How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.
The Farmers & Merchants Bank fell short of the national average on Bankrate's earnings test, achieving a score of 10 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for The Farmers & Merchants Bank was 4.86 percent, below the national average of 8.10 percent.
The bank earned net income of $832,000 on total equity of $16.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.02 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.