How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.
First Southern Bank fell short of the national average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.
One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. First Southern Bank's most recent annualized quarterly return on equity was -3.67 percent, below the national average of 8.10 percent.
The bank earned net income of $-176,000 on total equity of $4.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.17 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.