| Section 2: EX-99.1 (PRESS RELEASE) |
Exhibit 99.1
August 21, 2012
News Release
FOR IMMEDIATE RELEASE
For more information contact:
Susan K. Still, President and CEO, 540-278-1705
Charles W. Maness, Jr. Executive Vice President and CFO, 540-278-1702
HomeTown Bankshares Issues Correction to News Release
Roanoke, VA
HomeTown Bankshares Corporation announces a correction to its news release issued July 26, 2012 reporting second quarter 2012 operating results. Subsequent to the news release it was determined that additional provisions to the allowance for loan losses were needed in the second quarter based on information obtained during the 3rd quarter and prior to the issuance of the 2nd quarter financial statements. These additional provisions resulted in a corresponding decrease in pre-tax income.
The earnings adjustment resulted in pre-tax earnings of $139,000 for the second quarter ended June 30, 2012 and a pre-tax profit of $797,000 for the six months ended June 30, 2012 vs. the originally reported 2nd quarter and year-to-date pre-tax earnings of $586,000 and $1.24 million, respectively. These revised results also compared to a pre-tax profit of $590,000 for the second quarter of 2011 and a pre-tax profit of $852,000 for the first six months of 2011. The recognition of deferred tax assets of $2.9 million, reduced by current period tax expense, added a net tax benefit of $2.7 million during the first half of 2012 which resulted in net income of $3.46 million thru June 30, 2012 vs. $852,000 in net income for the first six months of 2011. After dividends of $152,000 in the 2nd quarter and $304,000 for the first six months of 2012, earnings available to common shareholders amounted to a net loss of $57,000 and year-to-date earnings of $3.2 million through June 30, 2012. This compares to earnings available to common shareholders of $440,000 in the 2nd quarter of 2011 and $551,000 thru June 30, 2011. On a per share basis, net income (loss) available to common shareholders for the 2nd quarter of 2012 was ($.02) and $.97 per share for first six months of 2012 vs. the originally reported $.07 per share for the 2nd quarter and $1.06 per share for the first six months of 2012.
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, 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 June 30, 2012)
| Consolidated Balance Sheets | ||||||||
| June 30, 2012 and December 31, 2011 | ||||||||
| Unaudited | ||||||||
| In Thousands, Except Share and Per Share Data | 6/30/2012 | 12/31/2011 | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 12,618 | $ | 12,529 | ||||
| Federal funds sold | 10,789 | 10,363 | ||||||
| Securities available for sale, at fair value | 69,097 | 69,207 | ||||||
| Restricted equity securities, at cost | 2,439 | 2,390 | ||||||
| Loans, net of allowance for loan losses of $4,019 in 2012 and $3,979 in 2011 | 257,656 | 245,100 | ||||||
| Property and equipment, net | 9,523 | 9,582 | ||||||
| Other real estate owned, net of valuation allowance of $156 in 2012 and $331 in 2011 | 8,888 | 9,562 | ||||||
| Deferred tax asset, net | 2,303 | - | ||||||
| Accrued income | 1,425 | 1,372 | ||||||
| Prepaid FDIC insurance | 241 | 473 | ||||||
| Other assets | 879 | 597 | ||||||
| Total assets | $ | 375,858 | $ | 361,175 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing | $ | 32,458 | $ | 26,822 | ||||
| Interest-bearing | 287,290 | 280,814 | ||||||
| Total deposits | 319,748 | 307,636 | ||||||
| Short term borrowings | 465 | 449 | ||||||
| Federal Home Loan Bank borrowings | 19,000 | 19,000 | ||||||
| Accrued interest payable | 399 | 435 | ||||||
| Other liabilities | 680 | 567 | ||||||
| Total liabilities | 340,292 | 328,087 | ||||||
| Commitments and contingencies | — | — | ||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $1,000 par value; 10,000 shares of series A and 374 shares of series B authorized, issued and outstanding at June 30, 2012 and December 31, 2011 | 10,374 | 10,374 | ||||||
| Discount on preferred stock | (179 | ) | (217 | ) | ||||
| Common stock, $5 par value; authorized 10,000,000 shares, issued and outstanding 3,262,518 (includes 29,178 restricted shares) at June 30, 2012, and 3,241,547 (includes 8,207 restricted shares) at December 31, 2011 | 16,167 | 16,167 | ||||||
| Surplus | 15,472 | 15,458 | ||||||
| Retained deficit | (7,423 | ) | (9,773 | ) | ||||
| Accumulated other comprehensive income | 1,155 | 1,079 | ||||||
| Total stockholders’ equity | 35,566 | 33,088 | ||||||
| Total liabilities and stockholders’ equity | $ | 375,858 | $ | 361,175 | ||||
| Consolidated Statements of Operations | ||||||||||||||||
| Three and Six Months Ended June 30, 2012 and 2011 | ||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| In Thousands, Except Share and Per Share Data | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans and fees on loans | $ | 3,431 | $ | 3,552 | $ | 6,809 | $ | 7,065 | ||||||||
| Taxable investment securities | 433 | 507 | 911 | 936 | ||||||||||||
| Nontaxable investment securities | 9 | - | 12 | - | ||||||||||||
| Federal funds sold | 2 | 8 | 6 | 16 | ||||||||||||
| Dividends on restricted stock | 21 | 15 | 39 | 32 | ||||||||||||
| Other interest income | 16 | 4 | 21 | 4 | ||||||||||||
| Total interest income | 3,912 | 4,086 | 7,798 | 8,053 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 581 | 1,034 | 1,221 | 2,119 | ||||||||||||
| Preferred stock dividends | - | - | 38 | - | ||||||||||||
| Other borrowed funds | 97 | 132 | 212 | 265 | ||||||||||||
| Total interest expense | 678 | 1,166 | 1,471 | 2,384 | ||||||||||||
| Net interest income | 3,234 | 2,920 | 6,327 | 5,669 | ||||||||||||
| Provision for loan losses | 1,088 | 266 | 1,278 | 514 | ||||||||||||
| Net interest income after provision for loan losses | 2,146 | 2,654 | 5,049 | 5,155 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges on deposit accounts | 64 | 63 | 138 | 125 | ||||||||||||
| Mortgage loan brokerage fees | 78 | 11 | 152 | 35 | ||||||||||||
| Rental income | 37 | 26 | 74 | 60 | ||||||||||||
| Gain on sale of investment securities | 127 | 125 | 127 | 129 | ||||||||||||
| Other income | 100 | 71 | 177 | 129 | ||||||||||||
| Total noninterest income | 406 | 296 | 668 | 478 | ||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 1,138 | 1,252 | 2,365 | 2,468 | ||||||||||||
| Occupancy and equipment expense | 310 | 323 | 635 | 655 | ||||||||||||
| Data processing expense | 168 | 146 | 335 | 283 | ||||||||||||
| Advertising and marketing expense | 77 | 61 | 197 | 136 | ||||||||||||
| Professional fees | 108 | 66 | 194 | 169 | ||||||||||||
| Bank franchise taxes | 33 | 46 | 69 | 102 | ||||||||||||
| FDIC insurance expense | 122 | 163 | 243 | 352 | ||||||||||||
| Loss on sales and writedowns of other real estate | 32 | 17 | 35 | 35 | ||||||||||||
| Other real estate owned expense | 72 | 38 | 177 | 111 | ||||||||||||
| Other expense | 353 | 248 | 670 | 470 | ||||||||||||
| Total noninterest expense | 2,413 | 2,360 | 4,920 | 4,781 | ||||||||||||
| Net income before income taxes | 139 | 590 | 797 | 852 | ||||||||||||
| Income tax expense (benefit) | 44 | - | (2,658 | ) | - | |||||||||||
| Net income | 95 | 590 | 3,455 | 852 | ||||||||||||
| Dividends accumulated on preferred stock | 134 | 133 | 267 | 266 | ||||||||||||
| Accretion of discount on preferred stock | 18 | 17 | 37 | 35 | ||||||||||||
| Net income (loss) available to common shareholders | $ | (57 | ) | $ | 440 | $ | 3,151 | $ | 551 | |||||||
| Earnings (loss) per common share, basic and diluted | $ | (0.02 | ) | $ | 0.14 | $ | 0.97 | $ | 0.17 | |||||||
| Weighted average common shares outstanding, basic and diluted | 3,262,518 | 3,241,547 | 3,256,296 | 3,241,547 | ||||||||||||
| Financial Highlights | ||||||||||||||||
| (Unaudited) | Three | Three | Six | Six | ||||||||||||
| Months | Months | Months | Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| PER COMMON SHARE | ||||||||||||||||
| Earnings per share, basic and diluted | $ | (0.02 | ) | $ | 0.14 | $ | 0.97 | $ | 0.17 | |||||||
| Book value | $ | 7.78 | $ | 6.64 | ||||||||||||
| FINANCIAL RATIOS | ||||||||||||||||
| Return on average assets | 0.10 | % | 0.66 | % | 1.72 | % | 0.48 | % | ||||||||
| Return on average shareholders' equity | 1.12 | % | 7.66 | % | 18.22 | % | 5.64 | % | ||||||||
| Net interest margin | 3.86 | % | 3.47 | % | 3.82 | % | 3.38 | % | ||||||||
| Efficiency | 65.71 | % | 74.57 | % | 68.54 | % | 77.03 | % | ||||||||
| Net charge-off to average loans (annualized) | 1.93 | % | 1.58 | % | 0.98 | % | 1.09 | % | ||||||||
| Loans to deposits | 81.84 | % | 85.03 | % | ||||||||||||
| ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Beginning balance | $ | 4,169 | $ | 5,079 | $ | 3,979 | $ | 5,228 | ||||||||
| Provision for loan losses | 1,088 | 266 | 1,278 | 514 | ||||||||||||
| Charge-offs | (1,238 | ) | (1,027 | ) | (1,238 | ) | (1,425 | ) | ||||||||
| Recoveries | - | 2 | - | 3 | ||||||||||||
| Ending balance | $ | 4,019 | $ | 4,320 | $ | 4,019 | $ | 4,320 | ||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||
| Nonperforming loans to total loans | 1.25 | % | 0.76 | % | ||||||||||||
| Nonperforming assets to total assets | 3.24 | % | 2.51 | % | ||||||||||||
| Allowance for loan losses to total loans | 1.54 | % | 1.69 | % | ||||||||||||
| Allowance for loan losses to nonaccrual loans | 122.8 | % | 222.7 | % | ||||||||||||
| COMPOSITION OF RISK ASSETS | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Nonperforming assets: | ||||||||||||||||
| 90 days past due and accruing | $ | - | $ | - | ||||||||||||
| Nonaccrual loans | 3,272 | 1,940 | ||||||||||||||
| Other real estate owned | 8,888 | 6,921 | ||||||||||||||
| Total nonperforming assets | $ | 12,160 | $ | 8,861 | ||||||||||||
| Performing restructured loans | $ | 6,395 | $ | 1,959 | ||||||||||||
| Nonperforming restructured loans included in nonaccrual loans above | $ | 1,575 | $ | - | ||||||||||||
| Total restructued loans | $ | 7,970 | $ | 1,959 | ||||||||||||