How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.
West Texas State Bank scored 14 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. West Texas State Bank's most recent annualized quarterly return on equity was 6.85 percent, below the national average of 8.10 percent.
The bank recorded net income of $3.0 million on total equity of $45.2 million for the twelve months ended December 31, 2017. The bank had 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.