Attached files
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| 8-K - FORM 8-K - HomeTown Bankshares Corp | hmta20140425_8k.htm |
Exhibit 99.1
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 Reports Record First Quarter Earnings
Earnings Per Share Up 36% Over 2013
ROANOKE, Va., April 25, 2014 - HomeTown Bankshares Corporation (the "Company"), the parent company of HomeTown Bank, reported record earnings of $803,000 for the quarter ended March 31, 2014, a 53.0% increase, or $278,000, over the $525,000 in net income reported for the comparative period in 2013.
Net income available to common shareholders increased 59.4%, or $221,000, to $593,000 after preferred dividend payments of $210,000. Fully diluted earnings per share increased 36.4% to $0.15 per share compared to $0.11 per share for the comparative period of 2013.
"We are very pleased to report another quarter of record earnings which was accomplished during a relatively flat economy. Our growth from increased activity in loan originations and a sizable increase in core deposits contributed to our strong earnings during the first quarter of 2014,” said Susan K. Still, President and CEO. “Continued growth in assets and net income, combined with ongoing improvement in asset quality are all indicative of the talent and commitment of our employees, our management team and our directors. As we grow we will continue to focus on building a strong and enduring financial institution for the communities we serve, our customers and our shareholders,” she continued.
Earnings Highlights
Net interest income increased to $3.56 million, a $264,000, or 8.0%, improvement over the first quarter of 2013. The improvement in net interest income was driven by a combination of growth in the Company's earning assets, predominantly loans, and the continued reduction in funding costs. The Company's loan portfolio ended the period at $311.8 million representing an increase of 12.5%, or $34.5 million, over the prior year. The Company's net interest margin increased to 3.94% in the first quarter of 2014, up from 3.87% in the same period of 2013. The increase in net interest margin over prior year reflects a lower cost of funds due to continued growth in non-interest bearing deposits.
Noninterest income, excluding gains on sales of investment securities, increased by $18,000, or 5.7%, to $333,000 for the first quarter of 2014, compared to the first quarter of 2013. The majority of the increase was attributable to service charge income on deposit accounts, ATM and interchange income as well as BOLI income, which collectively increased $68,000 or 28.9% and partially offset a $50,000 reduction in mortgage brokerage income over the comparative period in 2013. Mortgage income was down over the prior year due to the reduction in mortgage refinancing, a nationwide trend that began in the second half of 2013.
Noninterest expense decreased $43,000, or 1.6%, compared to the first quarter of 2013 due to a reduction in professional fees, primarily legal fees and FDIC insurance premiums.
Balance Sheet
At March 31, 2014, total assets reached $410.7 million, an increase of $33.8 million, or 9.0%, over 2013. The loan portfolio ended the period at $311.8 million representing an increase of 12.5%, or $34.5 million, from the prior year, while earning assets increased to $372.5 million, a 7.9%, or $27.4 million, increase over March 31, 2013.
Total deposits increased $29.3 million over prior year, or 9.2%, to $348.6 million, with continued growth in noninterest bearing demand deposits, which ended the quarter at $44.9 million, a 27.5% increase, or $9.7 million, from March 31, 2013. Noninterest bearing deposits represented 12.9% of total deposits at March 31, 2014. Retail deposits, excluding noncore CDARS and brokered deposits, increased by $31.1 million, or 11.1%, while noncore CDARS and brokered deposits decreased by $1.8 million, or 4.6%, as the Company reduced its use of wholesale funding sources.
Capital Strength
The Company's total equity at March 31, 2014 rose to $40.7 million, an increase of $3.7 million, or 10.0%, from March 31, 2013. Capital levels remained very satisfactory as total risk-based capital, Tier 1 capital, and Tier 1 leverage ratios were 13.7%, 12.5% and 10.2%, respectively. All ratios exceed the current regulatory standards for well capitalized status.
Credit Quality
As shown in the table below, the Company's asset quality continued to improve during the first quarter of 2014. Nonperforming assets, excluding performing restructured loans, totaled $8.1 million, or 1.97%, of Company assets at March 31, 2014, as compared to $11.8 million, or 3.13%, at March 31, 2013, and $9.1 million, or 2.27%, at December 31, 2013. During the current quarter, there were no additions of non-performing loans to foreclosed property, and there were sales of $968,000 of foreclosed property. The provision for loan losses decreased 44.0%, or $55,000, compared to the first quarter of 2013, while there were just $2,000 in net charge-offs during the first quarter of 2014 compared to $116,000 in the comparative period of 2013.
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Asset Quality Trends |
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(in thousands) |
3/31/2014 |
12/31/2013 |
9/30/2013 |
6/30/2013 |
3/31/2013 |
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Nonperforming loans |
$ | 937 | $ | 989 | $ | 801 | $ | 1,223 | $ | 2,356 | ||||||||||
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Foreclosed property, (Other Real Estate Owned) |
7,175 | 8,143 | 8,400 | 8,440 | 9,440 | |||||||||||||||
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Total nonperforming assets, excluding performing restructured loans |
$ | 8,112 | $ | 9,132 | $ | 9,201 | $ | 9,663 | $ | 11,796 | ||||||||||
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Quarterly net loans charged off (recovered) |
$ | 2 | $ | (37 | ) | $ | (24 | ) | $ | 139 | $ | 116 | ||||||||
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Year-to-date net loans charged off |
$ | 2 | $ | 194 | $ | 231 | $ | 255 | $ | 116 | ||||||||||
About HomeTown Bankshares Corporation
HomeTown Bankshares Corporation is the parent company of HomeTown Bank, which officially opened for business on November 14, 2005. HomeTown Bank offers a full range of banking services to small and medium-size businesses, real estate investors and developers, private investors, professionals and individuals. The Bank serves three markets including the Roanoke Valley, the New River Valley and Smith Mountain Lake through five branches, seven ATMs, HomeTown Mortgage and HomeTown Investments. A high level of responsive and personal service coupled with local decision-making is the hallmark of its banking strategy. For more information, please visit www.hometownbankva.com.
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, and 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 March 31, 2014)
HomeTown Bankshares Corporation
Consolidated Condensed Balance Sheets
March 31, 2014, December 31, 2013
and March 31, 2013
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March 31, |
December 31, |
March 31, |
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In Thousands, Except Share and Per Share Data |
2014 |
2013 |
2013 |
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Assets |
(Unaudited) |
(Unaudited) |
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Cash and due from banks |
$ | 15,784 | $ | 19,537 | $ | 12,456 | ||||||
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Federal funds sold |
498 | 738 | 47 | |||||||||
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Securities available for sale, at fair value |
57,350 | 57,922 | 65,453 | |||||||||
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Restricted equity securities, at cost |
2,363 | 2,564 | 2,358 | |||||||||
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Loans held for sale |
509 | - | - | |||||||||
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Total loans |
311,777 | 297,933 | 277,259 | |||||||||
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Allowance for loan losses |
(3,789 | ) | (3,721 | ) | (3,799 | ) | ||||||
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Net loans |
307,988 | 294,212 | 273,460 | |||||||||
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Property and equipment, net |
12,435 | 12,155 | 10,037 | |||||||||
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Other real estate owned |
7,175 | 8,143 | 9,440 | |||||||||
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Other assets |
6,641 | 7,166 | 3,694 | |||||||||
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Total assets |
$ | 410,743 | $ | 402,437 | $ | 376,945 | ||||||
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Liabilities and Stockholders’ Equity |
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Deposits: |
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Noninterest-bearing |
$ | 44,888 | $ | 46,232 | $ | 35,194 | ||||||
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Interest-bearing |
303,757 | 293,538 | 284,121 | |||||||||
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Total deposits |
348,645 | 339,770 | 319,315 | |||||||||
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Short term borrowings |
1,001 | 258 | 663 | |||||||||
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Federal Home Loan Bank borrowings |
19,000 | 22,000 | 19,000 | |||||||||
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Other liabilities |
1,438 | 871 | 1,024 | |||||||||
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Total liabilities |
370,084 | 362,899 | 340,002 | |||||||||
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Stockholders’ Equity: |
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Preferred stock |
13,293 | 13,293 | 10,252 | |||||||||
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Common stock |
16,438 | 16,351 | 16,167 | |||||||||
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Surplus |
15,263 | 15,339 | 15,494 | |||||||||
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Retained deficit |
(4,253 | ) | (4,846 | ) | (6,215 | ) | ||||||
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Accumulated other comprehensive (loss) income |
(82 | ) | (599 | ) | 1,245 | |||||||
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Total stockholders’ equity |
40,659 | 39,538 | 36,943 | |||||||||
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Total liabilities and stockholders’ equity |
$ | 410,743 | $ | 402,437 | $ | 376,945 | ||||||
HomeTown Bankshares Corporation
Consolidated Condensed Statements of Income
For the Three Months Ended March 31, 2014 and 2013
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For the Three Months |
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Ended March 31, |
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In Thousands, Except Share and Per Share Data |
2014 |
2013 |
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(Unaudited) |
(Unaudited) |
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Interest income: |
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Loans and fees on loans |
$ | 3,695 | $ | 3,475 | ||||
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Taxable investment securities |
263 | 332 | ||||||
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Nontaxable investment securities |
94 | 23 | ||||||
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Other interest income |
41 | 35 | ||||||
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Total interest income |
4,093 | 3,865 | ||||||
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Interest expense: |
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Deposits |
440 | 476 | ||||||
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Other borrowed funds |
94 | 94 | ||||||
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Total interest expense |
534 | 570 | ||||||
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Net interest income |
3,559 | 3,295 | ||||||
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Provision for loan losses |
70 | 125 | ||||||
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Net interest income after provision for loan losses |
3,489 | 3,170 | ||||||
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Noninterest income: |
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Service charges on deposit accounts |
91 | 68 | ||||||
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ATM and interchange income |
94 | 77 | ||||||
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Mortgage loan brokerage fees |
30 | 80 | ||||||
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Gains on sales of investment securities |
- | 2 | ||||||
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Other income |
118 | 90 | ||||||
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Total noninterest income |
333 | 317 | ||||||
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Noninterest expense: |
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Salaries and employee benefits |
1,412 | 1,376 | ||||||
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Occupancy and equipment expense |
366 | 320 | ||||||
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Advertising and marketing expense |
103 | 140 | ||||||
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Professional fees |
73 | 136 | ||||||
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(Gains), losses on sales and writedowns of other real estate owned, net |
(5 | ) | 2 | |||||
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Other real estate owned expense |
64 | 52 | ||||||
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Other expense |
644 | 674 | ||||||
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Total noninterest expense |
2,657 | 2,700 | ||||||
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Net income before income taxes |
1,165 | 787 | ||||||
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Income tax expense (benefit) |
362 | 262 | ||||||
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Net income |
803 | 525 | ||||||
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Effective dividends on preferred stock |
210 | 133 | ||||||
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Accretion of discount on preferred stock |
- | 20 | ||||||
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Net income available to common stockholders |
$ | 593 | $ | 372 | ||||
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Basic earnings per common share |
$ | 0.18 | $ | 0.11 | ||||
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Diluted earnings per common share |
$ | 0.15 | $ | 0.11 | ||||
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Weighted average common shares outstanding |
3,276,631 | 3,265,285 | ||||||
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Diluted average common shares outstanding |
5,516,631 | 3,265,285 | ||||||
HomeTown Bankshares Corporation
Financial Highlights
(Unaudited)
| Three | Three | |||||||
| Months | Months | |||||||
| Ended | Ended | |||||||
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March 31 |
March 31 |
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2014 |
2013 |
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PER SHARE INFORMATION |
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Book value |
$ | 8.32 | $ | 8.16 | ||||
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Earnings per share, basic |
$ | 0.18 | $ | 0.11 | ||||
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Earnings per share, diluted |
$ | 0.15 | $ | 0.11 | ||||
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PROFITABILITY |
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Return on average assets |
0.81 | % | 0.57 | % | ||||
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Return on average shareholders' equity |
8.09 | % | 5.75 | % | ||||
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Net interest margin |
3.94 | % | 3.87 | % | ||||
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Efficiency |
66.75 | % | 73.32 | % | ||||
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BALANCE SHEET RATIOS |
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Total loans to deposits |
89.43 | % | 86.83 | % | ||||
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Securities total assets |
14.54 | % | 17.99 | % | ||||
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Tier 1 leverage ratio |
10.2 | % | 9.6 | % | ||||
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ASSET QUALITY |
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Nonperforming assets to total assets |
1.97 | % | 3.13 | % | ||||
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Nonperforming assets, including restructured loans, to total assets |
3.50 | % | 4.81 | % | ||||
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Net charge-offs to average loans (annualized) |
0.00 | % | 0.17 | % | ||||
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Composition of risk assets: (in thousands) |
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Nonperforming assets: |
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Nonaccrual loans |
$ | 937 | $ | 2,356 | ||||
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Other real estate owned |
7,175 | 9,440 | ||||||
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Total nonperforming assets, excluding performing restructured loans |
$ | 8,112 | $ | 11,796 | ||||
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Restructured loans, performing in accordance with their modified terms |
6,266 | 6,332 | ||||||
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Total nonperforming assets, including performing restructured loans |
$ | 14,378 | $ | 18,128 | ||||
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Allowance for loan losses: (in thousands) |
||||||||
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Beginning balance |
$ | 3,721 | $ | 3,790 | ||||
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Provision for loan losses |
70 | 125 | ||||||
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Charge-offs |
(36 | ) | (279 | ) | ||||
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Recoveries |
34 | 163 | ||||||
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Ending balance |
$ | 3,789 | $ | 3,799 | ||||