A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, diminish a bank's ability to do those things.
On Bankrate's test of earnings, Watch Hill Bank scored 12 out of a possible 30, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. Watch Hill Bank's most recent annualized quarterly return on equity was 5.00 percent, below the national average of 8.10 percent.
The bank recorded net income of $804,000 on total equity of $15.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.56 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.