A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.
Alamerica Bank received below-average marks on Bankrate's earnings test, achieving a score of 6 out of a possible 30.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Alamerica Bank's most recent annualized quarterly return on equity was 2.63 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $156,000 on total equity of $6.0 million. The bank reported an annualized return on average assets, or ROA, of 0.43 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.