How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, diminish a bank's ability to do those things.
Farmers & Merchants Bank fell behind the national average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Farmers & Merchants Bank was 7.01 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $4.5 million on total equity of $65.0 million. The bank had an annualized return on average assets, or ROA, of 0.75 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.