A bank's profitability affects its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.
The Baxter State Bank scored 0 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for The Baxter State Bank was -3.74 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $-227,000 on total equity of $5.8 million. The bank reported an annualized return on average assets, or ROA, of -0.77 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.