How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.
The Lorraine State Bank underperformed the average on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for The Lorraine State Bank was 5.58 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $193,000 on total equity of $3.5 million. The bank experienced an annualized return on average assets, or ROA, of 0.83 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.