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

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	June 30
ASSETS	2014			2013
Cash and due from banks	$	21,295		$	18,994
Interest-bearing deposits in other banks		22,948			37,720
Securities available for sale, at fair value		349,719			340,135
Restricted stock, at cost		5,064			4,880
Loans held for sale		118			4,098
Loans		813,057			794,045
Less allowance for loan losses		(12,763	)		(12,676	)
Net Loans		800,294			781,369
Premises and equipment, net		23,083			24,269
Other real estate owned, net		2,622			5,569
Goodwill		39,043			39,043
Core deposit intangibles, net		2,498			3,819
Bank owned life insurance		14,945			14,495
Accrued interest receivable and other assets		19,019			19,626
Total assets	$	1,300,648		$	1,294,017
Liabilities
Demand deposits -- noninterest-bearing	$	228,588		$	213,123
Demand deposits -- interest-bearing		189,700			169,204
Money market deposits		165,090			173,696
Savings deposits		88,539			84,489
Time deposits		363,883			405,882
Total deposits		1,035,800			1,046,394
Short-term borrowings:
Customer repurchase agreements		38,420			41,972
Other short-term borrowings		12,000			-
Long-term borrowings		9,924			10,015
Trust preferred capital notes		27,470			27,368
Accrued interest payable and other liabilities		4,951			5,332
Total liabilities		1,128,565			1,131,081
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding		-			-
Common stock, $1 par, 20,000,000 shares authorized,
7,840,132 shares outstanding at June 30, 2014 and
7,872,250 shares outstanding at June 30, 2013		7,840			7,872
Capital in excess of par value		56,944			57,581
Retained earnings		102,152			95,333
Accumulated other comprehensive income, net		5,147			2,150
Total shareholders' equity		172,083			162,936
Total liabilities and shareholders' equity	$	1,300,648		$	1,294,017

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
	2014			2013		2014		2013
Interest and Dividend Income:
Interest and fees on loans	$	9,687		$	11,358	$	19,534	$	22,753
Interest and dividends on securities:
Taxable		968			851		1,932		1,729
Tax-exempt		1,016			1,045		2,051		2,097
Dividends		74			54		149		109
Other interest income		35			39		68		68
Total interest and dividend income		11,780			13,347		23,734		26,756
Interest Expense:
Interest on deposits		1,161			1,369		2,390		2,805
Interest on short-term borrowings		2			14		4		35
Interest on long-term borrowings		81			82		161		164
Interest on trust preferred capital notes		185			189		369		377
Total interest expense		1,429			1,654		2,924		3,381
Net Interest Income		10,351			11,693		20,810		23,375
Provision for loan losses		150			-		150		294
Net Interest Income After Provision
for Loan Losses		10,201			11,693		20,660		23,081
Noninterest Income:
Trust fees		1,017			944		2,139		1,532
Service charges on deposit accounts		431			429		844		838
Other fees and commissions		493			463		937		922
Mortgage banking income		275			531		538		1,249
Securities gains, net		150			1		189		199
Other		334			318		756		716
Total noninterest income		2,700			2,686		5,403		5,456
Noninterest Expense:
Salaries		3,638			3,503		7,176		6,942
Employee benefits		847			867		1,822		1,766
Occupancy and equipment		910			872		1,846		1,788
FDIC assessment		165			161		329		322
Bank franchise tax		231			185		453		372
Core deposit intangible amortization		330			421		661		841
Data processing		345			310		693		587
Software		235			249		497		461
Foreclosed real estate, net		(9	)		193		7		436
Other		1,673			1,667		3,304		3,231
Total noninterest expense		8,365			8,428		16,788		16,746
Income Before Income Taxes		4,536			5,951		9,275		11,791
Income Taxes		1,303			1,741		2,592		3,430
Net Income	$	3,233		$	4,210	$	6,683	$	8,361
Net Income Per Common Share:
Basic	$	0.41		$	0.54	$	0.85	$	1.06
Diluted	$	0.41		$	0.53	$	0.85	$	1.06
Average Common Shares Outstanding:
Basic		7,872,079			7,867,222		7,886,232		7,862,719
Diluted		7,879,854			7,876,969		7,896,541		7,872,351

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
	2014			2014			2013			2014			2013
EARNINGS
Interest income	$	11,780		$	11,954		$	13,347		$	23,734		$	26,756
Interest expense		1,429			1,495			1,654			2,924			3,381
Net interest income		10,351			10,459			11,693			20,810			23,375
Provision for loan losses		150			-			-			150			294
Noninterest income		2,700			2,703			2,686			5,403			5,456
Noninterest expense		8,365			8,423			8,428			16,788			16,746
Income taxes		1,303			1,289			1,741			2,592			3,430
Net income		3,233			3,450			4,210			6,683			8,361
PER COMMON SHARE
Earnings per share - basic	$	0.41		$	0.44		$	0.54		$	0.85		$	1.06
Earnings per share - diluted		0.41			0.44			0.53			0.85			1.06
Cash dividends paid		0.23			0.23			0.23			0.46			0.46
Book value per share		21.95			21.57			20.70			21.95			20.70
Book value per share - tangible (a)		16.65			16.27			15.25			16.65			15.25
Closing market price		21.73			23.52			23.24			21.73			23.24
FINANCIAL RATIOS
Return on average assets		1.00	%		1.06	%		1.29	%		1.03	%		1.29
Return on average equity		7.53			8.12			10.14			7.82			10.11
Return on average tangible equity (b)		10.67			11.54			14.66			11.10			14.68
Average equity to average assets		13.22			13.05			12.76			13.14			12.72
Tangible equity to tangible assets (a)		10.37			10.23			9.60			10.37			9.60
Net interest margin, taxable equivalent		3.68			3.71			4.16			3.70			4.18
Efficiency ratio (e)		62.87			61.82			55.72			62.34			55.73
Effective tax rate		28.73			27.20			29.26			27.95			29.09
PERIOD-END BALANCES
Securities	$	354,783		$	349,123		$	345,015		$	354,783		$	345,015
Loans held for sale		118			1,389			4,098			118			4,098
Loans, net of unearned income		813,057			783,369			794,045			813,057			794,045
Goodwill and other intangibles		41,541			41,871			42,862			41,541			42,862
Assets		1,300,648			1,299,802			1,294,017			1,300,648			1,294,017
Assets - tangible (a)		1,259,107			1,257,931			1,251,155			1,259,107			1,251,155
Deposits		1,035,800			1,051,249			1,046,394			1,035,800			1,046,394
Customer repurchase agreements		38,420			34,153			41,972			38,420			41,972
Long-term borrowings		37,394			37,363			37,383			37,394			37,383
Shareholders' equity		172,083			170,499			162,936			172,083			162,936
Shareholders' equity - tangible (a)		130,542			128,628			120,074			130,542			120,074
AVERAGE BALANCES
Securities	$	346,726		$	345,152		$	335,246		$	345,446		$	330,821
Loans held for sale		1,685			2,032			4,181			1,858			6,532
Loans, net of unearned income		793,060			788,419			791,292			790,752			786,844
Interest-earning assets		1,182,559			1,186,904			1,177,536			1,184,172			1,174,496
Goodwill and other intangibles		41,738			42,077			43,124			41,907			43,337
Assets		1,299,535			1,302,639			1,302,491			1,301,078			1,299,388
Assets - tangible (a)		1,257,797			1,260,562			1,259,367			1,259,171			1,256,051
Interest-bearing deposits		820,342			830,229			828,844			825,258			826,347
Deposits		1,043,479			1,051,614			1,045,444			1,047,524			1,041,810
Customer repurchase agreements		40,720			37,797			47,081			39,267			48,679
Long-term borrowings		37,376			37,373			37,393			37,374			37,396
Shareholders' equity		171,784			170,046			166,150			170,920			165,339
Shareholders' equity - tangible (a)		130,046			127,969			123,026			129,013			122,002

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
	2014			2014			2013			2014			2013
CAPITAL
Average shares outstanding - basic		7,872,079			7,904,759			7,867,222			7,886,232			7,862,719
Average shares outstanding - diluted		7,879,854			7,917,601			7,876,969			7,896,541			7,872,351
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,614		$	12,600		$	12,528		$	12,600		$	12,118
Provision for loan losses		150			0			-			150			294
Charge-offs		(95	)		(73	)		(180	)		(168	)		(467	)
Recoveries		94			87			328			181			731
Ending balance	$	12,763		$	12,614		$	12,676		$	12,763		$	12,676
LOANS
Construction and land development	$	50,856		$	40,458		$	44,029		$	50,856		$	44,029
Commercial real estate		363,657			358,362			354,323			363,657			354,323
Residential real estate		175,387			170,517			168,965			175,387			168,965
Home equity		89,725			89,081			89,688			89,725			89,688
Commercial and industrial		128,228			119,042			130,721			128,228			130,721
Consumer		5,204			5,909			6,319			5,204			6,319
Total	$	813,057		$	783,369		$	794,045		$	813,057		$	794,045
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonaccrual		5,224			5,557			5,828			5,224			5,828
Foreclosed real estate		2,622			3,233			5,569			2,622			5,569
Nonperforming assets	$	7,846		$	8,790		$	11,397		$	7,846		$	11,397
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.57			1.61			1.60			1.57			1.60
Allowance for loan losses to
nonperforming loans		244.31			226.99			217.50			244.31			217.50
Nonperforming assets to total assets		0.60			0.68			0.88			0.60			0.88
Nonperforming loans to total loans		0.64			0.71			0.73			0.64			0.73
Annualized net charge-offs (recoveries)
to average loans		0.00	%		(0.01	) %		(0.07	) %		0.00	%		(0.07	) %
OTHER DATA
Fiduciary assets at period-end (c)	$	450,352		$	435,635		$	417,861		$	450,352		$	417,861
Retail brokerage assets at period-end (c)	$	197,625		$	189,130		$	167,785		$	197,625		$	167,785
Number full-time equivalent employees (d)		291			292			292			291			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 June 30, 2014 and 2013
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2014		2013		2014		2013		2014			2013
Loans:
Commercial	$	120,216	$	132,381	$	1,285	$	1,605		4.29	%		4.86	%
Real estate		669,537		656,995		8,325		9,682		4.97			5.89
Consumer		4,992		6,097		87		102		6.99			6.71
Total loans		794,745		795,473		9,697		11,389		4.88			5.73
Securities:
Federal agencies & GSEs		79,284		53,349		227		126		1.15			0.94
Mortgage-backed & CMOs		62,356		76,999		368		338		2.36			1.76
State and municipal		190,821		191,536		1,866		1,927		3.91			4.02
Other		14,265		13,362		121		95		3.39			2.84
Total securities		346,726		335,246		2,582		2,486		2.98			2.97
Deposits in other banks		41,088		46,817		35		39		0.34			0.33
Total interest-earning assets		1,182,559		1,177,536		12,314		13,914		4.17			4.73
Non-earning assets		116,976		124,955
Total assets	$	1,299,535	$	1,302,491
Deposits:
Demand	$	185,601	$	164,094		19		28		0.04			0.07
Money market		171,466		169,417		50		78		0.12			0.18
Savings		89,485		84,471		11		17		0.05			0.08
Time		373,790		410,862		1,081		1,246		1.16			1.22
Total deposits		820,342		828,844		1,161		1,369		0.57			0.66
Customer repurchase agreements		40,720		47,081		1		14		0.01			0.12
Other short-term borrowings		571		-		1		-		0.36			-
Long-term borrowings		37,376		37,393		266		271		2.85			2.90
Total interest-bearing
liabilities		899,009		913,318		1,429		1,654		0.64		��	0.73
Noninterest bearing demand deposits		223,137		216,600
Other liabilities		5,605		6,423
Shareholders' equity		171,784		166,150
Total liabilities and
shareholders' equity	$	1,299,535	$	1,302,491
Interest rate spread										3.53	%		4.00	%
Net interest margin										3.68	%		4.16	%
Net interest income (taxable equivalent basis)						10,885		12,260
Less: Taxable equivalent adjustment						534		567
Net interest income					$	10,351	$	11,693

Net Interest Income Analysis
For the Six Months Ended June 30, 2014 and 2013
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2014		2013		2014		2013		2014			2013
Loans:
Commercial	$	120,460	$	128,022	$	2,757	$	3,195		4.62	%		5.03	%
Real estate		667,168		659,254		16,621		19,410		4.98			5.89
Consumer		4,982		6,100		176		212		7.12			7.01
Total loans		792,610		793,376		19,554		22,817		4.94			5.76
Securities:
Federal agencies & GSEs		73,850		49,698		405		242		1.10			0.97
Mortgage-backed & CMOs		64,482		78,208		771		718		2.39			1.84
State and municipal		192,174		190,303		3,765		3,859		3.92			4.06
Other		14,940		12,612		248		190		3.32			3.01
Total securities		345,446		330,821		5,189		5,009		3.00			3.03
Deposits in other banks		46,116		50,299		68		68		0.30			0.27
Total interest-earning assets		1,184,172		1,174,496		24,811		27,894		4.19			4.75
Non-earning assets		116,906		124,892
Total assets	$	1,301,078	$	1,299,388
Deposits:
Demand	$	176,889	$	159,351		41		60		0.05			0.08
Money market		182,109		170,940		125		171		0.14			0.20
Savings		88,199		83,589		25		37		0.06			0.09
Time		378,061		412,467		2,199		2,537		1.17			1.24
Total deposits		825,258		826,347		2,390		2,805		0.58			0.68
Customer repurchase agreements		39,267		48,679		3		35		0.02			0.14
Other short-term borrowings		287		-		1		-		0.36			-
Long-term borrowings		37,374		37,396		530		541		2.84			2.89
Total interest-bearing
liabilities		902,186		912,422		2,924		3,381		0.65			0.75
Noninterest bearing demand deposits		222,266		215,463
Other liabilities		5,706		6,164
Shareholders' equity		170,920		165,339
Total liabilities and
shareholders' equity	$	1,301,078	$	1,299,388
Interest rate spread										3.54	%		4.00	%
Net interest margin										3.70	%		4.18	%
Net interest income (taxable equivalent basis)						21,887		24,513
Less: Taxable equivalent adjustment						1,077		1,138
Net interest income					$	20,810	$	23,375