A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand financial trouble. Conversely, losses reduce a bank's ability to do those things.
Melvin Savings Bank underperformed the average on Bankrate's test of earnings, achieving a score of 8 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. The most recent annualized quarterly return on equity for Melvin Savings Bank was 3.80 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $457,000 on total equity of $12.1 million. The bank experienced an annualized return on average assets, or ROA, of 0.66 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.