A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.
Farmers & Merchants Bank scored 20 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. Farmers & Merchants Bank's most recent annualized quarterly return on equity was 11.64 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $5.0 million on total equity of $44.0 million. The bank reported an annualized return on average assets, or ROA, of 1.07 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.