A bank's earnings performance has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.
First Bank of Muleshoe scored 8 out of a possible 30 on Bankrate's test of earnings, below the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. First Bank of Muleshoe's most recent annualized quarterly return on equity was 3.79 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $541,000 on total equity of $14.1 million. The bank reported an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.