A bank's ability to earn money has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.
Morgan Federal Bank scored 16 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 16.52.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Morgan Federal Bank's most recent annualized quarterly return on equity was 8.10 percent, below the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank recorded net income of $504,000 on total equity of $12.6 million. The bank had an annualized return on average assets, or ROA, of 0.89 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.