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American National Bankshares Inc. (AMNB)

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  • Here's Why I Think American National Bankshares (NASDAQ:AMNB) Might Deserve Your Attention Today
    Simply Wall St.

    Here's Why I Think American National Bankshares (NASDAQ:AMNB) Might Deserve Your Attention Today

    Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling...

  • American National Bankshares (AMNB) Tops Q1 Earnings and Revenue Estimates
    Zacks

    American National Bankshares (AMNB) Tops Q1 Earnings and Revenue Estimates

    American National Bankshares (AMNB) delivered earnings and revenue surprises of 35.53% and 11.29%, respectively, for the quarter ended March 2021. Do the numbers hold clues to what lies ahead for the stock?

  • American National Bankshares Reports First Quarter Earnings
    GlobeNewswire

    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): 20221,203 2023689 2024416 2025302 2026185 Thereafter536 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 3/31/20Interest 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 ofnon-GAAP financial measures, see "Reconciliation of Non-GAAP Financial Measures" at the endof this release.(b) - Average does not include unrealized gains and losses.(c) - Market value.(d) - Assets are not owned by American National and are not reflected in the consolidated balancesheet. (e) - Average for quarter. Net Interest Income AnalysisFor the Three Months Ended 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