How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.
The State Bank of Townsend did above-average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.
One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for The State Bank of Townsend was 9.45 percent, above the national average of 8.10 percent.
The bank recorded net income of $1.2 million on total equity of $12.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.03 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.