ATLO Ames National Corporation

Iowa	0-32637	42-1039071
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	ATLO	NASDAQ Capital Market

	Exhibit No.	Description
	99.1	News Release dated October 20, 2023
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	AMES NATIONAL CORPORATION
Date: October 20, 2023	By:	/s/ John P. Nelson
	John P. Nelson, Chief Executive Officer and President
	Principal Executive Officer

 

EXHIBIT 99.1

 

NEWS RELEASE		CONTACT:	JOHN P. NELSON
FOR IMMEDIATE RELEASE			CEO AND PRESIDENT
			(515) 232-6251
OCTOBER 20, 2023

                                                                

 

AMES NATIONAL CORPORATION

ANNOUNCES EARNINGS FOR THE THIRD QUARTER OF 2023

 

Ames, Iowa – Ames National Corporation (Nasdaq: ATLO; the “Company”) today reported net income for the third quarter of 2023 of $2.9 million, or $0.33 per share, compared to $5.5 million, or $0.62 per share, earned in the third quarter of 2022. For the nine months ended September 30, 2023, net income for the Company totaled $8.7 million or $0.97 per share, compared to $14.9 million or $1.64 per share earned in 2022. The decrease in earnings is primarily the result of higher interest expense on deposits and other borrowed funds, offset in part by an increase in interest income on loans. The higher interest expense on deposits is due to an increase in market rates. Since March 1, 2022, The Federal Open Market Committee has increased its target for the federal funds interest rate by 5.25%. The increase in interest income on loans was primarily due to higher rates and growth in the loan portfolio.

 

 

INCOME STATEMENT HIGHLIGHTS (unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
Net income (in thousands)		$	2,924			$	5,543			$	8,678			$	14,881
Earnings per share - basic and diluted		$	0.33			$	0.62			$	0.97			$	1.64
Return on average assets			0.55	%			1.05	%			0.54	%			0.93	%
Return on average equity			7.60	%			13.65	%			7.47	%			11.15	%
Efficiency ratio			75.12	%			59.48	%			74.27	%			60.24	%
Net interest margin			2.11	%			2.71	%			2.21	%			2.63	%

 

 

COMPANY STOCK HIGHLIGHTS (unaudited)

 

		As of or for the three months ended
		September 30,
Company Stock (ATLO)		2023
Closing price			$16.59
Price range		$16.38	-	$20.32
Book value per common share			16.31
Cash dividend declared			0.27
Dividend yield			6.51

 

BALANCE SHEET HIGHLIGHTS (unaudited)

 

		September 30,
(Dollars in thousands)		2023				2022
Assets		$	2,154,051			$	2,086,939
Loans receivable, net			1,231,893				1,175,247
Deposits			1,828,681				1,873,011
Stockholders' equity			146,640				137,271
Capital ratio			6.81	%			6.58	%

 

 

Third quarter 2023 Results:

 

Third quarter 2023 loan interest income was $2.9 million higher than third quarter 2022 and was primarily due to higher average interest rates and growth in the loan portfolio. Deposit interest expense increased $4.7 million during this same period due primarily to an increase in market interest rates. Third quarter 2023 net interest income totaled $10.7 million, a decrease of $3.0 million, or 21.8%, compared to the same quarter a year ago. The Company’s net interest margin was 2.11% for the quarter ended September 30, 2023 as compared to 2.71% for the quarter ended September 30, 2022. The net interest margin was 2.20% for the quarter ended June 30, 2023. The decrease in net interest margin was primarily due to an increase in market interest rates on deposits in excess of rate increases on interest-earning assets.

 

A credit loss benefit of ($274) thousand was recognized in the third quarter of 2023 as compared to a credit loss benefit of ($520) thousand in the third quarter of 2022. Net loan recoveries totaled $4 thousand for the quarter ended September 30, 2023 compared to net loan charge-offs of $3 thousand for the quarter ended September 30, 2022.

 

Noninterest income for the third quarter of 2023 totaled $2.4 million as compared to $2.3 million in the third quarter of 2022, an increase of 3%.

 

Noninterest expense for the third quarter of 2023 totaled $9.8 million compared to $9.5 million recorded in the third quarter of 2022, an increase of 3%. The increase is primarily due to higher FDIC assessments and normal increases in salaries and benefits. The efficiency ratio was 75.1% for the third quarter of 2023 as compared to 59.5% in the third quarter of 2022.

 

Income tax expense for the third quarter of 2023 totaled $597 thousand compared to $1.4 million recorded in the third quarter of 2022. The effective tax rate was 17% and 21% for the quarters ended September 30, 2023 and 2022, respectively. The lower than expected tax rate in 2023 and 2022 was due primarily to tax-exempt interest income and New Markets Tax Credits.

 

 

Nine Months 2023 Results:

 

For the nine months ended September 30, 2023 loan interest income was $8.4 million higher than the first nine months of 2022. The increase is primarily due to higher average rates and growth in the loan portfolio. Taxable securities interest income was $695 thousand higher than 2022 due primarily to increased rates. Deposit interest expense increased $13.3 million during the same period due to an increase in market interest rates. The net interest income for the nine months ended September 30, 2023 totaled $33.7 million, a decrease of $6.8 million, or 16.8%, compared to the same period a year ago. The Company’s net interest margin was 2.21% for the nine months ended September 30, 2023 as compared to 2.63% for the nine months ended September 30, 2022. The decrease in net interest margin was primarily due to an increase in market interest rates on deposits in excess of rate increases on interest-earning assets.

 

A credit loss expense of $34 thousand was recognized for the nine months ended September 30, 2023 as compared to a credit loss benefit of ($706) thousand for the nine months ended September 30, 2022. Net loan charge-offs totaled $177 thousand for the nine months ended September 30, 2023 compared to net loan charge-offs of $18 thousand for the nine months ended September 30, 2022. The credit loss expense in 2023 was primarily due to charge-offs in the agriculture loan portfolio. The credit loss benefit in the third quarter of 2022 was primarily due to a reduction in specific reserves and an overall improvement in the quality of the loan portfolio.

 

Noninterest income for the nine months ended September 30, 2023 totaled $6.9 million compared to $7.2 million for the nine months ended September 30, 2022, a decrease of 4%. The decrease in noninterest income was primarily due to fewer gains on sale of residential loans held for sale as refinancing volume has slowed.

 

Noninterest expense for the nine months ended September 30, 2023 totaled $30.1 million compared to $28.7 million for the nine months ended September 30, 2022, an increase of 5%. The increase is primarily due to a wire fraud loss of $523 thousand recorded in the second quarter of 2023 and normal increases in salaries and employee benefits. The efficiency ratio was 74.3% and 60.2% for the nine months ended September 30, 2023 and 2022, respectively.

 

Income tax expense for the nine months ended September 30, 2023 and 2022 totaled $1.7 million and $4.8 million, respectively. The effective tax rate was 17% and 24% for the nine months ended September 30, 2023 and 2022, respectively. The decrease in income tax expense and higher than expected tax rate in 2022 was due to a $780 thousand adjustment to deferred taxes for the reduction in future Iowa bank franchise tax rates enacted in the second quarter of 2022. The lower than expected tax rate in 2023 was due primarily to tax-exempt interest income and New Markets Tax Credits.

 

 

Balance Sheet Review:

 

As of September 30, 2023, total assets were $2.15 billion, an increase of $67.1 million, as compared to September 30, 2022. The increase in assets is primarily due to interest-bearing deposit and loan growth funded by other borrowings. The increase was offset in part by a decrease in securities available-for-sale due primarily to maturities in the investment portfolio.

 

Securities available-for-sale as of September 30, 2023 decreased to $736.9 million from $784.0 million as of September 30, 2022. The decrease in securities available-for-sale is primarily due to maturities in excess of purchases. The Company's investment portfolio had an expected duration of 3.64 years as of September 30, 2023.

 

Net loans as of September 30, 2023 increased to $1.23 billion, as compared to $1.18 billion as of September 30, 2022. The increase was primarily due to an increase in the construction and multi-family real estate loan portfolios. Impaired loans were $14.0 million and $15.0 million as of September 30, 2023 and 2022, respectively.

 

Effective January 1, 2023, the Company adopted the Financial Instruments – Credit Losses (CECL) accounting guidance. The adoption of this guidance established a single allowance framework for all financial assets carried at amortized cost and certain off-balance sheet credit exposures. The framework requires that management’s estimate reflects credit losses over the full remaining expected life of each credit and considers expected future changes in macroeconomic conditions. The adoption resulted in the recognition on January 1, 2023 of cumulative effect adjustments of $518 thousand related to the allowance for credit losses and $273 thousand related to the liability for off-balance sheet credit exposures. The allowance for credit losses on September 30, 2023 totaled $16.1 million, or 1.29% of loans, compared to $15.9 million, or 1.34% of loans, as of September 30, 2022. The increase in the allowance for credit losses is mainly due to loan growth.

 

Deposits totaled $1.83 billion as of September 30, 2023, a decrease of 2%, compared to $1.87 billion recorded as of September 30, 2022. The decline in deposits is primarily due to decreases in savings and money market accounts, offset in part by an increase in time deposits as customers continue to seek higher interest rates. Deposit balances fluctuate as customers’ liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions.

 

Liquid assets of cash on hand, balances due from other banks and interest-bearing deposits in financial institutions for September 30, 2023 totaled $90.1 million. Other sources of liquidity available to the Banks as of September 30, 2023 include available borrowing capacity with the FHLB of $281.6 million and federal funds borrowing capacity at correspondent banks of $111.0 million. The available borrowing capacity represents 21% of total deposits.

 

The Federal Reserve Board created the Bank Term Funding Program (BTFP) in 2023, offering loans of up to one year in length to banks pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. The BTFP allows for borrowing from the Federal Reserve Bank up to the par value of the pledged collateral and will provide an additional source of liquidity. The Company had $83.3 million borrowed under the BTFP as of September 30, 2023.

 

The Company’s stockholders’ equity represented 6.8% of total assets as of September 30, 2023 with all of the Company’s six affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $146.6 million as of September 30, 2023, compared to $137.3 million as of September 30, 2022. The increase in stockholders’ equity was primarily the result of a decrease in unrealized losses on the investment portfolio and retention of net income in excess of dividends.

 

Cash Dividend Announcement

 

On August 9, 2023, the Company declared a quarterly cash dividend on common stock, payable on November 15, 2023 to stockholders of record as of November 1, 2023, equal to $0.27 per share.

 

 

About Ames National Corporation

 

Ames National Corporation affiliate Iowa banks are First National Bank, Ames; Boone Bank & Trust Co., Boone; State Bank & Trust Co., Nevada; Reliance State Bank, Story City; United Bank & Trust Co., Marshalltown; and Iowa State Savings Bank, Creston, Iowa.

 

The Private Securities Litigation Reform Act of 1995 provides the Company with the opportunity to make cautionary statements regarding forward-looking statements contained in this News Release, including forward-looking statements concerning the Company’s future performance and asset quality. Forward-looking statements contained in this News Release are not historical facts and are based on management’s current beliefs, assumptions, predictions and expectations of future events, including the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions, predictions and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to management and many of which are beyond management’s control. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, asset quality, plans and objectives may vary materially from those expressed in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on such forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “forecasts”, “continuing,” “ongoing,” “expects,” “views,” “intends” and similar words or phrases. The risks and uncertainties that may affect the Company’s future performance and asset quality include, but are not limited to, the following: national, regional and local economic conditions and the impact they may have on the Company and its customers; competitive products and pricing available in the marketplace; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for credit losses as dictated by new market conditions or regulatory requirements; changes in local, national and international economic conditions, including rising inflation rates; fiscal and monetary policies of the U.S. government; changes in governmental regulations affecting financial institutions (including regulatory fees and capital requirements); changes in prevailing interest rates; credit risk management and asset/liability management; the financial and securities markets; the availability of and cost associated with sources of liquidity; and other risks and uncertainties inherent in the Company’s business, including those discussed under the headings “Forward-Looking Statements and Business Risks” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2022. Any forward-looking statements are qualified in their entirety by the foregoing risks and uncertainties and speak only as of the date on which such statements are made. The Company undertakes no obligation to revise or update such forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)

 

		September 30,				September 30,
		2023				2022
ASSETS
Cash and due from banks		$	21,992			$	22,944
Interest-bearing deposits in financial institutions and federal funds sold			68,071				6,311
Total cash and cash equivalents			90,063				29,255
Interest-bearing time deposits			9,889				15,410
Securities available-for-sale			736,944				783,967
Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock, at cost			4,000				4,141
Loans receivable, net			1,231,893				1,175,247
Loans held for sale			428				467
Bank premises and equipment, net			21,828				18,155
Accrued income receivable			13,794				12,073
Bank-owned life insurance			3,111				3,036
Deferred income taxes, net			23,206				25,453
Other intangible assets, net			1,543				2,067
Goodwill			12,424				12,424
Other assets			4,928				5,244
Total assets		$	2,154,051			$	2,086,939
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing checking		$	371,691			$	381,137
Interest-bearing checking			616,382				621,082
Savings and money market			567,461				675,826
Time, $250 and over			74,360				34,955
Other time			198,787				160,011
Total deposits			1,828,681				1,873,011
Securities sold under agreements to repurchase			60,941				41,069
Other borrowings			105,942				27,450
Dividends payable			2,428				2,428
Accrued interest payable			3,561				319
Accrued expenses and other liabilities			5,858				5,391
Total liabilities			2,007,411				1,949,668
STOCKHOLDERS' EQUITY
Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 8,992,167 shares as of September 30, 2023 and 2022.			17,984				17,984
Additional paid-in capital			14,253				14,253
Retained earnings			180,724				177,947
Accumulated other comprehensive (loss)			(66,321	)			(72,913	)
Total stockholders' equity			146,640				137,271
Total liabilities and stockholders' equity		$	2,154,051			$	2,086,939

 

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)

(in thousands, except per share data)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
Interest and dividend income:
Loans, including fees		$	14,585			$	11,688			$	41,657			$	33,229
Securities
Taxable			3,152				3,226				9,556				8,861
Tax-exempt			549				641				1,748				1,990
Other interest and dividend income			476				250				1,484				675
Total interest and dividend income			18,762				15,805				54,445				44,755
Interest expense:
Deposits			6,518				1,847				17,214				3,921
Other borrowed funds			1,555				295				3,571				383
Total interest expense			8,073				2,142				20,785				4,304
Net interest income			10,689				13,663				33,660				40,451
Credit loss expense (benefit)			(274	)			(520	)			34				(706	)
Net interest income after credit loss expense (benefit)			10,963				14,183				33,626				41,157
Noninterest income:
Wealth management income			1,157				1,063				3,507				3,589
Service fees			343				348				1,000				1,013
Securities gains, net			28				2				35				37
Gain on sale of loans held for sale			95				137				254				501
Merchant and card fees			404				462				1,249				1,362
Other noninterest income			333				274				884				716
Total noninterest income			2,360				2,286				6,929				7,218
Noninterest expense:
Salaries and employee benefits			5,902				5,731				17,751				17,092
Data processing			1,497				1,494				4,395				4,594
Occupancy expenses, net			671				674				2,273				2,097
FDIC insurance assessments			284				155				803				450
Professional fees			545				431				1,540				1,407
Business development			311				346				975				981
Intangible asset amortization			130				145				388				438
New markets tax credit projects amortization			192				189				575				567
Other operating expenses, net			270				322				1,445				1,091
Total noninterest expense			9,802				9,487				30,145				28,717
Income before income taxes			3,521				6,982				10,410				19,658
Income tax expense			597				1,439				1,732				4,777
Net income		$	2,924			$	5,543			$	8,678			$	14,881
Basic and diluted earnings per share		$	0.33			$	0.62			$	0.97			$	1.64
Declared dividends per share		$	0.27			$	0.27			$	0.81			$	0.81

 

v3.23.3

Document And Entity Information	Oct. 20, 2023
Document Information [Line Items]
Entity, Registrant Name	AMES NATIONAL CORPORATION
Document, Type	8-K
Document, Period End Date	Oct. 20, 2023
Entity, Incorporation, State or Country Code	IA
Entity, File Number	0-32637
Entity, Tax Identification Number	42-1039071
Entity, Address, Address Line One	405 Fifth Street
Entity, Address, City or Town	Ames
Entity, Address, State or Province	IA
Entity, Address, Postal Zip Code	50010
City Area Code	515
Local Phone Number	232-6251
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock
Trading Symbol	ATLO
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001132651

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