Exhibit 99.1
Friday, October 23, 2015
HomeTown Bankshares Corporation Reports Strong Operating Performance through the Third Quarter of 2015
Net Income up 10% over 2014
| ● | Continued Solid Operating Performance |
| o | Net Income up 10% to $855,000 for the third quarter 2015 vs. $777,000 for 2014 |
| o | EPS of $0.15 for the third quarter of 2015 vs. $.14 per share for the third quarter of 2014 (fully diluted) | |
| o | YTD Earnings of $2.5 million in thru 9.30.15 vs. $2.4 million in 2014 | |
| o | YTD EPS of $.45 thru 9.30.15 vs. $0.44 in 2014 (fully diluted) | |
| o | Third quarter revenue of $5.2 million, up $437,000 or 9% over prior year | |
| o | YTD revenue of $15.0 million, up $1.18 million or 8% increase over 2014 | |
| o | Noninterest Income for third quarter 2015 up 36% over prior year | |
| o | YTD Noninterest Income thru third quarter 2015 up 43% over 2014 |
| ● | Strong Loan and Deposit Growth |
| o | Loans of $360 Million at September 30, 2015 |
| ■ | Up $28 million or 9% for the first three quarters of 2015, and |
| ■ | Up $41 million or 13% since September 30, 2014 |
| o | Core Deposits of $367 Million at September 30, 2015 |
| ■ | Increased $41 million or 13% for the first three quarters of 2015 |
| ■ | Increased $56 million or 18% since September 30, 2014 |
| ● | Credit Quality Remains Strong |
| o | YTD net charge-offs of $19,000 remained low at .01% of average total loans vs. .17% of average total loans for 2014 |
| o | Non-performing assets were 1.51% of total assets at September 30, 2015 vs. 2.39% at September 30, 2014 | |
| o | Nonaccrual loans remained low at .12% of total loans at September 30, 2015 vs. .41% of total loans at September 30, 2014 |
| ● | Well Capitalized with Solid Capital Ratios |
| o | Tier 1 Leverage Ratio for HomeTown Bank was 9.7% at September 30, 2015 vs. 9.8% in 2014 |
| o | Return on Assets (ROA) of 0.74% for the third quarter of 2015 vs. 0.73% for 2014 | |
| o | Return on Equity (ROE) of 7.54% for the third quarter of 2015 vs. 7.33% for 2014 | |
| o | Efficiency Ratio of 69.23% for the third quarter of 2015 vs. 72.20% for 2014 |
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 & CFO, (540) 278-1702
HomeTown Bankshares Corporation Reports Strong Operating Performance through the Third Quarter of 2015
Roanoke, VA (October 23, 2015)– HomeTown Bankshares Corporation, the parent company of HomeTown Bank, generated earnings of $855,000 for the third quarter ended September 30, 2015 and $2.5 million in earnings for the first nine months of 2015. The net profit for the third quarter, which was up 10% over the prior year, includes adjustments to the value of two bank owned properties (OREO) for sales contracted to close in the 4th quarter. These two sales totaled $2.1 million which will further reduce the OREO portfolio by 32% in the 4th quarter of 2015.
“We are very pleased with the strong growth in our assets, earnings, and reduction in bank owned real estate for the first nine months of 2015, stated Susan Still, President and CEO. “Strong growth in both the loan and core deposit portfolios, coupled with a significant increase in non-interest income, contributed to the increase in earnings. Further reductions in bank owned real estate during the 4th quarter will result in a 32% decrease in OREO during 2015.” she continued.
A net profit of $855,000 or $0.15 per diluted common share was realized for the third quarter of 2015 compared to a net profit of $777,000 or $0.14 per diluted common share for the third quarter of 2014. Net income for the first nine months of 2015 amounted to $2.5 million or $0.45 per diluted common share vs. net income of $2.4 million or $0.44 per diluted common share earned during the first nine months of 2014.
Non-interest income increased 36% to $681,000 in the third quarter of 2015 and 43% to $1.9 million for the nine months ended September 30, 2015 vs. $501,000 and $1.3 million, respectively, during the same periods of 2014. The primary growth in non-interest income was revenue generated from strong core deposit growth as well as a resurgence in mortgage lending during 2015.
Balance Sheet
Total assets grew to $473 million at September 30, 2015 from $428 million at December 31, 2014. Annualized loan growth was 11% for the first nine months of 2015, and increased 13% from $319 million over the prior period ended September 30, 2014. Total deposits also grew 10% during the same period from $363 million at December 31, 2014 to $400 million at September 30, 2015. Over the past twelve months, total deposits increased 14% with core deposits alone increasing 18% since September 30, 2014.
The capital ratios remain well above regulatory standards for well-capitalized banks through September 30, 2015.
Asset Quality
Loan quality remained strong during the first nine months of 2015 with nonperforming loans, excluding performing, restructured loans, of $436,000 or 0.12% of total loans at September 30, 2015 vs. $1.3 million or 0.41% of total loans at September 30, 2014. Nonperforming assets to total assets, excluding performing, restructured loans, improved to 1.51% at September 30, 2015 from 2.39% at September 30, 2014.
In addition, net charge-offs to average loans outstanding at September 30, 2015 were 0.00% for the quarter and 0.01% for the first nine months of 2015. The Company’s Allowance for Loan Losses dropped slightly to $3.31 million or .92% of total loans at September 30, 2015 vs. $3.33 million and 1.0% of total loans at December 31, 2014, and $3.5 million and 1.10% of total loans at September 30, 2014. The decline in the allowance for loan losses as a percentage of total loans over the past year is due to the improvement in credit quality and, in particular, the extraordinarily low level of net charge-offs.
“Asset quality has continued to improve and remains strong,” stated Still. “We are particularly pleased with the reduction in the OREO portfolio scheduled for the 4th quarter of 2015. We will remain focused on prudently reducing the level of bank owned real estate throughout the remainder of 2015 and into 2016,” she said.
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 the Roanoke and New River Valleys and Smith Mountain Lake through six full-service branches and seven ATM’s. A high level of responsive and professional service coupled with local decision-making is the hallmark of its banking strategy.
* * *
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 quarter ending September 30, 2015)
HomeTown Bankshares Corporation
Consolidated Condensed Balance Sheets
September 30. 2015; December 31, 2014; and September 30, 2014
September 30, | December 31 | September 30 | ||||||||||
In Thousands | 2015 | 2014 | 2014 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 30,377 | $ | 13,795 | $ | 14,051 | ||||||
Federal funds sold | 1,675 | 649 | 111 | |||||||||
Securities available for sale, at fair value | 50,686 | 54,603 | 56,662 | |||||||||
Restricted equity securities, at cost | 2,694 | 2,476 | 2,577 | |||||||||
Loans held for sale | 394 | 242 | 317 | |||||||||
Total loans | 360,160 | 331,679 | 319,364 | |||||||||
Allowance for loan losses | (3,313 | ) | (3,332 | ) | (3,522 | ) | ||||||
Net loans | 356,847 | 328,347 | 315,842 | |||||||||
Property and equipment, net | 14,658 | 14,900 | 13,536 | |||||||||
Other real estate owned | 6,708 | 6,986 | 8,686 | |||||||||
Other assets | 8,934 | 6,211 | 6,131 | |||||||||
Total assets | $ | 472,973 | $ | 428,209 | $ | 417,913 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing | $ | 81,450 | $ | 51,226 | $ | 47,179 | ||||||
Interest-bearing | 318,777 | 311,369 | 304,298 | |||||||||
Total deposits | 400,227 | 362,595 | 351,477 | |||||||||
Other borrowings | 861 | 422 | 469 | |||||||||
Federal Home Loan Bank borrowings | 24,900 | 20,000 | 22,250 | |||||||||
Other liabilities | 1,448 | 1,967 | 1,469 | |||||||||
Total liabilities | 427,436 | 384,984 | 375,665 | |||||||||
Stockholders’ Equity: | ||||||||||||
Preferred stock | 13,293 | 13,293 | 13,293 | |||||||||
Common stock | 16,481 | 16,438 | 16,438 | |||||||||
Surplus | 15,369 | 15,310 | 15,293 | |||||||||
Retained deficit | (407 | ) | (2,271 | ) | (3,063 | ) | ||||||
Accumulated other comprehensive income | 434 | 455 | 287 | |||||||||
Total HomeTown Bankshares Corporation stockholders’ equity | 45,170 | 43,225 | 42,248 | |||||||||
Noncontrolling interest in consolidated subsidiary | 367 | - | - | |||||||||
Total stockholders’ equity | 45,537 | 43,225 | 42,248 | |||||||||
Total liabilities and stockholders’ equity | $ | 472,973 | $ | 428,209 | $ | 417,913 | ||||||
HomeTown Bankshares Corporation
Consolidated Condensed Statements of Income
For the Threeand Nine Months EndedSeptember 30, 2015 and 2014
For theThree Months | For theNine Months | |||||||||||||||
EndedSeptember 30, | EndedSeptember 30, | |||||||||||||||
In Thousands, Except Share and Per Share Data | 2015 | 2014 | 2015 | 2014 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Interest income: | ||||||||||||||||
Loans and fees on loans | $ | 4,173 | $ | 3,845 | $ | 12,119 | $ | 11,314 | ||||||||
Taxable investment securities | 170 | 240 | 552 | 770 | ||||||||||||
Nontaxable investment securities | 100 | 106 | 303 | 293 | ||||||||||||
Other interest income | 46 | 41 | 132 | 124 | ||||||||||||
Total interest income | 4,489 | 4,232 | 13,106 | 12,501 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 490 | 426 | 1,403 | 1,308 | ||||||||||||
Other borrowed funds | 100 | 94 | 294 | 286 | ||||||||||||
Total interest expense | 590 | 520 | 1,697 | 1,594 | ||||||||||||
Net interest income | 3,899 | 3,712 | 11,409 | 10,907 | ||||||||||||
Provision for loan losses | - | - | - | 202 | ||||||||||||
Net interest income after provision for loan losses | 3,899 | 3,712 | 11,409 | 10,705 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on deposit accounts | 128 | 118 | 362 | 326 | ||||||||||||
ATM and interchange income | 148 | 113 | 416 | 316 | ||||||||||||
Mortgage banking | 161 | 102 | 539 | 149 | ||||||||||||
Gains on sales of investment securities | 12 | - | 52 | 108 | ||||||||||||
Other income | 232 | 168 | 542 | 441 | ||||||||||||
Total noninterest income | 681 | 501 | 1,911 | 1,340 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 1,641 | 1,510 | 4,801 | 4,303 | ||||||||||||
Occupancy and equipment expense | 441 | 398 | 1,325 | 1,128 | ||||||||||||
Advertising and marketing expense | 198 | 196 | 607 | 431 | ||||||||||||
Professional fees | 80 | 245 | 303 | 432 | ||||||||||||
(Gains), losses on sales, writedowns of other real estate owned, net | 140 | - | 140 | (5 | ) | |||||||||||
Other real estate owned expense | 35 | 50 | 105 | 173 | ||||||||||||
Other expense | 802 | 693 | 2,387 | 2,084 | ||||||||||||
Total noninterest expense | 3,337 | 3,092 | 9,668 | 8,546 | ||||||||||||
Net income before income taxes | 1,243 | 1,121 | 3,652 | 3,499 | ||||||||||||
Income tax expense | 381 | 344 | 1,108 | 1,086 | ||||||||||||
Net income | 862 | 777 | 2,544 | 2,413 | ||||||||||||
Less net income attributable to non-controlling interest | 7 | - | 50 | - | ||||||||||||
Net income attributable to HomeTown Bankshares Corporation | 855 | 777 | 2,494 | 2,413 | ||||||||||||
Effective dividends on preferred stock | 210 | 210 | 630 | 630 | ||||||||||||
Net income available to common stockholders | $ | 645 | $ | 567 | $ | 1,864 | $ | 1,783 | ||||||||
Basic earnings per common share | $ | 0.20 | $ | 0.17 | $ | 0.57 | $ | 0.54 | ||||||||
Diluted earnings per common share | $ | 0.15 | $ | 0.14 | $ | 0.45 | $ | 0.44 | ||||||||
Weighted average common shares outstanding | 3,296,237 | 3,287,567 | 3,294,681 | 3,283,962 | ||||||||||||
Diluted average common shares outstanding | 5,536,237 | 5,527,567 | 5,534,681 | 5,523,962 | ||||||||||||
HomeTown Bankshares Corporation | Three | Three | Nine | Nine | ||||||||||||
Financial Highlights | Months | Months | Months | Months | ||||||||||||
In Thousands, Except Share and Per Share Data | Ended | Ended | Ended | Ended | ||||||||||||
Sep 30 | Sep 30 | Sep 30 | Sep 30 | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| PER SHARE INFORMATION | ||||||||||||||||
Book value per share, basic | $ | 9.67 | $ | 8.81 | $ | 9.67 | $ | 8.81 | ||||||||
Book value per share, diluted | $ | 8.16 | $ | 7.64 | $ | 8.16 | $ | 7.64 | ||||||||
Earnings per share, basic | $ | 0.20 | $ | 0.17 | $ | 0.57 | $ | 0.54 | ||||||||
Earnings per share, diluted | $ | 0.15 | $ | 0.14 | $ | 0.45 | $ | 0.44 | ||||||||
PROFITABILITY | ||||||||||||||||
Return on average assets | 0.74 | % | 0.73 | % | 0.75 | % | 0.78 | % | ||||||||
Return on average shareholders' equity | 7.54 | % | 7.33 | % | 7.51 | % | 7.81 | % | ||||||||
Net interest margin | 3.77 | % | 3.88 | % | 3.80 | % | 3.89 | % | ||||||||
Efficiency | 69.23 | % | 72.20 | % | 71.02 | % | 69.09 | % | ||||||||
BALANCE SHEET RATIOS | ||||||||||||||||
Total loans to deposits | 89.99 | % | 90.86 | % | 89.99 | % | 90.86 | % | ||||||||
Securities to total assets | 11.29 | % | 14.18 | % | 11.29 | % | 14.18 | % | ||||||||
Tier 1 leverage ratio BANK ONLY | 9.7 | % | 9.8 | % | 9.7 | % | 9.8 | % | ||||||||
ASSET QUALITY | ||||||||||||||||
Nonperforming assets to total assets | 1.51 | % | 2.39 | % | 1.51 | % | 2.39 | % | ||||||||
Nonperforming assets, including restructured loans, to total assets | 2.89 | % | 3.86 | % | 2.89 | % | 3.86 | % | ||||||||
Net charge-offs to average loans (annualized) | 0.00 | % | 0.12 | % | 0.01 | % | 0.17 | % | ||||||||
Composition of risk assets:(in thousands) | ||||||||||||||||
Nonperforming assets: | ||||||||||||||||
Nonaccrual loans | $ | 436 | $ | 1,298 | $ | 436 | $ | 1,298 | ||||||||
Other real estate owned | 6,708 | 8,686 | 6,708 | 8,686 | ||||||||||||
Total nonperforming assets, excluding performing restructured loans | 7,144 | 9,984 | 7,144 | 9,984 | ||||||||||||
Restructured loans, performing in accordance with their modified terms | 6,523 | 6,132 | 6,523 | 6,132 | ||||||||||||
Total nonperforming assets, including performing restructured loans | $ | 13,667 | $ | 16,116 | $ | 13,667 | $ | 16,116 | ||||||||
Allowance for loan losses:(in thousands) | ||||||||||||||||
Beginning balance | $ | 3,313 | $ | 3,616 | $ | 3,332 | $ | 3,721 | ||||||||
Provision for loan losses | - | - | - | 202 | ||||||||||||
Charge-offs | (29 | ) | (103 | ) | (62 | ) | (445 | ) | ||||||||
Recoveries | 29 | 9 | 43 | 44 | ||||||||||||
Ending balance | $ | 3,313 | $ | 3,522 | $ | 3,313 | $ | 3,522 | ||||||||
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