How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.
Farmers State Bank of Watkins scored 18 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Farmers State Bank of Watkins's most recent annualized quarterly return on equity was 9.75 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $507,000 on total equity of $5.2 million. The bank had an annualized return on average assets, or ROA, of 1.14 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.