A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.
On Bankrate's earnings test, Arcola First Bank scored 12 out of a possible 30, falling short of the national average of 15.12.
One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Arcola First Bank was 5.31 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $667,000 on total equity of $11.9 million. The bank had an annualized return on average assets, or ROA, of 0.60 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.