A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.
On Bankrate's earnings test, Farmers State Bank of Hamel scored 16 out of a possible 30, beating the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Farmers State Bank of Hamel was 7.37 percent, below the national average of 8.10 percent.
The bank recorded net income of $950,000 on total equity of $13.1 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.75 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.