How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.
On Bankrate's test of earnings, Farmers-Merchants National Bank of Paxton scored 16 out of a possible 30, above the national average of 15.12.
One widely used measure of 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 National Bank of Paxton was 7.08 percent, below the national average of 8.10 percent.
The bank earned net income of $966,000 on total equity of $13.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.83 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.