DANVILLE, Va., April 23, 2020 (GLOBE NEWSWIRE) — American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported first quarter 2020 earnings of $8.5 million, or $0.77 per diluted common share. Those results compare to net income of $6.0 million, or $0.69 per diluted common share, during the same quarter in the prior year, and net income of $7.4 million, or $0.67 per diluted common share, recognized for the fourth quarter of 2019.
President and Chief Executive Officer Jeffrey V. Haley commented, “We are certainly pleased with the first quarter results, but have now entered unprecedented times in our nation with the onset of a global pandemic and resulting economic impacts. Our priorities have shifted somewhat to maintaining our high level of care for our customers, communities and our employees during this challenging time.”“We have taken comprehensive steps to help each of these constituencies. For our customers, we’ve suspended foreclosures and provided payment deferrals, among other actions. Starting in March and continuing into last week, we have provided payment deferral assistance to over 450 customers with approximately $200 million in loan balances outstanding.  In addition, we are pleased to be one of approximately 5,000 financial institutions who successfully implemented the SBA’s Paycheck Protection Program, in order to assist our small business customers. For our employees, we’ve enabled approximately 65% of our workforce to work remotely. We have made certain accommodations to employees whose roles require them to come into the office, and have taken significant actions to help ensure their safety. We continue to provide financial support to our communities and maintain banking hours at branches throughout our footprint.“I’m incredibly proud of the efforts our employees are making across American National to support our customers and each other. We will come out of this together and stronger.”  First quarter 2020 highlights include:Earnings produced a return on average assets of 1.37% for the first quarter of 2020, compared to 1.20% in the previous quarter and 1.29% for the same quarter in the prior year.
 Net loans receivable increased $24.1 million for the quarter, or 5.3% annualized.
 Net interest margin was 3.52% for the quarter, down from 3.62% in the fourth quarter of 2019 and up from 3.50% in the same quarter of the prior year (non-GAAP).   
 Noninterest revenues increased $629 thousand, or 16.3%, when compared to the previous quarter, and increased $1.0 million, or 30.3%, to $4.5 million from $3.5 million in the same quarter in the prior year.The first quarter provision for loan losses totaled $953 thousand, which compares to a provision of $462 thousand for the previous quarter, and $16 thousand in the same quarter in the prior year.
 Nonperforming assets as a percentage of total assets remained level at 0.16% at March 31, 2020, compared with 0.15% at December 31, 2019, and up from 0.10% at March 31, 2019.
 Annualized net charge-offs were 0.01% for the first quarter of 2020, compared to zero for the corresponding quarter in the prior year and down from 0.02% for the fourth quarter of 2019.NET INTEREST INCOMENet interest income for the first quarter of 2020 was $20.0 million, a decrease of $529 thousand, or 2.59%, from the prior quarter and an increase of $4.9 million, or 32.2%, from the first quarter of 2019. The year-over-year growth was positively impacted by higher earning asset balances and overall higher loan yields in large part associated with the Hometown Bankshares (“HomeTown”) acquisition which was consummated on April 1, 2019. The quarter-over-quarter decrease in net interest income was principally the result of lower yields on assets associated with the recent decreases in short term rates and market pricing pressure in the commercial portfolio offset in part by a decrease in funding costs. The fully taxable equivalent (“FTE”) net interest margin for the quarter was 3.52%, down from 3.62% in the prior quarter and up from 3.50% in the same period a year ago (non-GAAP).The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the first quarter of 2020, net accretion related to acquisition accounting amounted to $957 thousand, compared to $255 thousand for the same period in 2019 and $1.1 million in the prior quarter. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):ASSET QUALITY/LOAN LOSS PROVISIONNonperforming assets (“NPAs”) totaled $4.0 million as of March 31, 2020, up from $3.6 million at December 31, 2019 and up from $2.0 million at March 31, 2019. NPAs as a percentage of total assets were 0.16% at March 31, 2020, which compares to 0.15% at December 31, 2019 and 0.10% at March 31, 2019.The provision for loan losses was $953 thousand for the first quarter of 2020, as compared to $462 thousand for the previous quarter and $16 thousand for the same period in the previous year. The increase over the prior periods is a direct result of early stage declines in economic factors associated with increases in unemployment claims and a decrease in retail sales in the wake of the COVID-19 Pandemic. It also reflects $197 thousand in impairments recorded during the quarter, compared to $218 thousand in the prior quarter and $15 thousand in the same quarter of prior year. The allowance for loan losses was $14.1 million at March 31, 2020, compared to $13.2 million at December 31, 2019 and $12.8 million at March 31, 2019. Annualized net charge-offs as a percentage of average loans outstanding was 0.01% for the first quarter of 2020, compared to 0.02% in the previous quarter and none for the same period in the prior year. The allowance as a percentage of loans held for investment was 0.76% at March 31, 2020, compared to 0.72% at December 31, 2019 and 0.94% at March 31, 2019.American National continues to use an incurred loss model for its allowance methodology and has not implemented the new current expected credit losses standard (CECL). CECL incorporates an estimation of expected losses over the life of the loans instead of the current model which is an incurred loss model. The CECL implementation guidance was amended in October 2019 allowing for the deferral of CECL for smaller reporting companies.  American National qualified under this amendment and elected to defer the implementation until January 2023. DISASTER ASSISTANCE AND PAYCHECK PROTECTION PROGRAMSAmerican National has implemented a Disaster Assistance Program (DAP) and is participating in the Paycheck Protection Program (“PPP”) initiated by the U.S. Treasury on April 3, 2020. At March 31, 2020, American National has provided interest only and payment deferrals to over 450 customers on loan balances of approximately $200 million. With respect to the PPP program, American National has to date processed with U.S. Small Business Administration approval 1,321 applications for loans in excess of $228 million, representing 96% of applications received prior to the Treasury initial funding allocation of $349 billion reaching capacity and all of which occurred subsequent to March 31, 2020. From a funding perspective, the Company expects to utilize core and wholesale funding for liquidity needs related to the DAP loan program, and both the Federal Reserve discount window and newly created Payroll Protection Program Lending Facility for the PPP program.NONINTEREST INCOMENoninterest income increased $629 thousand to $4.5 million for the quarter ended March 31, 2020 from $3.9 million in the prior quarter and increased $1.0 million from the same period in the prior year. The first quarter of 2020 benefitted from gains on the sale of securities of $814 thousand, partially offset by a $188 thousand decrease in mortgage banking income from the prior quarter. The improvement from the prior quarter was also attributable to losses of $309 thousand in the fourth quarter of 2019 related to the write-down of premises and equipment in connection with an ATM replacement initiative. Increases in service charges on deposits, other fees and commissions, mortgage banking fees and securities gains primarily accounted for the increase over the same period in the prior year.NONINTEREST EXPENSENoninterest expense for the first quarter of 2020 amounted to $13.3 million, down $1.7 million, or 11.3%, when compared to the $15.0 million for the previous quarter and up $2.4 million, or 22.0%, when compared to the same period in the previous year. The change as compared to the previous quarter was driven by reduced corporate incentive and stock compensation expense in the first quarter of 2020 while the fourth quarter of 2019 reflected merger costs of $460 thousand, incentive compensation costs associated with establishing the Raleigh, North Carolina loan production office, and additional other professional fees and data processing costs. The increase from the same period in the prior year is primarily related to the acquisition of HomeTown.INCOME TAXESThe effective tax rate for the three months ended March 31, 2020 was 15.7%, compared to 15.6% for the prior quarter and 20.7% for the same period in the prior year. The decreased rates for the quarters ended March 31, 2020 and December 31, 2019 compared to the rates for the three months ended March 31, 2019 are a result of tax benefits recognized during both periods. As a result of the enactment of the CARES Act in the first quarter of 2020, the Company recognized a tax benefit for the net operating loss (‘NOL’) five-year carryback provision for the NOL acquired in the HomeTown merger.  An income tax benefit was realized for the difference between the current corporate income tax rate of 21% and the higher federal corporate tax rate of 35% prior to 2018. The lower effective tax rate in the fourth quarter of 2019 was primarily due to a change in the future effective rate assumption related to state apportionments which was prompted by the HomeTown acquisition.ABOUT AMERICAN NATIONALAmerican National is a multi-state bank holding company with total assets of approximately $2.5 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 $728 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about American National and American National Bank is available on American National’s website at www.amnb.com.NON-GAAP FINANCIAL MEASURESThis 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 STATEMENTSStatements 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 the recently completed merger with HomeTown may not be fully realized or realized within the expected timeframe; (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.Contact:
     Jeffrey W. Farrar
     Executive Vice President, COO & CFO
     (434)773-2274
     [email protected]





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