How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.
Mechanics & Farmers Bank scored 2 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 16.52.
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 Mechanics & Farmers Bank was 0.67 percent, below the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank recorded net income of $73,000 on total equity of $22.0 million. The bank had an annualized return on average assets, or ROA, of 0.06 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.