How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.
The Farmers State Bank did above-average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The Farmers State Bank's most recent annualized quarterly return on equity was 9.02 percent, above the national average of 8.10 percent.
The bank earned net income of $540,000 on total equity of $6.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.91 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.