A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. However, banks that are losing money have less ability to do those things.
On Bankrate's earnings test, Independent Bank scored 14 out of a possible 30, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. Independent Bank's most recent annualized quarterly return on equity was 7.19 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $8.4 million on total equity of $120.4 million. The bank had an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.