Ames National (ATLO) - 2024 Q3 - Quarterly Report

Net Income and Earnings - Net income for Q3 2024 was $2.2 million, or$0.25 per share, compared to $2.9 million, or$0.33 per share, in Q3 2023, primarily due to increased credit loss expense and consultant fees[118] - Net interest income (GAAP) for Q3 2024 was $11.077 million, up from$10.689 million in Q3 2023, with a tax-equivalent adjustment of $128 thousand[125] - Net interest margin on an FTE basis (non-GAAP) for Q3 2024 was 2.21$11.1 million, up from $10.7 million in Q3 2023, with a net interest margin of 2.21$32.9 million, with a net interest margin of 2.16%, compared to $33.7 million and 2.21$371 thousand, compared to a credit loss benefit of $274 thousand in Q3 2023, driven by loan growth and a specific reserve on a commercial loan[119] - Net loan charge-offs for Q3 2024 totaled$10 thousand, compared to net loan recoveries of $4 thousand in Q3 2023[119] - Credit loss expense for Q3 2024 was$371 thousand, compared to a credit loss benefit of $274 thousand in Q3 2023, mainly due to increased specific reserves in the commercial loan portfolio[137] - Credit loss expense for the nine months ended September 30, 2024 was$722 thousand, a significant increase from $34 thousand in the same period in 2023, primarily due to loan growth and increased specific reserves[153] - Problem loans as a percentage of total loans increased to 1.33$3.7 million to $16.9 million as of September 30, 2024, driven by downgrades in commercial real estate and commercial operating loan portfolios[169] - Nonaccrual loans totaled$17.5 million as of September 30, 2024, compared to $13.8 million as of December 31, 2023[172] - Loans past due 30 days or more totaled$9.8 million as of September 30, 2024, compared to $4.3 million as of December 31, 2023[173] - Watch and special mention loans classified as agricultural real estate and operating totaled$27.5 million as of September 30, 2024, compared to $19.9 million as of December 31, 2023[174] - Watch and special mention loans classified as commercial real estate totaled$41.0 million as of September 30, 2024, compared to $73.3 million as of December 31, 2023[175] - The allowance for credit losses as a percentage of outstanding loans was 1.34$2.0 million (10.4%) compared to Q3 2023, driven by higher average rates and loan portfolio growth[134] - Interest expense for Q3 2024 increased by $1.6 million (19.3$6.9 million (12.7%) compared to the same period in 2023, driven by higher average rates and loan portfolio growth[150] - Interest expense for the nine months ended September 30, 2024 increased by $7.7 million (37.1$2.41 million compared to $2.36 million in Q3 2023[138] - Noninterest expense for Q3 2024 rose by 7.2$10.5 million compared to $9.8 million in Q3 2023, driven by higher salaries and benefits and consultant fees[139] - Noninterest income increased by 4.0$7.2 million for the nine months ended September 30, 2024, driven by higher wealth management income, partially offset by securities sale losses[154] - Noninterest expense rose by 4.3% to $31.4 million for the nine months ended September 30, 2024, mainly due to increased employee numbers, salary and benefit costs, and$799 thousand in consultant fees[155] Tax and Equity - Income tax expense for Q3 2024 was $397 thousand, with an effective tax rate of 15$1.2 million for the nine months ended September 30, 2024, with an effective tax rate of 15%, down from 17% in 2023, due to tax-exempt interest income and New Markets Tax Credits[156] - The Company's total stockholders' equity as of September 30, 2024 totaled $183.4 million, an increase of$17.6 million from December 31, 2023[192] Loan and Investment Portfolio - Total loans (including fees) for Q3 2024 averaged $1.303 billion, with an average yield of 5.14$1.251 billion and 4.67% in Q3 2023[129] - Real estate loans for Q3 2024 averaged $1.074 billion, with an average yield of 4.75$1.049 billion and 4.34% in Q3 2023[129] - Investment securities for Q3 2024 averaged $687.362 million, with an average yield of 2.09$756.366 million and 2.03% in Q3 2023[129] - Interest-bearing deposits with banks and federal funds sold for Q3 2024 averaged $39.456 million, with an average yield of 5.02$42.382 million and 4.49% in Q3 2023[129] - The loan portfolio increased to $1.296 billion as of September 30, 2024, up from$1.278 billion at the end of 2023, driven by growth in residential real estate, multi-family real estate, and agricultural operating loans[165] - Commercial real estate and multi-family real estate represent approximately 42% of the loan portfolio as of September 30, 2024[178] - Total investments as of September 30, 2024 were $688.6 million compared to$736.4 million as of December 31, 2023[185] Deposits and Cash Flow - Deposits decreased to $1.80 billion as of September 30, 2024, from$1.81 billion at the end of 2023, due to lower balances in noninterest-bearing accounts, partially offset by increases in time deposits and public funds[166] - Net cash provided by operating activities for the nine months ended September 30, 2024 totaled $8.4 million compared to$12.8 million for the nine months ended September 30, 2023[186] - Net cash provided by investing activities for the nine months ended September 30, 2024 was $51.6 million compared to$38.8 million for the nine months ended September 30, 2023[187] Stock Repurchase and Controls - No shares were repurchased in July, August, or September 2024, with 100,000 shares remaining under the Stock Repurchase Plan as of September 30, 2024[197][199] - The company's disclosure controls and procedures were deemed effective as of the end of the reporting period[195] - There were no material changes in the company's internal control over financial reporting during the last fiscal quarter[196] - The company's risk factors remained unchanged from those disclosed in the Form 10-K filed on March 8, 2024[196] Asset and Liability Management - Total assets decreased by $32.3 million to$2.1 billion as of September 30, 2024, primarily due to a reduction in securities available-for-sale, partially offset by loan growth[158] - The investment portfolio decreased by $47.8 million to$688.6 million as of September 30, 2024, mainly due to maturities exceeding purchases and a decrease in unrealized losses[158]