A bank's profitability affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Obviously, banks that are losing money have less ability to do those things.
SouthFirst Bank fell short of the national average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for SouthFirst Bank was 3.56 percent, below the national average of 8.10 percent.
The bank earned net income of $355,000 on total equity of $10.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.40 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.