How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.
On Bankrate's earnings test, Hometown Bank scored 8 out of a possible 30, failing to reach the national average of 15.12.
One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Hometown Bank's most recent annualized quarterly return on equity was 3.74 percent, below the national average of 8.10 percent.
The bank reported net income of $618,000 on total equity of $16.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.33 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.