How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.
First South Bank fell behind the national average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.
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. First South Bank's most recent annualized quarterly return on equity was 3.43 percent, below the national average of 9.28 percent.
The bank earned net income of $1.1 million on total equity of $74.9 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.45 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.