Operating Strategy

In order to achieve the level of prompt, responsive service we believe it will be necessary to attract customers and to develop HomeTown Bank’s image as a local bank with an individual focus.  We will employ the following operating strategies:

Experienced Senior Management. We have assembled a management team with significant banking experience, who reside in the Roanoke area, have local banking experience and a history of service to the community.

Community-Oriented Board of Directors. Our management team will operate under the direction of our board of directors. As described in the Management Section of the Offering Circular, beginning on page 14, our directors are long-time residents and business leaders in the Roanoke area, with significant community involvement. These directors are dedicated to the success of the bank, and will play a key part in marketing the new bank in the community.

Client Relationship Management. HomeTown Bank will use a client-based philosophy. This philosophy is the basis of our relationship management initiative. We will focus on the overall relationship with each client as opposed to the product “push” approach used by larger banks. Our bankers will be accessible, and our president’s office will be in the lobby of our headquarters’ office. What the large banks call “private banking” will be available to all of our customers. We believe this one-to-one approach will ensure effective responsiveness to our clients’ financial needs, a hallmark of community banking.

Local Services and Decision Making. Clients will enjoy a professional bank environment with access to “their” specific bank officer. We will emphasize local decision-making with experienced bankers, attention to lower employee turnover, and professional and responsive service.

Capitalize on Need for Community Banks. The current trend of consolidation in the banking industry has led to the acquisition of all but one of the locally owned and managed banks in the Roanoke area by large national and regional banks headquartered outside of Roanoke. There was a time not so long ago when Dominion Bank, Colonial American National Bank, Mountain Trust Bank and Salem Bank and Trust were all headquartered in the Roanoke Valley. Now they have all been merged into larger out of the area institutions. In 2004, almost 70% of the total deposits were controlled by large financial institutions headquartered outside of the area. Despite the market-share dominance of larger super-regional and regional banks, total deposits for these large banks actually fell from 1999 to 2004. The deposit market share of small regional and local banks increased during the period. We believe these numbers reflect the desire of the residents of this area for a community bank relationship, and that they will support our new local bank as a result.

Focus on Under-Serviced Market Sector. Although size gives larger banks advantages in competing for business from large corporations, including higher lending limits and the ability to offer services in other areas of Virginia, we believe that there is opportunity in the community banking market in the Roanoke MSA and that we can successfully fill this niche. We will not compete with large institutions for the primary banking relationships of large corporations, but will compete for the consumer business of their employees. We will also focus on small-to-medium-size businesses and their employees. This includes retail, service, wholesale distribution, manufacturing, and health care businesses. We intend to attract such businesses based on relationships and contacts which the bank’s directors and management have and based on superior personal service that is responsive and accessible.

Entrepreneurial Spirit. We are motivated and proud that in the face of some gloomy press reports of slow growth in the region, almost 60 directors and organizers have quickly responded to this community bank idea with capital commitments and energetic efforts to complete its formation. It begins the process of returning us to something like the time when almost all of our banks were locally managed and deeply committed to the Valley’s welfare.