American National Bankshares Reports Third Quarter Earnings

Rhea-AI Summary

American National Bankshares (NASDAQ: AMNB) reported third quarter 2022 earnings of $9.3 million, or $0.87 per diluted share, a decrease from $10.2 million, or $0.94 per share, in Q3 2021. Earnings for the nine months ending September 30, 2022, totaled $26.4 million, down from $32.2 million in 2021. Net interest income rose 11.7% quarter-over-quarter, driven by loan growth, achieving a margin of 3.20%. However, noninterest revenue fell 1.6% sequentially, and expenses increased 6.4%. The asset quality remains strong, with nonperforming assets at 0.05% of total assets.

Positive

• Net interest income rose 11.7% quarter-over-quarter to $24.0 million.
• Return on average tangible common equity increased to 15.74% from 13.87% in the previous quarter.
• Loan portfolio grew by $57.2 million, or 11.4% annualized, in Q3 2022.

Negative

• Earnings decreased year-over-year from $10.2 million to $9.3 million.
• Noninterest revenue fell by $363 thousand, or 7.1%, compared to the same quarter in 2021.
• Noninterest expense increased by $993 thousand, or 6.4%, from the previous quarter.

DANVILLE, Va., Oct. 20, 2022 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported third quarter 2022 earnings of $9.3 million, or $0.87 per diluted common share. Those results compare to earnings of $10.2 million, or $0.94 per diluted common share, during the same quarter in the prior year, and earnings of $8.1 million, or $0.76 per diluted common share, for the second quarter of 2022. Earnings for the nine months ended September 30, 2022 were $26.4 million, or $2.47 per diluted common share, compared to $32.2 million, or $2.95 diluted common share, for the same period of 2021.

President and Chief Executive Officer, Jeffrey V. Haley, commented, “American National delivered another solid quarter of earnings performance with meaningful growth in top-line revenue and margins. Our continued growth in our loan portfolio and improved asset mix coupled with the continued rising rate environment drove double-digit growth in net interest income. Asset quality remains strong, and our local business markets continue to be healthy in spite of the geopolitical headwinds and some signs of a slowing economy nationally.”

Third quarter 2022 highlights include:

• Earnings produced a return on average tangible common equity of 15.74% for the third quarter of 2022, compared to 13.87% in the previous quarter and 16.01% for the same quarter in the prior year (non-GAAP).
  
  
• Net interest income increased $2.5 million, or 11.7%, when compared to the previous quarter, and increased $914 thousand, or 4.0%, when compared to the same quarter in 2021.
  
  
• Fully taxable equivalent (“FTE”) net interest margin was 3.20% for the quarter, up from 2.76% in the second quarter of 2022 and up from 3.09% in the same quarter of the prior year (non-GAAP).
  
  
• Noninterest revenues decreased $77 thousand, or 1.6%, when compared to the previous quarter, and decreased $363 thousand, or 7.1%, compared to the same quarter in the prior year.
  
  
• Noninterest expense increased $993 thousand, or 6.4%, when compared to the previous quarter, and increased $1.6 million, or 10.8%, when compared to the same quarter in the prior year.
  
  
• Average loans held for investment, excluding U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans, grew $57.2 million, or 11.4% annualized, during the third quarter as compared to the previous quarter of $44.5 million, or 9.1% annualized.
  
  
• The Company recognized a provision for loan losses in the third quarter of 2022 of $615 thousand compared to $581 thousand in the second quarter of 2022 and $482 thousand in the third quarter of 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third quarter of 2022 compared to 0.01% in the previous quarter and (0.01%) in the same quarter of 2021.
  
  
• Nonperforming assets as a percentage of total assets were 0.05% at September 30, 2022 and June 30, 2022, down from 0.06% at September 30, 2021.
  

NET INTEREST INCOME

Net interest income for the third quarter of 2022 increased by $2.5 million, or 11.7%, to $24.0 million compared to $21.5 million for the second quarter of 2022. The third quarter of 2022 compared to the same quarter of 2021 reflected an increase of $914 thousand, or 4.0%. The FTE net interest margin for the quarter was 3.20%, up from 2.76% in the prior quarter and 3.09% in the same quarter a year ago (non-GAAP). The margin expansion relative to the previous quarter was primarily due to a 45-basis point increase in yield on average earning assets. The higher yield resulted from a shift in the earning assets mix caused by excess deposits in other banks being deployed into the loan portfolio as well as increased yields on loans, securities, and deposits in other banks due to the rise in interest rates. The increase in margin from third quarter 2021 was also attributable to the higher rate environment and asset mix changes partially offset by substantially more PPP related income in 2021.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2022, net accretion related to acquisition accounting amounted to $454 thousand compared to $336 thousand in the prior quarter and $1.3 million for the same quarter in 2021. The third quarter of 2021 reflected additional accretion income from the early payoff of acquired loans. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

For the years ending December 31, (estimated):
2022	$	208
2023		745
2024		454
2025		320
2026		215
Thereafter		274

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $1.4 million as of September 30, 2022, down from $1.6 million at June 30, 2022, and down substantially from $2.1 million at September 30, 2021. NPAs as a percentage of total assets were 0.05% at September 30, 2022 and June 30, 2022, and 0.06% at September 30, 2021. The Company recorded a provision for loan losses for the third quarter of 2022 of $615 thousand compared to $581 thousand in the previous quarter and $482 thousand in the third quarter of the previous year. The provision expense for the third and second quarters of 2022 was a function of continued loan growth during the periods. The provision expense in the third quarter of 2021 was the net of the provision for loan growth offset by positive adjustments in qualitative factors for improved economic conditions.

The allowance for loan losses was $19.2 million at September 30, 2022, compared to $18.5 million at June 30, 2022 and $20.6 million at September 30, 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the third quarter of 2022 and the third quarter of 2021, compared to 0.01% in the second quarter of 2022. The allowance as a percentage of loans held for investment was 0.91% at September 30, 2022 and June 30, 2022, compared to 1.06% at September 30, 2021. Excluding PPP loans, the allowance as a percentage of loans was 0.91% at September 30, 2022 and June 30, 2022, compared to 1.08% at September 30, 2021.

NONINTEREST INCOME

Noninterest income decreased $77 thousand, or 1.6%, to $4.8 million for the quarter ended September 30, 2022 from the prior quarter and $363 thousand, or 7.1%, from $5.1 million in the same quarter in the prior year. The largest decrease in the third quarter of 2022 compared to the second quarter was income from small business investment companies. This income is generated by distributions based on ownership percentages and is highly unpredictable. The decrease for the third quarter of 2022 as compared to same quarter in the prior year is primarily attributable to mortgage revenue contraction associated with higher mortgage rates, with mortgage banking income decreasing by $601 thousand, or 60.8%, compared to the same quarter of 2021.

NONINTEREST EXPENSE

Noninterest expense for the third quarter of 2022 amounted to $16.4 million, up $993 thousand, or 6.4%, when compared to $15.5 million for the previous quarter and up $1.6 million, or 10.8%, from $14.8 million during the same quarter in the previous year. The increase in the third quarter compared to the second quarter of 2022 and the same quarter of 2021 was primarily the result of compensation associated with a lower staffing vacancy rate, and increased incentive accruals.

INCOME TAXES

The effective tax rate for the three months ended September 30, 2022 was 20.92%, compared to 20.90% for the prior quarter and 21.05% for the same quarter in the prior year. The effective tax rate fluctuations are attributable to changes in pre-tax earnings and the levels of permanent tax differences.

BALANCE SHEET

Total assets at September 30, 2022 were $3.0 billion, a decrease of $184.4 million from June 30, 2022 and a decrease of $239.7 million from September 30, 2021. The decrease from the previous quarter is due to lower interest-bearing deposits in other banks resulting from a decrease in deposits, partially offset by an increase in loans, net during the period.

At September 30, 2022, loans held for investment (net of deferred fees and costs) were $2.1 billion, an increase of $88.6 million, or 17.5% annualized, from June 30, 2022. Loans held for investment, excluding PPP loans, increased $216.2 million, or 11.4%, from September 30, 2021.

Investment securities available for sale amounted to $641.9 million at September 30, 2022, a decrease of $26.9 million, or 4.0%, compared to June 30, 2022, and a decrease of $2.1 million, or less than 1% compared to September 30, 2021.

Deposits amounted to $2.7 billion at September 30, 2022, a decrease of $139.5 million, or 19.7% annualized, from June 30, 2022 and a decrease of $171.2 million, or 6.0%, compared to September 30, 2021. Noninterest- bearing deposits increased $63.9 million, or 6.5%, compared to September 30, 2021.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 7.59% at September 30, 2022 compared to 7.58% at June 30, 2022 and compared to 8.14% at September 30, 2021 (non-GAAP). The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.80%, 12.98%, 13.80% and 9.92%, respectively, at September 30, 2022.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.0 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 $1.1 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

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 and the associated efforts to limit the spread of the virus; (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 adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future quarters, and the failure of assumptions underlying the allowance for loan losses; (6) cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (7) accounting principles, policies, and guidelines; and (8) 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.

Contact:

Jeffrey W. Farrar 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
			2022				2021
Assets
Cash and due from banks		$	35,437			$	38,349
Interest-bearing deposits in other banks			59,541				480,052
Securities available for sale, at fair value			641,884				643,949
Restricted stock, at cost			8,383				8,046
Loans held for sale			2,852				9,518
Loans, net of deferred fees and costs			2,119,415				1,940,332
Less allowance for loan losses			(19,189	)			(20,630	)
Net Loans			2,100,226				1,919,702
Premises and equipment, net			34,686				37,021
Other real estate owned, net			143				213
Goodwill			85,048				85,048
Core deposit intangibles, net			3,667				4,978
Bank owned life insurance			29,480				28,950
Other assets			47,973				33,237
Total assets		$	3,049,320			$	3,289,063
Liabilities
Demand deposits -- noninterest-bearing		$	1,044,803			$	980,985
Demand deposits -- interest-bearing			509,017				524,328
Money market deposits			612,600				733,515
Savings deposits			282,093				254,456
Time deposits			242,357				368,797
Total deposits			2,690,870				2,862,081
Customer repurchase agreements			625				26,595
Long-term borrowings			28,308				28,207
Other liabilities			16,127				21,793
Total liabilities			2,735,930				2,938,676
Shareholders' equity
Preferred stock, $5 par value, 2,000,000 shares authorized, none outstanding			-				-
Common stock, $1 par value, 20,000,000 shares authorized, 10,608,750 shares outstanding at September 30, 2022 and 10,778,562 shares outstanding at September 30, 2021			10,533				10,715
Capital in excess of par value			141,694				148,069
Retained earnings			218,814				193,107
Accumulated other comprehensive loss, net			(57,651	)			(1,504	)
Total shareholders' equity			313,390				350,387
Total liabilities and shareholders' equity		$	3,049,320			$	3,289,063

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
		9/30/22				6/30/22				9/30/21				9/30/22				9/30/21
Interest and Dividend Income:
Interest and fees on loans		$	21,160			$	19,076			$	21,974			$	59,024			$	65,334
Interest and dividends on securities:
Taxable			2,664				2,441				1,896				7,344				5,297
Tax-exempt			110				97				94				297				293
Dividends			118				116				112				347				349
Other interest income			1,099				800				201				2,076				375
Total interest and dividend income			25,151				22,530				24,277				69,088				71,648
Interest Expense:
Interest on deposits			741				646				781				1,956				2,990
Interest on short-term borrowings			11				9				3				26				19
Interest on long-term borrowings			392				385				400				1,156				1,352
Total interest expense			1,144				1,040				1,184				3,138				4,361
Net Interest Income			24,007				21,490				23,093				65,950				67,287
Provision for (recovery of) loan losses			615				581				482				438				(870	)
Net Interest Income After Provision for (recovery of) Loan Losses			23,392				20,909				22,611				65,512				68,157
Noninterest Income:
Trust and brokerage fees			1,603				1,587				1,576				4,999				3,757
Service charges on deposit accounts			681				709				664				2,079				1,916
Interchange fees			1,013				996				958				2,990				3,025
Other fees and commissions			233				200				189				699				619
Mortgage banking income			388				429				989				1,490				3,449
Securities gains, net			-				-				-				-				733
Income from Small Business Investment Companies			501				678				491				1,672				1,510
Income from insurance investments			100				97				132				644				1,062
Losses on premises and equipment, net			(2	)			(84	)			(107	)			(82	)			(588	)
Other			243				225				231				706				704
Total noninterest income			4,760				4,837				5,123				15,197				16,187
Noninterest Expense:
Salaries and employee benefits			9,618				8,720				8,185				26,936				23,881
Occupancy and equipment			1,514				1,520				1,513				4,576				4,548
FDIC assessment			227				228				194				694				644
Bank franchise tax			488				488				440				1,452				1,321
Core deposit intangible amortization			310				320				361				960				1,113
Data processing			818				781				748				2,446				2,224
Software			362				363				344				1,088				1,011
Other real estate owned, net			3				2				21				4				148
Other			3,108				3,033				3,037				9,096				8,655
Total noninterest expense			16,448				15,455				14,843				47,252				43,545
Income Before Income Taxes			11,704				10,291				12,891				33,457				40,799
Income Taxes			2,448				2,151				2,713				7,062				8,566
Net Income		$	9,256			$	8,140			$	10,178			$	26,395			$	32,233
Net Income Per Common Share:
Basic		$	0.87			$	0.76			$	0.94			$	2.47			$	2.96
Diluted		$	0.87			$	0.76			$	0.94			$	2.47			$	2.95
Weighted Average Common Shares Outstanding:
Basic			10,640,952				10,688,294				10,833,875				10,694,096				10,907,721
Diluted			10,643,073				10,690,496				10,836,293				10,696,409				10,911,372

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,
		2022				2022				2021				2022				2021
EARNINGS
Interest income	$	25,151			$	22,530			$	24,277			$	69,088			$	71,648
Interest expense		1,144				1,040				1,184				3,138				4,361
Net interest income		24,007				21,490				23,093				65,950				67,287
Provision for (recovery of) loan losses		615				581				482				438				(870	)
Noninterest income		4,760				4,837				5,123				15,197				16,187
Noninterest expense		16,448				15,455				14,843				47,252				43,545
Income taxes		2,448				2,151				2,713				7,062				8,566
Net income		9,256				8,140				10,178				26,395				32,233
PER COMMON SHARE
Net income per share - basic	$	0.87			$	0.76			$	0.94			$	2.47			$	2.96
Net income per share - diluted		0.87				0.76				0.94				2.47				2.95
Cash dividends paid		0.28				0.28				0.27				0.84				0.81
Book value per share		29.54				30.71				32.51				29.54				32.51
Book value per share - tangible (a)		21.18				22.36				24.16				21.18				24.16
Closing market price		31.95				34.61				33.04				31.95				33.04
FINANCIAL RATIOS
Return on average assets		1.17	%			0.99	%			1.27	%			1.08	%			1.38	%
Return on average common equity		11.21				9.83				11.58				10.42				12.40
Return on average tangible common equity (a)		15.74				13.87				16.01				14.57				17.24
Average common equity to average assets		10.42				10.06				10.99				10.35				11.13
Tangible common equity to tangible assets (a)		7.59				7.58				8.14				7.59				8.14
Net interest margin, taxable equivalent		3.20				2.76				3.09				2.86				3.10
Efficiency ratio (a)		55.98				57.18				51.02				56.87				50.24
Effective tax rate		20.92				20.90				21.05				21.11				21.00
PERIOD-END BALANCES
Securities	$	650,267			$	677,260			$	651,995			$	650,267			$	651,995
Loans held for sale		2,852				5,227				9,518				2,852				9,518
Loans, net		2,119,415				2,030,818				1,940,332				2,119,415				1,940,332
Goodwill and other intangibles		88,715				89,025				90,026				88,715				90,026
Assets		3,049,320				3,233,728				3,289,063				3,049,320				3,289,063
Assets - tangible (a)		2,960,605				3,144,703				3,199,037				2,960,605				3,199,037
Deposits		2,690,870				2,830,347				2,862,081				2,690,870				2,862,081
Customer repurchase agreements		625				32,038				26,595				625				26,595
Long-term borrowings		28,308				28,283				28,207				28,308				28,207
Shareholders' equity		313,390				327,431				350,387				313,390				350,387
Shareholders' equity - tangible (a)		224,675				238,406				260,361				224,675				260,361
AVERAGE BALANCES
Securities (b)	$	728,535			$	726,472			$	569,508			$	722,025			$	514,156
Loans held for sale		3,915				3,759				15,883				3,998				12,313
Loans, net		2,064,088				2,006,970				1,907,398				2,012,905				1,956,452
Interest-earning assets		3,005,292				3,120,925				2,989,661				3,083,815				2,905,032
Goodwill and other intangibles		88,886				89,200				90,257				89,202				90,600
Assets		3,170,328				3,292,913				3,199,514				3,260,636				3,115,683
Assets - tangible (a)		3,081,442				3,203,713				3,109,257				3,171,434				3,025,083
Interest-bearing deposits		1,723,931				1,849,664				1,817,595				1,817,581				1,773,354
Deposits		2,775,516				2,881,318				2,768,268				2,845,523				2,676,650
Customer repurchase agreements		18,719				35,766				29,681				31,858				36,954
Long-term borrowings		28,293				28,268				28,192				28,268				33,111
Shareholders' equity		330,318				331,276				351,646				337,633				346,730
Shareholders' equity - tangible (a)		241,432				242,076				261,389				248,431				256,130
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,
		2022				2022				2021				2022				2021
CAPITAL
Weighted average shares outstanding - basic		10,640,952				10,688,294				10,833,875				10,694,096				10,907,721
Weighted average shares outstanding - diluted		10,643,073				10,690,496				10,836,293				10,696,409				10,911,372
COMMON STOCK REPURCHASE PROGRAM
Weighted average shares outstanding - basic		60,104				54,676				100,764				203,709				247,999
Weighted average shares outstanding - diluted	$	34.26			$	35.32			$	32.87			$	36.26			$	32.84
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	18,505			$	17,988			$	20,097			$	18,678			$	21,403
Provision for (recovery for) loan losses		615				581				482				438				(870	)
Charge-offs		(31	)			(117	)			(19	)			(185	)			(70	)
Recoveries		100				53				70				258				167
Ending balance	$	19,189			$	18,505			$	20,630			$	19,189			$	20,630
LOANS
Construction and land development	$	210,500			$	174,361			$	120,193			$	210,500			$	120,193
Commercial real estate - owner occupied		423,678				403,478				404,029				423,678				404,029
Commercial real estate - non-owner occupied		764,963				749,174				713,339				764,963				713,339
Residential real estate		324,468				310,110				280,351				324,468				280,351
Home equity		93,659				95,352				95,317				93,659				95,317
Commercial and industrial		295,541				291,445				320,278				295,541				320,278
Consumer		6,606				6,898				6,825				6,606				6,825
Total	$	2,119,415			$	2,030,818			$	1,940,332			$	2,119,415			$	1,940,332
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	18			$	90			$	-			$	18			$	-
Nonaccrual		1,171				1,385				1,903				1,171				1,903
Other real estate owned and repossessions		196				143				213				196				213
Nonperforming assets	$	1,385			$	1,618			$	2,116			$	1,385			$	2,116
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		0.91	%			0.91	%			1.06	%			0.91	%			1.06	%
Allowance for loan losses to nonperforming loans		1,613.88				1,254.58				1,084.08				1,613.88				1,084.08
Nonperforming assets to total assets		0.05				0.05				0.06				0.05				0.06
Nonperforming loans to total loans		0.06				0.07				0.10				0.06				0.10
Annualized net (recoveries) charge-offs to average loans to average loans		(0.01	)			0.01				(0.01	)			0.00				(0.01	)
OTHER DATA
Fiduciary assets at period-end (c) (d)	$	693,153			$	709,264			$	697,546			$	693,153			$	697,546
Retail brokerage assets at period-end (c) (d)	$	376,891			$	370,493			$	406,408			$	376,891			$	406,408
Number full-time equivalent employees (e)		363				345				345				363				345
Number of full service offices		26				26				26				26				26
Number of loan production offices		1				1				1				1				1
Number of ATMs		34				36				36				34				36
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, 2022 and 2021
(Dollars in thousands)
Unaudited
									Interest
	Average Balance								Income/Expense (a)								Yield/Rate
		2022				2021				2022				2021			2022			2021
Loans:
Commercial	$	287,785			$	325,692			$	2,877			$	5,185			3.97	%		6.32	%
Real estate		1,773,694				1,590,858				18,207				16,702			4.11			4.20
Consumer		6,524				6,731				107				125			6.51			7.37
Total loans (b)		2,068,003				1,923,281				21,191				22,012			4.09			4.57
Securities:
U.S. Treasury		152,158				53,347				350				139			0.92			1.04
Federal agencies & GSEs		111,804				90,876				369				265			1.32			1.17
Mortgage-backed & CMOs		354,296				335,940				1,435				1,091			1.62			1.30
State and municipal		70,528				62,883				365				320			2.07			2.04
Other		39,749				26,462				401				311			4.04			4.70
Total securities		728,535				569,508				2,920				2,126			1.60			1.49
Deposits in other banks		208,754				496,872				1,099				201			2.09			0.16
Total interest-earning assets		3,005,292				2,989,661				25,210				24,339			3.35			3.25
Non-earning assets		165,036				209,853
Total assets	$	3,170,328			$	3,199,514
Deposits:
Demand	$	522,021			$	481,032				34				38			0.03			0.03
Money market		668,970				713,846				348				166			0.21			0.09
Savings		281,369				247,536				20				6			0.03			0.01
Time		251,571				375,181				339				571			0.53			0.60
Total deposits		1,723,931				1,817,595				741				781			0.17			0.17
Customer repurchase agreements		18,719				29,681				11				3			0.23			0.04
Long-term borrowings		28,293				28,192				392				400			5.54			5.68
Total interest-bearing liabilities		1,770,943				1,875,468				1,144				1,184			0.26			0.25
Noninterest bearing demand deposits		1,051,585				950,673
Other liabilities		17,482				21,727
Shareholders' equity		330,318				351,646
Total liabilities and shareholders' equity	$	3,170,328			$	3,199,514
Interest rate spread																	3.09	%		3.00	%
Net interest margin																	3.20	%		3.09	%
Net interest income (taxable equivalent basis)										24,066				23,155
Less: Taxable equivalent adjustment (c)										59				62
Net interest income									$	24,007			$	23,093
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 Nine Months Ended September 30, 2022 and 2021
(Dollars in thousands)
Unaudited
									Interest
	Average Balance								Income/Expense (a)								Yield/Rate
		2022				2021				2022				2021			2022			2021
Loans:
Commercial	$	288,968			$	393,571			$	7,982			$	15,433			3.69	%		5.24	%
Real estate		1,721,403				1,568,055				50,823				49,642			3.94			4.22
Consumer		6,532				7,139				317				364			6.49			6.82
Total loans (b)		2,016,903				1,968,765				59,122				65,439			3.91			4.43
Securities:
U.S. Treasury		150,483				36,969				1,021				265			0.90			0.96
Federal agencies & GSEs		108,050				99,595				985				867			1.22			1.16
Mortgage-backed & CMOs		358,739				292,207				3,922				3,025			1.46			1.38
State and municipal		68,752				61,210				1,038				958			2.01			2.09
Other		36,001				24,175				1,100				900			4.07			4.96
Total securities		722,025				514,156				8,066				6,015			1.49			1.56
Deposits in other banks		344,887				422,111				2,076				375			0.80			0.12
Total interest-earning assets		3,083,815				2,905,032				69,264				71,829			3.00			3.30
Non-earning assets		176,821				210,651
Total assets	$	3,260,636			$	3,115,683
Deposits:
Demand	$	531,301			$	466,999				107				116			0.03			0.03
Money market		721,697				700,027				673				657			0.12			0.13
Savings		273,858				238,349				35				19			0.02			0.01
Time		290,725				367,979				1,141				2,198			0.52			0.80
Total deposits		1,817,581				1,773,354				1,956				2,990			0.14			0.23
Customer repurchase agreements		31,858				36,954				26				19			0.11			0.07
Long-term borrowings		28,268				33,111				1,156				1,352			5.45			5.44
Total interest-bearing liabilities		1,877,707				1,843,419				3,138				4,361			0.22			0.32
Noninterest bearing demand deposits		1,027,942				903,296
Other liabilities		17,354				22,238
Shareholders' equity		337,633				346,730
Total liabilities and shareholders' equity	$	3,260,636			$	3,115,683
Interest rate spread																	2.78	%		2.98	%
Net interest margin																	2.86	%		3.10	%
Net interest income (taxable equivalent basis)										66,126				67,468
Less: Taxable equivalent adjustment (c)										176				181
Net interest income									$	65,950			$	67,287
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 Nine Months
	3rd Qtr				2nd Qtr				3rd Qtr				Ended September 30,
		2022				2022				2021				2022				2021
EFFICIENCY RATIO
Noninterest expense	$	16,448			$	15,455			$	14,843			$	47,252			$	43,545
Subtract: loss on sale of OREO		-				-				-				-				(111	)
Subtract: core deposit intangible amortization		(310	)			(320	)			(361	)			(960	)			(1,113	)
	$	16,138			$	15,135			$	14,482			$	46,292			$	42,321
Net interest income	$	24,007			$	21,490			$	23,093			$	65,950			$	67,287
Tax equivalent adjustment		59				58				62				176				181
Noninterest income		4,760				4,837				5,123				15,197				16,187
Add: loss on fixed assets		2				84				107				82				588
	$	28,828			$	26,469			$	28,385			$	81,405			$	84,243
Efficiency ratio		55.98	%			57.18	%			51.02	%			56.87	%			50.24	%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans	$	21,191			$	19,109			$	22,012			$	59,122			$	65,439
Interest income - investments and other		4,019				3,479				2,327				10,142				6,390
Interest expense - deposits		(741	)			(646	)			(781	)			(1,956	)			(2,990	)
Interest expense - customer repurchase agreements		(11	)			(9	)			(3	)			(26	)			(19	)
Interest expense - long-term borrowings		(392	)			(385	)			(400	)			(1,156	)			(1,352	)
Total net interest income	$	24,066			$	21,548			$	23,155			$	66,126			$	67,468
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans		(31	)			(34	)			(38	)			(98	)			(105	)
Tax benefit on nontaxable interest - securities		(28	)			(24	)			(24	)			(78	)			(76	)
GAAP measures	$	24,007			$	21,490			$	23,093			$	65,950			$	67,287
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)		11.21	%			9.83	%			11.58	%			10.42	%			12.40	%
Impact of excluding average goodwill and other intangibles		4.53				4.04	%			4.43				4.15				4.84
Return on average tangible equity (non-GAAP)		15.74	%			13.87	%			16.01	%			14.57	%			17.24	%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)		10.28	%			10.13	%			10.65	%			10.28	%			10.65	%
Impact of excluding goodwill and other intangibles		(2.69	)			(2.55	)			(2.51	)			(2.69	)			(2.51	)
Tangible equity to tangible assets ratio (non-GAAP)		7.59	%			7.58	%			8.14	%			7.59	%			8.14	%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)	$	29.54			$	30.71			$	32.51			$	29.54			$	32.51
Impact of excluding goodwill and other intangibles		(8.36	)			(8.35	)			(8.35	)			(8.36	)			(8.35	)
Tangible book value per share (non-GAAP)	$	21.18			$	22.36			$	24.16			$	21.18			$	24.16
ADJUSTED LOAN LOSS ALLOWANCE
Allowance for loan losses	$	19,189			$	18,505			$	20,630			$	19,189			$	20,630
Credit discount on purchased loans		3,477				3,741				5,258				3,477				5,258
Adjusted loan loss allowance	$	22,666			$	22,246			$	25,888			$	22,666			$	25,888
Total loans, net	$	2,119,415			$	2,030,818			$	1,940,332			$	2,119,415			$	1,940,332
Subtract: PPP loans, net		(95	)			(116	)			(37,199	)			(95	)			(37,199	)
Total loans less PPP loans, net	$	2,119,320			$	2,030,702			$	1,903,133			$	2,119,320			$	1,903,133
Adjusted loan loss allowance to total loans less PPP loans, net		1.07	%			1.10	%			1.36	%			1.07	%			1.36	%
Allowance for loan losses to total loans less PPP loans, net		0.91	%			0.91	%			1.08	%			0.91	%			1.08	%

FAQ

What were the Q3 2022 earnings for AMNB?

AMNB reported earnings of $9.3 million, or $0.87 per diluted share, for Q3 2022.

How did AMNB's net interest income perform in Q3 2022?

Net interest income increased by 11.7% quarter-over-quarter to $24.0 million.

What is the asset quality of AMNB as of September 30, 2022?

Nonperforming assets represented 0.05% of total assets as of September 30, 2022.

What are the major changes in AMNB's financial metrics compared to last year?

Earnings decreased from $10.2 million in Q3 2021 to $9.3 million in Q3 2022, while net interest income grew by $914 thousand.