A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. Banks that are losing money, however, are less able to do those things.
Preferred Community Bank did below-average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Preferred Community Bank was 3.21 percent, below the national average of 8.10 percent.
The bank earned net income of $425,000 on total equity of $13.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.37 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.