How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. However, banks that are losing money are less able to do those things.
On Bankrate's earnings test, State Bank of Waterloo scored 6 out of a possible 30, coming in below the national average of 16.52.
One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. State Bank of Waterloo's most recent annualized quarterly return on equity was 2.71 percent, below the national average of 9.28 percent.
The bank recorded net income of $193,000 on total equity of $14.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.25 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.