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

Attached files

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EX-99.1 - EXHIBIT 99.1 - AMERICAN NATIONAL BANKSHARES INC.	earningsreleaseq4-2017final.htm
8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	a8-kearningsrelease01x18x2.htm



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

	December 31
ASSETS	2017			2016

Cash and due from banks	$	28,594		$	20,268
Interest-bearing deposits in other banks	23,883			32,939

Securities available for sale, at fair value	321,337			346,502
Restricted stock, at cost	6,110			6,224
Loans held for sale	1,639			5,996

Loans	1,336,125			1,164,821
Less allowance for loan losses	(13,603		)	(12,801		)
Net Loans	1,322,522			1,152,020

Premises and equipment, net	25,901			25,439
Other real estate owned, net	1,225			1,328
Goodwill	43,872			43,872
Core deposit intangibles, net	1,191			1,719
Bank owned life insurance	18,460			18,163
Accrued interest receivable and other assets	20,940			24,168

Total assets	$	1,815,674		$	1,678,638


Liabilities
Demand deposits -- noninterest-bearing	$	394,344		$	378,600
Demand deposits -- interest-bearing	226,914			209,430
Money market deposits	403,024			283,035
Savings deposits	126,786			120,720
Time deposits	383,658			378,855
Total deposits	1,534,726			1,370,640

Short-term borrowings:
Customer repurchase agreements	10,726			39,166
Other short-term borrowings	24,000			20,000
Long-term borrowings	—			9,980
Junior subordinated debt	27,826			27,724
Accrued interest payable and other liabilities	10,083			9,748
Total liabilities	1,607,361			1,477,258

Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,650,547 shares outstanding at December 31, 2017 and
8,618,051 shares outstanding at December 31, 2016	8,604			8,578
Capital in excess of par value	76,179			75,076
Retained earnings	126,465			119,600
Accumulated other comprehensive loss, net	(2,935		)	(1,874		)
Total shareholders' equity	208,313			201,380

Total liabilities and shareholders' equity	$	1,815,674		$	1,678,638



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

	Three Months Ended					Twelve Months Ended
	December 31					December 31
	2017			2016		2017		2016
Interest and Dividend Income:
Interest and fees on loans	$	14,426		$	12,182	$	55,276	$	47,971
Interest and dividends on securities:
Taxable	1,271			1,108		4,666		4,454
Tax-exempt	439			728		2,043		3,135
Dividends	79			76		319		334
Other interest income	265			73		734		276
Total interest and dividend income	16,480			14,167		63,038		56,170

Interest Expense:
Interest on deposits	1,713			1,201		5,794		5,103
Interest on short-term borrowings	79			4		173		10
Interest on long-term borrowings	53			82		296		325
Interest on junior subordinated debt	272			234		1,028		878
Total interest expense	2,117			1,521		7,291		6,316

Net Interest Income	14,363			12,646		55,747		49,854
Provision for loan losses	(74		)	50		1,016		250

Net Interest Income After Provision
for Loan Losses	14,437			12,596		54,731		49,604

Noninterest Income:
Trust fees	1,008			962		3,926		3,791
Service charges on deposit accounts	504			528		2,002		2,048
Other fees and commissions	723			689		2,895		2,680
Mortgage banking income	605			544		2,208		1,713
Securities gains, net	222			175		812		836
Brokerage fees	226			207		829		843
Income from Small Business Investment Companies	118			225		236		463
Gains (losses) on premises and equipment, net	7			—		344		(9		)
Other	391			391		975		1,140
Total noninterest income	3,804			3,721		14,227		13,505

Noninterest Expense:
Salaries	5,225			4,696		19,829		17,568
Employee benefits	1,094			1,061		4,519		4,264
Occupancy and equipment	1,120			1,084		4,487		4,246
FDIC assessment	137			128		538		647
Bank franchise tax	277			226		1,072		995
Core deposit intangible amortization	80			175		528		964
Data processing	550			488		2,014		1,828
Software	291			271		1,144		1,143



Other real estate owned, net	130		22		303		336
Other	2,117		2,209		8,449		7,810
Total noninterest expense	11,021		10,360		42,883		39,801

Income Before Income Taxes	7,220		5,957		26,075		23,308
Income Taxes	5,100		1,835		10,826		7,007
Net Income	2,120		4,122		15,249		16,301

Net Income Per Common Share:
Basic	$	0.25	$	0.48	$	1.76	$	1.89
Diluted	$	0.24	$	0.48	$	1.76	$	1.89
Average Common Shares Outstanding:
Basic	8,648,494		8,615,700		8,641,717		8,611,507
Diluted	8,668,765		8,629,777		8,660,628		8,621,241



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)
		4th Qtr				3rd Qtr			4th Qtr			YTD			YTD
		2017				2017			2016			2017			2016
EARNINGS
Interest income		$	16,480			$	16,274		$	14,167		$	63,038		$	56,170
Interest expense		2,117				1,936			1,521			7,291			6,316
Net interest income		14,363				14,338			12,646			55,747			49,854
Provision for loan losses		(74		)		440			50			1,016			250
Noninterest income		3,804				3,804			3,721			14,227			13,505
Noninterest expense		11,021				10,710			10,360			42,883			39,801
Income taxes		5,100				2,205			1,835			10,826			7,007
Net income		2,120				4,787			4,122			15,249			16,301

PER COMMON SHARE
Income per share - basic		$	0.25			$	0.55		$	0.48		$	1.76		$	1.89
Income per share - diluted		0.24				0.55			0.48			1.76			1.89
Cash dividends paid		0.25				0.24			0.24			0.97			0.96
Book value per share		24.08				24.31			23.37			24.08			23.37
Book value per share - tangible (a)		18.87				19.09			18.08			18.87			18.08
Closing market price		38.30				41.20			34.80			38.30			34.80

FINANCIAL RATIOS
Return on average assets		0.47			%	1.08		%	1.00		%	0.87		%	1.02		%
Return on average equity		4.00				9.16			8.10			7.34			8.07
Return on average tangible equity (b)		5.21				11.81			10.73			9.59			10.85
Average equity to average assets		11.64				11.79			12.39			11.82			12.64
Tangible equity to tangible assets (a)		9.22				9.51			9.54			9.22			9.54
Net interest margin, taxable equivalent		3.46				3.56			3.45			3.50			3.52
Efficiency ratio (c)		59.93				59.14			62.32			60.89			61.47
Effective tax rate		70.64				31.54			30.80			41.52			30.06

PERIOD-END BALANCES
Securities		$	327,447			$	277,714		$	352,726		$	327,447		$	352,726
Loans held for sale		1,639				3,386			5,996			1,639			5,996
Loans, net of unearned income		1,336,125				1,295,154			1,164,821			1,336,125			1,164,821
Goodwill and other intangibles		45,063				45,143			45,591			45,063			45,591
Assets		1,815,674				1,780,541			1,678,638			1,815,674			1,678,638
Assets - tangible (a)		1,770,611				1,735,398			1,633,047			1,770,611			1,633,047
Deposits		1,534,726				1,480,205			1,370,640			1,534,726			1,370,640
Customer repurchase agreements		10,726				43,240			39,166			10,726			39,166
Other short-term borrowings		24,000				—			20,000			24,000			20,000
Long-term borrowings		27,826				37,796			37,704			27,826			37,704
Shareholders' equity		208,313				210,214			201,380			208,313			201,380
Shareholders' equity - tangible (a)		163,250				165,071			155,789			163,250			155,789



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)
		4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
		2017			2017			2016			2017			2016
AVERAGE BALANCES
Securities (d)		$	304,254		$	281,246		$	345,035		$	301,377		$	351,961
Loans held for sale		4,269			3,607			4,758			3,185			3,171
Loans, net of unearned income		1,301,833			1,291,822			1,110,524			1,262,264			1,060,106
Interest-earning assets		1,695,091			1,646,241			1,515,597			1,631,853			1,470,648
Goodwill and other intangibles		45,109			45,191			45,693			45,287			46,037
Assets		1,820,486			1,773,636			1,643,250			1,758,009			1,598,149
Assets - tangible (a)		1,775,377			1,728,445			1,597,557			1,712,722			1,552,112
Interest-bearing deposits		1,109,286			1,066,827			986,622			1,061,519			970,728
Deposits		1,520,665			1,468,523			1,345,743			1,454,182			1,301,043
Customer repurchase agreements		42,540			48,461			45,281			46,335			46,832
Other short-term borrowings		951			—			1,087			3,158			656
Long-term borrowings		34,331			37,780			37,686			36,887			37,640
Shareholders' equity		211,851			209,026			203,603			207,804			202,074
Shareholders' equity - tangible (a)		166,742			163,835			157,910			162,517			156,037

CAPITAL
Average common shares outstanding - basic		8,648,494			8,644,310			8,615,700			8,641,717			8,611,507
Average common shares outstanding - diluted		8,668,765			8,663,246			8,629,777			8,660,628			8,621,241

ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	13,858		$	13,632		$	12,757		$	12,801		$	12,601
Provision for loan losses		(74		)	440			50			1,016			250
Charge-offs		(280		)	(277		)	(81		)	(690		)	(326		)
Recoveries		99			63			75			476			276
Ending balance		$	13,603		$	13,858		$	12,801		$	13,603		$	12,801

LOANS
Construction and land development		$	123,147		$	137,869		$	114,258		$	123,147		$	114,258
Commercial real estate		637,701			602,434			510,960			637,701			510,960
Residential real estate		209,326			209,201			215,104			209,326			215,104
Home equity		109,857			110,926			110,751			109,857			110,751
Commercial and industrial		251,666			230,484			208,717			251,666			208,717
Consumer		4,428			4,240			5,031			4,428			5,031
Total		$	1,336,125		$	1,295,154		$	1,164,821		$	1,336,125		$	1,164,821

NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		$	359		$	538		$	587		$	359		$	587
Nonaccrual		2,201			2,498			2,965			2,201			2,965
Other real estate owned		1,225			2,101			1,328			1,225			1,328
Nonperforming assets		$	3,785		$	5,137		$	4,880		$	3,785		$	4,880



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)
		4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
		2017			2017			2016			2017			2016
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.02		%	1.07		%	1.10		%	1.02		%	1.10		%
Allowance for loan losses to
nonperforming loans		531.37			456.46			360.39			531.37			360.39
Nonperforming assets to total assets		0.21			0.29			0.29			0.21			0.29
Nonperforming loans to total loans		0.19			0.23			0.30			0.19			0.30
Annualized net charge-offs
to average loans		0.06			0.07			0.00			0.02			0.00


OTHER DATA
Fiduciary assets at period-end (e) (f)		$	518,284		$	517,294		$	498,767		$	518,284		$	498,767
Retail brokerage assets at period-end (e) (f)		$	321,151		$	307,281		$	282,454		$	321,151		$	282,454
Number full-time equivalent employees (g)		328			335			320			328			320
Number of full service offices		26			26			26			26			26
Number of loan production offices		2			2			2			2			2
Number of ATM's		34			34			33			34			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
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 December 31, 2017 and 2016
			(Dollars in thousands)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2017		2016		2017		2016		2017		2016
Loans:
	Commercial			$	233,689	$	204,489	$	2,253	$	2,003	3.82	%	3.90	%
	Real estate			1,068,273		905,721		12,171		10,143		4.56		4.48
	Consumer			4,140		5,072		81		98		7.76		7.69
		Total loans		1,306,102		1,115,282		14,505		12,244		4.44		4.39

Securities:
	Federal agencies & GSEs			104,523		96,134		508		423		1.94		1.76
	Mortgage-backed & CMOs			92,339		79,643		501		400		2.17		2.01
	State and municipal			92,636		152,518		829		1,311		3.58		3.44
	Other			14,756		16,740		171		150		4.64		3.58
		Total securities		304,254		345,035		2,009		2,284		2.64		2.65

Deposits in other banks				84,735		55,280		265		73		1.24		0.53

	Total interest-earning assets			1,695,091		1,515,597		16,779		14,601		3.95		3.85

Non-earning assets				125,395		127,653

		Total assets		$	1,820,486	$	1,643,250

Deposits:
	Demand			$	220,150	$	204,910	11		10		0.02		0.02
	Money market			374,691		276,435		623		148		0.66		0.21
	Savings			126,274		119,770		10		9		0.03		0.03
	Time			388,171		385,507		1,069		1,034		1.09		1.07
		Total deposits		1,109,286		986,622		1,713		1,201		0.61		0.48

Customer repurchase agreements				42,540		45,281		74		2		0.69		0.02
Other short-term borrowings				951		1,087		4		2		1.68		0.74
Long-term borrowings				34,331		37,686		326		316		3.80		3.35
	Total interest-bearing
		liabilities		1,187,108		1,070,676		2,117		1,521		0.71		0.57

Noninterest bearing demand deposits				411,379		359,121
Other liabilities				10,148		9,850
Shareholders' equity				211,851		203,603
		Total liabilities and
			shareholders' equity	$	1,820,486	$	1,643,250

Interest rate spread												3.24	%	3.28	%
Net interest margin												3.46	%	3.45	%

Net interest income (taxable equivalent basis)								14,662		13,080
Less: Taxable equivalent adjustment								299		434
Net interest income								$	14,363	$	12,646



			Net Interest Income Analysis
			For the Years Ended December 31, 2017 and 2016
			(Dollars in thousands)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2017		2016		2017		2016		2017		2016
Loans:
	Commercial			$	229,239	$	198,326	$	8,829	$	7,856	3.85	%	3.96	%
	Real estate			1,031,558		859,721		46,400		39,763		4.50		4.63
	Consumer			4,652		5,230		352		605		7.57		11.57
		Total loans		1,265,449		1,063,277		55,581		48,224		4.39		4.54

Securities:
	Federal agencies & GSEs			97,670		96,009		1,849		1,674		1.89		1.74
	Mortgage-backed & CMOs			82,042		79,720		1,725		1,635		2.10		2.05
	State and municipal			105,869		160,279		3,781		5,647		3.57		3.52
	Other			15,796		15,953		707		560		4.48		3.51
		Total securities		301,377		351,961		8,062		9,516		2.68		2.70

Deposits in other banks				65,027		55,410		734		276		1.13		0.50

	Total interest-earning assets			1,631,853		1,470,648		64,377		58,016		3.95		3.94

Non-earning assets				126,156		127,501

		Total assets		$	1,758,009	$	1,598,149

Deposits:
	Demand			$	217,833	$	216,521	43		99		0.02		0.05
	Money market			335,085		239,262		1,668		432		0.50		0.18
	Savings			125,157		118,144		38		47		0.03		0.04
	Time			383,444		396,801		4,045		4,525		1.05		1.14
		Total deposits		1,061,519		970,728		5,794		5,103		0.55		0.53

Customer repurchase agreements				46,335		46,832		142		5		0.31		0.01
Other short-term borrowings				3,158		656		31		5		0.98		0.76
Long-term borrowings				36,887		37,640		1,324		1,203		3.59		3.20
	Total interest-bearing
		liabilities		1,147,899		1,055,856		7,291		6,316		0.64		0.60

Noninterest bearing demand deposits				392,663		330,315
Other liabilities				9,643		9,904
Shareholders' equity				207,804		202,074
		Total liabilities and
			shareholders' equity	$	1,758,009	$	1,598,149

Interest rate spread												3.31	%	3.34	%
Net interest margin												3.50	%	3.52	%

Net interest income (taxable equivalent basis)								57,086		51,700
Less: Taxable equivalent adjustment								1,339		1,846
Net interest income								$	55,747	$	49,854

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AMERICAN NATIONAL BANKSHARES INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 18, 2018

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