A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.
Bank of Guam scored 14 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Bank of Guam's most recent annualized quarterly return on equity was 6.72 percent, below the national average of 8.10 percent.
The bank recorded net income of $8.8 million on total equity of $133.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.45 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.