How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, have less ability to do those things.
South Ottumwa Savings Bank scored 20 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for South Ottumwa Savings Bank was 10.41 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $5.2 million on total equity of $52.0 million. The bank experienced an annualized return on average assets, or ROA, of 1.25 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.