A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, lessen a bank's ability to do those things.
The Merchants & Citizens Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The Merchants & Citizens Bank's most recent annualized quarterly return on equity was 3.89 percent, below the national average of 8.10 percent.
The bank earned net income of $676,000 on total equity of $17.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.64 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.