A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.
Farmers and Merchants State Bank of Blooming Prairie scored 30 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Farmers and Merchants State Bank of Blooming Prairie's most recent annualized quarterly return on equity was 22.83 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $1.3 million on total equity of $5.9 million. The bank reported an annualized return on average assets, or ROA, of 1.56 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.