EXHIBIT 99.1
Contact: Neal A. Petrovich - (434) 773-2242
Senior Vice President and Chief Financial Officer
Distribute: PR Newswire, Virginia State/Local Newslines
July 21, 2004 Traded: NASDAQ National Market Symbol: AMNB
AMERICAN NATIONAL BANKSHARES INC. REPORTS EARNINGS INCREASE
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FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares
Inc. reported second quarter 2004 earnings of $2.424 million, which represents
income of $0.43 per share. During the same period in 2003, the Corporation
earned $2.308 million, or $0.40 per share. The annualized return on average
equity (ROE) for the quarter was 13.51%, compared to 13.14% in the second
quarter of 2003. The annualized return on average assets (ROA) was 1.52% for the
second quarter, compared with 1.49% in the year-earlier quarter.
For the first six months of 2004, earnings were $4.894 million, compared to
$4.642 million for the first six months of 2003, an increase of 5.4%. Diluted
earnings per share increased 7.5%, from $0.80 in 2003 to $0.86 in 2004. ROE was
13.57% for the first half of 2004, compared with 13.18% for the comparable 2003
period.
The growth in second quarter earnings was fueled by increases in
non-interest income, which advanced $430,000, or 26.6%, from the second quarter
of 2003 to 2004. This increase is attributable to growth in deposit service
charges, trust and investment management, mortgage banking income, and a gain on
the sale of real estate. Non-interest expense increased only 1.7% during this
period.
Total assets averaged $637.9 million during the second quarter of 2004, up
2.8% from the second quarter of 2003. While average total deposits increased
only 1.7% during this period, demand and savings accounts grew 12.9%. Average
loans declined 5.1%, due primarily to pay downs of participation loans.
"Our focus on growing non-interest income and controlling expenses during
this period of low interest rates and below-average loan growth produced good
results in the second quarter," stated Charles H. Majors, President and Chief
Executive Officer. "I am also pleased with the growth in demand and savings
deposits, which reflects our effort to build long-term customer relationships.
Additionally, our balance sheet is positioned to benefit from the recent
quarter-point prime rate increase. Looking forward, we will focus on growing the
loan portfolio through our business development efforts and our recent expansion
into the Greensboro, North Carolina area."
Nonperforming assets totaled $4.3 million at June 30, 2004, up from $3.0
million one year earlier. Two commercial relationships accounted for the
majority of this increase. "New credit policies and loan review procedures
implemented in 2003 will better enable us to manage our loan portfolio risks and
maintain strong credit quality as we grow," stated Majors.
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
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June 30
----------------------------
2004 2003
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ASSETS
Cash and due from banks.........................................................$ 14,829 $ 12,039
Interest-bearing deposits in other banks........................................ 1,097 7,953
Securities:
Securities available for sale................................................. 180,052 140,550
Securities held to maturity................................................... 19,528 24,105
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Total securities.............................................................. 199,580 164,655
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Loans held for sale............................................................. 1,059 2,106
Loans, net of unearned income .................................................. 400,613 432,647
Less allowance for loan losses.................................................. (5,457) (5,991)
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Net loans..................................................................... 395,156 426,656
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Bank premises and equipment, net................................................ 7,710 7,930
Core deposit intangibles, net................................................... 709 1,159
Accrued interest receivable and other assets.................................... 10,431 8,802
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Total assets..................................................................$ 630,571 $ 631,300
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LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- non-interest bearing.......................................$ 75,121 $ 68,166
Demand deposits -- interest bearing........................................... 71,071 60,943
Money market deposits......................................................... 50,434 44,634
Savings deposits.............................................................. 84,393 81,840
Time deposits................................................................. 203,878 234,588
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Total deposits................................................................ 484,897 490,171
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Repurchase agreements......................................................... 47,911 46,062
FHLB borrowings............................................................... 23,763 21,500
Accrued interest payable and other liabilities................................ 3,341 3,269
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Total liabilities............................................................. 559,912 561,002
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Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized,
5,593,430 shares outstanding at June 30, 2004 and
5,680,909 shares outstanding at June 30, 2003............................... 5,593 5,681
Capital in excess of par value................................................ 9,446 9,407
Retained earnings............................................................. 56,620 53,396
Accumulated other comprehensive income (loss), net............................ (1,000) 1,814
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Total shareholders' equity.................................................... 70,659 70,298
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Total liabilities and shareholders' equity....................................$ 630,571 $ 631,300
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Consolidated Statements of Income
American National Bankshares Inc. and Subsidiary
(In Thousands)
(Unaudited)
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Three Months Ended Six Months Ended
June 30 June 30
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2004 2003 2004 2003
-------- -------- -------- --------
Interest Income:
Interest and fees on loans....................................................$ 5,572 $ 6,508 $ 11,313 $ 13,067
Interest on deposits in other banks........................................... 13 11 44 36
Income on securities:
Federal agencies............................................................ 835 511 1,657 1,060
Mortgage-backed............................................................. 233 385 466 839
State and municipal......................................................... 525 515 1,037 984
Other ...................................................................... 232 305 474 651
-------- ------- -------- --------
Total interest income....................................................... 7,410 8,235 14,991 16,637
-------- ------- -------- --------
Interest Expense:
Interest on deposits:
Demand...................................................................... 61 61 120 129
Money market................................................................ 92 125 194 264
Savings..................................................................... 104 212 213 437
Time........................................................................ 1,233 1,677 2,560 3,397
Interest on repurchase agreements............................................. 124 135 251 260
Interest on other borrowings.................................................. 250 248 491 490
-------- ------- -------- --------
Total interest expense...................................................... 1,864 2,458 3,829 4,977
-------- ------- -------- --------
Net Interest Income............................................................. 5,546 5,777 11,162 11,660
Provision for Loan Losses....................................................... 255 255 470 495
-------- ------- -------- --------
Net Interest Income After Provision
For Loan Losses............................................................... 5,291 5,522 10,692 11,165
-------- ------- -------- --------
Non-Interest Income:
Trust and investment services................................................. 743 647 1,471 1,253
Service charges on deposit accounts........................................... 631 541 1,205 964
Other fees and commissions.................................................... 222 210 468 438
Mortgage banking income....................................................... 211 150 344 278
Securities gains (losses), net................................................ 14 1 119 3
Other income.................................................................. 224 66 291 141
-------- ------- -------- --------
Total non-interest income................................................... 2,045 1,615 3,898 3,077
-------- ------- -------- --------
Non-Interest Expense:
Salaries...................................................................... 1,846 1,754 3,614 3,475
Pension and other employee benefits........................................... 412 522 834 970
Occupancy and equipment....................................................... 647 640 1,264 1,281
Core deposit intangible amortization ......................................... 113 113 225 225
Other expenses................................................................ 931 853 1,813 1,740
-------- ------- -------- --------
Total non-interest expense.................................................. 3,949 3,882 7,750 7,691
-------- ------- -------- --------
Income Before Taxes............................................................. 3,387 3,255 6,840 6,551
Income Tax Provision............................................................ 963 947 1,946 1,909
-------- ------- -------- --------
Net Income......................................................................$ 2,424 $ 2,308 $ 4,894 $ 4,642
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Net Income Per Common Share:
Basic.........................................................................$ .43 $ .40 $ .87 $ .81
Diluted.......................................................................$ .43 $ .40 $ .86 $ .80
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
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2004 2003 Change 2004 2003 Change
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EARNINGS
Interest income $ 7,410 $ 8,235 (10.0)% $ 14,991 $ 16,637 (9.9)%
Interest expense 1,864 2,458 (24.2) 3,829 4,977 (23.1)
Net interest income 5,546 5,777 (4.0) 11,162 11,660 (4.3)
Provision for loan losses 255 255 - 470 495 (5.1)
Noninterest income 2,045 1,615 26.6 3,898 3,077 26.7
Noninterest expense 3,949 3,882 1.7 7,750 7,691 .8
Income taxes 963 947 1.7 1,946 1,909 1.9
Net income 2,424 2,308 5.0 4,894 4,642 5.4
PER COMMON SHARE
Earnings per share - basic $ .43 $ .40 7.5 % $ .87 $ .81 7.4 %
Earnings per share - diluted .43 .40 7.5 .86 .80 7.5
Cash dividends paid .20 .19 5.3 .39 .37 5.4
Book value 12.64 12.37 2.2
Closing market price 21.78 25.96 (16.1)
FINANCIAL RATIOS
Return on average assets 1.52 % 1.49 % 3 bp 1.53 % 1.52 % 1 bp
Return on average shareholders' equity 13.51 13.14 37 13.57 13.18 39
Average equity to average assets 11.25 11.32 (7) 11.28 11.50 (22)
Net interest margin (FTE) 3.80 4.07 (27) 3.82 4.15 (33)
Efficiency ratio 51.26 50.66 60 50.48 50.44 4
PERIOD END BALANCES
Securities $ 199,580 $ 164,655 21.2 %
Loans held for sale 1,059 2,106 (49.7)
Loans - net of unearned income 400,613 432,647 (7.4)
Assets 630,571 631,300 (.1)
Deposits 484,897 490,171 (1.1)
Repurchase agreement funding 47,911 46,062 4.0
FHLB borrowings 23,763 21,500 10.5
Shareholders' equity 70,659 70,298 .5
AVERAGE BALANCES
Securities $ 201,131 $ 163,186 23.3 % $ 196,849 $ 160,660 22.5 %
Loans - net of unearned income 405,717 427,380 (5.1) 406,881 418,970 (2.9)
Interest-earning assets 612,418 594,536 3.0 613,559 586,046 4.7
Assets 637,890 620,486 2.8 639,356 612,118 4.4
Interest-bearing deposits 417,372 420,804 (.8) 421,095 416,783 1.0
Total deposits 493,036 484,716 1.7 494,241 479,162 3.1
Repurchase agreements 47,980 39,489 21.5 48,628 37,065 31.2
FHLB borrowings 22,222 22,426 (.9) 21,819 22,089 (1.2)
Shareholders' equity 71,755 70,268 2.1 72,105 70,414 2.4
CAPITAL
Average shares outstanding - basic 5,610,462 5,718,821 (1.9)% 5,629,370 5,737,354 (1.9)%
Average shares outstanding - diluted 5,657,721 5,776,591 (2.1) 5,681,795 5,796,769 (2.0)
Shares repurchased 43,368 65,000 75,568 100,000
Average price of shares repurchased $ 23.29 $ 24.58 $ 24.12 $ 24.86
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
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2004 2003 Change 2004 2003 Change
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ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 5,323 $ 5,771 (7.8)% $ 5,292 $ 5,622 (5.9)%
Provision for loan losses 255 255 - 470 495 (5.1)
Charge-offs (196) (122) 60.7 (419) (286) 46.5
Recoveries 75 87 (13.8) 114 160 (28.8)
----------- ----------- ------ ----------- ----------- ------
Ending balance $ 5,457 $ 5,991 (8.9)% $ 5,457 $ 5,991 (8.9)%
COMPOSITION OF RISK ASSETS
Nonperforming loans:
90 days past due $ - $ 285 (100.0)%
Nonaccrual 4,088 2,607 56.8
OREO 251 124 102.4
----------- ----------- ------
Nonperforming assets $ 4,339 $ 3,016 43.9 %
ASSET QUALITY RATIOS **
Nonperforming loans to total assets .69 % .48 % 21 bp
Nonperforming loans to total loans 1.02 .67 35
Allowance for loan losses to total loans 1.36 1.38 (2)
Allowance for loan losses
to nonperforming loans 1.33 X 2.07 X (74)
Notes:
bp - Change is measured as difference in basis points
** - Balance sheet amounts used in calculations are based on period end balances