How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand economic trouble. However, banks that are losing money have less ability to do those things.
First National Bank of Muscatine beat the national average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.
Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. First National Bank of Muscatine's most recent annualized quarterly return on equity was 8.41 percent, above the national average of 8.10 percent.
The bank recorded net income of $2.9 million on total equity of $35.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.94 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.