A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. Conversely, losses reduce a bank's ability to do those things.
Farmers State Bank exceeded the national average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Farmers State Bank's most recent annualized quarterly return on equity was 11.23 percent, above the national average of 8.10 percent.
The bank earned net income of $6.9 million on total equity of $61.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.03 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.