American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
Unaudited
	September 30
ASSETS	2013			2012
Cash and due from banks	$	24,071		$	25,740
Interest-bearing deposits in other banks		54,198			41,900
Securities available for sale, at fair value		347,618			327,994
Restricted stock, at cost		4,885			5,284
Loans held for sale		3,919			8,118
Loans		798,996			797,818
Less allowance for loan losses		(12,684	)		(11,998	)
Net Loans		786,312			785,820
Premises and equipment, net		23,982			24,885
Other real estate owned, net		4,215			6,259
Goodwill		39,043			39,043
Core deposit intangibles, net		3,489			5,081
Bank owned life insurance		14,597			14,137
Accrued interest receivable and other assets		17,856			21,446
Total assets	$	1,324,185		$	1,305,707
Liabilities
Demand deposits -- noninterest-bearing	$	231,583		$	215,012
Demand deposits -- interest-bearing		170,641			152,706
Money market deposits		181,559			164,266
Savings deposits		85,016			78,665
Time deposits		402,284			441,778
Total deposits		1,071,083			1,052,427
Customer repurchase agreements		44,026			45,761
Long-term borrowings		9,983			10,111
Trust preferred capital notes		27,394			27,292
Accrued interest payable and other liabilities		5,873			8,071
Total liabilities		1,158,359			1,143,662
Shareholders' equity
Preferred stock, $5 par, 2,000,000 shares authorized,
none outstanding		-			-
Common stock, $1 par, 20,000,000 shares authorized,
7,886,476 shares outstanding at September 30, 2013 and
7,843,221 shares outstanding at September 30, 2012 and		7,886			7,843
Capital in excess of par value		57,905			57,045
Retained earnings		97,762			88,478
Accumulated other comprehensive income, net		2,273			8,679
Total shareholders' equity		165,826			162,045
Total liabilities and shareholders' equity	$	1,324,185		$	1,305,707

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
	2013		2012		2013		2012
Interest and Dividend Income:
Interest and fees on loans	$	11,100	$	11,421	$	33,853	$	37,224
Interest and dividends on securities:
Taxable		845		995		2,574		3,130
Tax-exempt		1,056		1,059		3,153		3,218
Dividends		67		52		176		155
Other interest income		38		19		106		47
Total interest and dividend income		13,106		13,546		39,862		43,774
Interest Expense:
Interest on deposits		1,338		1,725		4,143		5,291
Interest on short-term borrowings		3		33		38		127
Interest on long-term borrowings		82		84		246		252
Interest on trust preferred capital notes		190		204		567		616
Total interest expense		1,613		2,046		4,994		6,286
Net Interest Income		11,493		11,500		34,868		37,488
Provision for loan losses		-		333		294		1,799
Net Interest Income After Provision
for Loan Losses		11,493		11,167		34,574		35,689
Noninterest Income:
Trust fees		1,077		926		2,609		2,774
Service charges on deposit accounts		452		414		1,290		1,315
Other fees and commissions		471		421		1,393		1,323
Mortgage banking income		464		615		1,713		1,665
Securities gains, net		4		-		203		160
Other		299		314		1,015		1,487
Total noninterest income		2,767		2,690		8,223		8,724
Noninterest Expense:
Salaries		3,610		3,933		10,552		11,853
Employee benefits		856		780		2,622		2,657
Occupancy and equipment		933		929		2,721		2,942
FDIC assessment		163		84		485		530
Bank franchise tax		187		173		559		538
Core deposit intangible amortization		330		421		1,171		1,514
Foreclosed real estate, net		245		412		681		430
Other		2,131		2,148		6,410		7,176
Total noninterest expense		8,455		8,880		25,201		27,640
Income Before Income Taxes		5,805		4,977		17,596		16,773
Income Taxes		1,562		1,338		4,992		4,685
Net Income	$	4,243	$	3,639	$	12,604	$	12,088
Net Income Per Common Share:
Basic	$	0.54	$	0.46	$	1.60	$	1.54
Diluted	$	0.54	$	0.46	$	1.60	$	1.54
Average Common Shares Outstanding:
Basic		7,877,901		7,838,314		7,867,835		7,830,928
Diluted		7,892,015		7,855,537		7,878,961		7,846,659

Net Interest Income Analysis
For the Three Months Ended September 30, 2013 and 2012
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2013		2012		2013		2012		2013			2012
Loans:
Commercial	$	126,745	$	126,701	$	1,511	$	1,598		4.73	%		5.00	%
Real estate		663,539		676,905		9,517		9,743		5.74			5.76
Consumer		5,671		6,844		104		119		7.28			6.90
Total loans		795,955		810,450		11,132		11,460		5.59			5.65
Securities:
Federal agencies & GSEs		55,543		36,181		126		118		0.91			1.30
Mortgage-backed & CMOs		72,505		92,708		322		472		1.78			2.04
State and municipal		195,673		180,820		1,945		1,933		3.98			4.28
Other		15,861		13,846		116		121		2.93			3.50
Total securities		339,582		323,555		2,509		2,644		2.96			3.27
Deposits in other banks		54,307		32,567		38		19		0.28			0.23
Total interest-earning assets		1,189,844		1,166,572		13,679		14,123		4.59			4.84
Non-earning assets		117,503		131,126
Total assets	$	1,307,347	$	1,297,698
Deposits:
Demand	$	163,825	$	144,284		25		44		0.06			0.12
Money market		184,428		168,212		83		126		0.18			0.30
Savings		84,390		78,808		17		29		0.08			0.15
Time		401,662		448,598		1,213		1,526		1.20			1.35
Total deposits		834,305		839,902		1,338		1,725		0.64			0.81
Customer repurchase agreements		46,712		46,297		3		33		0.03			0.28
Long-term borrowings		37,388		37,413		272		288		2.91			3.08
Total interest-bearing
liabilities		918,405		923,612		1,613		2,046		0.70			0.88
Noninterest bearing demand deposits		218,819		204,532
Other liabilities		6,993		9,686
Shareholders' equity		163,130		159,868
Total liabilities and
shareholders' equity	$	1,307,347	$	1,297,698
Interest rate spread										3.89	%		3.96	%
Net interest margin										4.06	%		4.14	%
Net interest income (taxable equivalent basis)						12,066		12,077
Less: Taxable equivalent adjustment						573		577
Net interest income					$	11,493	$	11,500

Net Interest Income Analysis
For the Nine Months Ended September 30, 2013 and 2012
(in thousands, except rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2013		2012		2013		2012		2013			2012
Loans:
Commercial	$	127,592	$	129,821	$	4,706	$	5,136		4.95	%		5.29	%
Real estate		660,698		679,375		28,927		31,720		5.84			6.23
Consumer		5,955		9,060		316		485		7.12			7.16
Total loans		794,245		818,256		33,949		37,341		5.70			6.09
Securities:
Federal agencies & GSEs		51,668		36,179		368		435		0.95			1.60
Mortgage-backed & CMOs		76,286		97,057		1,040		1,487		1.82			2.04
State and municipal		192,113		181,393		5,804		5,884		4.03			4.33
Other		13,718		11,598		306		332		2.97			3.82
Total securities		333,785		326,227		7,518		8,138		3.00			3.33
Deposits in other banks		51,650		27,291		106		47		0.28			0.23
Total interest-earning assets		1,179,680		1,171,774		41,573		45,526		4.70			5.18
Non-earning assets		122,390		134,330
Total assets	$	1,302,070	$	1,306,104
Deposits:
Demand	$	160,858	$	141,682		85		154		0.07			0.15
Money market		175,486		175,497		254		414		0.19			0.32
Savings		83,859		77,977		54		88		0.09			0.15
Time		408,826		448,014		3,750		4,635		1.23			1.38
Total deposits		829,029		843,170		4,143		5,291		0.67			0.84
Customer repurchase agreements		48,016		47,419		38		125		0.11			0.35
Other short-term borrowings		-		662		-		2		-			0.40
Long-term borrowings		37,393		37,418		813		868		2.90			3.09
Total interest-bearing
liabilities		914,438		928,669		4,994		6,286		0.73			0.90
Noninterest bearing demand deposits		216,594		210,932
Other liabilities		6,443		9,180
Shareholders' equity		164,595		157,323
Total liabilities and
shareholders' equity	$	1,302,070	$	1,306,104
Interest rate spread										3.97	%		4.28	%
Net interest margin										4.14	%		4.47	%
Net interest income (taxable equivalent basis)						36,579		39,240
Less: Taxable equivalent adjustment						1,711		1,752
Net interest income					$	34,868	$	37,488

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
	2013			2013			2012			2013			2012
EARNINGS
Interest income	$	13,106		$	13,347		$	13,546		$	39,862		$	43,774
Interest expense		1,613			1,654			2,046			4,994			6,286
Net interest income		11,493			11,693			11,500			34,868			37,488
Provision for loan losses		-			-			333			294			1,799
Noninterest income		2,767			2,686			2,690			8,223			8,724
Noninterest expense		8,455			8,428			8,880			25,201			27,640
Income taxes		1,562			1,741			1,338			4,992			4,685
Net income		4,243			4,210			3,639			12,604			12,088
PER COMMON SHARE
Earnings per share - basic	$	0.54		$	0.54		$	0.46		$	1.60		$	1.54
Earnings per share - diluted		0.54			0.53			0.46			1.60			1.54
Cash dividends paid		0.23			0.23			0.23			0.69			0.69
Book value per share		21.03			20.70			20.66			21.03			20.66
Book value per share - tangible (a)		15.63			15.25			15.03			15.63			15.03
Closing market price		23.20			23.24			22.59			23.20			22.59
FINANCIAL RATIOS
Return on average assets		1.30	%		1.29	%		1.12	%		1.29	%		1.23	%
Return on average equity		10.40			10.14			9.11			10.21			10.24
Return on average tangible equity (b)		14.90			14.66			13.69			14.76			15.65
Average equity to average assets		12.48			12.76			12.32			12.64			12.05
Tangible equity to tangible assets (a)		9.62			9.60			9.35			9.62			9.35
Net interest margin, taxable equivalent		4.06			4.16			4.14			4.14			4.47
Efficiency ratio		57.43			57.06			62.00			56.02			58.20
Effective tax rate		26.91			29.26			26.88			28.37			27.93
PERIOD-END BALANCES
Securities	$	352,502		$	345,015		$	333,278		$	352,502		$	333,278
Loans held for sale		3,919			4,098			8,118			3,919			8,118
Loans, net of unearned income		798,996			794,045			797,818			798,996			797,818
Goodwill and other intangibles		42,532			42,862			44,124			42,532			44,124
Assets		1,324,185			1,294,017			1,305,707			1,324,185			1,305,707
Assets - tangible (a)		1,281,653			1,251,155			1,261,583			1,281,653			1,261,583
Deposits		1,071,083			1,046,394			1,052,427			1,071,083			1,052,427
Customer repurchase agreements		44,026			41,972			45,761			44,026			45,761
Long-term borrowings		37,377			37,383			37,403			37,377			37,403
Shareholders' equity		165,826			162,936			162,045			165,826			162,045
Shareholders' equity - tangible (a)		123,294			120,074			117,921			123,294			117,921
AVERAGE BALANCES
Securities	$	339,582		$	335,246		$	323,555		$	333,785		$	326,227
Loans held for sale		5,109			4,181			8,237			6,053			6,525
Loans, net of unearned income		790,846			791,292			802,213			788,192			811,731
Interest-earning assets		1,189,844			1,177,536			1,166,572			1,179,680			1,171,774
Goodwill and other intangibles		42,731			43,124			44,561			43,133			45,027
Assets		1,307,347			1,302,491			1,297,698			1,302,070			1,306,104
Assets - tangible (a)		1,264,616			1,259,367			1,253,137			1,258,937			1,261,077
Interest-bearing deposits		834,305			828,844			839,902			829,029			843,170
Deposits		1,053,124			1,045,444			1,044,434			1,045,623			1,054,102
Customer repurchase agreements		46,712			47,081			46,297			48,016			47,419
Other short-term borrowings		-			-			-			-			662
Long-term borrowings		37,388			37,393			37,413			37,393			37,418
Shareholders' equity		163,130			166,150			159,868			164,595			157,323
Shareholders' equity - tangible (a)		120,399			123,026			115,307			121,462			112,296

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
	2013			2013			2012			2013			2012
CAPITAL
Average shares outstanding - basic		7,877,901			7,867,222			7,838,314			7,867,835			7,830,928
Average shares outstanding - diluted		7,892,015			7,876,969			7,855,537			7,878,961			7,846,659
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	12,676		$	12,528		$	12,099		$	12,118		$	10,529
Provision for loan losses		-			-			333			294			1,799
Charge-offs		(162	)		(180	)		(614	)		(629	)		(1,682	)
Recoveries		170			328			180			901			1,352
Ending balance	$	12,684		$	12,676		$	11,998		$	12,684		$	11,998
LOANS
Construction and land development	$	43,386		$	44,029		$	50,688		$	43,386		$	50,688
Commercial real estate		361,968			354,323			356,692			361,968			356,692
Residential real estate		173,695			168,965			162,404			173,695			162,404
Home equity		89,154			89,688			95,008			89,154			95,008
Commercial and industrial		124,504			130,721			126,339			124,504			126,339
Consumer		6,289			6,319			6,687			6,289			6,687
Total	$	798,996		$	794,045		$	797,818		$	798,996		$	797,818
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonaccrual		4,647			5,828			7,815			4,647			7,815
Foreclosed real estate		4,215			5,569			6,259			4,215			6,259
Nonperforming assets	$	8,862		$	11,397		$	14,074		$	8,862		$	14,074
ASSET QUALITY RATIOS
Allowance for loan losses to total loans		1.59			1.60			1.50			1.59			1.50
Allowance for loan losses to
nonperforming loans		272.95			217.50			153.53			272.95			153.53
Nonperforming assets to total assets		0.67			0.88			1.08			0.67			1.08
Nonperforming loans to total loans		0.58			0.73			0.98			0.58			0.98
Annualized net charge-offs (recoveries)
to average loans		0.00	%		(0.07)	%		0.22	%		(0.05)	%		0.05	%
OTHER DATA
Fiduciary assets at period-end (c)	$	430,853		$	417,861		$	391,055		$	430,853		$	391,055
Retail brokerage assets at period-end (c)	$	175,856		$	167,785		$	154,632		$	175,856		$	154,632
Number full-time equivalent employees (d)		290			292			318			290			318
Number of full service offices		25			25			25			25			25
Number of loan production offices		2			2			2			2			2
Number of ATM's		31			31			31			31			31
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) - The efficiency ratio is calculated by dividing noninterest expense excluding gains or losses on the sale of OREO by net interest income including tax equivalent income on nontaxable loans and securities and excluding (a) gains or losses on securities and (b) gains or losses on sale of premises and equipment