A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial shocks. Banks that are losing money, however, are less able to do those things.
On Bankrate's earnings test, The Mer Rouge State Bank scored 10 out of a possible 30, lower than the national average of 15.12.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The Mer Rouge State Bank's most recent annualized quarterly return on equity was 4.11 percent, below the national average of 8.10 percent.
The bank reported net income of $212,000 on total equity of $5.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.