Heritage Bank chair Kerry Betros has hit out at the Australian Prudential Regulation Authority in the mutual's annual report, taking issue with its "extreme approach".Betros grumbled that APRA has been "particularly active in promulgating the Basel III environment for Australian financial institutions."He also complained about the levy of A$400,000 Heritage pays APRA, a rise of one third on last year.He said the $3 million budget for compliance and regulatory matters "is placing an enormous burden on our staff and causing a considerable diversion from the main activities of the bank."These distractions had no great impact on earnings, however.Heritage Bank increased its earnings by almost 20 per cent in the year to June. The bank's full financial statements confirmed an 18.5 per cent increase in net profit, to $37.05 million.The result included a gain on the sale of shares in Visa, as well as fair value adjustments required under accounting rules. After adjusting for these items, pre-tax profit was up 12.6 per cent.The bank's assets increased by 3.5 per cent, to $8.5 billion, during the year.