A bank's profitability affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial shocks. However, banks that are losing money have less ability to do those things.
On Bankrate's test of earnings, Farmers State Bank scored 6 out of a possible 30, failing to reach the national average of 16.52.
Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Farmers State Bank was 3.04 percent, below the national average of 9.28 percent.
The bank earned net income of $39,000 on total equity of $2.6 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.28 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.