How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand economic shocks. Losses, on the other hand, take away from a bank's ability to do those things.
First Federal of Northern Michigan underperformed the average on Bankrate's test of earnings, achieving a score of 4 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. First Federal of Northern Michigan's most recent annualized quarterly return on equity was 1.54 percent, below the national average of 8.10 percent.
The bank recorded net income of $472,000 on total equity of $30.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.14 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.