A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses lessen a bank's ability to do those things.
On Bankrate's test of earnings, First State Bank of Sauk Centre scored 20 out of a possible 30, better than the national average of 15.12.
One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. First State Bank of Sauk Centre's most recent annualized quarterly return on equity was 10.78 percent, above the national average of 8.10 percent.
The bank earned net income of $1.4 million on total equity of $13.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.46 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.