Section 2: EX-99.1 (PRESS RELEASE)

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 & CFO, (540) 278-1702

HomeTown Bankshares Reports Another Year of Record Earnings

Roanoke, VA (February 1, 2013) – HomeTown Bankshares Corporation, the parent company of HomeTown Bank, reported another year of record earnings in 2012. Net Income of $4.6 million was achieved in 2012 vs. $1.9 million in 2011. In addition, pre-tax earnings of $850,000 for the fourth quarter ended December 31, 2012 almost doubled the $430,000 in earnings realized in the fourth quarter of 2011.

The recognition of deferred tax assets added income tax benefit of $2.1 million to the pre-tax profit of $2.5 million for net income of $4.6 million for the year ended December 31, 2012 vs. $1.9 million in 2011. After net accumulated dividends on preferred stock of $153 thousand for the quarter and $609 thousand for the year, the Company had net income available to common shareholders of $0.12 per share for the quarter and $1.22 per share for the year ended December 31, 2012, compared to $0.09 per share for the 4^th quarter of 2011 and $.41 per share for year in 2011.

The net interest margin increased throughout the year from 3.48% in 2011 to 3.82% in 2012, contributing to strong core earnings growth during 2012. A 22% increase in non-interest bearing deposits for the twelve months ended December 31, 2012, accompanied by steady reduction in funding costs throughout the year, were the primary contributors to the improved net interest margin. A 35% increase in non-interest income was also a major contributor to the record earnings for 2012. Specifically, mortgage loan brokerage income increased 150% while ATM and interchange revenue increased 28% during 2012.

“We are very pleased with another year of strong operating results in 2012,” stated Susan Still, President. “Our focus during 2013 will remain on earnings growth through increased lending activity and higher non-interest income from deposit account growth and another strong year of anticipated growth in mortgage lending, “she continued.

Balance Sheet

Total assets grew $9.3 million to $370.5 million at December 31, 2012 from $361.2 million at December 31, 2011 due to a 10.6% increase in net loans. Total Loans outstanding increased $25.8 million from $249.1 million at December 31, 2011 to $274.9 million at December 31, 2012. Total Deposits grew from $307.6 million to $310.0 million at December 31, 2012 with total non-interest bearing deposits increasing 22% or $5.8 million to $32.6 million at December 31, 2012 while higher cost interest bearing deposits, specifically retail CD's, declined $3.4 million.

Total Equity increased $3.6 million during the year to $36.7 million at December 31, 2012. HomeTown Bankshares' risk-based and tangible capital ratios continued to increase throughout 2012 with the Company remaining consistently above regulatory standards for well-capitalized banks.

Asset Quality

Loan quality continued to stabilize during 2012 with the level of nonperforming loans amounting to 0.98% of Total Loans at December 31, 2012 and nonperforming assets totaling 3.14% vs. .82% and 3.21%, respectively, at December 31, 2011. The Bank's Other Real Estate Owned (OREO) decreased $624 thousand during 2012. Net charge-offs amounted to $111 thousand for the quarter ending December 31, 2012 and $1.6 million or .61% of Total Loans for the year ended December 31, 2012 vs. $773 thousand and $2.47 million or .96% of Total Loans, respectively, at December 31, 2011. The Company's Allowance for Loan Losses at December 31, 2012 amounted to $3.8 million or 1.38% of Total Loans vs. $4.0 million and 1.60% of Total Loans at December 31, 2011.

“We continue to be very pleased with the progress that has been made with our asset quality throughout 2012,” stated Still. “Strong asset quality along with solid loan and deposit growth will be continue to be our goal during 2013 as we proactively serve our existing customer relationships and the needs of our communities,” she continued.

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 the Roanoke and New River Valleys and Smith Mountain Lake through five branches and a loan production office. A high level of responsive and professionalized service coupled with local decision-making is the hallmark of its banking strategy.

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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 the year-to-date and quarter ending December 31, 2012)