How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.
Preferred Bank did below-average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Preferred Bank's most recent annualized quarterly return on equity was 5.31 percent, below the national average of 8.10 percent.
The bank recorded net income of $2.1 million on total equity of $40.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.77 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.