A bank's profitability has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial trouble. However, banks that are losing money are less able to do those things.
Hometown Bank scored 20 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.
One key measure of 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 10.36 percent, above the national average of 8.10 percent.
The bank reported net income of $4.0 million on total equity of $39.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.41 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.