How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money are less able to do those things.
On Bankrate's earnings test, State Bank of the Lakes scored 14 out of a possible 30, coming in below the national average of 15.12.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for State Bank of the Lakes was 6.59 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $9.6 million on total equity of $150.8 million. The bank had an annualized return on average assets, or ROA, of 0.90 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.