DANVILLE, Va., Oct. 21, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported third quarter 2021 earnings of $10.2 million, or $0.94 per diluted common share. Those results compare to net income of $10.8 million, or $0.99 per diluted common share recognized for the second quarter of 2021 and $7.2 million, or $0.66 per diluted common share, during the same quarter in the prior year. Earnings for the nine months ended September 30, 2021 were $32.2 million, or $2.95 per diluted common share, compared to $21.3 million, or $1.93 per diluted common share, for the same period of 2020.
President and Chief Executive Officer, Jeffrey V. Haley commented, “American National’s history of top tier financial performance continued during the third quarter, generating profitable growth for our shareholders. Strong organic loan growth was a highlight, with commercial real estate loans growing $82.4 million, or 31.9% annualized, during the quarter as our lending teams had some funding momentum during the period. This growth, in addition to accelerated income from our participation as a lender in the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”), contributed to top line revenue growth during the quarter. Credit metrics remain excellent, and provision expense for the quarter was a result of the strong loan growth during the period. The low interest rate environment and excess liquidity in the financial system continue to present challenges and will be a headwind going into 2022, but we are cautiously optimistic that we can continue to grow our balance sheet and maintain our strong financial performance.”
“We successfully upgraded and added to our digital product offerings during the quarter, which represents a significant step in our digital transformation strategy. We have heard much positive feedback from customers, and believe we will benefit from increased scale and efficiencies in the future.”
Third quarter 2021 highlights include:
- Net loans held for investment, excluding PPP loans, grew $92.9 million, or 5.1%, during the third quarter compared to $15.4 million, or 0.9%, in the second quarter of this year and $83.0 million, or 4.6%, in the third quarter of the prior year.
- Earnings produced a return on average tangible common equity (annualized) of 16.01% for the third quarter, compared to 17.30% in the second quarter of 2021 and 12.66% in the third quarter of the prior year (non-GAAP).
- Average deposits grew 3.4% during the quarter and 13.7% over the third quarter of 2020; the cost of interest-bearing deposits decreased to 0.17% in the third quarter from 0.21% in the second quarter of 2021 and 0.52% in the third quarter of the prior year.
- Fully taxable equivalent (“FTE”) net interest margin was 3.09% for the third quarter, up from 3.00% in the second quarter of 2021 but down from 3.26% in the third quarter of the prior year (non-GAAP).
- Noninterest revenues decreased $19 thousand, or 0.4%, when compared to the previous quarter, and increased $831 thousand, or 19.4%, compared to the same quarter in the prior year.
- Noninterest expense increased $206 thousand, or 1.4%, when compared to the previous quarter, and increased $703 thousand, or 5.0%, when compared to the same quarter in the prior year.
- The Company recorded a provision for loan losses in the third quarter of 2021 of $482 thousand compared to a negative provision in the second quarter of $1.4 million and a provision expense of $2.6 million in the third quarter in the prior year. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third and second quarters of 2021 and 0.01% for the third quarter of 2020.
- Nonperforming assets as a percentage of total assets were 0.06% at September 30, 2021, down from 0.07% at June 30, 2021 and 0.16% at September 30, 2020.
SMALL BUSINESS ADMINISTRATION’s PPP
The Company has processed a total of $364.2 million in PPP loans, with total remaining outstanding net PPP loans of $37.2 million at September 30, 2021, down from $104.1 million at June 30, 2021. These quarter-end balances are net of $66.9 million of loans forgiven in the third quarter of 2021 compared to $80.0 million forgiven in the second quarter. Total PPP fees recognized in net interest income during the third quarter of 2021 were $2.4 million compared to the prior quarter’s $1.8 million. The interest income from the outstanding PPP portfolio generated $169,000 and $369,000, respectively, in the third and second quarters of 2021.
NET INTEREST INCOME
Net interest income for the third quarter of 2021 was $23.1 million, an increase of $1.3 million, or 6.1%, from the prior quarter and an increase of $1.6 million, or 7.4%, from the third quarter of 2020. The FTE net interest margin for the quarter was up to 3.09% from 3.00% in the prior quarter and down from 3.26% in the same period a year ago (non-GAAP). The third quarter of 2021 reflected $600 thousand more in net fees on PPP loans than the second quarter as $66.9 million were forgiven in the third quarter compared to $80.0 million in the second quarter. The increase in net interest income from the same quarter in the prior year was primarily attributable to the PPP program and reduced deposit costs from a significantly lower rate environment.
The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2021, net accretion related to acquisition accounting amounted to $1.3 million compared to $875 thousand in the prior quarter and $1.6 million for the same period in 2020. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):
| For the remaining three months of 2021 (estimated) | $ 395 | |
| For the years ending (estimated): | ||
| 2022 | 1,278 | |
| 2023 | 710 | |
| 2024 | 450 | |
| 2025 | 324 | |
| 2026 | 194 | |
| Thereafter | 366 | |
ASSET QUALITY
Nonperforming assets (“NPAs”) totaled $2.1 million as of September 30, 2021, down from $2.4 million at June 30, 2021, and down from $4.6 million at September 30, 2020. NPAs as a percentage of total assets were 0.06% at September 30, 2021, compared to 0.07% at June 30, 2021 and 0.16% at September 30, 2020.
The Company recorded a provision of $482 thousand in the third quarter and a negative provision for the second quarter of 2021 of $1.4 million, as compared to a $2.6 million provision for the third quarter in the previous year. The need for provision expense in the third quarter of 2021 was driven by the net loan growth of $92.9 million, excluding PPP loans. The second quarter reflected significant improvement in both national and local economic conditions, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics and resulted in a negative provision. The continued improvement in those factors during the third quarter of 2021 partially offset the provision expense resulting from the loan growth.
The allowance for loan losses was $20.6 million at September 30, 2021, $20.1 million at June 30, 2021 and $21.1 million at September 30, 2020. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third and second quarters of 2021, compared to 0.01% for the third quarter in the prior year. The allowance as a percentage of loans held for investment was 1.06% at September 30, 2021 compared to 1.05% at June 30, 2021 and 1.01% at September 30, 2020. Excluding PPP loans, the allowance as a percentage of loans was 1.08% at September 30, 2021, 1.11% at June 30, 2021 and 1.16% at September 30, 2020.
NONINTEREST INCOME
Noninterest income decreased $19 thousand, or 0.4%, for the quarter ended September 30, 2021 compared to the second quarter and increased $831 thousand, or 19.4%, from the third quarter in the prior year. The largest fluctuations for the third quarter over the previous quarter were the decreases in other fees and commissions of $211 thousand, or 15.5%, and mortgage banking income of $153 thousand, or 13.4%, offset by decreased losses on premises and equipment of $325 thousand, or 75.2%. The Company recorded losses during the third and second quarters of 2021 of $107 thousand and $432 thousand, respectively, from the sale of buildings acquired in the HomeTown Bankshares Corporation acquisition. Comparing the third quarter of 2021 to the third quarter of 2020, after considering the increased loss on premises and equipment previously noted, the majority of categories of income increased except for mortgage banking income which decreased $41 thousand, or 4.0%, and other income which decreased $2 thousand, or 0.9%.
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2021 amounted to $14.8 million, up $206 thousand, or 1.4%, when compared to the $14.6 million for the previous quarter and up $703 thousand, or 5.0%, from $14.1 million during the same period in the previous year. The increase from the second quarter and third quarter of 2020 was primarily in the other expense category caused by increased loan related expenses and expense seasonality. The third quarter of 2021’s occupancy expense increase over the third quarter of 2020 quarter is attributable to the additional lease for the Triangle banking office which commenced in 2021.
INCOME TAXES
The effective tax rate for the three months ended September 30, 2021 was 21.1% and 21.0% for the three months ended June 30, 2021. This compares to 20.0% for the third quarter of 2020.
BALANCE SHEET
Total assets at September 30, 2021 were $3.3 billion, an increase of $87.5 million, or 2.7%, from the previous quarter and $385.8 million, or 13.3%, from the third quarter of 2020. The balance sheet at September 30, 2021 remained primarily consistent with the end of the second quarter with continued growth in core deposits deployed in investments, interest bearing cash and loan growth during the period. The growth over the same period a year ago is primarily due to growth in core deposits as well.
At September 30, 2021, loans held for investment (net of deferred fees and costs) were $1.9 billion, an increase of $26.0 million, or 1.4%, from June 30, 2021. The increase, excluding PPP forgiveness of $66.9 million, of loans held for investment was $92.9 million, or 5.1%, from the second quarter, and $89.2 million, or 4.6%, compared to September 30, 2020.
Investment securities available for sale amounted to $643.9 million at September 30, 2021, with growth of $88.5 million, or 15.9%, compared to June 30, 2021, and growth of $285.5 million, or 79.6%, compared to September 30, 2020.
Deposits amounted to $2.9 billion at September 30, 2021, an increase of $92.3 million, or 3.3%, over the previous quarter and $391.4 million, or 15.8%, compared to the end of the third quarter of 2020. The growth over the previous quarter and the same period of 2020 is primarily a result of remaining impacts from federal stimulus efforts, and continued higher than average cash balances being maintained by customers as elevated savings rates and liquidity patterns continue.
The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.14% at September 30, 2021 compared to 8.27% at June 30, 2021 and compared to 8.55% at September 30, 2020. The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.44%, 13.78%, 14.78% and 9.34%, respectively at September 30, 2021.
ABOUT AMERICAN NATIONAL
American National is a multi-state bank holding company with total assets of approximately $3.3 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. American National Bank also manages an additional $1.1 billion of trust, investment and brokerage assets in its Wealth Division. Additional information about American National and American National Bank is available on American National’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 in the United States (“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) the impacts of the ongoing COVID-19 pandemic and the associated efforts to limit the spread of the virus; (2) expected revenue synergies and cost savings from acquisitions and depositions; (3) 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; (4) 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; (5) the adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future periods, and the failure of assumptions underlying the allowance for loan losses; (6) cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (7) accounting principles, policies, and guidelines; and (8) 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.
| Consolidated Balance Sheets | ||||||||
| (Dollars in thousands, except per share data) | ||||||||
| Unaudited | ||||||||
| September 30 | ||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 38,349 | $ | 35,633 | ||||
| Interest-bearing deposits in other banks | 480,052 | 234,638 | ||||||
| Securities available for sale, at fair value | 643,949 | 358,493 | ||||||
| Restricted stock, at cost | 8,046 | 8,707 | ||||||
| Loans held for sale | 9,518 | 6,789 | ||||||
| Loans, net of deferred fees and costs | 1,940,332 | 2,086,094 | ||||||
| Less allowance for loan losses | (20,630 | ) | (21,088 | ) | ||||
| Net Loans | 1,919,702 | 2,065,006 | ||||||
| Premises and equipment, net | 37,021 | 39,979 | ||||||
| Other real estate owned, net | 213 | 999 | ||||||
| Goodwill | 85,048 | 85,048 | ||||||
| Core deposit intangibles, net | 4,978 | 6,482 | ||||||
| Bank owned life insurance | 28,950 | 28,278 | ||||||
| Other assets | 33,237 | 33,252 | ||||||
| Total assets | $ | 3,289,063 | $ | 2,903,304 | ||||
| Liabilities | ||||||||
| Demand deposits -- noninterest-bearing | $ | 980,985 | $ | 820,384 | ||||
| Demand deposits -- interest-bearing | 524,328 | 426,043 | ||||||
| Money market deposits | 733,515 | 602,392 | ||||||
| Savings deposits | 254,456 | 212,070 | ||||||
| Time deposits | 368,797 | 409,811 | ||||||
| Total deposits | 2,862,081 | 2,470,700 | ||||||
| Customer repurchase agreements | 26,595 | 41,906 | ||||||
| Long-term borrowings | 28,207 | 35,609 | ||||||
| Other liabilities | 21,793 | 23,108 | ||||||
| Total liabilities | 2,938,676 | 2,571,323 | ||||||
| Shareholders' equity | ||||||||
| Preferred stock, $5 par value, 2,000,000 shares authorized,none outstanding | - | - | ||||||
| Common stock, $1 par value, 20,000,000 shares authorized, 10,778,562 shares outstanding at September 30, 2021 and 10,969,756 shares outstanding at September 30, 2020 | 10,715 | 10,919 | ||||||
| Capital in excess of par value | 148,069 | 154,495 | ||||||
| Retained earnings | 193,107 | 163,855 | ||||||
| Accumulated other comprehensive income (loss), net | (1,504 | ) | 2,712 | |||||
| Total shareholders' equity | 350,387 | 331,981 | ||||||
| Total liabilities and shareholders' equity | $ | 3,289,063 | $ | 2,903,304 | ||||
| American National Bankshares Inc. | ||||||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||
| 9/30/21 | 6/30/21 | 9/30/20 | 9/30/21 | 9/30/20 | ||||||||||||||||
| Interest and Dividend Income: | ||||||||||||||||||||
| Interest and fees on loans | $ | 21,974 | $ | 21,087 | $ | 22,346 | $ | 65,334 | $ | 65,046 | ||||||||||
| Interest and dividends on securities: | ||||||||||||||||||||
| Taxable | 1,896 | 1,769 | 1,545 | 5,297 | 5,228 | |||||||||||||||
| Tax-exempt | 94 | 96 | 107 | 293 | 330 | |||||||||||||||
| Dividends | 112 | 117 | 122 | 349 | 382 | |||||||||||||||
| Other interest income | 201 | 98 | 59 | 375 | 356 | |||||||||||||||
| Total interest and dividend income | 24,277 | 23,167 | 24,179 | 71,648 | 71,342 | |||||||||||||||
| Interest Expense: | ||||||||||||||||||||
| Interest on deposits | 781 | 922 | 2,118 | 2,990 | 7,908 | |||||||||||||||
| Interest on short-term borrowings | 3 | 5 | 42 | 19 | 237 | |||||||||||||||
| Interest on long-term borrowings | 400 | 469 | 524 | 1,352 | 1,523 | |||||||||||||||
| Total interest expense | 1,184 | 1,396 | 2,684 | 4,361 | 9,668 | |||||||||||||||
| Net Interest Income | 23,093 | 21,771 | 21,495 | 67,287 | 61,674 | |||||||||||||||
| (Recovery of) Provision for loan losses | 482 | (1,352 | ) | 2,619 | (870 | ) | 8,331 | |||||||||||||
| Net Interest Income After (Recovery of) Provision for | ||||||||||||||||||||
| Loan Losses | 22,611 | 23,123 | 18,876 | 68,157 | 53,343 | |||||||||||||||
| Noninterest Income: | ||||||||||||||||||||
| Trust fees | 1,311 | 1,240 | 1,054 | 3,757 | 3,019 | |||||||||||||||
| Service charges on deposit accounts | 664 | 630 | 618 | 1,916 | 1,880 | |||||||||||||||
| Other fees and commissions | 1,147 | 1,358 | 996 | 3,644 | 2,888 | |||||||||||||||
| Mortgage banking income | 989 | 1,142 | 1,030 | 3,449 | 2,472 | |||||||||||||||
| Securities gains, net | - | - | - | - | 814 | |||||||||||||||
| Brokerage fees | 265 | 250 | 170 | 733 | 553 | |||||||||||||||
| Income from Small Business Investment Companies | 491 | 591 | 98 | 1,510 | 34 | |||||||||||||||
| Income from insurance investments | 132 | 141 | 108 | 1,062 | 271 | |||||||||||||||
| Losses on premises and equipment, net | (107 | ) | (432 | ) | (15 | ) | (588 | ) | (97 | ) | ||||||||||
| Other | 231 | 222 | 233 | 704 | 788 | |||||||||||||||
| Total noninterest income | 5,123 | 5,142 | 4,292 | 16,187 | 12,622 | |||||||||||||||
| Noninterest Expense: | ||||||||||||||||||||
| Salaries and employee benefits | 8,185 | 8,178 | 7,989 | 23,881 | 21,540 | |||||||||||||||
| Occupancy and equipment | 1,513 | 1,502 | 1,423 | 4,548 | 4,116 | |||||||||||||||
| FDIC assessment | 194 | 226 | 162 | 644 | 433 | |||||||||||||||
| Bank franchise tax | 440 | 443 | 426 | 1,321 | 1,277 | |||||||||||||||
| Core deposit intangible amortization | 361 | 371 | 402 | 1,113 | 1,246 | |||||||||||||||
| Data processing | 748 | 698 | 705 | 2,224 | 2,253 | |||||||||||||||
| Software | 344 | 338 | 353 | 1,011 | 1,112 | |||||||||||||||
| Other real estate owned, net | 21 | 10 | 28 | 148 | 34 | |||||||||||||||
| Other | 3,037 | 2,871 | 2,652 | 8,655 | 7,895 | |||||||||||||||
| Total noninterest expense | 14,843 | 14,637 | 14,140 | 43,545 | 39,906 | |||||||||||||||
| Income Before Income Taxes | 12,891 | 13,628 | 9,028 | 40,799 | 26,059 | |||||||||||||||
| Income Taxes | 2,713 | 2,862 | 1,801 | 8,566 | 4,808 | |||||||||||||||
| Net Income | $ | 10,178 | $ | 10,766 | $ | 7,227 | $ | 32,233 | $ | 21,251 | ||||||||||
| Net Income Per Common Share: | ||||||||||||||||||||
| Basic | $ | 0.94 | $ | 0.99 | $ | 0.66 | $ | 2.96 | $ | 1.93 | ||||||||||
| Diluted | $ | 0.94 | $ | 0.99 | $ | 0.66 | $ | 2.95 | $ | 1.93 | ||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||
| Basic | 10,833,875 | 10,919,333 | 10,966,645 | 10,907,721 | 10,983,729 | |||||||||||||||
| Diluted | 10,836,293 | 10,923,156 | 10,969,901 | 10,911,372 | 10,988,090 | |||||||||||||||
| American National Bankshares Inc. | ||||||||||||||||||||
| Financial Highlights | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | At or for the Nine Months | |||||||||||||||||||
| 3rd Qtr | 2nd Qtr | 3rd Qtr | Ended September 30, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| EARNINGS | ||||||||||||||||||||
| Interest income | $ | 24,277 | $ | 23,167 | $ | 24,179 | $ | 71,648 | $ | 71,342 | ||||||||||
| Interest expense | 1,184 | 1,396 | 2,684 | 4,361 | 9,668 | |||||||||||||||
| Net interest income | 23,093 | 21,771 | 21,495 | 67,287 | 61,674 | |||||||||||||||
| (Recovery of) Provision for loan losses | 482 | (1,352 | ) | 2,619 | (870 | ) | 8,331 | |||||||||||||
| Noninterest income | 5,123 | 5,142 | 4,292 | 16,187 | 12,622 | |||||||||||||||
| Noninterest expense | 14,843 | 14,637 | 14,140 | 43,545 | 39,906 | |||||||||||||||
| Income taxes | 2,713 | 2,862 | 1,801 | 8,566 | 4,808 | |||||||||||||||
| Net income | 10,178 | 10,766 | 7,227 | 32,233 | 21,251 | |||||||||||||||
| PER COMMON SHARE | ||||||||||||||||||||
| Net income per share - basic | $ | 0.94 | $ | 0.99 | $ | 0.66 | $ | 2.96 | $ | 1.93 | ||||||||||
| Net income per share - diluted | 0.94 | 0.99 | 0.66 | 2.95 | 1.93 | |||||||||||||||
| Cash dividends paid | 0.27 | 0.27 | 0.27 | 0.81 | 0.81 | |||||||||||||||
| Book value per share | 32.51 | 31.96 | 30.26 | 32.51 | 30.26 | |||||||||||||||
| Book value per share - tangible (a) | 24.16 | 23.65 | 21.92 | 24.16 | 21.92 | |||||||||||||||
| Closing market price | 33.04 | 31.09 | 20.92 | 33.04 | 20.92 | |||||||||||||||
| FINANCIAL RATIOS | ||||||||||||||||||||
| Return on average assets | 1.27 | % | 1.38 | % | 1.01 | % | 1.38 | % | 1.05 | % | ||||||||||
| Return on average common equity | 11.58 | 12.44 | 8.76 | 12.40 | 8.66 | |||||||||||||||
| Return on average tangible common equity (a) | 16.01 | 17.30 | 12.66 | 17.24 | 12.60 | |||||||||||||||
| Average common equity to average assets | 10.99 | 11.10 | 11.50 | 11.13 | 12.09 | |||||||||||||||
| Tangible common equity to tangible assets (a) | 8.14 | 8.27 | 8.55 | 8.14 | 8.55 | |||||||||||||||
| Net interest margin, taxable equivalent | 3.09 | 3.00 | 3.26 | 3.10 | 3.32 | |||||||||||||||
| Efficiency ratio (a) | 51.03 | 52.06 | 53.00 | 50.24 | 52.40 | |||||||||||||||
| Effective tax rate | 21.05 | 21.00 | 19.95 | 21.00 | 18.45 | |||||||||||||||
| PERIOD-END BALANCES | ||||||||||||||||||||
| Securities | $ | 651,995 | $ | 563,479 | $ | 367,200 | $ | 651,995 | $ | 367,200 | ||||||||||
| Loans held for sale | 9,518 | 13,807 | 6,789 | 9,518 | 6,789 | |||||||||||||||
| Loans, net | 1,940,332 | 1,914,371 | 2,086,094 | 1,940,332 | 2,086,094 | |||||||||||||||
| Goodwill and other intangibles | 90,026 | 90,387 | 91,530 | 90,026 | 91,530 | |||||||||||||||
| Assets | 3,289,063 | 3,201,584 | 2,903,304 | 3,289,063 | 2,903,304 | |||||||||||||||
| Assets - tangible (a) | 3,199,037 | 3,111,197 | 2,811,774 | 3,199,037 | 2,811,774 | |||||||||||||||
| Deposits | 2,862,081 | 2,769,750 | 2,470,700 | 2,862,081 | 2,470,700 | |||||||||||||||
| Customer repurchase agreements | 26,595 | 35,440 | 41,906 | 26,595 | 41,906 | |||||||||||||||
| Long-term borrowings | 28,207 | 28,181 | 35,609 | 28,207 | 35,609 | |||||||||||||||
| Shareholders' equity | 350,387 | 347,633 | 331,981 | 350,387 | 331,981 | |||||||||||||||
| Shareholders' equity - tangible (a) | 260,361 | 257,246 | 240,451 | 260,361 | 240,451 | |||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||
| Securities (b) | $ | 569,508 | $ | 512,981 | $ | 333,778 | $ | 514,156 | $ | 339,701 | ||||||||||
| Loans held for sale | 9,835 | 15,883 | 9,943 | 12,313 | 5,899 | |||||||||||||||
| Loans, net | 1,913,446 | 1,947,797 | 2,092,412 | 1,956,452 | 1,990,312 | |||||||||||||||
| Interest-earning assets | 2,989,661 | 2,909,216 | 2,648,990 | 2,905,032 | 2,483,908 | |||||||||||||||
| Goodwill and other intangibles | 90,257 | 90,577 | 91,749 | 90,600 | 91,883 | |||||||||||||||
| Assets | 3,199,514 | 3,118,687 | 2,870,213 | 3,115,683 | 2,706,359 | |||||||||||||||
| Assets - tangible (a) | 3,109,257 | 3,028,110 | 2,778,464 | 3,025,083 | 2,614,476 | |||||||||||||||
| Interest-bearing deposits | 1,817,595 | 1,761,203 | 1,619,960 | 1,773,354 | 1,560,204 | |||||||||||||||
| Deposits | 2,768,268 | 2,677,101 | 2,434,645 | 2,676,650 | 2,277,211 | |||||||||||||||
| Customer repurchase agreements | 29,681 | 37,591 | 45,689 | 36,954 | 43,649 | |||||||||||||||
| Other short-term borrowings | - | - | - | - | 1 | |||||||||||||||
| Long-term borrowings | 28,192 | 35,584 | 35,597 | 33,111 | 35,575 | |||||||||||||||
| Shareholders' equity | 351,646 | 346,210 | 330,038 | 346,730 | 327,231 | |||||||||||||||
| Shareholders' equity - tangible (a) | 261,389 | 255,633 | 238,289 | 256,130 | 235,348 | |||||||||||||||
| American National Bankshares Inc. | ||||||||||||||||||||
| Financial Highlights | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | At or for the Nine Months | |||||||||||||||||||
| 3rd Qtr | 2nd Qtr | 3rd Qtr | Ended September 30, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| CAPITAL | ||||||||||||||||||||
| Weighted average shares outstanding - basic | 10,833,875 | 10,919,333 | 10,966,645 | 10,907,721 | 10,983,729 | |||||||||||||||
| Weighted average shares outstanding - diluted | 10,836,293 | 10,923,156 | 10,969,901 | 10,911,372 | 10,988,090 | |||||||||||||||
| COMMON STOCK REPURCHASE PROGRAM | ||||||||||||||||||||
| Total shares of common stock repurchased | 100,764 | 93,212 | - | 247,999 | 140,526 | |||||||||||||||
| Average price paid per share of common stock | $ | 32.87 | $ | 34.73 | $ | - | $ | 32.84 | $ | 35.44 | ||||||||||
| ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
| Beginning balance | $ | 20,097 | $ | 21,416 | $ | 18,507 | $ | 21,403 | $ | 13,152 | ||||||||||
| (Recovery of) Provision for loan losses | 482 | (1,352 | ) | 2,619 | (870 | ) | 8,331 | |||||||||||||
| Charge-offs | (19 | ) | (29 | ) | (126 | ) | (70 | ) | (675 | ) | ||||||||||
| Recoveries | 70 | 62 | 88 | 167 | 280 | |||||||||||||||
| Ending balance | $ | 20,630 | $ | 20,097 | $ | 21,088 | $ | 20,630 | $ | 21,088 | ||||||||||
| LOANS | ||||||||||||||||||||
| Construction and land development | $ | 120,193 | $ | 133,592 | $ | 151,613 | $ | 120,193 | $ | 151,613 | ||||||||||
| Commercial real estate - owner occupied | 404,029 | 384,095 | 382,121 | 404,029 | 382,121 | |||||||||||||||
| Commercial real estate - non-owner occupied | 713,339 | 650,862 | 608,954 | 713,339 | 608,954 | |||||||||||||||
| Residential real estate | 280,351 | 264,680 | 279,815 | 280,351 | 279,815 | |||||||||||||||
| Home equity | 95,317 | 100,835 | 111,448 | 95,317 | 111,448 | |||||||||||||||
| Commercial and industrial | 320,278 | 372,759 | 543,746 | 320,278 | 543,746 | |||||||||||||||
| Consumer | 6,825 | 7,548 | 8,397 | 6,825 | 8,397 | |||||||||||||||
| Total | $ | 1,940,332 | $ | 1,914,371 | $ | 2,086,094 | $ | 1,940,332 | $ | 2,086,094 | ||||||||||
| NONPERFORMING ASSETS AT PERIOD-END | ||||||||||||||||||||
| Nonperforming loans: | ||||||||||||||||||||
| 90 days past due and accruing | $ | - | $ | 125 | $ | 285 | $ | - | $ | 285 | ||||||||||
| Nonaccrual | 1,903 | 2,057 | 3,088 | 1,903 | 3,088 | |||||||||||||||
| Other real estate owned and repossessions | 213 | 213 | 1,210 | 213 | 1,210 | |||||||||||||||
| Nonperforming assets | $ | 2,116 | $ | 2,395 | $ | 4,583 | $ | 2,116 | $ | 4,583 | ||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||||
| Allowance for loan losses to total loans | 1.06 | % | 1.05 | % | 1.01 | % | 1.06 | % | 1.01 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 1,084.08 | 921.04 | 625.20 | 1,084.08 | 625.20 | |||||||||||||||
| Nonperforming assets to total assets | 0.06 | 0.07 | 0.16 | 0.06 | 0.16 | |||||||||||||||
| Nonperforming loans to total loans | 0.10 | 0.11 | 0.16 | 0.10 | 0.16 | |||||||||||||||
| Annualized net charge-offs (recoveries) to average loans | (0.01 | ) | (0.01 | ) | 0.01 | (0.01 | ) | 0.03 | ||||||||||||
| OTHER DATA | ||||||||||||||||||||
| Fiduciary assets at period-end (c) (d) | $ | 697,546 | $ | 697,528 | $ | 569,095 | $ | 697,546 | $ | 569,095 | ||||||||||
| Retail brokerage assets at period-end (c) (d) | $ | 406,408 | $ | 392,881 | $ | 314,809 | $ | 406,408 | $ | 314,809 | ||||||||||
| Number full-time equivalent employees (e) | 345 | 340 | 341 | 345 | 341 | |||||||||||||||
| Number of full service offices | 26 | 26 | 25 | 26 | 25 | |||||||||||||||
| Number of loan production offices | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
| Number of ATMs | 36 | 36 | 37 | 36 | 37 | |||||||||||||||
| 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 September 30, 2021 and 2020 | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Unaudited | |||||||||||||||||||
| Interest | |||||||||||||||||||
| Average Balance | Income/Expense (a) | Yield/Rate | |||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial | $ | 325,692 | $ | 544,712 | $ | 5,185 | $ | 4,495 | 6.32 | % | 3.28 | % | |||||||
| Real estate | 1,590,858 | 1,549,078 | 16,702 | 17,755 | 4.20 | 4.58 | |||||||||||||
| Consumer | 6,731 | 8,565 | 125 | 144 | 7.37 | 6.69 | |||||||||||||
| Total loans (b) | 1,923,281 | 2,102,355 | 22,012 | 22,394 | 4.57 | 4.26 | |||||||||||||
| Securities: | |||||||||||||||||||
| U.S. Treasury | 53,347 | 10,541 | 139 | 3 | 1.04 | 0.11 | |||||||||||||
| Federal agencies & GSEs | 90,876 | 61,405 | 265 | 287 | 1.17 | 1.87 | |||||||||||||
| Mortgage-backed & CMOs | 335,940 | 194,585 | 1,091 | 942 | 1.30 | 1.94 | |||||||||||||
| State and municipal | 62,883 | 46,432 | 320 | 294 | 2.04 | 2.53 | |||||||||||||
| Other | 26,462 | 20,815 | 311 | 275 | 4.70 | 5.28 | |||||||||||||
| Total securities | 569,508 | 333,778 | 2,126 | 1,801 | 1.49 | 2.16 | |||||||||||||
| Deposits in other banks | 496,872 | 212,857 | 201 | 59 | 0.16 | 0.11 | |||||||||||||
| Total interest-earning assets | 2,989,661 | 2,648,990 | 24,339 | 24,254 | 3.25 | 3.66 | |||||||||||||
| Non-earning assets | 209,853 | 221,223 | |||||||||||||||||
| Total assets | $ | 3,199,514 | $ | 2,870,213 | |||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand | $ | 481,032 | $ | 410,228 | 38 | 56 | 0.03 | 0.05 | |||||||||||
| Money market | 713,846 | 580,200 | 166 | 475 | 0.09 | 0.33 | |||||||||||||
| Savings | 247,536 | 206,493 | 6 | 24 | 0.01 | 0.05 | |||||||||||||
| Time | 375,181 | 423,039 | 571 | 1,563 | 0.60 | 1.47 | |||||||||||||
| Total deposits | 1,817,595 | 1,619,960 | 781 | 2,118 | 0.17 | 0.52 | |||||||||||||
| Customer repurchase agreements | 29,681 | 45,689 | 3 | 42 | 0.04 | 0.37 | |||||||||||||
| Long-term borrowings | 28,192 | 35,597 | 400 | 524 | 5.68 | 5.89 | |||||||||||||
| Total interest-bearing liabilities | 1,875,468 | 1,701,246 | 1,184 | 2,684 | 0.25 | 0.63 | |||||||||||||
| Noninterest bearing demand deposits | 950,673 | 814,685 | |||||||||||||||||
| Other liabilities | 21,727 | 24,244 | |||||||||||||||||
| Shareholders' equity | 351,646 | 330,038 | |||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,199,514 | $ | 2,870,213 | |||||||||||||||
| Interest rate spread | 3.00 | % | 3.03 | % | |||||||||||||||
| Net interest margin | 3.09 | % | 3.26 | % | |||||||||||||||
| Net interest income (taxable equivalent basis) | 23,155 | 21,570 | |||||||||||||||||
| Less: Taxable equivalent adjustment (c) | 59 | 75 | |||||||||||||||||
| Net interest income | $ | 23,096 | $ | 21,495 | |||||||||||||||
| Notes: | |||||||||||||||||||
| (a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/amortization of deferred loan fees and costs. | |||||||||||||||||||
| (b) - Nonaccrual loans are included in the average balances. | |||||||||||||||||||
| (c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis. | |||||||||||||||||||
| Net Interest Income Analysis | |||||||||||||||||||
| For the Nine Months Ended September 30, 2021 and 2020 | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Unaudited | |||||||||||||||||||
| Interest | |||||||||||||||||||
| Average Balance | Income/Expense (a) | Yield/Rate | |||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial | $ | 393,571 | $ | 464,094 | $ | 15,433 | $ | 12,414 | 5.24 | % | 3.57 | % | |||||||
| Real estate | 1,568,055 | 1,522,803 | 49,642 | 52,319 | 4.22 | 4.58 | |||||||||||||
| Consumer | 7,139 | 9,314 | 364 | 451 | 6.82 | 6.47 | |||||||||||||
| Total loans (b) | 1,968,765 | 1,996,211 | 65,439 | 65,184 | 4.43 | 4.36 | |||||||||||||
| Securities: | |||||||||||||||||||
| U.S. Treasury | 36,969 | 7,292 | 265 | 47 | 0.96 | 0.86 | |||||||||||||
| Federal agencies & GSEs | 99,595 | 70,604 | 867 | 1,147 | 1.16 | 2.17 | |||||||||||||
| Mortgage-backed & CMOs | 292,207 | 198,528 | 3,025 | 3,144 | 1.38 | 2.11 | |||||||||||||
| State and municipal | 61,210 | 43,345 | 958 | 871 | 2.09 | 2.68 | |||||||||||||
| Other | 24,175 | 19,932 | 900 | 812 | 4.96 | 5.43 | |||||||||||||
| Total securities | 514,156 | 339,701 | 6,015 | 6,021 | 1.56 | 2.36 | |||||||||||||
| Deposits in other banks | 422,111 | 147,996 | 375 | 356 | 0.12 | 0.32 | |||||||||||||
| Total interest-earning assets | 2,905,032 | 2,483,908 | 71,829 | 71,561 | 3.30 | 3.84 | |||||||||||||
| Non-earning assets | 210,651 | 222,451 | |||||||||||||||||
| Total assets | $ | 3,115,683 | $ | 2,706,359 | |||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand | $ | 466,999 | $ | 371,155 | 116 | 294 | 0.03 | 0.11 | |||||||||||
| Money market | 700,027 | 550,063 | 657 | 2,254 | 0.13 | 0.55 | |||||||||||||
| Savings | 238,349 | 192,632 | 19 | 101 | 0.01 | 0.07 | |||||||||||||
| Time | 367,979 | 446,354 | 2,198 | 5,259 | 0.80 | 1.57 | |||||||||||||
| Total deposits | 1,773,354 | 1,560,204 | 2,990 | 7,908 | 0.23 | 0.68 | |||||||||||||
| Customer repurchase agreements | 36,954 | 43,649 | 19 | 237 | 0.07 | 0.73 | |||||||||||||
| Other short-term borrowings | - | 1 | - | - | - | 0.50 | |||||||||||||
| Long-term borrowings | 33,111 | 35,575 | 1,352 | 1,523 | 5.44 | 5.71 | |||||||||||||
| Total interest-bearing liabilities | 1,843,419 | 1,639,429 | 4,361 | 9,668 | 0.32 | 0.79 | |||||||||||||
| Noninterest bearing demand deposits | 903,296 | 717,007 | |||||||||||||||||
| Other liabilities | 22,238 | 22,692 | |||||||||||||||||
| Shareholders' equity | 346,730 | 327,231 | |||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,115,683 | $ | 2,706,359 | |||||||||||||||
| Interest rate spread | 2.98 | % | 3.05 | % | |||||||||||||||
| Net interest margin | 3.10 | % | 3.32 | % | |||||||||||||||
| Net interest income (taxable equivalent basis) | 67,468 | 61,893 | |||||||||||||||||
| Less: Taxable equivalent adjustment (c) | 181 | 219 | |||||||||||||||||
| Net interest income | $ | 67,287 | $ | 61,674 | |||||||||||||||
| Notes: | |||||||||||||||||||
| (a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/amortization of deferred loan fees and costs. | |||||||||||||||||||
| (b) - Nonaccrual loans are included in the average balances. | |||||||||||||||||||
| (c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis. | |||||||||||||||||||
| American National Bankshares Inc. | |||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||
| (Dollars in thousands, except per share data) | At or for the Nine Months | ||||||||||||||||||||||
| 3rd Qtr | 2nd Qtr | 3rd Qtr | Ended September 30, | ||||||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| EFFICIENCY RATIO | |||||||||||||||||||||||
| Noninterest expense | $ | 14,843 | $ | 14,637 | $ | 14,140 | $ | 43,545 | $ | 39,906 | |||||||||||||
| Add/subtract: gain/loss on sale of OREO | - | - | (23 | ) | (111 | ) | 12 | ||||||||||||||||
| Subtract: core deposit intangible amortization | (361 | ) | (371 | ) | (402 | ) | (1,113 | ) | (1,246 | ) | |||||||||||||
| $ | 14,482 | $ | 14,266 | $ | 13,715 | $ | 42,321 | $ | 38,672 | ||||||||||||||
| Net interest income | $ | 23,093 | $ | 21,771 | $ | 21,495 | $ | 67,287 | $ | 61,674 | |||||||||||||
| Tax equivalent adjustment | 59 | 59 | 75 | 181 | 219 | ||||||||||||||||||
| Noninterest income | 5,123 | 5,142 | 4,292 | 16,187 | 12,622 | ||||||||||||||||||
| Subtract: gain on securities | - | - | - | - | (814 | ) | |||||||||||||||||
| Add: loss on fixed assets | 107 | 432 | 15 | 588 | 97 | ||||||||||||||||||
| $ | 28,382 | $ | 27,404 | $ | 25,877 | $ | 84,243 | $ | 73,798 | ||||||||||||||
| Efficiency ratio | 51.03 | % | 52.06 | % | 53.00 | % | 50.24 | % | 52.40 | % | |||||||||||||
| TAX EQUIVALENT NET INTEREST INCOME | |||||||||||||||||||||||
| Non-GAAP measures: | |||||||||||||||||||||||
| Interest income - loans | $ | 22,012 | $ | 21,121 | $ | 22,394 | $ | 65,439 | $ | 65,184 | |||||||||||||
| Interest income - investments and other | 2,327 | 2,105 | 1,860 | 6,390 | 6,377 | ||||||||||||||||||
| Interest expense - deposits | (781 | ) | (922 | ) | (2,118 | ) | (2,990 | ) | (7,908 | ) | |||||||||||||
| Interest expense - customer repurchase agreements | (3 | ) | (5 | ) | (42 | ) | (19 | ) | (237 | ) | |||||||||||||
| Interest expense - long-term borrowings | (400 | ) | (469 | ) | (524 | ) | (1,352 | ) | (1,523 | ) | |||||||||||||
| Total net interest income | $ | 23,155 | $ | 21,830 | $ | 21,570 | $ | 67,468 | $ | 61,893 | |||||||||||||
| Less non-GAAP measures: | |||||||||||||||||||||||
| Tax benefit on nontaxable interest - loans | (38 | ) | (34 | ) | (48 | ) | (105 | ) | (138 | ) | |||||||||||||
| Tax benefit on nontaxable interest - securities | (24 | ) | (25 | ) | (27 | ) | (76 | ) | (81 | ) | |||||||||||||
| GAAP measures | $ | 23,093 | $ | 21,771 | $ | 21,495 | $ | 67,287 | $ | 61,674 | |||||||||||||
| RETURN ON AVERAGE TANGIBLE EQUITY | |||||||||||||||||||||||
| Return on average equity (GAAP basis) | 11.58 | % | 12.44 | % | 8.76 | % | 12.40 | % | 8.66 | % | |||||||||||||
| Impact of excluding average goodwill and other intangibles | 4.43 | 4.86 | 3.90 | 4.84 | 3.94 | ||||||||||||||||||
| Return on average tangible equity (non-GAAP) | 16.01 | % | 17.30 | % | 12.66 | % | 17.24 | % | 12.60 | % | |||||||||||||
| TANGIBLE EQUITY TO TANGIBLE ASSETS | |||||||||||||||||||||||
| Equity to assets ratio (GAAP basis) | 10.65 | % | 10.86 | % | 11.43 | % | 10.65 | % | 11.43 | % | |||||||||||||
| Impact of excluding goodwill and other intangibles | (2.51 | ) | (2.59 | ) | (2.88 | ) | (2.51 | ) | (2.88 | ) | |||||||||||||
| Tangible equity to tangible assets ratio (non-GAAP) | 8.14 | % | 8.27 | % | 8.55 | % | 8.14 | % | 8.55 | % | |||||||||||||
| TANGIBLE BOOK VALUE | |||||||||||||||||||||||
| Book value per share (GAAP basis) | $ | 32.51 | $ | 31.96 | $ | 30.26 | $ | 32.51 | $ | 30.26 | |||||||||||||
| Impact of excluding goodwill and other intangibles | (8.35 | ) | (8.31 | ) | (8.34 | ) | (8.35 | ) | (8.34 | ) | |||||||||||||
| Tangible book value per share (non-GAAP) | $ | 24.16 | $ | 23.65 | $ | 21.92 | $ | 24.16 | $ | 21.92 | |||||||||||||
| ADJUSTED LOAN LOSS ALLOWANCE | |||||||||||||||||||||||
| Allowance for loan losses | $ | 20,630 | $ | 20,097 | $ | 21,088 | $ | 20,630 | $ | 21,088 | |||||||||||||
| Credit discount on purchased loans | 5,258 | 6,055 | 7,896 | 5,258 | 7,896 | ||||||||||||||||||
| Adjusted loan loss allowance | $ | 25,888 | $ | 26,152 | $ | 28,984 | $ | 25,888 | $ | 28,984 | |||||||||||||
| Total loans, net of deferred fees and costs | $ | 1,940,332 | $ | 1,914,371 | $ | 2,086,094 | $ | 1,940,332 | $ | 2,086,094 | |||||||||||||
| Subtract: PPP loans, net | (37,199 | ) | (104,143 | ) | (265,941 | ) | (37,199 | ) | (265,941 | ) | |||||||||||||
| Total loans less PPP loans, net | $ | 1,903,133 | $ | 1,810,228 | $ | 1,820,153 | $ | 1,903,133 | $ | 1,820,153 | |||||||||||||
| Adjusted loan loss allowance to total loans less PPP loans, net | 1.36 | % | 1.44 | % | 1.59 | % | 1.36 | % | 1.59 | % | |||||||||||||
| Contact: | |
| Jeffrey W. Farrar | |
| Executive Vice President, COO & CFO | |
| (434)773-2274 | |
| farrarj@amnb.com |
