How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, take away from a bank's ability to do those things.
Valley State Bank underperformed the average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Valley State Bank's most recent annualized quarterly return on equity was 3.42 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $692,000 on total equity of $20.5 million. The bank reported an annualized return on average assets, or ROA, of 0.56 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.