AMNB American National Bankshares Inc

American National Bankshares Inc. (NASDAQ: AMNB) (“American National” or the “Company”) today reported fourth quarter 2022 earnings of $8.0 million, or $0.76 per diluted common share. Those results compare to earnings of $11.3 million, or $1.05 per diluted common share, during the same quarter in the prior year, and earnings of $9.3 million, or $0.87 per diluted common share, for the third quarter of 2022. Earnings for the twelve months ended December 31, 2022 were $34.4 million, or $3.23 per diluted common share, compared to $43.5 million, or $4.00 per diluted common share, for the same period of 2021.

President and Chief Executive Officer, Jeffrey V. Haley, commented, “American National finished 2022 on a positive note with strong earnings for the fourth quarter and the full year. Loan growth was again exceptional, and while we experienced deposit outflows during the period consistent with industry trends, we are pleased with balance sheet trends overall. While there has been some slowing, business activity and our local economies remain fairly stable in spite of factors associated with elevated inflation and rising rates.”

“I am so proud and appreciative of the efforts of our employees, the support of our customers and our shareholders over the past year. In October, American National was named one of the “Best Banks to Work For” by American Banker for the third consecutive year. This achievement is a testament to our efforts to provide a great place to work for a great team. We had a very successful year financially and achieved many other nonfinancial initiatives during the year as we prepare the Company for future growth and success.”

Fourth quarter 2022 highlights include:

• Earnings produced a return on average tangible common equity of 14.50% for the fourth quarter of 2022, compared to 15.74% in the previous quarter and 17.63% for the same quarter in the prior year (non-GAAP).
• Net interest income increased $281 thousand, or 1.2%, when compared to the previous quarter, and increased $1.2 million, or 5.1%, when compared to the same quarter in 2021.
• Fully taxable equivalent (“FTE”) net interest margin was 3.33% for the quarter, up from 3.20% in the third quarter of 2022 and up from 2.93% in the same quarter of the prior year (non-GAAP).
• Noninterest revenues decreased $1.2 million, or 24.2%, when compared to the previous quarter, and decreased $1.2 million, or 25.5%, compared to the same quarter in the prior year.
• Noninterest expense increased $386 thousand, or 2.3%, when compared to the previous quarter, and increased $1.4 million, or 8.9%, 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 $104.6 million, or 20.3% annualized, during the fourth quarter compared to $57.2 million, or 11.4% annualized, growth in the third quarter of this year and $69.0 million, or 14.9% annualized, growth in the fourth quarter of the prior year.
• The Company recognized a provision for loan losses in the fourth quarter of 2022 of $1.2 million compared to $615 thousand in the third quarter of 2022 and a negative provision of $2.0 million in the fourth quarter of 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.15% for the fourth quarter of 2022 compared to (0.01%) in the previous quarter and (0.00%) in the same quarter of 2021.
• Nonperforming assets as a percentage of total assets were 0.05% at December 31, 2022 and September 30, 2022, down from 0.07% at December 31, 2021.

NET INTEREST INCOME

Net interest income for the fourth quarter of 2022 increased by $281 thousand, or 1.2%, to $24.3 million compared to $24.0 million for the third quarter of 2022. The fourth quarter of 2022 compared to the same quarter of 2021 reflected an increase of $1.2 million, or 5.1%. The FTE net interest margin for the quarter was 3.33%, up from 3.20% in the prior quarter and 2.93% in the same quarter a year ago (non-GAAP). The margin expansion relative to the previous quarter was primarily due to a 34-basis point increase in yield on average earning assets partially offset by a 36-basis point increase in the cost of interest-bearing liabilities. The higher yield resulted from a shift in the earning assets mix caused by excess deposits in other banks being deployed into the loan portfolio as well as increased yields on loans, securities, and deposits in other banks due to the rise in interest rates. The higher interest cost on liabilities was also a result of higher interest rates and some additional borrowing costs associated with short term FHLB advances during the period. The increase in margin from fourth quarter 2021 was also attributable to the higher rate environment and asset mix changes partially offset by substantially more PPP related income in 2021.

The Company’s FTE net interest margin includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2022, net accretion related to acquisition accounting amounted to $253 thousand compared to $454 thousand in the prior quarter and $2.1 million 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 December 31, (estimated):
2023	$	744
2024		457
2025		324
2026		252
2027		116
Thereafter		112

ASSET QUALITY

Nonperforming assets (“NPAs”) totaled $1.4 million as of December 31, 2022 and as of September 30, 2022, down substantially from $2.4 million at December 31, 2021. NPAs as a percentage of total assets were 0.05% at December 31, 2022 and September 30, 2022, and 0.07% at December 31, 2021. The Company recorded a provision for loan losses for the fourth quarter of 2022 of $1.2 million compared to $615 thousand in the previous quarter and a negative provision of $2.0 million in the fourth quarter of the previous year. The provision expense increase for the fourth quarter as compared to third quarter of 2022 was a function of continued loan growth coupled with charge-off activity during the period. The negative provision in the fourth quarter of 2021 was the result of continued improvement in economic conditions, ongoing low charge-off and delinquency rates, and overall strong asset quality metrics.

The allowance for loan losses was $19.6 million at December 31, 2022, compared to $19.2 million at September 30, 2022 and $18.7 million at December 31, 2021. Annualized net charge-offs (recoveries) as a percentage of average loans outstanding were 0.15% for the fourth quarter of 2022 compared to (0.01%) and (0.00%) in the third quarter of 2022 and fourth quarter of 2021, respectively. The allowance as a percentage of loans held for investment was 0.89% at December 31, 2022, compared to 0.91% at September 30, 2022, and 0.96% at December 31, 2021.

NONINTEREST INCOME

Noninterest income decreased $1.2 million, or 24.2%, to $3.6 million for the quarter ended December 31, 2022 from the prior quarter and $1.2 million, or 25.5%, from $4.8 million in the same quarter in the prior year. The decrease in the fourth quarter of 2022 compared to the third quarter was primarily due to a reduction in equity income from investments in small business investment companies. During the fourth quarter of 2022, investments in these entities resulted in losses recorded of $263 thousand, compared to earnings of $501 thousand in the prior quarter and $462 thousand in the same quarter of the prior year. In addition, an impairment charge of $146 thousand was recorded during the fourth quarter of 2022 on an acquired real estate property from a previous acquisition. Mortgage income also decreased $212 thousand in the fourth quarter of 2022 as demand continues to slow due to higher mortgage rates. The decrease for the fourth quarter of 2022 as compared to the same quarter in the prior year can also be attributed to the aforementioned small business investment company losses and from mortgage revenue contraction associated with lower volumes due to higher mortgage rates. Mortgage banking income decreased by $570 thousand, or 76.4%, compared to the same quarter of 2021.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter of 2022 amounted to $16.8 million, up $386 thousand, or 2.3%, when compared to $16.4 million for the previous quarter and up $1.4 million, or 8.9%, from $15.5 million for the same quarter in the previous year. The increase in the fourth quarter compared to the third quarter of 2022 was primarily from increased charitable contributions and data processing and technology costs. The increase from the same quarter of 2021 was the result of higher compensation associated with a lower staffing vacancy rate and increased incentive accruals.

INCOME TAXES

The effective tax rate for the three months ended December 31, 2022 was 18.90%, compared to 20.92% for the prior quarter and 21.79% for the same quarter in the prior year. The Company recognized a tax benefit in the fourth quarter of 2022 resulting from adjustments from investment partnership income tax returns. 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 December 31, 2022 were $3.1 billion, an increase of $16.6 million from September 30, 2022 and a decrease of $268.7 million from December 31, 2021. The increase from the previous quarter is due to an increase in loans, net, partially offset by lower interest-bearing deposits in other banks resulting from a decrease in deposits and a decrease in the investment portfolio for maturities during the period.

At December 31, 2022, loans held for investment (net of deferred fees and costs) were $2.2 billion, an increase of $67.0 million, or 12.7% annualized, from September 30, 2022. Loans held for investment (net of deferred fees and costs) increased $239.9 million, or 12.3%, from December 31, 2021.

Investment securities available for sale amounted to $608.1 million at December 31, 2022, a decrease of $33.8 million, or 5.3%, compared to September 30, 2022, and a decrease of $84.4 million, or 12.2%, compared to December 31, 2021.

Deposits amounted to $2.6 billion at December 31, 2022, a decrease of $94.5 million, or 14.1% annualized, from September 30, 2022 and a decrease of $294.0 million, or 10.2%, compared to December 31, 2021.

The Company continues to be well-capitalized as defined by regulators, with tangible common equity to tangible assets of 7.82% at December 31, 2022 compared to 7.59% at September 30, 2022 and compared to 8.17% at December 31 2021 (non-GAAP). The Company’s common equity Tier 1, Tier 1, total, and Tier 1 leverage capital ratios were 11.69%, 12.84%, 13.65% and 10.35%, respectively, at December 31, 2022.

ABOUT AMERICAN NATIONAL

American National is a multi-state bank holding company with total assets of approximately $3.0 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 $1.2 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.

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

American National Bankshares Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Unaudited
	December 31
		2022				2021
Assets
Cash and due from banks	$	32,207			$	23,095
Interest-bearing deposits in other banks		41,133				487,773
Securities available for sale, at fair value		608,062				692,467
Restricted stock, at cost		12,651				8,056
Loans held for sale		1,061				8,481
Loans, net of deferred fees and costs		2,186,449				1,946,580
Less allowance for loan losses		(19,555	)			(18,678	)
Net Loans		2,166,894				1,927,902
Premises and equipment, net		32,900				35,564
Assets held-for-sale		1,382				-
Other real estate owned, net		27				143
Goodwill		85,048				85,048
Core deposit intangibles, net		3,367				4,627
Bank owned life insurance		29,692				29,107
Other assets		51,478				32,334
Total assets	$	3,065,902			$	3,334,597
Liabilities
Demand deposits -- noninterest-bearing	$	1,010,602			$	1,009,081
Demand deposits -- interest-bearing		484,037				547,878
Money market deposits		574,330				719,498
Savings deposits		269,426				259,193
Time deposits		257,933				354,703
Total deposits		2,596,328				2,890,353
Customer repurchase agreements		370				41,128
Other short-term borrowings		100,531				-
Long-term borrowings		28,334				28,232
Other liabilities		19,165				20,092
Total liabilities		2,744,728				2,979,805
Shareholders' equity
Preferred stock, $5 par value, 2,000,000 shares authorized,
none outstanding		-				-
Common stock, $1 par value, 20,000,000 shares authorized,
10,608,781 shares outstanding at December 31, 2022 and
10,766,967 shares outstanding at December 31, 2021		10,538				10,710
Capital in excess of par value		141,948				147,777
Retained earnings		223,664				201,380
Accumulated other comprehensive loss, net		(54,976	)			(5,075	)
Total shareholders' equity		321,174				354,792
Total liabilities and shareholders' equity	$	3,065,902			$	3,334,597

American National Bankshares Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Unaudited
	For the Three Months Ended												For the Twelve Months Ended
	12/31/22				9/30/22				12/31/21				12/31/22				12/31/21
Interest and Dividend Income:
Interest and fees on loans	$	23,544			$	21,160			$	21,706			$	82,568			$	87,040
Interest and dividends on securities:
Taxable		2,721				2,664				2,012				10,065				7,309
Tax-exempt		110				110				92				407				385
Dividends		126				118				115				473				464
Other interest income		415				1,099				223				2,491				598
Total interest and dividend income		26,916				25,151				24,148				96,004				95,796
Interest Expense:
Interest on deposits		1,597				741				655				3,553				3,645
Interest on short-term borrowings		633				11				3				659				22
Interest on long-term borrowings		398				392				386				1,554				1,738
Total interest expense		2,628				1,144				1,044				5,766				5,405
Net Interest Income		24,288				24,007				23,104				90,238				90,391
Provision for (recovery of) loan losses		1,159				615				(1,955	)			1,597				(2,825	)
Net Interest Income After Provision for (recovery of)
Loan Losses		23,129				23,392				25,059				88,641				93,216
Noninterest Income:
Trust and brokerage fees		1,522				1,603				1,529				6,521				6,019
Service charges on deposit accounts		597				681				695				2,676				2,611
Interchange fees		1,117				1,013				1,127				4,107				4,152
Other fees and commissions		207				233				182				906				801
Mortgage banking income		176				388				746				1,666				4,195
Securities gains, net		-				-				35				-				35
Income (loss) from Small Business Investment Companies		(263	)			501				462				1,409				1,972
Income from insurance investments		103				100				137				747				1,199
Losses on premises and equipment, net		(146	)			(2	)			(297	)			(228	)			(885	)
Other		297				243				228				1,003				932
Total noninterest income		3,610				4,760				4,844				18,807				21,031
Noninterest Expense:
Salaries and employee benefits		9,446				9,618				8,461				36,382				32,342
Occupancy and equipment		1,499				1,514				1,484				6,075				6,032
FDIC assessment		209				227				220				903				864
Bank franchise tax		501				488				446				1,953				1,767
Core deposit intangible amortization		300				310				351				1,260				1,464
Data processing		864				818				734				3,310				2,958
Software		417				362				357				1,505				1,368
Other real estate owned, net		(1	)			3				(17	)			3				131
Other		3,599				3,108				3,427				12,695				12,082
Total noninterest expense		16,834				16,448				15,463				64,086				59,008
Income Before Income Taxes		9,905				11,704				14,440				43,362				55,239
Income Taxes		1,872				2,448				3,147				8,934				11,713
Net Income	$	8,033			$	9,256			$	11,293			$	34,428			$	43,526
Net Income Per Common Share:
Basic	$	0.76			$	0.87			$	1.05			$	3.23			$	4.00
Diluted	$	0.76			$	0.87			$	1.05			$	3.23			$	4.00
Weighted Average Common Shares Outstanding:
Basic		10,607,678				10,640,952				10,774,268				10,672,314				10,873,817
Diluted		10,609,937				10,643,073				10,776,970				10,674,613				10,877,231

American National Bankshares Inc.
Financial Highlights
Unaudited
	(Dollars in thousands, except per share data)													At or for the Twelve Months
		4th Qtr				3rd Qtr				4th Qtr				Ended December 31,
			2022				2022				2021				2022				2021
EARNINGS
Interest income		$	26,916			$	25,151			$	24,148			$	96,004			$	95,796
Interest expense			2,628				1,144				1,044				5,766				5,405
Net interest income			24,288				24,007				23,104				90,238				90,391
Provision for (recovery of) loan losses			1,159				615				(1,955	)			1,597				(2,825	)
Noninterest income			3,610				4,760				4,844				18,807				21,031
Noninterest expense			16,834				16,448				15,463				64,086				59,008
Income taxes			1,872				2,448				3,147				8,934				11,713
Net income			8,033				9,256				11,293				34,428				43,526
PER COMMON SHARE
Net income per share - basic		$	0.76			$	0.87			$	1.05			$	3.23			$	4.00
Net income per share - diluted			0.76				0.87				1.05				3.23				4.00
Cash dividends paid			0.30				0.28				0.28				1.14				1.09
Book value per share			30.27				29.54				32.95				30.27				32.95
Book value per share - tangible (a)			21.94				21.18				24.62				21.94				24.62
Closing market price			36.93				31.95				37.68				36.93				37.68
FINANCIAL RATIOS
Return on average assets			1.05		%		1.17		%		1.35		%		1.43		%		1.37		%
Return on average common equity			10.15				11.21				12.82				13.81				12.50
Return on average tangible common equity (a)			14.50				15.74				17.63				19.41				17.34
Average common equity to average assets			10.33				10.42				10.50				10.35				10.96
Tangible common equity to tangible assets (a)			7.82				7.59				8.17				7.82				8.17
Net interest margin, taxable equivalent (a)			3.33				3.20				2.93				2.97				3.05
Efficiency ratio (a)			58.82				55.98				53.45				57.37				51.05
Effective tax rate			18.90				20.92				21.79				20.60				21.20
PERIOD-END BALANCES
Securities		$	620,713			$	650,267			$	700,523			$	620,713			$	700,523
Loans held for sale			1,061				2,852				8,481				1,061				8,481
Loans, net			2,186,449				2,119,415				1,946,580				2,186,449				1,946,580
Goodwill and other intangibles			88,415				88,715				89,675				88,415				89,675
Assets			3,065,902				3,049,320				3,334,597				3,065,902				3,334,597
Assets - tangible (a)			2,977,487				2,960,605				3,244,922				2,977,487				3,244,922
Deposits			2,596,328				2,690,870				2,890,353				2,596,328				2,890,353
Customer repurchase agreements			370				625				41,128				370				41,128
Long-term borrowings			28,334				28,308				28,232				28,334				28,232
Shareholders' equity			321,174				313,390				354,792				321,174				354,792
Shareholders' equity - tangible (a)			232,759				224,675				265,117				232,759				265,117
AVERAGE BALANCES
Securities (b)		$	713,996			$	728,535			$	654,595			$	720,001			$	549,554
Loans held for sale			972				3,915				8,121				3,235				11,257
Loans, net			2,168,636				2,064,088				1,943,238				2,052,158				1,953,121
Interest-earning assets			2,920,992				3,005,292				3,154,730				3,042,775				2,967,799
Goodwill and other intangibles			88,593				88,886				89,855				89,048				90,413
Assets			3,066,362				3,170,328				3,357,223				3,211,668				3,176,564
Assets - tangible (a)			2,977,769				3,081,442				3,267,368				3,122,620				3,086,151
Interest-bearing deposits			1,609,503				1,723,931				1,868,695				1,765,134				1,797,385
Deposits			2,641,133				2,775,516				2,914,381				2,794,005				2,736,571
Customer repurchase agreements			704				18,719				39,645				24,005				37,632
Long-term borrowings			28,318				28,293				28,218				28,280				31,878
Shareholders' equity			316,697				330,318				352,395				332,356				348,158
Shareholders' equity - tangible (a)			228,104				241,432				262,540				243,308				257,745
American National Bankshares Inc.
Financial Highlights
Unaudited
	(Dollars in thousands, except per share data)													At or for the Twelve Months
		4th Qtr				3rd Qtr				4th Qtr				Ended December 31,
			2022				2022				2021				2022				2021
CAPITAL
Weighted average shares outstanding - basic			10,607,678				10,640,952				10,774,268				10,672,314				10,873,817
Weighted average shares outstanding - diluted			10,609,937				10,643,073				10,776,970				10,674,613				10,877,231
COMMON STOCK REPURCHASE PROGRAM
Total shares of common stock repurchased			3,269				60,104				16,580				206,978				264,579
Average price paid per share of common stock		$	36.44			$	34.26			$	37.12			$	36.26			$	33.10
ALLOWANCE FOR LOAN LOSSES
Beginning balance		$	19,189			$	18,505			$	20,630			$	18,678			$	21,403
Provision for (recovery of) loan losses			1,159				615				(1,955	)			1,597				(2,825	)
Charge-offs			(834	)			(31	)			(76	)			(1,019	)			(146	)
Recoveries			41				100				79				299				246
Ending balance		$	19,555			$	19,189			$	18,678			$	19,555			$	18,678
LOANS
Construction and land development		$	197,525			$	210,500			$	134,221			$	197,525			$	134,221
Commercial real estate - owner occupied			418,462				423,678				391,517				418,462				391,517
Commercial real estate - non-owner occupied			827,728				764,963				731,034				827,728				731,034
Residential real estate			338,132				324,468				289,757				338,132				289,757
Home equity			93,740				93,659				93,203				93,740				93,203
Commercial and industrial			304,247				295,541				299,773				304,247				299,773
Consumer			6,615				6,606				7,075				6,615				7,075
Total		$	2,186,449			$	2,119,415			$	1,946,580			$	2,186,449			$	1,946,580
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing		$	16			$	18			$	216			$	16			$	216
Nonaccrual			1,307				1,171				2,006				1,307				2,006
Other real estate owned and repossessions			80				196				143				80				143
Nonperforming assets		$	1,403			$	1,385			$	2,365			$	1,403			$	2,365
ASSET QUALITY RATIOS
Allowance for loan losses to total loans			0.89		%		0.91		%		0.96		%		0.89		%		0.96		%
Allowance for loan losses to
nonperforming loans			1,478.08				1,613.88				840.59				1,478.08				840.59
Nonperforming assets to total assets			0.05				0.05				0.07				0.05				0.07
Nonperforming loans to total loans			0.06				0.06				0.11				0.06				0.11
Annualized net (recoveries) charge-offs to average loans			0.15				(0.01	)			(0.00	)			0.05				(0.01	)
OTHER DATA
Fiduciary assets at period-end (c) (d)		$	736,121			$	693,153			$	752,410			$	736,121			$	752,410
Retail brokerage assets at period-end (c) (d)		$	413,235			$	376,891			$	418,850			$	413,235			$	418,850
Number full-time equivalent employees (e)			359				363				346				359				346
Number of full service offices			26				26				26				26				26
Number of loan production offices			1				1				1				1				1
Number of ATMs			34				34				36				34				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 period.

			American National Bankshares Inc.
			Net Interest Income Analysis
			For the Three Months Ended December 31, 2022 and 2021
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2022			2021			2022			2021		2022		2021
Loans:
	Commercial			$	304,303		$	310,175		$	3,464		$	3,386		4.52	%	4.33	%
	Real estate				1,858,591			1,634,660			20,014			18,244		4.31		4.46
	Consumer				6,714			6,524			107			112		6.32		6.81
		Total loans (b)			2,169,608			1,951,359			23,585			21,742		4.34		4.45
Securities:
	U.S. Treasury				152,082			116,629			351			242		0.92		0.83
	Federal agencies & GSEs				105,119			93,042			364			265		1.39		1.14
	Mortgage-backed & CMOs				345,217			355,492			1,498			1,117		1.74		1.26
	State and municipal				69,451			63,148			361			314		2.08		1.99
	Other				42,127			26,284			410			305		3.89		4.64
		Total securities			713,996			654,595			2,984			2,243		1.67		1.37
Deposits in other banks					37,388			548,776			415			223		4.40		0.16
	Total interest-earning assets				2,920,992			3,154,730			26,984			24,208		3.69		3.07
Non-earning assets					145,370			202,493
		Total assets		$	3,066,362		$	3,357,223
Deposits:
	Demand			$	494,572		$	505,528			95			37		0.08		0.03
	Money market				590,509			743,354			974			101		0.65		0.05
	Savings				273,580			257,289			67			6		0.10		0.01
	Time				250,842			362,524			461			511		0.73		0.56
		Total deposits			1,609,503			1,868,695			1,597			655		0.39		0.14
Customer repurchase agreements					704			39,645			-			3		-		0.03
Other short-term borrowings					62,004			-			633			-		4.08		-
Long-term borrowings					28,318			28,218			398			386		5.62		5.47
	Total interest-bearing
		liabilities			1,700,529			1,936,558			2,628			1,044		0.62		0.21
Noninterest bearing demand deposits					1,031,630			1,045,686
Other liabilities					17,506			22,584
Shareholders' equity					316,697			352,395
		Total liabilities and
			shareholders' equity	$	3,066,362		$	3,357,223
Interest rate spread																3.07	%	2.86	%
Net interest margin																3.33	%	2.93	%
Net interest income (taxable equivalent basis)											24,356			23,164
Less: Taxable equivalent adjustment (c)											68			60
Net interest income										$	24,288		$	23,104
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 Twelve Months Ended December 31, 2022 and 2021
			(Dollars in thousands)
			Unaudited
										Interest
				Average Balance						Income/Expense (a)						Yield/Rate
					2022			2021			2022			2021		2022		2021
Loans:
	Commercial			$	292,833		$	372,538		$	11,448		$	18,819		3.91	%	5.05	%
	Real estate				1,755,982			1,584,856			70,837			67,887		4.03		4.28
	Consumer				6,578			6,984			423			475		6.43		6.80
		Total loans (b)			2,055,393			1,964,378			82,708			87,181		4.02		4.44
Securities:
	U.S. Treasury				150,886			57,048			1,372			507		0.91		0.89
	Federal agencies & GSEs				107,311			97,943			1,348			1,132		1.26		1.16
	Mortgage-backed & CMOs				355,331			308,158			5,420			4,142		1.53		1.34
	State and municipal				68,928			61,698			1,399			1,272		2.03		2.06
	Other				37,545			24,707			1,510			1,205		4.02		4.88
		Total securities			720,001			549,554			11,049			8,258		1.53		1.50
Deposits in other banks					267,381			453,867			2,491			598		0.93		0.13
	Total interest-earning assets				3,042,775			2,967,799			96,248			96,037		3.16		3.24
Non-earning assets					168,893			208,765
		Total assets		$	3,211,668		$	3,176,564
Deposits:
	Demand			$	522,043		$	476,710			202			152		0.04		0.03
	Money market				688,631			710,948			1,648			758		0.24		0.11
	Savings				273,788			243,123			102			26		0.04		0.01
	Time				280,672			366,604			1,601			2,709		0.57		0.74
		Total deposits			1,765,134			1,797,385			3,553			3,645		0.20		0.20
Customer repurchase agreements					24,005			37,632			26			22		0.11		0.06
Other short-term borrowings					15,629			-			633			-		4.05		-
Long-term borrowings					28,280			31,878			1,554			1,738		5.50		5.45
	Total interest-bearing
		liabilities			1,833,048			1,866,895			5,766			5,405		0.31		0.29
Noninterest bearing demand deposits					1,028,871			939,186
Other liabilities					17,393			22,325
Shareholders' equity					332,356			348,158
		Total liabilities and
			shareholders' equity	$	3,211,668		$	3,176,564
Interest rate spread																2.85	%	2.95	%
Net interest margin																2.97	%	3.05	%
Net interest income (taxable equivalent basis)											90,482			90,632
Less: Taxable equivalent adjustment (c)											244			241
Net interest income										$	90,238		$	90,391
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 Twelve Months
	4th Qtr				3rd Qtr				4th Qtr				Ended December 31,
		2022				2022				2021				2022				2021
EFFICIENCY RATIO
Noninterest expense	$	16,834			$	16,448			$	15,463			$	64,086			$	59,008
Subtract: loss (gain) on sale of OREO		2				-				-				2				(111	)
Subtract: core deposit intangible amortization		(300	)			(310	)			(351	)			(1,260	)			(1,464	)
	$	16,536			$	16,138			$	15,112			$	62,828			$	57,433
Net interest income	$	24,288			$	24,007			$	23,104			$	90,238			$	90,391
Tax equivalent adjustment		68				59				60				244				241
Noninterest income		3,610				4,760				4,844				18,807				21,031
Subtract: gain on securities		-				-				(35	)			-				(35	)
Add: loss on fixed assets		146				2				297				228				885
	$	28,112			$	28,828			$	28,270			$	109,517			$	112,513
Efficiency ratio		58.82		%		55.98		%		53.46		%		57.37		%		51.05		%
TAX EQUIVALENT NET INTEREST INCOME
Non-GAAP measures:
Interest income - loans	$	23,585			$	21,191			$	21,742			$	82,708			$	87,181
Interest income - investments and other		3,399				4,019				2,466				13,540				8,856
Interest expense - deposits		(1,597	)			(741	)			(655	)			(3,553	)			(3,645	)
Interest expense - customer repurchase
agreements		-				(11	)			(3	)			(26	)			(22	)
Interest expense - other short-term borrowings		(633	)			-				-				(633	)			(1	)
Interest expense - long-term borrowings		(398	)			(392	)			(386	)			(1,554	)			(1,738	)
Total net interest income	$	24,356			$	24,066			$	23,164			$	90,482			$	90,632
Less non-GAAP measures:
Tax benefit on nontaxable interest - loans		(41	)			(31	)			(36	)			(139	)			(141	)
Tax benefit on nontaxable interest - securities		(27	)			(28	)			(24	)			(105	)			(100	)
GAAP measures	$	24,288			$	24,007			$	23,104			$	90,238			$	90,391
NET INTEREST MARGIN
Net interest margin (FTE) (non-GAAP)		3.33		%		3.20		%		2.93		%		2.97		%		3.05		%
Net interest margin (GAAP)		3.32		%		3.19		%		2.93		%		2.97		%		3.05		%
RETURN ON AVERAGE TANGIBLE EQUITY
Return on average equity (GAAP basis)		10.15		%		11.21		%		12.82		%		13.81		%		12.50		%
Impact of excluding average goodwill
and other intangibles		4.35				4.53				4.81				5.60				4.84
Return on average tangible equity
(non-GAAP)		14.50		%		15.74		%		17.63		%		19.41		%		17.34		%
TANGIBLE EQUITY TO TANGIBLE ASSETS
Equity to assets ratio (GAAP basis)		10.48		%		10.28		%		10.64		%		10.48		%		10.64		%
Impact of excluding goodwill and
other intangibles		(2.66	)			(2.69	)			(2.47	)			(2.66	)			(2.47	)
Tangible equity to tangible assets ratio
(non-GAAP)		7.82		%		7.59		%		8.17		%		7.82		%		8.17		%
TANGIBLE BOOK VALUE
Book value per share (GAAP basis)	$	30.27			$	29.54			$	32.95			$	30.27			$	32.95
Impact of excluding goodwill and
other intangibles		(8.33	)			(8.36	)			(8.33	)			(8.33	)			(8.33	)
Tangible book value per share
(non-GAAP)	$	21.94			$	21.18			$	24.62			$	21.94			$	24.62
ADJUSTED LOAN LOSS ALLOWANCE
Allowance for loan losses	$	19,555			$	19,189			$	18,678			$	19,555			$	18,678
Credit discount on purchased loans		3,068				3,477				4,474				3,068				4,474
Adjusted loan loss allowance	$	22,623			$	22,666			$	23,152			$	22,623			$	23,152
Total loans, net	$	2,186,449			$	2,119,415			$	1,946,580			$	2,186,449			$	1,946,580
Subtract: PPP loans, net		(74	)			(95	)			(12,239	)			(74	)			(12,239	)
Total loans less PPP loans, net	$	2,186,375			$	2,119,320			$	1,934,341			$	2,186,375			$	1,934,341
Adjusted loan loss allowance to
total loans less PPP loans, net		1.03		%		1.07		%		1.20		%		1.03		%		1.20		%
Allowance for loan losses to
total loans less PPP loans, net		0.89		%		0.91		%		0.97		%		0.89		%		0.97		%