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 17, 2015

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.)

 

 

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:

 

●

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))

 

 

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 17, 2015, Ames National Corporation issued a News Release announcing financial results for the three and six months ended June 30, 2015. 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 17, 2015

 

 

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 17, 2015	By:	/s/ Thomas H. Pohlman
		Thomas H. Pohlman, Chief Executive Officer and President

 

 

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		News Release dated July 17, 2015

 

EXHIBIT 99.1

 

NEWS RELEASE		Contact:      THOMAS H. POHLMAN
FOR IMMEDIATE RELEASE		CHIEF EXECUTIVE OFFICER AND PRESIDENT
		(515) 232-6251

JULY 17, 2015                                                           

 

 

AMES NATIONAL CORPORATION

ANNOUNCES 2015 SECOND QUARTER EARNINGS RESULTS

 

Second Quarter 2015 Results:

 

For the quarter ended June 30, 2015, net income for Ames National Corporation (the Company) totaled $3,365,000 or $0.36 per share, compared to $3,855,000 or $0.41 per share earned in 2014. The lower earnings were primarily related to a provision for loan losses of $922,000 and an other real estate owned impairment write down of $563,000. The increase in the provision for loan losses was due to growth in the loan portfolio. Offsetting these expenses were increases in loan interest income and security gains.

 

As previously announced, the Company’s largest subsidiary bank, First National Bank (FNB), acquired First Bank, West Des Moines, Iowa on August 29, 2014 (the “Acquisition”). The acquired assets totaled approximately $89 million. Loan growth in the West Des Moines market has exceeded expectations since the Acquisition. The impact of the Acquisition on the Company’s net income was not significant for the quarter but in line with expectations.

 

Second quarter net interest income totaled $9,787,000, an increase of $808,000, or 9%, compared to the same quarter a year ago, due primarily to growth in the real estate loan portfolios. Loan growth was attributable to the Acquisition and favorable economic conditions in our markets. Excluding the Acquisition, the loan portfolio grew over 13% from a year ago. The Company’s net interest margin was 3.32% for the quarter ended June 30, 2015 as compared to 3.30% for the quarter ended June 30, 2014.

 

A provision for loan losses of $922,000 was recognized in the second quarter of 2015 as compared to $36,000 in the second quarter of 2014. Net loan recoveries were $24,000 for the quarter ended June 30, 2015 compared to net loan charge-offs of $87,000 for the quarter ended June 30, 2014. The growth in the loan portfolio was a primary factor in the increase in the provision for loan losses. Asset quality indicators for the Company, including impaired and past due loans, remain at favorable levels, including those problem assets obtained in the Acquisition. Payment performance on the Acquisition’s loan portfolio has exceeded management expectations through June 30, 2015.

 

Noninterest income for the second quarter of 2015 totaled $2,407,000 as compared to $1,734,000 for the same period in 2014. The increase in noninterest income is primarily due to security gains in 2015, with no corresponding gain in 2014. Exclusive of realized securities gains, noninterest income increased 10% in the second quarter of 2015 compared to the same period in 2014, primarily due to increased gain on sale of loans held for sale and higher merchant and card fees. The increase in merchant and card fees was primarily due to the Acquisition.

 

 

Noninterest expense for the second quarter of 2015 totaled $6,692,000 compared to $5,409,000 recorded in 2014, an increase of 24%, which was significantly impacted by the Acquisition. The increase in noninterest expense was primarily due to increases in salaries and benefits, other real estate owned expenses, data processing and occupancy expenses. The increase in salaries and benefits, data processing and occupancy expenses was mainly the result of additional expenses attributed to the Acquisition. The increase in other real estate owned expenses was due primarily to the impairment write down previously mentioned. The efficiency ratio for the second quarter of 2015 was 54.88%, compared to 50.49% in 2014.

 

Six Months 2015 Results:

 

For the six months ended June 30, 2015, net income for Ames National Corporation (the Company) totaled $7,000,000 or $0.75 per share, compared to $8,381,000 or $0.90 per share earned in 2014. The lower earnings were primarily related to the gain on the sale of premises and equipment in 2014 of $1,242,000 with no corresponding gain recorded in 2015; as well as a higher provision for loan losses, increased noninterest expense associated with the Acquisition and other real estate owned impairments in 2015.

 

Net interest income for the six months ended June 30, 2015 totaled $19,233,000, an increase of $1,520,000, or 9%, compared to the same period a year ago, due primarily to growth in the real estate loan portfolio. The Company’s net interest margin was 3.30% for the six months ended June 30, 2015 as compared to 3.27% for the six months ended June 30, 2014.

 

A provision for loan losses of $999,000 was recognized in the six months ended June 30, 2015 as compared to $75,000 in the same period a year ago. Net loan recoveries were $34,000 for the six months ended June 30, 2015 compared to net loan charge-offs of $130,000 for the six months ended June 30, 2014.

 

Noninterest income for the six months ended June 30, 2015 totaled $4,173,000 as compared to $4,680,000 for the same period in 2014. The decrease in noninterest income is primarily due to a gain on the sale of premises and equipment in 2014, with no corresponding gain in 2015. Exclusive of realized securities gains and gain on sale of premises and equipment, noninterest income increased 11% in the six months ended June 30, 2015 compared to the same period in 2014, primarily due to increased gain on sale of loans held for sale and higher merchant and card fees.

 

Noninterest expense for the six months ended June 30, 2015 totaled $12,831,000 compared to $10,738,000 recorded in 2014, an increase of 19%, which was significantly impacted by the Acquisition. The increase in noninterest expense was primarily due to increases in salaries and benefits and other real estate owned expenses. The increase in salaries and benefits was mainly the result of additional payroll costs attributed to the Acquisition. The increase in other real estate owned expenses was due primarily to the impairment write down. The efficiency ratio for the six months ended June 30, 2015 was 54.82%, compared to 47.95% in 2014.

 

 

Balance Sheet Review:

 

As of June 30, 2015, total assets were $1,322,119,000, a $86,415,000 increase compared to June 30, 2014. The increase in assets was due primarily to a higher volume of loans, as previously discussed, offset in part by a decrease in securities available-for-sale.

 

Securities available-for-sale as of June 30, 2015 declined to $546,633,000 from $599,239,000 as of June 30, 2014. The decrease in securities available-for-sale is primarily due to the sale or pay downs of U.S. government mortgage-backed bonds and matured or called state and political subdivision bonds. These bond proceeds were largely utilized to fund loan demand.

 

Net loans as of June 30, 2015 increased 23% to $677,580,000 as compared to $549,980,000 as of June 30, 2014. The growth was primarily due to the Acquisition and favorable lending environments in most of the affiliate bank communities. This growth is primarily reflected in all categories of loans, with the primary increases in the commercial real estate and construction real estate portfolios. Asset quality remained favorable as impaired loans, net of specific reserves, totaled $1,697,000, or 0.25% of gross loans as of June 30, 2015, compared to $967,000, or .17% of gross loans as of June 30, 2014. The allowance for loan losses on June 30, 2015 totaled $9,872,000, or 1.44% of gross loans, compared to $8,517,000 or 1.52% of gross loans as of June 30, 2014. The increase in the allowance for loan losses can be primarily attributed to loan growth.

 

Other real estate owned was $4,588,000 and $8,929,000 as of June 30, 2015 and 2014, respectively. The decrease in the other real estate owned was due to the sale of properties and impairment write downs. 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 $1,079,378,000 on June 30, 2015, a 10% increase from the $982,570,000 recorded at June 30, 2014. The increase in deposits was primarily due to the Acquisition.

 

Securities sold under agreements to repurchase totaled $43,478,000 on June 30, 2015, a 29% decrease from the $61,152,000 recorded at June 30, 2014. The decrease was primarily the result of the withdrawal of a portion of one customer’s securities sold under agreements to repurchase balances.

 

The Company’s stockholders’ equity represented 11.84% of total assets as of June 30, 2015 with all of the Company’s five affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $156,569,000 as of June 30, 2015, and $152,325,000 as of June 30, 2014. The increase in stockholders’ equity was primarily the result of net income, offset by lower fair value on the securities available-for-sale which is reflected as a decrease in accumulated other comprehensive income and dividends.

 

 

Shareholder Information:

 

Return on average assets was 1.01% for the quarter ended June 30, 2015, compared to 1.23% for the same period in 2014. Return on average equity was 8.48% for the quarter ended June 30, 2015, compared to the 10.27% in 2014.

 

Return on average assets was 1.05% for the six months ended June 30, 2015, compared to 1.34% for the same period in 2014. Return on average equity was 8.86% for the six months ended June 30, 2015, compared to the 11.33% in 2014.

 

The Company’s stock, which is listed on the NASDAQ Capital Market under the symbol ATLO, closed at $25.10 on June 30, 2015. During the second quarter of 2015, the price ranged from $23.51 to $26.43.

 

On May 13, 2015, the Company declared a quarterly cash dividend on common stock, payable on August 17, 2015 to stockholders of record as of August 3, 2015, equal to $0.20 per share.

 

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, 2015 and 2014

(unaudited)

  

 

		2015				2014
ASSETS
Cash and due from banks		$	26,310,646			$	23,718,424
Interest bearing deposits in financial institutions			29,685,112				26,426,762
Securities available-for-sale			546,632,788				599,239,228
Loans receivable, net			677,579,651				549,980,394
Loans held for sale			465,000				697,145
Bank premises and equipment, net			16,373,694				11,104,529
Accrued income receivable			7,435,248				7,186,788
Other real estate owned			4,587,683				8,928,652
Deferred income taxes			3,171,778				1,325,200
Core deposit intangible, net			1,507,233				902,816
Goodwill			6,732,216				5,600,749
Other assets			1,637,644				593,219
Total assets		$	1,322,118,693			$	1,235,703,906
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Demand, noninterest bearing		$	195,469,480			$	167,184,250
NOW accounts			298,586,336				280,415,844
Savings and money market			357,110,905				301,022,762
Time, $250,000 and over			33,950,601				36,686,658
Other time			194,261,076				197,260,885
Total deposits			1,079,378,398				982,570,399
Securities sold under agreements to repurchase			43,478,402				61,151,643
Federal Home Loan Bank (FHLB) advances and other borrowings			36,968,367				34,504,421
Dividend payable			1,862,183				1,675,964
Accrued expenses and other liabilities			3,862,105				3,476,535
Total liabilities			1,165,549,455				1,083,378,962
STOCKHOLDERS' EQUITY
Common stock, $2 par value, authorized 18,000,000 shares; issued 9,310,913 shares as of June 30, 2015 and 9,432,915 shares as of June 30, 2014; outstanding 9,310,913 shares as of June 30, 2015 and 2014			18,621,826				18,865,830
Additional paid-in capital			20,878,728				22,651,222
Retained earnings			113,977,220				107,183,584
Accumulated other comprehensive income-net unrealized income on securities available-for-sale			3,091,464				5,640,806
Treasury stock, at cost; 122,002 shares as of June 30, 2014			-				(2,016,498	)
Total stockholders' equity			156,569,238				152,324,944
Total liabilities and stockholders' equity		$	1,322,118,693			$	1,235,703,906

 

 

AMES NATIONAL CORPORATION AND SUBSIDIARIES

 

Consolidated Statements of Income

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Interest income:
Loans		$	7,712,057			$	6,576,580			$	15,111,747			$	12,986,011
Securities
Taxable			1,566,298				1,851,296				3,132,696				3,614,899
Tax-exempt			1,479,726				1,645,094				2,966,086				3,319,202
Interest bearing deposits and federal funds sold			100,669				72,937				194,047				146,076
Total interest income			10,858,750				10,145,907				21,404,576				20,066,188
Interest expense:
Deposits			768,650				862,691				1,531,046				1,754,701
Other borrowed funds			302,611				303,861				640,774				598,347
Total interest expense			1,071,261				1,166,552				2,171,820				2,353,048
Net interest income			9,787,489				8,979,355				19,232,756				17,713,140
Provision for loan losses			921,513				35,644				998,813				74,875
Net interest income after provision for loan losses			8,865,976				8,943,711				18,233,943				17,638,265
Noninterest income:
Wealth Management Income			681,347				724,376				1,369,257				1,421,195
Service fees			444,798				410,795				839,357				768,274
Securities gains, net			492,355				-				497,304				135,081
Gain on sale of loans held for sale			285,312				150,526				499,298				249,179
Merchant and card fees			351,879				290,250				666,473				549,639
Gain (loss) on sale of premises and equipment, net			-				(14,715	)			(1,132	)			1,242,209
Other noninterest income			151,296				172,740				302,649				314,179
Total noninterest income			2,406,987				1,733,972				4,173,206				4,679,756
Noninterest expense:
Salaries and employee benefits			3,810,977				3,430,736				7,535,911				6,722,188
Data processing			704,596				595,570				1,369,131				1,166,920
Occupancy expenses, net			467,509				349,588				993,596				818,808
FDIC insurance assessments			167,274				163,352				350,270				325,696
Professional fees			312,732				348,441				605,170				630,888
Business development			232,088				215,616				464,932				423,477
Other real estate owned expense, net			562,147				19,006				710,210				19,710
Core deposit intangible amortization			109,375				61,000				222,998				126,748
Other operating expenses, net			325,454				225,798				578,791				503,774
Total noninterest expense			6,692,152				5,409,107				12,831,009				10,738,209
Income before income taxes			4,580,811				5,268,576				9,576,140				11,579,812
Income tax expense			1,216,001				1,413,653				2,576,401				3,198,798
Net income		$	3,364,810			$	3,854,923			$	6,999,739			$	8,381,014
Basic and diluted earnings per share		$	0.36			$	0.41			$	0.75			$	0.90
Declared dividends per share		$	0.20			$	0.18			$	0.40			$	0.36