A bank's profitability 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, likely making the bank better prepared to withstand financial shocks. Obviously, banks that are losing money are less able to do those things.
Bank of Bluffs scored 4 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Bank of Bluffs was 1.07 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $87,000 on total equity of $8.2 million. The bank had an annualized return on average assets, or ROA, of 0.15 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.