A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.
Fairfax State Savings Bank fell behind the national average on Bankrate's earnings test, achieving a score of 10 out of a possible 30.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Fairfax State Savings Bank was 4.75 percent, below the national average of 8.10 percent.
The bank reported net income of $855,000 on total equity of $18.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.59 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.