A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.
On Bankrate's earnings test, Herring Bank scored 14 out of a possible 30, failing to reach the national average of 15.12.
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. The most recent annualized quarterly return on equity for Herring Bank was 6.73 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $3.0 million on total equity of $45.3 million. The bank reported an annualized return on average assets, or ROA, of 0.70 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.