A bank's ability to earn money affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.
Peoples State Bank of Velva scored 18 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Peoples State Bank of Velva's most recent annualized quarterly return on equity was 9.43 percent, above the national average of 8.10 percent.
The bank reported net income of $956,000 on total equity of $10.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.