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   %
                     
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