American National Bankshares Reports Second Quarter Earnings

DANVILLE, Va., July 21, 2022 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported second quarter 2022 earnings of $8.1 million, or $0.76 per diluted common share. Those results compare to earnings of $10.8 million, or $0.99 per diluted common share, during the same quarter in the prior year, and earnings of $9.0 million, or $0.84 per diluted common share, for the first quarter of 2022. Earnings for the six months ended June 30, 2022 were $17.1 million, or $1.60 per diluted common share, compared to $22.1 million, or $2.01 diluted common share, for the same period of 2021.

President and Chief Executive Officer, Jeffrey V. Haley, commented, “Core earnings remained solid during the quarter, with strong growth in net interest income reflecting our earnings capacity in a rising rate environment and offsetting some pressure on our fee based lines of business. Operating expenses remained stable, and we saw a return to a more normalized level of provision expense primarily associated with our loan growth. Asset quality remains strong and while we do not see any deterioration at this time, we are maintaining a watchful eye on a slowing economy.

“We continue to focus on adding talent and investing in the business. We successfully implemented several major projects during the quarter, including contactless debit cards and a new treasury management platform. Many other projects are in flight to further our digital offerings and better serve our customers.

“Looking forward, we should continue to benefit from rising rates in the short term, which should mitigate expected pressures on fee-based revenues and operating costs. Our history of exceptional credit quality should serve us well if we do experience an economic downturn.”

Second quarter 2022 highlights include:

• Earnings produced a return on average tangible common equity of 13.87% for the second quarter of 2022, compared to 14.14% in the previous quarter and 17.30% for the same quarter in the prior year (non-GAAP).
  
  
• Net interest income increased $1.0 million, or 5.1%, when compared to the previous quarter, and decreased $281 thousand, or 1.3%, when compared to the same quarter in 2021.
  
  
• Fully taxable equivalent (“FTE”) net interest margin was 2.76% for the quarter, up from 2.63% in the first quarter of 2022 and down from 3.00% in the same quarter of the prior year (non-GAAP).
  
  
• Noninterest revenues decreased $763 thousand, or 13.6%, when compared to the previous quarter, and decreased $305 thousand, or 5.9%, compared to the same quarter in the prior year.
  
  
• Noninterest expense increased $106 thousand, or less than 1%, when compared to the previous quarter, and increased $818 thousand, or 5.6%, when compared to the same quarter in the prior year.
  
  
• Average loans held for investment, excluding U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans, grew $44.5 million, or 9.1% annualized, during the second quarter as compared to the previous quarter of $44.5 million, or 9.5% annualized.
  
  
• The Company recognized a provision for loan losses in the second quarter of 2022 of $581 thousand compared to negative provisions of $758 thousand in the first quarter of 2022 and $1.4 million in the second quarter of 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.01% for the second quarter of 2022, compared to (0.01%) in the previous quarter and the same quarter in the prior year.
  
  
• Nonperforming assets as a percentage of total assets were 0.05% at June 30, 2022, down from 0.06% at March 31, 2022, and down from 0.07% at June 30, 2021.
  

NET INTEREST INCOME

Net interest income for the second quarter of 2022 increased by $1.0 million, or 5.1%, to $21.5 million compared to $20.5 million for the first quarter of 2022. The second quarter of 2022 compared to the same quarter of 2021 reflected a decrease of $281 thousand, or 1.3%. The FTE net interest margin for the quarter was 2.76%, up from 2.63% in the prior quarter but down from 3.00% in the same quarter a year ago (non-GAAP). The margin expansion relative to the previous quarter was the product of a shift in the earning assets mix resulting from excess deposits in other banks being deployed into the loan and investment portfolios as well as higher yields on securities and deposits in other banks due to the increase in interest rates. The decrease in margin from second quarter 2021 was attributable to significantly more PPP related income in 2021, partially offset by lower interest expense.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the second quarter of 2022, net accretion related to acquisition accounting amounted to $336 thousand compared to $566 thousand in the prior quarter and $875 thousand for the same quarter in 2021. Estimated remaining net accretion from acquisitions for the periods indicated is as follows (dollars in thousands):
                                

For the years ending (estimated):
2022	$ 436
2023	719
2024	420
2025	298
2026	185
Thereafter	225

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $1.6 million as of June 30, 2022, down from $2.0 million at March 31, 2022, and down substantially from $2.4 million at June 30, 2021. NPAs as a percentage of total assets were 0.05% at June 30, 2022, compared to 0.06% at March 31, 2022 and 0.07% at June 30, 2021. The Company recorded a provision for loan losses for the second quarter of 2022 of $581 thousand compared to a recovery of provision of $758 thousand in the previous quarter and a recovery of provision of $1.4 million in the second quarter of the previous year. The provision expense for the second quarter of 2022 was a function of continued loan growth during the period and a slight increase in specific reserves. The increased provision expense as compared to the previous quarter and same quarter in 2021 was associated with downward adjustments in qualitative factors during those previous periods as the economy improved.

The allowance for loan losses was $18.5 million at June 30, 2022, compared to $18.0 million at March 31, 2022 and $20.1 million at June 30, 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.01% for the second quarter of 2022, compared to (0.01%) in both the previous quarter of 2022 and in the same quarter in the prior year. The allowance as a percentage of loans held for investment was 0.91% at June 30, 2022, compared to 0.90% at March 31, 2022, and 1.05% at June 30, 2021. Excluding PPP loans, the allowance as a percentage of loans was 0.91% at June 30, 2022 and March 31, 2022, compared to 1.11% at June 30, 2021.

NONINTEREST INCOME

Noninterest income decreased $763 thousand, or 13.6%, to $4.8 million for the quarter ended June 30, 2022 from $5.6 million in the prior quarter and decreased $305 thousand, or 5.9%, from the same quarter in the prior year. Mortgage banking and insurance were the primary contributors to this decline, with mortgage banking revenues contracting $244 thousand, or 36.3%, and income from insurance investments contracting $350 thousand, or 78.3%. Lower originations because of higher mortgage rates impacted mortgage banking income, and the decrease in income from insurance investments reflects a nonrecurring dividend of $350 thousand received in the first quarter of 2022.  

The second quarter of 2022 compared to the second quarter of 2021 reflected a significant decrease in mortgage banking income, partially offset by growth in trust and brokerage fees, service charges on deposits, income from Small Business Investment Corporations and decreased losses on premises and equipment.

NONINTEREST EXPENSE

Noninterest expense for the second quarter of 2022 amounted to $15.5 million, up $106 thousand, or less than a 1% increase, when compared to $15.3 million for the previous quarter and up $818 thousand, or 5.6%, from $14.6 million during the same quarter in the previous year. The increase in the second quarter compared to the first quarter of 2022 was due to increased salary and benefits and other operational expenses.

The second quarter 2022 increase compared to the same quarter of 2021 was primarily due to increased salary and employee benefits expenses including incentive accruals, bank franchise taxes, data processing and other operational expenses.

INCOME TAXES

The effective tax rate for the three months ended June 30, 2022 was 20.90%, compared to 21.49% for the prior quarter and 21.00% for the same quarter in the prior year. The effective tax rate fluctuations are attributable to changes in pre-tax earnings and the levels of permanent tax differences.

BALANCE SHEET

Total assets at June 30, 2022 were $3.2 billion, a decrease of $112.5 million from March 31, 2022 and an increase of $32.1 million from June 30, 2021. The decrease from the previous quarter is due to lower interest bearing deposits in other banks resulting from a decrease in deposits, partially offset by the increase in loans, net during the period.

At June 30, 2022, loans held for investment (net of deferred fees and costs) were $2.0 billion, an increase of $42.8 million, or 8.6%, annualized from March 31, 2022. Loans held for investment, excluding PPP loans, increased $220.5 million, or 12.2%, from June 30, 2021.

Investment securities available for sale amounted to $668.8 million at June 30, 2022, a decrease of $17.4 million, or 2.5%, compared to March 31, 2022, and growth of $113.3 million, or 20.4%, compared to June 30, 2021.

Deposits amounted to $2.8 billion at June 30, 2022, a decrease of $95.9 million, or 13.1% annualized, from March 31, 2022 and growth of $60.6 million, or 2.2%, compared to June 30, 2021.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 7.58% at June 30, 2022 compared to 7.54% at March 31, 2022 and compared to 8.27% at June 30, 2021 (non-GAAP). The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.02%, 13.24%, 14.06% and 9.42%, respectively, at June 30, 2022.

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 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 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) 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 National’s market areas; (5) the adequacy of the level of the allowance for loan losses, the amount of loan loss provisions required in future quarters, 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.

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
		June 30
			2022				2021
Assets
Cash and due from banks		$	34,409			$	38,237
Interest-bearing deposits in other banks			307,164				502,300
Securities available for sale, at fair value			668,765				555,444
Restricted stock, at cost			8,495				8,035
Loans held for sale			5,227				13,807
Loans, net of deferred fees and costs			2,030,818				1,914,371
Less allowance for loan losses			(18,505	)			(20,097	)
Net Loans			2,012,313				1,894,274
Premises and equipment, net			34,878				37,478
Other real estate owned, net			143				213
Goodwill			85,048				85,048
Core deposit intangibles, net			3,977				5,339
Bank owned life insurance			29,318				28,791
Other assets			43,991				32,618
Total assets		$	3,233,728			$	3,201,584
Liabilities
Demand deposits -- noninterest-bearing		$	1,047,931			$	959,574
Demand deposits -- interest-bearing			544,323				482,586
Money market deposits			702,159				700,670
Savings deposits			275,945				241,746
Time deposits			259,989				385,174
Total deposits			2,830,347				2,769,750
Customer repurchase agreements			32,038				35,440
Long-term borrowings			28,283				28,181
Other liabilities			15,629				20,580
Total liabilities			2,906,297				2,853,951
Shareholders' equity
Preferred stock, $5 par value, 2,000,000 shares authorized,
none outstanding			-				-
Common stock, $1 par value, 20,000,000 shares authorized,
10,663,599 shares outstanding at June 30, 2022 and
10,875,756 shares outstanding at June 30, 2021			10,588				10,811
Capital in excess of par value			143,337				150,947
Retained earnings			212,524				185,843
Accumulated other comprehensive (loss) income, net			(39,018	)			32
Total shareholders' equity			327,431				347,633
Total liabilities and shareholders' equity		$	3,233,728			$	3,201,584

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
		6/30/22				3/31/22				6/30/21				6/30/22				6/30/21
Interest and Dividend Income:
Interest and fees on loans		$	19,076			$	18,788			$	21,087			$	37,864			$	43,360
Interest and dividends on securities:
Taxable			2,441				2,239				1,769				4,680				3,401
Tax-exempt			97				90				96				187				199
Dividends			116				113				117				229				236
Other interest income			800				177				98				977				175
Total interest and dividend income			22,530				21,407				23,167				43,937				47,371
Interest Expense:
Interest on deposits			646				569				922				1,215				2,209
Interest on short-term borrowings			9				6				5				15				16
Interest on long-term borrowings			385				379				469				764				952
Total interest expense			1,040				954				1,396				1,994				3,177
Net Interest Income			21,490				20,453				21,771				41,943				44,194
(Recovery of) provision for loan losses			581				(758	)			(1,352	)			(177	)			(1,352	)
Net Interest Income After (Recovery of) Provision
for Loan Losses			20,909				21,211				23,123				42,120				45,546
Noninterest Income:
Trust and brokerage fees			1,587				1,809				1,490				3,396				2,914
Service charges on deposit accounts			709				689				630				1,398				1,252
Interchange fees			996				981				1,178				1,977				2,064
Other fees and commissions			200				266				180				466				433
Mortgage banking income			429				673				1,142				1,102				2,460
Income from Small Business Investment Companies			678				493				591				1,171				1,019
Income from insurance investments			97				447				141				544				929
Gains (losses) on premises and equipment, net			(84	)			4				(432	)			(80	)			(481	)
Other			225				238				222				463				474
Total noninterest income			4,837				5,600				5,142				10,437				11,064
Noninterest Expense:
Salaries and employee benefits			8,720				8,598				8,178				17,318				15,696
Employee benefits			-				-				-
Occupancy and equipment			1,520				1,542				1,502				3,062				3,035
FDIC assessment			228				239				226				467				450
Bank franchise tax			488				476				443				964				881
Core deposit intangible amortization			320				330				371				650				752
Data processing			781				847				698				1,628				1,476
Software			363				363				338				726				667
Other real estate owned, net			2				(1	)			10				1				127
Other			3,033				2,955				2,871				5,988				5,618
Total noninterest expense			15,455				15,349				14,637				30,804				28,702
Income Before Income Taxes			10,291				11,462				13,628				21,753				27,908
Income Taxes			2,151				2,463				2,862				4,614				5,853
Net Income		$	8,140			$	8,999			$	10,766			$	17,139			$	22,055
Net Income Per Common Share:
Basic		$	0.76			$	0.84			$	0.99			$	1.60			$	2.02
Diluted		$	0.76			$	0.84			$	0.99			$	1.60			$	2.01
Weighted Average Common Shares Outstanding:
Basic			10,688,294				10,754,287				10,919,333				10,721,108				10,945,256
Diluted			10,690,496				10,756,902				10,923,156				10,723,517				10,949,523

American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Six Months
				2nd Qtr				1st Qtr				2nd Qtr				Ended June 30,
					2022				2022				2021				2022				2021
EARNINGS
Interest income				$	22,530			$	21,407			$	23,167			$	43,937			$	47,371
Interest expense					1,040				954				1,396				1,994				3,177
Net interest income					21,490				20,453				21,771				41,943				44,194
(Recovery of) provision for loan losses					581				(758	)			(1,352	)			(177	)			(1,352	)
Noninterest income					4,837				5,600				5,142				10,437				11,064
Noninterest expense					15,455				15,349				14,637				30,804				28,702
Income taxes					2,151				2,463				2,862				4,614				5,853
Net income					8,140				8,999				10,766				17,139				22,055
PER COMMON SHARE
Net income per share - basic				$	0.76			$	0.84			$	0.99			$	1.60			$	2.02
Net income per share - diluted					0.76				0.84				0.99				1.60				2.01
Cash dividends paid					0.28				0.28				0.27				0.56				0.54
Book value per share					30.71				31.27				31.96				30.71				31.96
Book value per share - tangible (a)					22.36				22.94				23.65				22.36				23.65
Closing market price					34.61				37.68				31.09				34.61				31.09
FINANCIAL RATIOS
Return on average assets					0.99		%		1.08		%		1.38		%		1.04		%		1.44		%
Return on average common equity					9.83				10.24				12.44				10.04				12.81
Return on average tangible common equity (a)					13.87				14.14				17.30				14.01				17.87
Average common equity to average assets					10.06				10.59				11.10				10.32				11.20
Tangible common equity to tangible assets (a)					7.58				7.54				8.27				7.58				8.27
Net interest margin, taxable equivalent					2.76				2.63				3.00				2.70				3.10
Efficiency ratio (a)					57.18				57.53				52.06				57.35				49.84
Effective tax rate					20.90				21.49				21.00				21.21				20.97
PERIOD-END BALANCES
Securities				$	677,260			$	694,660			$	563,479			$	677,260			$	563,479
Loans held for sale					5,227				2,524				13,807				5,227				13,807
Loans, net					2,030,818				1,988,008				1,914,371				2,030,818				1,914,371
Goodwill and other intangibles					89,025				89,345				90,387				89,025				90,387
Assets					3,233,728				3,346,238				3,201,584				3,233,728				3,201,584
Assets - tangible (a)					3,144,703				3,256,893				3,111,197				3,144,703				3,111,197
Deposits					2,830,347				2,926,207				2,769,750				2,830,347				2,769,750
Customer repurchase agreements					32,038				38,527				35,440				32,038				35,440
Long-term borrowings					28,283				28,257				28,181				28,283				28,181
Shareholders' equity					327,431				335,074				347,633				327,431				347,633
Shareholders' equity - tangible (a)					238,406				245,729				257,246				238,406				257,246
AVERAGE BALANCES
Securities (b)				$	726,472			$	710,873			$	512,981			$	718,716			$	486,020
Loans held for sale					3,759				4,324				15,883				4,040				13,573
Loans, net					2,006,970				1,966,586				1,947,797				1,986,890				1,978,312
Interest-earning assets					3,120,925				3,126,561				2,909,216				3,123,728				2,862,016
Goodwill and other intangibles					89,200				89,525				90,577				89,362				90,775
Assets					3,292,913				3,320,314				3,118,687				3,306,538				3,073,073
Assets - tangible (a)					3,203,713				3,230,789				3,028,110				3,217,176				2,982,298
Interest-bearing deposits					1,849,664				1,880,873				1,761,203				1,865,182				1,750,867
Deposits					2,881,318				2,880,893				2,677,101				2,881,106				2,630,081
Customer repurchase agreements					35,766				41,337				37,591				38,536				40,651
Long-term borrowings					28,268				28,241				35,584				28,255				35,612
Shareholders' equity					331,276				351,539				346,210				341,352				344,232
Shareholders' equity - tangible (a)					242,076				262,014				255,633				251,990				253,457
American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)																At or for the Six Months
				2nd Qtr				1st Qtr				2nd Qtr				Ended June 30,
					2022				2022				2021				2022				2021
CAPITAL
Weighted average shares outstanding - basic					10,688,294				10,754,287				10,919,333				10,721,108				10,945,256
Weighted average shares outstanding - diluted					10,690,496				10,756,902				10,923,156				10,723,517				10,949,523
COMMON STOCK REPURCHASE PROGRAM
Weighted average shares outstanding - basic	Total shares of common stock repurchased				54,676				88,929				93,212				143,605				147,235
Weighted average shares outstanding - diluted	Average price paid per share of common stock			$	35.32			$	38.18			$	34.73			$	37.09			$	32.81
ALLOWANCE FOR LOAN LOSSES
Beginning balance				$	17,988			$	18,678			$	21,416			$	18,678			$	21,403
(Recovery of) provision for loan losses					581				(758	)			(1,352	)			(177	)			(1,352	)
Charge-offs					(117	)			(37	)			(29	)			(154	)			(51	)
Recoveries					53				105				62				158				97
Ending balance				$	18,505			$	17,988			$	20,097			$	18,505			$	20,097
LOANS
Construction and land development				$	174,361			$	148,276			$	133,592			$	174,361			$	133,592
Commercial real estate - owner occupied					403,478				402,306				384,095				403,478				384,095
Commercial real estate - non-owner occupied					749,174				752,817				650,862				749,174				650,862
Residential real estate					310,110				295,949				264,680				310,110				264,680
Home equity					95,352				89,593				100,835				95,352				100,835
Commercial and industrial					291,445				291,697				372,759				291,445				372,759
Consumer					6,898				7,370				7,548				6,898				7,548
Total				$	2,030,818			$	1,988,008			$	1,914,371			$	2,030,818			$	1,914,371
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing				$	90			$	71			$	125			$	90			$	125
Nonaccrual					1,385				1,762				2,057				1385				2,057
Other real estate owned and repossessions					143				143				213				143				213
Nonperforming assets				$	1,618			$	1,976			$	2,395			$	1,618			$	2,395
ASSET QUALITY RATIOS
Allowance for loan losses to total loans					0.91		%		0.90		%		1.05		%		0.91		%		1.05		%
Allowance for loan losses to
nonperforming loans					1,254.58				981.34				921.04				1,254.58				921.04
Nonperforming assets to total assets					0.05				0.06				0.07				0.05				0.07
Nonperforming loans to total loans					0.07				0.09				0.11				0.07				0.11
Annualized net recoveries to average loans					0.01				(0.01	)			(0.01	)			0.00				0.00
to average loans
OTHER DATA
Fiduciary assets at period-end (c) (d)				$	709,264			$	727,022			$	697,528			$	709,264			$	697,528
Retail brokerage assets at period-end (c) (d)				$	370,493			$	405,742			$	392,881			$	370,493			$	392,881
Number full-time equivalent employees (e)					345				338				340				345				340
Number of full service offices					26				26				26				26				26
Number of loan production offices					1				1				1				1				1
Number of ATMs					36				36				36				36				36
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.

			American National Bankshares Inc.
			Net Interest Income Analysis
			For the Three Months Ended June 30, 2022 and 2021
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2022			2021			2022			2021		2022		2021
Loans:
	Commercial			$	289,092		$	391,871		$	2,473		$	4,458		3.43	%	4.56	%
	Real estate				1,715,073			1,564,747			16,538			16,551		3.86		4.23
	Consumer				6,564			7,062			98			112		5.99		6.36
		Total loans (b)			2,010,729			1,963,680			19,109			21,121		3.80		4.30
Securities:
	U.S. Treasury				152,234			41,840			349			114		0.92		1.09
	Federal agencies & GSEs				107,363			102,730			323			298		1.20		1.16
	Mortgage-backed & CMOs				360,418			281,820			1,280			961		1.42		1.36
	State and municipal				68,172			62,204			342			323		2.01		2.08
	Other				38,285			24,387			385			311		4.02		5.10
		Total securities			726,472			512,981			2,679			2,007		1.48		1.56
Deposits in other banks					383,724			432,555			800			98		0.84		0.09
	Total interest-earning assets				3,120,925			2,909,216			22,588			23,226		2.90		3.20
Non-earning assets					171,988			209,471
		Total assets		$	3,292,913		$	3,118,687
Deposits:
	Demand			$	546,412		$	468,684			36			37		0.03		0.03
	Money market				744,653			701,957			225			215		0.12		0.12
	Savings				275,957			239,887			8			6		0.01		0.01
	Time				282,642			350,675			377			664		0.54		0.76
		Total deposits			1,849,664			1,761,203			646			922		0.14		0.21
Customer repurchase agreements					35,766			37,591			8			5		0.09		0.05
Long-term borrowings					28,268			35,584			377			469		5.33		5.27
	Total interest-bearing
		liabilities			1,913,698			1,834,378			1,031			1,396		0.22		0.30
Noninterest bearing demand deposits					1,031,654			915,898
Other liabilities					16,285			22,201
Shareholders' equity					331,276			346,210
		Total liabilities and
			shareholders' equity	$	3,292,913		$	3,118,687
Interest rate spread																2.68	%	2.90	%
Net interest margin																2.76	%	3.00	%
Net interest income (taxable equivalent basis)											21,557			21,830
Less: Taxable equivalent adjustment (c)											58			59
Net interest income										$	21,499		$	21,771
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 Six Months Ended June 30, 2022 and 2021
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2022			2021			2022			2021		2022		2021
Loans:
	Commercial			$	289,569		$	428,073		$	5,105		$	10,249		3.56	%	4.83	%
	Real estate				1,694,825			1,556,465			32,616			32,941		3.85		4.23
	Consumer				6,536			7,347			210			238		6.48		6.53
		Total loans (b)			1,990,930			1,991,885			37,931			43,428		3.81		4.37
Securities:
	U.S. Treasury				149,632			28,645			672			126		0.90		0.88
	Federal agencies & GSEs				106,141			104,026			616			602		1.16		1.16
	Mortgage-backed & CMOs				360,997			269,977			2,487			1,934		1.38		1.43
	State and municipal				67,850			60,359			673			637		1.98		2.11
	Other				34,096			23,013			697			588		4.09		5.11
		Total securities			718,716			486,020			5,145			3,887		1.43		1.60
Deposits in other banks					414,082			384,111			977			175		0.48		0.09
	Total interest-earning assets				3,123,728			2,862,016			44,053			47,490		2.82		3.32
Non-earning assets					182,810			211,057
		Total assets		$	3,306,538		$	3,073,073
Deposits:
	Demand			$	536,018		$	459,867			73			77		0.03		0.03
	Money market				748,498			693,002			326			491		0.09		0.14
	Savings				270,040			233,680			15			13		0.01		0.01
	Time				310,626			364,318			801			1,628		0.52		0.90
		Total deposits			1,865,182			1,750,867			1,215			2,209		0.13		0.25
Customer repurchase agreements					38,536			40,651			15			16		0.08		0.08
Long-term borrowings					28,255			35,612			764			952		5.41		5.35
	Total interest-bearing
		liabilities			1,931,973			1,827,130			1,994			3,177		0.21		0.35
Noninterest bearing demand deposits					1,015,924			879,214
Other liabilities					17,289			22,497
Shareholders' equity					341,352			344,232
		Total liabilities and
			shareholders' equity	$	3,306,538		$	3,073,073
Interest rate spread																2.61	%	2.97	%
Net interest margin																2.70	%	3.10	%
Net interest income (taxable equivalent basis)											42,059			44,313
Less: Taxable equivalent adjustment (c)											116			119
Net interest income										$	41,943		$	44,194
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 Six Months
				2nd Qtr				1st Qtr				2nd Qtr				Ended June 30,
					2022				2022				2021				2022				2021
EFFICIENCY RATIO
Noninterest expense				$	15,455			$	15,349			$	14,637			$	30,804			$	28,702
Subtract: loss on sale of OREO					-				-				-				-				(111	)
Subtract: core deposit intangible amortization					(320	)			(330	)			(371	)			(650	)			(752	)
				$	15,135			$	15,019			$	14,266			$	30,154			$	27,839
Net interest income				$	21,490			$	20,453			$	21,771			$	41,943			$	44,194
Tax equivalent adjustment					58				58				59				116				119
Noninterest income					4,837				5,600				5,142				10,437				11,064
Add/subtract: (gain)/loss on fixed assets					84				(4	)			432				80				481
				$	26,469			$	26,107			$	27,404			$	52,576			$	55,858
Efficiency ratio					57.18		%		57.53		%		52.06		%		57.35		%		49.84		%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans				$	19,109			$	18,822			$	21,121			$	37,931			$	43,428
Interest income - investments and other					3,479				2,643				2,105				6,122				4,062
Interest expense - deposits					(646	)			(569	)			(922	)			(1,215	)			(2,209	)
Interest expense - customer repurchase
agreements					(8	)			(6	)			(5	)			(14	)			(16	)
Interest expense - long-term borrowings					(377	)			(379	)			(469	)			(756	)			(952	)
Total net interest income				$	21,557			$	20,511			$	21,830			$	42,068			$	44,313
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans					(34	)			(34	)			(34	)			(68	)			(68	)
Tax benefit on nontaxable interest - securities					(24	)			(24	)			(25	)			(48	)			(51	)
GAAP measures				$	21,499			$	20,453			$	21,771			$	41,952			$	44,194
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)					9.83		%		10.24		%		12.44		%		10.04		%		12.81		%
Impact of excluding average goodwill
and other intangibles					4.04				3.90				4.86				3.97				5.06
Return on average tangible equity
(non-GAAP)					13.87		%		14.14		%		17.30		%		14.01		%		17.87		%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)					10.13		%		10.01		%		10.86		%		10.13		%		10.86		%
Impact of excluding goodwill and
other intangibles					(2.55	)			(2.47	)			(2.59	)			(2.55	)			(2.59	)
Tangible equity to tangible assets ratio
(non-GAAP)					7.58		%		7.54		%		8.27		%		7.58		%		8.27		%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)				$	30.71			$	31.27			$	31.96			$	30.71			$	31.96
Impact of excluding goodwill and
other intangibles					(8.35	)			(8.33	)			(8.31	)			(8.35	)			(8.31	)
Tangible book value per share
(non-GAAP)				$	22.36			$	22.94			$	23.65			$	22.36			$	23.65
ADJUSTED LOAN LOSS ALLOWANCE
Allowance for loan losses				$	18,505			$	17,988			$	20,097			$	18,505			$	20,097
Credit discount on purchased loans					3,741				4,001				6,055				3,741				6,055
Adjusted loan loss allowance				$	22,246			$	21,989			$	26,152			$	22,246			$	26,152
Total loans, net				$	2,030,818			$	1,988,008			$	1,914,371			$	2,030,818			$	1,914,371
Subtract: PPP loans, net					(116	)			(689	)			(104,143	)			(116	)			(104,143	)
Total loans less PPP loans, net				$	2,030,702			$	1,987,319			$	1,810,228			$	2,030,702			$	1,810,228
Adjusted loan loss allowance to
total loans less PPP loans, net					1.10		%		1.11		%		1.44		%		1.10		%		1.44		%
Allowance for loan losses to
total loans less PPP loans, net					0.91		%		0.91		%		1.11		%		0.91		%		1.11		%

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