American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports Second Quarter 2013 Earnings

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	June 30
ASSETS	2013			2012
Cash and due from banks	$	18,994		$	18,529
Interest-bearing deposits in other banks		37,720			10,380
Securities available for sale, at fair value		340,135			334,523
Restricted stock, at cost		4,880			6,268
Loans held for sale		4,098			9,215
Loans		794,045			808,069
Less allowance for loan losses		(12,676	)		(12,099	)
Net loans		781,369			795,970
Premises and equipment, net		24,269			25,314
Other real estate owned, net		5,569			4,731
Goodwill		39,043			39,352
Core deposit intangibles, net		3,819			5,502
Bank owned life insurance		14,495			14,030
Accrued interest receivable and other assets		19,626			27,078
Total assets	$	1,294,017		$	1,290,892
Liabilities
Demand deposits -- noninterest-bearing	$	213,123		$	196,727
Demand deposits -- interest-bearing		169,204			149,229
Money market deposits		173,696			170,505
Savings deposits		84,489			78,842
Time deposits		405,882			447,182
Total deposits		1,046,394			1,042,485
Customer repurchase agreements		41,972			46,113
Long-term borrowings		10,015			10,142
Trust preferred capital notes		27,368			27,267
Accrued interest payable and other liabilities		5,332			6,461
Total liabilities		1,131,081			1,132,468
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding		-			-
Common stock, $1 par, 20,000,000 shares authorized,
7,872,250 shares outstanding at June 30, 2013 and
7,836,056 shares outstanding at June 30, 2012		7,872			7,836
Capital in excess of par value		57,581			56,825
Retained earnings		95,333			86,642
Accumulated other comprehensive income, net		2,150			7,121
Total shareholders' equity		162,936			158,424
Total liabilities and shareholders' equity	$	1,294,017		$	1,290,892

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
	2013		2012			2013		2012
Interest and Dividend Income:
Interest and fees on loans	$	11,358	$	12,683		$	22,753	$	25,803
Interest and dividends on securities:
Taxable		851		1,056			1,729		2,135
Tax-exempt		1,045		1,077			2,097		2,159
Dividends		54		52			109		103
Other interest income		39		18			68		28
Total interest and dividend income		13,347		14,886			26,756		30,228
Interest Expense:
Interest on deposits		1,369		1,729			2,805		3,566
Interest on short-term borrowings		14		51			35		94
Interest on long-term borrowings		82		84			164		168
Interest on trust preferred capital notes		189		206			377		412
Total interest expense		1,654		2,070			3,381		4,240
Net Interest Income		11,693		12,816			23,375		25,988
Provision for loan losses		-		733			294		1,466
Net Interest Income After Provision
for Loan Losses		11,693		12,083			23,081		24,522
Noninterest Income:
Trust fees		944		966			1,532		1,848
Service charges on deposit accounts		429		413			838		901
Other fees and commissions		463		445			922		902
Mortgage banking income		531		519			1,249		1,050
Securities gains, net		1		160			199		160
Other		318		297			716		1,173
Total noninterest income		2,686		2,800			5,456		6,034
Noninterest Expense:
Salaries		3,503		3,809			6,942		7,920
Employee benefits		867		799			1,766		1,877
Occupancy and equipment		872		1,048			1,788		2,013
FDIC assessment		161		213			322		446
Bank franchise tax		185		182			372		365
Core deposit intangible amortization		421		546			841		1,093
Foreclosed real estate, net		193		171			436		18
Merger related expenses		-		(202	)		-		49
Other		2,226		2,267			4,279		4,979
Total noninterest expense		8,428		8,833			16,746		18,760
Income Before Income Taxes		5,951		6,050			11,791		11,796
Income Taxes		1,741		1,776			3,430		3,347
Net Income	$	4,210	$	4,274		$	8,361	$	8,449
Net Income Per Common Share:
Basic	$	0.54	$	0.55		$	1.06	$	1.08
Diluted	$	0.53	$	0.54		$	1.06	$	1.08
Average Common Shares Outstanding:
Basic		7,867,222		7,832,162			7,862,719		7,827,195
Diluted		7,876,969		7,849,142			7,872,351		7,839,364

Net Interest Income Analysis
For the Three Months Ended June 30, 2013 and 2012
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2013		2012		2013		2012		2013			2012
Loans:
Commercial	$	132,381	$	130,697	$	1,605	$	1,727		4.86	%		5.30	%
Real estate		656,995		681,870		9,682		10,859		5.89			6.37
Consumer		6,097		7,294		102		139		6.71			7.64
Total loans		795,473		819,861		11,389		12,725		5.73			6.21
Securities:
Federal agencies & GSEs		53,349		41,517		126		155		0.94			1.49
Mortgage-backed & CMOs		76,999		99,391		338		486		1.76			1.96
State and municipal		191,536		182,499		1,927		1,975		4.02			4.33
Other		13,362		12,589		95		117		2.84			3.72
Total securities		335,246		335,996		2,486		2,733		2.97			3.25
Deposits in other banks		46,817		17,630		39		18		0.33			0.41
Total interest-earning assets		1,177,536		1,173,487		13,914		15,476		4.73			5.28
Non-earning assets		124,955		134,897
Total assets	$	1,302,491	$	1,308,384
Deposits:
Demand	$	164,094	$	155,550		28		54		0.07			0.14
Money market		169,417		172,439		78		127		0.18			0.30
Savings		84,471		78,608		17		30		0.08			0.15
Time		410,862		448,076		1,246		1,518		1.22			1.36
Total deposits		828,844		854,673		1,369		1,729		0.66			0.81
Customer repurchase agreements		47,081		48,742		14		49		0.12			0.40
Other short-term borrowings		-		1,878		-		2		-			0.43
Long-term borrowings		37,393		37,419		271		290		2.90			3.10
Total interest-bearing
liabilities		913,318		942,712		1,654		2,070		0.73			0.88
Noninterest bearing demand deposits		216,600		199,754
Other liabilities		6,423		8,528
Shareholders' equity		166,150		157,390
Total liabilities and
shareholders' equity	$	1,302,491	$	1,308,384
Interest rate spread										4.00	%		4.40	%
Net interest margin										4.16	%		4.57	%
Net interest income (taxable equivalent basis)						12,260		13,406
Less: Taxable equivalent adjustment						567		590
Net interest income					$	11,693	$	12,816

Net Interest Income Analysis
For the Six Months Ended June 30, 2013 and 2012
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2013		2012		2013		2012		2013			2012
Loans:
Commercial	$	128,022	$	137,057	$	3,195	$	3,538		5.03	%		5.18	%
Real estate		659,254		674,964		19,410		21,977		5.89			6.51
Consumer		6,100		10,181		212		366		7.01			7.21
Total loans		793,376		822,202		22,817		25,881		5.76			6.30
Securities:
Federal agencies & GSEs		49,698		36,178		242		317		0.97			1.75
Mortgage-backed & CMOs		78,208		99,255		718		1,015		1.84			2.05
State and municipal		190,303		181,683		3,859		3,951		4.06			4.35
Other		12,612		10,462		190		211		3.01			4.03
Total securities		330,821		327,578		5,009		5,494		3.03			3.35
Deposits in other banks		50,299		24,624		68		28		0.27			0.23
Total interest-earning assets		1,174,496		1,174,404		27,894		31,403		4.75			5.35
Non-earning assets		124,892		135,949
Total assets	$	1,299,388	$	1,310,353
Deposits:
Demand	$	159,351	$	163,014		60		110		0.08			0.14
Money market		170,940		179,180		171		288		0.20			0.32
Savings		83,589		77,557		37		59		0.09			0.15
Time		412,467		447,720		2,537		3,109		1.24			1.39
Total deposits		826,347		867,471		2,805		3,566		0.68			0.82
Customer repurchase agreements		48,679		47,986		35		92		0.14			0.38
Other short-term borrowings		-		997		-		2		-			0.40
Long-term borrowings		37,396		37,420		541		580		2.89			3.10
Total interest-bearing
liabilities		912,422		953,874		3,381		4,240		0.75			0.89
Noninterest bearing demand deposits		215,463		191,517
Other liabilities		6,164		8,925
Shareholders' equity		165,339		156,037
Total liabilities and
shareholders' equity	$	1,299,388	$	1,310,353
Interest rate spread										4.00	%		4.46	%
Net interest margin										4.18	%		4.63	%
Net interest income (taxable equivalent basis)						24,513		27,163
Less: Taxable equivalent adjustment						1,138		1,175
Net interest income					$	23,375	$	25,988

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
	2013			2013			2012			2013			2012
EARNINGS
Interest income	$	13,347		$	13,409		$	14,886		$	26,756		$	30,228
Interest expense		1,654			1,727			2,070			3,381			4,240
Net interest income		11,693			11,682			12,816			23,375			25,988
Provision for loan losses		-			294			733			294			1,466
Noninterest income		2,686			2,770			2,800			5,456			6,034
Noninterest expense		8,428			8,318			8,833			16,746			18,760
Income taxes		1,741			1,689			1,776			3,430			3,347
Net income		4,210			4,151			4,274			8,361			8,449
PER COMMON SHARE
Earnings per share - basic	$	0.54		$	0.53		$	0.55		$	1.06		$	1.08
Earnings per share - diluted		0.53			0.53			0.54			1.06			1.08
Cash dividends paid		0.23			0.23			0.23			0.46			0.46
Book value per share		20.70			20.99			20.22			20.70			20.22
Book value per share - tangible (a)		15.25			15.48			14.49			15.25			14.49
Closing market price		23.24			21.56			23.56			23.24			23.56
FINANCIAL RATIOS
Return on average assets		1.29	%		1.28	%		1.31	%		1.29	%		1.29	%
Return on average equity		10.14			10.09			10.86			10.11			10.83
Return on average tangible equity (b)		14.66			14.71			16.62			14.68			16.67
Average equity to average assets		12.76			12.69			12.03			12.72			11.91
Tangible equity to tangible assets (a)		9.60			9.73			9.11			9.60			9.11
Net interest margin, taxable equivalent		4.16			4.19			4.57			4.18			4.63
Efficiency ratio (e)		57.06			55.74			55.56			55.73			58.15
Effective tax rate		29.26			28.92			29.36			29.09			28.38
PERIOD-END BALANCES
Securities	$	345,015		$	346,052		$	340,791		$	345,015		$	340,791
Loans held for sale		4,098			4,395			9,215			4,098			9,215
Loans, net of unearned income		794,045			792,513			808,069			794,045			808,069
Goodwill and other intangibles		42,862			43,283			44,854			42,862			44,854
Assets		1,294,017			1,294,063			1,290,892			1,294,017			1,290,892
Assets - tangible (a)		1,251,155			1,250,780			1,246,038			1,251,155			1,246,038
Deposits		1,046,394			1,037,748			1,042,485			1,046,394			1,042,485
Customer repurchase agreements		41,972			46,666			46,113			41,972			46,113
Long-term borrowings		37,383			37,390			37,409			37,383			37,409
Shareholders' equity		162,936			165,032			158,424			162,936			158,424
Shareholders' equity - tangible (a)		120,074			121,749			113,570			120,074			113,570
AVERAGE BALANCES
Securities	$	335,246		$	326,348		$	335,996		$	330,821		$	327,578
Loans held for sale		4,181			8,910			5,819			6,532			5,659
Loans, net of unearned income		791,292			782,346			814,042			786,844			816,543
Interest-earning assets		1,177,536			1,171,424			1,173,487			1,174,496			1,174,404
Goodwill and other intangibles		43,124			43,552			45,214			43,337			45,263
Assets		1,302,491			1,296,250			1,308,384			1,299,388			1,310,353
Assets - tangible (a)		1,259,367			1,252,698			1,263,170			1,256,051			1,265,090
Interest-bearing deposits		828,844			823,822			854,673			826,347			867,471
Deposits		1,045,444			1,038,135			1,054,427			1,041,810			1,058,988
Customer repurchase agreements		47,081			50,296			48,742			48,679			47,986
Other short-term borrowings		-			-			1,878			-			997
Long-term borrowings		37,393			37,399			37,419			37,396			37,420
Shareholders' equity		166,150			164,520			157,390			165,339			156,037
Shareholders' equity - tangible (a)		123,026			120,968			112,176			122,002			110,774

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
	2013			2013			2012			2013			2012
CAPITAL
Average shares outstanding - basic		7,867,222			7,861,991			7,832,162			7,862,719			7,827,195
Average shares outstanding - diluted		7,876,969			7,871,508			7,849,142			7,872,351			7,839,364
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,528		$	12,118		$	11,691		$	12,118		$	10,529
Provision for loan losses		-			294			733			294			1,466
Charge-offs		(180	)		(287	)		(728	)		(467	)		(1,068	)
Recoveries		328			403			403			731			1,172
Ending balance	$	12,676		$	12,528		$	12,099		$	12,676		$	12,099
LOANS
Construction and land development	$	44,029		$	45,327		$	50,913		$	44,029		$	50,913
Commercial real estate		354,323			361,406			354,441			354,323			354,441
Residential real estate		168,965			163,920			170,893			168,965			170,893
Home equity		89,688			88,356			95,522			89,688			95,522
Commercial and industrial		130,721			127,028			128,846			130,721			128,846
Consumer		6,319			6,476			7,454			6,319			7,454
Total	$	794,045		$	792,513		$	808,069		$	794,045		$	808,069
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonaccrual		5,828			5,185			7,995			5,828			7,995
Foreclosed real estate		5,569			5,822			4,731			5,569			4,731
Nonperforming assets	$	11,397		$	11,007		$	12,726		$	11,397		$	12,726
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.60			1.58			1.50			1.60			1.50
Allowance for loan losses to
nonperforming loans		217.50			241.62			151.33			217.50			151.33
Nonperforming assets to total assets		0.88			0.85			0.99			0.88			0.99
Nonperforming loans to total loans		0.73			0.65			0.99			0.73			0.99
Annualized net charge-offs (recoveries)
to average loans		(0.07	) %		(0.06	) %		0.16	%		(0.07	) %		(0.03	) %
OTHER DATA
Fiduciary assets at period-end (c)	$	417,861		$	418,413		$	374,562		$	417,861		$	374,562
Retail brokerage assets at period-end (c)	$	167,785		$	164,961		$	151,246		$	167,785		$	151,246
Number full-time equivalent employees (d)		292			292			315			292			315
Number of full service offices		25			25			25			25			25
Number of loan production offices		2			2			2			2			2
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
(e) - 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 excluding (a) gains or losses on securities and (b) gains or losses on sale of premises and equipment.