American National Bankshares Inc. Reports Second Quarter 2011 Earnings and Announces Third Quarter Cash Dividend
|Company Release - 07/21/2011 17:47|
DANVILLE, VA -- (MARKET WIRE) -- 07/21/11 -- American National Bankshares Inc. (NASDAQ: AMNB)
American National Bankshares Inc. (NASDAQ: AMNB) ("American National"), parent company of American National Bank and Trust Company ("American National Bank"), today announced second quarter 2011 net income of $1 million compared to $2 million for the same quarter in 2010. Basic and diluted earnings per share were $0.16 for the 2011 quarter compared to $0.33 for the 2010 quarter. This net income produced returns on average assets and average equity of 0.48% and 3.65%, respectively.
Net income for the first six months of 2011 was $2.8 million compared to $4.2 million for the comparable period of 2010. Basic and diluted earnings per share were $0.45 for the 2011 period compared to $0.69 for the 2010 period.
Earnings for the quarter and six months in 2011 were adversely impacted by one-time merger related expenses, associated with the July 1, 2011, merger between American National and MidCarolina Financial Corporation ("MidCarolina"). Of those expenses, $835,000 was incurred during the second quarter and a total of $1,143,000 was incurred during the six months.
Financial Performance and Overview
"Our lower than usual operating results were not unexpected, given market conditions and one-time costs of the merger. Our income for the second quarter was $1 million, almost a 50% decrease compared to the same quarter in 2010. This reduction was driven by a decline in net interest income and expenses associated with our merger with MidCarolina. The decrease in net interest income reflects continued market-driven competition for loans, declining bond yields, and compression of our net interest margin. The merger related costs, one-time in nature, are an investment in a new and even better American National.
"Trust income was up $77,000 or 9.6% for the 2011 quarter compared to the 2010 quarter, as a result of asset growth and improvement in the stock market.
"Service charge income declined $83,000 or 17.2%, mostly as a result of declining overdraft fee income, a trend we've seen over the past few years and expect to continue.
"Secondary market mortgage income declined $72,000 or 21.0%, because of decreasing volume. We anticipated a continued slowdown in this revenue stream in the remainder of 2011.
"Our noninterest expenses for the 2011 quarter increased $1,154,000 or 19.6%, compared to the 2010 quarter. This was mostly related to $835,000 in merger related expenses.
"During 2010 and into 2011, we have experienced historically low interest rates and an ongoing deleveraging in the economy. Even in this environment, our loan portfolio has declined only by $5.3 million or 1% over the past year.
"We are pleased with the growth in our deposits. They have grown by $28.8 million or 4.6% in the last year. This will help provide needed liquidity as the economy begins to recover and as we move to integrate MidCarolina into American National. We expect that growth to continue during 2011 and plan to make every effort to grow our transaction deposit accounts.
"Our credit quality measurements continue to be strong. We expect some unfavorable changes in the combined metrics as we move into the third quarter and continue the transition with MidCarolina, but we are determined to vigorously preserve, protect and improve asset quality in our Virginia and North Carolina markets.
Majors concluded, "American National is now more than 100 years old. There have been many economic cycles during those decades, some prosperous, some very challenging. Right now Virginia and North Carolina, as well as the entire country, face some serious economic problems, many of which are exacerbated by macro-economic and political circumstances beyond our individual control. But we are building an exemplary community bank for the 21st century. We are doing this with our recent merger with MidCarolina. We are doing this by synthesizing modern technology with traditional core business principles -- safe and sound banking, strong asset quality, abundant capital, and an overarching dedication to our customers and shareholders."
Credit Quality Measurements
The allowance for loans losses was $8.7 million or 1.70% of loans at June 30, 2011 compared to 1.57% at June 30, 2010.
Net Interest Income
For the second quarter, American National's net interest margin has decreased 20 basis points (0.20%) to 3.65% compared to the same quarter in 2010.
For the six month period, the net interest margin has decreased 21 basis points (0.21%) to 3.65%.
American National considers the payment of appropriate dividends a vital part of its capital planning and management program. The Company adheres to a dividend policy based on a review of earnings, growth, capital and such other factors that the Board of Directors considers relevant to the dividend decision process.
About American National
Shares of American National are traded on the NASDAQ Global Select Market under the symbol "AMNB."
This press release contains "forward-looking statements" within the meaning of federal securities laws. Certain of the statements involve significant risks and uncertainties. The statements herein are based on certain assumptions and analyses by American National 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; significant changes in securities markets; and changes regarding acquisitions and dispositions. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in American National'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.
Source: American National Bankshares Inc.
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