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

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - AMERICAN NATIONAL BANKSHARES INC.	earningsreleaseq2-2016final.htm
8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	a8-kearningsrelease7x21x20.htm



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

	June 30			June 30
ASSETS	2016			2015

Cash and due from banks	$	21,625		$	24,548
Interest-bearing deposits in other banks	51,716			50,758
Federal funds sold	—			408

Securities available for sale, at fair value	362,800			355,595
Restricted stock, at cost	5,362			5,329
Loans held for sale	4,692			2,720

Loans	1,057,959			982,905
Less allowance for loan losses	(12,674		)	(12,793		)
Net Loans	1,045,285			970,112

Premises and equipment, net	22,878			24,182
Other real estate owned, net	1,289			2,113
Goodwill	43,872			44,210
Core deposit intangibles, net	2,107			3,283
Bank owned life insurance	17,885			17,376
Accrued interest receivable and other assets	22,140			23,722

Total assets	$	1,601,651		$	1,524,356


Liabilities
Demand deposits -- noninterest-bearing	$	321,442		$	294,342
Demand deposits -- interest-bearing	205,440			239,582
Money market deposits	252,118			190,799
Savings deposits	116,047			109,732
Time deposits	403,338			399,563
Total deposits	1,298,385			1,234,018

Customer repurchase agreements	53,369			50,123
Long-term borrowings	9,969			9,947
Junior subordinated debt	27,673			27,571
Accrued interest payable and other liabilities	9,551			7,814
Total liabilities	1,398,947			1,329,473

Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,609,160 shares outstanding at June 30, 2016 and
8,688,480 shares outstanding at June 30, 2015	8,572			8,671
Capital in excess of par value	74,753			76,826
Retained earnings	115,648			106,984
Accumulated other comprehensive income, net	3,731			2,402
Total shareholders' equity	202,704			194,883

Total liabilities and shareholders' equity	$	1,601,651		$	1,524,356



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

	Three Months Ended				Six Months Ended
	June 30				June 30
	2016		2015		2016		2015
Interest and Dividend Income:
Interest and fees on loans	$	11,642	$	11,767	$	23,757	$	23,537
Interest on federal funds sold	—		1		—		5
Interest and dividends on securities:
Taxable	1,150		994		2,234		1,969
Tax-exempt	817		940		1,640		1,900
Dividends	93		85		184		167
Other interest income	67		50		125		98
Total interest and dividend income	13,769		13,837		27,940		27,676

Interest Expense:
Interest on deposits	1,314		1,184		2,611		2,378
Interest on short-term borrowings	1		2		2		5
Interest on long-term borrowings	81		81		162		161
Interest on junior subordinated debt	213		188		421		372
Total interest expense	1,609		1,455		3,196		2,916

Net Interest Income	12,160		12,382		24,744		24,760
Provision for loan losses	50		100		100		700

Net Interest Income After Provision for Loan Losses	12,110		12,282		24,644		24,060

Noninterest Income:
Trust fees	961		1,005		1,891		1,957
Service charges on deposit accounts	514		525		1,006		1,022
Other fees and commissions	656		607		1,328		1,195
Mortgage banking income	365		389		657		611
Securities gains, net	222		237		588		547
Brokerage fees	223		211		427		426
Income from Small Business Investment Companies	72		94		238		328
Other	354		190		529		328
Total noninterest income	3,367		3,258		6,664		6,414

Noninterest Expense:
Salaries	4,031		4,308		8,246		8,455
Employee benefits	1,055		1,111		2,169		2,186
Occupancy and equipment	1,059		1,024		2,158		2,196
FDIC assessment	193		195		381		380
Bank franchise tax	256		220		512		455
Core deposit intangible amortization	288		300		576		601
Data processing	459		483		903		945
Software	274		277		571		560
Other real estate owned, net	76		133		209		186
Merger related expenses	—		1,502		—		1,861
Other	1,965		2,089		3,849		3,864
Total noninterest expense	9,656		11,642		19,574		21,689



Income Before Income Taxes	5,821		3,898		11,734		8,785
Income Taxes	1,733		1,018		3,518		2,390
Net Income	$	4,088	$	2,880	$	8,216	$	6,395

Net Income Per Common Share:
Basic	$	0.47	$	0.33	$	0.95	$	0.73
Diluted	$	0.47	$	0.33	$	0.95	$	0.73
Weighted Average Common Shares Outstanding:
Basic	8,610,156		8,707,504		8,610,998		8,713,528
Diluted	8,619,833		8,715,934		8,616,873		8,722,266



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
		2016			2016			2015			2016			2015
EARNINGS
Interest income		$	13,769		$	14,171		$	13,837		$	27,940		$	27,676
Interest expense		1,609			1,587			1,455			3,196			2,916
Net interest income		12,160			12,584			12,382			24,744			24,760
Provision for loan losses		50			50			100			100			700
Noninterest income		3,367			3,297			3,258			6,664			6,414
Noninterest expense		9,656			9,918			11,642			19,574			21,689
Income taxes		1,733			1,785			1,018			3,518			2,390
Net income		4,088			4,128			2,880			8,216			6,395

PER COMMON SHARE
Income per share - basic		$	0.47		$	0.48		$	0.33		$	0.95		$	0.73
Income per share - diluted		0.47			0.48			0.33			0.95			0.73
Cash dividends paid		0.24			0.24			0.23			0.48			0.46
Book value per share		23.54			23.27			22.43			23.54			22.43
Book value per share - tangible (a)		18.20			17.90			16.96			18.20			16.96
Closing market price		25.18			25.33			23.81			25.18			23.81

FINANCIAL RATIOS
Return on average assets		1.03		%	1.06		%	0.75		%	1.05		%	0.84		%
Return on average equity		8.11			8.28			5.86			8.19			6.51
Return on average tangible equity (b)		10.99			11.27			8.26			11.13			9.14
Average equity to average assets		12.67			12.86			12.85			12.76			12.88
Tangible equity to tangible assets (a)		10.07			10.04			9.98			10.07			9.98
Net interest margin, taxable equivalent		3.45			3.67			3.69			3.56			3.71
Efficiency ratio (c)		60.91			61.36			72.76			61.14			68.36
Effective tax rate		29.77			30.19			26.12			29.98			27.21

PERIOD-END BALANCES
Securities		$	368,162		$	362,353		$	361,176		$	368,162		$	361,176
Loans held for sale		4,692			785			2,720			4,692			2,720
Loans, net of unearned income		1,057,959			1,034,564			982,905			1,057,959			982,905
Goodwill and other intangibles		45,979			46,267			47,493			45,979			47,493
Assets		1,601,651			1,582,554			1,524,356			1,601,651			1,524,356
Assets - tangible (a)		1,555,672			1,536,287			1,476,863			1,555,672			1,476,863
Deposits		1,298,385			1,292,431			1,234,018			1,298,385			1,234,018
Customer repurchase agreements		53,369			42,184			50,123			53,369			50,123
Long-term borrowings		37,642			37,611			37,518			37,642			37,518
Shareholders' equity		202,704			200,443			194,883			202,704			194,883
Shareholders' equity - tangible (a)		156,725			154,176			147,390			156,725			147,390



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
		2016			2016			2015			2016			2015
AVERAGE BALANCES
Securities		$	361,064		$	347,290		$	349,813		$	354,038		$	347,816
Loans held for sale		2,087			2,055			2,836			2,071			1,893
Loans, net of unearned income		1,047,993			1,016,696			972,083			1,032,345			963,530
Interest-earning assets		1,464,692			1,424,808			1,397,448			1,444,611			1,390,172
Goodwill and other intangibles		46,150			46,441			47,682			46,296			47,834
Assets		1,592,261			1,551,124			1,530,867			1,571,692			1,524,693
Assets - tangible (a)		1,546,111			1,504,683			1,483,185			1,525,396			1,476,859
Interest-bearing deposits		972,385			950,271			945,931			961,328			942,019
Deposits		1,295,520			1,260,534			1,236,626			1,278,027			1,228,874
Customer repurchase agreements		47,607			44,412			51,417			46,008			52,294
Long-term borrowings		37,624			37,593			37,499			37,609			37,484
Shareholders' equity		201,685			199,525			196,663			200,605			196,376
Shareholders' equity - tangible (a)		155,535			153,084			148,981			154,309			148,542

CAPITAL
Weighted average shares outstanding - basic		8,610,156			8,608,728			8,707,504			8,610,998			8,713,528
Weighted average shares outstanding - diluted		8,619,833			8,613,896			8,715,934			8,616,873			8,722,266

ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	12,675		$	12,601		$	12,844		$	12,601		$	12,427
Provision for loan losses		50			50			100			100			700
Charge-offs		(119		)	(40		)	(321		)	(159		)	(630		)
Recoveries		68			64			170			132			296
Ending balance		$	12,674		$	12,675		$	12,793		$	12,674		$	12,793

LOANS
Construction and land development		$	89,451		$	82,711		$	66,543		$	89,451		$	66,543
Commercial real estate		438,164			427,824			432,315			438,164			432,315
Residential real estate		216,857			222,451			220,778			216,857			220,778
Home equity		107,007			100,019			97,866			107,007			97,866
Commercial and industrial		201,381			196,110			159,015			201,381			159,015
Consumer		5,099			5,449			6,388			5,099			6,388
Total		$	1,057,959		$	1,034,564		$	982,905		$	1,057,959		$	982,905

NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		—			—			—			—			—
Nonaccrual		3,412			5,276			3,772			3,412			3,772
Other real estate owned		1,289			1,493			2,113			1,289			2,113
Nonperforming assets		$	4,701		$	6,769		$	5,885		$	4,701		$	5,885



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	2nd Qtr			1st Qtr				2nd Qtr			YTD			YTD
		2016			2016				2015			2016			2015
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.20		%	1.23			%	1.30		%	1.20		%	1.30		%
Allowance for loan losses to
nonperforming loans		371.45			240.24				339.16			371.45			339.16
Nonperforming assets to total assets		0.29			0.43				0.39			0.29			0.39
Nonperforming loans to total loans		0.32			0.51				0.38			0.32			0.38
Annualized net charge-offs (recoveries)
to average loans		0.02			(0.01		)		0.06			0.01			0.07


OTHER DATA
Fiduciary assets at period-end (d) (e)		$	491,517		$	491,257			$	509,289		$	491,517		$	509,289
Retail brokerage assets at period-end (d) (e)		$	269,066		$	268,542			$	257,306		$	269,066		$	257,306
Number full-time equivalent employees (f)		302			301				322			302			322
Number of full service offices		25			25				27			25			27
Number of loan production offices		2			2				2			2			2
Number of ATM's		33			33				34			33			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) - 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 June 30, 2016 and 2015
			(in thousands, except yields/rates)

								Interest
				Average Balance				Income/Expense				Yield/Rate

				2016		2015		2016		2015		2016		2015
Loans:
	Commercial			$	200,000	$	155,752	$	1,976	$	1,760	3.97	%	4.53	%
	Real estate			844,914		807,605		9,591		9,841		4.54		4.87
	Consumer			5,166		11,562		140		205		10.90		7.11
		Total loans		1,050,080		974,919		11,707		11,806		4.46		4.85

Securities:
	Federal agencies & GSEs			100,205		86,815		446		324		1.78		1.49
	Mortgage-backed & CMOs			81,379		61,738		425		334		2.09		2.16
	State and municipal			164,788		185,848		1,472		1,720		3.57		3.70
	Other			14,692		15,412		130		125		3.54		3.24
		Total securities		361,064		349,813		2,473		2,503		2.74		2.86

Federal funds sold				—		6,480		—		1		—		0.06
Deposits in other banks				53,548		66,236		66		50		0.50		0.30

	Total interest-earning assets			1,464,692		1,397,448		14,246		14,360		3.89		4.11

Non-earning assets				127,569		133,419

		Total assets		$	1,592,261	$	1,530,867

Deposits:
	Demand			$	229,639	$	237,102	43		22		0.08		0.04
	Money market			221,508		195,578		91		61		0.17		0.13
	Savings			117,408		109,397		14		14		0.05		0.05
	Time			403,830		403,854		1,166		1,087		1.16		1.08
		Total deposits		972,385		945,931		1,314		1,184		0.54		0.50

Customer repurchase agreements				47,607		51,417		1		2		0.01		0.02
Long-term borrowings				37,624		37,499		294		269		3.13		2.87

	Total interest-bearing liabilities			1,057,616		1,034,847		1,609		1,455		0.61		0.56

Noninterest bearing demand deposits				323,135		290,695
Other liabilities				9,825		8,662
Shareholders' equity				201,685		196,663
		Total liabilities and
			shareholders' equity	$	1,592,261	$	1,530,867

Interest rate spread												3.28	%	3.55	%
Net interest margin												3.45	%	3.69	%

Net interest income (taxable equivalent basis)								12,637		12,905
Less: Taxable equivalent adjustment								478		523
Net interest income								$	12,159	$	12,382



			Net Interest Income Analysis
			For the Six Months Ended June 30, 2016 and 2015
			(in thousands, except yields/rates)

								Interest
				Average Balance				Income/Expense				Yield/Rate

				2016		2015		2016		2015		2016		2015
Loans:
	Commercial			$	194,137	$	147,482	$	3,830	$	3,586	3.99	%	4.90	%
	Real estate			834,943		804,507		19,681		19,560		4.71		4.86
	Consumer			5,336		13,434		371		445		14.06		6.68
		Total loans		1,034,416		965,423		23,882		23,591		4.63		4.89

Securities:
	Federal agencies & GSEs			94,244		80,866		824		569		1.75		1.41
	Mortgage-backed & CMOs			78,635		63,637		825		712		2.10		2.24
	State and municipal			165,349		188,020		2,964		3,483		3.59		3.70
	Other			15,810		15,293		278		248		3.52		3.24
		Total securities		354,038		347,816		4,891		5,012		2.76		2.88

Federal funds sold				—		10,508		—		5		—		0.10
Deposits in other banks				56,157		66,425		125		98		0.45		0.30

	Total interest-earning assets			1,444,611		1,390,172		28,898		28,706		4.01		4.13

Non-earning assets				127,081		134,521

		Total assets		$	1,571,692	$	1,524,693

Deposits:
	Demand			$	230,504	$	224,955	80		40		0.07		0.04
	Money market			213,391		199,236		166		132		0.16		0.13
	Savings			117,529		108,545		28		26		0.05		0.05
	Time			399,904		409,283		2,337		2,180		1.18		1.07
		Total deposits		961,328		942,019		2,611		2,378		0.55		0.51

Customer repurchase agreements				46,008		52,294		2		5		0.01		0.02
Long-term borrowings				37,609		37,484		583		533		3.10		2.84

	Total interest-bearing liabilities			1,044,945		1,031,797		3,196		2,916		0.62		0.57

Noninterest bearing demand deposits				316,699		286,855
Other liabilities				9,443		9,665
Shareholders' equity				200,605		196,376
		Total liabilities and
			shareholders' equity	$	1,571,692	$	1,524,693

Interest rate spread												3.39	%	3.56	%
Net interest margin												3.56	%	3.71	%

Net interest income (taxable equivalent basis)								25,702		25,790
Less: Taxable equivalent adjustment								958		1,030
Net interest income								$	24,744	$	24,760

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AMERICAN NATIONAL BANKSHARES INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 21, 2016

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