A bank's earnings performance affects its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.
Bank of Prescott scored 6 out of a possible 30 on Bankrate's earnings test, below 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 Prescott was 2.42 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $269,000 on total equity of $11.0 million. The bank reported an annualized return on average assets, or ROA, of 0.34 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.