A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to deal with 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 scored 14 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. First State Bank's most recent annualized quarterly return on equity was 6.10 percent, below the national average of 8.10 percent.
The bank reported net income of $203,000 on total equity of $3.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.53 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.