American National Bankshares (AMNB) 8-K American National Bankshares Inc. Reports Fourth Quarter and Full-year 2008 Earnings

American National Bankshares Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Unaudited
	December 31
ASSETS	2008			2007
Cash and due from banks	$	15,909		$	18,155
Interest-bearing deposits in other banks		8,189			149
Securities available for sale, at fair value		133,695			145,159
Securities held to maturity		7,121			11,990
Total securities		140,816			157,149
Loans held for sale		1,764			1,368
Loans, net of unearned income		571,110			551,391
Less allowance for loan losses		(7,824	)		(7,395	)
Net Loans		563,286			543,996
Premises and equipment, net		17,431			13,348
Other real estate owned		4,311			632
Goodwill		22,468			22,468
Core deposit intangibles, net		2,075			2,452
Accrued interest receivable and other assets		12,935			12,571
Total assets	$	789,184		$	772,288
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits -- noninterest-bearing	$	95,703		$	99,231
Demand deposits -- interest-bearing		116,132			104,751
Money market deposits		56,615			50,254
Savings deposits		59,624			62,400
Time deposits		261,064			264,585
Total deposits		589,138			581,221
Short-term borrowings:
Customer repurchase agreements		51,741			47,891
Other short-term borrowings		7,850			7,200
Long-term borrowings		13,787			8,937
Trust preferred capital notes		20,619			20,619
Accrued interest payable and other liabilities		3,749			4,909
Total liabilities		686,884			670,777
Shareholders' equity:
Common stock, $1 par, 10,000,000 shares authorized,
6,085,628 shares outstanding at December 31, 2008 and
6,118,717 shares outstanding at December 31, 2007		6,086			6,119
Capital in excess of par value		26,491			26,425
Retained earnings		71,090			69,409
Accumulated other comprehensive income (loss), net		(1,367	)		(442	)
Total shareholders' equity		102,300			101,511
Total liabilities and shareholders' equity	$	789,184		$	772,288

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
	2008		2007			2008			2007
Interest and Dividend Income:
Interest and fees on loans	$	8,594	$	10,506		$	35,941		$	41,499
Interest and dividends on securities:
Taxable		1,151		1,185			4,795			4,409
Tax-exempt		381		431			1,621			1,690
Dividends		23		74			214			320
Other interest income		76		104			301			679
Total interest and dividend income		10,225		12,300			42,872			48,597
Interest Expense:
Interest on deposits		2,737		3,888			12,280			15,535
Interest on short-term borrowings		289		492			1,629			1,860
Interest on long-term borrowings		134		119			557			602
Interest on trust preferred capital notes		343		343			1,373			1,373
Total interest expense		3,503		4,842			15,839			19,370
Net Interest Income		6,722		7,458			27,033			29,227
Provision for loan losses		600		100			1,620			403
Net Interest Income After Provision
for Loan Losses		6,122		7,358			25,413			28,824
Noninterest Income:
Trust fees		770		914			3,467			3,578
Service charges on deposit accounts		555		653			2,324			2,531
Other fees and commissions		235		195			857			786
Mortgage banking income		155		195			788			954
Brokerage fees		61		111			431			550
Securities gains (losses), net		-		1			(195	)		135
Impairment of securities		-		(362	)		(255	)		(362	)
Other		99		196			496			650
Total noninterest income		1,875		1,903			7,913			8,822
Noninterest Expense:
Salaries		2,376		2,404			9,792			9,688
Employee benefits		789		585			3,001			2,749
Occupancy and equipment		909		967			3,701			3,527
Bank franchise tax		172		165			694			663
Core deposit intangible amortization		94		94			377			377
Other		1,207		1,114			4,559			4,322
Total noninterest expense		5,547		5,329			22,124			21,326
Income Before Income Taxes		2,450		3,932			11,202			16,320
Income Taxes		767		1,157			3,181			4,876
Net Income	$	1,683	$	2,775		$	8,021		$	11,444
Net Income Per Common Share:
Basic	$	0.28	$	0.45		$	1.32		$	1.86
Diluted	$	0.28	$	0.45		$	1.31		$	1.86
Average Common Shares Outstanding:
Basic		6,086,868		6,117,571			6,096,649			6,139,095
Diluted		6,090,844		6,133,807			6,105,154			6,161,825

Financial Highlights
American National Bankshares Inc. and Subsidiaries
(Dollars in thousands, except share data, unaudited)
	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
	2008			2008			2007			2008			2007
EARNINGS
Interest income	$	10,225		$	10,599		$	12,300		$	42,872		$	48,597
Interest expense		3,503			3,743			4,842			15,839			19,370
Net interest income		6,722			6,856			7,458			27,033			29,227
Provision for loan losses		600			280			100			1,620			403
Noninterest income		1,875			2,062			1,903			7,913			8,822
Noninterest expense		5,547			5,485			5,329			22,124			21,326
Income taxes		767			929			1,157			3,181			4,876
Net income		1,683			2,224			2,775			8,021			11,444
PER COMMON SHARE
Earnings per share - basic	$	0.28		$	0.36		$	0.45		$	1.32		$	1.86
Earnings per share - diluted		0.28			0.36			0.45			1.31			1.86
Cash dividends declared		0.23			0.23			0.23			0.92			0.91
Book value per share		16.81			16.86			16.59			16.81			16.59
Book value per share - tangible (a)		12.78			12.82			12.52			12.78			12.52
Closing market price		17.00			18.00			19.97			17.00			19.97
FINANCIAL RATIOS
Return on average assets		0.86	%		1.13	%		1.44	%		1.02	%		1.48	%
Return on average equity		6.53			8.72			11.05			7.79			11.69
Return on average tangible equity (b)		8.90			11.84			15.05			10.60			16.09
Average equity to average assets		13.13			12.97			12.99			13.10			12.65
Net interest margin, taxable equivalent	3.85				3.90			4.31			3.87			4.24
Efficiency ratio		62.36			59.51			53.58			60.83			54.44
Effective tax rate		31.31			29.46			29.43			28.40			29.88
PERIOD-END BALANCES
Securities	$	140,816		$	141,247		$	157,149		$	140,816		$	157,149
Loans held for sale		1,764			2,269			1,368			1,764			1,368
Loans, net of unearned income		571,110			576,598			551,391			571,110			551,391
Goodwill and other intangibles		24,543			24,637			24,920			24,543			24,920
Assets		789,184			800,645			772,288			789,184			772,288
Assets - tangible (a)		764,641			776,008			747,368			764,641			747,368
Deoposits		589,138			589,087			581,221			589,138			581,221
Customer repurchase agreements		51,741			44,951			47,891			51,741			47,891
Other short-term borrowings		7,850			25,920			7,200			7,850			7,200
Long-term borrowings		34,406			34,444			29,556			34,406			29,556
Shareholders' equity		102,300			102,714			101,511			102,300			101,511
Shareholders' equity - tangible (a)		77,757			78,077			76,591			77,757			76,591
AVERAGE BALANCES
Securities	$	137,947		$	141,697		$	148,741		$	145,371		$	147,480
Loans held for sale		1,669			1,986			1,211			1,869			1,842
Loans, net of unearned income		571,081			572,196			553,900			565,530			547,934
Interest-earning assets		720,197			724,368			713,270			722,009			710,687
Goodwill and other intangibles		24,600			24,695			24,957			24,736			25,098
Assets		785,182			786,804			773,228			785,868			773,639
Assets - tangible (a)		760,582			762,109			748,271			761,132			748,541
Interest-bearing deposits		491,701			480,133			484,395			483,544			488,209
Deposits		590,196			577,263			586,545			581,701			590,212
Customer repurchase agreements		49,868			51,038			51,562			52,264			48,088
Other short-term borrowings		6,788			17,589			340			9,818			346
Long-term borrowings		34,436			34,474			29,586			34,235			32,245
Shareholders' equity		103,126			102,052			100,481			102,917			97,854
Shareholders' equity - tangible (a)		78,526			77,357			75,524			78,181			72,756

Financial Highlights
American National Bankshares Inc. and Subsidiaries
(Dollars in thousands, except share data, unaudited)	4th Qtr			3rd Qtr			4th Qtr			YTD			YTD
	2008			2008			2007			2008			2007
CAPITAL
Average shares outstanding - basic		6,086,868			6,093,851			6,117,571			6,096,649			6,139,095
Average shares outstanding - diluted		6,090,844			6,100,089			6,133,807			6,105,154			6,161,825
Shares repurchased		7,100			7,850			8,700			46,150			61,900
Average price of shares repurchased	$	16.40		$	17.42		$	21.93		$	19.58		$	21.96
ALLOWANCE FOR LOAN LOSSES
Beginning balance	$	8,083		$	7,932		$	7,334		$	7,395		$	7,264
Provision for loan losses		600			280			100			1,620			403
Charge-offs		(1,012	)		(179	)		(84	)		(1,564	)		(515	)
Recoveries		153			50			45			373			243
Ending balance	$	7,824		$	8,083		$	7,395		$	7,824		$	7,395
LOANS
Construction and land development	$	63,361		$	65,826		$	69,803		$	63,361		$	69,803
Commercial real estate		207,160			208,046			198,332			207,160			198,332
Residential real estate		136,480			139,683			133,899			136,480			133,899
Home equity		57,170			55,665			48,313			57,170			48,313
Commercial and industrial		98,546			99,139			91,028			98,546			91,028
Consumer		8,393			8,239			10,016			8,393			10,016
Total	$	571,110		$	576,598		$	551,391		$	571,110		$	551,391
NONPERFORMING ASSETS AT PERIOD-END
Nonperforming loans:
90 days past due	$	-		$	-		$	-		$	-		$	-
Nonaccrual		2,845			6,674			2,639			2,845			2,639
Foreclosed real estate		4,311			707			632			4,311			632
Nonperforming assets	$	7,156		$	7,381		$	3,271		$	7,156		$	3,271
ASSET QUALITY RATIOS
Annualized net chargeoffs to average loans	0.60		%		0.09	%		0.03	%		0.21	%		0.05	%
Nonperforming assets to total assets		0.91			0.92			0.42			0.91			0.42
Nonperforming loans to total loans		0.50			1.16			0.48			0.50			0.48
Allowance for loan losses to toal loans	1.37				1.40			1.34			1.37			1.34
Allowance for loan losses to nonperforming loans		275.01			121.11			280.22			275.01			280.22
OTHER DATA
Fiduciary assets at period-end (c)	$	326,614		$	368,341		$	404,478		$	326,614		$	404,478
Retail brokerage assets at period-end (c)	$	84,348		$	91,026		$	95,539		$	84,348		$	95,539
Number full time-time equivalent employees	258				258			263			258			259
Number of full service offices		20			20			19			20			19
Number of loan production offices		1			1			1			1			1
Number of ATM's		24			23			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 December 31, 2008 and 2007
(in thousands, except yields and rates)
					Interest
	Average Balance				Income/Expense				Yield/Rate
	2008		2007		2008		2007		2008		2007
Loans:
Commercial	$	93,548	$	88,330	$	1,296	$	1,694	5.54	%	7.67	%
Real Estate		470,968		456,583		7,132		8,596	6.06		7.53
Consumer		8,234		10,198		189		233	9.18		9.14
Total loans		572,750		555,111		8,617		10,523	6.02		7.58
Securities:
Federal agencies		43,373		58,408		533		695	4.92		4.76
Mortgage backed		46,237		36,499		581		463	5.03		5.07
State and municipal		43,180		47,272		595		644	5.51		5.45
Other securities		5,157		6,562		34		96	2.64		5.85
Total securities		137,947		148,741		1,743		1,898	5.05		5.10
Deposits in other banks		9,500		9,418		76		104	3.20		4.42
Total interest-earning assets		720,197		713,270		10,436		12,525	5.80		7.02
Non-earning assets		64,985		59,958
Total assets	$	785,182	$	773,228
Deposits:
Demand	$	112,556	$	102,991		203		305	0.72		1.18
Money market		57,514		52,740		232		345	1.61		2.62
Savings		60,169		63,236		55		160	0.37		1.01
Time		261,462		265,428		2,247		3,078	3.44		4.64
Total deposits		491,701		484,395		2,737		3,888	2.23		3.21
Customer repurchase agreements		49,868		51,562		274		488	2.20		3.79
Other short-term borrowings		6,788		340		15		4	0.88		4.71
Long-term borrowings		34,436		29,586		477		462	5.54		6.25
Total interest-bearing liabilities		582,793		565,883		3,503		4,842	2.40		3.42
Noninterest-bearing demand deposits		98,495		102,150
Other liabilities		768		4,714
Shareholders' equity		103,126		100,481
Total liabilities and
shareholders' equity	$	785,182	$	773,228
Interest rate spread									3.40	%	3.60	%
Net interest margin									3.85	%	4.31	%
Net interest income (taxable equivalent basis)						6,933		7,683
Less: Taxable equivalent adjustment						211		225
Net interest income					$	6,722	$	7,458

Net Interest Income Analysis
For the Years Ended December 31, 2008 and 2007
(in thousands, except yields and rates)
	Average Balance				Interest Income/Expense				Average Yield/Rate
	2008		2007		2008		2007		2008			2007
Loans:
Commercial	$	91,117	$	89,673	$	5,515	$	6,980		6.05	%		7.78	%
Real Estate		467,508		449,683		29,712		33,621		6.36			7.48
Consumer		8,774		10,420		795		975		9.06			9.36
Total loans		567,399		549,776		36,022		41,576		6.35			7.56
Securities:
Federal agencies		45,660		68,521		2,215		3,032		4.85			4.42
Mortgage-backed		47,997		25,406		2,433		1,255		5.07			4.94
State and municipal		45,573		46,069		2,505		2,530		5.50			5.49
Other		6,141		7,484		277		438		4.51			5.85
Total securities		145,371		147,480		7,430		7,255		5.11			4.92
Deposits in other banks		9,239		13,431		301		679		3.26			5.06
Total interest earning assets		722,009		710,687		43,753		49,510		6.06			6.97
Nonearning assets		63,859		62,952
Total assets	$	785,868	$	773,639
Deposits:
Demand	$	109,492	$	107,834		803		1,550		0.73	%		1.44	%
Money market		53,659		52,843		1,011		1,429		1.88			2.70
Savings		61,620		66,246		331		845		0.54			1.28
Time		258,773		261,286		10,135		11,711		3.92			4.48
Total deposits		483,544		488,209		12,280		15,535		2.54			3.18
Customer repurchase agreements		52,264		48,088		1,377		1,841		2.63			3.83
Other short-term borrowings		9,818		346		252		19		2.57			5.49
Long-term borrowings		34,235		32,245		1,930		1,975		5.64			6.12
Total interest bearing
liabilities		579,861		568,888		15,839		19,370		2.73			3.40
Non interest bearing demand deposits		98,157		102,003
Other liabilities		4,933		4,894
Shareholders' equity		102,917		97,854
Total liabilities and shareholders' equity	$	785,868	$	773,639
Interest rate spread										3.33	%		3.57	%
Net interest margin										3.87	%		4.24	%
Net interest income (taxable equivalent basis)						27,914		30,140
Less: Taxable equivalent adjustment						881		913
Net interest income					$	27,033	$	29,227