American National Bankshares Inc. Reports Third Quarter 2018 Earnings


  • Q3 2018 net income of $5.8 million and diluted EPS of $0.66
  • Net interest margin of 3.51% for Q3 2018
  • Average shareholders’ equity of $215.1 million is 11.87% of average assets
  • Nonperforming assets to total assets 0.18% for Q3 2018

DANVILLE, Va., Oct. 18, 2018 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (“American National”) (NASDAQ:  AMNB), parent company of American National Bank and Trust Company, today announced net income of $5,785,000 for the third quarter of 2018 compared to $4,787,000 for the third quarter of 2017, a $998,000 or 20.8% increase.  Basic and diluted net income per common share was $0.66 for the 2018 quarter compared to $0.55 for the 2017 quarter. Net income for the third quarter of 2018 produced annualized returns on average assets of 1.28%, on average equity of 10.76%, and on average tangible equity of 13.70%.

Net income for the first nine months of 2018 was $17,577,000 compared to $13,129,000 for the comparable period of 2017, a $4,448,000 or 33.9% increase. Basic and diluted net income per common share was $2.02 for the 2018 period compared to $1.52 for the 2017 period.

Financial Performance and Overview
Jeffrey V. Haley, President and Chief Executive Officer, reported, “We are very pleased to report net income for the quarter of $5.8 million, an increase of 20.8% over the comparable quarter of 2017. Net income for the nine months was $17.6 million, an increase of 33.9% over the comparable period of 2017. The main drivers of the increase for the quarter and the period were, as has been the case for the past few quarters, greater net interest income, lower loan loss provision and lower corporate income taxes. 

“Net interest income has increased with greater earning assets, mostly loans, and increasing market rates.

“Earnings have also increased due to a significant reduction in loan loss provision. Provision expense in the third quarter of 2018 was $463,000 less than the comparable quarter of 2017. Our need for provision expense was reduced by three factors: loan balances outstanding were effectively flat during the period, continued strong asset quality metrics, and improvements in various qualitative factors we use in computing our allowance for loan losses.

“Also benefiting earnings was the substantial decrease in our corporate tax rate. The tax cut, enacted in December 2017, reduced our statutory rate to 21% from 35% and our effective rate to 20.2% from 31.5%.

“The balance sheet has grown in the last year. Year over year growth in loans was $36 million or 2.8%.  However, net loans fell $5 million or 0.4% during the first nine months of 2018, primarily due to over $40 million in large commercial loan payoffs during the period. Current expectations for the remainder of 2018 and 2019 are for growth in loans at a moderate pace.

“Year over year growth in deposits was $42.9 million or 2.9%. Deposits fell $11.6 million or 0.8% during the first nine months of 2018. The year over year growth is mostly in non-maturity core deposits (noninterest bearing and money market accounts), which are the heart of our balance sheet. Our cost of interest bearing deposits for the third quarter was 0.73%, compared to 0.57% for the 2017 quarter.

“American National benefits from rising market interest rates. However, the yield on loans has been constrained by intense competition for high quality borrowers. On the other side of the balance sheet, after almost ten years of very low rates and as rates now rise customers are beginning to demand more yield for the use of their money. Our net interest margin for the current quarter was 3.51%, down five basis points from the prior year quarter, due in large portion to a decline in accretion income. As rates continue to move up, maintaining and protecting our net interest margin is a continuing strategic imperative.”

Haley concluded, “The fourth quarter got off to an outstanding start. On October 1, 2018, American National and HomeTown Bankshares Corporation (NASDAQ: HMTA - “HomeTown”), headquartered in Roanoke, Va., announced the signing of an agreement that calls for HomeTown to merge with American National in a transaction valued at approximately $95.6 million. The combination deepens American National’s footprint in the Roanoke MSA and creates a presence in the New River Valley.  Upon completion of the merger, American National will have eight offices in the combined Roanoke/New River Valley markets with total deposits of over $700 million.  Based on financial results as of June 30, 2018, the combined company will have approximately $2.4 billion in assets, $1.8 billion in loans, and $2.0 billion in deposits.

“Roanoke and Franklin County are already important markets for our company and the addition of the New River Valley market is an exciting growth opportunity. The combination of HomeTown and American National will create a company that is better positioned to serve the needs of those communities. We believe in community banking and focus on accessible, responsive, and friendly community-based services.  By combining our highly qualified and dedicated teams, we believe we will be the community bank of choice for businesses and individuals in this area. We feel so strongly that our combined organization will be able to offer a hometown banking platform for each of our ten regions in Virginia and North Carolina that we will change our tag line to ‘Welcome to Hometown Banking.’”
   
Capital
American National’s capital ratios remain strong and exceed all regulatory requirements. 

For the quarter ended September 30, 2018, average shareholders’ equity was 11.87% of average assets, compared to 11.79% for the quarter ended September 30, 2017.

Book value per common share was $24.79 at September 30, 2018, compared to $24.31 at September 30, 2017.

Tangible book value per common share was $19.65 at September 30, 2018, compared to $19.09 at September 30, 2017.

Credit Quality Measurements
Non-performing assets ($2,238,000 of non-performing loans, $74,000 of 90 day past due and accruing loans, and $916,000 of other real estate owned) represented 0.18% of total assets at September 30, 2018, compared to 0.29% at September 30, 2017. 

Annualized net recoveries to average loans were three basis points (0.03%) for the 2018 third quarter compared to net charge offs of seven basis points (0.07%) for the same quarter in 2017.

Other real estate owned was $916,000 compared to $2,101,000 at September 30, 2017, a decrease of $1,185,000 or 56.4%.

Acquisition Related Financial Impact
The acquisition accounting adjustments related to our 2011 and 2015 acquisitions have had and continue to have a positive impact on net interest income and income before income tax.  The impact of these adjustments is summarized below (dollars in thousands):

     
For the quarter ended September 30,  2018  2017
Net Interest Income $198 $557
Income Before Income Taxes $142 $477
     
For the nine months ended September 30,  2018  2017
Net Interest Income $1,002 $1,586
Income Before Income Taxes $792 $1,138
       

The third quarter of 2018 includes $59,000 in cash basis accretion income related to the early payoff of several acquired loans, compared to $333,000 for the comparable quarter of 2017.

The positive financial impact of these merger related accounting adjustments will continue to decline in upcoming quarters.

Net Interest Income
Net interest income before the provision for loan losses increased to $14,751,000 in the third quarter of 2018 from $14,338,000 in the third quarter of 2017, an increase of $413,000 or 2.9%.  

For the 2018 quarter, the net interest margin was 3.51% compared to 3.56% for the same quarter in 2017, a decrease of five basis points (0.05%).  The decrease in net interest margin was driven mostly by higher cost of funds.

Provision for Loan Losses and Allowance for Loan Losses
Provision expense for the third quarter of 2018 was a negative $23,000 compared to $440,000 for the third quarter of 2017. The third quarter 2018 negative provision was related to adjustments on the specific reserves for several impaired loans.

The allowance for loan losses as a percentage of total loans was 1.02% at September 30, 2018 compared to 1.07% at September 30, 2017.

Net loans outstanding fell during the third quarter by $8.2 million or 0.6%. The need for additions to the allowance for loan losses was also reduced by improvement in various qualitative factors used in the determination of the allowance, notably national and local economic conditions, and loan volume.

Noninterest Income
Noninterest income totaled $3,380,000 in the third quarter of 2018, compared with $3,804,000 in the third quarter of 2017, a decrease of $424,000 or 11.1%.  The major driver of the decrease was a $337,000 gain reflected in the 2017 quarter from the sale of a bank owned commercial lot.

Noninterest Expense
Noninterest expense totaled $10,904,000 in the third quarter of 2018, compared to $10,710,000 in the third quarter of 2017, an increase of $194,000 or 1.8%. The major driver of the increase was a $213,000 or 4.2% increase in salaries, mostly related to adjustments of fringe benefit accruals.

About American National
American National is a multi-state bank holding company with total assets of approximately $1.8 billion. Headquartered in Danville, Virginia, American National is the parent company of American National Bank and Trust Company. American National Bank is a community bank serving Virginia and North Carolina with 24 banking offices and two loan production offices. American National Bank also manages an additional $857 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about the company and the bank is available on the bank's website at www.amnb.com.
Shares of American National are traded on the NASDAQ Global Select Market under the symbol "AMNB."

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. These include statements as to the anticipated performance of American National and the benefits of the proposed merger with HomeTown, including future financial and operating results, cost savings and enhanced revenues that may be realized from the merger as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. 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 and the resulting company after the proposed merger with HomeTown, include but are not limited to: (1) 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; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected timeframe; (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) the ability to obtain required regulatory and shareholder approvals, and the ability to complete the merger on the expected timeframe may be more difficult, time-consuming or costly than expected; (6) 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; (7) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in the companies’ respective market areas; (8) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (9) accounting principles, policies, and guidelines; and (10) 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.

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


 American National Bankshares Inc. 
 Consolidated Balance Sheets 
(Dollars in thousands, except per share data)
Unaudited
     
  September 30
ASSETS 2018
 2017
     
Cash and due from banks $32,688  $26,949 
Interest-bearing deposits in other banks  37,355   76,271 
         
Equity securities, at fair value  2,087   - 
Securities available for sale, at fair value  295,777   272,205 
Restricted stock, at cost  5,239   5,509 
Loans held for sale  1,934   3,386 
         
Loans  1,331,153   1,295,154 
Less allowance for loan losses  (13,588)  (13,858)
Net Loans  1,317,565   1,281,296 
         
Premises and equipment, net  25,690   25,923 
Other real estate owned, net  916   2,101 
Goodwill  43,872   43,872 
Core deposit intangibles, net  981   1,271 
Bank owned life insurance  18,785   18,491 
Accrued interest receivable and other assets  23,602   23,267 
         
Total assets $1,806,491  $1,780,541 
         
         
Liabilities        
Demand deposits -- noninterest-bearing $420,486  $402,100 
Demand deposits -- interest-bearing  230,984   225,279 
Money market deposits  362,575   336,752 
Savings deposits  135,702   124,025 
Time deposits  373,360   392,049 
Total deposits  1,523,107   1,480,205 
         
Customer repurchase agreements  29,104   43,240 
Long-term borrowings  -   9,996 
Junior subordinated debt  27,902   27,800 
Accrued interest payable and other liabilities  10,312   9,086 
Total liabilities  1,590,425   1,570,327 
         
Shareholders' equity        
Preferred stock, $5 par, 2,000,000 shares authorized,        
none outstanding  -   - 
Common stock, $1 par, 20,000,000 shares authorized,        
8,714,431 shares outstanding at September 30, 2018 and        
8,647,345 shares outstanding at September 30, 2017  8,661   8,600 
Capital in excess of par value  77,842   75,943 
Retained earnings  138,715   126,507 
Accumulated other comprehensive loss, net  (9,152)  (836)
Total shareholders' equity  216,066   210,214 
         
Total liabilities and shareholders' equity $1,806,491  $1,780,541 
         

 

American National Bankshares Inc. 
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
         
  Three Months Ended Nine Months Ended
  September 30 September 30
  2018 2017 2018 2017
Interest and Dividend Income:         
Interest and fees on loans $15,062  $14,394 $44,485  $40,850
Interest and dividends on securities:              
Taxable  1,568   1,108  4,432   3,395
Tax-exempt  362   460  1,204   1,604
Dividends  82   77  240   240
Other interest income  143   235  516   469
Total interest and dividend income  17,217   16,274  50,877   46,558
               
Interest Expense:              
Interest on deposits  2,048   1,529  5,746   4,081
Interest on short-term borrowings  29   52  41   94
Interest on long-term borrowings  -   82  -   243
Interest on junior subordinated debt  389   273  1,008   756
Total interest expense  2,466   1,936  6,795   5,174
               
Net Interest Income   14,751   14,338  44,082   41,384
Provision for loan losses  (23)  440  (97)  1,090
               
Net Interest Income After Provision for Loan Losses  14,774   13,898  44,179   40,294
               
Noninterest Income:               
Trust fees  1,001   1,098  2,875   2,918
Service charges on deposit accounts  605   622  1,809   1,818
Other fees and commissions  656   618  1,977   1,852
Mortgage banking income  551   612  1,492   1,603
Securities gains (losses), net  (17)  -  393   590
Brokerage fees  172   219  603   603
Income from Small Business Investment Companies  150   86  476   118
Gains on premises and equipment, net  63   337  66   337
Other  199   212  585   584
Total noninterest income  3,380   3,804  10,276   10,423
               
Noninterest Expense:               
Salaries  5,285   5,072  15,377   14,604
Employee benefits  1,036   1,048  3,322   3,229
Occupancy and equipment  1,069   1,151  3,297   3,367
FDIC assessment  134   138  412   401
Bank franchise tax  291   276  863   795
Core deposit intangible amortization  56   80  210   448
Data processing  420   475  1,309   1,464
Software  307   303  966   853
Other real estate owned, net  46   62  101   173
Other  2,260   2,105  6,751   6,528
Total noninterest expense  10,904   10,710  32,608   31,862
               
Income Before Income Taxes  7,250   6,992  21,847   18,855
Income Taxes  1,465   2,205  4,270   5,726
Net Income  $5,785  $4,787 $17,577  $13,129
               
Net Income Per Common Share:               
Basic $0.66  $0.55 $2.02  $1.52
Diluted $0.66  $0.55 $2.02  $1.52
Average Common Shares Outstanding:               
Basic  8,712,443   8,644,310  8,691,423   8,639,433
Diluted  8,718,918   8,663,246  8,703,662   8,657,891
               

 

American National Bankshares Inc.          
Financial Highlights          
Unaudited           
             
 (Dollars in thousands, except per share data)          
   3rd Qtr 2nd Qtr 3rd Qtr YTD YTD 
    2018
 2018 2017 2018  2017 
EARNINGS           
Interest income$   17,217   $16,992  $16,274  $   50,877   $46,558  
Interest expense 2,466    2,204   1,936   6,795    5,174  
Net interest income 14,751    14,788   14,338   44,082    41,384  
Provision for loan losses   (23)  (30)  440     (97)  1,090  
Noninterest income 3,380    3,563   3,804   10,276    10,423  
Noninterest expense 10,904    11,002   10,710   32,608    31,862  
Income taxes 1,465    1,399   2,205   4,270    5,726  
Net income 5,785    5,980   4,787   17,577    13,129  
             
PER COMMON SHARE           
Income per share - basic$   0.66   $0.69  $0.55  $   2.02   $1.52  
Income per share - diluted   0.66    0.69   0.55     2.02    1.52  
Cash dividends paid   0.25    0.25   0.24     0.75    0.72  
Book value per share   24.79    24.50   24.31     24.79    24.31  
Book value per share - tangible (a)   19.65    19.34   19.09     19.65    19.09  
Closing market price   39.00    40.00   41.20     39.00    41.20  
             
FINANCIAL RATIOS          
Return on average assets 1.28  % 1.31 % 1.08 % 1.29  % 1.01 %
Return on average equity 10.76    11.27   9.16   11.04    8.48  
Return on average tangible equity (b) 13.70    14.44   11.81   14.14    11.11  
Average equity to average assets 11.87    11.62   11.79   11.67    11.89  
Tangible equity to tangible assets (a) 9.72    9.46   9.51   9.72    9.51  
Net interest margin, taxable equivalent 3.51    3.50   3.56   3.49    3.51  
Efficiency ratio (c) 59.65    60.38   59.14   59.94    61.23  
Effective tax rate 20.21    18.96   31.54   19.55    30.37  
             
PERIOD-END BALANCES          
Securities$   303,103   $348,887  $277,714  $   303,103   $277,714  
Loans held for sale   1,934    2,296   3,386     1,934    3,386  
Loans, net of unearned income   1,331,153    1,339,379   1,295,154     1,331,153    1,295,154  
Goodwill and other intangibles   44,853    44,909   45,143     44,853    45,143  
Assets
   1,806,491    1,824,531   1,780,541     1,806,491    1,780,541  
Assets - tangible (a)   1,761,638    1,779,622   1,735,398     1,761,638    1,735,398  
Deposits   1,523,107    1,560,746   1,480,205     1,523,107    1,480,205  
Customer repurchase agreements   29,104    6,776   43,240     29,104    43,240  
Other short-term borrowings   -    5,500   -     -    -  
Long-term borrowings   27,902    27,876   37,796     27,902    37,796  
Shareholders' equity   216,066    213,348   210,214     216,066    210,214  
Shareholders' equity - tangible (a)   171,213    168,439   165,071     171,213    165,071  
             
AVERAGE BALANCES          
Securities (d)$   335,320   $342,486  $281,246  $   330,561   $300,407  
Loans held for sale   3,282    2,616   3,607     2,650    2,820  
Loans, net of unearned income   1,327,060    1,321,812   1,291,822     1,328,936    1,248,929  
Interest-earning assets   1,693,912    1,707,223   1,646,241     1,700,128    1,610,541  
Goodwill and other intangibles   44,887    44,956   45,191     44,958    45,347  
Assets    1,811,631    1,825,860   1,773,636     1,818,615    1,736,955  
Assets - tangible (a)   1,766,744    1,780,904   1,728,445     1,773,657    1,691,608  
Interest-bearing deposits   1,118,929    1,145,701   1,066,827     1,140,443    1,045,422  
Deposits   1,542,945    1,565,321   1,468,523     1,555,086    1,431,777  
Customer repurchase agreements   11,896    11,347   48,461     11,829    47,614  
Other short-term borrowings   2,176    247   -     1,536    3,902  
Long-term borrowings   27,886    27,861   37,780     27,861    37,748  
Shareholders' equity   215,054    212,256   209,026     212,268    206,440  
Shareholders' equity - tangible (a)   170,167    167,300   163,835     167,310    161,093  
             
American National Bankshares Inc.          
Financial Highlights          
Unaudited           
             
 (Dollars in thousands, except per share data)          
   3rd Qtr 2nd Qtr 3rd Qtr YTD YTD 
    2018    2018   2017   2018    2017  
CAPITAL            
Average shares outstanding - basic 8,712,443    8,692,107   8,644,310   8,691,423    8,639,433  
Average shares outstanding - diluted 8,718,918    8,704,726   8,663,246   8,703,662    8,657,891  
             
ALLOWANCE FOR LOAN LOSSES          
Beginning balance$   13,508   $13,575  $13,632  $   13,603   $12,801  
Provision for loan losses (23)  (30)  440   (97)  1,090  
Charge-offs (28)  (130)  (277)  (202)  (411) 
Recoveries 131    93   63   284    378  
Ending balance$   13,588   $13,508  $13,858  $   13,588   $13,858  
             
LOANS           
Construction and land development$   99,546   $96,740  $137,869  $   99,546   $137,869  
Commercial real estate   632,022    633,128   602,434     632,022    602,434  
Residential real estate   205,277    207,374   209,201     205,277    209,201  
Home equity   104,873    105,558   110,926     104,873    110,926  
Commercial and industrial   284,176    291,454   230,484     284,176    230,484  
Consumer   5,259    5,125   4,240     5,259    4,240  
Total $   1,331,153   $1,339,379  $1,295,154  $  1,331,153   $1,295,154  
             
NONPERFORMING ASSETS AT PERIOD-END          
Nonperforming loans:          
90 days past due and accruing$   74   $229  $538  $   74   $538  
Nonaccrual 2,238    1,861   2,498   2,238    2,498  
Other real estate owned 916    1,124   2,101   916    2,101  
Nonperforming assets$   3,228   $3,214  $5,137  $   3,228   $5,137  
             
ASSET QUALITY RATIOS          
Allowance for loan losses to total loans 1.02  % 1.01 % 1.07 % 1.02  % 1.07 %
Allowance for loan losses to          
nonperforming loans 587.72    646.32   456.46   587.72    456.46  
Nonperforming assets to total assets 0.18    0.18   0.29   0.18    0.29  
Nonperforming loans to total loans 0.17    0.16   0.23   0.17    0.23  
Annualized net charge-offs (recoveries)          
to average loans (0.03)  0.01   0.07   (0.01)  0.00  
             
             
OTHER DATA          
Fiduciary assets at period-end (e) (f)$   523,754   $510,552  $517,294  $   523,754   $517,294  
Retail brokerage assets at period-end (e) (f)$   333,565   $326,692  $307,281  $   333,565   $307,281  
Number full-time equivalent employees (g)   316    323   335     316    335  
Number of full service offices   24    26   26     24    26  
Number of loan production offices   2    2   2     2    2  
Number of ATM's   34    34   34     34    34  
             
             
             
Notes:           
             
(a) - Excludes goodwill and other intangible assets.
(b) - Excludes amortization expense, net of tax, of intangible assets.
(c) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by net
interest income including tax equivalent income on nontaxable loans and securities and noninterest income and excluding (i) gains or
losses on securities and (ii) gains or losses on sale of premises and equipment.
(d) - Average does not include unrealized gains and losses.
(e) - Market value.
(f) - Assets are not owned by the Company and are not reflected in the consolidated balance sheet.    
(g) - Average for quarter.          
             

 

   Net Interest Income Analysis
   For the Three Months Ended September 30, 2018 and 2017
   (Dollars in thousands)
   Unaudited
                
        Interest     
    Average Balance Income/Expense Yield/Rate 
                
     2018  2017  2018  2017 2018 2017 
Loans:              
 Commercial $  268,296 $  233,455 $  2,715 $  2,282 4.01%3.88%
 Real estate    1,057,097    1,057,326    12,317    12,102 4.66 4.58 
 Consumer     4,949    4,648    76    92 6.09 7.85 
 Total loans   1,330,342    1,295,429    15,108    14,476 4.54 4.46 
                
Securities:              
 Federal agencies & GSEs   128,284    92,822    732    445 2.28 1.92 
 Mortgage-backed & CMOs   107,817    77,663    604    399 2.24 2.06 
 State and municipal    84,147    95,861    583    862 2.77 3.60 
 Other     15,072    14,900    180    170 4.78 4.56 
 Total securities   335,320    281,246    2,099    1,876 2.50 2.67 
                
Deposits in other banks    28,250    69,566    143    235 2.01 1.34 
                
 Total interest-earning assets   1,693,912    1,646,241    17,350    16,587 4.09 4.03 
                
Non-earning assets    117,719    127,395         
                
  Total assets$  1,811,631 $ 1,773,636         
                
Deposits:              
 Demand  $  231,339 $  215,486    12    11 0.02 0.02 
 Money market    377,074    336,501    839    463 0.88 0.55 
 Savings     132,450    124,949    10    9 0.03 0.03 
 Time     378,066    389,891    1,187    1,046 1.25 1.06 
  Total deposits   1,118,929    1,066,827    2,048    1,529 0.73 0.57 
                
Customer repurchase agreements   11,896    48,461    17    53 0.57 0.43 
Other short-term borrowings   2,176    -    12    - 2.21   - 
Long-term borrowings    27,886    37,780    389    354 5.58 3.75 
 Total interest-bearing             
  liabilities    1,160,887    1,153,068    2,466    1,936 0.84 0.67 
                
Noninterest bearing demand deposits   424,016    401,696         
Other liabilities    11,674    9,846         
Shareholders' equity    215,054    209,026         
Total liabilities and shareholders' equity            
    $  1,811,631 $ 1,773,636         
                
Interest rate spread         3.25%3.36%
Net interest margin         3.51%3.56%
                
Net interest income (taxable equivalent basis)       14,884    14,651     
Less: Taxable equivalent adjustment (a)       133    313     
Net interest income     $  14,751 $  14,338     
                
                
Notes:              
                
(a) - Calculated using 21% and 35% statutory tax rate in 2018 and 2017, respectively, due to tax rate change. 
                

 

   Net Interest Income Analysis
   For the Nine Months Ended September 30, 2018 and 2017
   (Dollars in thousands)
   Unaudited
                
        Interest     
    Average Balance Income/Expense Yield/Rate 
                
     2018  2017  2018  2017 2018 2017 
Loans:             
Commercial $  264,983 $  227,739 $  7,811 $  6,577 3.94%3.86%
Real estate    1,062,075    1,019,185    36,594    34,228 4.59 4.48 
Consumer    4,528    4,825    229    272 6.76 7.54 
Total loans    1,331,586    1,251,749    44,634    41,077 4.47 4.38 
                
Securities:             
Federal agencies & GSEs    119,597    95,360    1,956    1,340 2.18 1.87 
Mortgage-backed & CMOs    108,473    78,572    1,812    1,224 2.23 2.08 
State and municipal    87,365    110,328    1,870    2,952 2.85 3.57 
Other    15,126    16,147    531    536 4.68 4.43 
Total securities    330,561    300,407    6,169    6,052 2.49 2.69 
                
Deposits in other banks    37,981    58,385    516    469 1.82 1.07 
                
Total interest-earning assets    1,700,128    1,610,541    51,319    47,598 4.03 3.94 
                
Non-earning assets     118,487    126,414         
                
Total assets $ 1,818,615 $  1,736,955         
                
Deposits:             
Demand $  236,734 $  217,052    36    32 0.02 0.02 
Money market    394,005    321,738    2,424    1,046 0.82 0.43 
Savings    131,789    124,780    30    28 0.03 0.03 
Time    377,915    381,852    3,256    2,975 1.15 1.04 
Total deposits   1,140,443    1,045,422    5,746    4,081 0.67 0.52 
                
Customer repurchase agreements   11,829    47,614    19    68 0.21 0.19 
Other short-term borrowings    1,536    3,902    22    27 1.91 0.92 
Long-term borrowings    27,861    37,748    1,008    998 4.82 3.53 
Total interest-bearing             
liabilities    1,181,669    1,134,686    6,795    5,174 0.77 0.61 
                
Noninterest bearing demand deposits   414,643    386,355         
Other liabilities     10,035    9,474         
Shareholders' equity     212,268    206,440         
Total liabilities and            
shareholders' equity$ 1,818,615 $  1,736,955         
                
Interest rate spread          3.26%3.33%
Net interest margin          3.49%3.51%
                
Net interest income (taxable equivalent basis)         44,524    42,424     
Less: Taxable equivalent adjustment (a)       442    1,040     
Net interest income      $  44,082 $  41,384     
                
                
Notes:               
                
  (a) - Calculated using 21% and 35% statutory tax rate in 2018 and 2017, respectively, due to tax rate change.