How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses lessen a bank's ability to do those things.
Farmers & Merchants Bank scored 10 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Farmers & Merchants Bank was 4.50 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $1.0 million on total equity of $22.4 million. The bank had an annualized return on average assets, or ROA, of 0.50 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.