How profitable a bank is affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.
Farmers & Merchants Bank scored 0 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Farmers & Merchants Bank's most recent annualized quarterly return on equity was -2.70 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $-644,000 on total equity of $23.0 million. The bank reported an annualized return on average assets, or ROA, of -0.35 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.