A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.
Decorah Bank & Trust Company scored 22 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Decorah Bank & Trust Company was 12.41 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $6.6 million on total equity of $53.8 million. The bank reported an annualized return on average assets, or ROA, of 1.55 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.