HomeTown Bankshares Corporation is listed with the NASDAQ Capital Markets under the trading symbol “HMTA”. During the Q3 of 2017, the stock closed as high as $11.25 with an average close of $10.80 and most recent closing price of $11.04 on October 27, 2017.
Solid Operating Performance
º YTD Core Revenue of $17.9 million, up $1.4 million or 8% over 2016
º Q3 Core Revenue of $6.0 million, up 5% from $5.7 million in 2016
º YTD Net Income of $2.1 Mil, up $188,000 or 10% over 2016
º Net Income for Q3 of $917,000 for 2017 vs. $903,000 for 2016
º Diluted EPS of $0.16 for Q3 of 2017 and $0.37 YTD vs. $0.16 and $0.26, respectively, in 2016
Solid Loan Growth Supported by Strong Core Deposit Growth
º Total Loans of $435 Million at September 30, 2017
- Up $16 million or 5% annualized for the first three quarters of 2017
- Up $31 million or 8% since September 30, 2016
º Core Deposits of $437 Million at September 30, 2017
- $24 million increases or 8% annualized for the first nine months of 2017
- YOY increase of $40 million or 10% since September 30, 2016
º Brokered CDs were favorably reduced by $13 Million or 65% since Q3 of 2016
Credit Quality Remains Strong
º Q3 annualized net charge-offs of 0.03% vs. 0.02% in Q3 2016
º YTD net charge-offs of 0.16% in 2017 vs. 0.25% of for 2016
º Non-performing assets to total assets improved to 0.77% vs. 1.03% in 2016
º Including restructured loans, non-performing assets were 1.49% of total assets at September 30, 2017 vs. 2.25% in 2016
º Nonaccrual loans remained low at 0.16% of total loans at September 30, 2017 vs. 0.23% of total loans at September 30, 2016
º Past due accruing loans remained low at 0.70% of total loans at September 30, 2017 vs. 0.12% at September 30, 2016
Well Capitalized with Improved Capital Ratios
º At September 30, 2017, Total Risk-Based Capital amounted to 12.5% with Tier 1 Risk-Based Capital of 11.8% and a Tier 1 Leverage Ratio of 10.6% vs. 12.9%, 12.1%, and 10.6%, respectively, for 2016.
º Return on Assets (ROA) of 0.67% for the third quarter and 0.53% for the first nine months of 2017 vs. 0.70% and 0.52%, respectively, for 2016
º Return on Equity (ROE) of 7.25% for the third quarter and 5.73% for the first nine months of 2017 vs. 7.54% and 5.45%, respectively, for 2016
º Efficiency Ratio of 73.84% for the first nine months of 2017 vs. 71.00% for 2016
ROANOKE, Va., Oct. 30, 2017 (GLOBE NEWSWIRE) -- HomeTown Bankshares Corporation, (NASDAQ:HMTA), the parent company of HomeTown Bank generated a 10% increase in net income to $2.1 million on a 10% increase in total revenues for the first nine months of 2017. For the third quarter of 2017, net income amounted to $917,000, a 6% annualized increase on a 5% increase in total core revenues from the third quarter of 2016. Net earnings were $0.16 per diluted common share for the third quarter and $0.37 per diluted common share for the first nine months of 2017 vs. $0.16 and $0.26 per diluted share, respectively, in 2016.
“We are very pleased with the continued solid growth in revenues and net income for the first nine months of 2017,” stated Susan Still, President and CEO. “Strong growth in low-cost core deposits and solid loan portfolio growth along with increases in our non-interest income sources contributed to the improved operations at September 30,” she continued.
Revenue
Total core revenue for the first nine months of 2017 was up 9% to $17.8 million while total core revenue for the three months ended September 30, 2017 was up 5% to $6.0 million, from $5.7 million in the third quarter of 2016. Higher core revenues reflected increases in both interest income from the loan portfolio and non-interest income sources, excluding gains on sales of investments. Growth in commercial lines and loans, commercial real estate loans, personal lines and loans and credit cards, as well as non-interest income from treasury and merchant services as well as growth in mortgage income contributed to the increase in total revenue.
Net Interest Income
Net interest income in the third quarter of 2017 increased 8% or $323,000 to $4.4 million over the third quarter of 2016. Net interest income was up $1.1 million to $13.1million or 10% for the first nine months of 2017 vs. $12.0 million over the same period in 2016. Income from higher loan volume and a significant reduction in wholesale funding costs for the first nine months of 2017 contributed to the growth in net interest income. Continued competitive pressure resulted in a 3-basis point decline in the net interest margin during the third quarter of 2017 to 3.46% vs. 3.49% at September 30, 2016 with a year-over-year decline of 7 basis points to 3.48% for the first nine months of 2017 vs. 3.55% at September 30, 2016.
Noninterest Income
Core non-interest income increased 18% to $2.4 million for the nine months ended September 30, 2017 vs. $2.1 million during the same period of 2016. The primary growth in non-interest income was ATM and interchange income as well as a strong increase in mortgage lending and merchant services during the third quarter and the first nine months of 2017.
Noninterest Expense
Noninterest expense increased $318,000 in the third quarter 2017 vs. 2016 and $1.8 million year-to-date due to additional staffing costs to support increased growth as well as the successful completion of a core conversion during the third quarter of 2017. Noninterest expense also increased during the first nine months of 2017 due to increased staffing for growth and non-recurring conversion costs as well as professional fees related to outsourced internal audit activities prior to bringing the internal audit and risk management activities in-house.
Balance Sheet
Total assets grew at a 9% annualized rate to $551 million at September 30, 2017 from $517 million at December 31, 2016. The capital ratios remained well above regulatory standards for well-capitalized banks through September 30, 2017.
Loans
Loan growth increased 8% to $435 million or $31 million over the twelve months ended September 30, 2017. Annualized loan growth was 5% for the first nine months of 2017 due to strong loan growth offset somewhat by increased deleveraging by certain opportunities in the commercial sector. Overall loan growth was driven by commercial real estate, commercial and industrial lines and term loans as well as consumer lines and loans.
Deposits
Total core deposits were up $24 million or 8% on an annualized basis for the first nine months of 2017 while core deposit growth was up $39 million or 10% over September 30, 2016. Strong core deposit growth was achieved again in 2017 by strong growth in commercial, private banking and consumer banking relationships, especially lower cost demand deposits.
Capital
Total stockholders’ equity increased $2.4 million through September 30, 2017 over the previous year. HomeTown Bank’s Total capital ratio, Common equity tier 1 capital, Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios were 11.8%, 12.5%, 11.8%, and 10.6%, respectively. All ratios continue to exceed the current regulatory standards for well-capitalized institutions. Book value per common share amounted to $8.66 at September 30, 2017 vs. $8.30 at September 30, 2016, on a fully diluted basis.
Asset Quality
Loan quality remained solid thru the first nine months ended September 30, 2017.
Nonperforming Assets
OREO balances decreased $232,000 or 6% during the first nine months 2017 and $712,000 or 17% since September 30, 2016. This resulted in a decline in non-performing assets, excluding performing restructured loans, to 0.77% of total assets at September 30, 2017 vs. 1.03% at September 30, 2016. Non-performing assets, including restructured loans, were also down from 2.25% of total assets at September 30, 2016 to 1.49% at September 30, 2017.
Past Due and Nonaccrual Loans
Nonperforming loans, excluding performing, restructured loans, of $700,000 were 0.16% of total loans at September 30, 2017 vs. $935,000 or 0.23% of total loans at September 30, 2016. Past due accruing loans amounted to 0.70% of total loans at September 30, 2017 vs. 0.12% in 2016 while nonaccruals decreased to 0.16% of total loans during the third quarter of 2017 from 0.23% of total loans at September 30, 2016. Net charge-offs to average loans outstanding at September 30, 2017 were 0.03% for the quarter and 0.16% for the first nine months of 2017 vs. 0.02% and 0.25% in 2016.
Allowance for Loan Losses
The Company’s Allowance for Loan Losses amounted to $3.71 million or 0.85% of total loans at September 30, 2017 vs. $3.64 million and 0.87% of total loans at December 31, 2016.
“The level of bank owned real estate was reduced significantly during the first nine months of 2017 and over the past year,” stated Still. “Our ongoing focus will remain on maintaining low levels of non-performing loans and past dues and continuing to reduce the level of bank owned real estate prudently,” she said.
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 quarter ending September 30, 2017)
| HomeTown Bankshares Corporation | ||||||||||||||||||
| Consolidated Condensed Balance Sheets | ||||||||||||||||||
| September 30, 2017; December 31, 2016; and September 30, 2016 | ||||||||||||||||||
| September 30 | December 31 | September 30 | ||||||||||||||||
| In Thousands | 2017 | 2016 | 2016 | |||||||||||||||
| Assets | (Unaudited) | (Unaudited) | ||||||||||||||||
| Cash and due from banks | $ | 34,755 | $ | 18,229 | $ | 21,264 | ||||||||||||
| Federal funds sold | 132 | 42 | 1,033 | |||||||||||||||
| Securities available for sale, at fair value | 53,594 | 52,975 | 54,085 | |||||||||||||||
| Restricted equity securities, at cost | 2,371 | 2,213 | 2,213 | |||||||||||||||
| Loans held for sale | 1,013 | 678 | 294 | |||||||||||||||
| Total loans | 434,810 | 418,991 | 403,915 | |||||||||||||||
| Allowance for loan losses | (3,706) | (3,636) | (3,544) | |||||||||||||||
| Net loans | 431,104 | 415,355 | 400,371 | |||||||||||||||
| Property and equipment, net | 13,098 | 13,371 | 13,543 | |||||||||||||||
| Other real estate owned | 3,562 | 3,794 | 4,274 | |||||||||||||||
| Other assets | 11,818 | 10,633 | 10,635 | |||||||||||||||
| Total assets | $ | 551,447 | $ | 517,290 | $ | 507,712 | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Noninterest-bearing | $ | 110,249 | $ | 91,354 | $ | 88,716 | ||||||||||||
| Interest-bearing | 368,695 | 359,494 | 351,278 | |||||||||||||||
| Total deposits | 478,944 | 450,848 | 439,994 | |||||||||||||||
| Federal Home Loan Bank borrowings | 11,361 | 8,000 | 9,000 | |||||||||||||||
| Subordinated notes | 7,247 | 7,224 | 7,217 | |||||||||||||||
| Other borrowings | 992 | 1,117 | 1,126 | |||||||||||||||
| Other liabilities | 2,225 | 1,876 | 2,093 | |||||||||||||||
| Total liabilities | 500,769 | 469,065 | 459,430 | |||||||||||||||
| Stockholders’ Equity: | ||||||||||||||||||
| Common stock | 28,776 | 28,765 | 28,781 | |||||||||||||||
| Surplus | 17,942 | 17,833 | 17,810 | |||||||||||||||
| Retained surplus | 3,363 | 1,247 | 657 | |||||||||||||||
| Accumulated other comprehensive income | 107 | (56) | 611 | |||||||||||||||
| Total HomeTown Bankshares Corporation stockholders’ equity | 50,188 | 47,789 | 47,859 | |||||||||||||||
| Noncontrolling interest in consolidated subsidiary | 490 | 436 | 423 | |||||||||||||||
| Total stockholders’ equity | 50,678 | 48,225 | 48,282 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 551,447 | $ | 517,290 | $ | 507,712 | ||||||||||||
| HomeTown Bankshares Corporation | |||||||||||
| Consolidated Condensed Statements of Income | |||||||||||
| For the Three and Nine Months Ended September 30, 2017 and 2016 | |||||||||||
| For the Three Months | For the Nine Months | ||||||||||
| Ended September 30, | Ended September 30, | ||||||||||
| In Thousands, Except Share and Per Share Data | 2017 | 2016 | 2017 | 2016 | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
| Interest income: | |||||||||||
| Loans and fees on loans | $ | 4,797 | $ | 4,523 | $ | 14,123 | $ | 13,116 | |||
| Taxable investment securities | 244 | 209 | 744 | 614 | |||||||
| Nontaxable investment securities | 75 | 93 | 239 | 295 | |||||||
| Other interest income | 101 | 65 | 258 | 180 | |||||||
| Total interest income | 5,217 | 4,890 | 15,364 | 14,205 | |||||||
| Interest expense: | |||||||||||
| Deposits | 588 | 588 | 1,694 | 1,629 | |||||||
| Subordinated notes | 134 | 134 | 402 | 402 | |||||||
| Other borrowed funds | 58 | 54 | 171 | 221 | |||||||
| Total interest expense | 780 | 776 | 2,267 | 2,252 | |||||||
| Net interest income | 4,437 | 4,114 | 13,097 | 11,953 | |||||||
| Provision for loan losses | 40 | 111 | 575 | 979 | |||||||
| Net interest income after provision for loan losses | 4,397 | 4,003 | 12,522 | 10,974 | |||||||
| Noninterest income: | |||||||||||
| Service charges on deposit accounts | 120 | 178 | 415 | 496 | |||||||
| ATM and interchange income | 206 | 176 | 612 | 491 | |||||||
| Mortgage banking | 263 | 251 | 725 | 607 | |||||||
| Gains on sales of investment securities | 18 | 43 | 60 | 257 | |||||||
| Other income | 150 | 187 | 675 | 468 | |||||||
| Total noninterest income | 757 | 835 | 2,487 | 2,319 | |||||||
| Noninterest expense: | |||||||||||
| Salaries and employee benefits | 2,099 | 1,772 | 6,153 | 5,095 | |||||||
| Occupancy and equipment expense | 391 | 439 | 1,245 | 1,317 | |||||||
| Advertising and marketing expense | 112 | 127 | 383 | 345 | |||||||
| Professional fees | 89 | 135 | 454 | 352 | |||||||
| Losses on sales, write-downs of other real estate owned, net | - | - | 380 | 91 | |||||||
| Other real estate owned expense | 28 | 25 | 66 | 72 | |||||||
| Other expense | 1,085 | 988 | 3,228 | 2,841 | |||||||
| Total noninterest expense | 3,804 | 3,486 | 11,909 | 10,113 | |||||||
| Net income before income taxes | 1,350 | 1,352 | 3,100 | 3,180 | |||||||
| Income tax expense | 413 | 416 | 930 | 1,203 | |||||||
| Net income | 937 | 936 | 2,170 | 1,977 | |||||||
| Less net income attributable to non-controlling interest | 20 | 33 | 54 | 49 | |||||||
| Net income attributable to HomeTown Bankshares Corporation | 917 | 903 | 2,116 | 1,928 | |||||||
| Effective dividends on preferred stock | - | - | - | 408 | |||||||
| Net income available to common stockholders | $ | 917 | $ | 903 | $ | 2,116 | $ | 1,520 | |||
| Basic earnings per common share | $ | 0.16 | $ | 0.16 | $ | 0.37 | $ | 0.36 | |||
| Diluted earnings per common share | $ | 0.16 | $ | 0.16 | $ | 0.37 | $ | 0.26 | |||
| Weighted average common shares outstanding | 5,770,175 | 5,763,944 | 5,762,602 | 4,279,821 | |||||||
| Diluted average common shares outstanding | 5,794,777 | 5,774,086 | 5,792,204 | 5,776,632 | |||||||
| HomeTown Bankshares Corporation | Three | Three | Nine | Nine | ||||||||||||||
| Financial Highlights | Months | Months | Months | Months | ||||||||||||||
| In Thousands, Except Share and Per Share Data | Ended | Ended | Ended | Ended | ||||||||||||||
| Sep 30 | Sep 30 | Sep 30 | Sep 30 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| PER SHARE INFORMATION | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Book value per share, basic | $ | 8.70 | $ | 8.30 | $ | 8.70 | $ | 8.30 | ||||||||||
| Book value per share, diluted | $ | 8.66 | $ | 8.30 | $ | 8.66 | $ | 8.30 | ||||||||||
| Earnings (loss) per share, basic | $ | 0.16 | $ | 0.16 | $ | 0.37 | $ | 0.36 | ||||||||||
| Earnings (loss) per share, diluted | $ | 0.16 | $ | 0.16 | $ | 0.37 | $ | 0.26 | ||||||||||
| PROFITABILITY | ||||||||||||||||||
| Return on average assets | 0.67 | % | 0.70 | % | 0.53 | % | 0.52 | % | ||||||||||
| Return on average shareholders' equity | 7.25 | % | 7.54 | % | 5.73 | % | 5.45 | % | ||||||||||
| Net interest margin | 3.46 | % | 3.49 | % | 3.48 | % | 3.55 | % | ||||||||||
| Efficiency | 72.95 | % | 70.54 | % | 73.84 | % | 71.00 | % | ||||||||||
| BALANCE SHEET RATIOS | ||||||||||||||||||
| Total loans to deposits | 90.79 | % | 91.80 | % | 90.79 | % | 91.80 | % | ||||||||||
| Securities to total assets | 10.15 | % | 11.09 | % | 10.15 | % | 11.09 | % | ||||||||||
| Common equity tier 1 ratio BANK ONLY | 11.8 | % | 12.1 | % | 11.8 | % | 12.1 | % | ||||||||||
| Tier 1 capital ratio BANK ONLY | 11.8 | % | 12.1 | % | 11.8 | % | 12.1 | % | ||||||||||
| Total capital ratio BANK ONLY | 12.5 | % | 12.9 | % | 12.5 | % | 12.1 | % | ||||||||||
| Tier 1 leverage ratio BANK ONLY | 10.6 | % | 10.6 | % | 10.6 | % | 10.6 | % | ||||||||||
| ASSET QUALITY | ||||||||||||||||||
| Nonperforming assets to total assets | 0.77 | % | 1.03 | % | 0.77 | % | 1.03 | % | ||||||||||
| Nonperforming assets, including restructured loans, to total assets | 1.49 | % | 2.25 | % | 1.49 | % | 2.25 | % | ||||||||||
| Net charge-offs to average loans (annualized) | 0.03 | % | 0.02 | % | 0.16 | % | 0.25 | % | ||||||||||
| Composition of risk assets: (in thousands) | ||||||||||||||||||
| Nonperforming assets: | ||||||||||||||||||
| Nonaccrual loans | $ | 700 | $ | 935 | $ | 700 | $ | 935 | ||||||||||
| Other real estate owned | 3,562 | 4,274 | 3,562 | 4,274 | ||||||||||||||
| Total nonperforming assets, excluding performing restructured loans | 4,262 | 5,209 | 4,262 | 5,209 | ||||||||||||||
| Restructured loans, performing in accordance with their modified terms | 3,930 | 6,237 | 3,930 | 6,237 | ||||||||||||||
| Total nonperforming assets, including performing restructured loans | $ | 8,192 | $ | 11,446 | $ | 8,192 | $ | 11,446 | ||||||||||
| Allowance for loan losses: (in thousands) | ||||||||||||||||||
| Beginning balance | $ | 3,700 | $ | 3,449 | $ | 3,636 | $ | 3,298 | ||||||||||
| Provision for loan losses | 40 | 111 | 575 | 979 | ||||||||||||||
| Charge-offs | (37 | ) | (21 | ) | (563 | ) | (806 | ) | ||||||||||
| Recoveries | 3 | 5 | 58 | 73 | ||||||||||||||
| Ending balance | $ | 3,706 | $ | 3,544 | $ | 3,706 | $ | 3,544 | ||||||||||