A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, take away from a bank's ability to do those things.
Farmers State Bank of Munith scored 18 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.
One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Farmers State Bank of Munith's most recent annualized quarterly return on equity was 8.28 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $592,000 on total equity of $7.3 million. The bank experienced an annualized return on average assets, or ROA, of 0.83 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.