A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, diminish a bank's ability to do those things.
Farmers & Merchants Bank scored 0 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Farmers & Merchants Bank's most recent annualized quarterly return on equity was 2.43 percent, below the national average of 8.10 percent.
The bank recorded net income of $705,000 on total equity of $28.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.13 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.