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American National Bankshares Reports First Quarter Earnings

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DANVILLE, Va., April 22, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported first quarter 2021 earnings of $11.3 million, or $1.03 per diluted common share. Those results compare to net income of $8.5 million, or $0.77 per diluted common share, during the same quarter in the prior year, and net income of $8.8 million, or $0.80 per diluted common share, recognized for the fourth quarter of 2020.

President and Chief Executive Officer Jeffrey V. Haley commented, “We are certainly pleased with our first quarter results, with growth noted in revenues and in particular our noninterest lines of business. We are encouraged by the optimism surrounding the potential end of the pandemic and prospects for the economy with continued stimulus support.

“We were very active in the Paycheck Protection Program (“PPP”) during the quarter, with this program continuing to support our customers, while providing a meaningful contribution to both revenues and earnings. We continued to see excellent credit quality during the quarter, resulting in no additional allowance requirement or provision expense for the period. Noninterest revenues were strong for the quarter, with solid growth in our wealth, mortgage and insurance revenues. Operating expenses adjusted for the impacts of PPP were in line with expectations. Low interest rates, excess liquidity and light loan demand were headwinds during the quarter, but we saw some notable improvement in loan activity toward the end of the quarter and as we enter the second quarter.

“We have begun to return to the Bank and fully opened our lobbies to our customers with prudent safety protocols. We remain focused on supporting and protecting our employees, customers and communities while creating shareholder value.”

First quarter 2021 highlights include:

  • Earnings produced a return on average tangible common equity (annualized) of 18.45% for the first quarter of 2021, compared to 14.90% in the previous quarter and 15.32% for the same quarter in the prior year (non-GAAP).

  • Average deposits grew 1.8% during the quarter and 24.8% over the same quarter of 2020; the cost of interest-bearing deposits decreased to 0.30% in the first quarter, compared to 0.43% in the previous quarter and 0.89% in the same quarter of the prior year.

  • Fully taxable equivalent (“FTE”) net interest margin was 3.20% for the quarter, down from 3.22% in the fourth quarter of 2020 and from 3.52% in the same quarter of the prior year (non-GAAP).

  • Noninterest revenues increased $1.7 million, or 40.3%, when compared to the previous quarter, and increased $1.4 million, or 31.7%, compared to the same quarter in the prior year.

  • Noninterest expense decreased $594 thousand, or 4.1%, when compared to the previous quarter, and increased $731 thousand, or 5.5%, when compared to the same quarter in the prior year.

  • The Company had no provision for loan losses in the first quarter of 2021, compared to a provision of $585 thousand for the previous quarter, and a provision of $953 thousand in the same quarter in the prior year. Annualized net charge-offs were 0.00% for the first quarter of 2021, down from 0.01% for the corresponding quarter in the prior year and 0.05% for the fourth quarter of 2020.

  • Nonperforming assets as a percentage of total assets were 0.10% at March 31, 2021, down from 0.12% at December 31, 2020 and 0.16% at March 31, 2020.

SMALL BUSINESS ADMINISTRATION’s (“SBA’s”) PPP

The Company continued to participate in the SBA’s PPP under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in the first quarter of 2021. There were 805 loans processed for approximately $80.7 million from the second round of the program. In addition to the new loans, $105.1 million of first round loans from 2020 were forgiven in first quarter 2021 compared to $56.4 million in the fourth quarter of 2020. Total outstanding net PPP loans were $183.8 million at March 31, 2021 down from $211.3 at December 31, 2020. Total PPP fees recognized in net interest income during the quarter were $2.9 million compared to the prior quarter’s $2.4 million as a result of the forgiveness. The interest income from the total PPP portfolio generated $526,000 in revenues for the first quarter compared to $639,000 in the previous quarter.

NET INTEREST INCOME

Net interest income for the first quarter of 2021 was $22.4 million, an increase of $277 thousand, or 1.3%, from the prior quarter and an increase of $2.5 million, or 12.6%, from the first quarter of 2020. The FTE net interest margin for the quarter was 3.20%, down from 3.22% in the prior quarter and down from 3.52% in the same period a year ago (non-GAAP). The first quarter of 2021 benefited from the recognition of a higher level of remaining net fees on PPP loans that were forgiven during the quarter. The increase in net interest income from the same quarter in the prior year was 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 first quarter of 2021, net accretion related to acquisition accounting amounted to $948 thousand compared to $1.2 million in the prior quarter and $957 thousand 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 nine months of 2021

$1,299

For the years ending (estimated):

2022

1,203

2023

689

2024

416

2025

302

2026

185

Thereafter

536

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $2.9 million as of March 31, 2021 down from $3.7 million at December 31, 2020, and down from $4.0 million at March 31, 2020. NPAs as a percentage of total assets were 0.10% at March 31, 2021, compared to 0.12% at December 31, 2020 and 0.16% at March 31, 2020.

There was no provision expense for the first quarter of 2021, as compared to $585 thousand for the previous quarter and $953 thousand for the same period in the previous year. The first quarter of 2021 warranted a significantly lower provision than the fourth quarter of 2020 based on loan activity, an improving economy, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. However, risk levels in general remain elevated particularly in certain industry segments. The allowance for loan losses was $21.4 million at March 31, 2021 and December 31, 2020 and $14.1 million at March 31, 2020. Annualized net charge-offs as a percentage of average loans outstanding were 0.00% for the first quarter of 2021, compared to 0.05% in the previous quarter and 0.01% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.08% at March 31, 2021 compared to 1.06% at December 31, 2020 and 0.76% at March 31, 2020. Excluding PPP loans, the allowance as a percentage of loans was 1.19% at both March 31, 2021 and December 31, 2020.

American National continues to utilize a Disaster Assistance Program for borrowers in accordance with Section 4013 of the CARES Act. At March 31, 2021, American National had interest only deferrals to customers with outstanding balances amounting to $19.3 million, representing less than 1.0% of total loans held for investment, which compares to $30.0 million, or 1.5%, of total loans held for investment, at December 31, 2020. At March 31, 2021 $16.4 million of the $19.3 million was the result of second and third interest deferrals.

NONINTEREST INCOME

Noninterest income increased $1.7 million, or 40.3%, to $5.9 million for the quarter ended March 31, 2021 from $4.2 million in the prior quarter and increased $1.4 million, or 31.7%, from the same period in the prior year. The largest increases for the first quarter over the previous quarter were in income from mortgage banking, up $276 thousand or 26.5%; income from small business investment companies, up $192 thousand or 81.4%; and income from insurance investments, up $846 thousand or over 100%, respectively. Comparing the first quarter of 2021 to the first quarter of 2020, increases were noted in all categories except for service charges on deposit accounts, securities gains, net, and losses on premises and equipment, net.

NONINTEREST EXPENSE

Noninterest expense for the first quarter of 2021 amounted to $14.1 million, down $594 thousand, or 4.1%, when compared to the $14.7 million for the previous quarter and up $731 thousand, or 5.5%, from $13.3 million during the same period in the previous year. The first quarter of 2021 reflects a reduction in salaries and benefits expense associated with the deferral of $604 thousand in costs associated with the origination of PPP loans during the quarter. The fourth quarter of 2020 included $650 thousand in pension and salary expenses resulting from a voluntary early retirement package recognized as one-time costs. The increase from the first quarter of 2020 was attributable primarily to increases in salaries and benefits and occupancy expense reflecting normal growth, and the benefit of small bank credits in the FDIC assessment line item for 2020 that reduced expenses.

INCOME TAXES

The effective tax rate for the three months ended March 31, 2021 and December 31, 2020 was 20.9%. This compares to 15.7% for the same period in the prior year. In the quarter ended March 31, 2020, the Company benefited from a provision of the CARES Act which allowed it to recognize a tax benefit for the net operating loss (NOL) five-year carryback of the NOL acquired in the acquisition of HomeTown Bankshares Corporation in 2019. An income tax benefit was realized on the NOL for the difference between the 21% corporate tax rate and the higher rate of 35% in effect prior to 2018.

BALANCE SHEET

Total assets at March 31, 2021 and December 31, 2020 were $3.1 billion and increased $578.4 million from the first quarter of 2020. The balance sheet at March 31, 2021 reflected a slight shift in the mix of assets from the previous quarter but primarily remained constant. The growth over the same period a year ago is primarily due to loan and deposit growth associated with the PPP program and growth in core deposits during the period.

At March 31, 2021, loans held for investment (net of deferred fees and costs) were $2.0 billion, a decrease of $36.4 million, or 7.2% annualized, from December 31, 2020. The change was primarily a result of the changes discussed previously from the PPP. Excluding PPP loans, loans held for investment were slightly lower, contracting $8.9 million or 0.5% from year-end 2020.

Investment securities amounted to $482.1 million at March 31, 2021, with growth of $16.1 million, or 3.4%, compared to December 31, 2020, and growth of $139.4 million, or 40.7%, compared to March 31, 2020.

Deposits amounted to $2.6 billion at March 31, 2021 and December 31, 2020, with growth of $561.9 million, or 27.1%, compared to the first quarter of 2020. The growth over the previous quarter and the prior period of 2020 is a result of continued higher than average cash balances being maintained by customers as elevated savings rates and liquidity patterns continue. This pattern has been prevalent since the second quarter of 2020 and is consistent with trends with other commercial banks.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.42% at March 31, 2021 as compared to 8.34% at December 31, 2020 and 9.61% at March 31, 2020. The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.74%, 14.16%, 15.56% and 9.56%, respectively at March 31, 2021.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.1 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 $1.0 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; (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 implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (6) accounting principles, policies, and guidelines; and (7) 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

March 31

2021

2020

Assets

Cash and due from banks

$

33,266

$

39,602

Interest-bearing deposits in other banks

383,984

69,968

Securities available for sale, at fair value

482,143

342,769

Restricted stock, at cost

8,024

8,682

Loans held for sale

17,929

2,666

Loans, net of deferred fees and costs

1,978,640

1,854,928

Less allowance for loan losses

(21,416

)

(14,065

)

Net Loans

1,957,224

1,840,863

Premises and equipment, net

39,336

39,632

Other real estate owned, net

443

984

Goodwill

85,048

85,048

Core deposit intangibles, net

5,710

7,301

Bank owned life insurance

28,635

27,970

Other assets

31,690

29,580

Total assets

$

3,073,432

$

2,495,065

Liabilities

Demand deposits -- noninterest-bearing

$

907,721

$

567,772

Demand deposits -- interest-bearing

455,457

343,291

Money market deposits

688,051

524,234

Savings deposits

236,518

181,564

Time deposits

344,787

453,806

Total deposits

2,632,534

2,070,667

Customer repurchase agreements

39,205

42,114

Long-term borrowings

35,656

35,567

Other liabilities

24,244

23,424

Total liabilities

2,731,639

2,171,772

Shareholders' equity

Preferred stock, $5 par value, 2,000,000 shares authorized,

none outstanding

-

-

Common stock, $1 par value, 20,000,000 shares authorized,

10,958,171 shares outstanding at March 31, 2021 and

10,957,502 shares outstanding at March 31, 2020

10,894

10,898

Capital in excess of par value

153,651

153,817

Retained earnings

178,015

157,064

Accumulated other comprehensive income (loss), net

(767

)

1,514

Total shareholders' equity

341,793

323,293

Total liabilities and shareholders' equity

$

3,073,432

$

2,495,065




American National Bankshares Inc.

Consolidated Statements of Income

(Dollars in thousands, except per share data)

Unaudited

For the Three Months Ended

3/31/21

12/31/20

3/31/20

Interest and Dividend Income:

Interest and fees on loans

$

22,273

$

22,654

$

21,321

Interest and dividends on securities:

Taxable

1,632

1,536

2,037

Tax-exempt

103

103

112

Dividends

119

121

132

Other interest income

77

84

264

Total interest and dividend income

24,204

24,498

23,866

Interest Expense:

Interest on deposits

1,287

1,821

3,312

Interest on short-term borrowings

11

22

129

Interest on long-term borrowings

483

509

506

Total interest expense

1,781

2,352

3,947

Net Interest Income

22,423

22,146

19,919

Provision for loan losses

-

585

953

Net Interest Income After Provision

for Loan Losses

22,423

21,561

18,966

Noninterest Income:

Trust fees

1,206

1,025

1,012

Service charges on deposit accounts

622

677

721

Other fees and commissions

1,139

1,037

941

Mortgage banking income

1,318

1,042

549

Securities gains, net

-

-

814

Brokerage fees

218

192

211

Income from Small Business Investment Companies

428

236

55

Income (loss) from insurance investments

788

(58

)

48

Losses on premises and equipment, net

(49

)

(13

)

(82

)

Other

252

83

226

Total noninterest income

5,922

4,221

4,495

Noninterest Expense:

Salaries and employee benefits

7,518

8,225

7,360

Occupancy and equipment

1,533

1,470

1,366

FDIC assessment

224

206

95

Bank franchise tax

438

425

426

Core deposit intangible amortization

381

391

427

Data processing

778

764

763

Software

329

342

356

Other real estate owned, net

117

26

(9

)

Other

2,747

2,810

2,550

Total noninterest expense

14,065

14,659

13,334

Income Before Income Taxes

14,280

11,123

10,127

Income Taxes

2,991

2,329

1,585

Net Income

$

11,289

$

8,794

$

8,542

Net Income Per Common Share:

Basic

$

1.03

$

0.80

$

0.77

Diluted

$

1.03

$

0.80

$

0.77

Weighted Average Common Shares Outstanding:

Basic

10,971,466

10,975,349

11,025,185

Diluted

10,976,177

10,978,931

11,031,310



American National Bankshares Inc.

Financial Highlights

Unaudited

(Dollars in thousands, except per share data)

1st Qtr

4th Qtr

1st Qtr

2021

2020

2020

EARNINGS

Interest income

$

24,204

$

24,498

$

23,866

Interest expense

1,781

2,352

3,947

Net interest income

22,423

22,146

19,919

Provision for loan losses

-

585

953

Noninterest income

5,922

4,221

4,495

Noninterest expense

14,065

14,659

13,334

Income taxes

2,991

2,329

1,585

Net income

11,289

8,794

8,542

PER COMMON SHARE

Net income per share - basic

$

1.03

$

0.80

$

0.77

Net income per share - diluted

1.03

0.80

0.77

Cash dividends paid

0.27

0.27

0.27

Book value per share

31.19

30.77

29.50

Book value per share - tangible (a)

22.91

22.47

21.08

Closing market price

33.07

26.21

23.90

FINANCIAL RATIOS

Return on average assets

1.49

%

1.18

%

1.37

%

Return on average common equity

13.19

10.48

10.56

Return on average tangible common equity (a)

18.45

14.90

15.32

Average common equity to average assets

11.31

11.30

12.99

Tangible common equity to tangible assets (a)

8.42

8.34

9.61

Net interest margin, taxable equivalent

3.20

3.22

3.52

Efficiency ratio (a)

47.70

53.92

54.46

Effective tax rate

20.95

20.94

15.65

PERIOD-END BALANCES

Securities

$

490,167

$

474,806

$

351,451

Loans held for sale

17,929

15,591

2,666

Loans, net

1,978,640

2,015,056

1,854,928

Goodwill and other intangibles

90,758

91,139

92,349

Assets

3,073,432

3,050,010

2,495,065

Assets - tangible (a)

2,982,674

2,958,871

2,402,716

Deposits

2,632,534

2,611,330

2,070,667

Customer repurchase agreements

39,205

42,551

42,114

Long-term borrowings

35,656

35,630

35,567

Shareholders' equity

341,793

337,894

323,293

Shareholders' equity - tangible (a)

251,035

246,755

230,944

AVERAGE BALANCES

Securities (b)

$

458,760

$

372,529

$

369,730

Loans held for sale

11,237

8,601

3,156

Loans, net

2,009,166

2,063,397

1,829,125

Interest-earning assets

2,814,291

2,754,455

2,274,920

Goodwill and other intangibles

90,976

91,358

91,738

Assets

3,026,952

2,971,505

2,491,591

Assets - tangible (a)

2,935,976

2,880,147

2,399,853

Interest-bearing deposits

1,740,418

1,701,395

1,495,565

Deposits

2,582,539

2,536,363

2,069,927

Customer repurchase agreements

43,746

40,819

41,519

Other short-term borrowings

-

-

3

Long-term borrowings

35,640

35,617

35,554

Shareholders' equity

342,231

335,671

323,573

Shareholders' equity - tangible (a)

251,255

244,313

231,835

American National Bankshares Inc.

Financial Highlights

Unaudited

(Dollars in thousands, except per share data)

1st Qtr

4th Qtr

1st Qtr

2021

2020

2020

CAPITAL

Weighted average shares outstanding - basic

10,971,466

10,975,349

11,025,185

Weighted average shares outstanding - diluted

10,976,177

10,978,931

11,031,310

COMMON STOCK REPURCHASE PROGRAM

Total shares of common stock repurchased

54,023

-

140,526

Average price paid per share of common stock

$

29.51

$

-

$

35.44

ALLOWANCE FOR LOAN LOSSES

Beginning balance

$

21,403

$

21,088

$

13,152

Provision for loan losses

-

585

953

Charge-offs

(22

)

(331

)

(105

)

Recoveries

35

61

65

Ending balance

$

21,416

$

21,403

$

14,065

LOANS

Construction and land development

$

159,801

$

140,071

$

141,154

Commercial real estate - owner occupied

364,549

373,680

376,554

Commercial real estate - non-owner occupied

628,742

627,569

576,809

Residential real estate

266,595

269,137

301,284

Home equity

100,643

104,881

118,030

Commercial and industrial

447,109

491,256

331,507

Consumer

11,201

8,462

9,590

Total

$

1,978,640

$

2,015,056

$

1,854,928

NONPERFORMING ASSETS AT PERIOD-END

Nonperforming loans:

90 days past due and accruing

$

162

$

262

$

459

Nonaccrual

2,323

2,434

2,579

Other real estate owned and repossessions

443

958

984

Nonperforming assets

$

2,928

$

3,654

$

4,022

ASSET QUALITY RATIOS

Allowance for loan losses to total loans

1.08

%

1.06

%

0.76

%

Allowance for loan losses to

nonperforming loans

861.81

793.88

462.97

Nonperforming assets to total assets

0.10

0.12

0.16

Nonperforming loans to total loans

0.13

0.13

0.16

Annualized net charge-offs

to average loans

0.00

0.05

0.01

OTHER DATA

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

$

666,653

$

614,016

$

492,850

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

$

382,419

$

362,022

$

235,359

Number full-time equivalent employees (e)

340

342

355

Number of full service offices

26

26

26

Number of loan production offices

1

1

1

Number of ATMs

36

37

38

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 March 31, 2021 and 2020

(Dollars in thousands)

Unaudited

Interest

Average Balance

Income/Expense (a)

Yield/Rate

2021

2020

2021

2020

2021

2020

Loans:

Commercial

$

464,677

$

332,920

$

5,790

$

3,543

5.05

%

4.28

%

Real estate

1,548,091

1,489,319

16,390

17,663

4.23

4.74

Consumer

7,635

10,042

127

157

6.75

6.29

Total loans (b)

2,020,403

1,832,281

22,307

21,363

4.43

4.67

Securities:

U.S. Treasury

15,303

9,049

12

36

0.31

1.59

Federal agencies & GSEs

105,337

103,311

305

576

1.16

2.23

Mortgage-backed & CMOs

258,003

197,774

973

1,144

1.51

2.31

State and municipal

58,493

40,825

315

288

2.15

2.82

Other

21,624

18,771

275

264

5.09

5.63

Total securities

458,760

369,730

1,880

2,308

1.64

2.50

Deposits in other banks

335,128

72,909

77

264

0.09

1.46

Total interest-earning assets

2,814,291

2,274,920

24,264

23,935

3.46

4.21

Non-earning assets

212,661

216,671

Total assets

$

3,026,952

$

2,491,591

Deposits:

Demand

$

450,953

$

331,357

40

123

0.04

0.15

Money market

683,948

515,339

276

1,188

0.16

0.93

Savings

227,404

178,896

7

53

0.01

0.12

Time

378,113

469,973

964

1,948

1.03

1.67

Total deposits

1,740,418

1,495,565

1,287

3,312

0.30

0.89

Customer repurchase agreements

43,746

41,519

11

129

0.10

1.25

Other short-term borrowings

-

3

-

-

-

1.01

Long-term borrowings

35,640

35,554

483

506

5.42

5.69

Total interest-bearing

liabilities

1,819,804

1,572,641

1,781

3,947

0.40

1.01

Noninterest bearing demand deposits

842,121

574,362

Other liabilities

22,796

21,015

Shareholders' equity

342,231

323,573

Total liabilities and

shareholders' equity

$

3,026,952

$

2,491,591

Interest rate spread

3.06

%

3.20

%

Net interest margin

3.20

%

3.52

%

Net interest income (taxable equivalent basis)

22,483

19,988

Less: Taxable equivalent adjustment (c)

60

69

Net interest income

$

22,423

$

19,919

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)

1st Qtr

4th Qtr

1st Qtr

2021

2020

2020

EFFICIENCY RATIO

Noninterest expense

$

14,065

$

14,659

$

13,334

Add/subtract: gain/loss on sale of OREO

(111

)

(8

)

27

Subtract: core deposit intangible amortization

(381

)

(391

)

(427

)

$

13,573

$

14,260

$

12,934

Net interest income

$

22,423

$

22,146

$

19,919

Tax equivalent adjustment

60

69

69

Noninterest income

5,922

4,221

4,495

Subtract: gain on securities

-

-

(814

)

Add: loss on fixed assets

49

13

82

$

28,454

$

26,449

$

23,751

Efficiency ratio

47.70

%

53.92

%

54.46

%

TAX EQUIVALENT NET INTEREST INCOME

Non-GAAP measures:

Interest income - loans

$

22,307

$

22,697

$

21,363

Interest income - investments and other

1,957

1,870

2,572

Interest expense - deposits

(1,287

)

(1,821

)

(3,312

)

Interest expense - customer repurchase

agreements

(11

)

(22

)

(129

)

Interest expense - other short-term borrowings

-

-

-

Interest expense - long-term borrowings

(483

)

(509

)

(506

)

Total net interest income

$

22,483

$

22,215

$

19,988

Less non-GAAP measures:

Tax benefit on nontaxable interest - loans

(34

)

(43

)

(42

)

Tax benefit on nontaxable interest - securities

(26

)

(26

)

(27

)

GAAP measures

$

22,423

$

22,146

$

19,919

RETURN ON AVERAGE TANGIBLE EQUITY

Return on average equity (GAAP basis)

13.19

%

10.48

%

10.56

%

Impact of excluding average goodwill

and other intangibles

5.26

4.42

4.76

Return on average tangible equity

(non-GAAP)

18.45

%

14.90

%

15.32

%

TANGIBLE EQUITY TO TANGIBLE ASSETS

Equity to assets ratio (GAAP basis)

11.12

%

11.08

%

12.96

%

Impact of excluding goodwill and

other intangibles

(2.70

)

(2.74

)

(3.35

)

Tangible equity to tangible assets ratio

(non-GAAP)

8.42

%

8.34

%

9.61

%

TANGIBLE BOOK VALUE

Book value per share (GAAP basis)

$

31.19

$

30.77

$

29.50

Impact of excluding goodwill and

other intangibles

(8.28

)

(8.30

)

(8.42

)

Tangible book value per share

(non-GAAP)

$

22.91

$

22.47

$

21.08

ADJUSTED LOAN LOSS ALLOWANCE

Allowance for loan losses

$

21,416

$

21,403

$

14,065

Credit discount on purchased loans

6,528

7,255

10,547

Adjusted loan loss allowance

$

27,944

$

28,658

$

24,612

Total loans, net

$

1,978,640

$

2,015,056

$

1,854,928

Subtract: PPP loans, net

(183,783

)

(211,275

)

-

Total loans less PPP loans, net

$

1,794,857

$

1,803,781

$

1,854,928

Adjusted loan loss allowance to

total loans less PPP loans, net

1.56

%

1.59

%

1.33

%


Contact:

Jeffrey W. Farrar

Executive Vice President, COO & CFO

(434)773-2274

farrarj@amnb.com