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Date: 4/11/2014

Title: ANC Announces 2014 Q1 Earnings

Ames National Corporation Announces 2014 First Quarter Earnings Results


First Quarter 2014 Results:

For the quarter ended March 31, 2014, net income for Ames National Corporation (the Company) totaled $4,526,000, or $0.49 per share, compared to $3,586,000 or $0.39 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 interest income on securities available-for-sale and loans, offset in part by a decrease in the level of gain realized on sale of loans held for sale.  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 $3,738,000, or $0.40 per share in 2014, as compared to $3,586,000, or $0.39 per share in 2013. 

First quarter net interest income totaled $8,734,000, an increase of $649,000, or 8.0%, compared to the same quarter a year ago, due primarily to an increase in the average balance of loans and an increase in the yields on securities available-for-sale.  This improvement in interest income led to an improvement in the Company’s net interest margin to 3.24% for the quarter ended March 31, 2014 as compared to 3.13% for the quarter ended March 31, 2013.  

A provision for loan losses of $39,000 was recognized in the first quarter of 2014 as compared to a provision for loan losses of $14,000 in the first quarter of 2013.  Net loan charge-offs were $44,000 for the quarter ended March 31, 2014 compared to net loan charge-offs of $400 for the quarter ended March 31, 2013.

Noninterest income for the first quarter of 2014 totaled $2,946,000 as compared to $1,843,000 for the same period in 2013.  The increase in noninterest income is primarily due to the gain on the sale of the University office, which was offset in part by a decrease in the level of gains realized on the sale of loans held for sale due to decreased secondary market volume as refinancing activity has slowed.  

Noninterest expense for the first quarter of 2014 totaled $5,329,000 compared to $5,119,000 recorded in 2013.  The increase of 4.1% in noninterest expense was primarily the result of increased occupancy expense due to one-time costs associated with the sale of the University office and increased salaries and benefits due to normal salary increases.  The efficiency ratio for the first quarter of 2014 was 45.76%, compared to 51.56% in 2013.   

Balance Sheet Review:

As of March 31, 2014, total assets were $1,257,981,000, a $3,451,000 increase compared to March 31, 2013.  Assets remain relatively unchanged as compared to last year.

Securities available-for-sale as of March 31, 2014 declined to $600,831,000, from $608,304,000 as of March 31, 2013.  The decrease in securities available-for-sale is primarily due to a reduction in the unrealized gain on securities and pay downs of U.S. government mortgage-backed securities, offset in part by purchases of U.S. government agencies and corporate bonds.

Net loans as of March 31, 2014 increased 8.0% to $548,545,000 as compared to $507,834,000 as of March 31, 2013.  The growth was due primarily to increases in the commercial and agricultural real estate loan portfolios.  The allowance for loan losses on March 31, 2014 totaled $8,568,000, or 1.54% of gross loans, compared to $7,786,000 or 1.51% of gross loans as of March 31, 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 March 31, 2014, were $1,434,000, or 0.26% of gross loans, compared to $5,965,000, or 1.16% of gross loans as of March 31, 2013.  

Other real estate owned was $8,880,000 as of March 31, 2014, which was $715,000 lower than March 31, 2013, primarily due to a 2013 impairment write down and sales.  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 $1,027,793,000 on March 31, 2014, a 0.6% decrease from the $1,034,217,000 recorded at March 31, 2013.  While the deposit totals are relatively unchanged, the Company had reductions in time certificates of deposit and NOW accounts, offset by growth in savings and money market and demand accounts.

The Company’s stockholders’ equity represented 11.7% of total assets as of March 31, 2014 with all of the Company’s five affiliate banks considered well-capitalized as defined by federal capital regulations.  Total stockholders’ equity was $147,188,000 as of March 31, 2014, and $145,772,000 as of March 31, 2013.  The increase in stockholders’ equity was primarily the result of net income, offset by lower fair value on the securities available-for-sale as reflected in the decrease in accumulated other comprehensive income and dividends.

Shareholder Information:

Return on average assets was 1.45% for the quarter ended March 31, 2014, compared to 1.18% for the same period in 2013.  Return on average equity was 12.43% for the quarter ended March 31, 2014, compared to the 9.87% in 2013.  Excluding the after tax one-time gain on the sale of premises and equipment, return on average assets would have been 1.20% and return on average equity would have been 10.27% for 2014.  

The Company’s stock, which is listed on the NASDAQ Capital Market under the symbol ATLO, closed at $22.04 on March 31, 2014.   During the first quarter of 2014, the price ranged from $20.24 to $23.50.

On February 11, 2014, the Company declared a quarterly cash dividend on its common stock, payable on May 15, 2014 to stockholders of record as of May 1, 2014, equal to $0.18 per share.

The Company is forecasting earnings for the year ending December 31, 2014 in the range of $1.58 to $1.64 per share compared to $1.50 per share earned for the year ended December 31, 2013.

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.

For further information contact:
Thomas H. Pohlman, President and CEO
(515) 232-6251 or Tom.Pohlman@amesnational.com