-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wzs85Y9Ko5Kz0oHsh5idKhjdpYeIF70KSgZOIhmNXotYitYq5wO6X7sd1P4ViagG kQknphzbmU8knAKLgYvekw== 0000741516-95-000017.txt : 19951208 0000741516-95-000017.hdr.sgml : 19951208 ACCESSION NUMBER: 0000741516-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN NATIONAL BANKSHARES INC CENTRAL INDEX KEY: 0000741516 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 541284688 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12820 FILM NUMBER: 95593272 BUSINESS ADDRESS: STREET 1: 628 MAIN ST CITY: DANVILLE STATE: VA ZIP: 24541 BUSINESS PHONE: 8047925111 MAIL ADDRESS: STREET 1: 628 MAIN STREET CITY: DANVILLE STATE: VA ZIP: 24541 10-Q 1 3RD QTR 1995 FILING 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) EX-27 2
9 1,000 3-MOS 6-MOS 9-MOS YEAR DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995 JAN-01-1995 APR-01-1995 JUL-01-1995 JAN-01-1995 MAR-31-1995 JUN-30-1995 SEP-30-1995 SEP-30-1995 9236 7554 11436 11436 83 97 112 112 0 900 0 0 0 0 0 0 2807 2821 36026 36026 74276 68883 71731 71731 73579 69030 71919 71919 163036 169734 174920 174920 2415 2527 2600 2600 250552 251543 302500 302500 209776 211301 259936 259936 0 0 0 0 8917 7939 9046 9046 0 0 0 0 2400 2400 0 0 0 0 0 0 0 0 2400 2400 29459 29630 31118 31118 250552 251543 302500 302500 3432 3699 3884 11015 997 932 1141 3070 15 14 44 73 4444 4645 5069 14158 1723 1861 2173 5757 1786 1941 2251 5978 2658 2704 2818 8180 93 121 160 374 0 0 0 0 1566 1583 1547 4696 1478 1488 1636 4602 1478 1488 1636 4602 0 0 0 0 0 0 0 0 1009 1039 1123 3171 .42 .43 .47 1.32 .42 .43 .47 1.32 4.52 4.60 4.39 4.49 141 244 83 83 51 132 159 159 105 101 0 0 0 0 0 0 2353 2415 2527 2353 45 22 108 175 14 13 21 48 2415 2527 2600 2600 2415 2527 2513 2513 0 0 0 0 0 0 87 87
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