How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to deal with problematic loans, potentially making the bank better able to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.
First Community Bank of Mercersburg scored 10 out of a possible 30 on Bankrate's test of earnings, below the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for First Community Bank of Mercersburg was 4.23 percent, below the national average of 8.10 percent.
The bank reported net income of $865,000 on total equity of $20.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.48 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.