GlobeNewswire Inc | Jul 22, 2021 07:30AM EDT

July 22, 2021

DANVILLE, Va., July 22, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (American National or the Company) today reported second quarter 2021 earnings of $10.8 million, or $.99 per diluted common share. Those results compare to net income of $5.5 million, or $.50 per diluted common share, during the same quarter in the prior year, and net income of $11.3 million, or $1.03 per diluted common share, recognized for the first quarter of 2021.

President and Chief Executive Officer Jeffrey V. Haley commented, American National delivered strong earnings performance for the second quarter, in spite of the continuing challenges associated with the low interest rate environment. Credit quality remains excellent, and coupled with significant improvement in the reopening economy resulted in a $1.4 million negative provision for loan losses for the period. We had another strong quarter for our core noninterest revenue lines, with income from SBIC investments, mortgage and wealth management continuing to provide meaningful contributions. Deposit growth was again exceptional, and with significant PPP forgiveness during the period contributed to some additional excess liquidity on our balance sheet. Loan balances, excluding PPP, have begun to grow, although market pressures remain fierce. Key areas of focus are loan growth, talent management, process improvement initiatives and our digital product offerings.

Second quarter 2021 highlights include:

-- Earnings produced a return on average tangible common equity (annualized) of 17.30% for the second quarter of 2021, compared to 18.45% in the previous quarter and 9.85% for the same quarter in the prior year (non-GAAP). -- Average deposits grew 3.7% during the quarter and 15.1% over the same quarter of 2020; the cost of interest-bearing deposits decreased to 0.21% in the second quarter, compared to 0.30% in the previous quarter and 0.64% in the same quarter of the prior year. -- Fully taxable equivalent (FTE) net interest margin was 3.00% for the quarter, down from 3.20% in the first quarter of 2021 and from 3.22% in the same quarter of the prior year (non-GAAP). -- Noninterest revenues decreased $780 thousand, or 13.2%, when compared to the previous quarter, and increased $1.3 million, or 34.1%, compared to the same quarter in the prior year. -- Noninterest expense increased $572 thousand, or 4.1%, when compared to the previous quarter, and increased $2.2 million, or 17.7%, when compared to the same quarter in the prior year. -- The Company recorded a negative provision for loan losses in the second quarter of 2021 of $1.4 million and no provision in the first quarter, compared to a provision expense of $4.8 million in the second quarter in the prior year. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were (0.01%) for the second quarter of 2021, 0.00% for the first quarter of 2021 and 0.06% for the corresponding quarter in the prior year. -- Nonperforming assets as a percentage of total assets were 0.07% at June 30, 2021, down from 0.10% at March 31, 2021 and 0.16% at June 30, 2020.

SMALL BUSINESS ADMINISTRATIONs PPP

The Company continued to participate in the U.S. Small Business Administrations Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the second quarter of 2021. The Company has processed a total of $364.2 million in PPP loans with $80.0 million forgiven in the second quarter of 2021 compared to $105.1 million in the first quarter. Total outstanding net PPP loans were $104.1 million at June 30, 2021, down from $183.8 million at March 31, 2021. Total PPP fees recognized in net interest income during the quarter were $1.8 million compared to the prior quarters $2.9 million as a result of the forgiveness. The interest income from the PPP portfolio outstanding generated $360,000 in revenues for the second quarter compared to $526,000 in the previous quarter.

NET INTEREST INCOME

Net interest income for the second quarter of 2021 was $21.8 million, a decrease of $652 thousand, or 2.9%, from the prior quarter and an increase of $1.5 million, or 7.5%, from the second quarter of 2020. The FTE net interest margin for the quarter was 3.00%, down from 3.20% in the prior quarter and down from 3.22% in the same period a year ago (non-GAAP). The second quarter of 2021 reflected $1.1 million less in net fees on PPP loans than the first quarter as $80.0 million of first round loans were forgiven in the second quarter compared to $105.1 million in the first quarter. The increase in net interest income from the same quarter in the prior year was primarily attributable to the PPP program and reduced deposit costs from a significantly lower rate environment.

The Companys FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the second quarter of 2021, net accretion related to acquisition accounting amounted to $875 thousand compared to $948 thousand in the prior quarter and $801 thousand for the same period in 2020. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):

For the remaining six months of 2021 (estimated) $840 For the years ending (estimated): 2022 1,268 2023 702 2024 419 2025 306 2026 187 Thereafter 500

ASSET QUALITY

Nonperforming assets (NPAs) totaled $2.4 million as of June 30, 2021 down from $2.9 million at March 31, 2021, and down from $4.6 million at June 30, 2020. NPAs as a percentage of total assets were 0.07% at June 30, 2021, compared to 0.10% at March 31, 2021 and 0.16% at June 30, 2020.

The Company recorded a negative provision for the second quarter of 2021 of $1.4 million, as compared to no provision in the first quarter and a $4.8 million provision for the same period in the previous year. The second quarter negative provision as compared to the prior period and the same period of 2020 was driven by significant improvement in both national and local economic conditions, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. The allowance for loan losses was $20.1 million at June 30, 2021, $21.4 million at March 31, 2021 and $18.5 million at June 30, 2020. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding was a negative (0.01%) for the second quarter of 2021, compared to 0.00% in the previous quarter and 0.06% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.05% at June 30, 2021 compared to 1.08% at March 31, 2021 and 0.88% at June 30, 2020. Excluding PPP loans, the allowance as a percentage of loans was 1.11% at June 30, 2021, 1.19% at March 31, 2021 and 1.00% at June 30, 2020.

NONINTEREST INCOME

Noninterest income decreased $780 thousand, or 13.2%, to $5.1 million for the quarter ended June 30, 2021 from $5.9 million in the prior quarter and increased $1.3 million, or 34.1%, from the same period in the prior year. The largest fluctuations for the second quarter over the previous quarter were the decrease in income from insurance investments which was down $647 thousand, or 82.1%, and increased losses on premises and equipment, net, up $383 thousand or over 100%. The Company recorded a loss during the second quarter of 2021 from the sale of a building acquired in the HomeTown Bankshares acquisition. These declines were partially offset by growth in wealth management revenues, service charges on deposits and income from SBIC investments. Comparing the second quarter of 2021 to the second quarter of 2020, increases were noted in all categories except for securities gains, net, that recorded no activity in either period and had decreased income from insurance investments of $82 thousand, or 36.8%.

NONINTEREST EXPENSE

Noninterest expense for the second quarter of 2021 amounted to $14.6 million, up $572 thousand, or 4.1%, when compared to the $14.1 million for the previous quarter and up $2.2 million, or 17.7%, from $12.4 million during the same period in the previous year. Salary and benefit expense was up $660 thousand or 8.8% over the previous quarter, and up $2.0 million or 32.0% over the second quarter of 2020. These increases can largely be attributed to salary and benefit deferrals associated with loan originations under the PPP program. The second quarter of 2021 reflected $100 thousand in PPP related salaries and benefits deferrals, compared to $604 thousand in the first quarter and $1.6 million in the second quarter of 2020. Other operating expense components were in line with the previous quarter and represented normal growth levels over the same period in 2020.

INCOME TAXES

The effective tax rate for the three months ended June 30, 2021 was 21.0% and 20.9% for the three months ended March 31, 2021. This compares to 20.6% for the same period in the prior year.

BALANCE SHEET

Total assets at June 30, 2021 were $3.2 billion, an increase of $128.1 million or 4.2% growth from the previous quarter and increased $337.0 million or 11.8% from the second quarter of 2020. The asset mix of the balance sheet at June 30, 2021 remained primarily consistent with the first quarter with a decrease in loans as a result of the forgiveness of PPP loans, the proceeds from which were reinvested in the securities portfolio. The growth over the same period a year ago is primarily due to deposit growth in core deposits during the period.

At June 30, 2021, loans held for investment (net of deferred fees and costs) were $1.9 billion, a decrease of $64.3 million, or 3.2%, from March 31, 2021. The decline was primarily a result of the changes discussed previously from the PPP. Excluding PPP loans, loans held for investment increased $15.4 million, or 0.86%, from the first quarter, and decreased $27.5 million or 1.5% compared to June 30, 2020.

Investment securities amounted to $555.4 million at June 30, 2021, with growth of $73.4 million, or 15.2%, compared to March 31, 2021, and growth of $233.0 million, or 72.2%, compared to June 30, 2020.

Deposits amounted to $2.8 billion at June 30, 2021 and $2.6 billion at March 31, 2021, an increase of $137.2 million, or 5.2%, over the previous quarter and growth of $338.0 million, or 13.9%, compared to the second quarter of 2020. The growth over the previous quarter and the prior period of 2020 is primarily a result of continued federal stimulus efforts, and continued higher than average cash balances being maintained by customers as elevated savings rates and liquidity patterns continue.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.27% at June 30, 2021 compared to 8.42% at March 31, 2021 and compared to 8.49% at June 30, 2020. The Companys common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.79%, 14.19%, 15.21% and 9.42%, respectively at June 30, 2021.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.2 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 $1.1 billion of trust, investment and brokerage assets in its Wealth Division. Additional information about American National and American National Bank is available on American Nationals 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 and the associated efforts to limit the spread of the virus; (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 adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future periods, and the failure of assumptions underlying the allowance for loan losses; (6) cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (7) accounting principles, policies, and guidelines; and (8)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.

Consolidated Balance Sheets(Dollars in thousands, except per share data)Unaudited June 30 2021 2020 Assets Cash and due from banks $ 38,237 $ 44,607 Interest-bearing deposits in other banks 502,300 206,998 Securities available for sale, at fair 555,444 322,523 valueRestricted stock, at cost 8,035 8,694 Loans held for sale 13,807 2,845 Loans, net of deferred fees and costs 1,914,371 2,101,711 Less allowance for loan losses (20,097 ) (18,507 )Net Loans 1,894,274 2,083,204 Premises and equipment, net 37,478 39,571 Other real estate owned, net 213 984 Goodwill 85,048 85,048 Core deposit intangibles, net 5,339 6,884 Bank owned life insurance 28,791 28,122 Other assets 32,618 35,059 Total assets $ 3,201,584 $ 2,864,539 Liabilities Demand deposits -- noninterest-bearing $ 959,574 $ 824,679 Demand deposits -- interest-bearing 482,586 406,322 Money market deposits 700,670 562,061 Savings deposits 241,746 200,518 Time deposits 385,174 438,196 Total deposits 2,769,750 2,431,776 Customer repurchase agreements 35,440 46,296 Long-term borrowings 28,181 35,588 Other liabilities 20,580 23,446 Total liabilities 2,853,951 2,537,106 Shareholders' equity Preferred stock, $5 par value, 2,000,000 shares authorized,none outstanding - - Common stock, $1 par value, 20,000,000 shares authorized,10,875,756 shares outstanding at June 30, 2021 and10,964,320 shares outstanding at June 30, 10,811 10,911 2020Capital in excess of par value 150,947 154,222 Retained earnings 185,843 159,586 Accumulated other comprehensive income, net 32 2,714 Total shareholders' equity 347,633 327,433 Total liabilities and shareholders' equity $ 3,201,584 $ 2,864,539

American National Bankshares Inc.Consolidated Statements of Income(Dollars in thousands, except per share data)Unaudited For the Three Months Ended For the Six Months Ended 6/30/21 3/31/21 6/30/20 6/30/21 6/30/20Interestand Dividend Income:Interestand fees on $ 21,087 $ 22,273 $ 21,379 $ 43,360 $ 42,700 loansInterestand dividends onsecurities:Taxable 1,769 1,632 1,646 3,401 3,683 Tax-exempt 96 103 111 199 223 Dividends 117 119 128 236 260 Otherinterest 98 77 33 175 297 incomeTotalinterest and 23,167 24,204 23,297 47,371 47,163 dividendincome Interest Expense:Interest on 922 1,287 2,478 2,209 5,790 depositsInterest onshort-term 5 11 66 16 195 borrowingsInterest onlong-term 469 483 493 952 999 borrowingsTotalinterest 1,396 1,781 3,037 3,177 6,984 expense NetInterest 21,771 22,423 20,260 44,194 40,179 Income(Recoveryof) Provision (1,352 ) - 4,759 (1,352 ) 5,712 for loanlosses Net InterestIncome After (Recovery of)Provision forLoan Losses 23,123 22,423 15,501 45,546 34,467 Noninterest Income:Trust fees 1,240 1,206 953 2,446 1,965 Servicecharges on 630 622 541 1,252 1,262 depositaccountsOther feesand 1,358 1,139 951 2,497 1,892 commissionsMortgagebanking 1,142 1,318 893 2,460 1,442 incomeSecurities - - - - 814 gains, netBrokerage 250 218 172 468 383 feesIncome (loss)from SmallBusiness 591 428 (119 ) 1,019 (64 )InvestmentCompaniesIncome frominsurance 141 788 223 929 271 investmentsLosses onpremises and (432 ) (49 ) - (481 ) (82 )equipment,netOther 222 252 221 474 447 Totalnoninterest 5,142 5,922 3,835 11,064 8,330 income Noninterest Expense:Salariesand employee 8,178 7,518 6,191 15,696 13,551 benefitsOccupancy 1,502 1,533 1,327 3,035 2,693 and equipmentFDIC 226 224 176 450 271 assessmentBank 443 438 425 881 851 franchise taxCoredeposit 371 381 417 752 844 intangibleamortizationData 698 778 785 1,476 1,548 processingSoftware 338 329 403 667 759 Other realestate owned, 10 117 15 127 6 netOther 2,871 2,747 2,693 5,618 5,243 Totalnoninterest 14,637 14,065 12,432 28,702 25,766 expense IncomeBefore Income 13,628 14,280 6,904 27,908 17,031 TaxesIncome 2,862 2,991 1,422 5,853 3,007 TaxesNet Income $ 10,766 $ 11,289 $ 5,482 $ 22,055 $ 14,024 Net IncomePer Common Share:Basic $ 0.99 $ 1.03 $ 0.50 $ 2.02 $ 1.28 Diluted $ 0.99 $ 1.03 $ 0.50 $ 2.01 $ 1.28 WeightedAverage Common SharesOutstanding:Basic 10,919,333 10,971,466 10,959,545 10,945,256 10,992,365 Diluted 10,923,156 10,976,177 10,963,248 10,949,523 10,997,279

American National Bankshares Inc.Financial HighlightsUnaudited (Dollars inthousands, At or for the Six Months except pershare data) 2nd Qtr 1st Qtr 2nd Qtr Ended June 30, 2021 2021 2020 2021 2020 EARNINGS Interest income $ 23,167 $ 24,204 $ 23,297 $ 47,371 $ 47,163 Interest expense 1,396 1,781 3,037 3,177 6,984 Net interest income 21,771 22,423 20,260 44,194 40,179 (Recovery of)Provision for loan (1,352 ) - 4,759 (1,352 ) 5,712 lossesNoninterest income 5,142 5,922 3,835 11,064 8,330 Noninterest expense 14,637 14,065 12,432 28,702 25,766 Income taxes 2,862 2,991 1,422 5,853 3,007 Net income 10,766 11,289 5,482 22,055 14,024 PER COMMON SHARE Net income per $ 0.99 $ 1.03 $ 0.50 $ 2.02 $ 1.28 share - basicNet income per 0.99 1.03 0.50 2.01 1.28 share - dilutedCash dividends paid 0.27 0.27 0.27 0.54 0.54 Book value per 31.96 31.19 29.86 31.96 29.86 shareBook value pershare - tangible 23.65 22.91 21.48 23.65 21.48 (a)Closing market 31.09 33.07 25.04 31.09 25.04 price FINANCIAL RATIOS Return on average 1.38 % 1.49 % 0.80 % 1.44 % 1.07 %assetsReturn on average 12.44 13.19 6.68 12.81 8.61 common equityReturn onaveragetangible 17.30 18.45 9.85 17.87 12.56 common equity(a)Averagecommon equity 11.10 11.31 11.91 11.20 12.42 to averageassetsTangiblecommon equity 8.27 8.42 8.49 8.27 8.49 to tangibleassets (a)Net interestmargin, taxable 3.00 3.20 3.22 3.10 3.36 equivalentEfficiency ratio 52.06 47.70 49.74 49.84 52.08 (a)Effective tax rate 21.00 20.95 20.60 20.97 17.66 PERIOD-END BALANCES Securities $ 563,479 $ 490,167 $ 331,217 $ 563,479 $ 331,217 Loans held for sale 13,807 17,929 2,845 13,807 2,845 Loans, net 1,914,371 1,978,640 2,101,711 1,914,371 2,101,711 Goodwill and other 90,387 90,758 91,932 90,387 91,932 intangiblesAssets 3,201,584 3,073,432 2,864,539 3,201,584 2,864,539 Assets - tangible 3,111,197 2,982,674 2,772,607 3,111,197 2,772,607 (a)Deposits 2,769,750 2,632,534 2,431,776 2,769,750 2,431,776 Customer repurchase 35,440 39,205 46,296 35,440 46,296 agreementsLong-term 28,181 35,656 35,588 28,181 35,588 borrowingsShareholders' 347,633 341,793 327,433 347,633 327,433 equityShareholders'equity - tangible 257,246 251,035 235,501 257,246 235,501 (a) AVERAGE BALANCES Securities (b) $ 512,981 $ 458,760 $ 315,659 $ 486,020 $ 342,695 Loans held for sale 15,883 11,237 4,554 13,573 3,855 Loans, net 1,947,797 2,009,166 2,048,277 1,978,312 1,938,700 Interest-earning 2,909,216 2,814,291 2,525,998 2,862,016 2,400,459 assetsGoodwill and other 90,577 90,976 92,161 90,775 91,950 intangiblesAssets 3,118,687 3,026,952 2,755,470 3,073,073 2,623,531 Assets - tangible 3,028,110 2,935,976 2,663,309 2,982,298 2,531,581 (a)Interest-bearing 1,761,203 1,740,418 1,564,430 1,750,867 1,529,997 depositsDeposits 2,677,101 2,582,539 2,325,331 2,630,081 2,197,629 Customer repurchase 37,591 43,746 43,716 40,651 42,617 agreementsOther short-term - - - - 2 borrowingsLong-term 35,584 35,640 35,575 35,612 35,565 borrowingsShareholders' 346,210 342,231 328,051 344,232 325,812 equityShareholders'equity - tangible 255,633 251,255 235,890 253,457 233,862 (a) American National Bankshares Inc.Financial HighlightsUnaudited (Dollars inthousands, At or for the Six Months except pershare data) 2nd Qtr 1st Qtr 2nd Qtr Ended June 30, 2021 2021 2020 2021 2020 CAPITAL Weightedaverageshares 10,919,333 10,971,466 10,959,545 10,945,256 10,992,365 outstanding -basicWeightedaverageshares 10,923,156 10,976,177 10,963,248 10,949,523 10,997,279 outstanding -diluted COMMON STOCK REPURCHASE PROGRAM Total sharesof common 93,212 54,023 - 147,235 140,526 stockrepurchasedAverage pricepaid per $ 34.73 $ 29.51 $ - $ 32.81 $ 35.44 share ofcommon stock ALLOWANCE FOR LOAN LOSSESBeginning balance $ 21,416 $ 21,403 $ 14,065 $ 21,403 $ 13,152 (Recovery of)Provision for loan (1,352 ) - 4,759 (1,352 ) 5,712 lossesCharge-offs (29 ) (22 ) (444 ) (51 ) (549 ) Recoveries 62 35 127 97 192 Ending balance $ 20,097 $ 21,416 $ 18,507 $ 20,097 $ 18,507 LOANS Construction and $ 133,592 $ 159,801 $ 141,392 $ 133,592 $ 141,392 land developmentCommercial realestate - owner 384,095 364,549 388,947 384,095 388,947 occupiedCommercialreal estate - 650,862 628,742 589,821 650,862 589,821 non-owneroccupiedResidential real 264,680 266,595 291,242 264,680 291,242 estateHome equity 100,835 100,643 114,397 100,835 114,397 Commercial and 372,759 447,109 566,859 372,759 566,859 industrialConsumer 7,548 11,201 9,053 7,548 9,053 Total $ 1,914,371 $ 1,978,640 $ 2,101,711 $ 1,914,371 $ 2,101,711 NONPERFORMING ASSETS AT PERIOD-END Nonperforming loans: 90 days past $ 125 $ 162 $ 375 $ 125 $ 375 due and accruing Nonaccrual 2,057 2,323 2,855 2,057 2,855 Other realestate owned 213 443 1,346 213 1,346 andrepossessionsNonperforming $ 2,395 $ 2,928 $ 4,576 $ 2,395 $ 4,576 assets ASSET QUALITY RATIOSAllowance for loanlosses to total 1.05 % 1.08 % 0.88 % 1.05 % 0.88 %loansAllowance for loan losses to nonperforming 921.04 861.81 572.97 921.04 572.97 loansNonperformingassets to total 0.07 0.10 0.16 0.07 0.16 assetsNonperforming loans 0.11 0.13 0.15 0.11 0.15 to total loansAnnualized netcharge-offs (recoveries) to average (0.01 ) 0.00 0.06 0.00 0.04 loans OTHER DATA Fiduciary assets at $ 697,528 $ 666,653 $ 536,014 $ 697,528 $ 536,014 period-end (c) (d)Retailbrokerageassets at $ 392,881 $ 382,419 $ 301,096 $ 392,881 $ 301,096 period-end(c) (d)Number full-timeequivalent 340 340 345 340 345 employees (e)Number of full 26 26 26 26 26 service officesNumber of loan 1 1 1 1 1 production officesNumber of ATMs 36 36 38 36 38 Notes: (a) - This financial measure is not calculated in accordance with GAAP. For areconciliation ofnon-GAAP financial measures, see "Reconciliation of Non-GAAP FinancialMeasures" 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 AnalysisFor the Three Months Ended June 30, 2021 and 2020(Dollars in thousands)Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2021 2020 2021 2020 2021 2020 Loans: Commercial $ 391,871 $ 513,765 $ 4,458 $ 4,377 4.56 % 3.42 %Real estate 1,564,747 1,529,723 16,551 16,901 4.23 4.42 Consumer 7,062 9,343 112 149 6.36 6.40 Total loans (b) 1,963,680 2,052,831 21,121 21,427 4.30 4.18 Securities: U.S. Treasury 41,840 2,250 114 9 1.09 1.60 Federal agencies 102,730 47,197 298 284 1.16 2.41 & GSEsMortgage-backed 281,820 203,268 961 1,059 1.36 2.08 & CMOsState and 62,204 42,742 323 288 2.08 2.70 municipalOther 24,387 20,202 311 272 5.10 5.39 Total securities 512,981 315,659 2,007 1,912 1.56 2.42 Deposits in 432,555 157,508 98 33 0.09 0.08 other banks Totalinterest-earning 2,909,216 2,525,998 23,226 23,372 3.20 3.70 assets Non-earning 209,471 229,472 assets Total assets $ 3,118,687 $ 2,755,470 Deposits: Demand $ 468,684 $ 371,451 37 115 0.03 0.12 Money market 701,957 554,318 215 591 0.12 0.43 Savings 239,887 192,354 6 24 0.01 0.05 Time 350,675 446,307 664 1,748 0.76 1.57 Total deposits 1,761,203 1,564,430 922 2,478 0.21 0.64 Customerrepurchase 37,591 43,716 5 66 0.05 0.61 agreementsLong-term 35,584 35,575 469 493 5.27 5.54 borrowingsTotal interest-bearingliabilities 1,834,378 1,643,721 1,396 3,037 0.30 0.74 Noninterestbearing 915,898 760,901 demanddepositsOther 22,201 22,797 liabilitiesShareholders' 346,210 328,051 equityTotal liabilities andshareholders' $ 3,118,687 $ 2,755,470 equity Interest rate 2.90 % 2.96 %spreadNet interest 3.00 % 3.22 %margin Net interest income (taxable 21,830 20,335 equivalent basis)Less: Taxable equivalent 59 75 adjustment (c)Net interest $ 21,771 $ 20,260 income 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 AnalysisFor the Six Months Ended June 30, 2021 and 2020(Dollars in thousands)Unaudited Interest Average Balance Income/Expense (a) Yield/Rate 2021 2020 2021 2020 2021 2020 Loans: Commercial $ 428,073 $ 423,343 $ 10,249 $ 7,919 4.83 % 3.77 %Real estate 1,556,465 1,509,520 32,941 34,564 4.23 4.58 Consumer 7,347 9,692 238 307 6.53 6.39 Total loans (b) 1,991,885 1,942,555 43,428 42,790 4.37 4.41 Securities: U.S. Treasury 28,645 5,650 126 44 0.88 1.56 Federal agencies 104,026 75,254 602 861 1.16 2.29 & GSEsMortgage-backed 269,977 200,521 1,934 2,202 1.43 2.20 & CMOsState and 60,359 41,784 637 576 2.11 2.76 municipalOther 23,013 19,486 588 537 5.11 5.51 Total securities 486,020 342,695 3,887 4,220 1.60 2.46 Deposits in 384,111 115,209 175 297 0.09 0.52 other banks Totalinterest-earning 2,862,016 2,400,459 47,490 47,307 3.32 3.95 assets Non-earning 211,057 223,072 assets Total assets $ 3,073,073 $ 2,623,531 Deposits: Demand $ 459,867 $ 351,404 77 238 0.03 0.14 Money market 693,002 534,828 491 1,779 0.14 0.67 Savings 233,680 185,625 13 77 0.01 0.08 Time 364,318 458,140 1,628 3,696 0.90 1.63 Total deposits 1,750,867 1,529,997 2,209 5,790 0.25 0.76 Customerrepurchase 40,651 42,617 16 195 0.08 0.92 agreementsOther short-term - 2 - - - 0.50 borrowingsLong-term 35,612 35,565 952 999 5.35 5.62 borrowingsTotal interest-bearingliabilities 1,827,130 1,608,181 3,177 6,984 0.35 0.87 Noninterestbearing 879,214 667,632 demanddepositsOther 22,497 21,906 liabilitiesShareholders' 344,232 325,812 equityTotal liabilities andshareholders' $ 3,073,073 $ 2,623,531 equity Interest rate 2.97 % 3.08 %spreadNet interest 3.10 % 3.36 %margin Net interest income (taxable 44,313 40,323 equivalent basis)Less: Taxable equivalent 119 144 adjustment (c)Net interest $ 44,194 $ 40,179 income 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.

AmericanNational Bankshares Inc.Reconciliation of Non-GAAP Financial MeasuresUnaudited (Dollars in thousands, except At or for the Six Months per share data) 2nd Qtr 1st Qtr 2nd Qtr Ended June 30, 2021 2021 2020 2021 2020 EFFICIENCY RATIONoninterest $ 14,637 $ 14,065 $ 12,432 $ 28,702 $ 25,766 expenseAdd/subtract:gain/loss on - (111 ) 8 (111 ) 35 sale of OREOSubtract:core deposit (371 ) (381 ) (417 ) (752 ) (844 ) intangibleamortization $ 14,266 $ 13,573 $ 12,023 $ 27,839 $ 24,957 Net interest $ 21,771 $ 22,423 $ 20,260 $ 44,194 $ 40,179 incomeTax equivalent 59 60 75 119 144 adjustmentNoninterest 5,142 5,922 3,835 11,064 8,330 incomeSubtract: gain - - - - (814 ) on securitiesAdd: loss on 432 49 - 481 82 fixed assets $ 27,404 $ 28,454 $ 24,170 $ 55,858 $ 47,921 Efficiency 52.06 % 47.70 % 49.74 % 49.84 % 52.08 %ratio TAX EQUIVALENT NET INTEREST INCOMENon-GAAP measures:Interest income $ 21,121 $ 22,307 $ 21,427 $ 43,428 $ 42,790 - loansInterest income- investments 2,105 1,957 1,945 4,062 4,517 and otherInterestexpense - (922 ) (1,287 ) (2,478 ) (2,209 ) (5,790 ) depositsInterestexpense - customerrepurchaseagreements (5 ) (11 ) (66 ) (16 ) (195 ) Interestexpense - (469 ) (483 ) (493 ) (952 ) (999 ) long-termborrowingsTotal net $ 21,830 $ 22,483 $ 20,335 $ 44,313 $ 40,323 interest incomeLess non-GAAP measures:Tax benefit onnontaxable (34 ) (34 ) (48 ) (68 ) (90 ) interest -loansTax benefitonnontaxable (25 ) (26 ) (27 ) (51 ) (54 ) interest -securitiesGAAP measures $ 21,771 $ 22,423 $ 20,260 $ 44,194 $ 40,179 RETURN ON AVERAGE TANGIBLE EQUITYReturn onaverage equity 12.44 % 13.19 % 6.68 % 12.81 % 8.61 %(GAAP basis)Impact ofexcluding averagegoodwilland other 4.86 5.26 3.17 5.06 3.95 intangiblesReturn onaverage tangible equity(non-GAAP) 17.30 % 18.45 % 9.85 % 17.87 % 12.56 % TANGIBLE EQUITYTO TANGIBLE ASSETSEquity toassets ratio 10.86 % 11.12 % 11.43 % 10.86 % 11.43 %(GAAP basis)Impact ofexcluding goodwill andother (2.59 ) (2.70 ) (2.94 ) (2.59 ) (2.94 ) intangiblesTangible equityto tangible assets ratio(non-GAAP) 8.27 % 8.42 % 8.49 % 8.27 % 8.49 % TANGIBLE BOOK VALUEBook value pershare (GAAP $ 31.96 $ 31.19 $ 29.86 $ 31.96 $ 29.86 basis)Impact ofexcluding goodwill andother (8.31 ) (8.28 ) (8.38 ) (8.31 ) (8.38 ) intangiblesTangible book value per share(non-GAAP) $ 23.65 $ 22.91 $ 21.48 $ 23.65 $ 21.48 ADJUSTED LOAN LOSS ALLOWANCEAllowance for $ 20,097 $ 21,416 $ 18,507 $ 20,097 $ 18,507 loan lossesCredit discounton purchased 6,055 6,528 9,868 6,055 9,868 loansAdjusted loan $ 26,152 $ 27,944 $ 28,375 $ 26,152 $ 28,375 loss allowance Total loans, $ 1,914,371 $ 1,978,640 $ 2,101,711 $ 1,914,371 $ 2,101,711 netSubtract: PPP (104,143 ) (183,783 ) (264,022 ) (104,143 ) (264,022 ) loans, netTotal loansless PPP loans, $ 1,810,228 $ 1,794,857 $ 1,837,689 $ 1,810,228 $ 1,837,689 net Adjusted loanloss allowance tototal loansless PPP loans, 1.44 % 1.56 % 1.54 % 1.44 % 1.54 %net

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