How profitable a bank is affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less 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.
One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. Farmers & Merchants Bank's most recent annualized quarterly return on equity was 4.82 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $95,000 on total equity of $2.0 million. The bank experienced an annualized return on average assets, or ROA, of 0.51 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.