American National Bankshares Reports First Quarter Earnings

DANVILLE, Va., April 22, 2021 (GLOBE NEWSWIRE) -- American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported first quarter 2021 earnings of $11.3 million, or $1.03 per diluted common share. Those results compare to net income of $8.5 million, or $0.77 per diluted common share, during the same quarter in the prior year, and net income of $8.8 million, or $0.80 per diluted common share, recognized for the fourth quarter of 2020.

President and Chief Executive Officer Jeffrey V. Haley commented, “We are certainly pleased with our first quarter results, with growth noted in revenues and in particular our noninterest lines of business. We are encouraged by the optimism surrounding the potential end of the pandemic and prospects for the economy with continued stimulus support.

“We were very active in the Paycheck Protection Program (“PPP”) during the quarter, with this program continuing to support our customers, while providing a meaningful contribution to both revenues and earnings. We continued to see excellent credit quality during the quarter, resulting in no additional allowance requirement or provision expense for the period. Noninterest revenues were strong for the quarter, with solid growth in our wealth, mortgage and insurance revenues. Operating expenses adjusted for the impacts of PPP were in line with expectations. Low interest rates, excess liquidity and light loan demand were headwinds during the quarter, but we saw some notable improvement in loan activity toward the end of the quarter and as we enter the second quarter.

“We have begun to return to the Bank and fully opened our lobbies to our customers with prudent safety protocols. We remain focused on supporting and protecting our employees, customers and communities while creating shareholder value.”

First quarter 2021 highlights include:

• Earnings produced a return on average tangible common equity (annualized) of 18.45% for the first quarter of 2021, compared to 14.90% in the previous quarter and 15.32% for the same quarter in the prior year (non-GAAP).

• Average deposits grew 1.8% during the quarter and 24.8% over the same quarter of 2020; the cost of interest-bearing deposits decreased to 0.30% in the first quarter, compared to 0.43% in the previous quarter and 0.89% in the same quarter of the prior year.

• Fully taxable equivalent (“FTE”) net interest margin was 3.20% for the quarter, down from 3.22% in the fourth quarter of 2020 and from 3.52% in the same quarter of the prior year (non-GAAP).

• Noninterest revenues increased $1.7 million, or 40.3%, when compared to the previous quarter, and increased $1.4 million, or 31.7%, compared to the same quarter in the prior year.

• Noninterest expense decreased $594 thousand, or 4.1%, when compared to the previous quarter, and increased $731 thousand, or 5.5%, when compared to the same quarter in the prior year.

• The Company had no provision for loan losses in the first quarter of 2021, compared to a provision of $585 thousand for the previous quarter, and a provision of $953 thousand in the same quarter in the prior year. Annualized net charge-offs were 0.00% for the first quarter of 2021, down from 0.01% for the corresponding quarter in the prior year and 0.05% for the fourth quarter of 2020.

• Nonperforming assets as a percentage of total assets were 0.10% at March 31, 2021, down from 0.12% at December 31, 2020 and 0.16% at March 31, 2020.
  

SMALL BUSINESS ADMINISTRATION’s (“SBA’s”) PPP

The Company continued to participate in the SBA’s PPP under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in the first quarter of 2021. There were 805 loans processed for approximately $80.7 million from the second round of the program. In addition to the new loans, $105.1 million of first round loans from 2020 were forgiven in first quarter 2021 compared to $56.4 million in the fourth quarter of 2020. Total outstanding net PPP loans were $183.8 million at March 31, 2021 down from $211.3 at December 31, 2020. Total PPP fees recognized in net interest income during the quarter were $2.9 million compared to the prior quarter’s $2.4 million as a result of the forgiveness. The interest income from the total PPP portfolio generated $526,000 in revenues for the first quarter compared to $639,000 in the previous quarter.

NET INTEREST INCOME

Net interest income for the first quarter of 2021 was $22.4 million, an increase of $277 thousand, or 1.3%, from the prior quarter and an increase of $2.5 million, or 12.6%, from the first quarter of 2020. The FTE net interest margin for the quarter was 3.20%, down from 3.22% in the prior quarter and down from 3.52% in the same period a year ago (non-GAAP). The first quarter of 2021 benefited from the recognition of a higher level of remaining net fees on PPP loans that were forgiven during the quarter. The increase in net interest income from the same quarter in the prior year was attributable to the PPP program and reduced deposit costs from a significantly lower rate environment.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the first quarter of 2021, net accretion related to acquisition accounting amounted to $948 thousand compared to $1.2 million in the prior quarter and $957 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 nine months of 2021	$1,299
	For the years ending (estimated):
	2022	1,203
	2023	689
	2024	416
	2025	302
	2026	185
	Thereafter	536

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $2.9 million as of March 31, 2021 down from $3.7 million at December 31, 2020, and down from $4.0 million at March 31, 2020. NPAs as a percentage of total assets were 0.10% at March 31, 2021, compared to 0.12% at December 31, 2020 and 0.16% at March 31, 2020.

There was no provision expense for the first quarter of 2021, as compared to $585 thousand for the previous quarter and $953 thousand for the same period in the previous year. The first quarter of 2021 warranted a significantly lower provision than the fourth quarter of 2020 based on loan activity, an improving economy, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics. However, risk levels in general remain elevated particularly in certain industry segments. The allowance for loan losses was $21.4 million at March 31, 2021 and December 31, 2020 and $14.1 million at March 31, 2020. Annualized net charge-offs as a percentage of average loans outstanding were 0.00% for the first quarter of 2021, compared to 0.05% in the previous quarter and 0.01% for the same period in the prior year. The allowance as a percentage of loans held for investment was 1.08% at March 31, 2021 compared to 1.06% at December 31, 2020 and 0.76% at March 31, 2020. Excluding PPP loans, the allowance as a percentage of loans was 1.19% at both March 31, 2021 and December 31, 2020.

American National continues to utilize a Disaster Assistance Program for borrowers in accordance with Section 4013 of the CARES Act. At March 31, 2021, American National had interest only deferrals to customers with outstanding balances amounting to $19.3 million, representing less than 1.0% of total loans held for investment, which compares to $30.0 million, or 1.5%, of total loans held for investment, at December 31, 2020. At March 31, 2021 $16.4 million of the $19.3 million was the result of second and third interest deferrals.

NONINTEREST INCOME

Noninterest income increased $1.7 million, or 40.3%, to $5.9 million for the quarter ended March 31, 2021 from $4.2 million in the prior quarter and increased $1.4 million, or 31.7%, from the same period in the prior year. The largest increases for the first quarter over the previous quarter were in income from mortgage banking, up $276 thousand or 26.5%; income from small business investment companies, up $192 thousand or 81.4%; and income from insurance investments, up $846 thousand or over 100%, respectively. Comparing the first quarter of 2021 to the first quarter of 2020, increases were noted in all categories except for service charges on deposit accounts, securities gains, net, and losses on premises and equipment, net.

NONINTEREST EXPENSE

Noninterest expense for the first quarter of 2021 amounted to $14.1 million, down $594 thousand, or 4.1%, when compared to the $14.7 million for the previous quarter and up $731 thousand, or 5.5%, from $13.3 million during the same period in the previous year. The first quarter of 2021 reflects a reduction in salaries and benefits expense associated with the deferral of $604 thousand in costs associated with the origination of PPP loans during the quarter. The fourth quarter of 2020 included $650 thousand in pension and salary expenses resulting from a voluntary early retirement package recognized as one-time costs. The increase from the first quarter of 2020 was attributable primarily to increases in salaries and benefits and occupancy expense reflecting normal growth, and the benefit of small bank credits in the FDIC assessment line item for 2020 that reduced expenses.

INCOME TAXES

The effective tax rate for the three months ended March 31, 2021 and December 31, 2020 was 20.9%. This compares to 15.7% for the same period in the prior year. In the quarter ended March 31, 2020, the Company benefited from a provision of the CARES Act which allowed it to recognize a tax benefit for the net operating loss (NOL) five-year carryback of the NOL acquired in the acquisition of HomeTown Bankshares Corporation in 2019. An income tax benefit was realized on the NOL for the difference between the 21% corporate tax rate and the higher rate of 35% in effect prior to 2018.

BALANCE SHEET

Total assets at March 31, 2021 and December 31, 2020 were $3.1 billion and increased $578.4 million from the first quarter of 2020. The balance sheet at March 31, 2021 reflected a slight shift in the mix of assets from the previous quarter but primarily remained constant. 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 March 31, 2021, loans held for investment (net of deferred fees and costs) were $2.0 billion, a decrease of $36.4 million, or 7.2% annualized, from December 31, 2020. The change was primarily a result of the changes discussed previously from the PPP. Excluding PPP loans, loans held for investment were slightly lower, contracting $8.9 million or 0.5% from year-end 2020.

Investment securities amounted to $482.1 million at March 31, 2021, with growth of $16.1 million, or 3.4%, compared to December 31, 2020, and growth of $139.4 million, or 40.7%, compared to March 31, 2020.

Deposits amounted to $2.6 billion at March 31, 2021 and December 31, 2020, with growth of $561.9 million, or 27.1%, compared to the first quarter of 2020. The growth over the previous quarter and the prior period of 2020 is a result of continued higher than average cash balances being maintained by customers as elevated savings rates and liquidity patterns continue. This pattern has been prevalent since the second quarter of 2020 and is consistent with trends with other commercial banks.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 8.42% at March 31, 2021 as compared to 8.34% at December 31, 2020 and 9.61% at March 31, 2020. The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 12.74%, 14.16%, 15.56% and 9.56%, respectively at March 31, 2021.

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 $1.0 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; (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 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.

Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
	March 31
		2021				2020
Assets
Cash and due from banks	$	33,266			$	39,602
Interest-bearing deposits in other banks		383,984				69,968
Securities available for sale, at fair value		482,143				342,769
Restricted stock, at cost		8,024				8,682
Loans held for sale		17,929				2,666
Loans, net of deferred fees and costs		1,978,640				1,854,928
Less allowance for loan losses		(21,416	)			(14,065	)
Net Loans		1,957,224				1,840,863
Premises and equipment, net		39,336				39,632
Other real estate owned, net		443				984
Goodwill		85,048				85,048
Core deposit intangibles, net		5,710				7,301
Bank owned life insurance		28,635				27,970
Other assets		31,690				29,580
Total assets	$	3,073,432			$	2,495,065
Liabilities
Demand deposits -- noninterest-bearing	$	907,721			$	567,772
Demand deposits -- interest-bearing		455,457				343,291
Money market deposits		688,051				524,234
Savings deposits		236,518				181,564
Time deposits		344,787				453,806
Total deposits		2,632,534				2,070,667
Customer repurchase agreements		39,205				42,114
Long-term borrowings		35,656				35,567
Other liabilities		24,244				23,424
Total liabilities		2,731,639				2,171,772
Shareholders' equity
Preferred stock, $5 par value, 2,000,000 shares authorized,
none outstanding		-				-
Common stock, $1 par value, 20,000,000 shares authorized,
10,958,171 shares outstanding at March 31, 2021 and
10,957,502 shares outstanding at March 31, 2020		10,894				10,898
Capital in excess of par value		153,651				153,817
Retained earnings		178,015				157,064
Accumulated other comprehensive income (loss), net		(767	)			1,514
Total shareholders' equity		341,793				323,293
Total liabilities and shareholders' equity	$	3,073,432			$	2,495,065

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
	For the Three Months Ended
	3/31/21				12/31/20				3/31/20
Interest and Dividend Income:
Interest and fees on loans	$	22,273			$	22,654			$	21,321
Interest and dividends on securities:
Taxable		1,632				1,536				2,037
Tax-exempt		103				103				112
Dividends		119				121				132
Other interest income		77				84				264
Total interest and dividend income		24,204				24,498				23,866
Interest Expense:
Interest on deposits		1,287				1,821				3,312
Interest on short-term borrowings		11				22				129
Interest on long-term borrowings		483				509				506
Total interest expense		1,781				2,352				3,947
Net Interest Income		22,423				22,146				19,919
Provision for loan losses		-				585				953
Net Interest Income After Provision
for Loan Losses		22,423				21,561				18,966
Noninterest Income:
Trust fees		1,206				1,025				1,012
Service charges on deposit accounts		622				677				721
Other fees and commissions		1,139				1,037				941
Mortgage banking income		1,318				1,042				549
Securities gains, net		-				-				814
Brokerage fees		218				192				211
Income from Small Business Investment Companies		428				236				55
Income (loss) from insurance investments		788				(58	)			48
Losses on premises and equipment, net		(49	)			(13	)			(82	)
Other		252				83				226
Total noninterest income		5,922				4,221				4,495
Noninterest Expense:
Salaries and employee benefits		7,518				8,225				7,360
Occupancy and equipment		1,533				1,470				1,366
FDIC assessment		224				206				95
Bank franchise tax		438				425				426
Core deposit intangible amortization		381				391				427
Data processing		778				764				763
Software		329				342				356
Other real estate owned, net		117				26				(9	)
Other		2,747				2,810				2,550
Total noninterest expense		14,065				14,659				13,334
Income Before Income Taxes		14,280				11,123				10,127
Income Taxes		2,991				2,329				1,585
Net Income	$	11,289			$	8,794			$	8,542
Net Income Per Common Share:
Basic	$	1.03			$	0.80			$	0.77
Diluted	$	1.03			$	0.80			$	0.77
Weighted Average Common Shares Outstanding:
Basic		10,971,466				10,975,349				11,025,185
Diluted		10,976,177				10,978,931				11,031,310

American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)
	1st Qtr				4th Qtr				1st Qtr
		2021				2020				2020
EARNINGS
Interest income	$	24,204			$	24,498			$	23,866
Interest expense		1,781				2,352				3,947
Net interest income		22,423				22,146				19,919
Provision for loan losses		-				585				953
Noninterest income		5,922				4,221				4,495
Noninterest expense		14,065				14,659				13,334
Income taxes		2,991				2,329				1,585
Net income		11,289				8,794				8,542
PER COMMON SHARE
Net income per share - basic	$	1.03			$	0.80			$	0.77
Net income per share - diluted		1.03				0.80				0.77
Cash dividends paid		0.27				0.27				0.27
Book value per share		31.19				30.77				29.50
Book value per share - tangible (a)		22.91				22.47				21.08
Closing market price		33.07				26.21				23.90
FINANCIAL RATIOS
Return on average assets		1.49		%		1.18		%		1.37		%
Return on average common equity		13.19				10.48				10.56
Return on average tangible common equity (a)		18.45				14.90				15.32
Average common equity to average assets		11.31				11.30				12.99
Tangible common equity to tangible assets (a)		8.42				8.34				9.61
Net interest margin, taxable equivalent		3.20				3.22				3.52
Efficiency ratio (a)		47.70				53.92				54.46
Effective tax rate		20.95				20.94				15.65
PERIOD-END BALANCES
Securities	$	490,167			$	474,806			$	351,451
Loans held for sale		17,929				15,591				2,666
Loans, net		1,978,640				2,015,056				1,854,928
Goodwill and other intangibles		90,758				91,139				92,349
Assets		3,073,432				3,050,010				2,495,065
Assets - tangible (a)		2,982,674				2,958,871				2,402,716
Deposits		2,632,534				2,611,330				2,070,667
Customer repurchase agreements		39,205				42,551				42,114
Long-term borrowings		35,656				35,630				35,567
Shareholders' equity		341,793				337,894				323,293
Shareholders' equity - tangible (a)		251,035				246,755				230,944
AVERAGE BALANCES
Securities (b)	$	458,760			$	372,529			$	369,730
Loans held for sale		11,237				8,601				3,156
Loans, net		2,009,166				2,063,397				1,829,125
Interest-earning assets		2,814,291				2,754,455				2,274,920
Goodwill and other intangibles		90,976				91,358				91,738
Assets		3,026,952				2,971,505				2,491,591
Assets - tangible (a)		2,935,976				2,880,147				2,399,853
Interest-bearing deposits		1,740,418				1,701,395				1,495,565
Deposits		2,582,539				2,536,363				2,069,927
Customer repurchase agreements		43,746				40,819				41,519
Other short-term borrowings		-				-				3
Long-term borrowings		35,640				35,617				35,554
Shareholders' equity		342,231				335,671				323,573
Shareholders' equity - tangible (a)		251,255				244,313				231,835
American National Bankshares Inc.
Financial Highlights
Unaudited
(Dollars in thousands, except per share data)
	1st Qtr				4th Qtr				1st Qtr
		2021				2020				2020
CAPITAL
Weighted average shares outstanding - basic		10,971,466				10,975,349				11,025,185
Weighted average shares outstanding - diluted		10,976,177				10,978,931				11,031,310
COMMON STOCK REPURCHASE PROGRAM
Total shares of common stock repurchased		54,023				-				140,526
Average price paid per share of common stock	$	29.51			$	-			$	35.44
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	21,403			$	21,088			$	13,152
Provision for loan losses		-				585				953
Charge-offs		(22	)			(331	)			(105	)
Recoveries		35				61				65
Ending balance	$	21,416			$	21,403			$	14,065
LOANS
Construction and land development	$	159,801			$	140,071			$	141,154
Commercial real estate - owner occupied		364,549				373,680				376,554
Commercial real estate - non-owner occupied		628,742				627,569				576,809
Residential real estate		266,595				269,137				301,284
Home equity		100,643				104,881				118,030
Commercial and industrial		447,109				491,256				331,507
Consumer		11,201				8,462				9,590
Total	$	1,978,640			$	2,015,056			$	1,854,928
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	162			$	262			$	459
Nonaccrual		2,323				2,434				2,579
Other real estate owned and repossessions		443				958				984
Nonperforming assets	$	2,928			$	3,654			$	4,022
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.08		%		1.06		%		0.76		%
Allowance for loan losses to
nonperforming loans		861.81				793.88				462.97
Nonperforming assets to total assets		0.10				0.12				0.16
Nonperforming loans to total loans		0.13				0.13				0.16
Annualized net charge-offs
to average loans		0.00				0.05				0.01
OTHER DATA
Fiduciary assets at period-end (c) (d)	$	666,653			$	614,016			$	492,850
Retail brokerage assets at period-end (c) (d)	$	382,419			$	362,022			$	235,359
Number full-time equivalent employees (e)		340				342				355
Number of full service offices		26				26				26
Number of loan production offices		1				1				1
Number of ATMs		36				37				38
Notes:
(a) - This financial measure is not calculated in accordance with GAAP. For a reconciliation of
non-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the end
of this release.
(b) - Average does not include unrealized gains and losses.
(c) - Market value.
(d) - Assets are not owned by American National and are not reflected in the consolidated balance
sheet.
(e) - Average for quarter.

Net Interest Income Analysis
For the Three Months Ended March 31, 2021 and 2020
(Dollars in thousands)
Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2021			2020			2021			2020		2021		2020
Loans:
Commercial				$	464,677		$	332,920		$	5,790		$	3,543		5.05	%	4.28	%
Real estate					1,548,091			1,489,319			16,390			17,663		4.23		4.74
Consumer					7,635			10,042			127			157		6.75		6.29
Total loans (b)					2,020,403			1,832,281			22,307			21,363		4.43		4.67
Securities:
U.S. Treasury					15,303			9,049			12			36		0.31		1.59
Federal agencies & GSEs					105,337			103,311			305			576		1.16		2.23
Mortgage-backed & CMOs					258,003			197,774			973			1,144		1.51		2.31
State and municipal					58,493			40,825			315			288		2.15		2.82
Other					21,624			18,771			275			264		5.09		5.63
Total securities					458,760			369,730			1,880			2,308		1.64		2.50
Deposits in other banks					335,128			72,909			77			264		0.09		1.46
Total interest-earning assets					2,814,291			2,274,920			24,264			23,935		3.46		4.21
Non-earning assets					212,661			216,671
Total assets				$	3,026,952		$	2,491,591
Deposits:
Demand				$	450,953		$	331,357			40			123		0.04		0.15
Money market					683,948			515,339			276			1,188		0.16		0.93
Savings					227,404			178,896			7			53		0.01		0.12
Time					378,113			469,973			964			1,948		1.03		1.67
Total deposits					1,740,418			1,495,565			1,287			3,312		0.30		0.89
Customer repurchase agreements					43,746			41,519			11			129		0.10		1.25
Other short-term borrowings					-			3			-			-		-		1.01
Long-term borrowings					35,640			35,554			483			506		5.42		5.69
Total interest-bearing
liabilities					1,819,804			1,572,641			1,781			3,947		0.40		1.01
Noninterest bearing demand deposits					842,121			574,362
Other liabilities					22,796			21,015
Shareholders' equity					342,231			323,573
Total liabilities and
shareholders' equity				$	3,026,952		$	2,491,591
Interest rate spread																3.06	%	3.20	%
Net interest margin																3.20	%	3.52	%
Net interest income (taxable equivalent basis)											22,483			19,988
Less: Taxable equivalent adjustment (c)											60			69
Net interest income										$	22,423		$	19,919
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)
	1st Qtr				4th Qtr				1st Qtr
		2021				2020				2020
EFFICIENCY RATIO
Noninterest expense	$	14,065			$	14,659			$	13,334
Add/subtract: gain/loss on sale of OREO		(111	)			(8	)			27
Subtract: core deposit intangible amortization		(381	)			(391	)			(427	)
	$	13,573			$	14,260			$	12,934
Net interest income	$	22,423			$	22,146			$	19,919
Tax equivalent adjustment		60				69				69
Noninterest income		5,922				4,221				4,495
Subtract: gain on securities		-				-				(814	)
Add: loss on fixed assets		49				13				82
	$	28,454			$	26,449			$	23,751
Efficiency ratio		47.70		%		53.92		%		54.46		%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans	$	22,307			$	22,697			$	21,363
Interest income - investments and other		1,957				1,870				2,572
Interest expense - deposits		(1,287	)			(1,821	)			(3,312	)
Interest expense - customer repurchase
agreements		(11	)			(22	)			(129	)
Interest expense - other short-term borrowings		-				-				-
Interest expense - long-term borrowings		(483	)			(509	)			(506	)
Total net interest income	$	22,483			$	22,215			$	19,988
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans		(34	)			(43	)			(42	)
Tax benefit on nontaxable interest - securities		(26	)			(26	)			(27	)
GAAP measures	$	22,423			$	22,146			$	19,919
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)		13.19		%		10.48		%		10.56		%
Impact of excluding average goodwill
and other intangibles		5.26				4.42				4.76
Return on average tangible equity
(non-GAAP)		18.45		%		14.90		%		15.32		%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)		11.12		%		11.08		%		12.96		%
Impact of excluding goodwill and
other intangibles		(2.70	)			(2.74	)			(3.35	)
Tangible equity to tangible assets ratio
(non-GAAP)		8.42		%		8.34		%		9.61		%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)	$	31.19			$	30.77			$	29.50
Impact of excluding goodwill and
other intangibles		(8.28	)			(8.30	)			(8.42	)
Tangible book value per share
(non-GAAP)	$	22.91			$	22.47			$	21.08
ADJUSTED LOAN LOSS ALLOWANCE
Allowance for loan losses	$	21,416			$	21,403			$	14,065
Credit discount on purchased loans		6,528				7,255				10,547
Adjusted loan loss allowance	$	27,944			$	28,658			$	24,612
Total loans, net	$	1,978,640			$	2,015,056			$	1,854,928
Subtract: PPP loans, net		(183,783	)			(211,275	)			-
Total loans less PPP loans, net	$	1,794,857			$	1,803,781			$	1,854,928
Adjusted loan loss allowance to
total loans less PPP loans, net		1.56		%		1.59		%		1.33		%

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