A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Conversely, losses diminish a bank's ability to do those things.
On Bankrate's test of earnings, Bank of Montgomery scored 4 out of a possible 30, failing to reach the national average of 15.12.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Bank of Montgomery's most recent annualized quarterly return on equity was 0.97 percent, below the national average of 8.10 percent.
The bank earned net income of $39,000 on total equity of $3.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.09 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.