How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.
On Bankrate's earnings test, Bank of the Southwest scored 20 out of a possible 30, beating out the national average of 15.12.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Bank of the Southwest's most recent annualized quarterly return on equity was 10.52 percent, above the national average of 8.10 percent.
The bank reported net income of $1.5 million on total equity of $14.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.04 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.