EXHIBIT 99.1
AMERICAN NATIONAL BANKSHARES INC.
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Contact: Neal A. Petrovich - (434) 773-2242
Senior Vice President and Chief Financial Officer
Distribute: PR Newswire, Virginia state/local news lines
Date: July 25, 2005
Traded: NASDAQ National Market Symbol: AMNB
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AMERICAN NATIONAL BANKSHARES INC. ANNOUNCES SECOND QUARTER EARNINGS
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FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares
Inc. (NASDAQ: AMNB), the holding company of American National Bank and Trust
Company, reported second quarter earnings of $.44 per share, a 2.3% increase
over the same quarter in 2004. Net income was $2.42 million in each of these
quarters. Net income for the first half of the year improved from $4.89 million
in 2004 to $5.01 million in 2005. Basic earnings per share increased 4.6% for
the first six months of the year, from $.87 in 2004 to $.91 in 2005; diluted
earnings per share increased 4.7%, from $.86 in 2004 to $.90 in 2005.
Second quarter 2005 results were impacted by income from the Bank's
membership in a bankcard processor and expenses from the Bank's expansion into
the Lynchburg, Virginia market. Second quarter 2004 results were impacted by a
gain on the sale of real estate. Excluding these items, net income increased
6.2% over the second quarter of 2004. Second quarter return on average assets
improved from 1.52% in 2004 to 1.56% in 2005.
Net interest income, the Corporation's largest source of revenue, increased
6.6% over the second quarter of 2004, due to a higher interest rate spread and
to loan growth. "We are pleased with the increase in net interest income,"
stated Charles H. Majors, President and Chief Executive Officer. "As we have
stated before, during the prior period of declining rates, we chose to take the
long-term view and to position our balance sheet in preparation for rising
interest rates. The increase in our interest margin during the current period of
rate increases is a beneficial result of this ongoing strategy."
AMERICAN NATIONAL BANKSHARES INC.
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Noninterest income decreased $87,000, or 4.3% from the second quarter of
2004 to 2005. Trust and investment services income increased 3.2% due to new
accounts and market value increases. Other fees and commissions advanced 23.0%,
due largely to growth in retail brokerage sales. Mortgage banking income fell
21.8% as a result of a decline in mortgage refinance activity. Other noninterest
income declined 46.0%. This quarterly change reflected $55,000 in the current
quarter from the sale of a bankcard processor, of which the Bank was a member,
and a $150,000 gain in 2004 on the sale of a former branch office.
Noninterest expense increased $271,000, or 6.9% from the second quarter of
2004 to the second quarter of 2005, due primarily to the initial costs of the
Lynchburg office, general salary increases, and health insurance expenses.
Excluding the costs of the Lynchburg office, noninterest expense increased 3.7%.
As announced in April, the Bank began an expansion into the Lynchburg,
Virginia market with the hiring of three experienced commercial bankers to open
a loan production office. The Bank recently hired Joan Butler, an experienced
trust officer in the Lynchburg market, to provide trust and investment services.
The Bank has obtained regulatory approval to open a retail branch at this
location, and expects to do so during the third quarter. "We are excited about
the growth potential of the Lynchburg market," stated Majors. "With the addition
of Joan to our team and the imminent opening of the retail branch, we will soon
offer a full menu of financial services to our new customers in Lynchburg."
The Russell Investment Group recently launched a new stock index, the
Russell Microcap Index, which is comprised of the companies within the second
half of the Russell 2000 Index and the next one thousand companies below this
group. American National Bankshares Inc. was added to this new index.
American National Bankshares Inc. is the holding company of American
National Bank and Trust Company, a community bank with fourteen full service
offices and two loan production offices. Full service offices are located in
Danville, Chatham, Collinsville, Gretna, Martinsville, Henry County, and South
Boston, Virginia and in Yanceyville, North Carolina. Loan production offices are
located in Lynchburg, Virginia and Greensboro, North Carolina. American National
AMERICAN NATIONAL BANKSHARES INC.
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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 nineteen 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
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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.
American National Bankshares Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Unaudited
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June 30
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2005 2004
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ASSETS
Cash and due from banks.........................................................$ 14,363 $ 14,829
Interest-bearing deposits in other banks........................................ 7,030 1,097
Securities available for sale, at fair value.................................... 147,633 180,052
Securities held to maturity..................................................... 19,221 19,528
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Total securities.............................................................. 166,854 199,580
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Loans held for sale............................................................. 1,470 1,059
Loans, net of unearned income .................................................. 416,528 400,613
Less allowance for loan losses.................................................. (8,378) (5,457)
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Net loans..................................................................... 408,150 395,156
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Bank premises and equipment, net................................................ 7,610 7,710
Core deposit intangibles, net................................................... 259 709
Accrued interest receivable and other assets.................................... 11,117 10,431
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Total assets..................................................................$ 616,853 $ 630,571
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits - noninterest-bearing.........................................$ 91,653 $ 75,121
Demand deposits - interest-bearing............................................ 76,541 71,071
Money market deposits......................................................... 39,289 50,434
Savings deposits.............................................................. 81,157 84,393
Time deposits................................................................. 190,552 203,878
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Total deposits.............................................................. 479,192 484,897
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Repurchase agreements......................................................... 44,241 47,911
FHLB borrowings............................................................... 19,313 23,763
Accrued interest payable and other liabilities................................ 2,814 3,341
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Total liabilities........................................................... 545,560 559,912
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Shareholders' Equity:
Common stock, $1 par, 10,000,000 shares authorized,
5,445,186 shares outstanding at June 30, 2005 and
5,593,430 shares outstanding at June 30, 2004............................... 5,445 5,593
Capital in excess of par value................................................ 9,382 9,446
Retained earnings............................................................. 56,810 56,620
Accumulated other comprehensive income (loss), net............................ (344) (1,000)
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Total shareholders' equity.................................................. 71,293 70,659
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Total liabilities and shareholders' equity..................................$ 616,853 $ 630,571
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American National Bankshares Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
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Three Months Ended Six Months Ended
June 30 June 30
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2005 2004 2005 2004
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Interest Income:
Interest and fees on loans......................................................$ 6,382 $ 5,572 $ 12,414 $ 11,313
Interest and dividends on securities:
Taxable....................................................................... 1,021 1,284 2,140 2,551
Tax-exempt.................................................................... 497 505 1,024 996
Dividends..................................................................... 59 36 105 87
Other interest income........................................................... 28 13 70 44
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Total interest income......................................................... 7,987 7,410 15,753 14,991
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Interest Expense:
Interest on deposits............................................................ 1,612 1,490 3,132 3,087
Interest on repurchase agreements............................................... 214 124 367 251
Interest on other borrowings.................................................... 251 250 495 491
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Total interest expense........................................................ 2,077 1,864 3,994 3,829
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Net Interest Income............................................................. 5,910 5,546 11,759 11,162
Provision for Loan Losses....................................................... 240 255 540 470
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Net Interest Income after Provision
for Loan Losses............................................................... 5,670 5,291 11,219 10,692
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Noninterest Income:
Trust and investment services................................................... 767 743 1,487 1,471
Service charges on deposit accounts............................................. 632 631 1,191 1,205
Other fees and commissions...................................................... 273 222 524 468
Mortgage banking income......................................................... 165 211 265 344
Securities gains, net........................................................... - 14 45 119
Other........................................................................... 121 224 513 291
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Total noninterest income...................................................... 1,958 2,045 4,025 3,898
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Noninterest Expense:
Salaries........................................................................ 2,049 1,846 3,921 3,614
Pension and other employee benefits............................................. 503 412 971 834
Occupancy and equipment......................................................... 633 647 1,234 1,264
Bank franchise tax.............................................................. 134 138 272 278
Core deposit intangible amortization............................................ 113 113 225 225
Other........................................................................... 788 793 1,588 1,535
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Total noninterest expense..................................................... 4,220 3,949 8,211 7,750
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Income Before Income Tax Provision.............................................. 3,408 3,387 7,033 6,840
Income Tax Provision............................................................ 984 963 2,026 1,946
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Net Income......................................................................$ 2,424 $ 2,424 $ 5,007 $ 4,894
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Net Income Per Common Share:
Basic.........................................................................$ .44 $ .43 $ .91 $ .87
Diluted.......................................................................$ .44 $ .43 $ .90 $ .86
Average Common Shares Outstanding:
Basic.........................................................................5,472,021 5,610,462 5,491,211 5,629,370
Diluted.......................................................................5,517,736 5,657,721 5,538,074 5,681,795
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Unaudited
Three Months Ended June 30 Six Months Ended June 30
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2005 2004 Change 2005 2004 Change
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EARNINGS
Interest income $ 7,987 $ 7,410 7.8 % $ 15,753 $ 14,991 5.1 %
Interest expense 2,077 1,864 11.4 3,994 3,829 4.3
Net interest income 5,910 5,546 6.6 11,759 11,162 5.3
Provision for loan losses 240 255 (5.9) 540 470 14.9
Noninterest income 1,958 2,045 (4.3) 4,025 3,898 3.3
Noninterest expense 4,220 3,949 6.9 8,211 7,750 5.9
Income taxes 984 963 2.2 2,026 1,946 4.1
Net income 2,424 2,424 - 5,007 4,894 2.3
PER COMMON SHARE
Earnings per share - basic $ .44 $ .43 2.3 % $ .91 $ .87 4.6 %
Earnings per share - diluted .44 .43 2.3 .90 .86 4.7
Cash dividends paid .21 .20 5.0 .41 .39 5.1
Book value 13.09 12.63 3.6
Closing market price 23.58 21.78 8.3
FINANCIAL RATIOS
Return on average assets 1.56 % 1.52 % 4 bp 1.61 % 1.53 % 8 bp
Return on average shareholders' equity 13.58 13.51 7 14.07 13.57 50
Average equity to average assets 11.52 11.25 27 11.47 11.28 19
Net interest margin (FTE) 4.14 3.80 34 4.12 3.82 30
Efficiency ratio 51.87 51.26 61 50.31 50.48 (17)
PERIOD END BALANCES
Securities $ 166,854 $ 199,580 (16.4)%
Loans held for sale 1,470 1,059 38.8
Loans, net of unearned income 416,528 400,613 4.0
Assets 616,853 630,571 (2.2)
Deposits 479,192 484,897 (1.2)
Repurchase agreements 44,241 47,911 (7.7)
FHLB borrowings 19,313 23,763 (18.7)
Shareholders' equity 71,293 70,659 .9
AVERAGE BALANCES
Securities $ 172,577 $ 201,131 (14.2)% $ 176,586 $ 196,849 (10.3)%
Total loans 420,612 405,717 3.7 415,598 406,881 2.1
Interest-earning assets 597,153 612,418 (2.5) 597,583 613,559 (2.6)
Assets 619,758 637,890 (2.8) 620,333 639,356 (3.0)
Interest-bearing deposits 397,602 417,372 (4.7) 402,860 421,095 (4.3)
Deposits 480,625 493,036 (2.5) 483,605 492,241 (2.2)
Repurchase agreements 44,274 47,980 (7.7) 41,813 48,628 (14.0)
FHLB borrowings 21,426 22,222 (3.6) 21,360 21,819 (2.1)
Shareholders' equity 71,397 71,755 ( .5) 71,163 72,105 (1.3)
CAPITAL
Average shares outstanding - basic 5,472,021 5,610,462 (2.5)% 5,491,211 5,629,370 (2.5)%
Average shares outstanding - diluted 5,517,736 5,657,721 (2.5) 5,538,074 5,681,795 (2.5)
Shares repurchased 48,950 43,368 79,350 75,568
Average price of shares repurchased $ 24.39 $ 23.29 $ 24.54 $ 24.12
Financial Highlights
American National Bankshares Inc. and Subsidiary
(Dollars in thousands, except per share data)
Unaudited
Three Months Ended June 30 Six Months Ended June 30
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2005 2004 Change 2005 2004 Change
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ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 8,127 $ 5,323 52.7 % $ 7,982 $ 5,292 50.8 %
Provision for loan losses 240 255 (5.9) 540 470 14.9
Charge-offs (39) (196) (80.1) (272) (419) (35.1)
Recoveries 50 75 (33.3) 128 114 12.3
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Ending balance $ 8,378 $ 5,457 53.5 $ 8,378 $ 5,457 53.5
NONPERFORMING ASSETS
Nonperforming loans:
90 days past due $ 290 $ - NA %
Nonaccrual 8,216 4,088 101.0
OREO 158 251 (37.1)
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Nonperforming assets $ 8,664 $ 4,339 99.7 %
ASSET QUALITY RATIOS **
Net chargeoffs to average loans (.01)% .06 % (7)bp .07 % .15 % (8)bp
Nonperforming assets to total assets 1.40 .69 71
Nonperforming loans to total loans 2.04 1.02 102
Allowance for loan losses to total loans 2.01 1.36 65
Allowance for loan losses
to nonperforming loans .98 X 1.33 X (35)
Notes:
bp - Change is measured as difference in basis points
** - Balance sheet amounts used in calculations are based on period end balances