AMERICAN NATIONAL BANKSHARES INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - AMERICAN NATIONAL BANKSHARES INC.	earningsreleaseq4-2016draft.htm
8-K - 8-K - AMERICAN NATIONAL BANKSHARES INC.	a8-kearningsrelease01192017.htm



American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited

	December 31
ASSETS	2016			2015

Cash and due from banks	$	20,268		$	19,352
Interest-bearing deposits in other banks	32,939			75,985
Federal funds sold	—			—

Securities available for sale, at fair value	346,502			340,349
Restricted stock, at cost	6,224			5,312
Loans held for sale	5,996			3,266

Loans	1,164,821			1,005,525
Less allowance for loan losses	(12,801		)	(12,601		)
Net Loans	1,152,020			992,924

Premises and equipment, net	25,439			23,567
Other real estate owned, net	1,328			2,184
Goodwill	43,872			43,872
Core deposit intangibles, net	1,719			2,683
Bank owned life insurance	18,163			17,658
Accrued interest receivable and other assets	24,168			20,447

Total assets	$	1,678,638		$	1,547,599


Liabilities	$	378,600		$	322,442
Demand deposits -- noninterest-bearing	209,430			227,030
Demand deposits -- interest-bearing	283,035			200,495
Money market deposits	120,720			115,383
Savings deposits	378,855			397,310
Time deposits	1,370,640			1,262,660
Total deposits

Short-term borrowings:	39,166			40,611
Customer repurchase agreements	20,000			—
Other short-term borrowings	9,980			9,958
Long-term borrowings	27,724			27,622
Junior subordinated debt	9,748			8,913
Accrued interest payable and other liabilities	1,477,258			1,349,764
Total liabilities

Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,618,051 shares outstanding at December 31, 2016 and
8,622,007 shares outstanding at December 31, 2015	8,578			8,605
Capital in excess of par value	75,076			75,375
Retained earnings	119,600			111,565
Accumulated other comprehensive income (loss), net	(1,874		)	2,290
Total shareholders' equity	201,380			197,835

Total liabilities and shareholders' equity	$	1,678,638		$	1,547,599



American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited

	Three Months Ended				Twelve Months Ended
	December 31				December 31
	2016		2015		2016		2015
Interest and Dividend Income:
Interest and fees on loans	$	12,182	$	11,849	$	47,971	$	46,860
Interest on federal funds sold	—		—		—		6
Interest and dividends on securities:
Taxable	1,108		1,051		4,454		4,072
Tax-exempt	728		882		3,135		3,681
Dividends	76		88		334		346
Other interest income	73		81		276		204
Total interest and dividend income	14,167		13,951		56,170		55,169

Interest Expense:
Interest on deposits	1,201		1,228		5,103		4,811
Interest on short-term borrowings	4		2		10		9
Interest on long-term borrowings	82		81		325		324
Interest on junior subordinated debt	234		196		878		760
Total interest expense	1,521		1,507		6,316		5,904

Net Interest Income	12,646		12,444		49,854		49,265
Provision for loan losses	50		250		250		950

Net Interest Income After Provision
for Loan Losses	12,596		12,194		49,604		48,315

Noninterest Income:
Trust fees	962		972		3,791		3,935
Service charges on deposit accounts	528		523		2,048		2,066
Other fees and commissions	689		590		2,680		2,377
Mortgage banking income	544		333		1,713		1,320
Securities gains, net	175		314		836		867
Brokerage fees	207		265		843		946
Income from Small Business Investment Companies	225		485		463		912
Other	391		336		1,131		864
Total noninterest income	3,721		3,818		13,505		13,287

Noninterest Expense:
Salaries	4,696		3,920		17,568		16,554
Employee benefits	1,061		1,096		4,264		4,311
Occupancy and equipment	1,084		1,135		4,246		4,425
FDIC assessment	128		185		647		750
Bank franchise tax	226		223		995		898
Core deposit intangible amortization	175		300		964		1,201
Data processing	488		414		1,828		1,725
Software	271		308		1,143		1,158



Other real estate owned, net	22		39		336		99
Merger related expenses	—		50		—		1,998
Other	2,209		1,796		7,810		7,424
Total noninterest expense	10,360		9,466		39,801		40,543

Income Before Income Taxes	5,957		6,546		23,308		21,059
Income Taxes	1,835		1,939		7,007		6,020
Net Income	4,122		4,607		16,301		15,039

Net Income Per Common Share:
Basic	$	0.48	$	0.53	$	1.89	$	1.73
Diluted	$	0.48	$	0.53	$	1.89	$	1.73
Weighted Average Common Shares Outstanding:
Basic	8,615,700		8,627,414		8,611,507		8,680,502
Diluted	8,629,777		8,633,778		8,621,241		8,688,450



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
		2016			2016			2015			2016			2015
EARNINGS
Interest income		$	14,167		$	14,063		$	13,951		$	56,170		$	55,169
Interest expense		1,521			1,599			1,507			6,316			5,904
Net interest income		12,646			12,464			12,444			49,854			49,265
Provision for loan losses		50			100			250			250			950
Noninterest income		3,721			3,120			3,818			13,505			13,287
Noninterest expense		10,360			9,867			9,466			39,801			40,543
Income taxes		1,835			1,654			1,939			7,007			6,020
Net income		4,122			3,963			4,607			16,301			15,039

PER COMMON SHARE
Income per share - basic		$	0.48		$	0.46		$	0.53		$	1.89		$	1.73
Income per share - diluted		0.48			0.46			0.53			1.89			1.73
Cash dividends paid		0.24			0.24			0.24			0.96			0.93
Book value per share		23.37			23.66			22.95			23.37			22.95
Book value per share - tangible (a)		18.08			18.34			17.55			18.08			17.55
Closing market price		34.80			27.95			25.61			34.80			25.61

FINANCIAL RATIOS
Return on average assets		1.00		%	0.99		%	1.20		%	1.02		%	0.99		%
Return on average equity		8.10			7.79			9.32			8.07			7.65
Return on average tangible equity (b)		10.73			10.41			12.77			10.85			10.62
Average equity to average assets		12.39			12.67			12.88			12.64			12.90
Tangible equity to tangible assets (a)		9.54			10.06			10.08			9.54			10.08
Net interest margin, taxable equivalent		3.45			3.50			3.68			3.52			3.69
Efficiency ratio (c)		62.32			61.25			57.52			61.47			63.81
Effective tax rate		30.80			29.45			29.62			30.06			28.59

PERIOD-END BALANCES
Securities		$	352,726		$	357,445		$	345,661		$	352,726		$	345,661
Loans held for sale		5,996			4,776			3,266			5,996			3,266
Loans, net of unearned income		1,164,821			1,083,201			1,005,525			1,164,821			1,005,525
Goodwill and other intangibles		45,591			45,766			46,555			45,591			46,555
Assets		1,678,638			1,615,534			1,547,599			1,678,638			1,547,599
Assets - tangible (a)		1,633,047			1,569,768			1,501,044			1,633,047			1,501,044
Deposits		1,370,640			1,306,008			1,262,660			1,370,640			1,262,660
Customer repurchase agreements		39,166			44,090			40,611			39,166			40,611
Other short-term borrowings		20,000			15,000			—			20,000			—
Long-term borrowings		37,704			37,672			37,580			37,704			37,580
Shareholders' equity		201,380			203,713			197,835			201,380			197,835
Shareholders' equity - tangible (a)		155,789			157,947			151,280			155,789			151,280



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
		2016			2016			2015			2016			2015
AVERAGE BALANCES
Securities (d)		$	345,035		$	354,780		$	344,025		$	351,961		$	349,116
Loans held for sale		4,758			3,761			3,446			3,171			2,531
Loans, net of unearned income		1,110,524			1,064,606			983,725			1,060,106			973,329
Interest-earning assets		1,515,597			1,477,208			1,405,645			1,470,648			1,391,486
Goodwill and other intangibles		45,693			45,872			47,193			46,037			47,575
Assets		1,643,250			1,605,387			1,534,247			1,598,149			1,523,766
Assets - tangible (a)		1,597,557			1,559,515			1,487,054			1,552,112			1,476,191
Interest-bearing deposits		986,622			973,431			931,223			970,728			934,716
Deposits		1,345,743			1,301,874			1,247,612			1,301,043			1,232,199
Customer repurchase agreements		45,281			50,013			42,524			46,832			48,105
Other short-term borrowings		1,087			1,521			—			656			14
Long-term borrowings		37,686			37,655			37,561			37,640			37,515
Shareholders' equity		203,603			203,451			197,658			202,074			196,518
Shareholders' equity - tangible (a)		157,910			157,579			150,465			156,037			148,943

CAPITAL
Weighted average shares outstanding - basic		8,615,700			8,608,323			8,627,414			8,611,507			8,680,502
Weighted average shares outstanding - diluted		8,629,777			8,618,335			8,633,778			8,621,241			8,688,450

ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	12,757		$	12,674		$	12,611		$	12,601		$	12,427
Provision for loan losses		50			100			250			250			950
Charge-offs		(81		)	(86		)	(317		)	(326		)	(1,200		)
Recoveries		75			69			57			276			424
Ending balance		$	12,801		$	12,757		$	12,601		$	12,801		$	12,601

LOANS
Construction and land development		$	114,258		$	91,688		$	72,968		$	114,258		$	72,968
Commercial real estate		510,960			454,797			430,186			510,960			430,186
Residential real estate		215,104			218,632			220,434			215,104			220,434
Home equity		110,751			108,617			98,449			110,751			98,449
Commercial and industrial		208,717			204,184			177,481			208,717			177,481
Consumer		5,031			5,283			6,007			5,031			6,007
Total		$	1,164,821		$	1,083,201		$	1,005,525		$	1,164,821		$	1,005,525

NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		$	587		$	320		$	91		$	587		$	91
Nonaccrual		2,965			3,526			5,114			2,965			5,114
Other real estate owned		1,328			1,145			2,184			1,328			2,184
Nonperforming assets		$	4,880		$	4,991		$	7,389		$	4,880		$	7,389



American National Bankshares Inc.
Financial Highlights

	(In thousands, except share, ratio and
	nonfinancial data, unaudited)	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
		2016			2016			2015			2016			2015
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.10		%	1.18		%	1.25		%	1.10		%	1.25		%
Allowance for loan losses to
nonperforming loans		360.39			331.70			242.09			360.39			242.09
Nonperforming assets to total assets		0.29			0.31			0.48			0.29			0.48
Nonperforming loans to total loans		0.30			0.36			0.52			0.30			0.52
Annualized net charge-offs (recoveries)
to average loans		0.00			0.01			0.11			0.00			0.08


OTHER DATA
Fiduciary assets at period-end (e) (f)		$	498,767		$	502,390		$	491,681		$	498,767		$	491,681
Retail brokerage assets at period-end (e) (f)		$	282,454		$	278,089		$	257,546		$	282,454		$	257,546
Number full-time equivalent employees (g)		320			309			303			320			303
Number of full service offices		26			25			25			26			25
Number of loan production offices		2			2			2			2			2
Number of ATM's		33			33			33			33			33


Notes:

(a) - Excludes goodwill and other intangible assets.
(b) - Excludes amortization expense, net of tax, of intangible assets.
(c) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by
net interest income including tax equivalent income on nontaxable loans and securities and noninterest income and
excluding (i) gains or losses on securities and (ii) gains or losses on sale of premises and equipment.
(d) - Average does not include unrealized gains and losses.
(e) - Market value.
(f) - Assets are not owned by the Company and are not reflected in the consolidated balance sheet.
(g) - Average for quarter.



			Net Interest Income Analysis
			For the Three Months Ended December 31, 2016 and 2015
			(in thousands, except yields/rates)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2016		2015		2016		2015		2016		2015
Loans:
	Commercial			$	204,489	$	166,771	$	2,003	$	1,506	3.90	%	3.58	%
	Real estate			905,721		814,502		10,143		10,245		4.48		5.03
	Consumer			5,072		5,898		98		135		7.69		9.08
		Total loans		1,115,282		987,171		12,244		11,886		4.39		4.81

Securities:
	Federal agencies & GSEs			96,134		88,255		423		364		1.76		1.65
	Mortgage-backed & CMOs			79,643		62,652		400		352		2.01		2.25
	State and municipal			152,518		176,148		1,311		1,613		3.44		3.66
	Other			16,740		16,970		150		144		3.58		3.39
		Total securities		345,035		344,025		2,284		2,473		2.65		2.88

Federal funds sold				—		—		—		—		—		—
Deposits in other banks				55,280		74,449		73		81		0.53		0.43

	Total interest-earning assets			1,515,597		1,405,645		14,601		14,440		3.85		4.11

Non-earning assets				127,653		128,602

		Total assets		$	1,643,250	$	1,534,247

Deposits:
	Demand			$	204,910	$	223,724	10		22		0.02		0.04
	Money market			276,435		197,230		148		65		0.21		0.13
	Savings			119,770		111,742		9		14		0.03		0.05
	Time			385,507		398,527		1,034		1,127		1.07		1.12
		Total deposits		986,622		931,223		1,201		1,228		0.48		0.52

Customer repurchase agreements				45,281		42,524		2		2		0.02		0.02
Other short-term borrowings				1,087		—		2		—		0.74		—
Long-term borrowings				37,686		37,561		316		277		3.35		2.95
	Total interest-bearing
		liabilities		1,070,676		1,011,308		1,521		1,507		0.57		0.59

Noninterest bearing demand deposits				359,121		316,389
Other liabilities				9,850		8,892
Shareholders' equity				203,603		197,658
		Total liabilities and
			shareholders' equity	$	1,643,250	$	1,534,247

Interest rate spread												3.28	%	3.52	%
Net interest margin												3.45	%	3.68	%

Net interest income (taxable equivalent basis)								13,080		12,933
Less: Taxable equivalent adjustment								434		489
Net interest income								$	12,646	$	12,444



			Net Interest Income Analysis
			For the Years Ended December 31, 2016 and 2015
			(in thousands, except yields/rates)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate

				2016		2015		2016		2015		2016		2015
Loans:
	Commercial			$	198,326	$	156,646	$	7,856	$	6,893	3.96	%	4.40	%
	Real estate			859,721		809,545		39,763		39,362		4.63		4.86
	Consumer			5,230		9,669		605		730		11.57		7.55
		Total loans		1,063,277		975,860		48,224		46,985		4.54		4.81

Securities:
	Federal agencies & GSEs			96,009		88,384		1,674		1,364		1.74		1.54
	Mortgage-backed & CMOs			79,720		61,741		1,635		1,346		2.05		2.18
	State and municipal			160,279		183,208		5,647		6,746		3.52		3.68
	Other			15,953		15,783		560		532		3.51		3.37
		Total securities		351,961		349,116		9,516		9,988		2.70		2.86

Federal funds sold				—		5,230		—		6		—		0.11
Deposits in other banks				55,410		61,280		276		204		0.50		0.33

	Total interest-earning assets			1,470,648		1,391,486		58,016		57,183		3.94		4.11

Non-earning assets				127,501		132,280

		Total assets		$	1,598,149	$	1,523,766

Deposits:
	Demand			$	216,521	$	223,825	99		82		0.05		0.04
	Money market			239,262		196,828		432		260		0.18		0.13
	Savings			118,144		109,697		47		53		0.04		0.05
	Time			396,801		404,366		4,525		4,416		1.14		1.09
		Total deposits		970,728		934,716		5,103		4,811		0.53		0.51

Customer repurchase agreements				46,832		48,105		5		9		0.01		0.02
Other short-term borrowings				656		14		5		—		0.76		0.36
Long-term borrowings				37,640		37,515		1,203		1,084		3.20		2.89
	Total interest-bearing
		liabilities		1,055,856		1,020,350		6,316		5,904		0.60		0.58

Noninterest bearing demand deposits				330,315		297,483
Other liabilities				9,904		9,415
Shareholders' equity				202,074		196,518
		Total liabilities and
			shareholders' equity	$	1,598,149	$	1,523,766

Interest rate spread												3.34	%	3.53	%
Net interest margin												3.52	%	3.69	%

Net interest income (taxable equivalent basis)								51,700		51,279
Less: Taxable equivalent adjustment								1,846		2,014
Net interest income								$	49,854	$	49,265

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AMERICAN NATIONAL BANKSHARES INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 19, 2017

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