How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.
On Bankrate's earnings test, HomeTown Bank scored 12 out of a possible 30, failing to reach the national average of 15.12.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for HomeTown Bank was 5.38 percent, below the national average of 8.10 percent.
The bank earned net income of $3.0 million on total equity of $57.8 million for the twelve months ended December 31, 2017. The bank experienced 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.