ATLO Ames National Corporation

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

 

 

July 18, 2014

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		(Commission File Number)		(I.R.S. Employer
Incorporation or Organization)				Identification No.)

                                                         

 

405 FIFTH STREET

AMES, IOWA 50010

(Address of Principal Executive Offices)

 

 

Registrant’s Telephone Number, Including Area Code: (515) 232-6251

 

 

NOT APPLICABLE

(Former Name, Former Address and Former Fiscal Year, 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:

 

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

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

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

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

 

 

Item 2.02 Results of Operations and Financial Condition

 

Item 7.01 Regulation FD Disclosure

 

The following information is furnished pursuant to Items 2.02 and 7.01:

 

On July 18, 2014, Ames National Corporation issued a News Release announcing financial results for the three and six months ended June 30, 2014. A copy of the News Release is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits

 

 

(d) The following exhibit is furnished as part of this Report:

 

          Exhibit No.                                                                             Description

 

               99.1                                                                     News Release dated July 18, 2014

 

 

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: July 18, 2014	By:	/s/ Thomas H. Pohlman
		Thomas H. Pohlman, Chief Executive Officer and President

 

  

EXHIBIT INDEX

 

 

     Exhibit No.                                                                                        Description

 

            99.1                                                                     News Release dated July 18, 2014

 

 

 

EXHIBIT 99.1

NEWS RELEASE
FOR IMMEDIATE RELEASE	CONTACT:	THOMAS H. POHLMAN
		CHIEF EXECUTIVE OFFICER AND PRESIDENT
JULY 18, 2014		(515) 232-6251

 

 

AMES NATIONAL CORPORATION

ANNOUNCES 2014 SECOND QUARTER EARNINGS RESULTS

 

Second Quarter 2014 Results:

 

For the quarter ended June 30, 2014, net income for Ames National Corporation (the Company) totaled $3,855,000 or $0.41 per share, an 18% increase over the $3,279,000 or $0.35 per share earned in 2013. Net income improved primarily due to increases in loan and securities available-for-sale interest income and a decrease in other real estate owned expenses, offset in part by a decrease in securities gains.

 

Second quarter net interest income totaled $8,979,000, an increase of $873,000, or 11%, compared to the same quarter a year ago, due primarily to an increase in the average balance of real estate loans, higher yields on taxable securities available-for-sale and the recognition of $248,000 of interest income on two nonaccrual loans that were returned to accrual during the quarter. The increase in net interest income led to an improvement in the Company’s net interest margin to 3.30% for the quarter ended June 30, 2014 as compared to 3.07% for the quarter ended June 30, 2013. Excluding the interest income recognized on two nonaccrual loans, the net interest margin for the quarter ended June 30, 2014 would have been 3.22%, which was 15 basis points higher than the quarter ended June 30, 2013.  

 

A provision for loan losses of $36,000 was recognized in the second quarter of 2014 as compared to $60,000 in the second quarter of 2013. Net loan charge-offs were $86,000 for the quarter ended June 30, 2014 compared to $27,000 for the quarter ended June 30, 2013.

 

Noninterest income for the second quarter of 2014 totaled $1,734,000 as compared to $2,089,000 for the same period in 2013. The decrease in noninterest income is primarily due to no realized securities gains in 2014, as compared to $364,000 of realized securities gains in 2013. In addition, gains realized on the sale of loans held for sale were lower in 2014 by $195,000 due to decreased secondary market volume as refinancing activity has slowed. On a positive note, wealth management income increased $166,000 this quarter compared to 2013.

 

Noninterest expense for the second quarter of 2014 totaled $5,409,000 compared to $5,838,000 recorded in 2013. The decrease of 7.3% in noninterest expense was primarily the result of lower other real estate owned expenses, offset in part by increased salaries and benefits due to normal salary increases and higher performance awards associated with increased profitability. The efficiency ratio for the second quarter of 2014 was 50.49%, compared to 57.26% in 2013.   

 

Six Months 2014 Results:

 

For the six months ended June 30, 2014, net income for the Company totaled $8,381,000, or $0.90 per share, compared to $6,865,000 or $0.74 per share in 2013. Net income increased primarily due to an after tax gain on the sale of premises and equipment of $788,000, increases in loan and securities available-for-sale interest income and a decrease in other real estate owned expenses, offset in part by a decrease in securities gains. The Company sold its office location near Iowa State University in Ames, Iowa (University office), but the Company will maintain a presence near the campus. Excluding the after tax one-time gain on the sale of premises and equipment, net income would have been $7,593,000, or $0.82 per share in 2014, as compared to $6,865,000, or $0.74 per share in 2013.

 

  

Net interest income for the six months ended June 30, 2014 totaled $17,713,000, an increase of $1,522,000, or 9.4%, compared to the same period a year ago, due primarily to an increase in the average balance of real estate loans, higher yields on taxable securities available-for-sale and the recognition of $281,000 of interest income on primarily two nonaccrual loans that were returned to accrual during the quarter. This improvement in interest income led to an improvement in the Company’s net interest margin to 3.27% for the six months ended June 30, 2014 as compared to 3.10% for the six months ended June 30, 2013. Excluding the interest income recognized on the nonaccrual loans, the net interest margin for the six months ended June 30, 2014 would have been 3.22%, which was 12 basis points higher than the six months ended June 30, 2013.  

 

A provision for loan losses of $75,000 was recognized in the six months ended June 30, 2014 as compared to $74,000 for the six months ended June 30, 2013. Net loan charge-offs were $129,000 for the six months ended June 30, 2014 compared to $27,000 for the six months ended June 30, 2013.

 

Noninterest income for the six months ended June 30, 2014 totaled $4,680,000 as compared to $3,932,000 for the same period in 2013. The increase in noninterest income is primarily due to the gain on the sale of the University office and an increase in wealth management income, which was offset in part by a decrease in the level of gains realized on the sale of loans held for sale and a decrease in securities gains.

 

Noninterest expense for the six months ended June 30, 2014 totaled $10,738,000 compared to $10,957,000 recorded in 2013. The decrease of 2.0% in noninterest expense was primarily the result of lower other real estate owned expenses, offset in part by increased salaries and benefits due to normal salary increases and higher performance awards associated with increased profitability. The efficiency ratio for the six months ended June 30, 2014 was 47.95%, compared to 54.45% in 2013.

 

Balance Sheet Review:

 

As of June 30, 2014, total assets were $1,235,704,000, a $28,790,000 increase compared to June 30, 2013. The increase in assets was primarily due to an increase in loans, funded by an increase in securities under agreements to repurchase.

 

Securities available-for-sale as of June 30, 2014 declined to $599,239,000, from $602,300,000 as of June 30, 2013. The decrease in securities available-for-sale is primarily due to pay downs of U.S. government mortgage-backed securities and maturities of state and political subdivision bonds, offset in part by purchases of U.S. government agencies and corporate bonds and an increase in the unrealized gain on securities.

 

Net loans as of June 30, 2014 increased 9% to $549,980,000 as compared to $506,139,000 as of June 30, 2013. The growth was due primarily to increases in the commercial operating and one-to-four family, commercial and agricultural real estate loan portfolios. The allowance for loan losses on June 30, 2014 totaled $8,517,000, or 1.52% of gross loans, compared to $7,819,000 or 1.52% of gross loans as of June 30, 2013. The increase in the allowance for loan losses can be primarily attributed to the provision for loan losses necessary to accommodate the growth in the loan portfolio. Impaired loans as of June 30, 2014, were $967,000, or 0.17% of gross loans, compared to $4,771,000, or 0.93% of gross loans as of June 30, 2013.

 

Other real estate owned was $8,929,000 and $8,989,000 as of June 30, 2014 and 2013, respectively. Due to potential changes in the real estate markets, it is at least reasonably possible that management’s assessments of fair value will change in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements.

 

  

Deposits totaled $982,570,000 on June 30, 2014, a 1.8% decrease from the $1,000,457,000 recorded at June 30, 2013. The Company had reductions in time certificates of deposit less than $100,000, NOW accounts and demand deposit account, offset by growth in savings and money market.

 

Securities sold under agreements to repurchase totaled $61,152,000 on June 30, 2014, a 99.7% increase from the $30,629,000 recorded at June 30, 2013. The increase was primarily related to a commercial customer transferring funds to a daily repurchase account from a commercial checking account and an increase in an existing commercial customer’s repurchase account balance.

 

The Company’s stockholders’ equity represented 12.3% of total assets as of June 30, 2014 with all of the Company’s five affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $152,325,000 as of June 30, 2014, and $136,385,000 as of June 30, 2013. The increase in stockholders’ equity was primarily the result of net income and higher fair value on the securities available-for-sale as reflected in the increase in accumulated other comprehensive income, offset in part by dividends.

 

Shareholder Information:

 

Return on average assets was 1.23% for the quarter ended June 30, 2014, compared to 1.05% for the same period in 2013. Return on average equity was 10.27% for the quarter ended June 30, 2014, compared to the 8.98% in 2013. Return on average assets was 1.34% for the six months ended June 30, 2014, compared to 1.11% for the same period in 2013. Return on average equity was 11.33% for the six months ended June 30, 2014, compared to the 9.42% in 2013. Excluding the after tax one-time gain on the sale of University office, return on average assets would have been 1.22% and return on average equity would have been 10.29% for the six months ended June 30, 2014.

 

The Company’s stock, which is listed on the NASDAQ Capital Market under the symbol ATLO, closed at $23.14 on June 30, 2014. During the second quarter of 2014, the price ranged from $21.15 to $23.35.

 

On May 14, 2014, the Company declared a quarterly cash dividend on its common stock, payable on August 15, 2014 to stockholders of record as of August 1, 2014, equal to $0.18 per share.

 

On April 30, 2014, the Company announced that First National Bank, Ames, Iowa, a 100% owned subsidiary of the Company, had entered into a purchase and assumption agreement (Agreement) with First Bank, West Des Moines, Iowa. The Agreement is expected to close in the third quarter of 2014, subject to regulatory approval and other standard closing conditions.

 

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; and United Bank & Trust, Marshalltown.

 

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 financial performance and asset quality.  Any forward-looking statement contained in this News Release is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management.  These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to management.  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.  The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following:  economic conditions, particularly in the concentrated geographic area in which the Company and its affiliate banks operate; 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 loan losses dictated by new market conditions or regulatory requirements; 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 heading “Risk Factors” in the Company’s annual report on Form 10-K.  Management intends to identify forward-looking statements when using words such as “believe”, “expect”, “intend”, “anticipate”, “estimate”, “should”, “forecasting” or similar expressions.  Undue reliance should not be placed on these forward-looking statements.  The Company undertakes no obligation to revise or update such forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2014 and 2013

(unaudited)  

 

ASSETS		2014				2013
Cash and due from banks		$	23,718,424			$	19,429,057
Interest bearing deposits in financial institutions			26,426,762				36,408,837
Securities available-for-sale			599,239,228				602,299,900
Loans receivable, net			549,980,394				506,139,036
Loans held for sale			697,145				1,257,924
Bank premises and equipment, net			11,104,529				12,185,791
Accrued income receivable			7,186,788				7,021,977
Other real estate owned			8,928,652				8,989,208
Deferred income taxes			1,325,200				5,798,827
Core deposit intangible, net			902,816				1,161,066
Goodwill			5,600,749				5,600,749
Other assets			593,219				621,132
Total assets		$	1,235,703,906			$	1,206,913,504
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Demand, noninterest bearing		$	167,184,250			$	172,564,005
NOW accounts			280,415,844				298,457,426
Savings and money market			301,022,762				287,124,558
Time, $100,000 and over			94,395,668				93,247,877
Other time			139,551,875				149,062,756
Total deposits			982,570,399				1,000,456,622
Securities sold under agreements to repurchase			61,151,643				30,628,684
Federal Home Loan Bank advances and other borrowings			34,504,421				34,576,061
Dividend payable			1,675,964				1,489,746
Accrued expenses and other liabilities			3,476,535				3,377,173
Total liabilities			1,083,378,962				1,070,528,286
STOCKHOLDERS' EQUITY
Common stock, $2 par value, authorized 18,000,000 shares; issued 9,432,915 shares; outstanding 9,310,913 shares as of June 30, 2014 and 2013			18,865,830				18,865,830
Additional paid-in capital			22,651,222				22,651,222
Retained earnings			107,183,584				98,044,977
Accumulated other comprehensive income-net unrealized income on securities available-for-sale			5,640,806				(1,160,313	)
Treasury stock, at cost; 122,002 shares at June 30, 2014 and 2013			(2,016,498	)			(2,016,498	)
Total stockholders' equity			152,324,944				136,385,218
Total liabilities and stockholders' equity		$	1,235,703,906			$	1,206,913,504

  

 

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES   Consolidated Statements of Income (unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Interest income:
Loans		$	6,576,580			$	6,146,761			$	12,986,011			$	12,305,274
Securities
Taxable			1,851,296				1,399,811				3,614,899				2,779,773
Tax-exempt			1,645,094				1,746,378				3,319,202				3,474,811
Interest bearing deposits and federal funds sold			72,937				108,313				146,076				218,046
Total interest income			10,145,907				9,401,263				20,066,188				18,777,904
Interest expense:
Deposits			862,691				999,601				1,754,701				1,995,441
Other borrowed funds			303,861				294,939				598,347				590,850
Total interest expense			1,166,552				1,294,540				2,353,048				2,586,291
Net interest income			8,979,355				8,106,723				17,713,140				16,191,613
Provision for loan losses			35,644				60,000				74,875				73,574
Net interest income after provision for loan losses			8,943,711				8,046,723				17,638,265				16,118,039
Noninterest income:
Wealth Management Income			724,376				558,747				1,421,195				1,098,769
Service fees			410,795				402,002				768,274				777,827
Securities gains, net			-				364,250				135,081				433,241
Gain on sale of loans held for sale			150,526				345,377				249,179				700,920
Merchant and card fees			290,250				272,612				549,639				613,098
Gain (loss) on sale and disposal of premises and equipment			(14,715	)			-				1,242,209				-
Other noninterest income			172,740				146,032				314,179				308,133
Total noninterest income			1,733,972				2,089,020				4,679,756				3,931,988
Noninterest expense:
Salaries and employee benefits			3,430,736				3,231,314				6,722,188				6,447,396
Data processing			595,570				627,216				1,166,920				1,199,851
Occupancy expenses, net			349,588				339,457				818,808				745,181
FDIC insurance assessments			163,352				172,443				325,696				332,751
Professional fees			348,441				267,573				630,888				540,028
Business development			215,616				202,033				423,477				393,384
Other real estate owned expense, net			19,006				672,919				19,710				667,738
Core deposit intangible amortization			61,000				68,425				126,748				142,198
Other operating expenses, net			225,798				256,809				503,774				488,758
Total noninterest expense			5,409,107				5,838,189				10,738,209				10,957,285
Income before income taxes			5,268,576				4,297,554				11,579,812				9,092,742
Income tax expense			1,413,653				1,018,858				3,198,798				2,228,112
Net income		$	3,854,923			$	3,278,696			$	8,381,014			$	6,864,630
Basic and diluted earnings per share		$	0.41			$	0.35			$	0.90			$	0.74
Declared dividends per share		$	0.18			$	0.16			$	0.36			$	0.32