How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money have less ability to do those things.
On Bankrate's test of earnings, Mechanics & Farmers Bank scored 0 out of a possible 30, less than the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Mechanics & Farmers Bank's most recent annualized quarterly return on equity was -11.52 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $-2.5 million on total equity of $19.7 million. The bank experienced an annualized return on average assets, or ROA, of -0.94 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.