A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.
First Merchants Bank beat the national average on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. First Merchants Bank's most recent annualized quarterly return on equity was 8.81 percent, above the national average of 8.10 percent.
The bank earned net income of $103.2 million on total equity of $1.40 billion for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.27 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.