How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.
The Merchants and Farmers Bank of Salisbury scored 14 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for The Merchants and Farmers Bank of Salisbury 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 $559,000 on total equity of $8.5 million. The bank had an annualized return on average assets, or ROA, of 0.57 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.