A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.
Lovelady State Bank exceeded the national average on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Lovelady State Bank was 11.68 percent, above the national average of 8.10 percent.
The bank earned net income of $512,000 on total equity of $4.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.11 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.