A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic trouble. However, banks that are losing money are less able to do those things.
On Bankrate's earnings test, The First National Bank of Monterey scored 12 out of a possible 30, lower than the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for The First National Bank of Monterey was 5.14 percent, below the national average of 8.10 percent.
The bank reported net income of $1.9 million on total equity of $37.0 million for the twelve months ended December 31, 2017. The bank experienced 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.