How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.
The First National Bank of Cokato exceeded the national average on Bankrate's test of earnings, achieving a score of 28 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The First National Bank of Cokato's most recent annualized quarterly return on equity was 19.42 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $850,000 on total equity of $4.5 million. The bank had an annualized return on average assets, or ROA, of 1.50 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.