How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.
The Gerber State Bank did above-average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. The Gerber State Bank's most recent annualized quarterly return on equity was 7.69 percent, below the national average of 8.10 percent.
The bank earned net income of $639,000 on total equity of $8.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.80 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.