A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, diminish a bank's ability to do those things.
The Farmers & Merchants State Bank exceeded the national average on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.
One important measure of 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 State Bank was 11.07 percent, above the national average of 8.10 percent.
The bank earned net income of $11.9 million on total equity of $109.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.12 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.