How profitable a bank is affects its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.
The State Exchange Bank scored 28 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.
One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The State Exchange Bank's most recent annualized quarterly return on equity was 19.93 percent, above the national average of 8.10 percent.
The bank reported net income of $1.4 million on total equity of $7.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 2.27 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.