American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	June 30
ASSETS	2011			2010
Cash and due from banks	$	15,873		$	11,398
Interest-bearing deposits in other banks		23,310			22,705
Securities available for sale, at fair value		231,393			211,574
Securities held to maturity		2,381			4,823
Total securities		233,774			216,397
Restricted stock, at cost		3,666			4,362
Loans held for sale		2,087			2,879
Loans		514,081			519,416
Less allowance for loan losses		(8,744	)		(8,135	)
Net Loans		505,337			511,281
Premises and equipment, net		19,129			19,658
Other real estate owned, net		3,513			3,730
Goodwill		22,468			22,468
Core deposit intangibles, net		1,132			1,509
Accrued interest receivable and other assets		15,727			16,257
Total assets	$	846,016		$	832,644
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	115,329		$	100,099
Demand deposits -- interest-bearing		95,453			92,771
Money market deposits		67,273			81,247
Savings deposits		63,632			64,425
Time deposits		317,263			291,609
Total deposits		658,950			630,151
Customer repurchase agreements		50,329			61,665
Long-term borrowings		413			8,563
Trust preferred capital notes		20,619			20,619
Accrued interest payable and other liabilities		4,515			2,886
Total liabilities		734,826			723,884
Shareholders' equity:
Common stock, $1 par, 20,000,000 shares authorized,
6,156,563 shares outstanding at June 30, 2011 and
6,124,892 shares outstanding at June 30, 2010 and		6,157			6,125
Capital in excess of par value		27,670			27,131
Retained earnings		74,810			73,590
Accumulated other comprehensive income, net		2,553			1,914
Total shareholders' equity		111,190			108,760
Total liabilities and shareholders' equity	$	846,016		$	832,644

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended					Six Months Ended
	June 30					June 30
	2011			2010		2011			2010
Interest and Dividend Income:
Interest and fees on loans	$	6,618		$	7,071	$	13,297		$	14,226
Interest and dividends on securities:
Taxable		1,085			1,275		2,254			2,591
Tax-exempt		827			554		1,543			1,020
Dividends		26			24		53			47
Other interest income		14			87		84			178
Total interest and dividend income		8,570			9,011		17,231			18,062
Interest Expense:
Interest on deposits		1,587			1,647		3,167			3,282
Interest on short-term borrowings		82			99		162			204
Interest on long-term borrowings		5			63		58			127
Interest on trust preferred capital notes		297			344		640			687
Total interest expense		1,971			2,153		4,027			4,300
Net Interest Income		6,599			6,858		13,204			13,762
Provision for loan losses		336			285		673			570
Net Interest Income After Provision
for Loan Losses		6,263			6,573		12,531			13,192
Noninterest Income:
Trust fees		878			801		1,806			1,613
Service charges on deposit accounts		400			483		821			962
Other fees and commissions		338			288		654			566
Mortgage banking income		271			343		418			589
Securities gains (losses), net		(19	)		4		(18	)		(25	)
Other		120			124		278			262
Total noninterest income		1,988			2,043		3,959			3,967
Noninterest Expense:
Salaries		2,546			2,596		5,031			4,994
Employee benefits		624			633		1,165			1,273
Occupancy and equipment		696			698		1,395			1,477
FDIC assessment		197			199		402			394
Bank franchise tax		176			168		351			335
Core deposit intangible amortization		95			95		189			189
Foreclosed real estate, net		413			281		435			284
Other		2,281			1,204		3,839			2,428
Total noninterest expense		7,028			5,874		12,807			11,374
Income Before Income Taxes		1,223			2,742		3,683			5,785
Income Taxes		211			728		893			1,586
Net Income	$	1,012		$	2,014	$	2,790		$	4,199
Net Income Per Common Share:
Basic	$	0.16		$	0.33	$	0.45		$	0.69
Diluted	$	0.16		$	0.33	$	0.45		$	0.69
Average Common Shares Outstanding:
Basic		6,154,396			6,123,790		6,149,029			6,121,615
Diluted		6,161,265			6,129,943		6,157,032			6,127,137

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio andnonfinancial data, unaudited)
	2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
	2011			2011			2010			2011			2010
EARNINGS
Interest income	$	8,570		$	8,661		$	9,011		$	17,231		$	18,062
Interest expense		1,971			2,056			2,153			4,027			4,300
Net interest income		6,599			6,605			6,858			13,204			13,762
Provision for loan losses		336			337			285			673			570
Noninterest income		1,988			1,971			2,043			3,959			3,967
Noninterest expense		7,028			5,779			5,874			12,807			11,374
Income taxes		211			682			728			893			1,586
Net income		1,012			1,778			2,014			2,790			4,199
PER COMMON SHARE
Earnings per share - basic	$	0.16		$	0.29		$	0.33		$	0.45		$	0.69
Earnings per share - diluted		0.16			0.29			0.33			0.45			0.69
Cash dividends declared		0.23			0.23			0.23			0.46			0.46
Book value per share		18.06			17.77			17.76			18.06			17.76
Book value per share - tangible (a)		14.23			13.92			13.84			14.23			13.84
Closing market price		18.39			22.51			21.39			18.39			21.39
FINANCIAL RATIOS
Return on average assets		0.48	%		0.85	%		0.98	%		0.66	%		1.03	%
Return on average equity		3.65			6.51			7.45			5.07			7.79
Return on average tangible equity (b)		5.00			8.64			9.91			6.79			10.36
Average equity to average assets		13.06			13.03			13.21			13.06			13.23
Net interest margin, taxable equivalent		3.65			3.66			3.85			3.65			3.86
Efficiency ratio		73.00			64.16			60.55			68.59			60.39
Effective tax rate		17.25			27.72			26.55			24.25			27.42
PERIOD-END BALANCES
Securities	$	237,440		$	233,379		$	220,759		$	237,440		$	220,759
Loans held for sale		2,087			1,309			2,879			2,087			2,879
Loans, net of unearned income		514,081			516,629			519,416			514,081			519,416
Goodwill and other intangibles		23,600			23,694			23,977			23,600			23,977
Assets		846,016			845,238			832,644			846,016			832,644
Assets - tangible (a)		822,416			821,544			808,667			822,416			808,667
Deposits		658,950			663,483			630,151			658,950			630,151
Customer repurchase agreements		50,329			43,871			61,665			50,329			61,665
Other short-term borrowings		-			-			-			-			-
Long-term borrowings		21,032			25,069			29,182			21,032			29,182
Shareholders' equity		111,190			109,372			108,760			111,190			108,760
Shareholders' equity - tangible (a)		87,590			85,678			84,783			87,590			84,783
AVERAGE BALANCES
Securities	$	235,725		$	226,595		$	198,289		$	231,185		$	191,530
Loans held for sale		1,984			1,508			3,529			1,747			2,990
Loans, net of unearned income		515,161			516,610			519,485			515,882			520,162
Interest-earning assets		773,750			765,291			746,879			769,544			742,776
Goodwill and other intangibles		23,651			23,750			24,029			23,700			24,077
Assets		848,783			838,151			818,740			842,882			814,658
Assets - tangible (a)		825,132			814,401			794,711			819,182			790,581
Interest-bearing deposits		549,397			542,104			514,963			545,771			511,115
Deposits		666,325			652,922			615,456			659,661			610,791
Customer repurchase agreements		47,220			43,762			62,072			45,500			63,005
Other short-term borrowings		-			136			-			-			-
Long-term borrowings		21,062			27,855			29,212			24,439			29,230
Shareholders' equity		110,859			109,224			108,127			110,046			107,814
Shareholders' equity - tangible (a)		87,208			85,474			84,098			86,346			83,737

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio andnonfinancial data, unaudited)
		2nd Qtr			1st Qtr			2nd Qtr			YTD			YTD
		2011			2011			2010			2011			2010
CAPITAL
Average shares outstanding - basic		6,154,396			6,143,602			6,123,790			6,149,029			6,121,615
Average shares outstanding - diluted		6,161,265			6,152,738			6,129,943			6,157,032			6,127,137
Shares repurchased		-			-			-			-			-
Average price of shares repurchased	$	-		$	-		$	-		$	-		$	-
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	8,257		$	8,420		$	8,112		$	8,420		$	8,166
Provision for loan losses		336			337			285			673			570
Charge-offs		(134	)		(571	)		(305	)		(705	)		(732	)
Recoveries		285			71			43			356			131
Ending balance	$	8,744		$	8,257		$	8,135		$	8,744		$	8,135
LOANS
Construction and land development	$	35,756		$	36,516		$	40,039		$	35,756		$	40,039
Commercial real estate		208,685			207,502			202,602			208,685			202,602
Residential real estate		114,510			118,603			119,410			114,510			119,410
Home equity		61,218			61,674			63,992			61,218			63,992
Commercial and industrial		87,449			84,702			86,924			87,449			86,924
Consumer		6,463			7,632			6,449			6,463			6,449
Total	$	514,081		$	516,629		$	519,416		$	514,081		$	519,416
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	-		$	-		$	8		$	-		$	8
Nonaccrual		3,464			3,417			4,005			3,464			4,005
Foreclosed real estate		3,513			3,532			3,730			3,513			3,730
Nonperforming assets	$	6,977		$	6,949		$	7,743		$	6,977		$	7,743
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans		(0.12	) %		0.39	%		0.20	%		0.14	%		0.23	%
Nonperforming assets to total assets		0.82			0.82			0.93			0.82			0.93
Nonperforming loans to total loans		0.67			0.66			0.77			0.67			0.77
Allowance for loan losses to total loans		1.70			1.60			1.57			1.70			1.57
Allowance for loan losses to
nonperforming loans		252.42			241.64			202.72			252.42			202.72
OTHER DATA
Fiduciary assets at period-end (c)	$	368,579		$	380,259		$	342,519		$	368,579		$	342,519
Retail brokerage assets at period-end (c)	$	49,636		$	50,175		$	45,912		$	49,636		$	45,912
Number full-time equivalent employees (d)		244			242			242			244			242
Number of full service offices		18			18			18			18			18
Number of loan production offices		1			1			1			1			1
Number of ATM's		26			26			26			26			26

Notes:

      (a) - Excludes goodwill and other intangible assets

      (b) - Excludes amortization expense, net of tax, of intangible assets

      (c) - Market value

      (d) - Average for quarter

Net Interest Income Analysis
For the Three Months Ended June 30, 2011 and 2010
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	79,595	$	78,673	$	909	$	939		4.58	%		4.79	%
Real estate		430,872		437,856		5,620		6,033		5.22			5.51
Consumer		6,678		6,485		120		137		7.21			8.47
Total loans		517,145		523,014		6,649		7,109		5.15			5.44
Securities:
Federal agencies		35,919		66,019		256		525		2.85			3.18
Mortgage-backed & CMO's		56,133		45,651		466		479		3.32			4.20
State and municipal		137,843		79,622		1,585		1,079		4.60			5.42
Other		5,830		6,997		57		61		3.91			3.49
Total securities		235,725		198,289		2,364		2,144		4.01			4.33
Deposits in other banks		20,880		25,576		14		87		0.27			1.36
Total interest-earning assets		773,750		746,879		9,027		9,340		4.67			5.00
Non-earning assets		75,033		71,861
Total assets	$	848,783	$	818,740
Deposits:
Demand	$	98,224	$	96,098		17		21		0.07			0.09
Money market		61,714		82,372		67		101		0.44			0.49
Savings		63,716		64,561		22		22		0.14			0.14
Time		325,743		271,932		1,481		1,503		1.82			2.22
Total deposits		549,397		514,963		1,587		1,647		1.16			1.28
Customer repurchase agreements		47,220		62,072		82		99		0.70			0.64
Other short-term borrowings		-		-		-		-		-			-
Long-term borrowings		21,062		29,212		302		407		5.74			5.57
Total interest-bearing
liabilities		617,679		606,247		1,971		2,153		1.28			1.42
Noninterest bearing
demand deposits		116,928		100,493
Other liabilities		3,317		3,873
Shareholders' equity		110,859		108,127
Total liabilities and
shareholders' equity	$	848,783	$	818,740
Interest rate spread										3.39	%		3.58	%
Net interest margin										3.65	%		3.85	%
Net interest income (taxable equivalent basis)						7,056		7,187
Less: Taxable equivalent adjustment						457		329
Net interest income					$	6,599	$	6,858

Net Interest Income Analysis
For the Six Months Ended June 30, 2011 and 2010
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	78,765	$	78,974	$	1,789	$	1,892		4.58	%		4.83	%
Real estate		431,775		437,550		11,315		12,128		5.24			5.54
Consumer		7,089		6,628		256		271		7.28			8.25
Total loans		517,629		523,152		13,360		14,291		5.17			5.47
Securities:
Federal agencies		39,612		65,886		579		1,076		2.92			3.27
Mortgage-backed & CMO's		57,706		44,722		956		980		3.31			4.38
State and municipal		127,934		73,614		2,993		2,006		4.68			5.45
Other		5,933		7,308		115		130		3.88			3.56
Total securities		231,185		191,530		4,643		4,192		4.02			4.38
Deposits in other banks		20,730		28,094		84		178		0.82			1.28
Total interest-earning assets		769,544		742,776		18,087		18,661		4.71			5.03
Non-earning assets		73,338		72,882
Total assets	$	842,882	$	815,658
Deposits:
Demand	$	97,465	$	96,578		35		42		0.07			0.09
Money market		62,416		81,595		150		191		0.48			0.47
Savings		63,114		63,686		43		44		0.14			0.14
Time		322,776		269,256		2,939		3,005		1.84			2.25
Total deposits		545,771		511,115		3,167		3,282		1.17			1.29
Customer repurchase agreements		45,500		63,005		162		204		0.72			0.65
Other short-term borrowings		68		-		-		-		0.47			-
Long-term borrowings		24,439		29,230		698		814		5.71			5.57
Total interest-bearing
liabilities		615,778		603,350		4,027		4,300		1.32			1.43
Noninterest bearing
demand deposits		113,890		99,676
Other liabilities		3,168		3,818
Shareholders' equity		110,046		107,814
Total liabilities and
shareholders' equity	$	842,882	$	814,658
Interest rate spread										3.39	%		3.60	%
Net interest margin										3.65	%		3.86	%
Net interest income (taxable equivalent basis)						14,060		14,361
Less: Taxable equivalent adjustment						856		599
Net interest income					$	13,204	$	13,762