A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand financial trouble. Conversely, losses take away from a bank's ability to do those things.
Merchants Bank of Indiana beat the national average on Bankrate's earnings test, achieving a score of 24 out of a possible 30.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Merchants Bank of Indiana was 20.28 percent, above the national average of 8.10 percent.
The bank reported net income of $60.6 million on total equity of $411.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.99 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.