A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.
Farmers & Merchants State Bank scored 18 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.
One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Farmers & Merchants State Bank's most recent annualized quarterly return on equity was 9.10 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $1.6 million on total equity of $18.0 million. The bank reported an annualized return on average assets, or ROA, of 0.96 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.