**PRESS RELEASE**
Contact:
Thomas F. Gibney, President and CEO
12 Main Street
Walden, NY 12586
(845) 778-2171
October 31, 2008
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 $193,000 for the three months ended September 30, 2008 as compared
to $248,000 for the same period in 2007. For the nine months ended September 30,
2008, the Company reported net income of $552,000 compared to $633,000 for the
same period in 2007.
For the three months ended September 30, 2008, net interest income
increased 8.0% to $1.7 million from $1.5 million for the same period in 2007.
For the nine months ended September 30, 2008, net interest income increased
10.3% to $4.7 million from $4.3 million for the same period in 2007. The
increase in net interest income for the three and nine month periods in 2008
resulted primarily from a $11.5 million and a $10.2 million increase in the
average balance of interest-earning assets and a reduction in the cost of
interest-bearing liabilities of 114 and 78 basis points for the respective
periods. This gain was partially offset by a 85 and a 60 basis point decrease in
the yield on total interest-earning assets for the three and nine months ended
September 30, 2008, respectively. Our net interest rate spread in the comparable
three and nine month periods ended September 30, 2008 and 2007 increased by 29
basis points to 4.34% and 18 basis points to 4.16%, respectively. The net
interest margin decreased 5 basis points to 4.84% and increased 8 basis points
to 4.76% for the three and nine month periods of September 30, 2008,
respectively, as compared to the same periods in 2007.
The provision for loan losses increased by $68,000 to $134,000 for the
three months ended September 30, 2008 and $74,000 to $234,000 for the nine
months ended September 30, 2008 as compared to the same periods in 2007. The
increase in the three and nine month provisions reflected the increase in the
levels of nonperforming loans and weakening economic conditions in our market
area. Nonperforming loans as a percentage of total loans increased from 0.10% at
December 31, 2007, to 1.39% as of September 30, 2008, due to an increase of $1.7
million in nonperforming loans to $1.8 million as of September 30, 2008. The
reasons for the increase in nonperforming loans was the addition of six
nonperforming loans; a $112,000 residential mortgage loan, a $533,000 one family
spec home loan, two junior liens totaling $372,000 of which $225,000 is expected
to be paid in full in the next quarter and two commercial nonresidential
mortgage loans totaling $580,000.
Non-interest income was $468,000 for the quarter ended September 30, 2008
compared to $418,000 for the quarter ended September 30, 2007. Contributing
primarily to the increase in non-interest income for the three months ended
September 30, 2008, was a reduction of an accrued liability due to the
settlement of a litigation matter of approximately $83,000, offset by a decrease
in mortgage banking income, net, of $18,000 for the three months ended September
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 $1.3 million for both the nine months ended
September 30, 2008 and 2007. A reduction of an accrued liability due to the
settlement of a litigation matter of approximately $164,000 was offset by
decreases in banking fees and service charges of $32,000 as compared to the nine
months ended September 30, 2007, as a result of customer preference for service
charge free accounts and the competitive banking environment. In addition,
mortgage banking income, net, decreased $74,000 for the nine months ended
September 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 expense was $1.7 million for the quarter ended September 30,
2008 compared to $1.5 million for the quarter ended September 30, 2007.
Non-interest expense was $4.9 million for the nine months ended September 30,
2008 compared to $4.4 million for the nine months ended September 30, 2007. The
primary reason for the increase in non-interest expense during the three and
nine month comparable periods were the expenses associated with the operating of
a new branch office and the related compensation and benefit expenses for
increased branch and support staffing. Non-interest expense included expenses of
$51,000 and $219,000 for the three and nine months ended September 30, 2008,
respectively, for the Bank's sixth branch office which opened in September 2007,
in the Town of Newburgh. In addition, non-interest expense for professional fees
increased by $29,000 and $130,000, for the three and nine months ended September
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 $14.6 million, or 11.0%, to $147.3 million at September
30, 2008 from $132.7 million at December 31, 2007. Loans net, increased $9.9
million, or 8.1%, from $121.5 million at December 31, 2007 to $131.4 million at
September 30, 2008. Loan growth during the nine months of 2008 consisted of
$10.7 million in residential mortgages, $2.2 million in land loans, offset by a
decrease of $3.2 million in commercial business loans. During the nine months of
2008, cash and cash equivalents increased by $3.0 million, while investment
securities decreased by $488,000 primarily due to principal repayments on
mortgage-backed investments.
Total deposits were $122.7 million at September 30, 2008 compared to $112.1
million at December 31, 2007, an increase of $10.6 million or 9.5%. The growth
in deposits was predominately in certificates of deposit which increased by
$10.0 million mostly due to promotions of these accounts.
Total borrowings were $3.0 million at September 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 $499,000 from $18.5 million at
December 31, 2007 to $19.0 million at September 30, 2008. This increase was
primarily due to earnings of $552,000 for the nine months ended September 30,
2008, partially offset by common stock repurchases of $80,000.
Established in 1919, the Bank is a community-oriented financial institution
headquartered in Walden, New York. Through its six offices, the Bank offers a
full-range of financial services to individuals and businesses within its market
area. For more information on Hometown Bancorp, Inc. and Walden Federal Savings
and Loan Association go to our website www.waldenfederal.com.
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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September 30, December 31,
(Dollars in thousands) 2008 2007
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Financial Condition Data:
Total assets $147,283 $132,690
Investment securities 2,289 2,777
Loans receivable, net 131,360 121,510
Deposits 122,654 112,061
Borrowings 3,000 -
Total stockholders' equity 18,979 18,480
Capital Ratios:
Average equity to average assets 13.69 % 10.67 %
Equity to total assets at the end of the period 12.89 13.93
Asset Quality Ratios:
Allowance for loan losses as a percent of total
loans 0.76 % 0.64 %
Allowance for loan losses as a percent of
nonperforming loans 54.90 634.68
Net charge-offs to average outstanding loans
during the period (annualized) 0.02 0.02
Nonperforming loans as a percent of total loans 1.39 0.10
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Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except per share data) 2008 2007 2008 2007
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Operating Data:
Interest income $ 2,235 $ 2,317 $ 6,566 $ 6,599
Interest expense 567 772 1,870 2,341
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Net interest income
1,668 1,545 4,696 4,258
Provision for loan losses 134 66 234 160
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Net interest income after provision for loan
losses 1,534 1,479 4,462 4,098
Noninterest income 468 418 1,311 1,286
Noninterest expenses 1,678 1,498 4,871 4,360
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Income before taxes
324 399 902 1,024
Income tax expense 131 151 350 391
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Net income $ 193 $ 248 $ 552 $ 633
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Earnings Per Common Share:
Basic and diluted $ 0.08 $ 0.11 $ 0.24 $ 0.38
Weighted average shares outstanding 2,291 2,290 2,292 1,650
Performance Ratios (1):
Return on average assets 0.54 % 0.75 % 0.54 % 0.67 %
Return on average equity 4.06 5.46 3.91 7.04
Interest rate spread (2) 4.34 4.05 4.16 3.98
Net interest margin (3) 4.84 4.89 4.76 4.68
Noninterest income to average assets 1.30 1.27 1.27 1.35
Noninterest expense to average assets 4.67 4.54 4.72 4.58
Efficiency ratio (4) 78.56 76.31 81.09 78.64
Average interest-earning assets to average
interest-bearing liabilities 130.88 134.59 131.71 127.28
(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.