American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports Third Quarter 2012 Earnings

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	September 30
ASSETS	2012			2011
Cash and due from banks	$	25,740		$	23,450
Interest-bearing deposits in other banks		41,900			30,086
Securities available for sale, at fair value		327,994			311,517
Securities held to maturity		-			2,383
Total securities		327,994			313,900
Restricted stock, at cost		5,284			6,404
Loans held for sale		8,118			3,359
Loans		797,818			817,858
Less allowance for loan losses		(11,998	)		(9,086	)
Net Loans		785,820			808,772
Premises and equipment, net		24,885			26,263
Other real estate owned, net		6,259			5,920
Goodwill		39,043			37,709
Core deposit intangibles, net		5,081			7,142
Bank owned life insurance		13,380			12,948
Accrued interest receivable and other assets		22,203			29,186
Total assets	$	1,305,707		$	1,305,139
Liabilities
Demand deposits -- noninterest-bearing	$	215,012		$	170,398
Demand deposits -- interest-bearing		152,706			188,480
Money market deposits		164,266			199,172
Savings deposits		78,665			72,428
Time deposits		441,778			433,999
Total deposits		1,052,427			1,064,477
Customer repurchase agreements		45,761			43,758
Long-term borrowings		10,111			10,238
Trust preferred capital notes		27,292			27,190
Accrued interest payable and other liabilities		8,071			8,115
Total liabilities		1,143,662			1,153,778
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding at September 30, 2012 and
1,000,000 outstanding at September 30, 2011		-			5,000
Common stock, $1 par, 20,000,000 shares authorized,
7,843,221 shares outstanding at September 30, 2012 and
7,802,976 shares outstanding at September 30, 2011		7,843			7,803
Capital in excess of par value		57,045			56,094
Retained earnings		88,478			77,092
Accumulated other comprehensive income, net		8,679			5,372
Total shareholders' equity		162,045			151,361
Total liabilities and shareholders' equity	$	1,305,707		$	1,305,139

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended						Nine Months Ended
	September 30						September 30
	2012			2011			2012		2011
Interest and Dividend Income:
Interest and fees on loans	$	11,421		$	12,510		$	37,224	$	25,807
Interest and dividends on securities:
Taxable		995			1,192			3,130		3,446
Tax-exempt		1,059			1,014			3,218		2,557
Dividends		52			35			155		88
Other interest income		19			28			47		112
Total interest and dividend income		13,546			14,779			43,774		32,010
Interest Expense:
Interest on deposits		1,725			2,079			5,291		5,246
Interest on short-term borrowings		33			82			127		244
Interest on long-term borrowings		84			86			252		144
Interest on trust preferred capital notes		204			189			616		829
Total interest expense		2,046			2,436			6,286		6,463
Net Interest Income		11,500			12,343			37,488		25,547
Provision for loan losses		333			525			1,799		1,198
Net Interest Income After Provision
for Loan Losses		11,167			11,818			35,689		24,349
Noninterest Income:
Trust fees		926			921			2,774		2,727
Service charges on deposit accounts		414			575			1,315		1,396
Other fees and commissions		421			429			1,323		1,083
Mortgage banking income		615			374			1,665		792
Securities gains (losses), net		-			-			160		(18	)
Other		314			399			1,487		677
Total noninterest income		2,690			2,698			8,724		6,657
Noninterest Expense:
Salaries		3,933			3,676			11,853		8,707
Employee benefits		780			731			2,657		1,896
Occupancy and equipment		929			916			2,942		2,311
FDIC assessment		84			94			530		496
Bank franchise tax		173			206			538		557
Core deposit intangible amortization		421			545			1,514		734
Foreclosed real estate, net		412			(32	)		430		490
Merger related expenses		(30	)		390			19		1,534
Other		2,178			2,038			7,157		4,646
Total noninterest expense		8,880			8,564			27,640		21,371
Income Before Income Taxes		4,977			5,952			16,773		9,635
Income Taxes		1,338			1,823			4,685		2,716
Net Income		3,639			4,129			12,088		6,919
Dividends on preferred stock		-			51			-		51
Net income available to common shareholders	$	3,639		$	4,078		$	12,088	$	6,868
									$	6,868
Net Income Per Common Share:
Basic	$	0.46		$	0.52		$	1.54	$	1.02
Diluted	$	0.46		$	0.52		$	1.54	$	1.02
Average Common Shares Outstanding:
Basic		7,838,314			7,800,614			7,830,928		6,705,607
Diluted		7,855,537			7,806,668			7,846,659		6,712,960

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)	3rd Qtr			2nd Qtr			3rd Qtr			YTD			YTD
	2012			2012			2011			2012			2011
EARNINGS
Interest income	$	13,546		$	14,886		$	14,779		$	43,774		$	32,010
Interest expense		2,046			2,070			2,436			6,286			6,463
Net interest income		11,500			12,816			12,343			37,488			25,547
Provision for loan losses		333			733			525			1,799			1,198
Noninterest income		2,690			2,800			2,698			8,724			6,657
Noninterest expense		8,880			8,833			8,564			27,640			21,371
Income taxes		1,338			1,776			1,823			4,685			2,716
Net income		3,639			4,274			4,129			12,088			6,919
PER COMMON SHARE
Earnings per share - basic	$	0.46		$	0.55		$	0.52		$	1.54		$	1.02
Earnings per share - diluted		0.46			0.54			0.52			1.54			1.02
Cash dividends declared		0.23			0.23			0.23			0.69			0.69
Book value per share		20.66			20.22			19.40			20.66			19.40
Book value per share - tangible (a)		15.03			14.49			13.65			15.03			13.65
Closing market price		22.59			23.56			18.00			22.59			18.00
FINANCIAL RATIOS
Return on average assets		1.12	%		1.31	%		1.26	%		1.23	%		0.92
Return on average equity		9.11			10.86			11.08			10.24			7.49
Return on average tangible equity (b)		13.69			16.62			17.24			15.65			10.73
Average equity to average assets		12.32			12.03			11.40			12.05			12.33
Net interest margin, taxable equivalent		4.14			4.57			4.41			4.47			3.98
Efficiency ratio		62.00			55.56			57.03			58.20			63.24
Effective tax rate		26.88			29.36			30.63			27.93			28.19
PERIOD-END BALANCES
Securities	$	333,278		$	340,791		$	320,304		$	333,278		$	320,304
Loans held for sale		8,118			9,215			3,359			8,118			3,359
Loans, net of unearned income		797,818			808,069			817,858			797,818			817,858
Goodwill and other intangibles		44,124			44,854			44,851			44,124			44,851
Assets		1,305,707			1,290,892			1,305,139			1,305,707			1,305,139
Assets - tangible (a)		1,261,583			1,246,038			1,260,288			1,261,583			1,260,288
Deposits		1,052,427			1,042,485			1,064,477			1,052,427			1,064,477
Customer repurchase agreements		45,761			46,113			43,758			45,761			43,758
Other short-term borrowings		-			-			-			-			-
Long-term borrowings		37,403			37,409			37,428			37,403			37,428
Shareholders' equity		162,045			158,424			151,361			162,045			151,361
Shareholders' equity - tangible (a)		117,921			113,570			106,510			117,921			106,510
AVERAGE BALANCES
Securities	$	323,555		$	335,996		$	296,095		$	326,227		$	253,059
Loans held for sale		8,237			5,819			2,641			6,525			2,048
Loans, net of unearned income		802,213			814,042			827,720			811,731			619,812
Interest-earning assets		1,166,572			1,173,487			1,171,982			1,171,774			904,023
Goodwill and other intangibles		44,561			45,214			44,437			45,027			30,688
Assets		1,297,698			1,308,384			1,306,796			1,306,104			999,219
Assets - tangible (a)		1,253,137			1,263,170			1,262,359			1,261,077			968,531
Interest-bearing deposits		839,902			854,673			896,873			839,210			664,091
Deposits		1,044,434			1,054,427			1,067,491			1,044,656			797,099
Customer repurchase agreements		46,297			48,742			45,356			46,297			45,452
Other short-term borrowings		-			1,878			2			-			45
Long-term borrowings		37,413			37,419			37,439			37,413			28,820
Shareholders' equity		159,868			157,390			149,033			157,323			123,184
Shareholders' equity - tangible (a)		115,307			112,176			104,596			112,296			92,496

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)	3rd Qtr			2nd Qtr			3rd Qtr			YTD			YTD
	2012			2012			2011			2012			2011
CAPITAL
Average shares outstanding - basic		7,838,314			7,832,162			7,800,614			7,830,928			6,705,607
Average shares outstanding - diluted		7,855,537			7,849,142			7,806,668			7,846,659			6,712,960
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,099		$	11,691		$	8,744		$	10,529		$	8,420
Provision for loan losses		333			733			525			1,799			1,198
Charge-offs		(614	)		(728	)		(252	)		(1,682	)		(957	)
Recoveries		180			403			69			1,352			425
Ending balance	$	11,998		$	12,099		$	9,086		$	11,998		$	9,086
LOANS
Construction and land development	$	50,688		$	50,913		$	57,111		$	50,688		$	57,111
Commercial real estate		356,692			354,441			346,715			356,692			346,715
Residential real estate		162,404			170,893			174,493			162,404			174,493
Home equity		95,008			95,522			99,727			95,008			99,727
Commercial and industrial		126,339			128,846			131,704			126,339			131,704
Consumer		6,687			7,454			8,108			6,687			8,108
Total	$	797,818		$	808,069		$	817,858		$	797,818		$	817,858
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	-		$	-		$	-		$	-		$	-
Nonaccrual		7,815			7,995			13,455			7,815			13,455
Foreclosed real estate		6,259			4,731			5,920			6,259			5,920
Nonperforming assets	$	14,074		$	12,726		$	19,375		$	14,074		$	19,375
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans		0.22	%		0.16	%		0.09	%		0.05	%		0.11
Nonperforming assets to total assets		1.08			0.99			1.48			1.08			1.48
Nonperforming loans to total loans		0.98			0.99			1.65			0.98			1.65
Allowance for loan losses to total loans		1.50			1.50			1.11			1.50			1.11
Allowance for loan losses to
nonperforming loans		153.53			151.33			67.53			153.53			67.53
OTHER DATA
Fiduciary assets at period-end (c)	$	391,055		$	374,562		$	340,941		$	391,055		$	340,941
Retail brokerage assets at period-end (c)	$	197,434		$	191,577		$	149,284		$	197,434		$	149,284
Number full-time equivalent employees (d)		318			315			306			318			306
Number of full service offices		25			25			25			25			25
Number of loan production offices		2			2			1			2			1
Number of ATM's		31			31			31			31			31
											��
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

Net Interest Income Analysis
For the Three Months Ended September 30, 2012 and 2011
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2012		2011		2012		2011		2012			2011
Loans:
Commercial	$	126,701	$	136,204	$	1,598	$	1,603		5.00	%		4.67	%
Real estate		676,905		685,628		9,743		10,778		5.76			6.29
Consumer		6,844		8,529		119		163		6.90			7.58
Total loans		810,450		830,361		11,460		12,544		5.65			6.04
Securities:
Federal agencies		36,181		32,448		118		186		1.30			2.29
Mortgage-backed & CMOs		92,708		87,785		472		615		2.04			2.80
State and municipal		180,820		168,134		1,933		1,896		4.28			4.51
Other		13,846		7,728		121		78		3.50			4.04
Total securities		323,555		296,095		2,644		2,775		3.27			3.75
Deposits in other banks		32,567		45,526		19		28		0.23			0.24
Total interest-earning assets		1,166,572		1,171,982		14,123		15,347		4.84			5.23
Non-earning assets		131,126		134,814
Total assets	$	1,297,698	$	1,306,796
Deposits:
Demand	$	144,284	$	171,744		44		132		0.12			0.30
Money market		168,212		208,962		126		232		0.30			0.44
Savings		78,808		72,088		29		26		0.15			0.14
Time		448,598		444,079		1,526		1,689		1.35			1.51
Total deposits		839,902		896,873		1,725		2,079		0.81			0.92
Customer repurchase agreements		46,297		45,356		33		82		0.28			0.72
Other short-term borrowings		-		2		-		-		-			0.75
Long-term borrowings		37,413		37,439		288		275		3.08			2.94
Total interest-bearing
liabilities		923,612		979,670		2,046		2,436		0.88			0.99
Noninterest bearing
demand deposits		204,532		170,618
Other liabilities		9,686		7,475
Shareholders' equity		159,868		149,033
Total liabilities and
shareholders' equity	$	1,297,698	$	1,306,796
Interest rate spread										3.96	%		4.24	%
Net interest margin										4.14	%		4.41	%
Net interest income (taxable equivalent basis)						12,077		12,911
Less: Taxable equivalent adjustment						577		568
Net interest income					$	11,500	$	12,343

Net Interest Income Analysis
For the Nine Months Ended September 30, 2012 and 2011
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2012		2011		2012		2011		2012			2011
Loans:
Commercial	$	129,821	$	98,121	$	5,136	$	3,392		5.29	%		4.62	%
Real estate		679,375		516,165		31,720		22,093		6.23			5.71
Consumer		9,060		7,574		485		419		7.16			7.40
Total loans		818,256		621,860		37,341		25,904		6.09			5.56
Securities:
Federal agencies		36,179		37,197		435		765		1.60			2.74
Mortgage-backed & CMOs		97,057		67,843		1,487		1,571		2.04			3.09
State and municipal		181,393		141,481		5,884		4,889		4.33			4.61
Other		11,598		6,538		332		193		3.82			3.94
Total securities		326,227		253,059		8,138		7,418		3.33			3.91
Deposits in other banks		27,291		29,104		47		112		0.23			0.51
Total interest-earning assets		1,171,774		904,023		45,526		33,434		5.18			4.93
Non-earning assets		134,330		95,196
Total assets	$	1,306,104	$	999,219
Deposits:
Demand	$	144,284	$	122,497		154		167		0.14			0.18
Money market		168,212		111,801		414		382		0.33			0.46
Savings		78,808		66,138		88		69		0.15			0.14
Time		447,906		363,655		4,635		4,628		1.38			1.70
Total deposits		839,210		664,091		5,291		5,246		0.84			1.06
Customer repurchase agreements		46,297		45,452		125		244		0.36			0.72
Other short-term borrowings		-		45		2		-		0.47			0.47
Long-term borrowings		37,413		28,820		868		973		3.09			4.50
Total interest-bearing
liabilities		922,920		738,408		6,286		6,463		0.91			1.17
Noninterest bearing
demand deposits		205,446		133,008
Other liabilities		20,415		4,619
Shareholders' equity		157,323		123,184
Total liabilities and
shareholders' equity	$	1,306,104	$	999,219
Interest rate spread										4.27	%		3.76	%
Net interest margin										4.47	%		3.98	%
Net interest income (taxable equivalent basis)						39,240		26,971
Less: Taxable equivalent adjustment						1,752		1,424
Net interest income					$	37,488	$	25,547