Exhibit 99.1
Monday, October 31, 2016
HomeTown Bankshares Corporation Reports Strong Growth
YTD Revenues up 10% over 2015
● | Solid Operating Performance |
o | Q3 Core Revenue of $5.7 million, up 10% from $5.2 million in 2015 |
o | Net Income for Q3 of $903,000 for 2016 vs. $855,000 for 2015 |
o | Q3 Net Income available to common shareholders of $903,000 increased 40% or $258,000 due mostly to the elimination of a $210,000 preferred stock dividend with the Company’s conversion of outstanding preferred stock to common stock on June 29, 2016 |
o | Diluted EPS of $0.16 for the third quarter of 2016 vs. $.15 per share for Q3 of 2015 |
o | YTD Core Revenue of $16.3 million, up $1.3 million or 9% over 2015 |
o | Core noninterest Income thru third quarter 2016 up 11% over prior year 2015 |
o | Earnings for the first nine months of $1.93 million vs. $2.49 million in 2015 due to non-recurring charge(s) in Q2 of 2016. |
● | Strong Loan and Deposit Growth |
o | Total Loans of $404 Million at September 30, 2016 |
■ | Up $37 million or 13% annualized for the first three quarters of 2016 |
■ | Up $44 million or 12% since September 30, 2015 |
o | Core Deposits of $398 Million at September 30, 2016 |
■ | Increased $43 million or 12% for the first three quarters of 2016 |
■ | Increased $47 million or 13% since September 30, 2015 |
o | Year-over-year Non-Core Deposits were favorably reduced by 18% |
● | Credit Quality Remains Strong |
o | Q3 annualized net charge-offs of 0.02% vs. 0.00% in Q3 2015 |
o | YTD net annualized charge-offs of 0.25% vs. .01% of for 2015 |
o | Non-performing assets to total assets improved to 1.03% vs. 1.51% in 2015 |
o | Including restructured loans, non-performing assets were 2.25% of total assets at September 30, 2016 vs. 2.89% in 2015 |
o | Nonaccrual loans remained low at 0.23% of total loans at September 30, 2016 vs. 0.12% of total loans at September 30, 2015 |
o | Past due accruing loans also remained at historical low levels of 0.12% of total loans at September 30, 2016 vs. 0.37% at September 30, 2015 |
● | Well Capitalized withImproved Capital Ratios |
o | At September 30, 2016, Total Risk-Based Capital amounted to 12.9% with Tier 1 Risk-Based Capital of 12.1% and a Tier 1 Leverage Ratio of 10.6% vs. 12.1%, 11.3%, and 9.7%, respectively, in 2015 |
o | Return on Assets (ROA) of 0.70% for the third quarter and 0.52% for the first nine months of 2016 vs. 0.74% and .75%, respectively, for 2015 |
o | Return on Equity (ROE) of 7.54% for the third quarter and 5.45% for the first nine months of 2016 vs. 7.54% and 7.51%, respectively, for 2015 |
o | Efficiency Ratio of 71.0% for the first nine months of 2016 vs. 71.02% for 2015 |
News Release
FOR IMMEDIATE RELEASE
For more information contact:
Susan K. Still, President and CEO, (540) 278-1705
Vance W. Adkins, Executive Vice President & CFO, (540) 278-1702
HomeTown Bankshares Corporation Reports Continued Strong Growth through the Third Quarter of 2016
Roanoke, VA (October 31, 2016)– HomeTown Bankshares Corporation, the parent company of HomeTown Bank, generated net income of $903,000, a 6% increase for the third quarter ended September 30, 2016 on a 10% increase in revenues over a comparable period in 2015. Net income available to common shareholders increased 40% over the third quarter of 2015 mostly due to the elimination of preferred dividends of $210,000 beginning July 1, 2016. The elimination of dividends resulted from the Company’s conversion of preferred stock to common stock on June 29, 2016. A net profit of $0.16 per diluted common share was realized for the third quarter of 2016 vs. $0.15 per diluted common share for the third quarter of 2015, after being restated for a 4% stock dividend distributed on July 11, 2016.
Net income for the first nine months of 2016 amounted to $1.52 million or $0.26 per diluted common share. Net income was $340,000 less than the $1.86 million or $0.44 per diluted common share that was earned during the first nine months of 2015, after being restated for the 4% stock dividend. The reduction in year-to-date earnings was mostly due to an expiration of stock options in April of this year as well as provisions for loan losses being made during 2016 vs. no provision in 2015.
Core non-interest income increased 18% to $792,000 in the third quarter of 2016 and amounted to $2.06 million for the nine months ended September 30, 2016 vs. $669,000 and $1.86 million, respectively, during the same period of 2015. The primary growth in non-interest income was revenue generated from continued strong core checking account growth during 2016 as well as a strong increase in mortgage lending and merchant services during the third quarter and year-to-date.
“We are very pleased with the strong growth in revenues and net income available to shareholders during the third quarter of 2016 with the elimination of preferred dividends on July 1, 2016, stated Susan Still, President and CEO. “Continued, strong growth in core deposits and the loan portfolio coupled with a sizable increase in non-interest income contributed to the improvement in earnings.” she continued.
Revenue
Total core revenue for the third quarter was up 10% to $5.7 million while total core revenue for the nine months ended September 30, 2016 up 9% to $16.3 million, $1.3 million ahead of the first nine months of 2015. Higher core revenues reflected increases in both net interest income and non-interest income and exclude gains on sales of investments. Growth in commercial lines and loans, commercial real estate loans, personal lines and loans, as well as non-interest income from treasury and merchant services, title insurance and mortgage income contributed to the increase in total revenue.
Net Interest Income
Net interest income in the third quarter 2016 increased $215,000 to $4.11 million over the third quarter of 2015 with a $154,000 increase from $3.96 million earned from the second quarter of 2016. Net interest income was up $544,000 to $12.0 million or 5% for the first nine months of 2016 vs. $11.4 million over a comparable period in 2015. Higher loan volume helped to offset lower interest rates on loans and increased sub-debt interest expense for the first three quarters of 2016. As anticipated, the cost of our $7.5 million capital raise in December 2015 has had a near-term impact on earnings and our net interest margin while the continued growth in interest income from new loans and investments surpasses the interest expense incurred. Accordingly, a 6 basis point decline was realized in the net interest margin during the third quarter of 2016 from 3.55% in the second quarter to 3.49% at September 30, 2016 with a year-over-year decline of 28 basis points from 3.77% for the first nine months of 2015 vs. 3.49% at September 30, 2016.
Noninterest Income
Core noninterest income increased 18% to $792,000, net of securities gains, in the third quarter 2016 while noninterest income of $2.1 million was realized for the first nine months of 2016, up 11% from $1.9 million realized for the a comparable period in 2015, also net of securities gains. The primary increase for 2016 was continued growth in service charges from new deposit relationships, ATM and interchange income, title insurance, merchant income, and mortgage income.
Noninterest Expense
Noninterest expense increased $149,000 in the third quarter 2016 from the prior quarter due primarily to a 23% reduction in deferred loan costs from the prior quarter. Noninterest expense increased during the first nine months of 2016 compared to 2015 due primarily to cost increases in salaries and benefits for additions to our two new lines of business, Private Wealth and Merchant Services, in addition to increased staffing to support new account growth.
Balance Sheet
Total assets grew to $508 million at September 30, 2016 from $479 million at December 31, 2015. The capital ratios improved from the increase in earnings and remained well above regulatory standards for well-capitalized banks through September 30, 2016.
Loans
Annualized loan growth was 13% for the first nine months of 2016, a 12% increase or $44 million over the twelve months since September 30, 2015 to $404 million. Loan growth was driven by commercial real estate, commercial and industrial lines and term loans as well as consumer lines and loans.
Deposits
Total core deposits were up $43 million or 15% on an annualized basis for the first nine months of 2016 while core deposit growth was up $47 million or 13% over September 30, 2015. Strong core deposit growth was achieved again in 2016 by strong growth in commercial and consumer banking relationships.
Capital
Total stockholders’ equity increased $2.7 million through September 30, 2016 over the previous year. HomeTown Bank’s Total capital ratio, Common equity tier 1 capital, Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios were 12.1%, 12.9%, 12.1%, and 10.6%, respectively. All ratios continue to exceed the current regulatory standards for well-capitalized institutions.Book value per common share amounted to $8.30 at September 30, 2016 vs. $7.97 at September 30, 2015, on a fully diluted basis.
With the conversion of HMTA Preferred Stock on June 29, 2016, capital will no longer decrease with the reduction in quarterly dividends paid of approximately $200,000 per quarter beginning July 1, 2016.
Asset Quality
Loan quality remained solid thru the first nine months ended September 30, 2016.
Nonperforming Assets
OREO balances decreased significantly - $963,000 or 18% during the first nine months 2016 and $2.4 million or 36% since September 30, 2015. This resulted in a decline in non-performing assets, excluding performing restructured loans, to 1.03% of total assets at September 30, 2016 vs. 1.51% at September 30, 2015. Non-performing assets, including restructured loans, were also down from 2.89% of total assets at September 30, 2015 to 2.25% at September 30, 2016.
Past Due and Nonaccrual Loans
Nonperforming loans, excluding performing, restructured loans, of $935,000 were 0.23% of total loans at September 30, 2016 vs. $436,000 or 0.12% of total loans at September 30, 2015. Past due accruing loans amounted to 0.07% of total loans at September 30, 2016 vs. 0.33% in 2015 while nonaccruals increased to .29% of total loans during the third quarter of 2016 from .15% of total loans at September 30, 2015. Net charge-offs to average loans outstanding at September 30, 2016 were very low at 0.02% for the quarter and 0.25% for the first nine months of 2016.
Allowance forLoan Losses
The Company’s Allowance for Loan Losses amounted to $3.54 million or .88% of total loans at September 30, 2016 vs. $3.30 million and 0.90% of total loans at December 31, 2015, and $3.31 million and .92% of total loans at September 30,
2015.
“The level of bank owned real estate was reduced significantly during the first nine months of 2016 and over the past year,” stated Still. “Our ongoing focus will remain on maintaining low levels of non-performing loans and past dues and continuing to prudently reduce the level of bank owned real estate over the remainder of 2016,” she said.
* * *
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 theCompanybelieves 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. TheCompany does not update any forward-looking statements that it may make.
(See Attached Financial Statements for quarter endingSeptember 30, 2016)
HomeTown Bankshares Corporation | ||||||||
Consolidated Condensed Balance Sheets | ||||||||
September 30, 2016; December 31, 2015; and September 30, 2015 |
September 30, | December 31 | September 30, | ||||||||||
In Thousands | 2016 | 2015 | 2015 | |||||||||
| (Unaudited) | ||||||||||||
Assets |
| (Unaudited) | ||||||||||
Cash and due from banks | $ | 21,264 | $ | 28,745 | $ | 30,377 | ||||||
Federal funds sold | 1,033 | 1,329 | 1,675 | |||||||||
Securities available for sale, at fair value | 54,085 | 52,544 | 50,686 | |||||||||
Restricted equity securities, at cost | 2,213 | 2,535 | 2,694 | |||||||||
Loans held for sale | 294 | 1,643 | 394 | |||||||||
Total loans | 403,915 | 367,358 | 360,160 | |||||||||
Allowance for loan losses | (3,544 | ) | (3,298 | ) | (3,313 | ) | ||||||
Net loans | 400,371 | 364,060 | 356,847 | |||||||||
Property and equipment, net | 13,543 | 14,008 | 14,658 | |||||||||
Other real estate owned, net | 4,274 | 5,237 | 6,708 | |||||||||
Other assets | 10,635 | 9,284 | 8,934 | |||||||||
Total assets | $ | 507,712 | $ | 479,385 | $ | 472,973 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing | $ | 88,716 | $ | 77,268 | $ | 81,450 | ||||||
Interest-bearing | 351,278 | 322,278 | 318,777 | |||||||||
Total deposits | 439,994 | 399,546 | 400,227 | |||||||||
Federal Home Loan Bank borrowings | 9,000 | 22,000 | 24,900 | |||||||||
Subordinated notes | 7,217 | 7,194 | - | |||||||||
Other borrowings | 1,126 | 2,361 | 861 | |||||||||
Other liabilities | 2,093 | 1,893 | 1,448 | |||||||||
Total liabilities | 459,430 | 432,994 | 427,436 | |||||||||
Stockholders’ Equity: | ||||||||||||
Preferred stock | - | 12,893 | 13,293 | |||||||||
Common stock | 28,781 | 16,801 | 16,481 | |||||||||
Surplus | 17,810 | 15,484 | 15,369 | |||||||||
Retained surplus (deficit) | 657 | 443 | (407 | ) | ||||||||
Accumulated other comprehensive income | 611 | 396 | 434 | |||||||||
Total HomeTown Bankshares Corporation stockholders’ equity | 47,859 | 46,017 | 45,170 | |||||||||
Noncontrolling interest in consolidated subsidiary | 423 | 374 | 367 | |||||||||
Total stockholders’ equity | 48,282 | 46,391 | 45,537 | |||||||||
Total liabilities and stockholders’ equity | $ | 507,712 | $ | 479,385 | $ | 472,973 | ||||||
HomeTown Bankshares Corporation | |||||||||||
Consolidated Condensed Statements of Income | |||||||||||
For the Threeand NineMonths EndedSeptember 30, 2016 and 2015 |
For theThree Months | For theNine Months | |||||||||||||||
EndedSeptember 30, | EndedSeptember 30, | |||||||||||||||
In Thousands, Except Share and Per Share Data | 2016 | 2015 | 2016 | 2015 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Interest income: | ||||||||||||||||
Loans and fees on loans | $ | 4,523 | $ | 4,173 | $ | 13,116 | $ | 12,119 | ||||||||
Taxable investment securities | 209 | 170 | 614 | 552 | ||||||||||||
Nontaxable investment securities | 93 | 100 | 295 | 303 | ||||||||||||
Other interest income | 65 | 46 | 180 | 132 | ||||||||||||
Total interest income | 4,890 | 4,489 | 14,205 | 13,106 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 588 | 490 | 1,629 | 1,403 | ||||||||||||
Other borrowed funds | 188 | 100 | 623 | 294 | ||||||||||||
Total interest expense | 776 | 590 | 2,252 | 1,697 | ||||||||||||
Net interest income | 4,114 | 3,899 | 11,953 | 11,409 | ||||||||||||
Provision for loan losses | 111 | - | 979 | - | ||||||||||||
Net interest income after provision for loan losses | 4,003 | 3,899 | 10,974 | 11,409 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on deposit accounts | 178 | 128 | 496 | 362 | ||||||||||||
ATM and interchange income | 176 | 148 | 491 | 416 | ||||||||||||
Mortgage banking | 251 | 161 | 607 | 539 | ||||||||||||
Gains on sales of investment securities | 43 | 12 | 257 | 52 | ||||||||||||
Other income | 187 | 232 | 468 | 542 | ||||||||||||
Total noninterest income | 835 | 681 | 2,319 | 1,911 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 1,772 | 1,641 | 5,095 | 4,801 | ||||||||||||
Occupancy and equipment expense | 439 | 441 | 1,317 | 1,325 | ||||||||||||
Advertising and marketing expense | 127 | 198 | 345 | 607 | ||||||||||||
Professional fees | 135 | 80 | 352 | 303 | ||||||||||||
(Gains), losses on sales, writedowns of other real estate owned, net | - | 140 | 91 | 140 | ||||||||||||
Other real estate owned expense | 25 | 35 | 72 | 105 | ||||||||||||
Other expense | 988 | 802 | 2,841 | 2,387 | ||||||||||||
Total noninterest expense | 3,486 | 3,337 | 10,113 | 9,668 | ||||||||||||
Net income before income taxes | 1,352 | 1,243 | 3,180 | 3,652 | ||||||||||||
Income tax expense | 416 | 381 | 1,203 | 1,108 | ||||||||||||
Net income | 936 | 862 | 1,977 | 2,544 | ||||||||||||
Less net income attributable to non-controlling interest | 33 | 7 | 49 | 50 | ||||||||||||
Net income attributable to HomeTown Bankshares Corporation | 903 | 855 | 1,928 | 2,494 | ||||||||||||
Effective dividends on preferred stock | - | 210 | 408 | 630 | ||||||||||||
Net income available to common stockholders | $ | 903 | $ | 645 | $ | 1,520 | $ | 1,864 | ||||||||
Basic earnings per common share | $ | 0.16 | $ | 0.19* | $ | 0.36 | $ | 0.54 | ||||||||
Diluted earnings per common share | $ | 0.16 | $ | 0.15* | $ | 0.26 | $ | 0.44* | ||||||||
Weighted average common shares outstanding | 5,763,944 | 3,428,085* | 4,279,821 | 3,426,467* | ||||||||||||
Diluted average common shares outstanding | 5,774,086 | 5,668,085* | 5,776,632 | 5,666,467* | ||||||||||||
*Restated for the 4% stock dividend distributed July 11, 2016 | ||||||||||||||||
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 | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| PER SHARE INFORMATION | ||||||||||||||||
Book value per share, basic | $ | 8.30 | $ | 9.30 | * | $ | 8.30 | $ | 9.30 | * | ||||||
Book value per share, diluted | $ | 8.30 | $ | 7.97 | * | $ | 8.30 | $ | 7.97 | * | ||||||
Earnings (loss) per share, basic | $ | 0.16 | $ | 0.19 | * | $ | 0.36 | $ | 0.54 | * | ||||||
Earnings (loss) per share, diluted | $ | 0.16 | $ | 0.15 | * | $ | 0.26 | $ | 0.44 | * | ||||||
* Restated for the 4% stock dividend distributed July 11, 2016 | ||||||||||||||||
PROFITABILITY | ||||||||||||||||
Return on average assets | 0.70 | % | 0.74 | % | 0.52 | % | 0.75 | % | ||||||||
Return on average shareholders' equity | 7.54 | % | 7.54 | % | 5.45 | % | 7.51 | % | ||||||||
Net interest margin | 3.49 | % | 3.77 | % | 3.55 | % | 3.80 | % | ||||||||
Efficiency | 70.54 | % | 69.23 | % | 71.00 | % | 71.02 | % | ||||||||
BALANCE SHEET RATIOS | ||||||||||||||||
Total loans to deposits | 91.80 | % | 89.99 | % | 91.80 | % | 89.99 | % | ||||||||
Securities to total assets | 11.09 | % | 11.29 | % | 11.09 | % | 11.29 | % | ||||||||
Common equity tier 1 ratio BANK ONLY | 12.1 | % | 11.3 | % | 12.1 | % | 11.3 | % | ||||||||
Tier 1 capital ratio BANK ONLY | 12.1 | % | 11.3 | % | 12.1 | % | 11.3 | % | ||||||||
Total capital ratio BANK ONLY | 12.9 | % | 12.1 | % | 12.9 | % | 12.1 | % | ||||||||
Tier 1 leverage ratio BANK ONLY | 10.6 | % | 9.7 | % | 10.6 | % | 9.7 | % | ||||||||
ASSET QUALITY | ||||||||||||||||
Nonperforming assets to total assets | 1.03 | % | 1.51 | % | 1.03 | % | 1.51 | % | ||||||||
| Nonperforming assets, including restructured loans, to total assets | 2.25 | % | 2.89 | % | 2.25 | % | 2.89 | % | ||||||||
Net charge-offs to average loans (annualized) | 0.02 | % | 0.00 | % | 0.25 | % | 0.01 | % | ||||||||
Composition of risk assets:(in thousands) | ||||||||||||||||
Nonperforming assets: | ||||||||||||||||
Nonaccrual loans | $ | 935 | $ | 436 | $ | 935 | $ | 436 | ||||||||
Other real estate owned | 4,274 | 6,708 | 4,274 | 6,708 | ||||||||||||
Total nonperforming assets, excluding performing restructured loans | 5,209 | 7,144 | 5,209 | 7,144 | ||||||||||||
Restructured loans, performing in accordance with their modified terms | 6,237 | 6,523 | 6,237 | 6,523 | ||||||||||||
Total nonperforming assets, including performing restructured loans | $ | 11,446 | $ | 13,667 | $ | 11,446 | $ | 13,667 | ||||||||
Allowance for loan losses:(in thousands) | ||||||||||||||||
Beginning balance | $ | 3,449 | $ | 3,313 | $ | 3,298 | $ | 3,332 | ||||||||
Provision for loan losses | 111 | - | 979 | - | ||||||||||||
Charge-offs | (21 | ) | (27 | ) | (806 | ) | (60 | ) | ||||||||
Recoveries | 5 | 27 | 73 | 41 | ||||||||||||
Ending balance | $ | 3,544 | $ | 3,313 | $ | 3,544 | $ | 3,313 | ||||||||
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