A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.
First Farmers & Merchants State Bank of Grand Meadow outperformed the average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for First Farmers & Merchants State Bank of Grand Meadow was 7.36 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $499,000 on total equity of $6.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.