8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)			April 21, 2008
AMERICAN NATIONAL BANKSHARES INC.
(Exact name of registrant as specified in its charter)
Virginia		0-12820		54-1284688
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)
628 Main Street, Danville, VA				24541
(Address of principal executive offices)				(Zip Code)
Registrant’s telephone number, including area code 434-792-5111
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

Item 2.02Results of Operations and Financial Condition

On April 21, 2008, American National Bankshares Inc. issued a news release announcing first quarter earnings for the period ended March 31, 2008.  The release included Quarterly Balance Sheets, Statements of Income, Net Interest Income Analysis, and Selected Quarterly Financial Data, copies of which are furnished with this Current Report on Form 8-K as Exhibits 99.1 and 99.2. 

Item 9.01 Financial Statements and Exhibits

 (c) Exhibits: The following exhibits are furnished with this report.

Exhibit

Number    Description                                                                                                   & #160;                                                                                                                                                                    

99.1    News Release dated April 21, 2008, entitled "American National Bankshares Inc. Reports $2.31 Million In First Quarter Earnings" 

99.2   Quarterly Balance Sheets, Statements of Income, Net Interest Income Analysis and Selected Financial Data

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 21, 2008           /s/ Neal A. Petrovich    

                  Senior Vice President and Chief Financial Officer

EX-99.1

Date:	April 21, 2008
Contact:	Neal A. Petrovich, Senior Vice President and Chief Financial Officer
	434-773-2242          petrovichn@amnb.com
Traded:	NASDAQ Global Select Market	Symbol:	AMNB

AMERICAN NATIONAL BANKSHARES INC. REPORTS $2.31 MILLION IN FIRST QUARTER EARNINGS

Danville, VA -- American National Bankshares Inc. (NASDAQ:  AMNB), parent company of American National Bank and Trust Company, today announced first quarter net income of $2.31 million.  Earnings per share were $0.38 on both a basic and diluted basis.

This net income produced annualized returns on average assets and average equity of 1.18% and 9.01%, respectively.  Annualized return on average tangible equity was 12.24%.  Net income declined from $2.70 million, or $0.44 per share, in the first quarter of 2007.

“We are pleased to report solid results amidst very challenging market conditions,” stated President and Chief Executive Officer Charles H. Majors.  “Changes in the economy have resulted in a national climate of low interest rates, compressed interest margins, reductions in employment and business growth, and concerns about the ability of borrowers to make their loan payments.  We anticipate our first quarter results will continue to place our company’s performance well above industry averages.  However, while these results are satisfying for most financial companies, they are not up to the high standards of American National.  Consequently, the Company is working even harder on initiatives involving interest margin management, expense control, retention and expansion of profitable customer relationships, operational efficiency, and capital management.  At the same time, we will continue our efforts to maintain a loan portfolio with high credit quality.  I believe that, as a result of our continued focus on these important areas, the Company will emerge from this economic cycle in a position of strength.”

Credit Quality Remains Favorable

Nonperforming assets represented 0.42% of total assets at March 31, 2008, down from 0.48% one year earlier and consistent with the previous quarter-end.  Annualized net charge-offs were 0.08% of average loans during the quarter.  The provision for loan losses totaled $140,000 during the first quarter of 2008, down from $303,000 in the first quarter of 2007, and exceeded net charge-offs by $30,000 in the current quarter.  “We are very pleased with our credit quality during these uncertain economic times,” stated Majors.  “Our levels of nonperforming assets and charge-offs are significantly less than our peer group and reflect our conservative underwriting practices.”

Net Interest Income Impacted by Extreme Changes In Interest Rates

The decline in net income over the first quarter of 2007 is largely the result of a  decrease in net interest income, the Company’s largest source of revenue.  Beginning in September 2007, the Federal Reserve lowered interest rates quickly and significantly; as a result, rates earned on loans fell more quickly than rates paid on deposits.  This led to a drop in the Company’s net interest margin and a 5.8% decrease in net interest income over the first quarter of 2007.  The net interest margin was 3.88% in the first quarter of 2008 compared to 4.13% in the year-earlier period.  Year-over-year growth in quarterly average loans and deposits was not significant enough to overcome the decline in the net interest margin.  Loans increased 2.1% on average, while average deposits and customer repurchase agreements, excluding brokered and institutional deposits, increased 1.6%.

Noninterest Income $2.14 Million

Noninterest income, the Company’s other source of revenue, totaled $2.14 million in the first quarter of 2008, a decline of 3.5% over the first quarter of 2007.  A 60.7% increase in retail brokerage fees was more than offset by decreases in deposit account service charges and other income.  Service charges on deposit accounts declined $57,000, or 9.2%, primarily due to a drop in customer overdraft activity.  Trust fees remained the Company’s largest source of noninterest income and were virtually unchanged from the first quarter of 2007.  Volatility in the financial markets negatively impacted account asset values, which offset the income from new account activity.  A substantial portion of Trust fees are earned based on account values.  Mortgage banking income, other fees and commissions, and net securities gains all recorded slight increases over the first quarter of 2007.

Noninterest Expense Up 5.4% Over the First Quarter of 2007

Noninterest expense totaled $5.45 million in the first quarter of 2008, up 5.4% over the same quarter of 2007, due primarily to general increases in personnel expense and to increases in occupancy and equipment expense.  Noninterest expense was impacted by investments in new operational technology, costs associated with the Company’s new offices at Smith Mountain Lake and Bedford, Virginia, and $44,000 in one-time costs associated with the termination of a lease.

About American National

American National Bankshares Inc. is a bank holding company with assets of  $785 million.  Headquartered in Danville, Virginia, it is the holding company of American National Bank and Trust Company, a community bank serving Southern and Central Virginia and the northern portion of Central North Carolina with nineteen banking offices and a loan production office.  The Bank also manages an additional $476 million of assets in its Trust and Investment Services Division.

American National Bank and Trust Company provides a full array of financial products and services, including commercial, mortgage, and consumer banking; trust and investment services; and insurance.  Services are also provided through twenty-three ATMs, “AmeriLink” Internet banking, and 24-hour “Access American” phone banking.  Additional information is available on the Bank’s website at www.amnb.com.  The shares of American National Bankshares Inc. are traded on the NASDAQ Global Select Market under the symbol “AMNB.”

Forward-Looking Statements

This press release may contain “forward-looking statements,” within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Corporation and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario; significant changes in regulatory requirements; and significant changes in securities markets.  Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Corporation’s most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. American National Bankshares Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

EX-99.2

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Unaudited
	March 31
ASSETS	2008			2007
Cash and due from banks	$	20,310		$	22,844
Interest-bearing deposits in other banks		4,218			22,817
Securities available for sale, at fair value		149,636			138,533
Securities held to maturity		11,039			13,475
Total securities		160,675			152,008
Loans held for sale		1,681			2,017
Loans, net of unearned income		554,667			543,357
Less allowance for loan losses		(7,425	)		(7,590	)
Net Loans		547,242			535,767
Premises and equipment, net		13,392			12,759
Goodwill		22,468			22,468
Core deposit intangibles, net		2,358			2,735
Accrued interest receivable and other assets		12,705			14,129
Total assets	$	785,049		$	787,544
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	101,195		$	116,940
Demand deposits -- interest-bearing		103,365			113,778
Money market deposits		52,574			52,856
Savings deposits		64,198			69,083
Time deposits		260,207			253,377
Total deposits		581,539			606,034
Repurchase agreements		58,179			44,526
FHLB borrowings		16,125			15,050
Trust preferred capital notes		20,619			20,619
Accrued interest payable and other liabilities		5,714			4,675
Total liabilities		682,176			690,904
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized,
6,100,185 shares outstanding at March 31, 2008 and
6,156,823 shares outstanding at March 31, 2007 and		6,100			6,157
Capital in excess of par value		26,472			26,456
Retained earnings		69,866			65,726
Accumulated other comprehensive income (loss), net		435			(1,699	)
Total shareholders' equity		102,873			96,640
Total liabilities and shareholders' equity	$	785,049		$	787,544

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended
	March 31
	2008		2007
Interest and Dividend Income:
Interest and fees on loans	$	9,444	$	10,079
Interest and dividends on securities:
Taxable		1,231		1,136
Tax-exempt		432		423
Dividends		77		89
Other interest income		76		171
Total interest and dividend income		11,260		11,898
Interest Expense:
Interest on deposits		3,582		3,783
Interest on repurchase agreements		451		426
Interest on other borrowings		159		206
Interest on trust preferred capital notes		343		343
Total interest expense		4,535		4,758
Net Interest Income		6,725		7,140
Provision for Loan Losses		140		303
Net Interest Income After Provision
for Loan Losses		6,585		6,837
Noninterest Income:
Trust fees		880		879
Service charges on deposit accounts		565		622
Other fees and commissions		203		200
Mortgage banking income		195		190
Brokerage fees		143		89
Securities gains, net		30		25
Impairment of securities		-		-
Other		119		207
Total noninterest income		2,135		2,212
Noninterest Expense:
Salaries		2,469		2,390
Employee benefits		747		648
Occupancy and equipment		966		829
Bank franchise tax		177		168
Core deposit intangible amortization		94		94
Other		996		1,041
Total noninterest expense		5,449		5,170
Income Before Income Taxes		3,271		3,879
Income Taxes		966		1,175
Net Income	$	2,305	$	2,704
Net Income Per Common Share:
Basic	$	0.38	$	0.44
Diluted	$	0.38	$	0.44
Average Common Shares Outstanding:
Basic		6,107,832		6,156,812
Diluted		6,121,285		6,185,084

Net Interest Income Analysis
For the Three Months Ended March 31, 2008 and 2007
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2008		2007		2008		2007		2008			2007
Loans:
Commercial	$	85,632	$	88,962	$	1,466	$	1,693		6.85	%		7.61	%
Real Estate		460,429		444,854		7,777		8,165		6.76			7.34
Consumer		9,524		10,346		217		242		9.11			9.36
Total loans		555,585		544,162		9,460		10,100		6.81			7.42
Securities:
Federal agencies		50,064		82,257		597		857		4.77			4.17
Mortgage-backed		47,405		20,001		603		241		5.09			4.82
State and municipal		47,847		45,963		656		634		5.48			5.52
Other		6,383		8,783		99		129		6.20			5.87
Total securities		151,699		157,004		1,955		1,861		5.15			4.74
Deposits in other banks		10,224		13,261		76		171		2.97			5.16
Total interest-earning assets		717,508		714,427		11,491		12,132		6.41			6.79
Non-earning assets		62,696		64,431
Total assets	$	780,204	$	778,858
Deposits:
Demand	$	107,994	$	110,115		225		424		0.83			1.54
Money market		51,320		52,140		294		349		2.29			2.68
Savings		63,184		68,927		116		235		0.73			1.36
Time		263,700		262,624		2,947		2,775		4.47			4.23
Total deposits		486,198		493,806		3,582		3,783		2.95			3.06
Repurchase agreements		54,624		46,254		451		426		3.30			3.68
Other borrowings		33,870		36,720		502		549		5.93			5.98
Total interest-bearing
liabilities		574,692		576,780		4,535		4,758		3.16			3.30
Noninterest bearing
demand deposits		97,212		101,011
Other liabilities		5,958		5,735
Shareholders' equity		102,342		95,332
Total liabilities and
shareholders' equity	$	780,204	$	778,858
Interest rate spread										3.25	%		3.49	%
Net interest margin										3.88	%		4.13	%
Net interest income (taxable equivalent basis)						6,956		7,374
Less: Taxable equivalent adjustment						231		234
Net interest income					$	6,725	$	7,140

Financial Highlights
American National Bankshares Inc. and Subsidiaries
(Dollars in thousands, except share data)
Unaudited
	Three Months Ended March 31
	2008				2007				Change
EARNINGS
Interest income	$	11,260			$	11,898			(5.4	) %
Interest expense		4,535				4,758			(4.7	)
Net interest income		6,725				7,140			(5.8	)
Provision for loan losses		140				303			(53.8	)
Noninterest income		2,135				2,212			(3.5	)
Noninterest expense		5,449				5,170			5.4
Income taxes		966				1,175			(17.8	)
Net income		2,305				2,704			(14.8	)
PER COMMON SHARE
Earnings per share - basic	$	0.38			$	0.44			(13.6	) %
Earnings per share - diluted		0.38				0.44			(13.6	)
Cash dividends declared		0.23				0.22			4.5
Book value per share		16.86				15.70			7.4
Book value per share - tangible (a)		12.79				11.60			10.3
Closing market price		21.26				22.88			(7.1	)
FINANCIAL RATIOS
Return on average assets		1.18		%		1.39		%	(21	) bp
Return on average equity		9.01				11.35			(234	)
Return on average tangible equity (b)		12.24				15.81			(357	)
Average equity to average assets		13.12				12.24			88
Net interest margin, taxable equivalent		3.88				4.13			(25	)
Efficiency ratio		60.09				54.11			598
Effective tax rate		29.53				30.29			(76	)
PERIOD END BALANCES
Securities	$	160,675			$	152,008			5.7	%
Loans held for sale		1,681				2,017			(16.7	)
Loans, net of unearned income		554,667				543,357			2.1
Goodwill and other intangibles		24,826				25,203			(1.5	)
Assets		785,049				787,544			(0.3	)
Assets - tangible (a)		760,223				762,341			(0.3	)
Deposits		581,539				606,034			(4.0	)
Repurchase agreements		58,179				44,526			30.7
Borrowings		36,744				35,669			3.0
Shareholders' equity		102,873				96,640			6.4
Shareholders' equity - tangible (a)		78,047				71,437			9.3
AVERAGE BALANCES
Securities	$	151,699			$	157,004			(3.4	) %
Loans held for sale		1,614				1,328			21.5
Loans, net of unearned income		553,971				542,834			2.1
Interest-earning assets		717,508				714,427			0.4
Goodwill and other intangibles		24,864				25,240			(1.5	)
Assets		780,204				778,858			0.2
Assets - tangible (a)		755,340				753,618			0.2
Interest-bearing deposits		486,198				493,806			(1.5	)
Deposits		583,410				594,817			(1.9	)
Repurchase agreements		54,624				46,254			18.1
Borrowings		33,870				36,720			(7.8	)
Shareholders' equity		102,342				95,332			7.4
Shareholders' equity - tangible (a)		77,478				70,092			10.5
CAPITAL
Average shares outstanding - basic		6,107,832				6,156,812			(0.8	) %
Average shares outstanding - diluted		6,121,285				6,185,084			(1.0	)
Shares repurchased		28,800				11,600			148.3
Average price of shares repurchased	$	20.80			$	23.15			(10.2	)
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	7,395			$	7,264			1.8	%
Provision for loan losses		140				303			(53.8	)
Charge-offs		(170	)			(49	)		246.9
Recoveries		60				72			(16.7	)
Ending balance	$	7,425			$	7,590			(2.2	)
NONPERFORMING ASSETS
Nonperforming loans:
90 days past due	$	-			$	-			-	%
Nonaccrual		2,772				3,689			(24.9	)
Foreclosed real estate		550				99			455.6
Nonperforming assets	$	3,322			$	3,788			(12.3	)
ASSET QUALITY RATIOS
Net chargeoffs (recoveries) to average loans		0.08		%		(0.02	)	%	10	bp
Nonperforming assets to total assets (c)		0.42				0.48			(6	)
Nonperforming loans to total loans (c)		0.50				0.68			(18	)
Allowance for loan losses to total loans (c)		1.34				1.40			(6	)
Allowance for loan losses to
nonperforming loans (c)		2.68		X		2.06		X	62
OTHER DATA
Fiduciary assets at period-end (d)	$	386,375			$	388,405			(0.5	) %
Retail brokerage assets at period-end (d)	$	89,927			$	81,270			10.7
Number full time-time equivalent employees		258				257			0
Number of full service offices		19				18			6
Number of loan production offices		1				1			-
Number of ATM's		23				23			-
Notes:
(a) - Excludes goodwill and other intangible assets
(b) - Excludes amortization expense, net of tax, of intangible assets
(c) - Balance sheet amounts used in calculations are based on period-end balances
(d) - Market value
bp - Change is measured in basis points