A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.
First State Bank of Burnet received above-average marks on Bankrate's earnings test, achieving a score of 20 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. First State Bank of Burnet's most recent annualized quarterly return on equity was 10.86 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $3.3 million on total equity of $29.9 million. The bank reported an annualized return on average assets, or ROA, of 1.28 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.