A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.
On Bankrate's test of earnings, DeMotte State Bank scored 12 out of a possible 30, coming in below the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one key measure of a bank's earnings. DeMotte State Bank's most recent annualized quarterly return on equity was 4.96 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $2.3 million on total equity of $46.6 million. The bank reported an annualized return on average assets, or ROA, of 0.58 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.