HomeTown Bank Earnings Increased

HomeTown Bankshares Corporation, the holding company of HomeTown Bank, has reported increased earnings for the first quarter at $255,000 compared to a profit of $194,000 for the first quarter of 2009.

“We are very pleased with the consistent increase in earnings that we continued to realize in the first quarter of 2010," said President/CEO Susan K. Still (right). “Our focus throughout 2010 will be to grow earnings by continuing to increase our yield on earning assets and effectively controlling funding costs.”

After a $77,000 gain on sale of other real estate in 2010 and a $160,000 securities gain in 2009, income from operations totaled $178,000 in 2010 compared to $34,000 in 2009. Net income available to common shareholders for the first quarter of 2010 was $105,000 after preferred dividends of $150,000 vs. $34,000 in 2009.

Preferred dividends were payable on the company’s $10 million preferred equity issued via the Capital Purchase Program during the third quarter of 2009. After preferred dividends, earnings per share available to common shareholders were $0.04 per share in 2010 compared to $0.07 per share for the first quarter of 2009.

Earnings performance in 2010 was enhanced by a 50 percent increase in net interest income to $2.5 million, $817,000 higher than the same period of 2009. In addition, the Bank’s net interest margin has increased each quarter since the first quarter of 2009 from 2.90 percent to 3.13 percent for the first quarter of 2010.

Continued loan growth, higher yielding investments and consistent repricing of deposit liabilities, in line with current and historically low levels of interest rates, contributed to the improved margins. Non-interest income continued to be an important contributor to the company’s year-to-date financial performance for 2010. A sizable increase in the number of transaction accounts and revenues associated with these accounts resulted in a 37 percent increase in service charge income. The Bank also realized a $77 thousand gain from the sale of other real estate owned. Income from residential mortgages thus far in 2010 was down from 2009 due to a sluggish mortgage market during the first quarter.