A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, increasing 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 have less ability to do those things.
The Farmers State Bank scored 20 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
Return on equity, calculated by dividing net income (profit, basically) 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 10.67 percent, above the national average of 8.10 percent.
The bank reported net income of $969,000 on total equity of $9.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.42 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.