How profitable a bank is affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.
Severn Savings Bank, FSB fell behind the national average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. Severn Savings Bank, FSB's most recent annualized quarterly return on equity was 3.42 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $3.7 million on total equity of $108.7 million. The bank reported an annualized return on average assets, or ROA, of 0.47 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.