• Merger with HomeTown Bankshares Corp. consummated April 1, 2019
• Merger related expense (pretax) for Q2 2019 of $10.9 million
• Net loss of $1.2 million and diluted EPS of ($0.11) for Q2 2019
• Net interest margin of 3.82% for Q2 2019
• Increased cash dividend declared for Q3 and represents an 8% increase

DANVILLE, Va., July 18, 2019 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (“American National”) (NASDAQ:  AMNB), parent company of American National Bank and Trust Company, today announced a net loss of $1,230,000 for the second quarter 2019 compared to net income of $5,980,000 for the second quarter of 2018, a $7,210,000 or 120.6% decrease. Income for the second quarter of 2019 was impacted adversely by $10,871,000 in one-time merger expense related to the HomeTown acquisition.

Basic and diluted net income per common share was a loss of $0.11 for the 2019 quarter compared to net income per common share of $0.69 for the 2018 quarter. Net loss for the second quarter of 2019 produced annualized returns on average assets of (0.20%), on average equity of (1.60%), and on average tangible equity of (1.62%).

Net income for the first six months of 2019 was $4,773,000 compared to $11,792,000 for the comparable period of 2018, a $7,019,000 or 59.5% decrease. Basic and diluted net income per common share was $0.48 for the 2019 period compared to $1.36 for the 2018 period.

Income for the six-month period of 2019 was impacted adversely by $11,322,000 in one-time merger expense related to the HomeTown acquisition.

HomeTown Bankshares Corporation Merger
On April 1, 2019, American National completed its merger with Roanoke, Virginia based HomeTown Bankshares Corporation (“HomeTown”). The merger, valued at approximately $83.3 million, significantly expanded American National’s operations in Roanoke and added a new presence in the New River Valley. 

Dividends
American National also announced that its Board of Directors has declared a quarterly cash dividend of $0.27 per common share, payable September 20, 2019, to shareholders of record September 6, 2019. This represents an 8% increase in the cash dividend from the current $0.25 per common share per quarter.

American National considers the payment of appropriate dividends to be a vital part of its capital planning and management program. The Company adheres to a dividend policy based on a review of earnings, growth, capital and such other factors that the Board of Directors considers relevant to the dividend decision process.

Financial Performance and Overview
Jeffrey V. Haley, President and Chief Executive Officer, said, “The merger with HomeTown Bankshares brought us some of the best community bankers in the Roanoke market, $444 million in loans, and $484 million in deposits. American National is now the largest community bank in the Roanoke market.

“Income for the 2019 quarter was a loss of $1.2 million. On a pretax basis the loss for the 2019 quarter was $1.6 million. This was directly related to the $10.9 million in nonrecurring merger related expense.

“Net interest income for the 2019 quarter compared to the 2018 quarter significantly increased, it was up $6.2 million or 41.9%.

“This improvement in net interest income was primarily related to an increase in the average balance of loans for the 2019 quarter compared to the 2018 quarter. Loan average balances for the 2019 quarter were up $494.7 million or 37.4% over the 2018 quarter. Loan yields for the 2019 quarter were 51 basis points higher than the 2018 quarter. Of the increase in balances, $444.3 million represents loans acquired in the HomeTown merger and $50.4 million (3.8%) represents growth in the other parts of our franchise.

“End of period loan balance for June 30, 2019, compared to December 31, 2018, increased $478.8 million. Of this increase, $444.3 million was related to the HomeTown merger and $34.5 million (2.5%) represents growth throughout the rest of our franchise.

“Average interest bearing deposits for the 2019 quarter compared to the 2018 quarter also increased substantially, up $317.9 million or 27.7% with a 30 basis point higher cost. This reflects increased competition for deposits, especially evident in our new HomeTown market. Of the increase, $364.1 million represents deposits acquired in the HomeTown merger. Legacy deposits were down slightly for the same period.

“Average noninterest bearing deposits for the 2019 quarter compared to the 2018 quarter also increased substantially; they were up $140.3 million or 33.4%. Of this increase, $119.5 million represents deposits acquired in the HomeTown merger; the remaining $20.8 million (5.0%) represents growth in other parts of our franchise.

“The market for loans and deposits continues to be very competitive. Market competition drives yields on loans down and rates on deposits up. This puts continuing pressure on our net interest margin. Our challenge is to maintain quality growth in assets and deposits and at the same time protect our net interest margin. Our margin for the 2019 quarter was 3.82%, a 32 basis point increase from the 2018 quarter.”

Haley concluded, “We are optimistic about the future of community banking, but realistic enough to know that it is not a given, it must be earned. For American National that earning is what we strive for every day – through continued asset quality, continued relevance to existing and new customers with modern banking products and services, continued organic and acquisition growth, and continued superior returns to our shareholders.” 

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

For the quarter ended June 30, 2019, average shareholders’ equity was 12.62% of average assets, compared to 11.62% for the quarter ended June 30, 2018.

Book value per common share was $28.00 at June 30, 2019, compared to $24.50 at June 30, 2018.

Tangible book value per common share was $19.63 at June 30, 2019, compared to $19.34 at June 30, 2018.

Credit Quality Measurements
Nonperforming assets represented 0.14% of total assets at June 30, 2019, compared to 0.18% at June 30, 2018.

Annualized net charge offs to average loans were zero basis points (0.00%) for the second quarter of 2019 compared to one basis point (0.01%) for the same quarter in 2018.

Other real estate owned was $1,433,000 compared to $1,124,000 at June 30, 2018, an increase of $309,000 or 27.5%.

Merger Related Financial Impact
The merger accounting adjustments related to our acquisitions have had and continue to have a positive impact on net interest income and income before income taxes. The impact of these adjustments is summarized below (dollars in thousands):

	For the quarter ended June 30,			2019			2018
	Net Interest Income		$	1,118		$	377
	Income Before Income Taxes		$	660		$	300
	For the six months ended June 30,			2019			2018
	Net Interest Income		$	1,373		$	804
	Income Before Income Taxes		$	860		$	650

In the table above, the impact for the quarter ended June 30, 2019 related to the HomeTown merger on net interest income was $884,000 and on income before taxes was $481,000.

The second quarter of 2019 includes $225,000 in cash basis accretion income related to the early payoff of several acquired loans, compared to $231,000 for the comparable quarter of 2018.

For the six month period ended June 30, 2019, cash basis accretion income was $396,000, compared to $486,000 for the same period in 2018. 

Net Interest Income
Net interest income before the provision for loan losses increased to $20,989,000 in the second quarter of 2019 from $14,788,000 in the second quarter of 2018, an increase of $6,201,000 or 41.9%.

For the 2019 quarter, the net interest margin was 3.82% compared to 3.50% for the same quarter in 2018, an increase of 32 basis points.

The major drivers affecting margin between the 2019 quarter and the 2018 quarter were:

• Positively – a $504.1 million increase (29.5%) in average earning assets, mostly loans, at a 56 basis point higher yield.
• Positively – a $140.3 million increase (33.4%) in average noninterest bearing deposits.
• Negatively – a $317.9 million increase (27.7%) in the average balance of interest bearing deposits, at a 30 basis point higher cost.

Most of these increases were directly related to the HomeTown merger.

Provision for Loan Losses and Allowance for Loan Losses
Provision expense for the second quarter of 2019 was a recovery of $10,000 compared to a recovery of $30,000 for the second quarter of 2018, a decrease of $20,000. The provision for both quarters related to adjustments on the specific reserves for the impaired loan loss allowance.

The allowance for loan losses as a percentage of total loans was 0.70% at June 30, 2019 compared to 1.01% at June 30, 2018. The primary driver for the decrease in this ratio was the HomeTown merger which increased loan balances $444.3 million. In conformity with generally accepted accounting standards, these loans were accounted for at fair value at the merger date and were recorded at the total outstanding principal balance of the loans net of a $10.7 million credit mark (included in the gross loan balances as a separate allowance) and a $4.0 million liquidity mark.

However, the need for additional loan loss provision for the remainder of the loan portfolio 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 $3,682,000 in the second quarter of 2019, compared with $3,563,000 in the second quarter of 2018, an increase of $119,000 or 3.3%.

Service charge income increased $132,000 or 22.3%, mainly related to the HomeTown merger.

Other fees and commissions increased $336,000 or 49.5%. This revenue category was up in virtually all of our markets, but the largest driver was check card income in our new Roanoke and New River region.

Mortgage banking income increased $95,000 or 19.3% based on increased volume related to some dips in mortgage interest rates.

Securities gains decreased $142,000 or 49.1%, related to the sale of most of our equity investments in 2019, thus reducing the accounting volatility in this revenue category.

Noninterest Expense
Noninterest expense totaled $26,316,000 in the second quarter of 2019, compared to $11,002,000 in the second quarter of 2018, an increase of $15,314,000 or 139.2%.

The major factor causing the increase in noninterest expense was merger related expense. These are related to the HomeTown merger, are nonrecurring in nature, and totaled $10,871,000 during the second quarter of 2019. The largest component of merger expenses was $8,900,000 in costs related to data processing contract termination and conversion.

The second major factor was salaries and benefits. Salaries increased $1,953,000 or 38.3% and benefits increased $314,000 or 28.3%. Most of this increase was related to a 48 full-time equivalent increase in staff compared to the prior year quarter.

The effective income tax rate for the 2019 quarter was a benefit of 24.8%, compared to provision of 19.0% for the same quarter of 2018. The 2019 quarter was impacted by $10,871,000 in merger related expense, which generated a $1,635,000 pretax loss.

About American National
American National is a multi-state bank holding company with total assets of approximately $2.4 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 28 banking offices. American National Bank also manages an additional $862 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about American National and American National Bank is available on American National Bank's website at www.amnb.com.

Non-GAAP Financial Measures
This release contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). American National’s management uses these non-GAAP financial measures in its analysis of American National’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of American National’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. For a reconciliation of non-GAAP financial measures, see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.

Forward-Looking Statements
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. American National intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. American National’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the operations and future prospects of American National include but are not limited to: (1) expected revenue synergies and cost savings from the recently completed merger with HomeTown may not be fully realized or realized within the expected timeframe; (2) the businesses of American National and/or HomeTown may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (3) revenues following the merger may be lower than expected; (4) customer and employee relationships and business operations may be disrupted by the merger; (5) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (6) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in American National’s market areas; (7) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (8) accounting principles, policies, and guidelines; and (9) other risk factors detailed from time to time in filings made by American National with the Securities and Exchange Commission. American National undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
		June 30
			2019				2018
Assets
Cash and due from banks		$	34,460			$	24,042
Interest-bearing deposits in other banks			20,454				9,300
Equity securities, at fair value			125				2,177
Securities available for sale, at fair value			334,326				341,247
Restricted stock, at cost			7,796				5,463
Loans held for sale			3,165				2,296
Loans			1,836,241				1,339,379
Less allowance for loan losses			(12,786	)			(13,508	)
Net Loans			1,823,455				1,325,871
Premises and equipment, net			39,038				25,879
Other real estate owned, net			1,433				1,124
Goodwill			84,633				43,872
Core deposit intangibles, net			8,613				1,037
Bank owned life insurance			27,451				18,674
Accrued interest receivable and other assets			33,133				23,549
Total assets		$	2,418,082			$	1,824,531
Liabilities
Demand deposits -- noninterest-bearing		$	554,400			$	420,795
Demand deposits -- interest-bearing			326,105				251,056
Money market deposits			451,343				383,963
Savings deposits			178,723				132,839
Time deposits			488,526				372,093
Total deposits			1,999,097				1,560,746
Short-term borrowings:
Customer repurchase agreements			37,222				6,776
Other short-term borrowings			13,528				5,500
Subordinated debt			7,526				-
Junior subordinated debt			27,978				27,876
Accrued interest payable and other liabilities			20,814				10,285
Total liabilities			2,106,165				1,611,183
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized, none outstanding			-				-
Common stock, $1 par, 20,000,000 shares authorized, 11,141,355 shares outstanding at June 30, 2019 and 8,708,127 shares outstanding at June 30, 2018			11,089				8,654
Capital in excess of par value			160,572				77,496
Retained earnings			141,339				135,108
Accumulated other comprehensive loss, net			(1,083	)			(7,910	)
Total shareholders' equity			311,917				213,348
Total liabilities and shareholders' equity		$	2,418,082			$	1,824,531

 

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
		Three Months Ended								Six Months Ended
		June 30								June 30
			2019				2018				2019				2018
Interest and Dividend Income:
Interest and fees on loans		$	22,629			$	14,766			$	38,267			$	29,423
Interest and dividends on securities:
Taxable			1,980				1,540				3,801				2,864
Tax-exempt			239				423				526				842
Dividends			105				78				189				158
Other interest income			258				185				524				373
Total interest and dividend income			25,211				16,992				43,307				33,660
Interest Expense:
Interest on deposits			3,520				1,873				5,992				3,698
Interest on short-term borrowings			178				2				350				12
Interest on long-term borrowings			14				-				14				-
Interest on subordinated debt			122				-				122				-
Interest on junior subordinated debt			388				329				772				619
Total interest expense			4,222				2,204				7,250				4,329
Net Interest Income			20,989				14,788				36,057				29,331
Provision for (recovery of) loan losses			(10	)			(30	)			6				(74	)
Net Interest Income After Provision for Loan Losses			20,999				14,818				36,051				29,405
Noninterest Income:
Trust fees			933				945				1,847				1,874
Service charges on deposit accounts			724				592				1,318				1,204
Other fees and commissions			1,015				679				1,723				1,321
Mortgage banking income			586				491				992				941
Securities gains, net			147				289				470				410
Brokerage fees			186				209				333				431
Income from Small Business Investment Companies			(137	)			171				31				326
Gains (losses) on premises and equipment, net			(87	)			-				(87	)			3
Other			315				187				506				386
Total noninterest income			3,682				3,563				7,133				6,896
Noninterest Expense:
Salaries			7,048				5,095				11,712				10,092
Employee benefits			1,425				1,111				2,655				2,286
Occupancy and equipment			1,431				1,100				2,515				2,228
FDIC assessment			169				132				294				278
Bank franchise tax			412				291				702				572
Core deposit intangible amortization			458				77				513				154
Data processing			717				467				1,249				889
Software			321				354				645				659
Other real estate owned, net			(44	)			25				(31	)			55
Merger related expenses			10,871				-				11,322				-
Other			3,508				2,350				5,669				4,491
Total noninterest expense			26,316				11,002				37,245				21,704
Income (Loss) Before Income Taxes			(1,635	)			7,379				5,939				14,597
Income Taxes			(405	)			1,399				1,166				2,805
Net Income (Loss)		$	(1,230	)		$	5,980			$	4,773			$	11,792
Net Income (Loss) Per Common Share:
Basic		$	(0.11	)		$	0.69			$	0.48			$	1.36
Diluted		$	(0.11	)		$	0.69			$	0.48			$	1.36
Weighted Average Common Shares Outstanding:
Basic			11,126,800				8,692,107				9,942,566				8,680,739
Diluted			11,126,800				8,704,726				9,952,115				8,695,860

 

American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)
	2nd Qtr				1st Qtr				2nd Qtr				YTD				YTD
		2019				2019				2018				2019				2018
EARNINGS
Interest income	$	25,211			$	18,096			$	16,992			$	43,307			$	33,660
Interest expense		4,222				3,028				2,204				7,250				4,329
Net interest income		20,989				15,068				14,788				36,057				29,331
Provision for (recovery of) loan losses		(10	)			16				(30	)			6				(74	)
Noninterest income		3,682				3,451				3,563				7,133				6,896
Noninterest expense		26,316				10,929				11,002				37,245				21,704
Income taxes		(405	)			1,571				1,399				1,166				2,805
Net income		(1,230	)			6,003				5,980				4,773				11,792
PER COMMON SHARE
Income per share - basic	$	(0.11	)		$	0.69			$	0.69			$	0.48			$	1.36
Income per share - diluted		(0.11	)			0.69				0.69				0.48				1.36
Cash dividends paid		0.25				0.25				0.25				0.50				0.50
Book value per share		28.00				26.21				24.50				28.00				24.50
Book value per share - tangible (a)		19.63				21.10				19.34				19.63				19.34
Closing market price		38.75				34.92				40.00				38.75				40.00
FINANCIAL RATIOS
Return on average assets		(0.20	)%			1.29	%			1.31	%			0.44	%			1.29	%
Return on average equity		(1.60	)			10.69				11.27				3.59				11.19
Return on average tangible equity (a)		(1.62	)			13.44				14.44				5.25				14.37
Average equity to average assets		12.62				12.06				11.62				12.38				11.57
Tangible equity to tangible assets (a)		9.41				10.13				9.46				9.41				9.46
Net interest margin, taxable equivalent		3.82				3.50				3.50				3.67				3.48
Efficiency ratio (a)		60.94				56.95				59.96				59.24				59.66
Effective tax rate		(24.77	)			20.74				18.96				19.63				19.22
PERIOD-END BALANCES
Securities	$	342,247			$	331,657			$	348,887			$	342,247			$	348,887
Loans held for sale		3,165				1,252				2,296				3,165				2,296
Loans, net of unearned income		1,836,241				1,360,063				1,339,379				1,836,241				1,339,379
Goodwill and other intangibles		93,246				44,743				44,909				93,246				44,909
Assets		2,418,082				1,868,404				1,824,531				2,418,082				1,824,531
Assets - tangible (a)		2,324,836				1,823,661				1,779,622				2,324,836				1,779,622
Deposits		1,999,097				1,559,790				1,560,746				1,999,097				1,560,746
Customer repurchase agreements		37,222				35,945				6,776				37,222				6,776
Long-term borrowings		35,504				27,953				27,876				35,504				27,876
Shareholders' equity		311,917				229,473				213,348				311,917				213,348
Shareholders' equity - tangible (a)		218,671				184,730				168,439				218,671				168,439
AVERAGE BALANCES
Securities (b)	$	354,506			$	343,834			$	342,486			$	349,199			$	328,143
Loans held for sale		2,913				1,830				2,616				2,375				2,328
Loans, net of unearned income		1,816,203				1,352,521				1,321,812				1,585,643				1,329,890
Interest-earning assets		2,211,273				1,736,887				1,707,223				1,975,887				1,703,287
Goodwill and other intangibles		93,075				44,778				44,956				69,060				44,993
Assets		2,433,948				1,863,212				1,825,860				2,150,157				1,822,165
Assets - tangible (a)		2,340,873				1,818,434				1,780,904				2,081,097				1,777,172
Interest-bearing deposits		1,463,613				1,131,604				1,145,701				1,298,526				1,151,380
Deposits		2,023,557				1,551,413				1,565,321				1,788,789				1,561,258
Customer repurchase agreements		35,657				42,705				11,347				39,161				11,795
Other short-term borrowings		7,627				61				247				3,865				1,210
Long-term borrowings		36,301				27,937				27,861				32,142				27,848
Shareholders' equity		307,281				224,677				212,256				266,208				210,852
Shareholders' equity - tangible (a)		214,206				179,899				167,300				197,148				165,859
American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)
	2nd Qtr				1st Qtr				2nd Qtr				YTD				YTD
		2019				2019				2018				2019				2018
CAPITAL
Weighted average shares outstanding - basic		11,126,800				8,745,174				8,692,107				9,942,566				8,680,739
Weighted average shares outstanding - diluted		11,126,800				8,745,723				8,704,726				9,952,115				8,695,860
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,806			$	12,805			$	13,575			$	12,805			$	13,603
Provision for (recovery of) loan losses		(10	)			16				(30	)			6				(74	)
Charge-offs		(54	)			(69	)			(130	)			(123	)			(174	)
Recoveries		44				54				93				98				153
Ending balance	$	12,786			$	12,806			$	13,508			$	12,786			$	13,508
LOANS
Construction and land development	$	152,876			$	93,759			$	96,740			$	152,876			$	96,740
Commercial real estate		880,146				659,133				633,128				880,146				633,128
Residential real estate		328,400				212,665				207,374				328,400				207,374
Home equity		121,905				99,979				105,558				121,905				105,558
Commercial and industrial		340,427				289,301				291,454				340,427				291,454
Consumer		12,487				5,226				5,125				12,487				5,125
Total	$	1,836,241			$	1,360,063			$	1,339,379			$	1,836,241			$	1,339,379
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	930			$	197			$	229			$	930			$	229
Nonaccrual		969				1,111				1,861				969				1,861
Other real estate owned		1,433				646				1,124				1,433				1,124
Nonperforming assets	$	3,332			$	1,954			$	3,214			$	3,332			$	3,214
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		0.70	%			0.94	%			1.01	%			0.70	%			1.01	%
Allowance for loan losses to nonperforming loans		673.30				979.05				646.32				673.30				646.32
Nonperforming assets to total assets		0.14				0.10				0.18				0.14				0.18
Nonperforming loans to total loans		0.10				0.10				0.16				0.10				0.16
Annualized net charge-offs to average loans		0.00				0.00				0.01				0.00				0.00
OTHER DATA
Fiduciary assets at period-end (c) (d)	$	547,731			$	533,063			$	510,552			$	547,731			$	510,552
Retail brokerage assets at period-end (c) (d)	$	314,051			$	303,045			$	326,692			$	314,051			$	326,692
Number full-time equivalent employees (e)		371				299				323				371				323
Number of full service offices		28				24				26				28				26
Number of loan production offices		-				-				2				-				2
Number of ATM's		39				33				34				39				34
Notes:
(a) - This financial measure is not calculated in accordance with GAAP.  For a reconciliation of non-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(b) - Average does not include unrealized gains and losses.
(c) - Market value.
(d) - Assets are not owned by American National and are not reflected in the consolidated balance sheet.
(e) - Average for quarter.

 

Net Interest Income Analysis
For the Three Months Ended June 30, 2019 and 2018
(Dollars in thousands)
Unaudited
							Interest
	Average Balance						Income/Expense						Yield/Rate
	2019			2018			2019			2018			2019		2018
Loans:
Commercial	$	321,263		$	267,996		$	3,899		$	2,652		4.87	%	3.97	%
Real estate		1,485,665			1,052,105			18,578			12,087		5.00		4.60
Consumer		12,188			4,327			201			77		6.61		7.14
Total loans		1,819,116			1,324,428			22,678			14,816		4.99		4.48
Securities:
Federal agencies & GSEs		140,516			127,033			858			707		2.44		2.23
Mortgage-backed & CMOs		127,718			108,789			809			609		2.53		2.24
State and municipal		68,185			91,636			480			653		2.82		2.85
Other		18,087			15,028			233			176		5.15		4.68
Total securities		354,506			342,486			2,380			2,145		2.69		2.51
Deposits in other banks		37,651			40,309			258			185		2.75		1.84
Total interest-earning assets		2,211,273			1,707,223			25,316			17,146		4.58		4.02
Non-earning assets		222,675			118,637
Total assets	$	2,433,948		$	1,825,860
Deposits:
Demand	$	335,879		$	246,493			112			13		0.13		0.02
Money market		448,722			395,135			1,394			802		1.25		0.81
Savings		179,375			132,190			97			10		0.22		0.03
Time		499,637			371,883			1,916			1,048		1.54		1.13
Total deposits		1,463,613			1,145,701			3,519			1,873		0.96		0.66
Customer repurchase agreements		35,657			11,347			140			1		1.57		0.04
Other short-term borrowings		7,627			247			39			1		2.05		1.62
Long-term borrowings		36,301			27,861			524			329		5.77		4.72
Total interest-bearing liabilities		1,543,198			1,185,156			4,222			2,204		1.10		0.75
Noninterest bearing demand deposits		559,944			419,620
Other liabilities		23,525			8,828
Shareholders' equity		307,281			212,256
Total liabilities and shareholders' equity	$	2,433,948		$	1,825,860
Interest rate spread													3.48	%	3.27	%
Net interest margin													3.82	%	3.50	%
Net interest income (taxable equivalent basis)								21,094			14,942
Less: Taxable equivalent adjustment								105			154
Net interest income							$	20,989		$	14,788

 

Net Interest Income Analysis
For the Six Months Ended June 30, 2019 and 2018
(Dollars in thousands)
Unaudited
							Interest
	Average Balance						Income/Expense						Yield/Rate
	2019			2018			2019			2018			2019		2018
Loans:
Commercial	$	293,575		$	263,300		$	6,790		$	5,096		4.66	%	3.90	%
Real estate		1,285,842			1,064,605			31,294			24,277		4.87		4.56
Consumer		8,601			4,313			276			153		6.47		7.15
Total loans		1,588,018			1,332,218			38,360			29,526		4.84		4.44
Securities:
Federal agencies & GSEs		139,993			115,182			1,708			1,224		2.44		2.13
Mortgage-backed & CMOs		119,754			108,808			1,502			1,208		2.51		2.22
State and municipal		73,362			89,000			1,018			1,287		2.78		2.89
Other		16,090			15,153			411			351		5.11		4.63
Total securities		349,199			328,143			4,639			4,070		2.66		2.48
Deposits in other banks		38,670			42,926			524			373		2.73		1.75
Total interest-earning assets		1,975,887			1,703,287			43,523			33,969		4.41		3.99
Non-earning assets		174,270			118,878
Total assets	$	2,150,157		$	1,822,165
Deposits:
Demand	$	287,424		$	239,477			126			24		0.09		0.02
Money market		422,359			402,612			2,548			1,585		1.22		0.79
Savings		156,843			131,453			107			20		0.14		0.03
Time		431,900			377,838			3,211			2,069		1.50		1.10
Total deposits		1,298,526			1,151,380			5,992			3,698		0.93		0.65
Customer repurchase agreements		39,161			11,795			311			2		1.60		0.03
Other short-term borrowings		3,865			1,210			39			10		2.02		1.65
Long-term borrowings		32,142			27,848			908			619		5.65		4.45
Total interest-bearing liabilities		1,373,694			1,192,233			7,250			4,329		1.06		0.73
Noninterest bearing demand deposits		490,263			409,878
Other liabilities		19,992			9,202
Shareholders' equity		266,208			210,852
Total liabilities and shareholders' equity	$	2,150,157		$	1,822,165
Interest rate spread													3.35	%	3.26	%
Net interest margin													3.67	%	3.48	%
Net interest income (taxable equivalent basis)								36,273			29,640
Less: Taxable equivalent adjustment								216			309
Net interest income							$	36,057		$	29,331

 

 

American National Bankshares Inc.
Reconciliation of Non-GAAP Financial Measures
Unaudited
(Dollars in thousands, except per share data)
	2nd Qtr				1st Qtr				2nd Qtr				YTD				YTD
	2019				2019				2018				2019				2018
EFFICIENCY RATIO
Noninterest expense	$	26,316			$	10,929			$	11,002			$	37,245			$	21,704
Add/subtract: loss/(gain) on sale of OREO		76				2				(3	)			78				2
Subtract: core deposit intangible amortization		(458	)			(55	)			(77	)			(513	)			(154	)
Subtract: merger related expense		(10,871	)			(451	)			-				(11,322	)			-
	$	15,063			$	10,425			$	10,922			$	25,488			$	21,552
Net interest income	$	20,989			$	15,068			$	14,788			$	36,057			$	29,331
Tax equivalent adjustment		105				111				154				216				309
Noninterest income		3,682				3,451				3,563				7,133				6,896
Add/subtract: (gain)/loss on securities		(147	)			(323	)			(289	)			(470	)			(410	)
Add/subtract: (gain)/loss on fixed assets		87				-				-				87				(3	)
	$	24,716			$	18,307			$	18,216			$	43,023			$	36,123
Efficiency ratio		60.94	%			56.95	%			59.96	%			59.24	%			59.66	%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans	$	22,678			$	15,682			$	14,816			$	38,360			$	29,526
Interest income - investments and other		2,638				2,525				2,330				5,163				4,443
Interest expense - deposits		(3,519	)			(2,472	)			(1,873	)			(5,992	)			(3,698	)
Interest expense - customer repurchase agreements		(140	)			(171	)			(1	)			(311	)			(2	)
Interest expense - other short-term borrowings		(39	)			(1	)			(1	)			(39	)			(10	)
Interest expense - long-term borrowings		(524	)			(384	)			(329	)			(908	)			(619	)
Total net interest income	$	21,094			$	15,179			$	14,942			$	36,273			$	29,640
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans		(49	)			(44	)			(50	)			(93	)			(102	)
Tax benefit on nontaxable interest - securities		(56	)			(67	)			(104	)			(123	)			(207	)
GAAP measures	$	20,989			$	15,068			$	14,788			$	36,057			$	29,331
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)		(1.60	)%			10.69	%			11.27	%			3.59	%			11.19	%
Impact of excluding average goodwill and other intangibles		(0.02	)			2.75				3.17				1.66				3.18
Return on average tangible equity (non-GAAP)		(1.62	)%			13.44	%			14.44	%			5.25	%			14.37	%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)		12.90	%			12.28	%			11.69	%			12.90	%			11.69	%
Impact of excluding goodwill and other intangibles		3.49				2.15				2.23				3.49				2.23
Tangible equity to tangible assets ratio (non-GAAP)		9.41	%			10.13	%			9.46	%			9.41	%			9.46	%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)	$	28.00			$	26.21			$	24.50			$	28.00			$	24.50
Impact of excluding goodwill and other intangibles		8.37				5.11				5.16				8.37				5.16
Tangible book value per share (non-GAAP)	$	19.63			$	21.10			$	19.34			$	19.63			$	19.34

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