American National Bankshares Inc. today announced revised earnings for the fourth quarter of 2004. Earnings were revised to reflect an after-tax impairment charge of $650,000 on $4.5 million of Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") perpetual preferred stock. This write-down had no impact on the Corporation's equity. The reclassification of an unrealized mark-to-market loss on these securities to an other-than-temporary charge was based upon a detailed impairment analysis and does not necessarily reflect the expected long-term value of these government sponsored investment-grade securities.
"The decision to record this non-cash impairment charge was made after a thorough analysis of all factors," stated Charles H. Majors, President and Chief Executive Officer. "Those factors include recent public disclosures about FHLMC and FNMA, the length of time the market value of the securities has been less than our cost, the results of an impairment analysis recently completed by an outside party, and accounting interpretations. Like so many of our industry peers who have recently taken similar action, we have now concluded the securities should be considered impaired as of year-end and we reflected the charge in our income statement." Gains and losses on the securities were previously recognized in the equity section of the balance sheet.
Net income for the fourth quarter of 2004 was revised from $1.43 million to $.78 million and per share earnings were revised from $.26 to $.14 on both a primary and diluted basis. Net income for the full year 2004 was revised from $8.66 million to $8.01 million; basic earnings per share were revised from $1.55 to $1.43, and diluted earnings per share were revised from $1.54 to $1.42.
American National Bankshares Inc. is the holding company of American National Bank and Trust Company, a community bank with thirteen offices in Danville, Chatham, Collinsville, Gretna, Martinsville, Henry County, and South Boston, Virginia; one office in Yanceyville, North Carolina; and a loan production office in Greensboro, North Carolina. American National Bank and Trust Company provides a full array of financial products and services, including commercial, mortgage, and consumer banking; trust and investment services; and insurance. Services are also provided through eighteen ATMs, "AmeriLink" Internet banking, and our 24-hour "Access American" phone banking. Additional information is available on our website at http://www.amnb.com/. The shares of American National Bankshares Inc. are traded on the NASDAQ National Market under the symbol "AMNB."
This press release may contain "forward-looking statements," within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Corporation and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Corporation's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. American National Bankshares Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
Consolidated Balance Sheets American National Bankshares Inc. and Subsidiary (In thousands) Unaudited December 31 ASSETS 2004 2003 Cash and due from banks $12,371 $16,236 Interest-bearing deposits in other banks 197 1,652 Securities: Securities available for sale 165,958 171,376 Securities held to maturity 22,205 36,103 Total securities 188,163 207,479 Loans held for sale 971 560 Loans, net of unearned income 407,269 406,245 Less allowance for loan losses (7,982) (5,292) Net Loans 399,287 400,953 Bank premises and equipment, net 7,517 7,718 Core deposit intangibles, net 484 934 Accrued interest receivable and other assets 10,075 8,770 Total assets $619,065 $644,302 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Demand deposits - noninterest- bearing $75,256 $71,027 Demand deposits - interest-bearing 80,793 69,053 Money market deposits 52,031 59,251 Savings deposits 83,216 83,031 Time deposits 193,976 219,326 Total deposits 485,272 501,688 Repurchase agreements 38,945 47,035 FHLB borrowings 21,338 21,000 Accrued interest payable and other liabilities 2,510 2,648 Total liabilities 548,065 572,371 SHAREHOLDERS' EQUITY: Common stock, $1 par, 10,000,000 shares authorized, 5,521,164 shares outstanding at December 31, 2004 and 5,660,419 shares outstanding at December 31, 2003 5,521 5,660 Capital in excess of par value 9,474 9,437 Retained earnings 55,780 55,538 Accumulated other comprehensive income, net 225 1,296 Total shareholders' equity 71,000 71,931 Total liabilities and shareholders' equity $619,065 $644,302 Consolidated Statements of Income American National Bankshares Inc. and Subsidiary (In thousands) Unaudited Three Months Twelve Months Ended Ended December 31 December 31 2004 2003 2004 2003 Interest Income: Interest and fees on loans $5,906 $5,891 $22,791 $25,228 Interest on deposits in other banks 64 41 132 110 Income on securities: Federal agencies 714 745 3,169 2,365 Mortgage-backed 307 252 1,046 1,316 State and municipal 530 505 2,088 1,961 Other 199 263 894 1,198 Total interest income 7,720 7,697 30,120 32,178 Interest Expense: Interest on deposits: Demand 83 51 269 225 Money market 143 104 428 478 Savings 118 126 439 713 Time 1,134 1,490 4,843 6,500 Interest on repurchase agreements 151 123 528 496 Interest on other borrowings 238 244 972 979 Total interest expense 1,867 2,138 7,479 9,391 Net Interest Income 5,853 5,559 22,641 22,787 Provision for Loan Losses 2,370 255 3,095 920 Net Interest Income after Provision for Loan Losses 3,483 5,304 19,546 21,867 Noninterest Income: Trust and investment services 768 645 2,976 2,523 Service charges on deposit accounts 616 622 2,411 2,163 Other fees and commissions 219 235 888 914 Mortgage banking income 152 90 612 571 Securities gains (losses), net 38 69 157 115 Impairment of securities (985) - (985) - Other income 68 133 451 385 Total noninterest income 876 1,794 6,510 6,671 Noninterest Expense: Salaries 1,326 1,611 6,795 6,844 Pension and other employee benefits 438 411 1,699 1,814 Occupancy and equipment 613 608 2,457 2,513 Core deposit intangible amortization 113 113 450 450 Other expenses 925 875 3,610 3,490 Total noninterest expense 3,415 3,618 15,011 15,111 Income before Taxes 944 3,480 11,045 13,427 Income Tax Provision 164 1,014 3,032 3,914 Net Income $780 $2,466 $8,013 $9,513 Net Income Per Common Share: Basic $0.14 $0.44 $1.43 $1.67 Diluted $0.14 $0.43 $1.42 $1.65 Financial Highlights American National Bankshares Inc. and Subsidiary (Dollars in thousands, except per share data) Three Months Ended December 31 2004 2003 Change EARNINGS Interest income $7,720 $7,697 0.3 % Interest expense 1,867 2,138 (12.7) Net interest income 5,853 5,559 5.3 Provision for loan losses 2,370 255 829.4 Noninterest income 876 1,794 (51.2) Noninterest expense 3,415 3,618 (5.6) Income taxes 164 1,014 (83.8) Net income 780 2,466 (68.4) PER COMMON SHARE Earnings per share - basic $0.14 $0.44 (68.2)% Earnings per share - diluted 0.14 0.43 (67.4) Cash dividends paid 0.20 0.19 5.3 Book value Closing market price FINANCIAL RATIOS Return on average assets 0.49 % 1.54 % (105)bp Return on average shareholders' equity 4.34 13.92 (958) Average equity to average assets 11.32 11.04 28 Net interest margin (FTE) 4.02 3.78 24 Efficiency ratio 42.87 47.90 (503) AVERAGE BALANCES Securities $190,281 $186,474 2.0 % Total loans 406,073 411,376 (1.3) Interest-earning assets 610,363 615,981 (0.9) Assets 634,892 641,963 (1.1) Interest-bearing deposits 414,418 427,753 (3.1) Deposits 495,515 499,403 (0.8) Repurchase agreements 44,821 47,389 (5.4) FHLB borrowings 19,624 21,000 (6.6) Shareholders' equity 71,858 70,888 1.4 CAPITAL Average shares outstanding - basic 5,520,041 5,662,664 (2.5)% Average shares outstanding - diluted 5,570,386 5,725,481 (2.7) Shares repurchased 5,000 10,000 Average price of shares repurchased $25.25 $25.61 ALLOWANCE FOR LOAN LOSSES Beginning balance $5,599 $6,067 (7.7)% Provision for loan losses 2,370 255 829.4 Charge-offs (67) (1,040) (93.6) Recoveries 80 10 700.0 Ending balance $7,982 $5,292 50.8 Financial Highlights American National Bankshares Inc. and Subsidiary (Dollars in thousands, except per share data) Twelve Months Ended December 31 2004 2003 Change EARNINGS Interest income $30,120 $32,178 (6.4)% Interest expense 7,479 9,391 (20.4) Net interest income 22,641 22,787 (0.6) Provision for loan losses 3,095 920 236.4 Noninterest income 6,510 6,671 (2.4) Noninterest expense 15,011 15,111 (0.7) Income taxes 3,032 3,914 (22.5) Net income 8,013 9,513 (15.8) PER COMMON SHARE Earnings per share - basic $1.43 $1.67 (14.4)% Earnings per share - diluted 1.42 1.65 (13.9) Cash dividends paid 0.79 0.75 5.3 Book value 12.86 12.71 1.2 Closing market price 24.21 26.08 (7.2) FINANCIAL RATIOS Return on average assets 1.26 % 1.52 % (26)bp Return on average shareholders' equity 11.15 13.52 (237) Average equity to average assets 11.34 11.27 7 Net interest margin (FTE) 3.90 3.98 (8) Efficiency ratio 48.51 49.74 (123) PERIOD END BALANCES Securities $188,163 $207,479 (9.3)% Loans held for sale 971 560 73.4 Loans, net of unearned income 407,269 406,245 0.3 Assets 619,065 644,302 (3.9) Deposits 485,272 501,688 (3.3) Repurchase agreements 38,945 47,035 (17.2) FHLB borrowings 21,338 21,000 1.6 Shareholders' equity 71,000 71,931 (1.3) AVERAGE BALANCES Securities $195,128 $168,587 15.7 % Total loans 403,695 418,870 (3.6) Interest-earning assets 608,915 598,693 1.7 Assets 633,951 624,611 1.5 Interest-bearing deposits 415,402 422,097 (1.6) Deposits 491,525 488,397 0.6 Repurchase agreements 46,787 40,917 14.3 FHLB borrowings 20,931 21,578 (3.0) Shareholders' equity 71,862 70,367 2.1 CAPITAL Average shares outstanding - basic 5,591,839 5,702,625 (1.9)% Average shares outstanding - diluted 5,642,056 5,764,127 (2.1) Shares repurchased 159,968 125,000 Average price of shares repurchased $23.67 $25.03 ALLOWANCE FOR LOAN LOSSES Beginning balance $5,292 $5,622 (5.9)% Provision for loan losses 3,095 920 236.4 Charge-offs (655) (1,457) (55.0) Recoveries 250 207 20.8 Ending balance $7,982 $5,292 50.8 NONPERFORMING ASSETS Nonperforming loans: 90 days past due $- $53 (100.0)% Nonaccrual 8,113 3,262 148.7 OREO 221 303 (27.1) Nonperforming assets $8,334 $3,618 130.3 ASSET QUALITY RATIOS ** Nonperforming assets to total assets 1.35 % 0.56 % 79 bp Nonperforming loans to total loans 1.99 0.82 117 Net chargeoffs to average loans 0.10 0.30 (20) Allowance for loan losses to total loans 1.96 1.30 66 Allowance for loan losses to nonperforming loans 0.98 X 1.60 X (62) Notes: bp -- Change is measured as difference in basis points. ** -- Balance sheet amounts used in calculations are based on period end balances.
CONTACT: Neal A. Petrovich, Senior Vice President and Chief Financial Officer of American National Bankshares Inc., +1-434-773-2242
Web site: http://www.amnb.com/
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