 DANVILLE, Va., July 23, 2020 GLOBE NEWSWIRE -- American National Bankshares Inc. NASDAQ: AMNB American National or the Company today reported second quarter 2020 earnings of 5.5 million, or 0.50 per diluted common share. Those results compare to a net loss of 1.2 million, or 0.11 per diluted common share, during the same quarter in the prior year, and net income of 8.5 million, or 0.77 per diluted common share, recognized for the first quarter of 2020. Earnings for the first six months of 2020 were 14.0 million, or 1.28 per diluted common share, compared to 4.8 million, or 0.48 per diluted common share for the same period of 2019. Earnings for the second quarter and six months of 2019 were impacted by 10.9 million and 11.3 million, respectively, in merger related expenses. President and Chief Executive Officer Jeffrey V. Haley commented, In spite of a challenging interest rate and economic operating environment brought on by the pandemic, our Company performed well in the quarter. Capital, liquidity and credit quality all remain strong. From an earnings perspective, earnings were solid and absorbed a significant loan loss provision in anticipation of possible impacts from the economic uncertainty and stressed environment.We were an active participant in the SBAs Paycheck Protection Program during the quarter, assisting our small business customers with just under 2,200 loans for a total of 272 million. We also were active with our disaster assistance program, providing interest and payment deferrals to 395 million of our loans outstanding at quarter end.We continue to focus on the welfare of our employees, customers and communities. We have raised the emphasis around the critical issues of racial justice and equality in our country, and are having meaningful dialogue around what we can do as a company to improve opportunities for all.I continue to be amazed at our employees unwavering commitment to serve our customers while supporting each other during this challenging time. American National has seen our share of challenges during our 111 years in banking, and its this solid foundation that has provided us with the tools to operate our bank during times of adversity. We have successfully demonstrated our strengths including the ability to be nimble in order to quickly and effectively respond to the needs of our communities.Second quarter 2020 highlights include: Earnings produced a return on average assets of 0.80 for the second quarter of 2020, compared to 1.37 in the previous quarter and 0.20 for the same quarter in the prior year. Paycheck Protection Program PPP loans drove the 247 million expansion in net loans receivable for the quarter. At June 30, 2020, PPP loans totaled 272 million; declines in other categories offset some of the growth during the quarter. In addition, average deposits grew 12.3 during the quarter, as proceeds from PPP funding contributed to significant deposit growth. Net interest margin was 3.22 for the quarter, down from 3.52 in the first quarter of 2020 and down from 3.82 in the same quarter of the prior year non-GAAP. Noninterest revenues decreased 660 thousand, or 14.7, when compared to the previous quarter, and increased 153 thousand, or 4.2, compared to the same quarter in the prior year. Noninterest expense decreased 902 thousand, or 6.8, when compared to the previous quarter, and decreased 13.9 million, or 52.8 when compared to the same quarter in the prior year. The second quarter provision for loan losses totaled 4.8 million, which compares to a provision of 953 thousand for the previous quarter, and a recovery of 10 thousand in the same quarter in the prior year. The allowance for loan losses as a percentage of loans held for investment increased to 0.88 at period end. Excluding PPP loans, the allowance as a percentage of loans increased to 1.00 at period end. Nonperforming assets as a percentage of total assets remained stable at 0.16 at June 30, 2020 and at March 31, 2020, and up from 0.14 at June 30, 2019. Annualized net charge-offs were 0.06 for the second quarter of 2020, compared to zero for the corresponding quarter in the prior year and up from 0.01 for the first quarter of 2020.NET INTEREST INCOMENet interest income for the second quarter of 2020 was 20.3 million, an increase of 341 thousand, or 1.7, from the prior quarter and a decrease of 729 thousand, or 3.5, from the second quarter of 2019. The sequential quarter-over-quarter increase in net interest income was principally caused by an increase in average loan balances and reduced funding costs. The year-over-year decrease was the result of five reductions of the federal funds rate over the period totaling 225 basis points. The fully taxable equivalent FTE net interest margin for the quarter was 3.22, down from 3.52 in the prior quarter and from 3.82 in the same period a year ago non-GAAP.The Companys FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the second quarter of 2020, net accretion related to acquisition accounting amounted to 801 thousand, compared to 1.1 million for the same period in 2019 and 957 thousand in the prior quarter. Estimated remaining net accretion from acquisitions for the periods indicated is as follows dollars in thousands:For the remaining six months of 2020 estimated1,113 For the years ending estimated: 2021 1,852 2022 1,147 2023 678 2024 357 2025 260 Thereafter 1,188 ASSET QUALITYLOAN LOSS PROVISIONNonperforming assets NPAs totaled 4.6 million as of June 30, 2020, up from 4.0 million at March 31, 2020 and up from 3.3 million at June 30, 2019. NPAs as a percentage of total assets were 0.16 at June 30, 2020, which compares to 0.16 at March 31, 2020 and 0.14 at June 30, 2019.The provision for loan losses was 4.8 million for the second quarter of 2020, as compared to 953 thousand for the previous quarter and a recovery of 10 thousand for the same period in the previous year. The increase over the prior periods reflects a reserve build in response to the declining and uncertain economic landscape caused by the COVID-19 pandemic. The allowance for loan losses was 18.5 million at June 30, 2020, compared to 14.1 million at March 31, 2020 and 12.8 million at June 30, 2019. Annualized net charge-offs as a percentage of average loans outstanding was 0.06 for the second quarter of 2020, compared to 0.01 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 0.88 at June 30, 2020, compared to 0.76 at March 31, 2020 and 0.70 at June 30, 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 and is participating in the PPP initiated by the U.S. Treasury on April 3, 2020. At June 30, 2020, American National has provided interest only and payment deferrals to over 729 customers of predominately commercial real estate loan balances of approximately 395 million. With respect to the PPP program, American National has to date processed with U.S. Small Business Administration approval 2,179 applications for loans in excess of 272 million. From a funding perspective, the Company continues to utilize core funding sources.NONINTEREST INCOMENoninterest income decreased 660 thousand to 3.8 million for the quarter ended June 30, 2020 from 4.5 million in the prior quarter and increased 153 thousand from the same period in the prior year. The gain on the sale of securities of 814 thousand in the first quarter, partially offset by increased mortgage banking income in the second quarter, accounted for the majority of the decrease quarter over quarter in 2020. The increase from the same period of 2019 was reflective of increased mortgage banking income, offset by decreased service charges on deposit accounts and other fees and commissions.NONINTEREST EXPENSENoninterest expense for the second quarter of 2020 amounted to 12.4 million, down 902 thousand, or 6.8, when compared to the 13.3 million for the previous quarter and down from 26.3 million when compared to the same period in the previous year. The decrease from the first quarter of 2020 was a result of a reduction in salary expenses of 1.6 million for the deferral of loan costs related to PPP originations. The decrease from the same period in the prior year was primarily related to the expenses incurred in the acquisition of HomeTown Bankshares HomeTown completed on April 1, 2019.INCOME TAXESThe effective tax rate for the three months ended June 30, 2020 was 20.6, compared to 15.7 for the prior quarter and 24.8 for the same period in the prior year. The effective tax rate for the quarter ended March 31, 2020 benefitted by the enactment of the Coronavirus Aid, Relief, and Economic Security Act, whereas, the Company recognized a tax benefit for its decision to utilize the net operating loss NOL five-year carryback provision for the NOL acquired in the HomeTown acquisition. The 2019 quarter was impacted by 10.9 million in merger related expense relating to the HomeTown acquisition, which generated a 1.6 million pretax loss. 