HomeTown Bankshares Corporation is listed with the
NASDAQ Capital Markets under the trading symbol “HMTA”. During Q4
of 2017, the stock closed as high as $11.36 with an average close
of $11.01 and most recent closing price of $11.50 on February 15,
2018.
HomeTown Bankshares Corporation, (NASDAQ:HMTA), the parent company
of HomeTown Bank, grew assets $33 million in 2017 to $550 million
at December 31, 2017 with solid growth in both loans and core
deposits. The Company reported net income available to common
shareholders of $380,000 for the fourth quarter ended December 31,
2017 vs. $591,000 for the fourth quarter of 2016. Net Income
available to common shareholders for the 2017 fiscal year was $2.5
million vs. $2.1 million for the 2016 fiscal year after a $408,000
preferred stock dividend. Earnings per share on a fully diluted
basis were $0.07 for the fourth quarter of 2017 and $0.43 per share
for the fiscal year ended December 31, 2017 vs. $0.10 and $0.37 per
share, respectively, for similar periods in 2016.
Profitability in 2017 was impacted due
predominantly to non-recurring expenses from the successful
completion of a core conversion during the third quarter of 2017 as
well as professional fees related to the outsourcing of internal
audit activities prior to bringing this function in-house. Income
tax expense for 2017 included an adjustment to net deferred tax
assets in the amount of $100,000, as a result of the enactment of
the Tax Cuts and Jobs Act on December 22, 2017. The Act
reduced the corporate Federal tax rate from 34% to 21% effective
January 1, 2018 and will benefit future years.
“2017 was a year of transition for HomeTown Bank
with a major conversion to a new core processor, the continued
reduction in our OREO portfolio and a charge to earnings due to the
Tax Cuts and Jobs Act at year end," said Susan Still, President and
CEO. "In spite of these adjustments, our core banking
business was solid with an 8% increase in core revenues, 6%
increase in loans, and core deposit growth of 6% for the year."
RevenueRecord core revenue of
$23.9 million was realized for the year ended December 31, 2017, up
$1.9 million or 8% over 2016, which included $6.1 million in core
revenues realized during the fourth quarter of 2017 - 6% higher
than 2016. Higher core revenues were generated from commercial
lines and loans, commercial real estate loans, personal lines and
loans, private banking loans as well as non-interest income from
treasury and merchant services, mortgages and brokerage
services.
Net Interest IncomeNet interest
income in the fourth quarter 2017 increased $323,000 to $4.5
million from the fourth quarter of 2016 with a $1.5 million
increase or 9% to $17.6 million for the 2017 fiscal year vs. $16.2
million earned for the 2016 fiscal year. Higher loan volume
helped to offset the income from maturing, higher rate loans and
the competitive interest rate environment that continued during
2017. The more competitive marketplace ultimately led to an 8 basis
point decline in the net interest margin during 2017 in spite of a
5 basis point improvement in the cost of funds.
Noninterest IncomeNoninterest
income, net of security gains, increased slightly to $787,000 in
the fourth quarter of 2017 while core noninterest income of $3.2
million was realized for the fiscal year 2017, up 13% from $2.8
million realized for 2016. The primary increase for 2017 was
continued, double-digit growth in ATM and interchange income,
mortgage income, and merchant services income.
Noninterest ExpenseNoninterest
expense increased only slightly in the fourth quarter 2017 vs. Q4
of 2016 while noninterest expense during the 2017 fiscal year
increased 13% compared to 2016 due primarily to the core
conversion, increased operations staffing and data processing costs
to support the transition as well as costs associated with
additional consulting fees and OREO write-downs for the 2017 fiscal
year. We also experienced increased personnel costs with the
transition of a new Chief Credit Officer due to the retirement of
our former Chief Credit Officer as well as the addition of a new
Chief Risk Officer. We anticipate a return to normal overhead
and a favorable comparison to peers and core operating costs during
2018.
LoansTotal loans were $444
million at December 31, 2017, up $9 million or 2% for the fourth
quarter of 2017 and up $25 million or 6% over the prior year ended
December 31, 2016. Loan growth was driven by commercial real
estate, commercial and industrial lines and term loans, consumer
lines and loans as well as private client loans.
DepositsCore deposit growth for
the 2017 fiscal year was up $24 million and was 6% over the 2016
fiscal year. Solid core deposit growth was achieved in 2017 by
continued growth in new banking relationships as well as growth in
existing commercial and consumer accounts. Conversely,
increased liquidity from strong core deposit growth resulted in a
45% reduction in wholesale funding and the associated interest
expense.
CapitalCapital levels remained
sound during 2017 with total stockholders’ equity increasing $2.7
million through December 31, 2017. HomeTown Bank common
equity tier 1 capital, total risk-based capital, Tier 1 risk-based
capital and Tier 1 leverage ratios were 11.7%, 12.5%, 11.7% and
10.4%, respectively. All ratios continue to exceed the current
regulatory standards for well-capitalized institutions. Book
value per common share amounted to $8.72 at December 31, 2017 vs.
$8.30 at December 31, 2016.
Credit QualityCredit quality
remained sound thru December 31, 2017 with a slight increase in the
provision for loan losses to $1.14 million vs. $1.08 million in
2016. The increased provision was a result of a combination of
increased charge-offs and additional provision from increased loan
production.
Nonperforming AssetsOREO
balances continued to decrease during 2017 – down $545,000 or 14%.
Non-performing assets, excluding performing restructured loans,
improved to 0.80% of total assets at December 31, 2017 vs. 0.91% at
December 31, 2016. Non-performing assets, including
restructured loans, also improved from 2.10% of total assets at
December 31, 2016 to 1.51% at December 31, 2017.
Past Due and Nonaccrual
LoansPast due accruing loans amounted to 0.67% of total
loans at December 31, 2017 vs. 0.29% in 2017 while nonaccruals
amounted to 0.26% of total loans at December 31, 2017 vs. 0.22% of
total loans at December 31, 2016.
Allowance for Loan LossesThe
allowance for loan losses totaled $3.8 million at December 31, 2017
compared to $3.6 million at December 31, 2016. Provisions for
credit losses were $1.14 million for the fiscal year 2017 vs. $1.08
million for 2016 due to solid loan growth as well as charge-offs
during the fiscal year.
“Solid balance sheet growth in both loans and
core deposits as well as continued double-digit growth in core
non-interest income resulted in record core revenues during 2017,”
said Still. “Our credit quality is sound and we remain
well-capitalized,” continued Still. “Our brand recognition is
strong as evidenced by our growth and we continue to benefit from
being the largest bank headquartered in the Roanoke Valley," 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, 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 quarter
and year ending December 31, 2017)
HomeTown Bankshares Corporation |
Consolidated Condensed Balance Sheets |
December 31, 2017; and December 31, 2016 |
|
December 31 |
|
December
31 |
In
Thousands |
2017 |
|
2016 |
Assets |
(Unaudited) |
|
|
Cash and due from
banks |
$ |
21,714 |
|
|
$ |
18,229 |
|
Federal funds sold |
|
180 |
|
|
|
42 |
|
Securities available
for sale, at fair value |
|
55,344 |
|
|
|
52,975 |
|
Restricted equity
securities, at cost |
|
2,371 |
|
|
|
2,213 |
|
Loans held for
sale |
|
1,587 |
|
|
|
678 |
|
Total loans |
|
444,195 |
|
|
|
418,991 |
|
Allowance for loan
losses |
|
(3,758 |
) |
|
|
(3,636 |
) |
Net loans |
|
440,437 |
|
|
|
415,355 |
|
Property and equipment,
net |
|
12,937 |
|
|
|
13,371 |
|
Other real estate
owned |
|
3,249 |
|
|
|
3,794 |
|
Other assets |
|
12,434 |
|
|
|
10,633 |
|
Total
assets |
$ |
550,253 |
|
|
$ |
517,290 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Noninterest-bearing |
$ |
106,956 |
|
|
$ |
91,354 |
|
Interest-bearing |
|
370,364 |
|
|
|
359,494 |
|
Total
deposits |
|
477,320 |
|
|
|
450,848 |
|
Federal Home Loan Bank
borrowings |
|
11,028 |
|
|
|
8,000 |
|
Subordinated notes |
|
7,254 |
|
|
|
7,224 |
|
Other borrowings |
|
1,558 |
|
|
|
1,117 |
|
Other liabilities |
|
2,201 |
|
|
|
1,876 |
|
Total
liabilities |
|
499,361 |
|
|
|
469,065 |
|
|
|
|
|
|
|
Stockholders’
Equity: |
|
|
|
|
|
Common stock |
|
28,777 |
|
|
|
28,765 |
|
Surplus |
|
17,980 |
|
|
|
17,833 |
|
Retained surplus |
|
3,767 |
|
|
|
1,247 |
|
Accumulated other
comprehensive income |
|
(141 |
) |
|
|
(56 |
) |
Total
HomeTown Bankshares Corporation stockholders’ equity |
|
50,383 |
|
|
|
47,789 |
|
Noncontrolling interest
in consolidated subsidiary |
|
509 |
|
|
|
436 |
|
Total
stockholders’ equity |
|
50,892 |
|
|
|
48,225 |
|
Total
liabilities and stockholders’ equity |
$ |
550,253 |
|
|
$ |
517,290 |
|
|
|
|
|
|
|
|
|
HomeTown Bankshares Corporation |
Consolidated Condensed Statements of
Income |
For the Three and Twelve Months Ended December 31,
2017 and 2016 |
|
For the Three Months |
|
For the Twelve Months |
|
Ended December 31, |
|
Ended December 31, |
In
Thousands, Except Share and Per Share Data |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
Interest
income: |
|
|
|
|
|
|
|
|
|
|
|
Loans and
fees on loans |
$ |
4,850 |
|
$ |
4,595 |
|
$ |
18,973 |
|
$ |
17,711 |
Taxable
investment securities |
|
287 |
|
|
223 |
|
|
1,031 |
|
|
837 |
Nontaxable investment securities |
|
69 |
|
|
93 |
|
|
308 |
|
|
388 |
Other
interest income |
|
99 |
|
|
58 |
|
|
357 |
|
|
238 |
Total
interest income |
|
5,305 |
|
|
4,969 |
|
|
20,669 |
|
|
19,174 |
Interest
expense: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
588 |
|
|
587 |
|
|
2,282 |
|
|
2,216 |
Subordinated notes |
|
135 |
|
|
134 |
|
|
537 |
|
|
536 |
Other
borrowed funds |
|
56 |
|
|
45 |
|
|
227 |
|
|
266 |
Total
interest expense |
|
779 |
|
|
766 |
|
|
3,046 |
|
|
3,018 |
Net
interest income |
|
4,526 |
|
|
4,203 |
|
|
17,623 |
|
|
16,156 |
Provision for
loan losses |
|
567 |
|
|
103 |
|
|
1,142 |
|
|
1,082 |
Net
interest income after provision for loan losses |
|
3,959 |
|
|
4,100 |
|
|
16,481 |
|
|
15,074 |
Noninterest
income: |
|
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts |
|
129 |
|
|
173 |
|
|
544 |
|
|
669 |
ATM and
interchange income |
|
225 |
|
|
179 |
|
|
837 |
|
|
670 |
Mortgage
banking |
|
234 |
|
|
247 |
|
|
959 |
|
|
854 |
Gains on
sales of investment securities |
|
9 |
|
|
– |
|
|
69 |
|
|
257 |
Other
income |
|
199 |
|
|
183 |
|
|
874 |
|
|
651 |
Total noninterest income |
|
796 |
|
|
782 |
|
|
3,283 |
|
|
3,101 |
Noninterest
expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
1,945 |
|
|
1,886 |
|
|
8,098 |
|
|
6,981 |
Occupancy
and equipment expense |
|
405 |
|
|
400 |
|
|
1,650 |
|
|
1,650 |
Advertising and marketing expense |
|
154 |
|
|
135 |
|
|
537 |
|
|
480 |
Professional fees |
|
134 |
|
|
142 |
|
|
588 |
|
|
494 |
Losses on
sales, write-downs of other real estate owned, net |
|
201 |
|
|
404 |
|
|
581 |
|
|
495 |
Other
real estate owned expense |
|
40 |
|
|
25 |
|
|
106 |
|
|
97 |
Other
expense |
|
1,179 |
|
|
1,049 |
|
|
4,407 |
|
|
3,957 |
Total
noninterest expense |
|
4,058 |
|
|
4,041 |
|
|
15,967 |
|
|
14,154 |
Net income before
income taxes |
|
697 |
|
|
841 |
|
|
3,797 |
|
|
4,021 |
Income tax expense |
|
298 |
|
|
237 |
|
|
1,228 |
|
|
1,440 |
Net income |
|
399 |
|
|
604 |
|
|
2,569 |
|
|
2,581 |
Less net income
attributable to non-controlling interest |
|
19 |
|
|
13 |
|
|
73 |
|
|
62 |
Net income attributable
to HomeTown Bankshares Corporation |
|
380 |
|
|
591 |
|
|
2,496 |
|
|
2,519 |
Effective dividends on
preferred stock |
|
– |
|
|
– |
|
|
– |
|
|
408 |
Net income available to
common stockholders |
$ |
380 |
|
$ |
591 |
|
$ |
2,496 |
|
$ |
2,111 |
Basic earnings
per common share |
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.43 |
|
$ |
0.45 |
Diluted
earnings per common share |
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.43 |
|
$ |
0.37 |
Weighted
average common shares outstanding |
|
5,776,130 |
|
|
5,763,839 |
|
|
5,769,752 |
|
|
4,652,853 |
Diluted average
common shares outstanding |
|
5,810,760 |
|
|
5,774,308 |
|
|
5,804,382 |
|
|
5,776,292 |
|
|
|
|
|
|
|
|
|
|
|
|
HomeTown Bankshares Corporation |
|
Three |
|
|
Three |
|
|
Twelve |
|
|
Twelve |
Financial Highlights |
|
Months |
|
|
Months |
|
|
Months |
|
|
Months |
In
Thousands, Except Share and Per Share Data |
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
|
Dec 31 |
|
|
Dec 31 |
|
|
Dec 31 |
|
|
Dec 31 |
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
PER
SHARE INFORMATION |
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Book value
per share, basic |
$ |
8.72 |
|
|
$ |
8.30 |
|
|
$ |
8.72 |
|
|
$ |
8.30 |
|
|
Book value
per share, diluted |
$ |
8.71 |
|
|
$ |
8.30 |
|
|
$ |
8.71 |
|
|
$ |
8.30 |
|
|
Earnings
(loss) per share, basic |
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.43 |
|
|
$ |
0.45 |
|
|
Earnings
(loss) per share, diluted |
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.43 |
|
|
$ |
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFITABILITY |
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets |
|
0.27% |
|
|
|
0.46% |
|
|
|
0.46% |
|
|
|
0.50% |
|
|
Return on
average shareholders' equity |
|
2.97% |
|
|
|
4.87% |
|
|
|
5.02% |
|
|
|
5.31% |
|
|
Net
interest margin |
|
3.45% |
|
|
|
3.53% |
|
|
|
3.47% |
|
|
|
3.55% |
|
|
Efficiency |
|
71.83% |
|
|
|
72.45% |
|
|
|
73.33% |
|
|
|
71.38% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
to deposits |
|
93.06% |
|
|
|
92.93% |
|
|
|
93.06% |
|
|
|
92.93% |
|
|
Securities
to total assets |
|
10.49% |
|
|
|
10.67% |
|
|
|
10.49% |
|
|
|
10.67% |
|
|
Common
equity tier 1 ratio BANK ONLY |
|
11.7% |
|
|
|
11.8% |
|
|
|
11.7% |
|
|
|
11.8% |
|
|
Tier 1
capital ratio BANK ONLY |
|
11.7% |
|
|
|
11.8% |
|
|
|
11.7% |
|
|
|
11.8% |
|
|
Total
capital ratio BANK ONLY |
|
12.5% |
|
|
|
12.6% |
|
|
|
12.5% |
|
|
|
12.6% |
|
|
Tier 1
leverage ratio BANK ONLY |
|
10.4% |
|
|
|
10.7% |
|
|
|
10.4% |
|
|
|
10.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY |
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets to total assets |
|
0.80% |
|
|
|
0.91% |
|
|
|
0.80% |
|
|
|
0.91% |
|
|
Nonperforming assets, including restructured loans, to total
assets |
|
1.51% |
|
|
|
2.10% |
|
|
|
1.51% |
|
|
|
2.10% |
|
|
Net
charge-offs to average loans (annualized) |
|
0.46% |
|
|
|
0.01% |
|
|
|
0.24% |
|
|
|
0.19% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of risk assets: (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
$ |
1,144 |
|
|
$ |
924 |
|
|
$ |
1,144 |
|
|
$ |
924 |
|
|
|
Other real estate
owned |
|
3,249 |
|
|
|
3,794 |
|
|
|
3,249 |
|
|
|
3,794 |
|
|
Total
nonperforming assets, excluding performing restructured loans |
|
4,393 |
|
|
|
4,718 |
|
|
|
4,393 |
|
|
|
4,718 |
|
|
Restructured loans, performing in accordance with their modified
terms |
|
3,889 |
|
|
|
6,160 |
|
|
|
3,889 |
|
|
|
6,160 |
|
|
Total
nonperforming assets, including performing restructured loans |
$ |
8,282 |
|
|
$ |
10,878 |
|
|
$ |
8,282 |
|
|
$ |
10,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses: (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
$ |
3,706 |
|
|
$ |
3,544 |
|
|
$ |
3,636 |
|
|
$ |
3,298 |
|
|
|
Provision for loan
losses |
|
567 |
|
|
|
103 |
|
|
|
1,142 |
|
|
|
1,082 |
|
|
|
Charge-offs |
|
(515 |
) |
|
|
(42 |
) |
|
|
(1,078 |
) |
|
|
(848 |
) |
|
|
Recoveries |
|
- |
|
|
|
31 |
|
|
|
58 |
|
|
|
104 |
|
|
Ending
balance |
$ |
3,758 |
|
|
$ |
3,636 |
|
|
$ |
3,758 |
|
|
$ |
3,636 |
|
For more information contact:
Susan K. Still, President and CEO, 540-278-1705
Vance W. Adkins, Executive Vice President and CFO, 540-278-1702
HomeTown Bankshares Corporation (NASDAQ:HMTA)
Historical Stock Chart
From Apr 2024 to May 2024
HomeTown Bankshares Corporation (NASDAQ:HMTA)
Historical Stock Chart
From May 2023 to May 2024