How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.
On Bankrate's earnings test, Salem Five Cents Savings Bank scored 16 out of a possible 30, failing to reach 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 way to measure a bank's earnings. The most recent annualized quarterly return on equity for Salem Five Cents Savings Bank was 7.18 percent, below the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank reported net income of $16.0 million on total equity of $455.7 million. The bank experienced an annualized return on average assets, or ROA, of 0.74 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.