A bank's earnings performance affects 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, likely making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.
First State Bank of Newcastle scored 10 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. First State Bank of Newcastle's most recent annualized quarterly return on equity was 4.87 percent, below the national average of 8.10 percent.
The bank earned net income of $988,000 on total equity of $20.1 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.69 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.