How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.
On Bankrate's test of earnings, State Bank of Arthur scored 12 out of a possible 30, lower than the national average of 16.52.
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. State Bank of Arthur's most recent annualized quarterly return on equity was 5.30 percent, below the national average of 9.28 percent.
The bank recorded net income of $474,000 on total equity of $18.3 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.73 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.