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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 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 ) Noninterest income 4,372 3,610 5,600 Noninterest expense 15,648 16,834 15,349 Income taxes 2,462 1,872 2,463 Net income 9,157 8,033 8,999 PER COMMON SHARE Net income per share - basic $ 0.86 $ 0.76 $ 0.84 Net income per share - diluted 0.86 0.76 0.84 Cash dividends paid 0.30 0.30 0.28 Book value per share 30.97 30.27 31.27 Book value per share - tangible (a) 22.67 21.94 22.94 Closing market price 31.70 36.93 37.68 FINANCIAL RATIOS Return on average assets 1.20 % 1.05 % 1.08 % Return on average common equity 11.32 10.15 10.24 Return on average tangible common equity (a) 15.95 14.50 14.14 Average common equity to average assets 10.58 10.33 10.59 Tangible common equity to tangible assets (a) 8.06 7.82 7.54 Net interest margin, taxable equivalent 3.20 3.33 2.63 Efficiency ratio (a) 55.21 58.82 57.53 Effective tax rate 21.19 18.90 21.49 PERIOD-END BALANCES Securities $ 595,726 $ 620,713 $ 694,660 Loans held for sale 650 1,061 2,524 Loans, net 2,199,517 2,186,449 1,988,008 Goodwill and other intangibles 88,133 88,415 89,345 Assets 3,075,655 3,065,902 3,346,238 Assets - tangible (a) 2,987,522 2,977,487 3,256,893 Interest-bearing deposits 1,650,003 1,585,726 1,901,429 Noninterest bearing demand deposits 962,247 1,010,602 1,024,778 Customer repurchase agreements 63,220 370 38,527 Other short-term borrowings 25,000 100,531 - Long-term borrowings 28,359 28,334 28,257 Shareholders' equity 329,041 321,174 335,074 Shareholders' equity - tangible (a) 240,908 232,759 245,729 AVERAGE BALANCES Securities (b) $ 677,938 $ 713,996 $ 710,873 Loans held for sale 611 972 4,324 Loans, net 2,186,475 2,168,636 1,966,586 Interest-earning assets 2,910,165 2,920,992 3,126,561 Goodwill and other intangibles 88,311 88,593 89,525 Assets 3,056,918 3,066,362 3,320,314 Assets - tangible (a) 2,968,607 2,977,769 3,230,789 Interest-bearing deposits 1,614,273 1,609,503 1,880,873 Noninterest bearing demand deposits 969,001 1,031,630 1,000,020 Customer repurchase agreements 6,597 704 41,337 Other short-term borrowings 98,497 62,004 - Long-term borrowings 28,342 28,318 28,241 Shareholders' equity 323,497 316,697 351,539 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 - basic 10,630,571 10,607,678 10,754,287 Weighted average shares outstanding - diluted 10,632,681 10,609,937 10,756,902 COMMON STOCK REPURCHASE PROGRAM Weighted average shares outstanding - basic 20,443 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 adoption 5,192 - - Provision for (recovery of) credit losses 329 1,159 (758 ) Charge-offs (395 ) (834 ) (37 ) Recoveries 180 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 occupied 415,106 418,462 402,306 Commercial real estate - non-owner occupied 822,347 827,728 752,817 Residential real estate 343,548 338,132 295,949 Home equity 91,408 93,740 89,593 Commercial and industrial 304,486 304,247 291,697 Consumer 6,647 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 Nonaccrual 1,887 1,307 1,762 Other real estate owned and repossessions 80 80 143 Nonperforming assets $ 1,967 $ 1,403 $ 1,976 ASSET QUALITY RATIOS Allowance for credit losses - loans to total loans 1.13 % 0.89 % 0.90 % Allowance for credit losses - loans to nonperforming loans 1,317.49 1,478.08 981.34 Nonperforming assets to total assets 0.06 0.05 0.06 Nonperforming loans to total loans 0.09 0.06 0.09 Annualized net charge-offs (recoveries) to average loans to average loans 0.04 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 offices 26 26 26 Number of loan production offices 1 1 1 Number of ATMs 34 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
- Average loans held for investment grew $17.8 million, or 3.3% annualized, during the first quarter as compared to the previous quarter.