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American National Bankshares Reports Third Quarter Earnings
Source: Nasdaq GlobeNewswire / 20 Oct 2022 07:30:01 America/New_York
DANVILLE, Va., Oct. 20, 2022 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported third quarter 2022 earnings of $9.3 million, or $0.87 per diluted common share. Those results compare to earnings of $10.2 million, or $0.94 per diluted common share, during the same quarter in the prior year, and earnings of $8.1 million, or $0.76 per diluted common share, for the second quarter of 2022. Earnings for the nine months ended September 30, 2022 were $26.4 million, or $2.47 per diluted common share, compared to $32.2 million, or $2.95 diluted common share, for the same period of 2021.
President and Chief Executive Officer, Jeffrey V. Haley, commented, “American National delivered another solid quarter of earnings performance with meaningful growth in top-line revenue and margins. Our continued growth in our loan portfolio and improved asset mix coupled with the continued rising rate environment drove double-digit growth in net interest income. Asset quality remains strong, and our local business markets continue to be healthy in spite of the geopolitical headwinds and some signs of a slowing economy nationally.”
Third quarter 2022 highlights include:
- Earnings produced a return on average tangible common equity of 15.74% for the third quarter of 2022, compared to 13.87% in the previous quarter and 16.01% for the same quarter in the prior year (non-GAAP).
- Net interest income increased $2.5 million, or 11.7%, when compared to the previous quarter, and increased $914 thousand, or 4.0%, when compared to the same quarter in 2021.
- Fully taxable equivalent (“FTE”) net interest margin was 3.20% for the quarter, up from 2.76% in the second quarter of 2022 and up from 3.09% in the same quarter of the prior year (non-GAAP).
- Noninterest revenues decreased $77 thousand, or 1.6%, when compared to the previous quarter, and decreased $363 thousand, or 7.1%, compared to the same quarter in the prior year.
- Noninterest expense increased $993 thousand, or 6.4%, when compared to the previous quarter, and increased $1.6 million, or 10.8%, when compared to the same quarter in the prior year.
- Average loans held for investment, excluding U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans, grew $57.2 million, or 11.4% annualized, during the third quarter as compared to the previous quarter of $44.5 million, or 9.1% annualized.
- The Company recognized a provision for loan losses in the third quarter of 2022 of $615 thousand compared to $581 thousand in the second quarter of 2022 and $482 thousand in the third quarter of 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third quarter of 2022 compared to 0.01% in the previous quarter and (0.01%) in the same quarter of 2021.
- Nonperforming assets as a percentage of total assets were 0.05% at September 30, 2022 and June 30, 2022, down from 0.06% at September 30, 2021.
NET INTEREST INCOME
Net interest income for the third quarter of 2022 increased by $2.5 million, or 11.7%, to $24.0 million compared to $21.5 million for the second quarter of 2022. The third quarter of 2022 compared to the same quarter of 2021 reflected an increase of $914 thousand, or 4.0%. The FTE net interest margin for the quarter was 3.20%, up from 2.76% in the prior quarter and 3.09% in the same quarter a year ago (non-GAAP). The margin expansion relative to the previous quarter was primarily due to a 45-basis point increase in yield on average earning assets. The higher yield resulted from a shift in the earning assets mix caused by excess deposits in other banks being deployed into the loan portfolio as well as increased yields on loans, securities, and deposits in other banks due to the rise in interest rates. The increase in margin from third quarter 2021 was also attributable to the higher rate environment and asset mix changes partially offset by substantially more PPP related income in 2021.
The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2022, net accretion related to acquisition accounting amounted to $454 thousand compared to $336 thousand in the prior quarter and $1.3 million for the same quarter in 2021. The third quarter of 2021 reflected additional accretion income from the early payoff of acquired loans. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):
For the years ending December 31, (estimated): 2022 $ 208 2023 745 2024 454 2025 320 2026 215 Thereafter 274 ASSET QUALITY
Nonperforming assets (“NPAs”) totaled $1.4 million as of September 30, 2022, down from $1.6 million at June 30, 2022, and down substantially from $2.1 million at September 30, 2021. NPAs as a percentage of total assets were 0.05% at September 30, 2022 and June 30, 2022, and 0.06% at September 30, 2021. The Company recorded a provision for loan losses for the third quarter of 2022 of $615 thousand compared to $581 thousand in the previous quarter and $482 thousand in the third quarter of the previous year. The provision expense for the third and second quarters of 2022 was a function of continued loan growth during the periods. The provision expense in the third quarter of 2021 was the net of the provision for loan growth offset by positive adjustments in qualitative factors for improved economic conditions.
The allowance for loan losses was $19.2 million at September 30, 2022, compared to $18.5 million at June 30, 2022 and $20.6 million at September 30, 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third quarter of 2022 and the third quarter of 2021, compared to 0.01% in the second quarter of 2022. The allowance as a percentage of loans held for investment was 0.91% at September 30, 2022 and June 30, 2022, compared to 1.06% at September 30, 2021. Excluding PPP loans, the allowance as a percentage of loans was 0.91% at September 30, 2022 and June 30, 2022, compared to 1.08% at September 30, 2021.
NONINTEREST INCOME
Noninterest income decreased $77 thousand, or 1.6%, to $4.8 million for the quarter ended September 30, 2022 from the prior quarter and $363 thousand, or 7.1%, from $5.1 million in the same quarter in the prior year. The largest decrease in the third quarter of 2022 compared to the second quarter was income from small business investment companies. This income is generated by distributions based on ownership percentages and is highly unpredictable. The decrease for the third quarter of 2022 as compared to same quarter in the prior year is primarily attributable to mortgage revenue contraction associated with higher mortgage rates, with mortgage banking income decreasing by $601 thousand, or 60.8%, compared to the same quarter of 2021.
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2022 amounted to $16.4 million, up $993 thousand, or 6.4%, when compared to $15.5 million for the previous quarter and up $1.6 million, or 10.8%, from $14.8 million during the same quarter in the previous year. The increase in the third quarter compared to the second quarter of 2022 and the same quarter of 2021 was primarily the result of compensation associated with a lower staffing vacancy rate, and increased incentive accruals.
INCOME TAXES
The effective tax rate for the three months ended September 30, 2022 was 20.92%, compared to 20.90% for the prior quarter and 21.05% for the same quarter in the prior year. The effective tax rate fluctuations are attributable to changes in pre-tax earnings and the levels of permanent tax differences.
BALANCE SHEET
Total assets at September 30, 2022 were $3.0 billion, a decrease of $184.4 million from June 30, 2022 and a decrease of $239.7 million from September 30, 2021. The decrease from the previous quarter is due to lower interest-bearing deposits in other banks resulting from a decrease in deposits, partially offset by an increase in loans, net during the period.
At September 30, 2022, loans held for investment (net of deferred fees and costs) were $2.1 billion, an increase of $88.6 million, or 17.5% annualized, from June 30, 2022. Loans held for investment, excluding PPP loans, increased $216.2 million, or 11.4%, from September 30, 2021.
Investment securities available for sale amounted to $641.9 million at September 30, 2022, a decrease of $26.9 million, or 4.0%, compared to June 30, 2022, and a decrease of $2.1 million, or less than 1% compared to September 30, 2021.
Deposits amounted to $2.7 billion at September 30, 2022, a decrease of $139.5 million, or 19.7% annualized, from June 30, 2022 and a decrease of $171.2 million, or 6.0%, compared to September 30, 2021. Noninterest- bearing deposits increased $63.9 million, or 6.5%, compared to September 30, 2021.
The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 7.59% at September 30, 2022 compared to 7.58% at June 30, 2022 and compared to 8.14% at September 30, 2021 (non-GAAP). The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.80%, 12.98%, 13.80% and 9.92%, respectively, at September 30, 2022.
ABOUT AMERICAN NATIONAL
American National is a multi-state bank holding company with total assets of approximately $3.0 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 $1.1 billion of trust, investment, and brokerage assets in its Wealth Division. Additional information about American National and American National Bank is available on American National's website at www.amnb.com.
NON-GAAP FINANCIAL MEASURES
This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). American National’s management uses these non-GAAP financial measures in its analysis of American National’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of American National’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. For a reconciliation of non-GAAP financial measures, see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
FORWARD-LOOKING STATEMENTS
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. American National intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. American National’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the operations and future prospects of American National include but are not limited to: (1) the impacts of the ongoing COVID-19 pandemic and the associated efforts to limit the spread of the virus; (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 adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future quarters, and the failure of assumptions underlying the allowance for loan losses; (6) cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (7) accounting principles, policies, and guidelines; and (8) 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.
Contact: Jeffrey W. Farrar
Executive Vice President, COO & CFO
(434)773-2274
farrarj@amnb.comAmerican National Bankshares Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) Unaudited September 30 2022 2021 Assets Cash and due from banks $ 35,437 $ 38,349 Interest-bearing deposits in other banks 59,541 480,052 Securities available for sale, at fair value 641,884 643,949 Restricted stock, at cost 8,383 8,046 Loans held for sale 2,852 9,518 Loans, net of deferred fees and costs 2,119,415 1,940,332 Less allowance for loan losses (19,189 ) (20,630 ) Net Loans 2,100,226 1,919,702 Premises and equipment, net 34,686 37,021 Other real estate owned, net 143 213 Goodwill 85,048 85,048 Core deposit intangibles, net 3,667 4,978 Bank owned life insurance 29,480 28,950 Other assets 47,973 33,237 Total assets $ 3,049,320 $ 3,289,063 Liabilities Demand deposits -- noninterest-bearing $ 1,044,803 $ 980,985 Demand deposits -- interest-bearing 509,017 524,328 Money market deposits 612,600 733,515 Savings deposits 282,093 254,456 Time deposits 242,357 368,797 Total deposits 2,690,870 2,862,081 Customer repurchase agreements 625 26,595 Long-term borrowings 28,308 28,207 Other liabilities 16,127 21,793 Total liabilities 2,735,930 2,938,676 Shareholders' equity Preferred stock, $5 par value, 2,000,000 shares authorized, none outstanding - - Common stock, $1 par value, 20,000,000 shares authorized, 10,608,750 shares outstanding at September 30, 2022 and 10,778,562 shares outstanding at September 30, 2021 10,533 10,715 Capital in excess of par value 141,694 148,069 Retained earnings 218,814 193,107 Accumulated other comprehensive loss, net (57,651 ) (1,504 ) Total shareholders' equity 313,390 350,387 Total liabilities and shareholders' equity $ 3,049,320 $ 3,289,063
American National Bankshares Inc. Consolidated Statements of Income (Dollars in thousands, except per share data) Unaudited For the Three Months Ended For the Nine Months Ended 9/30/22 6/30/22 9/30/21 9/30/22 9/30/21 Interest and Dividend Income: Interest and fees on loans $ 21,160 $ 19,076 $ 21,974 $ 59,024 $ 65,334 Interest and dividends on securities: Taxable 2,664 2,441 1,896 7,344 5,297 Tax-exempt 110 97 94 297 293 Dividends 118 116 112 347 349 Other interest income 1,099 800 201 2,076 375 Total interest and dividend income 25,151 22,530 24,277 69,088 71,648 Interest Expense: Interest on deposits 741 646 781 1,956 2,990 Interest on short-term borrowings 11 9 3 26 19 Interest on long-term borrowings 392 385 400 1,156 1,352 Total interest expense 1,144 1,040 1,184 3,138 4,361 Net Interest Income 24,007 21,490 23,093 65,950 67,287 Provision for (recovery of) loan losses 615 581 482 438 (870 ) Net Interest Income After Provision for (recovery of) Loan Losses 23,392 20,909 22,611 65,512 68,157 Noninterest Income: Trust and brokerage fees 1,603 1,587 1,576 4,999 3,757 Service charges on deposit accounts 681 709 664 2,079 1,916 Interchange fees 1,013 996 958 2,990 3,025 Other fees and commissions 233 200 189 699 619 Mortgage banking income 388 429 989 1,490 3,449 Securities gains, net - - - - 733 Income from Small Business Investment Companies 501 678 491 1,672 1,510 Income from insurance investments 100 97 132 644 1,062 Losses on premises and equipment, net (2 ) (84 ) (107 ) (82 ) (588 ) Other 243 225 231 706 704 Total noninterest income 4,760 4,837 5,123 15,197 16,187 Noninterest Expense: Salaries and employee benefits 9,618 8,720 8,185 26,936 23,881 Occupancy and equipment 1,514 1,520 1,513 4,576 4,548 FDIC assessment 227 228 194 694 644 Bank franchise tax 488 488 440 1,452 1,321 Core deposit intangible amortization 310 320 361 960 1,113 Data processing 818 781 748 2,446 2,224 Software 362 363 344 1,088 1,011 Other real estate owned, net 3 2 21 4 148 Other 3,108 3,033 3,037 9,096 8,655 Total noninterest expense 16,448 15,455 14,843 47,252 43,545 Income Before Income Taxes 11,704 10,291 12,891 33,457 40,799 Income Taxes 2,448 2,151 2,713 7,062 8,566 Net Income $ 9,256 $ 8,140 $ 10,178 $ 26,395 $ 32,233 Net Income Per Common Share: Basic $ 0.87 $ 0.76 $ 0.94 $ 2.47 $ 2.96 Diluted $ 0.87 $ 0.76 $ 0.94 $ 2.47 $ 2.95 Weighted Average Common Shares Outstanding: Basic 10,640,952 10,688,294 10,833,875 10,694,096 10,907,721 Diluted 10,643,073 10,690,496 10,836,293 10,696,409 10,911,372
American National Bankshares Inc. Financial Highlights Unaudited (Dollars in thousands, except per share data) At or for the Nine Months 3rd Qtr 2nd Qtr 3rd Qtr Ended September 30, 2022 2022 2021 2022 2021 EARNINGS Interest income $ 25,151 $ 22,530 $ 24,277 $ 69,088 $ 71,648 Interest expense 1,144 1,040 1,184 3,138 4,361 Net interest income 24,007 21,490 23,093 65,950 67,287 Provision for (recovery of) loan losses 615 581 482 438 (870 ) Noninterest income 4,760 4,837 5,123 15,197 16,187 Noninterest expense 16,448 15,455 14,843 47,252 43,545 Income taxes 2,448 2,151 2,713 7,062 8,566 Net income 9,256 8,140 10,178 26,395 32,233 PER COMMON SHARE Net income per share - basic $ 0.87 $ 0.76 $ 0.94 $ 2.47 $ 2.96 Net income per share - diluted 0.87 0.76 0.94 2.47 2.95 Cash dividends paid 0.28 0.28 0.27 0.84 0.81 Book value per share 29.54 30.71 32.51 29.54 32.51 Book value per share - tangible (a) 21.18 22.36 24.16 21.18 24.16 Closing market price 31.95 34.61 33.04 31.95 33.04 FINANCIAL RATIOS Return on average assets 1.17 % 0.99 % 1.27 % 1.08 % 1.38 % Return on average common equity 11.21 9.83 11.58 10.42 12.40 Return on average tangible common equity (a) 15.74 13.87 16.01 14.57 17.24 Average common equity to average assets 10.42 10.06 10.99 10.35 11.13 Tangible common equity to tangible assets (a) 7.59 7.58 8.14 7.59 8.14 Net interest margin, taxable equivalent 3.20 2.76 3.09 2.86 3.10 Efficiency ratio (a) 55.98 57.18 51.02 56.87 50.24 Effective tax rate 20.92 20.90 21.05 21.11 21.00 PERIOD-END BALANCES Securities $ 650,267 $ 677,260 $ 651,995 $ 650,267 $ 651,995 Loans held for sale 2,852 5,227 9,518 2,852 9,518 Loans, net 2,119,415 2,030,818 1,940,332 2,119,415 1,940,332 Goodwill and other intangibles 88,715 89,025 90,026 88,715 90,026 Assets 3,049,320 3,233,728 3,289,063 3,049,320 3,289,063 Assets - tangible (a) 2,960,605 3,144,703 3,199,037 2,960,605 3,199,037 Deposits 2,690,870 2,830,347 2,862,081 2,690,870 2,862,081 Customer repurchase agreements 625 32,038 26,595 625 26,595 Long-term borrowings 28,308 28,283 28,207 28,308 28,207 Shareholders' equity 313,390 327,431 350,387 313,390 350,387 Shareholders' equity - tangible (a) 224,675 238,406 260,361 224,675 260,361 AVERAGE BALANCES Securities (b) $ 728,535 $ 726,472 $ 569,508 $ 722,025 $ 514,156 Loans held for sale 3,915 3,759 15,883 3,998 12,313 Loans, net 2,064,088 2,006,970 1,907,398 2,012,905 1,956,452 Interest-earning assets 3,005,292 3,120,925 2,989,661 3,083,815 2,905,032 Goodwill and other intangibles 88,886 89,200 90,257 89,202 90,600 Assets 3,170,328 3,292,913 3,199,514 3,260,636 3,115,683 Assets - tangible (a) 3,081,442 3,203,713 3,109,257 3,171,434 3,025,083 Interest-bearing deposits 1,723,931 1,849,664 1,817,595 1,817,581 1,773,354 Deposits 2,775,516 2,881,318 2,768,268 2,845,523 2,676,650 Customer repurchase agreements 18,719 35,766 29,681 31,858 36,954 Long-term borrowings 28,293 28,268 28,192 28,268 33,111 Shareholders' equity 330,318 331,276 351,646 337,633 346,730 Shareholders' equity - tangible (a) 241,432 242,076 261,389 248,431 256,130 American National Bankshares Inc. Financial Highlights Unaudited (Dollars in thousands, except per share data) At or for the Nine Months 3rd Qtr 2nd Qtr 3rd Qtr Ended September 30, 2022 2022 2021 2022 2021 CAPITAL Weighted average shares outstanding - basic 10,640,952 10,688,294 10,833,875 10,694,096 10,907,721 Weighted average shares outstanding - diluted 10,643,073 10,690,496 10,836,293 10,696,409 10,911,372 COMMON STOCK REPURCHASE PROGRAM Weighted average shares outstanding - basic 60,104 54,676 100,764 203,709 247,999 Weighted average shares outstanding - diluted $ 34.26 $ 35.32 $ 32.87 $ 36.26 $ 32.84 ALLOWANCE FOR LOAN LOSSES Beginning balance $ 18,505 $ 17,988 $ 20,097 $ 18,678 $ 21,403 Provision for (recovery for) loan losses 615 581 482 438 (870 ) Charge-offs (31 ) (117 ) (19 ) (185 ) (70 ) Recoveries 100 53 70 258 167 Ending balance $ 19,189 $ 18,505 $ 20,630 $ 19,189 $ 20,630 LOANS Construction and land development $ 210,500 $ 174,361 $ 120,193 $ 210,500 $ 120,193 Commercial real estate - owner occupied 423,678 403,478 404,029 423,678 404,029 Commercial real estate - non-owner occupied 764,963 749,174 713,339 764,963 713,339 Residential real estate 324,468 310,110 280,351 324,468 280,351 Home equity 93,659 95,352 95,317 93,659 95,317 Commercial and industrial 295,541 291,445 320,278 295,541 320,278 Consumer 6,606 6,898 6,825 6,606 6,825 Total $ 2,119,415 $ 2,030,818 $ 1,940,332 $ 2,119,415 $ 1,940,332 NONPERFORMING ASSETS AT PERIOD-END Nonperforming loans: 90 days past due and accruing $ 18 $ 90 $ - $ 18 $ - Nonaccrual 1,171 1,385 1,903 1,171 1,903 Other real estate owned and repossessions 196 143 213 196 213 Nonperforming assets $ 1,385 $ 1,618 $ 2,116 $ 1,385 $ 2,116 ASSET QUALITY RATIOS Allowance for loan losses to total loans 0.91 % 0.91 % 1.06 % 0.91 % 1.06 % Allowance for loan losses to nonperforming loans 1,613.88 1,254.58 1,084.08 1,613.88 1,084.08 Nonperforming assets to total assets 0.05 0.05 0.06 0.05 0.06 Nonperforming loans to total loans 0.06 0.07 0.10 0.06 0.10 Annualized net (recoveries) charge-offs to average loans to average loans (0.01 ) 0.01 (0.01 ) 0.00 (0.01 ) OTHER DATA Fiduciary assets at period-end (c) (d) $ 693,153 $ 709,264 $ 697,546 $ 693,153 $ 697,546 Retail brokerage assets at period-end (c) (d) $ 376,891 $ 370,493 $ 406,408 $ 376,891 $ 406,408 Number full-time equivalent employees (e) 363 345 345 363 345 Number of full service offices 26 26 26 26 26 Number of loan production offices 1 1 1 1 1 Number of ATMs 34 36 36 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 September 30, 2022 and 2021 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2022 2021 2022 2021 2022 2021 Loans: Commercial $ 287,785 $ 325,692 $ 2,877 $ 5,185 3.97 % 6.32 % Real estate 1,773,694 1,590,858 18,207 16,702 4.11 4.20 Consumer 6,524 6,731 107 125 6.51 7.37 Total loans (b) 2,068,003 1,923,281 21,191 22,012 4.09 4.57 Securities: U.S. Treasury 152,158 53,347 350 139 0.92 1.04 Federal agencies & GSEs 111,804 90,876 369 265 1.32 1.17 Mortgage-backed & CMOs 354,296 335,940 1,435 1,091 1.62 1.30 State and municipal 70,528 62,883 365 320 2.07 2.04 Other 39,749 26,462 401 311 4.04 4.70 Total securities 728,535 569,508 2,920 2,126 1.60 1.49 Deposits in other banks 208,754 496,872 1,099 201 2.09 0.16 Total interest-earning assets 3,005,292 2,989,661 25,210 24,339 3.35 3.25 Non-earning assets 165,036 209,853 Total assets $ 3,170,328 $ 3,199,514 Deposits: Demand $ 522,021 $ 481,032 34 38 0.03 0.03 Money market 668,970 713,846 348 166 0.21 0.09 Savings 281,369 247,536 20 6 0.03 0.01 Time 251,571 375,181 339 571 0.53 0.60 Total deposits 1,723,931 1,817,595 741 781 0.17 0.17 Customer repurchase agreements 18,719 29,681 11 3 0.23 0.04 Long-term borrowings 28,293 28,192 392 400 5.54 5.68 Total interest-bearing liabilities 1,770,943 1,875,468 1,144 1,184 0.26 0.25 Noninterest bearing demand deposits 1,051,585 950,673 Other liabilities 17,482 21,727 Shareholders' equity 330,318 351,646 Total liabilities and shareholders' equity $ 3,170,328 $ 3,199,514 Interest rate spread 3.09 % 3.00 % Net interest margin 3.20 % 3.09 % Net interest income (taxable equivalent basis) 24,066 23,155 Less: Taxable equivalent adjustment (c) 59 62 Net interest income $ 24,007 $ 23,093 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 Nine Months Ended September 30, 2022 and 2021 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2022 2021 2022 2021 2022 2021 Loans: Commercial $ 288,968 $ 393,571 $ 7,982 $ 15,433 3.69 % 5.24 % Real estate 1,721,403 1,568,055 50,823 49,642 3.94 4.22 Consumer 6,532 7,139 317 364 6.49 6.82 Total loans (b) 2,016,903 1,968,765 59,122 65,439 3.91 4.43 Securities: U.S. Treasury 150,483 36,969 1,021 265 0.90 0.96 Federal agencies & GSEs 108,050 99,595 985 867 1.22 1.16 Mortgage-backed & CMOs 358,739 292,207 3,922 3,025 1.46 1.38 State and municipal 68,752 61,210 1,038 958 2.01 2.09 Other 36,001 24,175 1,100 900 4.07 4.96 Total securities 722,025 514,156 8,066 6,015 1.49 1.56 Deposits in other banks 344,887 422,111 2,076 375 0.80 0.12 Total interest-earning assets 3,083,815 2,905,032 69,264 71,829 3.00 3.30 Non-earning assets 176,821 210,651 Total assets $ 3,260,636 $ 3,115,683 Deposits: Demand $ 531,301 $ 466,999 107 116 0.03 0.03 Money market 721,697 700,027 673 657 0.12 0.13 Savings 273,858 238,349 35 19 0.02 0.01 Time 290,725 367,979 1,141 2,198 0.52 0.80 Total deposits 1,817,581 1,773,354 1,956 2,990 0.14 0.23 Customer repurchase agreements 31,858 36,954 26 19 0.11 0.07 Long-term borrowings 28,268 33,111 1,156 1,352 5.45 5.44 Total interest-bearing liabilities 1,877,707 1,843,419 3,138 4,361 0.22 0.32 Noninterest bearing demand deposits 1,027,942 903,296 Other liabilities 17,354 22,238 Shareholders' equity 337,633 346,730 Total liabilities and shareholders' equity $ 3,260,636 $ 3,115,683 Interest rate spread 2.78 % 2.98 % Net interest margin 2.86 % 3.10 % Net interest income (taxable equivalent basis) 66,126 67,468 Less: Taxable equivalent adjustment (c) 176 181 Net interest income $ 65,950 $ 67,287 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 Nine Months 3rd Qtr 2nd Qtr 3rd Qtr Ended September 30, 2022 2022 2021 2022 2021 EFFICIENCY RATIO Noninterest expense $ 16,448 $ 15,455 $ 14,843 $ 47,252 $ 43,545 Subtract: loss on sale of OREO - - - - (111 ) Subtract: core deposit intangible amortization (310 ) (320 ) (361 ) (960 ) (1,113 ) $ 16,138 $ 15,135 $ 14,482 $ 46,292 $ 42,321 Net interest income $ 24,007 $ 21,490 $ 23,093 $ 65,950 $ 67,287 Tax equivalent adjustment 59 58 62 176 181 Noninterest income 4,760 4,837 5,123 15,197 16,187 Add: loss on fixed assets 2 84 107 82 588 $ 28,828 $ 26,469 $ 28,385 $ 81,405 $ 84,243 Efficiency ratio 55.98 % 57.18 % 51.02 % 56.87 % 50.24 % TAX EQUIVALENT NET INTEREST INCOME Non-GAAP measures: Interest income - loans $ 21,191 $ 19,109 $ 22,012 $ 59,122 $ 65,439 Interest income - investments and other 4,019 3,479 2,327 10,142 6,390 Interest expense - deposits (741 ) (646 ) (781 ) (1,956 ) (2,990 ) Interest expense - customer repurchase agreements (11 ) (9 ) (3 ) (26 ) (19 ) Interest expense - long-term borrowings (392 ) (385 ) (400 ) (1,156 ) (1,352 ) Total net interest income $ 24,066 $ 21,548 $ 23,155 $ 66,126 $ 67,468 Less non-GAAP measures: Tax benefit on nontaxable interest - loans (31 ) (34 ) (38 ) (98 ) (105 ) Tax benefit on nontaxable interest - securities (28 ) (24 ) (24 ) (78 ) (76 ) GAAP measures $ 24,007 $ 21,490 $ 23,093 $ 65,950 $ 67,287 RETURN ON AVERAGE TANGIBLE EQUITY Return on average equity (GAAP basis) 11.21 % 9.83 % 11.58 % 10.42 % 12.40 % Impact of excluding average goodwill and other intangibles 4.53 4.04 % 4.43 4.15 4.84 Return on average tangible equity (non-GAAP) 15.74 % 13.87 % 16.01 % 14.57 % 17.24 % TANGIBLE EQUITY TO TANGIBLE ASSETS Equity to assets ratio (GAAP basis) 10.28 % 10.13 % 10.65 % 10.28 % 10.65 % Impact of excluding goodwill and other intangibles (2.69 ) (2.55 ) (2.51 ) (2.69 ) (2.51 ) Tangible equity to tangible assets ratio (non-GAAP) 7.59 % 7.58 % 8.14 % 7.59 % 8.14 % TANGIBLE BOOK VALUE Book value per share (GAAP basis) $ 29.54 $ 30.71 $ 32.51 $ 29.54 $ 32.51 Impact of excluding goodwill and other intangibles (8.36 ) (8.35 ) (8.35 ) (8.36 ) (8.35 ) Tangible book value per share (non-GAAP) $ 21.18 $ 22.36 $ 24.16 $ 21.18 $ 24.16 ADJUSTED LOAN LOSS ALLOWANCE Allowance for loan losses $ 19,189 $ 18,505 $ 20,630 $ 19,189 $ 20,630 Credit discount on purchased loans 3,477 3,741 5,258 3,477 5,258 Adjusted loan loss allowance $ 22,666 $ 22,246 $ 25,888 $ 22,666 $ 25,888 Total loans, net $ 2,119,415 $ 2,030,818 $ 1,940,332 $ 2,119,415 $ 1,940,332 Subtract: PPP loans, net (95 ) (116 ) (37,199 ) (95 ) (37,199 ) Total loans less PPP loans, net $ 2,119,320 $ 2,030,702 $ 1,903,133 $ 2,119,320 $ 1,903,133 Adjusted loan loss allowance to total loans less PPP loans, net 1.07 % 1.10 % 1.36 % 1.07 % 1.36 % Allowance for loan losses to total loans less PPP loans, net 0.91 % 0.91 % 1.08 % 0.91 % 1.08 %
- Earnings produced a return on average tangible common equity of 15.74% for the third quarter of 2022, compared to 13.87% in the previous quarter and 16.01% for the same quarter in the prior year (non-GAAP).