A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, likely making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.
Security Federal Bank scored 16 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Security Federal Bank's most recent annualized quarterly return on equity was 7.09 percent, below the national average of 8.10 percent.
The bank earned net income of $6.5 million on total equity of $92.4 million for the twelve months ended December 31, 2017. 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.