How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money are less able to do those things.
First Bank, Upper Michigan scored 20 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. First Bank, Upper Michigan's most recent annualized quarterly return on equity was 12.07 percent, above the national average of 8.10 percent.
The bank earned net income of $6.5 million on total equity of $55.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.45 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.