AMERICAN NATIONAL BANKSHARES INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	a8-kearningsrelease4x21x16.htm
EX-99.1 - EXHIBIT 99.1 - AMERICAN NATIONAL BANKSHARES INC.	earningsreleaseq1-2016fina.htm



American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited

	March 31
ASSETS	2016			2015

Cash and due from banks	$	26,345		$	23,995
Interest-bearing deposits in other banks	61,186			75,254
Federal funds sold	—			13,616

Securities available for sale, at fair value	356,998			352,208
Restricted stock, at cost	5,355			4,979
Loans held for sale	785			1,936

Loans	1,034,564			965,902
Less allowance for loan losses	(12,675		)	(12,844		)
Net Loans	1,021,889			953,058

Premises and equipment, net	23,241			24,371
Other real estate owned, net	1,493			2,653
Goodwill	43,872			44,210
Core deposit intangibles, net	2,395			3,583
Bank owned life insurance	17,773			17,261
Accrued interest receivable and other assets	21,222			22,974

Total assets	$	1,582,554		$	1,540,098


Liabilities
Demand deposits -- noninterest-bearing	$	321,599		$	289,818
Demand deposits -- interest-bearing	231,970			229,721
Money market deposits	218,543			202,706
Savings deposits	119,286			110,104
Time deposits	401,033			410,326
Total deposits	1,292,431			1,242,675

Short-term borrowings:
Customer repurchase agreements	42,184			53,664
Long-term borrowings	9,963			9,941
Junior subordinated debt	27,648			27,546
Accrued interest payable and other liabilities	9,885			9,583
Total liabilities	1,382,111			1,343,409

Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,612,658 shares outstanding at March 31, 2016 and
8,709,935 shares outstanding at March 31, 2015	8,575			8,710
Capital in excess of par value	74,744			77,612
Retained earnings	113,628			106,102
Accumulated other comprehensive income, net	3,496			4,265
Total shareholders' equity	200,443			196,689

Total liabilities and shareholders' equity	$	1,582,554		$	1,540,098



American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited

	Three Months Ended
	March 31
	2016		2015
Interest and Dividend Income:
Interest and fees on loans	$	12,115	$	11,770
Interest on federal funds sold	—		4
Interest and dividends on securities:
Taxable	1,084		975
Tax-exempt	823		960
Dividends	91		82
Other interest income	58		48
Total interest and dividend income	14,171		13,839

Interest Expense:
Interest on deposits	1,297		1,194
Interest on short-term borrowings	1		3
Interest on long-term borrowings	81		80
Interest on junior subordinated debt	208		184
Total interest expense	1,587		1,461

Net Interest Income	12,584		12,378
Provision for loan losses	50		600

Net Interest Income After Provision for Loan Losses	12,534		11,778

Noninterest Income:
Trust fees	930		952
Service charges on deposit accounts	492		497
Other fees and commissions	672		588
Mortgage banking income	292		222
Securities gains, net	366		310
Brokerage fees	204		215
Income from Small Business Investment Companies	166		234
Other	175		138
Total noninterest income	3,297		3,156

Noninterest Expense:
Salaries	4,215		4,147
Employee benefits	1,114		1,075
Occupancy and equipment	1,099		1,172
FDIC assessment	188		185
Bank franchise tax	256		235
Core deposit intangible amortization	288		301
Data processing	444		462
Software	297		283
Other real estate owned, net	104		53
Merger related expenses	—		359
Other	1,913		1,775
Total noninterest expense	9,918		10,047



	Three Months Ended
	March 31
	2016		2015

Income Before Income Taxes	5,913		4,887
Income Taxes	1,785		1,372
Net Income	$	4,128	$	3,515

Net Income Per Common Share:
Basic	$	0.48	$	0.40
Diluted	$	0.48	$	0.40
Weighted Average Common Shares Outstanding:
Basic	8,608,728		8,723,633
Diluted	8,613,896		8,732,679



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	1st Qtr			4th Qtr			1st Qtr			YTD			YTD
		2016			2015			2015			2016			2015
EARNINGS
Interest income		$	14,171		$	13,951		$	13,839		$	14,171		$	13,839
Interest expense		1,587			1,507			1,461			1,587			1,461
Net interest income		12,584			12,444			12,378			12,584			12,378
Provision for loan losses		50			250			600			50			600
Noninterest income		3,297			3,818			3,156			3,297			3,156
Noninterest expense		9,918			9,466			10,047			9,918			10,047
Income taxes		1,785			1,939			1,372			1,785			1,372
Net income		4,128			4,607			3,515			4,128			3,515

PER COMMON SHARE
Net income per share - basic		$	0.48		$	0.53		$	0.40		$	0.48		$	0.40
Net income per share - diluted		0.48			0.53			0.40			0.48			0.40
Cash dividends paid		0.24			0.24			0.23			0.24			0.23
Book value per share		23.27			22.95			22.58			23.17			22.58
Book value per share - tangible (a)		17.90			17.55			17.09			17.90			17.09
Closing market price		25.33			25.61			22.58			25.33			22.58

FINANCIAL RATIOS
Return on average assets		1.06		%	1.20		%	0.93		%	1.06		%	0.93		%
Return on average equity		8.28			9.32			7.17			8.28			7.17
Return on average tangible equity (b)		11.27			12.77			10.02			12.86			10.02
Average equity to average assets		12.86			12.88			12.91			12.86			12.91
	Tangible equity to tangible assets (a)	10.04			10.08			9.98			10.04			9.98
Net interest margin, taxable equivalent		3.67			3.68			3.73			3.67			3.73
Efficiency ratio (c)		61.36			57.52			63.90			61.36			63.90
Effective tax rate		30.19			29.62			28.07			30.19			28.07

PERIOD-END BALANCES
Securities		$	362,353		$	345,661		$	357,187		$	362,353		$	357,187
Loans held for sale		785			3,266			1,936			785			1,936
Loans, net of unearned income		1,034,564			1,005,525			965,902			1,034,564			965,902
Goodwill and other intangibles		46,267			46,555			47,793			46,267			47,793
Assets		1,582,554			1,547,599			1,540,098			1,582,554			1,540,098
Assets - tangible (a)		1,536,287			1,501,044			1,492,305			1,536,287			1,492,305
Deposits		1,292,431			1,262,660			1,242,675			1,292,431			1,242,675
Customer repurchase agreements		42,184			40,611			53,664			42,184			53,664
Long-term borrowings		37,611			37,580			37,487			37,611			37,487
Shareholders' equity		200,443			197,835			196,689			200,443			196,689
Shareholders' equity - tangible (a)		154,176			151,280			148,896			154,176			148,896



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	1st Qtr			4th Qtr			1st Qtr			YTD			YTD
		2016			2015			2015			2016			2015
AVERAGE BALANCES
Securities		$	347,290		$	349,116		$	345,800		$	347,290		$	345,800
Loans held for sale		2,055			3,446			939			2,055			939
Loans, net of unearned income		1,016,696			983,725			954,882			1,016,696			954,882
Interest-earning assets		1,424,808			1,386,256			1,382,817			1,424,808			1,382,817
Goodwill and other intangibles		46,441			47,193			47,988			46,441			47,988
Assets		1,551,124			1,534,247			1,518,449			1,551,124			1,518,449
Assets - tangible (a)		1,504,683			1,487,054			1,470,461			1,504,683			1,470,461
Interest-bearing deposits		950,271			931,223			938,064			950,271			938,064
Deposits		1,260,534			1,247,612			1,221,037			1,260,534			1,221,037
Customer repurchase agreements		44,412			42,524			53,181			44,412			53,181
Long-term borrowings		37,593			37,561			37,469			37,593			37,469
Shareholders' equity		199,525			197,658			196,086			199,525			196,086
Shareholders' equity - tangible (a)		153,084			150,465			148,098			153,084			148,098

CAPITAL
Weighted average shares outstanding - basic		8,608,728			8,627,414			8,723,633			8,608,728			8,723,633
Weighted average shares outstanding - diluted		8,613,896			8,633,778			8,732,679			8,613,896			8,732,679

ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	12,601		$	12,611		$	12,427		$	12,601		$	12,427
Provision for loan losses		50			250			600			50			600
Charge-offs		(40		)	(317		)	(309		)	(40		)	(309		)
Recoveries		64			57			126			64			126
Ending balance		$	12,675		$	12,601		$	12,844		$	12,675		$	12,844

LOANS
Construction and land development		$	82,711		$	72,968		$	68,069		$	82,711		$	68,069
Commercial real estate		424,538			430,186			436,562			424,538			436,562
Residential real estate		225,737			220,434			211,261			225,737			211,261
Home equity		100,019			98,449			97,811			100,019			97,811
Commercial and industrial		196,110			177,481			146,280			196,110			146,280
Consumer		5,449			6,007			5,919			5,449			5,919
Total		$	1,034,564		$	1,005,525		$	965,902		$	1,034,564		$	965,902

NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		—			—			—			—			—
Nonaccrual		5,276			5,205			5,123			5,276			5,123
Other real estate owned		1,493			2,184			2,653			1,493			2,653
Nonperforming assets		$	6,769		$	7,389		$	7,776		$	6,769		$	7,776



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	1st Qtr				4th Qtr			1st Qtr			YTD				YTD
		2016				2015			2015			2016				2015
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.23			%	1.25		%	1.33		%	1.23			%	1.33		%
Allowance for loan losses to
nonperforming loans		240.24				242.09			250.71			240.24				250.71
Nonperforming assets to total assets		0.43				0.48			0.50			0.43				0.50
Nonperforming loans to total loans		0.51				0.52			0.53			0.51				0.53
Annualized net charge-offs (recoveries)
to average loans		(0.01		)		0.11			0.08			(0.01		)		0.08


OTHER DATA
Fiduciary assets at period-end (d) (e)		$	491,257			$	491,681		$	502,779		$	491,257			$	502,779
Retail brokerage assets at period-end (d) (e)		$	268,542			$	257,546		$	244,725		$	268,542			$	244,725
Number full-time equivalent employees (f)		301				303			318			301				318
Number of full service offices		25				25			27			25				25
Number of loan production offices		2				2			2			2				2
Number of ATM's		33				33			34			33				33

Notes:

(a) - Excludes goodwill and other intangible assets.

(b) - Excludes amortization expense, net of tax, of intangible assets.

(c) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by

noninterest income and net interest income including tax equivalent income on nontaxable loans and securities and

excluding (i) gains or losses on securities and (ii) gains or losses on sale of premises and equipment.

(d) - Market value.

(e) - Assets are not owned by the Company and are not reflected in the consolidated balance sheet.

(f) - Average for quarter.



			Net Interest Income Analysis
			For the Three Months Ended March 31, 2016 and 2015
			(in thousands, except rates)

								Interest
				Average Balance				Income/Expense				Yield/Rate

				2016		2015		2016		2015		2016		2015
Loans:
	Commercial			$	188,275	$	139,120	$	1,855	$	1,826	3.96	%	5.32	%
	Real estate			824,970		801,373		10,090		9,719		4.89		4.85
	Consumer			5,506		15,328		231		240		16.87		6.35
		Total loans		1,018,751		955,821		12,176		11,785		4.79		4.94

Securities:
	Federal agencies & GSEs			88,283		74,850		378		245		1.71		1.31
	Mortgage-backed & CMOs			75,891		65,558		384		378		2.02		2.31
	State and municipal			166,187		190,216		1,493		1,763		3.59		3.71
	Other			16,929		15,176		162		123		3.83		3.24
		Total securities		347,290		345,800		2,417		2,509		2.78		2.90

Federal funds sold				—		14,580		—		4		—		0.11
Deposits in other banks				58,767		66,616		58		48		0.40		0.29

	Total interest-earning assets			1,424,808		1,382,817		14,651		14,346		4.12		4.16

Non-earning assets				126,316		135,632

		Total assets		$	1,551,124	$	1,518,449

Deposits:
	Demand			$	231,368	$	212,673	36		18		0.06		0.03
	Money market			205,274		202,935		76		71		0.15		0.14
	Savings			117,650		107,683		14		12		0.05		0.05
	Time			395,979		414,773		1,171		1,093		1.19		1.07
		Total deposits		950,271		938,064		1,297		1,194		0.55		0.52

Customer repurchase agreements				44,412		53,181		1		3		0.01		0.02
Long-term borrowings				37,593		37,469		289		264		3.08		2.82
	Total interest-bearing
		liabilities		1,032,276		1,028,714		1,587		1,461		0.62		0.57

Noninterest bearing demand deposits				310,263		282,973
Other liabilities				9,060		10,676
Shareholders' equity				199,525		196,086
		Total liabilities and
			shareholders' equity	$	1,551,124	$	1,518,449

Interest rate spread												3.50	%	3.59	%
Net interest margin												3.67	%	3.73	%

Net interest income (taxable equivalent basis)								13,064		12,885
Less: Taxable equivalent adjustment								480		507
Net interest income								$	12,584	$	12,378

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AMERICAN NATIONAL BANKSHARES INC. Reports