-----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, EbJYTpdXzZ0ttsx8QfB5zJVrKIkxG0H5gNjOBSHD0XA75TGHu68U+xeejRxNOXbG T4fAuzN6RI27oVh/MOp3lA== 0000741516-98-000002.txt : 19990217 0000741516-98-000002.hdr.sgml : 19990217 ACCESSION NUMBER: 0000741516-98-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980327 DATE AS OF CHANGE: 19990216 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-K SEC ACT: SEC FILE NUMBER: 000-12820 FILM NUMBER: 98576275 BUSINESS ADDRESS: STREET 1: 628 MAIN ST STREET 2: PO BOX 191 CITY: DANVILLE STATE: VA ZIP: 24543 BUSINESS PHONE: 8047925111 MAIL ADDRESS: STREET 1: 628 MAIN STREET CITY: DANVILLE STATE: VA ZIP: 24541 10-K 1 1997 10K FOR AMERICAN NATIONAL BANKSHARES INC. This is a conforming paper copy pursuant to Rule # 901(d) of Regulation S-T. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 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) Registrant's telephone number, including area code: 804-792-5111 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Title of each class Common Stock ($1.00 Par Value) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at March 19, 1998 Common Stock ($1.00 Par Value) 3,051,733 Shares State the aggregate market value of the voting stock held by non-affiliates of the registrant Aggregate market value of voting Based upon the price of the most stock held by non-affiliates recent sale known to management as of $79,564,745 March 19, 1998 DOCUMENTS INCORPORATED BY REFERENCE None PART I ITEM 1 - BUSINESS American National Bankshares Inc. ("the Corporation") is a one-bank holding company which was organized under the laws of the State of Virginia in 1984. On September 1, 1984, the Corporation acquired all of the outstanding capital stock of American National Bank and Trust Company ("the Bank"), a National Banking Association chartered in 1909 under the laws of the United States. The Bank is the only subsidiary of the Corporation. At March 19, 1998 the Corporation employed 181 persons. American National Bank and Trust Company The Bank has been operating as a commercial bank in Danville, Virginia since its organization in 1909. On March 14, 1996, the Corporation completed the acquisition of Mutual Savings Bank, F.S.B. ("Mutual") and Mutual was merged with and into American National Bank and Trust Company. In this transaction the Corporation exchanged 879,798 common shares, at an exchange ratio of .705 of a share of the Corporation's common stock, for each of Mutual's 1,248,100 common shares. The operations of the Bank are conducted at eleven offices located throughout the Bank's trade area, which includes the City of Danville, City of Martinsville, Pittsylvania and Henry Counties in Virginia, Town of Yanceyville and the northern half of Caswell County in North Carolina. Eight of these offices are located in Danville, one office each in Collinsville, Virginia, Gretna, Virginia and Yanceyville, North Carolina. The Bank received approval to establish an office in Chatham, Virginia with an anticipated opening date in late 1998. The Bank also has nine automated teller machines at various locations in the trade area. The Bank offers all services normally offered by a full-service commercial bank, including commercial and individual demand and time deposit accounts, commercial and individual loans and trust services. Competition The Bank's primary service area is generally defined as the City of Danville, City of Martinsville, Pittsylvania and Henry Counties in Virginia, Town of Yanceyville and the northern half of Caswell County in North Carolina. Vigorous competition exists in this service area. The Bank competes not only with other commercial banks but also with diversified financial institutions, money market and mutual funds, and mortgage and finance companies. As of March 19, 1998, there were approximately 17 banks operating in this service area. American National Bank and Trust Company is the largest bank operating solely in this service area. No new banks or savings and loan associations have been chartered in the Danville area in the past five years. Several branch offices of existing banks have been opened in this trade area in the past two years. Supervision and Regulation The Corporation is a bank holding company within the meaning of the Bank Holding Company Act of 1956 ("the Act") and is registered as such with the Board of Governors of the Federal Reserve System ("the Federal Reserve Board"). As a bank holding company, the Corporation is required to file with the Federal Reserve Board an annual report and such other information as may be required. The Federal Reserve Board may also make examinations of the Corporation. The operations of the Bank are subject to federal statutes and to regulations of the Comptroller of the Currency, the Federal Reserve Board and the Federal Deposit Insurance Corporation, which insures the Bank's deposits. The primary supervisory authority over the Bank is the Comptroller of the Currency, which regularly examines such areas as reserves, loans, investments, management practices and other aspects of the Bank's operations. These examinations are designed primarily for the protection of the Bank's depositors. In addition to these regular examinations, the Bank must furnish the Comptroller periodic reports containing a full and accurate statement of its affairs. As a national bank, the Bank is a member of the Federal Reserve System and is affected by general fiscal and monetary policies of the Federal Reserve Board. The techniques used by the Federal Reserve Board include setting the reserve requirements of member banks and establishing the discount rate on member bank borrowings. Government Monetary Policies and Economic Controls The policies of the Federal Reserve Board have a direct effect on the amount of bank loans and deposits and the interest rates charged and paid thereon. While current economic conditions, the policies of the Federal Reserve Board (and other regulatory authorities) designed to deal with these conditions and the impact of such conditions and policies upon the future business and earnings of the Bank cannot accurately be predicted, they can materially affect the revenues and income of commercial banks. Foreign Operations The Corporation does not engage in any foreign operations. Executive Officers This information is included under Part III Item 12(b) below. ITEM 2 - PROPERTIES The principal executive offices of the Corporation as well as the principal executive offices of the Bank are located at 628 Main Street, Danville, Virginia. As of March 19, 1998 the Bank maintained seven full service branches located within the City of Danville at 1013 South Main Street, 1081 Riverside Drive, 239 Nor-Dan Drive, 1407 South Boston Road, 2016 West Main Street, 600 West Main Street and 103 Tower Drive. Full service branches are also located at 109 Main Street, Gretna, Virginia, 2484 Virginia Avenue, Collinsville, Virginia and 173 Main Street, Yanceyville, North Carolina. The Bank owns and operates nine Automated Teller Machines ("ATMs"). Four ATMs are located on branch office properties. Other ATMs are located at Piedmont Mall, Piedmont Drive in Danville, at Danville Regional Medical Center, 142 South Main Street, Danville,the Express Mart, Inc., U. S. Highway 29, Tightsqueeze, Virginia, Hillcrest Shopping Center, Highway 86, Yanceyville, North Carolina and Liberty Fair Mall, 240 Commonwealth Boulevard, Martinsville, Virginia. All property is owned by the Bank with the exception of 2016 West Main Street, Danville, the ATM locations at Piedmont Mall, the Express Mart, Inc., Hillcrest Shopping Center, Liberty Fair Mall and Danville Regional Medical Center. Both the land and building at 2016 West Main Street are leased and the space occupied at Piedmont Mall, the Express Mart, Inc., Hillcrest Shopping Center, Liberty Fair Mall and the Danville Regional Medical Center are leased. The Bank also owns a parking lot for its employees fronting on Ridge Street in close proximity to the main office and owns approximately 2.5 acres of land on Piedmont Drive in Danville, opposite of Piedmont Mall for future expansion of its retail banking operations. The Bank owns a lot at 13880 U.S. Highway 29, Chatham, Virginia, to establish a new branch in late 1998. There are no mortgages or liens against any property of the Bank or the Corporation. ITEM 3 - LEGAL PROCEEDINGS There are no legal actions or proceedings pending to which the Corporation is a party. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Corporation's common stock is not traded on any stock exchange but is listed on the OTC (Over The Counter) Bulletin Board under the symbol "AMNB". At March 19, 1998 the Corporation had 1,460 shareholders. The tables below present the high and low sales' prices known to management for the Corporation's common stock and dividends declared for the past two years. Market value and dividends are shown per share and are based on 3,279,798 and 3,051,733 shares outstanding at December 31, 1996 and 1997, respectively.
First Second Third Fourth Market Value Quarter Quarter Quarter Quarter 1997 Common Stock $23.50 - 24.75 $23.50 - 27.00 $26.25 - 28.25 $27.25 - 32.00 1996 Common Stock $26.00 - 30.00 $23.00 - 27.00 $23.25 - 26.00 $24.00 - 26.38
Per Share First Second Third Fourth Dividends Declared Quarter Quarter Quarter Quarter Total 1997 Common Stock $ .18 $ .21 $ .21 $ .21 $ .81 1996 Common Stock $ .15 $ .18 $ .18 $ .18 $ .69
ITEM 6 - SELECTED FINANCIAL DATA Summary of Selected Consolidated Financial Data (in thousands, except per share amounts) American National Bankshares Inc & Subsidiary
1997 1996 1995 1994 1993 Operations Information: Interest income: Loans.................................................$ 22,441 $ 20,335 $ 18,432 $ 14,923 $ 14,182 Federal funds sold and other.......................... 237 435 202 210 362 Investment securities................................. 9,050 9,162 7,300 6,701 7,549 ----------- ----------- ----------- ----------- ----------- Total interest income............................... 31,728 29,932 25,934 21,834 22,093 Interest expense........................................ 14,590 14,370 11,484 8,919 9,716 ----------- ----------- ----------- ----------- ----------- Net interest income..................................... 17,138 15,562 14,450 12,915 12,377 Provision for loan losses............................... (1,100) (673) (484) (272) (214) Non-interest income..................................... 3,201 2,691 2,035 2,122 2,011 Non-interest expense.................................... (10,245) (10,167) (8,702) (8,150) (7,586) ----------- ----------- ----------- ----------- ----------- Income before income taxes.............................. 8,994 7,413 7,299 6,615 6,588 Income taxes............................................ 2,725 2,381 2,283 2,106 2,023 ----------- ----------- ----------- ----------- ----------- Net income.............................................. $ 6,269 $ 5,032 $ 5,016 $ 4,509 $ 4,565 =========== =========== =========== =========== =========== Balance Sheet Information: Investment securities...................................$143,077 $175,757 $149,208 $122,509 $127,526 Net loans............................................... 251,173 233,509 212,684 188,034 177,130 Total deposits.......................................... 351,603 361,983 327,342 282,791 283,322 Shareholders' equity.................................... 50,003 52,218 48,912 45,045 42,815 Total assets............................................ 423,640 440,158 388,479 337,355 327,908 Per Share Information: Net income.............................................. $ 1.99 $ 1.54 $ 1.56 $ 1.40 $ 1.42 Dividends............................................... .81 .69 .56 .75 .47 Book value.............................................. 16.39 15.92 15.22 14.02 13.32 Ratios: Return on average assets................................ 1.47% 1.24% 1.43% 1.37% 1.41% Return on average shareholders' equity.................. 12.51% 10.12% 10.62% 10.13% 11.15% Total risk-based capital/assets......................... 18.37% 20.66% 23.67% 25.98% 26.35% Leverage capital/assets................................. 11.80% 11.86% 12.59% 13.35% 13.06% Net charge-offs to average net loans.................... .36% .17% .09% .04% .09% Reserve for loan losses to period-end loans, net of unearned income......................... 1.29% 1.30% 1.28% 1.29% 1.26% The financial information for years 1993 through 1995 has been restated to reflect the merger with Mutual Savings Bank, FSB.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS American National Bankshares Inc. (the Corporation) was organized in 1984 for the purpose of acquiring all of the outstanding shares of American National Bank and Trust Company (the Bank). The Bank was chartered and opened for business in February 1909. Under an agreement and plan of merger, the Bank was acquired by the Corporation on September 1, 1984. On March 14, 1996, the Corporation completed the merger of Mutual Savings Bank, F.S.B. (Mutual) into the Bank, upon the approval of the shareholders of each company. The Corporation exchanged 879,805 common shares, at an exchange ratio of .705 of a share of the Corporation's common stock for each outstanding share of Mutual common stock, for Mutual's 1,248,100 common shares. The transaction was accounted for as a pooling of interests. The financial position and results of operations of the Corporation and Mutual were combined and the fiscal year of Mutual was conformed to the Corporation's fiscal year. In addition, all prior periods presented have been restated to give effect to the merger. In March 1996 the shareholders of the Corporation approved an amendment to the articles of incorporation to increase the number of authorized shares of the Corporation's common stock from 3,000,000 shares to 10,000,000 shares. On August 25, 1996 the Corporation entered into an agreement with FirstSouth Bank of Burlington, North Carolina to purchase the branch office and associated ATM of FirstSouth Bank located in Yanceyville, (Caswell County) North Carolina. This acquisition was completed October 25, 1996. The transaction was accounted for as a purchase. Performance Summary The Corporation and Bank reported record profitability during 1997. Net income of $6,269,000 for 1997 increased by $1,237,000 or 25% over net income of $5,032,000 for 1996. Net income for 1996 was adversely affected by costs associated with the merger of Mutual and a one time FDIC assessment against Mutual deposits to recapitalize the SAIF fund. Net income for 1997 exceeded 1996 operating income of $5,935,000 (which excludes the effect of the merger costs and FDIC assessment and related tax effects) by $334,000, or 6%. The economy of the Bank's trade area continues to be healthy as evidenced by another year of strong loan demand. During 1997, net loans increased $17,663,000, or 8%. Total deposits declined $10,380,000 during 1997, or 3%, as the Bank executed a planned strategy to reduce high cost time deposits. Earnings and Capital On a per common share basis, net income (based on average shares outstanding of 3,144,834 in 1997, 3,267,038 for 1996 and 3,213,641 for 1995) was $1.99 in 1997, $1.54 in 1996, and $1.56 in 1995. The Corporation decreased shareholders' equity during 1997 by $2,215,000 or 4% through the repurchase of 228,065 shares of common stock for $6,278,000. The reduction from stock repurchase was offset by retention of 1997 earnings of $3,756,000 and an increase in net unrealized gains on "available for sale" securities of $307,000. This followed an increase in capital of $3,306,000 or 7%, in 1996. The increase in 1996 resulted from retention of 1996 earnings of $2,889,000, proceeds of $731,000 from exercise of stock options less a reduction of $314,000 in net unrealized gains on "available for sale" securities. Shareholders' equity was 11.8% of assets at December 31, 1997 and 11.9% at December 31, 1996. Shareholders' equity was $50,003,000 at December 31, 1997 and $52,218,000 at December 31, 1996. The total market value of American National Bankshares Inc. common stock at $31.00 per share (the last trade recorded on the OTC Bulletin Board during 1997) was $94,604,000. The market value of the Corporation's common stock was 189 percent of its book value. Book value per common share was $16.39 at the close of 1997. During 1997, the Corporation increased its reserve for loan losses to $3,277,000 an increase of $207,000 or 7% from 1996. The reserve, as a percentage of loans, was 1.29% at December 31, 1997 and 1.30% at December 31, 1996. The return of net income on average total assets was 1.47% in 1997 compared to 1.24% in 1996 and 1.43% in 1995. The return of operating earnings on average total assets (which excludes the effect of the merger and FDIC assessment and related tax effects) was 1.47% in 1997, 1.46% in 1996 and 1.47% in 1995. The return on average shareholders' equity was 12.51% in 1997 compared to 10.12% in 1996 and 10.62% in 1995. The return on average shareholders' equity (excluding the effect of the merger and FDIC assessment and related tax effects) was 11.94% in 1996 and 10.91% in 1995. Mergers and Acquisitions On March 14, 1996 American National Bankshares Inc. exchanged .705 of a share of its common stock for each share of Mutual common stock. Based on American National Bankshares stock price as of February 27, 1996 of $27, the transaction represented an exchange value of approximately $19.04 for each share of Mutual common stock. The purchase price was 1.69 times Mutual's June 30, 1995 book value. The merger was accounted for as a pooling of interests. At the consummation of the merger on March 14, 1996, Mutual had total assets of $84,718,000, total deposits of $67,996,000 and shareholders' equity of $15,958,000. The Corporation had approximately 1,492 shareholders at December 31, 1996. On October 25, 1996 the Bank purchased the branch office and associated ATM of FirstSouth Bank located in Yanceyville, (Caswell County) North Carolina. The Bank assumed $21,405,000 in deposits and purchased $4,775,000 in loans as well as the building, furniture, fixtures and equipment. The Bank paid a premium of $1,516,000, approximately 7% of the deposits assumed. The transaction was accounted for as a purchase and the premium was recorded as a core deposit intangible asset. The Yanceyville branch office is approximately 12 miles from the City of Danville and Management views this as a natural expansion of the Corporation's market area. The Bank already serves many customers who work in the greater Danville area but reside in Yanceyville and Caswell County. Trends and Future Events The economic conditions of the Corporation's trade area have continued to be healthy during 1997 as evidenced by another year of strong loan demand. The Corporation's net loans grew at a rate of 8% during 1997 following a 10% increase in 1996. Total deposits declined 3% during 1997 following an increase in 1996 as the Bank executed a planned strategy to reduce high cost time deposits. The weighted average yield on interest earning assets increased and the weighted average cost of interest-bearing liabilities decreased during 1997 due to a shift in balances from investments to loans, due to higher yielding investments and due to lower yields paid on interest-bearing liabilities. As a result of the Corporation's asset and liability repricing strategy and increased loan demand, the Corporation was able to increase its net interest income (interest income less interest expense) by 10%. Although management believes the Corporation has positioned itself to continue to maintain this level of net interest income into the near future, increased competition and slowing loan and deposit growth could negatively impact net interest income. During 1997, time deposits decreased by $10,390,000 or 6% as a result of the Bank strategy to decrease higher cost deposits. Interest bearing demand deposits increased $5,253,000 or 11%, and non-interest bearing demand deposits decreased by $137,000 or less than 1%. Money market deposits declined by $4,659,000, or 21%, as certain commercial accounts switched to higher yielding repurchase agreements and as individuals transferred balances to less restrictive interest bearing demand accounts. Repurchase agreements which are not included in deposits increased $2,980,000, or 20%, during 1997. Total deposits decreased $10,380,000 or 3% during 1997 after increasing $34,640,000 or 11% during 1996. The increase in total deposits during 1996 included $21,405,000 in deposits assumed in the Yanceyville acquisition. The increase in deposits during 1996, excluding the Yanceyville acquisition, was 4%. Pursuant to the Agreement and Plan of Reorganization by and between Mutual and the Corporation, Mutual Mortgage of the Piedmont, Inc. was organized in 1996 as a wholly owned subsidiary of American National Bank and Trust Company. The primary purpose of this organization is to originate and sell mortgage loans. Mutual Mortgage of the Piedmont, Inc. began operations on December 2, 1996. Its main office is located in the Bank's branch office building at 103 Tower Drive. The financial condition and results of operations of the Mortgage Company are included in the Consolidated Balance Sheets and Consolidated Statements of Income of the Corporation. On February 1, 1996, the Federal Reserve Bank ("FRB") lowered its discount rate by 1/4% and the major money center banks followed by lowering their prime rate by 1/4% on the same day. The major money center banks increased their prime rate 1/4% on March 26, 1997 in response to slightly higher U.S. Treasury bill and bond yields. Long term U.S. Treasury yields have declined almost 1% since March 1997 in response to the Asian financial crisis and due to low inflation. As mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the FDIC adopted regulations effective January 1, 1993, for the transition from a flat-rate insurance assessment system to a risk-based system by January 1, 1994. Pursuant to these regulations, the Bank's deposit insurance assessment was set at the lowest allowable rate of $.23 per $100 of deposits for the year 1994. The assessment rate was $.04 per $100 of deposits in 1995, reduced to a minimum $2,000 in 1996 and set at $.01 per $100 of deposits in 1997. In addition to the minimum assessment for American National Bank and Trust Company, a one time charge to recapitalize the SAIF fund of the FDIC in the amount of $350,000 was made against the deposits of Mutual during 1996. The Bank must also pay "OAKAR" premiums on the continuing deposits of Mutual. "OAKAR" premiums were assessed at an annual rate of $.17 per $100 of Mutual deposits in 1996 and $.06 per $100 of Mutual deposits in 1997. Among other things, FDICIA identifies five capital categories for insured depository institutions: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized" and "critically undercapitalized". FDICIA requires the federal banking regulators to take prompt corrective action with respect to insured depository institutions that do not meet minimum capital requirements. The FRB has adopted regulations establishing relevant capital requirements for banks. Under the regulations, a well capitalized institution must have a Tier I risk-based capital ratio of at least six percent, a total risk-based capital ratio of at least ten percent and a leverage ratio of at least five percent and not be subject to a capital directive order. Under these guidelines, the Bank has always been and continues to be considered well capitalized. Certain statements contained above in this section are forward-looking statements that involve a number of risks and uncertainties. In addition to the factors discussed above regarding the local economy and the expansion of the Corporation's market area are other factors that could cause actual results to differ materially. The factors include business conditions, development of new products and services, interest rate trends, future legislation, regulatory controls and the risks described from time to time in the Corporation's SEC reports. Year 2000 Issue The Corporation is aware of the issues associated with the programming code in existing computer systems as the millenium (year 2000) approaches. The "year 2000" problem is pervasive and complex as virtually every computer operation and many equipment systems will be affected in some way by the rollover of the two digit year value to 00. The issue is whether computer systems will properly recognize date sensitive information when the year changes to 2000. Systems that do not recognize such information could generate erroneous data or cause a system to fail. The Corporation is utilizing both internal and external resources to identify, correct or reprogram, and test systems for year 2000 compliance. It is anticipated that all reprogramming efforts will be complete by December 31, 1998, allowing adequate time for testing. To date, confirmations have been received from the Corporation's primary processing vendors that plans are being developed to address processing of transactions in the year 2000. Based on preliminary study, the corporation expects to spend approximately $125,000 from 1998 through 1999 to modify its computer information systems enabling proper processing of transactions related to the year 2000 and beyond. The amount expensed in 1997 was immaterial. Net Interest Income Net interest income, the most significant component of earnings, is the excess of interest income over interest expense. For analytical purposes, net interest income is adjusted to a taxable equivalent basis to recognize the income tax savings on tax-exempt assets, such as state and municipal securities. A tax rate of 34% was used in adjusting interest on tax-exempt securities and loans to a fully taxable equivalent basis for the years 1997, 1996 and 1995. During 1997, taxable equivalent net interest income increased to $17,622,000, up 10% from $15,978,000 in 1996. Taxable equivalent net interest income for 1996 was up 8% from $14,729,000 recorded in 1995. The $1,644,000 increase in taxable equivalent net interest income during 1997 consisted of $1,427,000 due to increases in volume and $217,000 attributable to rate. The $1,249,000 increase in taxable equivalent net interest income during 1996 was the net result of an increase of $1,101,000 due to volume and $148,000 attributable to rate. _______________________________________________________________________________ The following is an analysis of net interest income, on a taxable equivalent basis. Nonaccrual loans are included in average balances. Interest income on nonaccrual loans if recognized is recorded on a cash basis. (In thousands, except rates):
Average Balance Interest Income/Expense Average Yield/Rate ----------------------------- ------------------------- ----------------------- 1997 1996 1995 1997 1996 1995 1997 1996 1995 -------- -------- -------- ------- ------- ------- ------ ------ ------ Loans: Commercial $ 65,457 $ 59,385 $ 59,828 $ 6,004 $ 5,553 $ 5,325 9.17% 9.35% 8.90% Mortgage 131,004 118,223 107,955 11,366 10,300 9,551 8.68 8.71 8.85 Consumer 52,733 46,227 38,096 5,109 4,532 3,604 9.69 9.80 9.46 -------- -------- -------- ------- ------- ------- Total loans 249,194 223,835 205,879 22,479 20,385 18,480 9.02 9.11 8.98 -------- -------- -------- ------- ------- ------- Investment securities: U. S. Government 66,821 101,138 71,290 4,018 6,022 3,860 6.01 5.95 5.41 Federal agencies 53,507 26,984 35,703 3,471 1,712 2,315 6.49 6.34 6.48 State and municipal 21,349 18,363 12,340 1,582 1,354 926 7.41 7.37 7.50 Other investments 6,155 6,357 6,172 425 440 430 6.90 6.92 6.97 -------- -------- -------- ------- ------- ------- Total investment securities 147,832 152,842 125,505 9,496 9,528 7,531 6.42 6.23 6.00 -------- -------- -------- ------- ------- ------- Federal funds sold and other 4,295 8,121 3,350 237 435 202 5.52 5.36 6.03 -------- -------- -------- ------- ------- ------- Total interest-earning assets 401,321 384,798 334,734 32,212 30,348 26,213 8.02 7.89 7.83 -------- -------- -------- ------- ------- ------- Other non-earning assets 24,367 21,905 17,053 -------- -------- -------- Total assets $425,688 $406,703 $351,787 ======== ======== ======== Deposits: Demand $ 48,893 $ 43,012 $ 36,892 1,408 1,246 1,085 2.88 2.90 2.94 Money market 19,463 21,414 21,480 572 638 695 2.94 2.98 3.24 Savings 70,238 65,764 69,727 2,140 2,013 2,171 3.05 3.06 3.11 Time 176,403 172,390 136,725 9,590 9,670 7,193 5.44 5.61 5.26 -------- -------- -------- ------- ------- ------- Total deposits 314,997 302,580 264,824 13,710 13,567 11,144 4.35 4.48 4.21 Federal funds purchased 773 190 1,618 44 11 99 5.69 5.79 6.12 Repurchase agreements 17,909 16,757 5,877 836 792 241 4.67 4.73 4.10 -------- -------- -------- ------- ------- ------- Total interest-bearing liabilities 333,679 319,527 272,319 14,590 14,370 11,484 4.37 4.50 4.22 -------- -------- -------- ------- ------- ------- Demand deposits 39,752 34,723 29,303 Other liabilities 2,128 2,739 2,919 Shareholders' equity 50,129 49,714 47,246 -------- -------- -------- Total liabilities and Shareholders' equity $425,688 $406,703 $351,787 ======== ======== ======== Interest rate spread 3.65% 3.39% 3.61% ===== ===== ===== Net interest income $17,622 $15,978 $14,729 ======= ======= ======= Taxable equivalent adjustment $ 484 $ 416 $ 280 ======= ======= ======= Net yield on earning assets 4.39% 4.15% 4.40% ===== ===== =====
Changes in Net Interest Income (Rate/Volume Analysis) Net interest income is the product of the volume of average earning assets and the average rates earned, less the volume of average interest-bearing liabilities and the average rates paid. The portion of change relating to both rate and volume is allocated to each of the rate and volume changes based on the relative change in each category. The following table analyzes the changes in both rate and volume components of net interest income on a taxable equivalent basis for the past two years (in thousands):
1997 vs. 1996 1996 vs. 1995 ----------------------------- ----------------------------- Interest Change Interest Change Increase Attributable to Increase Attributable to (Decrease) Rate Volume (Decrease) Rate Volume Interest income Loans: Commercial $ 451 $(108) $ 559 $ 228 $ 268 $ (40) Mortgage 1,066 (67) 1,133 749 (147) 896 Consumer 577 (62) 639 928 135 793 ------- ------ ------- -------- ------ ------ Total loans 2,094 (237) 2,331 1,905 256 1,649 ------- ------ ------- -------- ------ ------- Investment securities: U.S. Government (2,004) 59 (2,063) 2,162 416 1,746 Federal agencies 1,759 39 1,720 (603) (49) (554) State and municipal 228 7 221 428 (16) 444 Other investments (15) (1) (14) 10 (3) 13 -------- ------ -------- -------- ------ ------- Total investment securities (32) 104 (136) 1,997 348 1,649 -------- ------ -------- -------- ------ ------- Federal funds sold and other (198) 13 (211) 233 (25) 258 -------- ------ -------- -------- ------ ------- Total interest income 1,864 (120) 1,984 4,135 579 3,556 -------- ------ -------- -------- ------ ------- Interest expense Deposits: Demand 162 (7) 169 161 (17) 178 Money market (66) (9) (57) (57) (55) (2) Savings 127 (9) 136 (158) (36) (122) Time (80) (302) 222 2,477 502 1,975 -------- ------ -------- -------- ------ ------- Total deposits 143 (327) 470 2,423 394 2,029 Federal funds purchased 33 - 33 (88) (5) (83) Repurchase agreements 44 (10) 54 551 42 509 -------- ------ -------- -------- ------ ------- Total interest expense 220 (337) 557 2,886 431 2,455 ======== ====== ======== ======== ====== ======= Net interest income $ 1,644 $ 217 $1,427 $ 1,249 $ 148 $1,101 ======== ====== ======== ======== ====== =======
Provision and Reserve for Loan Losses The provision for loan losses is an amount added to the reserve against which loan losses are charged. The amount of the provision is determined by Management based upon its assessment of the size and quality of the loan portfolio and the adequacy of the reserve in relation to the risks inherent within the loan portfolio. The 1997 provision for loan losses was $1,100,000 and compares with $673,000 in 1996 and $484,000 in 1995. The increase in the provision for loan losses was influenced by increased charge-offs and growth in loans. During recent years, the Bank has experienced unusually low levels of charge-offs. Net charge-offs increased to $893,000 in 1997 from $385,000 in 1996 because two commercial loans were written down $402,000 prior to acceptance of $385,000 in real estate collateral. The Bank is vigorously attempting to market the real estate owned through real estate agents. The reserve for loan losses totaled $3,277,000 at December 31, 1997, an increase of 7% over December 31, 1996. The ratio of reserve to loans, less unearned discount, was 1.29% at December 31, 1997 and 1.30% at December 31, 1996. The Bank's Loan Committee has responsibility for determining the level of the reserve for loan losses, subject to the review of the Board of Directors. The Loan Committee has taken economic factors, as well as any other external events that may affect the value and collectability of the loan portfolio, into consideration when making its assessment and recommendation. The methodology used to determine the level of the loan loss reserve on a quarterly basis includes the identification of losses from a review of the Corporation's loan "Watch" list. In addition to these identifiable potential losses, an experience factor for each major category of loans is applied against the remaining portion of the loans considered to have no more than a normal risk of collectability. Additional factors considered in determining the level of the loan loss reserve are economic conditions, historical losses, trends and other external factors. The sum of these elements is the Loan Committee's recommended level of the reserve for loan losses. If the existing level of the loan loss reserve is below the Loan Committee's recommended level of the reserve at the close of an interim period, an increase sufficient to eliminate the deficiency is recorded in the current period provision for loan losses. If the existing level of the reserve exceeds the recommended level at the close of an interim period, no adjustment is made to the provision for loan losses if loan growth is expected. The economy of the Corporation's trade area, which includes the City of Danville, City of Martinsville, Pittsylvania and Henry Counties in Virginia, Town of Yanceyville and the northern half of Caswell County in North Carolina, is dependent primarily on the success of Danville's largest employer (a textile manufacturing firm), tobacco farming (the major crop of rural Pittsylvania and Caswell County), tobacco marketing and processing, furniture manufacturing and Danville's second largest employer, a tire manufacturing plant. Textile manufacturing, tobacco farming and tobacco processing have been subjected to external market pressures in recent years but have continued to be prosperous. The local economy of the Corporation's trade area continues to be strong at this time and the Corporation's loan losses have not been significant in recent years; however, an inherent risk to the loan portfolio exists if a significant decline occurs in any of these industries along with a corresponding reduction in employment. Management believes the reserve for loan losses is appropriate in view of this geographic concentration. The adoption in 1995, of Statement of Financial Accounting Standards Nos. 114 and 118, which address accounting by creditors for loan impairment, did not have a significant impact on the provision for loan losses. Mangement has allocated the reserve for loan losses to loan categories as follows (in thousands):
1997 1996 1995 1994 1993 ----------------- ----------------- ----------------- ----------------- ----------------- Percent Percent Percent Percent Percent of loans of loans of loans of loans of loans in each in each in each in each in each category category category category category to total to total to total to total to total Amount loans Amount loans Amount loans Amount loans Amount loans ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- Commercial (including commercial real estate) $ 873 44% $ 886 40% $ 888 43% $ 858 42% $ 913 38% Real estate- residential 129 37 128 38 146 38 121 39 114 42 Consumer 1,173 19 1,152 22 549 19 291 19 275 20 Unallocated 1,102 - 904 - 1,174 - 1,184 - 954 - ------ -------- ------ -------- ------ -------- ------ -------- ------ -------- Balance at end of year $3,277 100% $3,070 100% $2,757 100% $2,454 100% $2,256 100% ====== ======== ====== ======== ====== ======== ====== ======== ====== ======== Management's criteria for evaluating the adequacy of its loan loss reserve includes individual evaluation of significant loans and overall portfolio analyses for more homogeneous, smaller balance loan portfolios. Based on management's evaluation, estimated loan loss reserves are assigned to the individual loans which present a greater risk of loan loss. The remaining loan loss reserve is allocated to the remaining loans on an overall portfolio basis based on historical loss experience. The assessed risk of loan loss is higher in the commercial and agricultural loan categories as these categories contain loans which are more significant to the Corporation and to the individual borrowers, thereby exposing the Corporation to a greater risk of loss in the event of downturns in the financial position of individual borrowers. The remaining loan categories are typically for lesser amounts and are distributed over a much larger population of borrowers, thereby reducing the Corporation's risk of loan loss.
_______________________________________________________________________________ Loan Losses - Ratios
1997 1996 1995 ------- ------- ------- Reserve as percentage of outstanding loans, net of unearned income 1.29% 1.30% 1.28% Net charge-offs as percentage of reserve 27.23% 12.58% 6.58% Net charge-offs as percentage of average loans, net of unearned income .36% .17% .09% Provision as percentage of net charge-offs 123.26% 174.40% 266.92% Provision as percentage of average loans, net of unearned income .44% .30% .24% Reserve for loan losses to nonperforming loans 8.34X 93.03X 9.01X
_______________________________________________________________________________ Non-Interest Income Non-interest income totaled $3,201,000 in 1997 compared with $2,691,000 in 1996 and $2,035,000 in 1995. This was an increase of 19% during 1997 after an increase of 32% during 1996 and a 4% decrease in 1995. The major components of non-interest income are trust department income, service charges on deposit accounts, non-deposit fees and insurance commissions and other income. The trust department services have been expanded in both corporate and personal trusts and other fiduciary accounts during the past three years and the income from the administration of several large estates during this period has caused some fluctuation in the department's income. The trust department reported income of $1,888,000 in 1997, a decrease of less than 1% from the $1,896,000 in 1996 which in turn was a 41% increase from the $1,343,000 reported in 1995. Beginning in 1995 the trust department expanded its investment services, including asset allocation, offered to corporate and personal trusts and other fiduciary accounts. The 41% increase in trust department income during 1996 resulted primarily from the closing of several large estates and from new business booked in 1996. Service charges on deposit accounts were $786,000 in 1997, an increase of 31% over $601,000 reported in 1995, which was a 34% increase over the $448,000 recorded for 1995. The increases in 1996 and 1997 were caused in part by the increase in deposit accounts of $36,295,000 from the acquisition of the Gretna branch office in August 1995 and $21,410,000 from the acquisition of the Yanceyville branch office in October 1996. The remaining increases in both years were attributable to growth in demand deposit accounts and a price increase in April 1997. Non-deposit fees and insurance commissions were $156,000 in 1997, an increase of 47% from the $106,000 reported in 1996 which was off from $114,000 reported in 1995. The large increase in 1997 resulted from renewed focus on insurance sales and strong loan demand. Other income was $371,000 in 1997, an increase of $283,000 from the $88,000 recorded in 1996, which in turn was a decrease of 32% from the $130,000 recorded in 1995. The increase in other income in 1997 resulted primarily from $220,000 of fees from originating and selling fixed rate mortgage loans through a wholly owned subsidiary of the Bank. There were no fees from loan sales prior to 1997 as the new operation was started in December 1996. Other income also included gains on sales of securities which were $31,000 in 1997, $0 in 1996 and $46,000 in 1995. Non-Interest Expense Non-interest expense totaled $10,245,000 in 1997, an increase of $78,000 or 1% over the $10,167,000 in 1996, which in turn was an increase of $1,465,000 or 17% over the $8,702,000 recorded for 1995. Non-interest expense includes salaries, pension and other employee benefits, occupancy and equipment expense, FDIC insurance expense, postage and printing, merger related expense and other expenses. Excluding $1,406,000 in 1996 and $140,000 in 1995 of non-interest costs associated with the Mutual merger and the one time FDIC assessment, 1997 non-interest expense increased $1,484,000 or 17% over 1996 while 1996 non-interest expense increased $199,000 or 2% over 1995. Salaries totaled $4,811,000 for 1997, an increase of 18% over 1996. Salaries increased $276,000, or 7% of the 18% increase for 1997, from inclusion of a full year of salaries in 1997 at the Yanceyville branch office purchased on October 25,1996 and at Mutual Mortgage of the Piedmont, Inc. which began operations in late 1996. Salaries totaled $4,083,000 in 1996, an increase of 8% over $3,787,000 reported for 1995. Pension and other employee benefits totaled $1,076,000 in 1997, an increase of 18% from the $913,000 recorded in 1996, which in turn was a decrease of 15% over the $1,073,000 reported in 1995. The percentage increase in 1997 over 1996 approximated the percentage increase in salaries in 1997. In 1996 the pension plan of Mutual was terminated and a distribution made to the employees. All employees of Mutual were then added to the Corporation's pension plan. The decrease in 1996 resulted primarily from a gain recorded on the curtailment and settlement of Mutual's pension plan. The total occupancy and equipment expense was $1,437,000 for 1997, an increase of 19% over $1,212,000 reported for 1996. This, in turn, was an increase of 16% over $1,044,000 recorded in 1995. The increases in 1997 and 1996 were primarily the cumulative result of adding the Gretna branch office in August 1995, the Yanceyville branch office in October 1996, and Mutual Mortgage of the Piedmont, Inc. in December 1996 along with the 1996 move of the operations departments into the renovated upper two floors of the Tower Drive branch office. FDIC insurance expense decreased 83% to $78,000 in 1997 from $467,000 in 1996 which was up 15% from $407,000 in 1995. The FDIC reduced the deposit insurance assessment rate in 1997 for deposits held by American National Bank and Trust Company to $.01 per $100 of deposits and to a flat $2,000 in 1996 from $.04 per $100 of deposits in 1995. The Bank is assessed a higher rate on deposits assumed from Mutual, and the Mutual assessment rate has decreased from $.23 per $100 of deposits in 1995 to $.17 per $100 in 1996 to $.06 per $100 in 1997. In 1996 the Bank paid a one-time $350,000 FDIC charge on the Mutual deposits to recapitalize the SAIF fund. The $350,000 assessment was offset partially by lower ongoing deposit premiums, but still resulted in higher a FDIC insurance expense in 1996. Postage and printing expense was $429,000 in 1997, an increase of 8% from the $397,000 recorded in 1996, which in turn was an increase of 40% from the $284,000 recorded in 1995. The increases in 1997 and 1996 were primarily related to the two branch offices purchased in 1995 and 1996 and the mortgage operation started in 1996. Merger-related expense for 1996 was $1,056,000. This included non-recurring items such as legal services, financial advisory services, accounting services, regulatory fees, data conversion costs, signage and other expense. Also included were losses on securities held by Mutual at the time of the merger which were not compatible with the Corporation's investment program. During 1995, $140,000 was recorded in merger-related expenses. There were no merger related expenses recorded in 1997. Core deposit intangible expense represents amortization of premiums paid for deposits at the Yanceyville and Gretna offices. The increase to $450,000 in 1997 from $318,000 in 1996 and $103,000 in 1995 represents a full year of amortization for both offices which is calculated on a straight line basis over ten years. Other expenses were $1,964,000 in 1997, an increase of 14% over the $1,721,000 reported in 1996. Other expenses in 1996 decreased 8% from the $1,865,000 recorded in 1995. The increase of $243,000 in 1997 reflects additional franchise tax of $78,000, higher audit expense of $61,000 from special projects, and increases from the two newly acquired branches and the new mortgage operation. Income Taxes The provision for income taxes (total of current and deferred) was $2,725,000 in 1997, compared with $2,381,000 in 1996 and $2,283,000 in 1995. In each year, the Corporation was subject to a Federal tax rate of 34%. The major difference between the statutory rate and the effective rate results from income which is not taxable for Federal income tax purposes. The primary non-taxable income is that of state and municipal securities and industrial revenue bonds or loans. The significant increase in the 1997 provision for income taxes reflects higher income before income taxes in 1997. Capital Management Regulatory agencies issued risk-based capital guidelines which were fully effective in 1992. The guidelines were established to more appropriately consider the credit risk inherent in the assets and off-balance sheet activities of a financial institution in the assessment of capital adequacy. Under the guidelines, total capital has been defined as core (Tier I) capital and supplementary (Tier II) capital. The Bank's Tier I capital consists primarily of stockholder's equity, while Tier II capital consists of the reserve for loan losses. The definition of assets has been modified to include items on and off the balance sheet, with each item being assigned a "risk-weight" for the determination of the ratio of capital to risk-adjusted assets. 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 December 31, 1997, the Bank's Tier I and Total capital ratios were 17.14% and 18.37%, respectively. At December 31, 1996, these ratios were 19.42% and 20.66%, respectively. The ratios for both years were well in excess of the regulatory requirements. The Corporation's leverage ratios (shareholders' equity divided by year-end assets) were 11.80% and 11.86% at December 31, 1997 and 1996, respectively. The leverage ratio has a regulatory minimum of 3%, with most institutions required to maintain a ratio 100 to 200 basis points above the 3% minimum depending upon risk profiles and other factors. The Corporation's 1997 capital formation rate (net income less dividends declared, divided by average shareholders' equity) was 7.5%. This compares with 5.6% in 1996 and 6.8% in 1995. These ratios evidence the Corporation's attainment of its goal of meeting future capital requirements by retaining a portion of operating earnings while providing steadily increasing cash dividends. Prior to 1996 the Corporation paid cash dividends on a semi-annual basis. In 1996 the Corporation began paying dividends on a quarterly basis and the Board of Directors declared regular quarterly dividends totaling $.81 and $.69 per share of common stock in 1997 and 1996,respectively. The Board of Directors reviews the Corporation's dividend policy regularly and increases dividends when justified by earnings after considering future capital needs. Asset and Liability Management The Corporation's primary objectives for asset and liability management are to identify opportunities to maximize net interest income while ensuring adequate liquidity and carefully managing interest rate risk. The Asset/Liability Investment Committee ("ALCO"), which is primarily composed of executive officers, is responsible for: Monitoring corporate financial performance; Meeting liquidity requirements; Establishing interest rate paramaters, indices, and terms for loan and deposit products; Assessing and evaluating the competitive rate environment; Reviewing and approving investment portfolio transactions under established policy guidelines; Monitoring and measuring interest rate risk. Liquidity Liquidity is the measure of the Corporation's ability to generate sufficient funds to meet customer demands for loans and the withdrawal of deposit balances. The Corporation, in its normal course of business, maintains cash reserves and has an adequate flow of funds from maturing loans and investment securities to meet present liquidity needs. Management monitors and plans the Corporation's liquidity position for future periods. Liquidity is provided from cash and amounts 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. Expansion of the Corporation's earning assets is based largely on the growth of deposits from individuals and small and medium size businesses. These deposits are more stable in number and size than large denomination certificates of deposit. In addition, the Corporation's customers have relatively stable requirements for funds. The Corporation's major source of funds and liquidity is its deposit base. The mix of the deposit base (time deposits versus demand, money market and savings) is constantly subject to change. During 1997, as shown in the consolidated balance sheets, the deposit mix changed with a planned decline in higher cost time deposits of $10,390,000, an increase in demand deposits of $5,116,000 and a decline in savings and money market accounts of $5,106,000. During 1996, time deposits and deposits subject to immediate withdrawal increased. The Consolidated Statement of Cash Flows appearing in the financial statement section shows a net decrease in cash and cash equivalents of $1,069,000 during 1997. This decrease was the result of a combination of $8,428,000 provided by operating activities, $13,619,000 net cash provided by investing activities, and $23,116,000 used in financing activities. Financing activity uses included a decline in deposits, decreases in federal funds purchased and repurchase agreements, repurchase of stock and cash dividends paid. The cash provided by operating and investing activities, more than adequately supplied the Corporation's liquidity needs at all times during the year. Liquidity strategies are implemented and monitored by ALCO on a day to day basis. The Committee uses a simulation model to assess the future liquidity needs of the Corporation and manage the investment of funds. Interest Rate Risk Interest rate risk refers to the exposure of the Corporation's earnings and market value of portfolio equity ("MVE") to changes in interest rates. The magnitude of the change in earnings and MVE resulting from interest rate changes is controlled by the time remaining to maturity on fixed-rate obligations, the contractual ability to adjust rates prior to maturity, competition, the general level of interest rates and customer actions. There are several common sources of interest rate risk that must be effectively managed if there is to be minimal impact on the Corporation's earnings and capital. Repricing risk arises largely from timing differences in the pricing of assets and liabilities. Reinvestment risk refers to the reinvestment of cash flows from interest payments and maturing assets at lower or higher rates. Basis risk exists when different yield curves or pricing indices do not change at precisely the same time or in the same magnitude such that assets and liabilities with the same maturity are not all affected equally. Yield curve risk refers to unequal movements in interest rate across a full range of maturities. In determining the appropriate level of interest rate risk, ALCO reviews the changes in net interest income and MVE given various changes in interest rates. The Corporation also considers the most likely interest rate scenarios, local economics, liquidity needs, business strategies, and other factors in determining the appropriate levels of interest rate risk. To effectively measure and manage interest rate risk, interest rate sensitivity and simulation analysis are used to determine the impact on net interest income and MVE from changes in interest rates. Interest rate sensitivity analysis presents the amount of assets and liabitiies that are estimated to reprice through specified periods if there are not changes in balance sheet mix. The interest rate sensitivity table, page 15, reflects the Corporation's assets and liabilities on December 31, 1997 that will either be repriced in accordance with market rates, mature or are estimated to mature early or prepay within the periods indicated. Interest Rate Sensitivity Analysis December 31, 1997 (in thousands)
Over 3 Over 6 3 Months Months Over 1 Months - 6 - 12 Year - Over 5 or Less Months Months 5 Years Years Total --------- --------- --------- --------- --------- --------- Interest sensitive assets: Interest bearing deposits with other banks $ 366 $ - $ - $ - $ - $ 366 Investment securities 6,348 5,987 15,148 83,460 32,134 143,077 Loans 116,862 24,387 39,933 71,939 1,672 254,793 --------- --------- --------- --------- --------- --------- Total interest sensitive assets 123,576 30,374 55,081 155,399 33,806 398,236 --------- --------- --------- --------- --------- --------- Interest sensitive liabilities: NOW and savings deposits 121,580 - - - - 121,580 Money market deposits 17,151 - - - - 17,151 Time deposits 39,619 29,886 37,587 63,980 45 171,117 Federal funds purchased and repurchase agreements 19,539 - - - - 19,539 --------- --------- --------- --------- --------- --------- Total interest sensitive liabilites 197,889 29,886 37,587 63,980 45 329,387 --------- --------- --------- --------- --------- --------- Interest sensitivity gap $(74,313) $ 488 $ 17,494 $ 91,419 $ 33,761 $ 68,849 ========= ========= ========= ========= ========= ========= Cumulative interest sensitivity gap $(74,313) $(73,825) $(56,331) $ 35,088 $ 68,849 ========= ========= ========= ========= ========= Percentage cumulative gap to total interest sensitive assets (18.7%) (18.5%) (14.1%) 8.8% 17.3% Of the loans in the above table that either mature or can be repriced in periods over 1 year, $33,483 have adjustable rates and $44,572 have fixed rates. Loan and investment security prepayments were estimated using recent market information.
_______________________________________________________________________________ Because of inherent limitations in interest rate sensitivity analysis, ALCO uses more sophisticated interest rate risk measurement techniques. Simulation analysis is used to subject the current repricing conditions to rising and falling interest rates in increments and decrements of 1%, 2% and 3% to determine how net interest income changes for the next twelve months. ALCO also measures the effects of changes in interest rates on the MVE by discounting future cash flows of deposits and loans using new rates at which deposits and loans would be made to similar depositors and borrowers. Market value changes on the investment portfolio are estimated by discounting future cash flows and using duration analysis. Loan and investment security prepayments are estimated using current market information. The following table shows the estimated impact of changes in interest rates up and down 1%, 2% and 3% on net interest income and on MVE. Change in Net Interest Income and Market Value of Portfolio Equity December 31, 1997 (in thousands)
Change in Change in Change in Market Value Interest Net Interest Income (1) of Portfolio Equity (2) Rates Amount Percent Amount Percent - - - --------- -------- --------- -------- --------- Up 3% $ (65) (.38%) $ (325) (.64%) Up 2% 179 1.05 414 .81 Up 1% 167 .98 267 .53 Down 1% (44) (.26) 1,109 2.18 Down 2% (166) (.97) 218 .43 Down 3% (488) (2.86) (1,172) (2.30) (1) Represents the difference between estimated net interest income for the next 12 months in the new interest rate environment and the current interest rate environment. (2) Represents the difference between market value of portfolio equity in the new interest rate environment and the current interest rate environment, and then tax effected at a 34% tax rate.
______________________________________________________________________________ The negative one year cumulative interest sensitivity gap of $56,331,000 in the interest rate sensitivity analysis normally implies that the Corporation's net interest income would rise if rates decline and fall if rates increase. The simulation analysis presents a more accurate picture since certain rate indices that reprice deposits do not change as rapidly as changes in the prime or indices that reprice many loans. While the Corporation cannot predict future interest rates or their effects on MVE or net interest income, the above analysis indicates that a change in interest rates of plus or minus 3% is unlikely to have a material adverse effect on net interest income and MVE in future periods. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, prepayments and deposit run-offs and should not be relied upon as indicative of actual results. Certain limitations are inherent in such computations. Certain assets and liabilities may react differently then projected to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable rate mortgage loans, generally have features which restrict changes in their interest rate on a short term basis and over the life of the asset. In the event of a change in interest rates, loan prepayments and early deposit withdrawal levels could deviate significantly from those assumed in making the calculations set forth above. Additionally, credit risk may increase if an interest rate increase adversely affects the ability of many borrowers to service their debt. INVESTMENT PORTFOLIO The following table presents information on the book and market values, maturities and taxable equivalent yields of investment securities at the end of the last 3 years (in thousands, except yields and footnote):
1997 1996 1995 -------------------------------- -------------------------------- -------------------------------- Taxable Taxable Taxable Book Market Equivalent Book Market Equivalent Book Market Equivalent Value Value Yield Value Value Yield Value Value Yield -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- U.S. Government: Within 1 year $ 19,001 $ 19,004 6.24% $ 32,073 $ 32,060 5.69% $ 29,055 $ 29,124 5.60% 1 to 5 years 32,144 32,188 6.06 62,907 62,922 6.18 64,923 65,091 6.00 -------- -------- -------- -------- -------- -------- Total 51,145 51,192 6.13 94,980 94,982 6.02 93,978 94,215 5.88 -------- -------- -------- -------- -------- -------- Federal Agencies: Within 1 year 5,995 5,993 5.51 750 750 3.98 1,452 1,455 4.28 1 to 5 years 37,002 37,191 6.51 30,075 30,115 6.32 17,601 17,319 5.30 6 to 10 years 17,913 17,930 6.67 21,103 21,022 6.67 14,375 14,145 6.57 After 10 years 918 922 7.20 930 936 7.24 811 818 7.02 -------- -------- -------- -------- -------- -------- Total 61,828 62,036 6.47 52,858 52,823 6.47 34,239 33,737 5.94 -------- -------- -------- -------- -------- -------- State and Municipal: Within 1 year 521 520 9.24 744 748 9.47 885 903 7.91 1 to 5 years 4,297 4,412 8.42 3,119 3,178 7.79 3,208 3,272 8.38 6 to 10 years 12,247 12,535 8.19 11,318 11,502 7.78 7,963 8,122 8.02 After 10 years 5,339 5,438 8.07 6,836 6,857 7.71 3,600 3,600 7.57 -------- -------- -------- -------- -------- -------- Total 22,404 22,905 8.23 22,017 22,285 7.82 15,656 15,897 7.93 -------- -------- -------- -------- -------- -------- Other Investments: Within 1 year - - - - - - 10 10 5.50 1 to 5 years 3,168 3,168 6.52 427 427 6.52 2,076 2,097 6.21 6 to 10 years 2,042 2,042 7.95 2,998 2,998 6.97 1,920 2,016 6.69 After 10 years 2,490 2,490 6.96 2,477 2,477 7.12 1,329 1,329 7.07 -------- -------- -------- -------- -------- -------- Total 7,700 7,700 7.06 5,902 5,902 7.01 5,335 5,452 6.63 -------- -------- -------- -------- -------- -------- Total portfolio $143,077 $143,833 6.64% $175,757 $175,992 6.38% $149,208 $149,301 6.14% At December 31, 1997, securities available for sale (at amortized cost) totaled $81,526,000 and included $35,033,000 in U. S. Government securities, $28,950,000 in federal agencies, $9,914,000 in state and municipal and $7,629,000 in other securities. A net unrealized gain of $621,000 related to these securities was recorded at December 31, 1997. At December 31, 1996 securities available for sale (at amortized cost) totaled $86,896,000 and included $53,753,000 in U. S. Government securities, $18,175,000 in federal agencies, $9,061,000 in state and municipal, and $5,907,000 in other securities. In 1996 the Corporation recorded a net unrealized gain of $314,000 on these securities. Securities held to maturity totaled $60,611,000 and $88,386,000 at December 31, 1997 and 1996, respectively and had respective estimated fair values of $61,367,000 and $88,621,000. Of the amount at December 31, 1997, $15,935,000, or 26%, were U. S. Government direct obligations, $32,610,000 or 54% were federal agencies and $12,066,000 or 20% were state and municipal securities. Securities held to maturity at December 31, 1997 consisted of $7,372,000 due in one year or less, $28,280,000 due after one year through five years, $22,880,000 due in five years through ten years and $2,079,000 due after ten years. The state and municipal securities were diversified among many different issues and localities. All investments by the Corporation in state and municipal securities were rated "A" or better. The market value of securities held to maturity at December 31, 1997 exceeded the book value by $756,000. No losses are anticipated since the Corporation has the ability and intent to hold these securities until their respective maturities.
_______________________________________________________________________________ Loan Portfolio Total gross loans increased $17,754,000 or 7% during 1997. As shown in schedule A below, the primary increases in types of loans were commercial and industrial loans, real estate loans secured by nonfarm, nonresidential properties and real estate loans secured by 1 - 4 family residential properties. The loan portfolio is diversified and consists of 52% mortgage loans, 27% commercial loans and 21% consumer loans. Note 10 of the Consolidated Financial Statements presents related party loan activity. A substantial portion of the loan additions and payments result from floorplan activity by two automobile dealerships owned separately by two of the Corporation's Directors. The Corporation does not participate in highly leveraged lending transactions, as defined by the bank regulators and there are no loans of this nature recorded in the loan portfolio. The Corporation has no foreign loans in its portfolio. Real Estate Loans Commercial real estate loans have received considerable attention in recent years by the bank regulators and the news media. The concerns have been in real estate values in certain areas of the country and the quality of banks' commercial real estate portfolios. It is difficult to measure commercial real estate values within the Corporation's trade area due to the light sales activity. Commercial real estate values did not escalate to levels seen in other areas of the state and country during the ten years prior to the last recession and management has not detected a significant change in values within the Corporation's trade area during 1997 or 1996. Management has confined its real estate lending to its trade area and has always taken a conservative approach in its lending practice to maintain equity in real estate loans. The Corporation is conforming to the real estate appraisal guidelines set forth by the Comptroller of the Currency. The total of outstanding real estate loans at December 31, 1997 was $143,096,000. This consisted of $94,472,000 or 66% in loans secured by 1-4 family residential properties, $41,368,000 or 29% in loans secured by non-farm, non-residential properties, $4,458,000 or 3% in construction and land development, $1,276,000 or 1% in loans secured by farmland and $1,522,000 of other real estate loans. Nonperforming real estate loans at December 31, 1997 and 1996 were $281,000 and $14,000, respectively. There were no real estate loans on accrual status and past due 90 days or more at December 31, 1997 or at December 31, 1996. Asset Quality The Corporation identifies specific credit exposures through its periodic analysis of the loan portfolio and monitors general exposures from economic trends, market values and other external factors. The Corporation maintains a reserve for loan losses, which is available to absorb losses inherent in the loan portfolio. The reserve is increased by the provision for losses and by recoveries from losses. Charge-offs decrease the reserve. The adequacy of the reserve for loan losses is determined on a quarterly basis. Various factors as defined in the previous section "Provision and Reserve for Loan Losses" are considered in determining the adequacy of the reserve. Loans, other than consumer, are generally placed on nonaccrual status when any portion of principal or interest is 90 days past due or collectability is uncertain. Unless loans are in the process of collection, income recognized on consumer loans is discontinued and the loans are charged off after a delinquency of 90 days. Under the Corporation's policy a nonaccuring loan may be restored to accrual status when none of its principal and interest is due and unpaid and the Corporation expects repayment of the remaining contractual principal and interest or when it otherwise becomes well secured and in the process of collection. Nonperforming assets include loans on which interest is no longer accrued, loans classified as troubled debt restructurings and foreclosed properties. Foreclosed properties of $385,000 at December 31, 1997 include two commercial real estate properties. There were no foreclosed properties held at the close of 1996. At December 31, 1997 and 1996, loans in a nonaccrual or restructured status totaled approximately $393,000 and $33,000, respectively. As shown in schedule C below, loans on accrual status and past due 90 days or more have decreased during 1997 by $298,000 from $479,000 reported in 1996 to $181,000 in 1997. The total of nonperforming loans and loans past due 90 days or more at December 31, 1997 was $574,000, an increase of $62,000 from the $512,000 shown at December 31, 1996. The increase in loans outstanding contributed to the increase in nonperforming loans and loans past due 90 days or more. Net charge-offs as a percentage of average loans increased from .17% in 1996 to .36% in 1997, primarily as a result of two commercial real estate loan chargeoffs. Management considers a charge-off level of .36% to be within reasonable norms from a historical perspective. Management has in place an aggressive program to control loan delinquencies, and the level of past due loans and nonperforming loans is considered to be within an acceptable range. Total nonperforming loans and loans past due 90 days or more represent .23% of total loans at December 31, 1997 and .22% at December 31, 1996. Total nonperforming loans and past due loans 90 days or more on an accrual status is considered low by industry standards. A. The following table presents the year-end balances of loans, classified by type (in thousands):
1997 1996 1995 1994 1993 -------- -------- -------- -------- -------- Real estate loans: Construction and land development $ 4,458 $ 3,640 $ 5,499 $ 4,130 $ 2,244 Secured by farmland 1,276 1,169 1,032 872 716 Secured by 1-4 family residential properties 94,472 90,495 81,667 75,691 76,742 Secured by multi-family (5 or more) residential properties 1,522 772 751 518 126 Secured by nonfarm, nonresidential properties 41,368 35,289 33,950 29,003 30,973 Loans to farmers 2,761 2,672 2,529 2,173 1,768 Commercial and industrial loans 57,980 49,247 46,902 41,804 32,215 Loans to individuals for personal expenditures 48,545 51,066 42,063 36,027 36,049 Loans for nonrated industrial development obligations 2,398 2,565 1,901 2,155 2,528 All other loans 13 124 61 255 11 -------- -------- -------- -------- -------- Total loans $254,793 $237,039 $216,355 $192,628 $183,372 ======== ======== ======== ======== ======== There were no foreign loans outstanding during any of the above periods.
_______________________________________________________________________________ B. An analysis of the loan maturity and interest rate sensitivity is as follows:
Remaining Maturities or First Repricing Opportunities (in thousands) ----------------------------------------------------- Over 1 Over 1 Year Year to Five or Less 5 Years Years Total Percent -------- -------- ------ -------- ------- Commercial, financial and agricultural $ 67,795 $ 1,481 $ 7 $ 69,283 27.2% Mortgage 90,268 38,257 4,822 133,347 52.3% Consumer 18,675 32,780 708 52,163 20.5% -------- -------- ------ -------- ------ $176,738 $ 72,518 $5,537 $254,793 100.0% ======== ======== ====== ======== ====== Rate Sensitivity: Pre-determined rate 19,162 39,111 5,461 63,734 25.0% Floating or adjustable rate 157,576 33,407 76 191,059 75.0% -------- -------- ------ -------- ------ 176,738 72,518 5,537 254,793 100.0% ======== ======== ====== ======== ====== Percent 69.4% 28.4% 2.2% 100.0% Certain short term loans and demand loans within the commercial, financial and agricultural classifications are anticipated to be curtailed prior to any renewal. Normally these loans are expected to be paid within one year and all such loans have been classified within the one year category. Any rollovers allowed depend upon the Bank's loan policy after a reappraisal of the borrower's creditworthiness at the date of maturity.
C. Nonperforming loans and loans past due 90 days or more (in thousands, except ratios):
1997 1996 1995 1994 1993 ------ ------ ------ ------ ------ Nonaccruing loans: Real Estate $281 $ 14 $290 $ 36 $445 Commercial 102 - - 40 73 Agricultural 10 19 16 - - ------ ------ ------ ------ ------ Total nonaccruing loans 393 33 306 76 518 ------ ------ ------ ------ ------ Restructured loans: Commercial - - - 109 256 ------ ------ ------ ------ ------ Total restructured loans - - - 109 256 ====== ====== ====== ====== ====== Total nonperforming loans $393 $ 33 $306 $185 $774 ====== ====== ====== ====== ====== Loans on accrual status past due 90 days or more: Real Estate $ - $ - $ 23 $ - $ - Consumer 160 241 95 112 108 Revolving credit 5 3 6 1 - Commercial - 225 22 - - Agricultural 16 10 15 - - ====== ====== ====== ====== ====== Total past due loans $181 $479 $161 $113 $108 ====== ====== ====== ====== ====== Asset Quality Ratios: Reserve for loan losses to year-end net loans 1.29% 1.30% 1.28% 1.29% 1.26% Nonperforming loans to year-end net loans .15% .01% .14% .10% .43% Reserve for loan losses to nonperforming loans 8.34X 93.03X 9.01X 13.26X 2.91X At December 31, 1997, the Bank had no loan concentrations (loans to borrowers engaged in similar activities) which exceeded 10% of total loans.
Summary of Loan Loss Experience An analysis of the reserve for losses is set forth in the following table (in thousands):
1997 1996 1995 1994 1993 ------ ------ ------ ------ ------ Balance at beginning of period $3,070 $2,757 $2,454 $2,256 $2,194 ------ ------ ------ ------ ------ Charge-offs: Commercial loans 452 9 - 5 80 Real estate loans - - - 14 11 Consumer loans 540 493 241 112 113 ------ ------ ------ ------ ------ 992 502 241 131 204 ------ ------ ------ ------ ------ Recoveries: Commercial loans - 3 - - - Real estate loans - - - 4 - Consumer loans 99 114 60 53 52 ------ ------ ------ ------ ------ 99 117 60 57 52 ------ ------ ------ ------ ------ Net charge-offs 893 385 181 74 152 Provision for loan losses 1,100 673 484 272 214 Other - 25 - - - ------ ------ ------ ------ ------ Balance at end of period $3,277 $3,070 $2,757 $2,454 $2,256 ====== ====== ====== ====== ====== Percent of net charge-offs to average net loans outstanding during the period .36% .17% .09% .04% 0.09% ======= ======= ======= ======= ======= The reserve for loan losses is based upon the quality of loans as determined by management taking into consideration historical loan loss experience, diversification of the loan portfolio, amount of secured and unsecured loans, banking industry standards and averages, and general economic conditions. At the time that collection of the outstanding balance of specific loans together with related interest is considered doubtful, such loans are placed in a nonaccuring status.
_______________________________________________________________________________ Deposits The following table presents the average balances of deposits and the average rates paid on those deposits for the past 3 years (in thousands):
1997 1996 1995 -------------------- --------------------- --------------------- Average Average Average Average Average Average Balance Rate Balance Rate Balance Rate --------- -------- --------- --------- --------- --------- Demand deposits - non-interest bearing $ 39,752 -% $ 34,723 -% $ 29,303 -% Demand deposits - interest bearing 48,893 2.88% 43,012 2.90% 36,892 2.94% Money market 19,463 2.94% 21,414 2.98% 21,480 3.24% Savings 70,238 3.05% 65,764 3.06% 69,727 3.11% Time 176,403 5.44% 172,390 5.61% 136,725 5.26% -------- -------- -------- $354,749 4.35% $337,303 4.48% $294,127 4.21% ======== ======== ========
Certificates of Deposit Certificates of deposit at the end of 1997 in amounts of $100,000 or more were classified by maturity as follows (in thousands): 3 months or less $ 6,106 Over 3 through 6 months 4,800 Over 6 through 12 months 6,979 Over 12 months 14,930 ------- $32,815 =======
Return on Assets and Shareholders' Equity The following table presents certain rates of return and percentages for the past 3 years:
1997 1996 1995 1994 ------ ------ ------ ------ Return on average assets 1.47% 1.24% 1.43% 1.37% Return on average shareholder's equity 12.51% 10.12% 10.62% 10.13% Dividend payout ratio 40.08% 44.97% 36.00% 50.16% Average shareholders' equity to average assets 11.78% 12.22% 13.43% 13.53%
_______________________________________________________________________________ Impact of Inflation and Changing Prices The majority of assets and liabilities of a financial institution are monetary in nature and therefore differ greatly from most industrial companies that have significant investments in fixed assets. Due to this fact, the effects of inflation on the Corporation's balance sheet are minimal, meaning that there are no substantial increases or decreases in net purchasing power over time. The most significant effect of inflation is on other expenses which tend to rise during periods of general inflation. Management feels that the most significant impact on financial results is changes in interest rates and the Corporation's ability to react to those changes. As discussed previously, management is attempting to measure, monitor and control interest rate risk. Quarterly Financial Results (in thousands, except per share amounts) American National Bankshares Inc. and Subsidiary
Fourth Third Second First Quarter Quarter Quarter Quarter -------- -------- -------- -------- 1997 Interest income....................................... $8,053 $7,916 $7,883 $7,876 Interest expense...................................... 3,665 3,629 3,619 3,677 -------- -------- -------- -------- Net interest income................................. 4,388 4,287 4,264 4,199 Provision for loan losses............................. 338 262 257 243 -------- -------- -------- -------- Net interest income after provision................. 4,050 4,025 4,007 3,956 Non-interest income................................... 845 835 783 738 Non-interest expense.................................. 2,722 2,466 2,542 2,515 -------- -------- -------- -------- Income before income tax provision.................. 2,173 2,394 2,248 2,179 Income tax provision.................................. 630 749 704 642 -------- -------- -------- -------- Net income.......................................... $1,543 $1,645 $1,544 $1,537 ======== ======== ======== ======== Per common share: Net Income.......................................... $ .50 $ .54 $ .48 $ .47 Cash dividends...................................... $ .21 $ .21 $ .21 $ .18 1996 Interest income....................................... $7,958 $7,607 $7,182 $7,185 Interest expense...................................... 3,827 3,587 3,480 3,476 -------- -------- -------- -------- Net interest income................................. 4,131 4,020 3,702 3,709 Provision for loan losses............................. 255 165 122 131 -------- -------- -------- -------- Net interest income after provision................. 3,876 3,855 3,580 3,578 Non-interest income................................... 642 678 761 610 Non-interest expense.................................. 2,272 2,496 2,086 3,313 -------- -------- -------- -------- Income before income tax provision.................. 2,246 2,037 2,255 875 Income tax provision.................................. 669 4 697 1,011 -------- -------- -------- -------- Net income.......................................... $1,577 $2,033 $1,558 $ (136) ======== ======== ======== ======== Per common share: Net Income.......................................... $ .48 $ .62 $ .48 $ (.04) Cash dividends...................................... $ .18 $ .18 $ .18 $ .15
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and the Board of Directors of American National Bankshares Inc.: We have audited the accompanying consolidated balance sheets of American National Bankshares Inc. (a Virginia corporation) and Subsidiary as of December 31, 1997 and 1996, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American National Bankshares Inc. and Subsidiary as of December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. /s/Arthur Andersen LLP Greensboro, North Carolina, February 6, 1998 Consolidated Balance Sheets December 31, 1997 and 1996 American National Bankshares Inc. and Subsidiary
1997 1996 ------------- ------------- ASSETS Cash and due from banks ........................................................$ 13,386,440 $ 14,622,925 Interest-bearing deposits in other banks........................................ 366,110 198,978 Investment securities: Securities available for sale (at market value)............................... 82,466,034 87,370,469 Securities held to maturity (market value of $61,367,264 in 1997 and $88,621,066 in 1996)............................................ 60,610,993 88,386,136 ------------- ------------- Total investment securities............................................... 143,077,027 175,756,605 ------------- ------------- Loans .......................................................................... 254,792,918 237,039,181 Less Unearned income............................................................. (343,211) (460,156) Reserve for loan losses..................................................... (3,277,179) (3,069,624) ------------- ------------- Net loans............................................................... 251,172,528 233,509,401 ------------- ------------- Bank premises and equipment, at cost, less accumulated depreciation of $6,349,589 in 1997 and $6,147,665 in 1996..................... 6,514,286 6,384,751 Accrued interest receivable and other assets.................................... 9,123,469 9,685,018 ------------- ------------- Total assets............................................................$423,639,860 $440,157,678 ============= ============= LIABILITIES and SHAREHOLDERS' EQUITY Liabilities: Demand deposits -- non-interest bearing.......................................$ 41,754,876 $ 41,891,451 Demand deposits -- interest bearing........................................... 52,029,224 46,776,481 Money market deposits......................................................... 17,151,352 21,810,145 Savings deposits.............................................................. 69,550,353 69,997,457 Time deposits................................................................. 171,117,111 181,507,058 ------------- ------------- Total deposits 351,602,916 361,982,592 ------------- ------------- Federal funds purchased......................................................... 1,500,000 8,425,000 Repurchase agreements........................................................... 18,038,964 15,059,281 Accrued interest payable and other liabilities.................................. 2,495,215 2,473,111 ------------- ------------- Total liabilities....................................................... 373,637,095 387,939,984 ------------- ------------- Shareholders' equity: Preferred stock, $5 par, 200,000 shares authorized, none outstanding............................................................ - - Common stock, $1 par,10,000,000 shares authorized, 3,051,733 and 3,279,798 shares outstanding in 1997 and 1996................. 3,051,733 3,279,798 Capital in excess of par value.................................................. 9,892,304 10,631,585 Retained earnings............................................................... 36,438,185 37,992,700 Net unrealized gains ........................................................... 620,543 313,611 ------------- ------------- Total shareholders' equity.............................................. 50,002,765 52,217,694 ------------- ------------- Total liabilities and shareholders' equity..............................$423,639,860 $440,157,678 ============= ============= The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
Consolidated Statements of Income For The Years Ended December 31, 1997, 1996 and 1995 American National Bankshares Inc and Subsidiary
1997 1996 1995 Interest Income: Interest and fees on loans.........................................$ 22,441,097 $ 20,334,588 $ 18,431,601 Interest on federal funds sold and other........................... 237,204 434,674 201,787 Income on investment securities: U S Government.................................................. 4,018,344 6,022,023 3,860,228 Federal agencies................................................ 3,470,483 1,711,974 2,315,000 State and municipal ............................................ 1,136,496 988,159 694,565 Other investments............................................... 424,521 440,374 430,192 ------------ ------------ ------------ Total interest income......................................... 31,728,145 29,931,792 25,933,373 ------------ ------------ ------------ Interest Expense: Interest on deposits: Demand.......................................................... 1,408,255 1,245,678 1,084,850 Money market.................................................... 571,873 637,954 695,495 Savings......................................................... 2,140,158 2,012,717 2,170,799 Time............................................................ 9,589,470 9,670,514 7,192,868 Interest on short-term borrowed funds.............................. 880,392 803,099 339,672 ------------ ------------ ------------ Total interest expense......................................... 14,590,148 14,369,962 11,483,684 ------------ ------------ ------------ Net Interest Income.................................................. 17,137,997 15,561,830 14,449,689 Provision for Loan Losses............................................ 1,100,000 673,291 483,930 ------------ ------------ ------------ Net Interest Income After Provision For Loan Losses.................................................... 16,037,997 14,888,539 13,965,759 ------------ ------------ ------------ Non-Interest Income: Trust and investment services...................................... 1,888,341 1,896,266 1,343,015 Service charges on deposit accounts................................ 786,270 600,606 447,898 Non-deposit fees and insurance commissions......................... 155,697 106,015 113,842 Other income....................................................... 370,667 88,355 130,296 ------------ ------------ ------------ Total non-interest income...................................... 3,200,975 2,691,242 2,035,051 ------------ ------------ ------------ Non-Interest Expense: Salaries........................................................... 4,810,783 4,083,106 3,786,607 Pension and other employee benefits................................ 1,076,144 912,935 1,073,453 Occupancy and equipment ........................................... 1,437,285 1,211,974 1,044,086 FDIC insurance .................................................... 77,801 466,663 406,624 Postage and printing............................................... 429,128 397,409 283,591 Core deposit intangible amortization............................... 450,179 317,961 102,774 Merger related .................................................... - 1,055,695 140,000 Other ............................................................. 1,963,680 1,721,321 1,865,076 ------------ ------------ ------------ Total non-interest expense..................................... 10,245,000 10,167,064 8,702,211 ------------ ------------ ------------ Income Before Income Tax Provision................................... 8,993,972 7,412,717 7,298,599 Income Tax Provision................................................. 2,724,780 2,380,529 2,282,836 ------------ ------------ ------------ Net Income...........................................................$ 6,269,192 $ 5,032,188 $ 5,015,763 ============ ============ ============ Net Income Per Common Share, based on weighted average shares outstanding of 3,144,834 for 1997, 3,267,038 for 1996 and 3,213,641 for 1995.......................... $1.99 $1.54 $1.56 The accompanying notes to consolidated financial statements are an integral part of these statements.
CONSOLIDATED STATEMENTS of CHANGES in SHAREHOLDERS' EQUITY For the Years Ended December 31, 1997, 1996 and 1995 American National Bankshares Inc. and Subsidiary
Common Stock Capital in Net Total ______________________ Excess of Retained Unrealized Shareholders' Shares Amount Par Value Earnings Gains(Losses) Equity --------- ---------- ----------- ------------ -------------- ------------- Balance, December 31, 1994.................... 3,213,641 $3,213,641 $ 9,966,711 $31,893,574 $ (28,641) $45,045,285 Net income.................................... - - - 5,015,763 - 5,015,763 Cash dividends, at $.56 per share............. - - - (1,344,000) - (1,344,000) Cash dividens declared by merged company........................ - - - (461,640) - (461,640) Net unrealized gain........................... - - - - 656,708 656,708 ----------- ---------- ----------- ------------ ----------- ------------- Balance, December 31, 1995.................... 3,213,641 3,213,641 9,966,711 35,103,697 628,067 48,912,116 MSB fiscal year to calendar year adjustment: Net income.................................. - - - 235,485 - 235,485 Cash dividends.............................. - - - (115,610) - (115,610) Exercise of stock options..................... 66,270 66,270 668,192 - - 734,462 Cash paid for fractional shares............... (113) (113) (3,318) - - (3,431) Net income.................................... - - - 5,032,188 - 5,032,188 Cash dividends, at $.69 per share............. - - - (2,263,060) - (2,263,060) Net unrealized loss........................... - - - - (314,456) (314,456) ----------- ---------- ------------ ----------- ----------- ------------- Balance, December 31, 1996.................... 3,279,798 3,279,798 10,631,585 37,992,700 313,611 52,217,694 Stock repurchase.............................. (228,065) (228,065) (739,281) (5,310,752) - (6,278,098) Net income.................................... - - - 6,269,192 - 6,269,192 Cash dividends, at $.81 per share............. - - - (2,512,955) - (2,512,955) Net unrealized gain........................... - - - - 306,932 306,932 ----------- ------------- ------------ ------------ ---------- ------------- Balance, December 31, 1997.................... 3,051,733 $ 3,051,733 $ 9,892,304 $36,438,185 $ 620,543 $50,002,765 =========== ============ ============ ============ ========== ============= The accompanying notes to consolidated financial statements are an integral part of these statements.
Consolidated Statements of Cash Flows For the Years Ended December 31, 1997, 1996 and 1995 American National Bankshares Inc. and Subsidiary
1997 1996 1995 ------------- ------------- ------------- Cash Flows from Operating Activities: Net income....................................................................$ 6,269,192 $ 5,032,188 $ 5,015,763 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses............................................... 1,100,000 673,291 483,930 Depreciation............................................................ 720,446 562,299 575,649 Core deposit intangible amortization.................................... 450,179 317,961 102,774 Amortization (accretion) of premiums and discounts on investment securities.............................................. (56,111) 36,737 (2,340) (Gain) loss on sale of securities....................................... (30,912) 338,103 (24,037) Gain on sale of property and equipment.................................. - (32,015) - Deferred income taxes benefit........................................... (154,749) (61,225) (79,218) Reconciliation of fiscal year of merged company to calendar year........ - (379,006) - Decrease (increase) in interest receivable.............................. 311,723 (227,123) (1,001,503) (Increase) decrease in other assets..................................... (203,721) (112,123) 42,021 (Decrease) increase in interest payable................................. (224,020) 522,644 389,520 Increase (decrease) in other liabilities................................ 246,124 (324,563) 269,762 ------------- ------------- ------------- Net cash provided by operating activities................................. 8,428,151 6,347,168 5,772,321 ------------- ------------- ------------- Cash Flows from Investing Activities: Acquisition of branch operations.............................................. - 14,866,883 30,716,425 Proceeds from maturities, calls, and sales of securities ..................... 53,402,611 56,166,496 34,211,253 Purchases of securities available for sale.................................... (20,170,962) (28,709,857) (2,733,960) Purchases of securities held to maturity...................................... - (53,916,004) (57,278,228) Net increase in loans......................................................... (18,763,126) (16,108,172) (22,985,274) Proceeds from sale of property and equipment.................................. - 158,047 - Purchases of property and equipment........................................... (849,981) (993,541) (488,557) ------------- ------------- ------------- Net cash provided by (used in) investing activities........................... 13,618,542 (28,536,148) (18,558,341) ------------- ------------- ------------- Cash Flows from Financing Activities: Net increase (decrease) in demand, money market, and savings deposits........................................................ 10,271 8,929,414 (22,181,491) Net (decrease) increase in time deposits...................................... (10,389,947) 3,186,875 30,558,646 Repayments on Federal Home Loan Bank advances................................. - - (1,500,000) Net (decrease) increase in federal funds purchased and repurchase agreements................................................... (3,945,317) 13,912,246 3,467,240 Cash dividends paid........................................................... (2,512,955) (2,263,060) (1,805,640) Cash paid in lieu of fractional shares........................................ - (3,431) - Repurchase of stock........................................................... (6,278,098) - - Proceeds from exercise of stock options....................................... - 460,000 - ------------- ------------- ------------- Net cash (used in) provided by financing activities........................... (23,116,046) 24,222,044 8,538,755 ------------- ------------- ------------- Net (Decrease) Increase in Cash and Cash Equivalents.......................... (1,069,353) 2,033,064 (4,247,265) Cash and Cash Equivalents at Beginning of Period.............................. 14,821,903 12,788,839 17,036,104 ------------- ------------- ------------- Cash and Cash Equivalents at End of Period....................................$ 13,752,550 $ 14,821,903 $ 12,788,839 ============= ============= ============= Supplemental Schedule of Cash and Cash Equivalents: Cash: Cash and due from banks.....................................................$ 13,386,440 $ 14,622,925 $ 10,394,143 Interest-bearing deposits in other banks.................................... 366,110 198,978 1,294,696 Federal funds sold.......................................................... - - 1,100,000 ------------- ------------- ------------- $ 13,752,550 $ 14,821,903 $ 12,788,839 ============= ============= ============= Supplemental Disclosure of Cash Flow Information: Interest paid................................................................$ 14,814,169 $ 13,746,911 $ 11,220,366 Income taxes paid............................................................$ 2,953,355 $ 2,600,939 $ 2,326,530 The accompanying notes to consolidated financial statements are an integral part of these statements.
Notes To Consolidated Financial Statements December 31, 1997, 1996 and 1995 American National Bankshares Inc. and Subsidiary 1. Summary of Accounting Policies: Consolidation The consolidated financial statements include the amounts and results of operations of American National Bankshares Inc. ("the Corporation") and its wholly owned subsidiary, American National Bank and Trust Company ("the Bank"). The Bank offers a wide variety of retail, commercial and trust banking services through its offices located in the trade area of the City of Danville, Virginia, the Counties of Pittsylvania and Henry in Virginia and the County of Caswell in North Carolina. Mutual Mortgage of the Piedmont, Inc., a wholly owned subsidiary of the Bank, commenced mortgage lending operations in December 1996. All significant intercompany transactions and accounts are eliminated in consolidation. Investment Securities The Bank classifies investment securities in one of three categories: held to maturity, available for sale and trading. Debt securities acquired with both the intent and ability to be held to maturity are classified as held to maturity and reported at amortized cost. Gains or losses realized from the sale of any securities held to maturity are determined by specific identification and are included in non-interest income. Securities which may be used to meet liquidity needs arising from unanticipated deposit and loan fluctuations, changes in regulatory capital and investment requirements, or unforeseen changes in market conditions, including interest rates, market values or inflation rates, are classified as available for sale. Securities available for sale are reported at estimated fair value, with unrealized gains and losses reported as a separate component of shareholders' equity, net of tax. Gains or losses realized from the sale of securities available for sale are determined by specific identification and are included in non-interest income. Trading account securities, of which none were held on December 31, 1997 and 1996, are reported at fair value. Market adjustments, fees, gains or losses and income earned on trading account securities are included in non-interest income. Gains or losses realized from the sale of trading securities are determined by specific identification and are included in non-interest income. During the fourth quarter of 1995, the Bank transferred $2,631,000 of securities which were previously classified as held to maturity to the available for sale category. The Financial Accounting Standards Board ("FASB") provided enterprises the opportunity to make a one time reassessment of the classification of all investment securities held at that time, such that the reclassification of any security from the held to maturity category would not call into question the enterprise's intent to hold other debt securities to maturity in the future. Management anticipates that this classification will allow more flexibility in the day-to-day management of the overall portfolio than the prior classification. Loans Loans are stated at the principal amount outstanding, net of unearned income. Mortgage and commercial loans accrue interest on the unpaid balance of the loans. Consumer loans made prior to April 1, 1994 earn interest on the level yield method based on the daily outstanding balance. Consumer loans made subsequent to April 1, 1994 accrue interest on the unpaid balance of the loans. The net amount of nonrefundable loan origination fees and direct costs associated with the lending process are deferred and amortized to interest income over the contractual lives of the loans using the effective interest method. Reserve for Loan Losses The reserve for loan losses is an estimate of losses inherent in the loan portfolio as determined by management taking into consideration historical loan loss experience, diversification of the loan portfolio, amount of secured and unsecured loans, banking industry standards and averages, and general economic conditions. Ultimate losses may vary from current estimates. These estimates are reviewed periodically and as adjustments become necessary, they are reported in earnings in the periods in which they become reasonably estimable. Bank Premises and Equipment Additions and major replacements are added to bank premises and equipment at cost. Maintenance and repair costs are charged to expense when incurred. Premises and equipment are depreciated over their estimated useful lives using primarily accelerated methods. Intangible Assets Premiums paid on acquisitions of deposits (core deposit intangibles) are included in other assets in the "Consolidated Balance Sheets". Such assets are being amortized on a straight line basis over 10 years. At December 31, 1997, the Bank had $3,633,000 recorded as core deposit intangibles, net of amortization. For the years ended December 31, 1997, 1996 and 1995, the Bank recorded core deposit intangible amortization of approximately $450,000, $318,000 and $103,000, respectively. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statements of Cash Flows Cash and cash equivalents include cash and amounts due from banks and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Income Taxes Deferred income taxes are provided where different accounting methods have been used for reporting income for income tax and for financial reporting purposes. Earnings Per Share The Corporation adopted FASB Statement No. 128, "Earnings Per Share", in 1997. This statement requires the dual presentation of basic and diluted earnings per share which are equal for the Corporation for all periods presented. No restatement of prior periods was required. New Accounting Pronouncements In June 1997, FASB Statement No. 130, "Reporting Comprehensive Income", was issued and establishes standards for reporting and displaying comprehensive income and its components. This statement requires comprehensive income and its components, as recognized under the accounting standards, to be displayed in a financial statement with the same prominence as other financial statements. The Corporation plans to adopt the Statement, as required, beginning in 1998 and its impact is not expected to be material. The FASB also issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information", in June 1997, which establishes new standards for reporting information about operating segments in annual and interim financial statements. This statement also requires descriptive information about the way operating segments are determined, the products and services provided by the segments and the nature of differences between reportable segment measurements and those used for the consolidated entity. This Statement is effective for years beginning after December 15, 1997. Adoption in interim financial statements is not required until the year following initial adoption. Once adopted, however, comparative prior period information is required. The Corporation is evaluating the Statement and plans to adopt as required in 1998. Adoption is not expected to have a material impact on the Corporation. 2. Parent Company Financial Information: Condensed parent company financial information is as follows (in thousands): As of December 31 Condensed Balance Sheets 1997 1996 Assets: Investment in Subsidiary $49,969 $52,180 Other Assets 34 38 ------- ------- Total Assets $50,003 $52,218 ======= ======= Shareholders' Equity $50,003 $52,218 ======= ======= For the Year Ended December 31 Condensed Statements of Income 1997 1996 1995 Dividends from Subsidiary $8,820 $2,283 $1,806 Expenses (33) (2) (1) ------- ------- ------- Income Before Equity in Undistributed Earnings of Subsidiary 8,787 2,281 1,805 Equity in Undistributed (Distibutions in Excess of)Earnings of Subsidiary 2,518 2,751 3,211 ------- ------- ------- Net Income $6,269 $5,032 $5,016 ======= ======= ======= For the Year Ended December 31 Condensed Statements of Cash Flows 1997 1996 1995 Cash provided by dividends received from Subsidiary $8,820 $2,283 $1,806 Cash used for payment of dividends (2,513) (2,263) (1,806) Cash used for repurchase of stock (6,278) - - Other (33) (11) (1) ------- ------- ------- Net increase (decrease) in cash $ (4) $ 9 $ (1) ======= ======= ====== 3. Mergers and Acquisitions: On March 14, 1996, the Corporation completed the acquisition of Mutual Savings Bank, F.S.B. ("Mutual") upon the approval of the shareholders of each company. The Corporation exchanged approximately 879,805 common shares, at an exchange ratio of .705 of a share of the Corporation's common stock, for each of Mutual's 1,248,100 common shares (which includes the exercise of all outstanding stock options). The transaction was accounted for as a pooling of interests. The financial position and results of operations of the Corporation and Mutual were combined and the fiscal year of Mutual was conformed to the Corporation's fiscal year. In addition, all prior periods presented were restated to give effect to the merger. In August 1995, the Corporation acquired the branch office of Crestar Bank in Gretna, Virginia. In addition to the branch facilities at Gretna, the Corporation acquired $2,150,000 in loans and assumed deposits of $36,295,000. This transaction was accounted for as a purchase. In October 1996, the Corporation acquired the branch office of FirstSouth Bank located in Yanceyville, North Carolina. In addition to the branch facilities and an ATM located in Yanceyville, the Corporation acquired $4,775,000 in loans and assumed deposits of $21,405,000. This transaction was accounted for as a purchase. 4. Investment Securities: The amortized cost and estimated fair value of investments in debt securities at December 31, 1997 and 1996 were as follows (in thousands): 1997 ---------------------------------------------- Amortized Estimated Cost Gains Losses Fair Value ---------- ------- -------- ------------ Securities held to maturity: U.S. Government $ 15,935 $ 47 $ - $ 15,982 Federal agencies 32,610 262 (54) 32,818 State and municipal 12,066 503 (2) 12,567 -------- ------ ------- -------- Total securities held to maturity 60,611 812 (56) 61,367 -------- ------ ------- -------- Securities available for sale: U.S. Government 35,033 177 - 35,210 Federal agencies 28,950 313 (45) 29,218 State and municipal 9,914 424 - 10,338 Other 7,629 75 (4) 7,700 -------- ------ ------- -------- Total securities available for sale 81,526 989 (49) 82,466 -------- ------ ------- -------- Total securities $142,137 $1,801 $ (105) $143,833 ======== ====== ======= ======== 1996 ---------------------------------------------- Amortized Estimated Cost Gains Losses Fair Value ---------- ------- -------- ------------ Securities held to maturity: U.S. Government $ 40,948 $ 52 $ (49) $ 40,951 Federal agencies 34,615 102 (136) 34,581 State and municipal 12,823 291 (25) 13,089 -------- ------ ------- -------- Total securities held to maturity 88,386 445 (210) 88,621 -------- ------ ------- -------- Securities available for sale: U.S. Government 53,753 290 (10) 54,033 Federal agencies 18,175 189 (122) 18,242 State and municipal 9,061 171 (38) 9,194 Other 5,907 28 (33) 5,902 -------- ------ ------- -------- Total securities available for sale 86,896 678 (203) 87,371 -------- ------ ------- -------- Total securities $175,282 $1,123 $ (413) $175,992 ======== ====== ======= ======== The amortized cost and estimated fair value of investments in debt securities at December 31, 1997, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Held to Maturity Available for Sale ------------------------- ------------------------- Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value ---------- ------------ ---------- ------------ Due in one year or less $ 7,372 $ 7,373 $18,100 $18,145 Due after on year through five years 28,280 28,627 47,873 48,332 Due after five years through ten years 22,880 23,185 8,991 9,321 Due after ten years 2,079 2,182 6,562 6,668 ------- ------- ------- ------- $60,611 $61,367 $81,526 $82,466 ======= ======= ======= ======= Proceeds from calls exercised by the issuers of investments in debt securities were $1,236,000 in 1997, $1,804,000 in 1996 and $2,045,000 in 1995. Proceeds from sales of investments in debt securities were $24,823,000 in 1997, $19,234,000 in 1996 and $9,021,000 in 1995. The Bank recognized losses of $13,000 and gains of $44,000 on sale of securities during 1997, losses of $592,000 and gains of $254,000 on sale of securities during 1996 and gains of $61,000 and losses of $37,000 on sales of securities during 1995. Investment securities with a book value of approximately $31,742,000 at December 31, 1997 were pledged to secure deposits of the U. S. Government, state and political sub-divisions and for other purposes as required by law. Of this amount, $19,789,000 was pledged to secure repurchase agreements. 5. Loans: Outstanding loans at December 31, 1997 and 1996 were composed of the following (in thousands): 1997 1996 Real Estate loans: Construction and land development $ 4,458 $ 3,640 Secured by farmland 1,276 1,169 Secured by 1 - 4 family residential properties 94,472 90,495 Secured by multi-family (5 or more) residential properties 1,522 772 Secured by nonfarm, nonresidential properties 41,368 35,289 Loans to farmers 2,761 2,672 Commercial and industrial loans 57,980 49,247 Loans to individuals for personal expenditures 48,545 51,066 Loans for nonrated industrial development obligations 2,398 2,565 All other loans 13 124 -------- -------- Total loans $254,793 $237,039 ======== ======== Loans, other than consumer, are generally placed on nonaccrual status when any portion of principal or interest is 90 days past due or collectability is uncertain. Unless loans are in the process of collection, income recognition on consumer loans is discontinued and the loans are charged off after a delinquency of 90 days. At December 31, 1997, 1996 and 1995, loans in a nonaccrual or restructured status totaled approximately $393,000, $33,000 and $306,000, respectively. Interest income on nonaccrual loans, if recognized, is recorded on a cash basis. For the years 1997, 1996 and 1995, the gross amount of interest income that would have been recorded on nonaccrual loans and restructured loans at December 31, if all such loans had been accruing interest at the original contractual rate, was $18,000, $40,000 and $25,000, respectively. No interest payments were recorded in 1997, 1996 or 1995 as interest income for all such nonperforming loans. Under the Corporation's policy a nonaccruing loan may be restored to accrual status when none of its principal and interest is due and unpaid and the Corporation expects repayment of the remaining contractual principal and interest or when it otherwise becomes well secured and in the process of collection. As of January 1, 1995, the Bank adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", which was amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures". SFAS No. 114, as amended, requires that impaired loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, or as a practical expedient, at the loan's observable market price or the fair value of the collateral, if the loan is collateral-dependent. When the measure of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through a valuation allowance. The Bank had previously measured the reserve for loan losses using methods similar to those prescribed in SFAS No. 114. As a result of adopting these statements, no additional reserve for loan losses was required as of January 1, 1995. For purposes of applying SFAS No. 114, commercial loans on nonaccrual status are evaluated for impairment on an individual basis. Management assesses the current economic condition and the historical repayment patterns of the creditor in determining whether delays in repayment on the loans are considered to be insignificant shortfalls or indicators of impairment. Those loans for which management considers it probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement are considered to be impaired. All loans made by the Bank other than commercial loans are excluded from the scope of SFAS No. 114 as they are considered smaller-balance homogeneous loans that are collectively evaluated for impairment. Interest income is recognized on impaired loans in the same manner as loans on nonaccrual status. The Bank did not identify any loans as impaired at December 31, 1997. The loan portfolio is concentrated primarily in the immediate geographic region which is the Corporation's trade area consisting of the City of Danville, City of Martinsville, Pittsylvania and Henry Counties in Virginia, Town of Yanceyville and the northern half of Caswell County in North Carolina. There were no concentrations of loans to any individual, group of individuals, businesses or industry that exceeded 10% of the outstanding loans at December 31, 1997. An analysis of the reserve for loan losses is as follows (in thousands): 1997 1996 1995 Balance, beginning of year $3,070 $2,757 $2,454 Provision for loan losses charged to expense 1,100 673 484 Charge-offs (992) (502) (241) Recoveries 99 117 60 Other - 25 - ------ ------ ------ Balance, end of year $3,277 $3,070 $2,757 ====== ====== ====== 6. Time Deposits: Included in time deposits are certificates of deposit in denominations of $100,000 or more totaling $32,815,000, $34,472,000 and $28,654,000 at December 31, 1997, 1996 and 1995, respectively. Interest expense on such deposits during 1997, 1996 and 1995 was $1,570,000, $1,392,000 and $788,000, respectively. 7. Stock Options: In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation" was issued. SFAS No. 123 is effective for fiscal years beginning after December 15, 1995. SFAS No.123 encourages companies to adopt the fair value method for compensation expense recognition related to employee stock options. Existing accounting requirements of Accounting Principles Board Opinion No. 25 (APB No. 25) use the intrinsic value method in determining compensation expense, which represents the excess of the market price of stock over the exercise price on the measurement date. The Corporation elected to remain under APB No. 25 for accounting for stock options. During 1997, the Corporation granted 16,800 stock options to all full time employees of the Corporation. The options have a vesting period of one year and are exercisable for nine years from the vesting date. Under APB No. 25, the Corporation recognizes compensation expense for the excess of the market value of the options over the exercise price on the date of grant. The options have an exercise price of $28. As the exercise price of the options exceeded the market price of the Corporation's stack at the date of grant, no compensation expense has been recognized. At December 31, 1997, 800 shares had been forfeited and the remaining 16,000 shares were outstanding. 8. Income Taxes: The components of the Corporation's net deferred tax assets as of December 31, 1997 and December 31, 1996, were as follows (in thousands): December 31 1997 1996 Deferred tax assets: Reserve for loan losses $ 911 $ 840 Deferred compensation 247 219 Other 201 150 ------- ------- 1,359 1,209 Valuation allowance (136) (121) ------- ------- Total deferred tax assets 1,223 1,088 Deferred tax liabilities: Depreciation 230 211 Net unrealized gains 320 162 Accretion of discount 211 173 Prepaid pension 39 75 Other 132 173 ------- ------- Total deferred tax liabilities 932 794 ======= ======= Net deferred tax assets $ 291 $ 294 ======= ======= The provision for income taxes consists of the following (in thousands): 1997 1996 1995 Taxes currently payable $2,880 $2,442 $2,362 Deferred tax benefit (155) (61) (79) ------- ------- ------- $2,725 $2,381 $2,283 ======= ======= ======= The effective rates of the provision differ from the statutory federal income tax rates due to the following items: 1997 1996 1995 Federal statutory rate 34.0% 34.0% 34.0% Non-taxable interest income (3.6) (3.6) (3.5) Non-deductible merger expenses - 2.3 .8 Other ( .1) ( .6) -- ----- ----- ----- 30.3% 32.1% 31.3% ===== ===== ===== 9. Commitments and Contingent Liabilities: The consolidated financial statements do not reflect various commitments and contingent liabilities which arise in the normal course of business to meet the financing needs of customers. These include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit, interest rate and liquidity risk in excess of the amount recognized in the consolidated balance sheets. The extent of the Bank's involvement in various commitments or contingent liabilities is expressed by the contract or notional amounts of such instruments. Commitments to extend credit, which amounted to $64,774,000 and $65,030,000 at December 31, 1997 and 1996, 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. There were no commitments at December 31, 1997 or December 31, 1996 to purchase securities when issued. 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 December 31, 1997 and 1996 the Bank had $1,500,000 and $705,000 in outstanding standby letters of credit. Management and the Corporation's counsel are not aware of any pending litigation against the Corporation and believe that there are no contingent liabilities outstanding that will result in a material adverse effect on the Corporation's consolidated financial position or consolidated results of operations. The Bank is a member of the Federal Reserve System and is required to maintain certain levels of its cash and due from bank balances as reserves based on regulatory requirements. At December 31, 1997, this reserve requirement was approximately $4,658,000. 10. Related Party Transactions: The Directors provide the Bank with substantial amounts of business, and many are among its largest depositors and borrowers. The total amount of loans outstanding to the executive officers, directors and their business interests was $11,825,000, $14,025,000 and $13,845,000 at December 31, 1997, 1996 and 1995, respectively. The maximum amount of loans outstanding to the officers, directors and their business interests at any month-end during 1997, 1996 and 1995 was approximately 6.8% of gross loans. Management believes that all such loans are made on substantially the same terms, including interest rates, as those prevailing at the time for comparable loans to similar, unrelated borrowers, and do not involve more than a normal risk of collectability. As of December 31, 1997, none of these loans were restructured, nor were any related party loans charged off during 1997. An analysis of these loans for 1997 is as follows (in thousands): Balance, beginning of year $14,025 Additions 19,153 Repayments (21,353) -------- Balance, end of year $11,825 ======== 11. Employee Benefit Plans: The Bank's retirement plan is a non-contributory defined benefit pension plan which covers substantially all employees of the Bank who are 21 years of age or older and who have had at least one year of service. Advanced funding is accomplished by using the actuarial cost method known as the collective aggregate cost method. The following table sets forth the plan's funded status as of December 31, 1997 and 1996 (in thousands): 1997 1996 Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $2,138 in 1997 and $2,518 in 1996 $(2,248) $(2,604) ======= ======= Projected benefit obligation at December 31 $(3,431) $(3,913) Plan assets at fair value 3,796 3,782 Plan assets greater than (less than) projected -------- -------- benefit obligation 365 (131) Unrecognized net asset, at date of adoption, being recognized over 16.4 years (67) (79) Unrecognized net loss 34 666 Unrecognized prior service cost (216) (240) -------- -------- Prepaid pension cost included in other assets $ 116 $ 216 ======== ======== Net periodic pension cost for 1997 and 1996, based on the above valuation included the following components (in thousands): 1997 1996 Service cost - benefits earned during the period $ 193 $ 125 Interest cost on projected benefit obligation 274 186 Actual return (gain) loss on plan assets (1,058) (601) Net amortization and deferral 742 370 ------- ------ Net periodic pension cost $ 151 $ 80 ======= ====== During 1997 and 1996, a rate of increase in future compensation levels of 4.0%, and a discount rate of 7.0% were used in determining the actuarial present value of the projected benefit obligation. The expected long-term rate of return on assets was 8.00% in 1997 and 6.25% in 1996. Pension expense was $151,000, $80,000 and $185,000, for years 1997, 1996 and 1995, respectively. During 1996, Mutual's non-contributory defined benefit pension plan was terminated and settled with payments to Mutual employees. As a result of this transaction, the Bank recorded a net curtailment and settlement gain of $102,000 during 1996. For the year ended December 31, 1995, the Bank recorded pension expense of $86,000 related to this plan. A non-contributory deferred compensation plan was adopted in 1982 by the Board of Directors of the Bank which covers certain key executives. This plan is being funded primarily by insurance and the expense was $128,000, $122,000 and $168,000 for years 1997, 1996 and 1995. A 401-(k) savings plan was adopted in 1995 which covers substantially all full-time employees of the Bank who have at least one year of service. The Bank matches a portion of the contribution made by employee participants. The Bank contributed $87,000 in 1997 and $83,000 in 1996. These amounts are included in pension and other employee benefits expense for the respective years. 12. Fair Value of Financial Instruments: The estimated fair values of the Corporation's financial instruments are as follows (in thousands): December 31, 1997 Carrying Fair Amount Value Financial assets: Cash and federal funds sold $ 13,752 $ 13,752 Investment securities 143,077 143,833 Other 15,638 15,638 Loans, net 251,173 251,805 Financial liabilities: Deposits $(351,603) $(352,156) Federal funds purchased and repurchase agreements (19,539) (19,539) Unrecognized financial instruments: Commitments to extend credit - - Standby letters of credit - - December 31, 1996 Carrying Fair Amount Value Financial assets: Cash and federal funds sold $ 14,822 $ 14,822 Investment securities 175,757 175,992 Other 16,070 16,070 Loans, net 233,509 235,121 Financial liabilities: Deposits $(361,983) $(362,937) Federal funds purchased and repurchase agreements (23,484) (23,484) Unrecognized financial instruments: Commitments to extend credit $ - - Standby letters of credit - (11) The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value: Cash and federal funds sold The carrying amount is a reasonable estimate of fair value. Investment securities and other For marketable securities held for investment purposes, fair values are based on quoted market prices or dealer quotes. For other securities held as investments, fair value equals market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Other Assets The carrying amount is a reasonable estimate of fair value. Loans Due to the repricing characteristics of revolving credit lines, home equity loans and adjustable demand loans, the carrying amount of these loans is a reasonable estimate of fair value. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Prepayment rates are taken into consideration in the calculation. Deposits The fair value of demand deposits, savings deposits, and money market deposits equals the carrying value. The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the current rates at which similar deposit instruments would be offered to depositors for the same remaining maturities at current rates. Federal funds purchased and repurchase agreements The carrying amount is a reasonable estimate of fair value. Unrecognized financial instruments The fair value of commitments to extend credit is estimated using the fees currently charged (if any) to enter into agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. At December 31, 1997 no fees were charged for commitments to extend credit and all such commitments were subject to current market rates; therefore, no fair value has been estimated for these commitments. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. 13. Dividend Restrictions and Capital: The approval of the Comptroller of the Currency is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's net income, as defined, for that year combined with its retained net income for the preceding two calendar years. Under this formula, the Bank can distribute as dividends, without the approval of the Comptroller of the Currency, $353,000 plus an additional amount equal to the Bank's net income for 1998 up to the date of any dividend declaration. Effective March 14, 1996, the shareholders of the Corporation approved an amendment to the articles of incorporation to increase the number of authorized shares of the Corporation's common stock from 3,000,000 shares to 10,000,000 shares. The Bank is required by the Federal Reserve Board and the Comptroller of the Currency to maintain certain capital to assets ratios. At December 31, 1997 and 1996 these ratios were above the minimums prescribed for holding companies and banks, as follows (in thousands):
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes: Action Provisions: ------------------- ------------------- ------------------- Amount Ratio Amount Ratio Amount Ratio --------- ------- --------- ------- --------- ------- As of December 31, 1997: Total Capital (to Risk Weighted Assets) $49,026 18.37% $21,353 >8.0% $26,691 >10.0% Tier I Capital (to Risk Weighted Assets) 45,749 17.14% 10,676 >4.0% 16,015 >6.0% Tier I Capital (to Average Assets) 45,749 10.74% 12,779 >3.0% 21,298 >5.0% As of December 31, 1996: Total Capital (to Risk Weighted Assets) $50,891 20.66% 19,703 >8.0% 24,628 >10.0% Tier I Capital (to Risk Weighted Assets) 47,821 19.42% 9,851 >4.0% 14,777 >6.0% Tier I Capital (to Average Assets) 47,821 11.05% 12,980 >3.0% 21,663 >5.0%
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT This information is included in Item 12(b) below. ITEM 11 - EXECUTIVE COMPENSATION REPORT OF SALARY COMMITTEE ON EXECUTIVE COMPENSATION The Salary Committee of the Board of Directors, which is composed of four independent outside directors, is responsible for making recommendations to the Board of Directors concerning compensation. The Salary Committee considers a variety of factors and criteria in arriving at its recommendations for compensation of executive officers. In making its recommendations regarding compensation, the Committee attempts to align the interests of the Bank's executive officers with those of the shareholders. The Committee believes that increases in dividends and net equity improve shareholder market value and, accordingly, compensation should be structured to enhance the long-term profitability of the Bank. Officer compensation generally consists of salary and participation in the Bank's profit sharing plan. A description of the profit sharing plan is included in Note (2) under Executive Compensation. Full-time employees received certain incentive compensation in 1997 due to the attainment of certain earnings by the Corporation. Certain officers may be eligible to receive incentive compensation if certain earnings are attained in 1998. Certain key executive officers are eligible to participate in the Executive Compensation Continuation Plan described below under "Deferred Compensation Plan". H. Dan Davis is subject to the employment agreement described below under "Employment Agreement". All compensation is paid by the Bank and no officer receives an additional compensation from the Corporation. In 1997, the Board of Directors and the shareholders approved the stock option plan described below under note (3) of "Executive Compensation". In considering officer compensation (other than the Chief Executive Officer), the Committee receives and considers recommendations from the Chief Executive Officer. The Committee conducts an annual evaluation of the performance and effectiveness of the Chief Executive Officer. The Chief Executive Officer's compensation then is determined by the Committee after consideration of the Bank's performance and the resulting benefit to the shareholders. Salary Committee, Richard G. Barkhouser B. Carrington Bidgood Lester A. Hudson, Jr. Fred B. Leggett, Jr. OTHER INFORMATION Comparative Company Performance The following graph compares American National Bankshares Inc.'s cumulative total return to its shareholders with the returns of two indexes for the five-year period ended December 31, 1997. The two indexes are the S & P 500 Total Return published by Standard & Poor's Corporation and the Independent Community Bank Index, consisting of 23 independent banks located in the states of Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia. The Independent Community Bank Index is published by the Carson Medlin Company. 1992 1993 1994 1995 1996 1997 American National Bankshares Inc 100 113 122 118 101 134 Independent Bank Index 100 125 153 208 248 358 S & P 500 Index 100 110 111 153 189 251 EXECUTIVE COMPENSATION
Annual Compensation Long-Term Compensation Awards Payouts Name and Other Restricted Stock Long-Term All Principal Bonus Annual Stock Options/ Incentive Other Position Year Salary(1) (2) Compensation Awards SARs(3) Payouts Comp.(4) Charles H. Majors 1997 153,855 23,538 N/A N/A 100 N/A 33,528 President & Chief 1996 144,071 14,882 N/A N/A N/A N/A 31,309 Executive Officer 1995 118,665 27,479 N/A N/A N/A N/A 28,780 H. Dan Davis 1997 116,478 4,400 N/A N/A 100 N/A 14,870 Executive Vice Pres. 1996 114,248 N/A N/A N/A N/A N/A 0 of the Corporation; 1995 100,011 N/A N/A N/A N/A N/A 32,085 Sr. Vice President of the Bank (Retired December 31, 1997) E. Budge Kent, Jr. 1997 97,292 13,640 N/A N/A 100 N/A 18,721 Sr. Vice President & 1996 90,623 9,253 N/A N/A N/A N/A 16,975 Asst. Secretary of the 1995 77,584 17,676 N/A N/A N/A N/A 15,757 Corporation; Sr. Vice President & Trust Officer of the Bank David Hyler 1997 94,510 13,172 N/A N/A 100 N/A 19,926 Sr. Vice President, 1996 87,173 8,819 N/A N/A N/A N/A 43,925 Secretary & Treasurer 1995 73,675 16,722 N/A N/A N/A N/A 55,039 of the Corporation; Sr. Vice President & Chief Financial Officer of the Bank (Retired December 31, 1997) Carl T. Yeatts 1997 89,682 13,172 N/A N/A 100 N/A 18,721 Sr. Vice President 1996 85,747 8,819 N/A N/A N/A N/A 16,975 of the Corporation; 1995 72,786 16,722 N/A N/A N/A N/A 15,757 Sr. Vice President & Sr. Loan Officer of the Bank (1) Includes salary deferrals contributed by the employee to the 401(k) Plan, fees to Mr. Davis as director of Mutual and compensation and fees for service as officer and director of Mutual Service Corporation, and taxable compensation for term life insurance over $50,000. (2) Includes matching contributions to the 401(k) Plan made by the Bank. Also includes accrued payments of profit-sharing (bonus) and incentive compensation participations. In 1997, the profit-sharing (bonus) plan provided that an amount equal to 6.50% of the Bank's net income (after taxes, but before deducting profit sharing and its related tax effect), less the Bank's 401(k) contributions, be paid to officers and employees who are in the Bank's employ on December 31, 1997. Incentive compensation represented payments to full-time employees based on the Corporation attaining certain earnings increase. The total expense, paid or accrued, for the profit sharing (bonus) plan and incentive compensation payments for the year 1997 amounted to $483,553. (3) Pursuant to the Corporation's Stock Option Plan approved by the shareholders at the 1997 annual meeting, on September 16, 1997, the Corporation granted each full-time employee an option for 100 shares of stock in the Corporation. The exercise price is $28 per share. The options vest on September 16, 1998 and may be exercised through September 15, 2007, subject to certain conditions. Utilizing the Black-Scholes valuation method, a value of $9.43 per share was determined for the options. (4) All Other Compensation includes amounts set aside or accrued by the Bank for the Retirement Plan and Executive Compensation Continuation Plan. For 1995, it includes amounts set aside or accrued by Mutual Savings Bank, F.S.B. for Mr. Davis' benefit under the Mutual Retirement Plan and the Mutual Employee Stock Ownership Plan. (5) The Bank provided life insurance and disability insurance benefits for all full-time officers and employees and hospitalization insurance for such individuals on a contributory basis and the aggregate of personal benefits paid for by the Bank for all such individuals did not exceed $5,000 each in 1997. (6) In 1997, each non-officer director received a monthly retainer fee of $500 and attendance fees of $200 for each regular Board meeting and $400 for each Committee meeting attended. The aggregate total amount paid for the year 1997 was $117,800. Non-officer directors are excluded from the Bank's retirement plan and, therefore, do not qualify for pension benefits. (7) Prior to the merger on March 14, 1996, Mr. Davis exercised options on 29,900 shares of Mutual Savings Bank, F.S.B. which had been granted to Mr. Davis in 1987.
Retirement Plan The Bank's retirement plan is a non-contributory defined benefit pension plan which covers substantially all employees of the Bank who are 21 years of age or older and who have had at least one year of service. Advanced funding is accomplished by using the actuarial cost method known as the collective aggregate cost method. As of December 31, 1997, the normal retirement benefit formula was 1.3% per year of service times compensation plus .65% per year of service times compensation in excess of social security covered compensation. At normal retirement, the monthly benefit is calculated based on any consecutive five-year period which will produce the highest average rate of basic monthly compensation. Bonuses are not included in the definition of compensation. Cash benefits under the plan generally commence on retirement at age 65, death, or termination of employment. Partial vesting of the retirement benefits under the plan occurs after three years of service and full vesting occurs after seven years of service with the Bank. The estimated annual benefits at retirement for the six executive officers as of December 31, 1997 are as follows:
Name of Individual Estimated Annual Benefit at Retirement - - - ------------------------------------------------------------------------------------------------------- Charles H. Majors, $ 46,425 President and Chief Executive Officer of the Corporation and the Bank H. Dan Davis, 3,778* Executive Vice President of the Corporation and Senior Vice President of the Bank (Retired December 31, 1997) E. Budge Kent, Jr., 52,214 Senior Vice President and Asst. Secretary of the Corporation and Senior Vice President and Trust Officer of the Bank Carl T. Yeatts, 49,484 Senior Vice President of the Corporation and Senior Vice President and Senior Loan Officer of the Bank Gilmer D. Jefferson, 39,914* Senior Vice President and Asst. Treasurer of the Corporation and Senior Vice President of the Bank (Retired December 31, 1997) David Hyler, 37,738* Senior Vice President and Secretary & Treasurer of the Corporation and Senior Vice President and Chief Financial Officer of the Bank (Retired December 31, 1997) ---------- $ 229,553 ---------- *Retired December 31, 1997 and these individuals elected to take their share in a lump sum prior to December 31, 1997.
Deferred Compensation Plan The Board of Directors of the Bank adopted the Executive Compensation Continuation Plan, a non-contributory deferred compensation plan, in 1982. Under the plan, certain key executives who, in the opinion of the Directors, are making substantial contributions to the overall growth and success of the Bank and who must be retained in order to expand and continue satisfactory long term growth are eligible to receive benefits afforded by the plan. Under agreements with eligible key executives pursuant to this plan, if any such executive dies or retires while employed by the Bank, such executive or his designated beneficiary will receive annual payments commencing at death or retirement and continuing for a period of 10 years. As of December 31, 1997, Gilmer D. Jefferson and David Hyler are each entitled to a vested annual benefit of $25,000 under the plan beginning in 1998. Charles H. Majors is entitled to an annual benefit of $50,000 under the plan. E. Budge Kent, Jr. and Carl T. Yeatts are entitled to an annual benefit of $25,000 each under the plan and the above executive officers as a group (5) are entitled to annual benefits of $150,000 under the plan. A portion of the related costs of the plan are expected to be recovered through life insurance policies purchased by the bank on the key executives Premiums in the aggregate amount of $25,857 were paid in 1997. Employment Agreement Pursuant to the terms of the Agreement and Plan of Reorganization between the Corporation and Mutual Savings Bank, F.S.B., the Corporation entered into an employment agreement with H. Dan Davis, effective March 14, 1996, to serve as Executive Vice President of the Corporation, Senior Vice President of the Bank and President and Chief Executive Officer of Mutual Mortgage of the Piedmont, Inc. for a term of two years at an annual salary of $110,000. During this two-year term, Mr. Davis has the right to elect to become a senior consultant to the Corporation and the Bank with a monthly payment of $5,500 for a period expiring March 14, 2003. Mr. Davis made such election and retired as an officer, effective December 31, 1997. As a senior consultant, Mr. Davis is responsible for carrying out such advisory or consulting duties and responsibilities as may be requested of him from time to time by the Chief Executive Officer or the Board of Directors of the Corporation. As a senior consultant, Mr. Davis also will be restricted as to employment by other financial institutions in competition with the Corporation or the Bank. 401(k) Plan Effective July 1, 1995, the Bank adopted a 401(k) Plan which covers substantially all full-time employees who are 21 years of age or older and who have had at least one year of service. An employee may defer a portion of his or her salary, not to exceed the lesser of 15% of compensation or $9,500. The Bank will make a matching contribution in the amount of 50% of the first 6.0% of compensation so deferred. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) INFORMATION AS TO VOTING SECURITIES The Board of Directors has set March 13, 1998 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. Shareholders of record on that date will be entitled to vote on the matters described herein. As of March 13, 1998, the Corporation had 1,460 shareholders of record. No one individual or entity owns directly and indirectly more than 5% of the outstanding Corporation Common Stock except Ambro and Company, the nominee name in which American National Bank and Trust Company (the "Bank"), the corporation's banking subsidiary, registers securities it holds in a fiduciary capacity, which held 598,123 shares (19.5995%) on March 13, 1998. The number of shares of common stock, there being no other class of stock, outstanding and entitled to vote at the Annual Shareholders' Meeting is 3,051,733. There are 598,123 shares held of record by Ambro and Company which amount represents 19.5995% of the outstanding securities, and only 354,623 of these shares may be voted by the existing co-fiduciaries. The remaining shares may not be voted by the Bank but co-fiduciaries may be qualified for the sole purpose of voting all or a portion of the shares at the Annual Meeting. (b) DIRECTORS Certain information with regard to their ownership of the common stock of the Corporation and memberships on various committees of the Board of Directors of the Corporation, are set forth below.
Director Amount of Common Stock Owned Name, Principal of Bank Beneficially and Nature of Percent Occupation and (Age) Since Ownership on March 14, 1997 of Class - - - ----------------------------------------------------------------------------------------------------------------- Willie G. Barker, Jr. (60) 1996 14,100 - Direct (1) .4620 Retired President of Dibrell Brothers, Inc., Danville, VA, leaf tobacco and flowers, since June, 1993; prior thereto, Consultant to DIMON Incorporated, Danville, VA, leaf tobacco & flowers since May, 1995; prior thereto, Consultant to Dibrell Brothers, Incorporated, Danville, VA, leaf tobacco & flowers since June, 1993; prior thereto, President and Chief Operating Officer of Dibrell Brothers, Incorporated Richard G. Barkhouser (67) 1980 82,412 - Direct (1) 2.7005 President, Barkhouser 7,260 - Family .2379 Motors, Inc., Danville, Relationship (4) VA, automobile dealership B. Carrington Bidgood (73) 1975 32,436 - Direct (1) 1.0629 Retired Senior Vice 1,200 - Family .0393 President, Dibrell Relationship (4) Brothers, Inc., Danville, VA, leaf tobacco & flowers Fred A. Blair (51) 1992 1,854 - Direct (1) .0608 President, Blair 225 - Family .0074 Construction, Inc., Relationship (3) Gretna, VA, commercial building contractor Ben J. Davenport, Jr. (55) 1992 4,056 - Direct (1)(2) .1330 Chairman, First Piedmont Corporation, Chatham, VA, waste management
Director Amount of Common Stock Owned Name, Principal of Bank Beneficially and Nature of Percent Occupation and (Age) Since Ownership on March 13, 1998 of Class - - - ------------------------------------------------------------------------------------------------------------------ H. Dan Davis (60) 1996 43,600 - Direct (1) 1.4287 Senior Consultant to the Corporation 20,352 - Family .6669 Corporation and the Bank since January, Relationship (4) 1998; prior thereto Executive Vice President of the Corporation and Senior Vice President of the Bank since March, 1996; prior thereto, President and Chief Executive Officer of Mutual Savings Bank, F.S.B. since January, 1995; prior thereto, President and Chief Operations Officer of Mutual Savings Bank, F.S.B. Lester A. Hudson, Jr. (58) 1984 4,902 - Direct (1) .1606 Chairman, H & E Associates, Greenville, SC, investments, since June, 1995; prior thereto Vice Chairman, Wunda Weve Carpets, Inc., Greenville, SC, carpet manufacturer, since August, 1993; prior thereto Chairman, Wunda Weve Carpets, Inc. E. Budge Kent, Jr. (59) 1979 7,411 - Direct (1) .2428 Senior Vice President & 316 - Family .0104 Assistant Secretary of Relationship (4) the Corporation and Senior Vice President & Trust Officer of the Bank Fred B. Leggett, Jr. (61) 1994 8,361 - Direct (1)(2) .2740 Retired Chairman and 3,192 - Family .1046 Chief Executive Officer, Relationship (4) Leggett Stores, Danville, VA, retail department stores, since March, 1996; prior thereto, Chairman and Chief Executive Officer, Leggett Stores, Danville, VA, since December, 1994; prior thereto, Executive Vice President, Leggett Stores Charles H. Majors (52) 1981 4,066 - Direct (1) .1332 President and Chief 1,062 - Family .0348 Executive Officer of Relationship (4) the Corporation and the Bank since January, 1994; prior thereto President of the Corporation and the Bank
Director Amount of Common Stock Owned Name, Principal of Bank Beneficially and Nature of Percent Occupation and (Age) Since Ownership on March 14, 1997 of Class - - - ------------------------------------------------------------------------------------------------------------------- James A. Motley (69) 1975 7,510 - Direct (1)(2) .2461 Retired Chairman and Chief 5,242 - Family .1716 Executive Officer of Relationship (4) the Corporation and the Bank since January, 1994; prior thereto Chairman and Chief Executive Officer of the Corporation and the Bank since January, 1993; prior thereto President of the Corporation and the Bank Claude B. Owen, Jr. (52) 1984 5,716 - Direct (1) .1873 Chairman & Chief 2,100 - Family .0688 Executive Officer of Relationship (4) DIMON Incorporated, Danville, VA, leaf tobacco & flowers, since May, 1995; prior thereto, Chairman, President & Chief Executive Officer, Dibrell Brothers, Inc., Danville, VA, leaf tobacco & flowers, since July, 1993; prior thereto, Chairman & Chief Executive Officer, Dibrell Brothers, Inc. Landon R. Wyatt, Jr. (72) 1965 4,540 - Direct (1) .1486 President, Wyatt Buick 9,070 - Family .2968 Sales Co., Danville, VA, Relationship (4) automobile dealership All Executive officers and directors, 236,469 - Direct (1)(2) 7.7487 including nominees and directors 50,019 - Family 1.6390 named above (15 in group) Relationship (3)(4) (1) Individual exercises sole voting and investment power over shares held. (2) Shared voting and investment power. (3) Sole voting and investment power as custodian for minor children. (4) Can exercise no voting or investment power. All of the above nominees and directors have been engaged in the occupations listed during the last five years. There exists no family relationship between any director or nominee. Mr. Owen is a director of DIMON Incorporated and Richfood Holdings Inc. Mr. Hudson is a director of American Electric Power Company, Inc. Mr. Motley and Mr. Davenport are directors of Intertape Polymer Group Inc. The stock of these corporations is registered with the Securities and Exchange Commission.
EXECUTIVE OFFICERS Mr. Charles H. Majors and Mr. E. Budge Kent, Jr., together with the two senior vice presidents listed below, are the executive officers of the Corporation and the Bank. Name Age Principal Occupation and Business Experience - - - -------------------------------------------------------------------------------- T. Allen Liles 45 Senior Vice President, Secretary, Treasurer and Chief Financial Officer of the Corporation and Senior Vice President, Cashier and Chief Financial Officer of the Bank; Officer of the Bank since 1997 Carl T. Yeatts 59 Senior Vice President of the Corporation and Senior Vice President and Senior Loan Officer of the Bank; Officer of the Bank since 1964 All executive officers serve one-year terms of office. BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD The Board of Directors held 13 Board Meetings during the year 1997. These meetings were either the Corporation Board Meetings and/or the Bank Board Meetings. In addition to meeting as a group to review the Corporation and Bank's business, certain members of the Board are appointed to serve on various standing committees. Among those committees are the Audit and Compliance Committee, Salary Committee and Directors' Nominating Committee. All incumbent directors attended more than 75% of the aggregate of all meetings of the Board of Directors and Committees on which they served. Audit and Compliance Committee The Audit and Compliance Committee, which currently consists of Messrs. Barker, Blair, and Motley, reviews significant audit, accounting, and compliance principles, policies and practices, meets with the Corporation and Bank's independent auditors to discuss the results of their annual audit and reviews the performance of the internal auditing and compliance functions. The Audit and Compliance Committee held four meetings in 1997. Salary Committee The Salary Committee currently consists of Messrs. Barkhouser, Bidgood, Hudson and Leggett. The Salary Committee makes recommendations to the Board of Directors for officers' compensation and promotions, directors' fees and related personnel matters. The Salary Committee held four meetings in 1997. Directors' Nominating Committee The Committee's function is to search for potential qualified directors, to review the qualifications of potential directors as suggested by Directors, Management, Shareholders and others, and to make recommendations to the entire Board for nominations of such individuals to the shareholders. A shareholder may recommend nominees for director by writing to the President of the Corporation and providing the proposed nominee's full name, address, qualifications and other relevant biographical information. Members of the present committee are Messrs. Barkhouser, Owen and Wyatt. The Directors' Nominating Committee held one meeting in 1997. (c) There are no arrangements known to the registrant, the operation of which may at a subsequent date result in control of the registrant. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Indebtedness of and Transactions with Management Some of the directors and officers of the Corporation and the companies with which they are associated were customers of, and had banking transactions with, the Bank in the ordinary course of the Bank's business during 1997. All loans and commitments to loan included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and, in the opinion of the management of the Bank, do not involve more than a normal risk of collectibility or present other unfavorable features. During the year 1997, the highest aggregate amount of outstanding loans, direct and indirect, to the directors and officers was $15,037,076 or 32% of equity capital and this peak amount occurred on May 31, 1997. Also, refer to FOOTNOTE 10 of the Financial Statements and Supplementary Data. PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) List of Documents filed as part of this Report: Page Number or Incorporation Exhibit by Reference to 2.1 Agreement and Plan of Reorganization, dated Exhibit 2.1 on Form 8-K as of September 26, 1995, by and between filed September 27, 1995 American National Bankshares Inc. and Mutual Savings Bank, F.S.B. 2.2 Plan of Merger, dated as of September 26, Exhibit 2.2 on Form 8-K 1995, by and between American National Bank filed September 27, 1995 and Trust Company and Mutual Savings Bank, F.S.B. 3.1 Amended and Restated Articles of Exhibit 4.1 on Form S-3 Incorporation dated August 20, 1997 filed August 20, 1997 3.2 Amended Bylaws dated August 20, 1997 Exhibit 4.2 on Form S-3 filed August 20, 1997 10.1 Agreement between American National Bank Exhibit 4a. on Form 10-K and Trust Company and James A. Motley dated filed March 28, 1994 August 26, 1982, as amended August 11, 1987 10.2 Agreement between American National Bank and Filed herewith Trust Company and Charles H. Majors dated June 12, 1997 10.3 Agreement between American National Bank and Filed herewith Trust Company and E. Budge Kent, Jr. dated June 12, 1997 10.4 Agreement between American National Bank and Filed herewith Trust Company and David Hyler dated June 12, 1997 10.5 Agreement between American National Bank and Filed herewith Trust Company and Gilmer D. Jefferson dated June 12, 1997 10.6 Agreement between American National Bank and Filed herewith Trust Company and Carl T. Yeatts dated June 12, 1997 10.7 American National Bankshares Inc. Stock Exhibit 4.3 on Form S-8 Option Plan dated August 19, 1997 filed September 17, 1997 27.0 Financial Data Schedule Exhibit 27 99.1 Text of joint press release, dated September Exhibit 99.1 on Form 8-K 26, 1995, issued by American National filed September 27, 1995 Bankshares Inc. and Mutual Savings Bank, F.S.B. 99.2 American National Bankshares Inc. Dividend Exhibit 99 on Form S-3 Reinvestment Plan dated August 19, 1997 filed August 20, 1997 (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of 1997. SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) 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. BY: /s/ T. Allen Liles Senior Vice President, ---------------------------------------------- Secretary & Treasurer T. Allen Liles Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 17, 1998. /s/ Charles H. Majors President and - - - --------------------------------------------------- Chief Executive Officer Charles H. Majors /s/ B. Carrington Bidgood Director - - - --------------------------------------------------- B. Carrington Bidgood /s/ Fred A. Blair Director - - - --------------------------------------------------- Fred A. Blair /s/ Lester A. Hudson, Jr. Director - - - --------------------------------------------------- Lester A. Hudson, Jr. /s/ Ben J. Davenport, Jr. Director - - - --------------------------------------------------- Ben J. Davenport, Jr. /s/ Bill Barker, Jr. Director - - - --------------------------------------------------- Bill Barker, Jr. /s/ H. Dan Davis Director - - - --------------------------------------------------- H. Dan Davis /s/ E. Budge Kent, Jr. Director - - - --------------------------------------------------- E. Budge Kent, Jr. /s/ Fred B. Leggett, Jr. Director - - - --------------------------------------------------- Fred B. Leggett, Jr. /s/ Claude B. Owen, Jr. Director - - - --------------------------------------------------- Claude B. Owen, Jr. /s/ James A. Motley Director - - - --------------------------------------------------- James A. Motley /s/ Richard G. Barkhouser Director - - - --------------------------------------------------- Richard G. Barkhouser /s/ Landon R. Wyatt, Jr. Director - - - --------------------------------------------------- Landon R. Wyatt, Jr. /s/ T. Allen Liles Senior Vice President - - - --------------------------------------------------- Secretary & Treasurer T. Allen Liles EX-10 2 MATERIAL CONTRACTS EXHIBIT 10.2 THIS AGREEMENT, made this 12th day of June, 1997, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association, ("the Bank"), and CHARLES H. MAJORS ("the Employee"). WHEREAS, the Bank values the ability of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits and that the loss of his services would result in substantial cost in the efficient and effective operation of the Bank; and, WHEREAS, the Bank in order to retain the services of the Employee is willing to provide retirement benefits and/or death benefits for his designated beneficiary as set out below; NOW THEREFORE, it is mutually agreed that: 1. If the Employee dies while employed by the Bank prior to Retirement (as hereinafter defined), the Bank shall pay the annual sum of $50,000, payable in annual installments, for a period of ten years, to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. The first payment shall be made not later than three months following the Employee's date of death. 2. In the event the Employee terminates employment because of the total disability of the Employee, and such disability continues until the death of the Employee or the Employee attains the age of 62 years, whichever occurs first, the Employee shall be entitled to receive from the Bank the annual sum of $50,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 3. Upon Retirement, the Employee shall be entitled to receive from the Bank the annual sum of $50,000, payable in annual installments beginning not later than three months after retirement, for a period of ten years. If the Employee should die during said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 4. In the event, following a Change in Control (as hereinafter defined), (a) the Employee terminates employment following a Change in Control or (b) the Bank terminates the Employee's employment for other than Proper Cause (as hereinafter defined), the Employee shall be entitled to receive from the Bank the annual sum of $50,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 5. During the period of disability and/or during the ten year period the Employee is receiving payments under this Agreement, the Employee will not become associated with, or engage in, or render service to any other business competitive to the business of the Bank within a fifty-mile radius of any office of the Bank. 6. If the Employee shall fail to substantially perform all of the terms and conditions of this Agreement to be performed by him, or if other than following Change in Control he voluntarily leaves the employ of the Bank prior to retirement, or if prior to retirement he is discharged for Proper Cause, then all subsequent compensation required to be paid by the Bank to him or any designated beneficiary, or the remainder thereof, as the case may be, shall be forfeited. 7. If any benefits become payable under this Agreement, the Employee (or designated beneficiary in the case of the Employee's death) shall file a claim for benefits by notifying the Bank orally or in writing. If the claim is wholly or partially denied, the Bank shall provide a written notice within 90 days specifying the reason for the denial, the provisions of the Agreement on which the denial is based, and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the Employee (or designated beneficiary in the case of the Employee's death) shall notify the Bank in writing within 60 days. In requesting a review, the Employee or beneficiary may submit any written issues and comments he feels are appropriate. The Bank shall then review the claim and provide a written decision within 60 days. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 8. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder. 9. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee or the Employee's designated beneficiary by the Bank. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Bank to discharge the Employee for Proper Cause or the right of the Employee to terminate employment. The Bank shall be under no obligation whatever to purchase or maintain any contract, policy or other asset to provide the benefits under this Agreement. Further, any contract, policy or other asset which the Bank may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Bank's performance under this Agreement. The rights accruing to the Employee or any beneficiary hereunder shall be solely those of an unsecured creditor of the Bank. 10. "Change in Control" means if: (a) after the date hereof, any person, including a 'group' as defined in Section 13(d)(3) of the Exchange Act, becomes, directly or indirectly, the beneficial owner of shares of American National Bankshares Inc. ("Bankshares") having 30% or more of the combined voting power of the then outstanding shares of Bankshares that may be cast for the election of the Bankshares' directors (other than as a result of an issuance of securities initiated by Bankshares or a tender offer or open market purchases approved by the Board of Directors of Bankshares ("the Board"), as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of Bankshares before any such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 11. "Retirement" means the Employee's retirement from the Bank upon attaining at least 62 years of age or such earlier date as may be mutually agreed upon by the Employee and the Bank. 12. "Proper Cause" means: (a) conviction of the Employee for a felony or misdemeanor involving moral turpitude; (b) failure or refusal by the Employee to faithfully or diligently perform the duties reasonably required by the Bank; or (c) any act by the Employee which, under Federal law or regulation, disqualifies the Employee from serving as an officer of the Bank. 13. The laws of the Commonwealth of Virginia shall govern this Agreement. 14. This Agreement may not be altered, amended or revoked except by a written agreement signed by the Bank and Employee. 15. This Agreement shall be binding upon and shall inure to the benefit of any successor entity of the Bank. 16. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine. 17. This Agreement replaces and supercedes that certain agreement between the Bank and Employee dated February 22, 1993. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. AMERICAN NATIONAL BANK AND TRUST COMPANY BY: /s/Gilmer D. Jefferson ______________________________ TITLE: Senior Vice Pres. & Cashier ___________________________ /s/Charles H. Majors ___________________________________ CHARLES H. MAJORS EXHIBIT 10.3 THIS AGREEMENT, made this 12th day of June, 1997, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association, ("the Bank"), and E. BUDGE KENT, JR. ("the Employee"). WHEREAS, the Bank values the ability of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits and that the loss of his services would result in substantial cost in the efficient and effective operation of the Bank; and, WHEREAS, the Bank in order to retain the services of the Employee is willing to provide retirement benefits and/or death benefits for his designated beneficiary as set out below; NOW THEREFORE, it is mutually agreed that: 1. If the Employee dies while employed by the Bank prior to Retirement (as hereinafter defined), the Bank shall pay the annual sum of $25,000, payable in annual installments, for a period of ten years, to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. The first payment shall be made not later than three months following the Employee's date of death. 2. In the event the Employee terminates employment because of the total disability of the Employee, and such disability continues until the death of the Employee or the Employee attains the age of 62 years, whichever occurs first, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 3. Upon Retirement, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months after retirement, for a period of ten years. If the Employee should die during said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 4. In the event, following a Change in Control (as hereinafter defined), (a) the Employee terminates employment following a Change in Control or (b) the Bank terminates the Employee's employment for other than Proper Cause (as hereinafter defined), the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 5. During the period of disability and/or during the ten year period the Employee is receiving payments under this Agreement, the Employee will not become associated with, or engage in, or render service to any other business competitive to the business of the Bank within a fifty-mile radius of any office of the Bank. 6. If the Employee shall fail to substantially perform all of the terms and conditions of this Agreement to be performed by him, or if other than following Change in Control he voluntarily leaves the employ of the Bank prior to retirement, or if prior to retirement he is discharged for Proper Cause, then all subsequent compensation required to be paid by the Bank to him or any designated beneficiary, or the remainder thereof, as the case may be, shall be forfeited. 7. If any benefits become payable under this Agreement, the Employee (or designated beneficiary in the case of the Employee's death) shall file a claim for benefits by notifying the Bank orally or in writing. If the claim is wholly or partially denied, the Bank shall provide a written notice within 90 days specifying the reason for the denial, the provisions of the Agreement on which the denial is based, and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the Employee (or designated beneficiary in the case of the Employee's death) shall notify the Bank in writing within 60 days. In requesting a review, the Employee or beneficiary may submit any written issues and comments he feels are appropriate. The Bank shall then review the claim and provide a written decision within 60 days. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 8. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder. 9. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee or the Employee's designated beneficiary by the Bank. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Bank to discharge the Employee for Proper Cause or the right of the Employee to terminate employment. The Bank shall be under no obligation whatever to purchase or maintain any contract, policy or other asset to provide the benefits under this Agreement. Further, any contract, policy or other asset which the Bank may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Bank's performance under this Agreement. The rights accruing to the Employee or any beneficiary hereunder shall be solely those of an unsecured creditor of the Bank. 10. "Change in Control" means if: (a) after the date hereof, any person, including a 'group' as defined in Section 13(d)(3) of the Exchange Act, becomes, directly or indirectly, the beneficial owner of shares of American National Bankshares Inc. ("Bankshares") having 30% or more of the combined voting power of the then outstanding shares of Bankshares that may be cast for the election of the Bankshares' directors (other than as a result of an issuance of securities initiated by Bankshares or a tender offer or open market purchases approved by the Board of Directors of Bankshares ("the Board"), as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of Bankshares before any such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 11. "Retirement" means the Employee's retirement from the Bank upon attaining at least 62 years of age or such earlier date as may be mutually agreed upon by the Employee and the Bank. 12. "Proper Cause" means: (a) conviction of the Employee for a felony or misdemeanor involving moral turpitude; (b) failure or refusal by the Employee to faithfully or diligently perform the duties reasonably required by the Bank; or (c) any act by the Employee which, under Federal law or regulation, disqualifies the Employee from serving as an officer of the Bank. 13. The laws of the Commonwealth of Virginia shall govern this Agreement. 14. This Agreement may not be altered, amended or revoked except by a written agreement signed by the Bank and Employee. 15. This Agreement shall be binding upon and shall inure to the benefit of any successor entity of the Bank. 16. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine. 17. This Agreement replaces and supercedes that certain agreement between the Bank and Employee dated August 31, 1982 , as amended August 11, 1987. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. AMERICAN NATIONAL BANK AND TRUST COMPANY BY: /s/Charles H. Majors ______________________________ TITLE: President ___________________________ /s/E. Budge Kent, Jr. ___________________________________ E. BUDGE KENT, JR. EXHIBIT 10.4 THIS AGREEMENT, made this 12th day of June, 1997, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association, ("the Bank"), and DAVID HYLER ("the Employee"). WHEREAS, the Bank values the ability of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits and that the loss of his services would result in substantial cost in the efficient and effective operation of the Bank; and, WHEREAS, the Bank in order to retain the services of the Employee is willing to provide retirement benefits and/or death benefits for his designated beneficiary as set out below; NOW THEREFORE, it is mutually agreed that: 1. If the Employee dies while employed by the Bank prior to Retirement (as hereinafter defined), the Bank shall pay the annual sum of $25,000, payable in annual installments, for a period of ten years, to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. The first payment shall be made not later than three months following the Employee's date of death. 2. In the event the Employee terminates employment because of the total disability of the Employee, and such disability continues until the death of the Employee or the Employee attains the age of 62 years, whichever occurs first, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 3. Upon Retirement, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months after retirement, for a period of ten years. If the Employee should die during said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 4. In the event, following a Change in Control (as hereinafter defined), (a) the Employee terminates employment following a Change in Control or (b) the Bank terminates the Employee's employment for other than Proper Cause (as hereinafter defined), the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 5. During the period of disability and/or during the ten year period the Employee is receiving payments under this Agreement, the Employee will not become associated with, or engage in, or render service to any other business competitive to the business of the Bank within a fifty-mile radius of any office of the Bank. 6. If the Employee shall fail to substantially perform all of the terms and conditions of this Agreement to be performed by him, or if other than following Change in Control he voluntarily leaves the employ of the Bank prior to retirement, or if prior to retirement he is discharged for Proper Cause, then all subsequent compensation required to be paid by the Bank to him or any designated beneficiary, or the remainder thereof, as the case may be, shall be forfeited. 7. If any benefits become payable under this Agreement, the Employee (or designated beneficiary in the case of the Employee's death) shall file a claim for benefits by notifying the Bank orally or in writing. If the claim is wholly or partially denied, the Bank shall provide a written notice within 90 days specifying the reason for the denial, the provisions of the Agreement on which the denial is based, and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the Employee (or designated beneficiary in the case of the Employee's death) shall notify the Bank in writing within 60 days. In requesting a review, the Employee or beneficiary may submit any written issues and comments he feels are appropriate. The Bank shall then review the claim and provide a written decision within 60 days. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 8. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder. 9. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee or the Employee's designated beneficiary by the Bank. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Bank to discharge the Employee for Proper Cause or the right of the Employee to terminate employment. The Bank shall be under no obligation whatever to purchase or maintain any contract, policy or other asset to provide the benefits under this Agreement. Further, any contract, policy or other asset which the Bank may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Bank's performance under this Agreement. The rights accruing to the Employee or any beneficiary hereunder shall be solely those of an unsecured creditor of the Bank. 10. "Change in Control" means if: (a) after the date hereof, any person, including a 'group' as defined in Section 13(d)(3) of the Exchange Act, becomes, directly or indirectly, the beneficial owner of shares of American National Bankshares Inc. ("Bankshares") having 30% or more of the combined voting power of the then outstanding shares of Bankshares that may be cast for the election of the Bankshares' directors (other than as a result of an issuance of securities initiated by Bankshares or a tender offer or open market purchases approved by the Board of Directors of Bankshares ("the Board"), as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of Bankshares before any such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 11. "Retirement" means the Employee's retirement from the Bank upon attaining at least 62 years of age or such earlier date as may be mutually agreed upon by the Employee and the Bank. 12. "Proper Cause" means: (a) conviction of the Employee for a felony or misdemeanor involving moral turpitude; (b) failure or refusal by the Employee to faithfully or diligently perform the duties reasonably required by the Bank; or (c) any act by the Employee which, under Federal law or regulation, disqualifies the Employee from serving as an officer of the Bank. 13. The laws of the Commonwealth of Virginia shall govern this Agreement. 14. This Agreement may not be altered, amended or revoked except by a written agreement signed by the Bank and Employee. 15. This Agreement shall be binding upon and shall inure to the benefit of any successor entity of the Bank. 16. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine. 17. This Agreement replaces and supercedes that certain agreement between the Bank and Employee dated August 31, 1982 , as amended August 11, 1987. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. AMERICAN NATIONAL BANK AND TRUST COMPANY BY: /s/Charles H. Majors ______________________________ TITLE: President ___________________________ /s/David Hyler ___________________________________ DAVID HYLER EXHIBIT 10.5 THIS AGREEMENT, made this 12th day of June, 1997, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association, ("the Bank"), and GILMER D. JEFFERSON ("the Employee"). WHEREAS, the Bank values the ability of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits and that the loss of his services would result in substantial cost in the efficient and effective operation of the Bank; and, WHEREAS, the Bank in order to retain the services of the Employee is willing to provide retirement benefits and/or death benefits for his designated beneficiary as set out below; NOW THEREFORE, it is mutually agreed that: 1. If the Employee dies while employed by the Bank prior to Retirement (as hereinafter defined), the Bank shall pay the annual sum of $25,000, payable in annual installments, for a period of ten years, to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. The first payment shall be made not later than three months following the Employee's date of death. 2. In the event the Employee terminates employment because of the total disability of the Employee, and such disability continues until the death of the Employee or the Employee attains the age of 62 years, whichever occurs first, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 3. Upon Retirement, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months after retirement, for a period of ten years. If the Employee should die during said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 4. In the event, following a Change in Control (as hereinafter defined), (a) the Employee terminates employment following a Change in Control or (b) the Bank terminates the Employee's employment for other than Proper Cause (as hereinafter defined), the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 5. During the period of disability and/or during the ten year period the Employee is receiving payments under this Agreement, the Employee will not become associated with, or engage in, or render service to any other business competitive to the business of the Bank within a fifty-mile radius of any office of the Bank. 6. If the Employee shall fail to substantially perform all of the terms and conditions of this Agreement to be performed by him, or if other than following Change in Control he voluntarily leaves the employ of the Bank prior to retirement, or if prior to retirement he is discharged for Proper Cause, then all subsequent compensation required to be paid by the Bank to him or any designated beneficiary, or the remainder thereof, as the case may be, shall be forfeited. 7. If any benefits become payable under this Agreement, the Employee (or designated beneficiary in the case of the Employee's death) shall file a claim for benefits by notifying the Bank orally or in writing. If the claim is wholly or partially denied, the Bank shall provide a written notice within 90 days specifying the reason for the denial, the provisions of the Agreement on which the denial is based, and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the Employee (or designated beneficiary in the case of the Employee's death) shall notify the Bank in writing within 60 days. In requesting a review, the Employee or beneficiary may submit any written issues and comments he feels are appropriate. The Bank shall then review the claim and provide a written decision within 60 days. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 8. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder. 9. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee or the Employee's designated beneficiary by the Bank. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Bank to discharge the Employee for Proper Cause or the right of the Employee to terminate employment. The Bank shall be under no obligation whatever to purchase or maintain any contract, policy or other asset to provide the benefits under this Agreement. Further, any contract, policy or other asset which the Bank may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Bank's performance under this Agreement. The rights accruing to the Employee or any beneficiary hereunder shall be solely those of an unsecured creditor of the Bank. 10. "Change in Control" means if: (a) after the date hereof, any person, including a 'group' as defined in Section 13(d)(3) of the Exchange Act, becomes, directly or indirectly, the beneficial owner of shares of American National Bankshares Inc. ("Bankshares") having 30% or more of the combined voting power of the then outstanding shares of Bankshares that may be cast for the election of the Bankshares' directors (other than as a result of an issuance of securities initiated by Bankshares or a tender offer or open market purchases approved by the Board of Directors of Bankshares ("the Board"), as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of Bankshares before any such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 11. "Retirement" means the Employee's retirement from the Bank upon attaining at least 62 years of age or such earlier date as may be mutually agreed upon by the Employee and the Bank. 12. "Proper Cause" means: (a) conviction of the Employee for a felony or misdemeanor involving moral turpitude; (b) failure or refusal by the Employee to faithfully or diligently perform the duties reasonably required by the Bank; or (c) any act by the Employee which, under Federal law or regulation, disqualifies the Employee from serving as an officer of the Bank. 13. The laws of the Commonwealth of Virginia shall govern this Agreement. 14. This Agreement may not be altered, amended or revoked except by a written agreement signed by the Bank and Employee. 15. This Agreement shall be binding upon and shall inure to the benefit of any successor entity of the Bank. 16. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine. 17. This Agreement replaces and supercedes that certain agreement between the Bank and Employee dated August 31, 1982 , as amended August 11, 1987. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. AMERICAN NATIONAL BANK AND TRUST COMPANY BY: /s/Charles H. Majors ______________________________ TITLE: President ___________________________ /s/Gilmer D. Jefferson ___________________________________ GILMER D. JEFFERSON EXHIBIT 10.6 THIS AGREEMENT, made this 12th day of June, 1997, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY, a national banking association, ("the Bank"), and CARL T. YEATTS ("the Employee"). WHEREAS, the Bank values the ability of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits and that the loss of his services would result in substantial cost in the efficient and effective operation of the Bank; and, WHEREAS, the Bank in order to retain the services of the Employee is willing to provide retirement benefits and/or death benefits for his designated beneficiary as set out below; NOW THEREFORE, it is mutually agreed that: 1. If the Employee dies while employed by the Bank prior to Retirement (as hereinafter defined), the Bank shall pay the annual sum of $25,000, payable in annual installments, for a period of ten years, to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. The first payment shall be made not later than three months following the Employee's date of death. 2. In the event the Employee terminates employment because of the total disability of the Employee, and such disability continues until the death of the Employee or the Employee attains the age of 62 years, whichever occurs first, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 3. Upon Retirement, the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months after retirement, for a period of ten years. If the Employee should die during said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 4. In the event, following a Change in Control (as hereinafter defined), (a) the Employee terminates employment following a Change in Control or (b) the Bank terminates the Employee's employment for other than Proper Cause (as hereinafter defined), the Employee shall be entitled to receive from the Bank the annual sum of $25,000, payable in annual installments beginning not later than three months following the Employee's date of death or the date the Employee attains the age of 62 years, whichever occurs first, for a period of ten years. If the Employee should die during the said ten year period, the installments shall continue to be payable until the expiration of said ten year period to such individual or individuals as the Employee shall have designated in writing filed with the Bank or, in the absence of such designation, to the estate of the Employee. 5. During the period of disability and/or during the ten year period the Employee is receiving payments under this Agreement, the Employee will not become associated with, or engage in, or render service to any other business competitive to the business of the Bank within a fifty-mile radius of any office of the Bank. 6. If the Employee shall fail to substantially perform all of the terms and conditions of this Agreement to be performed by him, or if other than following Change in Control he voluntarily leaves the employ of the Bank prior to retirement, or if prior to retirement he is discharged for Proper Cause, then all subsequent compensation required to be paid by the Bank to him or any designated beneficiary, or the remainder thereof, as the case may be, shall be forfeited. 7. If any benefits become payable under this Agreement, the Employee (or designated beneficiary in the case of the Employee's death) shall file a claim for benefits by notifying the Bank orally or in writing. If the claim is wholly or partially denied, the Bank shall provide a written notice within 90 days specifying the reason for the denial, the provisions of the Agreement on which the denial is based, and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the Employee (or designated beneficiary in the case of the Employee's death) shall notify the Bank in writing within 60 days. In requesting a review, the Employee or beneficiary may submit any written issues and comments he feels are appropriate. The Bank shall then review the claim and provide a written decision within 60 days. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 8. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder. 9. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee or the Employee's designated beneficiary by the Bank. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Bank to discharge the Employee for Proper Cause or the right of the Employee to terminate employment. The Bank shall be under no obligation whatever to purchase or maintain any contract, policy or other asset to provide the benefits under this Agreement. Further, any contract, policy or other asset which the Bank may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Bank's performance under this Agreement. The rights accruing to the Employee or any beneficiary hereunder shall be solely those of an unsecured creditor of the Bank. 10. "Change in Control" means if: (a) after the date hereof, any person, including a 'group' as defined in Section 13(d)(3) of the Exchange Act, becomes, directly or indirectly, the beneficial owner of shares of American National Bankshares Inc. ("Bankshares") having 30% or more of the combined voting power of the then outstanding shares of Bankshares that may be cast for the election of the Bankshares' directors (other than as a result of an issuance of securities initiated by Bankshares or a tender offer or open market purchases approved by the Board of Directors of Bankshares ("the Board"), as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of Bankshares before any such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 11. "Retirement" means the Employee's retirement from the Bank upon attaining at least 62 years of age or such earlier date as may be mutually agreed upon by the Employee and the Bank. 12. "Proper Cause" means: (a) conviction of the Employee for a felony or misdemeanor involving moral turpitude; (b) failure or refusal by the Employee to faithfully or diligently perform the duties reasonably required by the Bank; or (c) any act by the Employee which, under Federal law or regulation, disqualifies the Employee from serving as an officer of the Bank. 13. The laws of the Commonwealth of Virginia shall govern this Agreement. 14. This Agreement may not be altered, amended or revoked except by a written agreement signed by the Bank and Employee. 15. This Agreement shall be binding upon and shall inure to the benefit of any successor entity of the Bank. 16. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine. 17. This Agreement replaces and supercedes that certain agreement between the Bank and Employee dated August 31, 1982 , as amended August 11, 1987. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. AMERICAN NATIONAL BANK AND TRUST COMPANY BY: /s/Charles H. Majors ______________________________ TITLE: President ___________________________ /s/Carl T. Yeatts ___________________________________ CARL T. YEATTS EX-27 3 FDS-AMERICAN NATIONAL BANKSHARES INC & SUBSIDIARY
9 1000 3-MOS 6-MOS 9-MOS 12-MOS YEAR DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 JAN-01-1997 APR-01-1997 JUL-01-1997 OCT-01-1997 JAN-01-1997 MAR-31-1997 JUN-30-1997 SEP-01-1997 DEC-31-1997 DEC-31-1997 $10,471 $13,816 $16,022 $13,386 $13,386 105 145 699 366 366 5,350 0 5,800 0 0 0 0 0 0 0 74,139 64,491 67,890 82,466 82,466 81,056 74,976 69,394 60,611 60,611 80,686 75,114 70,029 61,367 61,367 247,368 253,707 254,049 254,793 254,793 3,206 3,416 3,558 3,277 3,277 430,900 419,258 425,681 423,640 423,640 359,266 350,962 356,373 351,603 351,603 0 2,975 0 1,500 1,500 18,930 17,608 20,269 20,534 20,534 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,280 3,052 3,052 3,052 3,052 49,424 44,661 45,987 46,951 46,951 430,900 419,258 425,681 50,003 50,003 5,352 5,609 5,755 5,725 22,441 2,500 2,237 2,108 2,205 9,050 24 37 53 123 237 7,876 7,883 7,916 8,053 31,728 3,475 3,417 3,415 3,403 13,710 3,677 3,619 3,629 3,665 14,590 4,199 4,264 4,287 4,388 17,138 243 257 262 338 1,100 23 8 0 0 31 2,515 2,542 2,466 2,722 10,245 2,179 2,248 2,394 2,173 8,994 2,179 2,248 2,394 2,173 8,994 0 0 0 0 0 0 0 0 0 0 1,537 1,544 1,645 1,543 6,269 .47 .48 .54 .50 1.99 .47 .48 .54 .50 1.99 4.21 4.36 4.40 4.43 4.39 278 1,029 1,160 393 393 257 566 381 181 181 0 0 0 0 0 0 0 0 0 0 3,070 3,206 3,416 3,558 3,558 122 73 148 649 992 15 27 28 29 99 3,206 3,416 3,558 3,277 3,277 2,091 2,022 2,187 2,175 2,175 0 0 0 0 0 1,115 1,394 1,371 1,102 1,102
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