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DANVILLE, Va., July 24 /PRNewswire-FirstCall/ --
-- EPS of $.30 per share
-- Shareholders' equity of $102 million
-- Assets increase to $791 million
-- Average loans increase $10.8 million over previous quarter
-- Allowance for loan losses increases to 1.39% of loans; increase in loan
loss provision expense
-- Net interest margin of 3.83%
-- Special charges related to Fannie Mae and Freddie Mac preferred stock
American National Bankshares Inc.
(Nasdaq: AMNB), parent company of American
National Bank and Trust Company,
today announced second quarter net income of $1.81 million.
Earnings per share were $0.30 on both a basic and diluted
basis. This net income produced annualized returns on
average assets and average equity of 0.92% and 7.06%,
respectively. Annualized return on average tangible equity
was 9.69%. Net income declined from $3.03 million in the
second quarter of 2007. Current quarter earnings were
impacted by larger-than-normal credit expenses and losses
related to the company's investment in
Fannie Mae and Freddie Mac
preferred stock.
Capital Remains High
American National continues to maintain high levels of
capital, with a capital-to-assets ratio of 12.89% at the end
of the quarter. The Company's capital, relative to assets,
places it among the top financial institutions in the
country. "We believe that maintaining a high capital level
is imperative during these very challenging financial
times," stated Charles H. Majors,
President and Chief Executive Officer. "Due to American
National's strong capital position and ongoing
profitability, we have not been faced with the issues that
many banks are dealing with, such as reducing dividends or
attempting to raise new capital. Additionally, our customers
and shareholders should be pleased that American National
continues to operate profitably and soundly."
Net Charge-Offs Low; Nonperforming Assets Increase
Annualized net loan charge-offs represented 0.07% of
average loans during the second quarter, well below industry
averages. However, nonperforming assets increased $3.6
million over the first quarter of 2008, primarily as a
result of one residential construction and development loan
relationship which became nonperforming due to the
borrower's depleted liquidity and a decline in the market
value of the real estate. The collateral consists of
undeveloped and partially-developed land in the Triad area
of North Carolina. The
borrower recently submitted a proposed workout plan, which
is being evaluated by American National and other creditors.
American National has extended loans to the borrower
totaling $3.84 million, plus letters of credit in the amount
of $352,000 related to the development project. Largely as a
result of this loan relationship, and to reflect greater
overall loan loss potential due to current economic
conditions, loan loss provision expense increased to
$600,000 during the quarter. Loan loss provision expense was
$140,000 in the first quarter of 2008, and $0 in the second
quarter of 2007. Additionally, the Company recorded an
expense of $175,000 during the quarter related to the
estimated loss exposure on the letters of credit. This
expense is recorded with other noninterest expense. Loans
30-89 days past due remain well below industry averages, at
0.25% of loans as of June 30, 2008.
Preferred Stock Investments in Fannie
Mae and Freddie Mac
During the second quarter, the Company recorded a
$139,000 loss on sale of its remaining preferred stock
investment in the Federal National
Mortgage Association ("Fannie Mae"),
and recorded an impairment loss of $255,000 on its
investment in Federal Home Loan Mortgage
Corporation ("Freddie Mac")
preferred stock. The impairment expense is classified as a
reduction of other noninterest income. The company's
remaining investment in the Freddie Mac
stock is $392,000. During the quarter, the Company
eliminated its deferred tax valuation allowance related to
these investments, which resulted in a $125,000 reduction in
income tax expense.
Net Interest Income $6.73 Million
Net interest income during the second quarter was $6.73
million, approximately the same as recorded during the first
quarter of 2008, and down 7.6% from the second quarter of
2007. Net interest income was adversely impacted by a series
of rate reductions enacted by the Federal Reserve from
September 2007 to April 2008. The net interest margin was
3.83% during the recently completed quarter, down from 3.88%
in the previous quarter and 4.26% in the second quarter of
2007. Net interest income was augmented in the current
quarter by $84,000 related to the payoff of a loan acquired
in a merger and accounted for under special accounting rules
for acquired loans. Loans increased $10.8 million, on
average, over the previous quarter, while average deposits
and customer repurchase accounts declined $8.3 million.
Largely as a result of these changes, the company increased
its average borrowings by $18.1 million during the quarter.
Noninterest Income $1.84 Million
Noninterest income totaled $1.84 million in the second
quarter of 2008, a decline of $590,000 over the second
quarter of 2007. Excluding the expenses associated with the
Company's preferred stock investments, noninterest income
decreased $196,000, due in large part to a reduction in
mortgage banking and retail brokerage revenue.
Noninterest Expense $5.64 Million
Noninterest expense totaled $5.64 million in the second
quarter of 2008, up 3.6% over the same quarter of 2007.
Excluding the aforementioned expense related to the reserve
for unfunded lending commitments, noninterest expense was
approximately the same as the year-earlier quarter.
About American National
American National Bankshares Inc.
is a bank holding company with assets of $791 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
twenty banking offices and a loan production office. The
Bank also manages an additional $471 million of assets in
its Trust and Investment Services Division.
American National Bank and
Trust Company provides a full array
of financial products and services, including commercial,
mortgage, and consumer banking; trust and investment
services; and insurance. Services are also provided through
twenty-three ATMs, "AmeriLink"
Internet banking, and 24-hour "Access American" telephone
banking. 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
Corporation 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 Corporation'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 data)
Unaudited
June 30
ASSETS 2008 2007
Cash and due from banks $20,082 $21,735
Interest-bearing deposits in other banks 8,265 17,053
Securities available for sale, at fair value 136,632 121,083
Securities held to maturity 9,828 13,148
Total securities 146,460 134,231
Loans held for sale 2,200 2,306
Loans, net of unearned income 568,830 551,744
Less allowance for loan losses (7,932) (7,493)
Net Loans 560,898 544,251
Premises and equipment, net 13,659 12,899
Goodwill 22,468 22,468
Core deposit intangibles, net 2,264 2,641
Accrued interest receivable and other assets 14,399 13,553
Total assets $790,695 $771,137
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing $98,005 $107,206
Demand deposits -- interest-bearing 105,809 110,482
Money market deposits 52,772 50,749
Savings deposits 61,469 66,948
Time deposits 251,189 260,359
Total deposits 569,244 595,744
Repurchase agreements 57,973 43,615
FHLB borrowings 37,488 10,012
Trust preferred capital notes 20,619 20,619
Accrued interest payable and other
liabilities 3,475 3,898
Total liabilities 688,799 673,888
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares
authorized, 6,097,862 shares outstanding
at June 30, 2008 and 6,145,617 shares
outstanding at June 30, 2007 6,098 6,146
Capital in excess of par value 26,463 26,422
Retained earnings 70,233 67,122
Accumulated other comprehensive income
(loss), net (898) (2,441)
Total shareholders' equity 101,896 97,249
Total liabilities and shareholders'
equity $790,695 $771,137
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
2008 2007 2008 2007
Interest and Dividend Income:
Interest and fees on loans $8,987 $10,408 $18,431 $20,487
Interest and dividends on
securities:
Taxable 1,234 1,028 2,465 2,164
Tax-exempt 420 420 852 843
Dividends 73 82 150 171
Other interest income 74 168 150 339
Total interest and
dividend income 10,788 12,106 22,048 24,004
Interest Expense:
Interest on deposits 3,116 3,860 6,698 7,643
Interest on repurchase
agreements 339 449 790 875
Interest on other
borrowings 259 170 418 376
Interest on trust preferred
capital notes 344 344 687 687
Total interest expense 4,058 4,823 8,593 9,581
Net Interest Income 6,730 7,283 13,455 14,423
Provision for loan losses 600 - 740 303
Net Interest Income After
Provision for Loan Losses 6,130 7,283 12,715 14,120
Noninterest Income:
Trust fees 916 924 1,796 1,803
Service charges on deposit
accounts 601 625 1,166 1,247
Other fees and commissions 226 198 429 398
Mortgage banking income 200 329 395 519
Brokerage fees 101 159 244 248
Securities gains (losses), net (138) 64 (108) 89
Impairment of securities (255) - (255) -
Other 190 132 309 339
Total noninterest income 1,841 2,431 3,976 4,643
Noninterest Expense:
Salaries 2,481 2,514 4,950 4,904
Employee benefits 777 737 1,524 1,385
Occupancy and equipment 928 850 1,894 1,679
Bank franchise tax 173 165 350 333
Core deposit intangible
amortization 95 95 189 189
Other 1,189 1,087 2,185 2,128
Total noninterest expense 5,643 5,448 11,092 10,618
Income Before Income Taxes 2,328 4,266 5,599 8,145
Income Taxes 519 1,235 1,485 2,410
Net Income $1,809 $3,031 $4,114 $5,735
Net Income Per Common Share:
Basic $0.30 $0.49 $0.67 $0.93
Diluted $0.30 $0.49 $0.67 $0.93
Average Common Shares
Outstanding:
Basic 6,098,184 6,150,216 6,103,008 6,153,496
Diluted 6,108,536 6,177,165 6,114,911 6,181,107
Financial Highlights
American National Bankshares Inc. and Subsidiaries
(Dollars in thousands,
except share data, unaudited) 2nd Qtr 1st Qtr 2nd Qtr
2008 2008 2007
EARNINGS
Interest income $10,788 $11,260 $12,106
Interest expense 4,058 4,535 4,823
Net interest income 6,730 6,725 7,283
Provision for loan losses 600 140 -
Noninterest income 1,841 2,135 2,431
Noninterest expense 5,643 5,449 5,448
Income taxes 519 966 1,235
Net income 1,809 2,305 3,031
PER COMMON SHARE
Earnings per share - basic $0.30 $0.38 $0.49
Earnings per share - diluted 0.30 0.38 0.49
Cash dividends declared 0.23 0.23 0.23
Book value per share 16.71 16.86 15.82
Book value per share - tangible (a) 12.65 12.79 11.74
Closing market price 18.25 21.26 22.50
FINANCIAL RATIOS
Return on average assets 0.92% 1.18% 1.57%
Return on average equity 7.06 9.01 12.47
Return on average tangible equity (b) 9.69 12.24 17.20
Average equity to average assets 12.99 13.12 12.61
Net interest margin, taxable equivalent 3.83 3.88 4.26
Efficiency ratio 61.40 60.09 55.18
Effective tax rate 22.29 29.53 28.95
PERIOD END BALANCES
Securities $146,460 $160,675 $134,231
Loans held for sale 2,200 1,681 2,306
Loans, net of unearned income 568,830 554,667 551,744
Goodwill and other intangibles 24,732 24,826 25,109
Assets 790,695 785,049 771,137
Assets - tangible (a) 765,963 760,223 746,028
Deposits 569,244 581,539 595,744
Repurchase agreements 57,973 58,179 43,615
Borrowings 58,107 36,744 30,631
Shareholders' equity 101,896 102,873 97,249
Shareholders' equity - tangible (a) 77,164 78,047 72,140
AVERAGE BALANCES
Securities $150,247 $151,699 $143,106
Loans held for sale 2,206 1,614 2,890
Loans, net of unearned income 564,769 553,971 547,420
Interest-earning assets 725,789 717,508 706,285
Goodwill and other intangibles 24,785 24,864 25,146
Assets 789,412 780,204 770,710
Assets - tangible (a) 764,627 755,340 745,564
Interest-bearing deposits 476,207 486,198 487,322
Deposits 576,167 583,410 588,346
Repurchase agreements 53,535 54,624 46,032
Borrowings 52,012 33,870 33,884
Shareholders' equity 102,511 102,342 97,183
Shareholders' equity - tangible (a) 77,726 77,478 72,037
CAPITAL
Average shares outstanding - basic 6,098,184 6,107,832 6,150,216
Average shares outstanding - diluted 6,108,536 6,121,285 6,177,165
Shares repurchased 2,400 28,800 12,700
Average price of shares repurchased $21.43 $20.80 $22.66
LOANS
Construction and land development $66,740 $72,001 $73,596
Commercial real estate 201,102 198,698 196,426
Residential real estate 140,024 138,384 129,032
Home equity 52,773 48,958 48,136
Commercial and industrial 99,603 87,199 93,763
Consumer 8,588 9,427 10,791
Total $568,830 $554,667 $551,744
ALLOWANCE FOR LOAN LOSSES
Beginning balance $7,425 $7,395 $7,590
Provision for loan losses 600 140 -
Charge-offs (203) (170) (155)
Recoveries 110 60 58
Ending balance $7,932 $7,425 $7,493
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due $172 $- $-
Nonaccrual 6,216 2,772 3,192
Foreclosed real estate 558 550 85
Nonperforming assets $6,946 $3,322 $3,277
ASSET QUALITY RATIOS
Net chargeoffs (recoveries) to
average loans 0.07% 0.08% 0.07%
Nonperforming assets to total assets (c) 0.88 0.42 0.42
Nonperforming loans to total loans (c) 1.12 0.50 0.58
Allowance for loan losses to total
loans (c) 1.39 1.34 1.36
Allowance for loan losses to
nonperforming loans (c) 1.24X 2.68X 2.35X
OTHER DATA
Fiduciary assets at period-end (d) $377,008 $386,375 $406,135
Retail brokerage assets at period-
end (d) $94,472 $89,927 $89,684
Number full time-time equivalent
employees 261 258 257
Number of full service offices 20 19 19
Number of loan production offices 1 1 1
Number of ATM's 23 23 23
YTD YTD
2008 2007
EARNINGS
Interest income $22,048 $24,004
Interest expense 8,593 9,581
Net interest income 13,455 14,423
Provision for loan losses 740 303
Noninterest income 3,976 4,643
Noninterest expense 11,092 10,618
Income taxes 1,485 2,410
Net income 4,114 5,735
PER COMMON SHARE
Earnings per share - basic $0.67 $0.93
Earnings per share - diluted 0.67 0.93
Cash dividends declared 0.46 0.45
Book value per share 16.71 15.82
Book value per share - tangible (a) 12.65 11.74
Closing market price 18.25 22.50
FINANCIAL RATIOS
Return on average assets 1.05% 1.48%
Return on average equity 8.03 11.89
Return on average tangible equity (b) 10.96 16.47
Average equity to average assets 13.05 12.45
Net interest margin, taxable equivalent 3.86 4.19
Efficiency ratio 60.75 54.65
Effective tax rate 26.52 29.59
PERIOD END BALANCES
Securities $146,460 $134,231
Loans held for sale 2,200 2,306
Loans, net of unearned income 568,830 551,744
Goodwill and other intangibles 24,732 25,109
Assets 790,695 771,137
Assets - tangible (a) 765,963 746,028
Deposits 569,244 595,744
Repurchase agreements 57,973 43,615
Borrowings 58,107 30,631
Shareholders' equity 101,896 97,249
Shareholders' equity - tangible (a) 77,164 72,140
AVERAGE BALANCES
Securities $150,973 $150,004
Loans held for sale 1,910 2,113
Loans, net of unearned income 559,370 545,140
Interest-earning assets 721,741 710,321
Goodwill and other intangibles 24,825 25,193
Assets 784,772 774,667
Assets - tangible (a) 759,947 749,474
Interest-bearing deposits 481,203 490,546
Deposits 579,789 591,723
Repurchase agreements 54,079 46,142
Borrowings 42,941 35,294
Shareholders' equity 102,410 96,434
Shareholders' equity - tangible (a) 77,585 71,241
CAPITAL
Average shares outstanding - basic 6,103,008 6,153,496
Average shares outstanding - diluted 6,114,911 6,181,107
Shares repurchased 31,200 24,300
Average price of shares repurchased $20.85 $22.89
LOANS
Construction and land development $66,740 $73,596
Commercial real estate 201,102 196,426
Residential real estate 140,024 129,032
Home equity 52,773 48,136
Commercial and industrial 99,603 93,763
Consumer 8,588 10,791
Total $568,830 $551,744
ALLOWANCE FOR LOAN LOSSES
Beginning balance $7,395 $7,264
Provision for loan losses 740 303
Charge-offs (373) (204)
Recoveries 170 130
Ending balance $7,932 $7,493
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due $172 $-
Nonaccrual 6,216 3,192
Foreclosed real estate 558 85
Nonperforming assets $6,946 $3,277
ASSET QUALITY RATIOS
Net chargeoffs (recoveries) to average loans 0.07% 0.03%
Nonperforming assets to total assets (c) 0.88 0.42
Nonperforming loans to total loans (c) 1.12 0.58
Allowance for loan losses to total loans (c) 1.39 1.36
Allowance for loan losses to
nonperforming loans (c) 1.24X 2.35X
OTHER DATA
Fiduciary assets at period-end (d) $377,008 $406,135
Retail brokerage assets at period-end (d) $94,472 $89,684
Number full time-time equivalent employees 261 257
Number of full service offices 20 19
Number of loan production offices 1 1
Number of ATM's 23 23
Notes:
(a) - Excludes goodwill and other intangible assets
(b) - Excludes amortization expense, net of tax, of intangible assets
(c) - Balance sheet amounts used in calculations are based on period-end
balances
(d) - Market value
Net Interest Income Analysis
For the Three Months Ended June 30, 2008 and 2007
(in thousands, except rates)
Interest
Average Balance Income/Expense Yield/Rate
2008 2007 2008 2007 2008 2007
Loans:
Commercial $90,648 $91,852 $1,342 $1,819 5.92% 7.92%
Real estate 467,424 448,024 7,468 8,364 6.39 7.47
Consumer 8,903 10,434 197 247 8.85 9.47
Total loans 566,975 550,310 9,007 10,430 6.35 7.58
Securities:
Federal agencies 45,708 68,991 551 748 4.82 4.34
Mortgage-backed &
CMO's 50,357 20,501 642 247 5.10 4.82
State and municipal 47,201 45,623 652 628 5.53 5.51
Other 6,981 7,991 90 116 5.16 5.81
Total securities 150,247 143,106 1,935 1,739 5.15 4.86
Deposits in other banks 8,567 12,869 74 168 3.46 5.22
Total interest-
earning assets 725,789 706,285 11,016 12,337 6.07 6.99
Non-earning assets 63,623 64,425
Total assets $789,412 $770,710
Deposits:
Demand $107,154 $111,064 160 416 0.60 1.50
Money market 51,124 52,279 239 356 1.87 2.72
Savings 62,648 67,716 84 230 0.54 1.36
Time 255,281 256,263 2,633 2,858 4.13 4.46
Total deposits 476,207 487,322 3,116 3,860 2.62 3.17
Repurchase agreements 53,535 46,032 339 449 2.53 3.90
Other borrowings 52,012 33,884 603 514 4.64 6.07
Total interest-
bearing liabilities 581,754 567,238 4,058 4,823 2.79 3.40
Noninterest bearing
demand deposits 99,960 101,024
Other liabilities 5,187 5,265
Shareholders' equity 102,511 97,183
Total liabilities
and shareholders'
equity $789,412 $770,710
Interest rate spread 3.28% 3.59%
Net interest margin 3.83% 4.26%
Net interest income
(taxable equivalent
basis) 6,958 7,514
Less: Taxable
equivalent adjustment 228 231
Net interest income $6,730 $7,283
Net Interest Income Analysis
For the Six Months Ended June 30, 2008 and 2007
(in thousands, except rates)
Interest
Average Balance Income/Expense Yield/Rate
2008 2007 2008 2007 2008 2007
Loans:
Commercial $88,140 $90,415 $2,796 $3,512 6.34% 7.77%
Real estate 463,927 446,448 15,257 16,529 6.58 7.40
Consumer 9,213 10,390 414 489 8.99 9.41
Total loans 561,280 547,253 18,467 20,530 6.58 7.50
Securities:
Federal agencies 47,886 75,587 1,148 1,605 4.79 4.25
Mortgage-backed &
CMO's 48,881 20,253 1,245 488 5.09 4.82
State and municipal 47,524 45,792 1,308 1,262 5.50 5.51
Other 6,682 8,372 189 245 5.66 5.85
Total securities 150,973 150,004 3,890 3,600 5.15 4.80
Deposits in other
banks 9,488 13,064 150 339 3.16 5.19
Total interest-
earning assets 721,741 710,321 22,507 24,469 6.24 6.89
Non-earning assets 63,031 64,346
Total assets $784,772 $774,667
Deposits:
Demand $107,574 $110,592 385 840 0.72 1.52
Money market 51,222 52,210 533 705 2.08 2.70
Savings 62,916 68,318 200 465 0.64 1.36
Time 259,491 259,426 5,580 5,633 4.30 4.34
Total deposits 481,203 490,546 6,698 7,643 2.78 3.12
Repurchase agreements 54,079 46,142 790 875 2.92 3.79
Other borrowings 42,941 35,294 1,105 1,063 5.15 6.02
Total interest-
bearing
liabilities 578,223 571,982 8,593 9,581 2.97 3.35
Noninterest bearing
demand deposits 98,586 101,177
Other liabilities 5,553 5,074
Shareholders' equity 102,410 96,434
Total liabilities
and shareholders'
equity $784,772 $774,667
Interest rate spread 3.27% 3.54%
Net interest margin 3.86% 4.19%
Net interest income
(taxable equivalent
basis) 13,914 14,888
Less: Taxable
equivalent
adjustment 459 465
Net interest income $13,455 $14,423
SOURCE American National Bankshares Inc.
-0- 07/24/2008
/CONTACT: Neal A. Petrovich, Senior Vice President and Chief Financial
Officer, American National Bankshares Inc., +1-434-773-2242,
petrovichn@amnb.com /
/Web site: http://www.amnb.com /
(AMNB)
CO: American National Bankshares Inc.; American National Bank and Trust
Company
ST: Virginia
IN: FIN
SU: ERN
JA-AD
-- NETH087 --
8895 07/24/2008 17:00 EDT http://www.prnewswire.com
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