How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.
The Farmers State Bank did below-average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The Farmers State Bank's most recent annualized quarterly return on equity was 7.00 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $1.3 million on total equity of $19.0 million. The bank had an annualized return on average assets, or ROA, of 0.80 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.