How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.
The Hometown Bank of Alabama scored 20 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.
Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. The Hometown Bank of Alabama's most recent annualized quarterly return on equity was 12.37 percent, above the national average of 8.10 percent.
The bank earned net income of $5.9 million on total equity of $50.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.68 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.