Ames National (US:ATLO)2020-11-05 17:01Financial Performance - The Company reported net income of $5,671,000, or $0.62 per share, for the three months ended September 30, 2020, an increase from $4,041,000, or $0.44 per share, for the same period in 2019[96]. - For the nine months ended September 30, 2020, net income was $13,654,000, or $1.49 per share, compared to $12,896,000, or $1.40 per share, for the same period in 2019[98]. - The Company's return on assets was 1.21% for the three months ended September 30, 2020, compared to 1.10% for the same period in 2019[112]. - The return on equity was 11.18% for the three months ended September 30, 2020, up from 8.74% for the same period in 2019[113]. - The efficiency ratio improved to 54.80% for the three months ended September 30, 2020, from 57.80% for the same period in 2019[115]. - Income tax expense for the three months ended September 30, 2020, was $1,451,000, with an effective tax rate of 20%[146]. Loan and Credit Quality - Net loan charge-offs increased to $615,000 for the three months ended September 30, 2020, compared to $314,000 for the same period in 2019[97]. - As of September 30, 2020, approximately $94.8 million, or 8.1%, of loans were in payment deferral status due to COVID-19 related modifications[108]. - Provisions for credit losses surged by $49.1 billion (382.2%) to $61.9 billion, with 61.2% of banks reporting yearly increases in provisions[121]. - The average net charge-off rate increased by 7 basis points to 0.57%, with net charge-offs rising by $2.8 billion (22.2%) year-over-year[122]. - Noncurrent loan rate increased by 15 basis points to 1.08%, with noncurrent loan balances totaling $118.3 billion, up $15.9 billion (15.5%) from the previous quarter[123]. - The allowance for loan losses as a percentage of outstanding loans rose to 1.35% in 2020 from 1.19% in 2019[179]. - Problem loans as a percentage of total loans increased to 1.44% in 2020 from 0.48% in 2019, indicating rising credit risk[168]. - Impaired loans surged to $16,388,000 in 2020, up from $4,788,000 in 2019, a significant increase of 242%[169]. - The agricultural real estate and operating loan portfolio classifications showed elevated watch and special mention loans totaling $58,653,000 in 2020, up from $48,028,000 in 2019[177]. - As of September 30, 2020, the allowance for loan losses increased due to heightened risks from the COVID-19 pandemic, with expectations for further increases if economic conditions worsen[180]. Income and Expenses - Net interest income decreased by $7.6 billion (5.4%) year-over-year to $131.5 billion, marking the third consecutive quarterly decline[118]. - Noninterest income increased by $4.6 billion (6.9%) to $70.8 billion, driven by higher trading revenue, which rose by $6.7 billion (80.2%) and net gains on loan sales, which increased by $4.1 billion (110.8%)[119]. - Noninterest expense rose to $122.3 billion, up $7.2 billion (6.2%) from a year ago, with salary and employee benefits increasing by $2.7 billion (4.8%) and goodwill impairment charges rising by $2.5 billion[120]. - Noninterest income increased by 32% to $2,795,000 for the three months ended September 30, 2020, driven by gains on loan sales and refinancing volume[144]. - Noninterest expense totaled $9,291,000 for the three months ended September 30, 2020, an increase of 24% primarily related to the Acquisition[145]. - Noninterest income totaled $7,854,000 for the nine months ended September 30, 2020, a 26% increase from $6,258,000 in 2019, mainly due to gains on loan sales and the acquisition[152]. - Noninterest expense increased to $27,440,000 for the nine months ended September 30, 2020, up 24% from $22,150,000 in 2019, largely due to the acquisition[153]. Assets and Capital - Total assets expanded by $884.6 billion (4.4%) to $21.1 trillion, with cash and balances due from depository institutions increasing by $478 billion (19.9%)[124]. - Total loan and lease balances increased by $33.9 billion (0.3%), led by a $146.5 billion (5.8%) rise in the commercial and industrial loan portfolio[125]. - Total deposit balances increased by $1.2 trillion (7.5%) from the previous quarter, with noninterest-bearing account balances rising by $637 billion (17.7%)[126]. - Equity capital rose by $31.9 billion (1.5%) to $2.1 trillion, with retained earnings contributing $4.8 billion to equity formation[127]. - Total assets as of September 30, 2020, were $1,910,395,000, an increase of $173,212,000 compared to December 31, 2019, primarily funded by deposits[154]. - The investment portfolio increased to $548,818,000 as of September 30, 2020, up $68,975,000 from $479,843,000 at the end of 2019[155]. - The Company's total stockholders' equity as of September 30, 2020, was $206,037,000, an increase of $18,458,000 from $187,579,000 as of December 31, 2019[191]. Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2020, was $21,323,000, an increase of $6,984,000 from $14,339,000 in the same period of 2019[186]. - Net cash used in investing activities surged to $178,202,000 for the nine months ended September 30, 2020, compared to $32,866,000 in 2019, primarily due to increased loans and investments[187]. - Net cash provided by financing activities increased to $145,012,000 for the nine months ended September 30, 2020, up from $21,628,000 in 2019, driven by higher deposits[188]. Future Outlook - The COVID-19 pandemic is expected to continue adversely impacting the Company's business and financial results, with potential increases in credit losses and loan loss allowances[196]. - The company expects most Paycheck Protection Program (PPP) loans, totaling $79.6 million, to be forgiven, impacting future interest income positively[163]. - The Company had outstanding lines of credit with the FHLB of Des Moines totaling $214,567,000 as of September 30, 2020[184]. - The Company completed its stock repurchase program in April 2020, repurchasing 100,000 shares at an average price of $19.92[199].