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American National Bankshares Reports Fourth Quarter and Full Year 2020 Earnings
Source: Nasdaq GlobeNewswire / 21 Jan 2021 07:30:01 America/New_York
DANVILLE, Va., Jan. 21, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported fourth quarter 2020 earnings of $8.8 million, or $0.80 per diluted common share. Those results compare to $7.4 million, or $0.67 per diluted common share, during the same quarter in the prior year, and net income of $7.2 million, or $0.66 per diluted common share, recognized for the third quarter of 2020. Earnings for the twelve months ended December 31, 2020 were $30.0 million, or $2.73 per diluted common share, compared to $20.9 million, or $1.98 per diluted common share for the same period of 2019. Earnings for the twelve months ended December 31, 2019 were impacted by $11.8 million in merger related expenses.
President and Chief Executive Officer Jeffrey V. Haley commented, “Despite the significant economic impact of COVID-19, we ended 2020 on a positive note, with earnings of $8.8 million or $0.80 per share for the fourth quarter, representing an increase of $1.4 million, or 18.2%, as compared to same quarter in 2019. Annual revenues were just over $100 million or 9% growth as compared to 2019. For the year, we generated earnings of $30.0 million or 43.7% growth as compared to 2019 despite increasing our allowance for loan losses by $8.3 million as a result of the pandemic. Tangible book value increased to $22.47 per share, reflecting growth of $1.83 per share, or 8.9%, as compared to 2019. Capital and liquidity levels remain very strong.”
“We are excited about 2021 and our plans to improve our digital capabilities and deepen our customer relationships. I want to again express my appreciation to our employees and customers, who continue to adapt to the many challenges of the pandemic. It has been inspirational to witness our team’s ability to meet our customer and community needs during these challenging times.”
Fourth quarter 2020 highlights include:
- Earnings produced a return on average tangible common equity of 14.90% for the fourth quarter of 2020, compared to 12.66% in the previous quarter and 13.71% for the same quarter in the prior year (non-GAAP).
- Average deposits grew 4.2% during the quarter and 22.7% over the same quarter of 2019; the cost of deposits decreased to 0.43% in the fourth quarter, compared to 0.52% in the previous quarter and 0.95% in the same quarter of the prior year.
- Net interest margin was 3.22% for the quarter, down from 3.26% in the third quarter of 2020 and from 3.62% in the same quarter of the prior year (non-GAAP).
- Noninterest revenues decreased $71 thousand, or 1.7%, when compared to the previous quarter, and increased $355 thousand, or 9.2%, compared to the same quarter in the prior year.
- Noninterest expense increased $519 thousand, or 3.7%, when compared to the previous quarter, and decreased $378 thousand, or 2.5%, when compared to the same quarter in the prior year.
- The fourth quarter provision for loan losses totaled $585 thousand, which compares to a provision of $2.6 million for the previous quarter, and a provision of $462 thousand in the same quarter in the prior year. The allowance for loan losses as a percentage of loans held for investment increased to 1.06% at period end. Excluding Paycheck Protection Program (“PPP”) loans, the allowance as a percentage of loans increased to 1.19% at period end.
- Nonperforming assets as a percentage of total assets were 0.12% at December 31, 2020, down from 0.16% at September 30, 2020 and 0.15% at December 31, 2019.
- Annualized net charge-offs were 0.05% for the fourth quarter of 2020, up from 0.02% for the corresponding quarter in the prior year and 0.01% for the third quarter of 2020.
- As a result of the Company’s participation in the Small Business Administration’s PPP under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, it had outstanding net PPP loans of $211.3 million at December 31, 2020, which compares to $266.0 million at September 30, 2020. The Company had net unamortized PPP loan origination fees with a balance of $4.4 million at December 31, 2020, which compares to $6.8 million at September 30, 2020.
NET INTEREST INCOME
Net interest income for the fourth quarter of 2020 was $22.1 million, an increase of $651 thousand, or 3.0%, from the prior quarter and an increase of $1.7 million, or 8.3%, from the fourth quarter of 2019. The fully taxable equivalent (“FTE”) net interest margin for the quarter was 3.22%, down from 3.26% in the prior quarter and down from 3.62% in the same period a year ago (non-GAAP). The fourth quarter of 2020 benefited from the recognition of the remaining net fees on PPP loans that were repaid during the quarter. Total PPP fees recognized in net interest income during the quarter was $2.4 million, an increase of $1.3 million as compared to the prior quarter as a result of the forgiveness of $56.4 million of PPP loans. The increase in net interest income from the same quarter in the prior year was attributable to the PPP program and core deposit growth partially offset by a significantly lower rate environment.
The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2020, net accretion related to acquisition accounting amounted to $1.2 million compared to $1.1 million for the same period in 2019 and $1.7 million in the prior quarter. The third quarter of 2020 included an $800,000 cash basis accretion collection from a loan charged off prior to an American National acquisition. Net accretion for the twelve months ended December 31, 2020 amounted to $3.8 million, compared to $3.4 million for the same period in 2019. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):
2021 $ 1,830 2022 1,146 2023 646 2024 388 2025 281 Thereafter 956 ASSET QUALITY
Nonperforming assets (“NPAs”) totaled $3.7 million as of December 31, 2020, down from $4.6 million at September 30, 2020, and up slightly from $3.6 million at December 31, 2019. NPAs as a percentage of total assets were 0.12% at December 31, 2020, compared to 0.16% at September 30, 2020 and 0.15% at December 31, 2019.
The provision for loan losses was $585 thousand for the fourth quarter of 2020, as compared to $2.6 million for the previous quarter and $462 thousand for the same period in the previous year. The fourth quarter of 2020 warranted a significantly lower provision than third quarter based on the economic outlook, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. The allowance for loan losses was $21.4 million at December 31, 2020, compared to $21.1 million at September 30, 2020 and $13.2 million at December 31, 2019. Annualized net charge-offs as a percentage of average loans outstanding was 0.05% for the fourth quarter of 2020, compared to 0.01% in the previous quarter and 0.02% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.06% at December 31, 2020, compared to 1.01% at September 30, 2020, and 0.72% at December 31, 2019. Excluding PPP loans, the allowance as a percentage of loans increased to 1.19% at December 31, 2020, compared to 1.16% at September 30, 2020 and 0.72% at December 31, 2019.
American National continues to utilize a Disaster Assistance Program for borrowers in accordance with Section 4013 of the CARES Act. At December 31, 2020, American National had interest only and payment deferrals to customers with outstanding balances amounting to $30.0 million, representing 1.5% of total loans held for investment, which compares to $135.2 million, or 6.5% of outstanding loans held for investment, at September 30, 2020. At December 31, 2020, $18.2 million of the $30.0 million in total deferrals were the result of second and third payment or interest deferrals, representing less than 1% of total loans held for investment.
NONINTEREST INCOME
Noninterest income decreased $71 thousand, or 1.7%, to $4.2 million for the quarter ended December 31, 2020 from $4.3 million in the prior quarter and increased $355 thousand, or 9.2%, from the same period in the prior year. The largest increase in the quarter was the increase in income from small business investment companies (“SBICs”) which was up $138 thousand, or 140.8%, over the previous quarter. The primary decrease in the quarter related to reduced earnings in other investments of the Company. Comparing the fourth quarter of 2020 to the fourth quarter of 2019, the increase was reflective of increased mortgage banking income, income from SBICs and reduced losses on premises and equipment. Other noninterest income for the fourth quarter of 2020 was reduced by a loss on the sale of repossessed assets of $139 thousand.
NONINTEREST EXPENSE
Noninterest expense for the fourth quarter of 2020 amounted to $14.7 million, up $519 thousand, or 3.7%, when compared to the $14.1 million for the previous quarter and down $378 thousand, or 2.5%, from $15.0 million during the same period in the previous year. The increase from the third quarter of 2020 was primarily attributable to increased pension and salary expenses resulting from voluntary early retirement package costs. The fourth quarter of 2019 included $460,000 of merger related expenses.
INCOME TAXES
The effective tax rate for the three months ended December 31, 2020 was 20.9%, compared to 20.0% for the prior quarter and 15.6% for the same period in the prior year.
BALANCE SHEET
Total assets at December 31, 2020 were $3.1 billion, an increase of $146.7 million from September 30, 2020 and $571.5 million from the same quarter one year ago. The growth over the previous quarter was attributable to core deposit growth and related growth in cash and investments. 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 December 31, 2020, loans held for investment (net of deferred fees and costs) were $2.0 billion, a decrease of $71.0 million, or 13.6%, annualized from September 30, 2020. Of this decrease, approximately $56.4 million was associated with PPP loan forgiveness. Loans held for investment increased $184.2 million, or 10.1%, from December 31, 2019. Excluding PPP loans, loans held for investment were slightly lower year over year.
Deposits amounted to $2.6 billion at December 31, 2020, with growth of $140.6 million, or 22.8%, annualized from September 30, 2020 and $550.8 million, or 26.7%, compared to the same quarter of 2019. The growth over the prior quarter and prior period of 2019 is a result of continued higher than average cash balances being maintained by customers as the uncertainty of the pandemic continues. This pattern has been prevalent through the second, third and fourth quarters of 2020 and is consistent with trends for all commercial banks.
The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.34% at December 31, 2020 as compared to 8.55% at September 30, 2020 and 9.57% at December 31, 2019.
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 $976 million 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.
American National Bankshares Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) Unaudited December 31 2020 2019 Assets Cash and due from banks $ 30,767 $ 32,505 Interest-bearing deposits in other banks 343,603 47,077 Securities available for sale, at fair value 466,091 379,195 Restricted stock, at cost 8,715 8,630 Loans held for sale 15,591 2,027 Loans, net of deferred fees and costs 2,015,056 1,830,815 Less allowance for loan losses (21,403 ) (13,152 ) Net Loans 1,993,653 1,817,663 Premises and equipment, net 39,723 39,848 Other real estate owned, net 958 1,308 Goodwill 85,048 84,002 Core deposit intangibles, net 6,091 7,728 Bank owned life insurance 28,482 27,817 Other assets 31,288 30,750 Total assets $ 3,050,010 $ 2,478,550 Liabilities Demand deposits -- noninterest-bearing $ 830,094 $ 578,606 Demand deposits -- interest-bearing 501,283 328,015 Money market deposits 666,122 504,651 Savings deposits 217,405 177,505 Time deposits 396,426 471,770 Total deposits 2,611,330 2,060,547 Customer repurchase agreements 42,551 40,475 Long-term borrowings 35,630 35,546 Other liabilities 22,605 21,724 Total liabilities 2,712,116 2,158,292 Shareholders' equity Preferred stock, $5 par value, 2,000,000 shares authorized, none outstanding - - Common stock, $1 par value, 20,000,000 shares authorized, 10,982,367 shares outstanding at December 31, 2020 and 11,071,540 shares outstanding at December 31, 2019 10,926 11,019 Capital in excess of par value 154,850 158,244 Retained earnings 169,681 151,478 Accumulated other comprehensive income (loss), net 2,437 (483 ) Total shareholders' equity 337,894 320,258 Total liabilities and shareholders' equity $ 3,050,010 $ 2,478,550
American National Bankshares Inc. Consolidated Statements of Income (Dollars in thousands, except per share data) Unaudited Three Months Ended Twelve Months Ended December 31 December 31 2020 2019 2020 2019 Interest and Dividend Income: Interest and fees on loans $ 22,654 $ 21,947 $ 87,700 $ 82,684 Interest and dividends on securities: Taxable 1,536 1,991 6,764 7,682 Tax-exempt 103 117 433 777 Dividends 121 127 503 451 Other interest income 84 408 440 1,261 Total interest and dividend income 24,498 24,590 95,840 92,855 Interest Expense: Interest on deposits 1,821 3,496 9,729 13,143 Interest on short-term borrowings 22 134 259 650 Interest on long-term borrowings 509 512 2,032 1,935 Total interest expense 2,352 4,142 12,020 15,728 Net Interest Income 22,146 20,448 83,820 77,127 Provision for loan losses 585 462 8,916 456 Net Interest Income After Provision for Loan Losses 21,561 19,986 74,904 76,671 Noninterest Income: Trust fees 1,025 1,021 4,044 3,847 Service charges on deposit accounts 677 765 2,557 2,866 Other fees and commissions 1,037 967 3,925 3,693 Mortgage banking income 1,042 737 3,514 2,439 Securities gains, net - 32 814 607 Brokerage fees 192 205 745 721 Income from Small Business Investment Companies 236 37 270 211 Losses on premises and equipment, net (13 ) (338 ) (110 ) (427 ) Other 25 440 1,084 1,213 Total noninterest income 4,221 3,866 16,843 15,170 Noninterest Expense: Salaries and employee benefits 8,225 7,986 29,765 30,015 Occupancy and equipment 1,470 1,454 5,586 5,417 FDIC assessment 206 - 639 119 Bank franchise tax 425 531 1,702 1,644 Core deposit intangible amortization 391 437 1,637 1,398 Data processing 764 729 3,017 2,567 Software 342 363 1,454 1,295 Other real estate owned, net 26 15 60 31 Merger related expenses - 460 - 11,782 Other 2,810 3,062 10,705 11,806 Total noninterest expense 14,659 15,037 54,565 66,074 Income Before Income Taxes 11,123 8,815 37,182 25,767 Income Taxes 2,329 1,374 7,137 4,861 Net Income $ 8,794 $ 7,441 $ 30,045 $ 20,906 Net Income Per Common Share: Basic $ 0.80 $ 0.67 $ 2.74 $ 1.99 Diluted $ 0.80 $ 0.67 $ 2.73 $ 1.98 Weighted Average Common Shares Outstanding: Basic 10,975,349 11,094,346 10,981,623 10,531,572 Diluted 10,978,931 11,103,905 10,985,790 10,541,337
American National Bankshares Inc. Financial Highlights Unaudited (Dollars in thousands, except per share data) At or for the Year Ended 4th Qtr 3rd Qtr 4th Qtr December 31, 2020 2020 2019 2020 2019 EARNINGS Interest income $ 24,498 $ 24,179 $ 24,590 $ 95,840 $ 92,855 Interest expense 2,352 2,684 4,142 12,020 15,728 Net interest income 22,146 21,495 20,448 83,820 77,127 Provision for loan losses 585 2,619 462 8,916 456 Noninterest income 4,221 4,292 3,866 16,843 15,170 Noninterest expense 14,659 14,140 15,037 54,565 66,074 Income taxes 2,329 1,801 1,374 7,137 4,861 Net income 8,794 7,227 7,441 30,045 20,906 PER COMMON SHARE Net income per share - basic $ 0.80 $ 0.66 $ 0.67 $ 2.74 $ 1.99 Net income per share - diluted 0.80 0.66 0.67 2.73 1.98 Cash dividends paid 0.27 0.27 0.27 1.08 1.04 Book value per share 30.77 30.26 28.93 30.77 28.93 Book value per share - tangible (a) 22.47 21.92 20.64 22.47 20.64 Closing market price 26.21 20.92 39.57 26.21 39.57 FINANCIAL RATIOS Return on average assets 1.18 % 1.01 % 1.20 % 1.08 % 0.91 % Return on average equity 10.48 8.76 9.31 9.12 7.16 Return on average tangible equity (a) 14.90 12.66 13.71 13.19 10.43 Average equity to average assets 11.30 11.50 12.88 11.88 12.68 Tangible equity to tangible assets (a) 8.34 8.55 9.57 8.34 9.57 Net interest margin, taxable equivalent 3.22 3.26 3.62 3.30 3.68 Efficiency ratio (a) 53.92 53.00 57.24 52.80 57.25 Effective tax rate 20.94 19.95 15.59 19.19 18.87 PERIOD-END BALANCES Securities $ 474,806 $ 367,200 $ 387,825 $ 474,806 $ 387,825 Loans held for sale 15,591 6,789 2,027 15,591 2,027 Loans, net 2,015,056 2,086,094 1,830,815 2,015,056 1,830,815 Goodwill and other intangibles 91,139 91,530 91,730 91,139 91,730 Assets 3,050,010 2,903,304 2,478,550 3,050,010 2,478,550 Assets - tangible (a) 2,958,871 2,811,774 2,386,820 2,958,871 2,386,820 Deposits 2,611,330 2,470,700 2,060,547 2,611,330 2,060,547 Customer repurchase agreements 42,551 41,906 40,475 42,551 40,475 Long-term borrowings 35,630 35,609 35,546 35,630 35,546 Shareholders' equity 337,894 331,981 320,258 337,894 320,258 Shareholders' equity - tangible (a) 246,755 240,451 228,528 246,755 228,528 AVERAGE BALANCES Securities (b) $ 372,529 $ 333,778 $ 347,502 $ 347,952 $ 342,219 Loans held for sale 8,601 9,943 4,991 6,578 3,419 Loans, net 2,063,397 2,092,412 1,810,744 2,008,683 1,700,880 Interest-earning assets 2,754,455 2,648,990 2,264,687 2,551,913 2,107,169 Goodwill and other intangibles 91,358 91,749 92,607 91,751 81,049 Assets 2,971,505 2,870,213 2,482,502 2,773,007 2,303,624 Assets - tangible (a) 2,880,147 2,778,464 2,389,895 2,681,256 2,222,575 Interest-bearing deposits 1,701,395 1,619,960 1,466,116 1,595,694 1,377,422 Deposits 2,536,363 2,434,645 2,066,435 2,342,353 1,915,197 Customer repurchase agreements 40,819 45,689 38,742 42,937 39,134 Other short-term borrowings - - - 1 2,694 Long-term borrowings 35,617 35,597 35,537 35,586 33,644 Shareholders' equity 335,671 330,038 319,851 329,353 292,022 Shareholders' equity - tangible (a) 244,313 238,289 227,244 237,602 210,973 American National Bankshares Inc. Financial Highlights Unaudited (Dollars in thousands, except per share data) At or for the Year Ended 4th Qtr 3rd Qtr 4th Qtr December 31, 2020 2020 2019 2020 2019 CAPITAL Weighted average shares outstanding - basic 10,975,349 10,966,645 11,094,346 10,981,623 10,531,572 Weighted average shares outstanding - diluted 10,978,931 10,969,901 11,103,905 10,985,790 10,541,337 ALLOWANCE FOR LOAN LOSSES Beginning balance $ 21,088 $ 18,507 $ 12,758 $ 13,152 $ 12,805 Provision for loan losses 585 2,619 462 8,916 456 Charge-offs (331 ) (126 ) (144 ) (1,006 ) (333 ) Recoveries 61 88 76 341 224 Ending balance $ 21,403 $ 21,088 $ 13,152 $ 21,403 $ 13,152 LOANS Construction and land development $ 140,071 $ 151,613 $ 137,920 $ 140,071 $ 137,920 Commercial real estate - owner occupied 373,680 382,121 360,991 373,680 360,991 Commercial real estate - non-owner occupied 627,569 608,954 538,208 627,569 538,208 Residential real estate 269,137 279,815 324,315 269,137 324,315 Home equity 104,881 111,448 119,423 104,881 119,423 Commercial and industrial 491,256 543,746 339,077 491,256 339,077 Consumer 8,462 8,397 10,881 8,462 10,881 Total $ 2,015,056 $ 2,086,094 $ 1,830,815 $ 2,015,056 $ 1,830,815 NONPERFORMING ASSETS AT PERIOD-END Nonperforming loans: 90 days past due and accruing $ 262 $ 285 $ 361 $ 262 $ 361 Nonaccrual 2,434 3,088 1,944 2,434 1,944 Other real estate owned and repossessions 958 1,210 1,308 958 1,308 Nonperforming assets $ 3,654 $ 4,583 $ 3,613 $ 3,654 $ 3,613 ASSET QUALITY RATIOS Allowance for loan losses to total loans 1.06 % 1.01 % 0.72 % 1.06 % 0.72 % Allowance for loan losses to nonperforming loans 793.88 625.20 570.59 793.88 570.59 Nonperforming assets to total assets 0.12 0.16 0.15 0.12 0.15 Nonperforming loans to total loans 0.13 0.16 0.13 0.13 0.13 Annualized net charge-offs to average loans 0.05 0.01 0.02 0.03 0.01 OTHER DATA Fiduciary assets at period-end (c) (d) $ 614,016 $ 569,095 $ 560,776 $ 614,016 $ 560,776 Retail brokerage assets at period-end (c) (d) $ 362,022 $ 314,809 $ 317,262 $ 362,022 $ 317,262 Number full-time equivalent employees (e) 342 341 355 342 355 Number of full service offices 26 25 26 26 26 Number of loan production offices 1 1 1 1 1 Number of ATMs 37 37 38 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 December 31, 2020 and 2019 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2020 2019 2020 2019 2020 2019 Loans: Commercial $ 507,750 $ 315,902 $ 5,354 $ 3,516 4.19 % 4.42 % Real estate 1,556,192 1,488,577 17,206 18,268 4.42 4.91 Consumer 8,056 11,256 137 209 6.77 7.37 Total loans (b) 2,071,998 1,815,735 22,697 21,993 4.38 4.84 Securities: U.S. Treasury 14,126 - 4 - 0.11 - Federal agencies & GSEs 76,606 123,950 276 716 1.44 2.31 Mortgage-backed & CMOs 206,817 164,727 916 996 1.77 2.42 State and municipal 53,257 41,109 304 303 2.28 2.95 Other 21,723 17,716 286 250 5.27 5.64 Total securities 372,529 347,502 1,786 2,265 1.92 2.61 Deposits in other banks 309,928 101,450 84 408 0.11 1.60 Total interest-earning assets 2,754,455 2,264,687 24,567 24,666 3.56 4.35 Non-earning assets 217,050 217,815 Total assets $ 2,971,505 $ 2,482,502 Deposits: Demand $ 433,356 $ 329,759 50 126 0.05 0.15 Money market 647,320 482,671 380 1,283 0.23 1.05 Savings 215,233 176,686 16 83 0.03 0.19 Time 405,486 477,000 1,375 2,004 1.35 1.67 Total deposits 1,701,395 1,466,116 1,821 3,496 0.43 0.95 Customer repurchase agreements 40,819 38,742 22 134 0.21 1.37 Long-term borrowings 35,617 35,537 509 512 5.72 5.76 Total interest-bearing liabilities 1,777,831 1,540,395 2,352 4,142 0.53 1.07 Noninterest bearing demand deposits 834,968 600,319 Other liabilities 23,035 21,937 Shareholders' equity 335,671 319,851 Total liabilities and shareholders' equity $ 2,971,505 $ 2,482,502 Interest rate spread 3.03 % 3.28 % Net interest margin 3.22 % 3.62 % Net interest income (taxable equivalent basis) 22,215 20,524 Less: Taxable equivalent adjustment (c) 69 76 Net interest income $ 22,146 $ 20,448 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.
Net Interest Income Analysis For the Years Ended December 31, 2020 and 2019 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2020 2019 2020 2019 2020 2019 Loans: Commercial $ 475,068 $ 306,065 $ 17,768 $ 14,125 3.74 % 4.62 % Real estate 1,531,195 1,388,188 69,525 68,050 4.54 4.90 Consumer 8,998 10,046 588 694 6.53 6.91 Total loans (b) 2,015,261 1,704,299 87,881 82,869 4.36 4.86 Securities: U.S. Treasury 9,010 - 51 - 0.57 - Federal agencies & GSEs 72,112 132,916 1,423 3,191 1.97 2.40 Mortgage-backed & CMOs 200,612 134,458 4,060 3,350 2.02 2.49 State and municipal 45,836 58,293 1,175 1,650 2.56 2.83 Other 20,382 16,552 1,098 903 5.39 5.46 Total securities 347,952 342,219 7,807 9,094 2.24 2.66 Deposits in other banks 188,700 60,651 440 1,261 0.23 2.08 Total interest-earning assets 2,551,913 2,107,169 96,128 93,224 3.77 4.42 Non-earning assets 221,094 196,455 Total assets $ 2,773,007 $ 2,303,624 Deposits: Demand $ 386,790 $ 307,329 344 370 0.09 0.12 Money market 574,510 445,505 2,634 5,246 0.46 1.18 Savings 198,313 166,842 117 284 0.06 0.17 Time 436,081 457,746 6,634 7,243 1.52 1.58 Total deposits 1,595,694 1,377,422 9,729 13,143 0.61 0.95 Customer repurchase agreements 42,937 39,134 259 596 0.60 1.52 Other short-term borrowings 1 2,694 - 54 0.55 2.00 Long-term borrowings 35,586 33,644 2,032 1,935 5.71 5.75 Total interest-bearing liabilities 1,674,218 1,452,894 12,020 15,728 0.72 1.08 Noninterest bearing demand deposits 746,659 537,775 Other liabilities 22,777 20,933 Shareholders' equity 329,353 292,022 Total liabilities and shareholders' equity $ 2,773,007 $ 2,303,624 Interest rate spread 3.05 % 3.34 % Net interest margin 3.30 % 3.68 % Net interest income (taxable equivalent basis) 84,108 77,496 Less: Taxable equivalent adjustment (c) 288 369 Net interest income $ 83,820 $ 77,127 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) At or for the Year Ended 4th Qtr 3rd Qtr 4th Qtr December 31, 2020 2020 2019 2020 2019 EFFICIENCY RATIO Noninterest expense $ 14,659 $ 14,140 $ 15,037 $ 54,565 $ 66,074 Add/subtract: gain/loss on sale of OREO (8 ) (23 ) (3 ) 4 52 Subtract: core deposit intangible amortization (391 ) (402 ) (437 ) (1,637 ) (1,398 ) Subtract: merger related expenses - - (460 ) - (11,782 ) $ 14,260 $ 13,715 $ 14,137 $ 52,932 $ 52,946 Net interest income $ 22,146 $ 21,495 $ 20,448 $ 83,820 $ 77,127 Tax equivalent adjustment 69 75 76 288 369 Noninterest income 4,221 4,292 3,866 16,843 15,170 Subtract: gain on securities - - (32 ) (814 ) (607 ) Add: loss on fixed assets 13 15 338 110 427 $ 26,449 $ 25,877 $ 24,696 $ 100,247 $ 92,486 Efficiency ratio 53.92 % 53.00 % 57.24 % 52.80 % 57.25 % TAX EQUIVALENT NET INTEREST INCOME Non-GAAP measures: Interest income - loans $ 22,697 $ 22,394 $ 21,993 $ 87,881 $ 82,869 Interest income - investments and other 1,870 1,860 2,673 8,247 10,355 Interest expense - deposits (1,821 ) (2,118 ) (3,496 ) (9,729 ) (13,143 ) Interest expense - customer repurchase agreements (22 ) (42 ) (134 ) (259 ) (596 ) Interest expense - other short-term borrowings - - - - (54 ) Interest expense - long-term borrowings (509 ) (524 ) (512 ) (2,032 ) (1,935 ) Total net interest income $ 22,215 $ 21,570 $ 20,524 $ 84,108 $ 77,496 Less non-GAAP measures: Tax benefit on nontaxable interest - loans (43 ) (48 ) (46 ) (181 ) (185 ) Tax benefit on nontaxable interest - securities (26 ) (27 ) (30 ) (107 ) (184 ) GAAP measures $ 22,146 $ 21,495 $ 20,448 $ 83,820 $ 77,127 RETURN ON AVERAGE TANGIBLE EQUITY Return on average equity (GAAP basis) 10.48 % 8.76 % 9.31 % 9.12 % 7.16 % Impact of excluding average goodwill and other intangibles 4.42 3.90 4.40 4.07 3.27 Return on average tangible equity (non-GAAP) 14.90 % 12.66 % 13.71 % 13.19 % 10.43 % TANGIBLE EQUITY TO TANGIBLE ASSETS Equity to assets ratio (GAAP basis) 11.08 % 11.43 % 12.92 % 11.08 % 12.92 % Impact of excluding goodwill and other intangibles (2.74 ) (2.88 ) (3.35 ) (2.74 ) (3.35 ) Tangible equity to tangible assets ratio (non-GAAP) 8.34 % 8.55 % 9.57 % 8.34 % 9.57 % TANGIBLE BOOK VALUE Book value per share (GAAP basis) $ 30.77 $ 30.26 $ 28.93 $ 30.77 $ 28.93 Impact of excluding goodwill and other intangibles (8.30 ) (8.34 ) (8.29 ) (8.30 ) (8.29 ) Tangible book value per share (non-GAAP) $ 22.47 $ 21.92 $ 20.64 $ 22.47 $ 20.64 ADJUSTED LOAN LOSS ALLOWANCE Allowance for loan losses $ 21,403 $ 21,088 $ 13,152 $ 21,403 $ 13,152 Credit discount on purchased loans 7,255 7,896 12,214 7,255 12,214 Adjusted loan loss allowance $ 28,658 $ 28,984 $ 25,366 $ 28,658 $ 25,366 Total loans, net $ 2,015,056 $ 2,086,094 $ 1,830,815 $ 2,015,056 $ 1,830,815 Subtract: PPP loans, net (211,275 ) (265,941 ) - (211,275 ) - Total loans less PPP loans, net $ 1,803,781 $ 1,820,153 $ 1,830,815 $ 1,803,781 $ 1,830,815 Adjusted loan loss allowance to total loans less PPP loans, net 1.59 % 1.59 % 1.39 % 1.59 % 1.39 % Contact:
Jeffrey W. Farrar
Executive Vice President, COO & CFO
(434)773-2274
farrarj@amnb.com
- Earnings produced a return on average tangible common equity of 14.90% for the fourth quarter of 2020, compared to 12.66% in the previous quarter and 13.71% for the same quarter in the prior year (non-GAAP).