• American National Bankshares Reports First Quarter Earnings

    Source: Nasdaq GlobeNewswire / 25 Apr 2023 07:30:01   America/New_York

    DANVILLE, Va., April 25, 2023 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (Nasdaq: AMNB) (“American National” or the “Company”) today reported first quarter 2023 earnings of $9.2 million, or $0.86 per diluted common share. Those results compare to earnings of $9.0 million, or $0.84 per diluted common share, during the same quarter in the prior year, and earnings of $8.0 million, or $0.76 per diluted common share, for the fourth quarter of 2022. Earnings produced a return on average tangible common equity of 15.95% for the first quarter of 2023, compared to 14.50% in the previous quarter and 14.14% for the same quarter in the prior year (non-GAAP).

    President and Chief Executive Officer, Jeffrey V. Haley, commented, “I could not be prouder of our Company’s resiliency in the face of unfortunate turmoil in the banking industry over the course of the past few weeks. The failure of two large regional banks certainly created challenges for the regional and community banking industry, but our industry remains strong and American National remains strong. Our customers have continued to place trust in us, and we continue to serve their needs. Our balance sheet maintains strong liquidity and capital, and we were able to deliver a solid quarter of earnings performance for our shareholders. While economic activity in our markets is still fairly strong, we are seeing indications of slowing and have consciously narrowed our lending focus in the face of an uncertain economic future. We have placed additional emphasis on deposit gathering but continue to see a shift in funding mix and rising funding costs associated with higher market rates and fiscal policy. While certainly this represents a headwind, we are confident in our ability to pivot and continue to build franchise value.”

    First quarter 2023 highlights include:

    • Average loans held for investment grew $17.8 million, or 3.3% annualized, during the first quarter as compared to the previous quarter.

    • Average deposits declined by 8.8% annualized during the quarter, while period-end deposits increased $15.9 million, or 2.5% annualized.

    • Fully taxable equivalent (“FTE”) net interest margin was 3.20% for the quarter, down 13 basis points from 3.33% in the fourth quarter of 2022 and up 57 basis points from 2.63% in the same quarter of the prior year (non-GAAP).

    • Noninterest revenues increased $762 thousand, or 21.1%, when compared to the previous quarter, and decreased $1.2 million, or 21.9%, compared to the same quarter in the prior year.

    • Noninterest expense decreased $1.2 million, or 7.0% when compared to the previous quarter, and increased $299 thousand, or 1.9%, when compared to the same quarter in the prior year.

    • On January 1, 2023, the Company adopted the current expected credit losses (“CECL”) standard for estimating credit losses, which resulted in increases of $5.2 million in the allowance for credit losses (“ACL”), $305 thousand in the reserve liability for unfunded commitments, $1.2 million in deferred tax assets and decreased retained earnings by $4.2 million.

    • The Company recognized a provision for credit losses on loans in the first quarter of 2023 of $329 thousand compared to $1.2 million in the fourth quarter of 2022 and a negative provision in the first quarter of 2022 of $758 thousand.

    • Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.04% for the first quarter of 2023, compared to 0.15% in the previous quarter and (0.01%) in the same quarter in the prior year.

    • Nonperforming assets as a percentage of total assets were 0.06% at March 31, 2023 and March 31, 2022 and 0.05% at December 31, 2022.

    NET INTEREST INCOME

    Net interest income for the first quarter of 2023 decreased by $1.1 million, or 4.4%, to $23.2 million compared to $24.3 million for the fourth quarter of 2022. The first quarter of 2023 compared to the same quarter of 2022 reflected an increase of $2.8 million, or 13.5%. The FTE net interest margin for the quarter was 3.20%, down from 3.33% in the prior quarter and up from 2.63% in the same quarter a year ago (non-GAAP). The margin contraction relative to the previous quarter resulted from funding costs increasing more than earning asset yields. The yield on average earning assets increased 22 basis points quarter-over-quarter, while the cost of average interest-bearing liabilities rose 55 basis points due to an acceleration in deposit repricing, shift of the deposit mix into interest-bearing accounts and increased reliance on short-term borrowings. The cost of interest-bearing deposits increased to 0.88% in the first quarter, compared to 0.39% in the previous quarter and 0.12% in the same quarter of the prior year. The improvement in net interest margin relative to the first quarter of 2022 is a reflection of an increase in the yield on average earning assets of 116 basis points partially offset by a 97 basis point rise in the cost of average interest-bearing liabilities.

    ASSET QUALITY

    Nonperforming assets (“NPAs”) totaled $2.0 million as of March 31, 2023 and 2022, respectively, up $564 thousand from December 31, 2022. NPAs as a percentage of total assets were 0.06% at March 31, 2023 and 2022, respectively, compared to 0.05% at December 31, 2022. The Company recorded a provision for credit losses for the first quarter of 2023 of $329 thousand compared to $1.2 million in the previous quarter and a negative provision of $758 thousand in the first quarter of the previous year. The first quarter of 2023 and fourth quarter of 2022 provisions were the result of loan growth and replenishment of the allowance for net charge-off activity. The negative provision expense for the first quarter of 2022 was the result of improvement in economic conditions, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics from the prior quarter.

    The allowance for credit losses on loans increased $5.2 million from the fourth quarter of 2022 resulting from the Day 1 adjustment for the adoption of CECL to $24.9 million at March 31, 2023 as compared to $19.6 million at December 31, 2022. The reserve for unfunded commitments increased $305 thousand to $682 thousand as a result of the Day 1 adoption of CECL. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.04% for the first quarter of 2023, compared to 0.15% in the previous quarter and (0.01%) in the same quarter in the prior year. The ACL as a percentage of loans held for investment was 1.13% at March 31, 2023, compared to 0.89% at December 31, 2022, and 0.90% at March 31, 2022.

    NONINTEREST INCOME

    Noninterest income increased $762 thousand, or 21.1%, to $4.4 million for the quarter ended March 31, 2023 from $3.6 million in the prior quarter and decreased $1.2 million, or 21.9%, from the same quarter in the prior year. The increase in the first quarter of 2023 from the fourth quarter of 2022 was primarily the result of increased income from small business investment companies of $590 thousand and income from insurance commissions of $265 thousand included in other fees and commissions.

    The first quarter of 2023 compared to the first quarter of 2022 reflected a decrease in the majority of line items, with the most significant decrease in mortgage banking income of $529 thousand, or 78.6%, and a decrease in income from insurance investments of $418 thousand, or 93.5%, partially offset by increased interchange fees of $129 thousand, or 13.1%, and $216 thousand, or 81.2%, in other fees and commissions.

    NONINTEREST EXPENSE

    Noninterest expense for the first quarter of 2023 amounted to $15.6 million, down $1.2 million, or 7.0%, when compared to the $16.8 million for the previous quarter and up $299 thousand, or 1.9%, from $15.3 million during the same quarter in the previous year. The decrease in the first quarter compared to the fourth quarter of 2022 was the result of reduced incentive accruals in salaries and employee benefits of $638 thousand partially offset by a $262 thousand increase in payroll taxes and retirement contributions; reduced costs in the first quarter associated with deferred compensation programs of $203 thousand; and one-time seasonal expenses and fraud losses included in the fourth quarter of 2022 of $300 thousand and $184 thousand, respectively.

    The first quarter 2023 increase compared to the same quarter of 2022 was primarily due to a higher salary base partially offset by reduced incentive and commission expense.

    INCOME TAXES

    The effective tax rate for the three months ended March 31, 2023 was 21.19%, compared to 18.90% for the prior quarter and 21.49% for the same quarter in the prior year. The Company recognized a tax benefit in the fourth quarter in the prior year resulting from investment partnership income tax returns reducing the effective tax rate for that period. The decrease in effective tax rate from the March 31, 2022 quarter was attributable to changes in pre-tax earnings and the levels of permanent tax differences.

    BALANCE SHEET

    Total assets at March 31, 2023 were $3.1 billion, an increase of $9.8 million or 1.3% annualized from December 31, 2022 and a decrease of $270.6 million, or 8.1%, from March 31, 2022.

    At March 31, 2023, loans held for investment (net of deferred fees and costs) were $2.2 billion, an increase of $13.1 million, or 2.4% annualized, from December 31, 2022. Loans held for investment (net of deferred fees and costs) increased $211.5 million, or 10.6%, from March 31, 2022.

    Investment securities available for sale amounted to $586.4 million at March 31, 2023, a decrease of $21.7 million, or 3.6%, from December 31, 2022, and a decrease of $99.8 million, or 14.5%, compared to March 31, 2022. The unrealized loss on available for sale securities was $62.4 million at March 31, 2023 compared to $71.0 million at December 31, 2022 and $33.0 million at March 31, 2022. The improvement relative to the prior quarter was primarily the result of declines in market yields for longer term securities. 65% of the market value of the securities portfolio is unencumbered and could be used to provide additional liquidity if needed.

    Deposits amounted to $2.6 billion at March 31, 2023, with growth of $15.9 million, or 2.5% annualized, from December 31, 2022 and decreased $314.0 million, or 10.7%, compared to March 31, 2022. Deposit accounts that were uninsured amounted to 39.9% of total deposits (29.3% excluding collateralized municipal deposits) at March 31, 2023.

    Borrowings from the Federal Home Loan Bank of Atlanta (“FHLB”) totaled $25.0 million at March 31, 2023, down from $100.5 million at December 31, 2022. The Company had no FHLB borrowings at March 31, 2022. The Company’s remaining credit availability from the FHLB was $723.3 million as of March 31, 2023, $485.8 million of which could be accessed without pledging additional collateral.

    The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.06% at March 31, 2023 compared to 7.82% at December 31, 2022 and compared to 7.54% at March 31, 2022 (non-GAAP). The Company’s preliminary common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.75%, 12.90%, 13.93% and 10.46%, respectively, at March 31, 2023.

    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 $1.2 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
    Certain statements in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding anticipated changes in the interest rate environment, future economic conditions and the impacts of current economic uncertainties, and projections, predictions, expectations, or beliefs about future events or results, or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks and uncertainties, some of which cannot be predicted or quantified, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “seek to,” “opportunity,” “potential,” “continue,” “confidence” or words of similar meaning, or other statements concerning opinions or judgment of our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in: the level of inflation; financial market volatility including the level of interest rates, could affect the values of financial instruments and the amount of net interest income earned; the adequacy of the level of the Company’s allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses; general economic or business conditions, either nationally or in the market areas in which the Company does business, may be less favorable than expected, resulting in deteriorating credit quality, reduced demand for credit, or a weakened ability to generate deposits; competition among financial institutions may increase, and competitors may have greater financial resources and develop products and technology that enable those competitors to compete more successfully than the Company; businesses that the Company is engaged in may be adversely affected by legislative or regulatory changes, including changes in accounting standards and tax laws; the ability to recruit and retain key personnel; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable and secure electronic systems; the effects of climate change, natural disasters, and extreme weather events; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts of threats or terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad; the impact of health emergencies, epidemics or pandemics, including the COVID-19 pandemic; risks related to environmental, social and governance practices; risks associated with mergers, acquisitions, and other expansion activities; and other factors described from time to time in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

     
    American National Bankshares Inc.
    Consolidated Balance Sheets
    (Dollars in thousands, except per share data)
    Unaudited
        
     March 31
     2023 2022
    Assets   
    Cash and due from banks$45,090  $34,506 
    Interest-bearing deposits in other banks 58,340   452,562 
    Securities available for sale, at fair value 586,407   686,176 
    Restricted stock, at cost 9,319   8,484 
    Loans held for sale 650   2,524 
    Loans, net of deferred fees and costs 2,199,517   1,988,008 
    Less allowance for credit losses - loans (24,861)  (17,988)
    Net Loans 2,174,656   1,970,020 
    Premises and equipment, net 32,440   34,001 
    Assets held-for-sale 1,382   1,382 
    Other real estate owned, net 27   143 
    Goodwill 85,048   85,048 
    Core deposit intangibles, net 3,085   4,297 
    Bank owned life insurance 29,853   29,159 
    Other assets 49,358   37,936 
        
    Total assets$3,075,655  $3,346,238 
        
        
    Liabilities   
    Demand deposits -- noninterest-bearing$962,247  $1,024,778 
    Demand deposits -- interest-bearing 481,499   539,252 
    Money market deposits 619,621   759,782 
    Savings deposits 252,121   271,384 
    Time deposits 296,762   331,011 
    Total deposits 2,612,250   2,926,207 
    Customer repurchase agreements 63,220   38,527 
    Other short-term borrowings 25,000   - 
    Long-term borrowings 28,359   28,257 
    Other liabilities 17,785   18,173 
    Total liabilities 2,746,614   3,011,164 
        
    Shareholders' equity   
    Preferred stock, $5 par value, 2,000,000 shares authorized, none outstanding -   - 
    Common stock, $1 par value, 20,000,000 shares authorized, 10,626,066 shares outstanding at March 31, 2023 and 10,713,958 shares outstanding at March 31, 2022 10,536   10,638 
    Capital in excess of par value 141,713   144,848 
    Retained earnings 225,409   207,373 
    Accumulated other comprehensive loss, net (48,617)  (27,785)
    Total shareholders' equity 329,041   335,074 
        
    Total liabilities and shareholders' equity$3,075,655  $3,346,238 
        


    American National Bankshares Inc.
    Consolidated Statements of Income
    (Dollars in thousands, except per share data)
    Unaudited
          
     For the Three Months Ended
     3/31/23 12/31/22 3/31/22
    Interest and Dividend Income:     
    Interest and fees on loans$24,912  $23,544  $18,788 
    Interest and dividends on securities:     
    Taxable 2,684   2,721   2,239 
    Tax-exempt 65   110   90 
    Dividends 170   126   113 
    Other interest income 471   415   177 
    Total interest and dividend income 28,302   26,916   21,407 
          
    Interest Expense:     
    Interest on deposits 3,486   1,597   569 
    Interest on short-term borrowings 1,205   633   6 
    Interest on long-term borrowings 387   398   379 
    Total interest expense 5,078   2,628   954 
          
    Net Interest Income 23,224   24,288   20,453 
    Provision for (recovery of) credit losses 329   1,159   (758)
          
    Net Interest Income After Provision for     
    (Recovery of) Credit Losses 22,895   23,129   21,211 
          
    Noninterest Income:     
    Wealth management income 1,568   1,522   1,809 
    Service charges on deposit accounts 556   597   689 
    Interchange fees 1,110   1,117   981 
    Other fees and commissions 482   207   266 
    Mortgage banking income 144   176   673 
    Securities losses, net (68)  -   - 
    Income (loss) from Small Business Investment Companies 327   (263)  493 
    Income from insurance investments 29   103   447 
    (Losses) gains on premises and equipment, net (105)  (146)  4 
    Other 329   297   238 
    Total noninterest income 4,372   3,610   5,600 
          
    Noninterest Expense:     
    Salaries and employee benefits 9,172   9,446   8,598 
    Occupancy and equipment 1,444   1,499   1,542 
    FDIC assessment 207   209   239 
    Bank franchise tax 510   501   476 
    Core deposit intangible amortization 283   300   330 
    Data processing 851   864   847 
    Software 444   417   363 
    Other real estate owned, net -   (1)  (1)
    Other 2,737   3,599   2,955 
    Total noninterest expense 15,648   16,834   15,349 
          
    Income Before Income Taxes 11,619   9,905   11,462 
    Income Taxes 2,462   1,872   2,463 
    Net Income$9,157  $8,033  $8,999 
          
    Net Income Per Common Share:     
    Basic$0.86  $0.76  $0.84 
    Diluted$0.86  $0.76  $0.84 
    Weighted Average Common Shares Outstanding:     
    Basic 10,630,571   10,607,678   10,754,287 
    Diluted 10,632,681   10,609,937   10,756,902 
          



    American National Bankshares Inc.
    		        
    Financial Highlights        
    Unaudited        
             
    (Dollars in thousands, except per share data)        
     1st Qtr 4th Qtr 1st Qtr
     2023 2022 2022
             
    EARNINGS        
    Interest income$ 28,302  $26,916  $21,407 
    Interest expense5,078  2,628  954 
    Net interest income23,224  24,288  20,453 
    Provision for (recovery of) credit losses329  1,159  (758)
    Noninterest income4,372  3,610  5,600 
    Noninterest expense15,648  16,834  15,349 
    Income taxes2,462  1,872  2,463 
    Net income9,157  8,033  8,999 
             
    PER COMMON SHARE         
    Net income per share - basic$ 0.86  $0.76  $0.84 
    Net income per share - diluted0.86  0.76  0.84 
    Cash dividends paid0.30  0.30  0.28 
    Book value per share30.97  30.27  31.27 
    Book value per share - tangible (a)22.67  21.94  22.94 
    Closing market price31.70  36.93  37.68 
             
    FINANCIAL RATIOS        
    Return on average assets1.20% 1.05% 1.08%
    Return on average common equity11.32  10.15  10.24 
    Return on average tangible common equity (a)15.95  14.50  14.14 
    Average common equity to average assets10.58  10.33  10.59 
    Tangible common equity to tangible assets (a)8.06  7.82  7.54 
    Net interest margin, taxable equivalent3.20  3.33  2.63 
    Efficiency ratio (a)55.21  58.82  57.53 
    Effective tax rate21.19  18.90  21.49 
             
    PERIOD-END BALANCES        
    Securities$ 595,726  $620,713  $694,660 
    Loans held for sale650  1,061  2,524 
    Loans, net2,199,517  2,186,449  1,988,008 
    Goodwill and other intangibles88,133  88,415  89,345 
    Assets3,075,655  3,065,902  3,346,238 
    Assets - tangible (a)2,987,522  2,977,487  3,256,893 
    Interest-bearing deposits1,650,003  1,585,726  1,901,429 
    Noninterest bearing demand deposits962,247  1,010,602  1,024,778 
    Customer repurchase agreements63,220  370  38,527 
    Other short-term borrowings25,000  100,531  - 
    Long-term borrowings28,359  28,334  28,257 
    Shareholders' equity329,041  321,174  335,074 
    Shareholders' equity - tangible (a)240,908  232,759  245,729 
             
    AVERAGE BALANCES        
    Securities (b)$ 677,938  $713,996  $710,873 
    Loans held for sale611  972  4,324 
    Loans, net2,186,475  2,168,636  1,966,586 
    Interest-earning assets2,910,165  2,920,992  3,126,561 
    Goodwill and other intangibles88,311  88,593  89,525 
    Assets3,056,918  3,066,362  3,320,314 
    Assets - tangible (a)2,968,607  2,977,769  3,230,789 
    Interest-bearing deposits1,614,273  1,609,503  1,880,873 
    Noninterest bearing demand deposits969,001  1,031,630  1,000,020 
    Customer repurchase agreements6,597  704  41,337 
    Other short-term borrowings98,497  62,004  - 
    Long-term borrowings28,342  28,318  28,241 
    Shareholders' equity323,497  316,697  351,539 
    Shareholders' equity - tangible (a)235,186  228,104  262,014 
             
    American National Bankshares Inc.        
    Financial Highlights        
    Unaudited        
             
             
     1st Qtr 4th Qtr 1st Qtr
     2023 2022 2022
    CAPITAL         
    Weighted average shares outstanding - basic10,630,571  10,607,678  10,754,287 
    Weighted average shares outstanding - diluted10,632,681  10,609,937  10,756,902 
             
    COMMON STOCK REPURCHASE PROGRAM        
    Weighted average shares outstanding - basic20,443  3,269  88,929 
    Weighted average shares outstanding - diluted$ 32.98  $36.44  $38.18 
             
    ALLOWANCE FOR CREDIT LOSSES - LOANS        
    Beginning balance$ 19,555  $19,189  $18,678 
    Day 1 Impact of CECL adoption5,192  -  - 
    Provision for (recovery of) credit losses329  1,159  (758)
    Charge-offs(395) (834) (37)
    Recoveries180  41  105 
    Ending balance$ 24,861  $19,555  $17,988 
             
    LOANS        
    Construction and land development$ 215,975  $197,525  $148,276 
    Commercial real estate - owner occupied415,106  418,462  402,306 
    Commercial real estate - non-owner occupied822,347  827,728  752,817 
    Residential real estate343,548  338,132  295,949 
    Home equity91,408  93,740  89,593 
    Commercial and industrial304,486  304,247  291,697 
    Consumer6,647  6,615  7,370 
    Total$ 2,199,517  $2,186,449  $1,988,008 
             
    NONPERFORMING ASSETS AT PERIOD-END        
    Nonperforming loans:        
    90 days past due and accruing$ -  $16  $71 
    Nonaccrual1,887  1,307  1,762 
    Other real estate owned and repossessions80  80  143 
    Nonperforming assets$ 1,967  $1,403  $1,976 
             
    ASSET QUALITY RATIOS        
    Allowance for credit losses - loans to total loans1.13% 0.89% 0.90%
    Allowance for credit losses - loans to nonperforming loans1,317.49  1,478.08  981.34 
    Nonperforming assets to total assets0.06  0.05  0.06 
    Nonperforming loans to total loans0.09  0.06  0.09 
    Annualized net charge-offs (recoveries) to average loans to average loans0.04  0.15  (0.01)
             
             
             
    OTHER DATA        
    Fiduciary assets at period-end (c) (d)$ 775,379  $736,121  $727,022 
    Retail brokerage assets at period-end (c) (d)$ 420,540  $413,235  $405,742 
    Number full-time equivalent employees (e)357  359  338 
    Number of full service offices26  26  26 
    Number of loan production offices1  1  1 
    Number of ATMs34  34  36 
             
             
    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.
             



     American National Bankshares Inc.
     Net Interest Income Analysis
     For the Three Months Ended March 31, 2023 and 2022
     (Dollars in thousands)
     Unaudited
                     
            Interest     
      Average Balance  Income/Expense (a) Yield/Rate 
                     
      2023  2022  2023  2022 2023 2022 
    Assets:                
                     
    Total loans (b)$2,187,086 $1,970,910 $24,957 $18,822 4.57%3.83%
                     
    Securities:                
    Taxable 665,635  692,998  2,854  2,351 1.72 1.36 
    Tax exempt 12,303  17,875  82  115 2.67 2.56 
    Total securities 677,938  710,873  2,936  2,466 1.74 1.39 
                     
    Deposits in other banks 45,141  444,778  471  177 4.23 0.16 
                     
    Total interest-earning assets 2,910,165  3,126,561  28,364  21,465 3.91 2.75 
                     
    Non-earning assets 146,753  193,753           
    Total assets$3,056,918 $3,320,314           
                     
    Liabilities and Stockholders' Equity:                
                     
    Deposits:                
    Demand$474,334 $525,508  174  37 0.15 0.03 
    Savings and money market 864,008  1,016,443  2,288  108 1.07 0.04 
    Time 275,931  338,922  1,024  424 1.51 0.51 
    Total deposits 1,614,273  1,880,873  3,486  569 0.88 0.12 
                     
    Customer repurchase agreements 6,597  41,337  65  6 4.02 0.06 
    Other short-term borrowings 98,497  -  1,140  - 4.63 - 
    Long-term borrowings 28,342  28,241  387  379 5.46 5.37 
                     
    Total interest-bearing liabilities 1,747,709  1,950,451  5,078  954 1.17 0.20 
                     
    Noninterest bearing demand deposits 969,001  1,000,020           
    Other liabilities 16,711  18,304           
    Shareholders' equity 323,497  351,539           
                     
    Total liabilities and shareholders' equity$3,056,918 $3,320,314           
                     
    Interest rate spread            2.74%2.55%
    Net interest margin            3.20%2.63%
                     
    Net interest income (taxable equivalent basis)     23,286  20,511     
    Less: Taxable equivalent adjustment (c)       62  58     
    Net interest income      $23,224 $20,453     
                     
                     
    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 and loans held for sale 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
      2023   2022   2022 
    EFFICIENCY RATIO     
    Noninterest expense$ 15,648  $16,834  $15,349 
    Subtract: loss on sale of OREO -   2   - 
    Subtract: core deposit intangible amortization (283)  (300)  (330)
     $ 15,365  $16,536  $15,019 
          
    Net interest income$ 23,224  $24,288  $20,453 
    Tax equivalent adjustment 62   68   58 
    Noninterest income 4,372   3,610   5,600 
    Add: loss on securities 68   -   - 
    Add/subtract: (gain)/loss on fixed assets 105   146   (4)
     $ 27,831  $28,112  $26,107 
          
    Efficiency ratio 55.21%  58.82%  57.53%
          
    TAX EQUIVALENT NET INTEREST INCOME    
    Non-GAAP measures:     
    Interest income - loans$ 24,957  $23,585  $18,822 
    Interest income - investments and other 3,407   3,399   2,643 
    Interest expense - deposits (3,486)  (1,597)  (569)
    Interest expense - customer repurchase agreements (65)  -   (6)
    Interest expense - other short-term borrowings (1,140)  (633)  - 
    Interest expense - long-term borrowings (387)  (398)  (379)
    Total net interest income$ 23,286  $24,356  $20,511 
    Less non-GAAP measures:     
    Tax benefit on nontaxable interest - loans (45)  (41)  (34)
    Tax benefit on nontaxable interest - securities (17)  (27)  (24)
    GAAP measures$ 23,224  $24,288  $20,453 
          
    NET INTEREST MARGIN     
    Net interest margin (FTE) (non-GAAP) 3.20%  3.33%  2.63%
    Net interest margin (GAAP) 3.19   3.32   2.63 
          
    RETURN ON AVERAGE TANGIBLE EQUITY    
    Return on average equity (GAAP basis) 11.32%  10.15%  10.24%
    Impact of excluding average goodwill and other intangibles 4.63   4.35   3.90 
    Return on average tangible equity (non-GAAP) 15.95%  14.50%  14.14%
          
    TANGIBLE EQUITY TO TANGIBLE ASSETS     
    Equity to assets ratio (GAAP basis) 10.70%  10.48%  10.01%
    Impact of excluding goodwill and other intangibles (2.64)  (2.66)  (2.47)
    Tangible equity to tangible assets ratio (non-GAAP) 8.06%  7.82%  7.54%
          
    TANGIBLE BOOK VALUE     
    Book value per share (GAAP basis)$ 30.97  $30.27  $31.27 
    Impact of excluding goodwill and other intangibles (8.30)  (8.33)  (8.33)
    Tangible book value per share (non-GAAP)$ 22.67  $21.94  $22.94 
          
    ADJUSTED CREDIT LOSS ALLOWANCE - LOANS    
    Allowance for credit losses - loans$ 24,861  $19,555  $17,988 
    Credit discount on purchased loans -   3,068   4,001 
    Adjusted credit loss allowance - loans$ 24,861  $22,623  $21,989 
          
    Total loans, net$ 2,199,517  $2,186,449  $1,988,008 
    Subtract: PPP loans, net (65)  (74)  (689)
    Total loans less PPP loans, net$ 2,199,452  $2,186,375  $1,987,319 
          
    Adjusted credit loss allowance - loans to total loans less PPP loans, net 1.13%  1.03%  1.11%
          
    Allowance for credit losses - loans to total loans less PPP loans, net 1.13%  0.89%  0.91%
          

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


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