A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.
Preferred Bank received above-average marks on Bankrate's test of earnings, achieving a score of 22 out of a possible 30.
One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Preferred Bank's most recent annualized quarterly return on equity was 12.62 percent, above the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $1.1 million on total equity of $8.1 million. The bank reported an annualized return on average assets, or ROA, of 0.95 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.