A bank's profitability affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Conversely, losses reduce a bank's ability to do those things.
Friends Bank scored 16 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.
One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. Friends Bank's most recent annualized quarterly return on equity was 7.64 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $667,000 on total equity of $9.2 million. The bank reported an annualized return on average assets, or ROA, of 0.67 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.