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American National Bankshares Inc. Reports Second Quarter 2009 Earnings and Announces Third Quarter Cash Dividend
- Q2 net income of $1.7 million and EPS of $.28 per share
- Q2 net interest margin 3.84%
- Average shareholders' equity of $102.9 million represents 12.66% of average assets
- Dividend declared for Q3 of $.23 per common share
- AMNB added to Russell 2000
DANVILLE, Va., July 22 /PRNewswire-FirstCall/ -- American National Bankshares Inc. (Nasdaq: AMNB), parent company of American National Bank and Trust Company, today announced second quarter 2009 net income of $1.7 million compared to $1.8 million for the same quarter in 2008. Earnings per share, basic and diluted, were $0.28 for the 2009 quarter compared to $0.30, basic and diluted, for the 2008 quarter. This net income produced returns on average assets and average equity of 0.84% and 6.63%, respectively. For the quarter, return on tangible equity was 9.40%.
Net income for the first six months of 2009 was $2.5 million compared to $4.1 million for the comparable period of 2008. Earnings per share, basic and diluted, were $0.41 for the 2009 period compared to $0.67, basic and diluted, for the 2008 period. Earnings for the 2009 period were adversely impacted by a first quarter $1.2 million pre-tax charge writing down other real estate owned.
Financial Performance and Overview
"Our second quarter net income was $1.7 million compared to $1.8 million for the same quarter a year ago. While we wish earnings could have been higher," stated Charles H. Majors, President and Chief Executive Officer, "we are pleased American National remains consistently profitable with strong capital and credit quality measures.
"During the second quarter, the Bank accrued the first FDIC special assessment. This new fee, applied industry wide, resulted in an additional $362,000 in expense. It is likely that we will have another similar assessment in the third quarter and possibly have one in the fourth quarter. The addition of these fees will have a significant and negative impact on our earnings for the year.
"Our board and senior management are constantly seeking new ways to improve revenue and reduce expense. In an effort to improve efficiency and contain costs we have reduced the number of full time equivalent employees in the bank by 14, over 5% of our total staff. This was a difficult, but necessary, process and was accomplished through a combination of retirements, unfilled vacancies and a small number of layoffs. We estimate the annualized savings will be $700,000.
"Successful banks are dynamic and ever changing organizations. They must grow and evolve and adapt to changing circumstances or face severe consequences. Our Bank is strategically focused on building, maintaining, retaining, and improving customer relationships. In order to do so we must have our banking offices where our customers most need us and do it in a cost effective manner. Earlier this year we closed two branches in close proximity to each other. We consolidated their operations into a new, larger facility, with extended hours, at Piedmont Drive in Danville. In April, we relocated our Smith Mountain Lake office to a better facility in order to provide services not previously available to our customers in that market. We recently converted our Ridgeway office to a drive-through only from a full-service facility. During July, we will relocate our Martinsville office from a multi-building leased facility to a newly constructed, modern building. Our South Main office in Danville will be closed in October.
"We remain optimistic that the business cycle will improve and, when that occurs, we will be prepared to resume quality growth in earning assets and profitability."
Capital
American National's capital ratios are among the highest in its peer group. At June 30, 2009, average shareholders' equity was 12.66% of average assets.
Credit Quality Measurements
Nonperforming assets ($2.7 million of non-accrual loans and $4 million of foreclosed real estate) were below industry averages and represented 0.84% of total assets at June 30, 2009, compared to 0.91% at December 31, 2008. The allowance for loans losses was $7.9 million or 1.42% of loans at June 30, 2009 compared to 1.37% at December 31, 2008 and 1.39% at June 30, 2008.
Net Interest Income
Net interest income increased to $6.9 million in the second quarter of 2009 from $6.7 million in the second quarter of 2008, an increase of $179,000 or 2.7%. Net interest income has been adversely impacted by a long series of rate reductions enacted by the Federal Reserve. The Bank has mitigated the impact of the rate reductions by reducing the cost of its interest bearing liabilities. The Company's net interest margin has increased one basis point (0.01%) in the second quarter 2009 compared to the same quarter in 2008, though for the six month period the margin declined 14 basis points (0.08%).
Noninterest Income
Noninterest income totaled $2.3 million in the second quarter of 2009, compared with $1.8 million in the second quarter of 2008. Noninterest income was benefited by the increase in demand for secondary market mortgage loans, which more than offset the market-related decline in trust income and the decrease in service charge income.
Noninterest Expense
Noninterest expense totaled $6.3 million in the second quarter of 2009, compared to $5.6 million in the second quarter of 2008. The major factor impacting noninterest expense was deposit insurance expense. During the second quarter the Bank incurred a special assessment of $362,000 and premium increases of $180,000, due primarily to industry-wide conditions which resulted in increased FDIC costs for all member banks. Also, personnel expense for the second quarter 2009 included $100,000 in one-time costs associated with the staff reductions previously discussed.
Dividend Declaration
American National Bankshares Inc. announced today that its Board of Directors has declared a quarterly cash dividend of $0.23 per share, payable September 18, 2009, to shareholders of record September 4, 2009.
American National Bankshares Inc. considers the payment of appropriate dividends a vital part of its capital planning and management program. The Company adheres to a dividend policy based on a review of earnings, growth, capital and other such factors that the Board of Directors considers relevant to the dividend decision process.
Russell 2000
American National Bankshares Inc. was added to the Russell 3000 Index and the Russell 2000 Index on June 29, 2009 when Russell Investments reconstituted its comprehensive set of U.S. and Global equity indexes. The Russell indexes are widely used by investment managers as index funds and performance benchmarks for investment strategies. The indexes are reconstituted annually in late May and are comprised of the 3,000 largest U.S. stocks by market capitalization. The largest 1,000 companies comprise the Russell 1000 and the next 2,000 companies comprise the Russell 2000.
About American National
American National Bankshares Inc. is a bank holding company with assets of $811 million. Headquartered in Danville, Virginia, it is the holding company of American National Bank and Trust Company, a community bank serving Southern and Central Virginia and the northern portion of Central North Carolina with nineteen banking offices. The Bank also manages an additional $423 million of assets in its Trust and Investment Services Division. Additional information is available on the Bank's website at www.amnb.com. The shares of American National Bankshares Inc. are traded on the NASDAQ Global Select Market under the symbol "AMNB."
Forward-Looking Statements
This press release may contain "forward-looking statements," within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Company and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario; significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. American National Bankshares Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
June 30
ASSETS 2009 2008
Cash and due from banks $13,905 $20,082
Interest-bearing deposits in other banks 26,879 8,265
Securities available for sale, at fair value 144,706 136,632
Securities held to maturity 6,712 9,828
Total securities 151,418 146,460
Loans held for sale 10,408 2,200
Loans, net of unearned income 557,042 568,830
Less allowance for loan losses (7,934) (7,932)
Net Loans 549,108 560,898
Premises and equipment, net 18,912 13,230
Other real estate owned 4,033 558
Goodwill 22,468 22,468
Core deposit intangibles, net 1,886 2,264
Accrued interest receivable and other assets 12,466 14,270
Total assets $811,483 $790,695
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing $101,449 $98,005
Demand deposits -- interest-bearing 91,424 105,809
Money market deposits 81,306 52,772
Savings deposits 62,768 61,469
Time deposits 278,284 251,189
Total deposits 615,231 569,244
Short-term borrowings:
Customer repurchase agreements 59,437 57,973
Other short-term borrowings - 23,625
Long-term borrowings 8,712 13,863
Trust preferred capital notes 20,619 20,619
Accrued interest payable and other liabilities 4,866 3,475
Total liabilities 708,865 688,799
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares
authorized, 6,100,330 shares outstanding
at June 30, 2009 and 6,097,862 shares
outstanding at June 30, 2008 6,100 6,098
Capital in excess of par value 26,772 26,463
Retained earnings 70,682 70,233
Accumulated other comprehensive income (loss),
net (936) (898)
Total shareholders' equity 102,618 101,896
Total liabilities and shareholders' equity $811,483 $790,695
American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
Interest and Dividend Income:
Interest and fees on loans $7,917 $8,987 $15,951 $18,431
Interest and dividends on securities:
Taxable 1,233 1,234 2,353 2,465
Tax-exempt 416 420 802 852
Dividends 21 73 43 150
Other interest income 103 74 191 150
Total interest and dividend
income 9,690 10,788 19,340 22,048
Interest Expense:
Interest on deposits 2,180 3,116 4,707 6,698
Interest on short-term borrowings 177 427 413 911
Interest on long-term borrowings 80 171 211 297
Interest on trust preferred capital
notes 344 344 687 687
Total interest expense 2,781 4,058 6,018 8,593
Net Interest Income 6,909 6,730 13,322 13,455
Provision for loan losses 492 600 842 740
Net Interest Income After Provision
for Loan Losses 6,417 6,130 12,480 12,715
Noninterest Income:
Trust fees 767 916 1,525 1,796
Service charges on deposit
accounts 511 601 1,013 1,166
Other fees and commissions 251 226 493 429
Mortgage banking income 568 200 854 395
Brokerage fees 73 101 130 244
Securities gains (losses), net 1 (138) 1 (108)
Impairment of securities - (255) - (255)
Net loss on foreclosed real
estate (43) - (1,222) (7)
Other 125 190 193 316
Total noninterest income 2,253 1,841 2,987 3,976
Noninterest Expense:
Salaries 2,732 2,481 5,263 4,950
Employee benefits 832 777 1,645 1,524
Occupancy and equipment 719 1,210 1,470 1,436
FDIC assessment 564 24 781 41
Bank franchise tax 160 173 323 350
Core deposit intangible
amortization 95 95 189 189
Other 1,219 883 2,525 2,602
Total noninterest expense 6,321 5,643 12,196 11,092
Income Before Income Taxes 2,349 2,328 3,271 5,599
Income Taxes 643 519 797 1,485
Net Income $1,706 $1,809 $2,474 $4,114
Net Income Per Common Share:
Basic $0.28 $0.30 $0.41 $0.67
Diluted $0.28 $0.30 $0.41 $0.67
Average Common Shares Outstanding:
Basic 6,096,034 6,098,184 6,089,055 6,103,008
Diluted 6,097,047 6,108,536 6,091,291 6,114,911
American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and nonfinancial data, unaudited)
2nd Qtr 1st Qtr 2nd Qtr YTD YTD
2009 2009 2008 2009 2008
EARNINGS
Interest income $9,690 $9,650 $10,788 $19,340 $22,048
Interest expense 2,781 3,237 4,058 6,018 8,593
Net interest income 6,909 6,413 6,730 13,322 13,455
Provision for loan
losses 492 350 600 842 740
Noninterest income 2,253 734 1,841 2,987 3,976
Noninterest expense 6,321 5,875 5,643 12,196 11,092
Income taxes 643 154 519 797 1,485
Net income 1,706 768 1,809 2,474 4,114
PER COMMON SHARE
Earnings per share -
basic $0.28 $0.13 $0.30 $0.41 $0.67
Earnings per share -
diluted 0.28 0.13 0.30 0.41 0.67
Cash dividends
declared 0.23 0.23 0.23 0.46 0.46
Book value per share 16.82 16.76 16.71 16.82 16.71
Book value per share
- tangible (a) 12.83 12.74 12.65 12.83 12.65
Closing market price 19.25 15.60 18.25 19.25 18.25
FINANCIAL RATIOS
Return on average
assets 0.84% 0.38% 0.92% 0.61% 1.05%
Return on average
equity 6.63 2.99 7.06 4.81 8.03
Return on average
tangible equity (b) 9.40 4.32 9.69 6.86 10.96
Average equity to
average assets 12.66 12.80 12.99 12.73 13.05
Net interest margin,
taxable equivalent 3.84 3.57 3.83 3.72 3.86
Efficiency ratio 66.98 68.77 61.40 67.83 60.75
Effective tax rate 27.37 16.70 22.29 24.37 26.52
PERIOD-END BALANCES
Securities $151,418 $174,792 $146,460 $151,418 $146,460
Loans held for sale 10,408 2,782 2,200 10,408 2,200
Loans, net of
unearned income 557,042 569,003 568,830 557,042 568,830
Goodwill and other
intangibles 24,354 24,449 24,732 24,354 24,732
Assets 811,483 829,478 790,695 811,483 790,695
Assets -tangible(a) 787,129 805,029 765,963 787,129 765,963
Deposits 615,231 615,888 569,244 615,231 569,244
Customer repurchase
agreements 59,437 60,678 57,973 59,437 57,973
Other short-term
borrowings - 12,440 23,625 - -
Long-term borrowings 29,331 34,369 34,482 29,331 58,107
Shareholders'
equity 102,618 101,915 101,896 102,618 101,896
Shareholders' equity
- tangible(a) 78,264 77,466 77,164 78,264 77,164
AVERAGE BALANCES
Securities $147,576 $138,067 $150,247 $142,847 $150,973
Loans held for sale 7,787 2,996 2,206 5,405 1,910
Loans, net of
unearned income 562,654 570,342 564,769 566,476 559,370
Interest-earning
assets 744,899 741,631 725,789 739,965 721,741
Goodwill and other
intangibles 24,406 24,507 24,785 24,456 24,825
Assets 812,404 803,206 789,412 808,071 784,772
Assets -tangible(a) 787,998 778,699 764,627 783,615 759,947
Interest-bearing
deposits 513,876 510,821 476,207 512,357 481,203
Deposits 612,134 604,002 576,167 608,105 579,789
Customer repurchase
agreements 60,876 56,051 53,535 58,477 54,079
Other short-term
borrowings 1,553 2,071 14,765 1,811 8,928
Long-term borrowings 30,460 34,398 37,247 32,418 34,013
Shareholders'
equity 102,862 102,845 102,511 102,854 102,410
Shareholders'
equity-tangible(a) 78,456 78,338 77,726 78,398 77,585
CAPITAL
Average shares
outstanding-basic 6,096,034 6,081,998 6,098,184 6,089,055 6,103,008
Average shares
outstanding-diluted 6,097,047 6,085,457 6,108,536 6,091,291 6,114,911
Shares repurchased - 7,600 2,400 7,600 31,200
Average price of
shares repurchased $- $15.92 $21.43 $15.92 $20.85
ALLOWANCE FOR LOAN LOSSES
Beginning balance $7,836 $7,824 $7,425 $7,824 $7,395
Provision for loan
losses 492 350 600 842 740
Charge-offs (422) (376) (203) (798) (373)
Recoveries 28 38 110 66 170
Ending balance $7,934 $7,836 $7,932 $7,934 $7,932
LOANS
Construction and land
development $50,930 $53,579 $66,740 $50,930 $66,740
Commercial real
estate 210,832 213,508 201,102 210,832 201,102
Residential real
estate 128,835 134,510 140,024 128,835 140,024
Home equity 61,818 61,459 52,773 61,818 52,773
Commercial and
industrial 96,978 97,259 99,603 96,978 99,603
Consumer 7,649 8,688 8,588 7,649 8,588
Total $557,042 $569,003 $568,830 $557,042 $568,830
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due $- $- $172 $- $172
Nonaccrual 2,745 2,821 6,216 2,745 6,216
Foreclosed real
estate 4,033 3,345 558 4,033 558
Nonperforming Assets $6,778 $6,166 $6,946 $6,778 $6,946
ASSET QUALITY RATIOS
Annualized net
chargeoffs to
average loans 0.28% 0.24% 0.07% 0.26% 0.07%
Nonperforming assets
to total assets 0.84 0.74 0.88 0.84 0.88
Nonperforming loans
to total loans 0.49 0.50 1.12 0.49 1.12
Allowance for loan
losses to total
loans 1.42 1.38 1.39 1.42 1.39
Allowance for loan
losses to
nonperforming loans 289.03 277.77 124.17 289.03 124.17
OTHER DATA
Fiduciary assets at
period-end (c) $333,754 $305,129 $377,008 $333,754 $377,008
Retail brokerage
assets at
period-end (c) $89,016 $82,554 $94,472 $89,016 $94,472
Number full time-
time equivalent
employees(d) 255 258 261 255 261
Number of full
service offices 19 20 20 19 20
Number of loan
production offices 2 2 1 2 1
Number of ATM's 24 23 23 24 23
Notes:
(a) - Excludes goodwill and other intangible assets
(b) - Excludes amortization expense, net of tax, of intangible assets
(c) - Market value
(d) - Average for quarter
N/A - Percentage change is not applicable or not meaningful
Net Interest Income Analysis
For the Three Months Ended June 30, 2009 and 2008
(in thousands, except rates)
Interest
Income/
Average Balance Expense Yield/Rate
--------------- -------- ----------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Loans:
Commercial $91,701 $90,648 $1,100 $1,342 4.80% 5.92%
Real estate 470,859 467,424 6,669 7,468 5.67 6.39
Consumer 7,881 8,903 175 197 8.88 8.85
Total loans 570,441 566,975 7,944 9,007 5.57 6.35
Securities:
Federal agencies 46,225 45,708 525 551 4.54 4.82
Mortgage-backed & CMO's 41,382 50,357 550 642 5.32 5.10
State and municipal 51,718 47,201 731 652 5.65 5.53
Other 8,251 6,981 72 90 3.49 5.16
Total securities 147,576 150,247 1,878 1,935 5.09 5.15
Deposits in other banks 26,882 8,567 103 74 1.53 3.46
Total interest-earning
assets 744,899 725,789 9,925 11,016 5.33 6.07
Non-earning assets 67,505 63,623
Total assets $812,404 $789,412
Deposits:
Demand $92,447 $107,154 42 160 0.18 0.60
Money market 78,143 51,124 148 239 0.76 1.87
Savings 62,557 62,648 37 84 0.24 0.54
Time 280,729 255,281 1,953 2,633 2.78 4.13
Total deposits 513,876 476,207 2,180 3,116 1.70 2.62
Customer repurchase
agreements 60,876 53,535 176 339 1.16 2.53
Other short-term borrowings 1,553 14,765 1 88 0.26 2.38
Long-term borrowings 30,460 37,247 424 515 5.57 5.53
Total interest-bearing
liabilities 606,765 581,754 2,781 4,058 1.83 2.79
Noninterest bearing
demand deposits 98,258 99,960
Other liabilities 4,519 5,187
Shareholders' equity 102,862 102,511
Total liabilities and
shareholders' equity $812,404 $789,412
Interest rate spread 3.50% 3.28%
Net interest margin 3.84% 3.83%
Net interest income
(taxable equivalent
basis) 7,144 6,958
Less: Taxable
equivalent adjustment 235 228
Net interest income $6,909 $6,730
Net Interest Income Analysis
For the Six Months Ended June 30, 2009 and 2008
(in thousands, except rates)
Interest
Average Balance Income/Expense Yield/Rate
2009 2008 2009 2008 2009 2008
Loans:
Commercial $93,887 $88,140 $2,200 $2,796 4.69% 6.34%
Real estate 470,106 463,927 13,448 15,257 5.72 6.58
Consumer 7,888 9,213 353 414 8.95 8.99
Total loans 571,881 561,280 16,001 18,467 5.60 6.58
Securities:
Federal agencies 45,997 47,886 1,046 1,148 4.55 4.79
Mortgage-backed & CMO's 42,962 48,881 1,112 1,245 5.18 5.09
State and municipal 47,247 47,524 1,335 1,308 5.65 5.50
Other 6,641 6,682 105 189 3.16 5.66
Total securities 142,847 150,973 3,598 3,890 5.04 5.15
Deposits in other banks 25,237 9,488 191 150 1.51 3.16
Total interest-earning
assets 739,965 721,741 19,790 22,507 5.35 6.24
Non-earning assets 68,106 63,031
Total assets $808,071 $784,772
Deposits:
Demand $102,397 $107,574 232 385 0.45 0.72
Money market 71,433 51,222 346 533 0.97 2.08
Savings 61,927 62,916 77 200 0.25 0.64
Time 276,600 259,491 4,052 5,580 2.93 4.30
Total deposits 512,357 481,203 4,707 6,698 1.84 2.78
Customer repurchase
agreements 58,477 54,079 409 790 1.40 2.92
Other short-term borrowings 1,811 8,928 4 121 0.44 2.71
Long-term borrowings 32,418 34,013 898 984 5.54 5.79
Total interest-bearing
liabilities 605,063 578,223 6,018 8,593 1.99 2.97
Noninterest bearing
demand deposits 95,748 98,586
Other liabilities 4,406 5,553
Shareholders' equity 102,854 102,410
Total liabilities and
shareholders' equity $808,071 $784,772
Interest rate spread 3.36% 3.27%
Net interest margin 3.72% 3.86%
Net interest income
(taxable equivalent basis) 13,772 13,914
Less: Taxable equivalent
adjustment 450 459
Net interest income $13,322 $13,455
SOURCE American National Bankshares Inc.