**PRESS RELEASE**
Contact:
Thomas F. Gibney, President and CEO
12 Main Street
Walden, NY 12586
(845) 778-2171
July 28, 2008
HOMETOWN BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS
AND 5% STOCK REPURCHASE PLAN
Hometown Bancorp, Inc., (the "Company") (OTCBB: HTWC) the mid-tier holding
company for Walden Federal Savings and Loan Association (the "Bank"), announced
earnings of $202,000 for the three months ended June 30, 2008 as compared to
$205,000 for the same period in 2007. For the six months ended June 30, 2008,
the Company reported net income of $359,000 compared to $385,000 for the same
period in 2007.
The Company has approved a stock repurchase program to purchase up to 5% of
its outstanding shares (excluding shares held by Hometown Bancorp, MHC, the
Company's mutual holding company), or up to 53,561 shares for a period of up to
12 months. The repurchases will depend on certain factors, including but not
limited to, market conditions and prices, the Company's liquidity requirements
and alternative uses of capital. Any repurchases will be held as treasury stock
and will be available for general corporate purposes. The Company anticipates
conducting such repurchases in accordance with a Rule 10b5-1 trading plan
administered by a broker dealer.
For the three months ended June 30, 2008, net interest income increased
14.8% to $1.6 million from $1.4 million for the same period in 2007. For the six
months ended June 30, 2008, net interest income increased 11.6% to $3.0 million
from $2.7 million for the same period in 2007. The increase in net interest
income for the three and six month periods in 2008, resulted primarily from a
$7.5 million and a $9.9 million increase in the average balance of
interest-earning assets and a reduction in the cost of interest-bearing
liabilities of 97 and 58 basis points for the respective periods. This was
partially offset by a 53 and a 47 basis point decrease in the yield on total
interest-earning assets for the three and six months ended June 30, 2008,
respectively. Our net interest rate spread in the comparable three and six month
periods ended June 30, 2008 and 2007 increased by 44 and 11 basis points,
respectively. The net interest margin increased 36 and 14 basis points for the
three and six month periods of June 30, 2008 as compared to the same periods in
2007, respectively.
The provision for loan losses increased by $39,000 to $74,000 and $6,000 to
$100,000 for the three and six months ended June 30, 2008 as compared to the
same periods in 2007, respectively. The increase in the three and six month
provision reflected the increase in the levels of nonperforming loans and
weakening economic conditions. Nonperforming loans as a percentage of total
loans increased from 0.10% at December 31, 2007, to 0.77% as of June 30, 2008,
primarily because of an increase of $864,000 in nonperforming loans to $988,000
as of June 30, 2008. The primary reason for the increase in nonperforming loans
was the addition of two nonperforming commercial mortgage loans totaling
$580,000.
As previously disclosed in our Form 10Q for the quarter ended March 31,
2008, our largest lending relationship, consisting of two loans to a real estate
developer totaling $3.0 million, was determined by the Office of Thrift
Supervision to be in excess of our loans to one borrower limit. The Bank sold a
participation in these two loans in June to another institution bringing such
lending relationship into compliance with our loans to one borrower limit.
Non-interest income was $460,000 for the quarter ended June 30, 2008
compared to $441,000 for the quarter ended June 30, 2007. Contributing primarily
to the increase in non-interest income for the three months ended June 30, 2008,
was a reduction of an accrued liability due to settlement of a litigation matter
of approximately $81,000, offset by decreases in banking fees and service
charges of $18,000 as compared to the three months ended June 30, 2007, as a
result of customer preference for service charge free accounts and the
competitive banking environment. Mortgage banking income, net, decreased $22,000
for the three months ended June 30, 2008 as compared to the same period in 2007,
as a result of the decrease in the volume of mortgages sold during the period
and the gains derived from these sales.
Non-interest income was $843,000 for the six months ended June 30, 2008
compared to $868,000 for the six months ended June 30, 2007. Non-interest income
declined during the six months ended June 30, 2008 primarily due to the
decreases in banking fees and service charges of $29,000 as compared to the six
months ended June 30, 2007, as a result of customer preference for service
charge free accounts and the competitive banking environment. Mortgage banking
income, net, decreased $56,000 for the six months ended June 30, 2008 as
compared to the same period in 2007, as a result of the decrease in the volume
of mortgages sold during the period and the gains derived from these sales. The
decrease in non-interest income was partially offset by the $81,000 reduction in
the accrued liability discussed above.
Non-interest expense was $1.6 million for the quarter ended June 30, 2008
compared to $1.5 million for the quarter ended June 30, 2007. Non-interest
expense was $3.2 million for the six months ended June 30, 2008 compared to $2.9
million for the six months ended June 30, 2007. The primary reason for the
increase in non-interest expense during the three and six month comparable
periods were the expenses associated with the opening of a new branch office and
the related compensation expenses for increased staffing. Non-interest expense
includes expenses of $84,000 and $167,000 for the three and six months ended
June 30, 2008 for the Bank's sixth branch which opened in September 2007, in the
Town of Newburgh. In addition non-interest expense for professional fees
increased by $66,000 and $101,000, for the three and six months ended June 30,
2008, as compared to the same periods in the prior year primarily due to
expenses relating to being a public company.
Total assets grew $5.5 million, or 4.2%, to $138.2 million at June 30, 2008
from $132.7 million at December 31, 2007. Loans net, increased $5.3 million, or
4.4%, from $121.5 million at December 31, 2007 to $126.8 million at June 30,
2008. Loan growth during the six months of 2008 consisted of $4.7 million in
residential mortgages, $2.5 million in land loans offset by, a decrease of $1.6
million in commercial business loans. Cash and cash equivalents decreased by
$47,000, while investment securities decreased by $168,000 primarily due to
principal repayments on mortgage-backed investments.
Total deposits were $114.2 million at June 30, 2008 compared to $112.1
million at December 31, 2007, an increase of $2.1 million or 1.9%. The increase
was predominately in core deposits of $3.7 million offset by a decrease in
certificates of deposit of $1.6 million mostly due to promotional certificates
of deposit maturing and our decision to use lower cost borrowings from the FHLB
to fund the loan growth.
Total borrowings were $3.0 million at June 30, 2008 compared to no
borrowings at December 31, 2007. The borrowings were advances from the FHLB used
to partially fund the loan growth.
Total stockholders' equity increased $380,000 from $18.5 million at
December 31, 2007 to $18.9 million at June 30, 2008. This increase was primarily
due to earnings of $359,000 for the six months ended June 30, 2008.
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.
Selected Financial and Other Data
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June 30, December 31,
(Dollars in thousands) 2008 2007
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Financial Condition Data:
Total assets $138,216 $132,690
Investment securities 2,609 2,777
Loans receivable, net 126,813 121,510
Deposits 114,191 112,061
Borrowings 3,000 -
Total stockholders' equity 18,860 18,480
Capital Ratios:
Average equity to average assets 13.94 % 10.67 %
Equity to total assets at the end of the period 13.65 13.93
Asset Quality Ratios:
Allowance for loan losses as a percent of total
loans 0.69 % 0.64 %
Allowance for loan losses as a percent of
nonperforming loans 89.07 634.68
Net charge-offs to average outstanding loans
during the period (annualized) 0.01 0.02
Nonperforming loans as a percent of total loans 0.77 0.10
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Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2008 2007 2008 2007
---- ---- ---- ----
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Operating Data:
Interest income $ 2,149 $ 2,189 $ 4,331 $ 4,282
Interest expense 568 812 1,303 1,569
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Net interest income 1,581 1,377 3,028 2,713
Provision for loan losses 74 35 100 94
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Net interest income after provision for loan
losses 1,507 1,342 2,928 2,619
Noninterest income 460 441 843 868
Noninterest expenses 1,646 1,452 3,193 2,862
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Income before taxes 321 331 578 625
Income tax expense 119 126 219 240
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Net income $ 202 $ 205 $ 359 $ 385
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Earnings Per Common Share:
Basic and diluted $ 0.09 $ 0.15 $ 0.16 $ 0.29
Weighted average shares outstanding 2,293 1,342 2,292 1,326
Performance Ratios (1):
Return on average assets 0.59 % 0.64 % 0.53 % 0.62 %
Return on average equity 4.30 8.94 3.83 8.63
Interest rate spread (2) 4.30 3.86 4.01 3.90
Net interest margin (3) 4.85 4.49 4.68 4.54
Noninterest income to average assets 1.35 1.38 1.26 1.40
Noninterest expense to average assets 4.84 4.55 4.75 4.61
Efficiency ratio (4) 80.65 79.87 82.49 79.92
Average interest-earning assets to average
interest-bearing liabilities 132.17 123.56 133.15 124.30
(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.