American National Bankshares Inc. Reports Second Quarter 2015 Earnings

DANVILLE, VA--(Marketwired - Jul 23, 2015) - American National Bankshares Inc. ("American National") (NASDAQ: AMNB)

• Organic loan growth of $61.5 million (7.6%) over last four quarters
• Completed integration of MainStreet BankShares, Inc.
• Q2 2015 net income of $2.9 million and diluted EPS of $0.33
• Net interest margin of 3.69% for Q2 2015
• Average shareholders' equity of $197 million is 12.85% of average assets

American National Bankshares Inc. ("American National") (NASDAQ: AMNB), parent company of American National Bank and Trust Company, today announced twelve month organic loan growth of 7.6%, the completion of the integration of MainStreet BankShares, Inc., and $2,880,000 net income for the second quarter 2015. 

The net income of $2,880,000 compared to $3,233,000 for the second quarter of 2014, is a $353,000 or 10.9% decrease. Basic and diluted net income per common share was $0.33 for the 2015 quarter compared to $0.41 for the 2014 quarter. Net income for the second quarter of 2015 produced a return on average assets of 0.75%, a return on average equity of 5.86%, and a return on average tangible equity of 8.26%.

Net income for the first six months of 2015 was $6,395,000 compared to $6,683,000 for the comparable period of 2014, a $288,000 or 4.3% decrease. Basic and diluted net income per common share was $0.73 for the 2015 period compared to $0.85 for the 2014 period.

The 2015 quarter and six month period were negatively impacted by nonrecurring, merger related costs associated with the January acquisition of MainStreet BankShares, Inc. ("MainStreet"). Merger related costs for the 2015 quarter were $1,502,000 and for the six month period $1,861,000.

Financial Performance and Overview
Jeffrey V. Haley, President and Chief Executive Officer, reported, "One major story for early 2015 continues to be our acquisition of MainStreet and its banking subsidiary, Franklin Community Bank, N.A. ("Franklin Community Bank"). This merger closed on January 1, 2015, and we completed the operational and technology aspects of the union in mid-May. We are extremely pleased with the integration progress made during the first half of this year and we are fortunate to have the employees and customers of Franklin Community Bank as part of our growing American National corporate family.

"The merger has had a positive impact on our balance sheet and we are also seeing organic balance sheet growth in our other markets.

"At June 30, 2015, American National had $982,905,000 in loans compared to $813,057,000 at June 30, 2014, an increase of $169,848,000 or 20.9%. Of this increase, $108,326,000 or 63.8% relates directly to the MainStreet acquisition. 

"Our other major story for early 2015 is organic growth. Organic loan growth over the past year was $61,522,000 or 7.6%. We are very encouraged that a combination of active business development and gradually improving local market economic conditions are beginning to result in high quality growth. 

"At June 30, 2015, American National had $1,234,018,000 in deposits compared to $1,035,800,000 at June 30, 2014, an increase of $198,218,000 or 19.1%. Of this increase, $125,320,000 or 63.2% relates directly to the MainStreet acquisition. The deposit growth was strong in all categories, but most notably in non-maturity (core) deposits. We are continuously working to grow core deposits and their affiliated relationships, but the challenge in this ongoing low rate environment is to do that in a cost effective and yet competitive manner. Our cost of interest bearing deposits for the second quarter was 0.50%, compared to 0.57% for the 2014 quarter.

"On the earnings side, our net income for the second quarter was $2,880,000, down from $3,233,000 in the 2014 quarter, a decrease of $353,000 or 10.9%.

"We had several drivers that impacted the 2015 quarter compared to the 2014 quarter.

"The merger with MainStreet had a significant and positive impact to operating results by adding substantially to earning assets.

"The provision for loan loss decreased by $50,000 during the quarter. This decrease was primarily related to improving economic conditions and continuing strong asset quality metrics, but was offset by loan growth during the quarter.

"Noninterest income was higher in the 2015 quarter by $558,000 or 20.7%, related mostly to the MainStreet merger.

"Noninterest expense was higher in the 2015 quarter by $3,277,000 or 39.2%, related mostly to the merger and to merger related, nonrecurring expenses. The nonrecurring merger costs were $1,502,000 for the quarter."

Haley concluded, "The first half of 2015 has been busy and productive for American National. The Franklin Community Bank merger in January and operational conversion in May were major accomplishments and I want to thank all people that worked so hard and successfully to make them happen.

"On another front, we are extremely pleased to see the beginning of significant organic loan growth. This is our favorite leading indicator of improving business conditions.

"American National will continue to grow its balance sheet and maintain high asset quality. Asset quality is a fundamental value for us. But, at the same time, we are constantly seeking ways to better deploy our capital. Among those ways is our ongoing stock repurchase plan, which during the quarter bought almost 52,000 shares. These efforts will continue to manifest themselves through continuing consideration of future merger and acquisition opportunities, continuing timely and economical stock repurchase activity, and an ongoing review of our dividend policy."

Capital
American National's capital ratios remain strong and exceed all regulatory requirements. 

For the quarter ended June 30, 2015, average shareholders' equity was 12.85% of average assets, compared to 13.22% for the quarter ended June 30, 2014.

Book value per common share was $22.43 at June 30, 2015, compared to $21.95 at June 30, 2014.

Tangible book value per common share was $16.96 at June 30, 2015, compared to $16.65 at June 30, 2014.

Credit Quality Measurements
Non-performing assets ($3,772,000 of non-performing loans and $2,113,000 of other real estate owned) represented 0.39% of total assets at June 30, 2015, compared to 0.60% at June 30, 2014. 

Annualized net charge offs to average loans was six basis points (0.06%) for the 2015 second quarter, compared to zero basis points (0.00%) for the same quarter in 2014.

The allowance for loan losses as a percentage of total loans was 1.30% at June 30, 2015 compared to 1.57% at June 30, 2014. The largest driver of this decrease was the merger with MainStreet, whose loans have been marked to fair value at the merger date and whose related allowance for loan loss was eliminated in the valuation process.

Other real estate owned was $2,113,000 at June 30, 2015, compared to $2,622,000 at June 30, 2014, a decrease of $509,000 or 19.4%.

Merger related financial impact
The fair value adjustments related to our two recent mergers have had a favorable impact on net interest income and income before income tax for American National. The adjustments are summarized below (dollars in thousands):

MainStreet		June 30, 2015
		For the three months ended			For the six months ended
Net Interest Income		$	316		$	1,019
Income Before Income Taxes		$	243		$	872
MidCarolina		June 30, 2015						June 30, 2014
		For the three months ended			For the six months ended			For the three months ended			For the six months ended
Net Interest Income		$	528		$	938		$	604		$	1,500
Income Before Income Taxes		$	301		$	485		$	368		$	1,029

The MainStreet merger was effective January 1, 2015; therefore, no comparative 2014 information is presented.

Net Interest Income
Net interest income before provision for loan losses increased to $12,382,000 in the second quarter of 2015 from $10,351,000 in the second quarter of 2014, an increase of $2,031,000 or 19.6%. 

For the 2015 quarter, the net interest margin was 3.69% compared to 3.68% for the same quarter in 2014, an increase of one basis point (0.01%). 

Provision for loan losses
Provision expense for the second quarter of 2015 was $100,000 compared to $150,000 for the second quarter of 2014.

The need for provision expense in the 2015 quarter was driven primarily by an increase in loan volume of approximately $17 million. It was partially mitigated by improving economic conditions and continuing strong asset quality metrics.

Noninterest Income
Noninterest income totaled $3,258,000 in the second quarter of 2015, compared with $2,700,000 in the second quarter of 2014, an increase of $558,000 or 20.7%. Almost all income categories showed substantial increases, most of which were related to increased transaction volumes resulting from the MainStreet transaction.

Noninterest Expense
Noninterest expense totaled $11,642,000 in the second quarter of 2015, compared to $8,365,000 in the second quarter of 2014, an increase of $3,277,000 or 39.2%. 

All expense categories were impacted by the MainStreet merger and the integration of Franklin Community Bank into American National's operations. 

However, the major driver of the increase was nonrecurring, merger related expenses, related to the MainStreet acquisition, which accounted for $1,502,000 or 45.8% of the increase. The operational conversion of Franklin Community Bank was completed in mid-May and substantially all of the related technology costs have been recognized. Accordingly, management expects no substantial expense in this category in future periods.

About American National
As of January 1, 2015, with the closing of the acquisition of MainStreet BankShares, Inc., American National Bankshares Inc. is a multi-state bank holding company with total assets of approximately $1.5 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 southern and central Virginia and north central North Carolina with 27 banking offices and two loan production offices. American National Bank and Trust Company also manages an additional $767 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about the company and the bank is available on the bank's website at www.amnb.com.

Shares of American National are traded on the NASDAQ Global Select Market under the symbol "AMNB."

Forward-Looking Statements

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 does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
					June 30
ASSETS					2015					2014
Cash and due from banks					$	24,548				$	21,295
Interest-bearing deposits in other banks						50,758					22,948
Federal funds sold						408					-
Securities available for sale, at fair value						355,595					349,719
Restricted stock, at cost						5,581					4,998
Loans held for sale						2,720					118
Loans						982,905					813,057
	Less allowance for loan losses					(12,793	)				(12,763	)
		Net Loans				970,112					800,294
Premises and equipment, net						24,182					23,083
Other real estate owned, net						2,113					2,622
Goodwill						44,210					39,043
Core deposit intangibles, net						3,283					2,498
Bank owned life insurance						17,376					14,945
Accrued interest receivable and other assets						23,470					19,085
		Total assets			$	1,524,356				$	1,300,648
Liabilities
	Demand deposits -- noninterest-bearing				$	294,342				$	228,588
	Demand deposits -- interest-bearing					239,582					189,700
	Money market deposits					190,799					165,090
	Savings deposits					109,732					88,539
	Time deposits					399,563					363,883
		Total deposits				1,234,018					1,035,800
	Short-term borrowings:
		Customer repurchase agreements				50,123					38,420
		Other short-term borrowings				-					12,000
	Long-term borrowings					9,947					9,924
	Trust preferred capital notes					27,571					27,470
	Accrued interest payable and other liabilities					7,814					4,951
		Total liabilities				1,329,473					1,128,565
Shareholders' equity
	Preferred stock, $5 par, 2,000,000 shares authorized, none outstanding
	Common stock, $1 par, 20,000,000 shares authorized, 8,688,480 shares outstanding at June 30, 2015 and 7,840,132 shares outstanding at June 30, 2014					8,671					7,840
	Capital in excess of par value					76,826					56,944
	Retained earnings					106,984					102,152
	Accumulated other comprehensive income, net					2,402					5,147
		Total shareholders' equity				194,883					172,083
		Total liabilities and shareholders' equity			$	1,524,356				$	1,300,648

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
					Three Months Ended							Six Months Ended
					June 30							June 30
					2015			2014				2015			2014
Interest and Dividend Income:
	Interest and fees on loans				$	11,767		$	9,687			$	23,537		$	19,534
	Interest on federal funds sold					1			-				5			-
	Interest and dividends on securities:
		Taxable				994			968				1,969			1,932
		Tax-exempt				940			1,016				1,900			2,051
		Dividends				85			74				167			149
	Other interest income					50			35				98			68
			Total interest and dividend income			13,837			11,780				27,676			23,734
Interest Expense:
	Interest on deposits					1,184			1,161				2,378			2,390
	Interest on short-term borrowings					2			2				5			4
	Interest on long-term borrowings					81			81				161			161
	Interest on trust preferred capital notes					188			185				372			369
			Total interest expense			1,455			1,429				2,916			2,924
Net Interest Income						12,382			10,351				24,760			20,810
	Provision for loan losses					100			150				700			150
Net Interest Income After Provision
	for Loan Losses					12,282			10,201				24,060			20,660
Noninterest Income:
	Trust fees					1,005			1,017				1,957			2,139
	Service charges on deposit accounts					525			431				1,022			844
	Other fees and commissions					607			493				1,195			937
	Mortgage banking income					389			275				611			538
	Securities gains, net					237			150				547			189
	Other					495			334				1,082			756
			Total noninterest income			3,258			2,700				6,414			5,403
Noninterest Expense:
	Salaries					4,308			3,638				8,455			7,176
	Employee benefits					1,111			847				2,186			1,822
	Occupancy and equipment					1,024			910				2,196			1,846
	FDIC assessment					195			165				380			329
	Bank franchise tax					220			231				455			453
	Core deposit intangible amortization					300			330				601			661
	Data processing					483			345				945			693
	Software					277			235				560			497
	Other real estate owned, net					133			(9	)			186			7
	Merger related expenses					1,502			-				1,861			-
	Other					2,089			1,673				3,864			3,304
			Total noninterest expense			11,642			8,365				21,689			16,788
Income Before Income Taxes						3,898			4,536				8,785			9,275
Income Taxes						1,018			1,303				2,390			2,592
Net Income					$	2,880		$	3,233			$	6,395		$	6,683
Net Income Per Common Share:
	Basic				$	0.33		$	0.41			$	0.73		$	0.85
	Diluted				$	0.33		$	0.41			$	0.73		$	0.85
Weighted Average Common Shares Outstanding:
	Basic					8,707,504			7,872,079				8,713,528			7,886,232
	Diluted					8,715,934			7,879,854				8,722,266			7,896,541

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)			2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
			2015			2015			2014			2015			2014
EARNINGS
	Interest income		$	13,837		$	13,839		$	11,780		$	27,676		$	23,734
	Interest expense			1,455			1,461			1,429			2,916			2,924
	Net interest income			12,382			12,378			10,351			24,760			20,810
	Provision for loan losses			100			600			150			700			150
	Noninterest income			3,258			3,156			2,700			6,414			5,403
	Noninterest expense			11,642			10,047			8,365			21,689			16,788
	Income taxes			1,018			1,372			1,303			2,390			2,592
	Net income			2,880			3,515			3,233			6,395			6,683
PER COMMON SHARE
	Income per share - basic		$	0.33		$	0.40		$	0.41		$	0.73		$	0.85
	Income per share - diluted			0.33			0.40			0.41			0.73			0.85
	Cash dividends paid			0.23			0.23			0.23			0.46			0.46
	Book value per share (a)			22.43			22.58			21.95			22.43			21.95
	Book value per share - tangible (a) (b)			16.96			17.09			16.65			16.96			16.65
	Closing market price			23.81			22.58			21.73			23.81			21.73
FINANCIAL RATIOS
	Return on average assets			0.75	%		0.93	%		1.00	%		0.84	%		1.03	%
	Return on average equity			5.86			7.17			7.53			6.51			7.82
	Return on average tangible equity (c)			8.26			10.02			10.67			9.14			11.10
	Average equity to average assets			12.85			12.91			13.22			12.88			13.14
	Tangible equity to tangible assets (b)			9.98			9.98			10.37			9.98			10.37
	Net interest margin, taxable equivalent			3.69			3.73			3.68			3.71			3.69
	Efficiency ratio (d)			72.76			63.90			62.87			68.36			62.34
	Effective tax rate			26.12			28.07			28.73			27.21			27.95
PERIOD-END BALANCES
	Securities		$	361,176		$	357,544		$	354,717		$	361,176		$	354,717
	Loans held for sale			2,720			1,936			118			2,720			118
	Loans, net of unearned income			982,905			965,902			813,057			982,905			813,057
	Goodwill and other intangibles			47,493			47,793			41,541			47,493			41,541
	Assets			1,524,356			1,540,098			1,300,648			1,524,356			1,300,648
	Assets - tangible (b)			1,476,863			1,492,305			1,259,107			1,476,863			1,259,107
	Deposits			1,234,018			1,242,675			1,035,800			1,234,018			1,035,800
	Customer repurchase agreements			50,123			53,664			38,420			50,123			38,420
	Other short-term borrowings			-			-			12,000			-			12,000
	Long-term borrowings			37,518			37,487			37,394			37,518			37,394
	Shareholders' equity			194,883			196,689			172,083			194,883			172,083
	Shareholders' equity - tangible (b)			147,390			148,896			130,542			147,390			130,542
AVERAGE BALANCES
	Securities		$	349,813		$	345,800		$	347,726		$	347,816		$	346,446
	Loans held for sale			2,836			939			1,685			1,893			1,858
	Loans, net of unearned income			972,083			954,882			793,060			963,530			790,752
	Interest-earning assets			1,397,448			1,382,817			1,183,559			1,390,172			1,185,172
	Goodwill and other intangibles			47,682			47,988			41,738			47,834			41,907
	Assets			1,530,867			1,518,449			1,299,535			1,524,693			1,301,078
	Assets - tangible (b)			1,483,185			1,470,461			1,257,797			1,476,859			1,259,171
	Interest-bearing deposits			945,931			938,064			820,342			942,019			825,258
	Deposits			1,236,626			1,221,037			1,043,479			1,228,874			1,047,524
	Customer repurchase agreements			51,417			53,181			40,720			52,294			39,267
	Long-term borrowings			37,499			37,469			37,376			37,484			37,374
	Shareholders' equity			196,663			196,086			171,784			196,376			170,920
	Shareholders' equity - tangible (b)			148,981			148,098			130,046			148,542			129,013

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)				2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
				2015			2015			2014			2015			2014
CAPITAL
	Weighted average shares outstanding - basic				8,707,504			8,723,633			7,872,079			8,713,528			7,886,232
	Weighted average shares outstanding - diluted				8,715,934			8,732,679			7,879,854			8,722,266			7,896,541
ALLOWANCE FOR LOAN LOSSES
	Beginning balance			$	12,844		$	12,427		$	12,614		$	12,427		$	12,600
	Provision for loan losses				100			600			150			700			150
	Charge-offs				(321	)		(309	)		(95	)		(630	)		(168	)
	Recoveries				170			126			94			296			181
	Ending balance			$	12,793		$	12,844		$	12,763		$	12,793		$	12,763
LOANS
	Construction and land development			$	66,543		$	68,069		$	50,856		$	66,543		$	50,856
	Commercial real estate				432,315			436,562			366,722			432,315			366,722
	Residential real estate				220,778			211,261			175,387			220,778			175,387
	Home equity				97,866			97,811			89,725			97,866			89,725
	Commercial and industrial				159,015			146,280			125,163			159,015			125,163
	Consumer				6,388			5,919			5,204			6,388			5,204
	Total			$	982,905		$	965,902		$	813,057		$	982,905		$	813,057
NONPERFORMING ASSETS AT PERIOD-END
	Nonperforming loans:
		90 days past due and accruing		$	-		$	-		$	-		$	-		$	-
		Nonaccrual			3,772			5,123			5,224			3,772			5,224
	Other real estate owned				2,113			2,653			2,622			2,113			2,622
	Nonperforming assets			$	5,885		$	7,776		$	7,846		$	5,885		$	7,846
ASSET QUALITY RATIOS
	Allowance for loan losses to total loans				1.30	%		1.33	%		1.57	%		1.30	%		1.57	%
	Allowance for loan losses to nonperforming loans				339.16			250.71			244.31			339.16			244.31
	Nonperforming assets to total assets				0.39			0.50			0.60			0.39			0.60
	Nonperforming loans to total loans				0.38			0.53			0.64			0.38			0.64
	Annualized net charge-offs (recoveries) to average loans				0.06			0.08			0.00			0.07			0.00
OTHER DATA
	Fiduciary assets at period-end (e) (f)			$	509,289		$	502,779		$	450,352		$	509,289		$	450,352
	Retail brokerage assets at period-end (e) (f)			$	257,306		$	244,725		$	197,625		$	257,306		$	197,625
	Number full-time equivalent employees (g)				322			318			291			322			291
	Number of full service offices				27			27			25			27			25
	Number of loan production offices				2			2			2			2			2
	Number of ATM's				34			34			31			34			31

Notes:
	(a) - Unvested restricted stock of 17,761 shares are not included in the calculation.
	(b) - Excludes goodwill and other intangible assets.
	(c) - Excludes amortization expense, net of tax, of intangible assets.
	(d) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by net
	interest income including tax equivalent income on nontaxable loans and securities and excluding (i) gains or losses on
	securities and (ii) gains or losses on sale of premises and equipment.
	(e) - Market value.
	(f) - Assets are not owned by the Company and are not reflected in the consolidated balance sheet.
	(g) - Average for quarter.

Net Interest Income Analysis
For the Three Months Ended June 30, 2015 and 2014
(in thousands, except rates)
										Interest
				Average Balance						Income/Expense						Yield/Rate
				2015			2014			2015			2014			2015			2014
Loans:
	Commercial			$	155,752		$	120,216		$	1,760		$	1,285		4.53	%		4.29	%
	Real estate				807,605			669,537			9,841			8,325		4.87			4.97
	Consumer				11,562			4,992			205			87		7.11			6.99
		Total loans			974,919			794,745			11,806			9,697		4.85			4.88
Securities:
	Federal agencies & GSEs				86,815			79,284			324			227		1.49			1.15
	Mortgage-backed & CMOs				61,738			62,356			334			368		2.16			2.36
	State and municipal				185,848			190,821			1,719			1,866		3.70			3.91
	Other				15,412			15,265			125			121		3.24			3.17
		Total securities			349,813			347,726			2,502			2,582		2.86			2.97
Federal funds sold					6,480			-			2			-		0.12			-
Deposits in other banks					66,236			41,088			50			35		0.30			0.34
	Total interest-earning assets				1,397,448			1,183,559			14,360			12,314		4.11			4.16
Non-earning assets					133,419			115,976
		Total assets		$	1,530,867		$	1,299,535
Deposits:
	Demand			$	237,102		$	185,601			22			19		0.04			0.04
	Money market				195,578			171,466			61			50		0.13			0.12
	Savings				109,397			89,485			14			11		0.05			0.05
	Time				403,854			373,790			1,087			1,081		1.08			1.16
		Total deposits			945,931			820,342			1,184			1,161		0.50			0.57
Customer repurchase agreements					51,417			40,720			2			1		0.02			0.01
Other short-term borrowings					-			571			-			1		-			-
Long-term borrowings					37,499			37,376			269			266		2.87			2.85
	Total interest-bearing
		liabilities			1,034,847			899,009			1,455			1,429		0.56			0.64
Noninterest bearing demand deposits					290,695			223,137
Other liabilities					8,662			5,605
Shareholders' equity					196,663			171,784
	Total liabilities and
		shareholders' equity		$	1,530,867		$	1,299,535
Interest rate spread																3.55	%		3.52	%
Net interest margin																3.69	%		3.68	%
Net interest income (taxable equivalent basis)											12,905			10,885
Less: Taxable equivalent adjustment											523			534
Net interest income										$	12,382		$	10,351

				Net Interest Income Analysis
				For the Six Months Ended June 30, 2015 and 2014
				(in thousands, except rates)
										Interest
				Average Balance						Income/Expense						Yield/Rate
				2015			2014			2015			2014			2015			2014
Loans:
	Commercial			$	147,482		$	120,460		$	3,586		$	2,757		4.90	%		4.62	%
	Real estate				804,507			667,168			19,560			16,621		4.86			4.98
	Consumer				13,434			4,982			445			176		6.68			7.12
		Total loans			965,423			792,610			23,591			19,554		4.89			4.94
Securities:
	Federal agencies & GSEs				80,866			73,850			569			405		1.41			1.10
	Mortgage-backed & CMOs				63,637			64,482			712			771		2.24			2.39
	State and municipal				188,020			192,174			3,482			3,765		3.70			3.92
	Other				15,293			15,940			248			248		3.24			3.11
		Total securities			347,816			346,446			5,011			5,189		2.88			3.00
Federal funds sold					10,508			-			6			-		0.12			-
Deposits in other banks					66,425			46,116			98			68		0.30			0.30
	Total interest-earning assets				1,390,172			1,185,172			28,706			24,811		4.13			4.19
Non-earning assets					134,521			115,906
		Total assets		$	1,524,693		$	1,301,078
Deposits:
	Demand			$	224,955		$	176,889			40			41		0.04			0.05
	Money market				199,236			182,109			132			125		0.13			0.14
	Savings				108,545			88,199			26			25		0.05			0.06
	Time				409,283			378,061			2,180			2,199		1.07			1.17
		Total deposits			942,019			825,258			2,378			2,390		0.51			0.58
Customer repurchase agreements					52,294			39,267			5			3		0.02			0.02
Other short-term borrowings					-			287			-			1		-			-
Long-term borrowings					37,484			37,374			533			530		2.84			2.84
	Total interest-bearing
		liabilities			1,031,797			902,186			2,916			2,924		0.57			0.65
Noninterest bearing demand deposits					286,855			222,266
Other liabilities					9,665			5,706
Shareholders' equity					196,376			170,920
	Total liabilities and
		shareholders' equity		$	1,524,693		$	1,301,078
Interest rate spread																3.56	%		3.54	%
Net interest margin																3.71	%		3.69	%
Net interest income (taxable equivalent basis)											25,790			21,887
Less: Taxable equivalent adjustment											1,030			1,077
Net interest income										$	24,760		$	20,810