American National Bankshares Inc.
Annual Report 2018

Plain-text annual report

Annual Report 2018 Bigger. Better. Stronger. Together. we’re focused on delivering a better banking experience for our customers contents Shareholder Letter HomeTown Bank Announcement Growing Communities Future and Focus Leadership Charley Majors Achievement Award Financials Shareholder Information 1 3 4 8 10 12 13 16 To Our Shareholders Our accomplishments in 2018, both financially and strategically, underscore the relevance of our focus and direction as a progressive community bank. As outlined in American National’s three-year strategic plan that guides us through 2021, we will remain a top-performing community bank by focusing on key objectives under the theme of Bigger, Better, Stronger. We demonstrated our commitment to the “Bigger” part of this theme in October of 2018 when we announced our largest acquisition to date. With the merger with Roanoke-based HomeTown Bankshares Corporation and HomeTown Bank effective on April 1, we have expanded our presence in a market that we have enjoyed being part of for the past couple of years, in addition to building a presence in the New River Valley. We now have assets approaching $2.5 billion and are one of the largest community banks headquartered in Virginia. As we actively work to strategically grow in markets that afford the best opportunities for growth, we Charles H. Majors I Chairman of the Board Jeffrey V. Haley I President & Chief Executive Officer are also becoming “Better.” We all recognize that With balance sheet growth during 2018 combined bigger isn’t everything, but by focusing on delivering with our strong capital position and excellent asset a better banking experience for our customers quality, we are “Stronger” than ever. We plan to and employees, we will continue to attract new leverage our strengths as we demonstrate our ability customers and talent to our bank. We are actively to grow in both our new and existing markets. Our seeking ways to improve processes to ensure it’s revenue growth was impressive in each of American easy to do business with us, while also investing in National’s three regions with year-over-year loan our bank’s next generation of leaders. growth of $21.4 million over 2017, and year-over-year 1 HomeTown Bank Announcement deposit growth was $31.5 million, primarily driven We wish to recognize Fred Blair and Frank Crist, by growth in non-interest bearing accounts. who will retire as directors at the May 2019 annual meeting. Mr. Blair has served on our board since Net income for 2018 was $22.6 million, compared 1992 and Dr. Crist joined us in 2006. We anticipate to $15.2 million for 2017, a 48.1% increase, while the board naming each of them as a director earnings per share were $2.60 for 2018 compared emeritus for the coming year. to $1.76 for 2017. Net income for 2017 was impacted negatively by the enactment of the new federal tax With our HomeTown acquisition, we welcome new 2018 was an exciting year on all fronts for American National Bank & Trust Company. It was a year filled with growth, success, opportunities, community involvement, and new milestones as we enter our 110th year of business. Biggest and brightest among 2018’s achievements is American National’s acquisition of HomeTown law in December 2017, but it had a positive impact in board members, with the addition of Nancy Agee, Bank. It’s an important addition for many reasons, our presence in this great community and also 2018 and for future years. President & CEO of Carilion Clinic; Kenneth Bowling, but perhaps the most significant of these is how further into the New River Valley. With the additional Net Income Earnings per share 2018 $22,579 $2.60 2017 $15,249 $1.76 Vice President, HT Bowling Inc.; and Susan Still, HomeTown Bank’s President & CEO. Ms. Agee and Mr. Bowling now serve as directors of both the bank and the Company. Ms. Still is now a director of the bank and she has been nominated for election to the Company board at the annual shareholders’ Our growth, performance and accomplishments are meeting in May. These directors will help ensure not possible without a strong and committed team a smooth transition during HomeTown Bank’s of bankers to carry out our vision. We have always integration and beyond. known and appreciate that our greatest asset is our well our banks complement each other and the locations, we’ll inherit a great team of bankers and extent to which we share missions and values. professionals to help us continue to grow. Cultural alignment is what makes most mergers successful (or not), and we knew early on it was a But bigger isn’t everything. Together we’re now great fit with HomeTown. BETTER as well. While HomeTown was younger, having been founded in 2005, we did learn some Together we’re now BIGGER, and American National things from their youth; pairing those learnings has added 4 branches in key areas of Roanoke, with our strong legacy of community banking, we Salem, and the New River Valley to our footprint, have combined the best of both of our banks. In for a total of 28 offices. We have enjoyed being part the spirit of constant improvement, we’re actively people, and we thank all 417 team members who As we work to be Bigger, Better, and Stronger, we of the Roanoke market and are excited to expand refining what it means to be a community bank, now will be an integral part of American National’s appreciate your support and your investment in overall success. our company. We look forward to ongoing success as we realize new opportunities and continue to We also recognize that a strong team is made deliver on our commitment to our shareholders, stronger with the guidance and expertise of an employees, customers, and communities. experienced, dedicated and effective Board of Directors. We have a seasoned team of directors Very truly yours, who bring the voice for the shareholders, customers and local markets to every decision, action and strategy of the Company. and what we can offer the communities we serve. Finally, coming together has made us even STRONGER. As a combined bank, we’re now one of the largest independent community banks in the state, with assets of around $2.5 billion. That means more possibilities, more growth and more support for the communities we call home. For us, that’s what it’s all about. Community. 2 3 Community Growth: News from across our footprint American National Bank & Trust Company operates growing franchises in three regions surrounding our main office in Danville: North, South, and East. Each region is led by a Regional President and is composed of distinct markets, including a string of cities and counties we are proud to be part of. Across our footprint, we are very involved in financial education through our partnerships with Everfi’s Financial Literacy program, as well as loyal supporters of our local United Way chapters. We are guided by the belief that a community bank is only as strong as the communities it serves, and are very proud of the active role we play in growing and investing in each of our markets while staying true to the things that make each one unique. There has been no shortage of activity, and what follows are highlights from some of this year’s most important stories from across our regions. 2018 Big Lick Train Tug 4 Vikeesa Stultz (center) at the Field of Honor ceremony NORTH REGION Led by Kevin Meade, the North Region stayed active with many community events across Roanoke, Franklin County, and Lynchburg. Roanoke The biggest headline by far is American National’s announcement of the merger with HomeTown Bank as we subsequently established Roanoke as our Virginia banking headquarters. We are excited to welcome our new colleagues and customers as we grow bigger, better, and stronger together. American National sponsored the Big Lick Train Tug benefiting the Presbyterian Community Center for the second year. This unique event assembles teams of people to raise money and compete for the best time for pulling the iconic 611 locomotive a specified distance. We also enjoyed being part of Turn the Page’s inaugural fundraiser, “The Rooftop is Waiting.” Turn the Page is a non-profit organization promoting early learning that encourages parents to read to their children by providing new, age-appropriate books. Franklin County Always active supporters in our local United Way chapters, we love the opportunity to write BIG checks to them (big both in monetary amount and physical size!) as our Rocky Mount team was able to do in 2018. Market President Todd Hammock, as Treasurer of the area chamber, along with his community-oriented team stayed busy with many Smith Mountain Lake Chamber of Commerce events throughout the year. Our Rocky Mount team presenting a check to the United Way Lynchburg American National proudly sponsored the Forest Jason Owens and Tim Marshall delivering 14 bicycles EAST REGION Charles Canaday leads our East Region, which includes Alamance County, North Carolina; Southside Virginia; and our home market of Danville in Pittsylvania County. Pittsylvania County The community of Danville has seen a lot of resurgence on the economic development front, and we are proud to play an important role in this growth. John Settle, with his involvement on the Chamber of Commerce Board, and Market President Rotary Club’s annual Field of Honor from September Ted Laws, through his involvement with the River 1-15. Market President Vikeesa Stultz had the honor District Association (RDA), are both an active part of reading the mayoral proclamation on behalf of this rebirth. The RDA has done tremendous work of Lynchburg Mayor Tweedy at the Field of Honor revitalizing the downtown Danville community opening ceremony. through public-private partnerships, events, and initiatives to help market the area’s unique assets. Employees acquired a total of 14 bicycles, which In other Danville-area developments, American were purchased by the central market of Lynchburg National played a key part in financing Kyocera’s new and Bedford and donated to Dearington Elementary 30,000-square-foot state-of-the-art facility through School of Innovation during the end-of-year awards our partnership with The Industrial Development program. Authority of Danville. 5 Ted Laws, Ashley Ege with the Heart Association, and Stetson Franklin showing AMNB’s awards from the 2018 Heart Walk Edwin Bland, Vanessa Smith with Stitch Design Shop, Trent Wall, Rhonda Joyce, Jeff Haley, and Mark Dunnagan with Frank L Blum Construction inside our Winston-Salem office under construction South Boston Market President Ronnie Moore chaired the Jeff Nelson Memorial Golf Tournament, an event for which American National was a major sponsor. The tournament raised over $7,500 for the Halifax County Education Foundation to benefit its high school athletics programs. Alamance County American National has always been a leading sponsor of the Alamance Chamber of Commerce’s Teacher of the Year program. We were thrilled when this year’s recipient, Freebird McKinney, went on to complete for North Carolina Teacher of the Year. After winning community. This project is a prime example of our commitment to investing in our communities. We love when we can inject money directly into our communities to help them grow and prosper. SOUTH REGION Our South Region is led by Rhonda Joyce and includes Greensboro, which was named our North Carolina banking headquarters; Winston-Salem; and Martinsville. Greensboro In this bustling corner of the Triad, we’ve stayed active in many community events, with Rhonda co-chairing the state competition, Freebird is now a candidate for the Habitat for Humanity Bankers Build as well as National Teacher of the Year. It’s our distinct pleasure participating in the Simple Gesture program to help to help support those who are creating our next fight hunger. Our Chief Banking Officer, Gregg Strader, generation. chaired the United Way of Greater Greensboro’s Board of Directors for a second year. Gregg has been The city of Mebane completed the construction of a instrumental in leading American National’s support of highly anticipated new community park in November the United Way and helping them achieve their mission 2018. We were proud to be involved with financing of improving lives and creating thriving communities. this great community asset as it helps create another attraction for the charming and fast-growing Mebane AMNB’s Winston-Salem location coming soon! Martinsville While Martinsville has long been known for its exciting short track, which we love, we’ve also enjoyed supporting some of its newly established community events as well. The Rooster Walk is one of the events growing in popularity that is playing a part in Guilford banker Andrea Davis presenting bags of donated food to A Simple Gesture Winston-Salem 2018 marked the first full year of operation for our de novo Winston-Salem banking office and validated the need for an updated space, which we began renovating in 2018 under the leadership of Market we look forward to becoming more visible in this great city President Trent Wall. After establishing ourselves and serving customers from an office space with no City of Mebane Community Park Volunteers at the Habitat for Humanity Bankers Build signage, we are excited to become significantly more Rooster Walk Kids Area sponsorship visible in the community. With 9,800-square-feet, the new space is in a vibrant part of the city and will offer reinventing Martinsville. As sponsor of the children’s full-service banking with a drive-thru and ATM. The area, we helped create a fun event for families to opening is planned for the third quarter of 2019, and enjoy during the multi-day music and art festival we are looking forward to becoming a bigger, better, each spring. and stronger part of this great city. 6 7 Future and Focus Guiding Principles: Core Values: 1. Operate a sound, efficient, growing, and highly 1. Build personal relationships based on honesty profitable company. and integrity. 2. Identify and respond to our internal and external customers’ needs and expectations in an ever- changing financial environment. 3. Provide 21st-century financial solutions to our customers that are designed to meet their current and future needs. 2. Treat people fairly and speak with candor and care. 3. Develop people to their highest potential. 4. Coach for improved performance. 5. Show a passion for winning. 4. Provide an attractive return for our shareholders. 6. Act like business owners. 5. Furnish positive leadership for the well-being of 7. Celebrate individual and team successes often. all the communities we serve. 6. Continuously develop a challenging and rewarding work environment for our employees that focuses on working as a team. 7. Conduct our work with integrity and professionalism. 8. Communicate with strategic purpose and aim for consistency. 9. Hold ourselves and our teammates accountable for results. 10. Always use good, sound judgment when engaging with customers and seek help with decisions when we are uncomfortable. OUR MISSION: We provide quality financial services with exceptional customer service. OUR VISION: We will enhance the value of our shareholders’ investment by being our communities’ preferred provider of relationship-based financial services. 8 9 9 Leadership Our Executive Leadership Jeffrey V. Haley President Chief Executive Officer William W. Traynham Executive Vice President Chief Financial Officer H. Gregg Strader Executive Vice President Chief Banking Officer American National Bankshares Inc. and American National Bank & Trust Company Edward C. Martin Executive Vice President Chief Credit Officer John H. Settle, Jr. Executive Vice President President of Trust and Investment Services Charles Canaday, Jr. Executive Vice President Regional President, East Region Rhonda P. Joyce Executive Vice President Regional President, South Region Kevin S. Meade Executive Vice President Regional President, North Region Board of Directors Fred A. Blair President Blair Construction Inc. Director since 1992 Committees 1, 5, 6 Michael P. Haley Retired Advisor Fenway Partners Director since 2002 Committees 1, 2, 4, 6, 8 Frank C. Crist Jr., D.D.S. President Brady & Crist Dentists Inc. Director since 2006 Committees 3, 6, 7 Charles S. Harris Executive Vice President Averett University Director since 2008 Committees 1, 5, 6 Franklin W. Maddux, M.D. Chief Medical Officer Executive Vice President for Clinical & Scientific Affairs Fresenius Medical Care North America Director since 2002 Committees 3, 5, 6 Charles H. Majors Chairman of the Board American National Bankshares Inc. American National Bank & Trust Company Director since 1981 Committee 7 Ronda M. Penn Chief Financial Officer Plexus Capital LLC Director since 2015 Committees 1, 4, 6 Dan M. Pleasant Chief Operating Officer The Dewberry Companies Inc. Director since 2011 Committees 4, 6, 8 Joel R. Shepherd President Virginia Home Furnishings Inc. 220 Self Storage Inc. Director since 2015 Committees 2, 3, 6, 8 F. D. Hornaday III President & Chief Executive Officer Knit Wear Fabrics Inc. Director since 2011 Committees 3, 6, 7 John H. Love President & Chief Executive Officer W. E. Love & Associates Inc. Director since 2011 Committees 4, 5, 6 Claude B. Owen Jr. Retired Chairman & Chief Executive Officer DIMON Inc. Director since 1984 Committees 2, 3, 6, 8 1. Audit 2. Chief Executive Officer’s Advisory 3. Corporate Governance and Nominating 4. Human Resources and Compensation 5. Risk and Compliance 6. Stock Grant and Option 7. Trust 8. Capital Management Committees Tammy M. Finley Executive Vice President and General Counsel Advance Auto Parts, Inc. Director since 2017 Committee 4, 5, 6 Jeffrey V. Haley President & Chief Executive Officer American National Bankshares Inc. American National Bank & Trust Company Director since 2010 Committee 7 10 North Carolina Advisory Board Members: Advisory Boards (as of January 1, 2018) Thomas E. Chandler Jr. President Chandler Concrete Company Inc. Diane M. Rumley, CPA Partner Leeper, Kean & Rumley LLP Tammy B. Jewell Business Manager Jewell Machinery, Inc. Adrian T. Smith Chief Executive Officer Ice Age Management Sherri K. Squier Chief Executive Officer All-State Express, Inc. Richard H. Jones CPA Jones & Associates Harry G. Norris President Howell’s Motor Freight Danny M. Purdue Vice President Perdue Properties Inc. Earnest C. Jordan Retired Senior Vice President American National Bank & Trust Company Keith Robinson, M.D. Physician Complexions Dermatology James B. Crouch Jr. Vice President Harris, Crouch, Long, Scott & Miller Inc. Kyle M. Winslow Vice President Briggs-Shaffner Acquisition Company J. Nathan Duggins, III Managing Partner Tuggle Duggins P.A. Anthony E. Foriest Retired Xerox Corporation John A. Holt Sr. President & Chief Financial Officer DynaYarn USA LLC David S. Johnson, M.D. Physician Burlington Pediatrics Ronald A. Joyce President & Chief Executive Officer Joyce Foods R. Aubrey Linville, III Partner Linville Team Partners, LLC Phillip J. Nahser Jr., M.D. Cardiologist Cone Health Medical Group Richard H. Ramsey Operating Partner New Page Capital President Engineered Steel Products, Inc. President American Industrial, LLC Virginia Advisory Board Members: W. Kelvin Bowles President & Owner Eastern Communications Associates Thomas C. Capps President Capps Shoe Company Inc. James D. Coleman Jr. President Rives Brown Realty Nicholas C. Conte SVP and General Counsel Carilion Clinic John M. Deekens Retired General Manager Stuart Forest Products S. Cabell Dudley Jr. Retired Executive Vice President American National Bank & Trust Company Harold E. Green Jr. President Distinct Impressions Inc. Brian J. Kelleher President Atlantic Precision Resources Inc. Andy C. Kelderhouse President Fralin & Waldron, Inc. John H. Laramore Realtor Wilkins and Co. Realtors John D. Lugar President Virginia Varsity Transfer & Storage Lauren M. Mathena Director of Economic Development and Community Engagement Mid-Atlantic Broadband Communities Corp. Martha W. Medley Partner Daniel, Medley & Kirby P.C. Chris F. Mohr Chairman & Chief Executive Officer Ameristaff Inc. James K. Muehleck, D.D.S. Dentist Martinsville Family Dentistry Stephen A. Musselwhite President Musselwhite & Associates R. Eddie Shelton Owner Diamond S Farms W. Earle Spruill Jr. President Osage, Inc. Thomas S. Stump President & Chief Executive Officer First Piedmont Corporation Michael A. Turner CEO & Partial Owner Turner’s Building Inc. William C. Vaughn Vice President J&R Management Inc. E. Linwood Wright Consultant Danville IDA 11 2018 Charley Majors Achievement Award Recipient: Lisa Pass Financials FINANCIAL HIG HL IGHTS as of December 31 (Dollars in thousands, except for share data) Lisa’s dedication and work ethic have been highly visible throughout our merger with Franklin Community Bank, where she mentored new staff and set the example of how to deliver excellent customer service. Because of her strengths as a manager and leader, Lisa will also be assisting our newest team members throughout this year’s merger with HomeTown Bank. Another shining example of her commitment to service is the leadership role she informally took in a complex Each year, one exceptional American National branch operational project involving routing and employee is selected to receive the Charley Majors transit number conversion. Lisa quickly established a Award in honor of our Chairman and retired Chief Executive Officer. Established in 2014, this award is presented to an individual who best exemplifies process and set of simple strategies to complete the necessary tasks. As a result, the Cum Park office was the first to complete their portion of the project, and American National’s Core Values. The recipient must the strategies Lisa developed were put into use at possess an exceptional degree of character, high other branches. levels of personal integrity, and a sense of service that goes above and beyond expectations. In addition to her leadership role at American National, Lisa is highly active in her community, volunteering This year we are proud to present the Charley Majors with Everfi for four years as well as partnering with Award to Lisa Pass, Manager of the Cum Park branch Cummings High School to teach financial literacy to in Burlington. Lisa has been with the bank since 2004, high school teenagers. having started her career with MidCarolina Bank, which was acquired by American National in 2012. In the words of her manager, Matt Blake, “Lisa’s As she has advanced in her career, Lisa has become leadership, teamwork and customer focus are her adept at all aspects of branch management from start greatest components of success. She makes sure that to finish. everyone around her — both our customers as well as her fellow employees — know that they are valued and “To say Lisa Pass is a self-starter would be a major really matter.” understatement,” says Charles Canaday, Jr., Executive Vice President. “She is a natural leader who plans On behalf of everyone at American National, we would a path ahead of schedule and sets a well-defined direction that is very clear for the entire team to like to extend our heartfelt congratulations to Lisa for receiving the 2018 Charley Majors Award and wish her follow. Above all else, she simply knows how to get continued success in her important role at American things done!” National Bank & Trust Company. RESULTS OF OPERATIONS: Interest income Interest expense Net interest income Provision for (recovery of) loan losses Noninterest income Noninterest expense Income before income tax provision Income tax provision Net income FINANCIAL CONDITION: Assets Loans, net of unearned income Securities Deposits Shareholders’ equity Shareholders’ equity, tangible PER-SHARE INFORMATION: Earnings per share, basic Earnings per share, diluted Cash dividends paid Book value Book value, tangible 2018 2017 2016 2015 2014 $68,768 9,674 59,094 (103) 13,274 44,246 28,225 5,646 22,579 $63,038 7,291 55,747 1,016 14,227 42,883 26,075 10,826 15,249 $56,170 6,316 49,854 250 13,505 39,801 23,308 7,007 16,301 $55,169 5,904 49,265 950 13,287 40,543 21,059 6,020 15,039 $47,455 5,730 41,725 400 11,176 34,558 17,943 5,202 12,741 $1,862,866 1,357,476 339,730 1,566,227 222,542 177,744 $1,816,078 1,336,125 327,447 1,534,726 208,717 163,654 $1,678,638 1,164,821 352,726 1,370,640 201,380 155,789 $1,547,599 1,005,525 345,661 1,262,660 197,835 151,280 $1,346,492 840,925 349,250 1,075,837 173,780 132,692 $2.60 2.59 1.00 25.52 20.38 $1.76 1.76 0.97 24.13 18.92 $1.89 1.89 0.96 23.37 18.08 $1.73 1.73 0.93 22.95 17.55 $1.62 1.62 0.92 22.07 16.86 Average shares outstanding, basic Average shares outstanding, diluted 8,698,014 8,708,462 8,641,717 8,660,628 8,611,507 8,621,241 8,680,502 8,688,450 7,867,198 7,877,576 SELECTED RATIOS: Return on average assets Return on average equity Return on average tangible equity Dividend payout ratio Efficiency ratio Net interest margin ASSET QUALITY RATIOS: 1.24% 10.56% 13.49% 38.54% 59.57% 3.49% 0.87% 7.34% 9.59% 54.98% 60.89% 3.50% 1.02% 8.07% 10.85% 50.71% 61.47% 3.52% 0.99% 7.65% 10.62% 53.65% 63.81% 3.69% 0.97% 7.40% 10.31% 56.80% 63.41% 3.66% Allowance for loan losses to period-end loans Allowance for loan losses to period-end non-performing loans Non-performing assets to total assets Net charge-offs to average loans 0.94% 1,101.98% 0.11% 0.05% 1.02% 531.37% 0.21% 0.02% 1.10% 360.39% 0.29% 0.00% 1.25% 242.09% 0.48% 0.08% 1.48% 302.21% 0.46% 0.07% CAPITAL RATIOS: Total risk-based capital ratio Common equity tier 1 capital ratio Tier 1 risk-based capital ratio Tier 1 leverage ratio Tangible equity to tangible assets ratio 15.35% 12.55% 14.46% 11.62% 9.78% 14.39% 11.50% 13.42% 10.95% 9.24% 14.81% 11.77% 13.83% 11.67% 9.54% 16.35% 12.88% 15.23% 12.05% 10.08% 17.68% n/a 16.59% 12.16% 10.00% 12 13 2018 CON S OLIDATED BALANCE SHEETS as of December 31 (Dollars in thousands, except for share data) CONSOLIDATED STATEMENTS O F INCOME as of December 31 (Dollars in thousands, except for share data) ASSETS: Cash and due from banks Interest bearing deposits in other banks Equity securities, at fair value Securities available for sale, at fair value Restricted stock, at cost Loans held for sale Loans, net of unearned income Less allowance for loan losses Net Loans Premises and equipment, net Other real estate owned, net of valuation allowance of $109 in 2018 and $147 in 2017 Goodwill Core deposit intangibles, net Bank owned life insurance Accrued interest receivable and other assets Total Assets LIABILITIES AND SHAREHOLDERS’ EQUITY: LIABILITIES: Demand deposits — non-interest bearing Demand deposits — interest bearing Money market deposits Savings deposits Time deposits Total deposits Short-term borrowings: Customer repurchase agreements Other short-term borrowings Junior subordinated debt Accrued interest payable and other liabilities Total liabilities Commitments and Contingencies 2018 $29,587 34,668 1,830 332,653 5,247 640 1,357,476 (12,805) 1,344,671 26,675 869 43,872 926 18,941 22,287 $1,862,866 $435,828 234,621 401,461 132,360 361,957 1,566,227 35,243 0 27,927 10,927 1,640,324 2017 $28,594 23,883 0 321,337 6,110 1,639 1,336,125 (13,603) 1,322,522 25,901 1,225 43,872 1,191 18,460 21,344 $1,816,078 $394,344 226,914 403,024 126,786 383,658 1,534,726 10,726 24,000 27,826 10,083 1,607,361 SHAREHOLDERS’ EQUITY Preferred stock, $5 par, 2,000,000 shares authorized, none outstanding Common stock, $1 par, 20,000,000 shares authorized, 8,720,337 shares outstanding at December 31, 2018 and 8,650,547 shares outstanding at December 31, 2017 Capital in excess of par value Retained earnings Accumulated other comprehensive loss, net Total shareholders’ equity Total liabilities and shareholders’ equity 0 0 8,668 78,172 141,537 (5,835) 222,542 $1,862,866 8,604 76,179 127,010 (3,076) 208,717 $1,816,078 INTEREST AND DIVIDEND INCOME: Interest and fees on loans Interest and dividends on securities: Taxable Tax-exempt Dividends Other interest income Total interest and dividend income INTEREST EXPENSE: Interest on deposits Interest on short-term borrowings Interest on long-term borrowings Interest on junior subordinated debt Total interest expense NET INTEREST INCOME Provision for (recovery of) loan losses 2018 $59,966 6,106 1,502 321 873 68,768 8,086 186 0 1,402 9,674 59,094 (103) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES: 59,197 Noninterest Income: Trust fees Service charges on deposit accounts Other fees and commissions Mortgage banking income Securities gains, net Brokerage fees Income from Small Business Investment Companies Gains (losses) on premises and equipment, net Other TOTAL NONINTEREST INCOME Noninterest Expense: Salaries Employee benefits Occupancy and equipment FDIC assessment Bank franchise tax Core deposit intangible amortization Data processing Software Other real estate owned, net Merger-related expenses Other TOTAL NON-INTEREST EXPENSE Income Before Income Taxes Income Taxes NET INCOME NET INCOME PER COMMON SHARE: Basic Diluted AVERAGE COMMON SHARES OUTSTANDING: Basic Diluted 3,783 2,455 2,637 1,862 123 795 637 60 922 13,274 20,509 4,370 4,378 537 1,054 265 1,691 1,279 122 872 9,169 44,246 28,225 5,646 $22,579 $2.60 $2.59 2017 $55,276 4,666 2,043 319 734 63,038 5,794 173 296 1,028 7,291 55,747 1,016 54,731 3,926 2,426 2,471 2,208 812 829 236 344 975 14,227 19,829 4,274 4,487 538 1,072 528 2,014 1,144 303 0 8,694 42,883 26,075 10,826 $15,249 $1.76 $1.76 2016 $47,971 4,454 3,135 334 276 56,170 5,103 10 325 878 6,316 49,854 250 49,604 3,791 2,467 2,261 1,713 836 843 463 (9) 1,140 13,505 17,568 3,829 4,246 647 995 964 1,828 1,143 336 0 8,245 39,801 23,308 7,007 $16,301 $1.89 $1.89 8,698,014 8,708,462 8,641,717 8,660,628 8,611,507 8,621,241 14 15 Shareholder Information Branch Locations Annual Meeting The 2018 Annual Meeting of Shareholders of Equal Opportunity Employer American National Bank & Trust Company, a American National Bankshares Inc. will be held wholly owned subsidiary of American National on Tuesday, May 21, 2019, at 9 a.m. (EDT) at The Bankshares Inc., is an equal opportunity employer. Wednesday Club, 1002 Main Street, Danville, VA. All matters regarding recruiting, hiring, training, Stock Listing The common stock of American National Bankshares Inc. (the “Company”) is traded on the NASDAQ Global Select Market under the symbol “AMNB.” Shareholder Inquiries Shareholders needing information on stock compensation, benefits, promotions, transfers and all other personnel policies will remain free from discriminatory practices. This Report The American National Bankshares Inc. 2018 Summary Annual Report is presented in a summary format to provide information regarding the transfer requirements, lost certificates, performance of the Company in a manner that dividends, the dividend retirement plan and other is meaningful and useful to the widest range shareholder matters may contact: of readers. The audited consolidated financial Computershare Inc. PO Box 30170 College Station, TX 77842 800.368.5948 General Corporate Information Independent Auditors Yount, Hyde & Barbour PC 50 South Cameron Street Winchester, VA 22601 Regulatory and Securities Counsel Williams Mullen Williams Mullen Center 200 South 10th Street, Suite 1600 PO Box 1320 (23218) Richmond, VA 23219 16 statements of the Company and other more detailed analytical information regarding the Company are contained in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Investor Relations & Financial Statements A copy of the Company’s annual reports on Form 10-K and quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission, are available without charge to shareholders upon written request and are also available on our website, amnb.com. Those with requests for this or other financial information about American National Bankshares Inc. should contact: American National Bankshares Inc. Investor Relations PO Box 191 Danville, VA 24543 800.240.8190 Virginia DANVILLE (Bank & Company headquarters) BEDFORD CHATHAM CHRISTIANSBURG GRETNA LYNCHBURG MARTINSVILLE RIDGEWAY North Carolina ROANOKE (VA Banking headquarters) BURLINGTON GRAHAM ROCKY MOUNT SALEM SOUTH BOSTON UNION HALL GREENSBORO (NC Banking headquarters) MEBANE WINSTON-SALEM YANCEYVILLE Forward-Looking Statements This Summary Annual Report 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 Company 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: financial market volatility including the level of interest rates could affect the values of financial instruments and the amount of net interest income earned; general economic or business conditions, either nationally or in the market areas in which the Company does business, may be less favorable than expected, resulting in deteriorating credit quality, reduced demand for credit, or a weakened ability to generate deposits; competition among financial institutions may increase and competitors may have greater financial resources and develop products and technology that enable those competitors to compete more successfully than the Company; businesses that the Company is engaged in may be adversely affected by legislative or regulatory changes, including changes in accounting standards; the ability to retain key personnel; the failure of assumptions underlying the allowance for loan losses; and risks associated with mergers, acquisitions, and other expansion activities. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’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. Bigger. Better. Stronger. Together. (800) 240-8190 I www.amnb.com 

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