How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.
The Exchange Bank of Alabama scored 16 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The Exchange Bank of Alabama's most recent annualized quarterly return on equity was 8.07 percent, below the national average of 8.10 percent.
The bank recorded net income of $2.8 million on total equity of $36.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.01 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.