A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.
Houghton State Bank scored 14 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.
One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Houghton State Bank's most recent annualized quarterly return on equity was 6.34 percent, below the national average of 8.10 percent.
The bank reported net income of $1.3 million on total equity of $21.4 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.78 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.