A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial shocks. Conversely, losses diminish a bank's ability to do those things.
On Bankrate's test of earnings, The Farmers & Merchants Bank of North Dakota scored 18 out of a possible 30, better than the national average of 15.12.
One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The Farmers & Merchants Bank of North Dakota's most recent annualized quarterly return on equity was 8.50 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $896,000 on total equity of $10.6 million. The bank reported an annualized return on average assets, or ROA, of 0.88 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.