How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.
Farmers State Bank of Western Illinois scored 10 out of a possible 30 on Bankrate's test of earnings, less than the national average of 16.52.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Farmers State Bank of Western Illinois's most recent annualized quarterly return on equity was 4.35 percent, below the national average of 9.28 percent.
The bank earned net income of $346,000 on total equity of $16.1 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.54 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.