American National Bankshares Reports Third Quarter Earnings

Danville, Virginia, UNITED STATES


DANVILLE, Va., Oct. 21, 2021 (GLOBE NEWSWIRE) -- 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): 
20221,278
2023710
2024450
2025324
2026194
Thereafter366

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.

 
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
     
  September 30
   2021   2020 
Assets    
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 value, 2,000,000 shares authorized,none outstanding  -   - 
   Common stock, $1 par value, 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 (loss), 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)        At or for the Nine Months 
 3rd Qtr 2nd Qtr 3rd Qtr 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  
           
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  
           
American National Bankshares Inc.          
Financial Highlights          
Unaudited          
           
      (Dollars in thousands, except per share data)     At or for the Nine Months 
 3rd Qtr 2nd Qtr 3rd Qtr Ended September 30,  
  2021   2021   2020   2021   2020  
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  
           
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)     At or for the Nine Months 
    3rd Qtr 2nd Qtr 3rd Qtr 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 of deferred fees and costs$ 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 %
              

 

Contact:  
 Jeffrey W. Farrar
 Executive Vice President, COO & CFO
 (434)773-2274
 farrarj@amnb.com