How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.
German American Bancorp received above-average marks on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for German American Bancorp was 12.22 percent, above the national average of 8.10 percent.
The bank recorded net income of $40.7 million on total equity of $342.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.35 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.