How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.
On Bankrate's test of earnings, Pacific Mercantile Bank scored 18 out of a possible 30, beating the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Pacific Mercantile Bank's most recent annualized quarterly return on equity was 9.28 percent, above the national average of 8.10 percent.
The bank recorded net income of $10.4 million on total equity of $122.2 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.86 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.