DANVILLE, Va., Jan. 21, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) 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.

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.