A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.
On Bankrate's earnings test, Merchants & Farmers Bank of Greene County, Alabama scored 20 out of a possible 30, above the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. Merchants & Farmers Bank of Greene County, Alabama's most recent annualized quarterly return on equity was 10.91 percent, above the national average of 8.10 percent.
The bank recorded net income of $739,000 on total equity of $6.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.20 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.