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HomeTown Bankshares Corporation Reports Continued, Strong Market Share Growth for First Quarter

NASDAQ Listing
HomeTown Bankshares Corporation listed with the NASDAQ Capital Markets under the trading symbol “HMTA” on October 12, 2016 when the stock price closed at $8.95. Since listing, the Company’s stock has received enhanced exposure, increased trading volume, and higher closing prices with a high of $11.00, an average of $9.53, and most recent closing price of $9.80 as of April 27, 2017.

Operating Performance Highlights

  • Revenue of $5.7 million in Q1 2017, up 10% from $5.2 million in Q1 2016
  • Net Interest Income up 10% in Q1 2017 over prior year with Net Interest Margin of 3.54%
  • Noninterest Income for first quarter 2017 up 13% over prior year, net of securities gains
  • Net Income was $765,000 for first quarter 2017 compared to $801,000 in Q1 2016
  • Net Income Available to Shareholders was $765,000 in Q1 2017 vs. $597,000 in 2016 after $204,000 in preferred dividends; the preferred stock converted to common stock in June, 2016
  • Fully diluted Earnings per Share of $0.13 for first quarter of 2017, compared with $0.14 per share for 2016

Continued Strong Loan and Core Deposit Growth

  • Total assets of $534 million at March 31, 2017, increasing by $41 million or 8% over Q1 2016.
  • Total Loans of $428 million at March 31, 2017
    - Up $47 million or 12% for Q1 2017 over 2016
  • Total Deposits of $465 million, up $51 million or 12% for Q1 2017 over 2016
    - Core Deposits up 14% to $425 million due to Demand Deposits increasing $27 Million or 25% for Q1 2017 over 2016
    - 32% decrease in wholesale deposits in Q1 2017 vs. the prior year

Credit Quality Remains Strong

  • YTD net recoveries for Q1 2017 were $20,000 or -0.02% of average loans due to recoveries totaling $36,000 exceeding charge-offs vs. net charge-offs of $11,000 or 0.01% of average loans for Q1 2016
  • Non-performing assets improved significantly to 0.76% of total assets at March 31, 2017 vs. 1.24% in 2016
  • Nonperforming assets, including restructured loans, of 1.51% to total assets at March 31, 2017 vs. 2.53% in Q1 2016
  • Nonaccrual loans remained low at .22% of total loans at March 31, 2017 and .11% of total loans at March 31, 2016; OREO improved 45% to $3.1 Million at Q1 2017 from $5.7 million at Q1 2016
  • Past due accruing loans improved and remained at historically low levels of 0.33% of total loans at March 31, 2017 vs. 0.49% at March 31, 2016

ROANOKE, Va., April 28, 2017 (GLOBE NEWSWIRE) -- HomeTown Bankshares Corporation, (NASDAQ:HMTA), the parent company of HomeTown Bank, reported strong revenue growth of 10% for the first quarter of 2017 over the prior year. Net income available to common shareholders amounted to $765,000 for the first quarter of 2017 vs. $597,000 during the prior year after preferred stock dividend payments of $204,000 in Q1 2016. Net Income was $765,000 for Q1 2017 due to certain nonrecurring charges vs. $801,000 in 2016. Fully diluted earnings per share amounted to $0.13 per share for the first quarter of 2017 compared to $0.14 per share for the comparative period of 2016. The net interest margin increased for the past two consecutive quarters to 3.54% at March 31, 2017.

"We are delighted with the strong growth in market share in both loans and core deposits reflecting our continued ability to capitalize on the recent, competitive changes in our markets,” said Susan K. Still, President and CEO. “This expansion in market share is coupled with solid revenue growth, an improving quarter-to-quarter net interest margin and strong asset quality,” she continued.

Financial Highlights

Revenues increased 10% to $5.7 million during the first quarter due to strong loan and core deposit growth system-wide and a 13% increase in non-interest income, net of gain(s) on securities sales. Service charge and ATM and interchange income related to strong core deposit growth and the continued increase in mortgage origination income were the major contributors to the sizable increase in non-interest income during the first quarter of 2017 vs. 2016.

At March 31, 2017, total assets reached $534 million, an increase of $41 million or 8%, over 2016. The loan portfolio ended the period at $428 million, representing an increase of 12%, or $47 million over the prior year, supported by strong core deposit growth of 14% or $51 million in Q1 2017 over 2016. Another year of strong core deposit growth was due to another strong increase in demand deposits accounts over the prior year. Total deposits increased $51 million or 12% to $465 million at Q1 of 2017, with a 32% reduction in wholesale deposits since Q1 2016.

The expansion of our Private Banking Group in early 2016 continued to be a strong contributor to growth in both loans and deposits during the first quarter of 2017. In addition, higher mortgage originations resulted in an 18% increase in mortgage revenue for the first quarter of 2017 over 2016.

The Company’s asset quality improved and remains strong at March 31, 2017. Nonperforming assets, excluding performing restructured loans, improved to 0.76% at March 31, 2017 from 1.24% of Company assets at March 31, 2016. Both non-performing loans and Bank Owned Real Estate improved significantly with a combined 33% decrease in Q1 2017 over the prior year. In addition, recoveries exceeded charge-offs by $20,000 during the first quarter of 2017. The allowance for loan losses increased to $3.73 million at March 31, 2017 from $3.35 million in 2016 to support the strong loan growth.

The Bank remains well-capitalized with total equity at March 31, 2017 rising to $49 million with all ratios exceeding the current regulatory standards for well-capitalized status. The Common equity tier 1 ratio, Tier 1 capital ratio, Total capital ratio, and Tier 1 leverage ratio were 11.7%, 11.7%, 12.5% and 10.5%, respectively, for the Bank at March 31, 2017.

“While we are now the largest community bank headquartered in the Roanoke Valley, we have also been selected as the “Best Regional/Local Bank” by readers of the Roanoker Magazine for 2017 - the sixth consecutive year. Our strategic initiatives will continue to focus on being the best bank we can be in providing value for our shareholders as well as all of our customers and our employees in each market we serve,” Still said.

About HomeTown Bankshares Corporation

HomeTown Bankshares Corporation is the parent company of HomeTown Bank, which officially opened for business on November 14, 2005. HomeTown Bank offers a full range of banking services to small and medium-size businesses, real estate investors and developers, private investors, professionals and individuals. The Bank serves three markets including the Roanoke Valley, the New River Valley and Smith Mountain Lake through six branches, seven ATMs, HomeTown Mortgage and HomeTown Investments. A high level of responsive and personal service coupled with local decision-making is the hallmark of its banking strategy. For more information, please visit www.hometownbank.com.

Forward-Looking Statements:

Certain statements in this press release may be “forward-looking statements.” Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties. Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results will not differ materially from any future results implied by the forward-looking statements. Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, and competition, changes in the stock and bond markets and technology. The Company does not update any forward-looking statements that it may make.

(See Attached Financial Statements for the year-to-date and quarter ending March 31, 2017)

HomeTown Bankshares Corporation
Consolidated Condensed Balance Sheets
March 31, 2017; December 31, 2016; and March 31, 2016
March 31,
December 31
March 31
In Thousands 2017
2016
2016
Assets (Unaudited)
(Unaudited)
Cash and due from banks $28,005 $18,229 $27,890
Federal funds sold 51 42 1,082
Securities available for sale, at fair value 52,159 52,975 54,757
Restricted equity securities, at cost 2,290 2,213 2,765
Loans held for sale 123 678 289
Total loans 428,043 418,991 381,063
Allowance for loan losses (3,726) (3,636) (3,347)
Net loans 424,317 415,355 377,716
Property and equipment, net 13,274 13,371 13,864
Other real estate owned, net 3,148 3,794 5,686
Other assets 10,946 10,633 9,273
Total assets $534,313 $517,290 $493,322
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing $106,585 $91,354 $80,060
Interest-bearing 358,060 359,494 333,558
Total deposits 464,645 450,848 413,618
Federal Home Loan Bank borrowings 9,917 8,000 22,000
Subordinated notes 7,232 7,224 7,202
Other borrowings 1,121 1,117 1,072
Other liabilities 2,335 1,876 2,190
Total liabilities 485,250 469,065 446,082
Stockholders’ Equity:
Preferred stock - - 12,893
Common stock 28,756 28,765 16,801
Surplus 17,861 17,833 15,521
Retained surplus 2,012 1,247 1,040
Accumulated other comprehensive (loss) income (14) (56) 597
Total HomeTown Bankshares Corporation stockholders’ equity 48,615 47,789 46,852
Noncontrolling interest in consolidated subsidiary 448 436 388
Total stockholders’ equity 49,063 48,225 47,240
Total liabilities and stockholders’ equity $534,313 $517,290 $493,322


HomeTown Bankshares Corporation
Consolidated Condensed Statements of Income
For the Three Months Ended March 31, 2017 and 2016
For the For the
Three Three
Months Months
Ended Ended
Mar 31 Mar 31
In Thousands, Except Share and Per Share Data 2017 2016
(Unaudited) (Unaudited)
Interest income:
Loans and fees on loans $4,624 $4,256
Taxable investment securities 240 204
Nontaxable investment securities 87 101
Other interest income 74 53
Total interest income 5,025 4,614
Interest expense:
Deposits 554 504
Subordinated notes 134 134
Other borrowed funds 53 97
Total interest expense 741 735
Net interest income 4,284 3,879
Provision for loan losses 70 60
Net interest income after provision for loan losses 4,214 3,819
Noninterest income:
Service charges on deposit accounts 149 154
ATM and interchange income 178 147
Mortgage banking 207 175
Gains on sales of investment securities 13 5
Other income 150 130
Total noninterest income 697 611
Noninterest expense:
Salaries and employee benefits 1,989 1,726
Occupancy and equipment expense 428 434
Advertising and marketing expense 130 94
Professional fees 233 101
Losses on sales, and writedowns of other real estate owned, net - -
Other real estate owned expense 13 22
Other expense 999 885
Total noninterest expense 3,792 3,262
Net income before income taxes 1,119 1,168
Income tax expense 342 353
Net income 777 815
Less net income attributable to non-controlling interest 12 14
Net income attributable to HomeTown Bankshares Corporation 765 801
Effective dividends on preferred stock - 204
Net income available to common stockholders $765 $597
Basic earnings per common share $0.13 $0.17
*Diluted earnings per common share $0.13 $0.14
Weighted average common shares outstanding 5,763,383 3,501,446
Diluted average common shares outstanding 5,783,573 5,787,337

HomeTown Bankshares Corporation Three Three
Financial Highlights Months Months
In Thousands, Except Share and Per Share Data Ended Ended
Mar 31 Mar 31
2017 2016
PER SHARE INFORMATION (Unaudited) (Unaudited)
Book value per share, basic $8.43 $9.68 *
Book value per share, diluted $8.43 $8.12 *
Earnings per share, basic $0.13 $0.17 *
Earnings per share, diluted $0.13 $0.14 *
* Restated for the 4% stock dividend distributed July 11, 2016
PROFITABILITY
Return on average assets 0.59% 0.67%
Return on average shareholders' equity 6.40% 6.92%
Net interest margin 3.54% 3.62%
Efficiency 76.06% 72.23%
BALANCE SHEET RATIOS
Total loans to deposits 92.12% 92.13%
Securities to total assets 10.19% 11.66%
Common equity tier 1 ratio BANK ONLY 11.7% 12.5%
Tier 1 capital ratio BANK ONLY 11.7% 12.5%
Total capital ratio BANK ONLY 12.5% 13.3%
Tier 1 leverage ratio BANK ONLY 10.5% 10.9%
ASSET QUALITY
Nonperforming assets to total assets 0.76% 1.24%
Nonperforming assets, including restructured loans, to total assets 1.51% 2.53%
Net (recoveries) charge-offs to average loans (annualized) (0.02)% 0.01%
Composition of risk assets: (in thousands)
Nonperforming assets:
Nonaccrual loans $936 $415
Other real estate owned 3,148 5,686
Total nonperforming assets, excluding performing restructured loans 4,084 6,101
Restructured loans, performing in accordance with their modified terms 3,980 6,378
Total nonperforming assets, including performing restructured loans $8,064 $12,479
Allowance for loan losses: (in thousands)
Beginning balance $3,636 $3,298
Provision for loan losses 70 60
Charge-offs (16) (15)
Recoveries 36 4
Ending balance $3,726 $3,347

For more information contact: Susan K. Still, President and CEO, (540) 278-1705 Vance W. Adkins, Executive Vice President and CFO, (540) 278-1702

Source:HomeTown Bankshares Corporation