A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.
First State Bank of Warner, S. Dak. scored 10 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. First State Bank of Warner, S. Dak.'s most recent annualized quarterly return on equity was 6.06 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $527,000 on total equity of $11.0 million. The bank had an annualized return on average assets, or ROA, of 0.76 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.