UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
Date of Report (Date of earliest event reported) July 23, 2015
 
 
 
AMERICAN NATIONAL BANKSHARES INC.
(Exact name of registrant as specified in its charter)
 
 
 
Virginia
0-12820
54-1284688
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
 
 
 
 
 
 
Registrant’s telephone number, including area code: 434-792-5111
 
 
 
 
 
 
Not Applicable
(Former name or former address, if changed since last report.)
 
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
þ
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))
 
 
Item 2.02 Results of Operations and Financial Condition
 
On July 23, 2015, American National Bankshares Inc. ("the Company") reports earnings for second quarter 2015.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits:
 
99.1  July 23, 2015 News Release
 
99.2 Quarterly Balance Sheets, Statements of Income, Net Interest Income Analysis and Selected Financial Data
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 24, 2015                                                                       /s/ William W. Traynham
                                              Executive Vice President and Chief Financial Officer







Date:
July 23, 2015
 
 
Contact:
William W. Traynham, Chief Financial Officer
   
434-773-2242   
 
traynhamw@amnb.com
 
 
 
 
Traded:
NASDAQ Global Select Market
Symbol:
AMNB

AMERICAN NATIONAL BANKSHARES INC. REPORTS SECOND QUARTER 2015 EARNINGS

•
Organic loan growth of $61.5 million (7.6%) over last four quarters
•
Completed integration of MainStreet BankShares, Inc.
•
Q2 2015 net income of $2.9 million and diluted EPS of $0.33
•
Net interest margin of 3.69% for Q2 2015
•
Average shareholders’ equity of $197 million is 12.85% of average assets

Danville, VA -- American National Bankshares Inc. (“American National”) (NASDAQ: AMNB), parent company of American National Bank and Trust Company, today announced twelve month organic loan growth of 7.6%, the completion of the integration of MainStreet BankShares, Inc., and $2,880,000 net income for the second quarter 2015.
The net income of $2,880,000 compared to $3,233,000 for the second quarter of 2014, is a $353,000 or 10.9% decrease. Basic and diluted net income per common share was $0.33 for the 2015 quarter compared to $0.41 for the 2014 quarter. Net income for the second quarter of 2015 produced a return on average assets of 0.75%, a return on average equity of 5.86%, and a return on average tangible equity of 8.26%.
Net income for the first six months of 2015 was $6,395,000 compared to $6,683,000 for the comparable period of 2014, a $288,000 or 4.3% decrease. Basic and diluted net income per common share was $0.73 for the 2015 period compared to $0.85 for the 2014 period.
The 2015 quarter and six month period were negatively impacted by nonrecurring, merger related costs associated with the January acquisition of MainStreet

1




BankShares, Inc. (“MainStreet”). Merger related costs for the 2015 quarter were $1,502,000 and for the six month period $1,861,000.
Financial Performance and Overview
Jeffrey V. Haley, President and Chief Executive Officer, reported, “One major story for early 2015 continues to be our acquisition of MainStreet and its banking subsidiary, Franklin Community Bank, N.A. (“Franklin Community Bank”). This merger closed on January 1, 2015, and we completed the operational and technology aspects of the union in mid-May. We are extremely pleased with the integration progress made during the first half of this year and we are fortunate to have the employees and customers of Franklin Community Bank as part of our growing American National corporate family.
“The merger has had a positive impact on our balance sheet and we are also seeing organic balance sheet growth in our other markets.
“At June 30, 2015, American National had $982,905,000 in loans compared to $813,057,000 at June 30, 2014, an increase of $169,848,000 or 20.9%. Of this increase, $108,326,000 or 63.8% relates directly to the MainStreet acquisition.
“Our other major story for early 2015 is organic growth. Organic loan growth over the past year was $61,522,000 or 7.6%. We are very encouraged that a combination of active business development and gradually improving local market economic conditions are beginning to result in high quality growth.
“At June 30, 2015, American National had $1,234,018,000 in deposits compared to $1,035,800,000 at June 30, 2014, an increase of $198,218,000 or 19.1%. Of this increase, $125,320,000 or 63.2% relates directly to the MainStreet acquisition. The deposit growth was strong in all categories, but most notably in non-maturity (core) deposits. We are continuously working to grow core deposits and their affiliated relationships, but the challenge in this ongoing low rate environment is to do that in a cost effective and yet competitive manner. Our cost of interest bearing deposits for the second quarter was 0.50%, compared to 0.57% for the 2014 quarter.
“On the earnings side, our net income for the second quarter was $2,880,000, down from $3,233,000 in the 2014 quarter, a decrease of $353,000 or 10.9%.
“We had several drivers that impacted the 2015 quarter compared to the 2014 quarter.

2




“The merger with MainStreet had a significant and positive impact to operating results by adding substantially to earning assets.
“The provision for loan loss decreased by $50,000 during the quarter. This decrease was primarily related to improving economic conditions and continuing strong asset quality metrics, but was offset by loan growth during the quarter.
“Noninterest income was higher in the 2015 quarter by $558,000 or 20.7%, related mostly to the MainStreet merger.
“Noninterest expense was higher in the 2015 quarter by $3,277,000 or 39.2%, related mostly to the merger and to merger related, nonrecurring expenses. The nonrecurring merger costs were $1,502,000 for the quarter.”
Haley concluded, “The first half of 2015 has been busy and productive for American National. The Franklin Community Bank merger in January and operational conversion in May were major accomplishments and I want to thank all people that worked so hard and successfully to make them happen.
“On another front, we are extremely pleased to see the beginning of significant organic loan growth. This is our favorite leading indicator of improving business conditions.
“American National will continue to grow its balance sheet and maintain high asset quality. Asset quality is a fundamental value for us. But, at the same time, we are constantly seeking ways to better deploy our capital. Among those ways is our ongoing stock repurchase plan, which during the quarter bought almost 52,000 shares. These efforts will continue to manifest themselves through continuing consideration of future merger and acquisition opportunities, continuing timely and economical stock repurchase activity, and an ongoing review of our dividend policy.”
                    
Capital
American National’s capital ratios remain strong and exceed all regulatory requirements.
For the quarter ended June 30, 2015, average shareholders’ equity was 12.85% of average assets, compared to 13.22% for the quarter ended June 30, 2014.

3




Book value per common share was $22.43 at June 30, 2015, compared to $21.95 at June 30, 2014.
Tangible book value per common share was $16.96 at June 30, 2015, compared to $16.65 at June 30, 2014.

Credit Quality Measurements
Non-performing assets ($3,772,000 of non-performing loans and $2,113,000 of other real estate owned) represented 0.39% of total assets at June 30, 2015, compared to 0.60% at June 30, 2014.
Annualized net charge offs to average loans was six basis points (0.06%) for the 2015 second quarter, compared to zero basis points (0.00%) for the same quarter in 2014.
The allowance for loan losses as a percentage of total loans was 1.30% at June 30, 2015 compared to 1.57% at June 30, 2014. The largest driver of this decrease was the merger with MainStreet, whose loans have been marked to fair value at the merger date and whose related allowance for loan loss was eliminated in the valuation process.
Other real estate owned was $2,113,000 at June 30, 2015, compared to $2,622,000 at June 30, 2014, a decrease of $509,000 or 19.4%.

Merger related financial impact
The fair value adjustments related to our two recent mergers have had a favorable impact on net interest income and income before income tax for American National. The adjustments are summarized below (dollars in thousands):


4




The MainStreet merger was effective January 1, 2015; therefore, no comparative 2014 information is presented.

Net Interest Income
Net interest income before provision for loan losses increased to $12,382,000 in the second quarter of 2015 from $10,351,000 in the second quarter of 2014, an increase of $2,031,000 or 19.6%.
For the 2015 quarter, the net interest margin was 3.69% compared to 3.68% for the same quarter in 2014, an increase of one basis point (0.01%).

Provision for loan losses
Provision expense for the second quarter of 2015 was $100,000 compared to $150,000 for the second quarter of 2014.
The need for provision expense in the 2015 quarter was driven primarily by an increase in loan volume of approximately $17 million. It was partially mitigated by improving economic conditions and continuing strong asset quality metrics.

Noninterest Income
Noninterest income totaled $3,258,000 in the second quarter of 2015, compared with $2,700,000 in the second quarter of 2014, an increase of $558,000 or 20.7%. Almost all income categories showed substantial increases, most of which were related to increased transaction volumes resulting from the MainStreet transaction.

Noninterest Expense
Noninterest expense totaled $11,642,000 in the second quarter of 2015, compared to $8,365,000 in the second quarter of 2014, an increase of $3,277,000 or 39.2%.
All expense categories were impacted by the MainStreet merger and the integration of Franklin Community Bank into American National’s operations.
However, the major driver of the increase was nonrecurring, merger related expenses, related to the MainStreet acquisition, which accounted for $1,502,000 or 45.8%

5




of the increase. The operational conversion of Franklin Community Bank was completed in mid-May and substantially all of the related technology costs have been recognized. Accordingly, management expects no substantial expense in this category in future periods.

About American National
As of January 1, 2015, with the closing of the acquisition of MainStreet BankShares, Inc., American National Bankshares Inc. is a multi-state bank holding company with total assets of approximately $1.5 billion. Headquartered in Danville, Virginia, American National is the parent company of American National Bank and Trust Company. American National Bank is a community bank serving southern and central Virginia and north central North Carolina with 27 banking offices and two loan production offices. American National Bank and Trust Company also manages an additional $767 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about the company and the bank is available on the bank's website at www.amnb.com.
Shares of American National are traded on the NASDAQ Global Select Market under the symbol "AMNB."
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws. Certain of the statements involve significant risks and uncertainties. The statements herein are based on certain assumptions and analyses by American National and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies or guidelines; significant changes in the economic scenario; significant changes in regulatory requirements; significant changes in securities markets; and changes regarding acquisitions and dispositions. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in American National's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. American National does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

6





 American National Bankshares Inc. and Subsidiaries
 Consolidated Balance Sheets
 (Dollars in thousands, except share and per share data)
Unaudited
 
 
 
 
 
 
 
June 30
ASSETS
 
2015
 
2014
 
 
 
 
 
Cash and due from banks
 
 $ 24,548

 
 $ 21,295

Interest-bearing deposits in other banks
 
          50,758

 
          22,948

Federal funds sold
 
               408

 
0

 
 
 
 
 
Securities available for sale, at fair value
 
        355,595

 
        349,719

Restricted stock, at cost
 
            5,581

 
            4,998

Loans held for sale
 
            2,720

 
               118

 
 
 
 
 
Loans
 
        982,905

 
        813,057

  Less allowance for loan losses
 
         (12,793)

 
         (12,763)

      Net Loans
 
        970,112

 
        800,294

 
 
 
 
 
Premises and equipment, net
 
          24,182

 
          23,083

Other real estate owned, net
 
            2,113

 
            2,622

Goodwill
 
          44,210

 
          39,043

Core deposit intangibles, net
 
            3,283

 
            2,498

Bank owned life insurance
 
          17,376

 
          14,945

Accrued interest receivable and other assets
 
          23,470

 
          19,085

 
 
 
 
 
      Total assets
 
 $ 1,524,356

 
 $ 1,300,648

 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
   Demand deposits -- noninterest-bearing
 
 $ 294,342

 
 $ 228,588

   Demand deposits -- interest-bearing
 
        239,582

 
        189,700

   Money market deposits
 
        190,799

 
        165,090

   Savings deposits
 
        109,732

 
          88,539

   Time deposits
 
        399,563

 
        363,883

      Total deposits
 
     1,234,018

 
     1,035,800

 
 
 
 
 
   Short-term borrowings:
 
 
 
 
      Customer repurchase agreements
 
          50,123

 
          38,420

      Other short-term borrowings
 
0

 
          12,000

   Long-term borrowings
 
            9,947

 
            9,924

   Trust preferred capital notes
 
          27,571

 
          27,470

   Accrued interest payable and other liabilities
 
            7,814

 
            4,951

      Total liabilities
 
     1,329,473

 
     1,128,565

 
 
 
 
 
Shareholders' equity
 
 
 
 
   Preferred stock, $5 par, 2,000,000 shares authorized,
 
 
 
 
       none outstanding
 
—

 
—

   Common stock, $1 par, 20,000,000 shares authorized,
 
 
 
 
       8,688,480 shares outstanding at June 30, 2015 and
 
 
 
 




       7,840,132 shares outstanding at June 30, 2014
 
            8,671

 
            7,840

   Capital in excess of par value
 
          76,826

 
          56,944

   Retained earnings
 
        106,984

 
        102,152

   Accumulated other comprehensive income, net
 
            2,402

 
            5,147

      Total shareholders' equity
 
        194,883

 
        172,083

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

 
 $ 1,300,648








American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30
 
June 30
 
 
2015
 
2014
 
2015
 
2014
  Interest and Dividend Income:
 
 
 
 
 
 
 
 
   Interest and fees on loans
 
 $ 11,767
 
 $ 9,687

 
 $ 23,537
 
 $ 19,534

   Interest on federal funds sold
 
               1
 
—

 
               5
 
—

   Interest and dividends on securities:
 
 
 
 
 
 
 
 
     Taxable
 
           994
 
           968

 
        1,969
 
        1,932

     Tax-exempt
 
           940
 
        1,016

 
        1,900
 
        2,051

     Dividends
 
             85
 
             74

 
           167
 
           149

   Other interest income
 
             50
 
             35

 
             98
 
             68

       Total interest and dividend income
 
      13,837
 
      11,780

 
      27,676
 
      23,734

 
 
 
 
 
 
 
 
 
 Interest Expense:
 
 
 
 
 
 
 
 
   Interest on deposits
 
        1,184
 
        1,161

 
        2,378
 
        2,390

   Interest on short-term borrowings
 
               2
 
               2

 
               5
 
               4

   Interest on long-term borrowings
 
             81
 
             81

 
           161
 
           161

   Interest on trust preferred capital notes
 
           188
 
           185

 
           372
 
           369

      Total interest expense
 
        1,455
 
        1,429

 
        2,916
 
        2,924

 
 
 
 
 
 
 
 
 
 Net Interest Income
 
      12,382
 
      10,351

 
      24,760
 
      20,810

   Provision for loan losses
 
           100
 
           150

 
           700
 
           150

 
 
 
 
 
 
 
 
 
Net Interest Income After Provision
 
 
 
 
 
 
 
 
    for Loan Losses
 
      12,282
 
      10,201

 
      24,060
 
      20,660

 
 
 
 
 
 
 
 
 
 Noninterest Income:
 
 
 
 
 
 
 
 
   Trust fees
 
        1,005
 
        1,017

 
        1,957
 
        2,139

   Service charges on deposit accounts
 
           525
 
           431

 
        1,022
 
           844

   Other fees and commissions
 
           607
 
           493

 
        1,195
 
           937

   Mortgage banking income
 
           389
 
           275

 
           611
 
           538

   Securities gains, net
 
           237
 
           150

 
           547
 
           189

   Other
 
           495
 
           334

 
        1,082
 
           756

      Total noninterest income
 
        3,258
 
        2,700

 
        6,414
 
        5,403

 
 
 
 
 
 
 
 
 
 Noninterest Expense:
 
 
 
 
 
 
 
 
   Salaries
 
        4,308
 
        3,638

 
        8,455
 
        7,176

   Employee benefits
 
        1,111
 
           847

 
        2,186
 
        1,822

   Occupancy and equipment
 
        1,024
 
           910

 
        2,196
 
        1,846

   FDIC assessment
 
           195
 
           165

 
           380
 
           329

   Bank franchise tax
 
           220
 
           231

 
           455
 
           453





   Core deposit intangible amortization
 
           300
 
           330

 
           601
 
           661

   Data processing
 
           483
 
           345

 
           945
 
           693

   Software
 
           277
 
           235

 
           560
 
           497

   Other real estate owned, net
 
           133
 
              (9)

 
           186
 
               7

   Merger related expenses
 
        1,502
 
0

 
        1,861
 
0

   Other
 
        2,089
 
        1,673

 
        3,864
 
        3,304

      Total noninterest expense
 
      11,642
 
        8,365

 
      21,689
 
      16,788

 
 
 
 
 
 
 
 
 
 Income Before Income Taxes
 
        3,898
 
        4,536

 
        8,785
 
        9,275

 Income Taxes
 
        1,018
 
        1,303

 
        2,390
 
        2,592

 Net Income
 
 $ 2,880
 
 $ 3,233

 
 $ 6,395
 
 $ 6,683

 
 
 
 
 
 
 
 
 
Net Income Per Common Share:
 
 
 
 
 
 
 
 
    Basic
 
 $ 0.33
 
 $ 0.41

 
 $ 0.73
 
 $ 0.85

    Diluted
 
 $ 0.33
 
 $ 0.41

 
 $ 0.73
 
 $ 0.85

 Weighted Average Common Shares Outstanding:
 
 
 
 
 
 
 
    Basic
 
 8,707,504
 
 7,872,079

 
 8,713,528
 
 7,886,232

    Diluted
 
 8,715,934
 
 7,879,854

 
 8,722,266
 
 7,896,541







American National Bankshares Inc. and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Financial Highlights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except share, ratio and
 
 
 
 
 
 
 
 
 
 
 
  nonfinancial data, unaudited)
2nd Qtr
 
1st Qtr
 
2nd Qtr
 
 
YTD
 
YTD
 
 
 
 
 
2,015
 
2,015
 
2,014
 
 
2,015
 
2,014
 
EARNINGS
 
 
 
 
 
 
 
 
 
 
 
 
 
      Interest income
 
$
13,837

 
$
13,839

 
$
11,780

 
 
$
27,676

 
$
23,734

 
      Interest expense
 
1,455

 
1,461

 
1,429

 
 
2,916

 
2,924

 
      Net interest income
12,382

 
12,378

 
10,351

 
 
24,760

 
20,810

 
      Provision for loan losses
100

 
600

 
150

 
 
700

 
150

 
      Noninterest income
3,258

 
3,156

 
2,700

 
 
6,414

 
5,403

 
      Noninterest expense
11,642

 
10,047

 
8,365

 
 
21,689

 
16,788

 
      Income taxes
 
1,018

 
1,372

 
1,303

 
 
2,390

 
2,592

 
      Net income
 
2,880

 
3,515

 
3,233

 
 
6,395

 
6,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PER COMMON SHARE
 
 
 
 
 
 
 
 
 
 
 
      Income per share - basic
$
0.33

 
$
0.40

 
$
0.41

 
 
$
0.73

 
$
0.85

 
      Income per share - diluted
0.33

 
0.40

 
0.41

 
 
0.73

 
0.85

 
      Cash dividends paid
0.23

 
0.23

 
0.23

 
 
0.46

 
0.46

 
      Book value per share (a)
22.43

 
22.58

 
21.95

 
 
22.43

 
21.95

 
      Book value per share - tangible (a) (b)
16.96

 
17.09

 
16.65

 
 
16.96

 
16.65

 
      Closing market price
23.81

 
22.58

 
21.73

 
 
23.81

 
21.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
      Return on average assets
0.75

%
0.93

%
1.00

%
0.84

%
1.03

%
      Return on average equity
5.86

 
7.17

 
7.53

 
 
6.51

 
7.82

 
      Return on average tangible equity (c)
8.26

 
10.02

 
10.67

 
 
9.14

 
11.10

 
      Average equity to average assets
12.85

 
12.91

 
13.22

 
 
12.88

 
13.14

 
 Tangible equity to tangible assets (b)
9.98

 
9.98

 
10.37

 
 
9.98

 
10.37

 
      Net interest margin, taxable equivalent
3.69

 
3.73

 
3.68

 
 
3.71

 
3.69

 
      Efficiency ratio (d)
 
72.76

 
63.90

 
62.87

 
 
68.36

 
62.34

 
      Effective tax rate
 
26.12

 
28.07

 
28.73

 
 
27.21

 
27.95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PERIOD-END BALANCES
 
 
 
 
 
 
 
 
 
 
 
      Securities
 
$
361,176

 
$
357,544

 
$
354,717

 
 
$
361,176

 
$
354,717

 
      Loans held for sale
2,720

 
1,936

 
118

 
 
2,720

 
118

 
      Loans, net of unearned income
982,905

 
965,902

 
813,057

 
 
982,905

 
813,057

 
      Goodwill and other intangibles
47,493

 
47,793

 
41,541

 
 
47,493

 
41,541

 
      Assets
 
 
1,524,356

 
1,540,098

 
1,300,648

 
 
1,524,356

 
1,300,648

 
      Assets - tangible (b)
1,476,863

 
1,492,305

 
1,259,107

 
 
1,476,863

 
1,259,107

 
      Deposits
 
1,234,018

 
1,242,675

 
1,035,800

 
 
1,234,018

 
1,035,800

 
      Customer repurchase agreements
50,123

 
53,664

 
38,420

 
 
50,123

 
38,420

 
      Other short-term borrowings
—

 
—

 
12,000

 
 
—

 
12,000

 
      Long-term borrowings
37,518

 
37,487

 
37,394

 
 
37,518

 
37,394

 
      Shareholders' equity
194,883

 
196,689

 
172,083

 
 
194,883

 
172,083

 
      Shareholders' equity - tangible (b)
147,390

 
148,896

 
130,542

 
 
147,390

 
130,542

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
 
 
 
 
 
      Securities
 
$
349,813

 
$
345,800

 
$
347,726

 
 
$
347,816

 
$
346,446

 
      Loans held for sale
2,836

 
939

 
1,685

 
 
1,893

 
1,858

 
      Loans, net of unearned income
972,083

 
954,882

 
793,060

 
 
963,530

 
790,752

 
      Interest-earning assets
1,397,448

 
1,382,817

 
1,183,559

 
 
1,390,172

 
1,185,172

 
      Goodwill and other intangibles
47,682

 
47,988

 
41,738

 
 
47,834

 
41,907

 
      Assets
 
 
1,530,867

 
1,518,449

 
1,299,535

 
 
1,524,693

 
1,301,078

 
      Assets - tangible (b)
1,483,185

 
1,470,461

 
1,257,797

 
 
1,476,859

 
1,259,171

 
      Interest-bearing deposits
945,931

 
938,064

 
820,342

 
 
942,019

 
825,258

 
      Deposits
 
1,236,626

 
1,221,037

 
1,043,479

 
 
1,228,874

 
1,047,524

 
      Customer repurchase agreements
51,417

 
53,181

 
40,720

 
 
52,294

 
39,267

 
      Long-term borrowings
37,499

 
37,469

 
37,376

 
 
37,484

 
37,374

 
      Shareholders' equity
196,663

 
196,086

 
171,784

 
 
196,376

 
170,920

 
      Shareholders' equity - tangible (b)
148,981

 
148,098

 
130,046

 
 
148,542

 
129,013

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





American National Bankshares Inc. and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Financial Highlights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except share, ratio and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  nonfinancial data, unaudited)
2nd Qtr
 
1st Qtr
 
2nd Qtr
 
 
YTD
 
YTD
 
 
2,015
 
2,015
 
2,014
 
 
2,015
 
2,014
 
CAPITAL
 
 
 
 
 
 
 
 
 
 
 
 
 
      Weighted average shares outstanding - basic
8,707,504

 
8,723,633

 
7,872,079

 
 
8,713,528

 
7,886,232

 
      Weighted average shares outstanding - diluted
8,715,934

 
8,732,679

 
7,879,854

 
 
8,722,266

 
7,896,541

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ALLOWANCE FOR LOAN LOSSES
 
 
 
 
 
 
 
 
 
 
 
      Beginning balance
$
12,844

 
$
12,427

 
$
12,614

 
 
$
12,427

 
$
12,600

 
      Provision for loan losses
100

 
600

 
150

 
 
700

 
150

 
      Charge-offs
 
(321
)
 
(309
)
 
(95
)
 
 
(630
)
 
(168
)
 
      Recoveries
 
170

 
126

 
94

 
 
296

 
181

 
      Ending balance
 
$
12,793

 
$
12,844

 
$
12,763

 
 
$
12,793

 
$
12,763

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LOANS
 
 
 
 
 
 
 
 
 
 
 
 
 
      Construction and land development
$
66,543

 
$
68,069

 
$
50,856

 
 
$
66,543

 
$
50,856

 
      Commercial real estate
432,315

 
436,562

 
366,722

 
 
432,315

 
366,722

 
      Residential real estate
220,778

 
211,261

 
175,387

 
 
220,778

 
175,387

 
      Home equity
 
97,866

 
97,811

 
89,725

 
 
97,866

 
89,725

 
      Commercial and industrial
159,015

 
146,280

 
125,163

 
 
159,015

 
125,163

 
      Consumer
 
6,388

 
5,919

 
5,204

 
 
6,388

 
5,204

 
      Total
 
 
$
982,905

 
$
965,902

 
$
813,057

 
 
$
982,905

 
$
813,057

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NONPERFORMING ASSETS AT PERIOD-END
 
 
 
 
 
 
 
 
 
 
 
      Nonperforming loans:
 
 
 
 
 
 
 
 
 
 
 
          90 days past due and accruing
$
—

 
$
—

 
$
—

 
 
$
—

 
$
—

 
          Nonaccrual
 
3,772

 
5,123

 
5,224

 
 
3,772

 
5,224

 
      Other real estate owned
2,113

 
2,653

 
2,622

 
 
2,113

 
2,622

 
      Nonperforming assets
$
5,885

 
$
7,776

 
$
7,846

 
 
$
5,885

 
$
7,846

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
 
      Allowance for loan losses to total loans
1.30

%
1.33

%
1.57

%
1.30

%
1.57

%
      Allowance for loan losses to
 
 
 
 
 
 
 
 
 
 
 
         nonperforming loans
339.16

 
250.71

 
244.31

 
 
339.16

 
244.31

 
      Nonperforming assets to total assets
0.39

 
0.50

 
0.60

 
 
0.39

 
0.60

 
      Nonperforming loans to total loans
0.38

 
0.53

 
0.64

 
 
0.38

 
0.64

 
      Annualized net charge-offs (recoveries)
 
 
 
 
 
 
 
 
 
 
 
         to average loans
0.06

 
0.08

 
—

 
 
0.07

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER DATA
 
 
 
 
 
 
 
 
 
 
 
 
      Fiduciary assets at period-end (e) (f)
$
509,289

 
$
502,779

 
$
450,352

 
 
$
509,289

 
$
450,352

 
      Retail brokerage assets at period-end (e) (f)
$
257,306

 
$
244,725

 
$
197,625

 
 
$
257,306

 
$
197,625

 
      Number full-time equivalent employees (g)
322

 
318

 
291

 
 
322

 
291

 
      Number of full service offices
27

 
27

 
25

 
 
27

 
25

 




      Number of loan production offices
2

 
2

 
2

 
 
2

 
2

 
      Number of ATM's
 
34

 
34

 
31

 
 
34

 
31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      (a) - Unvested restricted stock of 17,761 shares are not included in the calculation.
      (b) - Excludes goodwill and other intangible assets.
      (c) - Excludes amortization expense, net of tax, of intangible assets.
      (d) - 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 excluding (i) gains or losses on
      securities and (ii) gains or losses on sale of premises and equipment.
      (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 June 30, 2015 and 2014
 
 
 
(in thousands, except rates)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
 
 
 
 
 
 
 
 
 
Average Balance
 
Income/Expense
 
Yield/Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 $ 155,752

 
 $ 120,216

 
 $ 1,760

 
 $ 1,285

 
4.53

%
4.29

%
 
Real estate
      807,605

 
      669,537

 
     9,841

 
     8,325

 
4.87

 
4.97

 
 
Consumer
       11,562

 
         4,992

 
       205

 
         87

 
7.11

 
6.99

 
 
 
Total loans
      974,919

 
      794,745

 
   11,806

 
     9,697

 
4.85

 
4.88

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal agencies & GSEs
       86,815

 
       79,284

 
       324

 
       227

 
1.49

 
1.15

 
 
Mortgage-backed & CMOs
       61,738

 
       62,356

 
       334

 
       368

 
2.16

 
2.36

 
 
State and municipal
      185,848

 
      190,821

 
     1,719

 
     1,866

 
3.70

 
3.91

 
 
Other
       15,412

 
       15,265

 
       125

 
       121

 
3.24

 
3.17

 
 
 
Total securities
      349,813

 
      347,726

 
     2,502

 
     2,582

 
2.86

 
2.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold
         6,480

 
—

 
           2

 
—

 
0.12

 
—

 
Deposits in other banks
       66,236

 
       41,088

 
         50

 
         35

 
0.30

 
0.34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-earning assets
   1,397,448

 
   1,183,559

 
   14,360

 
   12,314

 
4.11

 
4.16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-earning assets
      133,419

 
      115,976

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 $1,530,867

 
 $1,299,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand
 $ 237,102

 
 $ 185,601

 
         22

 
         19

 
0.04

 
0.04

 
 
Money market
      195,578

 
      171,466

 
         61

 
         50

 
0.13

 
0.12

 
 
Savings
      109,397

 
       89,485

 
         14

 
         11

 
0.05

 
0.05

 
 
Time
 
      403,854

 
      373,790

 
     1,087

 
     1,081

 
1.08

 
1.16

 
 
 
Total deposits
      945,931

 
      820,342

 
     1,184

 
     1,161

 
0.50

 
0.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer repurchase agreements
       51,417

 
       40,720

 
           2
 
           1
 
0.02

 
0.01

 
Other short-term borrowings
—

 
            571

 
—

 
           1
 
—

 
—

 
Long-term borrowings
       37,499

 
       37,376

 
       269
 
       266
 
2.87

 
2.85

 
 
Total interest-bearing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
liabilities
   1,034,847

 
      899,009

 
     1,455

 
     1,429

 
0.56

 
0.64

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest bearing demand deposits
      290,695

 
      223,137

 
 
 
 
 
 
 
 
 
Other liabilities
         8,662

 
         5,605

 
 
 
 
 
 
 
 
 
Shareholders' equity
      196,663

 
      171,784

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
shareholders' equity
 $1,530,867

 
 $1,299,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Interest rate spread
 
 
 
 
 
 
 
 
3.55

%
3.52

%
Net interest margin
 
 
 
 
 
 
 
 
3.69

%
3.68

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (taxable equivalent basis)
 
 
 
   12,905

 
   10,885

 
 
 
 
 
Less: Taxable equivalent adjustment
 
 
 
 
       523

 
       534

 
 
 
 
 
Net interest income
 
 
 
 
 $12,382

 
 $10,351

 
 
 
 
 







 
 
 
Net Interest Income Analysis
 
 
 
For the Six Months Ended June 30, 2015 and 2014
 
 
 
(in thousands, except rates)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
 
 
 
 
 
 
 
 
 
Average Balance
 
Income/Expense
 
Yield/Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 $ 147,482

 
 $ 120,460

 
 $ 3,586

 
 $ 2,757

 
4.90

%
4.62

%
 
Real estate
      804,507

 
      667,168

 
   19,560

 
  16,621

 
4.86

 
4.98

 
 
Consumer
       13,434

 
         4,982

 
       445

 
       176

 
6.68

 
7.12

 
 
 
Total loans
      965,423

 
      792,610

 
   23,591

 
  19,554

 
4.89

 
4.94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal agencies & GSEs
       80,866

 
       73,850

 
       569

 
       405

 
1.41

 
1.10

 
 
Mortgage-backed & CMOs
       63,637

 
       64,482

 
       712

 
       771

 
2.24

 
2.39

 
 
State and municipal
      188,020

 
      192,174

 
     3,482

 
    3,765

 
3.70

 
3.92

 
 
Other
 
       15,293

 
       15,940

 
       248

 
       248

 
3.24

 
3.11

 
 
 
Total securities
      347,816

 
      346,446

 
     5,011

 
    5,189

 
2.88

 
3.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold
       10,508

 
—

 
           6

 
—

 
0.12

 
—

 
Deposits in other banks
       66,425

 
       46,116

 
         98

 
         68

 
0.30

 
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-earning assets
   1,390,172

 
   1,185,172

 
   28,706

 
  24,811

 
4.13

 
4.19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-earning assets
      134,521

 
      115,906

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 $1,524,693

 
 $1,301,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand
 $ 224,955

 
 $ 176,889

 
         40

 
         41

 
0.04

 
0.05

 
 
Money market
      199,236

 
      182,109

 
       132

 
       125

 
0.13

 
0.14

 
 
Savings
      108,545

 
       88,199

 
         26

 
         25

 
0.05

 
0.06

 
 
Time
 
      409,283

 
      378,061

 
     2,180

 
    2,199

 
1.07

 
1.17

 
 
 
Total deposits
      942,019

 
      825,258

 
     2,378

 
    2,390

 
0.51

 
0.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer repurchase agreements
       52,294

 
       39,267

 
           5
 
          3
 
0.02

 
0.02

 
Other short-term borrowings
—

 
            287

 
—

 
          1
 
—

 
—

 
Long-term borrowings
       37,484

 
       37,374

 
       533
 
       530
 
2.84

 
2.84

 
 
Total interest-bearing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
liabilities
   1,031,797

 
      902,186

 
     2,916

 
    2,924

 
0.57

 
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest bearing demand deposits
      286,855

 
      222,266

 
 
 
 
 
 
 
 
 
Other liabilities
         9,665

 
         5,706

 
 
 
 
 
 
 
 
 
Shareholders' equity
      196,376

 
      170,920

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
shareholders' equity
 $1,524,693

 
 $1,301,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Interest rate spread
 
 
 
 
 
 
 
 
3.56

%
3.54

%
Net interest margin
 
 
 
 
 
 
 
 
3.71

%
3.69

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (taxable equivalent basis)
 
 
 
   25,790

 
  21,887

 
 
 
 
 
Less: Taxable equivalent adjustment
 
 
 
 
     1,030

 
    1,077

 
 
 
 
 
Net interest income
 
 
 
 
 $24,760

 
 $20,810

 
 
 
 
 



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