A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.
Farmers & Merchants Bank of Hutsonville scored 14 out of a possible 30 on Bankrate's test of earnings, below the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for Farmers & Merchants Bank of Hutsonville was 6.38 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $475,000 on total equity of $7.5 million. The bank experienced an annualized return on average assets, or ROA, of 1.14 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.