How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.
On Bankrate's test of earnings, Sterling State Bank scored 14 out of a possible 30, lower than the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Sterling State Bank was 6.80 percent, below the national average of 8.10 percent.
The bank recorded net income of $1.9 million on total equity of $28.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.