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AN

AMES NATIONAL CORP (ATLO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid improvement: EPS rose to $0.39 (vs $0.26 YoY) on stronger net interest income and margin expansion, partially offset by higher credit loss expense tied to a specific commercial loan reserve . Net interest margin (NIM) expanded to 2.53% (2.13% YoY; 2.38% in Q4) and the efficiency ratio improved to 66.38% (77.92% YoY; 71.47% in Q4) .
  • Asset quality mixed: allowance increased to 1.36% of loans; substandard-impaired loans rose to $15.7M; problem loans were 1.25% of loans, above Iowa peers (0.47% as of 12/31/24) .
  • Funding and liquidity strengthened: deposits grew sequentially to $1.91B; other borrowings declined; securities unrealized losses narrowed; capital ratio at 8.4% equity/asset with banks well-capitalized .
  • Capital return: $0.20 dividend declared with a timing policy shift (declare and pay in same quarter); repurchased 33,553 shares in Q1 under the 2024 authorization .
  • Estimates context: S&P Global Wall Street consensus for Q1 2025 EPS and revenue was not available; no call transcript found; focus shifts to sustained NIM recovery and credit trends as primary stock catalysts [List result: no transcript] [GetEstimates returned no consensus fields].

What Went Well and What Went Wrong

  • What Went Well

    • Margin and efficiency inflected: “First quarter 2025 net interest income totaled $12.9 million… primary contributors to the Company’s net interest margin improving to 2.53%… from 2.13% [YoY] and 2.38% [Q4]” . Efficiency ratio improved to 66.38% from 77.92% YoY .
    • Funding mix and lower borrowings: Deposit interest expense decreased $170K YoY; other borrowed funds interest expense fell $832K on reduced borrowings, supporting NII growth and NIM .
    • Noninterest income growth: Wealth management and lower securities losses lifted noninterest income 17% YoY to $2.55M .

  • What Went Wrong

    • Higher credit loss expense: Provision rose to $962K (vs $169K YoY) due to a specific reserve on a commercial relationship; net charge-offs were $48K (vs $4K net recoveries YoY) .
    • Asset quality pressure pockets: Substandard-impaired loans increased to $15.7M; nonaccruals at $16.3M; problem loans ratio increased to 1.25% (above Iowa peers at 0.47%) amid commercial real estate softness (occupancy and collateral values) .
    • Covenant sensitivity: Company disclosed noncompliance with a lender’s modified Texas Ratio covenant (21.8% vs ≤20% target) at quarter-end; lender waived noncompliance (also waived at 12/31/24) .

Financial Results

Income statement snapshot (oldest → newest):

MetricQ1 2024Q4 2024Q1 2025
Net income ($MM)$2.304 $3.513 $3.443
Diluted EPS ($)$0.26 $0.39 $0.39
Net interest income ($MM)$10.906 $12.121 $12.915
Credit loss expense ($MM)$0.169 $(0.130) $0.962
Noninterest income ($MM)$2.177 $2.628 $2.547
Noninterest expense ($MM)$10.194 $10.541 $10.263
Net interest margin (FTE) %2.13% 2.38% 2.53%
Efficiency ratio %77.92% 71.47% 66.38%
ROA %0.43% 0.66% 0.65%
ROE %5.60% 7.84% 7.72%

Balance sheet highlights:

MetricQ1 2024Q4 2024Q1 2025
Total assets ($MM)$2,191.8 $2,133.2 $2,184.3
Loans receivable, net ($MM)$1,272.6 $1,303.9 $1,306.2
Deposits ($MM)$1,872.1 $1,846.7 $1,906.4
Stockholders’ equity ($MM)$165.5 $174.7 $183.1
Equity/Assets %7.55% 8.19% 8.38%

Credit quality and capital KPIs:

KPIQ3 2024Q4 2024Q1 2025
Nonaccrual loans ($MM)$17.5 $14.8 $16.3
Problem loans / total loans %1.33% 1.17% 1.25%
Substandard-impaired loans ($MM)$16.9 $14.2 $15.7
Allowance for credit losses / loans %1.34% 1.29% 1.36%
CET1 ratio – Consolidatedn/a13.1% 13.2%

Note: For banks, “revenue” comparisons are not consistently defined; we present Net Interest Income and Noninterest Income components rather than a synthetic “total revenue.”

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (diluted)FY 2025$1.72 – $1.82 (issued with Q4 release on 1/24/25) No update provided in Q1 materialsMaintained (no update)
Dividend policyOngoingHistorically declared in one quarter, paid next Shift to declare and pay in same quarter beginning 2025; Q1 dividend $0.20 payable June 13, 2025; no Q2 declaration (timing transition) Policy change
Share repurchase2024–2025 program100,000 shares authorized in Nov-2024; 43,057 repurchased in Q4 2024 33,553 shares repurchased in Q1 2025; 23,390 remaining as of 3/31/25 Ongoing execution

No explicit 2025 NIM, credit costs, or operating expense guidance was provided in Q1 materials.

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 2025 (no transcript found in document system). Thematic evolution below draws from Q3 2024 10-Q, Q4 2024 release, and Q1 2025 8-K/10-Q.

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Net interest marginQ3: 2.21% FTE; pressures from funding costs . Q4: improved to 2.38% .NIM 2.53% on higher loan yields and reduced borrowings .Improving
Credit quality (CRE softness)Rising substandard-impaired; CRE occupancy and collateral declining; watch/special mention elevated .Specific reserve on commercial relationship drove higher provision; substandard-impaired $15.7M; nonaccrual $16.3M .Mixed/Deteriorating pockets
Deposits & fundingQ3: shift to higher-rate products; repurchase balances down . Q4: continued deposit mix shift; borrowings reduced .Deposits +$60M QoQ to $1.91B; 16% of deposits indexed; borrowings down to $35.8M .Improving liquidity
Securities AFS & OCIQ3: unrealized losses $39.8M; duration ~3.16 years . Q4: $648.5M AFS .AFS $640.4M; unrealized losses $42.7M; duration ~3.0 years .Stable to slightly better duration/OCI
Capital & repurchaseQ3: equity up on OCI improvement . Q4: buyback initiated .Equity/asset 8.4%; 33,553 shares repurchased; CET1 13.2% .Stable/Shareholder friendly
Covenants/creditQ3: Texas Ratio covenant breach waived . Q4: n/a.Modified Texas Ratio noncompliance waived again at 3/31/25 .Risk flag persists (waived)

Management Commentary

  • “The increase in earnings is primarily due to an increase in net interest income and partially offset by an increase in credit loss expense. The increase in net interest income is primarily due to an increase in the volume and yield of loans and a decrease in interest expense on other borrowed funds… The increase in credit loss expense is primarily due to a specific reserve placed on a commercial loan relationship.”
  • “These factors were the primary contributors to the Company’s net interest margin improving to 2.53% for the quarter ended March 31, 2025 as compared to 2.13% for the quarter ended March 31, 2024 and 2.38% for the quarter ended December 31, 2024.”
  • “The efficiency ratio continues to improve as net interest margin increases and noninterest expense is comparable to the prior year.”

Q&A Highlights

  • No Q1 2025 earnings call transcript was available in the document system; therefore, no Q&A themes or additional guidance clarifications could be extracted [ListDocuments showed no earnings-call-transcript].

Estimates Context

  • S&P Global consensus estimates for Q1 2025 EPS and revenue, and FY 2025 EPS, were not available in the dataset returned (no “Primary EPS Consensus Mean,” “Revenue Consensus Mean,” or target price fields populated for Q1 2025/FY 2025). As a result, we cannot quantify beats/misses versus Street for this quarter. Values retrieved from S&P Global.

Where estimates are unavailable, we anchor analysis to reported metrics and sequential/YoY trends from company filings -.

Key Takeaways for Investors

  • Margin recovery is the core driver: NIM rose to 2.53% and efficiency reached 66%, pointing to operating leverage if funding costs remain contained and loan yields hold; continued runoff of higher-cost borrowings is an incremental tailwind .
  • Credit remains the swing factor: Provision stepped up on a specific commercial loan reserve; substandard-impaired and nonaccrual balances remain elevated, particularly in CRE; monitor downgrades and provisioning cadence through 2025 .
  • Funding/liquidity improving: Deposits increased QoQ to $1.91B and borrowings declined to $35.8M, providing flexibility while 16% of deposits are index-linked (potentially more volatile in rate shifts) .
  • Capital/OCI sensitivity manageable: Equity/assets at 8.4%, CET1 ~13.2%; AFS duration ~3 years and unrealized losses remain rate-driven; OCI tailwinds could continue if rates ease -.
  • Shareholder returns intact: Dividend maintained at $0.20 with a timing change; buyback activity continued with 33.6K shares repurchased in Q1; scope remains modest but supportive .
  • Covenant watch: Repeated waiver of modified Texas Ratio covenant is a governance/credit flag to monitor; additional waivers or remediation plan details would be incremental information .
  • Near-term positioning: With no Street consensus to calibrate expectations, the narrative path is clear—sustain NIM, hold expenses, and contain credit costs. Upside hinges on stable credit trends; downside risks are further CRE stress or funding cost re-acceleration .