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American National Bankshares Inc. Reports Fourth Quarter 2017 Earnings

  • 2017 loan growth $171 million or 14.7%
  • Q4 2017 net income of $2.1 million
  • New tax law negatively impacts earnings with a one-time charge, deferred tax write down of $2.7 million
  • Net interest margin of 3.46% for Q4 2017
  • Average shareholders’ equity for Q4 of $211.9 million is 11.64% of average assets

DANVILLE, Va., Jan. 18, 2018 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (“American National”) (NASDAQ:AMNB), parent company of American National Bank and Trust Company, today announced net income for the fourth quarter of 2017 of $2,120,000 compared to $4,122,000 for the fourth quarter of 2016, a $2,002,000 or 48.6% decrease.  Basic and diluted net income per common share was $0.25 and $0.24, respectively for the fourth quarter of 2017 compared to $0.48 for the 2016 quarter.  Net income for the fourth quarter of 2017 produced a return on average assets of 0.47%, a return on average equity of 4.00%, and a return on average tangible equity of 5.21%.

Net income for the year ended December 31, 2017 was $15,249,000 compared to $16,301,000 for 2016, a $1,052,000 or 6.5% decrease. Basic and diluted net income per common share was $1.76 for the 2017 period compared to $1.89 for the 2016 period.

Deferred Tax Asset Adjustment

The enactment of the new federal tax law, signed in late December 2017, negatively affected net income for the current quarter and year.

The law provides for the corporate tax rate to be reduced from 35% to 21%. The new tax rates become effective in 2018, but the 2017 enactment requires companies to revalue their deferred tax assets at the new tax rate in 2017. Accordingly, American National recognized a $2.7 million charge ($0.31 per share) to its deferred tax asset and a corresponding increase in income tax expense in the fourth quarter. 

Beginning in 2018, income tax expense will be positively affected by the substantial reduction in the corporate tax rate.

Financial Performance and Overview

Jeffrey V. Haley, President and Chief Executive Officer, reported, “For 2017 we continued to see robust growth in loans. Our loan portfolio grew $171 million or 14.7%. This growth was widespread throughout our markets, but especially evident in our de novo offices and our Guilford County offices. 

“Deposits have continued to grow also. They increased $164 million or 12.0%. This growth was also widespread.

“Our national and local economies are improving and market interest rates are increasing. An improving economy and rising rates are good for American National.

“Our continuing challenge in this environment is achieving a reasonable yield on our earnings assets, mostly loans, and maintaining control of the cost of our liabilities, mostly deposits. Rising rates are good for us, but the benefit of those increases is reduced by competition for high quality loan customers and, on the liability side, also reduced by the desire of high volume, high value deposit customers for better returns. The net result is continuing and increasing pressure on net interest margin.

“We are pleased that for the fourth quarter of 2017 our net interest margin was 3.46% compared to 3.45% for the comparable quarter of 2016.

“For 2017 our net interest margin was 3.50% compared to 3.52% for 2016.

“Net income for the fourth quarter of 2017 was $2.1 million or $0.24 per diluted share, a decrease of $2.0 million or 48.6%. Without the impact of the one-time, deferred tax write-down, net income would have been $4.8 million or $0.55 per diluted share, approximately a $700,000 increase.

“Net income for 2017 was $15.2 million or $1.76 per diluted share, a decrease of $1.1 million or 6.5%. Without the impact of the one-time, deferred tax write-down, net income would have been $17.9 million or $2.07 per diluted share, approximately a $1.6 million increase.

“A lot of factors impacted earnings in 2017, but the major driver was the recently enacted tax reform legislation.

“The cut in the tax rate for corporations from 35% to 21% is a good event for the economy. However, the 14% reduction in the statutory tax rate requires every corporation to revalue its deferred tax assets. Deferred taxes are how we reconcile the many differences between income as defined by generally accepted accounting principles and income as defined by the IRS. The short version of this long, technical story is that American National had to write down its deferred tax asset $2.7 million, or $0.31 per share, in December 2017, in advance of receiving the benefit of the tax rate cut, which began in January 2018.

“Notwithstanding the one-time charge to income taxes, the fourth quarter results were excellent. The primary driver was a $1.7 million or 13.6% increase in net interest income, mostly the result of higher interest income on the loan portfolio. Interest income was driven by higher loan volume; average loan volume for the quarter was up $191 million or 17.2%, compared to the first quarter of 2016.”

Haley concluded, “American National has a long and enviable legacy of a strong balance sheet. Over the past three years we have had substantial growth in that balance sheet, while maintaining high asset quality and exceptional capital ratios. We are working hard to continue that strategy. In the meantime, we are seeing improvement in the local economies of our various markets. That should continue to provide us with increasing opportunities to do what we do best – provide our customers with the best possible banking services and products. We look forward optimistically to the opportunities that 2018 will surely provide.”

Capital

American National’s capital ratios remain strong and exceed all regulatory requirements. 

For the quarter ended December 31, 2017, average shareholders’ equity was 11.64% of average assets, compared to 12.39% for the quarter ended December 31, 2016.

Book value per common share was $24.08 at December 31, 2017, compared to $23.37 at December 31, 2016.

Tangible book value per common share was $18.87 at December 31, 2017, compared to $18.08 at December 31, 2016.

Credit Quality Measurements

Non-performing assets ($2,201,000 of non-performing loans, $359,000 of 90 day past due and accruing loans, and $1,225,000 of other real estate owned) represented 0.21% of total assets at December 31, 2017, compared to 0.29% at December 31, 2016.

Annualized net charge offs to average loans were six basis points for the fourth quarter of 2017, compared to zero for the same quarter in 2016.

Other real estate owned was $1,225,000 at December 31, 2017, compared to $1,328,000 at December 31, 2016, a decrease of $103,000 or 7.8%.

Merger Related Financial Impact

The acquisition accounting adjustments related to our two recent acquisitions have had and continue to have a positive impact on net interest income and income before income tax for American National.  The impact of these adjustments is summarized below (dollars in thousands):


For the quarter ended December 31,     2017     2016
Net Interest Income   $   529   $   427
Income Before Income Taxes   $   449   $   252
         
For the year ended December 31,     2017     2016
Net Interest Income   $   2,114   $   2,136
Income Before Income Taxes   $   1,586   $   1,172


The fourth quarter of 2017 includes $348,000 in cash basis accretion income related to the early payoff of several acquired loans, compared to $123,000 for the comparable quarter of 2016.

For 2017, cash basis accretion income totaled $968,000, compared to $465,000 for 2016.

Net Interest Income

Net interest income before the provision for loan losses increased to $14,363,000 in the fourth quarter of 2017 from $12,646,000 in the fourth quarter of 2016, an increase of $1,717,000 or 13.6%.

For the 2017 quarter, the net interest margin was 3.46% compared to 3.45% for the same quarter in 2016, an increase of 0.01%.

The major drivers affecting margin were:

  • Positively affecting margin was $179.5 million (11.8%) increase in average earning assets, at a 10 basis point higher yield.
  • Positively affecting margin was a $52.3 million (14.6%) increase in average noninterest bearing deposits.
  • Negatively affecting margin was a $98.3 million (35.5%) increase in the average balance of money market deposits, at a 45 basis point higher cost.

Provision for Loan Losses and Allowance for Loan Losses

Provision expense for the fourth quarter of 2017 was ($74,000) compared to $50,000 for the fourth quarter of 2016, a decrease of $124,000. The negative provision expense in the 2017 quarter was related to the payoff and revaluation of various purchased credit impaired loans and adjustment of their related loss reserves.

The allowance for loan losses as a percentage of total loans was 1.02% at December 31, 2017 compared to 1.10% at December 31, 2016. There was significant growth in the loans in the fourth quarter, a net increase of $41.0 million. The need for additional loan loss provision was mitigated by continued high asset quality, low charge offs, and improvement in various qualitative factors, notably economic, political and regulatory, used in the determination of the allowance.

Noninterest Income

Noninterest income totaled $3,804,000 in the fourth quarter of 2017, compared with $3,721,000 in the fourth quarter of 2016, an increase of $83,000 or 2.2%.

Trust income increased $46,000 (4.8%) from the prior year quarter. Securities gains showed a $47,000 (26.9%) increase from the prior year quarter.  Secondary market mortgage income showed an increase of $61,000 (11.2%), related to higher mortgage volume.

Noninterest Expense

Noninterest expense totaled $11,021,000 in the fourth quarter of 2017, compared to $10,360,000 in the fourth quarter of 2016, an increase of $661,000 or 6.4%.

Salaries expense, the largest component, increased $529,000 or 11.3%.  This increase resulted primarily due to the addition of eight FTEs during 2017. American National added two mortgage loan originators, a trust officer, and several branch level personnel. On the support side of the bank, additions were made to the credit function, risk, and loan review.   

About American National

American National is a multi-state bank holding company with total assets of approximately $1.8 billion. Headquartered in Danville, Virginia, American National is the parent company of American National Bank and Trust Company. American National Bank is a community bank serving Virginia and North Carolina with 26 banking offices and two loan production offices. American National Bank also manages an additional $839 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about the company and the bank is available on the bank's website at www.amnb.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws. Certain of the statements involve significant risks and uncertainties. The statements herein are based on certain assumptions and analyses by American National and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies or guidelines; significant changes in the economic scenario; significant changes in regulatory requirements or law; significant changes in securities markets; and changes regarding acquisitions and dispositions. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in American National's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission.  American National does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.


 American National Bankshares Inc. 
 Consolidated Balance Sheets 
 (Dollars in thousands, except per share data) 
Unaudited
         
    December 31
ASSETS     2017       2016  
         
Cash and due from banks   $   28,594     $   20,268  
Interest-bearing deposits in other banks       23,883         32,939  
         
Securities available for sale, at fair value       321,337         346,502  
Restricted stock, at cost       6,110         6,224  
Loans held for sale       1,639         5,996  
         
Loans       1,336,125         1,164,821  
  Less allowance for loan losses       (13,603 )       (12,801 )
    Net Loans       1,322,522         1,152,020  
         
Premises and equipment, net       25,901         25,439  
Other real estate owned, net       1,225         1,328  
Goodwill       43,872         43,872  
Core deposit intangibles, net       1,191         1,719  
Bank owned life insurance       18,460         18,163  
Accrued interest receivable and other assets       20,940         24,168  
         
    Total assets   $   1,815,674     $   1,678,638  
         
         
Liabilities        
  Demand deposits -- noninterest-bearing   $   394,344     $   378,600  
  Demand deposits -- interest-bearing       226,914         209,430  
  Money market deposits       403,024         283,035  
  Savings deposits       126,786         120,720  
  Time deposits       383,658         378,855  
    Total deposits       1,534,726         1,370,640  
         
  Short-term borrowings:        
    Customer repurchase agreements       10,726         39,166  
    Other short-term borrowings       24,000         20,000  
  Long-term borrowings       -         9,980  
  Junior subordinated debt       27,826         27,724  
  Accrued interest payable and other liabilities       10,083         9,748  
    Total liabilities       1,607,361         1,477,258  
         
Shareholders' equity        
  Preferred stock, $5 par, 2,000,000 shares authorized,        
    none outstanding       -         -  
  Common stock, $1 par, 20,000,000 shares authorized,        
    8,650,547 shares outstanding at December 31, 2017 and        
    8,618,051 shares outstanding at December 31, 2016       8,604         8,578  
  Capital in excess of par value       76,179         75,076  
  Retained earnings       126,465         119,600  
  Accumulated other comprehensive loss, net       (2,935 )       (1,874 )
    Total shareholders' equity       208,313         201,380  
         
    Total liabilities and shareholders' equity   $   1,815,674     $   1,678,638  

 

American National Bankshares Inc.   
Consolidated Statements of Income  
(Dollars in thousands, except per share data)  
Unaudited  
                   
    Three Months Ended   Twelve Months Ended  
    December 31   December 31  
      2017       2016     2017     2016    
Interest and Dividend Income:                   
   Interest and fees on loans   $   14,426     $   12,182   $   55,276   $   47,971    
   Interest and dividends on securities:                  
     Taxable       1,271         1,108       4,666       4,454    
     Tax-exempt       439         728       2,043       3,135    
     Dividends       79         76       319       334    
   Other interest income       265         73       734       276    
     Total interest and dividend income       16,480         14,167       63,038       56,170    
                   
Interest Expense:                  
   Interest on deposits       1,713         1,201       5,794       5,103    
   Interest on short-term borrowings       79         4       173       10    
   Interest on long-term borrowings       53         82       296       325    
   Interest on junior subordinated debt       272         234       1,028       878    
     Total interest expense       2,117         1,521       7,291       6,316    
                   
Net Interest Income        14,363         12,646       55,747       49,854    
   Provision for loan losses       (74 )       50       1,016       250    
                   
Net Interest Income After Provision                  
  for Loan Losses        14,437         12,596       54,731       49,604    
                   
 Noninterest Income:                   
   Trust fees       1,008         962       3,926       3,791    
   Service charges on deposit accounts       504         528       2,002       2,048    
   Other fees and commissions       723         689       2,895       2,680    
   Mortgage banking income       605         544       2,208       1,713    
   Securities gains, net       222         175       812       836    
   Brokerage fees       226         207       829       843    
   Income from Small Business Investment Companies       118         225       236       463    
   Gains (losses) on premises and equipment, net       7         -       344       (9 )  
   Other       391         391       975       1,140    
     Total noninterest income       3,804         3,721       14,227       13,505    
                   
Noninterest Expense:                   
   Salaries       5,225         4,696       19,829       17,568    
   Employee benefits       1,094         1,061       4,519       4,264    
   Occupancy and equipment        1,120         1,084       4,487       4,246    
   FDIC assessment       137         128       538       647    
   Bank franchise tax       277         226       1,072       995    
   Core deposit intangible amortization       80         175       528       964    
   Data processing       550         488       2,014       1,828    
   Software       291         271       1,144       1,143    
   Other real estate owned, net       130         22       303       336    
   Other        2,117         2,209       8,449       7,810    
     Total noninterest expense       11,021         10,360       42,883       39,801    
                   
Income Before Income Taxes       7,220         5,957       26,075       23,308    
Income Taxes       5,100         1,835       10,826       7,007    
Net Income    $   2,120     $   4,122   $   15,249   $   16,301    
                   
Net Income Per Common Share:                   
   Basic   $   0.25     $   0.48   $   1.76   $   1.89    
   Diluted   $   0.24     $   0.48   $   1.76   $   1.89    
Average Common Shares Outstanding:                   
   Basic       8,648,494         8,615,700       8,641,717       8,611,507    
   Diluted       8,668,765         8,629,777       8,660,628       8,621,241    
                   

 

American National Bankshares Inc.                           
Financial Highlights                            
Unaudited                              
                                 
  (Dollars in thousands, except per share data)                          
        4th Qtr   3rd Qtr   4th Qtr     YTD   YTD      
          2017       2017       2016         2017       2016        
EARNINGS                              
  Interest income   $    16,480     $   16,274     $   14,167       $    63,038     $   56,170        
  Interest expense     2,117       1,936       1,521           7,291       6,316        
  Net interest income   14,363       14,338       12,646         55,747       49,854        
  Provision for loan losses     (74 )       440         50           1,016       250        
  Noninterest income   3,804       3,804       3,721           14,227       13,505        
  Noninterest expense   11,021       10,710       10,360           42,883       39,801        
  Income taxes     5,100       2,205       1,835           10,826       7,007        
  Net income     2,120       4,787       4,122         15,249       16,301        
                                 
PER COMMON SHARE                           
  Income per share - basic $    0.25     $   0.55     $   0.48       $    1.76     $   1.89        
  Income per share - diluted     0.24         0.55         0.48           1.76         1.89        
  Cash dividends paid     0.25         0.24         0.24           0.97         0.96        
  Book value per share     24.08         24.31         23.37           24.08         23.37        
  Book value per share - tangible (a)     18.87         19.09         18.08           18.87         18.08        
  Closing market price     38.30         41.20         34.80           38.30         34.80        
                                 
FINANCIAL RATIOS                            
  Return on average assets   0.47   %   1.08   %   1.00   %   0.87   %   1.02   %  
  Return on average equity   4.00       9.16       8.10         7.34       8.07        
  Return on average tangible equity (b)   5.21       11.81       10.73         9.59       10.85        
  Average equity to average assets   11.64       11.79       12.39         11.82       12.64        
  Tangible equity to tangible assets (a)   9.22       9.51       9.54         9.22       9.54        
  Net interest margin, taxable equivalent   3.46       3.56       3.45         3.50       3.52        
  Efficiency ratio (c)     59.93       59.14       62.32         60.89       61.47        
  Effective tax rate     70.64       31.54       30.80         41.52       30.06        
                                 
PERIOD-END BALANCES                          
  Securities   $    327,447     $   277,714     $   352,726       $    327,447     $   352,726        
  Loans held for sale     1,639         3,386         5,996           1,639         5,996        
  Loans, net of unearned income     1,336,125         1,295,154         1,164,821           1,336,125         1,164,821        
  Goodwill and other intangibles     45,063         45,143         45,591           45,063         45,591        
  Assets         1,815,674         1,780,541         1,678,638           1,815,674         1,678,638        
  Assets - tangible (a)     1,770,611         1,735,398         1,633,047           1,770,611         1,633,047        
  Deposits       1,534,726         1,480,205         1,370,640           1,534,726         1,370,640        
  Customer repurchase agreements     10,726         43,240         39,166           10,726         39,166        
  Other short-term borrowings     24,000         -         20,000           24,000         20,000        
  Long-term borrowings     27,826         37,796         37,704           27,826         37,704        
  Shareholders' equity     208,313         210,214         201,380           208,313         201,380        
  Shareholders' equity - tangible (a)     163,250         165,071         155,789           163,250         155,789        
                                 
AVERAGE BALANCES                          
  Securities (d)   $    304,254     $   281,246     $   345,035       $    301,377     $   351,961        
  Loans held for sale     4,269         3,607         4,758           3,185         3,171        
  Loans, net of unearned income     1,301,833         1,291,822         1,110,524           1,262,264         1,060,106        
  Interest-earning assets     1,695,091         1,646,241         1,515,597           1,631,853         1,470,648        
  Goodwill and other intangibles     45,109         45,191         45,693           45,287         46,037        
  Assets         1,820,486         1,773,636         1,643,250           1,758,009         1,598,149        
  Assets - tangible (a)     1,775,377         1,728,445         1,597,557           1,712,722         1,552,112        
  Interest-bearing deposits     1,109,286         1,066,827         986,622           1,061,519         970,728        
  Deposits       1,520,665         1,468,523         1,345,743           1,454,182         1,301,043        
  Customer repurchase agreements     42,540         48,461         45,281           46,335         46,832        
  Other short-term borrowings     951         -         1,087           3,158         656        
  Long-term borrowings     34,331         37,780         37,686           36,887         37,640        
  Shareholders' equity     211,851         209,026         203,603           207,804         202,074        
  Shareholders' equity - tangible (a)     166,742         163,835         157,910           162,517         156,037        
                                 
American National Bankshares Inc.                          
Financial Highlights                            
Unaudited                              
                                 
  (Dollars in thousands, except per share data)                          
        4th Qtr   3rd Qtr   4th Qtr     YTD   YTD      
          2017       2017       2016         2017       2016        
CAPITAL                               
  Average common shares outstanding - basic     8,648,494         8,644,310         8,615,700           8,641,717         8,611,507        
  Average common shares outstanding - diluted     8,668,765         8,663,246         8,629,777           8,660,628         8,621,241        
                                 
ALLOWANCE FOR LOAN LOSSES                          
  Beginning balance $    13,858     $   13,632     $   12,757       $    12,801     $   12,601        
  Provision for loan losses     (74 )       440       50         1,016       250        
  Charge-offs     (280 )     (277 )     (81 )       (690 )     (326 )      
  Recoveries     99       63       75         476       276        
  Ending balance   $    13,603     $   13,858     $   12,801       $    13,603     $   12,801        
                                 
LOANS                              
  Construction and land development $    123,147     $   137,869     $   114,258       $    123,147     $   114,258        
  Commercial real estate     637,701         602,434         510,960           637,701         510,960        
  Residential real estate     209,326         209,201         215,104           209,326         215,104        
  Home equity       109,857         110,926         110,751           109,857         110,751        
  Commercial and industrial     251,666         230,484         208,717           251,666         208,717        
  Consumer       4,428         4,240         5,031           4,428         5,031        
  Total     $  1,336,125     $  1,295,154     $  1,164,821       $  1,336,125     $  1,164,821        
                                 
NONPERFORMING ASSETS AT PERIOD-END                          
  Nonperforming loans:                          
    90 days past due and accruing $    359     $   538     $   587       $    359     $   587        
    Nonaccrual     2,201       2,498       2,965         2,201       2,965        
  Other real estate owned   1,225       2,101       1,328         1,225       1,328        
  Nonperforming assets $    3,785     $   5,137     $   4,880       $    3,785     $   4,880        
                                 
ASSET QUALITY RATIOS                          
  Allowance for loan losses to total loans   1.02   %   1.07   %   1.10   %   1.02   %   1.10   %  
  Allowance for loan losses to                          
    nonperforming loans   531.37       456.46       360.39         531.37       360.39        
  Nonperforming assets to total assets   0.21       0.29       0.29         0.21       0.29        
  Nonperforming loans to total loans   0.19       0.23       0.30         0.19       0.30        
  Annualized net charge-offs                           
    to average loans   0.06       0.07       0.00         0.02       0.00        
                                 
                                 
OTHER DATA                            
  Fiduciary assets at period-end (e) (f) $    518,284     $   517,294     $   498,767       $    518,284     $   498,767        
  Retail brokerage assets at period-end (e) (f) $    321,151     $   307,281     $   282,454       $    321,151     $   282,454        
  Number full-time equivalent employees (g)     328         335         320           328         320        
  Number of full service offices     26         26         26           26         26        
  Number of loan production offices     2         2         2           2         2        
  Number of ATM's       34         34         33           34         33        
                                 
                                 
                                 
Notes:                              
                                 
  (a) - Excludes goodwill and other intangible assets.    
  (b) - Excludes amortization expense, net of tax, of intangible assets.    
  (c) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by net     
  interest income including tax equivalent income on nontaxable loans and securities and noninterest income and excluding (i) gains or    
  losses on securities and (ii) gains or losses on sale of premises and equipment.    
  (d) - Average does not include unrealized gains and losses.    
  (e) - Market value.    
  (f) - Assets are not owned by the Company and are not reflected in the consolidated balance sheet.             
  (g) - Average for quarter.                          
                                 

 

 Net Interest Income Analysis
 For the Three Months Ended December 31, 2017 and 2016
 (Dollars in thousands)
 Unaudited
                               
                Interest          
        Average Balance   Income/Expense   Yield/Rate  
                               
          2017     2016     2017     2016   2017   2016  
Loans:                          
  Commercial $   233,689   $   204,489   $   2,253   $   2,003   3.82 % 3.90 %
  Real estate     1,068,273       905,721       12,171       10,143   4.56   4.48  
  Consumer     4,140       5,072       81       98   7.76   7.69  
  Total loans
    1,306,102       1,115,282       14,505       12,244   4.44   4.39  
                               
Securities:                        
  Federal agencies & GSEs     104,523       96,134       508       423   1.94   1.76  
  Mortgage-backed & CMOs     92,339       79,643       501       400   2.17   2.01  
  State and municipal     92,636       152,518       829       1,311   3.58   3.44  
  Other       14,756       16,740       171       150   4.64   3.58  
  Total securities
    304,254       345,035       2,009       2,284   2.64   2.65  
                               
Deposits in other banks     84,735       55,280       265       73   1.24   0.53  
                               
  Total interest-earning assets     1,695,091       1,515,597       16,779       14,601   3.95   3.85  
                               
Non-earning assets     125,395       127,653                  
                               
  Total assets
$  1,820,486   $  1,643,250                  
                               
Deposits:                        
  Demand $   220,150   $   204,910       11       10   0.02   0.02  
  Money market     374,691       276,435       623       148   0.66   0.21  
  Savings     126,274       119,770       10       9   0.03   0.03  
  Time       388,171       385,507       1,069       1,034   1.09   1.07  
  Total deposits
    1,109,286       986,622       1,713       1,201   0.61   0.48  
                               
Customer repurchase agreements     42,540       45,281       74       2   0.69   0.02  
Other short-term borrowings     951       1,087       4       2   1.68   0.74  
Long-term borrowings     34,331       37,686       326       316   3.80   3.35  
  Total interest-bearing                        
         liabilities
    1,187,108       1,070,676       2,117       1,521   0.71   0.57  
                               
Noninterest bearing demand deposits     411,379       359,121                  
Other liabilities     10,148       9,850                  
Shareholders' equity     211,851       203,603                  
  Total liabilities and
                       
             shareholders' equity $  1,820,486   $  1,643,250                  
                               
Interest rate spread                 3.24 % 3.28 %
Net interest margin                 3.46 % 3.45 %
                               
Net interest income (taxable equivalent basis)           14,662       13,080          
Less: Taxable equivalent adjustment             299       434          
Net interest income         $  14,363   $  12,646          
                               

 

 Net Interest Income Analysis
 For the Years Ended December 31, 2017 and 2016
 (Dollars in thousands)
 Unaudited
                               
                Interest          
        Average Balance   Income/Expense   Yield/Rate  
                               
          2017     2016     2017     2016   2017   2016  
Loans:                          
  Commercial $   229,239   $   198,326   $   8,829   $   7,856   3.85 % 3.96 %
  Real estate     1,031,558       859,721       46,400       39,763   4.50   4.63  
  Consumer     4,652       5,230       352       605   7.57   11.57  
    Total loans     1,265,449       1,063,277       55,581       48,224   4.39   4.54  
                               
Securities:                        
  Federal agencies & GSEs     97,670       96,009       1,849       1,674   1.89   1.74  
  Mortgage-backed & CMOs     82,042       79,720       1,725       1,635   2.10   2.05  
  State and municipal     105,869       160,279       3,781       5,647   3.57   3.52  
  Other       15,796       15,953       707       560   4.48   3.51  
    Total securities     301,377       351,961       8,062       9,516   2.68   2.70  
                               
Deposits in other banks     65,027       55,410       734       276   1.13   0.50  
                               
  Total interest-earning assets     1,631,853       1,470,648       64,377       58,016   3.95   3.94  
                               
Non-earning assets     126,156       127,501                  
                               
    Total assets $  1,758,009   $  1,598,149                  
                               
Deposits:                        
  Demand $   217,833   $   216,521       43       99   0.02   0.05  
  Money market     335,085       239,262       1,668       432   0.50   0.18  
  Savings     125,157       118,144       38       47   0.03   0.04  
  Time       383,444       396,801       4,045       4,525   1.05   1.14  
    Total deposits     1,061,519       970,728       5,794       5,103   0.55   0.53  
                               
Customer repurchase agreements     46,335       46,832       142       5   0.31   0.01  
Other short-term borrowings     3,158       656       31       5   0.98   0.76  
Long-term borrowings     36,887       37,640       1,324       1,203   3.59   3.20  
  Total interest-bearing                        
         liabilities
    1,147,899       1,055,856       7,291       6,316   0.64   0.60  
                               
Noninterest bearing demand deposits     392,663       330,315                  
Other liabilities     9,643       9,904                  
Shareholders' equity     207,804       202,074                  
    Total liabilities and                        
               shareholders' equity $  1,758,009   $  1,598,149                  
                               
Interest rate spread                 3.31 % 3.34 %
Net interest margin                 3.50 % 3.52 %
                               
Net interest income (taxable equivalent basis)           57,086       51,700          
Less: Taxable equivalent adjustment             1,339       1,846          
Net interest income         $  55,747   $  49,854          
                               

 

Contact:      William W. Traynham, Chief Financial Officer
                     434-773-2242
                     traynhamw@amnb.com

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