A bank's earnings performance 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, potentially making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.
Five Star Bank scored 30 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Five Star Bank was 25.42 percent, above the national average of 8.10 percent.
The bank earned net income of $22.2 million on total equity of $101.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.43 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.