American National Bankshares Inc.
) has witnessed sharp downward estimate revisions after reporting
disappointing third-quarter 2012 results that included an 11.5%
year-over-year decrease in earnings per share and a negative
earnings surprise of 2.1%. Consequently, this southeast-regional
bank sunk to a Zacks #5 Rank (Strong Sell) on December 5.
The stock has been on a downtrend since the beginning of May and
given its expected negative earnings growth rates in the upcoming
quarters, it has more downside left. Moreover, Zacks ESP
(Expected Surprise Prediction) of negative 2.3% indicates that
the company will miss the Zacks Consensus Estimate for the fourth
quarter as well.
What are the Concerns?
Increasing noninterest expense, declining net interest margin,
weakening loan portfolio and deteriorating credit quality are the
primary headwinds for American National.
On November 27, American National reported third-quarter earnings
per share of 46 cents, missing the Zacks Consensus Estimate by a
penny and the year-ago earnings by 6 cents.
Earnings were primarily aided by reduction in both provision for
loan losses (down 36.6% year over year) and interest expense
(down 16%). However, these positives were more than offset by an
8.3% decline in interest and dividend income, and a 3.7% increase
in noninterest expense. Personnel costs relating to last year's
merger with MidCarolina Financial Corporation are primarily
responsible for higher noninterest
Though American National's capital ratios remained strong and
exceed all regulatory requirements, credit quality showed
deterioration with net charge offs increasing 13 basis points
(bps) year over year to 0.22% and the allowance for loan losses
increasing 39 bps to 1.50% of total loans as of September 30,
Estimate Revisions Show Weakness
The Zacks Consensus Estimate for 2012 decreased 2.5% to $1.93 per
share owing to 2 out of 4 downward estimate revisions over the
last 60 days. The company has seen one estimate revising downward
in the last 30 days, reducing the estimate by 2.0%. No upward
estimate revision was witnessed in the last 60 days.
For 2013, 3 out of 4 estimates were revised downward over the
last 60 days, sinking the Zacks Consensus Estimate by 11.7% to
$1.62 per share.
Among southeast-regional banks,
Cardinal Financial Corp.
) hold a Zacks #1 Rank (Strong Buy).
AMER NATL BNKSH (AMNB): Free Stock Analysis
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