How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.
The Gorham State Bank did above-average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The Gorham State Bank's most recent annualized quarterly return on equity was 7.75 percent, below the national average of 8.10 percent.
The bank reported net income of $229,000 on total equity of $3.0 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.77 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.