GlobeNewswire Inc | Jan 21, 2021 07:30AM EST

January 21, 2021

DANVILLE, Va., Jan. 21, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (American National or the Company) today reported fourth quarter 2020 earnings of $8.8 million, or $0.80 per diluted common share. Those results compare to $7.4 million, or $0.67 per diluted common share, during the same quarter in the prior year, and net income of $7.2 million, or $0.66 per diluted common share, recognized for the third quarter of 2020. Earnings for the twelve months ended December 31, 2020 were $30.0 million, or $2.73 per diluted common share, compared to $20.9 million, or $1.98 per diluted common share for the same period of 2019. Earnings for the twelve months ended December 31, 2019 were impacted by $11.8 million in merger related expenses.

President and Chief Executive Officer Jeffrey V. Haley commented, Despite the significant economic impact of COVID-19, we ended 2020 on a positive note, with earnings of $8.8 million or $0.80 per share for the fourth quarter, representing an increase of $1.4 million, or 18.2%, as compared to same quarter in 2019. Annual revenues were just over $100 million or 9% growth as compared to 2019. For the year, we generated earnings of $30.0 million or 43.7% growth as compared to 2019 despite increasing our allowance for loan losses by $8.3 million as a result of the pandemic. Tangible book value increased to $22.47 per share, reflecting growth of $1.83 per share, or 8.9%, as compared to 2019. Capital and liquidity levels remain very strong.

We are excited about 2021 and our plans to improve our digital capabilities and deepen our customer relationships. I want to again express my appreciation to our employees and customers, who continue to adapt to the many challenges of the pandemic. It has been inspirational to witness our teams ability to meet our customer and community needs during these challenging times.

Fourth quarter 2020 highlights include:

-- Earnings produced a return on average tangible common equity of 14.90% for the fourth quarter of 2020, compared to 12.66% in the previous quarter and 13.71% for the same quarter in the prior year (non-GAAP). -- Average deposits grew 4.2% during the quarter and 22.7% over the same quarter of 2019; the cost of deposits decreased to 0.43% in the fourth quarter, compared to 0.52% in the previous quarter and 0.95% in the same quarter of the prior year. -- Net interest margin was 3.22% for the quarter, down from 3.26% in the third quarter of 2020 and from 3.62% in the same quarter of the prior year (non-GAAP). -- Noninterest revenues decreased $71 thousand, or 1.7%, when compared to the previous quarter, and increased $355 thousand, or 9.2%, compared to the same quarter in the prior year. -- Noninterest expense increased $519 thousand, or 3.7%, when compared to the previous quarter, and decreased $378 thousand, or 2.5%, when compared to the same quarter in the prior year. -- The fourth quarter provision for loan losses totaled $585 thousand, which compares to a provision of $2.6 million for the previous quarter, and a provision of $462 thousand in the same quarter in the prior year. The allowance for loan losses as a percentage of loans held for investment increased to 1.06% at period end. Excluding Paycheck Protection Program (PPP) loans, the allowance as a percentage of loans increased to 1.19% at period end. -- Nonperforming assets as a percentage of total assets were 0.12% at December 31, 2020, down from 0.16% at September 30, 2020 and 0.15% at December 31, 2019. -- Annualized net charge-offs were 0.05% for the fourth quarter of 2020, up from 0.02% for the corresponding quarter in the prior year and 0.01% for the third quarter of 2020. -- As a result of the Companys participation in the Small Business Administrations PPP under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it had outstanding net PPP loans of $211.3 million at December 31, 2020, which compares to $266.0 million at September 30, 2020. The Company had net unamortized PPP loan origination fees with a balance of $4.4 million at December 31, 2020, which compares to $6.8 million at September 30, 2020.

NET INTEREST INCOME

Net interest income for the fourth quarter of 2020 was $22.1 million, an increase of $651 thousand, or 3.0%, from the prior quarter and an increase of $1.7 million, or 8.3%, from the fourth quarter of 2019. The fully taxable equivalent (FTE) net interest margin for the quarter was 3.22%, down from 3.26% in the prior quarter and down from 3.62% in the same period a year ago (non-GAAP). The fourth quarter of 2020 benefited from the recognition of the remaining net fees on PPP loans that were repaid during the quarter. Total PPP fees recognized in net interest income during the quarter was $2.4 million, an increase of $1.3 million as compared to the prior quarter as a result of the forgiveness of $56.4 million of PPP loans. The increase in net interest income from the same quarter in the prior year was attributable to the PPP program and core deposit growth partially offset by a significantly lower rate environment.

The Companys FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2020, net accretion related to acquisition accounting amounted to $1.2 million compared to $1.1 million for the same period in 2019 and $1.7 million in the prior quarter. The third quarter of 2020 included an $800,000 cash basis accretion collection from a loan charged off prior to an American National acquisition. Net accretion for the twelve months ended December 31, 2020 amounted to $3.8 million, compared to $3.4 million for the same period in 2019. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

2021 $ 1,8302022 1,1462023 6462024 3882025 281Thereafter 956

ASSET QUALITY

Nonperforming assets (NPAs) totaled $3.7 million as of December 31, 2020, down from $4.6 million at September 30, 2020, and up slightly from $3.6 million at December 31, 2019. NPAs as a percentage of total assets were 0.12% at December 31, 2020, compared to 0.16% at September 30, 2020 and 0.15% at December 31, 2019.

The provision for loan losses was $585 thousand for the fourth quarter of 2020, as compared to $2.6 million for the previous quarter and $462 thousand for the same period in the previous year. The fourth quarter of 2020 warranted a significantly lower provision than third quarter based on the economic outlook, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. The allowance for loan losses was $21.4 million at December 31, 2020, compared to $21.1 million at September 30, 2020 and $13.2 million at December 31, 2019. Annualized net charge-offs as a percentage of average loans outstanding was 0.05% for the fourth quarter of 2020, compared to 0.01% in the previous quarter and 0.02% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.06% at December 31, 2020, compared to 1.01% at September 30, 2020, and 0.72% at December 31, 2019. Excluding PPP loans, the allowance as a percentage of loans increased to 1.19% at December 31, 2020, compared to 1.16% at September 30, 2020 and 0.72% at December 31, 2019.

American National continues to utilize a Disaster Assistance Program for borrowers in accordance with Section 4013 of the CARES Act. At December 31, 2020, American National had interest only and payment deferrals to customers with outstanding balances amounting to $30.0 million, representing 1.5% of total loans held for investment, which compares to $135.2 million, or 6.5% of outstanding loans held for investment, at September 30, 2020. At December 31, 2020, $18.2 million of the $30.0 million in total deferrals were the result of second and third payment or interest deferrals, representing less than 1% of total loans held for investment.

NONINTEREST INCOME

Noninterest income decreased $71 thousand, or 1.7%, to $4.2 million for the quarter ended December 31, 2020 from $4.3 million in the prior quarter and increased $355 thousand, or 9.2%, from the same period in the prior year. The largest increase in the quarter was the increase in income from small business investment companies (SBICs) which was up $138 thousand, or 140.8%, over the previous quarter. The primary decrease in the quarter related to reduced earnings in other investments of the Company. Comparing the fourth quarter of 2020 to the fourth quarter of 2019, the increase was reflective of increased mortgage banking income, income from SBICs and reduced losses on premises and equipment. Other noninterest income for the fourth quarter of 2020 was reduced by a loss on the sale of repossessed assets of $139 thousand.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter of 2020 amounted to $14.7 million, up $519 thousand, or 3.7%, when compared to the $14.1 million for the previous quarter and down $378 thousand, or 2.5%, from $15.0 million during the same period in the previous year. The increase from the third quarter of 2020 was primarily attributable to increased pension and salary expenses resulting from voluntary early retirement package costs. The fourth quarter of 2019 included $460,000 of merger related expenses.

INCOME TAXES

The effective tax rate for the three months ended December 31,2020 was 20.9%, compared to 20.0% for the prior quarter and 15.6% for the same period in the prior year.

BALANCE SHEET

Total assets at December 31, 2020 were $3.1 billion, an increase of $146.7 million from September 30, 2020 and $571.5 million from the same quarter one year ago. The growth over the previous quarter was attributable to core deposit growth and related growth in cash and investments. The growth over the same period a year ago is primarily due to loan and deposit growth associated with the PPP program and growth in core deposits during the period.

At December 31, 2020, loans held for investment (net of deferred fees and costs) were $2.0 billion, a decrease of $71.0 million, or 13.6%, annualized from September 30, 2020. Of this decrease, approximately $56.4 million was associated with PPP loan forgiveness. Loans held for investment increased $184.2 million, or 10.1%, from December 31, 2019. Excluding PPP loans, loans held for investment were slightly lower year over year.

Deposits amounted to $2.6 billion at December 31, 2020, with growth of $140.6 million, or 22.8%, annualized from September 30, 2020 and $550.8 million, or 26.7%, compared to the same quarter of 2019. The growth over the prior quarter and prior period of 2019 is a result of continued higher than average cash balances being maintained by customers as the uncertainty of the pandemic continues. This pattern has been prevalent through the second, third and fourth quarters of 2020 and is consistent with trends for all commercial banks.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.34% at December 31, 2020 as compared to 8.55% at September 30, 2020 and 9.57% at December 31, 2019.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.1 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 $976 million of trust, investment and brokerage assets in its Wealth 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 in the United States (GAAP). American Nationals management uses these non-GAAP financial measures in its analysis of American Nationals 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 Nationals 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 Nationals 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) the impacts of the ongoing COVID-19 pandemic; (2) expected revenue synergies and cost savings from acquisitions and depositions; (3)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; (4) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in American Nationals market areas; (5) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (6) accounting principles, policies, and guidelines; and (7)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.

American National Bankshares Inc.Consolidated Balance Sheets(Dollars in thousands, except per share data)Unaudited December 31 2020 2019 Assets Cash and due from banks $ 30,767 $ 32,505 Interest-bearing deposits in other banks 343,603 47,077 Securities available for sale, at fair 466,091 379,195 valueRestricted stock, at cost 8,715 8,630 Loans held for sale 15,591 2,027 Loans, net of deferred fees and costs 2,015,056 1,830,815 Less allowance for loan losses (21,403 ) (13,152 )Net Loans 1,993,653 1,817,663 Premises and equipment, net 39,723 39,848 Other real estate owned, net 958 1,308 Goodwill 85,048 84,002 Core deposit intangibles, net 6,091 7,728 Bank owned life insurance 28,482 27,817 Other assets 31,288 30,750 Total assets $ 3,050,010 $ 2,478,550 Liabilities Demand deposits -- $ 830,094 $ 578,606 noninterest-bearingDemand deposits -- interest-bearing 501,283 328,015 Money market deposits 666,122 504,651 Savings deposits 217,405 177,505 Time deposits 396,426 471,770 Total deposits 2,611,330 2,060,547 Customer repurchase agreements 42,551 40,475 Long-term borrowings 35,630 35,546 Other liabilities 22,605 21,724 Total liabilities 2,712,116 2,158,292 Shareholders' equity Preferred stock, $5 par value, 2,000,000 shares authorized,none outstanding - - Common stock, $1 par value, 20,000,000 shares authorized,10,982,367 shares outstanding at December 31, 2020 and11,071,540 shares outstanding 10,926 11,019 at December 31, 2019Capital in excess of par value 154,850 158,244 Retained earnings 169,681 151,478 Accumulated other comprehensive 2,437 (483 )income (loss), netTotal shareholders' equity 337,894 320,258 Total liabilities and $ 3,050,010 $ 2,478,550 shareholders' equity

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 2020 2019 2020 2019 Interest and Dividend Income:Interest and $ 22,654 $ 21,947 $ 87,700 $ 82,684 fees on loansInterest anddividends on securities:Taxable 1,536 1,991 6,764 7,682 Tax-exempt 103 117 433 777 Dividends 121 127 503 451 Other interest 84 408 440 1,261 incomeTotalinterest and 24,498 24,590 95,840 92,855 dividend income Interest Expense: Interest on 1,821 3,496 9,729 13,143 depositsInterest onshort-term 22 134 259 650 borrowingsInterest on 509 512 2,032 1,935 long-term borrowingsTotal 2,352 4,142 12,020 15,728 interest expense Net Interest Income 22,146 20,448 83,820 77,127 Provision for 585 462 8,916 456 loan losses Net Interest Income After Provisionfor Loan 21,561 19,986 74,904 76,671 Losses Noninterest Income: Trust fees 1,025 1,021 4,044 3,847 Servicecharges on deposit 677 765 2,557 2,866 accountsOther fees and 1,037 967 3,925 3,693 commissionsMortgage 1,042 737 3,514 2,439 banking incomeSecurities - 32 814 607 gains, netBrokerage fees 192 205 745 721 Income fromSmall Business 236 37 270 211 Investment CompaniesLosses onpremises and (13 ) (338 ) (110 ) (427 )equipment, netOther 25 440 1,084 1,213 Total 4,221 3,866 16,843 15,170 noninterest income Noninterest Expense: Salaries and 8,225 7,986 29,765 30,015 employee benefitsOccupancy and 1,470 1,454 5,586 5,417 equipmentFDIC 206 - 639 119 assessmentBank franchise 425 531 1,702 1,644 taxCore depositintangible 391 437 1,637 1,398 amortizationData 764 729 3,017 2,567 processingSoftware 342 363 1,454 1,295 Other real 26 15 60 31 estate owned, netMerger related - 460 - 11,782 expensesOther 2,810 3,062 10,705 11,806 Total 14,659 15,037 54,565 66,074 noninterest expense Income Before 11,123 8,815 37,182 25,767 Income TaxesIncome Taxes 2,329 1,374 7,137 4,861 Net Income $ 8,794 $ 7,441 $ 30,045 $ 20,906 Net Income Per Common Share:Basic $ 0.80 $ 0.67 $ 2.74 $ 1.99 Diluted $ 0.80 $ 0.67 $ 2.73 $ 1.98 Weighted AverageCommon Shares Outstanding:Basic 10,975,349 11,094,346 10,981,623 10,531,572 Diluted 10,978,931 11,103,905 10,985,790 10,541,337

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, 2020 2020 2019 2020 2019 EARNINGS Interest income $ 24,498 $ 24,179 $ 24,590 $ 95,840 $ 92,855 Interest expense 2,352 2,684 4,142 12,020 15,728 Net interest income 22,146 21,495 20,448 83,820 77,127 Provision for loan 585 2,619 462 8,916 456 lossesNoninterest income 4,221 4,292 3,866 16,843 15,170 Noninterest expense 14,659 14,140 15,037 54,565 66,074 Income taxes 2,329 1,801 1,374 7,137 4,861 Net income 8,794 7,227 7,441 30,045 20,906 PER COMMON SHARE Net income per share $ 0.80 $ 0.66 $ 0.67 $ 2.74 $ 1.99 - basicNet income per share 0.80 0.66 0.67 2.73 1.98 - dilutedCash dividends paid 0.27 0.27 0.27 1.08 1.04 Book value per share 30.77 30.26 28.93 30.77 28.93 Book value per share 22.47 21.92 20.64 22.47 20.64 - tangible (a)Closing market price 26.21 20.92 39.57 26.21 39.57 FINANCIAL RATIOS Return on average 1.18 % 1.01 % 1.20 % 1.08 % 0.91 %assetsReturn on average 10.48 8.76 9.31 9.12 7.16 equityReturn on average 14.90 12.66 13.71 13.19 10.43 tangible equity (a)Average equity to 11.30 11.50 12.88 11.88 12.68 average assetsTangible equity to 8.34 8.55 9.57 8.34 9.57 tangible assets (a)Net interest margin, 3.22 3.26 3.62 3.30 3.68 taxable equivalentEfficiency ratio (a) 53.92 53.00 57.24 52.80 57.25 Effective tax rate 20.94 19.95 15.59 19.19 18.87 PERIOD-END BALANCES Securities $ 474,806 $ 367,200 $ 387,825 $ 474,806 $ 387,825 Loans held for sale 15,591 6,789 2,027 15,591 2,027 Loans, net 2,015,056 2,086,094 1,830,815 2,015,056 1,830,815 Goodwill and other 91,139 91,530 91,730 91,139 91,730 intangiblesAssets 3,050,010 2,903,304 2,478,550 3,050,010 2,478,550 Assets - tangible (a) 2,958,871 2,811,774 2,386,820 2,958,871 2,386,820 Deposits 2,611,330 2,470,700 2,060,547 2,611,330 2,060,547 Customer repurchase 42,551 41,906 40,475 42,551 40,475 agreementsLong-term borrowings 35,630 35,609 35,546 35,630 35,546 Shareholders' equity 337,894 331,981 320,258 337,894 320,258 Shareholders' equity 246,755 240,451 228,528 246,755 228,528 - tangible (a) AVERAGE BALANCES Securities (b) $ 372,529 $ 333,778 $ 347,502 $ 347,952 $ 342,219 Loans held for sale 8,601 9,943 4,991 6,578 3,419 Loans, net 2,063,397 2,092,412 1,810,744 2,008,683 1,700,880 Interest-earning 2,754,455 2,648,990 2,264,687 2,551,913 2,107,169 assetsGoodwill and other 91,358 91,749 92,607 91,751 81,049 intangiblesAssets 2,971,505 2,870,213 2,482,502 2,773,007 2,303,624 Assets - tangible (a) 2,880,147 2,778,464 2,389,895 2,681,256 2,222,575 Interest-bearing 1,701,395 1,619,960 1,466,116 1,595,694 1,377,422 depositsDeposits 2,536,363 2,434,645 2,066,435 2,342,353 1,915,197 Customer repurchase 40,819 45,689 38,742 42,937 39,134 agreementsOther short-term - - - 1 2,694 borrowingsLong-term borrowings 35,617 35,597 35,537 35,586 33,644 Shareholders' equity 335,671 330,038 319,851 329,353 292,022 Shareholders' equity 244,313 238,289 227,244 237,602 210,973 - tangible (a) 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, 2020 2020 2019 2020 2019 CAPITAL Weightedaverage shares 10,975,349 10,966,645 11,094,346 10,981,623 10,531,572 outstanding - basicWeightedaverage shares 10,978,931 10,969,901 11,103,905 10,985,790 10,541,337 outstanding - diluted ALLOWANCE FOR LOAN LOSSES Beginning balance $ 21,088 $ 18,507 $ 12,758 $ 13,152 $ 12,805 Provision for loan 585 2,619 462 8,916 456 lossesCharge-offs (331 ) (126 ) (144 ) (1,006 ) (333 ) Recoveries 61 88 76 341 224 Ending balance $ 21,403 $ 21,088 $ 13,152 $ 21,403 $ 13,152 LOANS Construction and land $ 140,071 $ 151,613 $ 137,920 $ 140,071 $ 137,920 developmentCommercial real 373,680 382,121 360,991 373,680 360,991 estate - owner occupiedCommercialreal estate - non-owner 627,569 608,954 538,208 627,569 538,208 occupiedResidential real 269,137 279,815 324,315 269,137 324,315 estateHome equity 104,881 111,448 119,423 104,881 119,423 Commercial and 491,256 543,746 339,077 491,256 339,077 industrialConsumer 8,462 8,397 10,881 8,462 10,881 Total $ 2,015,056 $ 2,086,094 $ 1,830,815 $ 2,015,056 $ 1,830,815 NONPERFORMING ASSETS AT PERIOD-END Nonperforming loans: 90 days past $ 262 $ 285 $ 361 $ 262 $ 361 due and accruingNonaccrual 2,434 3,088 1,944 2,434 1,944 Other realestate owned and 958 1,210 1,308 958 1,308 repossessionsNonperforming assets $ 3,654 $ 4,583 $ 3,613 $ 3,654 $ 3,613 ASSET QUALITY RATIOS Allowance for loan 1.06 % 1.01 % 0.72 % 1.06 % 0.72 %losses to total loansAllowance for loan losses tononperforming 793.88 625.20 570.59 793.88 570.59 loansNonperforming assets 0.12 0.16 0.15 0.12 0.15 to total assetsNonperforming loans 0.13 0.16 0.13 0.13 0.13 to total loansAnnualized net charge-offsto average 0.05 0.01 0.02 0.03 0.01 loans OTHER DATA Fiduciary assets at $ 614,016 $ 569,095 $ 560,776 $ 614,016 $ 560,776 period-end (c) (d)Retailbrokerage assets at $ 362,022 $ 314,809 $ 317,262 $ 362,022 $ 317,262 period-end (c) (d)Number full-time 342 341 355 342 355 equivalent employees (e)Number of full 26 25 26 26 26 service officesNumber of loan 1 1 1 1 1 production officesNumber of ATMs 37 37 38 37 38 Notes: (a) - This financial measure is not calculated in accordance withGAAP. For a reconciliation ofnon-GAAP financial measures, see "Reconciliation of Non-GAAPFinancial Measures" at the endof 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 balancesheet. (e) - Average for quarter.

Net Interest Income Analysis For the Three Months Ended December 31, 2020 and 2019 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2020 2019 2020 2019 2020 2019 Loans: Commercial $ 507,750 $ 315,902 $ 5,354 $ 3,516 4.19 % 4.42 % Real estate 1,556,192 1,488,577 17,206 18,268 4.42 4.91 Consumer 8,056 11,256 137 209 6.77 7.37 Total loans (b) 2,071,998 1,815,735 22,697 21,993 4.38 4.84 Securities: U.S. Treasury 14,126 - 4 - 0.11 - Federal agencies & 76,606 123,950 276 716 1.44 2.31 GSEs Mortgage-backed & 206,817 164,727 916 996 1.77 2.42 CMOs State and municipal 53,257 41,109 304 303 2.28 2.95 Other 21,723 17,716 286 250 5.27 5.64 Total securities 372,529 347,502 1,786 2,265 1.92 2.61 Deposits in other banks 309,928 101,450 84 408 0.11 1.60 Total interest-earning 2,754,455 2,264,687 24,567 24,666 3.56 4.35 assets Non-earning assets 217,050 217,815 Total assets $ 2,971,505 $ 2,482,502 Deposits: Demand $ 433,356 $ 329,759 50 126 0.05 0.15 Money market 647,320 482,671 380 1,283 0.23 1.05 Savings 215,233 176,686 16 83 0.03 0.19 Time 405,486 477,000 1,375 2,004 1.35 1.67 Total deposits 1,701,395 1,466,116 1,821 3,496 0.43 0.95 Customerrepurchase 40,819 38,742 22 134 0.21 1.37 agreementsLong-term borrowings 35,617 35,537 509 512 5.72 5.76 Total interest-bearing liabilities 1,777,831 1,540,395 2,352 4,142 0.53 1.07 Noninterestbearing 834,968 600,319 demanddepositsOther liabilities 23,035 21,937 Shareholders' equity 335,671 319,851 Total liabilities and shareholders' $ 2,971,505 $ 2,482,502 equity Interest rate spread 3.03 % 3.28 %Net interest margin 3.22 % 3.62 % Net interest income (taxable equivalent 22,215 20,524 basis)Less: Taxable equivalent adjustment (c) 69 76 Net interest income $ 22,146 $ 20,448 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, 2020 and 2019 (Dollars in thousands) Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2020 2019 2020 2019 2020 2019 Loans: Commercial $ 475,068 $ 306,065 $ 17,768 $ 14,125 3.74 % 4.62 % Real estate 1,531,195 1,388,188 69,525 68,050 4.54 4.90 Consumer 8,998 10,046 588 694 6.53 6.91 Total loans (b) 2,015,261 1,704,299 87,881 82,869 4.36 4.86 Securities: U.S. Treasury 9,010 - 51 - 0.57 - Federal agencies & 72,112 132,916 1,423 3,191 1.97 2.40 GSEs Mortgage-backed & 200,612 134,458 4,060 3,350 2.02 2.49 CMOs State and municipal 45,836 58,293 1,175 1,650 2.56 2.83 Other 20,382 16,552 1,098 903 5.39 5.46 Total securities 347,952 342,219 7,807 9,094 2.24 2.66 Deposits in other banks 188,700 60,651 440 1,261 0.23 2.08 Total interest-earning 2,551,913 2,107,169 96,128 93,224 3.77 4.42 assets Non-earning assets 221,094 196,455 Total assets $ 2,773,007 $ 2,303,624 Deposits: Demand $ 386,790 $ 307,329 344 370 0.09 0.12 Money market 574,510 445,505 2,634 5,246 0.46 1.18 Savings 198,313 166,842 117 284 0.06 0.17 Time 436,081 457,746 6,634 7,243 1.52 1.58 Total deposits 1,595,694 1,377,422 9,729 13,143 0.61 0.95 Customerrepurchase 42,937 39,134 259 596 0.60 1.52 agreementsOther short-term borrowings 1 2,694 - 54 0.55 2.00 Long-term borrowings 35,586 33,644 2,032 1,935 5.71 5.75 Total interest-bearing liabilities 1,674,218 1,452,894 12,020 15,728 0.72 1.08 Noninterestbearing 746,659 537,775 demanddepositsOther liabilities 22,777 20,933 Shareholders' equity 329,353 292,022 Total liabilities and shareholders' $ 2,773,007 $ 2,303,624 equity Interest rate spread 3.05 % 3.34 %Net interest margin 3.30 % 3.68 % Net interest income (taxable equivalent 84,108 77,496 basis)Less: Taxable equivalent adjustment (c) 288 369 Net interest income $ 83,820 $ 77,127 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, 2020 2020 2019 2020 2019 EFFICIENCY RATIO Noninterest expense $ 14,659 $ 14,140 $ 15,037 $ 54,565 $ 66,074 Add/subtract: gain/ (8 ) (23 ) (3 ) 4 52 loss on sale of OREOSubtract:core deposit (391 ) (402 ) (437 ) (1,637 ) (1,398 ) intangibleamortizationSubtract: merger - - (460 ) - (11,782 ) related expenses $ 14,260 $ 13,715 $ 14,137 $ 52,932 $ 52,946 Net interest income $ 22,146 $ 21,495 $ 20,448 $ 83,820 $ 77,127 Tax equivalent 69 75 76 288 369 adjustmentNoninterest income 4,221 4,292 3,866 16,843 15,170 Subtract: gain on - - (32 ) (814 ) (607 ) securitiesAdd: loss on fixed 13 15 338 110 427 assets $ 26,449 $ 25,877 $ 24,696 $ 100,247 $ 92,486 Efficiency ratio 53.92 % 53.00 % 57.24 % 52.80 % 57.25 % TAX EQUIVALENT NET INTEREST INCOME Non-GAAP measures: Interest income - $ 22,697 $ 22,394 $ 21,993 $ 87,881 $ 82,869 loansInterest income - 1,870 1,860 2,673 8,247 10,355 investments and otherInterest expense - (1,821 ) (2,118 ) (3,496 ) (9,729 ) (13,143 ) depositsInterest expense - customer repurchaseagreements (22 ) (42 ) (134 ) (259 ) (596 ) Interestexpense - other - - - - (54 ) short-term borrowingsInterest expense - (509 ) (524 ) (512 ) (2,032 ) (1,935 ) long-term borrowingsTotal net interest $ 22,215 $ 21,570 $ 20,524 $ 84,108 $ 77,496 incomeLess non-GAAP measures:Tax benefit on (43 ) (48 ) (46 ) (181 ) (185 ) nontaxable interest - loansTaxbenefit on nontaxable (26 ) (27 ) (30 ) (107 ) (184 ) interest - securitiesGAAP measures $ 22,146 $ 21,495 $ 20,448 $ 83,820 $ 77,127 RETURN ON AVERAGE TANGIBLE EQUITY Return on average 10.48 % 8.76 % 9.31 % 9.12 % 7.16 %equity (GAAP basis)Impact of excluding average goodwilland other 4.42 3.90 4.40 4.07 3.27 intangiblesReturn on average tangible equity(non-GAAP) 14.90 % 12.66 % 13.71 % 13.19 % 10.43 % TANGIBLE EQUITY TO TANGIBLE ASSETSEquity to assets 11.08 % 11.43 % 12.92 % 11.08 % 12.92 %ratio (GAAP basis)Impact of excluding goodwill andother (2.74 ) (2.88 ) (3.35 ) (2.74 ) (3.35 ) intangiblesTangible equity to tangible assets ratio(non-GAAP) 8.34 % 8.55 % 9.57 % 8.34 % 9.57 % TANGIBLE BOOK VALUE Book value per $ 30.77 $ 30.26 $ 28.93 $ 30.77 $ 28.93 share (GAAP basis)Impact of excluding goodwill andother (8.30 ) (8.34 ) (8.29 ) (8.30 ) (8.29 ) intangiblesTangible book value per share(non-GAAP) $ 22.47 $ 21.92 $ 20.64 $ 22.47 $ 20.64 ADJUSTED LOAN LOSS ALLOWANCE Allowance for loan $ 21,403 $ 21,088 $ 13,152 $ 21,403 $ 13,152 lossesCredit discount on 7,255 7,896 12,214 7,255 12,214 purchased loansAdjusted loan loss $ 28,658 $ 28,984 $ 25,366 $ 28,658 $ 25,366 allowance Total loans, net $ 2,015,056 $ 2,086,094 $ 1,830,815 $ 2,015,056 $ 1,830,815 Subtract: PPP (211,275 ) (265,941 ) - (211,275 ) - loans, netTotal loans less $ 1,803,781 $ 1,820,153 $ 1,830,815 $ 1,803,781 $ 1,830,815 PPP loans, net Adjusted loan loss allowance tototal loans 1.59 % 1.59 % 1.39 % 1.59 % 1.39 %less PPP loans, net

Contact:

Jeffrey W. FarrarExecutive Vice President, COO & CFO(434)773-2274farrarj@amnb.com