A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money are less able to do those things.
On Bankrate's test of earnings, Farmers-Merchants Bank & Trust Company scored 18 out of a possible 30, better than 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 the total amount of equity. The most recent annualized quarterly return on equity for Farmers-Merchants Bank & Trust Company was 8.51 percent, above the national average of 8.10 percent.
The bank recorded net income of $3.3 million on total equity of $39.8 million for the twelve months ended December 31, 2017. 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.