SOURCE: American National Bankshares Inc.
July 27, 2010 17:04 ET
American National Bankshares Inc. Reports Second Quarter 2010 Earnings and Announces Third Quarter Cash Dividend
DANVILLE, VA--(Marketwire - July 27, 2010) - American National Bankshares Inc. (NASDAQ: AMNB)
-- Q2 net income of $2 million and EPS of $.33 per share
-- Net interest margin 3.85%
-- Average shareholders' equity of $108 million represents 13.21% of
assets
-- Dividend declared for Q3 of $.23 per common share
American National Bankshares Inc. (NASDAQ: AMNB), parent company of
American National Bank and Trust Company, today announced second quarter
2010 net income of $2 million compared to $1.7 million for the same quarter
in 2009. Basic and diluted earnings per share were $0.33 for the 2010
quarter compared to $0.28 for the 2009 quarter. This net income produced
returns on average assets and average equity of 0.98% and 7.45%,
respectively.
Net income for the first six months of 2010 was $4.2 million compared to
$2.5 million for the comparable period of 2009. Basic and diluted earnings
per share were $0.69 for the 2010 period compared to $0.41 for the 2009
period.
Earnings for the comparable periods in 2009 were adversely impacted by a
first quarter $1.2 million pre-tax charge writing down other real estate
owned and a second quarter industry wide FDIC special assessment, which
cost the Company approximately $360,000. Income before income taxes for the
2010 period is $2.5 million greater than the 2009 period. The two onetime
charges in 2009 represent approximately 62% of that improvement.
Financial Performance and Overview
"Our second quarter 2010 earnings represent a good quarter for American
National, even though the earnings improvement was driven primarily by the
industry wide FDIC special assessment levied in the second quarter of
2009," stated Charles H. Majors, President and Chief Executive Officer.
"Net interest income was basically unchanged, down only slightly from the
2009 quarter. The good news here is our net interest margin was actually up
one basis point (0.01%) from the same quarter a year earlier.
"Provision for loan losses declined $207,000 or 42%, which was
directionally consistent with the decrease in the size of our loan
portfolio.
"Noninterest income was down $491,000 or 21.8%. The biggest drivers for the
second quarter 2010 were a reduction in secondary market mortgage income
and a $253,000 write down in other real estate owned.
"Noninterest expense improved, with a decline of $728,000 or 11.5%. That
cost reduction was related to lower staff levels, a change in our defined
benefit program, and reduced total FDIC insurance costs.
"Our net loan portfolio fell $8.6 million or 1.6% over the first half of
2010. Deposits increased $25.9 million or 4.3% during the same period.
These changes are continuations of trends that have dominated our balance
sheet during 2009 and into 2010. However, while we would not yet consider
it a trend, our loan totals at June 30, 2010 were higher than the totals at
the end of the first quarter."
Mr. Majors concluded, "There has been and continues to be a massive
deleveraging in the consumer and commercial sectors of the economy. This is
a macro-economic trend that has impacted all segments of our industry.
While our industry and the economy at large are hopefully seeing the
beginnings of what may be a fragile recovery, the recently enacted federal
banking legislation creates new and more onerous regulatory burdens on the
entire industry, without adequate regard to institution size or relative
risk or cost and benefit.
"We believe that a healthy and active community banking sector is vital for
our economy at all levels. We also believe that the community banks that
survive and prosper in the future will most likely be those banks today
that possess strong balance sheets and whose boards and managements can
balance attractive business opportunities with safe and sound risk
management. We firmly believe that American National is such a community
bank."
Capital
American National's capital ratios are among the highest in its peer group.
For the quarter ended June 30, 2010, average shareholders' equity was
13.21% of average assets and the ratio of tangible equity to tangible
assets was 9.91%.
Credit Quality Measurements
Nonperforming assets ($4 million of non-accrual loans and $3.7 million of
foreclosed real estate) were below industry averages and represented 0.93%
of total assets at June 30, 2010, compared to 0.84% at June 30, 2009.
The allowance for loan losses was $8.1 million or 1.57% of loans at June
30, 2010 compared to 1.42% at June 30, 2009.
Net Interest Income
Net interest income decreased slightly to $6.8 million in the second
quarter of 2010 from $6.9 million in the second quarter of 2009, a decrease
of $51,000 or 0.74%. The Bank has mitigated the impact of the current
historically low rate environment by actively managing the cost of its
interest bearing liabilities.
For the second quarter, the Company's net interest margin has increased one
basis point (0.01%) to 3.85% compared to the same quarter in 2009. For the
six month period the net interest margin has increased 14 basis points
(0.14%) to 3.86%.
Noninterest Income
Noninterest income totaled $1.8 million in the second quarter of 2010,
compared with $2.3 million in the second quarter of 2009, a decrease of
$491,000 or 21.8%. Noninterest income in the 2010 quarter was negatively
impacted by decrease in demand for secondary market mortgage loans, related
to the overall slowdown in the real estate market and secondarily to the
expiration of the home buyer tax credit. The 2010 quarter was also
negatively impacted by a $253,000 write down in other real estate owned.
This write down was related to the same asset the Company wrote down $1.2
million last year.
Noninterest Expense
Noninterest expense totaled $5.6 million in the second quarter of 2010,
compared to $6.3 million in the second quarter of 2009, a decrease of
$728,000 or 11.5%. The second quarter of 2010 was positively impacted by
reduced salaries and benefits costs, related to lower staff levels and a
change in the Company's defined benefit program, and by reductions in FDIC
insurance costs.
Dividend Declaration
American National Bankshares Inc. announced today that its Board of
Directors has declared a quarterly cash dividend of $0.23 per share,
payable September 17, 2010, to shareholders of record September 3, 2010.
American National Bankshares Inc. considers the payment of appropriate
dividends a vital part of its capital planning and management program. The
Company adheres to a dividend policy based on a review of earnings, growth,
capital and such other factors that the Board of Directors considers
relevant to the dividend decision process.
About American National
American National Bankshares Inc. is a bank holding company with assets of
$833 million. Headquartered in Danville, Virginia, it is the holding
company of American National Bank and Trust Company, a community bank
serving Southern and Central Virginia and the northern portion of Central
North Carolina with nineteen banking offices. The Bank also manages an
additional $388 million of assets in its Trust and Investment Services
Division. Additional information is available on the Bank's website at
www.amnb.com. The shares of American National Bankshares Inc. are traded
on the NASDAQ Global Select Market under the symbol "AMNB."
Forward-Looking Statements
This press release may contain "forward-looking statements," within the
meaning of federal securities laws that involve significant risks and
uncertainties. Statements herein are based on certain assumptions and
analyses by the Company 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; and significant
changes in securities markets. Consequently, all forward-looking
statements made herein are qualified by these cautionary statements and the
cautionary language in the Company's most recent Form 10-K report and other
documents filed with the Securities and Exchange Commission. American
National Bankshares Inc. does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements are made.
American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
June 30
--------------------
ASSETS 2010 2009
--------- ---------
Cash and due from banks $ 11,398 $ 13,905
Interest-bearing deposits in other banks 22,705 26,879
Securities available for sale, at fair value 211,574 140,344
Securities held to maturity 4,823 6,712
--------- ---------
Total securities 216,397 147,056
--------- ---------
Restricted stock, at cost 4,362 4,362
Loans held for sale 2,879 10,408
Loans 519,416 557,042
Less allowance for loan losses (8,135) (7,934)
--------- ---------
Net Loans 511,281 549,108
--------- ---------
Premises and equipment, net 19,658 18,912
Other real estate owned, net 3,730 4,033
Goodwill 22,468 22,468
Core deposit intangibles, net 1,509 1,886
Accrued interest receivable and other assets 16,257 12,466
--------- ---------
Total assets $ 832,644 $ 811,483
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing $ 100,099 $ 101,449
Demand deposits -- interest-bearing 92,771 91,424
Money market deposits 81,247 81,306
Savings deposits 64,425 62,768
Time deposits 291,609 278,284
--------- ---------
Total deposits 630,151 615,231
Short-term borrowings:
Customer repurchase agreements 61,665 59,437
Long-term borrowings 8,563 8,712
Trust preferred capital notes 20,619 20,619
Accrued interest payable and other liabilities 2,886 4,866
--------- ---------
Total liabilities 723,884 708,865
--------- ---------
Shareholders' equity:
Common stock, $1 par, 20,000,000 shares
authorized, 6,124,892 shares outstanding at
June 30, 2010 and 6,100,330 shares outstanding
at June 30, 2009 6,125 6,100
Capital in excess of par value 27,131 26,772
Retained earnings 73,590 70,682
Accumulated other comprehensive income (loss),
net 1,914 (936)
--------- ---------
Total shareholders' equity 108,760 102,618
--------- ---------
Total liabilities and shareholders' equity $ 832,644 $ 811,483
========= =========
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
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Interest and Dividend Income:
Interest and fees on loans $ 7,071 $ 7,917 $ 14,226 $ 15,951
Interest and dividends on
securities:
Taxable 1,275 1,233 2,591 2,353
Tax-exempt 554 416 1,020 802
Dividends 24 21 47 43
Other interest income 87 103 178 191
--------- --------- --------- ---------
Total interest and
dividend income 9,011 9,690 18,062 19,340
--------- --------- --------- ---------
Interest Expense:
Interest on deposits 1,647 2,180 3,282 4,707
Interest on short-term
borrowings 99 177 204 413
Interest on long-term
borrowings 63 80 127 211
Interest on trust preferred
capital notes 344 344 687 687
--------- --------- --------- ---------
Total interest expense 2,153 2,781 4,300 6,018
--------- --------- --------- ---------
Net Interest Income 6,858 6,909 13,762 13,322
Provision for loan losses 285 492 570 842
--------- --------- --------- ---------
Net Interest Income After
Provision for Loan Losses 6,573 6,417 13,192 12,480
--------- --------- --------- ---------
Noninterest Income:
Trust fees 801 767 1,613 1,525
Service charges on deposit
accounts 483 511 962 1,013
Other fees and commissions 288 251 566 493
Mortgage banking income 343 568 589 854
Brokerage fees 22 73 43 130
Securities gains (losses),
net 4 1 (25) 1
Foreclosed real estate
gains (losses), net (281) (43) (284) (1,222)
Other 102 125 219 193
--------- --------- --------- ---------
Total noninterest income 1,762 2,253 3,683 2,987
--------- --------- --------- ---------
Noninterest Expense:
Salaries 2,596 2,732 4,994 5,263
Employee benefits 633 832 1,273 1,645
Occupancy and equipment 698 724 1,477 1,464
FDIC assessment 199 564 394 781
Bank franchise tax 168 160 335 323
Core deposit intangible
amortization 95 95 189 189
Other 1,204 1,214 2,428 2,531
--------- --------- --------- ---------
Total noninterest expense 5,593 6,321 11,090 12,196
--------- --------- --------- ---------
Income Before Income Taxes 2,742 2,349 5,785 3,271
Income Taxes 728 643 1,586 797
--------- --------- --------- ---------
Net Income $ 2,014 $ 1,706 $ 4,199 $ 2,474
========= ========= ========= =========
Net Income Per Common Share:
Basic $ 0.33 $ 0.28 $ 0.69 $ 0.41
Diluted $ 0.33 $ 0.28 $ 0.69 $ 0.41
Average Common Shares
Outstanding:
Basic 6,123,790 6,096,034 6,121,615 6,089,055
Diluted 6,129,943 6,097,047 6,127,137 6,091,291
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
2010 2010 2009 2010 2009
--------- --------- --------- --------- ---------
EARNINGS
Interest income $ 9,011 $ 9,051 $ 9,690 $ 18,062 $ 19,340
Interest expense 2,153 2,147 2,781 4,300 6,018
Net interest
income 6,858 6,904 6,909 13,762 13,322
Provision for
loan losses 285 285 492 570 842
Noninterest income 1,762 1,921 2,253 3,683 2,987
Noninterest
expense 5,593 5,497 6,321 11,090 12,196
Income taxes 728 858 643 1,586 797
Net income 2,014 2,185 1,706 4,199 2,474
PER COMMON SHARE
Earnings per
share - basic $ 0.33 $ 0.36 $ 0.28 $ 0.69 $ 0.41
Earnings per
share - diluted 0.33 0.36 0.28 0.69 0.41
Cash dividends
declared 0.23 0.23 0.23 0.46 0.46
Book value per
share 17.76 17.50 16.82 17.76 16.82
Book value per
share - tangible
(a) 13.84 13.57 12.83 13.84 12.83
Closing market
price 21.39 20.15 19.25 21.39 19.25
FINANCIAL RATIOS
Return on average
assets 0.98% 1.08% 0.84% 1.03% 0.61%
Return on average
equity 7.45 8.14 6.63 7.79 4.81
Return on average
tangible equity (b) 9.91 10.83 9.05 10.36 6.86
Average equity
to average assets 13.21 13.24 12.66 13.23 12.73
Net interest
margin, taxable
equivalent 3.85 3.90 3.84 3.86 3.72
Efficiency ratio 60.55 60.22 66.98 60.39 67.83
Effective tax
rate 26.55 28.20 27.37 27.42 24.37
PERIOD-END BALANCES
Securities $ 220,759 $ 201,113 $ 151,418 $ 220,759 $ 151,418
Loans held for
sale 2,879 2,208 10,408 2,879 10,408
Loans, net of
unearned income 519,416 515,366 557,042 519,416 557,042
Goodwill and
other intangibles 23,977 24,071 24,354 23,977 24,354
Assets 832,644 810,654 811,483 832,644 811,483
Assets -
tangible (a) 808,667 786,583 787,129 808,667 787,129
Deposits 630,151 609,621 615,231 630,151 615,231
Customer
repurchase
agreements 61,665 60,372 59,437 61,665 59,437
Other
short-term
borrowings - - - - -
Long-term
borrowings 29,182 29,219 29,331 29,182 29,331
Shareholders'
equity 108,760 107,182 102,618 108,760 102,618
Shareholders'
equity -
tangible (a) 84,783 83,111 78,264 84,783 78,264
AVERAGE BALANCES
Securities $ 198,289 $ 184,696 $ 147,576 $ 191,530 $ 142,847
Loans held for
sale 3,529 2,444 7,787 2,990 5,405
Loans, net of
unearned income 519,485 520,847 562,654 520,162 566,476
Interest-earning
assets 746,879 736,183 744,899 742,776 739,965
Goodwill and
other intangibles 24,029 24,125 24,406 24,077 24,456
Assets 818,740 810,620 812,404 814,658 808,071
Assets -
tangible (a) 794,711 786,495 787,998 790,581 783,615
Interest-bearing
deposits 514,963 507,209 513,876 511,115 512,357
Deposits 615,456 606,085 612,134 610,791 608,105
Customer
repurchase
agreements 62,072 63,947 60,876 63,005 58,477
Other
short-term
borrowings - - 1,553 - 1,811
Long-term
borrowings 29,212 29,248 30,460 29,230 32,418
Shareholders'
equity 108,127 107,336 102,862 107,814 102,854
Shareholders'
equity -
tangible (a) 84,098 83,211 78,456 83,737 78,398
CAPITAL
Average shares
outstanding -
basic 6,123,790 6,119,415 6,096,034 6,096,034 6,089,055
Average shares
outstanding -
diluted 6,129,943 6,124,306 6,097,047 6,097,047 6,091,291
Shares
repurchased - - - - 7,600
Average price
of shares
repurchased $ - $ - $ - $ - $ 15.92
ALLOWANCE FOR LOAN
LOSSES
Beginning balance $ 8,112 $ 8,166 $ 7,836 $ 8,166 $ 7,824
Provision for
loan losses 285 285 492 570 842
Charge-offs (305) (427) (422) (732) (798)
Recoveries 43 88 28 131 66
--------- --------- --------- --------- ---------
Ending balance $ 8,135 $ 8,112 $ 7,934 $ 8,135 $ 7,934
LOANS
Construction
and land
development $ 40,039 $ 39,421 $ 50,930 $ 40,039 $ 50,930
Commercial
real estate 202,602 205,642 210,832 202,602 210,832
Residential
real estate 119,410 119,776 128,835 119,410 128,835
Home equity 63,992 63,302 61,818 63,992 61,818
Commercial and
industrial 86,924 80,331 96,978 86,924 96,978
Consumer 6,449 6,894 7,649 6,449 7,649
--------- --------- --------- --------- ---------
Total $ 519,416 $ 515,366 $ 557,042 $ 519,416 $ 557,042
NONPERFORMING ASSETS
AT PERIOD-END
Nonperforming
loans:
90 days past due $ 8 $ - $ - $ 8 $ -
Nonaccrual 4,005 3,436 2,745 4,005 2,745
Foreclosed
real estate 3,730 3,815 4,033 3,730 4,033
--------- --------- --------- --------- ---------
Nonperforming
assets $ 7,743 $ 7,251 $ 6,778 $ 7,743 $ 6,778
ASSET QUALITY RATIOS
Annualized net
chargeoffs to
average loans 0.20% 0.26% 0.28% 0.23% 0.26%
Nonperforming
assets to total
assets 0.93 0.89 0.84 0.93 0.84
Nonperforming
loans to total
loans 0.77 0.67 0.49 0.77 0.49
Allowance for
loan losses to
total loans 1.57 1.57 1.42 1.57 1.42
Allowance for
loan losses to
nonperforming
loans 202.72 236.09 289.03 202.72 289.03
OTHER DATA
Fiduciary
assets at
period-end (c) $ 342,519 $ 363,205 $ 333,754 $ 342,519 $ 333,754
Retail brokerage
assets at
period-end (c) $ 45,912 $ 51,848 $ 89,016 $ 45,912 $ 89,016
Number
full-time
equivalent
employees (d) 242 235 255 242 255
Number of full
service offices 19 18 19 19 19
Number of loan
production
offices 1 1 2 1 2
Number of ATM's 26 26 24 26 24
Notes:
(a) - Excludes goodwill and other intangible assets
(b) - Excludes amortization expense, net of tax, of intangible assets
(c) - Market value
(d) - Average for quarter
N/A - Percentage change is not applicable or not meaningful
Net Interest Income Analysis
For the Three Months Ended June 30, 2010 and 2009
(in thousands, except rates)
Interest
Average Balance Income/Expense Yield/Rate
----------------- ----------------- ------------------
2010 2009 2010 2009 2010 2009
-------- -------- -------- -------- -------- --------
Loans:
Commercial $ 78,673 $ 91,701 $ 939 $ 1,100 4.79% 4.80%
Real estate 437,856 470,859 6,033 6,669 5.51 5.67
Consumer 6,485 7,881 137 175 8.47 8.88
-------- -------- -------- -------- -------- --------
Total loans 523,014 570,441 7,109 7,944 5.44 5.57
-------- -------- -------- -------- -------- --------
Securities:
Federal agencies 66,019 46,225 525 525 3.18 4.54
Mortgage-backed &
CMO's 45,651 41,382 479 550 4.20 5.32
State and
municipal 79,622 51,718 1,079 731 5.42 5.65
Other 6,997 8,251 61 72 3.49 3.49
-------- -------- -------- -------- -------- --------
Total
securities 198,289 147,576 2,144 1,878 4.33 5.09
-------- -------- -------- -------- -------- --------
Deposits in other
banks 25,576 26,882 87 103 1.36 1.53
-------- -------- -------- -------- -------- --------
Total
interest-earning
assets 746,879 744,899 9,340 9,925 5.00 5.33
-------- -------- -------- --------
Non-earning assets 71,861 67,505
-------- --------
Total assets $818,740 $812,404
======== ========
Deposits:
Demand $ 96,098 $ 92,447 21 42 0.09 0.18
Money market 82,372 78,143 101 148 0.49 0.76
Savings 64,561 62,557 22 37 0.14 0.24
Time 271,932 280,729 1,503 1,953 2.22 2.78
-------- -------- -------- -------- -------- --------
Total deposits 514,963 513,876 1,647 2,180 1.28 1.70
Customer repurchase
agreements 62,072 60,876 99 176 0.64 1.16
Other short-term
borrowings - 1,553 - 1 - 0.26
Long-term
borrowings 29,212 30,460 407 424 5.57 5.57
-------- -------- -------- -------- -------- --------
Total
interest-bearing
liabilities 606,247 606,765 2,153 2,781 1.42 1.83
-------- -------- -------- --------
Noninterest bearing
demand deposits 100,493 98,258
Other liabilities 3,873 4,519
Shareholders'
equity 108,127 102,862
-------- --------
Total
liabilities and
shareholders'
equity $818,740 $812,404
======== ========
Interest rate spread 3.58% 3.50%
======== ========
Net interest margin 3.85% 3.84%
======== ========
Net interest income (taxable
equivalent basis) 7,187 7,144
Less: Taxable equivalent
adjustment 329 235
-------- --------
Net interest income $ 6,858 $ 6,909
======== ========
Net Interest Income Analysis
For the Six Months Ended June 30, 2010 and 2009
(in thousands, except rates)
Interest
Average Balance Income/Expense Yield/Rate
----------------- ----------------- ------------------
2010 2009 2010 2009 2010 2009
-------- -------- -------- -------- -------- --------
Loans:
Commercial $ 78,974 $ 93,887 $ 1,892 $ 2,200 4.83% 4.69%
Real estate 437,550 470,106 12,128 13,448 5.54 5.72
Consumer 6,628 7,888 271 353 8.25 8.95
-------- -------- -------- -------- -------- --------
Total loans 523,152 571,881 14,291 16,001 5.47 5.60
-------- -------- -------- -------- -------- --------
Securities:
Federal agencies 65,886 45,997 1,076 1,046 3.27 4.55
Mortgage-backed &
CMO's 44,722 42,962 980 1,112 4.38 5.18
State and
municipal 73,614 47,247 2,006 1,335 5.45 5.65
Other 7,308 6,641 130 105 3.56 3.16
-------- -------- -------- -------- -------- --------
Total
securities 191,530 142,847 4,192 3,598 4.38 5.04
-------- -------- -------- -------- -------- --------
Deposits in other
banks 28,094 25,237 178 191 1.28 1.51
-------- -------- -------- -------- -------- --------
Total
interest-earning
assets 742,776 739,965 18,661 19,790 5.03 5.35
-------- -------- -------- --------
Non-earning assets 71,882 68,106
-------- --------
Total assets $814,658 $808,071
======== ========
Deposits:
Demand $ 96,578 $102,397 42 232 0.09 0.45
Money market 81,595 71,433 191 346 0.47 0.97
Savings 63,686 61,927 44 77 0.14 0.25
Time 269,256 276,600 3,005 4,052 2.25 2.93
-------- -------- -------- -------- -------- --------
Total deposits 511,115 512,357 3,282 4,707 1.29 1.84
Customer repurchase
agreements 63,005 58,477 204 409 0.65 1.40
Other short-term
borrowings - 1,811 - 4 - 0.44
Long-term
borrowings 29,230 32,418 814 898 5.57 5.54
-------- -------- -------- -------- -------- --------
Total
interest-bearing
liabilities 603,350 605,063 4,300 6,018 1.43 1.99
-------- -------- -------- --------
Noninterest bearing
demand deposits 99,676 95,748
Other liabilities 3,818 4,406
Shareholders'
equity 107,814 102,854
-------- --------
Total
liabilities and
shareholders'
equity $814,658 $808,071
======== ========
Interest rate spread 3.60% 3.36%
======== ========
Net interest margin 3.86% 3.72%
======== ========
Net interest income (taxable
equivalent basis) 14,361 13,772
Less: Taxable equivalent
adjustment 599 450
-------- --------
Net interest income $ 13,762 $ 13,322
======== ========