EX-99 2 ex991102004-8k.txt 10/20/04 8K PRESS RELEASE & RESULTS OF OPERATIONS EXHIBIT 99.1 Contact: Neal A. Petrovich - (434) 773-2242 Senior Vice President and Chief Financial Officer Distribute: PR Newswire, Virginia State/Local Newslines Date: October 20, 2004 Traded: NASDAQ National Market Symbol: AMNB AMERICAN NATIONAL BANKSHARES INC. REPORTS THIRD QUARTER EARNINGS FOR IMMEDIATE RELEASE (Danville, Virginia) -- American National Bankshares Inc. (NASDAQ: AMNB) reported net income of $2.3 million for the third quarter of 2004. Basic and diluted earnings per share were $.42, the same as in the third quarter of 2003. During the first nine months of 2004, earnings per share increased 4.9% over 2003, on both a basic and diluted basis. Net interest income, the Corporation's largest source of revenue, advanced 1.0% from the third quarter of 2003 to the third quarter of 2004. Recent upward movements in the federal funds rate and prime rate produced increases in the income earned on loans and investments. These increases offset the impact of a decline in loans, due primarily to pay-downs of out-of-market participation loans. "Growing our loan portfolio without sacrificing our underwriting standards remains our number one goal," stated Charles H. Majors, President and Chief Executive Officer. "Looking forward, we will focus on increasing the loan portfolio through strong business development efforts, new products, and our recent expansion into the Greensboro, North Carolina area." Noninterest income declined $64,000, or 3.6% from the third quarter of 2003 to 2004. An increase in trust income was offset by a decrease in mortgage banking fees resulting from a decline in home mortgage refinancings. The third quarter of 2003 also included securities gains which did not occur in the current quarter. Noninterest expense continues to be well contained. Comparing the third quarter of 2004 with the same quarter in 2003, noninterest expense increased only $44,000 or 1.2%. "Expense control has long been a hallmark of American National," stated Majors. "One indication of our cost control efforts is the efficiency ratio, which continues to be significantly better than the peer average." Average deposits declined $14.3 million, or 2.9% from 2003's third quarter to the third quarter of 2004, as the Corporation did not strive to retain certain certificates of deposit with high interest rates. Instead, the Corporation has focused its efforts on growing lower-cost checking and savings accounts. The growth in these "core" deposits was $19.3 million, on average, from the third quarter of 2003 to 2004, representing an increase of 7.3%. "I am very pleased with the growth in demand and savings deposits, which reflects our effort to build long-term customer relationships," stated Majors. Nonperforming assets totaled $4.5 million at September 30, 2004, up slightly from the previous quarter and up from $3.1 million one year earlier. Two commercial relationships accounted for the majority of this increase. "New credit policies and loan review procedures implemented in 2003 will better enable us to manage our loan portfolio risks and maintain strong credit quality as we grow," stated Majors. American National Bankshares Inc. is the holding company of American National Bank and Trust Company, a community bank with thirteen offices in Danville, Chatham, Collinsville, Gretna, Martinsville, Henry County, and South Boston, Virginia; one office in Yanceyville, North Carolina; and a loan production office in Greensboro, North Carolina. Services are also provided through nineteen ATMs, "AmeriLink" internet banking, and our 24-hour "Access American" phone banking. Banking subsidiaries include ANB Mortgage Corp. (secondary mortgage origination), ANB Investor Services (retail brokerage) and ANB Insurance Services (full-service insurance agency). Additional information is available on our website at www.amnb.com. The shares of American National Bankshares Inc. are traded on the NASDAQ National Market under the symbol "AMNB". This press release may contain "forward-looking statements," within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Corporation and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Corporation's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. American National Bankshares Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Consolidated Balance Sheets American National Bankshares Inc. and Subsidiary (In Thousands) Unaudited ------------------------------------------------------------------------------------------------------------
September 30 ---------------------------- 2004 2003 ------------ ----------- ASSETS Cash and due from banks.........................................................$ 13,676 $ 17,713 Interest bearing deposits in other banks........................................ 2,809 13,574 Securities: Securities available for sale................................................. 177,664 158,605 Securities held to maturity................................................... 21,328 21,922 ----------- ----------- Total securities.............................................................. 198,992 180,527 ----------- ----------- Loans, held for sale............................................................ 1,203 740 Loans, net of unearned income .................................................. 394,710 419,916 Less allowance for loan losses.................................................. (5,599) (6,067) ----------- ----------- Net loans..................................................................... 389,111 413,849 ----------- ----------- Bank premises and equipment, net................................................ 7,714 7,725 Core deposit intangibles, net................................................... 597 1,047 Accrued interest receivable and other assets.................................... 9,337 8,861 ----------- ----------- Total assets..................................................................$ 623,439 $ 644,036 =========== =========== LIABILITIES and SHAREHOLDERS' EQUITY Liabilities: Demand deposits -- non-interest bearing.......................................$ 81,670 $ 71,624 Demand deposits -- interest bearing........................................... 71,242 66,393 Money market deposits......................................................... 51,139 49,607 Savings deposits.............................................................. 82,649 82,480 Time deposits................................................................. 197,317 231,106 ----------- ----------- Total deposits................................................................ 484,017 501,210 ----------- ----------- Repurchase agreements......................................................... 45,696 47,091 FHLB borrowings............................................................... 19,425 21,000 Accrued interest payable and other liabilities................................ 2,873 3,672 ----------- ----------- Total liabilities............................................................. 552,011 572,973 ----------- ----------- Shareholders' equity: Common stock, $1 par, 10,000,000 shares authorized, 5,522,299 shares outstanding at September 30, 2004 and 5,667,464 shares outstanding at September 30, 2003.......................... 5,522 5,667 Capital in excess of par value................................................ 9,433 9,404 Retained earnings............................................................. 56,217 54,378 Accumulated other comprehensive income, net................................... 256 1,614 ----------- ----------- Total shareholders' equity.................................................... 71,428 71,063 ----------- ----------- Total liabilities and shareholders' equity....................................$ 623,439 $ 644,036 =========== ===========
Consolidated Statements of Income American National Bankshares Inc. and Subsidiary (In Thousands) (Unaudited) ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------- 2004 2003 2004 2003 -------- -------- -------- -------- Interest Income: Interest and fees on loans....................................................$ 5,572 $ 6,270 $ 16,885 $ 19,337 Interest on deposits in other banks........................................... 24 33 68 69 Income on securities: Federal agencies............................................................ 798 560 2,455 1,620 Mortgage-backed............................................................. 273 225 739 1,064 State and municipal......................................................... 521 472 1,558 1,456 Other ...................................................................... 221 284 695 935 -------- ------- -------- -------- Total interest income....................................................... 7,409 7,844 22,400 24,481 -------- ------- -------- -------- Interest Expense: Interest on deposits: Demand...................................................................... 66 45 186 174 Money market................................................................ 91 110 285 374 Savings..................................................................... 108 150 321 587 Time........................................................................ 1,149 1,613 3,709 5,010 Interest on repurchase agreements............................................. 126 113 377 373 Interest on other borrowings.................................................. 243 245 734 735 -------- ------- -------- -------- Total interest expense...................................................... 1,783 2,276 5,612 7,253 -------- ------- -------- -------- Net Interest Income............................................................. 5,626 5,568 16,788 17,228 Provision for Loan Losses....................................................... 255 170 725 665 -------- ------- -------- -------- Net Interest Income After Provision For Loan Losses............................................................... 5,371 5,398 16,063 16,563 -------- ------- -------- -------- Non-Interest Income: Trust and investment services................................................. 737 625 2,208 1,878 Service charges on deposit accounts........................................... 590 577 1,795 1,541 Other fees and commissions.................................................... 201 241 669 679 Mortgage banking income....................................................... 116 203 460 481 Securities gains (losses), net................................................ - 43 119 46 Other income.................................................................. 92 111 383 252 -------- ------- -------- -------- Total non-interest income................................................... 1,736 1,800 5,634 4,877 -------- ------- -------- -------- Non-Interest Expense: Salaries...................................................................... 1,855 1,758 5,469 5,233 Pension and other employee benefits........................................... 427 433 1,261 1,403 Occupancy and equipment....................................................... 580 624 1,844 1,905 Core deposit intangible amortization ......................................... 112 112 337 337 Other expenses................................................................ 872 875 2,685 2,615 -------- ------- -------- -------- Total non-interest expense.................................................. 3,846 3,802 11,596 11,493 -------- ------- -------- -------- Income Before Taxes............................................................. 3,261 3,396 10,101 9,947 Income Tax Provision............................................................ 922 991 2,868 2,900 -------- ------- -------- -------- Net Income......................................................................$ 2,339 $ 2,405 $ 7,233 $ 7,047 ======== ======= ======== ======== --------------------------------------------------------------------------------------------------------------------------- Net Income Per Common Share: Basic.........................................................................$ .42 $ .42 $ 1.29 $ 1.23 Diluted.......................................................................$ .42 $ .42 $ 1.28 $ 1.22
Financial Highlights American National Bankshares Inc. and Subsidiary (Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------ ------------------------ 2004 2003 Change 2004 2003 Change ----------- ----------- -------- ----------- ----------- -------- EARNINGS Interest income $ 7,409 $ 7,844 (5.5)% $ 22,400 $ 24,481 (8.5)% Interest expense 1,783 2,276 (21.7) 5,612 7,253 (22.6) Net interest income 5,626 5,568 1.0 16,788 17,228 (2.6) Provision for loan losses 255 170 50.0 725 665 9.0 Noninterest income 1,736 1,800 (3.6) 5,634 4,877 15.5 Noninterest expense 3,846 3,802 1.2 11,596 11,493 .9 Income taxes 922 991 (7.0) 2,868 2,900 (1.1) Net income 2,339 2,405 (2.7) 7,233 7,047 2.6 PER COMMON SHARE Earnings per share - basic $ .42 $ .42 - % $ 1.29 $ 1.23 4.9 % Earnings per share - diluted .42 .42 - 1.28 1.22 4.9 Cash dividends paid .20 .19 5.3 .59 .56 5.4 Book value 12.93 12.54 3.1 Closing market price 24.31 24.97 (2.6) FINANCIAL RATIOS Return on average assets 1.50 % 1.52 % (2)bp 1.53 % 1.52 % - bp Return on average shareholders' equity 13.11 13.78 (67) 13.42 13.39 3 Average equity to average assets 11.47 11.05 42 11.34 11.34 - Net interest margin (FTE) 3.94 3.84 10 3.86 4.05 (19) Efficiency ratio 50.45 50.19 26 50.47 50.35 12 PERIOD END BALANCES Securities $ 198,992 $ 180,527 10.2 % Loans held for sale 1,203 740 62.6 Loans - net of unearned income 394,710 419,916 (6.0) Assets 623,439 644,036 (3.2) Deposits 484,017 501,210 (3.4) Repurchase agreements 45,696 47,091 (3.0) FHLB borrowings 19,425 21,000 (7.5) Shareholders' equity 71,428 71,063 .5 AVERAGE BALANCES Securities $ 196,568 $ 165,890 18.5 % $ 196,754 $ 162,140 21.3 % Total loans 394,969 426,146 (7.3) 402,857 421,397 (4.4) Interest-earning assets 598,288 605,672 (1.2) 608,390 592,256 2.7 Assets 622,321 631,840 (1.5) 633,635 618,762 2.4 Interest-bearing deposits 405,126 426,902 (5.1) 415,733 420,393 (1.1) Deposits 482,169 496,467 (2.9) 490,187 485,845 .9 Repurchase agreements 45,108 42,024 7.3 47,446 38,736 22.5 FHLB borrowings 20,530 21,152 (2.9) 21,370 21,773 (1.9) Shareholders' equity 71,377 69,798 2.3 71,869 70,197 2.4 CAPITAL Average shares outstanding - basic 5,587,042 5,674,259 (1.5)% 5,615,946 5,716,092 (1.8)% Average shares outstanding - diluted 5,632,715 5,738,622 (1.8) 5,666,120 5,777,156 (1.9) Shares repurchased 79,400 15,000 154,968 115,000 Average price of shares repurchased $ 23.15 $ 25.72 $ 23.62 $ 24.98
Financial Highlights American National Bankshares Inc. and Subsidiary (Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------ ------------------------ 2004 2003 Change 2004 2003 Change ----------- ----------- -------- ----------- ----------- -------- ALLOWANCE FOR LOAN LOSSES Beginning balance $ 5,457 $ 5,991 (8.9)% $ 5,292 $ 5,622 (5.9)% Provision for loan losses 255 170 50.0 725 665 9.0 Charge-offs (169) (131) 29.0 (588) (417) 41.0 Recoveries 56 37 51.4 170 197 (13.7) ----------- ----------- ------ ----------- ----------- ------ Ending balance $ 5,599 $ 6,067 (7.7)% $ 5,599 $ 6,067 (7.7)% NONPERFORMING ASSETS Nonperforming loans: 90 days past due $ - $ 362 (100.0)% Nonaccrual 4,307 2,612 64.9 OREO 231 146 58.2 ----------- ----------- ------ Nonperforming assets $ 4,538 $ 3,120 45.4 % ASSET QUALITY RATIOS ** Nonperforming assets to total assets .73 % .48 % 25 bp Nonperforming loans to total loans 1.09 .71 38 Allowance for loan losses to total loans 1.42 1.44 (2) Allowance for loan losses to nonperforming loans 1.30 X 2.04 X (74) Notes: bp - Change is measured as difference in basis points ** - Balance sheet amounts used in calculations are based on period end balances