A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses reduce a bank's ability to do those things.
On Bankrate's earnings test, The First National Bank of McHenry scored 10 out of a possible 30, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. The First National Bank of McHenry's most recent annualized quarterly return on equity was 4.64 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $737,000 on total equity of $15.7 million. The bank had an annualized return on average assets, or ROA, of 0.43 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.