How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.
On Bankrate's test of earnings, The Farmers and Merchants Bank scored 14 out of a possible 30, lower than the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The Farmers and Merchants Bank's most recent annualized quarterly return on equity was 6.50 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $895,000 on total equity of $13.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.70 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.