American National Bankshares Reports Fourth Quarter and Full Year 2020 Earnings

Rhea-AI Summary

American National Bankshares Inc. (NASDAQ: AMNB) reported fourth quarter 2020 earnings of $8.8 million, or $0.80 per diluted share, marking an 18.2% increase year-over-year. Annual earnings reached $30.0 million, a 43.7% growth from 2019. Average deposits grew 4.2% quarter-over-quarter and 22.7% year-over-year, with total revenue surpassing $100 million for the year. However, net interest margin decreased to 3.22%. The loan loss provision was significantly lower at $585 thousand, reflecting strong asset quality. The tangible book value rose to $22.47 per share, indicating continued financial stability.

Positive

• Fourth quarter earnings of $8.8 million, up 18.2% year-over-year.
• Annual earnings of $30.0 million, a 43.7% increase from the previous year.
• Average deposits increased by 22.7% compared to Q4 2019.
• Tangible book value rose to $22.47 per share, up 8.9% from 2019.

Negative

• Net interest margin decreased to 3.22%, down from 3.62% year-over-year.
• Provision for loan losses increased by $8.3 million due to the pandemic.

DANVILLE, Va., Jan. 21, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported fourth quarter 2020 earnings of $8.8 million, or $0.80 per diluted common share. Those results compare to $7.4 million, or $0.67 per diluted common share, during the same quarter in the prior year, and net income of $7.2 million, or $0.66 per diluted common share, recognized for the third quarter of 2020. Earnings for the twelve months ended December 31, 2020 were $30.0 million, or $2.73 per diluted common share, compared to $20.9 million, or $1.98 per diluted common share for the same period of 2019. Earnings for the twelve months ended December 31, 2019 were impacted by $11.8 million in merger related expenses.

President and Chief Executive Officer Jeffrey V. Haley commented, “Despite the significant economic impact of COVID-19, we ended 2020 on a positive note, with earnings of $8.8 million or $0.80 per share for the fourth quarter, representing an increase of $1.4 million, or 18.2%, as compared to same quarter in 2019. Annual revenues were just over $100 million or 9% growth as compared to 2019. For the year, we generated earnings of $30.0 million or 43.7% growth as compared to 2019 despite increasing our allowance for loan losses by $8.3 million as a result of the pandemic. Tangible book value increased to $22.47 per share, reflecting growth of $1.83 per share, or 8.9%, as compared to 2019. Capital and liquidity levels remain very strong.”

“We are excited about 2021 and our plans to improve our digital capabilities and deepen our customer relationships. I want to again express my appreciation to our employees and customers, who continue to adapt to the many challenges of the pandemic. It has been inspirational to witness our team’s ability to meet our customer and community needs during these challenging times.”

Fourth quarter 2020 highlights include:

• Earnings produced a return on average tangible common equity of 14.90% for the fourth quarter of 2020, compared to 12.66% in the previous quarter and 13.71% for the same quarter in the prior year (non-GAAP).
  
  
• Average deposits grew 4.2% during the quarter and 22.7% over the same quarter of 2019; the cost of deposits decreased to 0.43% in the fourth quarter, compared to 0.52% in the previous quarter and 0.95% in the same quarter of the prior year.
  
  
• Net interest margin was 3.22% for the quarter, down from 3.26% in the third quarter of 2020 and from 3.62% in the same quarter of the prior year (non-GAAP).
  
  
• Noninterest revenues decreased $71 thousand, or 1.7%, when compared to the previous quarter, and increased $355 thousand, or 9.2%, compared to the same quarter in the prior year.
  
  
• Noninterest expense increased $519 thousand, or 3.7%, when compared to the previous quarter, and decreased $378 thousand, or 2.5%, when compared to the same quarter in the prior year.
  
  
• The fourth quarter provision for loan losses totaled $585 thousand, which compares to a provision of $2.6 million for the previous quarter, and a provision of $462 thousand in the same quarter in the prior year. The allowance for loan losses as a percentage of loans held for investment increased to 1.06% at period end. Excluding Paycheck Protection Program (“PPP”) loans, the allowance as a percentage of loans increased to 1.19% at period end.
  
  
• Nonperforming assets as a percentage of total assets were 0.12% at December 31, 2020, down from 0.16% at September 30, 2020 and 0.15% at December 31, 2019.
  
  
• Annualized net charge-offs were 0.05% for the fourth quarter of 2020, up from 0.02% for the corresponding quarter in the prior year and 0.01% for the third quarter of 2020.
  
  
• As a result of the Company’s participation in the Small Business Administration’s PPP under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, it had outstanding net PPP loans of $211.3 million at December 31, 2020, which compares to $266.0 million at September 30, 2020. The Company had net unamortized PPP loan origination fees with a balance of $4.4 million at December 31, 2020, which compares to $6.8 million at September 30, 2020.
  

NET INTEREST INCOME

Net interest income for the fourth quarter of 2020 was $22.1 million, an increase of $651 thousand, or 3.0%, from the prior quarter and an increase of $1.7 million, or 8.3%, from the fourth quarter of 2019. The fully taxable equivalent (“FTE”) net interest margin for the quarter was 3.22%, down from 3.26% in the prior quarter and down from 3.62% in the same period a year ago (non-GAAP). The fourth quarter of 2020 benefited from the recognition of the remaining net fees on PPP loans that were repaid during the quarter. Total PPP fees recognized in net interest income during the quarter was $2.4 million, an increase of $1.3 million as compared to the prior quarter as a result of the forgiveness of $56.4 million of PPP loans. The increase in net interest income from the same quarter in the prior year was attributable to the PPP program and core deposit growth partially offset by a significantly lower rate environment.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2020, net accretion related to acquisition accounting amounted to $1.2 million compared to $1.1 million for the same period in 2019 and $1.7 million in the prior quarter. The third quarter of 2020 included an $800,000 cash basis accretion collection from a loan charged off prior to an American National acquisition. Net accretion for the twelve months ended December 31, 2020 amounted to $3.8 million, compared to $3.4 million for the same period in 2019. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

2021	$	1,830
2022		1,146
2023		646
2024		388
2025		281
Thereafter		956

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $3.7 million as of December 31, 2020, down from $4.6 million at September 30, 2020, and up slightly from $3.6 million at December 31, 2019. NPAs as a percentage of total assets were 0.12% at December 31, 2020, compared to 0.16% at September 30, 2020 and 0.15% at December 31, 2019.

The provision for loan losses was $585 thousand for the fourth quarter of 2020, as compared to $2.6 million for the previous quarter and $462 thousand for the same period in the previous year. The fourth quarter of 2020 warranted a significantly lower provision than third quarter based on the economic outlook, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. The allowance for loan losses was $21.4 million at December 31, 2020, compared to $21.1 million at September 30, 2020 and $13.2 million at December 31, 2019. Annualized net charge-offs as a percentage of average loans outstanding was 0.05% for the fourth quarter of 2020, compared to 0.01% in the previous quarter and 0.02% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.06% at December 31, 2020, compared to 1.01% at September 30, 2020, and 0.72% at December 31, 2019. Excluding PPP loans, the allowance as a percentage of loans increased to 1.19% at December 31, 2020, compared to 1.16% at September 30, 2020 and 0.72% at December 31, 2019.

American National continues to utilize a Disaster Assistance Program for borrowers in accordance with Section 4013 of the CARES Act. At December 31, 2020, American National had interest only and payment deferrals to customers with outstanding balances amounting to $30.0 million, representing 1.5% of total loans held for investment, which compares to $135.2 million, or 6.5% of outstanding loans held for investment, at September 30, 2020. At December 31, 2020, $18.2 million of the $30.0 million in total deferrals were the result of second and third payment or interest deferrals, representing less than 1% of total loans held for investment.

NONINTEREST INCOME

Noninterest income decreased $71 thousand, or 1.7%, to $4.2 million for the quarter ended December 31, 2020 from $4.3 million in the prior quarter and increased $355 thousand, or 9.2%, from the same period in the prior year. The largest increase in the quarter was the increase in income from small business investment companies (“SBICs”) which was up $138 thousand, or 140.8%, over the previous quarter. The primary decrease in the quarter related to reduced earnings in other investments of the Company. Comparing the fourth quarter of 2020 to the fourth quarter of 2019, the increase was reflective of increased mortgage banking income, income from SBICs and reduced losses on premises and equipment. Other noninterest income for the fourth quarter of 2020 was reduced by a loss on the sale of repossessed assets of $139 thousand.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter of 2020 amounted to $14.7 million, up $519 thousand, or 3.7%, when compared to the $14.1 million for the previous quarter and down $378 thousand, or 2.5%, from $15.0 million during the same period in the previous year. The increase from the third quarter of 2020 was primarily attributable to increased pension and salary expenses resulting from voluntary early retirement package costs. The fourth quarter of 2019 included $460,000 of merger related expenses.

INCOME TAXES

The effective tax rate for the three months ended December 31, 2020 was 20.9%, compared to 20.0% for the prior quarter and 15.6% for the same period in the prior year.

BALANCE SHEET

Total assets at December 31, 2020 were $3.1 billion, an increase of $146.7 million from September 30, 2020 and $571.5 million from the same quarter one year ago. The growth over the previous quarter was attributable to core deposit growth and related growth in cash and investments. The growth over the same period a year ago is primarily due to loan and deposit growth associated with the PPP program and growth in core deposits during the period.

At December 31, 2020, loans held for investment (net of deferred fees and costs) were $2.0 billion, a decrease of $71.0 million, or 13.6%, annualized from September 30, 2020. Of this decrease, approximately $56.4 million was associated with PPP loan forgiveness. Loans held for investment increased $184.2 million, or 10.1%, from December 31, 2019. Excluding PPP loans, loans held for investment were slightly lower year over year.

Deposits amounted to $2.6 billion at December 31, 2020, with growth of $140.6 million, or 22.8%, annualized from September 30, 2020 and $550.8 million, or 26.7%, compared to the same quarter of 2019. The growth over the prior quarter and prior period of 2019 is a result of continued higher than average cash balances being maintained by customers as the uncertainty of the pandemic continues. This pattern has been prevalent through the second, third and fourth quarters of 2020 and is consistent with trends for all commercial banks.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.34% at December 31, 2020 as compared to 8.55% at September 30, 2020 and 9.57% at December 31, 2019.

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 $976 million 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

Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. American National intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. American National’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the operations and future prospects of American National include but are not limited to: (1) the impacts of the ongoing COVID-19 pandemic; (2) expected revenue synergies and cost savings from acquisitions and depositions; (3) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (4) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in American National’s market areas; (5) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (6) accounting principles, policies, and guidelines; and (7) other risk factors detailed from time to time in filings made by American National with the Securities and Exchange Commission. American National undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
		December 31
			2020				2019
Assets
Cash and due from banks		$	30,767			$	32,505
Interest-bearing deposits in other banks			343,603				47,077
Securities available for sale, at fair value			466,091				379,195
Restricted stock, at cost			8,715				8,630
Loans held for sale			15,591				2,027
Loans, net of deferred fees and costs			2,015,056				1,830,815
Less allowance for loan losses			(21,403	)			(13,152	)
Net Loans			1,993,653				1,817,663
Premises and equipment, net			39,723				39,848
Other real estate owned, net			958				1,308
Goodwill			85,048				84,002
Core deposit intangibles, net			6,091				7,728
Bank owned life insurance			28,482				27,817
Other assets			31,288				30,750
Total assets		$	3,050,010			$	2,478,550
Liabilities
Demand deposits -- noninterest-bearing		$	830,094			$	578,606
Demand deposits -- interest-bearing			501,283				328,015
Money market deposits			666,122				504,651
Savings deposits			217,405				177,505
Time deposits			396,426				471,770
Total deposits			2,611,330				2,060,547
Customer repurchase agreements			42,551				40,475
Long-term borrowings			35,630				35,546
Other liabilities			22,605				21,724
Total liabilities			2,712,116				2,158,292
Shareholders' equity
Preferred stock, $5 par value, 2,000,000 shares authorized,
none outstanding			-				-
Common stock, $1 par value, 20,000,000 shares authorized,
10,982,367 shares outstanding at December 31, 2020 and
11,071,540 shares outstanding at December 31, 2019			10,926				11,019
Capital in excess of par value			154,850				158,244
Retained earnings			169,681				151,478
Accumulated other comprehensive income (loss), net			2,437				(483	)
Total shareholders' equity			337,894				320,258
Total liabilities and shareholders' equity		$	3,050,010			$	2,478,550

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
		Three Months Ended								Twelve Months Ended
		December 31								December 31
			2020				2019				2020				2019
Interest and Dividend Income:
Interest and fees on loans		$	22,654			$	21,947			$	87,700			$	82,684
Interest and dividends on securities:
Taxable			1,536				1,991				6,764				7,682
Tax-exempt			103				117				433				777
Dividends			121				127				503				451
Other interest income			84				408				440				1,261
Total interest and dividend income			24,498				24,590				95,840				92,855
Interest Expense:
Interest on deposits			1,821				3,496				9,729				13,143
Interest on short-term borrowings			22				134				259				650
Interest on long-term borrowings			509				512				2,032				1,935
Total interest expense			2,352				4,142				12,020				15,728
Net Interest Income			22,146				20,448				83,820				77,127
Provision for loan losses			585				462				8,916				456
Net Interest Income After Provision
for Loan Losses			21,561				19,986				74,904				76,671
Noninterest Income:
Trust fees			1,025				1,021				4,044				3,847
Service charges on deposit accounts			677				765				2,557				2,866
Other fees and commissions			1,037				967				3,925				3,693
Mortgage banking income			1,042				737				3,514				2,439
Securities gains, net			-				32				814				607
Brokerage fees			192				205				745				721
Income from Small Business Investment Companies			236				37				270				211
Losses on premises and equipment, net			(13	)			(338	)			(110	)			(427	)
Other			25				440				1,084				1,213
Total noninterest income			4,221				3,866				16,843				15,170
Noninterest Expense:
Salaries and employee benefits			8,225				7,986				29,765				30,015
Occupancy and equipment			1,470				1,454				5,586				5,417
FDIC assessment			206				-				639				119
Bank franchise tax			425				531				1,702				1,644
Core deposit intangible amortization			391				437				1,637				1,398
Data processing			764				729				3,017				2,567
Software			342				363				1,454				1,295
Other real estate owned, net			26				15				60				31
Merger related expenses			-				460				-				11,782
Other			2,810				3,062				10,705				11,806
Total noninterest expense			14,659				15,037				54,565				66,074
Income Before Income Taxes			11,123				8,815				37,182				25,767
Income Taxes			2,329				1,374				7,137				4,861
Net Income		$	8,794			$	7,441			$	30,045			$	20,906
Net Income Per Common Share:
Basic		$	0.80			$	0.67			$	2.74			$	1.99
Diluted		$	0.80			$	0.67			$	2.73			$	1.98
Weighted Average Common Shares Outstanding:
Basic			10,975,349				11,094,346				10,981,623				10,531,572
Diluted			10,978,931				11,103,905				10,985,790				10,541,337

American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2020				2020				2019				2020				2019
EARNINGS
Interest income				$	24,498			$	24,179			$	24,590			$	95,840			$	92,855
Interest expense					2,352				2,684				4,142				12,020				15,728
Net interest income					22,146				21,495				20,448				83,820				77,127
Provision for loan losses					585				2,619				462				8,916				456
Noninterest income					4,221				4,292				3,866				16,843				15,170
Noninterest expense					14,659				14,140				15,037				54,565				66,074
Income taxes					2,329				1,801				1,374				7,137				4,861
Net income					8,794				7,227				7,441				30,045				20,906
PER COMMON SHARE
Net income per share - basic				$	0.80			$	0.66			$	0.67			$	2.74			$	1.99
Net income per share - diluted					0.80				0.66				0.67				2.73				1.98
Cash dividends paid					0.27				0.27				0.27				1.08				1.04
Book value per share					30.77				30.26				28.93				30.77				28.93
Book value per share - tangible (a)					22.47				21.92				20.64				22.47				20.64
Closing market price					26.21				20.92				39.57				26.21				39.57
FINANCIAL RATIOS
Return on average assets					1.18		%		1.01		%		1.20		%		1.08		%		0.91		%
Return on average equity					10.48				8.76				9.31				9.12				7.16
Return on average tangible equity (a)					14.90				12.66				13.71				13.19				10.43
Average equity to average assets					11.30				11.50				12.88				11.88				12.68
Tangible equity to tangible assets (a)					8.34				8.55				9.57				8.34				9.57
Net interest margin, taxable equivalent					3.22				3.26				3.62				3.30				3.68
Efficiency ratio (a)					53.92				53.00				57.24				52.80				57.25
Effective tax rate					20.94				19.95				15.59				19.19				18.87
PERIOD-END BALANCES
Securities				$	474,806			$	367,200			$	387,825			$	474,806			$	387,825
Loans held for sale					15,591				6,789				2,027				15,591				2,027
Loans, net					2,015,056				2,086,094				1,830,815				2,015,056				1,830,815
Goodwill and other intangibles					91,139				91,530				91,730				91,139				91,730
Assets					3,050,010				2,903,304				2,478,550				3,050,010				2,478,550
Assets - tangible (a)					2,958,871				2,811,774				2,386,820				2,958,871				2,386,820
Deposits					2,611,330				2,470,700				2,060,547				2,611,330				2,060,547
Customer repurchase agreements					42,551				41,906				40,475				42,551				40,475
Long-term borrowings					35,630				35,609				35,546				35,630				35,546
Shareholders' equity					337,894				331,981				320,258				337,894				320,258
Shareholders' equity - tangible (a)					246,755				240,451				228,528				246,755				228,528
AVERAGE BALANCES
Securities (b)				$	372,529			$	333,778			$	347,502			$	347,952			$	342,219
Loans held for sale					8,601				9,943				4,991				6,578				3,419
Loans, net					2,063,397				2,092,412				1,810,744				2,008,683				1,700,880
Interest-earning assets					2,754,455				2,648,990				2,264,687				2,551,913				2,107,169
Goodwill and other intangibles					91,358				91,749				92,607				91,751				81,049
Assets					2,971,505				2,870,213				2,482,502				2,773,007				2,303,624
Assets - tangible (a)					2,880,147				2,778,464				2,389,895				2,681,256				2,222,575
Interest-bearing deposits					1,701,395				1,619,960				1,466,116				1,595,694				1,377,422
Deposits					2,536,363				2,434,645				2,066,435				2,342,353				1,915,197
Customer repurchase agreements					40,819				45,689				38,742				42,937				39,134
Other short-term borrowings					-				-				-				1				2,694
Long-term borrowings					35,617				35,597				35,537				35,586				33,644
Shareholders' equity					335,671				330,038				319,851				329,353				292,022
Shareholders' equity - tangible (a)					244,313				238,289				227,244				237,602				210,973
American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2020				2020				2019				2020				2019
CAPITAL
Weighted average shares outstanding - basic					10,975,349				10,966,645				11,094,346				10,981,623				10,531,572
Weighted average shares outstanding - diluted					10,978,931				10,969,901				11,103,905				10,985,790				10,541,337
ALLOWANCE FOR LOAN LOSSES
Beginning balance				$	21,088			$	18,507			$	12,758			$	13,152			$	12,805
Provision for loan losses					585				2,619				462				8,916				456
Charge-offs					(331	)			(126	)			(144	)			(1,006	)			(333	)
Recoveries					61				88				76				341				224
Ending balance				$	21,403			$	21,088			$	13,152			$	21,403			$	13,152
LOANS
Construction and land development				$	140,071			$	151,613			$	137,920			$	140,071			$	137,920
Commercial real estate - owner occupied					373,680				382,121				360,991				373,680				360,991
Commercial real estate - non-owner occupied					627,569				608,954				538,208				627,569				538,208
Residential real estate					269,137				279,815				324,315				269,137				324,315
Home equity					104,881				111,448				119,423				104,881				119,423
Commercial and industrial					491,256				543,746				339,077				491,256				339,077
Consumer					8,462				8,397				10,881				8,462				10,881
Total				$	2,015,056			$	2,086,094			$	1,830,815			$	2,015,056			$	1,830,815
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing				$	262			$	285			$	361			$	262			$	361
Nonaccrual					2,434				3,088				1,944				2,434				1,944
Other real estate owned and repossessions					958				1,210				1,308				958				1,308
Nonperforming assets				$	3,654			$	4,583			$	3,613			$	3,654			$	3,613
ASSET QUALITY RATIOS
Allowance for loan losses to total loans					1.06		%		1.01		%		0.72		%		1.06		%		0.72		%
Allowance for loan losses to
nonperforming loans					793.88				625.20				570.59				793.88				570.59
Nonperforming assets to total assets					0.12				0.16				0.15				0.12				0.15
Nonperforming loans to total loans					0.13				0.16				0.13				0.13				0.13
Annualized net charge-offs
to average loans					0.05				0.01				0.02				0.03				0.01
OTHER DATA
Fiduciary assets at period-end (c) (d)				$	614,016			$	569,095			$	560,776			$	614,016			$	560,776
Retail brokerage assets at period-end (c) (d)				$	362,022			$	314,809			$	317,262			$	362,022			$	317,262
Number full-time equivalent employees (e)					342				341				355				342				355
Number of full service offices					26				25				26				26				26
Number of loan production offices					1				1				1				1				1
Number of ATMs					37				37				38				37				38
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.

			Net Interest Income Analysis
			For the Three Months Ended December 31, 2020 and 2019
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2020			2019			2020			2019		2020		2019
Loans:
	Commercial			$	507,750		$	315,902		$	5,354		$	3,516		4.19	%	4.42	%
	Real estate				1,556,192			1,488,577			17,206			18,268		4.42		4.91
	Consumer				8,056			11,256			137			209		6.77		7.37
		Total loans (b)			2,071,998			1,815,735			22,697			21,993		4.38		4.84
Securities:
	U.S. Treasury				14,126			-			4			-		0.11		-
	Federal agencies & GSEs				76,606			123,950			276			716		1.44		2.31
	Mortgage-backed & CMOs				206,817			164,727			916			996		1.77		2.42
	State and municipal				53,257			41,109			304			303		2.28		2.95
	Other				21,723			17,716			286			250		5.27		5.64
		Total securities			372,529			347,502			1,786			2,265		1.92		2.61
Deposits in other banks					309,928			101,450			84			408		0.11		1.60
	Total interest-earning assets				2,754,455			2,264,687			24,567			24,666		3.56		4.35
Non-earning assets					217,050			217,815
		Total assets		$	2,971,505		$	2,482,502
Deposits:
	Demand			$	433,356		$	329,759			50			126		0.05		0.15
	Money market				647,320			482,671			380			1,283		0.23		1.05
	Savings				215,233			176,686			16			83		0.03		0.19
	Time				405,486			477,000			1,375			2,004		1.35		1.67
		Total deposits			1,701,395			1,466,116			1,821			3,496		0.43		0.95
Customer repurchase agreements					40,819			38,742			22			134		0.21		1.37
Long-term borrowings					35,617			35,537			509			512		5.72		5.76
	Total interest-bearing
		liabilities			1,777,831			1,540,395			2,352			4,142		0.53		1.07
Noninterest bearing demand deposits					834,968			600,319
Other liabilities					23,035			21,937
Shareholders' equity					335,671			319,851
		Total liabilities and
			shareholders' equity	$	2,971,505		$	2,482,502
Interest rate spread																3.03	%	3.28	%
Net interest margin																3.22	%	3.62	%
Net interest income (taxable equivalent basis)											22,215			20,524
Less: Taxable equivalent adjustment (c)											69			76
Net interest income										$	22,146		$	20,448
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 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.

			Net Interest Income Analysis
			For the Years Ended December 31, 2020 and 2019
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2020			2019			2020			2019		2020		2019
Loans:
	Commercial			$	475,068		$	306,065		$	17,768		$	14,125		3.74	%	4.62	%
	Real estate				1,531,195			1,388,188			69,525			68,050		4.54		4.90
	Consumer				8,998			10,046			588			694		6.53		6.91
		Total loans (b)			2,015,261			1,704,299			87,881			82,869		4.36		4.86
Securities:
	U.S. Treasury				9,010			-			51			-		0.57		-
	Federal agencies & GSEs				72,112			132,916			1,423			3,191		1.97		2.40
	Mortgage-backed & CMOs				200,612			134,458			4,060			3,350		2.02		2.49
	State and municipal				45,836			58,293			1,175			1,650		2.56		2.83
	Other				20,382			16,552			1,098			903		5.39		5.46
		Total securities			347,952			342,219			7,807			9,094		2.24		2.66
Deposits in other banks					188,700			60,651			440			1,261		0.23		2.08
	Total interest-earning assets				2,551,913			2,107,169			96,128			93,224		3.77		4.42
Non-earning assets					221,094			196,455
		Total assets		$	2,773,007		$	2,303,624
Deposits:
	Demand			$	386,790		$	307,329			344			370		0.09		0.12
	Money market				574,510			445,505			2,634			5,246		0.46		1.18
	Savings				198,313			166,842			117			284		0.06		0.17
	Time				436,081			457,746			6,634			7,243		1.52		1.58
		Total deposits			1,595,694			1,377,422			9,729			13,143		0.61		0.95
Customer repurchase agreements					42,937			39,134			259			596		0.60		1.52
Other short-term borrowings					1			2,694			-			54		0.55		2.00
Long-term borrowings					35,586			33,644			2,032			1,935		5.71		5.75
	Total interest-bearing
		liabilities			1,674,218			1,452,894			12,020			15,728		0.72		1.08
Noninterest bearing demand deposits					746,659			537,775
Other liabilities					22,777			20,933
Shareholders' equity					329,353			292,022
		Total liabilities and
			shareholders' equity	$	2,773,007		$	2,303,624
Interest rate spread																3.05	%	3.34	%
Net interest margin																3.30	%	3.68	%
Net interest income (taxable equivalent basis)											84,108			77,496
Less: Taxable equivalent adjustment (c)											288			369
Net interest income										$	83,820		$	77,127
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 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 Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2020				2020				2019				2020				2019
EFFICIENCY RATIO
Noninterest expense				$	14,659			$	14,140			$	15,037			$	54,565			$	66,074
Add/subtract: gain/loss on sale of OREO					(8	)			(23	)			(3	)			4				52
Subtract: core deposit intangible amortization					(391	)			(402	)			(437	)			(1,637	)			(1,398	)
Subtract: merger related expenses					-				-				(460	)			-				(11,782	)
				$	14,260			$	13,715			$	14,137			$	52,932			$	52,946
Net interest income				$	22,146			$	21,495			$	20,448			$	83,820			$	77,127
Tax equivalent adjustment					69				75				76				288				369
Noninterest income					4,221				4,292				3,866				16,843				15,170
Subtract: gain on securities					-				-				(32	)			(814	)			(607	)
Add: loss on fixed assets					13				15				338				110				427
				$	26,449			$	25,877			$	24,696			$	100,247			$	92,486
Efficiency ratio					53.92		%		53.00		%		57.24		%		52.80		%		57.25		%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans				$	22,697			$	22,394			$	21,993			$	87,881			$	82,869
Interest income - investments and other					1,870				1,860				2,673				8,247				10,355
Interest expense - deposits					(1,821	)			(2,118	)			(3,496	)			(9,729	)			(13,143	)
Interest expense - customer repurchase
agreements					(22	)			(42	)			(134	)			(259	)			(596	)
Interest expense - other short-term borrowings					-				-				-				-				(54	)
Interest expense - long-term borrowings					(509	)			(524	)			(512	)			(2,032	)			(1,935	)
Total net interest income				$	22,215			$	21,570			$	20,524			$	84,108			$	77,496
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans					(43	)			(48	)			(46	)			(181	)			(185	)
Tax benefit on nontaxable interest - securities					(26	)			(27	)			(30	)			(107	)			(184	)
GAAP measures				$	22,146			$	21,495			$	20,448			$	83,820			$	77,127
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)					10.48		%		8.76		%		9.31		%		9.12		%		7.16		%
Impact of excluding average goodwill
and other intangibles					4.42				3.90				4.40				4.07				3.27
Return on average tangible equity
(non-GAAP)					14.90		%		12.66		%		13.71		%		13.19		%		10.43		%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)					11.08		%		11.43		%		12.92		%		11.08		%		12.92		%
Impact of excluding goodwill and
other intangibles					(2.74	)			(2.88	)			(3.35	)			(2.74	)			(3.35	)
Tangible equity to tangible assets ratio
(non-GAAP)					8.34		%		8.55		%		9.57		%		8.34		%		9.57		%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)				$	30.77			$	30.26			$	28.93			$	30.77			$	28.93
Impact of excluding goodwill and
other intangibles					(8.30	)			(8.34	)			(8.29	)			(8.30	)			(8.29	)
Tangible book value per share
(non-GAAP)				$	22.47			$	21.92			$	20.64			$	22.47			$	20.64
ADJUSTED LOAN LOSS ALLOWANCE
Allowance for loan losses				$	21,403			$	21,088			$	13,152			$	21,403			$	13,152
Credit discount on purchased loans					7,255				7,896				12,214				7,255				12,214
Adjusted loan loss allowance				$	28,658			$	28,984			$	25,366			$	28,658			$	25,366
Total loans, net				$	2,015,056			$	2,086,094			$	1,830,815			$	2,015,056			$	1,830,815
Subtract: PPP loans, net					(211,275	)			(265,941	)			-				(211,275	)			-
Total loans less PPP loans, net				$	1,803,781			$	1,820,153			$	1,830,815			$	1,803,781			$	1,830,815
Adjusted loan loss allowance to
total loans less PPP loans, net					1.59		%		1.59		%		1.39		%		1.59		%		1.39		%

Contact:

Jeffrey W. Farrar
Executive Vice President, COO & CFO
(434)773-2274
farrarj@amnb.com 

FAQ

What were American National Bankshares Inc.'s earnings for Q4 2020?

American National Bankshares Inc. reported earnings of $8.8 million, or $0.80 per diluted share for Q4 2020.

How much did American National Bankshares earn in 2020?

The company earned $30.0 million in 2020, representing a 43.7% increase from 2019.

What is the net interest margin for American National Bankshares?

For the fourth quarter of 2020, the net interest margin was 3.22%, down from 3.62% in the same quarter of the prior year.

How did average deposits change at American National Bankshares in Q4 2020?

Average deposits grew by 4.2% during Q4 2020 and by 22.7% compared to the same quarter in 2019.