A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.
On Bankrate's test of earnings, The Farmers and Merchants State Bank scored 12 out of a possible 30, below the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for The Farmers and Merchants State Bank was 5.82 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $175,000 on total equity of $3.0 million. The bank experienced an annualized return on average assets, or ROA, of 0.63 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.