Return on AssetsROA
Return on assets (ROA) is a bank’s net income divided by its average total assets, usually annualized. It shows how much profit the bank earns for every dollar on its balance sheet, and it is the most common single measure of bank profitability.
How ROA is calculated
ROA = net income ÷ average total assets. Quarterly figures are annualized, so a bank that earns $5 million in a quarter on $2 billion of average assets reports an ROA of about 1.0% ($20 million a year ÷ $2 billion). Using average rather than period-end assets keeps a large deposit inflow on the last day of the quarter from distorting the ratio.
What counts as a good ROA
Banks have thin margins by design: they are highly leveraged, so a small return on assets becomes a much larger return on equity. For community banks, an ROA around 1% is the long-standing rule of thumb for solid performance, and sustained results well above that usually reflect a low-cost deposit base, a lean expense structure, or both.
For example, First Community Bank in South Carolina reported a 1.34% return on average assets for the third quarter of 2026, according to its earnings release (see our First Community profile).
What moves it
ROA is the product of everything else on the income statement: the net interest margin earned on loans and securities, fee income, operating expenses (captured in the efficiency ratio), credit losses and taxes. One-time items, such as a securities sale or a gain on a branch sale, can swing a single quarter, which is why analysts look at several quarters or a core ROA that strips them out.
Common questions
What is a good ROA for a bank?
Around 1% is the common benchmark for a well-run community bank. Results consistently above that point to strong margins or low costs; results well below it usually mean thin margins, high expenses or elevated credit losses.
What is the difference between ROA and ROE?
ROA divides net income by assets; return on equity (ROE) divides it by shareholders’ equity. Because banks fund most assets with deposits, ROE is typically around ten times ROA.
Where can I find a bank’s ROA?
In its quarterly earnings release, or for any FDIC-insured bank in the call report data published by the FDIC.