A bank's profitability affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. However, banks that are losing money are less able to do those things.
On Bankrate's earnings test, Farmers State Bank scored 16 out of a possible 30, beating out the national average of 15.12.
One important 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 was 7.72 percent, below the national average of 8.10 percent.
The bank earned net income of $766,000 on total equity of $10.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.68 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.