How profitable a bank is 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 tough times. Losses, on the other hand, reduce a bank's ability to do those things.
Farmers Exchange Bank scored 26 out of a possible 30 on Bankrate's test of earnings, exceeding 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 Farmers Exchange Bank was 19.13 percent, above the national average of 8.10 percent.
The bank earned net income of $7.2 million on total equity of $40.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.07 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.