A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Conversely, losses lessen a bank's ability to do those things.
The Farmers State Bank scored 10 out of a possible 30 on Bankrate's earnings test, lower than the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The Farmers State Bank's most recent annualized quarterly return on equity was 4.79 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $94,000 on total equity of $2.0 million. The bank reported an annualized return on average assets, or ROA, of 0.41 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.