A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.
Farmers & Merchants Bank of Colby scored 20 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Farmers & Merchants Bank of Colby's most recent annualized quarterly return on equity was 12.10 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $3.4 million on total equity of $28.8 million. The bank experienced an annualized return on average assets, or ROA, of 1.65 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.