A bank's earnings performance has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.
Bank of the Southwest scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 16.52.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. Bank of the Southwest's most recent annualized quarterly return on equity was 11.15 percent, above the national average of 9.28 percent.
The bank reported net income of $785,000 on total equity of $14.2 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.13 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.