How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand economic trouble. However, banks that are losing money have less ability to do those things.
The Bank of Herrin scored 22 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.
One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The Bank of Herrin's most recent annualized quarterly return on equity was 12.99 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $3.1 million on total equity of $24.7 million. The bank reported an annualized return on average assets, or ROA, of 1.22 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.