A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.
Farmers State Bank of Newcastle scored 22 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Farmers State Bank of Newcastle was 12.48 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $499,000 on total equity of $4.1 million. The bank had an annualized return on average assets, or ROA, of 1.18 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.