How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, potentially making the bank better able to withstand financial shocks. Conversely, losses lessen a bank's ability to do those things.
The Farmers & Merchants Bank underperformed the average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.
One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for The Farmers & Merchants Bank was 6.63 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $8.7 million on total equity of $135.3 million. The bank experienced 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.