A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, take away from a bank's ability to do those things.
On Bankrate's test of earnings, Montezuma State Bank scored 12 out of a possible 30, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Montezuma State Bank's most recent annualized quarterly return on equity was 5.87 percent, below the national average of 8.10 percent.
The bank reported net income of $267,000 on total equity of $4.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.74 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.