Ames National Corporation Announces Earnings 2022 Q1 Earnings (04/22/22)
AMES NATIONAL CORPORATION ANNOUNCES EARNINGS FOR THE FIRST QUARTER OF 2022
Ames, Iowa – Ames National Corporation (Nasdaq: ATLO; the “Company”) today reported net income for the first quarter of 2022 of $5.1 million, or $0.57 per share, compared to $6.0 million, or $0.66 per share, earned in the first quarter of 2021. The decrease in earnings is primarily the result of lower interest income on loans, offset in part by an increase in interest income on taxable securities and a decrease in interest expense on time deposits. The reduction in interest income on loans was primarily due to fewer Paycheck Protection Program (“PPP”) fees recognized into income compared to the same period in 2021 and a decline in interest rates. The increase in interest income on taxable securities was primarily due to purchases in excess of maturities. The reduction in interest expense on time deposits was due to declines in interest rates and average balances.
First Quarter 2022 Results:
First quarter 2022 loan interest income was $1.3 million lower than first quarter 2021. The decrease is primarily due to a reduction in interest rates, less income recognized from PPP fees, and a reduction in the recovery of interest income on nonaccrual loans. Fees recognized from PPP loans during the first quarter of 2022 were $200 thousand as compared to $840 thousand of fees during the first quarter of 2021. Nonaccrual interest income recognized in the first quarter of 2022 was $7 thousand compared to $335 thousand recognized during the first quarter of 2021. Taxable securities interest income was $599 thousand higher than the first quarter of 2021 due primarily to increased balances. Deposit interest expense declined $406 thousand during this same period primarily related to time deposits. This decline was primarily due to interest rate declines and a decrease in time deposit balances. First quarter 2022 net interest income totaled $13.2 million, a decrease of $512 thousand, or 4%, compared to the same quarter a year ago. The Company’s net interest margin was 2.55% for the quarter ended March 31, 2022 as compared to 2.86% for the quarter ended March 31, 2021, as growth in deposits was reinvested in loans and investments at lower average interest rates and a decline in PPP fees.
A credit for loan losses of ($127) thousand was recognized in the first quarter of 2022 as compared to a credit for loan losses of ($426) thousand in the first quarter of 2021. Net loan charge-offs totaled $10 thousand for the quarter ended March 31, 2022 compared to net loan recoveries of $118 thousand for the quarter ended March 31, 2021. The credit for loan losses in the first quarter of 2022 was primarily due to a decline in loans outstanding from December 31, 2021. The credit for loan losses in the first quarter of 2021 was primarily due to loan recoveries, a reduction in a specific reserve and lower loan balances from December 31, 2020.
Noninterest income for the first quarter of 2022 totaled $2.6 million as compared to $2.5 million in the first quarter of 2021. The increase in noninterest income was primarily due to an increase in wealth management income, offset in part by a decrease in gains on sale of residential loans held for sale as refinancing volume has slowed.
Noninterest expense for the first quarter of 2022 totaled $9.4 million compared to $9.0 million recorded in the first quarter of 2021, an increase of 4%. The increase is primarily due to an increase in salaries and employee benefits, professional fees and business development costs. The efficiency ratio was 59.7% for the first quarter of 2022 as compared to 55.7% in the first quarter of 2021.
Income tax expense for the first quarter of 2022 totaled $1.3 million compared to $1.6 million recorded in the first quarter of 2021. The effective tax rate was 20% and 21% for the quarters ended March 31, 2022 and 2021, respectively. The lower than expected tax rate in 2022 and 2021 was due primarily to tax-exempt interest income and New Markets Tax Credits.
Balance Sheet Review:
As of March 31, 2022, total assets were $2.2 billion, an increase of $85 million, as compared to March 31, 2021. This increase in assets is primarily due to investment securities which was funded by growth in our deposits due in part to federal government stimulus programs.
Securities available-for-sale as of March 31, 2022 increased to $824 million from $672 million as of March 31, 2021. The increase in securities available-for-sale is primarily due to purchases of U.S. treasuries and municipals as deposit growth was deployed, offset in part by a decline in fair value. The decline in fair value is due to interest rate increases during the first quarter of 2022.
Net loans as of March 31, 2022 increased slightly to $1.13 billion, as compared to $1.12 billion as of March 31, 2021. The increase was primarily due to increases in the 1-4 family and commercial real estate loan portfolios, offset in part by a reduction in PPP loans. PPP loans totaled $301 thousand and $59.2 million as of March 31, 2022 and 2021, respectively. Impaired loans were $12.2 million and $13.4 million as of March 31, 2022 and 2021, respectively. Loans classified as substandard were $38.6 million and $39.9 million as of March 31, 2022 and 2021, respectively. Loans classified as watch and special mention totaled $138.7 million and $176.0 million as of March 31, 2022 and 2021, respectively. The allowance for loan losses on March 31, 2022 totaled $16.5 million, or 1.44% of gross loans, compared to $16.9 million, or 1.48% of gross loans, as of March 31, 2021. The decrease in the allowance for loan losses is mainly due to lower specific reserves and an improved economy, offset in part by loan growth, excluding PPP loans. PPP loans are government guaranteed and their impact on the allowance for loan loss was not significant. Additional increases in the allowance for loan losses and charge-offs are possible if the effects of the COVID-19 pandemic or high inflation levels negatively impact our loan portfolio in the future.
Deposits totaled $1.96 billion as of March 31, 2022, an increase of 6%, compared to $1.84 billion recorded as of March 31, 2021. The growth in deposits is primarily due to increases in core deposits, including retail, commercial and public funds, offset in part by a decrease in time deposits. Balances fluctuate as customer’s liquidity needs vary and could be impacted by additional government stimulus or distressed economic conditions.
The Company’s stockholders’ equity represented 8.1% of total assets as of March 31, 2022 with all of the Company’s six affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $176.7 million as of March 31, 2022, compared to $204.4 million as of March 31, 2021. The decrease in stockholders’ equity was primarily the result of an increase in unrealized losses on the investment portfolio, offset in part by the retention of net income in excess of dividends.
Cash Dividend Announcement
On February 9, 2022, the Company declared a quarterly cash dividend on common stock, payable on May 13, 2022 to stockholders of record as of April 29, 2022, equal to $0.27 per share, an increase of $0.01 per share or 4% from the prior quarter.
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About Ames National Corporation
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; United Bank & Trust, Marshalltown; and Iowa State Savings Bank, Creston, Iowa.
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: the substantial negative impact of the COVID-19 pandemic on national, regional and local economies in general and on our customers in particular; 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 resulting from the COVID-19 pandemic or as 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.
For further information contact:
(515) 232-6251 or [email protected]