A bank's ability to earn money 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, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.
The Capital Bank scored 0 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The Capital Bank's most recent annualized quarterly return on equity was -3.33 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank earned net income of $-491,000 on total equity of $13.6 million. The bank experienced an annualized return on average assets, or ROA, of -0.33 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.