How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.
On Bankrate's earnings test, First Covenant Bank scored 24 out of a possible 30, exceeding the national average of 15.12.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. First Covenant Bank's most recent annualized quarterly return on equity was 17.45 percent, above the national average of 8.10 percent.
The bank earned net income of $2.8 million on total equity of $17.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.49 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.