A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to deal with problematic loans, likely making the bank better able to withstand financial trouble. However, banks that are losing money are less able to do those things.
Bank of Laverne scored 8 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Bank of Laverne's most recent annualized quarterly return on equity was 3.88 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $368,000 on total equity of $9.3 million. The bank reported an annualized return on average assets, or ROA, of 0.63 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.