How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.
Pavillion Bank fell behind the national average on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Pavillion Bank's most recent annualized quarterly return on equity was 5.75 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $586,000 on total equity of $10.2 million. The bank reported an annualized return on average assets, or ROA, of 0.77 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.