American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	December 31
ASSETS	2011			2010
Cash and due from banks	$	22,561		$	9,547
Interest-bearing deposits in other banks		6,332			8,967
Securities available for sale, at fair value		333,366			228,295
Securities held to maturity		-			3,334
Total securities		333,366			231,629
Restricted stock, at cost		6,019			4,062
Loans held for sale		6,330			3,135
Loans		824,758			520,781
Less allowance for loan losses		(10,529	)		(8,420	)
Net Loans		814,229			512,361
Premises and equipment, net		26,804			19,509
Other real estate owned, net		5,353			3,716
Goodwill		38,045			22,468
Core deposit intangibles, net		6,595			1,320
Accrued interest receivable and other assets		38,888			16,950
Total assets	$	1,304,522		$	833,664
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	179,148		$	105,240
Demand deposits -- interest-bearing		189,212			90,012
Money market deposits		182,347			59,891
Savings deposits		74,193			62,522
Time deposits		433,854			322,433
Total deposits		1,058,754			640,098
Short-term borrowings:
Customer repurchase agreements		45,575			47,084
Other short-term borrowings		3,000			6,110
Long-term borrowings		10,206			8,488
Trust preferred capital notes		27,212			20,619
Accrued interest payable and other liabilities		6,946			3,178
Total liabilities		1,151,693			725,577
Shareholders' equity:
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding at December 31, 2011 and
December 31, 2010		-			-
Common stock, $1 par, 20,000,000 shares authorized,
7,806,869 shares outstanding at December 31, 2011 and
6,127,735 shares outstanding at December 31, 2010		7,807			6,128
Capital in excess of par value		56,395			27,268
Retained earnings		81,797			74,850
Accumulated other comprehensive income (loss), net		6,830			(159	)
Total shareholders' equity		152,829			108,087
Total liabilities and shareholders' equity	$	1,304,522		$	833,664

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
Unaudited
	Three Months Ended				Twelve Months Ended
	December 31				December 31
	2011		2010		2011			2010
Interest and Dividend Income:
Interest and fees on loans	$	14,881	$	6,928	$	40,688		$	28,148
Interest and dividends on securities:
Taxable		1,149		1,198		4,595			5,042
Tax-exempt		1,089		647		3,646			2,288
Dividends		43		24		131			95
Other interest income		15		92		127			360
Total interest and dividend income		17,177		8,889		49,187			35,933
Interest Expense:
Interest on deposits		1,957		1,704		7,203			6,708
Interest on short-term borrowings		81		85		325			382
Interest on long-term borrowings		85		64		229			256
Interest on trust preferred capital notes		194		343		1,023			1,373
Total interest expense		2,317		2,196		8,780			8,719
Net Interest Income		14,860		6,693		40,407			27,214
Provision for loan losses		1,972		485		3,170			1,490
Net Interest Income After Provision
for Loan Losses		12,888		6,208		37,237			25,724
Noninterest Income:
Trust fees		834		936		3,561			3,391
Service charges on deposit accounts		567		457		1,963			1,897
Other fees and commissions		427		307		1,510			1,163
Mortgage banking income		470		543		1,262			1,560
Securities gains (losses), net		17		84		(1	)		126
Other		272		579		949			977
Total noninterest income		2,587		2,906		9,244			9,114
Noninterest Expense:
Salaries		3,702		2,473		12,409			10,063
Employee benefits		785		605		2,681			2,442
Occupancy and equipment		888		727		3,199			2,936
FDIC assessment		155		198		651			795
Bank franchise tax		206		167		763			670
Core deposit intangible amortization		547		95		1,282			378
Foreclosed real estate, net		122		304		296			583
Merger related expenses		73		-		1,607			-
Other		2,151		1,905		7,112			5,512
Total noninterest expense		8,629		6,474		30,000			23,379
Income Before Income Taxes		6,846		2,640		16,481			11,459
Income Taxes		2,194		789		4,910			3,181
Net Income		4,652		1,851		11,571			8,278
Dividends on preferred stock		52		-		103			-
Net income available to common shareholders	$	4,600	$	1,851	$	11,468		$	8,278
Net Income Per Common Share:
Basic	$	0.59	$	0.30	$	1.64		$	1.35
Diluted	$	0.59	$	0.30	$	1.64		$	1.35
Average Common Shares Outstanding:
Basic		7,804,245		6,126,817		6,982,524			6,123,870
Diluted		7,811,243		6,141,123		6,989,877			6,131,650

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio andnonfinancial data)
Unaudited
	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
	2011			2011			2010			2011			2010
EARNINGS
Interest income	$	17,177		$	14,779		$	8,889		$	49,187		$	35,933
Interest expense		2,317			2,436			2,196			8,780			8,719
Net interest income		14,860			12,343			6,693			40,407			27,214
Provision for loan losses		1,972			525			485			3,170			1,490
Noninterest income		2,587			2,698			2,906			9,244			9,114
Noninterest expense		8,629			8,564			6,474			30,000			23,379
Income taxes		2,194			1,823			789			4,910			3,181
Net income		4,652			4,129			1,851			11,571			8,278
PER COMMON SHARE
Earnings per share - basic	$	0.59		$	0.52		$	0.30		$	1.64		$	1.35
Earnings per share - diluted		0.59			0.52			0.30			1.64			1.35
Cash dividends declared		0.23			0.23			0.23			0.92			0.92
Book value per share		19.58			19.40			17.64			19.58			17.64
Book value per share - tangible (a)		13.86			13.65			13.76			13.86			13.76
Closing market price		19.49			18.00			23.55			19.49			23.55
FINANCIAL RATIOS
Return on average assets		1.42	%		1.26	%		0.88	%		1.07	%		1.00
Return on average equity		12.28			11.08			6.69			8.88			7.59
Return on average tangible equity (b)		18.77			17.24			8.83			12.97			10.05
Average equity to average assets		11.59			11.40			13.12			12.10			13.18
Net interest margin, taxable equivalent		5.27			4.41			3.65			4.35			3.78
Efficiency ratio		49.57			57.03			65.70			58.48			61.53
Effective tax rate		32.05			30.63			29.89			29.79			27.76
PERIOD-END BALANCES
Securities	$	339,385		$	320,304		$	235,691		$	339,385		$	235,691
Loans held for sale		6,330			3,359			3,135			6,330			3,135
Loans, net of unearned income		824,758			817,858			520,781			824,758			520,781
Goodwill and other intangibles		44,640			44,851			23,788			44,640			23,788
Assets		1,304,522			1,305,139			833,664			1,304,522			833,664
Assets - tangible (a)		1,259,882			1,260,288			809,876			1,259,882			809,876
Deposits		1,058,754			1,064,477			640,098			1,058,754			640,098
Customer repurchase agreements		45,575			43,758			47,084			45,575			47,084
Other short-term borrowings		3,000			-			6,110			3,000			6,110
Long-term borrowings		37,418			37,428			29,107			37,418			29,107
Shareholders' equity		152,829			151,361			108,087			152,829			108,087
Shareholders' equity - tangible (a)		108,189			106,510			84,299			108,189			84,299
AVERAGE BALANCES
Securities	$	322,018		$	296,095		$	215,208		$	270,441		$	203,296
Loans held for sale		5,989			2,641			5,629			3,042			4,159
Loans, net of unearned income		819,688			827,720			521,832			671,724			520,315
Interest-earning assets		1,172,965			1,171,982			770,649			974,601			754,833
Goodwill and other intangibles		44,455			44,437			23,844			34,158			23,982
Assets		1,306,699			1,306,796			843,922			1,077,094			827,422
Assets - tangible (a)		1,262,244			1,262,359			820,078			1,042,936			803,440
Interest-bearing deposits		886,551			896,873			537,662			720,163			522,614
Deposits		1,060,013			1,067,491			647,526			863,367			625,822
Customer repurchase agreements		49,257			45,356			52,068			46,411			59,270
Other short-term borrowings		130			2			251			66			87
Long-term borrowings		37,434			37,439			29,136			30,991			29,192
Shareholders' equity		151,496			149,033			110,688			130,320			109,060
Shareholders' equity - tangible (a)		107,041			104,596			86,844			96,162			85,078

American National Bankshares Inc. and Subsidiaries
Financial Highlights
(In thousands, except share, ratio and nonfinancial data)
Unaudited
	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
	2011			2011			2010			2011			2010
CAPITAL
Average shares outstanding - basic		7,804,245			7,800,614			6,126,817			6,982,524			6,123,870
Average shares outstanding - diluted		7,811,243			7,806,668			6,141,123			6,989,877			6,131,650
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	9,086		$	8,744		$	8,542		$	8,420		$	8,166
Provision for loan losses		1,972			525			485			3,170			1,490
Charge-offs		(906	)		(252	)		(662	)		(1,863	)		(1,531	)
Recoveries		377			69			55			802			295
Ending balance	$	10,529		$	9,086		$	8,420		$	10,529		$	8,420
LOANS
Construction and land development	$	54,433		$	57,111		$	37,168		$	54,433		$	37,168
Commercial real estate		351,961			346,715			210,393			351,961			210,393
Residential real estate		179,812			174,493			119,398			179,812			119,398
Home equity		96,195			99,727			61,064			96,195			61,064
Commercial and industrial		134,166			131,704			85,051			134,166			85,051
Consumer		8,191			8,108			7,707			8,191			7,707
Total	$	824,758		$	817,858		$	520,781		$	824,758		$	520,781
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	197		$	-		$	-		$	197		$	-
Nonaccrual		13,523			13,455			2,597			13,523			2,597
Foreclosed real estate		5,353			5,920			3,716			5,353			3,716
Nonperforming assets	$	19,073		$	19,375		$	6,313		$	19,073		$	6,313
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans		0.26	%		0.09	%		0.47	%		0.16	%		0.24	%
Nonperforming assets to total assets		1.46			1.48			0.76			1.46			0.76
Nonperforming loans to total loans		1.66			1.65			0.50			1.66			0.50
Allowance for loan losses to total loans		1.28			1.11			1.62			1.28			1.62
Allowance for loan losses to total loans
net or fair value loans (e)		1.96			1.76			1.62			1.96			1.62
Allowance for loan losses to
nonperforming loans		76.74			67.53			324.22			76.74			324.22
OTHER DATA
Fiduciary assets at period-end (c)	$	355,202		$	340,941		$	368,018		$	355,202		$	368,018
Retail brokerage assets at period-end (c)	$	176,636		$	149,284		$	49,311		$	176,636		$	49,311
Number full-time equivalent employees (d)		315			306			242			315			242
Number of full service offices		25			25			18			25			18
Number of loan production offices		1			1			1			1			1
Number of ATM's		31			31			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
(e) - Excludes acquired loans measured at fair value

Net Interest Income Analysis
For the Three Months Ended December 31, 2011 and 2010
(in thousands, except rates)
Unaudited
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	134,836	$	75,012	$	1,555	$	868		4.58	%		4.59	%
Real estate		682,631		445,017		13,205		5,949		7.74			5.35
Consumer		8,210		7,432		156		144		7.54			7.69
Total loans		825,677		527,461		14,916		6,961		7.22			5.27
Securities:
Federal agencies		33,427		48,184		181		382		2.17			3.17
Mortgage-backed & CMO's		99,817		57,251		577		484		2.31			3.38
State and municipal		180,254		103,692		1,983		1,255		4.40			4.84
Other		8,520		6,081		86		55		4.04			3.62
Total securities		322,018		215,208		2,827		2,176		3.51			4.04
Deposits in other banks		25,270		27,980		15		92		0.24			1.30
Total interest-earning assets		1,172,965		770,649		17,758		9,229		6.05			4.79
Non-earning assets		133,734		73,273
Total assets	$	1,306,699	$	843,922
Deposits:
Demand	$	180,874	$	93,133		123		18		0.27			0.08
Money market		195,534		60,500		190		86		0.39			0.56
Savings		73,674		63,010		29		22		0.16			0.14
Time		436,469		321,019		1,615		1,578		1.47			1.95
Total deposits		886,551		537,662		1,957		1,704		0.88			1.26
Customer repurchase agreements		49,257		52,068		81		85		0.65			0.65
Other short-term borrowings		130		251		-		-		0.43			0.14
Long-term borrowings		37,434		29,136		279		407		2.98			5.59
Total interest-bearing
liabilities		973,372		619,117		2,317		2,196		0.95			1.41
Noninterest bearing
demand deposits		173,462		109,864
Other liabilities		8,369		4,253
Shareholders' equity		151,496		110,688
Total liabilities and
shareholders' equity	$	1,306,699	$	843,922
Interest rate spread										5.10	%		3.38	%
Net interest margin										5.27	%		3.65	%
Net interest income (taxable equivalent basis)						15,441		7,033
Less: Taxable equivalent adjustment						581		340
Net interest income					$	14,860	$	6,693

Net Interest Income Analysis
For the Years Ended December 31, 2011 and 2010
(in thousands, except yields and rates)
Unaudited
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2011		2010		2011		2010		2011			2010
Loans:
Commercial	$	107,376	$	77,382	$	4,947	$	3,694		4.61	%		4.77	%
Real estate		559,656		440,318		35,298		24,045		6.31			5.46
Consumer		7,734		6,774		575		541		7.43			7.99
Total loans		674,766		524,474		40,820		28,280		6.05			5.39
Securities:
Federal agencies		36,247		59,960		946		1,917		2.61			3.20
Mortgage-backed & CMO's		75,902		50,178		2,148		1,957		2.83			3.90
State and municipal		151,254		86,439		6,872		4,478		4.54			5.18
Other		7,038		6,719		279		240		3.96			3.57
Total securities		270,441		203,296		10,245		8,592		3.79			4.23
Deposits in other banks		29,394		27,063		127		360		0.43			1.33
Total interest-earning assets		974,601		754,833		51,192		37,232		5.25			4.93
Non-earning assets		102,493		72,589
Total assets	$	1,077,094	$	827,422
Deposits:
Demand	$	137,211	$	94,236		290		76		0.21			0.08
Money market		132,906		73,358		572		371		0.43			0.51
Savings		68,038		63,484		98		88		0.14			0.14
Time		382,008		291,536		6,243		6,173		1.63			2.12
Total deposits		720,163		522,614		7,203		6,708		1.00			1.28
Customer repurchase agreements		46,411		59,270		325		382		0.70			0.64
Other short-term borrowings		66		87		0		0		0.47			0.42
Long-term borrowings		30,991		29,192		1,252		1,629		4.04			5.58
Total interest-bearing
liabilities		797,631		611,163		8,780		8,719		1.10			1.43
Noninterest bearing
demand deposits		143,204		103,208
Other liabilities		5,939		3,991
Shareholders' equity		130,320		109,060
Total liabilities and
shareholders' equity	$	1,077,094	$	827,422
Interest rate spread										4.15	%		3.50	%
Net interest margin										4.35	%		3.78	%
Net interest income (taxable equivalent basis)						42,412		28,513
Less: Taxable equivalent adjustment						2,005		1,299
Net interest income					$	40,407	$	27,214