A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing 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 exceeded the national average on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.
One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Farmers & Merchants Bank's most recent annualized quarterly return on equity was 7.63 percent, below the national average of 8.10 percent.
The bank recorded net income of $350,000 on total equity of $4.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.89 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.