A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.
Sound Banking Company scored 30 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Sound Banking Company's most recent annualized quarterly return on equity was 19.97 percent, above the national average of 8.10 percent.
The bank recorded net income of $970,000 on total equity of $4.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.66 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.