A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, lessen a bank's ability to do those things.
First Exchange Bank of Alabama underperformed the average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.
One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for First Exchange Bank of Alabama was 2.93 percent, below the national average of 8.10 percent.
The bank reported net income of $383,000 on total equity of $13.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.28 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.