How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.
HomeStar Bank and Financial Services fell behind the national average on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.
One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. HomeStar Bank and Financial Services's most recent annualized quarterly return on equity was 6.11 percent, below the national average of 8.10 percent.
The bank earned net income of $1.6 million on total equity of $26.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.46 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.