A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.
On Bankrate's earnings test, Bank of Edmonson County scored 24 out of a possible 30, better than the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. Bank of Edmonson County's most recent annualized quarterly return on equity was 14.33 percent, above the national average of 8.10 percent.
The bank reported net income of $3.5 million on total equity of $24.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.64 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.