American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports First Quarter 2019 Earnings

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
	March 31
Assets	2019			2018
Cash and due from banks	$	28,912		$	18,772
Interest-bearing deposits in other banks	41,949			57,881
Equity securities, at fair value	2,069			2,320
Securities available for sale, at fair value	324,289			310,348
Restricted stock, at cost	5,299			5,221
Loans held for sale	1,252			1,792
Loans	1,360,063			1,321,221
Less allowance for loan losses	(12,806		)	(13,575		)
Net Loans	1,347,257			1,307,646
Premises and equipment, net	30,900			25,759
Other real estate owned, net	646			1,716
Goodwill	43,872			43,872
Core deposit intangibles, net	871			1,114
Bank owned life insurance	19,047			18,566
Accrued interest receivable and other assets	22,041			22,567
Total assets	$	1,868,404		$	1,817,574
Liabilities
Demand deposits -- noninterest-bearing	$	400,225		$	381,247
Demand deposits -- interest-bearing	233,973			222,356
Money market deposits	409,290			314,495
Savings deposits	134,171			126,774
Time deposits	381,592			371,232
Total deposits	1,559,251			1,416,104
Customer repurchase agreements	10,466			47,776
Long-term borrowings	—			9,985
Junior subordinated debt	27,851			27,749
Accrued interest payable and other liabilities	10,166			9,950
Total liabilities	1,607,734			1,511,564
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding	—			—
Common stock, $1 par, 20,000,000 shares authorized,
8,756,569 shares outstanding at March 31, 2019 and
8,675,033 shares outstanding at March 31, 2018	8,705			8,621
Capital in excess of par value	78,738			76,525
Retained earnings	145,351			131,299
Accumulated other comprehensive loss, net	(3,321		)	(6,605		)
Total shareholders' equity	229,473			209,840
Total liabilities and shareholders' equity	$	1,868,404		$	1,817,574

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
	Three Months Ended
	March 31
	2019		2018
Interest and Dividend Income:
Interest and fees on loans	$	15,638	$	14,657
Interest and dividends on securities:
Taxable	1,821		1,324
Tax-exempt	287		419
Dividends	84		80
Other interest income	266		188
Total interest and dividend income	18,096		16,668
Interest Expense:
Interest on deposits	2,472		1,825
Interest on short-term borrowings	172		10
Interest on junior subordinated debt	384		290
Total interest expense	3,028		2,125
Net Interest Income	15,068		14,543
Provision for (recovery of) loan losses	16		(44		)
Net Interest Income After Provision
for (Recovery of) Loan Losses	15,052		14,587
Noninterest Income:
Trust fees	914		929
Service charges on deposit accounts	594		612
Other fees and commissions	708		642
Mortgage banking income	406		450
Securities gains, net	323		121
Brokerage fees	147		222
Income from Small Business Investment Companies	168		155
Other	191		202
Total noninterest income	3,451		3,333
Noninterest Expense:
Salaries	4,664		4,997
Employee benefits	1,230		1,175
Occupancy and equipment	1,084		1,128
FDIC assessment	125		146
Bank franchise tax	290		281
Core deposit intangible amortization	55		77
Data processing	532		422
Software	324		305
Other real estate owned, net	13		30
Merger related expenses	451		—
Other	2,161		2,141
Total noninterest expense	10,929		10,702
Income Before Income Taxes	7,574		7,218
Income Taxes	1,571		1,406
Net Income	$	6,003	$	5,812

Net Income Per Common Share:
Basic	$	0.69	$	0.67
Diluted	$	0.69	$	0.67
Weighted Average Common Shares Outstanding:
Basic	8,745,174		8,669,728
Diluted	8,745,723		8,687,351

American National Bankshares Inc.
Financial Highlights
Unaudited
	(Dollars in thousands, except per share data)
		1st Qtr			4th Qtr				1st Qtr
		2019			2018				2018
EARNINGS
Interest income		$	18,096		$	17,891			$	16,668
Interest expense		3,028			2,879				2,125
Net interest income		15,068			15,012				14,543
Provision for (recovery of) loan losses		16			(6		)		(44		)
Noninterest income		3,451			2,998				3,333
Noninterest expense		10,929			11,638				10,702
Income taxes		1,571			1,376				1,406
Net income		6,003			5,002				5,812
PER COMMON SHARE
Income per share - basic		$	0.69		$	0.57			$	0.67
Income per share - diluted		0.69			0.57				0.67
Cash dividends paid		0.25			0.25				0.25
Book value per share		26.21			25.52				24.19
Book value per share - tangible (a)		21.10			20.38				19.00
Closing market price		34.92			29.31				37.60
FINANCIAL RATIOS
Return on average assets		1.29		%	1.08			%	1.28			%
Return on average equity		10.69			9.16				11.10
Return on average tangible equity (a)		13.44			11.63				14.29
Average equity to average assets		12.06			11.78				11.52
Tangible equity to tangible assets (a)		10.13			9.78				9.30
Net interest margin, taxable equivalent		3.50			3.48				3.46
Efficiency ratio (a)		56.95			58.15				59.36
Effective tax rate		20.74			21.57				19.48
PERIOD-END BALANCES
Securities		$	331,657		$	339,730			$	317,889
Loans held for sale		1,252			640				1,792
Loans, net of unearned income		1,360,063			1,357,476				1,321,221
Goodwill and other intangibles		44,743			44,798				44,986
Assets		1,868,404			1,862,866				1,817,574
Assets - tangible (a)		1,823,661			1,818,068				1,772,588
Deposits		1,559,790			1,566,227				1,559,251
Customer repurchase agreements		35,945			35,243				10,466
Long-term borrowings		32,191			27,927				27,851
Shareholders' equity		229,473			222,542				209,840
Shareholders' equity - tangible (a)		184,730			177,744				164,854

American National Bankshares Inc.
Financial Highlights
Unaudited
	(Dollars in thousands, except per share data)
		1st Qtr			4th Qtr			1st Qtr
		2019			2018			2018
AVERAGE BALANCES
Securities (b)		$	343,834		$	332,230		$	312,783
Loans held for sale		1,830			1,201			2,037
Loans, net of unearned income		1,352,521			1,335,469			1,338,058
Interest-earning assets		1,736,887			1,736,453			1,698,451
Goodwill and other intangibles		44,778			44,831			45,031
Assets		1,863,212			1,854,492			1,818,429
Assets - tangible (a)		1,818,434			1,809,661			1,773,398
Interest-bearing deposits		1,131,604			1,116,911			1,157,122
Deposits		1,551,413			1,558,864			1,557,149
Customer repurchase agreements		42,705			37,905			12,247
Other short-term borrowings		61			—			2,183
Long-term borrowings		32,197			27,914			27,836
Shareholders' equity		224,677			218,430			209,433
Shareholders' equity - tangible (a)		179,899			173,599			164,402
CAPITAL
Weighted average shares outstanding - basic		8,745,174			8,717,572			8,669,728
Weighted average shares outstanding - diluted		8,745,723			8,723,388			8,687,351
ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	12,805		$	13,588		$	13,603
Provision for (recovery of) loan losses		16			(6		)	(44		)
Charge-offs		(69		)	(818		)	(44		)
Recoveries		54			41			60
Ending balance		$	12,806		$	12,805		$	13,575
LOANS
Construction and land development		$	93,759		$	97,240		$	93,031
Commercial real estate		659,133			655,800			624,164
Residential real estate		212,665			209,438			207,256
Home equity		99,979			103,933			108,024
Commercial and industrial		289,301			285,972			284,257
Consumer		5,226			5,093			4,489
Total		$	1,360,063		$	1,357,476		$	1,321,221
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		$	197		$	72		$	273
Nonaccrual		1,111			1,090			1,598
Other real estate owned		646			869			1,716
Nonperforming assets		$	1,954		$	2,031		$	3,587

American National Bankshares Inc.
Financial Highlights
Unaudited
	(Dollars in thousands, except per share data)
		1st Qtr			4th Qtr			1st Qtr
		2019			2018			2018
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		0.94		%	0.94		%	1.03		%
Allowance for loan losses to nonperforming loans		979.05			1,101.98			725.55
Nonperforming assets to total assets		0.10			0.11			0.20
Nonperforming loans to total loans		0.10			0.09			0.14
Annualized net charge-offs (recoveries) to average loans		0.00			0.23			0.00
OTHER DATA
Fiduciary assets at period-end (c) (d)		$	533,063		$	494,034		$	509,668
Retail brokerage assets at period-end (c) (d)		$	303,045		$	274,552		$	316,064
Number full-time equivalent employees (e)		299			305			326
Number of full service offices		24			24			26
Number of loan production offices		—			2			2
Number of ATM's		33			33			34
Notes:
(a) - This financial measure is not calculated in accordance with GAAP. For a reconciliation of non-GAAP financial
measures, see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(b) - Average does not include unrealized gains and losses.
(c) - Market value.
(d) - Assets are not owned by American National and are not reflected in the consolidated balance sheet.
(e) - Average for quarter.

			Net Interest Income Analysis
			For the Three Months Ended March 31, 2019 and 2018
			(Dollars in thousands)
			Unaudited
								Interest
				Average Balance				Income/Expense				Yield/Rate
				2019		2018		2019		2018		2019		2018
Loans:
	Commercial			$	265,578	$	258,552	$	2,891	$	2,444	4.41	%	3.83	%
	Real estate			1,083,800		1,077,243		12,716		12,189		4.69		4.53
	Consumer			4,973		4,300		75		76		6.12		7.17
		Total loans		1,354,351		1,340,095		15,682		14,709		4.64		4.40
Securities:
	Federal agencies & GSEs			139,465		103,199		850		517		2.44		2.00
	Mortgage-backed & CMOs			111,701		108,826		693		600		2.48		2.21
	State and municipal			78,597		86,336		538		634		2.74		2.94
	Other			14,071		14,422		178		175		5.06		4.85
		Total securities		343,834		312,783		2,259		1,926		2.63		2.46
Deposits in other banks				38,702		45,573		266		188		2.79		1.67
	Total interest-earning assets			1,736,887		1,698,451		18,207		16,823		4.20		3.97
Non-earning assets				126,325		119,978
		Total assets		$	1,863,212	$	1,818,429
Deposits:
	Demand			$	238,430	$	232,383	14		11		0.02		0.02
	Money market			395,704		410,171		1,153		783		1.18		0.77
	Savings			134,060		130,708		10		9		0.03		0.03
	Time			363,410		383,860		1,295		1,022		1.45		1.08
		Total deposits		1,131,604		1,157,122		2,472		1,825		0.89		0.64
Customer repurchase agreements				42,705		12,247		171		1		1.62		0.03
Other short-term borrowings				61		2,183		1		9		6.56		1.65
Long-term borrowings				27,937		27,836		384		290		5.50		4.17
	Total interest-bearing
		liabilities		1,202,307		1,199,388		3,028		2,125		1.02		0.72
Noninterest bearing demand deposits				419,809		400,027
Other liabilities				16,419		9,581
Shareholders' equity				224,677		209,433
		Total liabilities and
			shareholders' equity	$	1,863,212	$	1,818,429
Interest rate spread												3.18	%	3.25	%
Net interest margin												3.5	%	3.46	%
Net interest income (taxable equivalent basis)								15,179		14,698
Less: Taxable equivalent adjustment (a)								111		155
Net interest income								$	15,068	$	14,543

American National Bankshares Inc.
Reconciliation of Non-GAAP Financial Measures
Unaudited
	(Dollars in thousands, except per share data)
		1st Qtr				4th Qtr				1st Qtr
		2019				2018				2018
EFFICIENCY RATIO
Noninterest expense		$	10,929			$	11,638			$	10,702
Add/subtract: loss/(gain) on sale of OREO		2				(11		)		5
Subtract: core deposit intangible amortization		(55		)		(55		)		(77		)
Subtract: merger related expense		(451		)		(872		)		—
		$	10,425			$	10,700			$	10,630
Net interest income		$	15,068			$	15,012			$	14,543
Tax equivalent adjustment		111				114				155
Noninterest income		3,451				2,998				3,333
Add/subtract: (gain)/loss on securities		(323		)		270				(121		)
Add/subtract: (gain)/loss on fixed assets		—				6				(3		)
		$	18,307			$	18,400			$	17,907
Efficiency ratio		56.95			%	58.15			%	59.36			%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans		$	15,682			$	15,525			$	14,709
Interest income - investments and other		2,525				2,480				2,114
Interest expense - deposits		(2,472		)		(2,340		)		(1,825		)
Interest expense - customer repurchase agreements		(171		)		(145		)		(1		)
Interest expense - other short-term borrowings		(1		)		—				(9		)
Interest expense - long-term borrowings		(384		)		(394		)		(290		)
Total net interest income		$	15,179			$	15,126			$	14,698
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans		(44		)		(44		)		(52		)
Tax benefit on nontaxable interest - securities		(67		)		(70		)		(103		)
GAAP measures		$	15,068			$	15,012			$	14,543
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)		10.69			%	9.16			%	11.10			%
Impact of excluding average goodwill and other intangibles		2.75				2.47				3.19
Return on average tangible equity (non-GAAP)		13.44			%	11.63			%	14.29			%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)		12.28			%	11.95			%	11.55			%
Impact of excluding goodwill and other intangibles		2.15				2.17				2.25
Tangible equity to tangible assets ratio (non-GAAP)		10.13			%	9.78			%	9.30			%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)		$	26.21			$	25.52			$	24.19
Impact of excluding goodwill and other intangibles		5.11				5.14				5.19
Tangible book value per share (non-GAAP)		$	21.10			$	20.38			$	19.00