A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.
Waukon State Bank scored 24 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Waukon State Bank was 15.13 percent, above the national average of 8.10 percent.
The bank reported net income of $5.4 million on total equity of $36.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.01 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.