Amendment to Annual Report - Form 10-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-12820

AMERICAN NATIONAL BANKSHARES INC.

(Exact name of registrant as specified in its charter)

434-792-5111

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes ☑ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☑

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (12 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

☐ Yes ☑ No

The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2023, based on the closing price, was $321,204,000.

The number of shares of the registrant's common stock outstanding on March 26, 2024 was 10,419,679.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

American National Bankshares Inc. (the "Company") is filing this Amendment No. 1 on Form 10-K/A (the "Form 10-K/A") to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (together with the Form 10-K/A, the "Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on March 15, 2024. The purpose of this Form 10-K/A is solely to disclose the information required in Part III (Items 10, 11, 12, 13 and 14) of Form 10-K, which information was previously omitted in reliance on General Instruction G(3) to Form 10-K. Accordingly, the Company hereby amends and replaces in its entirety Part III of the Form 10-K.

In addition, pursuant to the rules of the SEC, Item 15 of Part IV has been amended to include the currently dated certifications of the Company's principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. New certifications of the Company's principal executive officer and principal financial officer are filed with this Form 10-K/A as Exhibits 31.3 and 31.4 hereto. Because no financial statements have been included in this Form 10-K/A and this Form 10-K/A does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted. The Company is not including a new certification under Section 906 of the Sarbanes-Oxley Act of 2002 as no financial statements are being filed with this Form 10-K/A.

Except as described above, this Form 10-K/A does not amend any other information set forth in the Form 10-K, and the Company has not updated disclosures included therein to reflect any subsequent events. This Form 10-K/A should be read in conjunction with the Form 10-K and with the Company's filings with the SEC subsequent to the Form 10-K.

_______________________________

PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

The following is biographical information with respect to the members of the Company's Board of Directors (the "Board"), including their principal occupations and qualifications to serve as directors.

Board Members Serving on Other Publicly Traded Company Boards of Directors

Ms. Agee has been a director of RGC Resources, Inc. since 2005 and Healthcare Realty Trust Incorporated since 2016.

Executive Officers

Information on the Company's executive officers as of December 31, 2023 is disclosed in Part I, Item 1, of this Form 10-K/A.

Audit Committee

The Audit Committee currently consists of Ms. Penn and Finley and Messrs. Michael Haley, Farrell, and Shepherd. Ms. Penn serves as the Chair. The committee reviews significant audit, accounting and financial reporting principles, policies and practices; is directly responsible for engaging and monitoring the independent registered public accounting firm of the Company; and provides oversight of the financial reporting and internal auditing functions. All of the members of this committee are considered independent within the meaning of the SEC regulations, the listing standards of the Nasdaq Stock Market, LLC ("Nasdaq") and the Company's Corporate Governance Guidelines. Ms. Penn and Messrs. Michael Haley and Shepherd, members of the committee, are qualified as audit committee financial experts within the meaning of the SEC regulations, and the Board has determined that each has accounting and related financial management expertise within the meaning of the listing standards of Nasdaq.

Delinquent Section16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's directors and executive officers, and any persons who beneficially own more than 10% of its common stock, to file reports of ownership and changes in ownership with the SEC. Based solely upon a review of Forms 3, 4, and 5 filed with the SEC during the year ended December 31, 2023, the Company believes that all directors, executive officers and beneficial owners of more than 10% of its common stock timely complied with all of the filing requirements applicable to them with respect to transactions during the year ended December 31, 2023.

Code of Conduct

The Board of Directors has adopted a Code of Conduct, which applies to all directors and employees of the Company and the Bank. A portion of the Code of Conduct has special provisions for senior financial officers of the Company and the Bank, which apply to the Company's Principal Executive Officer and Principal Financial Officer, as well as the Bank's Chief Accounting Officer or person performing similar functions for the Company and/or the Bank. The Code of Conduct for senior financial officers meets the requirements of a "code of ethics" as defined by Item 406 of the SEC's Regulation S-K. The Code of Conduct is available on the Company's website, www.amnb.com. Select the "Investors" icon, and then select "Governance Documents." The Code of Conduct is reviewed and reaffirmed on an annual basis by the Board, executive officers, and all other employees.

ITEM 11 - EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Human Resources and Compensation Committee of the Board of Directors has reviewed and discussed with the Board and management the Company's Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to the Board of Directors that the following Compensation Discussion and Analysis be included in this Form 10-K.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Company's executive compensation programs are designed to attract, retain, pay for performance, and motivate the leadership team, even during times of uncertainty, and include a mix of fixed and variable compensation with both short- and long-term incentives used to drive sustained growth and profitability of the Company. The Company's compensation programs, levels, practices, and policies are consistent with the Company's values, culture, and mission.This section provides an overview and explanation of the material information relevant to understanding the objectives, policies, and philosophy underlying the Company's executive compensation programs, focusing on the named executive officers.

The Human Resources and Compensation Committee of the Board of Directors (the "Committee") is responsible for establishing and approving the compensation of the executive officers of the Company, except for the compensation of the Chief Executive Officer, which is approved by the independent members of the Board of Directors. The Committee considers a variety of factors and criteria in arriving at its decisions and recommendations for compensation. The Committee's objective is to attract and retain a superb leadership team with market-competitive compensation and to align the team members' interests with those of the Company, its customers and its shareholders. Accordingly, a significant portion of the Company's executive officers' compensation is directly and materially linked to operating performance. Cash incentive payments and restricted stock awards are heavily dependent on meeting or exceeding Company financial performance goals as well as objective and subjective criteria related to the executive officer's area of responsibility.

Each director who served on the Committee during 2023 qualifies as a "non-employee director" as such term is defined in Rule 16b-3 promulgated under the Exchange Act and is an "independent director" as such term is defined in Nasdaq Marketplace Rule 5605(a)(2).

The Committee considers the results of the shareholder advisory say-on-pay vote in its deliberations regarding compensation of the named executive officers. At the Company's 2023 Annual Meeting, 85.96%of shareholders who voted at the meeting voted for the approval of the compensation levels and programs provided to the named executive officers. While the shareholder vote reflected support for the Company's executive compensation, the Committee, the Board of Directors and executive management have evaluated the compensation programs each year to ensure they continue to align the interests of the executives with those of the Company's shareholders and continue to strengthen the linkage of pay to performance.

Named Executive Officers

This Compensation Discussion and Analysis section describes the Company's 2023 executive compensation programs and decisions with respect to the Company's executive officers and, in particular, each executive officer named in the Summary Compensation Table (the "named executive officers" or "NEOs"). In 2023, our named executive officers were:

Role of Compensation Consultant

The Committee retained the services of Pearl Meyer & Partners, LLC ("PM&P"), an independent executive compensation consulting firm, during 2021 to provide consulting services in connection with conducting a competitive compensation review with respect to the organization's executive management team, a larger group than the named executive officers. Management was not involved in the decision to use an outside consultant or the selection of PM&P in 2021. The Committee determined not to retain the services of an executive compensation consulting firm in 2023.

The 2021 compensation review encompassed (i) the development of a custom peer group consisting of community banks of comparable size in Virginia and contiguous states, publicly traded, with assets between $2.2 billion and $6.1 billion; (ii) an assessment of the Company's executive compensation as compared to market (similar executives in the peer group); (iii) a high level assessment of the Company's performance relative to peers; and (iv) establishing a basis for discussing potential pay or other compensation changes in future periods.

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The 2021 custom peer group of comparable community banks consisted of the following institutions:

The PM&P review in 2021 determined that overall base salaries provided to executive management approximated 98% of the market median and were competitive with the market. The review further determined that total direct compensation (total cash plus equity awards) approximated 84% of the market median and were again competitive with the market within a tolerance. The Board of Directors, the Committee, and the Chief Executive Officer considered this information as part of their decision-making process on current executive compensation levels.

During 2021, PM&P reported directly to the Committee and did not provide any other services to the Company. In 2019, the Corporate Governance and Nominating Committee also engaged PM&P to provide a peer comparison of director compensation. In 2021, the Committee analyzed whether the work of PM&P raised any conflicts of interest, taking into consideration the following factors, among others: (i) the provision of other services to the Company by PM&P; (ii) the amount of fees from the Company paid to PM&P as a percentage of PM&P's total revenues; (iii) PM&P's policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of PM&P or the individual compensation advisors employed by PM&P with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Committee; and (vi) any stock of the Company owned by PM&P or the individual compensation advisors employed by PM&P. The Committee determined, based on its analysis of the above factors, among others, that the work of PM&P and the individual compensation advisors employed by PM&P as compensation consultants or advisors to the Company did not create any conflicts of interest.

Salary

The base salary of each named executive officer is designed to be competitive with that of the Company's peer banks and bank holding companies. In establishing the base salaries for the named executive officers in 2023, the Committee and Board relied upon an evaluation of each officer's level of responsibility and performance. In establishing the base salary for the executive officers other than the Chief Executive Officer, the Committee also received and took into account the individual compensation recommendations of the Chief Executive Officer. In executive session, the independent directors collectively evaluated the performance of the Chief Executive Officer and considered whether his performance benefited the Company's shareholders. The Chair of the Committee met with the Chief Executive Officer to review the results of the evaluation after the Committee's discussion. The 2023 salary of the Chief Executive Officer was ultimately reviewed, discussed, and approved by the independent members of the Board of Directors in executive session, upon recommendation of the Committee.

Performance Compensation and Bonus Program

Pursuant to the terms of the incentive program established for the Company's named executive officers, the officers had the opportunity to earn incentive payments for 2023 performance, with the targeted payout for the Chief Executive Officer initially set at amount equal to 60% of his base salary, and the targeted payout for each of the other named executive officers initially set at an amount equal to 50% of their respective base salaries. For 2023, for the Chief Executive Officer and each of the other named executive officers targeted incentive payment was based primarily on the achievement of a singular corporate goal of core earnings per share ("Core EPS"), defined as net income per diluted share, per generally accepted accounting principles, less the impact of fair value and merger related adjustments. The achievement of certain individual non-financial operational goals was also considered. Incentive payments are normally made in a combination of cash and restricted stock grants, with the percentage mix established by the Committee in its sole discretion. The participants have the option of taking a larger percentage of the bonus payment in restricted stock and less in cash.

During mid - 2023, given the economic headwinds associated with rapidly increasing interest rates, inflation and the pending merger with Atlantic Union, the Committee elected to reset both the financial targets and payout ratios for then named executive officers based on a revised forecast for the remainder of the year. The targeted payout for the Chief Executive Officer was reduced to an amount equal to 30% of his base salary, and the targeted payout for each of the other named executive officers initially was reduced to an amount equal to 22.5% of their respective base salaries.

The financial target and thresholds to activate incentive compensation payments for 2023 performance are outlined below:

The actual calculated Core EPS for 2023 was $2.70 per share. The Committee elected to pay at the maximum threshold for 2023 in recognition of the team's efforts including the pending merger with Atlantic Union.

For the Chief Executive Officer, the revised targeted Core EPS of $2.74 would have resulted in eligibility for a $162,000 incentive compensation payment, in a combination of cash and restricted stock grants. The minimum threshold to receive an incentive payment (Core EPS of $2.63) would have resulted in a $80,871 payment eligibility, and the maximum threshold (Core EPS of $2.83) would have resulted in a $243,000 payment eligibility. As discussed above, the payout was approved at the maximum threshold, resulting in a total incentive payment to the Chief Executive Officer of 40.5% of his base salary, or $243,000, paid in cash.

For each of the named executive officers other than the Chief Executive Officer, the revised targeted Core EPS of $2.74 would have resulted in a target incentive payment equal to 22.5% of the respective base salaries for Messrs. Farrar, Martin Jung, and Ms. Joyce. The target payment would have decreased or increased proportionately if Core EPS was either less than the target to a minimum Core EPS of $2.63 or more than the target to a maximum of Core EPS of $2.83. The revised maximum incentive payment eligibility, in combination of cash and restricted stock grants, for 2023 was 33.75% of base salary for Messrs. Farrar, Martin, Jung, and Ms. Joyce.

As discussed above, the Committee approved a payout at the maximum threshold for incentive payment eligibility under the program. Accordingly, Messrs. Farrar, Martin, Jung, and Ms. Joyce received cash payments of $128,996, $118,058, $104,288, and $115,172, respectively in cash payments.

Beginning in 2015, certain named executive officers became eligible to participate in a voluntary, nonqualified deferred compensation plan pursuant to which the officers may defer any portion of their annual cash incentive payments. The only eligible executive officer for 2023 was Mr. Jeffrey Haley. In addition, the Company may make discretionary cash bonus contributions to the deferred compensation plan. Such contributions, if any, are made on an annual basis after the Committee assesses the performance of each of the named executive officers and the Company during the most recently completed fiscal year. The goal of the Committee is to award such discretionary bonus payments commensurate with the officer's performance during such year.

In the opinion of the Committee and the Board of Directors, the Company's compensation practices do not encourage excessive or inappropriate risk taking and are not reasonably likely to have a material adverse effect on the Company, but rather will have a positive effect on the Company.

Equity Compensation Plan

The Company maintains the American National Bankshares Inc. 2018 Equity Compensation Plan ("2018 Plan"), which was designed to attract and retain qualified key personnel, provide employees with a proprietary interest in the Company as an incentive to contribute to the success of the Company, and reward employees for outstanding performance and the attainment of goals. The 2018 Plan was adopted by the Board of Directors of the Company on February 20, 2018, approved by the shareholders on May 15, 2018 at the Company's 2018 Annual Meeting and expires on February 19, 2028. The 2018 Plan provides for the granting of restricted stock awards, incentive and non-statutory stock options, restricted stock units and other stock-based awards to employees and directors, at the discretion of the Board or a Board designated committee. The 2018 Plan prohibits the payment of dividends or similar distributions on awards, whether subject to time-based or performance-based vesting, unless and until the vesting requirements have been met, and prohibits share recycling. The 2018 Plan authorizes the issuance of up to 675,000 shares of common stock and replaced the Company's 2008 Stock Incentive Plan ("2008 Plan") that expired February 18, 2018. As of December 31, 2023, of the 675,000 shares authorized, 477,691 shares were available for granting purposes under the 2018 Plan.

The 2018 Plan is administered by the Committee. Under the 2018 Plan, the Committee determines which employees will be granted restricted stock awards, other stock-based awards and options, whether such options will be incentive or non-statutory options, the number of shares subject to each option, whether such options will be exercised by delivering other shares of common stock, and when such options become vested and exercisable. In general, the per share exercise price of an incentive stock option must be at least equal to the fair market value of a share of common stock on the date the option is granted. Restricted stock is granted under terms and conditions established by the Committee.

Stock options become vested and exercisable in the manner specified by the Committee. Each stock option or portion thereof is exercisable at any time on or after it vests and is exercisable until ten years after its date of grant. No stock options can be backdated or repriced. As of December 31, 2023, there were no options outstanding or awarded under the 2018 Plan.

The Company from time-to-time grants shares of restricted stock under the 2018 Plan to key employees and non-employee directors. The Company believes the awards help align the interests of these employees and directors with the interests of the shareholders of the Company by providing economic value directly related to increases in the value of the Company's common stock. The value of the stock awarded is based on the fair market value of the Company's common stock at the time of the grant, which is the closing price of the stock on the Nasdaq Global Select Market on the grant date. The Company recognizes expense, equal to the total value of such awards, proportionately over the vesting period of the stock grants.

The time-based grants of restricted stock do not have performance conditions that must be satisfied in order for the shares to be earned and vest at 36 months after the award date, contingent on continuous service though the applicable vesting date. On January 17, 2023, the Company awarded an aggregate of 32,554 shares of restricted stock to the named executive officers and 19 other key employees of the Bank.

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Unvested restricted stock for the year ended December 31, 2023 is summarized in the following table.

As of December 31, 2023, total unrecognized compensation cost related to unvested restricted stock granted under the 2008 Plan and the 2018 Plan amounted to $1.2 million. This cost is expected to be recognized over the next 12 to 36 months.

Retirement Plan

Through December 31, 2009, the Company's retirement plan was a non-contributory defined benefit pension plan that covered all full-time employees of the Company who were 21 years of age or older and who had at least one year of service. Advanced funding of the plan was accomplished by using the actuarial cost method known as the "collective aggregate cost method."

The plan was closed to new participants at December 31, 2009. On that date, the Company converted the plan to a cash balance plan. Participant balances at that date reflected the net present value of the plan's then existing obligation to the participants. Beginning January 1, 2010, participants earn income each year based on the ten-year U.S. Treasury note yield established at December 31 of the prior year, subject to certain adjustments. The Plan notified participants of the intent to apply for Internal Revenue Service approval to terminate the Pension Plan. Final determination can take 12-24 months for the projected benefit payments. Total projected payments of $3.5 million are estimated to be disbursed in 2024.

401(k) Employee Savings Plan

The Company sponsors a 401(k) Employee Savings Plan in which all full-time employees (age 21 and older) are eligible to participate. The Company matches 100% of employee contributions on the first 3% of earned compensation and 50% of employee contributions of the second 3% of earned compensation. Perquisites received by executive officers are not included as earned compensation under this plan. The Company's contributions are not subject to a vesting schedule.

Perquisites

Due to the geographic size of the Company's market area, in 2023 the Company provided the Chief Executive Officer with an automobile and reimbursed him for the cost of fuel and maintenance for the vehicle other than the estimated amount of personal use of the vehicle. In 2024, such arrangement will continue. There is no tax gross-up provided by the Company for any employee perquisites.

Other Benefit Plans

Executive officers participate in the Company's benefit plans on the same terms as other employees. These plans include medical, dental, life, and disability insurance. The Company provides life insurance coverage equal to four times the employee's salary for all eligible employees. Coverage in excess of $50,000 is subject to taxation paid by the employee based on Internal Revenue Service guidelines.

Executive Employment Agreements and Change in Control Arrangements

The Company recognizes that, as a publicly held financial services company, it is imperative that it maintain stability and continuity in its executive management positions. The Company also understands that the possibility of a change in control of the Company exists. In order to protect the interests of the shareholders and the Company, to promote continuity in the event of a change in control and to minimize uncertainty among executive management, the Company and its executive officers have entered into employment agreements that contain severance arrangements in connection with a change in control of the Company. All named executive officers currently have operative employment agreements, a summary of which is provided below.

On March 1, 2022, the Company and the Bank entered into separate amended and restated employment agreements, effective as of January 1, 2022, with each of Messrs. Jeffrey Haley, Farrar, and Martin that superseded and replaced their prior employment agreements that were in place until January 1, 2022. On January 1, 2022, the Bank and Ms. Joyce entered into an amended and restated employment agreement, effective as of January 1, 2022, that superseded and replaced her prior employment agreement that was in place until January 1, 2022. On March 1, 2022, the Bank also entered into an employment agreement with Mr. Jung, effective as of January 1, 2022.

Mr. Jeffrey Haley's agreement has an initial term of three years from its effective date, January 1, 2022, and expires on December 31, 2024, provided that on and after January 1, 2023, the term of the agreement will be automatically extended on a daily basis by one day so that there will always be at least two years remaining in the term of the agreement upon such extension. Each agreement for Messrs. Farrar, Martin, and Jung, and Ms. Joyce has an initial term of two years from its effective date, January 1, 2022, and expires on December 31, 2023, provided that on and after January 1, 2023, the term of the agreement will be automatically extended on a daily basis by one day so that there will always be at least one year remaining in the term of the agreement upon such extension. The Company may give each of the officers notice of nonrenewal of their respective agreements at any time on or after January 1, 2023, and Mr. Jeffrey Haley's agreement will terminate two years after the date of such notice and Messrs. Farrar, Martin, and Jung, and Ms. Joyce's agreements will terminate one year after the date of such notice. Each of the agreements automatically terminate on the first day of the month immediately following the month in which the officer turns 67.

The agreements provide that Messrs. Jeffrey Haley, Farrar, Martin, and Jung, and Ms. Joyce are entitled to receive annual base salaries of not less than $575,000, $364,000, $330,000, $300,000, and $325,000, respectively, which will be reviewed annually by the Committee or the Board of Directors. In addition, each officer is entitled to cash bonuses and equity-based awards in such amounts as may be determined by the Committee or Board of Directors in accordance with the terms and conditions of the applicable short-term and long-term cash and equity incentive plans of the Company. Any incentive-based compensation or award that an officer receives is subject to clawback by the Company as may be required by applicable law or, if applicable, any stock exchange listing requirement and on such basis as the Company determines. Each officer is expected to maintain a level of share ownership of the Company's common stock in accordance with guidelines established by the Company.

Pursuant to the agreement for each officer, if the Company terminates the officer's employment without "Cause" or if the officer terminates his or her employment for "Good Reason" (each as defined in the agreement), the Company will pay the officer any accrued but unpaid salary, bonus and benefits to which the officer is entitled as of the date of termination. In addition, subject to the officer's execution and non-revocation of a general release of claims, the Company will make a lump sum payment to the officer in an amount equal to the product of (x) the officer's "Total Annual Compensation" divided by 12 times (y) the number of months remaining between the date of termination and the last day of the then-current term of the agreement, including pro-rated credit for any partial month. As defined in the agreement for each officer, "Total Annual Compensation" means the sum of: (1) the officer's base salary in effect on the date of termination; (2) the greater of the officer's maximum annual bonus opportunity for the year in which the officer's employment terminates and the annual bonus earned for the most recently completed calendar year; (3) the grant date value of any equity awards granted to the officer over the 12 months immediately prior to the date of termination (the "prior 12 months"); (4) any tax-qualified or non-tax qualified plan contributions or allocations made on the officer's behalf over the prior 12 months; and (5) the value of any perquisites and other benefits, including the employer portion of benefit premiums, paid or made available to the officer or on the officer's behalf over the prior 12 months. Upon termination of employment under the above-described circumstances, Mr. Jeffrey Haley will be subject to certain non-competition and non-solicitation restrictions for 12 months, and Messrs. Farrar, Martin and Jung, and Ms. Joyce will be subject to certain non-competition restrictions for 6 months and non-solicitation restrictions for 12 months.

The agreements include a double-trigger severance structure in the event of a "Change in Control" of the Company (as defined in the agreements). If a Change in Control occurs and Mr. Jeffrey Haley's employment is terminated by him for Good Reason or by the Company on account of its failure to renew the agreement or without Cause, in each case within 24 months following the Change in Control, he will be entitled to receive, subject to his execution and non-revocation of a general release of claims, a lump sum payment equal to the sum of: (1) any earned but unpaid incentive or bonus compensation with respect to any completed calendar year; (2) a pro-rated cash bonus amount based on his prior year's cash bonus amount; (3) any other benefits or awards which, pursuant to the terms of any plans, policies or programs of the Company, have been earned or become payable but which have not been paid; and (4) an amount equal to either (A) 2.99 times Mr. Haley's Total Annual Compensation, or (B) if his employment terminates between his 65th birthday and the date he attains his U.S. Social Security Administration ("Social Security") normal retirement age, the product of (x) his Total Annual Compensation divided by 12 times (y) the number of months remaining between the date of termination and the date he attains his Social Security normal retirement age.

If a Change in Control of the Company occurs and Mr. Farrar's, Mr. Martin's, Ms. Joyce's, or Mr. Jung's employment is terminated by him or her for Good Reason or by the Company on account of its failure to renew the agreement or without Cause, in each case within 24 months following the Change in Control, the officer will be entitled to receive, subject to execution of a general release of claims, a lump sum payment equal to the sum of: (1) any earned but unpaid incentive or bonus compensation with respect to any completed calendar year; (2) a pro-rated cash bonus amount based on the officer's prior year's cash bonus amount; (3) any other benefits or awards which, pursuant to the terms of any plans, policies or programs of the Company, have been earned or become payable but which have not been paid to the officer; and (4) an amount equal to the product of (x) the officer's Total Annual Compensation divided by 12 times (y) the lesser of 24 or the number of months remaining between the date of termination and the date the officer attains his or her Social Security normal retirement age.

For the purposes of calculating each officer's Total Annual Compensation in connection with a Change in Control termination, the base salary used will be that in effect on the date of termination of employment or, if higher, immediately prior to the Change in Control, and the term "prior 12 months" will refer to such period immediately before the date of the Change in Control. Each agreement also provides that the severance payments and benefits to which the officer may be entitled in connection with a Change in Control will be reduced to the amount that does not trigger the excise tax under Section 4999 of the Internal Revenue Code of 1986. No reduction, however, will be made and the officer will be responsible for all excise and other taxes if his or her after-tax position with no cutback exceeds his or her after-tax position with a cutback by more than 5%.

On December 22, 2023, the Company and/or the Bank, as applicable. entered into amendments to the agreements with all of the named executive officers. Such amendments were made in contemplation of the Company's proposed merger with Atlantic Union. Pursuant to the amendments, the Company or the Bank, as applicable, made lump sum cash payments to each officer on or before December 31, 2023 (the "Change in Control Payments"), which payments are intended to offset any future payment to which the officer is expected to become entitled, in connection with the effectiveness of the merger with Atlantic Union. The Change in Control Payments were as follows: Mr. Haley, $2,648,351, Mr. Farrar, $702,205, Mr. Martin, $746,865, Ms. Joyce, $525,468, and Mr. Jung, $386,790. Each officer has agreed to repay the net after-tax portion of the Change in Control Payments (the "Repayment Amount") if: (i) the officer's employment is terminated by the Company or the Bank, as applicable, for "Cause" or due to resignation without "Good Reason" (as such terms are defined in the employment agreements) prior to the effectiveness of the merger; (ii) the officer does not execute, or the officer revokes, an applicable release of claims (which release shall be in a form acceptable to Atlantic Union); (iii) the merger is not completed; or (iv) the officer's employment is terminated by the Company or the Bank, as applicable, without Cause or due to resignation with Good Reason prior to the effectiveness of the merger; provided, that if the officer is required to repay due to clause (iv) and the officer executes, without revoking, an applicable release of claims, the Repayment Amount will be reduced by an amount equal to the difference, if any, between the net after-tax portion of the Change in Control Payment and the net after-tax portion of the severance benefits the officer would have received in the event of a termination of employment not involving a change in control.

Tax and Accounting Considerations

The Company's practice is to expense salary, bonus and incentive compensation, and benefit costs as they are incurred for tax and accounting purposes. Salary, bonus and incentive compensation, and some benefit payments are taxable to the recipient as ordinary income. The tax and accounting treatment of the various elements of compensation is not a major factor in the Company's decision making with respect to executive compensation. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible. The Company did not have any nondeductible compensation in 2023.

Security Ownership Guidelines and Hedging of Securities

Stock ownership guidance is in effect for executive officers of the Company. The target for the Chief Executive Officer is stock ownership equal to at least three times his current base salary, and the target for each Executive Vice President is stock ownership equal to at least two times current base salary. No formal deadline has been set for compliance with these guideline targets. However, the Committee and the Board of Directors have adopted a requirement that, except for sales for tax payments upon vesting, grants of restricted stock to an executive officer be held by the officer (a) until fully vested and (b) until and for so long as the officer has achieved the minimum ownership guidelines set by the Company.

The Company does not have any practices or policies regarding the ability of employees or directors to engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company's common stock (including prepaid variable forward contracts, short sales, equity swaps, puts, collars, exchange funds, or similar transactions).

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Clawback Policy

The Board of Directors has approved a Clawback Policy designed to comply with Rule 10D-1 under the Exchange Act, and the listing standards of the Nasdaq Stock Market, which allows the Company to recoup from named executive officers any portion of incentive-based compensation (cash, incentive/bonus awards and all forms of equity based compensation) as the Board deems appropriate if it is determined that such officer engaged in fraud, willful misconduct, or violation of Company or Bank policy that caused or otherwise contributed to the need for a material restatement of the Company's financial results. Recommendations to recover any portion of incentive-based compensation will be presented to the Board by the Committee after review of all relevant facts and circumstances.

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COMPENSATION TABLES

Summary Compensation Table

The following table reflects total compensation paid to or earned by the Company's named executive officers for the years presented.

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All Other Compensation Table

Grants of Plan-Based Awards in 2023

The following table provides information on the restricted stock awards granted to the named executive officers during the year ended December 31, 2023. There were no stock options granted in 2023.

Outstanding Equity Awards at Fiscal Year-End

The following table reflects the outstanding stock awards as of December 31, 2023 for the named executive officers. All restricted stock awards were granted at fair market value at the grant date and vest at 36 months after the date of grant, contingent on continuous service through the applicable vesting date. There were no stock options outstanding as of December 31, 2023 for the named executive officers.

Option Exercises and Stock Vested

The following table reflects shares acquired upon the vesting of restricted stock awards in 2023 by the named executive officers and the value realized on vesting. None of the named executive officers holds any outstanding stock options.

Pension Benefits

The following table reflects the actuarial present value of the named executive officers' accumulated benefits under the Company's former pension plan and the number of years of service earned and credited under the plan as of December 31, 2009, which was the final year of the plan.

Nonqualified Deferred Compensation

The executive officers of the Company are entitled to participate in the American National Bank & Trust Company Deferred Compensation Plan. Pursuant to the Deferred Compensation Plan, eligible employees can defer up to 100% of base salary or annual cash bonus or both, on an annual basis. Deferral elections are made by eligible executives in December of each year for amounts to be earned in the following year. The plan is administered through the Virginia Bankers Association.

The Company has the option to make a discretionary cash bonus contribution to the account of each eligible executive officer on an annual basis. Such contribution, if any, is made after the Human Resources and Compensation Committee assesses the performance of the officer and the Company with respect to the most recently completed fiscal year. The Company made discretionary contributions to the plan account of Mr. Jeffrey Haley in 2023 related to the Company's operational performance and financial results for 2023 as outlined below.

Amounts deferred under the plan are payable beginning on the first day of the calendar quarter following a distributable event. A distributable event includes termination of employment or normal retirement. Distributions can be received either as a lump-sum payment or in monthly or annual installments over a period of not more than 20 years.

The following table provides certain information on nonqualified deferred compensation contributions by the Company and the eligible named executive officers, as well as earnings or losses on such compensation, with respect to the named executive officers for 2023.

Potential Payments upon Termination or Change in Control

If a change in control of the Company had occurred on December 31, 2023, and the named executive officers were terminated on that same date, the compensation and benefits that would be payable to each of the named executive officers under the terms of their employment agreements in effect on December 31, 2023 are identified in the following table. See "Compensation Discussion and Analysis - Executive Employment Agreements and Change in Control Arrangements." The amounts reflected in the following table are estimates, as the actual amounts to be paid to or received by a named executive officer can only be determined at the time of termination or change in control.

CEO Pay Ratio

As required by SEC regulations, the Company is providing the following information about the relationship of the annual total compensation of its median employee and the annual total compensation of its Chief Executive Officer.

For 2023, the median of the annual total compensation of all employees of the Company, excluding the Chief Executive Officer, was $68,173 and the annual total compensation of the Chief Executive Officer was $3,806,295 as reflected in the Summary Compensation Table. Based on this information, for 2023, the ratio of the annual total compensation of the Chief Executive Officer to the median of the annual total compensation of all employees was 55 to 1.

To determine the median of the annual total compensation of all employees of the Company, excluding the Chief Executive Officer, the Company identified its total employee population as of December 31, 2023, which consisted of 352 employees. To identify the median employee, the Company conducted a full analysis of this employee population, without the use of statistical sampling. The median employee was determined using "total compensation" for the full year 2023. "Total compensation" consisted of gross wages which included base wages, bonus, paid time off, and overtime plus Company provided benefits. Gross wages were annualized for employees who were not employed for the full year in 2023. The Company then calculated the annual total compensation of the median employee using the same methodology used in calculating the annual total compensation of the Chief Executive Officer.

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Pay versus Performance

As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. Compensation Actually Paid ("CAP") is calculated in accordance with SEC rules and does not reflect the actual amount of compensation earned or paid during the applicable year. For information concerning the Company's pay for performance philosophy and how the Company aligns executive compensation with the Company's performance, refer to our "Compensation Discussion and Analysis."

Pay versus Performance Table

The following table reports the (i) total compensation for the Company's principal executive officer ("PEO") and, on average, for the other NEOs for the past four fiscal years as shown in the Summary Compensation Table, (ii) the CAP for the PEO and, on average, for the other NEOs, (iii) the Company's total shareholder return ("TSR") and the TSR of the selected peer group (the S&P US SmallCap Banks Index) over a four-year period, (iv) the Company's net income, and (v) core earnings per share, defined as net income per diluted share less the impact of fair value and merger related adjustments and earnings associated with the U.S. Small Business Administration's Paycheck Protection Program ("PPP"), which represents the Company's selected measure for aligning performance and compensation.

																		Value of Initial Fixed $100 Investment on: 12/31/2019
Year		Summary Compensation Table Total for PEO (1)			Compensation Actually Paid to PEO (2)			Average Summary Compensation Table Total for Non-PEO NEOs (1)			Average Compensation Actually Paid to Non-PEO NEOs (2)			Total Shareholder Return (3)			Peer Group Total Shareholder Return (4)			Net Income (in millions)			Core EPS (less PPP) (5)
2023		$	3,806,295			$	4,056,898			$	1,170,811			$	1,290,778			$	141.45			$	107.99			$	26.16			$	2.70
2022		$	1,082,098			$	1,077,764			$	523,305			$	520,550			$	103.51			$	107.95			$	34.43			$	3.17
2021		$	1,002,451			$	1,123,925			$	468,054			$	513,444			$	102.34			$	119.79			$	43.53			$	3.00
2020		$	754,799			$	579,539			$	398,606			$	354,370			$	68.98			$	89.23			$	30.05			$	2.10

Calculation of Compensation Actually Paid ("CPT")

To calculate CAP for our PEO and the other NEOs in the table above according to SEC reporting rules, the following adjustments were made to Total Compensation as reported in the Summary Compensation Table for each covered year.

Performance Measures

The following table identifies the most important financial measures used by the Human Resources & Compensation Committee to link CAP for the PEO and other NEOs in 2023, calculated in accordance with SEC regulations, to Company performance. Core EPS was used in determining payouts under the Company's annual incentive program discussed in the Compensation Discussion and Analysis.

Pay versus Performance Graphs

In accordance with SEC reporting rules, we have prepared the following graphs which overlay the following performance results with CAP:

Director Compensation

During 2023, directors of the Company received their quarterly retainer in the form of restricted stock with a market value of $10,000. These shares were paid quarterly. The attendance fee for each committee meeting was $1,000 in cash or restricted stock with a market value of $1,000, also paid quarterly. In addition, the chairs of the five standing board committees of the Company, the Chair of the Bank's Trust Committee, and the Chair of the Subcommittee on Technology and Information Security received annual retainers in 2023 of $4,000 in cash or shares of restricted stock with a market value of $4,000.

During 2012, the Board approved an unfunded, nonqualified deferred compensation plan within the meaning of Section 409A of the Internal Revenue Code. This plan granted outside directors the option to defer cash or restricted stock compensation. Amounts deferred were credited to a bookkeeping reserve account maintained by the Company. Such reserve accounts rise and fall with the value of the underlying restricted stock held and any dividends are reinvested in Company stock. Amounts credited to the participant's account will be payable in lump sum in Company stock on the first business day following the 30^th day after the director's separation of service. Three of the current outside directors elected this option in prior years. Beginning in 2019, this option is no longer available for deferral of future fees.

Effective January 1, 2018, Board policy requires the directors to maintain ownership of a minimum aggregate market value of $250,000 with respect to shares received for service on the Board. Additional shares may be sold as long as the director maintains the required minimum market value amount. Dividends paid on the shares may be reinvested or not, at the option of the director. The purpose of the stock for fees payment option described above is to encourage greater equity ownership in the Company and, thereby, further align the interests of each director with the interests of the shareholders at large. The Board of Directors sets the retainer and attendance fee based upon recommendation from the Corporate Governance and Nominating Committee. In making its recommendation, the Committee reviews the director compensation of peer banks and received a comparison of peer bank compensation for directors provided by PM&P. There is no tax gross-up provided by the Company for any director compensation. Non-employee directors living outside the Danville, Virginia area are reimbursed for meeting-related travel and lodging expenses. Non-employee directors were excluded from the Company's retirement plan and, therefore, do not qualify for pension benefits. Directors who are employees of the Company do not receive any director compensation.

Mr. Majors, who retired as Chair of the Company and Bank effective with the annual meeting in May 2023, received director fees of $80,000 in 2023. Mr. Majors did not receive any employee compensation, restricted stock, or the other fees customarily paid to the directors.

The following table reflects the director compensation earned or paid during 2023.

Deferred Compensation for Former Chair and Chief Executive Officer

The Bank entered into a deferred compensation agreement with Charles H. Majors, the Company's former Chair and Chief Executive Officer, initially as of February 22, 1993, and most recently amended and restated as of December 31, 2008. The agreement, which was entered into in connection with Mr. Majors' employment with the Bank, requires an annual payment of $50,000 for a period of ten years to Mr. Majors or his designated beneficiary, commencing within three months of his termination of employment or death, whichever occurs first. The amount of the payment is fixed and the funds for payment are not established in an account that allows for additional contributions or earnings growth. Mr. Majors is an unsecured creditor for the payments under this agreement. Payments under this agreement are independent of, and in addition to, those under any other plan, program, or agreement between Mr. Majors and the Company or the Bank. Mr. Majors received his first payment on July 1, 2015.

Compensation Committee Interlocks and Insider Participation

No member of the Human Resources and Compensation Committee or executive officer of the Company has a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The table below includes information on all shareholders of the Company known to management to beneficially own 5% or more of the Company's common stock.

The following table sets forth, as of February 28, 2024, the beneficial ownership of the Company's common stock by all directors and all executive officers of the Company named in the Summary Compensation Table, and all current directors and executive officers of the Company as a group.

The following table summarizes information, as of December 31, 2023, relating to the Company's equity based compensation plans, pursuant to which grants of options to acquire shares of common stock have been and may be granted from time to time.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Board Independence

The Company's Board of Directors has determined that, except for Mr. Jeffrey Haley, each director is independent within the director independence standards of the Nasdaq as currently in effect, and within the Company's director independence standards, as established and monitored by the Company's Corporate Governance and Nominating Committee.

Michael P. Haley is not related to Jeffrey V. Haley, President and Chief Executive Officer of the Company and the Bank. In order to avoid any confusion, Michael P. Haley will be referred to as Michael Haley and Jeffrey V. Haley will be referred to as Jeffrey Haley herein.

Related Party Transactions

In the ordinary course of its business, the Bank makes loans to, accepts deposits from, and provides other banking services to, certain directors and executive officers of the Company, their associates, and members of their immediate families. Loans are made on substantially the same terms, including interest rates, collateral and repayment terms, as those prevailing at the time for comparable loans with persons not affiliated with the Bank, and do not involve more than the normal risk of collectability or present other unfavorable features. Such loans are processed through the Bank's normal credit approval procedures, but ultimate approval authority rests with the Board of Directors of the Bank. Rates paid on deposits and fees charged for other banking services and other terms of these transactions, are also the same as those prevailing at the time for comparable transactions with persons not affiliated with the Bank. The Bank expects to continue to enter into transactions in the ordinary course of business on similar terms with the directors, officers, principal shareholders, their associates, and members of their immediate families.

From time to time the Company may also enter into other types of business transactions or arrangements for services with the Company's directors, officers, principal shareholders or their associates. These types of transactions or services might include, among others, purchases of equipment or provision of legal services. The Company will only enter into such arrangements if it is determined that the prices or rates offered are comparable to those available to the Company from unaffiliated third parties. Management approves such transactions on a case-by-case basis. The Company does not have written policies or procedures with respect to such approvals. As of December 31, 2023, the Company has no such reportable transactions.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee pre-approves all audits, audit-related, and tax services on an annual basis, and, in addition, authorizes individual engagements that exceed pre-established thresholds. Any additional engagement that falls below the pre-established thresholds must be reported by management at the Audit Committee meeting immediately following the initiation of such an engagement.

The Audit Committee of the Board of Directors of the Company annually considers the selection of the Company's independent public accountants. On March 13, 2023, the Audit Committee appointed Yount, Hyde and Barbour, P.C. to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2023. Yount, Hyde and Barbour, P.C. has served as the Company's independent public accountants since May 2002.

Fees to Independent Registered Public Accounting Firm for Fiscal Years 2023 and 2022

Yount, Hyde and Barbour, P.C. audited the consolidated financial statements included in the Company's Annual Reports on Form 10-K for the years ended December 31, 2023 and 2022; reviewed the Company's quarterly reports on Form 10-Q during the years ended December 31, 2023 and 2022; and audited management's assessment of internal control over financial reporting as of December 31, 2023 and 2022. The following table presents aggregate fees paid or to be paid by the Company and the Bank for professional services rendered by Yount, Hyde and Barbour, P.C. for the years ended December 31, 2023 and 2022.

Audit-related fees are for pre-approved consultation concerning financial accounting and report and performing a Housing and Urban Development (HUD) audit. Tax fees are for the preparation of the annual consolidated federal and state income tax returns.

PART IV

ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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