How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.
The Farmers and Merchants State Bank of Argonia scored 0 out of a possible 30 on Bankrate's earnings test, lower than the national average of 16.52.
One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The Farmers and Merchants State Bank of Argonia's most recent annualized quarterly return on equity was -152.33 percent, below the national average of 9.28 percent.
The bank earned net income of $-1.4 million on total equity of $984,000 for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of -7.92 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.