How profitable a bank is affects 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, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.
On Bankrate's test of earnings, Valley Exchange Bank scored 8 out of a possible 30, less than the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Valley Exchange Bank was 3.14 percent, below the national average of 8.10 percent.
The bank earned net income of $230,000 on total equity of $7.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.34 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.