A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.
Flagship Bank Minnesota fell behind the national average on Bankrate's test of earnings, achieving a score of 4 out of a possible 30.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Flagship Bank Minnesota's most recent annualized quarterly return on equity was 1.96 percent, below the national average of 8.10 percent.
The bank recorded net income of $440,000 on total equity of $22.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.22 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.