A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.
Farmers & Merchants Bank & Trust underperformed the average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. Farmers & Merchants Bank & Trust's most recent annualized quarterly return on equity was 3.09 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $484,000 on total equity of $15.7 million. The bank had an annualized return on average assets, or ROA, of 0.35 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.