EXHIBIT 99.1
Contact: Neal A. Petrovich - (434) 773-2242
Senior Vice President and Chief Financial Officer
Distribute: PR Newswire, Virginia state/local news lines
Date: January 19, 2005
Traded: NASDAQ National Market Symbol: AMNB
AMERICAN NATIONAL BANKSHARES INC. ANNOUNCES EARNINGS
----------------------------------------------------
FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares
Inc. (NASDAQ: AMNB) announced today reduced earnings for the fourth quarter of
2004 due to an increase in its allowance for loan losses. The Corporation added
an additional $2.0 million to its reserve related to a $4.5 million loan secured
by a hotel in a major North Carolina metropolitan area. Although payments have
always been current on the loan, the increased reserve resulted from reduced
cash flow of the hotel and a significant reduction in the collateral valuation
of the property. As a result, the loan was determined to be impaired and was
moved to nonaccrual status as of year-end.
The addition brought the loan loss reserve to $7.98 million, which is 1.96%
of loans at December 31, 2004. "Although this non-cash expense reduces our
earnings as compared with 2003, we believe it fully reserves for our estimated
potential exposure with the loan," stated Charles H. Majors, President and Chief
Executive Officer.
Net income was $1.43 million for the fourth quarter of 2004, down from
$2.47 million in the prior year's final quarter. For the full year, 2004 net
income was $8.66 million compared with $9.51 million in 2003. Basic earnings per
share declined from $1.67 in 2003 to $1.55 in 2004; diluted earnings per share
declined from $1.65 to $1.54. "Without the special addition to the loan loss
reserve, we estimate that 2004 earnings per share would have increased by 4.4%
over the prior year," said Majors. "We are gratified that, despite the special
addition, the Corporation generated a 1.37% return on average assets, which is
still higher than our peer group average."
Net interest income, the Corporation's largest source of revenue, advanced
5.3% from the fourth quarter of 2003 to the fourth quarter of 2004, due largely
to interest rate increases. The net interest margin improved from 3.78% to
4.02%.
Non-interest income increased $67,000, or 3.7% from the fourth quarter of
2003 to 2004. Increased trust and mortgage banking income were primary
contributors to this improvement.
Comparing the fourth quarter of 2004 with the same quarter in 2003,
non-interest expense declined $203,000 or 5.6%, due largely to a reduction in
personnel expense. Profit sharing accruals were eliminated during the final
quarter of 2004 as a result of the increased loan loss provision.
Average deposits declined $3.89 million, or .8% from 2003's fourth quarter
to the fourth quarter of 2004, as the Corporation did not strive to retain
high-cost certificates of deposit. Instead, the Corporation focused on growing
lower-cost checking and savings accounts. The growth in these "core" deposits
was $27.28 million, on average, from the fourth quarter of 2003 to 2004,
representing an increase of 10.0%.
American National Bankshares Inc. will hold an earnings conference call at
9:00 a.m. Eastern Standard Time on Thursday, January 20, 2005. Interested
parties may refer to our website at WWW.AMNB.COM for instructions.
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. American National Bank and
Trust Company provides a full array of financial products and services,
including commercial, mortgage, and consumer banking; trust and investment
services; and insurance. Services are also provided through eighteen ATMs,
"AmeriLink" Internet banking, and our 24-hour "Access American" phone banking.
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
----------------------------
2004 2003
------------ -----------
ASSETS
Cash and due from banks.........................................................$ 12,371 $ 16,236
Interestbearing deposits in other banks......................................... 197 1,652
Securities:
Securities available for sale................................................. 165,958 171,376
Securities held to maturity................................................... 22,205 36,103
----------- -----------
Total securities.............................................................. 188,163 207,479
----------- -----------
Loans held for sale............................................................. 971 560
Loans, net of unearned income .................................................. 407,269 406,245
Less allowance for loan losses.................................................. (7,982) (5,292)
----------- -----------
Net loans..................................................................... 399,287 400,953
----------- -----------
Bank premises and equipment, net................................................ 7,517 7,718
Core deposit intangibles, net................................................... 484 934
Accrued interest receivable and other assets.................................... 10,075 8,770
----------- -----------
Total assets..................................................................$ 619,065 $ 644,302
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Demand deposits - noninterest-bearing.........................................$ 75,256 $ 71,027
Demand deposits - interest-bearing............................................ 80,793 69,053
Money market deposits......................................................... 52,031 59,251
Savings deposits.............................................................. 83,216 83,031
Time deposits................................................................. 193,976 219,326
----------- -----------
Total deposits................................................................ 485,272 501,688
----------- -----------
Repurchase agreements......................................................... 38,945 47,035
FHLB borrowings............................................................... 21,338 21,000
Accrued interest payable and other liabilities................................ 2,510 2,648
----------- -----------
Total liabilities............................................................. 548,065 572,371
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par, 10,000,000 shares authorized,
5,521,164 shares outstanding at December 31, 2004 and
5,660,419 shares outstanding at December 31, 2003........................... 5,521 5,660
Capital in excess of par value................................................ 9,474 9,437
Retained earnings............................................................. 56,430 55,538
Accumulated other comprehensive income, net................................... (425) 1,296
----------- -----------
Total shareholders' equity.................................................... 71,000 71,931
----------- -----------
Total liabilities and shareholders' equity....................................$ 619,065 $ 644,302
=========== ===========
Consolidated Statements of Income
American National Bankshares Inc. and Subsidiary
(In thousands)
Unaudited
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ -------------------
2004 2003 2004 2003
-------- -------- -------- --------
Interest Income:
Interest and fees on loans....................................................$ 5,906 $ 5,891 $ 22,791 $ 25,228
Interest on deposits in other banks........................................... 64 41 132 110
Income on securities:
Federal agencies............................................................ 714 745 3,169 2,365
Mortgage-backed............................................................. 307 252 1,046 1,316
State and municipal......................................................... 530 505 2,088 1,961
Other....................................................................... 199 263 894 1,198
-------- ------- -------- --------
Total interest income....................................................... 7,720 7,697 30,120 32,178
-------- ------- -------- --------
Interest Expense:
Interest on deposits:
Demand...................................................................... 83 51 269 225
Money market................................................................ 143 104 428 478
Savings..................................................................... 118 126 439 713
Time........................................................................ 1,134 1,490 4,843 6,500
Interest on repurchase agreements............................................. 151 123 528 496
Interest on other borrowings.................................................. 238 244 972 979
-------- ------- -------- --------
Total interest expense...................................................... 1,867 2,138 7,479 9,391
-------- ------- -------- --------
Net Interest Income............................................................. 5,853 5,559 22,641 22,787
Provision for Loan Losses....................................................... 2,370 255 3,095 920
-------- ------- -------- --------
Net Interest Income after Provision
for Loan Losses............................................................... 3,483 5,304 19,546 21,867
-------- ------- -------- --------
Noninterest Income:
Trust and investment services................................................. 768 645 2,976 2,523
Service charges on deposit accounts........................................... 616 622 2,411 2,163
Other fees and commissions.................................................... 219 235 888 914
Mortgage banking income....................................................... 152 90 612 571
Securities gains (losses), net................................................ 38 69 157 115
Other income.................................................................. 68 133 451 385
-------- ------- -------- --------
Total noninterest income.................................................... 1,861 1,794 7,495 6,671
-------- ------- -------- --------
Noninterest Expense:
Salaries...................................................................... 1,326 1,611 6,795 6,844
Pension and other employee benefits........................................... 438 411 1,699 1,814
Occupancy and equipment....................................................... 613 608 2,457 2,513
Core deposit intangible amortization ......................................... 113 113 450 450
Other expenses................................................................ 925 875 3,610 3,490
-------- ------- -------- --------
Total noninterest expense................................................... 3,415 3,618 15,011 15,111
-------- ------- -------- --------
Income before Taxes............................................................. 1,929 3,480 12,030 13,427
Income Tax Provision............................................................ 499 1,014 3,367 3,914
-------- ------- -------- --------
Net Income......................................................................$ 1,430 $ 2,466 $ 8,663 $ 9,513
======== ======= ======== ========
Net Income Per Common Share:
Basic.........................................................................$ .26 $ .44 $ 1.55 $ 1.67
Diluted.......................................................................$ .26 $ .43 $ 1.54 $ 1.65
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
------------------------ ------------------------
2004 2003 Change 2004 2003 Change
----------- ----------- -------- ----------- ----------- --------
EARNINGS
Interest income $ 7,720 $ 7,697 .3 % $ 30,120 $ 32,178 (6.4)%
Interest expense 1,867 2,138 (12.7) 7,479 9,391 (20.4)
Net interest income 5,853 5,559 5.3 22,641 22,787 (.6)
Provision for loan losses 2,370 255 829.4 3 095 920 236.4
Noninterest income 1,861 1,794 3.7 7,495 6,671 12.4
Noninterest expense 3,415 3,618 (5.6) 15,011 15,111 (.7)
Income taxes 499 1,014 (50.8) 3,367 3,914 (14.0)
Net income 1,430 2,466 (42.0) 8,663 9,513 (8.9)
PER COMMON SHARE
Earnings per share - basic $ .26 $ .44 (40.9)% $ 1.55 $ 1.67 (7.2)%
Earnings per share - diluted .26 .43 (39.5) 1.54 1.65 (6.7)
Cash dividends paid .20 .19 5.3 .79 .75 5.3
Book value 12.86 12.71 1.2
Closing market price 24.21 26.08 (7.2)
FINANCIAL RATIOS
Return on average assets .90 % 1.54 % (64)bp 1.37 % 1.52 % (15)bp
Return on average shareholders' equity 7.96 13.92 (596) 12.06 13.52 (146)
Average equity to average assets 11.32 11.04 28 11.34 11.27 7
Net interest margin (FTE) 4.02 3.78 24 3.90 3.98 (8)
Efficiency ratio 42.87 47.90 (503) 48.51 49.74 (123)
PERIOD END BALANCES
Securities $ 188,163 $ 207,479 (9.3)%
Loans held for sale 971 560 73.4
Loans, net of unearned income 407,269 406,245 .3
Assets 619,065 644,302 (3.9)
Deposits 485,272 501,688 (3.3)
Repurchase agreements 38,945 47,035 (17.2)
FHLB borrowings 21,338 21,000 1.6
Shareholders' equity 71,000 71,931 (1.3)
AVERAGE BALANCES
Securities $ 190,281 $ 186,474 2.0 % $ 195,128 $ 168,587 15.7 %
Total loans 406,073 411,376 (1.3) 403,695 418,870 (3.6)
Interest-earning assets 610,363 615,981 (.9) 608,915 598,693 1.7
Assets 634,892 641,963 (1.1) 633,951 624,611 1.5
Interest-bearing deposits 414,418 427,753 (3.1) 415,402 422,097 (1.6)
Deposits 495,515 499,403 (.8) 491,525 488,397 .6
Repurchase agreements 44,821 47,389 (5.4) 46,787 40,917 14.3
FHLB borrowings 19,624 21,000 (6.6) 20,931 21,578 (3.0)
Shareholders' equity 71,858 70,888 1.4 71,862 70,367 2.1
CAPITAL
Average shares outstanding - basic 5,520,041 5,662,664 (2.5)% 5,591,839 5,702,625 (1.9)%
Average shares outstanding - diluted 5,570,386 5,725,481 (2.7) 5,642,056 5,764,127 (2.1)
Shares repurchased 5,000 10,000 159,968 125,000
Average price of shares repurchased $ 25.25 $ 25.61 $ 23.67 $ 25.03
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
------------------------ ------------------------
2004 2003 Change 2004 2003 Change
----------- ----------- -------- ----------- ----------- --------
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 5,599 $ 6,067 (7.7)% $ 5,292 $ 5,622 (5.9)%
Provision for loan losses 2,370 255 829.4 3,095 920 236.4
Charge-offs (67) (1,040) (93.6) (655) (1,457) (55.0)
Recoveries 80 10 700.0 250 207 20.8
----------- ----------- ------- ----------- ----------- -------
Ending balance $ 7,982 $ 5,292 50.8 $ 7,982 $ 5,292 50.8 %
NONPERFORMING ASSETS
Nonperforming loans:
90 days past due $ - $ 53 (100.0)%
Nonaccrual 8,113 3,262 148.7
OREO 221 303 (27.1)
----------- ----------- -------
Nonperforming assets $ 8,334 $ 3,618 130.3 %
ASSET QUALITY RATIOS **
Nonperforming assets to total assets 1.35 % .56 % 79 bp
Nonperforming loans to total loans 1.99 .82 117
Net chargeoffs to average loans .10 .30 (20)
Allowance for loan losses to total loans 1.96 1.30 66
Allowance for loan losses
to nonperforming loans .98 X 1.60 X (62)
Notes:
bp - Change is measured as difference in basis points
** - Balance sheet amounts used in calculations are based on period end balances