American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	September 30
ASSETS	2011			2010
Cash and due from banks	$	23,450		$	10,860
Interest-bearing deposits in other banks		30,086			16,338
Securities available for sale, at fair value		311,517			209,434
Securities held to maturity		2,383			4,501
Total securities		313,900			213,935
Restricted stock, at cost		6,404			4,161
Loans held for sale		3,359			3,952
Loans		817,858			519,421
Less allowance for loan losses		(9,086	)		(8,542	)
Net Loans		808,772			510,879
Premises and equipment, net		26,263			20,142
Other real estate owned, net		5,920			3,987
Goodwill		37,709			22,468
Core deposit intangibles, net		7,142			1,415
Accrued interest receivable and other assets		42,134			16,080
Total assets	$	1,305,139		$	824,217
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	170,398		$	101,578
Demand deposits -- interest-bearing		188,480			91,301
Money market deposits		199,172			53,388
Savings deposits		72,428			62,841
Time deposits		433,999			316,522
Total deposits		1,064,477			625,630
Short-term borrowings:
Customer repurchase agreements		43,758			54,285
Long-term borrowings		10,238			8,525
Trust preferred capital notes		27,190			20,619
Accrued interest payable and other liabilities		8,115			4,290
Total liabilities		1,153,778			713,349
Shareholders' equity:
Preferred stock, $5 par, 2,000,000 shares authorized,
1,000,000 shares outstanding at September 30, 2011 and
none outstanding at September 30, 2010		5,000			-
Common stock, $1 par, 20,000,000 shares authorized,
7,802,976 shares outstanding at September 30, 2011 and
6,126,374 shares outstanding at September 30, 2010		7,803			6,126
Capital in excess of par value		56,094			27,200
Retained earnings		77,092			74,409
Accumulated other comprehensive income, net		5,372			3,133
Total shareholders' equity		151,361			110,868
Total liabilities and shareholders' equity	$	1,305,139		$	824,217

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended						Nine Months Ended
	September 30						September 30
	2011			2010			2011			2010
Interest and Dividend Income:
Interest and fees on loans	$	12,510		$	6,994		$	25,807		$	21,220
Interest and dividends on securities:
Taxable		1,192			1,253			3,446			3,844
Tax-exempt		1,014			621			2,557			1,641
Dividends		35			24			88			71
Other interest income		28			90			112			268
Total interest and dividend income		14,779			8,982			32,010			27,044
Interest Expense:
Interest on deposits		2,079			1,722			5,246			5,004
Interest on short-term borrowings		82			93			244			297
Interest on long-term borrowings		86			65			144			192
Interest on trust preferred capital notes		189			343			829			1,030
Total interest expense		2,436			2,223			6,463			6,523
Net Interest Income		12,343			6,759			25,547			20,521
Provision for loan losses		525			435			1,198			1,005
Net Interest Income After Provision
for Loan Losses		11,818			6,324			24,349			19,516
Noninterest Income:
Trust fees		921			842			2,727			2,455
Service charges on deposit accounts		575			478			1,396			1,440
Other fees and commissions		429			290			1,083			856
Mortgage banking income		374			428			792			1,017
Securities gains (losses), net		-			67			(18	)		42
Other		399			136			677			398
Total noninterest income		2,698			2,241			6,657			6,208
Noninterest Expense:
Salaries		3,676			2,596			8,707			7,590
Employee benefits		731			564			1,896			1,837
Occupancy and equipment		916			732			2,311			2,209
FDIC assessment		94			203			496			597
Bank franchise tax		206			168			557			503
Core deposit intangible amortization		546			94			735			283
Foreclosed real estate, net		(261	)		(5	)		174			279
Merger related expenses		390			-			1,534			-
Other		2,266			1,179			4,961			3,607
Total noninterest expense		8,564			5,531			21,371			16,905
Income Before Income Taxes		5,952			3,034			9,635			8,819
Income Taxes		1,823			806			2,716			2,392
Net Income		4,129			2,228			6,919			6,427
Dividends on preferred stock		51			-			51			-
Net income available to common shareholders	$	4,078		$	2,228		$	6,868		$	6,427
Net Income Per Common Share:
Basic	$	0.52		$	0.36		$	1.02		$	1.05
Diluted	$	0.52		$	0.36		$	1.02		$	1.05
Average Common Shares Outstanding:
Basic		7,800,614			6,125,359			6,705,607			6,122,876
Diluted		7,806,668			6,131,129			6,712,960			6,128,481

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)	3rd Qtr			2nd Qtr			3rd Qtr			YTD			YTD
	2011			2011			2010			2011			2010
EARNINGS
Interest income	$	14,779		$	8,570		$	8,982		$	32,010		$	27,044
Interest expense		2,436			1,971			2,223			6,463			6,523
Net interest income		12,343			6,599			6,759			25,547			20,521
Provision for loan losses		525			336			435			1,198			1,005
Noninterest income		2,698			1,988			2,241			6,657			6,208
Noninterest expense		8,564			7,028			5,531			21,371			16,905
Income taxes		1,823			211			806			2,716			2,392
Net income		4,129			1,012			2,228			6,919			6,427
PER COMMON SHARE
Earnings per share - basic	$	0.52		$	0.16		$	0.36		$	1.02		$	1.05
Earnings per share - diluted		0.52			0.16			0.36			1.02			1.05
Cash dividends declared		0.23			0.23			0.23			0.69			0.69
Book value per share		19.40			18.06			18.10			19.40			18.10
Book value per share - tangible (a)		13.65			14.23			14.20			13.65			14.20
Closing market price		18.00			18.39			21.94			18.00			21.94
FINANCIAL RATIOS
Return on average assets		1.26	%		0.48	%		1.07	%		0.92	%		1.04	%
Return on average equity		11.08			3.65			8.11			7.49			7.90
Return on average tangible equity (b)		17.24			5.00			10.69			10.73			10.47
Average equity to average assets		11.40			13.06			13.14			12.33			13.20
Net interest margin, taxable equivalent		4.41			3.65			3.74			3.98			3.82
Efficiency ratio		57.03			73.00			59.54			63.24			60.10
Effective tax rate		30.63			17.25			26.57			28.19			27.12
PERIOD-END BALANCES
Securities	$	320,304		$	237,440		$	218,096		$	320,304		$	218,096
Loans held for sale		3,359			2,087			3,952			3,359			3,952
Loans, net of unearned income		817,858			514,081			519,421			817,858			519,421
Goodwill and other intangibles		44,851			23,600			23,883			44,851			23,883
Assets		1,305,139			846,016			824,217			1,305,139			824,217
Assets - tangible (a)		1,260,288			822,416			800,334			1,260,288			800,334
Deposits		1,064,477			658,950			625,630			1,064,477			625,630
Customer repurchase agreements		43,758			50,329			54,285			43,758			54,285
Other short-term borrowings		-			-			-			-			-
Long-term borrowings		37,428			21,032			29,144			37,428			29,144
Shareholders' equity		151,361			111,190			110,868			151,361			110,868
Shareholders' equity - tangible (a)		106,510			87,590			86,985			106,510			86,985
AVERAGE BALANCES
Securities	$	296,095		$	235,725		$	214,532		$	253,059		$	199,282
Loans held for sale		2,641			1,984			4,991			2,048			3,664
Loans, net of unearned income		827,720			515,161			519,101			619,812			519,805
Interest-earning assets		1,171,982			773,750			762,742			904,023			749,505
Goodwill and other intangibles		44,437			23,651			23,935			30,688			24,029
Assets		1,306,796			848,783			836,033			999,219			821,861
Assets - tangible (a)		1,262,359			825,132			812,098			968,531			797,832
Interest-bearing deposits		896,873			549,397			530,191			664,091			517,543
Deposits		1,067,491			666,325			633,692			797,099			618,508
Customer repurchase agreements		45,356			47,220			59,126			45,452			61,698
Other short-term borrowings		2			-			92			45			31
Long-term borrowings		37,439			21,062			29,174			28,820			29,211
Shareholders' equity		149,033			110,859			109,885			123,184			108,512
Shareholders' equity - tangible (a)		104,596			87,208			85,950			92,496			84,483

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and
nonfinancial data, unaudited)
	3rd Qtr			2nd Qtr			3rd Qtr			YTD			YTD
CAPITAL	2011			2011			2010			2011			2010
Average shares outstanding - basic		7,800,614			6,154,396			6,125,359			6,705,607			6,122,876
Average shares outstanding - diluted		7,806,668			6,161,265			6,131,129			6,712,960			6,128,481
Shares repurchased		-			-			-			-			-
Average price of shares repurchased	$	-		$	-		$	-		$	-		$	-
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	8,744		$	8,257		$	8,135		$	8,420		$	8,166
Provision for loan losses		525			336			435			1,198			1,005
Charge-offs		(252	)		(134	)		(137	)		(957	)		(869	)
Recoveries		69			285			109			425			240
Ending balance	$	9,086		$	8,744		$	8,542		$	9,086		$	8,542
LOANS
Construction and land development	$	57,111		$	35,756		$	42,602		$	57,111		$	42,602
Commercial real estate		346,715			208,685			206,142			346,715			206,142
Residential real estate		174,493			114,510			118,554			174,493			118,554
Home equity		99,727			61,218			64,847			99,727			64,847
Commercial and industrial		131,704			87,449			80,818			131,704			80,818
Consumer		8,108			6,463			6,458			8,108			6,458
Total	$	817,858		$	514,081		$	519,421		$	817,858		$	519,421
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	-		$	-		$	-		$	-		$	-
Nonaccrual		13,455			3,464			3,910			13,455			3,910
Foreclosed real estate		5,920			3,513			3,987			5,920			3,987
Nonperforming assets	$	19,375		$	6,977		$	7,897		$	19,375		$	7,897
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans		0.09	%		(0.12	) %		0.02	%		0.11	%		0.16	%
Nonperforming assets to total assets		1.48			0.82			0.96			1.48			0.96
Nonperforming loans to total loans		1.65			0.67			0.75			1.65			0.75
Allowance for loan losses to total loans		1.11			1.70			1.64			1.11			1.64
Allowance for loan losses to
nonperforming loans		67.53			252.42			218.47			67.53			218.47
OTHER DATA
Fiduciary assets at period-end (c)	$	340,941		$	368,579		$	370,016		$	340,941		$	370,016
Retail brokerage assets at period-end (c)	$	149,284		$	49,636		$	47,507		$	149,284		$	47,507
Number full-time equivalent employees (d)		306			244			242			306			242
Number of full service offices		25			18			18			25			18
Number of loan production offices		1			1			1			1			1
Number of ATM's		31			26			26			31			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

American National Bankshares Inc. and Subsidiaries
Net Interest Income Analysis
For the Three Months Ended September 30, 2011 and 2010
(in thousands, except rates)
Unaudited
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	136,204	$	76,618	$	1,603	$	934		4.67	%		4.84	%
Real estate		685,628		441,069		10,778		5,968		6.29			5.41
Consumer		8,529		6,405		163		126		7.58			7.80
Total loans		830,361		524,092		12,544		7,028		6.04			5.36
Securities:
Federal agencies		32,448		60,079		186		459		2.29			3.06
Mortgage-backed & CMO's		87,785		53,839		615		493		2.80			3.66
State and municipal		168,134		94,419		1,896		1,217		4.51			5.16
Other		7,728		6,195		78		55		4.04			3.55
Total securities		296,095		214,532		2,775		2,224		3.75			4.15
Deposits in other banks		45,526		24,118		28		90		0.24			1.48
Total interest-earning assets		1,171,982		762,742		15,347		9,342		5.23			4.89
Non-earning assets		134,814		73,291
Total assets	$	1,306,796	$	836,033
Deposits:
Demand	$	171,744	$	90,731		132		16		0.30			0.07
Money market		208,962		70,011		232		94		0.44			0.53
Savings		72,088		63,562		26		22		0.14			0.14
Time		444,079		305,887		1,689		1,590		1.51			2.06
Total deposits		896,873		530,191		2,079		1,722		0.92			1.29
Customer repurchase agreements		45,356		59,126		82		93		0.72			0.62
Other short-term borrowings		2		92		0		0		0.75			0.43
Long-term borrowings		37,439		29,174		275		408		2.94			5.59
Total interest-bearing
liabilities		979,670		618,583		2,436		2,223		0.99			1.43
Noninterest bearing
demand deposits		170,618		103,501
Other liabilities		7,475		4,064
Shareholders' equity		149,033		109,885
Total liabilities and
shareholders' equity	$	1,306,796	$	836,033
Interest rate spread										4.24	%		3.46	%
Net interest margin										4.41	%		3.74	%
Net interest income (taxable equivalent basis)						12,911		7,119
Less: Taxable equivalent adjustment						568		360
Net interest income					$	12,343	$	6,759

American National Bankshares Inc. and Subsidiaries
Net Interest Income Analysis
For the Nine Months Ended September 30, 2011 and 2010
(in thousands, except rates)
Unaudited
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	98,121	$	78,180	$	3,392	$	2,826		4.62	%		4.83	%
Real estate		516,165		438,736		22,093		18,096		5.71			5.50
Consumer		7,574		6,553		419		397		7.40			8.10
Total loans		621,860		523,469		25,904		21,319		5.56			5.43
Securities:
Federal agencies		37,197		63,929		765		1,535		2.74			3.20
Mortgage-backed & CMO's		67,843		47,795		1,571		1,473		3.09			4.11
State and municipal		141,481		80,625		4,889		3,223		4.61			5.33
Other		6,538		6,933		193		185		3.94			3.56
Total securities		253,059		199,282		7,418		6,416		3.91			4.29
Deposits in other banks		29,104		26,754		112		268		0.51			1.34
Total interest-earning assets		904,023		749,505		33,434		28,003		4.93			4.98
Non-earning assets		95,196		72,356
Total assets	$	999,219	$	821,861
Deposits:
Demand	$	122,497	$	94,607		167		58		0.18			0.08
Money market		111,801		77,691		382		285		0.46			0.49
Savings		66,138		63,644		69		66		0.14			0.14
Time		363,655		281,601		4,628		4,595		1.70			2.18
Total deposits		664,091		517,543		5,246		5,004		1.06			1.29
Customer repurchase agreements		45,452		61,698		244		297		0.72			0.64
Other short-term borrowings		45		31		0		0		0.47			0.43
Long-term borrowings		28,820		29,211		973		1,222		4.50			5.58
Total interest-bearing
liabilities		738,408		608,483		6,463		6,523		1.17			1.43
Noninterest bearing
demand deposits		133,008		100,965
Other liabilities		4,619		3,901
Shareholders' equity		123,184		108,512
Total liabilities and
shareholders' equity	$	999,219	$	821,861
Interest rate spread										3.76	%		3.55	%
Net interest margin										3.98	%		3.82	%
Net interest income (taxable equivalent basis)						26,971		21,480
Less: Taxable equivalent adjustment						1,424		959
Net interest income					$	25,547	$	20,521