American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports Third Quarter 2015 Earnings

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	September 30
ASSETS	2015			2014
Cash and due from banks	$	19,280		$	22,699
Interest-bearing deposits in other banks	46,637			58,278
Securities available for sale, at fair value	358,306			328,534
Restricted stock, at cost	5,308			4,362
Loans held for sale	2,998			811
Loans	980,984			816,588
Less allowance for loan losses	(12,611		)	(12,620		)
Net Loans	968,373			803,968
Premises and equipment, net	23,854			23,085
Other real estate owned, net	1,333			2,364
Goodwill	44,333			39,043
Core deposit intangibles, net	2,983			2,271
Bank owned life insurance	17,491			15,044
Accrued interest receivable and other assets	21,541			18,698
Total assets	$	1,512,437		$	1,319,157
Liabilities
Demand deposits -- noninterest-bearing	$	305,110		$	244,469
Demand deposits -- interest-bearing	220,562			185,982
Money market deposits	191,534			173,192
Savings deposits	108,992			88,226
Time deposits	400,323			359,191
Total deposits	1,226,521			1,051,060
Customer repurchase agreements	43,579			51,945
Long-term borrowings	9,952			9,930
Trust preferred capital notes	27,597			27,495
Accrued interest payable and other liabilities	8,337			5,562
Total liabilities	1,315,986			1,145,992
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,630,329 shares outstanding at September 30, 2015 and
7,843,454 shares outstanding at September 30, 2014	8,611			7,843
Capital in excess of par value	75,524			57,087
Retained earnings	109,030			103,515

Accumulated other comprehensive income, net	3,286		4,720
Total shareholders' equity	196,451		173,165
Total liabilities and shareholders' equity	$	1,512,437	$	1,319,157

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
	2015		2014		2015		2014
Interest and Dividend Income:
Interest and fees on loans	$	11,474	$	9,864	$	35,011	$	29,398
Interest on federal funds sold	1		—		6		—
Interest and dividends on securities:
Taxable	1,052		918		3,021		2,850
Tax-exempt	899		966		2,799		3,017
Dividends	91		72		258		221
Other interest income	25		32		123		100
Total interest and dividend income	13,542		11,852		41,218		35,586
Interest Expense:
Interest on deposits	1,205		1,120		3,583		3,510
Interest on short-term borrowings	2		4		7		8
Interest on long-term borrowings	82		82		243		243
Interest on trust preferred capital notes	192		186		564		555
Total interest expense	1,481		1,392		4,397		4,316
Net Interest Income	12,061		10,460		36,821		31,270
Provision for loan losses	—		—		700		150
Net Interest Income After Provision
for Loan Losses	12,061		10,460		36,121		31,120
Noninterest Income:
Trust fees	1,006		992		2,963		3,131
Service charges on deposit accounts	521		441		1,543		1,285
Other fees and commissions	592		479		1,787		1,416
Mortgage banking income	376		342		987		880
Securities gains, net	6		315		553		504
Other	554		412		1,636		1,168
Total noninterest income	3,055		2,981		9,469		8,384
Noninterest Expense:
Salaries	4,179		3,714		12,634		10,890
Employee benefits	1,029		799		3,215		2,621
Occupancy and equipment	1,094		933		3,290		2,779
FDIC assessment	185		157		565		486
Bank franchise tax	220		216		675		669
Core deposit intangible amortization	300		227		901		888
Data processing	366		361		1,311		1,054

Software	290			248		850		745
Other real estate owned, net	(126		)	141		60		148
Merger related expenses	87			268		1,948		268
Other	1,764			1,763		5,628		5,067
Total noninterest expense	9,388			8,827		31,077		25,615
Income Before Income Taxes	5,728			4,614		14,513		13,889
Income Taxes	1,691			1,446		4,081		4,038
Net Income	$	4,037		$	3,168	$	10,432	$	9,851
Net Income Per Common Share:
Basic	$	0.47		$	0.40	$	1.20	$	1.25
Diluted	$	0.47		$	0.40	$	1.20	$	1.25
Weighted Average Common Shares Outstanding:
Basic	8,668,618			7,841,078		8,698,394		7,871,016
Diluted	8,676,571			7,851,735		8,706,870		7,881,441

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
	2015			2015			2014			2015			2014
EARNINGS
Interest income	$	13,542		$	13,837		$	11,852		$	41,218		$	35,586
Interest expense	1,481			1,455			1,392			4,397			4,316
Net interest income	12,061			12,382			10,460			36,821			31,270
Provision for loan losses	—			100			—			700			150
Noninterest income	3,055			3,258			2,981			9,469			8,384
Noninterest expense	9,388			11,642			8,827			31,077			25,615
Income taxes	1,691			1,018			1,446			4,081			4,038
Net income	4,037			2,880			3,168			10,432			9,851
PER COMMON SHARE
Net income per share - basic	$	0.47		$	0.33		$	0.40		$	1.20		$	1.25
Net income per share - diluted	0.47			0.33			0.40			1.20			1.25
Cash dividends paid	0.23			0.23			0.23			0.69			0.69
Book value per share (a)	22.81			22.43			22.08			22.81			22.08
Book value per share - tangible (a) (b)	17.32			16.96			16.81			17.32			16.81
Closing market price	23.45			23.81			22.75			23.45			22.75
FINANCIAL RATIOS
Return on average assets	1.07		%	0.75		%	0.97		%	0.91		%	1.01		%
Return on average equity	8.25			5.86			7.35			7.09			7.66
Return on average tangible equity (c)	11.42			8.26			10.12			9.90			10.72
Average equity to average assets	12.95			12.85			13.18			12.90			13.15
Tangible equity to tangible assets (b)	10.18			9.98			10.32			10.18			10.32
Net interest margin, taxable equivalent	3.64			3.69			3.68			3.69			3.69
Efficiency ratio (d)	61.25			72.76			64.35			66.00			63.01
Effective tax rate	29.52			26.12			31.34			28.12			29.07
PERIOD-END BALANCES
Securities	$	363,614		$	361,176		$	333,063		$	363,614		$	333,063
Loans held for sale	2,998			2,720			811			2,998			811
Loans, net of unearned income	980,984			982,905			816,588			980,984			816,588
Goodwill and other intangibles	47,316			47,493			41,314			47,316			41,314
Assets	1,512,437			1,524,356			1,319,157			1,512,437			1,319,157
Assets - tangible (b)	1,465,121			1,476,863			1,277,843			1,465,121			1,277,843
Deposits	1,226,521			1,234,018			1,051,060			1,226,521			1,051,060
Customer repurchase agreements	43,579			50,123			51,945			43,579			51,945
Other short-term borrowings	—			—			—			—			—
Long-term borrowings	37,549			37,518			37,425			37,549			37,425
Shareholders' equity	196,451			194,883			173,165			196,451			173,165
Shareholders' equity - tangible (b)	149,135			147,390			131,851			149,135			131,851
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AVERAGE BALANCES
Securities	$	357,427			$	349,813			$	329,455			$	350,831			$	340,720
Loans held for sale	2,873				2,836				1,998				2,223				1,905
Loans, net of unearned income	982,212				972,083				815,564				969,826				799,114
Interest-earning assets	1,380,576				1,397,448				1,192,761				1,386,714				1,187,763
Goodwill and other intangibles	47,446				47,682				41,455				47,703				41,754
Assets	1,511,464				1,530,867				1,309,120				1,520,235				1,303,788
Assets - tangible (b)	1,464,018				1,483,185				1,267,665				1,472,532				1,262,034
Interest-bearing deposits	923,840				945,931				806,267				935,893				818,858
Deposits	1,223,328				1,236,626				1,044,913				1,227,005				1,046,644
Customer repurchase agreements	45,444				51,417				45,725				49,985				41,443
Long-term borrowings	37,531				37,499				37,406				37,500				37,385
Shareholders' equity	195,660				196,663				172,493				196,135				171,450
Shareholders' equity - tangible (b)	148,214				148,981				131,038				148,432				129,696
CAPITAL
Weighted average shares outstanding - basic	8,668,618				8,707,504				7,841,078				8,698,394				7,871,016
Weighted average shares outstanding - diluted	8,676,571				8,715,934				7,851,735				8,706,870				7,881,441
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,793			$	12,844			$	12,763			$	12,427			$	12,600
Provision for loan losses	—				100				—				700				150
Charge-offs	(253		)		(321		)		(230		)		(883		)		(398		)
Recoveries	71				170				87				367				268
Ending balance	$	12,611			$	12,793			$	12,620			$	12,611			$	12,620
LOANS
Construction and land development	$	68,692			$	66,543			$	47,060			$	68,692			$	47,060
Commercial real estate	424,404				432,315				371,743				424,404				371,743
Residential real estate	219,415				220,778				175,091				219,415				175,091
Home equity	98,249				97,866				90,952				98,249				90,952
Commercial and industrial	164,025				159,015				126,437				164,025				126,437
Consumer	6,199				6,388				5,305				6,199				5,305
Total	$	980,984			$	982,905			$	816,588			$	980,984			$	816,588
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	—				—				—				—				—
Nonaccrual	5,360				3,772				4,494				5,360				4,494
Other real estate owned	1,333				2,113				2,364				1,333				2,364
Nonperforming assets	$	6,693			$	5,885			$	6,858			$	6,693			$	6,858
ASSET QUALITY RATIOS
Allowance for loan losses to total loans	1.29			%	1.30			%	1.55			%	1.29			%	1.55			%
Allowance for loan losses to
nonperforming loans	235.28				339.16				280.82				235.28				280.82
Nonperforming assets to total assets	0.44				0.39				0.52				0.44				0.52

Nonperforming loans to total loans	0.55		0.38		0.55		0.55		0.55
Annualized net charge-offs (recoveries)
to average loans	0.07		0.06		0.07		0.07		0.02
OTHER DATA
Fiduciary assets at period-end (e) (f)	$	486,173	$	509,289	$	441,753	$	486,173	$	441,753
Retail brokerage assets at period-end (e) (f)	$	247,258	$	257,306	$	201,327	$	247,258	$	201,327
Number full-time equivalent employees (g)	310		322		292		310		292
Number of full service offices	25		27		24		25		24
Number of loan production offices	2		2		2		2		2
Number of ATM's	34		34		30		34		30
Notes:
(a) - Unvested restricted stock of 19,155 shares are not included in the calculation.
(b) - Excludes goodwill and other intangible assets.
(c) - Excludes amortization expense, net of tax, of intangible assets.
(d) - 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 (i) gains or losses on
securities and (ii) gains or losses on sale of premises and equipment.
(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 September 30, 2015 and 2014
			(in thousands, except rates)
								Interest
				Average Balance				Income/Expense				Yield/Rate
				2015		2014		2015		2014		2015		2014
Loans:
	Commercial			$	164,551	$	126,340	$	1,801	$	1,339	4.34	%	4.20	%
	Real estate			814,500		686,682		9,557		8,451		4.69		4.92
	Consumer			6,034		4,540		150		85		9.86		7.43
		Total loans		985,085		817,562		11,508		9,875		4.67		4.83
Securities:
	Federal agencies & GSEs			103,303		72,828		431		212		1.67		1.16
	Mortgage-backed & CMOs			57,100		58,365		282		345		1.98		2.36
	State and municipal			180,799		183,679		1,650		1,783		3.65		3.88
	Other			16,225		14,583		140		114		3.45		3.13
		Total securities		357,427		329,455		2,503		2,454		2.80		2.98
Federal funds sold				76		—		1		—		5.22		—
Deposits in other banks				37,988		45,744		25		32		0.26		0.28
	Total interest-earning assets			1,380,576		1,192,761		14,037		12,361		4.06		4.14
Non-earning assets				130,888		116,359
		Total assets		$	1,511,464	$	1,309,120
Deposits:
	Demand			$	221,700	$	189,208	20		15		0.04		0.03
	Money market			191,689		167,777		63		51		0.13		0.12
	Savings			109,919		88,456		13		10		0.05		0.04
	Time			400,532		360,826		1,109		1,044		1.10		1.15
		Total deposits		923,840		806,267		1,205		1,120		0.52		0.55
Customer repurchase agreements				45,444		45,725		2		2		0.02		0.02
Other short-term borrowings				57		2,215		—		2		0.35		0.36
Long-term borrowings				37,531		37,406		274		268		2.92		2.87
	Total interest-bearing
		liabilities		1,006,872		891,613		1,481		1,392		0.58		0.62
Noninterest bearing demand deposits				299,488		238,646
Other liabilities				9,444		6,368
Shareholders' equity				195,660		172,493
		Total liabilities and
			shareholders' equity	$	1,511,464	$	1,309,120

Interest rate spread					3.48	%	3.52	%
Net interest margin					3.64	%	3.68	%
Net interest income (taxable equivalent basis)	12,556		10,969
Less: Taxable equivalent adjustment	495		509
Net interest income	$	12,061	$	10,460

			Net Interest Income Analysis
			For the Nine Months Ended September 30, 2015 and 2014
			(in thousands, except rates)
								Interest
				Average Balance				Income/Expense				Yield/Rate
				2015		2014		2015		2014		2015		2014
Loans:
	Commercial			$	153,234	$	122,441	$	5,387	$	4,096	4.70	%	4.49	%
	Real estate			807,875		673,745		29,117		25,072		4.81		4.96
	Consumer			10,940		4,833		595		261		7.27		7.25
		Total loans		972,049		801,019		35,099		29,429		4.82		4.90
Securities:
	Federal agencies & GSEs			88,427		73,506		1,000		617		1.51		1.12
	Mortgage-backed & CMOs			61,434		62,420		994		1,116		2.16		2.38
	State and municipal			185,587		189,311		5,133		5,548		3.69		3.91
	Other			15,383		15,483		388		362		3.36		3.12
		Total securities		350,831		340,720		7,515		7,643		2.86		2.99
Federal funds sold				6,992		—		6		—		0.11		—
Deposits in other banks				56,842		46,024		123		100		0.29		0.29
	Total interest-earning assets			1,386,714		1,187,763		42,743		37,172		4.11		4.18
Non-earning assets				133,521		116,025
		Total assets		$	1,520,235	$	1,303,788
Deposits:
	Demand			$	223,858	$	181,040	60		56		0.04		0.04
	Money market			196,693		177,279		195		176		0.13		0.13
	Savings			109,008		88,286		39		35		0.05		0.05
	Time			406,334		372,253		3,289		3,243		1.08		1.17
		Total deposits		935,893		818,858		3,583		3,510		0.51		0.58
Customer repurchase agreements				49,985		41,443		7		5		0.02		0.02
Other short-term borrowings				19		937		—		3		0.35		0.43
Long-term borrowings				37,500		37,385		807		798		2.87		2.85
	Total interest-bearing
		liabilities		1,023,397		898,623		4,397		4,316		0.57		0.64
Noninterest bearing demand deposits				291,112		227,786
Other liabilities				9,591		5,929
Shareholders' equity				196,135		171,450
		Total liabilities and
			shareholders' equity	$	1,520,235	$	1,303,788

Interest rate spread					3.54	%	3.54	%
Net interest margin					3.69	%	3.69	%
Net interest income (taxable equivalent basis)	38,346		32,856
Less: Taxable equivalent adjustment	1,525		1,586
Net interest income	$	36,821	$	31,270