EXHIBIT 99.1
January 21, 2004
Traded: NASDAQ
Symbol: AMNB
Contact: Brad E. Schwartz - (434) 773-2242
Senior Vice President/ Chief Financial Officer
American National Bankshares Inc. Reports Financial Results
FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares Inc.
(NASDAQ: AMNB) today reported record earnings for the year ending December 31,
2003. Diluted earnings per share rose to $1.65 from $1.62 in 2002, an increase
of 1.9%, while basic earnings per share rose to $1.67 from $1.63 in 2002, an
increase of 2.5%. Net income was $9,513,000, a slight increase from the
$9,461,000 in 2002. For the fourth quarter of 2003, earnings were strong with
net income of $2,466,000 and diluted and basic earnings per share of $0.43 and
$0.44, respectively.
"We are pleased to produce another year of positive earnings growth.
The year 2003 was challenging as interest rates hit lows not seen since the
1950's and economic growth remained sluggish. We worked diligently to ensure
earnings in future periods would not be traded for short-term earnings gains in
2003, by conservatively positioning the balance sheet to maximize earnings when
rates and markets return to more traditional levels", said Charles H. Majors,
President and Chief Executive Officer. Mr. Majors added, "Our efficiency ratio
remained at the enviable level of below 50% for the year, and we are proud of
our increase in non-interest income. We are focused on containing the growth in
non-performing loans, which are above their historical averages. We realize the
recent implementation of new credit policies, underwriting guidelines, and
credit quality review procedures has focused our management on better measuring
our loan portfolio risks. Our commitment is to retain strong credit quality as
we grow, and we believe our investment in the credit risk management area will
pay strong dividends in the future and position the company for growth."
Return on average equity (ROE) and return on average assets (ROA) were
13.52% and 1.52%, respectively for 2003, compared to 13.97% and 1.63%,
respectively for 2002. The annualized return on average equity (ROE) for the
fourth quarter of 2003 was 13.92% and the annualized return on average assets
(ROA) for the quarter was 1.54%.
At December 31, 2003, total assets were $644.3 million, up $38.4
million or 6.3% from $605.9 million one year earlier. Deposit and retail
repurchase accounts increased 7.7% in 2003 while loan growth remained flat.
"While overall loan growth remained flat, we saw in-market growth in both our
Martinsville and South Boston market areas" stated Charles H. Majors.
"Unfortunately, we had significant pay downs in out-of-market participation
loans which offset our progress in growing our loan portfolio."
The Corporation's capital position remains strong with shareholders'
equity at December 31, 2003 of $71.9 million representing 11.2% of total assets.
Dividends paid per share of $0.75 in 2003 represent a 5.6% increase over the
$0.71 paid in 2002. Based on the Corporation's average stock price in 2003, the
dividend payment provided a 2.94% yield.
At year end 2003, non-performing assets equaled $3,618,000, compared to
$570,000 one year earlier. Two commercial relationships account for the majority
of the increases in non-performing loans and charge-offs. Due to the increases,
a provision for loan losses of $920,000 was expensed in 2003 even though loan
growth remained flat. The Corporation continues to work with the borrowers to
protect its interest and has allocated an additional $804,000 in loan loss
reserves to these relationships. Despite this growth in non-performing assets,
overall asset quality remains strong. At December 31, 2003, non-performing loans
to total loans were under one percent at 0.81%, and the allowance for loan
losses was 1.30% of total loans.
American National Bankshares Inc. is the holding company of American
National Bank and Trust Company, a community bank with fourteen offices in
Danville, Chatham, Collinsville, Gretna, Martinsville, Henry County, and South
Boston, Virginia, and Yanceyville, North Carolina. Services are also provided
through eighteen ATMs, "AmeriLink" internet banking, and our 24-hour "Access
American" phone banking. Banking subsidiaries include ANB Mortgage Corp.
(secondary mortgage origination), ANB Investor Services (retail brokerage) and
ANB Insurance Services (full-service insurance agency). Additional information
is available on our website at www.amnb.com. The shares of American National
Bankshares Inc. are traded on the NASDAQ National Market under the symbol
"AMNB".
This press release may contain "forward-looking statements," within the
meaning of federal securities laws that involve significant risks and
uncertainties. Statements herein are based on certain assumptions and analyses
by the Corporation and are factors it believes are appropriate in the
circumstances. Actual results could differ materially from those contained in or
implied by such statements for a variety of reasons including, but not limited
to: changes in interest rates; changes in accounting principles, policies, or
guidelines; significant changes in the economic scenario: significant changes in
regulatory requirements; and significant changes in securities markets.
Consequently, all forward-looking statements made herein are qualified by these
cautionary statements and the cautionary language in the Corporation's most
recent Form 10-K report and other documents filed with the Securities and
Exchange Commission. American National Bankshares Inc. does not undertake to
update forward-looking statements to reflect circumstances or events that occur
after the date the forward-looking statements are made.
Consolidated Balance Sheets
American National Bankshares Inc. and Subsidiary
(In Thousands)
Unaudited
- ------------------------------------------------------------------------------------------------------------
December 31
----------------------------
2003 2002
------------ -----------
ASSETS
Cash and due from banks.........................................................$ 16,236 $ 16,757
Interest-bearing deposits in other banks........................................ 1,652 6,720
Securities:
Securities available for sale................................................. 171,376 137,046
Securities held to maturity................................................... 36,103 26,778
----------- -----------
Total securities.............................................................. 207,479 163,824
----------- -----------
Loans held for sale............................................................. 560 1,285
Loans, net of unearned income .................................................. 406,245 406,403
Less allowance for loan losses.................................................. (5,292) (5,622)
----------- -----------
Net loans..................................................................... 400,953 400,781
----------- -----------
Bank premises and equipment..................................................... 7,718 8,167
Core deposit intangibles........................................................ 934 1,384
Accrued interest receivable and other assets.................................... 8,770 6,941
----------- -----------
Total assets..................................................................$ 644,302 $ 605,859
=========== ===========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- non-interest bearing.......................................$ 71,027 $ 69,102
Demand deposits -- interest bearing........................................... 69,053 62,680
Money market deposits......................................................... 59,251 43,831
Savings deposits.............................................................. 83,031 73,410
Time deposits................................................................. 219,326 224,539
----------- -----------
Total deposits................................................................ 501,688 473,562
----------- -----------
Repurchase agreements......................................................... 47,035 36,155
FHLB borrowings............................................................... 21,000 22,000
Accrued interest payable and other liabilities................................ 2,648 3,406
----------- -----------
Total liabilities............................................................. 572,371 535,123
----------- -----------
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized,
5,660,419 shares outstanding at December 31, 2003 and
5,780,816 shares outstanding at December 31, 2002........................... 5,660 5,781
Capital in excess of par value................................................ 9,437 9,571
Retained earnings............................................................. 55,538 53,093
Accumulated other comprehensive income, net................................... 1,296 2,291
----------- -----------
Total shareholders' equity.................................................... 71,931 70,736
----------- -----------
Total liabilities and shareholders' equity....................................$ 644,302 $ 605,859
=========== ===========
Consolidated Statements of Income
American National Bankshares Inc. and Subsidiary
(In Thousands)
(Unaudited)
- ---------------------------------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ -------------------
2003 2002 2003 2002
-------- -------- -------- --------
Interest Income:
Interest and fees on loans....................................................$ 5,891 $ 6,697 $ 25,228 $ 27,150
Interest on deposits in other banks........................................... 41 78 110 248
Income on securities:
Federal agencies............................................................ 745 518 2,365 1,942
Mortgage-backed............................................................. 252 522 1,316 2,352
State and municipal......................................................... 505 471 1,961 1,887
Other investments........................................................... 263 368 1,198 1,556
-------- ------- -------- --------
Total interest income....................................................... 7,697 8,654 32,178 35,135
-------- ------- -------- --------
Interest Expense:
Interest on deposits:
Demand...................................................................... 51 83 225 417
Money market................................................................ 104 174 478 775
Savings..................................................................... 126 246 713 1,049
Time........................................................................ 1,490 1,878 6,500 8,607
Interest on repurchase agreements............................................. 123 157 496 634
Interest on other borrowings.................................................. 244 250 979 828
-------- ------- -------- --------
Total interest expense...................................................... 2,138 2,788 9,391 12,310
-------- ------- -------- --------
Net Interest Income............................................................. 5,559 5,866 22,787 22,825
Provision for Loan Losses....................................................... 255 240 920 873
-------- ------- -------- --------
Net Interest Income After Provision
For Loan Losses............................................................... 5,304 5,626 21,867 21,952
-------- ------- -------- --------
Non-Interest Income:
Trust and investment services................................................. 645 578 2,523 2,516
Service charges on deposit accounts........................................... 622 474 2,163 1,706
Other fees and commissions.................................................... 235 196 914 816
Mortgage banking income....................................................... 90 98 571 361
Securities gains, net......................................................... 69 20 115 39
Other income.................................................................. 133 72 385 274
-------- ------- -------- --------
Total non-interest income................................................... 1,794 1,438 6,671 5,712
-------- ------- -------- --------
Non-Interest Expense:
Salaries...................................................................... 1,611 1,578 6,844 6,519
Pension and other employee benefits........................................... 411 311 1,814 1,471
Occupancy and equipment....................................................... 608 626 2,513 2,460
Core deposit intangible amortization ......................................... 113 113 450 450
Other expenses................................................................ 875 920 3,490 3,385
-------- ------- -------- --------
Total non-interest expense.................................................. 3,618 3,548 15,111 14,285
-------- ------- -------- --------
Income Before Taxes............................................................. 3,480 3,516 13,427 13,379
Income Tax Provision............................................................ 1,014 1,050 3,914 3,918
-------- ------- -------- --------
Net Income......................................................................$ 2,466 $ 2,466 $ 9,513 $ 9,461
======== ======= ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
Net Income Per Common Share:
Basic.........................................................................$ .44 $ .43 $ 1.67 $ 1.63
Diluted.......................................................................$ .43 $ .42 $ 1.65 $ 1.62
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------------ ------------------------
2003 2002 Change 2003 2002 Change
----------- ----------- -------- ----------- ----------- --------
EARNINGS
Interest income $ 7,697 $ 8,654 (11.1)% $ 32,178 $ 35,135 (8.4)%
Interest expense 2,138 2,788 (23.3) 9,391 12,310 (23.7)
Net interest income 5,559 5,866 (5.2) 22,787 22,825 (.2)
Provision for loan losses 255 240 6.3 920 873 5.4
Noninterest income 1,794 1,438 24.8 6,671 5,712 16.8
Noninterest expense 3,618 3,548 2.0 15,111 14,285 5.8
Income taxes 1,014 1,050 (3.4) 3,914 3,918 (.1)
Net income 2,466 2,466 - 9,513 9,461 .5
PER COMMON SHARE
Earnings per share - basic $ .44 $ .43 2.3 % $ 1.67 $ 1.63 2.5 %
Earnings per share - diluted .43 .42 2.4 1.65 1.62 1.9
Cash dividends paid .19 .18 5.6 .75 .71 5.6
Book value 12.71 12.24 3.8
Closing market price 26.08 26.00 .3
FINANCIAL RATIOS
Return on average assets 1.54 % 1.63 % (9)bp 1.52 % 1.63 % (11)bp
Return on average shareholders' equity 13.92 14.08 (16) 13.52 13.97 (45)
Average equity to average assets 11.04 11.58 (54) 11.27 11.64 (37)
Net interest margin (FTE) 3.78 4.22 (44) 3.98 4.28 (30)
Efficiency ratio 47.90 47.08 82 49.74 48.44 130
PERIOD END BALANCES
Securities $ 207,479 $ 163,824 26.6 %
Loans held for sale 560 1,285 (56.4)
Loans - net of unearned income 406,245 406,403 (-)
Assets 644,302 605,859 6.3
Total deposits 501,688 473,562 5.9
Repurchase agreement funding 47,035 36,155 30.1
FHLB borrowings 21,000 22,000 (4.5)
Shareholders' equity 71,931 70,736 1.7
AVERAGE BALANCES
Loans - net of unearned income $ 411,376 $ 401,662 2.4 % $ 418,870 $ 391,394 7.0 %
Interest-earning assets 615,981 579,158 6.4 598,693 556,439 7.6
Assets 641,963 605,148 6.1 624,611 581,898 7.3
Interest-bearing deposits 427,753 408,060 4.8 422,097 401,368 5.2
Repurchase agreement funding 47,389 39,417 20.2 40,917 34,183 19.7
FHLB borrowings 21,000 20,000 (4.5) 21,578 17,274 24.9
Shareholders' equity 70,888 70,097 1.1 70,367 67,709 3.9
CAPITAL
Average shares outstanding - basic 5,662,664 5,781,496 (2.1)% 5,702,625 5,800,302 (1.7)%
Average shares outstanding - diluted 5,725,481 5,847,305 (2.1) 5,764,127 5,850,349 (1.5)
Shares repurchased 10,000 5,000 125,000 45,100
Average price of shares repurchased $ 25.61 $ 26.05 $ 25.03 $ 23.26
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 6,067 $ 5,574 8.8 % $ 5,622 $ 5,334 5.4 %
Provision for loan losses 255 240 6.3 920 873 5.4
Charge-offs (1,040) (241) 331.5 (1,457) (740) 96.9
Recoveries 10 49 (79.6) 207 155 33.5
----------- ----------- ------ ----------- ----------- ------
Ending balance $ 5,292 $ 5,622 (5.9)% $ 5,292 $ 5,622 (5.9)%
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------------ ------------------------
2003 2002 Change 2003 2002 Change
----------- ----------- -------- ----------- ----------- --------
COMPOSITION OF RISK ASSETS
Nonperforming loans:
90 days past due $ 53 $ 239 (77.8)%
Nonaccrual 3,262 301 983.7
OREO 303 30 910.0
----------- ----------- ------
Nonperforming assets $ 3,618 $ 570 534.7
ASSET QUALITY RATIOS **
Nonperforming loans to total loans .81 % .13 % 68 bp
Allowance for loan losses to total loans 1.30 1.38 (8)
Allowance for loan losses
to nonperforming loans 1.60 X 10.41 X (881)
Notes:
bp - Change is measured as difference in basis points
** - Balance sheet amounts used in calculations are based on period end balances