A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.
Sterling State Bank scored 12 out of a possible 30 on Bankrate's test of earnings, less than the national average of 16.52.
One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Sterling State Bank's most recent annualized quarterly return on equity was 5.42 percent, below the national average of 9.28 percent.
The bank reported net income of $737,000 on total equity of $27.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.41 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.