A bank's profitability affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.
First State Bank scored 22 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.
One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for First State Bank was 13.85 percent, above the national average of 8.10 percent.
The bank reported net income of $3.1 million on total equity of $23.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.77 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.