How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Banks that are losing money, however, are less able to do those things.
SmartBank scored 10 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. SmartBank's most recent annualized quarterly return on equity was 5.69 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $7.1 million on total equity of $168.1 million. The bank had an annualized return on average assets, or ROA, of 0.59 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.