A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic trouble. However, banks that are losing money have less ability to do those things.
Fort Davis State Bank fell short of the national average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Fort Davis State Bank was 7.06 percent, below the national average of 8.10 percent.
The bank earned net income of $534,000 on total equity of $7.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.66 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.