UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 8-K

 


 CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report: July 29, 2015

 


 HOMETOWN BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

 


 

         

Virginia

 

333-158525

 

26-4549960

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

   

202 S. Jefferson Street

Roanoke, Virginia

 

24011

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (540) 345-6000

 

Not Applicable

(Former name or former address, if changed since last report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02.

Results of Operations and Financial Condition.

 

HomeTown Bankshares Corporation (the “Company”), the parent company for Roanoke, Virginia based HomeTown Bank, announced on July 29, 2015 its financial results for the three months and six months ended June 30, 2015. The financial results are detailed in the Company’s Press Release dated July 29, 2015, which is attached as Exhibit 99.1 to this Form 8-K.

 

The information in this Item 2.02, including Exhibit 99.1 to this Current Report, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any registration statement or other document filed by the Company with the Securities and Exchange Commission, whether made before or after the date of this Current Report, regardless of any general incorporation language in such filing (or any reference to this Current Report generally), except as shall be expressly set forth by specific reference in such filing.

 

 

Item 8.01 Other Events

 

On July 23, 2015, HomeTown Bankshares Corporation declared a 6% per annum quarterly dividend on its Series C Non-Cumulative Perpetual Convertible Preferred Stock, payable September 15, 2015 to shareholders of record on August 31, 2015.

 

 
 

 

 

Item 9.01

Financial Statements and Exhibits.

 

(c) Exhibits

 

     

Exhibit
No.

  

Description

   

99.1

  

Press Release

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

         

 

 

HOMETOWN BANKSHARES CORPORATION

Date: July 29, 2015

 

By:

 

 

/s/ Charles W. Maness, Jr.

 

 

 

 

 

Charles W. Maness, Jr.,

 

 

 

 

Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

 

     

Exhibit
No.

  

Description

   

99.1

  

Press Release

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Exhibit 99.1

 

 

Wednesday, July 29, 2015

HomeTown Bankshares Corporation Reports

Strong Growth & Solid Operating Performance

Net Income up 4% Over 2014

 

 

Solid Operating Performance

 

o

Net Income of $863,000 for second quarter, up 4% from second quarter 2014

 

o

EPS on a fully diluted basis of $0.16 for the second quarter of 2015 and $0.30 YTD vs. $0.15 and $0.30, respectively, in 2014

 

o

YTD Earnings of $1.64 million vs. $1.64 million in 2014

 

o

Second quarter revenue of $5.1 million, up 6% or $277,000 over first quarter 2015 and 8% over 2014

 

o

YTD revenue of $9.8 million, up $739,000 or 8% increase over 2014

 

o

Noninterest Income up 30% over prior quarter and year to date 47% over prior year

 

 

Continued Strong Loan and Deposit Growth

 

o

Loans of $354 Million at June 30, 2015

 

Up $22.3 million or 7% for the first half of 2015, and

 

Up $36.1 million or 11% since June 30, 2014

 

o

Core Deposits of $332 Million at June 30, 2015

 

Increased $18.8 million or 6% for the first half of 2015

 

Increased $36.1 million or 12% since June 30, 2014

 

 

Credit Quality Remains Strong

 

o

YTD net charge-offs of $18,800 dropped to .01% of average total loans compared to .20% of average total loans for 2014

 

o

Non-performing assets were 1.62% of total assets at June 30, 2015 vs. 2.36% at June 30, 2014

 

o

Nonaccrual loans decreased to .11% of total loans at June 30, 2015 from .77% of total loans at June 30, 2014

 

o

Past due accruing loans remained low at 0.38% of total loans at June 30, 2015 vs. 0.16% at June 30, 2014

 

 

Well Capitalized with Solid Capital Ratios

 

o

Common Equity Tier 1 Capital amounted to 11.1% at June 30, 2015

 

o

Total Risk-Based Capital amounted to 11.9% at June 30, 2015

 

o

Tier 1 Risk-Based Capital amounted to 11.1% at June 30, 2015

 

o

Tier 1 Leverage Ratio amounted to 9.9% at June 30, 2015

Ratios are for wholly-owned subsidiary HomeTown Bank

 

 
 

 

 

 

 

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 Strong Growth & Solid Operating Performance for Second Quarter

Net Income up 4% over 2014

 

ROANOKE, Va., July 29, 2015 - HomeTown Bankshares Corporation (the "Company"), the parent company of HomeTown Bank, reported earnings of $863,000 for the second quarter ended June 30, 2015, a 4% increase over the $833,000 in net income reported for the comparative period in 2014. Net Income for the first six months of 2015 was $1.64 million vs. $1.64 million for the first six months of 2014. Earnings per share on a fully diluted basis were $0.16 for the second quarter of 2015 and $0.30 per share for the six months ended June 30, 2015 vs. $0.15 and $0.30 per share, respectively, for similar periods in 2014.

 

“Second quarter results continue to reflect strong balance sheet growth in both loans and core deposits, resulting in a solid increase in revenues and net income for the first half of 2015, “ said President and CEO Susan Still. “We continued to realize double-digit growth in new business during the first half of 2015, and we remain very optimistic about our future growth in market share and profitability while meeting the financial needs of our customers.”

 

Revenue

Total core revenue for the second quarter was 11% higher than 2014. Total core revenue for the six months ended June 30, 2015 was $9.8 million, up $807,000 or 9% over 2014, which included $5.1 million in revenues realized during the second quarter of 2015, up 7% or $317,000 over the $4.7 million realized in the first quarter of 2015. Higher revenues reflected increases in both net interest income and non-interest income and exclude gains on sales of investments. Growth in commercial lines and loans, commercial real estate loans, personal lines and loans, as well as in non-interest income from treasury and merchant services, title insurance, mortgage and brokerage services contributed to the increase in total revenue.

 

Net Interest Income

Net interest income in the second quarter 2015 increased $90,000 to $3.8 million from the first quarter of 2015 with a $164,000 increase from $3.6 million earned for the comparative 2014 second quarter. Higher loan volume offset margin compression that included a 6 basis point decline in the net interest margin during the second quarter of 2015 and a YTD drop of 10 basis points from 3.92% for the first six months of 2014 to. 3.82% at June 30, 2015.

 

 
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Noninterest Income

Noninterest income increased 37% to $695,000 in the second quarter 2015 while noninterest income of $1.2 million was realized for the first half of 2015, up 47% from $839,000 realized for the second half of 2014. The primary increase for 2015 was continued growth in mortgage income, service charges from the strong increase in new deposit relationships, ATM and interchange income, title insurance, brokerage and merchant income.

 

Noninterest Expense

Noninterest expense increased $113,000 in the second quarter 2015 from the prior quarter due to higher revenue-based incentive, annual merit increases and the impact of an additional day during the quarter. Noninterest expense increased during the first half of 2015 over the six months ended June 30, 2014 compared to 2014 due primarily to costs associated with a new branch in Salem, VA that opened in the 3rd quarter of 2014 as well as increased revenue based compensation for higher mortgage volume.

 

Loans

Total loans were $354 million at June 30, 2015, up $22.4 million or 14% on an annualized basis for the first half of 2015 and up $36.1 million or 11% over the prior year ended June 30, 2014. 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 $18.8 million or 12% on an annualized basis for the first half of 2015 while core deposit growth was up $36.1 million or 12% over June 30, 2014. Strong core deposit growth was achieved again in 2015 by strong growth in commercial and consumer banking relationships.

 

Capital

Capital levels remained strong in the second quarter, with total stockholders’ equity increasing $3.1 million through June 30, 2015 over the previous year. HomeTown Bank Common equity tier 1 capital, Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios were 11.1%, 11.9%, 11.1% and 9.9%, respectively. All ratios continue to exceed the current regulatory standards for well-capitalized institutions. Book value per common share increased to $9.41 at June 30, 2015, up from $8.60 at June 30, 2014 and $7.93 at June 30, 2013.

 

Credit Quality

Credit quality continued to improve during the second half of 2015 and remains strong. Non-performing assets improved to 1.62% at June 30, 2015 vs. 2.36% of total assets at June 30, 2014. Non-performing assets, including restructured loans, were also down from 3.83% of total assets at June 30, 2014 to 3.08% at June 30, 2015. Net charge-offs dropped to historical lows during the second quarter.

 

Net Loan Charge-Offs

Net loan charge-offs were $18,800, or 0.01% for the first six months ended June 30, 2015 compared to .20% through June 30, 2014.

 

 
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Nonperforming Assets

Non-performing assets, excluding performing restructured loans, improved $2.6 million and amounted to 1.62% of total assets at June 30, 2015 vs. 2.36% at June 30, 2014. Foreclosed assets improved as well by $522,000 during the second quarter to $6.9 million at June 30, 2015 from $7.4 million at June 30, 2014. 

 

Past Due and Nonaccrual Loans

Total past due and non-accrual loans also improved, dropping to .49% of total loans at June 30, 2015 from 0.93% of total loans at June 30, 2014. Past due accruing loans amounted to 0.38% of total loans at June 30, 2015 vs. 0.16% in 2014 while nonaccruals improved to .11% of total loans during the second quarter of 2015 from .77% of total loans at June 30, 2014.

 

Allowance for Loan Losses

The allowance for loan losses totaled $3.3 million at June 30, 2015 compared to $3.6 million at June 30, 2014. Provisions for credit losses were $-0- for the first half of 2015 vs. $202,000 for the first half of 2014 due to the continued improvement and strong loan quality maintained during the first half of 2015.

 

 

* * *

 

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 ending June 30, 2015)

 

 
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HomeTown Bankshares Corporation

 

Consolidated Condensed Balance Sheets

 

June 30. 2015; December 31, 2014; and June 30, 2014

 
   

June 30,

   

December 31

   

June 30

 

In Thousands

 

2015

   

2014

   

2014

 

Assets

 

(Unaudited)

           

(Unaudited)

 

Cash and due from banks

  $ 15,063     $ 13,795     $ 17,112  

Federal funds sold

    797       649       495  

Securities available for sale, at fair value

    48,931       54,603       56,022  

Restricted equity securities, at cost

    2,695       2,476       2,718  

Loans held for sale

    382       242       162  

Total loans

    354,075       331,679       317,968  

Allowance for loan losses

    (3,313 )     (3,332 )     (3,616 )

Net loans

    350,762       328,347       314,352  

Property and equipment, net

    14,792       14,900       12,799  

Other real estate owned

    6,872       6,986       7,394  

Other assets

    9,052       6,211       6,307  

Total assets

  $ 449,346     $ 428,209     $ 417,361  
                         

Liabilities and Stockholders’ Equity

                       

Deposits:

                       

Noninterest-bearing

  $ 53,730     $ 51,226     $ 43,300  

Interest-bearing

    323,487       311,369       305,133  

Total deposits

    377,217       362,595       348,433  

Other borrowings

    552       422       573  

Federal Home Loan Bank borrowings

    25,750       20,000       26,000  

Other liabilities

    1,150       1,967       800  

Total liabilities

    404,669       384,984       375,806  
                         

Stockholders’ Equity:

                       

Preferred stock

    13,293       13,293       13,293  

Common stock

    16,481       16,438       16,438  

Surplus

    15,335       15,310       15,278  

Retained deficit

    (1,052 )     (2,271 )     (3,630 )

Accumulated other comprehensive income

    260       455       176  

Total HomeTown Bankshares Corporation stockholders’ equity

    44,317       43,225       41,555  

Noncontrolling interest in consolidated subsidiary

    360       -       -  

Total stockholders’ equity

    44,677       43,225       41,555  

Total liabilities and stockholders’ equity

  $ 449,346     $ 428,209     $ 417,361  

 

 
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HomeTown Bankshares Corporation

 

Consolidated Condensed Statements of Income

 

For the Three and Six Months Ended June 30, 2015 and 2014

 
   

For the Three Months

   

For the Six Months

 
   

Ended June 30,

   

Ended June 30,

 

In Thousands, Except Share and Per Share Data

 

2015

   

2014

   

2015

   

2014

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 

Interest income:

                               

Loans and fees on loans

  $ 4,047     $ 3,774     $ 7,946     $ 7,469  

Taxable investment securities

    176       267       382       530  

Nontaxable investment securities

    100       93       203       187  

Other interest income

    44       42       86       83  

Total interest income

    4,367       4,176       8,617       8,269  

Interest expense:

                               

Deposits

    465       442       913       882  

Other borrowed funds

    102       98       194       192  

Total interest expense

    567       540       1,107       1,074  

Net interest income

    3,800       3,636       7,510       7,195  

Provision for loan losses

    -       132       -       202  

Net interest income after provision for loan losses

    3,800       3,504       7,510       6,993  

Noninterest income:

                               

Service charges on deposit accounts

    124       117       234       208  

ATM and interchange income

    146       109       268       203  

Mortgage loan brokerage fees

    258       17       378       47  

Gains on sales of investment securities

    -       108       40       108  

Other income

    167       155       310       273  

Total noninterest income

    695       506       1,230       839  

Noninterest expense:

                               

Salaries and employee benefits

    1,619       1,381       3,160       2,793  

Occupancy and equipment expense

    439       364       884       730  

Advertising and marketing expense

    167       132       409       235  

Professional fees

    111       114       223       187  

(Gains), losses on sales, writedowns of other real estate owned, net

    -       -       -       (5 )

Other real estate owned expense

    40       59       70       123  

Other expense

    846       747       1,585       1,391  

Total noninterest expense

    3,222       2,797       6,331       5,454  

Net income before income taxes

    1,273       1,213       2,409       2,378  

Income tax expense

    381       380       727       742  

Net income

    892       833       1,682       1,636  

Less net income attributable to non-controlling interest

    29       -       43       -  

Net income attributable to HomeTown Bankshares Corporation

    863       833       1,639       1,636  

Effective dividends on preferred stock

    210       210       420       420  

Net income available to common stockholders

  $ 653     $ 623     $ 1,219     $ 1,216  

Basic earnings per common share

  $ 0.20     $ 0.19     $ 0.37     $ 0.37  

Diluted earnings per common share

  $ 0.16     $ 0.15     $ 0.30     $ 0.30  

Weighted average common shares outstanding

    3,296,237       3,287,567       3,293,890       3,282,129  

Diluted average common shares outstanding

    5,536,237       5,527,567       5,533,890       5,522,129  

 

 
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HomeTown Bankshares Corporation

 

Three

   

Three

   

Six

   

Six

 

Financial Highlights

 

Months

   

Months

   

Months

   

Months

 

In Thousands, Except Share and Per Share Data

 

Ended

   

Ended

   

Ended

   

Ended

 
   

Jun 30

   

Jun 30

   

Jun 30

   

Jun 30

 
   

2015

   

2014

   

2015

   

2014

 

PER SHARE INFORMATION

 

((Unaudited))

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 

Book value

  $ 9.41     $ 8.60     $ 9.41     $ 8.60  

Earnings per share, basic

  $ 0.20     $ 0.19     $ 0.37     $ 0.37  

Earnings per share, diluted

  $ 0.16     $ 0.15     $ 0.30     $ 0.30  
                                 

PROFITABILITY

                               

Return on average assets

    0.78 %     0.81 %     0.75 %     0.81 %

Return on average shareholders' equity

    7.80 %     8.07 %     7.50 %     8.08 %

Net interest margin

    3.80 %     3.86 %     3.82 %     3.92 %

Efficiency

    70.78 %     67.90 %     71.97 %     67.33 %
                                 

BALANCE SHEET RATIOS

                               

Total loans to deposits

    93.87 %     91.26 %     93.87 %     91.26 %

Securities to total assets

    11.49 %     14.07 %     11.49 %     14.07 %

Tier 1 leverage ratio BANK ONLY

    9.9 %     9.8 %     9.9 %     9.8 %
                                 

ASSET QUALITY

                               

Nonperforming assets to total assets

    1.62 %     2.36 %     1.62 %     2.36 %

Nonperforming assets, including restructured loans, to total assets

    3.08 %     3.83 %     3.08 %     3.83 %

Net charge-offs to average loans (annualized)

    0.02 %     0.39 %     0.01 %     0.20 %
                                 

Composition of risk assets: (in thousands)

                               

Nonperforming assets:

                               

Nonaccrual loans

  $ 398     $ 2,442     $ 398     $ 2,442  

Other real estate owned

    6,872       7,394       6,872       7,394  

Total nonperforming assets, excluding performing restructured loans

    7,270       9,836       7,270       9,836  

Restructured loans, performing in accordance with their modified terms

    6,553       6,144       6,553       6,144  

Total nonperforming assets, including performing restructured loans

  $ 13,823     $ 15,980     $ 13,823     $ 15,980  
                                 

Allowance for loan losses: (in thousands)

                               

Beginning balance

  $ 3,329     $ 3,789     $ 3,332     $ 3,721  

Provision for loan losses

    -       132       -       202  

Charge-offs

    (17 )     (306 )     (33 )     (342 )

Recoveries

    1       1       14       35  

Ending balance

  $ 3,313     $ 3,616     $ 3,313     $ 3,616  

 

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