A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.
Pinnacle Bank, Inc. scored 10 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Pinnacle Bank, Inc.'s most recent annualized quarterly return on equity was 4.83 percent, below the national average of 8.10 percent.
The bank earned net income of $368,000 on total equity of $7.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.73 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.