American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
Dollars in thousands, except share and per share data
Unaudited
	March 31
ASSETS	2009			2008
Cash and due from banks	$	13,632		$	20,310
Interest-bearing deposits in other banks		18,188			4,218
Securities available for sale, at fair value		167,981			149,636
Securities held to maturity		6,811			11,039
Total securities		174,792			160,675
Loans held for sale		2,782			1,681
Loans, net of unearned income		569,003			554,667
Less allowance for loan losses		(7,836	)		(7,425	)
Net Loans		561,167			547,242
Premises and equipment, net		18,282			13,392
Other real estate owned		3,345			550
Goodwill		22,468			22,468
Core deposit intangibles, net		1,981			2,358
Accrued interest receivable and other assets		12,841			12,155
Total assets	$	829,478		$	785,049
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	98,926		$	101,195
Demand deposits -- interest-bearing		94,505			103,365
Money market deposits		72,085			52,574
Savings deposits		63,553			64,198
Time deposits		286,819			260,207
Total deposits		615,888			581,539
Short-term borrowings:
Customer repurchase agreements		60,768			58,179
Other short-term borrowings		12,440			3,225
Long-term borrowings		13,750			12,900
Trust preferred capital notes		20,619			20,619
Accrued interest payable and other liabilities		4,098			5,714
Total liabilities		727,563			682,176
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized,
6,079,161 shares outstanding at March 31, 2009 and
6,100,185 shares outstanding at March 31, 2008		6,079			6,100
Capital in excess of par value		26,488			26,472
Retained earnings		70,379			69,866
Accumulated other comprehensive income (loss), net		(1,031	)		435
Total shareholders' equity		101,915			102,873
Total liabilities and shareholders' equity	$	829,478		$	785,049

American National Bankshares Inc. and Subsidiaries
Consolidated Statements of Income
Dollars in thousands, except share and per share data
Unaudited
	Three Months Ended
	March 31
	2009			2008
Interest and Dividend Income:
Interest and fees on loans	$	8,034		$	9,444
Interest and dividends on securities:
Taxable		1,120			1,231
Tax-exempt		386			432
Dividends		22			77
Other interest income		88			76
Total interest and dividend income		9,650			11,260
Interest Expense:
Interest on deposits		2,527			3,582
Interest on short-term borrowings		236			484
Interest on long-term borrowings		131			126
Interest on trust preferred capital notes		343			343
Total interest expense		3,237			4,535
Net Interest Income		6,413			6,725
Provision for loan losses		350			140
Net Interest Income After Provision
for Loan Losses		6,063			6,585
Noninterest Income:
Trust fees		758			880
Service charges on deposit accounts		502			565
Other fees and commissions		242			203
Mortgage banking income		286			195
Brokerage fees		57			143
Securities gains (losses), net		-			30
Net loss on foreclosed real estate		(1,196	)		(7	)
Other		85			126
Total noninterest income		734			2,135
Noninterest Expense:
Salaries		2,531			2,469
Employee benefits		813			747
Occupancy and equipment		971			966
FDIC assessment		217			17
Bank franchise tax		163			177
Core deposit intangible amortization		94			94
Other		1,086			979
Total noninterest expense		5,875			5,449
Income Before Income Taxes		922			3,271
Income Taxes		154			966
Net Income	$	768		$	2,305
Net Income Per Common Share:
Basic	$	0.13		$	0.38
Diluted	$	0.13		$	0.38
Average Common Shares Outstanding:
Basic		6,081,998			6,107,832
Diluted		6,085,457			6,121,285

American National Bankshares Inc. and Subsidiaries
Financial Highlights
Dollars in thousands, except share, per share data, ratio and nonfinancial data
Unaudited
	1st Qtr			4th Qtr			1st Qtr
	2009			2008			2008
EARNINGS
Interest income	$	9,650		$	10,225		$	11,260
Interest expense		3,237			3,503			4,535
Net interest income		6,413			6,722			6,725
Provision for loan losses		350			600			140
Noninterest income		734			1,875			2,135
Noninterest expense		5,875			5,547			5,449
Income taxes		154			767			966
Net income		768			1,683			2,305
PER COMMON SHARE
Earnings per share - basic	$	0.13		$	0.28		$	0.38
Earnings per share - diluted		0.13			0.28			0.38
Cash dividends declared		0.23			0.23			0.23
Book value per share		16.76			16.81			16.86
Book value per share - tangible (a)		12.74			12.78			12.79
Closing market price		15.60			17.00			21.26
FINANCIAL RATIOS
Return on average assets		0.38	%		0.86	%		1.18	%
Return on average equity		2.99			6.53			9.01
Return on average tangible equity (b)		4.32			8.90			12.24
Average equity to average assets		12.80			13.13			13.12
Net interest margin, taxable equivalent		3.61			3.85			3.88
Efficiency ratio		68.77			62.36			60.09
Effective tax rate		16.70			31.31			29.53
PERIOD-END BALANCES
Securities	$	174,792		$	140,816		$	160,675
Loans held for sale		2,782			1,764			1,681
Loans, net of unearned income		569,003			571,110			554,667
Goodwill and other intangibles		24,449			24,543			24,826
Assets		829,478			789,184			785,049
Assets - tangible (a)		805,029			764,641			760,223
Deposits		615,888			589,138			581,539
Customer repurchase agreements		60,678			51,741			58,179
Other short-term borrowings		12,440			7,850			3,225
Long-term borrowings		34,369			34,406			33,519
Shareholders' equity		101,915			102,300			102,873
Shareholders' equity - tangible (a)		77,466			77,757			78,047
AVERAGE BALANCES
Securities	$	138,067		$	137,947		$	151,699
Loans held for sale		2,996			1,669			1,614
Loans, net of unearned income		570,342			571,081			553,971
Interest-earning assets		734,980			720,197			717,508
Goodwill and other intangibles		24,507			24,600			24,864
Assets		803,206			785,182			780,204
Assets - tangible (a)		778,699			760,582			755,340
Interest-bearing deposits		510,821			491,701			486,198
Deposits		604,002			590,196			583,410
Customer repurchase agreements		56,051			49,868			54,624
Other short-term borrowings		2,071			6,788			3,091
Long-term borrowings		34,398			34,436			30,779
Shareholders' equity		102,845			103,126			102,342
Shareholders' equity - tangible (a)		78,338			78,526			77,478
CAPITAL
Average shares outstanding - basic		6,081,998			6,086,868			6,107,832
Average shares outstanding - diluted		6,085,457			6,090,844			6,121,285
Shares repurchased		7,600			7,100			28,800
Average price of shares repurchased	$	15.92		$	16.40		$	20.80
American National Bankshares Inc. and Subsidiaries
Financial Highlights
Dollars in thousands, except share, per share data, ratio and nonfinancial data
Unaudited
		1st Qtr			4th Qtr			1st Qtr
		2009			2008			2008
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	7,824		$	8,083		$	7,395
Provision for loan losses		350			600			140
Charge-offs		(376	)		(1,012	)		(170	)
Recoveries		38			153			60
Ending balance	$	7,836		$	7,824		$	7,425
LOANS
Construction and land development	$	53,579		$	63,361		$	72,001
Commercial real estate		213,508			207,160			198,698
Residential real estate		134,510			136,480			138,384
Home equity		61,459			57,170			48,958
Commercial and industrial		97,259			98,546			87,199
Consumer		8,688			8,393			9,427
Total	$	569,003		$	571,110		$	554,667
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	-		$	-		$	-
Nonaccrual		2,821			2,845			2,772
Foreclosed real estate		3,345			4,311			550
Nonperforming assets	$	6,166		$	7,156		$	3,322
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans		0.24	%		0.60	%		0.08	%
Nonperforming assets to total assets		0.74			0.91			0.42
Nonperforming loans to total loans		0.50			0.50			0.50
Allowance for loan losses to total loans		1.38			1.37			1.34
Allowance for loan losses to
nonperforming loans		277.77			275.01			267.86
OTHER DATA
Fiduciary assets at period-end (c)	$	305,129		$	326,614		$	386,375
Retail brokerage assets at period-end (c)	$	82,554		$	84,348		$	89,927
Number full time-time equivalent employees		258			258			258
Number of full service offices		20			20			19
Number of loan production offices		2			1			1
Number of ATM's		23			24			23
Notes:
(a) - Excludes goodwill and other intangible assets
(b) - Excludes amortization expense, net of tax, of intangible assets
(c) - Market value

Net Interest Income Analysis
For the Three Months Ended March 31, 2009 and 2008
Dollars in thousands, except rates
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2009		2008		2009		2008		2009			2008
Loans:
Commercial	$	96,097	$	85,632	$	1,100	$	1,454		4.58	%		6.79	%
Real estate		469,346		460,429		6,779		7,789		5.78			6.77
Consumer		7,895		9,524		178		217		9.02			9.11
Total loans		573,338		555,585		8,057		9,460		5.62			6.81
Securities:
Federal agencies		45,767		50,064		521		597		4.55			4.77
Mortgage-backed		44,560		47,405		562		603		5.04			5.09
State and municipal		42,726		47,847		604		656		5.65			5.48
Other		5,014		6,383		33		99		2.63			6.20
Total securities		138,067		151,699		1,720		1,955		4.98			5.15
Deposits in other banks		23,575		10,224		88		76		1.49			2.97
Total interest earning assets		734,980		717,508		9,865		11,491		5.37			6.41
Nonearning assets		68,226		62,696
Total assets	$	803,206	$	780,204
Deposits:
Demand	$	112,459	$	107,994		190		225		0.68			0.83
Money market		64,648		51,320		198		294		1.23			2.29
Savings		61,289		63,184		40		116		0.26			0.73
Time		272,425		263,700		2,099		2,947		3.08			4.47
Total deposits		510,821		486,198		2,527		3,582		1.98			2.95
Customer repurchase agreements		56,051		54,624		233		451		1.66			3.30
Other short-term borrowings		2,071		3,091		3		33		0.58			4.27
Long-term borrowings		34,398		30,779		474		469		5.51			6.10
Total interest bearing liabilities		603,341		574,692		3,237		4,535		2.15			3.16
Noninterest bearing
demand deposits		93,181		97,212
Other liabilities		3,839		5,958
Shareholders' equity		102,845		102,342
Total liabilities and
shareholders' equity	$	803,206	$	780,204
Interest rate spread										3.22	%		3.25	%
Net interest margin										3.61	%		3.88	%
Net interest income (taxable equivalent basis)						6,628		6,956
Less: Taxable equivalent adjustment						215		231
Net interest income					$	6,413	$	6,725