A bank's earnings performance has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. However, banks that are losing money are less able to do those things.
Southern Bank scored 4 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.
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. Southern Bank's most recent annualized quarterly return on equity was 1.93 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $178,000 on total equity of $9.1 million. The bank had an annualized return on average assets, or ROA, of 0.22 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.