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American National Bankshares Reports Third Quarter Earnings
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American National Bankshares Reports Third Quarter Earnings

DANVILLE, Va., Oct. 19, 2023 (GLOBE NEWSWIRE) — American National Bankshares Inc. (Nasdaq: AMNB) (“American National” or the “Company”) today reported third quarter 2023 earnings of $5.8 million, or $0.54 per diluted common share. These results compare to earnings of $9.3 million, or $0.87 per diluted common share, during the same quarter in the prior year, and earnings of $7.1 million, or $0.67 per diluted common share, for the second quarter of 2023. Earnings for the nine months ended September 30, 2023 were $22.1 million, or $2.08 per diluted common share, compared to $26.4 million, or $2.47 per diluted common share, for the same period of 2022.

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President and Chief Executive Officer, Jeffrey V. Haley, commented, “The third quarter was a historic one for American National as we announced our agreement to merge with Atlantic Union Bankshares Corporation subject to shareholder and regulatory approvals. We continue to believe this partnership will provide the combined company with a stronger platform for growth and create enhanced value for our shareholders, customers and employees. I have been so pleased with the level of collaboration from both companies since announcement as we work through our various regulatory approvals and early integration planning.”

“We had a solid third quarter from an operating perspective, with revenues and earnings (adjusting for merger expenses) in line with our expectations for the quarter. Strengths included loan growth, continued favorable credit trends, expense management, reduced margin compression from higher rates and growth in fee income over the previous quarter.”

Third quarter 2023 highlights include:

  • Average loans held for investment grew $30.8 million, or 5.6% annualized, during the third quarter as compared to the previous quarter.
  • Average deposits increased by $51.5 million, or 8.0% annualized, during the quarter, while period-end deposits declined $80.7 million, or 12.2% annualized.
  • Fully taxable equivalent (“FTE”) net interest margin was 2.76% for the quarter, down 12 basis points from 2.88% in the second quarter of 2023 and down 44 basis points from 3.20% in the third quarter of the prior year (non-GAAP).
  • Noninterest revenues increased $419 thousand, or 9.6%, when compared to the previous quarter, and increased $14 thousand, or 0.3%, compared to the same quarter in the prior year.
  • Noninterest expense increased $2.2 million, or 13.4%, when compared to the previous quarter, and increased $1.9 million, or 11.5%, when compared to the same quarter in the prior year. Excluding non-recurring merger related expenses of $1.7 million recorded during the quarter, increases relative to the prior quarter and same quarter of 2022 were 2.8% and 1.2%, respectively.
  • The Company recognized a recovery of credit losses on loans in the third quarter of 2023 of $538 thousand compared to provisions of $268 thousand in the second quarter of 2023 and $615 thousand in the third quarter of the previous year.
  • Annualized net recoveries as a percentage of average loans outstanding were (0.06%) for the third quarter of 2023, compared to (0.05%) in the previous quarter and (0.01%) in the same quarter in the prior year.
  • Nonperforming assets as a percentage of total assets were 0.12% at September 30, 2023, up from 0.04% at June 30, 2023 and 0.05% at September 30, 2022.

NET INTEREST INCOME

Net interest income for the third quarter of 2023 decreased by $485 thousand, or 2.3%, to $20.7 million compared to $21.1 million for the previous quarter. The third quarter of 2023 compared to the same quarter of 2022 reflected a decrease of $3.3 million, or 13.9%. The FTE net interest margin for the third quarter of 2023 was 2.76%, down from 2.88% in the prior quarter and 3.20% in the same quarter a year ago (non-GAAP). The margin contraction relative to the previous quarter resulted from funding costs increasing more than earning asset yields. The yield on average earning assets increased 15 basis points quarter-over-quarter, while the cost of average interest-bearing liabilities rose 37 basis points due to higher rates paid on interest-bearing deposits and the continued migration of the deposit composition from demand deposits to higher cost money market and time deposits. Similarly, the 82-basis point increase in average earning asset yields was more than offset by the 195-basis point increase in the cost of average interest-bearing liabilities when comparing the third quarter of 2023 to the same quarter of 2022. The cost of interest-bearing deposits increased to 2.04% in the third quarter, compared to 1.59% in the previous quarter and 0.17% in the same quarter of the prior year.

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $3.7 million as of September 30, 2023, up from $1.1 million at June 30, 2023 and $1.4 million at September 30, 2022. NPAs as a percentage of total assets were 0.12% at September 30, 2023, compared to 0.04% at June 30, 2023 and 0.05% at September 30, 2022. The Company recorded a recovery of credit losses for the third quarter of 2023 of $538 thousand compared to provisions of $268 thousand in the previous quarter and $615 thousand in the third quarter of the previous year. The negative provision for the third quarter of 2023 was principally the result of net loan recoveries of $315 thousand and a slight reduction in the quantitative expected loan loss rates partially offset by net loan growth during the quarter.

The allowance for credit losses – loans was $25.1 million at September 30, 2023, compared to $25.3 million at June 30, 2023 and $19.2 million at September 30, 2022. Annualized net recoveries as a percentage of average loans outstanding were 0.06% for the third quarter of 2023 compared to 0.05% in the previous quarter and 0.01% in the same quarter in the prior year. The allowance for credit losses as a percentage of loans held for investment was 1.11% at September 30, 2023, compared to 1.13% at June 30, 2023, and 0.91% at September 30, 2022.

NONINTEREST INCOME

Noninterest income in the third quarter of 2023 increased by $419 thousand, or 9.6%, compared to the prior quarter and increased $14 thousand, or 0.3%, from the same quarter in the prior year. Noninterest income totaled $4.8 million for each of the quarters ended September 30, 2023 and September 30, 2022 compared to $4.4 million for the quarter ended June 30, 2023.

The increase in the third quarter compared to the previous quarter was attributable to higher income from small business investment companies of $345 thousand and growth in mortgage banking income of $96 thousand.

The third quarter of 2023 compared to the same quarter of 2022 reflected increases in interchange fees of $149 thousand and wealth management income of $133 thousand, partially offset by lower income from service charges on deposit accounts of $116 thousand and mortgage banking income of $95 thousand.

NONINTEREST EXPENSE

Noninterest expense for the third quarter of 2023 amounted to $18.3 million, up $2.2 million, or 13.4%, when compared to $16.2 million for the previous quarter and up $1.9 million, or 11.5%, from $16.4 million during the same quarter in the previous year. The increase in the third quarter compared to the previous quarter was driven by merger related expenses totaling $1.7 million and increased incentive accruals of $1.0 million included in salaries and employee benefits.

The third quarter 2023 increase compared to the same quarter of 2022 was principally attributable to merger related expenses of $1.7 million and an increase in FDIC assessments of $127 thousand.

INCOME TAXES

The effective tax rate for the three months ended September 30, 2023 was 24.16%, compared to 21.13% for the prior quarter and 20.92% for the same quarter in the prior year. The increase in the effective tax rate in the third quarter of 2023 was primarily the result of certain non-deductible merger related expenses.

BALANCE SHEET

Total assets at September 30, 2023 were $3.1 billion, a decline of $21.9 million, or 0.7% from June 30, 2023, and an increase of $41.9 million, or 1.4%, from September 30, 2022.

At September 30, 2023, loans held for investment (net of deferred fees and costs) were $2.3 billion, an increase of $29.0 million, or 5.2% annualized, from June 30, 2023. Loans held for investment (net of deferred fees and costs) increased $154.0 million, or 7.3%, from September 30, 2022.

Investment securities available for sale amounted to $543.9 million at September 30, 2023, a decrease of $16.8 million, or 3.0%, from June 30, 2023 and a decrease of $98.0 million, or 15.3%, compared to September 30, 2022. The unrealized loss on available for sale securities was $75.1 million at September 30, 2023 compared to $69.7 million at June 30, 2023 and $73.6 million at September 30, 2022. The increase in unrealized losses relative to the prior quarter was the result of increases in market yields for investment securities. At September 30, 2023, 54% of the market value of the securities portfolio was unencumbered and could be used to provide additional liquidity, if needed.

Deposits amounted to $2.6 billion at September 30, 2023, representing declines of $80.7 million, or 12.2% annualized, from June 30, 2023 and $119.6 million, or 4.4%, compared to September 30, 2022.

Borrowings from the Federal Home Loan Bank of Atlanta (“FHLB”) totaled $85.0 million at September 30, 2023 compared to $25.0 million at June 30, 2023. The Company had no FHLB borrowings at September 30, 2022. The Company’s remaining credit availability from the FHLB was $677.6 million as of September 30, 2023, $446.5 million of which could be accessed without pledging additional collateral.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 7.98% at September 30, 2023 compared to 7.94% at June 30, 2023 and compared to 7.59% at September 30, 2022 (non-GAAP). The Company’s preliminary common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.77%, 12.89%, 13.91% and 10.61%, respectively, at September 30, 2023.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.1 billion. Headquartered in Danville, Virginia, American National is the parent company of American National Bank and Trust Company. American National Bank is a community bank serving Virginia and North Carolina with 26 banking offices. American National Bank also manages an additional $1.2 billion of trust, investment and brokerage assets in its Wealth Division. Additional information about American National and American National Bank is available on American National’s website at www.amnb.com.

NON-GAAP FINANCIAL MEASURES

This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). American National’s management uses these non-GAAP financial measures in its analysis of American National’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of American National’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. For a reconciliation of non-GAAP financial measures, see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.

FORWARD-LOOKING STATEMENTS

Certain statements in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding anticipated changes in the interest rate environment, future economic conditions and the impacts of current economic uncertainties, and projections, predictions, expectations, or beliefs about future events or results, or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks and uncertainties, some of which cannot be predicted or quantified, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “seek to,” “opportunity,” “potential,” “continue,” “confidence” or words of similar meaning, or other statements concerning opinions or judgment of our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the following: the businesses of American National and Atlantic Union Bankshares Corporation (“Atlantic Union”) may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the expected growth opportunities or cost savings from the merger with Atlantic Union may not be fully realized or may take longer to realize than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger with Atlantic Union, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger with Atlantic Union may not be obtained; the level of inflation; financial market volatility including the level of interest rates, could affect the values of financial instruments and the amount of net interest income earned; the ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company’s or banking industry’s reputation becomes damaged; the adequacy of the level of the Company’s allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses; general economic or business conditions, either nationally or in the market areas in which the Company does business, may be less favorable than expected, resulting in deteriorating credit quality, reduced demand for credit, or a weakened ability to generate deposits; competition among financial institutions may increase, and competitors may have greater financial resources and develop products and technology that enable those competitors to compete more successfully than the Company; businesses that the Company is engaged in may be adversely affected by legislative or regulatory changes, including changes in accounting standards and tax laws; the ability to recruit and retain key personnel; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable and secure electronic systems; the effects of climate change, natural disasters, and extreme weather events; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts of threats or terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad; the impact of health emergencies, epidemics or pandemics; risks related to environmental, social and governance practices; risks associated with mergers, acquisitions, and other expansion activities; and other factors described from time to time in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Contact:  
  Jeffrey W. Farrar
  Senior Executive Vice President, COO & CFO
  (434)773-2274
  farrarj@amnb.com
American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
       
  September 30
    2023       2022  
Assets      
Cash and due from banks $ 34,646     $ 35,437  
Interest-bearing deposits in other banks   40,622       59,541  
Securities available for sale, at fair value   543,915       641,884  
Restricted stock, at cost   12,936       8,383  
Loans held for sale   1,981       2,852  
Loans, net of deferred fees and costs   2,273,455       2,119,415  
Less allowance for credit losses – loans   (25,124 )     (19,189 )
Net Loans   2,248,331       2,100,226  
Premises and equipment, net   32,167       34,686  
Assets held-for-sale   1,131        
Other real estate owned, net         143  
Goodwill   85,048       85,048  
Core deposit intangibles, net   2,550       3,667  
Bank owned life insurance   30,197       29,480  
Other assets   57,734       47,973  
       
Total assets $ 3,091,258     $ 3,049,320  
       
       
Liabilities      
Demand deposits — noninterest-bearing $ 848,017     $ 1,044,803  
Demand deposits — interest-bearing   484,511       509,017  
Money market deposits   659,899       612,600  
Savings deposits   214,955       282,093  
Time deposits   363,862       242,357  
Total deposits   2,571,244       2,690,870  
Customer repurchase agreements   60,035       625  
Other short-term borrowings   85,000        
Long-term borrowings   28,410       28,308  
Other liabilities   19,291       16,127  
Total liabilities   2,763,980       2,735,930  
       
Shareholders’ equity      
Preferred stock, $5 par value, 2,000,000 shares authorized,      
none outstanding          
Common stock, $1 par value, 20,000,000 shares authorized,      
10,629,111 shares outstanding at September 30, 2023 and    
10,608,750 shares outstanding at September 30, 2022   10,544       10,533  
Capital in excess of par value   142,392       141,694  
Retained earnings   231,962       218,814  
Accumulated other comprehensive loss, net   (57,620 )     (57,651 )
Total shareholders’ equity   327,278       313,390  
       
Total liabilities and shareholders’ equity $ 3,091,258     $ 3,049,320  
       

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
                   
  For the Three Months Ended   For the Nine Months Ended
  9/30/23   6/30/23   9/30/22   9/30/23   9/30/22
Interest and Dividend Income:                  
Interest and fees on loans $ 27,512     $ 26,052     $ 21,160     $ 78,476     $ 59,024  
Interest and dividends on securities:                  
Taxable   2,564       2,607       2,664       7,855       7,344  
Tax-exempt   24       26       110       115       297  
Dividends   163       196       118       529       347  
Other interest income   797       550       1,099       1,818       2,076  
Total interest and dividend income   31,060       29,431       25,151       88,793       69,088  
                   
Interest Expense:                  
Interest on deposits   9,057       6,607       741       19,149       1,956  
Interest on short-term borrowings   938       1,282       11       3,427       26  
Interest on long-term borrowings   402       394       392       1,183       1,156  
Total interest expense   10,397       8,283       1,144       23,759       3,138  
                   
Net Interest Income   20,663       21,148       24,007       65,034       65,950  
Provision for (recovery of) credit losses   (538 )     268       615       59       438  
                   
Net Interest Income After Provision for                  
(Recovery of) Credit Losses   21,201       20,880       23,392       64,975       65,512  
                   
Noninterest Income:                  
Wealth management income   1,736       1,726       1,603       5,030       4,999  
Service charges on deposit accounts   565       564       681       1,685       2,079  
Interchange fees   1,162       1,187       1,013       3,458       2,990  
Other fees and commissions   169       158       233       493       699  
Mortgage banking income   293       197       388       634       1,490  
Securities losses, net                     (68 )      
Income from Small Business Investment Companies   453       108       501       888       1,672  
Income from insurance investments   128       120       100       594       644  
Losses on premises and equipment, net         (8 )     (2 )     (113 )     (82 )
Other   268       303       243       900       706  
Total noninterest income   4,774       4,355       4,760       13,501       15,197  
                   
Noninterest Expense:                  
Salaries and employee benefits   9,229       8,300       9,618       26,701       26,936  
Occupancy and equipment   1,601       1,631       1,514       4,676       4,576  
FDIC assessment   354       492       227       1,053       694  
Bank franchise tax   520       520       488       1,550       1,452  
Core deposit intangible amortization   262       272       310       817       960  
Data processing   821       939       818       2,611       2,446  
Software   470       476       362       1,391       1,088  
Other real estate owned, net   (10 )           3       (10 )     4  
Merger related expenses   1,702                   1,702        
Other   3,394       3,552       3,108       9,683       9,096  
Total noninterest expense   18,343       16,182       16,448       50,174       47,252  
                   
Income Before Income Taxes   7,632       9,053       11,704       28,303       33,457  
Income Taxes   1,844       1,913       2,448       6,218       7,062  
Net Income $ 5,788     $ 7,140     $ 9,256     $ 22,085     $ 26,395  
                   
Net Income Per Common Share:                  
Basic $ 0.54     $ 0.67     $ 0.87     $ 2.08     $ 2.47  
Diluted $ 0.54     $ 0.67     $ 0.87     $ 2.08     $ 2.47  
Weighted Average Common Shares Outstanding:                  
Basic   10,625,709       10,623,571       10,640,952       10,626,599       10,694,096  
Diluted   10,625,709       10,624,859       10,643,073       10,627,732       10,696,409  
                   

American National Bankshares Inc.                  
Financial Highlights                  
Unaudited                      
                         
  (Dollars in thousands, except per share data)             At or for the Nine Months
        3rd Qtr   2nd Qtr   3rd Qtr   Ended September 30,
          2023       2023       2022       2023       2022  
                         
EARNINGS                    
Interest income $ 31,060     $ 29,431     $ 25,151     $ 88,793     $ 69,088  
Interest expense   10,397       8,283       1,144       23,759       3,138  
Net interest income   20,663       21,148       24,007       65,034       65,950  
Provision for (recovery of) credit losses   (538 )     268       615       59       438  
Noninterest income   4,774       4,355       4,760       13,501       15,197  
Noninterest expense   18,343       16,182       16,448       50,174       47,252  
Income taxes     1,844       1,913       2,448       6,218       7,062  
Net income     5,788       7,140       9,256       22,085       26,395  
                         
PER COMMON SHARE                  
Net income per share – basic $ 0.54     $ 0.67     $ 0.87     $ 2.08     $ 2.47  
Net income per share – diluted   0.54       0.67       0.87       2.08       2.47  
Cash dividends paid   0.30       0.30       0.28       0.90       0.84  
Book value per share   30.79       30.88       29.54       30.79       29.54  
Book value per share – tangible (a)   22.55       22.61       21.18       22.55       21.18  
Closing market price   37.94       28.98       31.95       37.94       31.95  
                         
FINANCIAL RATIOS                  
Return on average assets   0.75 %     0.93 %     1.17 %     0.96 %     1.08 %
Return on average common equity   7.02       8.61       11.21       8.97       10.42  
Return on average tangible common equity (a)   9.91       12.07       15.74       12.61       14.57  
Average common equity to average assets   10.68       10.82       10.42       10.70       10.35  
Tangible common equity to tangible assets (a)   7.98       7.94       7.59       7.98       7.59  
Net interest margin, taxable equivalent   2.76       2.88       3.20       2.94       2.86  
Efficiency ratio (a)   64.31       62.24       55.98       60.43       56.87  
Effective tax rate   24.16       21.13       20.92       21.97       21.11  
                         
PERIOD-END BALANCES                  
Securities   $ 556,851     $ 570,039     $ 650,267     $ 556,851     $ 650,267  
Loans held for sale   1,981       4,048       2,852       1,981       2,852  
Loans, net     2,273,455       2,244,464       2,119,415       2,273,455       2,119,415  
Goodwill and other intangibles   87,598       87,860       88,715       87,598       88,715  
Assets       3,091,258       3,113,163       3,049,320       3,091,258       3,049,320  
Assets – tangible (a)   3,003,660       3,025,303       2,960,605       3,003,660       2,960,605  
Interest-bearing deposits   1,723,227       1,767,258       1,646,067       1,723,227       1,646,067  
Noninterest bearing demand deposits   848,017       884,658       1,044,803       848,017       1,044,803  
Customer repurchase agreements   60,035       62,886       625       60,035       625  
Other short-term borrowings   85,000       25,000             85,000        
Long-term borrowings   28,410       28,384       28,308       28,410       28,308  
Shareholders’ equity   327,278       328,090       313,390       327,278       313,390  
Shareholders’ equity – tangible (a)   239,680       240,230       224,675       239,680       224,675  
                         
AVERAGE BALANCES                  
Securities (b)   $ 634,313     $ 652,439     $ 728,535     $ 654,737     $ 722,025  
Loans held for sale   2,488       1,984       3,915       1,701       3,998  
Loans, net     2,248,675       2,217,859       2,064,088       2,217,898       2,012,905  
Interest-earning assets   2,939,234       2,912,623       3,005,292       2,920,781       3,083,815  
Goodwill and other intangibles   87,758       88,036       88,886       88,033       89,202  
Assets       3,088,231       3,065,449       3,170,328       3,070,314       3,260,636  
Assets – tangible (a)   3,000,473       2,977,413       3,081,442       2,982,281       3,171,434  
Interest-bearing deposits   1,758,994       1,669,076       1,723,931       1,681,311       1,817,581  
Noninterest bearing demand deposits   872,488       910,911       1,051,585       917,113       1,027,942  
Customer repurchase agreements   65,550       62,419       18,719       45,071       31,858  
Other short-term borrowings   12,935       45,934             52,142        
Subordinated debt   28,393       28,368       28,293       28,368       28,268  
Shareholders’ equity   329,812       331,821       330,318       328,400       337,633  
Shareholders’ equity – tangible (a)   242,054       243,785       241,432       240,367       248,431  
                         
American National Bankshares Inc.                  
Financial Highlights                  
Unaudited                      
                         
  (Dollars in thousands, except per share data)             At or for the Nine Months
        3rd Qtr   2nd Qtr   3rd Qtr   Ended September 30,
          2023       2023       2022       2023       2022  
CAPITAL                      
Weighted average shares outstanding – basic   10,625,709       10,623,571       10,640,952       10,626,599       10,694,096  
Weighted average shares outstanding – diluted   10,625,709       10,624,859       10,643,073       10,627,732       10,696,409  
                         
COMMON STOCK REPURCHASE PROGRAM                  
Total shares of common stock repurchased         13,688       60,104       34,131       203,709  
Average price paid per share of common stock $     $ 26.99     $ 34.26       30.58       36.26  
                         
ALLOWANCE FOR CREDIT LOSSES – LOANS                  
Beginning balance $ 25,342     $ 24,861     $ 18,505     $ 19,555     $ 18,678  
Day 1 Impact of CECL adoption                     5,192        
Provision for (recovery of) credit losses   (533 )     219       615       15       438  
Charge-offs     (19 )     (15 )     (31 )     (429 )     (185 )
Recoveries     334       277       100       791       258  
Ending balance $ 25,124     $ 25,342     $ 19,189     $ 25,124     $ 19,189  
                         
LOANS                      
Construction and land development $ 269,840     $ 240,934     $ 210,500     $ 269,840     $ 210,500  
Commercial real estate – owner occupied   413,151       416,397       423,678       413,151       423,678  
Commercial real estate – non-owner occupied   803,440       833,084       764,963       803,440       764,963  
Residential real estate   366,557       351,855       324,468       366,557       324,468  
Home equity     91,393       93,594       93,659       91,393       93,659  
Commercial and industrial   322,209       301,778       295,541       322,209       295,541  
Consumer     6,865       6,822       6,606       6,865       6,606  
Total     $ 2,273,455     $ 2,244,464     $ 2,119,415     $ 2,273,455     $ 2,119,415  
                         
NONPERFORMING ASSETS AT PERIOD-END                  
Nonperforming loans:                  
90 days past due and accruing $     $     $ 18     $     $ 18  
Nonaccrual     3,740       1,024       1,171       3,740       1,171  
Other real estate owned and repossessions         80       196             196  
Nonperforming assets $ 3,740     $ 1,104     $ 1,385     $ 3,740     $ 1,385  
                         
ASSET QUALITY RATIOS                  
Allowance for credit losses – loans to total loans   1.11 %     1.13 %     0.91 %     1.11 %     0.91 %
Allowance for credit losses – loans to                  
nonperforming loans   671.76       2,474.80       1,613.88       671.76       1,613.88  
Nonperforming assets to total assets   0.12       0.04       0.05       0.12       0.05  
Nonperforming loans to total loans   0.16       0.05       0.06       0.16       0.06  
Annualized net charge-offs (recoveries) to average loans       (0.06 )     (0.05 )     (0.01 )     (0.02 )     0.00  
to average loans                  
                         
                         
OTHER DATA                    
Fiduciary assets at period-end (c) (d) $ 774,126     $ 782,659     $ 693,153     $ 774,126       693,153  
Retail brokerage assets at period-end (c) (d) $ 413,956     $ 426,565     $ 376,891     $ 413,956       376,891  
Number full-time equivalent employees (e)   358       365       363       358       363  
Number of full service offices   26       26       26       26       26  
Number of loan production offices   1       1       1       1       1  
Number of ATMs   34       34       34       34       34  
                         
                         
Notes:                      
                         
(a) – This financial measure is not calculated in accordance with GAAP. For a reconciliation of      
non-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the end      
of this release.      
(b) – Average does not include unrealized gains and losses.      
(c) – Market value.      
(d) – Assets are not owned by American National and are not reflected in the consolidated balance      
sheet.                      
(e) – Average for quarter.                  
      American National Bankshares Inc.
      Net Interest Income Analysis
      For the Three Months Ended September 30, 2023 and 2022
      (Dollars in thousands)
      Unaudited
                                                     
                          Interest                
          Average Balance     Income/Expense (a)   Yield/Rate
                                                     
          2023       2022       2023       2022       2023       2022  
Assets:                                                
                                                     
Total loans (b) $ 2,251,163     $ 2,068,003     $ 27,559     $ 21,191       4.81 %     4.09 %
                                                     
Securities:                                              
  Taxable   630,034       708,076       2,727       2,782       1.73       1.56  
  Tax exempt   4,279       20,459       30       138       2.85       2.70  
    Total securities   634,313       728,535       2,757       2,920       1.74       1.60  
                                                     
Deposits in other banks   53,758       208,754       797       1,099       5.88       2.09  
                                                     
  Total interest-earning assets   2,939,234       3,005,292       31,113       25,210       4.17       3.35  
                                                     
Non-earning assets   148,997       165,036                                  
    Total assets $ 3,088,231     $ 3,170,328                                  
                                                     
Liabilities and Stockholders’ Equity:                                              
                                                     
Deposits:                                              
  Demand $ 489,126     $ 522,021       983       34       0.80       0.03  
  Savings and money market   923,732       950,339       5,448       368       2.34       0.15  
  Time     346,136       251,571       2,626       339       3.00       0.53  
    Total deposits   1,758,994       1,723,931       9,057       741       2.04       0.17  
                                                     
Customer repurchase agreements   65,550       18,719       759       11       4.60       0.23  
Other short-term borrowings   12,935             179             5.42        
Long-term borrowings   28,393       28,293       402       392       5.55       5.54  
  Total interest-bearing                                              
    liabilities   1,865,872       1,770,943       10,397       1,144       2.21       0.26  
                                                     
Noninterest bearing demand deposits   872,488       1,051,585                                  
Other liabilities   20,059       17,482                                  
Shareholders’ equity   329,812       330,318                                  
    Total liabilities and                                              
      shareholders’ equity $ 3,088,231     $ 3,170,328                                  
                                                     
Interest rate spread                                   1.96 %     3.09 %
Net interest margin                                   2.76 %     3.20 %
                                                     
Net interest income (taxable equivalent basis)             20,716       24,066                  
Less: Taxable equivalent adjustment (c)                   53       59                  
Net interest income                 $ 20,663     $ 24,007                  
                                                     
                                                     
Notes:                                                
                                                     
(a) – Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/
amortization of deferred loan fees and costs.
(b) – Nonaccrual loans and loans held for sale are included in the average balances.
(c) – A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.
                                                     

      American National Bankshares Inc.
      Net Interest Income Analysis
      For the Nine Months Ended September 30, 2023 and 2022
      (Dollars in thousands)
      Unaudited
                                                     
                          Interest                
          Average Balance     Income/Expense (a)   Yield/Rate
                                                     
          2023       2022       2023       2022       2023       2022  
Assets:                                                
                                                     
Total loans (b) $ 2,219,599     $ 2,016,903     $ 78,612     $ 59,122       4.68 %     3.91 %
                                                     
Securities:                                              
  Taxable   647,688       703,048       8,384       7,691       1.73       1.46  
  Tax exempt   7,049       18,977       146       375       2.76       2.64  
    Total securities   654,737       722,025       8,530       8,066       1.74       1.49  
                                                     
Deposits in other banks   46,445       344,887       1,818       2,076       5.23       0.80  
                                                     
  Total interest-earning assets   2,920,781       3,083,815       88,960       69,264       4.03       3.00  
                                                     
Non-earning assets   149,533       176,821                                  
    Total assets $ 3,070,314     $ 3,260,636                                  
                                                     
Liabilities and Stockholders’ Equity:                                              
                                                     
Deposits:                                              
  Demand $ 480,422     $ 531,301       1,815       107       0.51       0.03  
  Savings and money market   891,035       995,555       11,841       708       1.78       0.10  
  Time     309,854       290,725       5,493       1,141       2.37       0.52  
    Total deposits   1,681,311       1,817,581       19,149       1,956       1.52       0.14  
                                                     
Customer repurchase agreements   45,071       31,858       1,519       26       4.50       0.11  
Other short-term borrowings   52,142             1,908             4.83        
Long-term borrowings   28,368       28,268       1,183       1,156       5.50       5.45  
  Total interest-bearing                                              
    liabilities   1,806,892       1,877,707       23,759       3,138       1.75       0.22  
                                                     
Noninterest bearing demand deposits   917,113       1,027,942                                  
Other liabilities   17,909       17,354                                  
Shareholders’ equity   328,400       337,633                                  
    Total liabilities and                                              
      shareholders’ equity $ 3,070,314     $ 3,260,636                                  
                                                     
Interest rate spread                                   2.28 %     2.78 %
Net interest margin                                   2.94 %     2.86 %
                                                     
Net interest income (taxable equivalent basis)             65,201       66,126                  
Less: Taxable equivalent adjustment (c)                   167       176                  
Net interest income                 $ 65,034     $ 65,950                  
                                                     
                                                     
Notes:                                                
                                                     
(a) – Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/
amortization of deferred loan fees and costs.
(b) – Nonaccrual loans and loans held for sale are included in the average balances.
(c) – A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.
                                                     

American National Bankshares Inc.                  
Reconciliation of Non-GAAP Financial Measures   `            
Unaudited                      
                         
  (Dollars in thousands, except per share data)           At or for the Nine Months
        3rd Qtr   2nd Qtr   3rd Qtr   Ended September 30,
          2023       2023       2022       2023       2022  
EFFICIENCY RATIO                  
Noninterest expense $ 18,343     $ 16,182     $ 16,448     $ 50,174     $ 47,252  
Add: loss on sale of OREO   13                   13        
Subtract: core deposit intangible amortization       (262 )     (272 )     (310 )     (817 )     (960 )
Subtract: merger related expenses   (1,702 )                 (1,702 )      
        $ 16,392     $ 15,910     $ 16,138     $ 47,668     $ 46,292  
                         
Net interest income $ 20,663     $ 21,148     $ 24,007     $ 65,034     $ 65,950  
Tax equivalent adjustment   53       51       59       167       176  
Noninterest income   4,774       4,355       4,760       13,501       15,197  
Add: loss on securities                     68        
Add: loss on premises and equipment         8       2       113       82  
        $ 25,490     $ 25,562     $ 28,828     $ 78,883     $ 81,405  
                         
Efficiency ratio     64.31 %     62.24 %     55.98 %     60.43 %     56.87 %
                         
TAX EQUIVALENT NET INTEREST INCOME                
Non-GAAP measures:                  
Interest income – loans $ 27,559     $ 26,096     $ 21,191     $ 78,612     $ 59,122  
Interest income – investments and other   3,554       3,386       4,019       10,348       10,142  
Interest expense – deposits   (9,057 )     (6,607 )     (741 )     (19,149 )     (1,956 )
Interest expense – customer repurchase                  
agreements     (759 )     (694 )     (11 )     (1,519 )     (26 )
Interest expense – other short-term borrowings         (179 )     (588 )           (1,908 )      
Interest expense – long-term borrowings   (402 )     (394 )     (392 )     (1,183 )     (1,156 )
Total net interest income $ 20,716     $ 21,199     $ 24,066     $ 65,201     $ 66,126  
Less non-GAAP measures:                  
Tax benefit on nontaxable interest – loans   (47 )     (44 )     (31 )     (136 )     (98 )
Tax benefit on nontaxable interest – securities       (6 )     (7 )     (28 )     (31 )     (78 )
GAAP measures $ 20,663     $ 21,148     $ 24,007     $ 65,034     $ 65,950  
                         
NET INTEREST MARGIN                  
Net interest margin (FTE) (non-GAAP)   2.76 %     2.88 %     3.20 %     2.94 %     2.86 %
Net interest margin (GAAP)   2.75 %     2.87 %     3.19 %     2.92 %     2.84 %
                         
RETURN ON AVERAGE TANGIBLE EQUITY                
Return on average equity (GAAP basis)   7.02 %     8.61 %     11.21 %     8.97 %     10.42 %
Impact of excluding average goodwill                  
and other intangibles   2.89       3.46       4.53       3.64       4.15  
Return on average tangible equity                  
(non-GAAP)     9.91 %     12.07 %     15.74 %     12.61 %     14.57 %
                         
TANGIBLE EQUITY TO TANGIBLE ASSETS                  
Equity to assets ratio (GAAP basis)   10.59 %     10.54 %     10.28 %     10.59 %     10.28 %
Impact of excluding goodwill and                  
other intangibles   (2.61 )     (2.60 )     (2.69 )     (2.61 )     (2.69 )
Tangible equity to tangible assets ratio                  
(non-GAAP)   7.98 %     7.94 %     7.59 %     7.98 %     7.59 %
                         
TANGIBLE BOOK VALUE                  
Book value per share (GAAP basis) $ 30.79     $ 30.88     $ 29.54     $ 30.79     $ 29.54  
Impact of excluding goodwill and                  
other intangibles   (8.24 )     (8.27 )     (8.36 )     (8.24 )     (8.36 )
Tangible book value per share                  
(non-GAAP)   $ 22.55     $ 22.61     $ 21.18     $ 22.55     $ 21.18  
                         

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