Ames National (ATLO) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Ames National Corporation's Q2 2025 performance shows significant net income growth, improved efficiency, and a stronger capital position Overall Performance Net income for Q2 2025 significantly increased, driven by expanded net interest income from improved loan yields and lower funding costs - Net income for Q2 2025 increased to $4.5 million ($0.51 per share) from $2.2 million ($0.24 per share) in Q2 2024[2] - The increase in earnings was primarily due to an increase in net interest income, driven by improved loan yield, growth in interest-bearing cash deposits, and a decreased cost of funds[2] Income Statement Highlights Income statement highlights for Q2 and YTD 2025 demonstrate substantial improvements in net income, EPS, profitability ratios, and efficiency | | Three Months Ended | | | | Six Months Ended | | | |---|---|---|---|---|---|---|---|---| | | June 30, | | | | June 30, | | | | | 2025 | | 2024 | | 2025 | 2024 | | | Net income (Thousands of USD) | $ | 4,511 | $ | 2,184 | $ 7,954 | $ | 4,488 | | Earnings per share - basic and diluted (USD) | $ | 0.51 | $ | 0.24 | $ 0.89 | $ | 0.50 | | Return on average assets | | 0.85% | | 0.41% | 0.75% | | 0.42% | | Return on average equity | | 9.67% | | 5.40% | 8.72% | | 5.50% | | Efficiency ratio | | 64.34% | | 79.61% | 65.34% | | 78.78% | | Net interest margin | | 2.65% | | 2.14% | 2.59% | | 2.14% | Company Stock Highlights As of June 30, 2025, the company's stock closed at $17.81, with a book value of $21.69 per share and a 4.49% dividend yield | Company Stock (ATLO) | 2025 (USD) | |---|---| | Closing price | $ 17.81 | | Price range | $ 16.09 - 18.10 | | Book value per common share | $ 21.69 | | Cash dividend declared | $ - | | Cash dividend paid | $ 0.20 | | Dividend yield based on cash dividend paid | 4.49% | Balance Sheet Highlights The balance sheet as of June 30, 2025, shows slight asset and deposit decreases, offset by significant growth in stockholders' equity and capital ratio | (Thousands of USD) | 2025 | 2024 | |---|---|---| | Assets | $ 2,092,844 | 2,126,315 | | Loans receivable, net | 1,279,644 | 1,281,214 | | Deposits | 1,819,205 | 1,821,113 | | Stockholders' equity | 193,029 | 167,053 | | Capital ratio | 9.22% | 7.86% | Detailed Financial Results This section provides an in-depth analysis of the company's financial performance for the second quarter and six months ended June 30, 2025 Second Quarter 2025 Performance Q2 2025 performance was robust, characterized by significant net interest income growth, improved efficiency, and managed credit loss expenses Net Interest Income & Margin (Q2 2025) Q2 2025 net interest income grew 23.9% to $13.5 million, with margin improving to 2.65%, driven by higher loan income and lower funding costs - Second quarter 2025 net interest income totaled $13.5 million, an increase of $2.6 million, or 23.9%, compared to the same quarter a year ago[8] - Net interest margin improved to 2.65% for the quarter ended June 30, 2025, compared to 2.14% for the quarter ended June 30, 2024[8] - Drivers included $447 thousand higher loan interest income, $472 thousand increase in interest-bearing deposits income, $783 thousand decrease in deposit interest expense, and $861 thousand decrease in other borrowed funds interest expense[8] Credit Loss Expense (Q2 2025) Q2 2025 credit loss expense decreased to $108 thousand, despite $1.1 million in net loan charge-offs, mainly from a commercial loan - Credit loss expense was $108 thousand in Q2 2025, down from $182 thousand in Q2 2024[9] - Net loan charge-offs for Q2 2025 totaled $1.1 million, compared to no net loan charge-offs in Q2 2024[9] Noninterest Income (Q2 2025) Q2 2025 noninterest income slightly increased by 0.8% to $2.64 million compared to the prior year - Noninterest income for Q2 2025 totaled $2.64 million, an increase of 0.8% from $2.62 million in Q2 2024[10] Noninterest Expense & Efficiency Ratio (Q2 2025) Q2 2025 noninterest expense decreased 3.5% to $10.4 million, improving the efficiency ratio to 64.34% due to lower fees and higher margin - Noninterest expense for Q2 2025 totaled $10.4 million, a decrease of 3.5% from $10.7 million in Q2 2024, primarily due to $300 thousand in lower consultant fees[11] - The efficiency ratio improved to 64.34% for Q2 2025, compared to 79.61% in Q2 2024[11] Income Tax Expense (Q2 2025) Q2 2025 income tax expense rose to $1.1 million, with an effective rate of 20%, influenced by tax-exempt income and New Markets Tax Credits - Income tax expense for Q2 2025 totaled $1.1 million, compared to $385 thousand in Q2 2024[12] - The effective tax rate was 20% for Q2 2025 and 15% for Q2 2024, influenced by tax-exempt interest income and New Markets Tax Credits[12] Six Months 2025 Performance YTD 2025 performance showed strong financial growth, with significant net interest income and improved efficiency, despite increased credit loss expense Net Interest Income & Margin (Six Months 2025) YTD 2025 net interest income increased 21.1% to $26.4 million, with margin improving to 2.59%, driven by higher loan income and lower funding costs - Net interest income for the six months ended June 30, 2025, totaled $26.4 million, an increase of $4.6 million, or 21.1%, compared to the same period a year ago[13] - Net interest margin improved to 2.59% for the six months ended June 30, 2025, compared to 2.14% for the same period in 2024[13] - Drivers included $1.3 million higher loan interest income, $961 thousand increase in interest-bearing deposits income, $1.0 million decrease in deposit interest expense, and $1.7 million decrease in other borrowed funds interest expense[13] Credit Loss Expense (Six Months 2025) YTD 2025 credit loss expense rose to $1.1 million, primarily due to $1.2 million in commercial loan charge-offs, contrasting with prior year recoveries - Credit loss expense was $1.1 million for the six months ended June 30, 2025, compared to $351 thousand in the prior year, primarily due to commercial loan charge-offs[14] - Net loan charge-offs for the six months ended June 30, 2025, totaled $1.2 million, compared to net loan recoveries of $4 thousand in the prior year[14] Noninterest Income (Six Months 2025) YTD 2025 noninterest income increased 8.2% to $5.2 million, driven by wealth management growth from increased assets under management - Noninterest income for the six months ended June 30, 2025, totaled $5.2 million, an increase of 8.2% from $4.8 million in the prior year[15] - The increase was primarily due to growth in wealth management income from increased assets under management and new account relationships[15] Noninterest Expense & Efficiency Ratio (Six Months 2025) YTD 2025 noninterest expense decreased 1.5% to $20.6 million, improving the efficiency ratio to 65.34% due to lower fees and higher margin - Noninterest expense for the six months ended June 30, 2025, totaled $20.6 million, a decrease of 1.5% from $20.9 million in the prior year, primarily due to $350 thousand in lower consultant fees[16] - The efficiency ratio improved to 65.34% for the six months ended June 30, 2025, compared to 78.78% in the prior year[16] Income Tax Expense (Six Months 2025) YTD 2025 income tax expense rose to $1.9 million, with an effective rate of 19%, influenced by tax-exempt income and New Markets Tax Credits - Income tax expense for the six months ended June 30, 2025, totaled $1.9 million, compared to $801 thousand in the prior year[17] - The effective tax rate was 19% for the six months ended June 30, 2025, and 15% for the prior year, influenced by tax-exempt interest income and New Markets Tax Credits[17] Balance Sheet Review This section reviews the company's balance sheet components, including assets, liabilities, and stockholders' equity, as of June 30, 2025 Assets Total assets slightly decreased due to reduced securities available-for-sale, partially offset by increased interest-bearing deposits, with mixed loan portfolio performance Total Assets Total assets decreased by $33.5 million to $2.1 billion as of June 30, 2025, primarily due to reduced securities available-for-sale - Total assets were $2.1 billion as of June 30, 2025, a decrease of $33.5 million compared to June 30, 2024[18] - The decrease was primarily due to a decrease in securities available-for-sale, partially offset by an increase in interest-bearing deposits in financial institutions[18] Securities Available-for-Sale Securities available-for-sale decreased to $644.7 million, driven by maturities exceeding purchases and lower unrealized losses, with a 3.1-year duration - Securities available-for-sale decreased to $644.7 million as of June 30, 2025, from $690.8 million as of June 30, 2024[19] - The decrease is primarily due to maturities in excess of purchases, partially offset by lower unrealized losses[19] - The investment portfolio had an expected duration of 3.1 years as of June 30, 2025[19] Loans Receivable, Net Net loans slightly decreased to $1.280 billion, with substandard-impaired loans increasing to $18.4 million due to commercial real estate and agricultural portfolio weakening - Net loans decreased to $1.280 billion as of June 30, 2025, a 0.1% decrease from $1.281 billion as of June 30, 2024[20] - Substandard loans were $23.5 million (2025) vs $26.6 million (2024), while substandard-impaired loans increased to $18.4 million (2025) from $12.0 million (2024)[20] - The increase in substandard-impaired loans is primarily due to weakening in the commercial real estate and agricultural loan portfolios[20] Allowance for Credit Losses Allowance for credit losses decreased to $17.0 million (1.31% of loans), primarily due to a reduction in overall loan balances - Allowance for credit losses totaled $17.0 million or 1.31% of loans as of June 30, 2025, down from $17.2 million or 1.32% of loans as of June 30, 2024[21] - The decrease is primarily due to a decrease in loan balances[21] Other Assets Other assets significantly decreased to $2.9 million, primarily due to $8 million in investments maturing in June 2024 - Other assets were $2.9 million as of June 30, 2025, compared to $12.5 million as of June 30, 2024[22] - The higher balance in 2024 was due to $8 million of investments that matured on June 30, 2024, with proceeds received on July 1, 2024[22] Liabilities Total deposits slightly decreased as customers sought higher rates, while other borrowings significantly reduced due to investment maturities Deposits Total deposits slightly decreased to $1.819 billion, driven by customers seeking higher rates, partially offset by time deposits and public funds growth - Deposits totaled $1.819 billion as of June 30, 2025, a decrease of 0.1% from $1.821 billion as of June 30, 2024[23] - The decrease is primarily due to lower balances in retail and commercial checking and money market accounts as customers seek higher interest rates, partially offset by an increase in time deposits and public funds[23] - Approximately 14% of deposits are tied to external indexes as of June 30, 2025, making their interest expense more volatile[23] Other Borrowings Other borrowings significantly decreased to $30.7 million as the company continued to reduce debt with investment maturities - Other borrowings decreased to $30.7 million as of June 30, 2025, compared to $85.9 million as of June 30, 2024[24] - The Company has continued to reduce borrowings as investments have matured[24] Stockholders' Equity Stockholders' equity increased by $25.9 million to $193.0 million (9.2% of assets), driven by reduced unrealized losses and retained net income - Total stockholders' equity was $193.0 million as of June 30, 2025, compared to $167.1 million as of June 30, 2024, an increase of $25.9 million[25] - The increase was primarily the result of a decrease in unrealized losses on the investment portfolio and retention of net income in excess of dividends[25] - The Company's stockholders' equity represented 9.2% of total assets, and all six affiliate banks are considered well-capitalized[25] Capital Management & Dividends This section outlines the company's share repurchase activities and dividend policy for the second quarter of 2025 Share Repurchase Program In Q2 2025, the company repurchased 16,868 shares for $278 thousand, with 6,522 shares remaining under the program - From April 1, 2025, through June 30, 2025, the Company repurchased 16,868 shares of common stock at an average price of $16.48 per share, for a total cost of $278 thousand[26] - There were 6,522 shares available to be repurchased under the program as of June 30, 2025[26] Cash Dividend Announcement No dividend was declared in Q2 2025, but a $0.20 per share dividend from Q1 was paid, with future dividends expected to be declared and paid concurrently - The Company did not declare a dividend in the second quarter of 2025[27] - A cash dividend of $0.20 per share, declared in the first quarter of 2025, was paid[27] - Going forward, the Company expects to declare and pay dividends in the same quarter, subject to the discretion of the Board of Directors[27] Company Information & Disclosures This section provides information about Ames National Corporation and its forward-looking statements About Ames National Corporation Ames National Corporation operates through its six affiliate Iowa banks, including First National Bank and United Bank & Trust Co - Ames National Corporation's 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[28] Forward-Looking Statements This cautionary statement highlights that forward-looking statements are subject to numerous risks, including economic conditions, competitive pressures, and regulatory changes - Forward-looking statements are not historical facts and are based on management's current beliefs, assumptions, predictions, and expectations, subject to numerous risks and uncertainties[29] - Key risks include national, regional, and local economic conditions, competitive products and pricing, changes in credit and other risks in loan and investment portfolios, changes in interest rates, and governmental regulations affecting financial institutions[29] - Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made, and the Company undertakes no obligation to revise or update them[29] Consolidated Financial Statements This section presents the unaudited consolidated balance sheets and statements of income for Ames National Corporation Consolidated Balance Sheets The unaudited consolidated balance sheets detail assets, liabilities, and stockholders' equity for Ames National Corporation as of June 30, 2025 and 2024 | ASSETS (Thousands of USD) | | 2025 | | 2024 | |---|---|---|---|---| | Cash and due from banks | $ | 24,148 | $ | 25,494 | | Interest-bearing deposits in financial institutions and federal funds sold | | 71,063 | | 37,948 | | Total cash and cash equivalents | | 95,211 | | 63,442 | | Interest-bearing time deposits | | 6,918 | | 6,415 | | Securities available-for-sale | | 644,702 | | 690,843 | | Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock, at cost | | 3,166 | | 3,948 | | Loans receivable, net | | 1,279,644 | | 1,281,214 | | Loans held for sale | | 341 | | 510 | | Bank premises and equipment, net | | 21,239 | | 22,134 | | Accrued income receivable | | 12,166 | | 12,484 | | Bank-owned life insurance | | 3,256 | | 3,171 | | Deferred income taxes, net | | 9,949 | | 16,022 | | Intangible assets, net | | 938 | | 1,256 | | Goodwill | | 12,424 | | 12,424 | | Other assets | | 2,890 | | 12,452 | | Total assets | $ | 2,092,844 | $ | 2,126,315 | | LIABILITIES AND STOCKHOLDERS' EQUITY (Thousands of USD) | | | | | | LIABILITIES | | | | | | Deposits | | | | | | Noninterest-bearing checking | $ | 309,379 | $ | 340,569 | | Interest-bearing checking | | 629,728 | | 618,819 | | Savings and money market | | 547,277 | | 556,074 | | Time, $250 and over | | 88,692 | | 73,368 | | Other time | | 244,129 | | 232,283 | | Total deposits | | 1,819,205 | | 1,821,113 | | Securities sold under agreements to repurchase | | 40,061 | | 40,664 | | Other borrowings | | 30,652 | | 85,930 | | Dividends payable | | - | | 2,428 | | Accrued interest payable | | 2,472 | | 3,191 | | Accrued expenses and other liabilities | | 7,425 | | 5,936 | | Total liabilities | | 1,899,815 | | 1,959,262 | | STOCKHOLDERS' EQUITY (Thousands of USD) | | | | | | Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding | | | | | | 8,898,689 and 8,992,167 shares as of June 30, 2025 and 2024, respectively | | 17,797 | | 17,984 | | Additional paid-in capital | | 12,907 | | 14,253 | | Retained earnings | | 188,442 | | 180,082 | | Accumulated other comprehensive (loss) | | (26,117) | | (45,266) | | Total stockholders' equity | | 193,029 | | 167,053 | | Total liabilities and stockholders' equity | $ | 2,092,844 | $ | 2,126,315 | Consolidated Statements of Income The unaudited consolidated statements of income detail the company's financial performance for the three and six months ended June 30, 2025 and 2024 | | | | Three Months Ended (Thousands of USD) | | | | Six Months Ended (Thousands of USD) | | |---|---|---|---|---|---|---|---|---| | | | 2025 | June 30, | 2024 | | June 30, 2025 | | 2024 | | Interest and dividend income: | | | | | | | | | | Loans, including fees | $ | 16,667 | $ | 16,220 | $ | 33,341 | $ | 32,042 | | Securities: | | | | | | | | | | Taxable | | 3,116 | | 3,027 | | 5,956 | | 6,119 | | Tax-exempt | | 450 | | 508 | | 903 | | 1,043 | | Other interest and dividend income | | 1,252 | | 780 | | 2,403 | | 1,442 | | Total interest and dividend income | | 21,485 | | 20,535 | | 42,603 | | 40,646 | | Interest expense: | | | | | | | | | | Deposits | | 7,387 | | 8,170 | | 14,806 | | 15,759 | | Other borrowed funds | | 632 | | 1,493 | | 1,416 | | 3,109 | | Total interest expense | | 8,019 | | 9,663 | | 16,222 | | 18,868 | | Net interest income | | 13,466 | | 10,872 | | 26,381 | | 21,778 | | Credit loss expense | | 108 | | 182 | | 1,070 | | 351 | | Net interest income after credit loss expense | | 13,358 | | 10,690 | | 25,311 | | 21,427 | | Noninterest income: | | | | | | | | | | Wealth management income | | 1,518 | | 1,476 | | 2,962 | | 2,671 | | Service fees | | 378 | | 341 | | 748 | | 663 | | Securities gains (losses), net | | - | | - | | - | | (165) | | Gain on sale of loans held for sale | | 150 | | 166 | | 225 | | 249 | | Merchant and card fees | | 392 | | 423 | | 740 | | 785 | | Other noninterest income | | 203 | | 213 | | 513 | | 593 | | Total noninterest income | | 2,641 | | 2,619 | | 5,188 | | 4,796 | | Noninterest expense: | | | | | | | | | | Salaries and employee benefits | | 6,479 | | 6,437 | | 12,852 | | 12,674 | | Data processing | | 1,456 | | 1,568 | | 2,808 | | 3,003 | | Occupancy expenses, net | | 728 | | 716 | | 1,500 | | 1,493 | | FDIC insurance assessments | | 275 | | 296 | | 535 | | 597 | | Professional fees | | 540 | | 863 | | 1,025 | | 1,323 | | Business development | | 311 | | 285 | | 683 | | 665 | | Intangible asset amortization | | 77 | | 86 | | 154 | | 173 | | New market tax credit projects amortization | | 191 | | 175 | | 383 | | 349 | | Other operating expenses, net | | 306 | | 314 | | 686 | | 657 | | Total noninterest expense | | 10,363 | | 10,740 | | 20,626 | | 20,934 | | Income before income taxes | | 5,636 | | 2,569 | | 9,873 | | 5,289 | | Provision for income taxes | | 1,125 | | 385 | | 1,919 | | 801 | | Net income | $ | 4,511 | $ | 2,184 | $ | 7,954 | $ | 4,488 | | Basic and diluted earnings per share (USD) | $ | 0.51 | $ | 0.24 | $ | 0.89 | $ | 0.50 | | Dividends declared per share (USD) | $ | - | $ | 0.27 | $ | 0.20 | $ | 0.54 | Average Balances and Interest Rates This section provides a detailed breakdown of average balances, interest income/expense, and yields/rates for assets and liabilities Average Assets and Yields This section details average interest-earning assets, revenues, and yields for Q2 2025 and 2024, providing insights into asset composition and profitability | | 2025 | | | 2024 | | |---|---|---|---|---|---| | | Average balance (Thousands of USD) | Revenue/ expense (Thousands of USD) | Yield/ rate (%) | Average balance (Thousands of USD) | Revenue/ expense (Thousands of USD) | Yield/ rate (%) | | ASSETS | | | | | | | | Interest-earning assets | | | | | | | | Loans (1) | | | | | | | | Commercial | $ 94,535 | $ 1,410 | 5.97% | $ 86,998 | $ 1,370 | 6.30% | | Agricultural | 126,189 | 2,075 | 6.58% | 118,579 | 2,254 | 7.60% | | Real estate | 1,052,915 | 12,951 | 4.92% | 1,069,663 | 12,386 | 4.63% | | Consumer and other | 16,532 | 231 | 5.59% | 16,833 | 210 | 4.99% | | Total loans (including fees) | 1,290,171 | 16,667 | 5.17% | 1,292,073 | 16,220 | 5.02% | | Investment securities | | | | | | | | Taxable | 567,859 | 3,116 | 2.19% | 614,133 | 3,027 | 1.97% | | Tax-exempt (2) | 81,427 | 570 | 2.80% | 96,036 | 643 | 2.68% | | Total investment securities | 649,286 | 3,686 | 2.27% | 710,169 | 3,670 | 2.07% | | Interest-bearing deposits with banks and federal funds sold | 108,889 | 1,252 | 4.60% | 53,146 | 780 | 5.87% | | Total interest-earning assets | 2,048,346 | $ 21,605 | 4.22% | 2,055,388 | $ 20,670 | 4.02% | | Noninterest-earning assets | 64,251 | | | 75,635 | | | | TOTAL ASSETS | $ 2,112,597 | | | $ 2,131,023 | | | Average Liabilities and Expenses This section presents average interest-bearing liabilities, expenses, and rates for Q2 2025 and 2024, illustrating funding costs and structure | | 2025 | | | 2024 | | |---|---|---|---|---|---| | | Average balance (Thousands of USD) | Revenue/ expense (Thousands of USD) | Yield/ rate (%) | Average balance (Thousands of USD) | Revenue/ expense (Thousands of USD) | Yield/ rate (%) | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | Interest-bearing liabilities | | | | | | | | Deposits | | | | | | | | Interest-bearing checking, savings accounts and money markets | $ 1,188,237 | $ 4,268 | 1.44% | $ 1,185,388 | $ 5,049 | 1.70% | | Time deposits | 332,652 | 3,119 | 3.75% | 304,653 | 3,121 | 4.10% | | Total deposits | 1,520,889 | 7,387 | 1.94% | 1,490,041 | 8,170 | 2.19% | | Other borrowed funds | 70,904 | 632 | 3.57% | 129,613 | 1,493 | 4.61% | | Total interest-bearing liabilities | 1,591,793 | 8,019 | 2.02% | 1,619,654 | 9,663 | 2.39% | | Noninterest-bearing liabilities | | | | | | | | Noninterest-bearing checking | 321,056 | | | 337,211 | | | | Other liabilities | 13,077 | | | 12,304 | | | | Stockholders' equity | 186,671 | | | 161,854 | | | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,112,597 | | | $ 2,131,023 | | | Net Interest Margin (FTE) Reconciliation This section reconciles non-GAAP net interest income and margin on a fully taxable equivalent (FTE) basis to GAAP, adjusting for tax-exempt income - Net interest income and net interest margin on an FTE basis are non-GAAP financial measures used to analyze and evaluate the Company's financial performance[42] | | Three Months Ended June | |---|---| | | 30, | | | 2025 (Thousands of USD) | 2024 (Thousands of USD) | | Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP: | | | | Net interest income (GAAP) | $ 13,466 | $ 10,872 | | Tax-equivalent adjustment (1) | 120 | 135 | | Net interest income on an FTE basis (non-GAAP) | 13,586 | 11,007 | | Average interest-earning assets (Thousands of USD) | $ 2,048,346 | $ 2,055,388 | | Net interest margin on an FTE basis (non-GAAP) | 2.65% | 2.14% |