How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.
Northern Sky Bank scored 22 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Northern Sky Bank's most recent annualized quarterly return on equity was 13.58 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $799,000 on total equity of $6.0 million. The bank had an annualized return on average assets, or ROA, of 1.16 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.