A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Losses, on the other hand, reduce a bank's ability to do those things.
First South Bank outperformed the average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. First South Bank's most recent annualized quarterly return on equity was 8.55 percent, below the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank reported net income of $4.2 million on total equity of $100.5 million. The bank had an annualized return on average assets, or ROA, of 0.82 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.