A bank's earnings performance has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial shocks. Conversely, losses reduce a bank's ability to do those things.
On Bankrate's earnings test, Bank of South Texas scored 16 out of a possible 30, beating the national average of 15.12.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Bank of South Texas's most recent annualized quarterly return on equity was 7.29 percent, below the national average of 8.10 percent.
The bank earned net income of $980,000 on total equity of $13.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.76 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.