SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-12820
AMERICAN NATIONAL BANKSHARES INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1284688
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
628 Main Street
Danville, Virginia 24541
(Address of principal executive offices) (Zip Code)
(804) 792-5111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X
No .
The number of shares outstanding of the issuer's common
stock as of November 9, 1995 was 2,400,000.
AMERICAN NATIONAL BANKSHARES INC.
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of September 30, 1995
and December 31, 1994......................................... 3
Consolidated Condensed Statements of Income for the three months
ended September 30, 1995 and 1994............................. 4
Consolidated Condensed Statements of Income for the nine months
ended September 30, 1995 and 1994............................. 5
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994............................. 6
Notes to Consolidated Condensed Financial Statements............ 7-8
Item 2. Management's Discussion and Analysis of the Financial Condition
and Results of Operations....................................... 9-14
Part II. Other Information............................................... 15
SIGNATURES ................................................................ 15
2
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
September 30 December 31
ASSETS 1995 1994
---------- -----------
CASH AND DUE FROM BANKS...............................$ 11,436 $ 9,177
FEDERAL FUNDS SOLD.................................... -- 4,650
INTEREST-BEARING DEPOSITS IN OTHER BANKS.............. 112 1,586
INVESTMENT SECURITIES:
U. S. Government and federal agencies.............. 97,991 68,761
State and municipal................................ 9,756 10,480
Other investments.................................. 10 10
---------- --------
Total investment securities (market value
$107,945 at September 30, 1995 and $77,231
at December 31, 1994)...................... 107,757 79,251
---------- --------
LOANS................................................. 174,920 155,436
Less: Unearned income....................... (960) (1,957)
Reserve for loan losses............... (2,600) (2,353)
---------- --------
Net loans.................................... 171,360 151,126
---------- --------
CORE DEPOSIT INTANGIBLES.............................. 2,896 --
OTHER ASSETS.......................................... 8,939 7,978
---------- --------
Total assets.................................$ 302,500 $253,768
========== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
LIABILITIES:
Demand deposits--non-interest bearing..............$ 37,009 $ 27,827
Demand deposits--interest bearing.................. 35,856 31,773
Money market deposits.............................. 18,402 21,916
Savings deposits................................... 51,857 54,029
Time deposits...................................... 116,812 80,316
---------- --------
Total deposits............................... 259,936 215,861
Federal funds purchased............................ 800 --
Repurchase agreements.............................. 6,082 6,105
Accrued interest payable and other liabilities..... 2,164 1,017
---------- --------
Total liabilities............................ 268,982 222,983
---------- --------
SHAREHOLDERS' INVESTMENT:
Common stock, $1 par, 3,000,000 shares authorized,
2,400,000 shares outstanding..................... 2,400 2,400
Capital in excess of par value..................... 5,400 5,400
Retained earnings.................................. 25,537 23,014
Net unrealized appreciation (depreciation)......... 181 (29)
---------- --------
Total shareholders' investment............... 33,518 30,785
---------- --------
Total liabilities and
shareholders' investment...................$ 302,500 $253,768
========== ========
The accompanying notes are an integral part of these balance sheets.
3
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands)
Three Months Ended
September 30
------------------
1995 1994
INTEREST INCOME: ---- ----
Interest and fees on loans..................................$3,884 $3,093
Interest on federal funds sold and other.................... 44 34
Income on investment securities:
U. S. Government.......................................... 973 765
Federal Agencies.......................................... 37 40
State and municipal (tax exempt).......................... 131 149
------ ------
Total interest income................................. 5,069 4,081
------ ------
INTEREST EXPENSE:
Interest on deposits:
Demand.................................................... 245 182
Money Market.............................................. 122 117
Savings................................................... 374 396
Time...................................................... 1,432 872
Interest on federal funds purchased and
repurchase agreements..................................... 78 12
------ ------
Total interest expense................................ 2,251 1,579
------ ------
NET INTEREST INCOME............................................ 2,818 2,502
PROVISION FOR LOAN LOSSES...................................... 160 90
------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............ 2,658 2,412
------ ------
NON-INTEREST INCOME:
Trust revenue............................................... 376 294
Service charges on deposit accounts......................... 97 70
Fees and insurance premiums................................. 20 29
Other....................................................... 32 29
------ ------
Total non-interest income............................. 525 422
------ ------
NON-INTEREST EXPENSE:
Salaries.................................................... 769 690
Pension and other employee benefits......................... 182 162
Occupancy and equipment .................................... 208 220
FDIC insurance.............................................. (15) 120
Postage and printing........................................ 74 51
Other....................................................... 329 253
------ ------
Total non-interest expense............................ 1,547 1,496
------ ------
INCOME BEFORE INCOME TAX PROVISION............................. 1,636 1,338
INCOME TAX PROVISION........................................... 513 440
------ ------
NET INCOME.....................................................$1,123 $ 898
====== ======
NET INCOME PER COMMON SHARE, based on
2,400,000 shares outstanding................................ $.47 $.37
CASH DIVIDENDS PAID per common share........................... $.00 $.00
The accompanying notes are an integral part of these statements.
4
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands)
Nine Months Ended
September 30
------------------
1995 1994
INTEREST INCOME: ---- ----
Interest and fees on loans..................................$11,015 $ 8,562
Interest on federal funds sold and other.................... 73 124
Income on investment securities:
U. S. Government.......................................... 2,527 2,369
Federal Agencies.......................................... 113 234
State and municipal (tax exempt).......................... 430 464
------- -------
Total interest income................................. 14,158 11,753
------- -------
INTEREST EXPENSE:
Interest on deposits:
Demand.................................................... 731 528
Money Market.............................................. 372 353
Savings................................................... 1,127 1,163
Time...................................................... 3,527 2,603
Interest on federal funds purchased and
repurchase agreements..................................... 221 24
------- -------
Total interest expense................................ 5,978 4,671
------- -------
NET INTEREST INCOME............................................ 8,180 7,082
PROVISION FOR LOAN LOSSES...................................... 374 189
------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............ 7,806 6,893
------- -------
NON-INTEREST INCOME:
Trust revenue............................................... 1,067 970
Service charges on deposit accounts......................... 264 199
Fees and insurance premiums................................. 66 80
Other....................................................... 95 79
------- -------
Total non-interest income............................. 1,492 1,328
------- -------
NON-INTEREST EXPENSE:
Salaries.................................................... 2,245 2,054
Pension and other employee benefits......................... 497 450
Occupancy and equipment..................................... 610 645
FDIC insurance.............................................. 227 364
Postage and printing........................................ 183 186
Other....................................................... 934 754
------- -------
Total non-interest expense............................ 4,696 4,453
------- -------
INCOME BEFORE INCOME TAX PROVISION............................. 4,602 3,768
INCOME TAX PROVISION........................................... 1,431 1,194
------- -------
NET INCOME.....................................................$ 3,171 $ 2,574
======= =======
NET INCOME PER COMMON SHARE, based on
2,400,000 shares outstanding................................ $1.32 $1.07
CASH DIVIDENDS PAID per common share........................... $ .27 $ .25
The accompanying notes are an integral part of these statements.
5
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30
------------------
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 13,083 $ 11,932
Fees and commissions received 1,397 1,313
Interest paid (5,584) (4,680)
Cash paid to suppliers and employees (3,054) (3,827)
Income taxes paid (1,303) (1,136)
-------- --------
Net cash provided by operating activities 4,539 3,602
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of branch operations 30,626 --
Proceeds from maturing investment securities 17,820 32,376
Purchase of investment securities and
corporate stock (46,099) (20,738)
Proceeds from maturing interest bearing deposits
in other banks 1,474 2,000
Interest bearing deposits in other banks -- (73)
Net increase in loans made to customers (18,459) (12,544)
Capital expenditures (322) (90)
-------- --------
Net cash (used) provided by investing activities (14,960) 931
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand, money market
and savings accounts (7,876) (2,361)
Net increase in certificates of deposit 15,777 2,550
Net increase in repurchase agreements and
federal funds purchased 777 595
Dividends paid (648) (600)
-------- --------
Net cash provided by financing activities 8,030 184
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,391) 4,717
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,827 7,858
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,436 $ 12,575
======== ========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Net income $ 3,171 $ 2,574
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 292 340
Provision for possible loan losses 374 189
Deferred income tax (benefit) provision (38) 4
Increase in accrued interest receivable
and other assets (513) (293)
Increase in accrued interest payable
and other liabilities 1,253 788
-------- --------
Net cash provided by operating activities $ 4,539 $ 3,602
======== ========
The accompanying notes are an integral part of these statements.
6
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
necessary to present fairly American National Bankshares' financial
position as of September 30, 1995, the results of its operations
for the three and nine months periods and its cash flows for the
nine months period then ended. A summary of the Corporation's
significant accounting policies is set forth in Note 1 to the
Consolidated Financial Statements in the Corporation's Annual
Report to Shareholders for 1994.
2. Investment Securities
Management determines the appropriate classification of
securities at the time of purchase. Securities classified as held
for investment are those securities that management intends to hold
to maturity, subject to continued credit-worthiness of the issuer,
and that the Bank has the ability to hold on a long-term basis.
Accordingly, these securities are stated at cost, adjusted for
amortization of premium and accretion of discount on the level
yield method. Securities designated as available for sale have
been adjusted to their respective market values and a corresponding
adjustment made to shareholder's investment at September 30, 1995
and December 31, 1994.
3. Commitments and Contingencies
The Bank has available to it a line of credit in the amount of
$5,153,000 with the Federal Home Loan Bank of Atlanta. As of
September 30, 1995 and December 31, 1994, there were no borrowings
outstanding under this line of credit.
Commitments to extend credit, which amount to $35,930,000 at
September 30, 1995 and $34,150,000 at December 31, 1994, represent
legally binding agreements to lend to a customer with fixed
expiration dates or other termination clauses. Since many of the
commitments are expected to expire without being funded, the total
commitment amounts do not necessarily represent future liquidity
requirements.
Standby letters of credit are conditional commitments issued by
the Bank guaranteeing the performance of a customer to a third
party. Those guarantees are primarily issued to support public and
private borrowing arrangements. At September 30, 1995 and December
31, 1994 the Bank had $630,000 and $672,000 in outstanding standby
letters of credit.
4. New Accounting Pronouncements
During the first quarter of 1995 the Bank adopted the
provisions of Statement of Financial Accounting Standards Nos. 114
and 118, which address accounting by creditors for loan impairment.
The effect of adopting these standards did not have a material
impact on the Bank's financial position or the results of
operations.
AMERICAN NATIONAL BANKSHARES INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS and CAPITAL
The Corporation's net income for the third quarter of 1995 was
$1,123,000, an increase of 25% from the $898,000 earned in the
third quarter of 1994. For the nine months period ended September
30, 1995, net income was $3,171,000, a 23% increase from the
$2,574,000 reported in the same period of 1994.
Net income per common share was $.47 for the third quarter of
1995, compared to $.37 recorded during the same period of 1994.
For the first nine months of 1995 and 1994 net income per share was
$1.32 and $1.07, respectively. Per share earnings for both periods
have been computed on 2,400,000 weighted average shares of common
stock outstanding.
On an annualized basis, return on average total assets was
1.65% for the third quarter of 1995 and 1.69% for the first nine
months of 1995 compared with 1.47% for the third quarter of 1994
and 1.41% for the first nine months of 1994.
Return on average common shareholders' equity was 13.69% for
the third quarter of 1995 and 13.19% for the first nine months of
1995 compared to 11.75% for the same quarter of 1994 and 11.44% for
the first nine months of 1994.
TRENDS AND FUTURE EVENTS
As reported by the Company in its SEC Form 8-K filed September
7, 1995, the Company acquired the branch office of Crestar Bank at
Gretna, Virginia on August 24, 1995. In addition to the branch
facilities at Gretna, the Company acquired $2,150,000 in loans and
assumed deposits of $36,295,000. Without regard to the purchased
loans of the Gretna branch office, loans increased $3,227,000
during the third quarter of 1995. This was an increase of 2%
during the quarter. During the first nine months of 1995 loans
increased (without the purchased Gretna branch loans) $18,084,000
or 12%. During the third quarter of 1995 deposits (without regard
to the assumed deposits of the Gretna branch office) increased by
$12,340,000 or 6%. Without regard to the Gretna branch deposits,
deposits of the Bank increased by $7,780,000 or 4% during the first
nine months of 1995.
The increase in loans during the nine months period is the
result of a continued strong loan demand which Management views as
an indication of a continuing strong local economy.
As evidenced in the Consolidated Statements of Cash Flows on
page 6, funds received by the Bank from the assumption of deposits
in the Gretna transaction were used primarily to purchase
investment securities. Investment securities increased $28,506,000
during the first nine months of 1995.
During the month of May 1995, the reserves of the Bank
Insurance Fund held by the Federal Deposit Insurance Corporation
reached its legally mandated level. This allowed the FDIC to
reduce the premiums charged to banks effective June 1, 1995.
American National Bank and Trust Company continues to meet the
highest safety classification set by the FDIC and its annual
premium rate was reduced from $.23 per thousand of deposits to $.04
per thousand of deposits. The Bank received a $131,000 refund from
the FDIC in September representing a reduction for the months of
June through September. Based on deposits held at September 30,
1995 the decrease in FDIC premiums will approximate $494,000 per
year in future periods or until such time the rate may be adjusted.
On September 27, 1995 the Company filed an SEC Form 8-K
announcing a proposed merger of American National Bank and Trust
Company and Mutual Savings Bank, F.S.B. In accordance with the
terms of the agreement, American National Bankshares Inc. will
acquire Mutual pursuant to a merger of Mutual with and into
American National Bank and Trust Company with American National
Bank and Trust Company as the surviving entity resulting from the
merger. Upon consummation of the merger, each share of the common
stock of Mutual issued and outstanding will be converted into and
exchanged for .705 of a share of the common stock of American
National Bankshares Inc. Assuming regulatory and shareholder
approval is completed, it is anticipated that the merger will take
place in the first quarter of 1996. The addition of Mutual's
assets of approximately $84,000,000 will increase the Company's
total assets to approximately $385,000,000.
PENDING LITIGATION
On July 28, 1995 Charles A. Womack, Jr., Register Acquisition
Corp. and Andrew C. Boor, Trustee of an Employee Stock Ownership
Plan to be Formed served American National Bank and Trust Company
with a Bill of Complaint. The suit was filed in the Circuit Court
of Pittsylvania County. The suit names as defendants the Bank in
its capacity as Executor under the Will of E. Stuart James Grant,
as Trustee of the E. Stuart James Grant Charitable Trust and the
Bank in its own capacity. The suit seeks to compel the Bank to
sell to plaintiffs the stock of the Register Publishing Company,
the primary asset of the Grant Estate. In the alternative,
plaintiffs seek damages of $10,000,000. Management believes the
complaint is without merit and intends to defend vigorously the
allegations in this Bill of Complaint. A motion has been filed by
the Bank to dismiss the suit and a hearing was held before the
court on October 10, 1995. A ruling is expected at any time on
this motion. This suit was filed after a federal district court
for the Western District of Virginia dismissed on July 14, 1995
(and reaffirmed its dismissal on November 1, 1995), a suit seeking
to compel the sale of the Register Publishing Company to Trustees
of the Register Publishing Company Employee Stock Ownership Plan.
The Bank was named as a defendant in its capacity as Executor and
Trustee. In the opinion of management, the outcome of the above
legal proceeding will not have a material adverse affect on the
financial position of the Bank.
NET INTEREST INCOME
Net interest income is the excess of interest income over
interest expense. During the third quarter of 1995, net interest
income increased by $316,000 or 12.6% over the same quarter a year
ago. For the first nine months of 1995, net interest income
increased $1,098,000 or 15.5% over the same period of 1994. The
increase for both periods was attributable to an increase in the
volume of both loans and investment securities. During the second
and third calendar quarters of 1995, market interest rates have
remained relatively steady showing only minor fluctuations.
Taxable equivalent net yield on interest earning assets was
4.45% in the third quarter of 1995, compared to 4.37% for the third
quarter of 1994, and 4.57% for the first nine months of 1995
compared to 4.13% for the first nine months of 1994.
During the next twelve months repricing opportunities in
liabilities will exceed repricing opportunities in assets by
approximately $35,000,000 or 11% of assets. This makes the
Corporation slightly liability sensitive. At June 30, 1995 the
Corporation was asset sensitive by 1% of assets. This change
during the third quarter is the result of assuming $36,295,000 in
deposits and acquiring only $2,150,000 in loans from the
acquisition of the branch office of Crestar Bank in Gretna,
Virginia on August 24, 1995. The funds received from Crestar were
primarily used to purchase securities with yields greater than one
year. Any increase in market interest rates during the next twelve
months may tend to decrease the Corporation's taxable equivalent
net yield on interest earning assets. It should be recognized
however, that the Corporation's interest-sensitive position changes
quickly as a result of management decisions and market conditions.
In any event this interest-sensitive position is not expected to
have a substantial effect upon the earnings of the Corporation
during the next twelve months.
ASSET QUALITY
Nonperforming assets include loans on which interest is no
longer accrued, loans classified as trouble debt restructurings and
foreclosed properties. There were no foreclosed properties held
during the reporting period. Nonperforming assets were $83,000 at
September 30, 1995 and $171,000 at December 31, 1994, a decrease of
$88,000 during the first nine months of 1995.
For the nine months ended September 30, 1995, the gross amount
of interest income that would have been recorded on nonaccrual
loans and restructured loans at September 30, 1995, if all such
loans had been accruing interest at the original contractual rate,
was $10,000. No interest payments were recorded during the nine
months period of 1995 as interest income for all such nonperforming
loans.
Nonperforming assets as a percentage of net loans were .05% at
September 30, 1995 and .11% at December 31, 1994. Loans past due
90 days or more and still accruing interest totaled $159,000 at
September 30, 1995 and $113,000 at December 31, 1994. This was an
increase of $46,000 during the first nine months of 1995.
Management does not anticipate any significant increase in
nonperforming assets in the foreseeable future.
PROVISION and RESERVE FOR LOAN LOSSES
The provision for loan losses for the third quarter of 1995
was $160,000 compared to $90,000 for the same quarter of 1994. The
provision for loan losses was $374,000 for the nine months period
ended September 30, 1995 and $189,000 for the same period of 1994.
The increase in the provision for loan losses for both periods was
primarily the result of increases in loans.
The reserve for loan losses was $2,600,000 at September 30,
1995 and $2,353,000 at December 31, 1994. As a percentage of total
loans (less unearned income), the reserve for loan losses was 1.50%
at September 30, 1995 and 1.53% at December 31, 1994.
In Management's opinion, the current reserve for loan losses
is adequate.
NON-INTEREST INCOME
Non-interest income for the third quarter of 1995 was
$525,000, an increase of 24% from the $422,000 reported in the
third quarter of 1994. The increase in non-interest income
during the quarter was primarily attributable to a 28% increase in
trust department income as a result of new business booked and
increased activity of existing accounts and a 28% increase in
service charges on deposit accounts from increased activity and an
increased volume of deposits from the acquisition of the Gretna
branch office. It also included a 31% decrease in fees and
insurance premiums primarily due to a decline in loans subject to
such fees and premiums and a 10% increase in other non-interest
income.
For the first nine months of 1995 non-interest income was
$1,492,000, an increase of 12% from the $1,328,000 reported for the
same period of 1994. This included an increase of 10% in trust
department income resulting from new business booked and increased
activity of existing accounts and an increase of 33% in service
charges on deposit accounts resulting from both increased deposit
account activity and new accounts. Fees and insurance premiums for
the nine months period decreased 18% due to a reduced volume of
loans subject to fees. Other non-interest income increased $16,000
or 20%.
NON-INTEREST EXPENSE
Non-interest expense for the third quarter of 1995 was
$1,547,000, up 3% from the $1,496,000 reported in the third quarter
of 1994. The increase in non-interest expense for the quarterly
period over 1994 included an 11% increase in salaries, due in part
to the additional employees of the Gretna branch office, a 12%
increase in pension and other employee benefits, also due in part
from the additional employees of the Gretna branch office, a 5%
decrease in occupancy and equipment expense. Also included was a
113% decrease in FDIC premiums resulting from a refund in the
amount of $131,000 from the FDIC which represents a decrease in
FDIC premiums from June 1, 1995 through September 30, 1995. Also
included was a 45% increase in postage and printing due to
increased postage rates and additional printing related to the
acquisition of the Gretna branch office and a 30% increase in other
expense primarily related to the acquisition of the Gretna branch
office and the use of consultants for training.
For the first nine months of 1995 non-interest expense was
$4,696,000, up 5% from the $4,453,000 reported for the same period
of 1994. The increase in non-interest expense for the first nine
months period of 1995 over the same period of 1994 included a 9%
increase in salaries, due in part to additional personnel at the
Gretna branch office, a 10% increase in pension and other employee
benefits due in part to the additional personnel at the Gretna
branch office, a 5% decrease in occupancy and equipment expense, a
38% decrease in FDIC premiums as mentioned above, a 2% decrease in
postage and printing and a 24% increase in other expense due
primarily to expenses related to the acquisition of the Gretna
branch office and consultant fees for personnel training.
INCOME TAX PROVISION
The income tax provision for the third quarter of 1995 was
$513,000, an increase of $73,000 from the $440,000 reported for the
same period a year earlier. The income tax provision for the nine
months period in 1995 was $1,431,000, an increase of $237,000 from
the $1,194,000 reported for the same period of 1994. The
Corporation's overall effective tax rates were 31.1% and 31.7% for
the nine months periods ended September 30, 1995 and 1994,
respectively. Changes in the income tax provision were primarily
attributable to the corresponding changes in taxable income.
CAPITAL MANAGEMENT
Federal regulatory agencies have adopted risk-based capital
ratio guidelines requiring percentages to be applied to various
assets including off-balance-sheet assets in relation to their
perceived risk. Total capital is defined as core (Tier I) capital
and supplementary (Tier II) capital. The Corporation's Tier I
capital consists primarily of shareholders' equity, while Tier II
includes reserves for loan losses. The guidelines require that
total capital (Tier I and Tier II) of 8% be held against total
risk-adjusted assets, at least half of which (4%) must be Tier I
capital.
At September 30, 1995 the Corporation had a ratio of 18.9% for
Tier I and a combined total ratio for Tier I and Tier II capital of
20.2%. At December 31, 1994 these ratios were 21.0% for Tier I and
22.3% for the combined total of Tier I and Tier II.
The Corporation's leverage ratios (shareholder's equity
divided by assets at the close of the reporting period) were 11.1%
and 12.1% at September 30, 1995 and December 31, 1994,
respectively.
Cash dividends are normally declared during the second and
fourth calendar quarters and consequently no dividend was declared
during the third quarter ending September 30, 1995.
LIQUIDITY
The Corporation had a liquidity position with a ratio of 33%
of net liquid assets to net liabilities at September 30, 1995. At
December 31, 1994, this ratio was 34%.
Management constantly monitors and plans the Corporation's
liquidity position for future periods. Liquidity is provided from
cash and due from banks, federal funds sold, interest-bearing
deposits in other banks, repayments from loans, seasonal increases
in deposits, lines of credit from two correspondent banks and two
federal agency banks and a planned structured continuous maturity
of investments. Management believes that these factors provide
sufficient and timely liquidity for the foreseeable future.
PART II
OTHER INFORMATION
Item:
1. Legal Proceedings
None
2. Changes in securities
None
3. Defaults upon senior securities
None
4. Results of votes of security holders
None
5. Other information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits - Financial Data Schedule EX-27
(b) Reports on Form 8-K - There were two reports on Form 8-K
filed for the three months ended September 30, 1995. The
reports were filed September 7, 1995 and September 27, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERICAN NATIONAL BANKSHARES INC.
Charles H. Majors
President and Chief
Date - November 9, 1995 Executive Officer
David Hyler
Senior Vice-President and
Secretary-Treasurer
Date - November 9, 1995 (Chief Financial Officer)