HomeTown Bankshares Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - HomeTown Bankshares Corp	hbc_8k-082112.htm

Section 2: EX-99.1 (PRESS RELEASE)

Exhibit 99.1

August 21, 2012

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 and CFO, 540-278-1702

HomeTown Bankshares Issues Correction to News Release

Roanoke, VA

HomeTown Bankshares Corporation announces a correction to its news release issued July 26, 2012 reporting second quarter 2012 operating results. Subsequent to the news release it was determined that additional provisions to the allowance for loan losses were needed in the second quarter based on information obtained during the 3rd quarter and prior to the issuance of the 2nd quarter financial statements. These additional provisions resulted in a corresponding decrease in pre-tax income.

The earnings adjustment resulted in pre-tax earnings of $139,000 for the second quarter ended June 30, 2012 and a pre-tax profit of $797,000 for the six months ended June 30, 2012 vs. the originally reported 2nd quarter and year-to-date pre-tax earnings of $586,000 and $1.24 million, respectively. These revised results also compared to a pre-tax profit of $590,000 for the second quarter of 2011 and a pre-tax profit of $852,000 for the first six months of 2011. The recognition of deferred tax assets of $2.9 million, reduced by current period tax expense, added a net tax benefit of $2.7 million during the first half of 2012 which resulted in net income of $3.46 million thru June 30, 2012 vs. $852,000 in net income for the first six months of 2011. After dividends of $152,000 in the 2nd quarter and $304,000 for the first six months of 2012, earnings available to common shareholders amounted to a net loss of $57,000 and year-to-date earnings of $3.2 million through June 30, 2012. This compares to earnings available to common shareholders of $440,000 in the 2nd quarter of 2011 and $551,000 thru June 30, 2011. On a per share basis, net income (loss) available to common shareholders for the 2nd quarter of 2012 was ($.02) and $.97 per share for first six months of 2012 vs. the originally reported $.07 per share for the 2nd quarter and $1.06 per share for the first six months of 2012.

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 the year-to-date and quarter ending June 30, 2012)

HomeTown Bankshares Corporation
Consolidated Balance Sheets
June 30, 2012 and December 31, 2011
	Unaudited
In Thousands, Except Share and Per Share Data	6/30/2012			12/31/2011
Assets
Cash and due from banks	$	12,618		$	12,529
Federal funds sold		10,789			10,363
Securities available for sale, at fair value		69,097			69,207
Restricted equity securities, at cost		2,439			2,390
Loans, net of allowance for loan losses of $4,019 in 2012 and $3,979 in 2011		257,656			245,100
Property and equipment, net		9,523			9,582
Other real estate owned, net of valuation allowance of $156 in 2012 and $331 in 2011		8,888			9,562
Deferred tax asset, net		2,303			-
Accrued income		1,425			1,372
Prepaid FDIC insurance		241			473
Other assets		879			597
Total assets	$	375,858		$	361,175

Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing	$	32,458		$	26,822
Interest-bearing		287,290			280,814
Total deposits		319,748			307,636
Short term borrowings		465			449
Federal Home Loan Bank borrowings		19,000			19,000
Accrued interest payable		399			435
Other liabilities		680			567
Total liabilities		340,292			328,087

Commitments and contingencies		—			—

Stockholders’ Equity:
Preferred stock, $1,000 par value; 10,000 shares of series A and 374 shares of series B authorized, issued and outstanding at June 30, 2012 and December 31, 2011		10,374			10,374
Discount on preferred stock		(179	)		(217	)
Common stock, $5 par value; authorized 10,000,000 shares, issued and outstanding 3,262,518 (includes 29,178 restricted shares) at June 30, 2012, and 3,241,547 (includes 8,207 restricted shares) at December 31, 2011		16,167			16,167
Surplus		15,472			15,458
Retained deficit		(7,423	)		(9,773	)
Accumulated other comprehensive income		1,155			1,079
Total stockholders’ equity		35,566			33,088
Total liabilities and stockholders’ equity	$	375,858		$	361,175

HomeTown Bankshares Corporation
Consolidated Statements of Operations
Three and Six Months Ended June 30, 2012 and 2011
	For the Three Months Ended June 30,					For the Six Months Ended June 30,
In Thousands, Except Share and Per Share Data	2012			2011		2012			2011
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Interest income:
Loans and fees on loans	$	3,431		$	3,552	$	6,809		$	7,065
Taxable investment securities		433			507		911			936
Nontaxable investment securities		9			-		12			-
Federal funds sold		2			8		6			16
Dividends on restricted stock		21			15		39			32
Other interest income		16			4		21			4
Total interest income		3,912			4,086		7,798			8,053

Interest expense:
Deposits		581			1,034		1,221			2,119
Preferred stock dividends		-			-		38			-
Other borrowed funds		97			132		212			265
Total interest expense		678			1,166		1,471			2,384
Net interest income		3,234			2,920		6,327			5,669

Provision for loan losses		1,088			266		1,278			514
Net interest income after provision for loan losses		2,146			2,654		5,049			5,155

Noninterest income:
Service charges on deposit accounts		64			63		138			125
Mortgage loan brokerage fees		78			11		152			35
Rental income		37			26		74			60
Gain on sale of investment securities		127			125		127			129
Other income		100			71		177			129
Total noninterest income		406			296		668			478

Noninterest expense:
Salaries and employee benefits		1,138			1,252		2,365			2,468
Occupancy and equipment expense		310			323		635			655
Data processing expense		168			146		335			283
Advertising and marketing expense		77			61		197			136
Professional fees		108			66		194			169
Bank franchise taxes		33			46		69			102
FDIC insurance expense		122			163		243			352
Loss on sales and writedowns of other real estate		32			17		35			35
Other real estate owned expense		72			38		177			111
Other expense		353			248		670			470
Total noninterest expense		2,413			2,360		4,920			4,781
Net income before income taxes		139			590		797			852
Income tax expense (benefit)		44			-		(2,658	)		-
Net income		95			590		3,455			852
Dividends accumulated on preferred stock		134			133		267			266
Accretion of discount on preferred stock		18			17		37			35
Net income (loss) available to common shareholders	$	(57	)	$	440	$	3,151		$	551

Earnings (loss) per common share, basic and diluted	$	(0.02	)	$	0.14	$	0.97		$	0.17
Weighted average common shares outstanding, basic and diluted		3,262,518			3,241,547		3,256,296			3,241,547

HOMETOWN BANKSHARES CORPORATION
Financial Highlights
(Unaudited)	Three			Three			Six			Six
	Months			Months			Months			Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2012			2011			2012			2011
PER COMMON SHARE
Earnings per share, basic and diluted	$	(0.02	)	$	0.14		$	0.97		$	0.17
Book value							$	7.78		$	6.64

FINANCIAL RATIOS
Return on average assets		0.10	%		0.66	%		1.72	%		0.48	%
Return on average shareholders' equity		1.12	%		7.66	%		18.22	%		5.64	%
Net interest margin		3.86	%		3.47	%		3.82	%		3.38	%
Efficiency		65.71	%		74.57	%		68.54	%		77.03	%
Net charge-off to average loans (annualized)		1.93	%		1.58	%		0.98	%		1.09	%
Loans to deposits								81.84	%		85.03	%

ALLOWANCE FOR LOAN LOSSES
(in thousands)
Beginning balance	$	4,169		$	5,079		$	3,979		$	5,228
Provision for loan losses		1,088			266			1,278			514
Charge-offs		(1,238	)		(1,027	)		(1,238	)		(1,425	)
Recoveries		-			2			-			3
Ending balance	$	4,019		$	4,320		$	4,019		$	4,320

ASSET QUALITY RATIOS
Nonperforming loans to total loans								1.25	%		0.76	%
Nonperforming assets to total assets								3.24	%		2.51	%
Allowance for loan losses to total loans								1.54	%		1.69	%
Allowance for loan losses to nonaccrual loans								122.8	%		222.7	%

COMPOSITION OF RISK ASSETS
(in thousands)
Nonperforming assets:
90 days past due and accruing							$	-		$	-
Nonaccrual loans								3,272			1,940
Other real estate owned								8,888			6,921
Total nonperforming assets							$	12,160		$	8,861

Performing restructured loans							$	6,395		$	1,959
Nonperforming restructured loans included in nonaccrual loans above							$	1,575		$	-
Total restructued loans							$	7,970		$	1,959

HomeTown Bankshares Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 24, 2012

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HomeTown Bankshares Corp Reports