DANVILLE, Va., Jan. 23, 2020 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or “the Company”) today reported fourth quarter 2019 earnings of $7.4 million or $0.67 per diluted common share. Those results compare to net income of $5.0 million, or $0.57 per diluted common share during the same quarter in the prior year, and net income of $8.7 million or $0.78 per diluted common share recognized for the third quarter of 2019. Earnings for the twelve months ended December 31, 2019 amounted to $20.9 million or $1.98 per diluted share, compared to $22.6 million or $2.59 per diluted share in 2018. Results for 2019 include the impact of merger related costs of $11.8 million associated with the HomeTown Bank (HomeTown) acquisition.

“2019 was a transformative year for American National, as we successfully completed the acquisition of HomeTown, added some key management talent and just announced the opening of a loan production office in the strong Raleigh, North Carolina market” said Jeffrey V. Haley, President and Chief Executive Officer of the Company. “Loan growth picked up in the quarter, and our credit quality continues to be strong. Margin compression continues to be a challenge in this low rate environment, both from market pricing pressure as well as the impact from recent reductions in short term rates. We incurred some additional merger related expenses associated with completing the HomeTown acquisition during the quarter, as well as some expenses associated with the Raleigh loan production office. I am proud of our accomplishments in 2019 to grow the Company and maintain our solid financial performance, and look to 2020 with optimism and enthusiasm.”

Fourth quarter 2019 highlights include:

• Earnings produced a return on average assets of 1.20% for the fourth quarter of 2019, compared to 1.43% in the previous quarter and 1.08% for the same quarter in prior year.
   
• Net loans receivable increased $26.4 million for the quarter or 5.8% annualized.
   
• Net interest margin was 3.62% for the quarter, down from 3.75% in the third quarter of 2019 and up from 3.48% in the same quarter of the prior year.   
   
• Noninterest revenues decreased $305.0 thousand or 7.3% when compared to the previous quarter, but increased $868.0 thousand or 29.0% to $3.9 million from $3.0 million in the same quarter in the prior year.
  
  
• The fourth quarter provision for loan losses totaled $462 thousand, which compares to a net recovery of $12 thousand for the previous quarter, and a net recovery of $6 thousand in the same quarter in the prior year.
  
  
• Nonperforming assets as a percentage of total assets remained level at 0.15% at December 31, 2019, compared with 0.15% at September 30, 2019, and up from 0.11% at December 31, 2018.
  
  
• Annualized net charge-offs were 0.02% for the fourth quarter of 2019, compared to 0.23% for the corresponding quarter in the prior year and up from none for the third quarter of 2019.

NET INTEREST INCOME

Net interest income for the fourth quarter of 2019 was $20.4 million, a decrease of $174 thousand or 0.8% from the prior quarter and an increase of $5.4 million or 36.2% from the fourth quarter of 2018. The year-over-year growth was positively impacted by higher earning asset balances and higher loan yields in large part associated with the HomeTown acquisition. The quarter-over-quarter decrease in net interest income was principally the result of lower yields on assets associated with the recent decreases in short term rates  and market pricing pressure in the commercial portfolio offset in part by a decrease in funding costs. The fully taxable equivalent (“FTE”) net interest margin for the quarter was 3.62%, down from 3.75% in the prior quarter and up from 3.48% in the same period a year ago.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2019, net accretion related to acquisition accounting increased $118 thousand from the prior quarter to $1.1 million and increased $780 thousand from the fourth quarter of 2018. Net accretion for the twelve months ended December 31, 2019 amounted to $3.4 million, compared to $1.3 million for the same period in 2018. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

2020		$1,968
2021		1,479
2022		980
2023		657
2024		371
Thereafter		1,631

ASSET QUALITY/LOAN LOSS PROVISION

Non-performing assets (“NPAs”) totaled $3.6 million as of December 31, 2019, down from $3.7 million at September 30, 2019 and up from $2.0 million at December 31, 2018. NPAs as a percentage of total assets were 0.15% at December 31, 2019, which compares to 0.15% at September 30, 2019 and 0.11% at December 31, 2018.

The provision for loan losses was $462 thousand for the fourth quarter of 2019, as compared to a net recovery $12 thousand for the previous quarter and a net recovery of $6 thousand for the same period in the previous year. The allowance for loan losses was $13.2 million at December 31, 2019, compared to $12.8 million at September 30, 2019 and $12.8 million at December 31, 2018. Annualized net charge-offs as a percentage of average loans outstanding was 0.02% for the fourth quarter of 2019, compared to none in the previous quarter and 0.23% for the same period in the prior year. The allowance as a percentage of loans held for investment was 0.72% at December 31, 2019, compared to 0.71% at September 30, 2019 and 0.94% at December 31, 2018.

NONINTEREST INCOME

Noninterest income decreased $305.0 thousand to $3.9 million for the quarter ended December 31, 2019 from $4.2 million in the prior quarter and increased from $3.0 million for the same period in the prior year. Losses of $309 thousand related to the write-down of premises and equipment in connection with an ATM replacement initiative accounted for most of the decrease from the previous quarter, while increases in other fees and commissions, mortgage banking fees and securities gains partially offset by losses on premises and equipment accounted for much of the increase over the same period in the prior year.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter amounted to $15.0 million, up $1.2 million or 9.0% when compared to the $13.8 million for the previous quarter and up $3.4 million or 29.2% when compared to the same period in the previous year. The increase as compared to the previous quarter was driven by additional merger costs of $460 thousand incurred during the quarter, compensation costs associated with establishing the Raleigh loan production office, corporate incentive compensation adjustments, other professional fees and data processing costs. The increase from the same period in the prior year is primarily related to regulatory, data processing and compensation costs associated with the acquisition of HomeTown.

INCOME TAXES

The effective tax rate for the three months ended December 31, 2019 was 15.6% compared to 21.1% for the three months ended September 30, 2019 and 21.6% for the same period in the prior year. The decrease in the effective tax rate as compared to the previous periods was primarily due to a change in future effective rate assumption related to state apportionments which was prompted by the HomeTown acquisition.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $2.5 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 Virginia and North Carolina with 26 banking offices. American National Bank also manages an additional $878 million of trust, investment and brokerage assets in its Trust and Investment Services Division. Additional information about American National and American National Bank is available on American National's website at www.amnb.com.

NON-GAAP FINANCIAL MEASURES

This release contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). American National’s management uses these non-GAAP financial measures in its analysis of American National’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of American National’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. For a reconciliation of non-GAAP financial measures, see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.

Forward-Looking Statements

Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. American National intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. American National’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could have a material effect on the operations and future prospects of American National include but are not limited to: (1) expected revenue synergies and cost savings from the recently completed merger with HomeTown may not be fully realized or realized within the expected timeframe; (2) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (3) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in American National’s market areas; (4) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (5) accounting principles, policies, and guidelines; and (6) other risk factors detailed from time to time in filings made by American National with the Securities and Exchange Commission. American National undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:
Jeffrey W. Farrar
Executive Vice President, COO & CFO
(434)773-2274
farrarj@amnb.com 

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
		December 31
			2019				2018
Assets
Cash and due from banks		$	32,505			$	29,587
Interest-bearing deposits in other banks			47,077				34,668
Equity securities, at fair value			-				1,830
Securities available for sale, at fair value			379,195				332,653
Restricted stock, at cost			8,630				5,247
Loans held for sale			2,027				640
Loans			1,830,815				1,357,476
Less allowance for loan losses			(13,152	)			(12,805	)
Net Loans			1,817,663				1,344,671
Premises and equipment, net			39,848				26,675
Other real estate owned, net			1,308				869
Goodwill			84,002				43,872
Core deposit intangibles, net			7,728				926
Bank owned life insurance			27,817				18,941
Accrued interest receivable and other assets			30,750				22,287
Total assets		$	2,478,550			$	1,862,866
Liabilities
Demand deposits -- noninterest-bearing		$	578,606			$	435,828
Demand deposits -- interest-bearing			328,015				234,621
Money market deposits			504,651				401,461
Savings deposits			177,505				132,360
Time deposits			471,770				361,957
Total deposits			2,060,547				1,566,227
Customer repurchase agreements			40,475				35,243
Subordinated debt			7,517				-
Junior subordinated debt			28,029				27,927
Accrued interest payable and other liabilities			21,724				10,927
Total liabilities			2,158,292				1,640,324
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding			-				-
Common stock, $1 par, 20,000,000 shares authorized,
11,071,540 shares outstanding at December 31, 2019 and
8,720,337 shares outstanding at December 31, 2018			11,019				8,668
Capital in excess of par value			158,244				78,172
Retained earnings			151,478				141,537
Accumulated other comprehensive loss, net			(483	)			(5,835	)
Total shareholders' equity			320,258				222,542
Total liabilities and shareholders' equity		$	2,478,550			$	1,862,866

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
		Three Months Ended								Twelve Months Ended
		December 31								December 31
			2019				2018				2019				2018
Interest and Dividend Income:
Interest and fees on loans		$	21,947			$	15,481			$	82,684			$	59,966
Interest and dividends on securities:
Taxable			1,991				1,674				7,682				6,106
Tax-exempt			117				298				777				1,502
Dividends			127				81				451				321
Other interest income			408				357				1,261				873
Total interest and dividend income			24,590				17,891				92,855				68,768
Interest Expense:
Interest on deposits			3,496				2,340				13,143				8,086
Interest on short-term borrowings			134				145				650				186
Interest on long-term borrowings			-				-				14				-
Interest on subordinated debt			122				-				367				-
Interest on junior subordinated debt			390				394				1,554				1,402
Total interest expense			4,142				2,879				15,728				9,674
Net Interest Income			20,448				15,012				77,127				59,094
Provision for (recovery of) loan losses			462				(6	)			456				(103	)
Net Interest Income After Provision
for Loan Losses			19,986				15,018				76,671				59,197
Noninterest Income:
Trust fees			1,021				908				3,847				3,783
Service charges on deposit accounts			765				646				2,866				2,455
Other fees and commissions			967				660				3,693				2,637
Mortgage banking income			737				370				2,439				1,862
Securities gains (losses), net			32				(270	)			607				123
Brokerage fees			205				192				721				795
Income from Small Business Investment Companies			37				161				211				637
Gains (losses) on premises and equipment, net			(338	)			(6	)			(427	)			60
Other			440				337				1,213				922
Total noninterest income			3,866				2,998				15,170				13,274
Noninterest Expense:
Salaries			6,665				5,132				24,672				20,509
Employee benefits			1,321				1,048				5,343				4,370
Occupancy and equipment			1,454				1,081				5,417				4,378
FDIC assessment			-				125				119				537
Bank franchise tax			531				191				1,644				1,054
Core deposit intangible amortization			437				55				1,398				265
Data processing			729				382				2,567				1,691
Software			363				313				1,295				1,279
Other real estate owned, net			15				21				31				122
Merger related expenses			460				872				11,782				872
Other			3,062				2,418				11,806				9,169
Total noninterest expense			15,037				11,638				66,074				44,246
Income Before Income Taxes			8,815				6,378				25,767				28,225
Income Taxes			1,374				1,376				4,861				5,646
Net Income		$	7,441			$	5,002			$	20,906			$	22,579
Net Income Per Common Share:
Basic		$	0.67			$	0.57			$	1.99			$	2.60
Diluted		$	0.67			$	0.57			$	1.98			$	2.59
Weighted Average Common Shares Outstanding:
Basic			11,094,346				8,717,572				10,531,572				8,698,014
Diluted			11,103,905				8,722,645				10,541,337				8,708,462

American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2019				2019				2018				2019				2018
EARNINGS
Interest income				$	24,590			$	24,958			$	17,891			$	92,855			$	68,768
Interest expense					4,142				4,336				2,879				15,728				9,674
Net interest income					20,448				20,622				15,012				77,127				59,094
Provision for (recovery of) loan losses					462				(12	)			(6	)			456				(103	)
Noninterest income					3,866				4,171				2,998				15,170				13,274
Noninterest expense					15,037				13,792				11,638				66,074				44,246
Income taxes					1,374				2,321				1,376				4,861				5,646
Net income					7,441				8,692				5,002				20,906				22,579
PER COMMON SHARE
Net income per share - basic				$	0.67			$	0.78			$	0.57			$	1.99			$	2.60
Net income per share - diluted					0.67				0.78				0.57				1.98				2.59
Cash dividends paid					0.27				0.27				0.25				1.04				1.00
Book value per share					28.93				28.54				25.52				28.93				25.52
Book value per share - tangible (a)					20.64				20.19				20.38				20.64				20.38
Closing market price					39.57				35.47				29.31				39.57				29.31
FINANCIAL RATIOS
Return on average assets					1.20		%		1.43		%		1.08		%		0.91		%		1.24		%
Return on average equity					9.31				11.04				9.16				7.16				10.56
Return on average tangible equity (a)					13.71				16.31				11.63				10.43				13.49
Average equity to average assets					12.88				12.98				11.78				12.68				11.70
Tangible equity to tangible assets (a)					9.57				9.50				9.78				9.57				9.78
Net interest margin, taxable equivalent					3.62				3.75				3.48				3.68				3.49
Efficiency ratio (a)					57.24				53.79				58.15				57.25				59.20
Effective tax rate					15.59				21.08				21.57				18.87				20.00
PERIOD-END BALANCES
Securities				$	387,825			$	317,111			$	339,730			$	387,825			$	339,730
Loans held for sale					2,027				5,646				640				2,027				640
Loans, net					1,830,815				1,804,447				1,357,476				1,830,815				1,357,476
Goodwill and other intangibles					91,730				92,798				44,798				91,730				44,798
Assets					2,478,550				2,454,529				1,862,866				2,478,550				1,862,866
Assets - tangible (a)					2,386,820				2,361,731				1,818,068				2,386,820				1,818,068
Deposits					2,060,547				2,041,862				1,566,227				2,060,547				1,566,227
Customer repurchase agreements					40,475				38,924				35,243				40,475				35,243
Long-term borrowings					35,546				35,524				27,927				35,546				27,927
Shareholders' equity					320,258				317,246				222,542				320,258				222,542
Shareholders' equity - tangible (a)					228,528				224,448				177,744				228,528				177,744
AVERAGE BALANCES
Securities (b)				$	347,502			$	323,202			$	332,230			$	342,219			$	330,982
Loans held for sale					4,991				3,904				1,201				3,419				2,285
Loans, net					1,810,744				1,817,732				1,335,469				1,700,880				1,330,582
Interest-earning assets					2,264,687				2,207,935				1,736,453				2,107,169				1,709,283
Goodwill and other intangibles					92,607				93,077				44,831				81,049				44,926
Assets					2,482,502				2,426,678				1,854,492				2,303,624				1,827,658
Assets - tangible (a)					2,389,895				2,333,601				1,809,661				2,222,575				1,782,732
Interest-bearing deposits					1,466,116				1,443,947				1,116,911				1,377,422				1,134,512
Deposits					2,066,435				2,012,653				1,558,864				1,915,197				1,556,039
Customer repurchase agreements					38,742				39,470				37,905				39,134				18,401
Other short-term borrowings					-				1,986				-				2,694				1,149
Long-term borrowings					35,537				35,806				27,914				33,644				27,874
Shareholders' equity					319,851				314,980				218,430				292,022				213,821
Shareholders' equity - tangible (a)					227,244				221,903				173,599				210,973				168,895
American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2019				2019				2018				2019				2018
CAPITAL
Weighted average shares outstanding - basic					11,094,346				11,127,603				8,717,572				10,531,572				8,698,014
Weighted average shares outstanding - diluted					11,103,905				11,138,008				8,722,645				10,541,337				8,708,462
ALLOWANCE FOR LOAN LOSSES
Beginning balance				$	12,758			$	12,786			$	13,588			$	12,805			$	13,603
Provision for (recovery of) loan losses					462				(12	)			(6	)			456				(103	)
Charge-offs					(144	)			(66	)			(818	)			(333	)			(1,020	)
Recoveries					76				50				41				224				325
Ending balance				$	13,152			$	12,758			$	12,805			$	13,152			$	12,805
LOANS
Construction and land development				$	137,920			$	143,788			$	97,240			$	137,920			$	97,240
Commercial real estate					899,199				883,219				655,800				899,199				655,800
Residential real estate					324,315				318,833				209,438				324,315				209,438
Home equity					119,423				122,074				103,933				119,423				103,933
Commercial and industrial					339,077				324,508				285,972				339,077				285,972
Consumer					10,881				12,025				5,093				10,881				5,093
Total				$	1,830,815			$	1,804,447			$	1,357,476			$	1,830,815			$	1,357,476
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing				$	361			$	874			$	72			$	361			$	72
Nonaccrual					1,944				1,446				1,090				1,944				1,090
Other real estate owned					1,308				1,353				869				1,308				869
Nonperforming assets				$	3,613			$	3,673			$	2,031			$	3,613			$	2,031
ASSET QUALITY RATIOS
Allowance for loan losses to total loans					0.72		%		0.71		%		0.94		%		0.72		%		0.94		%
Allowance for loan losses to
nonperforming loans					570.59				549.91				1,101.98				570.59				1,101.98
Nonperforming assets to total assets					0.15				0.15				0.11				0.15				0.11
Nonperforming loans to total loans					0.13				0.13				0.09				0.13				0.09
Annualized net charge-offs
to average loans					0.02				0.00				0.23				0.01				0.05
OTHER DATA
Fiduciary assets at period-end (c) (d)				$	560,776			$	546,407			$	494,034			$	560,776			$	494,034
Retail brokerage assets at period-end (c) (d)				$	317,262			$	308,820			$	274,552			$	317,262			$	274,552
Number full-time equivalent employees (e)					355				365				305				355				305
Number of full service offices					26				28				24				26				24
Number of loan production offices					1				1				-				1				-
Number of ATMs					38				40				33				38				33
Notes:
(a) - This financial measure is not calculated in accordance with GAAP.  For a reconciliation of non-GAAP financial measures, see
"Reconciliation of Non-GAAP Financial Measures" at the end of  this release.
(b) - Average does not include unrealized gains and losses.
(c) - Market value.
(d) - Assets are not owned by American National and are not reflected in the consolidated balance sheet.
(e) - Average for quarter.

			Net Interest Income Analysis
			For the Three Months Ended December 31, 2019 and 2018
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2019			2018			2019			2018		2019		2018
Loans:
	Commercial			$	315,902		$	262,040		$	3,516		$	2,768		4.42	%	4.19	%
	Real estate				1,488,577			1,069,515			18,268			12,681		4.91		4.74
	Consumer				11,256			5,115			209			76		7.37		5.89
		Total loans (b)			1,815,735			1,336,670			21,993			15,525		4.84		4.64
Securities:
	Federal agencies & GSEs				123,950			128,826			716			752		2.31		2.33
	Mortgage-backed & CMOs				164,727			110,753			996			655		2.42		2.37
	State and municipal				41,109			78,223			303			529		2.95		2.71
	Other				17,716			14,428			250			187		5.64		5.18
		Total securities			347,502			332,230			2,265			2,123		2.61		2.56
Deposits in other banks					101,450			67,553			408			357		1.60		2.10
	Total interest-earning assets				2,264,687			1,736,453			24,666			18,005		4.35		4.14
Non-earning assets					217,815			118,039
		Total assets		$	2,482,502		$	1,854,492
Deposits:
	Demand			$	329,759		$	229,286			126			13		0.15		0.02
	Money market				482,671			391,289			1,283			1,081		1.05		1.10
	Savings				176,686			133,350			83			10		0.19		0.03
	Time				477,000			362,986			2,004			1,236		1.67		1.35
		Total deposits			1,466,116			1,116,911			3,496			2,340		0.95		0.83
Customer repurchase agreements					38,742			37,905			134			145		1.37		1.52
Long-term borrowings					35,537			27,914			512			394		5.76		5.65
	Total interest-bearing
		liabilities			1,540,395			1,182,730			4,142			2,879		1.07		0.97
Noninterest bearing demand deposits					600,319			441,953
Other liabilities					21,937			11,379
Shareholders' equity					319,851			218,430
		Total liabilities and
			shareholders' equity	$	2,482,502		$	1,854,492
Interest rate spread																3.28	%	3.17	%
Net interest margin																3.62	%	3.48	%
Net interest income (taxable equivalent basis)											20,524			15,126
Less: Taxable equivalent adjustment (c)											76			114
Net interest income										$	20,448		$	15,012
Notes:
(a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/
amortization of deferred loan fees and costs.
(b) - Nonaccrual loans are included in the average balances.
(c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.

			Net Interest Income Analysis
			For the Years Ended December 31, 2019 and 2018
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2019			2018			2019			2018		2019		2018
Loans:
	Commercial			$	306,065		$	264,241		$	14,125		$	10,579		4.62	%	4.00	%
	Real estate				1,388,188			1,063,950			68,050			49,275		4.90		4.63
	Consumer				10,046			4,676			694			305		6.91		6.52
		Total loans (b)			1,704,299			1,332,867			82,869			60,159		4.86		4.51
Securities:
	Federal agencies & GSEs				132,916			121,923			3,191			2,708		2.40		2.22
	Mortgage-backed & CMOs				134,458			109,048			3,350			2,467		2.49		2.26
	State and municipal				58,293			85,061			1,650			2,399		2.83		2.82
	Other				16,552			14,950			903			718		5.46		4.80
		Total securities			342,219			330,982			9,094			8,292		2.66		2.51
Deposits in other banks					60,651			45,434			1,261			873		2.08		1.92
	Total interest-earning assets				2,107,169			1,709,283			93,224			69,324		4.42		4.06
Non-earning assets					196,455			118,375
		Total assets		$	2,303,624		$	1,827,658
Deposits:
	Demand			$	307,329		$	234,857			370			49		0.12		0.02
	Money market				445,505			393,321			5,246			3,505		1.18		0.89
	Savings				166,842			132,182			284			40		0.17		0.03
	Time				457,746			374,152			7,243			4,492		1.58		1.20
		Total deposits			1,377,422			1,134,512			13,143			8,086		0.95		0.71
Customer repurchase agreements					39,134			18,401			595			164		1.52		0.89
Other short-term borrowings					2,694			1,149			55			22		2.04		1.91
Long-term borrowings					33,644			27,874			1,935			1,402		5.75		5.03
	Total interest-bearing
		liabilities			1,452,894			1,181,936			15,728			9,674		1.08		0.82
Noninterest bearing demand deposits					537,775			421,527
Other liabilities					20,933			10,374
Shareholders' equity					292,022			213,821
		Total liabilities and
			shareholders' equity	$	2,303,624		$	1,827,658
Interest rate spread																3.34	%	3.24	%
Net interest margin																3.68	%	3.49	%
Net interest income (taxable equivalent basis)											77,496			59,650
Less: Taxable equivalent adjustment (c)											369			556
Net interest income										$	77,127		$	59,094
Notes:
(a) - Interest income includes net accretion/amortization of acquired loan fair value adjustments and the net accretion/
amortization of deferred loan fees and costs.
(b) - Nonaccrual loans are included in the average balances.
(c) - A tax rate of 21% was used in adjusting interest on tax-exempt assets to a fully taxable equivalent basis.

American National Bankshares Inc.
Reconciliation of Non-GAAP Financial Measures
Unaudited
	(Dollars in thousands, except per share data)															At or for the Year Ended
				4th Qtr				3rd Qtr				4th Qtr				December 31,
					2019				2019				2018				2019				2018
EFFICIENCY RATIO
Noninterest expense				$	15,037			$	13,792			$	11,638			$	66,074			$	44,246
Add/subtract: gain/loss on sale of OREO					(3	)			(22	)			(11	)			52				(44	)
Subtract: core deposit intangible amortization					(437	)			(448	)			(55	)			(1,398	)			(265	)
Subtract: merger related expense					(460	)			0				(872	)			(11,782	)			(872	)
				$	14,137			$	13,322			$	10,700			$	52,946			$	43,065
Net interest income				$	20,448			$	20,622			$	15,012			$	77,127			$	59,094
Tax equivalent adjustment					76				77				114				369				556
Noninterest income					3,866				4,171				2,998				15,170				13,274
Add/subtract: loss/gain on securities					(32	)			(105	)			270				(607	)			(123	)
Add/subtract: loss/gain on fixed assets					338				2				6				427				(60	)
				$	24,696			$	24,767			$	18,400			$	92,486			$	72,741
Efficiency ratio					57.24		%		53.79		%		58.15		%		57.25		%		59.20		%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans				$	21,993			$	22,516			$	15,525			$	82,869			$	60,159
Interest income - investments and other					2,673				2,519				2,480				10,355				9,165
Interest expense - deposits					(3,496	)			(3,655	)			(2,340	)			(13,143	)			(8,086	)
Interest expense - customer repurchase
agreements					(134	)			(150	)			(145	)			(595	)			(164	)
Interest expense - other short-term borrowings					-				(12	)			-				(55	)			(22	)
Interest expense - long-term borrowings					(512	)			(519	)			(394	)			(1,935	)			(1,402	)
Total net interest income				$	20,524			$	20,699			$	15,126			$	77,496			$	59,650
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans					(46	)			(46	)			(43	)			(185	)			(192	)
Tax benefit on nontaxable interest - securities					(30	)			(31	)			(71	)			(184	)			(364	)
GAAP measures				$	20,448			$	20,622			$	15,012			$	77,127			$	59,094
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)					9.31		%		11.04		%		9.16		%		7.16		%		10.56		%
Impact of excluding average goodwill
and other intangibles					4.40				5.27				2.47				3.27				2.93
Return on average tangible equity
(non-GAAP)					13.71		%		16.31		%		11.63		%		10.43		%		13.49		%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)					12.92		%		12.92		%		11.95		%		12.92		%		11.95		%
Impact of excluding goodwill and
other intangibles					3.35				3.42				2.17				3.35				2.17
Tangible equity to tangible assets ratio
(non-GAAP)					9.57		%		9.50		%		9.78		%		9.57		%		9.78		%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)				$	28.93			$	28.54			$	25.52			$	28.93			$	25.52
Impact of excluding goodwill and
other intangibles					8.29				8.35				5.14				8.29				5.14
Tangible book value per share
(non-GAAP)				$	20.64			$	20.19			$	20.38			$	20.64			$	20.38

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