American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports First Quarter 2014 Earnings

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	March 31
ASSETS	2014			2013
Cash and due from banks	$	25,880		$	15,365
Interest-bearing deposits in other banks		45,466			42,280
Securities available for sale, at fair value		349,123			341,176
Restricted stock, at cost		4,529			4,876
Loans held for sale		1,389			4,395
Loans		783,369			792,513
Less allowance for loan losses		(12,614	)		(12,528	)
Net Loans		770,755			779,985
Premises and equipment, net		23,359			24,297
Other real estate owned, net		3,233			5,822
Goodwill		39,043			39,043
Core deposit intangibles, net		2,828			4,240
Bank owned life insurance		14,845			14,391
Accrued interest receivable and other assets		19,352			18,193
Total assets	$	1,299,802		$	1,294,063
Liabilities
Demand deposits -- noninterest-bearing	$	218,795		$	210,201
Demand deposits -- interest-bearing		170,894			154,407
Money market deposits		194,528			173,724
Savings deposits		89,024			83,966
Time deposits		378,008			415,450
Total deposits		1,051,249			1,037,748
Customer repurchase agreements		34,153			46,666
Long-term borrowings		9,919			10,047
Trust preferred capital notes		27,444			27,343
Accrued interest payable and other liabilities		6,538			7,227
Total liabilities		1,129,303			1,129,031
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding		-			-
Common stock, $1 par, 10,000,000 shares authorized,
7,905,243 shares outstanding at March 31, 2014 and
7,862,701 shares outstanding at March 31, 2013		7,905			7,863
Capital in excess of par value		58,202			57,341
Retained earnings		100,721			92,933
Accumulated other comprehensive income, net		3,671			6,895
Total shareholders' equity		170,499			165,032
Total liabilities and shareholders' equity	$	1,299,802		$	1,294,063

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended
	March 31
	2014		2013
Interest and Dividend Income:
Interest and fees on loans	$	9,847	$	11,395
Interest and dividends on securities:
Taxable		964		878
Tax-exempt		1,035		1,052
Dividends		75		55
Other interest income		33		29
Total interest and dividend income		11,954		13,409
Interest Expense:
Interest on deposits		1,229		1,436
Interest on short-term borrowings		2		21
Interest on long-term borrowings		80		82
Interest on trust preferred capital notes		184		188
Total interest expense		1,495		1,727
Net Interest Income		10,459		11,682
Provision for loan losses		-		294
Net Interest Income After Provision
for Loan Losses		10,459		11,388
Noninterest Income:
Trust fees		1,122		588
Service charges on deposit accounts		413		409
Other fees and commissions		444		459
Mortgage banking income		263		718
Securities gains (losses), net		39		198
Other		422		398
Total noninterest income		2,703		2,770
Noninterest Expense:
Salaries		3,538		3,439
Employee benefits		975		899
Occupancy and equipment		936		916
FDIC assessment		164		161
Bank franchise tax		222		187
Core deposit intangible amortization		331		420
Data processing		348		277
Software		262		212
Foreclosed real estate, net		16		243
Other		1,631		1,564
Total noninterest expense		8,423		8,318
Income Before Income Taxes		4,739		5,840
Income Taxes		1,289		1,689
Net Income	$	3,450	$	4,151
Net Income Per Common Share:
Basic	$	0.44	$	0.53
Diluted	$	0.44	$	0.53
Average Common Shares Outstanding:
Basic		7,904,759		7,861,991
Diluted		7,917,601		7,871,508

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)	1st Qtr			4th Qtr			1st Qtr			YTD			YTD
	2014			2013			2013			2014			2013
EARNINGS
Interest income	$	11,954		$	13,094		$	13,409		$	11,954		$	13,409
Interest expense		1,495			1,589			1,727			1,495			1,727
Net interest income		10,459			11,505			11,682			10,459			11,682
Provision for loan losses		-			-			294			-			294
Noninterest income		2,703			2,604			2,770			2,703			2,770
Noninterest expense		8,423			9,904			8,318			8,423			8,318
Income taxes		1,289			1,062			1,689			1,289			1,689
Net income		3,450			3,143			4,151			3,450			4,151
PER COMMON SHARE
Earnings per share - basic	$	0.44		$	0.40		$	0.53		$	0.44		$	0.53
Earnings per share - diluted		0.44			0.40			0.53			0.44			0.53
Cash dividends paid		0.23			0.23			0.23			0.23			0.23
Book value per share		21.57			21.23			20.99			21.57			20.99
Book value per share - tangible (a)		16.27			15.89			15.48			16.27			15.48
Closing market price		23.52			26.25			21.56			23.52			21.56
FINANCIAL RATIOS
Return on average assets		1.06	%		0.95	%		1.28	%		1.06	%		1.28
Return on average equity		8.12			7.50			10.09			8.12			10.09
Return on average tangible equity (b)		11.54			10.86			14.71			11.54			14.71
Average equity to average assets		13.05			12.67			12.69			13.05			12.69
Tangible equity to tangible assets (a)		10.23			9.91			9.73			10.23			9.73
Net interest margin, taxable equivalent		3.71			4.00			4.19			3.71			4.19
Efficiency ratio		61.82			72.76			55.74			61.82			55.74
Effective tax rate		27.20			22.77			28.92			27.20			28.92
PERIOD-END BALANCES
Securities	$	349,123		$	351,013		$	346,052		$	349,123		$	346,052
Loans held for sale		1,389			2,760			4,395			1,389			4,395
Loans, net of unearned income		783,369			794,671			792,513			783,369			792,513
Goodwill and other intangibles		41,871			42,202			43,283			41,871			43,283
Assets		1,299,802			1,307,512			1,294,063			1,299,802			1,294,063
Assets - tangible (a)		1,257,931			1,265,310			1,250,780			1,257,931			1,250,780
Deposits		1,051,249			1,057,675			1,037,748			1,051,249			1,037,748
Customer repurchase agreements		34,153			39,478			46,666			34,153			46,666
Long-term borrowings		37,363			37,370			37,390			37,363			37,390
Shareholders' equity		170,499			167,551			165,032			170,499			165,032
Shareholders' equity - tangible (a)		128,628			125,349			121,749			128,628			121,749
AVERAGE BALANCES
Securities	$	345,152		$	350,974		$	326,348		$	345,152		$	326,348
Loans held for sale		2,032			1,669			8,910			2,032			8,910
Loans, net of unearned income		788,419			793,007			782,346			788,419			782,346
Interest-earning assets		1,186,904			1,206,058			1,171,424			1,186,904			1,171,424
Goodwill and other intangibles		42,077			42,404			43,552			42,077			43,552
Assets		1,302,639			1,322,242			1,296,250			1,302,639			1,296,250
Assets - tangible (a)		1,260,562			1,279,838			1,252,698			1,260,562			1,252,698
Interest-bearing deposits		830,229			829,753			823,822			830,229			823,822
Deposits		1,051,614			1,063,920			1,038,135			1,051,614			1,038,135
Customer repurchase agreements		37,797			47,220			50,296			37,797			50,296
Long-term borrowings		37,373			37,380			37,399			37,373			37,399
Shareholders' equity		170,046			167,545			164,520			170,046			164,520
Shareholders' equity - tangible (a)		127,969			125,141			120,968			127,969			120,968

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)	1st Qtr			4th Qtr			1st Qtr			YTD			YTD
	2014			2013			2013			2014			2013
CAPITAL
Average shares outstanding - basic		7,904,759			7,887,811			7,861,991			7,904,759			7,861,991
Average shares outstanding - diluted		7,917,601			7,901,198			7,871,508			7,917,601			7,871,508
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,600		$	12,684		$	12,118		$	12,600		$	12,118
Provision for loan losses		-			-			294			-			294
Charge-offs		(73	)		(208	)		(287	)		(73	)		(287	)
Recoveries		87			124			403			87			403
Ending balance	$	12,614		$	12,600		$	12,528		$	12,614		$	12,528
LOANS
Construction and land development	$	40,458		$	41,822		$	45,327		$	40,458		$	45,327
Commercial real estate		358,362			364,616			361,406			358,362			361,406
Residential real estate		170,517			171,917			163,920			170,517			163,920
Home equity		89,081			87,797			88,356			89,081			88,356
Commercial and industrial		119,042			122,553			127,028			119,042			127,028
Consumer		5,909			5,966			6,476			5,909			6,476
Total	$	783,369		$	794,671		$	792,513		$	783,369		$	792,513
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonaccrual		5,557			5,071			5,185			5,557			5,185
Foreclosed real estate		3,233			3,422			5,822			3,233			5,822
Nonperforming assets	$	8,790		$	8,493		$	11,007		$	8,790		$	11,007
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.61			1.59			1.58			1.61			1.58
Allowance for loan losses to
nonperforming loans		226.99			248.47			241.62			226.99			241.62
Nonperforming assets to total assets		0.68			0.65			0.85			0.68			0.85
Nonperforming loans to total loans		0.71			0.64			0.65			0.71			0.65
Annualized net charge-offs (recoveries)
to average loans		(0.01	) %		0.04	%		(0.06	) %		(0.01	)%		(0.06	) %
OTHER DATA
Fiduciary assets at period-end (c)	$	435,635		$	442,583		$	418,413		$	435,635		$	418,413
Retail brokerage assets at period-end (c)	$	189,130		$	185,810		$	164,961		$	189,130		$	164,961
Number full-time equivalent employees (d)		292			290			292			292			292
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.

Net Interest Income Analysis
For the Three Months Ended March 31, 2014 and 2013
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2014		2013		2014		2013		2014			2013
Loans:
Commercial	$	120,707	$	123,615	$	1,472	$	1,590		4.95	%		5.22	%
Real estate		664,772		661,538		8,296		9,728		4.99			5.88
Consumer		4,972		6,103		89		110		7.26			7.31
Total loans		790,451		791,256		9,857		11,428		5.00			5.79
Securities:
Federal agencies & GSEs		68,356		46,006		178		116		1.04			1.01
Mortgage-backed & CMOs		66,631		79,432		403		380		2.42			1.91
State and municipal		193,542		189,056		1,899		1,932		3.92			4.09
Other		16,623		11,854		127		95		3.06			3.21
Total securities		345,152		326,348		2,607		2,523		3.02			3.09
Deposits in other banks		51,301		53,820		33		29		0.26			0.22
Total interest-earning assets		1,186,904		1,171,424		12,497		13,980		4.22			4.78
Non-earning assets		115,735		124,826
Total assets	$	1,302,639	$	1,296,250
Deposits:
Demand	$	168,080	$	154,555		22		32		0.05			0.08
Money market		192,871		172,481		75		93		0.16			0.22
Savings		86,898		82,696		14		20		0.07			0.10
Time		382,380		414,090		1,118		1,291		1.19			1.26
Total deposits		830,229		823,822		1,229		1,436		0.60			0.71
Customer repurchase agreements		37,797		50,296		2		21		0.02			0.17
Long-term borrowings		37,373		37,399		264		270		2.83			2.89
Total interest-bearing
liabilities		905,399		911,517		1,495		1,727		0.67			0.77
Noninterest bearing demand deposits		221,385		214,313
Other liabilities		5,809		5,900
Shareholders' equity		170,046		164,520
Total liabilities and
shareholders' equity	$	1,302,639	$	1,296,250
Interest rate spread										3.55	%		4.01	%
Net interest margin										3.71	%		4.19	%
Net interest income (taxable equivalent basis)						11,002		12,253
Less: Taxable equivalent adjustment						543		571
Net interest income					$	10,459	$	11,682