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OFFON

AMERICAN NATIONAL BANKSHARES INC.

(AMNB)
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AMERICAN NATIONAL BANKSHARES : REPORTS THIRD QUARTER EARNINGS - Form 8-K

10/21/2021 | 05:24pm EST

AMERICAN NATIONALBANKSHARES

REPORTS THIRD QUARTER EARNINGS

Danville, VA, October 21, 2021 - American National Bankshares Inc. (NASDAQ: AMNB) ("American National" or the "Company") today reported third quarter 2021 earnings of $10.2 million, or $0.94 per diluted common share. Those results compare to net income of $10.8 million, or $0.99 per diluted common share recognized for the second quarter of 2021 and $7.2 million, or $0.66 per diluted common share, during the same quarter in the prior year. Earnings for the nine months ended September 30, 2021 were $32.2 million, or $2.95 per diluted common share, compared to $21.3 million, or $1.93 per diluted common share, for the same period of 2020.

President and Chief Executive Officer, Jeffrey V. Haley commented, "American National's history of top tier financial performance continued during the third quarter, generating profitable growth for our shareholders. Strong organic loan growth was a highlight, with commercial real estate loans growing $82.4 million, or 31.9% annualized, during the quarter as our lending teams had some funding momentum during the period. This growth, in addition to accelerated income from our participation as a lender in the U.S. Small Business Administration's Paycheck Protection Program ("PPP"), contributed to top line revenue growth during the quarter. Credit metrics remain excellent, and provision expense for the quarter was a result of the strong loan growth during the period. The low interest rate environment and excess liquidity in the financial system continue to present challenges and will be a headwind going into 2022, but we are cautiously optimistic that we can continue to grow our balance sheet and maintain our strong financial performance."

"We successfully upgraded and added to our digital product offerings during the quarter, which represents a significant step in our digital transformation strategy. We have heard much positive feedback from customers, and believe we will benefit from increased scale and efficiencies in the future."

Third quarter 2021 highlights include:

Net loans held for investment, excluding PPP loans, grew $92.9 million, or 5.1%, during the third quarter compared to $15.4 million, or 0.9%, in the second quarter of this year and $83.0 million, or 4.6%, in the third quarter of the prior year.

Earnings produced a return on average tangible common equity (annualized) of 16.01% for the third quarter, compared to 17.30% in the second quarter of 2021 and 12.66% in the third quarter of the prior year (non-GAAP).

Average deposits grew 3.4% during the quarter and 13.7% over the third quarter of 2020; the cost of interest-bearing deposits decreased to 0.17% in the third quarter from 0.21% in the second quarter of 2021 and 0.52% in the third quarter of the prior year.

Fully taxable equivalent ("FTE") net interest margin was 3.09% for the third quarter, up from 3.00% in the second quarter of 2021 but down from 3.26% in the third quarter of the prior year (non-GAAP).

Noninterest revenues decreased $19 thousand, or 0.4%, when compared to the previous quarter, and increased $831 thousand, or 19.4%, compared to the same quarter in the prior year.

Noninterest expense increased $206 thousand, or 1.4%, when compared to the previous quarter, and increased $703 thousand, or 5.0%, when compared to the same quarter in the prior year.

The Company recorded a provision for loan losses in the third quarter of 2021 of $482 thousand compared to a negative provision in the second quarter of $1.4 million and a provision expense of $2.6 million in the third quarter in the prior year. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third and second quarters of 2021 and 0.01% for the third quarter of 2020.

Nonperforming assets as a percentage of total assets were 0.06% at September 30, 2021, down from 0.07% at June 30, 2021 and 0.16% at September 30, 2020.

SMALL BUSINESS ADMINISTRATION's PPP

The Company has processed a total of $364.2 million in PPP loans, with total remaining outstanding net PPP loans of $37.2 million at September 30, 2021, down from $104.1 million at June 30, 2021. These quarter-end balances are net of $66.9 million of loans forgiven in the third quarter of 2021 compared to $80.0 million forgiven in the second quarter. Total PPP fees recognized in net interest income during the third quarter of 2021 were $2.4 million compared to the prior quarter's $1.8 million. The interest income from the outstanding PPP portfolio generated $169,000 and $369,000, respectively, in the third and second quarters of 2021.

NET INTEREST INCOME

Net interest income for the third quarter of 2021 was $23.1 million, an increase of $1.3 million, or 6.1%, from the prior quarter and an increase of $1.6 million, or 7.4%, from the third quarter of 2020. The FTE net interest margin for the quarter was up to 3.09% from 3.00% in the prior quarter and down from 3.26% in the same period a year ago (non-GAAP). The third quarter of 2021 reflected $600 thousand more in net fees on PPP loans than the second quarter as $66.9 million were forgiven in the third quarter compared to $80.0 million in the second quarter. The increase in net interest income from the same quarter in the prior year was primarily attributable to the PPP program and reduced deposit costs from a significantly lower rate environment.

The Company's FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2021, net accretion related to acquisition accounting amounted to $1.3 million compared to $875 thousand in the prior quarter and $1.6 million for the same period in 2020. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

For the remaining three months of 2021 (estimated)

$ 395

For the years ending (estimated):

2022

1,278

2023

710

2024

450

2025

324

2026

194

Thereafter

366

ASSET QUALITY

Nonperforming assets ("NPAs") totaled $2.1 million as of September 30, 2021, down from $2.4 million at June 30, 2021, and down from $4.6 million at September 30, 2020. NPAs as a percentage of total assets were 0.06% at September 30, 2021, compared to 0.07% at June 30, 2021 and 0.16% at September 30, 2020.

The Company recorded a provision of $482 thousand in the third quarter and a negative provision for the second quarter of 2021 of $1.4 million, as compared to a $2.6 million provision for the third quarter in the previous year. The need for provision expense in the third quarter of 2021 was driven by the net loan growth of $92.9 million, excluding PPP loans. The second quarter reflected significant improvement in both national and local economic conditions, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics and resulted in a negative provision. The continued improvement in those factors during the third quarter of 2021 partially offset the provision expense resulting from the loan growth.

The allowance for loan losses was $20.6 million at September 30, 2021, $20.1 million at June 30, 2021 and $21.1 million at September 30, 2020. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third and second quarters of 2021, compared to 0.01% for the third quarter in the prior year. The allowance as a percentage of loans held for investment was 1.06% at September 30, 2021 compared to 1.05% at June 30, 2021 and 1.01% at September 30, 2020. Excluding PPP loans, the allowance as a percentage of loans was 1.08% at September 30, 2021, 1.11% at June 30, 2021 and 1.16% at September 30, 2020.

NONINTEREST INCOME

Noninterest income decreased $19 thousand, or 0.4%, for the quarter ended September 30, 2021 compared to the second quarter and increased $831 thousand, or 19.4%, from the third quarter in the prior year. The largest fluctuations for the third quarter over the previous quarter were the decreases in other fees and commissions of $211 thousand, or 15.5%, and mortgage banking income of $153 thousand, or 13.4%, offset by decreased losses on premises and equipment of $325 thousand, or 75.2%. The Company recorded losses during the third and second quarters of 2021 of $107 thousand and $432 thousand, respectively, from the sale of buildings acquired in the HomeTown Bankshares Corporation acquisition. Comparing the third quarter of 2021 to the third quarter of 2020, after considering the increased loss on premises and equipment previously noted, the majority of categories of income increased except for mortgage banking income which decreased $41 thousand, or 4.0%, and other income which decreased $2 thousand, or 0.9%.

NONINTEREST EXPENSE

Noninterest expense for the third quarter of 2021 amounted to $14.8 million, up $206 thousand, or 1.4%, when compared to the $14.6 million for the previous quarter and up $703 thousand, or 5.0%, from $14.1 million during the same period in the previous year. The increase from the second quarter and third quarter of 2020 was primarily in the other expense category caused by increased loan related expenses and expense seasonality. The third quarter of 2021's occupancy expense increase over the third quarter of 2020 quarter is attributable to the additional lease for the Triangle banking office which commenced in 2021.

INCOME TAXES

The effective tax rate for the three months ended September 30, 2021 was 21.1% and 21.0% for the three months ended June 30, 2021. This compares to 20.0% for the third quarter of 2020.

BALANCE SHEET

Total assets at September 30, 2021 were $3.3 billion, an increase of $87.5 million, or 2.7%, from the previous quarter and $385.8 million, or 13.3%, from the third quarter of 2020. The balance sheet at September 30, 2021 remained primarily consistent with the end of the second quarter with continued growth in core deposits deployed in investments, interest bearing cash and loan growth during the period. The growth over the same period a year ago is primarily due to growth in core deposits as well.

At September 30, 2021, loans held for investment (net of deferred fees and costs) were $1.9 billion, an increase of $26.0 million, or 1.4%, from June 30, 2021. The increase, excluding PPP forgiveness of $66.9 million, of loans held for investment was $92.9 million, or 5.1%, from the second quarter, and $89.2 million, or 4.6%, compared to September 30, 2020.

Investment securities available for sale amounted to $643.9 million at September 30, 2021, with growth of $88.5 million, or 15.9%, compared to June 30, 2021, and growth of $285.5 million, or 79.6%, compared to September 30, 2020.

Deposits amounted to $2.9 billion at September 30, 2021, an increase of $92.3 million, or 3.3%, over the previous quarter and $391.4 million, or 15.8%, compared to the end of the third quarter of 2020. The growth over the previous quarter and the same period of 2020 is primarily a result of remaining impacts from federal stimulus efforts, and continued higher than average cash balances being maintained by customers as elevated savings rates and liquidity patterns continue.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.14% at September 30, 2021 compared to 8.27% at June 30, 2021 and compared to 8.55% at September 30, 2020. The Company's common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.44%, 13.78%, 14.78% and 9.34%, respectively at September 30, 2021.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.3 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 Virginia and North Carolina with 26 banking offices. American National Bank also manages an additional $1.1 billion of trust, investment and brokerage assets in its Wealth Division. Additional information about American National and American National Bank is available on American National's website at www.amnb.com.

NON-GAAP FINANCIAL MEASURES

This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States ("GAAP"). American National's management uses these non-GAAP financial measures in its analysis of American National's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of American National's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. For a reconciliation of non-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

FORWARD-LOOKING STATEMENTS

Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. American National intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. American National's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the operations and future prospects of American National include but are not limited to: (1) the impacts of the ongoing COVID-19 pandemic and the associated efforts to limit the spread of the virus; (2) expected revenue synergies and cost savings from acquisitions and depositions; (3) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (4) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in American National's market areas; (5) the adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future periods, and the failure of assumptions underlying the allowance for loan losses; (6) cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (7) accounting principles, policies, and guidelines; and (8) other risk factors detailed from time to time in filings made by American National with the Securities and Exchange Commission. American National undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

American National Bankshares Inc.

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

Unaudited

September 30,

ASSETS

2021

2020

Cash and due from banks

$ 38,349 $ 35,633

Interest-bearing deposits in other banks

480,052 234,638

Securities available for sale, at fair value

643,949 358,493

Restricted stock, at cost

8,046 8,707

Loans held for sale

9,518 6,789

Loans, net of deferred fees and costs

1,940,332 2,086,094

Less allowance for loan losses

(20,630 ) (21,088 )

Net Loans

1,919,702 2,065,006

Premises and equipment, net

37,021 39,979

Other real estate owned, net

213 999

Goodwill

85,048 85,048

Core deposit intangibles, net

4,978 6,482

Bank owned life insurance

28,950 28,278

Other assets

33,237 33,252

Total assets

$ 3,289,063 $ 2,903,304

Liabilities

Demand deposits -- noninterest-bearing

$ 980,985 $ 820,384

Demand deposits -- interest-bearing

524,328 426,043

Money market deposits

733,515 602,392

Savings deposits

254,456 212,070

Time deposits

368,797 409,811

Total deposits

2,862,081 2,470,700

Customer repurchase agreements

26,595 41,906

Long-term borrowings

28,207 35,609

Other liabilities

21,793 23,108

Total liabilities

2,938,676 2,571,323

Shareholders' equity

Preferred stock, $5 par, 2,000,000 shares authorized, none outstanding

- -

Common stock, $1 par, 20,000,000 shares authorized, 10,778,562 shares outstanding at September 30, 2021 and 10,969,756 shares outstanding at September 30, 2020

10,715 10,919

Capital in excess of par value

148,069 154,495

Retained earnings

193,107 163,855

Accumulated other comprehensive income, net

(1,504 ) 2,712

Total shareholders' equity

350,387 331,981

Total liabilities and shareholders' equity

$ 3,289,063 $ 2,903,304

American National Bankshares Inc.

Consolidated Statements of Income

(Dollars in thousands, except per share data)

Unaudited

For the Three Months Ended

For the Nine Months Ended

9/30/21

6/30/21

9/30/20

9/30/21

9/30/20

Interest and Dividend Income:

Interest and fees on loans

$ 21,974 $ 21,087 $ 22,346 $ 65,334 $ 65,046

Interest and dividends on securities:

Taxable

1,896 1,769 1,545 5,297 5,228

Tax-exempt

94 96 107 293 330

Dividends

112 117 122 349 382

Other interest income

201 98 59 375 356

Total interest and dividend income

24,277 23,167 24,179 71,648 71,342

Interest Expense:

Interest on deposits

781 922 2,118 2,990 7,908

Interest on short-term borrowings

3 5 42 19 237

Interest on long-term borrowings

400 469 524 1,352 1,523

Total interest expense

1,184 1,396 2,684 4,361 9,668

Net Interest Income

23,093 21,771 21,495 67,287 61,674

(Recovery of) Provision for loan losses

482 (1,352 ) 2,619 (870 ) 8,331

Net Interest Income After (Recovery of) Provision for Loan Losses

22,611 23,123 18,876 68,157 53,343

Noninterest Income:

Trust fees

1,311 1,240 1,054 3,757 3,019

Service charges on deposit accounts

664 630 618 1,916 1,880

Other fees and commissions

1,147 1,358 996 3,644 2,888

Mortgage banking income

989 1,142 1,030 3,449 2,472

Securities gains, net

- - - - 814

Brokerage fees

265 250 170 733 553

Income from Small Business Investment Companies

491 591 98 1,510 34

Income from insurance investments

132 141 108 1,062 271

Losses on premises and equipment, net

(107 ) (432 ) (15 ) (588 ) (97 )

Other

231 222 233 704 788

Total noninterest income

5,123 5,142 4,292 16,187 12,622

Noninterest Expense:

Salaries and employee benefits

8,185 8,178 7,989 23,881 21,540

Occupancy and equipment

1,513 1,502 1,423 4,548 4,116

FDIC assessment

194 226 162 644 433

Bank franchise tax

440 443 426 1,321 1,277

Core deposit intangible amortization

361 371 402 1,113 1,246

Data processing

748 698 705 2,224 2,253

Software

344 338 353 1,011 1,112

Other real estate owned, net

21 10 28 148 34

Other

3,037 2,871 2,652 8,655 7,895

Total noninterest expense

14,843 14,637 14,140 43,545 39,906

Income Before Income Taxes

12,891 13,628 9,028 40,799 26,059

Income Taxes

2,713 2,862 1,801 8,566 4,808

Net Income

$ 10,178 $ 10,766 $ 7,227 $ 32,233 $ 21,251

Net Income Per Common Share:

Basic

$ 0.94 $ 0.99 $ 0.66 $ 2.96 $ 1.93

Diluted

$ 0.94 $ 0.99 $ 0.66 $ 2.95 $ 1.93

Weighted Average Common Shares Outstanding:

Basic

10,833,875 10,919,333 10,966,645 10,907,721 10,983,729

Diluted

10,836,293 10,923,156 10,969,901 10,911,372 10,988,090

American National Bankshares Inc.

Financial Highlights

Unaudited

(Dollars in thousands, except per share data)

3rd Qtr

2nd Qtr

3rd Qtr

At or for the Nine Months Ended September 30,

2021

2021

2020

2021

2020

EARNINGS

Interest income

$ 24,277 $ 23,167 $ 24,179 $ 71,648 $ 71,342

Interest expense

1,184 1,396 2,684 4,361 9,668

Net interest income

23,093 21,771 21,495 67,287 61,674

(Recovery of) Provision for loan losses

482 (1,352 ) 2,619 (870 ) 8,331

Noninterest income

5,123 5,142 4,292 16,187 12,622

Noninterest expense

14,843 14,637 14,140 43,545 39,906

Income taxes

2,713 2,862 1,801 8,566 4,808

Net income

10,178 10,766 7,227 32,233 21,251

PER COMMON SHARE

Net income per share - basic

$ 0.94 $ 0.99 $ 0.66 $ 2.96 $ 1.93

Net income per share - diluted

0.94 0.99 0.66 2.95 1.93

Cash dividends paid

0.27 0.27 0.27 0.81 0.81

Book value per share

32.51 31.96 30.26 32.51 30.26

Book value per share - tangible (a)

24.16 23.65 21.92 24.16 21.92

Closing market price

33.04 31.09 20.92 33.04 20.92

FINANCIAL RATIOS

Return on average assets

1.27

%

1.38

%

1.01

%

1.38

%

1.05 %

Return on average common equity

11.58 12.44 8.76 12.40 8.66

Return on average tangible common equity (a)

16.01 17.30 12.66 17.24 12.60

Average common equity to average assets

10.99 11.10 11.50 11.13 12.09

Tangible common equity to tangible assets (a)

8.14 8.27 8.55 8.14 8.55

Net interest margin, taxable equivalent

3.09 3.00 3.26 3.10 3.32

Efficiency ratio (a)

51.03 52.06 53.00 50.24 52.40

Effective tax rate

21.05 21.00 19.95 21.00 18.45

PERIOD-END BALANCES

Securities

$ 651,995 $ 563,479 $ 367,200 $ 651,995 $ 367,200

Loans held for sale

9,518 13,807 6,789 9,518 6,789

Loans, net

1,940,332 1,914,371 2,086,094 1,940,332 2,086,094

Goodwill and other intangibles

90,026 90,387 91,530 90,026 91,530

Assets

3,289,063 3,201,584 2,903,304 3,289,063 2,903,304

Assets - tangible (a)

3,199,037 3,111,197 2,811,774 3,199,037 2,811,774

Deposits

2,862,081 2,769,750 2,470,700 2,862,081 2,470,700

Customer repurchase agreements

26,595 35,440 41,906 26,595 41,906

Long-term borrowings

28,207 28,181 35,609 28,207 35,609

Shareholders' equity

350,387 347,633 331,981 350,387 331,981

Shareholders' equity - tangible (a)

260,361 257,246 240,451 260,361 240,451

American National Bankshares Inc.

Financial Highlights

Unaudited

(Dollars in thousands, except per share data)

3rd Qtr

2nd Qtr

3rd Qtr

At or for the Nine Months Ended September 30,

2021

2021

2020

2021

2020

AVERAGE BALANCES

Securities (b)

$ 569,508 $ 512,981 $ 333,778 $ 514,156 $ 339,701

Loans held for sale

9,835 15,883 9,943 12,313 5,899

Loans, net

1,913,446 1,947,797 2,092,412 1,956,452 1,990,312

Interest-earning assets

2,989,661 2,909,216 2,648,990 2,905,032 2,483,908

Goodwill and other intangibles

90,257 90,577 91,749 90,600 91,883

Assets

3,199,514 3,118,687 2,870,213 3,115,683 2,706,359

Assets - tangible (a)

3,109,257 3,028,110 2,778,464 3,025,083 2,614,476

Interest-bearing deposits

1,817,595 1,761,203 1,619,960 1,773,354 1,560,204

Deposits

2,768,268 2,677,101 2,434,645 2,676,650 2,277,211

Customer repurchase agreements

29,681 37,591 45,689 36,954 43,649

Other short-term borrowings

- - - - 1

Long-term borrowings

28,192 35,584 35,597 33,111 35,575

Shareholders' equity

351,646 346,210 330,038 346,730 327,231

Shareholders' equity - tangible (a)

261,389 255,633 238,289 256,130 235,348

CAPITAL

Weighted average shares outstanding - basic

10,833,875 10,919,333 10,966,645 10,907,721 10,983,729

Weighted average shares outstanding - diluted

10,836,293 10,923,156 10,969,901 10,911,372 10,988,090

COMMON STOCK REPURCHASE PROGRAM

Total shares of common stock repurchased

100,764 93,212 - 247,999 140,526

Average price paid per share of common stock

$ 32.87 $ 34.73 $ - $ 32.84 $ 35.44

ALLOWANCE FOR LOAN LOSSES

Beginning balance

$ 20,097 $ 21,416 $ 18,507 $ 21,403 $ 13,152

(Recovery of) Provision for loan losses

482 (1,352 ) 2,619 (870 ) 8,331

Charge-offs

(19 ) (29 ) (126 ) (70 ) (675 )

Recoveries

70 62 88 167 280

Ending balance

$ 20,630 $ 20,097 $ 21,088 $ 20,630 $ 21,088

LOANS

Construction and land development

$ 120,193 $ 133,592 $ 151,613 $ 120,193 $ 151,613

Commercial real estate - owner occupied

404,029 384,095 382,121 404,029 382,121

Commercial real estate - non-owner occupied

713,339 650,862 608,954 713,339 608,954

Residential real estate

280,351 264,680 279,815 280,351 279,815

Home equity

95,317 100,835 111,448 95,317 111,448

Commercial and industrial

320,278 372,759 543,746 320,278 543,746

Consumer

6,825 7,548 8,397 6,825 8,397

Total

$ 1,940,332 $ 1,914,371 $ 2,086,094 $ 1,940,332 $ 2,086,094

American National Bankshares Inc.

Financial Highlights

Unaudited

(Dollars in thousands, except per share data)

3rd Qtr

2nd Qtr

3rd Qtr

At or for the Nine Months Ended September 30,

2021

2021

2020

2021

2020

NONPERFORMING ASSETS AT PERIOD-END

Nonperforming loans:

90 days past due and accruing

$ - $ 125 $ 285 $ - $ 285

Nonaccrual

1,903 2,057 3,088 1,903 3,088

Other real estate owned and repossessions

213 213 1,210 213 1,210

Nonperforming assets

$ 2,116 $ 2,395 $ 4,583 $ 2,116 $ 4,583

ASSET QUALITY RATIOS

Allowance for loan losses to total loans

1.06

%

1.05

%

1.01

%

1.06 % 1.01 %

Allowance for loan losses to nonperforming loans

1,084.08 921.04 625.20 1,084.08 625.20

Nonperforming assets to total assets

0.06 0.07 0.16 0.06 0.16

Nonperforming loans to total loans

0.10 0.11 0.16 0.10 0.16

Annualized net charge-offs (recoveries) to average loans

(0.01 ) (0.01 ) 0.01 (0.01 ) 0.03

OTHER DATA

Fiduciary assets at period-end (c) (d)

$ 697,546 $ 697,528 $ 569,095 $ 697,546 $ 569,095

Retail brokerage assets at period-end (c) (d)

$ 406,408 $ 392,881 $ 314,809 $ 406,408 $ 314,809

Number full-time equivalent employees (e)

345 340 341 345 341

Number of full service offices

26 26 25 26 25

Number of loan production offices

1 1 1 1 1

Number of ATMs

36 36 37 36 37
Notes:
(a) - This financial measure is not calculated in accordance with GAAP. For a reconciliation of non-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(b) - Average does not include unrealized gains and losses.
(c) - Market value.
(d) - Assets are not owned by American National and are not reflected in the consolidated balance sheet.
(e) - Average for quarter.

Net Interest Income Analysis

For the Three Months Ended September 30, 2021 and 2020

(Dollars in thousands)

Unaudited

Interest

Average Balance

Income/Expense (a)

Yield/Rate

2021

2020

2021

2020

2021

2020

Loans:

Commercial

$ 325,692 $ 544,712 $ 5,185 $ 4,495 6.32

%

3.28

%

Real estate

1,590,858 1,549,078 16,702 17,755 4.20 4.58

Consumer

6,731 8,565 125 144 7.37 6.69

Total loans (b)

1,923,281 2,102,355 22,012 22,394 4.57 4.26

Securities:

U.S. Treasury

53,347 10,541 139 3 1.04 0.11

Federal agencies & GSEs

90,876 61,405 265 287 1.17 1.87

Mortgage-backed & CMOs

335,940 194,585 1,091 942 1.30 1.94

State and municipal

62,883 46,432 320 294 2.04 2.53

Other

26,462 20,815 311 275 4.70 5.28

Total securities

569,508 333,778 2,126 1,801 1.49 2.16

Deposits in other banks

496,872 212,857 201 59 0.16 0.11

Total interest-earning assets

2,989,661 2,648,990 24,339 24,254 3.25 3.66

Non-earning assets

209,853 221,223

Total assets

$ 3,199,514 $ 2,870,213

Deposits:

Demand

$ 481,032 $ 410,228 38 56 0.03 0.05

Money market

713,846 580,200 166 475 0.09 0.33

Savings

247,536 206,493 6 24 0.01 0.05

Time

375,181 423,039 571 1,563 0.60 1.47

Total deposits

1,817,595 1,619,960 781 2,118 0.17 0.52

Customer repurchase agreements

29,681 45,689 3 42 0.04 0.37

Long-term borrowings

28,192 35,597 400 524 5.68 5.89

Total interest-bearing liabilities

1,875,468 1,701,246 1,184 2,684 0.25 0.63

Noninterest bearing demand deposits

950,673 814,685

Other liabilities

21,727 24,244

Shareholders' equity

351,646 330,038

Total liabilities and shareholders' equity

$ 3,199,514 $ 2,870,213

Interest rate spread

3.00 % 3.03 %

Net interest margin

3.09 % 3.26 %

Net interest income (taxable equivalent basis)

23,155 21,570

Less: Taxable equivalent adjustment (c)

59 75

Net interest income

$ 23,096 $ 21,495
Notes:
(a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/amortization of deferred loan fees and costs.
(b) - Nonaccrual loans are included in the average balances.
(c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.

Net Interest Income Analysis

For the Nine Months Ended September 30, 2021 and 2020

(Dollars in thousands)

Unaudited

Interest

Average Balance

Income/Expense (a)

Yield/Rate

2021

2020

2021

2020

2021

2020

Loans:

Commercial

$ 393,571 $ 464,094 $ 15,433 $ 12,414 5.24 % 3.57 %

Real estate

1,568,055 1,522,803 49,642 52,319 4.22 4.58

Consumer

7,139 9,314 364 451 6.82 6.47

Total loans (b)

1,968,765 1,996,211 65,439 65,184 4.43 4.36

Securities:

U.S. Treasury

36,969 7,292 265 47 0.96 0.86

Federal agencies & GSEs

99,595 70,604 867 1,147 1.16 2.17

Mortgage-backed & CMOs

292,207 198,528 3,025 3,144 1.38 2.11

State and municipal

61,210 43,345 958 871 2.09 2.68

Other

24,175 19,932 900 812 4.96 5.43

Total securities

514,156 339,701 6,015 6,021 1.56 2.36

Deposits in other banks

422,111 147,996 375 356 0.12 0.32

Total interest-earning assets

2,905,032 2,483,908 71,829 71,561 3.30 3.84

Non-earning assets

210,651 222,451

Total assets

$ 3,115,683 $ 2,706,359

Deposits:

Demand

$ 466,999 $ 371,155 116 294 0.03 0.11

Money market

700,027 550,063 657 2,254 0.13 0.55

Savings

238,349 192,632 19 101 0.01 0.07

Time

367,979 446,354 2,198 5,259 0.80 1.57

Total deposits

1,773,354 1,560,204 2,990 7,908 0.23 0.68

Customer repurchase agreements

36,954 43,649 19 237 0.07 0.73

Other short-term borrowings

- 1 - - - 0.50

Long-term borrowings

33,111 35,575 1,352 1,523 5.44 5.71

Total interest-bearing liabilities

1,843,419 1,639,429 4,361 9,668 0.32 0.79

Noninterest bearing demand deposits

903,296 717,007

Other liabilities

22,238 22,692

Shareholders' equity

346,730 327,231

Total liabilities and shareholders' equity

$ 3,115,683 $ 2,706,359

Interest rate spread

2.98 % 3.05 %

Net interest margin

3.10 % 3.32 %

Net interest income (taxable equivalent basis)

67,468 61,893

Less: Taxable equivalent adjustment (c)

181 219

Net interest income

$ 67,287 $ 61,674
Notes:
(a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/amortization of deferred loan fees and costs.
(b) - Nonaccrual loans are included in the average balances.
(c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.

American National Bankshares Inc.

Reconciliation of Non-GAAP Financial Measures

Unaudited

(Dollars in thousands, except per share data)

3rd Qtr

2nd Qtr

3rd Qtr

At or for the Nine Months Ended September 30,

2021

2021

2020

2021

2020

EFFICIENCY RATIO

Noninterest expense

$ 14,843 $ 14,637 $ 14,140 $ 43,545 $ 39,906

Add/subtract: gain/loss on sale of OREO

- - (23 ) (111 ) 12

Subtract: core deposit intangible amortization

(361 ) (371 ) (402 ) (1,113 ) (1,246 )
$ 14,482 $ 14,266 $ 13,715 $ 42,321 $ 38,672

Net interest income

$ 23,093 $ 21,771 $ 21,495 $ 67,287 $ 61,674

Tax equivalent adjustment

59 59 75 181 219

Noninterest income

5,123 5,142 4,292 16,187 12,622

Subtract: gain on securities

- - - - (814 )

Add: loss on fixed assets

107 432 15 588 97
$ 28,382 $ 27,404 $ 25,877 $ 84,243 $ 73,798

Efficiency ratio

51.03 % 52.06 % 53.00 % 50.24 % 52.40 %

TAX EQUIVALENT NET INTEREST INCOME

Non-GAAP measures:

Interest income - loans

$ 22,012 $ 21,121 $ 22,394 $ 65,439 $ 65,184

Interest income - investments and other

2,327 2,105 1,860 6,390 6,377

Interest expense - deposits

(781 ) (922 ) (2,118 ) (2,990 ) (7,908 )

Interest expense - customer repurchase agreements

(3 ) (5 ) (42 ) (19 ) (237 )

Interest expense - long-term borrowings

(400 ) (469 ) (524 ) (1,352 ) (1,523 )

Total net interest income

$ 23,155 $ 21,830 $ 21,570 $ 67,468 $ 61,893

Less non-GAAP measures:

Tax benefit on nontaxable interest - loans

(38 ) (34 ) (48 ) (105 ) (138 )

Tax benefit on nontaxable interest - securities

(24 ) (25 ) (27 ) (76 ) (81 )

GAAP measures

$ 23,093 $ 21,771 $ 21,495 $ 67,287 $ 61,674

RETURN ON AVERAGE TANGIBLE EQUITY

Return on average equity (GAAP basis)

11.58 % 12.44 % 8.76 % 12.40 % 8.66 %

Impact of excluding average goodwill and other intangibles

4.43 4.86 3.90 4.84 3.94

Return on average tangible equity (non-GAAP)

16.01 % 17.30 % 12.66 % 17.24 % 12.60 %

TANGIBLE EQUITY TO TANGIBLE ASSETS

Equity to assets ratio (GAAP basis)

10.65 % 10.86 % 11.43 % 10.65 % 11.43 %

Impact of excluding goodwill and other intangibles

(2.51 ) (2.59 ) (2.88 ) (2.51 ) (2.88 )

Tangible equity to tangible assets ratio (non-GAAP)

8.14 % 8.27 % 8.55 % 8.14 % 8.55 %

TANGIBLE BOOK VALUE

Book value per share (GAAP basis)

$ 32.51 $ 31.96 $ 30.26 $ 32.51 $ 30.26

Impact of excluding goodwill and other intangibles

(8.35 ) (8.31 ) (8.34 ) (8.35 ) (8.34 )

Tangible book value per share (non-GAAP)

$ 24.16 $ 23.65 $ 21.92 $ 24.16 $ 21.92

ADJUSTED LOAN LOSS ALLOWANCE

Allowance for loan losses

$ 20,630 $ 20,097 $ 21,088 $ 20,630 $ 21,088

Credit discount on purchased loans

5,258 6,055 7,896 5,258 7,896

Adjusted loan loss allowance

$ 25,888 $ 26,152 $ 28,984 $ 25,888 $ 28,984

Total loans, net

$ 1,940,332 $ 1,914,371 $ 2,086,094 $ 1,940,332 $ 2,086,094

Subtract: PPP loans, net

(37,199 ) (104,143 ) (265,941 ) (37,199 ) (265,941 )

Total loans less PPP loans, net

$ 1,903,133 $ 1,810,228 $ 1,820,153 $ 1,903,133 $ 1,820,153

Adjusted loan loss allowance to total loans less PPP loans, net

1.36 % 1.44 % 1.59 % 1.36 % 1.59 %

Disclaimer

American National Bankshares Inc. published this content on 21 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 October 2021 21:23:02 UTC.


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Financials (USD)
Sales 2021 109 M - -
Net income 2021 40,9 M - -
Net Debt 2021 - - -
P/E ratio 2021 9,89x
Yield 2021 2,92%
Capitalization 401 M 401 M -
Capi. / Sales 2021 3,67x
Capi. / Sales 2022 3,98x
Nbr of Employees 342
Free-Float 95,5%
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Last Close Price 37,17 $
Average target price 38,75 $
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Managers and Directors
Jeffrey Vernon Haley President, Chief Executive Officer & Director
Jeffrey W. Farrar Chief Operating Officer, CFO, Secretary & EVP
Charles H. Majors Chairman
John H. Settle President-Trust & Investment Services, EVP
Edward Coleman Martin Chief Administrative Officer