A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.
Merchants & Farmers Bank & Trust Company scored 12 out of a possible 30 on Bankrate's test of earnings, less than the national average of 15.12.
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. The most recent annualized quarterly return on equity for Merchants & Farmers Bank & Trust Company was 5.70 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $2.5 million on total equity of $43.9 million. The bank reported an annualized return on average assets, or ROA, of 0.61 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.