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CST: 23/08/2019 08:38:40   

American National Bankshares Inc. Reports Second Quarter 2019 Earnings and Third Quarter Dividend Increase

35 Days ago

  • 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

 

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