**PRESS RELEASE**
Contact:
Thomas F. Gibney, President and CEO
12 Main Street
Walden, NY 12586
(845) 778-2171
October 19, 2007
HOMETOWN BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS
Hometown Bancorp, Inc., (the "Company") (OTCBB: HTWC) the mid-tier
holding company for Walden Federal Savings and Loan Association (the "Bank"),
announced earnings of $248,000 for the three months ended September 30, 2007 as
compared to $209,000 for the same period in 2006. For the nine months ended
September 30, 2007, the Company reported net income of $633,000 compared to
$418,000 for the same period in 2006.
For the three and nine months ended September 30, 2007, net interest
income increased 11.1% to $1.5 million from $1.4 million, and increased 10.7% to
$4.3 million compared to $3.8 million, respectively, compared to the same
periods in 2006. The increase in net interest income resulted primarily from an
$11.9 million increase in the average balance of net interest-earning assets,
partially offset by a 55 basis point decrease in our net interest rate spread in
the comparable three months periods ended September 30, 2007 and 2006. The
increase in net interest income for the nine months ended September 30, 2007,
resulted primarily from a $5.8 million increase in the average balance of net
interest-earning assets, partially offset by a 50 basis point decrease in our
net interest rate spread in the comparable nine months periods. The net interest
margin decreased 32 and 30 basis points for the comparable three and nine month
periods of September 30, 2007.
The provision for loan losses increased $47,000 and $97,000 for the
three and nine months ended September 30, 2007, respectively. The increase in
the three and nine month provision is related to the increase in the loan
portfolio, mostly in the commercial business and mortgage loan portfolios.
Nonperforming loans as percentage of total loans decreased from 0.45% at
December 31, 2006, to 0.09% as of September 30, 2007, primarily because of a
decrease in nonperforming loans of $338,000 to $101,000 as of September 30,
2007.
Non-interest income was $418,000 for the quarter ended September 30,
2007 compared to $321,000 for the quarter ended September 30, 2006. Non-interest
income was $1.3 million for the nine months ended for 2007 compared to $862,000
for the same period in 2006. Contributing to the increase in non-interest income
for the three and nine months ended September 30, 2007, were increases in
banking fees and service charges of $73,000 and $272,000, respectively, as a
result of the branch expansion in late 2005 and 2006, and new deposit services
offered. Mortgage banking income, net, increased $11,000 and $83,000 for the
three and nine month periods, respectively, as a result of the increase in the
volume of mortgages sold during the periods and the gains derived from the
sales.
Non-interest expense was $1.5 million for the quarter ended September
30, 2007 compared to $1.4 million for the quarter ended September 30, 2006.
Non-interest expense was $4.4 million for the nine months ended September 30,
2007 compared to $4.0 million for the same period in 2006. The primary reasons
for the increases in operating costs during the respective periods were the
expenses associated with the expansion of the branch offices and the related
compensation expenses for increased staffing. This includes expenses of $33,000
for the Bank's newest branch opened in September 2007, in the Town of Newburgh.
In the nine months ended September 30, 2007, the Bank incurred compensation
expenses for the newly started Employee Stock Ownership Plan ("ESOP") of $33,000
related to the shares committed for release under the plan. For the nine months
ended September 30, 2007 the Bank recorded an expense of $33,000 for its
Director Retirement Plan, which was adopted in March 2007, for the estimated net
periodic pension expense.
Total assets grew $12.5 million, or 10.6%, to $129.9 million at
September 30, 2007 from $117.4 million at December 31, 2006. Loans net,
increased $18.9 million, or 19.3%, from December 31, 2006 to $116.7 million at
September 30, 2007. The primary loan growth during 2007 was increased volume of
$7.7 million in residential mortgages, $5.0 million in commercial business loans
and $3.2 million in non-residential mortgage loans. Cash and cash equivalents
increased by $2.6 million, while securities decreased by $9.2 million. A $9.0
million security was called on the last day of the quarter and $7.0 million of
these funds were used to pay off borrowings and the balance went to
interest-earning deposits.
Total deposits were $109.7 million at September 30, 2007 compared to
$104.5 million at December 31, 2006, an increase of $5.2 million or 4.9%. The
increase was predominately in certificates of deposit of $11.1 million, offset
by decreases in money market accounts of $5.1 million, mostly due to
certificates of deposit promotions to fund loan growth and customer's preference
for higher deposit rates.
Total stockholders' equity increased $9.7 million from $8.5 million at
December 31, 2006 to $18.3 million at September 30, 2007. The increase in equity
is related to the Company completing its stock offering on June 28, 2007, during
which the Company sold 1,071,225 shares of common stock to subscribers at a
price of $10.00 per share. The Company also issued 1,309,275 shares of its
common stock to Hometown Bancorp MHC. The net offering proceeds after offering
and ESOP expenses were $9.1 million, of which $6.0 million was provided to the
Bank. Equity also increased by earnings of $633,000 for the nine months ended
September 30, 2007.
Hometown Bancorp, Inc. is the holding company for Walden Federal
Savings & Loan Association. Established in 1919, Walden Federal is a
community-oriented financial institution headquartered in Walden, New York.
Through its six offices, Walden Federal offers a full-range of financial
services to individuals and businesses within its market area.
This press release contains certain forward-looking statements that are based on
assumptions and may describe future plans, strategies and expectations of the
Company. Forward-looking statements can be identified by the fact that they do
not relate strictly to historical or current facts. They often include words
like "believe," "expect," "anticipate," "estimate" and "intend" or future or
conditional verbs such as "will," "would," "should," "could" or "may." Certain
factors that could cause actual results to differ materially from expected
results include changes in the interest rate environment, changes in general
economic conditions, legislative and regulatory changes that adversely affect
the business of the Company and the Bank, and changes in the securities markets.
Except as required by law, the Company does not undertake any obligation to
update any forward-looking statements to reflect changes in belief, expectations
or events.
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SEPTEMBER 30, DECEMBER 31,
(Dollars in thousands) 2007 2006
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FINANCIAL CONDITION DATA:
Total assets $129,869 $117,413
Investment securities 2,837 12,041
Loans receivable, net 116,721 97,833
Deposits 109,674 104,518
Borrowings - 2,525
Total stockholders' equity 18,250 8,520
CAPITAL RATIOS:
Average equity to average assets 9.46% 7.24%
Equity to total assets at the end of the period 14.05 7.26
ASSET QUALITY RATIOS:
Allowance for loan losses as a percent of total loans 0.65% 0.64%
Allowance for loan losses as a percent of
nonperforming loans 760.53 141.91
Net charge-offs to average outstanding loans
during the period (annualized) 0.02 0.01
Nonperforming loans as a percent of total loans 0.09 0.45
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands) 2007 2006 2007 2006
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OPERATING DATA:
Interest income $ 2,317 $ 2,007 $ 6,599 $ 5,446
Interest expense 772 616 2,341 1,598
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Net interest income 1,545 1,391 4,258 3,848
Provision for loan losses 66 19 160 63
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Net interest income after provision for loan losses 1,479 1,372 4,098 3,785
Non-interest income 418 321 1,286 862
Non-interest expenses 1,498 1,362 4,360 3,985
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Income before taxes 399 331 1,024 662
Income tax expense 151 122 391 244
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Net income $ 248 $ 209 $ 633 $ 418
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EARNINGS PER COMMON SHARE:
Basic and diluted $ 0.11 $ 0.16 $ 0.38 $ 0.32
Weighted average shares outstanding 2,290 1,309 1,650 1,309
PERFORMANCE RATIOS (1):
Return on average assets 0.75 % 0.73 % 0.67 % 0.52 %
Return on average equity 5.46 10.45 7.04 7.02
Interest rate spread (2) 4.05 4.60 3.98 4.48
Net interest margin (3) 4.89 5.14 4.68 4.98
Non-interest income to average assets 1.27 1.13 1.35 1.06
Non-interest expense to average assets 4.54 4.79 4.58 4.91
Efficiency ratio (4) 76.31 79.56 78.64 84.61
Average interest-earning assets to average
interest-bearing liabilities 134.59 123.47 127.28 124.38
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(1) Performance ratios are annualized.
(2) Represents the difference between the weighted average yield on average
interest-earning assets and the weighted average cost of interest-bearing
liabilities.
(3) Represents net interest income as a percent of average interest-earning
assets.
(4) Represents noninterest expense divided by the sum of net interest income
and noninterest income.