EXHIBIT 99.1
Contact: Neal A. Petrovich - (434) 773-2242
Senior Vice President and Chief Financial Officer
Distribute: PR Newswire, Virginia State/Local Newslines
Date: October 20, 2004
Traded: NASDAQ National Market Symbol: AMNB
AMERICAN NATIONAL BANKSHARES INC. REPORTS THIRD QUARTER EARNINGS
FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares
Inc. (NASDAQ: AMNB) reported net income of $2.3 million for the third quarter of
2004. Basic and diluted earnings per share were $.42, the same as in the third
quarter of 2003. During the first nine months of 2004, earnings per share
increased 4.9% over 2003, on both a basic and diluted basis.
Net interest income, the Corporation's largest source of revenue, advanced
1.0% from the third quarter of 2003 to the third quarter of 2004. Recent upward
movements in the federal funds rate and prime rate produced increases in the
income earned on loans and investments. These increases offset the impact of a
decline in loans, due primarily to pay-downs of out-of-market participation
loans. "Growing our loan portfolio without sacrificing our underwriting
standards remains our number one goal," stated Charles H. Majors, President and
Chief Executive Officer. "Looking forward, we will focus on increasing the loan
portfolio through strong business development efforts, new products, and our
recent expansion into the Greensboro, North Carolina area."
Noninterest income declined $64,000, or 3.6% from the third quarter of 2003
to 2004. An increase in trust income was offset by a decrease in mortgage
banking fees resulting from a decline in home mortgage refinancings. The third
quarter of 2003 also included securities gains which did not occur in the
current quarter.
Noninterest expense continues to be well contained. Comparing the third
quarter of 2004 with the same quarter in 2003, noninterest expense increased
only $44,000 or 1.2%. "Expense control has long been a hallmark of American
National," stated Majors. "One indication of our cost control efforts is the
efficiency ratio, which continues to be significantly better than the peer
average."
Average deposits declined $14.3 million, or 2.9% from 2003's third quarter
to the third quarter of 2004, as the Corporation did not strive to retain
certain certificates of deposit with high interest rates. Instead, the
Corporation has focused its efforts on growing lower-cost checking and savings
accounts. The growth in these "core" deposits was $19.3 million, on average,
from the third quarter of 2003 to 2004, representing an increase of 7.3%. "I am
very pleased with the growth in demand and savings deposits, which reflects our
effort to build long-term customer relationships," stated Majors.
Nonperforming assets totaled $4.5 million at September 30, 2004, up
slightly from the previous quarter and up from $3.1 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 thirteen offices in
Danville, Chatham, Collinsville, Gretna, Martinsville, Henry County, and South
Boston, Virginia; one office in Yanceyville, North Carolina; and a loan
production office in Greensboro, North Carolina. Services are also provided
through nineteen 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
- ------------------------------------------------------------------------------------------------------------
September 30
----------------------------
2004 2003
------------ -----------
ASSETS
Cash and due from banks.........................................................$ 13,676 $ 17,713
Interest bearing deposits in other banks........................................ 2,809 13,574
Securities:
Securities available for sale................................................. 177,664 158,605
Securities held to maturity................................................... 21,328 21,922
----------- -----------
Total securities.............................................................. 198,992 180,527
----------- -----------
Loans, held for sale............................................................ 1,203 740
Loans, net of unearned income .................................................. 394,710 419,916
Less allowance for loan losses.................................................. (5,599) (6,067)
----------- -----------
Net loans..................................................................... 389,111 413,849
----------- -----------
Bank premises and equipment, net................................................ 7,714 7,725
Core deposit intangibles, net................................................... 597 1,047
Accrued interest receivable and other assets.................................... 9,337 8,861
----------- -----------
Total assets..................................................................$ 623,439 $ 644,036
=========== ===========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- non-interest bearing.......................................$ 81,670 $ 71,624
Demand deposits -- interest bearing........................................... 71,242 66,393
Money market deposits......................................................... 51,139 49,607
Savings deposits.............................................................. 82,649 82,480
Time deposits................................................................. 197,317 231,106
----------- -----------
Total deposits................................................................ 484,017 501,210
----------- -----------
Repurchase agreements......................................................... 45,696 47,091
FHLB borrowings............................................................... 19,425 21,000
Accrued interest payable and other liabilities................................ 2,873 3,672
----------- -----------
Total liabilities............................................................. 552,011 572,973
----------- -----------
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized, 5,522,299 shares
outstanding at September 30, 2004 and
5,667,464 shares outstanding at September 30, 2003.......................... 5,522 5,667
Capital in excess of par value................................................ 9,433 9,404
Retained earnings............................................................. 56,217 54,378
Accumulated other comprehensive income, net................................... 256 1,614
----------- -----------
Total shareholders' equity.................................................... 71,428 71,063
----------- -----------
Total liabilities and shareholders' equity....................................$ 623,439 $ 644,036
=========== ===========
Consolidated Statements of Income
American National Bankshares Inc. and Subsidiary
(In Thousands)
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -------------------
2004 2003 2004 2003
-------- -------- -------- --------
Interest Income:
Interest and fees on loans....................................................$ 5,572 $ 6,270 $ 16,885 $ 19,337
Interest on deposits in other banks........................................... 24 33 68 69
Income on securities:
Federal agencies............................................................ 798 560 2,455 1,620
Mortgage-backed............................................................. 273 225 739 1,064
State and municipal......................................................... 521 472 1,558 1,456
Other ...................................................................... 221 284 695 935
-------- ------- -------- --------
Total interest income....................................................... 7,409 7,844 22,400 24,481
-------- ------- -------- --------
Interest Expense:
Interest on deposits:
Demand...................................................................... 66 45 186 174
Money market................................................................ 91 110 285 374
Savings..................................................................... 108 150 321 587
Time........................................................................ 1,149 1,613 3,709 5,010
Interest on repurchase agreements............................................. 126 113 377 373
Interest on other borrowings.................................................. 243 245 734 735
-------- ------- -------- --------
Total interest expense...................................................... 1,783 2,276 5,612 7,253
-------- ------- -------- --------
Net Interest Income............................................................. 5,626 5,568 16,788 17,228
Provision for Loan Losses....................................................... 255 170 725 665
-------- ------- -------- --------
Net Interest Income After Provision
For Loan Losses............................................................... 5,371 5,398 16,063 16,563
-------- ------- -------- --------
Non-Interest Income:
Trust and investment services................................................. 737 625 2,208 1,878
Service charges on deposit accounts........................................... 590 577 1,795 1,541
Other fees and commissions.................................................... 201 241 669 679
Mortgage banking income....................................................... 116 203 460 481
Securities gains (losses), net................................................ - 43 119 46
Other income.................................................................. 92 111 383 252
-------- ------- -------- --------
Total non-interest income................................................... 1,736 1,800 5,634 4,877
-------- ------- -------- --------
Non-Interest Expense:
Salaries...................................................................... 1,855 1,758 5,469 5,233
Pension and other employee benefits........................................... 427 433 1,261 1,403
Occupancy and equipment....................................................... 580 624 1,844 1,905
Core deposit intangible amortization ......................................... 112 112 337 337
Other expenses................................................................ 872 875 2,685 2,615
-------- ------- -------- --------
Total non-interest expense.................................................. 3,846 3,802 11,596 11,493
-------- ------- -------- --------
Income Before Taxes............................................................. 3,261 3,396 10,101 9,947
Income Tax Provision............................................................ 922 991 2,868 2,900
-------- ------- -------- --------
Net Income......................................................................$ 2,339 $ 2,405 $ 7,233 $ 7,047
======== ======= ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
Net Income Per Common Share:
Basic.........................................................................$ .42 $ .42 $ 1.29 $ 1.23
Diluted.......................................................................$ .42 $ .42 $ 1.28 $ 1.22
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
2004 2003 Change 2004 2003 Change
----------- ----------- -------- ----------- ----------- --------
EARNINGS
Interest income $ 7,409 $ 7,844 (5.5)% $ 22,400 $ 24,481 (8.5)%
Interest expense 1,783 2,276 (21.7) 5,612 7,253 (22.6)
Net interest income 5,626 5,568 1.0 16,788 17,228 (2.6)
Provision for loan losses 255 170 50.0 725 665 9.0
Noninterest income 1,736 1,800 (3.6) 5,634 4,877 15.5
Noninterest expense 3,846 3,802 1.2 11,596 11,493 .9
Income taxes 922 991 (7.0) 2,868 2,900 (1.1)
Net income 2,339 2,405 (2.7) 7,233 7,047 2.6
PER COMMON SHARE
Earnings per share - basic $ .42 $ .42 - % $ 1.29 $ 1.23 4.9 %
Earnings per share - diluted .42 .42 - 1.28 1.22 4.9
Cash dividends paid .20 .19 5.3 .59 .56 5.4
Book value 12.93 12.54 3.1
Closing market price 24.31 24.97 (2.6)
FINANCIAL RATIOS
Return on average assets 1.50 % 1.52 % (2)bp 1.53 % 1.52 % - bp
Return on average shareholders' equity 13.11 13.78 (67) 13.42 13.39 3
Average equity to average assets 11.47 11.05 42 11.34 11.34 -
Net interest margin (FTE) 3.94 3.84 10 3.86 4.05 (19)
Efficiency ratio 50.45 50.19 26 50.47 50.35 12
PERIOD END BALANCES
Securities $ 198,992 $ 180,527 10.2 %
Loans held for sale 1,203 740 62.6
Loans - net of unearned income 394,710 419,916 (6.0)
Assets 623,439 644,036 (3.2)
Deposits 484,017 501,210 (3.4)
Repurchase agreements 45,696 47,091 (3.0)
FHLB borrowings 19,425 21,000 (7.5)
Shareholders' equity 71,428 71,063 .5
AVERAGE BALANCES
Securities $ 196,568 $ 165,890 18.5 % $ 196,754 $ 162,140 21.3 %
Total loans 394,969 426,146 (7.3) 402,857 421,397 (4.4)
Interest-earning assets 598,288 605,672 (1.2) 608,390 592,256 2.7
Assets 622,321 631,840 (1.5) 633,635 618,762 2.4
Interest-bearing deposits 405,126 426,902 (5.1) 415,733 420,393 (1.1)
Deposits 482,169 496,467 (2.9) 490,187 485,845 .9
Repurchase agreements 45,108 42,024 7.3 47,446 38,736 22.5
FHLB borrowings 20,530 21,152 (2.9) 21,370 21,773 (1.9)
Shareholders' equity 71,377 69,798 2.3 71,869 70,197 2.4
CAPITAL
Average shares outstanding - basic 5,587,042 5,674,259 (1.5)% 5,615,946 5,716,092 (1.8)%
Average shares outstanding - diluted 5,632,715 5,738,622 (1.8) 5,666,120 5,777,156 (1.9)
Shares repurchased 79,400 15,000 154,968 115,000
Average price of shares repurchased $ 23.15 $ 25.72 $ 23.62 $ 24.98
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
2004 2003 Change 2004 2003 Change
----------- ----------- -------- ----------- ----------- --------
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 5,457 $ 5,991 (8.9)% $ 5,292 $ 5,622 (5.9)%
Provision for loan losses 255 170 50.0 725 665 9.0
Charge-offs (169) (131) 29.0 (588) (417) 41.0
Recoveries 56 37 51.4 170 197 (13.7)
----------- ----------- ------ ----------- ----------- ------
Ending balance $ 5,599 $ 6,067 (7.7)% $ 5,599 $ 6,067 (7.7)%
NONPERFORMING ASSETS
Nonperforming loans:
90 days past due $ - $ 362 (100.0)%
Nonaccrual 4,307 2,612 64.9
OREO 231 146 58.2
----------- ----------- ------
Nonperforming assets $ 4,538 $ 3,120 45.4 %
ASSET QUALITY RATIOS **
Nonperforming assets to total assets .73 % .48 % 25 bp
Nonperforming loans to total loans 1.09 .71 38
Allowance for loan losses to total loans 1.42 1.44 (2)
Allowance for loan losses
to nonperforming loans 1.30 X 2.04 X (74)
Notes:
bp - Change is measured as difference in basis points
** - Balance sheet amounts used in calculations are based on period end balances