false 0001132651 0001132651 2024-10-18 2024-10-18
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
October 18, 2024
Date of Report (Date of Earliest Event Reported)
 
 
AMES NATIONAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)
 
 
Iowa
0-32637
42-1039071
(State or Other Jurisdiction of 
Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer
Identification No.)
 
 
323 Sixth Street
Ames, Iowa 50010
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (515) 232-6251
 
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock
ATLO
NASDAQ Capital Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company 
 
If an emerging growth company, indicate by checkmark 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. ☐
 
 

 
Item 2.02 Results of Operations and Financial Condition
 
On October 18, 2024, Ames National Corporation issued a News Release announcing financial results for the three and nine months ended September 30, 2024. A copy of the News Release is furnished as Exhibit 99.1.
 
Item 9.01 Financial Statements and Exhibits
 
 
(d) Exhibits:
 
 
Exhibit No.
 
Description
       
 
99.1
 
       
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
AMES NATIONAL CORPORATION
 
Date: October 18, 2024
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 18, 2024

     
anc01.jpg

 

AMES NATIONAL CORPORATION

ANNOUNCES EARNINGS FOR THE third QUARTER OF 2024

 

Ames, Iowa – Ames National Corporation (Nasdaq: ATLO; the “Company”) today reported net income for the third quarter of 2024 of $2.2 million, or $0.25 per share, compared to $2.9 million, or $0.33 per share, earned in the third quarter of 2023.  For the nine months ended September 30, 2024, net income for the Company totaled $6.7 million or $0.75 per share, compared to $8.7 million or $0.97 per share earned in 2023.  The decrease in earnings is primarily due to an increase in credit loss expense and consultant fees related to negotiating long-term vendor contracts. The increase in credit loss expense is primarily due to loan growth and a specific reserve placed on a commercial loan relationship. The consultant fees were paid as a percentage of the negotiated benefit to the Company. The consultant fees are recognized into expense during the contract negotiations while the benefits will be recognized throughout the related contractual agreements.

 

 

INCOME STATEMENT HIGHLIGHTS (unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2024

   

2023

   

2024

   

2023

 
                                 

Net income (in thousands)

  $ 2,217     $ 2,924     $ 6,705     $ 8,678  

Earnings per share - basic and diluted

  $ 0.25     $ 0.33     $ 0.75     $ 0.97  

Return on average assets

    0.42 %     0.55 %     0.42 %     0.54 %

Return on average equity

    5.12 %     7.60 %     5.37 %     7.47 %

Efficiency ratio

    77.87 %     75.12 %     78.47 %     74.27 %

Net interest margin

    2.21 %     2.11 %     2.16 %     2.21 %
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

COMPANY STOCK HIGHLIGHTS (unaudited)

 

   

As of or for the

   

three months ended

   

September 30,

Company Stock (ATLO)

 

2024

     

Closing price

  $18.23

Price range

  $17.29 - 22.03

Book value per common share

  $20.39

Cash dividend declared

  $0.20

Dividend yield

  4.39%

 

BALANCE SHEET HIGHLIGHTS (unaudited)

 

   

September 30,

 

(Dollars in thousands)

 

2024

   

2023

 
                 

Assets

  $ 2,123,173     $ 2,154,051  

Loans receivable, net

    1,295,773       1,231,893  

Deposits

    1,801,721       1,828,681  

Stockholders' equity

    183,394       146,640  

Capital ratio

    8.64 %     6.81 %

 

Third Quarter 2024 Results:

 

Third quarter 2024 loan interest income was $2.2 million higher than third quarter 2023 and was primarily due to higher average interest rates and growth in the loan portfolio. Deposit interest expense increased $1.8 million during this same period due primarily to customers shifting to higher rate deposit products. Other borrowed funds interest expense decreased $198 thousand during the same period due primarily to reduced borrowings. Third quarter 2024 net interest income totaled $11.1 million, an increase of $0.4 million, or 3.6%, compared to the same quarter a year ago. The Company’s net interest margin was 2.21% for the quarter ended September 30, 2024 as compared to 2.11% for the quarter ended September 30, 2023 and 2.14% for the quarter ended June 30, 2024. The increase in net interest margin compared to 2023 was primarily due to an increase in the volume and yield of loans, offset in part by an increase in deposit interest expense. Proceeds from maturing lower yielding investments have also been used to pay down higher cost borrowing and fund loan growth.

 

A credit loss expense of $371 thousand was recognized in the third quarter of 2024 as compared to a credit loss benefit of $274 thousand in the third quarter of 2023. Net loan charge-offs for the quarter ended September 30, 2024 totaled $10 thousand compared to net loan recoveries of $4 thousand for the quarter ended September 30, 2023. The credit loss expense in 2024 was primarily due to an increase in specific reserves in the commercial loan portfolio. 

  

Noninterest income for the third quarter of 2024 totaled $2.41 million as compared to $2.36 million in the third quarter of 2023, an increase of 2.2%

 

Noninterest expense for the third quarter of 2024 totaled $10.5 million compared to $9.8 million recorded in the third quarter of 2023, an increase of 7.2%. The increase is primarily due to normal increases in salaries and benefits and $449 thousand of consultant fees for certain contract negotiations included in professional fees in 2024. The consultant fees are infrequent as they normally relate to longer term contracts and no additional fees are anticipated for contracts for the remainder of the year. The efficiency ratio was 77.87% for the third quarter of 2024 as compared to 75.12% in the third quarter of 2023.

 

Income tax expense for the third quarter of 2024 totaled $397 thousand compared to $597 thousand recorded in the third quarter of 2023. The effective tax rate was 15% and 17% for the quarters ended September 30, 2024 and 2023, respectively. The lower than expected tax rate in 2024 and 2023 was primarily due to tax-exempt interest income and New Markets Tax Credits.

 

2

 

Nine Months 2024 Results:

 

For the nine months ended September 30, 2024 loan interest income was $7.1 million higher than the first nine months of 2023. The increase is primarily due to higher average interest rates and growth in the loan portfolio. Deposit interest expense increased $6.8 million during this same period due to customers shifting to higher rate deposit products. Other borrowed funds interest expense increased $895 thousand during the same period due to increased borrowings and higher average rates. The net interest income for the nine months ended September 30, 2024 totaled $32.9 million, a decrease of $0.8 million, or 2.4%, compared to the same period a year ago. The Company’s net interest margin was 2.16% for the nine months ended September 30, 2024 as compared to 2.21% for the nine months ended September 30, 2023. The decrease in net interest margin was primarily due to an increase in market interest rates and deposits repricing more quickly than interest-earning assets.

 

A credit loss expense of $722 thousand was recognized for the nine months ended September 30, 2024 as compared to a credit loss expense of $34 thousand for the nine months ended September 30, 2023. Net loan charge-offs totaled $6 thousand for the nine months ended September 30, 2024 compared to net loan charge-offs of $177 thousand for the nine months ended September 30, 2023. The credit loss expense in 2024 was primarily due to loan growth and an increase in specific reserves. The credit loss expense in 2023 was primarily due to charge-offs in the agriculture and commercial loan portfolios.

 

Noninterest income for the nine months ended September 30, 2024 totaled $7.2 million compared to $6.9 million for the nine months ended September 30, 2023, an increase of 4.0%. The increase in noninterest income was primarily due to an increase in wealth management income and partially offset by losses on the sale of securities.

 

Noninterest expense for the nine months ended September 30, 2024 totaled $31.4 million compared to $30.1 million for the nine months ended September 30, 2023, an increase of 4.3%. The increase is primarily due to an increase in number of employees, normal increases in salaries and benefits and $799 thousand of consultant fees for certain contract negotiations included in professional fees. The efficiency ratio was 78.47% and 74.27% for the nine months ended September 30, 2024 and 2023, respectively.

 

Income tax expense for the nine months ended September 30, 2024 and 2023 totaled $1.2 million and $1.7 million, respectively. The effective tax rate was 15% and 17% for the nine months ended September 30, 2024 and 2023, respectively.  The lower than expected tax rate in 2024 and 2023 was due primarily to tax-exempt interest income and New Markets Tax Credits.

 

Balance Sheet Review:

 

As of September 30, 2024, total assets were $2.1 billion, a decrease of $30.9 million, as compared to September 30, 2023. The decrease in assets was primarily due to a decrease in interest-bearing deposits and securities available-for-sale, partially offset by an increase in loans.

 

Securities available-for-sale as of September 30, 2024 decreased to $688.6 million from $736.9 million as of September 30, 2023. 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 3.16 years as of September 30, 2024. There are approximately $110 million of investments maturing within one year at an average yield of approximately 1.7%.

 

Net loans as of September 30, 2024 increased to $1.30 billion as compared to $1.23 billion as of September 30, 2023, an increase of 5.2%. The increase was primarily due to an increase in the agriculture, 1 to 4 family residential and commercial real estate loan portfolios. Substandard loans were $28.3 million and $24.0 million as of September 30, 2024 and 2023, respectively. Substandard-impaired loans were $16.9 million and $13.9 million as of September 30, 2024 and 2023, respectively. The increase in substandard and substandard-impaired loans is primarily due to weakening in the commercial real estate loan portfolio. Some commercial real estate loans are experiencing a decline in occupancy rates and collateral valuation. There are approximately $253 million of loans maturing within one year at an average yield of approximately 6.5%.

 

The allowance for credit losses on September 30, 2024 totaled $17.6 million or 1.34% of loans, compared to $16.1 million, or 1.29% of loans, as of September 30, 2023. The increase in the allowance for credit losses is mainly due to loan growth and an increase in specific reserves.

 

 

 

 

3

 

Deposits totaled $1.80 billion as of September 30, 2024, a decrease of 1.5%, compared to $1.83 billion recorded as of September 30, 2023. The decrease in deposits is primarily due to lower balances in retail and commercial noninterest-bearing checking, savings and money market accounts as customers seek higher interest rates. A portion of the decrease in retail and commercial noninterest-bearing checking, savings and money market accounts was offset by an increase in time deposits and public funds. Securities sold under agreements to repurchase decreased to $42.8 million as of September 30, 2024 compared to $60.9 million as of September 30, 2023. Securities sold under agreements to repurchase and deposit balances fluctuate as customers’ liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions.  Approximately 15% of deposits are tied to external indexes as of September 30, 2024. Deposit interest expense related to these deposits can be more volatile than other deposit products in a changing interest rate environment.

 

Other borrowings decreased to $83.1 million as of September 30, 2024 compared to $105.9 million as of September 30, 2023. The Company has reduced borrowings throughout 2024 as investments have matured.

 

The Company’s stockholders’ equity represented 8.6% of total assets as of September 30, 2024 with all of the Company’s six affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $183.4 million as of September 30, 2024, compared to $146.6 million as of September 30, 2023. The increase in stockholders’ equity of $36.8 million was primarily the result of a decrease in unrealized losses on the investment portfolio.

 

Cash Dividend Announcement

 

On August 14, 2024, the Company declared a quarterly cash dividend on common stock, payable on November 15, 2024 to stockholders of record as of November 1, 2024, equal to $0.20 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, 2023. 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.

4

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES

 

Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)

 

   

September 30,

   

September 30,

 

ASSETS

 

2024

   

2023

 
                 

Cash and due from banks

  $ 22,660     $ 21,992  

Interest-bearing deposits in financial institutions and federal funds sold

    36,309       68,071  

Total cash and cash equivalents

    58,969       90,063  

Interest-bearing time deposits

    6,167       9,889  

Securities available-for-sale

    688,595       736,944  

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock, at cost

    5,186       4,000  

Loans receivable, net

    1,295,773       1,231,893  

Loans held for sale

    338       428  

Bank premises and equipment, net

    21,858       21,828  

Accrued income receivable

    15,261       13,794  

Bank-owned life insurance

    3,193       3,111  

Deferred income taxes, net

    11,138       23,206  

Intangible assets, net

    1,170       1,543  

Goodwill

    12,424       12,424  

Other assets

    3,101       4,928  
                 

Total assets

  $ 2,123,173     $ 2,154,051  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               
                 

LIABILITIES

               

Deposits

               

Noninterest-bearing checking

  $ 335,469     $ 371,691  

Interest-bearing checking

    612,017       616,382  

Savings and money market

    535,096       567,461  

Time, $250 and over

    79,538       74,360  

Other time

    239,601       198,787  

Total deposits

    1,801,721       1,828,681  
                 

Securities sold under agreements to repurchase

    42,756       60,941  

Other borrowings

    83,101       105,942  

Dividends payable

    1,798       2,428  

Accrued interest payable

    3,045       3,561  

Accrued expenses and other liabilities

    7,358       5,858  

Total liabilities

    1,939,779       2,007,411  
                 

STOCKHOLDERS' EQUITY

               

Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 8,992,167 shares as of September 30, 2024 and 2023

    17,984       17,984  

Additional paid-in capital

    14,253       14,253  

Retained earnings

    180,505       180,724  

Accumulated other comprehensive (loss)

    (29,348 )     (66,321 )

Total stockholders' equity

    183,394       146,640  
                 

Total liabilities and stockholders' equity

  $ 2,123,173     $ 2,154,051  

 

5

 

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,

 
   

2024

   

2023

   

2024

   

2023

 
                                 

Interest and dividend income:

                               

Loans, including fees

  $ 16,751     $ 14,585     $ 48,793     $ 41,657  

Securities:

                               

Taxable

    2,985       3,152       9,104       9,556  

Tax-exempt

    481       549       1,524       1,748  

Other interest and dividend income

    495       476       1,937       1,484  

Total interest and dividend income

    20,712       18,762       61,358       54,445  
                                 

Interest expense:

                               

Deposits

    8,278       6,518       24,037       17,214  

Other borrowed funds

    1,357       1,555       4,466       3,571  

Total interest expense

    9,635       8,073       28,503       20,785  
                                 

Net interest income

    11,077       10,689       32,855       33,660  
                                 

Credit loss expense

    371       (274 )     722       34  
                                 

Net interest income after credit loss expense

    10,706       10,963       32,133       33,626  
                                 

Noninterest income:

                               

Wealth management income

    1,242       1,157       3,913       3,507  

Service fees

    399       343       1,062       1,000  

Securities gains (losses), net

    -       28       (165 )     35  

Gain on sale of loans held for sale

    112       95       361       254  

Merchant and card fees

    426       404       1,211       1,249  

Other noninterest income

    234       333       827       884  

Total noninterest income

    2,413       2,360       7,209       6,929  
                                 

Noninterest expense:

                               

Salaries and employee benefits

    6,291       5,902       18,965       17,751  

Data processing

    1,475       1,497       4,478       4,395  

Occupancy expenses, net

    745       671       2,238       2,273  

FDIC insurance assessments

    281       284       878       803  

Professional fees

    867       545       2,190       1,540  

Business development

    318       311       983       975  

Intangible asset amortization

    86       130       259       388  

New market tax credit projects amortization

    174       192       523       575  

Other operating expenses, net

    268       270       925       1,445  

Total noninterest expense

    10,505       9,802       31,439       30,145  
                                 

Income before income taxes

    2,614       3,521       7,903       10,410  
                                 

Provision for income taxes

    397       597       1,198       1,732  
                                 

Net income

  $ 2,217     $ 2,924     $ 6,705     $ 8,678  
                                 

Basic and diluted earnings per share

  $ 0.25     $ 0.33     $ 0.75     $ 0.97  
                                 

Dividends declared per share

  $ 0.20     $ 0.27     $ 0.74     $ 0.81  

 

6
v3.24.3
Document And Entity Information
Oct. 18, 2024
Document Information [Line Items]  
Entity, Registrant Name AMES NATIONAL CORPORATION
Document, Type 8-K
Document, Period End Date Oct. 18, 2024
Entity, Incorporation, State or Country Code IA
Entity, File Number 0-32637
Entity, Tax Identification Number 42-1039071
Entity, Address, Address Line One 323 Sixth 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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