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American National Bankshares Reports Third Quarter Earnings
Source: Nasdaq GlobeNewswire / 19 Oct 2023 07:30:01 America/New_York
DANVILLE, Va., Oct. 19, 2023 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (Nasdaq: AMNB) (“American National” or the “Company”) today reported third quarter 2023 earnings of $5.8 million, or $0.54 per diluted common share. These results compare to earnings of $9.3 million, or $0.87 per diluted common share, during the same quarter in the prior year, and earnings of $7.1 million, or $0.67 per diluted common share, for the second quarter of 2023. Earnings for the nine months ended September 30, 2023 were $22.1 million, or $2.08 per diluted common share, compared to $26.4 million, or $2.47 per diluted common share, for the same period of 2022.
President and Chief Executive Officer, Jeffrey V. Haley, commented, “The third quarter was a historic one for American National as we announced our agreement to merge with Atlantic Union Bankshares Corporation subject to shareholder and regulatory approvals. We continue to believe this partnership will provide the combined company with a stronger platform for growth and create enhanced value for our shareholders, customers and employees. I have been so pleased with the level of collaboration from both companies since announcement as we work through our various regulatory approvals and early integration planning.”
“We had a solid third quarter from an operating perspective, with revenues and earnings (adjusting for merger expenses) in line with our expectations for the quarter. Strengths included loan growth, continued favorable credit trends, expense management, reduced margin compression from higher rates and growth in fee income over the previous quarter.”
Third quarter 2023 highlights include:
- Average loans held for investment grew $30.8 million, or 5.6% annualized, during the third quarter as compared to the previous quarter.
- Average deposits increased by $51.5 million, or 8.0% annualized, during the quarter, while period-end deposits declined $80.7 million, or 12.2% annualized.
- Fully taxable equivalent (“FTE”) net interest margin was 2.76% for the quarter, down 12 basis points from 2.88% in the second quarter of 2023 and down 44 basis points from 3.20% in the third quarter of the prior year (non-GAAP).
- Noninterest revenues increased $419 thousand, or 9.6%, when compared to the previous quarter, and increased $14 thousand, or 0.3%, compared to the same quarter in the prior year.
- Noninterest expense increased $2.2 million, or 13.4%, when compared to the previous quarter, and increased $1.9 million, or 11.5%, when compared to the same quarter in the prior year. Excluding non-recurring merger related expenses of $1.7 million recorded during the quarter, increases relative to the prior quarter and same quarter of 2022 were 2.8% and 1.2%, respectively.
- The Company recognized a recovery of credit losses on loans in the third quarter of 2023 of $538 thousand compared to provisions of $268 thousand in the second quarter of 2023 and $615 thousand in the third quarter of the previous year.
- Annualized net recoveries as a percentage of average loans outstanding were (0.06%) for the third quarter of 2023, compared to (0.05%) in the previous quarter and (0.01%) in the same quarter in the prior year.
- Nonperforming assets as a percentage of total assets were 0.12% at September 30, 2023, up from 0.04% at June 30, 2023 and 0.05% at September 30, 2022.
NET INTEREST INCOME
Net interest income for the third quarter of 2023 decreased by $485 thousand, or 2.3%, to $20.7 million compared to $21.1 million for the previous quarter. The third quarter of 2023 compared to the same quarter of 2022 reflected a decrease of $3.3 million, or 13.9%. The FTE net interest margin for the third quarter of 2023 was 2.76%, down from 2.88% in the prior quarter and 3.20% 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 15 basis points quarter-over-quarter, while the cost of average interest-bearing liabilities rose 37 basis points due to higher rates paid on interest-bearing deposits and the continued migration of the deposit composition from demand deposits to higher cost money market and time deposits. Similarly, the 82-basis point increase in average earning asset yields was more than offset by the 195-basis point increase in the cost of average interest-bearing liabilities when comparing the third quarter of 2023 to the same quarter of 2022. The cost of interest-bearing deposits increased to 2.04% in the third quarter, compared to 1.59% in the previous quarter and 0.17% in the same quarter of the prior year.
ASSET QUALITY
Nonperforming assets (“NPAs”) totaled $3.7 million as of September 30, 2023, up from $1.1 million at June 30, 2023 and $1.4 million at September 30, 2022. NPAs as a percentage of total assets were 0.12% at September 30, 2023, compared to 0.04% at June 30, 2023 and 0.05% at September 30, 2022. The Company recorded a recovery of credit losses for the third quarter of 2023 of $538 thousand compared to provisions of $268 thousand in the previous quarter and $615 thousand in the third quarter of the previous year. The negative provision for the third quarter of 2023 was principally the result of net loan recoveries of $315 thousand and a slight reduction in the quantitative expected loan loss rates partially offset by net loan growth during the quarter.
The allowance for credit losses – loans was $25.1 million at September 30, 2023, compared to $25.3 million at June 30, 2023 and $19.2 million at September 30, 2022. Annualized net recoveries as a percentage of average loans outstanding were 0.06% for the third quarter of 2023 compared to 0.05% in the previous quarter and 0.01% in the same quarter in the prior year. The allowance for credit losses as a percentage of loans held for investment was 1.11% at September 30, 2023, compared to 1.13% at June 30, 2023, and 0.91% at September 30, 2022.
NONINTEREST INCOME
Noninterest income in the third quarter of 2023 increased by $419 thousand, or 9.6%, compared to the prior quarter and increased $14 thousand, or 0.3%, from the same quarter in the prior year. Noninterest income totaled $4.8 million for each of the quarters ended September 30, 2023 and September 30, 2022 compared to $4.4 million for the quarter ended June 30, 2023.
The increase in the third quarter compared to the previous quarter was attributable to higher income from small business investment companies of $345 thousand and growth in mortgage banking income of $96 thousand.
The third quarter of 2023 compared to the same quarter of 2022 reflected increases in interchange fees of $149 thousand and wealth management income of $133 thousand, partially offset by lower income from service charges on deposit accounts of $116 thousand and mortgage banking income of $95 thousand.
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2023 amounted to $18.3 million, up $2.2 million, or 13.4%, when compared to $16.2 million for the previous quarter and up $1.9 million, or 11.5%, from $16.4 million during the same quarter in the previous year. The increase in the third quarter compared to the previous quarter was driven by merger related expenses totaling $1.7 million and increased incentive accruals of $1.0 million included in salaries and employee benefits.
The third quarter 2023 increase compared to the same quarter of 2022 was principally attributable to merger related expenses of $1.7 million and an increase in FDIC assessments of $127 thousand.
INCOME TAXES
The effective tax rate for the three months ended September 30, 2023 was 24.16%, compared to 21.13% for the prior quarter and 20.92% for the same quarter in the prior year. The increase in the effective tax rate in the third quarter of 2023 was primarily the result of certain non-deductible merger related expenses.
BALANCE SHEET
Total assets at September 30, 2023 were $3.1 billion, a decline of $21.9 million, or 0.7% from June 30, 2023, and an increase of $41.9 million, or 1.4%, from September 30, 2022.
At September 30, 2023, loans held for investment (net of deferred fees and costs) were $2.3 billion, an increase of $29.0 million, or 5.2% annualized, from June 30, 2023. Loans held for investment (net of deferred fees and costs) increased $154.0 million, or 7.3%, from September 30, 2022.
Investment securities available for sale amounted to $543.9 million at September 30, 2023, a decrease of $16.8 million, or 3.0%, from June 30, 2023 and a decrease of $98.0 million, or 15.3%, compared to September 30, 2022. The unrealized loss on available for sale securities was $75.1 million at September 30, 2023 compared to $69.7 million at June 30, 2023 and $73.6 million at September 30, 2022. The increase in unrealized losses relative to the prior quarter was the result of increases in market yields for investment securities. At September 30, 2023, 54% of the market value of the securities portfolio was unencumbered and could be used to provide additional liquidity, if needed.
Deposits amounted to $2.6 billion at September 30, 2023, representing declines of $80.7 million, or 12.2% annualized, from June 30, 2023 and $119.6 million, or 4.4%, compared to September 30, 2022.
Borrowings from the Federal Home Loan Bank of Atlanta (“FHLB”) totaled $85.0 million at September 30, 2023 compared to $25.0 million at June 30, 2023. The Company had no FHLB borrowings at September 30, 2022. The Company’s remaining credit availability from the FHLB was $677.6 million as of September 30, 2023, $446.5 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 7.98% at September 30, 2023 compared to 7.94% at June 30, 2023 and compared to 7.59% at September 30, 2022 (non-GAAP). The Company’s preliminary common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.77%, 12.89%, 13.91% and 10.61%, respectively, at September 30, 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 following: the businesses of American National and Atlantic Union Bankshares Corporation (“Atlantic Union”) may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the expected growth opportunities or cost savings from the merger with Atlantic Union may not be fully realized or may take longer to realize than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger with Atlantic Union, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger with Atlantic Union may not be obtained; 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 ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company's or banking industry's reputation becomes damaged; 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; 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.
Contact: Jeffrey W. Farrar Senior Executive Vice President, COO & CFO (434)773-2274 farrarj@amnb.com
American National Bankshares Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) Unaudited September 30 2023 2022 Assets Cash and due from banks $ 34,646 $ 35,437 Interest-bearing deposits in other banks 40,622 59,541 Securities available for sale, at fair value 543,915 641,884 Restricted stock, at cost 12,936 8,383 Loans held for sale 1,981 2,852 Loans, net of deferred fees and costs 2,273,455 2,119,415 Less allowance for credit losses - loans (25,124 ) (19,189 ) Net Loans 2,248,331 2,100,226 Premises and equipment, net 32,167 34,686 Assets held-for-sale 1,131 - Other real estate owned, net - 143 Goodwill 85,048 85,048 Core deposit intangibles, net 2,550 3,667 Bank owned life insurance 30,197 29,480 Other assets 57,734 47,973 Total assets $ 3,091,258 $ 3,049,320 Liabilities Demand deposits -- noninterest-bearing $ 848,017 $ 1,044,803 Demand deposits -- interest-bearing 484,511 509,017 Money market deposits 659,899 612,600 Savings deposits 214,955 282,093 Time deposits 363,862 242,357 Total deposits 2,571,244 2,690,870 Customer repurchase agreements 60,035 625 Other short-term borrowings 85,000 - Long-term borrowings 28,410 28,308 Other liabilities 19,291 16,127 Total liabilities 2,763,980 2,735,930 Shareholders' equity Preferred stock, $5 par value, 2,000,000 shares authorized, none outstanding - - Common stock, $1 par value, 20,000,000 shares authorized, 10,629,111 shares outstanding at September 30, 2023 and 10,608,750 shares outstanding at September 30, 2022 10,544 10,533 Capital in excess of par value 142,392 141,694 Retained earnings 231,962 218,814 Accumulated other comprehensive loss, net (57,620 ) (57,651 ) Total shareholders' equity 327,278 313,390 Total liabilities and shareholders' equity $ 3,091,258 $ 3,049,320 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 9/30/23 6/30/23 9/30/22 9/30/23 9/30/22 Interest and Dividend Income: Interest and fees on loans $ 27,512 $ 26,052 $ 21,160 $ 78,476 $ 59,024 Interest and dividends on securities: Taxable 2,564 2,607 2,664 7,855 7,344 Tax-exempt 24 26 110 115 297 Dividends 163 196 118 529 347 Other interest income 797 550 1,099 1,818 2,076 Total interest and dividend income 31,060 29,431 25,151 88,793 69,088 Interest Expense: Interest on deposits 9,057 6,607 741 19,149 1,956 Interest on short-term borrowings 938 1,282 11 3,427 26 Interest on long-term borrowings 402 394 392 1,183 1,156 Total interest expense 10,397 8,283 1,144 23,759 3,138 Net Interest Income 20,663 21,148 24,007 65,034 65,950 Provision for (recovery of) credit losses (538 ) 268 615 59 438 Net Interest Income After Provision for (Recovery of) Credit Losses 21,201 20,880 23,392 64,975 65,512 Noninterest Income: Wealth management income 1,736 1,726 1,603 5,030 4,999 Service charges on deposit accounts 565 564 681 1,685 2,079 Interchange fees 1,162 1,187 1,013 3,458 2,990 Other fees and commissions 169 158 233 493 699 Mortgage banking income 293 197 388 634 1,490 Securities losses, net - - - (68 ) - Income from Small Business Investment Companies 453 108 501 888 1,672 Income from insurance investments 128 120 100 594 644 Losses on premises and equipment, net - (8 ) (2 ) (113 ) (82 ) Other 268 303 243 900 706 Total noninterest income 4,774 4,355 4,760 13,501 15,197 Noninterest Expense: Salaries and employee benefits 9,229 8,300 9,618 26,701 26,936 Occupancy and equipment 1,601 1,631 1,514 4,676 4,576 FDIC assessment 354 492 227 1,053 694 Bank franchise tax 520 520 488 1,550 1,452 Core deposit intangible amortization 262 272 310 817 960 Data processing 821 939 818 2,611 2,446 Software 470 476 362 1,391 1,088 Other real estate owned, net (10 ) - 3 (10 ) 4 Merger related expenses 1,702 - - 1,702 - Other 3,394 3,552 3,108 9,683 9,096 Total noninterest expense 18,343 16,182 16,448 50,174 47,252 Income Before Income Taxes 7,632 9,053 11,704 28,303 33,457 Income Taxes 1,844 1,913 2,448 6,218 7,062 Net Income $ 5,788 $ 7,140 $ 9,256 $ 22,085 $ 26,395 Net Income Per Common Share: Basic $ 0.54 $ 0.67 $ 0.87 $ 2.08 $ 2.47 Diluted $ 0.54 $ 0.67 $ 0.87 $ 2.08 $ 2.47 Weighted Average Common Shares Outstanding: Basic 10,625,709 10,623,571 10,640,952 10,626,599 10,694,096 Diluted 10,625,709 10,624,859 10,643,073 10,627,732 10,696,409 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, 2023 2023 2022 2023 2022 EARNINGS Interest income $ 31,060 $ 29,431 $ 25,151 $ 88,793 $ 69,088 Interest expense 10,397 8,283 1,144 23,759 3,138 Net interest income 20,663 21,148 24,007 65,034 65,950 Provision for (recovery of) credit losses (538 ) 268 615 59 438 Noninterest income 4,774 4,355 4,760 13,501 15,197 Noninterest expense 18,343 16,182 16,448 50,174 47,252 Income taxes 1,844 1,913 2,448 6,218 7,062 Net income 5,788 7,140 9,256 22,085 26,395 PER COMMON SHARE Net income per share - basic $ 0.54 $ 0.67 $ 0.87 $ 2.08 $ 2.47 Net income per share - diluted 0.54 0.67 0.87 2.08 2.47 Cash dividends paid 0.30 0.30 0.28 0.90 0.84 Book value per share 30.79 30.88 29.54 30.79 29.54 Book value per share - tangible (a) 22.55 22.61 21.18 22.55 21.18 Closing market price 37.94 28.98 31.95 37.94 31.95 FINANCIAL RATIOS Return on average assets 0.75 % 0.93 % 1.17 % 0.96 % 1.08 % Return on average common equity 7.02 8.61 11.21 8.97 10.42 Return on average tangible common equity (a) 9.91 12.07 15.74 12.61 14.57 Average common equity to average assets 10.68 10.82 10.42 10.70 10.35 Tangible common equity to tangible assets (a) 7.98 7.94 7.59 7.98 7.59 Net interest margin, taxable equivalent 2.76 2.88 3.20 2.94 2.86 Efficiency ratio (a) 64.31 62.24 55.98 60.43 56.87 Effective tax rate 24.16 21.13 20.92 21.97 21.11 PERIOD-END BALANCES Securities $ 556,851 $ 570,039 $ 650,267 $ 556,851 $ 650,267 Loans held for sale 1,981 4,048 2,852 1,981 2,852 Loans, net 2,273,455 2,244,464 2,119,415 2,273,455 2,119,415 Goodwill and other intangibles 87,598 87,860 88,715 87,598 88,715 Assets 3,091,258 3,113,163 3,049,320 3,091,258 3,049,320 Assets - tangible (a) 3,003,660 3,025,303 2,960,605 3,003,660 2,960,605 Interest-bearing deposits 1,723,227 1,767,258 1,646,067 1,723,227 1,646,067 Noninterest bearing demand deposits 848,017 884,658 1,044,803 848,017 1,044,803 Customer repurchase agreements 60,035 62,886 625 60,035 625 Other short-term borrowings 85,000 25,000 - 85,000 - Long-term borrowings 28,410 28,384 28,308 28,410 28,308 Shareholders' equity 327,278 328,090 313,390 327,278 313,390 Shareholders' equity - tangible (a) 239,680 240,230 224,675 239,680 224,675 AVERAGE BALANCES Securities (b) $ 634,313 $ 652,439 $ 728,535 $ 654,737 $ 722,025 Loans held for sale 2,488 1,984 3,915 1,701 3,998 Loans, net 2,248,675 2,217,859 2,064,088 2,217,898 2,012,905 Interest-earning assets 2,939,234 2,912,623 3,005,292 2,920,781 3,083,815 Goodwill and other intangibles 87,758 88,036 88,886 88,033 89,202 Assets 3,088,231 3,065,449 3,170,328 3,070,314 3,260,636 Assets - tangible (a) 3,000,473 2,977,413 3,081,442 2,982,281 3,171,434 Interest-bearing deposits 1,758,994 1,669,076 1,723,931 1,681,311 1,817,581 Noninterest bearing demand deposits 872,488 910,911 1,051,585 917,113 1,027,942 Customer repurchase agreements 65,550 62,419 18,719 45,071 31,858 Other short-term borrowings 12,935 45,934 - 52,142 - Subordinated debt 28,393 28,368 28,293 28,368 28,268 Shareholders' equity 329,812 331,821 330,318 328,400 337,633 Shareholders' equity - tangible (a) 242,054 243,785 241,432 240,367 248,431 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, 2023 2023 2022 2023 2022 CAPITAL Weighted average shares outstanding - basic 10,625,709 10,623,571 10,640,952 10,626,599 10,694,096 Weighted average shares outstanding - diluted 10,625,709 10,624,859 10,643,073 10,627,732 10,696,409 COMMON STOCK REPURCHASE PROGRAM Total shares of common stock repurchased - 13,688 60,104 34,131 203,709 Average price paid per share of common stock $ - $ 26.99 $ 34.26 30.58 36.26 ALLOWANCE FOR CREDIT LOSSES - LOANS Beginning balance $ 25,342 $ 24,861 $ 18,505 $ 19,555 $ 18,678 Day 1 Impact of CECL adoption - - - 5,192 - Provision for (recovery of) credit losses (533 ) 219 615 15 438 Charge-offs (19 ) (15 ) (31 ) (429 ) (185 ) Recoveries 334 277 100 791 258 Ending balance $ 25,124 $ 25,342 $ 19,189 $ 25,124 $ 19,189 LOANS Construction and land development $ 269,840 $ 240,934 $ 210,500 $ 269,840 $ 210,500 Commercial real estate - owner occupied 413,151 416,397 423,678 413,151 423,678 Commercial real estate - non-owner occupied 803,440 833,084 764,963 803,440 764,963 Residential real estate 366,557 351,855 324,468 366,557 324,468 Home equity 91,393 93,594 93,659 91,393 93,659 Commercial and industrial 322,209 301,778 295,541 322,209 295,541 Consumer 6,865 6,822 6,606 6,865 6,606 Total $ 2,273,455 $ 2,244,464 $ 2,119,415 $ 2,273,455 $ 2,119,415 NONPERFORMING ASSETS AT PERIOD-END Nonperforming loans: 90 days past due and accruing $ - $ - $ 18 $ - $ 18 Nonaccrual 3,740 1,024 1,171 3,740 1,171 Other real estate owned and repossessions - 80 196 - 196 Nonperforming assets $ 3,740 $ 1,104 $ 1,385 $ 3,740 $ 1,385 ASSET QUALITY RATIOS Allowance for credit losses - loans to total loans 1.11 % 1.13 % 0.91 % 1.11 % 0.91 % Allowance for credit losses - loans to nonperforming loans 671.76 2,474.80 1,613.88 671.76 1,613.88 Nonperforming assets to total assets 0.12 0.04 0.05 0.12 0.05 Nonperforming loans to total loans 0.16 0.05 0.06 0.16 0.06 Annualized net charge-offs (recoveries) to average loans (0.06 ) (0.05 ) (0.01 ) (0.02 ) 0.00 to average loans OTHER DATA Fiduciary assets at period-end (c) (d) $ 774,126 $ 782,659 $ 693,153 $ 774,126 693,153 Retail brokerage assets at period-end (c) (d) $ 413,956 $ 426,565 $ 376,891 $ 413,956 376,891 Number full-time equivalent employees (e) 358 365 363 358 363 Number of full service offices 26 26 26 26 26 Number of loan production offices 1 1 1 1 1 Number of ATMs 34 34 34 34 34 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, 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) $ 2,251,163 $ 2,068,003 $ 27,559 $ 21,191 4.81 % 4.09 % Securities: Taxable 630,034 708,076 2,727 2,782 1.73 1.56 Tax exempt 4,279 20,459 30 138 2.85 2.70 Total securities 634,313 728,535 2,757 2,920 1.74 1.60 Deposits in other banks 53,758 208,754 797 1,099 5.88 2.09 Total interest-earning assets 2,939,234 3,005,292 31,113 25,210 4.17 3.35 Non-earning assets 148,997 165,036 Total assets $ 3,088,231 $ 3,170,328 Liabilities and Stockholders' Equity: Deposits: Demand $ 489,126 $ 522,021 983 34 0.80 0.03 Savings and money market 923,732 950,339 5,448 368 2.34 0.15 Time 346,136 251,571 2,626 339 3.00 0.53 Total deposits 1,758,994 1,723,931 9,057 741 2.04 0.17 Customer repurchase agreements 65,550 18,719 759 11 4.60 0.23 Other short-term borrowings 12,935 - 179 - 5.42 - Long-term borrowings 28,393 28,293 402 392 5.55 5.54 Total interest-bearing liabilities 1,865,872 1,770,943 10,397 1,144 2.21 0.26 Noninterest bearing demand deposits 872,488 1,051,585 Other liabilities 20,059 17,482 Shareholders' equity 329,812 330,318 Total liabilities and shareholders' equity $ 3,088,231 $ 3,170,328 Interest rate spread 1.96 % 3.09 % Net interest margin 2.76 % 3.20 % Net interest income (taxable equivalent basis) 20,716 24,066 Less: Taxable equivalent adjustment (c) 53 59 Net interest income $ 20,663 $ 24,007 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. Net Interest Income Analysis For the Nine Months Ended September 30, 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) $ 2,219,599 $ 2,016,903 $ 78,612 $ 59,122 4.68 % 3.91 % Securities: Taxable 647,688 703,048 8,384 7,691 1.73 1.46 Tax exempt 7,049 18,977 146 375 2.76 2.64 Total securities 654,737 722,025 8,530 8,066 1.74 1.49 Deposits in other banks 46,445 344,887 1,818 2,076 5.23 0.80 Total interest-earning assets 2,920,781 3,083,815 88,960 69,264 4.03 3.00 Non-earning assets 149,533 176,821 Total assets $ 3,070,314 $ 3,260,636 Liabilities and Stockholders' Equity: Deposits: Demand $ 480,422 $ 531,301 1,815 107 0.51 0.03 Savings and money market 891,035 995,555 11,841 708 1.78 0.10 Time 309,854 290,725 5,493 1,141 2.37 0.52 Total deposits 1,681,311 1,817,581 19,149 1,956 1.52 0.14 Customer repurchase agreements 45,071 31,858 1,519 26 4.50 0.11 Other short-term borrowings 52,142 - 1,908 - 4.83 - Long-term borrowings 28,368 28,268 1,183 1,156 5.50 5.45 Total interest-bearing liabilities 1,806,892 1,877,707 23,759 3,138 1.75 0.22 Noninterest bearing demand deposits 917,113 1,027,942 Other liabilities 17,909 17,354 Shareholders' equity 328,400 337,633 Total liabilities and shareholders' equity $ 3,070,314 $ 3,260,636 Interest rate spread 2.28 % 2.78 % Net interest margin 2.94 % 2.86 % Net interest income (taxable equivalent basis) 65,201 66,126 Less: Taxable equivalent adjustment (c) 167 176 Net interest income $ 65,034 $ 65,950 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) At or for the Nine Months 3rd Qtr 2nd Qtr 3rd Qtr Ended September 30, 2023 2023 2022 2023 2022 EFFICIENCY RATIO Noninterest expense $ 18,343 $ 16,182 $ 16,448 $ 50,174 $ 47,252 Add: loss on sale of OREO 13 - - 13 - Subtract: core deposit intangible amortization (262 ) (272 ) (310 ) (817 ) (960 ) Subtract: merger related expenses (1,702 ) - - (1,702 ) - $ 16,392 $ 15,910 $ 16,138 $ 47,668 $ 46,292 Net interest income $ 20,663 $ 21,148 $ 24,007 $ 65,034 $ 65,950 Tax equivalent adjustment 53 51 59 167 176 Noninterest income 4,774 4,355 4,760 13,501 15,197 Add: loss on securities - - - 68 - Add: loss on premises and equipment - 8 2 113 82 $ 25,490 $ 25,562 $ 28,828 $ 78,883 $ 81,405 Efficiency ratio 64.31 % 62.24 % 55.98 % 60.43 % 56.87 % TAX EQUIVALENT NET INTEREST INCOME Non-GAAP measures: Interest income - loans $ 27,559 $ 26,096 $ 21,191 $ 78,612 $ 59,122 Interest income - investments and other 3,554 3,386 4,019 10,348 10,142 Interest expense - deposits (9,057 ) (6,607 ) (741 ) (19,149 ) (1,956 ) Interest expense - customer repurchase agreements (759 ) (694 ) (11 ) (1,519 ) (26 ) Interest expense - other short-term borrowings (179 ) (588 ) - (1,908 ) - Interest expense - long-term borrowings (402 ) (394 ) (392 ) (1,183 ) (1,156 ) Total net interest income $ 20,716 $ 21,199 $ 24,066 $ 65,201 $ 66,126 Less non-GAAP measures: Tax benefit on nontaxable interest - loans (47 ) (44 ) (31 ) (136 ) (98 ) Tax benefit on nontaxable interest - securities (6 ) (7 ) (28 ) (31 ) (78 ) GAAP measures $ 20,663 $ 21,148 $ 24,007 $ 65,034 $ 65,950 NET INTEREST MARGIN Net interest margin (FTE) (non-GAAP) 2.76 % 2.88 % 3.20 % 2.94 % 2.86 % Net interest margin (GAAP) 2.75 % 2.87 % 3.19 % 2.92 % 2.84 % RETURN ON AVERAGE TANGIBLE EQUITY Return on average equity (GAAP basis) 7.02 % 8.61 % 11.21 % 8.97 % 10.42 % Impact of excluding average goodwill and other intangibles 2.89 3.46 4.53 3.64 4.15 Return on average tangible equity (non-GAAP) 9.91 % 12.07 % 15.74 % 12.61 % 14.57 % TANGIBLE EQUITY TO TANGIBLE ASSETS Equity to assets ratio (GAAP basis) 10.59 % 10.54 % 10.28 % 10.59 % 10.28 % Impact of excluding goodwill and other intangibles (2.61 ) (2.60 ) (2.69 ) (2.61 ) (2.69 ) Tangible equity to tangible assets ratio (non-GAAP) 7.98 % 7.94 % 7.59 % 7.98 % 7.59 % TANGIBLE BOOK VALUE Book value per share (GAAP basis) $ 30.79 $ 30.88 $ 29.54 $ 30.79 $ 29.54 Impact of excluding goodwill and other intangibles (8.24 ) (8.27 ) (8.36 ) (8.24 ) (8.36 ) Tangible book value per share (non-GAAP) $ 22.55 $ 22.61 $ 21.18 $ 22.55 $ 21.18