A bank's profitability affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.
Bank of Chestnut scored 0 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.
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. The most recent annualized quarterly return on equity for Bank of Chestnut was -5.10 percent, below the national average of 8.10 percent.
The bank reported net income of $-92,000 on total equity of $1.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.51 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.