How profitable a bank is has an effect on its safety and soundness. 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 more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.
Texas Heritage Bank fell behind the national average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.
One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Texas Heritage Bank's most recent annualized quarterly return on equity was 6.11 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $749,000 on total equity of $12.4 million. The bank experienced an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.