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.	earningsreleaseq4-2018final.htm
8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	form8-kearningsrelease1172.htm



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

	December 31
Assets	2018			2017

Cash and due from banks	$	29,587		$	28,594
Interest-bearing deposits in other banks	34,668			23,883

Equity securities, at fair value	1,830			—
Securities available for sale, at fair value	332,653			321,337
Restricted stock, at cost	5,247			6,110
Loans held for sale	640			1,639

Loans	1,357,476			1,336,125
Less allowance for loan losses	(12,805		)	(13,603		)
Net Loans	1,344,671			1,322,522

Premises and equipment, net	26,675			25,901
Other real estate owned, net	869			1,225
Goodwill	43,872			43,872
Core deposit intangibles, net	926			1,191
Bank owned life insurance	18,941			18,460
Accrued interest receivable and other assets	22,287			21,344

Total assets	$	1,862,866		$	1,816,078


Liabilities
Demand deposits -- noninterest-bearing	$	435,828		$	394,344
Demand deposits -- interest-bearing	234,621			226,914
Money market deposits	401,461			403,024
Savings deposits	132,360			126,786
Time deposits	361,957			383,658
Total deposits	1,566,227			1,534,726

Short-term borrowings:
Customer repurchase agreements	35,243			10,726
Other short-term borrowings	—			24,000
Junior subordinated debt	27,927			27,826
Accrued interest payable and other liabilities	10,927			10,083
Total liabilities	1,640,324			1,607,361

Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,720,337 shares outstanding at December 31, 2018 and
8,650,547 shares outstanding at December 31, 2017	8,668			8,604
Capital in excess of par value	78,172			76,179
Retained earnings	141,537			127,010
Accumulated other comprehensive loss, net	(5,835		)	(3,076		)
Total shareholders' equity	222,542			208,717

Total liabilities and shareholders' equity	$	1,862,866		$	1,816,078



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
	2018			2017			2018			2017
Interest and Dividend Income:
Interest and fees on loans	$	15,481		$	14,426		$	59,966		$	55,276
Interest and dividends on securities:
Taxable	1,674			1,271			6,106			4,666
Tax-exempt	298			439			1,502			2,043
Dividends	81			79			321			319
Other interest income	357			265			873			734
Total interest and dividend income	17,891			16,480			68,768			63,038

Interest Expense:
Interest on deposits	2,340			1,713			8,086			5,794
Interest on short-term borrowings	145			79			186			173
Interest on long-term borrowings	—			53			—			296
Interest on junior subordinated debt	394			272			1,402			1,028
Total interest expense	2,879			2,117			9,674			7,291

Net Interest Income:	15,012			14,363			59,094			55,747
Provision for loan losses	(6		)	(74		)	(103		)	1,016

Net Interest Income After Provision
for Loan Losses	15,018			14,437			59,197			54,731

Noninterest Income:
Trust fees	908			1,008			3,783			3,926
Service charges on deposit accounts	646			608			2,455			2,426
Other fees and commissions	660			619			2,637			2,471
Mortgage banking income	370			605			1,862			2,208
Securities gains (losses), net	(270		)	222			123			812
Brokerage fees	192			226			795			829
Income from Small Business Investment Companies	161			118			637			236
Gains (losses) on premises and equipment, net	(6		)	7			60			344
Other	337			391			922			975
Total noninterest income	2,998			3,804			13,274			14,227

Noninterest Expense:
Salaries	5,132			5,225			20,509			19,829
Employee benefits	1,048			1,045			4,370			4,274
Occupancy and equipment	1,081			1,120			4,378			4,487
FDIC assessment	125			137			537			538
Bank franchise tax	191			277			1,054			1,072
Core deposit intangible amortization	55			80			265			528
Data processing	382			550			1,691			2,014
Software	313			291			1,279			1,144



Other real estate owned, net	21		130		122		303
Merger related expenses	872		—		872		—
Other	2,418		2,166		9,169		8,694
Total noninterest expense	11,638		11,021		44,246		42,883

Income Before Income Taxes	6,378		7,220		28,225		26,075
Income Taxes	1,376		5,100		5,646		10,826
Net Income	5,002		2,120		22,579		15,249

Net Income Per Common Share:
Basic	$	0.57	$	0.25	$	2.60	$	1.76
Diluted	$	0.57	$	0.24	$	2.59	$	1.76
Average Common Shares Outstanding:
Basic	8,717,572		8,648,494		8,698,014		8,641,717
Diluted	8,723,388		8,668,765		8,708,647		8,660,628



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)													At or for the Year Ended
		4th Qtr				3rd Qtr				4th Qtr				December 31,
		2018				2018				2017				2018				2017
EARNINGS
Interest income		$	17,891			$	17,217			$	16,480			$	68,768			$	63,038
Interest expense		2,879				2,466				2,117				9,674				7,291
Net interest income		15,012				14,751				14,363				59,094				55,747
Provision for loan losses		(6		)		(23		)		(74		)		(103		)		1,016
Noninterest income		2,998				3,380				3,804				13,274				14,227
Noninterest expense		11,638				10,904				11,021				44,246				42,883
Income taxes		1,376				1,465				5,100				5,646				10,826
Net income		5,002				5,785				2,120				22,579				15,249

PER COMMON SHARE
Income per share - basic		$	0.57			$	0.66			$	0.25			$	2.60			$	1.76
Income per share - diluted		0.57				0.66				0.24				2.59				1.76
Cash dividends paid		0.25				0.25				0.25				1.00				0.97
Book value per share		25.52				24.79				24.13				25.52				24.13
Book value per share - tangible (a)		20.38				19.65				18.92				20.38				18.92
Closing market price		29.31				39.00				38.30				29.31				38.30

FINANCIAL RATIOS
Return on average assets		1.08			%	1.28			%	0.47			%	1.24			%	0.87		%
Return on average equity		9.16				10.76				4.00				10.56				7.34
Return on average tangible equity (b)		11.63				13.70				5.21				13.49				9.59
Average equity to average assets		11.78				11.87				11.64				11.70				11.82
Tangible equity to tangible assets (a)		9.78				9.72				9.24				9.78				9.24
Net interest margin, taxable equivalent		3.48				3.51				3.46				3.49				3.50
Efficiency ratio (c)		58.45				59.65				59.93				59.57				60.89
Effective tax rate		21.57				20.21				70.64				20.00				41.52

PERIOD-END BALANCES
Securities		$	339,730			$	303,103			$	327,447			$	339,730			$	327,447
Loans held for sale		640				1,934				1,639				640				1,639
Loans, net of unearned income		1,357,476				1,331,153				1,336,125				1,357,476				1,336,125
Goodwill and other intangibles		44,798				44,853				45,063				44,798				45,063
Assets		1,862,866				1,806,491				1,816,078				1,862,866				1,816,078
Assets - tangible (a)		1,818,068				1,761,638				1,771,015				1,818,068				1,771,015
Deposits		1,566,227				1,523,107				1,534,726				1,566,227				1,534,726
Customer repurchase agreements		35,243				29,104				10,726				35,243				10,726
Other short-term borrowings		—				—				24,000				—				24,000
Long-term borrowings		27,927				27,902				27,826				27,927				27,826
Shareholders' equity		222,542				216,066				208,717				222,542				208,717
Shareholders' equity - tangible (a)		177,744				171,213				163,654				177,744				163,654



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)										At or for the Year Ended
		4th Qtr			3rd Qtr			4th Qtr			December 31,
		2018			2018			2017			2018			2017
AVERAGE BALANCES
Securities (d)		$	332,230		$	335,320		$	304,254		$	330,982		$	301,377
Loans held for sale		1,201			3,282			4,269			2,285			3,185
Loans, net of unearned income		1,335,469			1,327,060			1,301,833			1,330,582			1,262,264
Interest-earning assets		1,736,453			1,693,912			1,695,091			1,709,283			1,631,853
Goodwill and other intangibles		44,831			44,887			45,109			44,926			45,287
Assets		1,854,492			1,811,631			1,820,499			1,827,658			1,758,012
Assets - tangible (a)		1,809,661			1,766,744			1,775,390			1,782,732			1,712,725
Interest-bearing deposits		1,116,911			1,118,929			1,109,286			1,134,512			1,061,519
Deposits		1,558,864			1,542,945			1,520,665			1,556,039			1,454,182
Customer repurchase agreements		37,905			11,896			42,540			18,401			46,335
Other short-term borrowings		—			2,176			951			1,149			3,158
Long-term borrowings		27,914			27,886			34,331			27,874			36,887
Shareholders' equity		218,430			215,054			211,864			213,821			207,807
Shareholders' equity - tangible (a)		173,599			170,167			166,755			168,895			162,520

CAPITAL
Average common shares outstanding - basic		8,717,572			8,712,443			8,648,494			8,698,014			8,641,717
Average common shares outstanding - diluted		8,723,388			8,718,918			8,668,765			8,708,647			8,660,628

ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	13,588		$	13,508		$	13,858		$	13,603		$	12,801
Provision for loan losses		(6		)	(23		)	(74		)	(103		)	1,016
Charge-offs		(818		)	(28		)	(280		)	(1,020		)	(690		)
Recoveries		41			131			99			325			476
Ending balance		$	12,805		$	13,588		$	13,603		$	12,805		$	13,603

LOANS
Construction and land development		$	97,240		$	99,546		$	123,147		$	97,240		$	123,147
Commercial real estate		655,800			632,022			637,701			655,800			637,701
Residential real estate		209,438			205,277			209,326			209,438			209,326
Home equity		103,933			104,873			109,857			103,933			109,857
Commercial and industrial		285,972			284,176			251,666			285,972			251,666
Consumer		5,093			5,259			4,428			5,093			4,428
Total		$	1,357,476		$	1,331,153		$	1,336,125		$	1,357,476		$	1,336,125

NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		$	72		$	74		$	359		$	72		$	359
Nonaccrual		1,090			2,238			2,201			1,090			2,201
Other real estate owned		869			916			1,225			869			1,225
Nonperforming assets		$	2,031		$	3,228		$	3,785		$	2,031		$	3,785



American National Bankshares Inc.
Financial Highlights
Unaudited

	(Dollars in thousands, except per share data)										At or for the Year Ended
		4th Qtr			3rd Qtr			4th Qtr			December 31,
		2018			2018			2017			2018			2017
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		0.94		%	1.02		%	1.02		%	0.94		%	1.02		%
Allowance for loan losses to
nonperforming loans		1,101.98			587.72			531.37			1,101.98			531.37
Nonperforming assets to total assets		0.11			0.18			0.21			0.11			0.21
Nonperforming loans to total loans		0.09			0.17			0.19			0.09			0.19
Annualized net charge-offs (recoveries)
to average loans		0.23			(0.03)			0.06			0.05			0.02


OTHER DATA
Fiduciary assets at period-end (e) (f)		$	494,034		$	523,754		$	518,284		$	494,034		$	518,284
Retail brokerage assets at period-end (e) (f)		$	274,552		$	333,565		$	321,151		$	274,552		$	321,151
Number full-time equivalent employees (g)		305			316			328			305			328
Number of full service offices		24			24			26			24			26
Number of loan production offices		2			2			2			2			2
Number of ATM's		33			34			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 (i) gains (losses) on the sale of OREO,
net and (ii) merger related expenses by net interest income including tax equivalent income on nontaxable loans
and securities and noninterest income excluding (i) securities gains (losses), net and (ii) gains (losses) on premises and
equipment, net.
(d) - Average does not include unrealized gains and losses.
(e) - Market value.
(f) - Assets are not owned by American National and are not reflected in the consolidated balance sheet.
(g) - Average for quarter.



			Net Interest Income Analysis
			For the Three Months Ended December 31, 2018 and 2017
			(Dollars in thousands)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2018		2017		2018		2017		2018		2017
Loans:
	Commercial			$	262,040	$	233,689	$	2,768	$	2,253	4.19	%	3.82	%
	Real estate			1,069,515		1,068,273		12,681		12,171		4.74		4.56
	Consumer			5,115		4,140		76		81		5.89		7.76
		Total loans		1,336,670		1,306,102		15,525		14,505		4.64		4.44

Securities:
	Federal agencies & GSEs			128,826		104,523		752		508		2.33		1.94
	Mortgage-backed & CMOs			110,753		92,339		655		501		2.37		2.17
	State and municipal			78,223		92,636		529		829		2.71		3.58
	Other			14,428		14,756		187		171		5.18		4.64
		Total securities		332,230		304,254		2,123		2,009		2.56		2.64

Deposits in other banks				67,553		84,735		357		265		2.10		1.24

	Total interest-earning assets			1,736,453		1,695,091		18,005		16,779		4.14		3.95

Non-earning assets				118,039		125,408

		Total assets		$	1,854,492	$	1,820,499

Deposits:
	Demand			$	229,286	$	220,150	13		11		0.02		0.02
	Money market			391,289		374,691		1,081		623		1.10		0.66
	Savings			133,350		126,274		10		10		0.03		0.03
	Time			362,986		388,171		1,236		1,069		1.35		1.09
		Total deposits		1,116,911		1,109,286		2,340		1,713		0.83		0.61

Customer repurchase agreements				37,905		42,540		145		74		1.52		0.69
Other short-term borrowings				—		951		—		4		—		1.68
Long-term borrowings				27,914		34,331		394		326		5.65		3.80
	Total interest-bearing
		liabilities		1,182,730		1,187,108		2,879		2,117		0.97		0.71

Noninterest bearing demand deposits				441,953		411,379
Other liabilities				11,379		10,148
Shareholders' equity				218,430		211,864
		Total liabilities and
			shareholders' equity	$	1,854,492	$	1,820,499

Interest rate spread												3.17	%	3.24	%
Net interest margin												3.48	%	3.46	%

Net interest income (taxable equivalent basis)								15,126		14,662
Less: Taxable equivalent adjustment (a)								114		299
Net interest income								$	15,012	$	14,363

Notes:
	(a) - Calculated using 21% and 35% statutory income tax rate in 2018 and 2017, respectively, due to tax rate change.



			Net Interest Income Analysis
			For the Years Ended December 31, 2018 and 2017
			(Dollars in thousands)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2018		2017		2018		2017		2018		2017
Loans:
	Commercial			$	264,241	$	229,239	$	10,579	$	8,829	4.00	%	3.85	%
	Real estate			1,063,950		1,031,558		49,275		46,400		4.63		4.50
	Consumer			4,676		4,652		305		352		6.52		7.57
		Total loans		1,332,867		1,265,449		60,159		55,581		4.51		4.39

Securities:
	Federal agencies & GSEs			121,923		97,670		2,708		1,849		2.22		1.89
	Mortgage-backed & CMOs			109,048		82,042		2,467		1,725		2.26		2.10
	State and municipal			85,061		105,869		2,399		3,781		2.82		3.57
	Other			14,950		15,796		718		707		4.80		4.48
		Total securities		330,982		301,377		8,292		8,062		2.51		2.68

Deposits in other banks				45,434		65,027		873		734		1.92		1.13

	Total interest-earning assets			1,709,283		1,631,853		69,324		64,377		4.06		3.95

Non-earning assets				118,375		126,159

		Total assets		$	1,827,658	$	1,758,012

Deposits:
	Demand			$	234,857	$	217,833	49		43		0.02		0.02
	Money market			393,321		335,085		3,505		1,668		0.89		0.50
	Savings			132,182		125,157		40		38		0.03		0.03
	Time			374,152		383,444		4,492		4,045		1.20		1.05
		Total deposits		1,134,512		1,061,519		8,086		5,794		0.71		0.55

Customer repurchase agreements				18,401		46,335		164		142		0.89		0.31
Other short-term borrowings				1,149		3,158		22		31		1.91		0.98
Long-term borrowings				27,874		36,887		1,402		1,324		5.03		3.59
	Total interest-bearing
		liabilities		1,181,936		1,147,899		9,674		7,291		0.82		0.64

Noninterest bearing demand deposits				421,527		392,663
Other liabilities				10,374		9,643
Shareholders' equity				213,821		207,807
		Total liabilities and
			shareholders' equity	$	1,827,658	$	1,758,012

Interest rate spread												3.24	%	3.31	%
Net interest margin												3.49	%	3.50	%

Net interest income (taxable equivalent basis)								59,650		57,086
Less: Taxable equivalent adjustment								556		1,339
Net interest income								$	59,094	$	55,747

Notes:
	(a) - Calculated using 21% and 35% statutory income 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 - January 17, 2019

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