How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand financial shocks. Obviously, banks that are losing money have less ability to do those things.
On Bankrate's earnings test, Preferred Bank scored 22 out of a possible 30, above the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. Preferred Bank's most recent annualized quarterly return on equity was 13.76 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $43.2 million on total equity of $355.0 million. The bank had an annualized return on average assets, or ROA, of 1.22 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.