Date: 4/22/2024

Title: Ames National Corporation Announces Earnings for the First Quarter of 2024

AMES NATIONAL CORPORATION ANNOUNCES EARNINGS FOR THE FIRST QUARTER OF 2024

Ames, Iowa – Ames National Corporation (Nasdaq: ATLO; the “Company”) today reported net income for the first quarter of 2024 of $2.3 million, or $0.26 per share, compared to $3.2 million, or $0.36 per share, earned in the first quarter of 2023. The decrease in earnings is primarily the result of higher interest expense on deposits and other borrowed funds, offset in part by an increase in interest income on loans. The higher interest expense on deposits is due to an increase in market rates and customers seeking higher interest rate options. The increase in interest income on loans was primarily due to higher rates and growth in the loan portfolio.

First Quarter 2024 Results:
First quarter 2024 loan interest income was $2.8 million higher than first quarter 2023 and was primarily due to higher average interest rates and growth in the loan portfolio. Deposit interest expense increased $2.9 million during this same period due primarily to an increase in market interest rates and customers shifting to higher rate deposit products. Other borrowed funds interest expense increased $804 thousand during the same period due primarily to increased borrowings. First quarter 2024 net interest income totaled $10.9 million, a decrease of $0.8 million, or 6.5%, compared to the same quarter a year ago. The Company’s net interest margin was 2.13% for the quarter ended March 31, 2024 as compared to 2.32% for the quarter ended March 31, 2023. The net interest margin was 2.15% for the quarter ended December 31, 2023. The decrease in net interest margin compared to 2023 was primarily due to an increase in market interest rates on deposits in excess of rate increases on interest-earning assets.

A credit loss expense of $169 thousand was recognized in the first quarter of 2024 as compared to a credit loss expense of $275thousand in the first quarter of 2023. Net loan recoveries totaled $4 thousand for the quarter ended March 31, 2024 compared to net loan charge-offs of $158 thousand for the quarter ended March 31, 2023. The credit loss expense in 2024 was primarily due to an increase in the risks associated with the softening of commercial real estate collateral. The credit loss expense in 2023 was primarily due to a charge-off in the agriculture loan portfolio.

Noninterest income for the first quarter of 2024 totaled $2.2 million as compared to $2.3 million in the first quarter of 2023, a decrease of 3%. The decrease is primarily due to losses on the sale of securities. The Company used the $2.0 million of proceeds from the sale of securities to reduce outstanding borrowings.

Noninterest expense for the first quarter of 2024 totaled $10.2 million compared to $9.8 million recorded in the first quarter of 2023, an increase of 4%. The increase is primarily due to higher FDIC assessments and normal increases in salaries and benefits. The efficiency ratio was 77.9% for the first quarter of 2024 as compared to 70.2% in the first quarter of 2023.

Income tax expense for the first quarter of 2024 totaled $416 thousand compared to $671 thousand recorded in the first quarter of 2023. The effective tax rate was 15% and 17% for the quarters ended March 31, 2024 and 2023, respectively. The lower than expected tax rate in 2024 and 2023 was primarily due to tax-exempt interest income and New Markets Tax Credits.

Balance Sheet Review:
As of March 31, 2024, total assets were $2.19 billion, an increase of $2.2 million, as compared to March 31, 2023. The increase in assets was primarily due to an increase in loans and interest-bearing deposits, offset by a decrease in securities available-for-sale.

Securities available-for-sale as of March 31, 2024 decreased to $723.2 million from $788.9 million as of March 31, 2023. The decrease in securities available-for-sale is primarily due to maturities in excess of purchases. The Company's investment portfolio had an expected duration of 3.4 years as of March 31, 2024. There are approximately $96 million of investments maturing within one year at an average yield of approximately 1.6%.

Net loans as of March 31, 2024 increased to $1.27 billion as compared to $1.22 billion as of March 31, 2023, an increase of 4%. The increase was primarily due to an increase in the agriculture and 1-4 family loan portfolios. There are approximately $225 million of loans maturing within one year.

The allowance for credit losses on March 31, 2024 totaled $17.0 million, or 1.31% of loans, compared to $16.3 million, or 1.31% of loans, as of March 31, 2023. The increase in the allowance for credit losses is mainly due to loan growth and an
increased collateral value risk factor in the commercial real estate portfolio. Regarding the commercial real estate portfolio, the Company’s outstanding loans to finance non-owner occupied commercial office properties is approximately 3% of total loans outstanding as of March 31, 2024.

Deposits totaled $1.87 billion as of March 31, 2024, a decrease of 1%, compared to $1.90 billion recorded as of March 31, 2023. The decline in deposits is primarily due to decreases in retail and commercial noninterest-bearing checking, savings and money market accounts as customers seek higher interest rates. A portion of the decline in retail and commercial noninterest bearing checking, savings and money market accounts was offset by an increase in time deposits and public funds. Deposit balances fluctuate as customers’ liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions.

Other borrowings increased to $90.3 million as of March 31, 2024 compared to $78.6 million as of March 31, 2023. The increase in other borrowings is primarily due to growth in loans and a decrease in retail and commercial deposits. Bank Term Financing Program (BTFP) borrowings of $75 million matured during the first quarter of 2024 with an interest rate of 4.37%. The Company replaced $72 million of this borrowing with $30 million from the FHLB at a weighted average interest rate of 5.15% and $42 million from the BTFP at an interest rate of 5.40%. The Company plans to reduce borrowings throughout 2024 as investments mature.

The Company’s stockholders’ equity represented 7.6% of total assets as of March 31, 2024 with all of the Company’s six affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $165.5
million as of March 31, 2024, compared to $159.1 million as of March 31, 2023. The increase in stockholders’ equity was primarily the result of a decrease in unrealized losses on the investment portfolio.

Cash Dividend Announcement
On February 14, 2024, the Company declared a quarterly cash dividend on common stock, payable on May 15, 2024 to stockholders of record as of May 1, 2024, equal to $0.27 per share.

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 Co., 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 performance and asset quality. Forward-looking statements contained in this News Release are not historical facts and are based on management’s current beliefs, assumptions, predictions and expectations of future events, including the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions, predictions and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to management and many of which are beyond management’s control. 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. Accordingly, investors are cautioned not to place undue reliance on such forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “forecasts”, “continuing,” “ongoing,” “expects,” “views,” “intends” and similar words or phrases. The risks and uncertainties that may affect the Company’s future performance and asset quality include, but are not limited to, the following: national, regional and local economic conditions and the impact they may have on the Company and its customers; 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 credit losses as dictated by new market conditions or regulatory requirements; changes in local, national and international economic conditions, including rising inflation rates; 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 headings “Forward-Looking Statements and Business Risks” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2023. Any forward-looking statements are qualified in their entirety by the foregoing risks and uncertainties and speak only as of the date on which such statements are made. The Company undertakes no obligation to revise or update such forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.