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AN

AMES NATIONAL CORP (ATLO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 EPS was $0.51 and net income was $4.5M, up sharply year over year, driven by a 23.9% increase in net interest income and improving net interest margin to 2.65% (FTE) .
  • Operating efficiency improved materially as the efficiency ratio fell to 64.34% from 79.61% in Q2 2024, aided by lower noninterest expense and funding costs .
  • Credit costs remained manageable with $108K provision and one commercial charge‑off reserved in Q1; allowance stood at $17.0M (1.31% of loans) amid CRE and agriculture weakness .
  • Dividend timing change reaffirmed (declare and pay in same quarter); no dividend declared in Q2 but the $0.20 dividend paid from Q1 was executed as planned .
  • No earnings call transcript was available for Q2 2025; MarketBeat listed “Conference Call Date: N/A” for Q2 2025, limiting real‑time Q&A insights .

What Went Well and What Went Wrong

What Went Well

  • Net interest income expanded to $13.5M (+$2.6M YoY), driven by improved loan yields, higher interest‑bearing cash balances, and reduced cost of funds as rates fell and borrowings declined .
    • “The net interest income expansion was driven by…improved loan yield, growth in interest‑bearing cash deposits and a decreased cost of funds as market rates have decreased and the Company has reduced borrowings.” — Company news release .
  • Net interest margin improved to 2.65% (FTE) versus 2.14% in Q2 2024 and 2.53% in Q1 2025, reflecting the funding cost relief and asset repricing benefits .
  • Efficiency ratio improved to 64.34% from 79.61% YoY, with noninterest expense down 3.5% due to lower consultant fees and cost discipline .

What Went Wrong

  • Net loan charge‑offs totaled $1.1M (vs. none in Q2 2024), tied to a commercial relationship reserved in Q1; allowance coverage eked down to 1.31% of loans (from 1.36% in Q1) .
  • Signs of weakening credit in CRE (occupancy/valuation) and agriculture (one relationship), with substandard‑impaired loans rising to $18.4M YoY (vs. $12.0M) .
  • Deposits were flat YoY at $1.819B, with continued customer migration to higher‑rate products and 14% of deposits indexed (potentially more volatile), limiting funding mix improvement .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
EPS ($)$0.39 $0.39 $0.51
Net Income ($USD Millions)$3.51 $3.44 $4.51
Net Interest Income ($USD Millions)$12.12 $12.92 $13.47
Noninterest Income ($USD Millions)$2.63 $2.55 $2.64
Net Interest Margin (FTE, %)2.38% 2.53% 2.65%
Efficiency Ratio (%)71.47% 66.38% 64.34%
ROAA (%)0.66% 0.65% 0.85%
ROAE (%)7.84% 7.72% 9.67%

Revenue vs estimates (S&P Global definitions):

MetricQ1 2025Q2 2025
Revenue (Actual, $USD Millions)$14.50*$16.00*
Consensus Revenue MeanN/A*N/A*
Consensus EPS MeanN/A*N/A*

Values retrieved from S&P Global.*

KPIs

KPIQ4 2024Q1 2025Q2 2025
Loans Receivable, Net ($USD Billions)$1.304 $1.306 $1.280
Deposits ($USD Billions)$1.847 $1.906 $1.819
Other Borrowings ($USD Millions)$46.95 $35.80 $30.65
Securities AFS ($USD Millions)$648.51 $640.42 $644.70
Allowance for Credit Losses ($USD Millions)$17.10 $18.00 $17.00
ACL / Loans (%)1.29% 1.36% 1.31%
Substandard Loans ($USD Millions)$35.5 $32.4 $23.5
Substandard‑Impaired Loans ($USD Millions)$14.2 $15.7 $18.4
Indexed Deposits (% of Total)14% 16% 14%

Non‑GAAP note: Net interest margin presented on a fully taxable equivalent basis, reconciled to GAAP (Q2 2025 FTE NIM 2.65%; GAAP NII $13.466M, tax‑equiv. adj. $120K) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (GAAP)FY 2025$1.72–$1.82 (issued Jan 24, 2025) No update provided in Q2 release Maintained (latest available)
Dividend PolicyOngoingDeclare in one quarter, pay next (historical) Reaffirmed shift to declare and pay in same quarter; Q2 no declaration, paid $0.20 from Q1 Maintained new timing
Share RepurchaseProgram through Nov 2024 authorization100,000 shares authorized; 43,057 repurchased in Q4 2024; 33,553 repurchased by Jan 24, 2025 16,868 repurchased in Q2 (avg $16.48); 6,522 shares remaining under program Ongoing execution
Tax Rate (Effective)Q2 2025N/A20% in Q2; 19% YTD commentary (not formal guidance) Informational only

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Net Interest MarginQ4: 2.38%; Q1: 2.53% 2.65% (FTE) as funding costs fell and assets repriced Improving
Funding Costs & BorrowingsQ4 borrowings $47.0M; Q1 $35.8M Borrowings down to $30.7M; deposit interest expense −$783K YoY Improving
Credit Quality (CRE/Agriculture)Q4: rising substandard due to CRE softening CRE occupancy/valuation pressure; one ag relationship; net charge‑offs $1.1M Mixed / watchlist
Wealth ManagementQ4 and Q1 growth in AUM driving income Noninterest up modestly; wealth income +$42K YoY Positive
Deposits & Indexed ProductsQ4 14% indexed; Q1 16% indexed 14% indexed; deposit mix shift to time/public funds continues Stable with mix shift
Regulatory/Macro (Tariffs, Rates)Forward‑looking risks summarized Similar risk factors including tariffs and rate environment Unchanged

Note: No Q2 2025 earnings call transcript was available; MarketBeat listed “Conference Call Date: N/A” for Q2 2025 .

Management Commentary

  • “Net interest income totaled $13.5 million, an increase of $2.6 million… These factors were the primary contributors to the Company’s net interest margin improving to 2.65%…” — Q2 News Release .
  • “Deposit interest expense decreased $783 thousand… Other borrowed funds interest expense decreased $861 thousand… due primarily to reduced borrowings.” — Q2 News Release .
  • “The charge‑off in the second quarter 2025 was on a commercial loan relationship that was reserved for in the allowance for credit losses in the first quarter of 2025.” — Q2 News Release .
  • “Going forward, the Company expects… to declare and pay dividends in the same quarter.” — Q2 News Release .
  • “Substandard‑impaired loans were $18.4 million… The increase… is primarily due to weakening in the commercial real estate and agricultural loan portfolios.” — Q2 News Release .

Q&A Highlights

  • No Q2 2025 earnings call transcript or Q&A was available; MarketBeat flagged “Conference Call Date: N/A” for the quarter .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue was unavailable (no coverage), so a beat/miss determination versus consensus cannot be made.*
  • Actual “Revenue” (S&P definition) recorded as $16.00M* in Q2 2025 and $14.50M* in Q1 2025, consistent with strong net interest income and stable noninterest income components .*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential NIM expansion (2.38% → 2.53% → 2.65%) alongside lower funding costs is the core earnings driver; continuation would support FY 2025 EPS guidance ($1.72–$1.82) issued in January .
  • Efficiency gains (64.34% ratio) and reduced borrowings are accretive to profitability and capital flexibility .
  • Credit remains the swing factor: watch CRE occupancy/valuations and agriculture exposure; Q2 charge‑off was anticipated via Q1 specific reserve .
  • Deposit mix remains competitive with 14% indexed products; funding cost relief helped Q2, but index‑linked volatility warrants monitoring if rates shift .
  • Capital returns: continued share repurchases (16,868 shares in Q2) and clarified dividend timing enhance shareholder visibility .
  • With no consensus estimates coverage, price discovery may hinge on reported NIM trajectory and credit updates rather than headline beats/misses .
  • Near term: momentum in NIM and efficiency support constructive trading; medium term: thesis depends on managing CRE/agriculture credit normalization while maintaining deposit stability and loan yields .

Appendix: Prior Two Quarters (for Trend)

  • Q1 2025: EPS $0.39; NIM 2.53%; NII $12.92M; provision $0.96M (specific reserve); noninterest income $2.55M; efficiency 66.38% .
  • Q4 2024: EPS $0.39; NIM 2.38%; NII $12.12M; credit loss benefit ($130K); noninterest income $2.63M; efficiency 71.47%; FY25 EPS guidance $1.72–$1.82 initiated .

Additional Q2 2025 press release reference (company site): .