A bank's profitability affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to deal with problematic loans, likely making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.
Farmers State Bank exceeded the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Farmers State Bank's most recent annualized quarterly return on equity was 9.68 percent, above the national average of 8.10 percent.
The bank earned net income of $1.9 million on total equity of $18.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.88 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.