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.	earningsreleaseq3-2018.htm
8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	a8-kearningsrelease10182018.htm



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




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
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

CAPITAL
Average common shares outstanding - basic		8,712,443			8,692,107			8,644,310			8,691,423			8,639,433
Average common 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



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
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		)		—


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								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.

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

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