A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.
First National Bank of Hereford scored 0 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. First National Bank of Hereford's most recent annualized quarterly return on equity was -7.37 percent, below the national average of 8.10 percent.
The bank recorded net income of $-1.1 million on total equity of $14.8 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -0.67 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.