A bank's ability to earn money 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, likely making the bank better prepared to withstand financial shocks. Conversely, losses lessen a bank's ability to do those things.
Horizon Bank scored 22 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.
One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Horizon Bank was 14.35 percent, above the national average of 8.10 percent.
The bank reported net income of $5.3 million on total equity of $38.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.95 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.