How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to deal with problematic loans, potentially making the bank better prepared to withstand economic trouble. However, banks that are losing money have less ability to do those things.
Bank of the Sierra scored 18 out of a possible 30 on Bankrate's test of earnings, better than the national average of 16.52.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Bank of the Sierra was 8.40 percent, below the national average of 9.28 percent.
The bank earned net income of $10.1 million on total equity of $247.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.00 percent, right at the level deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.