How profitable a bank is affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.
The First State Bank fell behind the national average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The First State Bank's most recent annualized quarterly return on equity was 3.64 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $686,000 on total equity of $18.7 million. The bank had an annualized return on average assets, or ROA, of 0.47 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.