A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.
First Bank of Newton received above-average marks on Bankrate's earnings test, achieving a score of 22 out of a possible 30.
One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. First Bank of Newton's most recent annualized quarterly return on equity was 13.32 percent, above the national average of 8.10 percent.
The bank recorded net income of $2.3 million on total equity of $18.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.21 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.