How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.
The First State Bank of Red Wing underperformed the average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for The First State Bank of Red Wing was 2.50 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $170,000 on total equity of $6.8 million. The bank had an annualized return on average assets, or ROA, of 0.22 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.