How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.
Putnam 1st Mercantile Bank scored 22 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Putnam 1st Mercantile Bank's most recent annualized quarterly return on equity was 13.19 percent, above the national average of 8.10 percent.
The bank recorded net income of $1.8 million on total equity of $13.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.48 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.