Ames National Corporation
Annual Report 2014

Plain-text annual report

Ames National Corporation 405 5th Street, Box 846 | Ames, IA 50010 t (515) 232-6251 | f (515) 663-3033 www.amesnational.com info@amesnational.com MISSION STATEMENT MISSION Ames National Corporation is a result-oriented financial services holding company providing leadership, counsel and support to its community affiliate banks and superior performance for its shareholders. CORPORATE CULTURE Provide an environment where our affiliates and employees can be successful and provide products and services that enhance the financial well-being of customers and shareholders. CORE VALUES Excellence: Striving to exceed expectations Integrity: Demonstrating high moral and ethical conduct Leadership: Creating and developing opportunities that benefit our employees, customers, communities, and shareholders Stability: Maintaining financial strength and a dedicated staff to successfully serve the current and future needs of our employees, customers, communities, and shareholders Trust: Acting in the best interest of our employees, customers, and shareholders Community: Dedicated to serving our communities through local decision making, community involvement and active boards of directors TABLE OF CONTENTS Ames National Corporation at a Glance . . . . . . . . . . . . . . 1 Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 10 Years on the NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . 5 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Five-Year Performance Record . . . . . . . . . . . . . . . . . . . . . 7 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Affiliate Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11 Stock and Dividend Information . . . . . . . . . . . . . . . . . . . 12 Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . 13 SHAREHOLDER INFORMATION Company Contact Information Ames National Corporation P.O. Box 846 405 5th Street Ames, IA 50010 (515) 232-6251 | Fax (515) 663-3033 info@amesnational.com | www.amesnational.com Company Officers Thomas H. Pohlman President & CEO John P. Nelson Vice President & CFO John L. Pierschbacher Controller Kevin G. Deardorff Vice President & Technology Director Nicole J. Gebhart Vice President & Marketing Director Matthew R. Hackbart Vice President & Information Systems Asst. Manager Jennifer J. Hanson Vice President & Human Resources Director Tracy W. Laws Vice President & Auditor Timothy J. Lupardus Vice President & Information Systems Manager Joel P. Jacobsen Asst. Vice President & Compliance Officer Lori J. Hill Asst. Corporate Secretary Colin T. Richey Information Systems Officer Independent Auditors CliftonLarsonAllen LLP West Des Moines, Iowa Counsel Nyemaster Goode, P.C. Des Moines, Iowa Annual Meeting The Board of Directors of Ames National Corporation has established Wednesday, April 29, 2015, at 4:30 p.m. as the date of the Annual Meeting of Shareholders. Registration will begin at 4:00 p.m. We invite all shareholders to attend the meeting, which will be held at Reiman Gardens, 1407 University Boulevard, Ames, Iowa. Market Makers Ames National Corporation’s common stock is listed on the NASDAQ Capital Market under the symbol “ATLO.” Market makers and brokers in the stock include: First Point Wealth Management , First National Bank, Ames (515) 663-3074 Stifel Nicolaus | (515) 233-4064 Monroe Securities, Inc. | (800) 766-5560 Raymond James | (800) 800-4693 FTN Financial Group | (800) 456-5460 Stock Transfer Agent Continental Stock Transfer & Trust 17 Battery Place New York, NY 10004 (212) 509-4000 www.continentalstock.com Form 10-K and Other Information A copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K will be available on the Securities and Exchange Commission’s website at http://www.sec.gov and through a link on the Company’s website, www.amesnational.com, at Financial Information, SEC Filings on March 15, 2015. Additional information is also available by contacting John Nelson, Vice President & CFO at 515-232-6251 or info@amesnational.com. 13 AMES NATIONAL CORPORATION AT A GLANCE Ames National Corporation (the “Company) is an Iowa-based bank holding company. The Company was organized and incorporated on January 21, 1975, under the laws of the State of Iowa to serve as a holding company for its principal banking subsidiary, First National Bank, Ames, Iowa. In 1983, the Company acquired the stock of the State Bank & Trust Co. located in Nevada, Iowa; in 1991, the Company, through a newly-chartered state bank known as Boone Bank & Trust Co., acquired certain assets and assumed certain liabilities of the former Boone State Bank & Trust Company located in Boone, Iowa; in 1995, the Company acquired the stock of the Reliance State Bank located in Story City, Iowa; and in 2002, the Company chartered and commenced operations of United Bank & Trust NA, located in Marshalltown, Iowa. In 2012, Reliance State Bank acquired two offices in Garner and Klemme, Iowa, and in 2014, First National Bank acquired three offices in West Des Moines and Johnston, Iowa. Today, each Affiliate Bank is operated as a wholly-owned subsidiary of the Company. Each Affiliate Bank operates with a local board of directors and a local bank president. All decisions are made locally which means customers receive quick responses to questions, and services are customized to meet customer needs in each community. The principal sources of Company revenue are: interest and fees earned on loans made and held by the Company and Affiliate Banks, interest on fixed income investments, fees on wealth management services, service charges on deposit accounts maintained by Affiliate Banks, gain on sale of loans, securities gains and merchant and card fees. The Affiliate Banks’ lending activities consist primarily of short-term and medium-term commercial, agricultural and residential real estate loans, agricultural and business operating loans and lines of credit, equipment loans, vehicle loans, personal loans, home equity loans and lines of credit. Affiliate Banks also offer a variety of demand, savings and time deposits, cash management services, merchant credit card processing and safe deposit box services. Convenient access to funds and account information is also available through online banking, mobile banking, online bill pay, online statements and debit cards. The Company provides various services to the Affiliate Banks which include: management assistance, internal auditing services, human resources services, compliance management, marketing assistance, loan review and technology support. Company staff handles the backroom operations that make the Company more efficient so the Affiliate Bank staff can focus on what they do best: banking and taking care of customers’ financial needs. The principal executive office of Ames National Corporation is located at 405 5th Street, Ames, Iowa 50010. The Company’s phone number is (515) 232-6251. More information about the Company can also be found at www.amesnational.com. RECENT RECOGNITIONS • Recognized by the NASDAQ for its 10th Anniversary as a Publicly Traded Company (12/14) • Ranked as the 6th largest Iowa commercial bank holding company based on total deposits (6/14) • Ranked among the top 200 banks with assets less than $2 billion based on a 3-year average ROE by the American Banker Magazine (4/14) • Ranked 25th on Bank Director’s Nifty 50 for NYSE and NASDAQ-listed companies based on profitability and capital levels (3/14) 1 LETTER TO SHAREHOLDERS NET INCOME Year ended December 31, 2014 2013 $15,300,000 $14,000,000 ASSETS Year ended December 31, 2014 2013 $1,301,000,000 $1,233,000,000 WEALTH MANAGEMENT INCOME Year ended December 31, 2014 Up 25% over 2013 ROAA ROAE 2014 2013 1.21% 1.14% 10.09% 9.76% ...PROVIDING CLIENTS CUSTOMIZED BANKING EXPERIENCES AND EXCEEDING EXPECTATIONS. 2 We are pleased to present the 2014 Ames National Corporation Summary Annual Report and highlight the Company’s financial performance and strategic initiatives. As we reflect on 2014, we would like to thank our board of directors and employees in helping us reach record earnings, assets, deposits and loans. Reaching record levels is a direct result of your dedication and commitment to helping our clients succeed. Our team is focused on providing clients with customized banking experiences and exceeding expectations. Whether we are assisting clients with buying their first homes, financing business expansions, building long-term financial plans or simply helping them log into mobile banking for the first time, our clients find value in our local, personal and responsive approach to banking. This client-first philosophy has created a loyal customer base and strong relationships that produce financial results for both our clients and shareholders. Financial Results. Net income reached a record high of $15.3 million, or $1.64 per share, compared to $14 million, or $1.50 per share in 2013, a 9.3 percent increase. The main contributors to the growth in earnings were increases in net interest income, the sale of one of our office buildings in Ames, Iowa, and higher wealth management income. With an upturn in loan demand, the Company was able to put more dollars to work in higher yielding loans compared to lower yielding investments. As a result, the improvement in net interest income led to an increase in the Company’s net interest margin of 3.31 percent for 2014 compared to 3.18 percent for 2013. In addition to income generated through loans and securities, we are strategically focused on building non-interest income through services like Wealth Management. Income generated through Wealth Management grew from $2.2 million in 2013 to $2.7 million in 2014, up 25 percent. The consumer demand for services, such as: financial management, trust services, financial planning and estate planning continues to grow, and we have found a niche in delivering financial expertise to assist clients with their short and long-term financial goals. According to a 2013 survey on retirement from The PNC Financial Services Group Inc., almost two-thirds of Americans between the ages of 35 and 70 surveyed had not yet taken steps to prepare retirement plans and approximately 10,000 baby boomers are retiring daily. Through our financial planning and wealth management services, our clients are benefiting from our programs designed to provide financial peace of mind through every life stage. In return, our assets under management continue to rise. The sale of our office building, which housed the First National Bank University Office, resulted in an after-tax gain of $778,000, but also provided an opportunity to enhance the Bank’s presence in Ames. During the fall of 2015, First National Bank plans to open a new branch office in West Ames, complete with the latest in Interactive Teller services. With an emphasis on technology coupled with personal services, the new office will be designed with the future of banking in mind. As a result of the improvement in net income, return on average assets rose to 1.21 percent for 2014, compared to 1.14 percent for the same period in 2013. The Cost of Regulation. We would be amiss if we didn’t mention the current regulatory environment. Managing the 5,905 pages of proposed regulations as a part of the Dodd-Frank has meant additional costs for banks of all sizes, both in terms of dollars paid for implementation and banks’ ability to offer services. In some cases, clients have become burdened by the added paperwork necessary for obtaining loans. The regulatory costs have not only affected the clients, but have also had a direct impact on non-interest expense. With the additional staff needed to implement and monitor new regulatory processes, the Company has seen an ongoing increase in auditing and compliance expenses. Although the cost of the current regulatory environment is not unique to Ames National Corporation, we have been working diligently to address the mandates efficiently and effectively. We are fortunate to have an experienced compliance staff in place to address mandates resulting from the ever-changing regulatory landscape. Company Stock. The Company’s stock, which is listed on the NASDAQ Capital Market under the symbol ATLO, closed at $25.94 on December 31, 2014. During the year, the price ranged from $20.24 to $26.87 with 3,214,500 shares traded. Ames National Corporation returned $6,703,858, or $0.72 per share, to shareholders through dividends in 2014. In Conclusion. We would like to recognize Dr. Charles Jons for his service on the Ames National Corporation Board of Directors. Dr. Jons joined the First National Bank board in 1991 and the Ames National Corporation board in 1996. He has been a trusted resource, providing guidance and assistance for both boards over the past 23 years. Thank you, Chuck, for your leadership and commitment to Ames National Corporation. This year marks the 40th anniversary for Ames National Corporation. We invite you to join us at Reiman Gardens on April 29th as we celebrate this milestone at the Annual Shareholders’ Meeting, highlight our financial results and look forward to many new opportunities in 2015. Thank you for your ongoing support of Ames National Corporation, and we encourage you to contact us if you have questions prior to the meeting. Return on average equity was also up and ended 2014 at 10.09 percent, compared to 9.76 percent in 2013. The efficiency ratio was 53.37 percent in 2014, slightly over the 52.78 percent recorded in 2013 due to one-time costs relating to the First Bank acquisition described below and other real estate owned write-downs. Growth. As we continue to focus on strategies to enhance shareholder value, the Company successfully completed a bank acquisition during 2014. First National Bank, the Company’s largest subsidiary bank, acquired First Bank in West Des Moines, Iowa, on August 29, 2014. The acquired loans totaled $45 million and acquired deposits totaled $82 million. The Company welcomes our new clients and employees and look forward to a mutually beneficial, long-term relationship. The newly combined staffs of First National Bank have made outstanding progress with the integration of the offices in West Des Moines and Johnston and are to be commended for their significant efforts to ensure a smooth transition. We are also pleased to report that the retention of loan and deposit clients has been favorable. We are looking forward to new business development opportunities through the expansion of our footprint in the Des Moines Metro area. The First Bank purchase was the second acquisition for the Company in the past two years. In April 2012, Reliance State Bank acquired two offices in Garner and Klemme, Iowa. This growth strategy has proven to be successful. In fact, Reliance State Bank’s net income grew from $1.8 million in 2012 to $2.4 million in 2014, a 33 percent increase. We know the importance of maintaining our service culture as we continue to expand. Through our acquisition strategy, we have been fortunate to find organizations and people with a similar focus on delivering responsive, personal service and who believe in the value of our banking model. Balance Sheet Review. Assets reached a record level of $1.3 billion, $67.9 million higher compared to December 31, 2013, primarily as a result of the First Bank acquisition. The loan portfolio grew from $565 million as of December 31, 2013, to $658 million at year-end 2014, representing a 16.6 percent increase. Commercial real estate, 1-4 family real estate and construction real estate made up the majority of the growth in loans and is a good indication of an improving economy in our market area. Deposits finished 2014 at $1.1 billion, up 4.0 percent from the $1.0 billion recorded at 2013. Similar to loans, the increase in deposits was mainly due to the First Bank acquisition. The Company’s stockholders’ equity represented 11.9 percent of total assets as of December 31, 2014, with all of the Company’s five affiliate banks continuing to maintain strong capital levels. Total equity was $155 million as of December 31, 2014, compared to $142 million as of December 31, 2013. Capital is impacted by earnings, dividends and the fair value of the investment portfolio. The increase in stockholders’ equity was primarily the result of net income and higher fair value on the securities available-for-sale. Thomas H. Pohlman President Douglas C. Gustafson Chairman 3 BOARD OF DIRECTORS BACK ROW, LEFT TO RIGHT: FRONT ROW, LEFT TO RIGHT: Warren R. Madden Vice President for Business & Finance, Iowa State University Douglas C. Gustafson Retired Veterinarian, Boone Veterinary Hospital and Chairman of the Company Thomas H. Pohlman President of the Company Richard O. Parker Attorney, Parker Law Firm Steven D. Forth Farmer John P. Nelson Vice President and Chief Financial Officer of the Company Larry A. Raymon Chief Executive Officer, Raymon Enterprises, Inc. David W. Benson Partner, Nyemaster Goode Attorneys at Law Betty A. Baudler Horras President, Baudler Enterprises, Inc. (marketing) James R. Larson, II President, Larson Development Corporation (real estate development) Robert L. Cramer Retired President and Chief Operating Officer Fareway Stores, Inc. (grocery stores) 4 AMES NATIONAL CORPORATION RINGS IN 10 YEARS ON THE NASDAQ Ten years ago, the Company's Board of Directors decided it was in the best interest of shareholders to list our common shares on the NASDAQ stock market to improve liquidity. In 2014, Ames National Corporation celebrated its 10th anniversary as a publically-traded company in the NASDAQ Capital Market. In recognition of this milestone, Tom Pohlman, president of the Company, and representatives from the board of directors, affiliate bank presidents, and families were invited to ring the NASDAQ closing bell on December 2, 2014. We would like to thank our shareholders, board of directors and employees for their ongoing support of the Ames National Corporation mission. Through 40 years of managing the wide fluctuations in interest rates, navigating the ever-changing regulatory environment, balancing changes in technology and delivering the latest in banking products and services, we have remained focused on doing what is right for our customers and, in turn, enhancing shareholder value. We are proud of our strong past performance and look forward to the many new growth opportunities yet to come. TRADE VOLUME Average Shares per Day 2014 2005 12,800 7,300 NASDAQ TICKER SYMBOL ATLO FINANCIAL SNAPSHOT December 31, (in millions) 2014 2004 1975 Assets $ 1,301.0 $ 839.8 $ 47.3 Deposits $ 1,052.1 $ 658.2 $ 41.8 Capital $ 154.7 $ 110.9 $ 4.5 Ames National Corporation was organized and incorporated to serve as a holding company for First National Bank, Ames, Iowa. The Company acquired the stock of the State Bank & Trust Co. located in Nevada, Iowa. The Company, through a newly- chartered state bank known as Boone Bank & Trust Co., acquired the assets of the former Boone State Bank & Trust Company located in Boone, Iowa. The Company acquired the stock of the Randall-Story State Bank located in Story City, Iowa. The Company chartered United Bank & Trust NA, located in Marshalltown, Iowa. Ames National Corporation lists its stock on the NASDAQ Capital Market. First National Bank opens a new office in Ankeny, Iowa. Randall-Story State Bank acquired two offices in Garner and Klemme, Iowa and changed its name to Reliance State Bank. First National Bank, Ames, acquired three offices in West Des Moines and Johnston, Iowa. 5 FINANCIAL HIGHLIGHTS FOR THE YEAR PERFORMANCE 2014 2013 2012 2011 2010 Net Income (in thousands) $15,251 $13,954 $14,182 $13,921 $12,966 Return on Average Assets Average Equity Efficiency Ratio PER COMMON SHARE DATA Basic and Diluted Earnings Cash Dividends Declared Dividend Payout Ratio Dividend Yield AT DECEMBER 31 BALANCE SHEET DATA (in thousands) Total Assets Net Loans Deposits 1.21% 10.09% 53.37% 1.14% 9.76% 52.78% 1.24% 10.08% 52.33% 1.38% 10.82% 49.80% 1.40% 10.91% 50.12% $1.64 $0.72 $1.50 $0.64 $1.52 $0.60 43.90% 42.67% 39.47% 2.8% 2.9% 2.7% $1.48 $0.52 35.14% 2.7% $1.37 $0.44 32.12% 2.0% $1,301,031 $1,233,084 $1,217,692 $1,035,564 $962,975 $658,441 $564,502 $510,126 $438,651 $418,094 $1,052,123 $1,011,803 $1,004,732 $818,705 $743,862 Stockholders' Equity $154,674 $ 142,106 $144,736 $134,557 $121,363 LOAN QUALITY Allowance for loan losses to total loans Net charge-offs to average outstanding loans Non performing loans to total loans CAPITAL Tier 1 Risk-Based Capital Ratio Total Equity/Total Assets Market Price per Share Closing High Low 6 1.32% 0.03% 0.37% 11.0% 11.9% $25.94 $26.87 $20.24 1.50% 0.00% 0.44% 11.0% 11.5% $22.39 $23.94 $18.50 1.50% 0.03% 1.07% 10.9% 11.9% $21.90 $24.00 $18.30 1.77% 0.03% 1.81% 12.2% 13.0% $19.50 $21.92 $14.15 1.77% 0.19% 1.48% 12.5% 12.6% $21.67 $22.84 $16.61 FIVE-YEAR PERFORMANCE RECORD FIVE-YEAR FINANCIAL HIGHLIGHTS AVERAGE TOTAL ASSETS MILLIONS OF DOLLARS AVERAGE DEPOSITS MILLIONS OF DOLLARS AVERAGE LOANS MILLIONS OF DOLLARS $929 $1,009 $1,143 $1226 $1263 $717 $792 $923 $1004 $1021 $418 $431 $483 $528 $584 $1,000 $900 $800 $700 $600 $500 $400 $300 2010 2011 2012 2013 2014 $600 $500 $400 $300 $200 $100 $0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 EARNINGS PER SHARE DOLLARS BOOK VALUE PER SHARE DECLARED DIVIDENDS PER SHARE DOLLARS DOLLARS $1.37 $1.48 $1.52 $1.50 $1.64 $12.87 $14.45 $15.54 $15.26 $16.61 $0.44 $0.52 $0.60 $0.64 $0.72 $16.00 $15.50 $15.00 $14.50 $14.00 $13.50 $13.00 $12.00 $11.50 $11.00 $10.50 $10.00 2010 2011 2012 2013 2014 $.80 $.60 $.40 $.20 $.00 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $1.60 $1.40 $1.20 $1.00 $.80 $.60 $.40 $.20 $.00 7 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) December 31, 2014 December 31, 2013 $ $ $ ASSETS Cash and due from banks Federal funds sold Interest bearing deposits in financial institutions Securities available-for-sale Loans receivable, net Loans held for sale Bank premises and equipment, net Accrued income receivable Other real estate owned Deferred income taxes Core deposit intangible, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Deposits Demand, noninterest bearing NOW accounts Savings and money market Time, $250,000 and over Other time Total deposits Securities sold under agreements to repurchase and federal funds purchased FHLB advances and other borrowings Dividend payable Accrued expenses and other liabilities Total liabilities STOCKHOLDERS’ EQUITY Common stock, $2 par value, authorized 18,000,000 shares; issued 9,310,913 shares as of December 31, 2014 and 9,432,915 shares as of December 31, 2013; outstanding 9,310,913 shares as of December 31, 2014 and 2013 Additional paid-in capital Retained earnings Accumulated other comprehensive income-net unrealized income on securities available-for-sale Treasury stock, at cost; 122,002 shares as of December 31, 2013 Total stockholders’ equity Total liabilities and stockholders’ equity $ 8 23,730,257 6,000 31,463,382 542,502,381 658,440,998 704,850 15,956,989 7,471,023 8,435,885 2,633,177 1,730,231 6,732,216 1,223,328 1,301,030,717 188,725,609 298,581,556 321,700,422 36,169,601 206,946,069 1,052,123,257 51,265,011 37,467,737 1,675,964 3,824,330 1,146,356,299 18,621,826 20,878,728 110,701,847 4,472,017 – 154,674,418 1,301,030,717 $ $ $ $ 24,270,031 – 23,628,117 580,039,080 564,501,547 295,618 11,892,329 7,437,673 8,861,107 5,027,103 1,029,564 5,600,749 501,242 1,233,084,160 179,946,472 299,788,852 289,307,102 36,839,069 205,921,683 1,011,803,178 39,616,644 34,540,526 1,489,746 3,527,882 1,090,977,976 18,865,830 22,651,222 102,154,498 451,132 (2,016,498) 142,106,184 1,233,084,160 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Years Ended December 31, 2014 2013 2012 $ 27,196,859 $ 25,433,950 $ 24,761,633 INTEREST INCOME: Loans Securities Taxable Tax-exempt Interest bearing deposits and federal funds sold Total interest income INTEREST EXPENSE: Deposits Other borrowed funds Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses NONINTEREST INCOME: Wealth Management Income Service fees Securities gains, net Gain on sale of loans held for sale Merchant and card fees Gain on sale of premises and equipment, net Other noninterest income Total noninterest income NONINTEREST EXPENSE: Salaries and employee benefits Data processing Occupancy expenses FDIC insurance assessments Professional fees Business development Other real estate owned, net Core deposit intangible amortization Other operating expenses, net Total noninterest expense Income before income taxes 7,104,563 6,354,147 308,782 40,964,351 3,385,099 1,162,002 4,547,101 36,417,250 429,140 35,988,110 2,748,619 1,649,169 1,110,953 704,051 1,189,503 1,239,581 610,203 9,252,079 14,129,956 2,609,185 1,680,351 645,997 1,274,111 1,103,923 1,502,408 317,333 1,110,199 24,373,463 20,866,726 5,744,321 6,864,948 390,594 38,433,813 3,861,713 1,213,050 5,074,763 33,359,050 786,390 32,572,660 2,199,797 1,580,811 1,002,920 1,200,402 1,142,027 – 591,821 7,717,778 13,131,556 2,414,564 1,471,978 661,127 1,127,666 957,702 651,401 273,700 989,178 21,678,872 18,611,566 6,058,556 6,767,545 484,004 38,071,738 4,472,337 1,279,604 5,751,941 32,319,797 22,277 32,297,520 2,219,320 1,578,672 646,755 1,589,122 1,055,613 – 605,753 7,435,384 12,465,403 2,239,003 1,462,898 664,285 1,224,093 941,090 482,904 196,736 1,126,541 20,802,953 18,929,951 4,747,643 14,182,308 1.52 9 INCOME TAX EXPENSE NET INCOME Basic and diluted earnings per share 5,615,519 15,251,207 1.64 $ $ 4,657,922 13,953,644 1.50 $ $ $ $ AFFILIATE BANKS 10 Organized: The former Boone State Bank & Trust Co., was organized in 1883. In 1992, the Bank was organized by the Company under a new state charter in connection with a purchase and assumption transaction, whereby Boone Bank & Trust Co. purchased certain assets and assumed certain liabilities of the former Boone State Bank & Trust Co. in exchange for a cash payment. Financial Highlights: As of December 31, 2014, Boone Bank had capital of $13,653,000 and 26 full-time equivalent employees. Boone Bank had net income for the years ended December 31, 2014, 2013 and 2012 of approximately $1,614,000, $1,533,000 and $1,764,000, respectively. Total assets as of December 31, 2014, 2013 and 2012 were approximately $125,776,000, $128,551,000 and $123,829,000, respectively. Locations: Main Office: 716 8th Street, Boone Boone Branch Office: 1326 S. Story Street, Boone Contact Information: Phone: (515) 432-6200 Fax: Web: (515) 432-3312 www.boonebankiowa.com Email: service@boonebankiowa.com Board Of Directors: Back Row, Left to Right: Robert L. Cramer, Richard D. Blomgren, Front Row, Left to Right: William S. Zinnel, Thomas H. Pohlman, Jeffrey K. Putzier Douglas C. Gustafson, DVM, Patrick J. McMullan Organized: The Bank was organized in 1903 and became a wholly-owned subsidiary of the Company in 1975 through a bank holding company reorganization, whereby those shareholders of First National exchanged all of their First National stock for stock in the Company. In 2014, First National Bank acquired offices in West Des Moines and Johnston, Iowa, with a purchase and assumption transaction whereby First National Bank purchased certain assets and assumed certain liabilities in exchange for a cash payment. Financial Highlights: As of December 31, 2014, First National had capital of $69,400,000 and 111 full- time equivalent employees. First National had net income for the years ended December 31, 2014, 2013 and 2012 of approximately $7,490,000, $7,200,000 and $7,193,000, respectively. Total assets as of December 31, 2014, 2013 and 2012 were approximately $706,185,000, $629,414,000 and $616,287,000, respectively. Contact Information: (515) 232-5561 Phone: Fax: Web: (515) 232-5778 www.FNBames.com Email: info@FNBames.com Locations: Main Office: 405 5th Street, Ames West Office: 119 Stanton, Ames North Grand Office: 2406 Grand Avenue, Ames Ankeny Office: 1205 North Ankeny Blvd., Ankeny Johnston Office: 8460 Birchwood Court, Johnston West Des Moines Offices: West Glen: 5625 Mills Civic Parkway, West Des Moines Valley Junction: 301 5th Street, West Des Moines Board Of Directors: Back Row, Left to Right: Warren R. Madden, Scott T. Bauer, David W. Benson Front Row, Left to Right: Charles D. Jons, Lisa M. Eslinger, Betty A. Baudler Horras, Thomas H. Pohlman,Terrill L. Wycoff, James R. Larson, II John R. Linch Organized: Reliance State Bank, formerly known as “Randall-Story State Bank,” Story City, Iowa, is an Iowa, state-chartered, FDIC insured commercial bank. Organized in 1928, Reliance Bank was acquired by the Company in 1995 through a stock transaction whereby the then shareholders of Reliance Bank exchanged all their Reliance Bank stock for stock in the Company. In 2012, Reliance Bank acquired the Garner, Iowa and Klemme, Iowa offices with a purchase and assumption transaction whereby Reliance Bank purchased certain assets and assumed certain liabilities in exchange for a cash payment. Financial Highlights: As of December 31, 2014, Reliance Bank had capital of $26,728,000 and 30 full- time equivalent employees. Reliance Bank had net income for the years ended December 31, 2014, 2013 and 2012 of approximately $2,392,000, $2,172,000 and $1,833,000, respectively. Total assets as of December 31, 2014, 2013 and 2012 were approximately $219,474,000, $221,597,000 and $221,799,000, respectively. Locations: 606 Broad Street, Story City 175 E. 3rd Street, Garner 100 E. Main Street, Klemme Contact Information: (515) 733-4396 Phone: Fax: Web: (515) 733-2068 www.RSBiowa.com Email: info@rsbiowa.com Board Of Directors: Back Row, Left to Right: Harold E. Thompson, Cory K. Milbrandt, Michael M. Hrubes, Elaine C. Tekippe, Steven D. Forth, Gary G. Vulgamott Front Row, Left to Right: Neil W. Fell, John P. Nelson, Richard J. Schreier Organized: State Bank & Trust Co. was organized in 1939 and acquired by the Company in 1983 through a stock transaction, whereby those shareholders of State Bank exchanged all of their State Bank stock for stock in the Company. Financial Highlights: As of December 31, 2014, State Bank had capital of $17,890,000 and 23 full-time equivalent employees. State Bank had net income for the years ended December 31, 2014, 2013 and 2012 of approximately $2,280,000, $2,122,000 and $2,208,000, respectively. Total assets as of December 31, 2014, 2013 and 2012 were approximately $157,894,000, $154,405,000 and $151,859,000, respectively. Locations: Main Office: 1025 6th Street, Nevada Colo Office: 405 Main Street, Colo Contact Information: Phone: (515) 382-2191 Fax: Web: (515) 382-3826 www.banksbt.com Email: info@banksbt.com Board Of Directors: Back Row, Left to Right: Dan E. Johnson, Stephen C. McGill, Richard O. Parker, James M. Kurtenbach Front Row, Left to Right: Laurie L. Henry, Thomas H. Pohlman, Michelle R. Cassabaum Organized: United Bank & Trust, n.a. was chartered as a national bank in June 2002. The bank opened a second office in 2006. Financial Highlights: As of December 31, 2014, United Bank had capital of $13,883,000 and 23 full-time equivalent employees. United Bank had net income for the years ended December 31, 2014, 2013 and 2012 of approximately $1,110,000, $1,103,000 and $1,269,000, respectively. Total assets as of December 31, 2014, 2013 and 2012 were approximately $107,000,000, $111,420,000 and $107,627,000, respectively. Locations: Main Office: 2101 S. Center Street, Marshalltown Courthouse Branch: 29 S. Center Street, Marshalltown Contact Information: (641) 753-5900 Phone: Fax: Web: (641) 753-0800 www.ubtna.com Email: info@ubtna.com Board Of Directors: Back Row, Left to Right: Keith R. Brown, Kathy L. Baker, Dale L. Ites Middle Row, Left to Right: John S. Wise, Thomas H. Pohlman Front Row, Left to Right: Larry A. Raymon, Curtis A. Hoff, Kevin L. Swartz 11 STOCK & DIVIDEND INFORMATION Market Price & Dividend Information The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “ATLO.” Trading in the Company’s common stock is, however, relatively limited. The closing price of the Company’s common stock was $25.94 on December 31, 2014. Below is a summary of the Company’s high and low sales price for the common stock on a per share basis during the last two years, based on information provided to and gathered by the Company on an informal basis. The comparison also outlines the Company’s declared cash dividends during the past two years. The Company declared aggregate annual cash dividends in 2014 and 2013 of $6,704,000 and $5,959,000, respectively, or $0.72 per share in 2014 and $0.64 per share in 2013. Market Price & Dividend Two-Year Comparison Quarter High 2014 MARKET PRICE $23.50 $23.35 $24.37 Low $20.24 $21.15 $22.13 $26.87 $21.63 CASH DIVIDENDS 2013 MARKET PRICE Declared Quarter High $0.18 $0.18 $0.18 $0.18 1st 2nd 3rd 4th $22.91 $23.15 $23.94 $23.05 Low $19.92 $18.50 $19.87 $21.09 CLOSING PRICE $22.04 $23.14 $22.35 $25.94 CLOSING PRICE $20.86 $22.76 $22.41 $22.39 CASH DIVIDENDS Declared $0.16 $0.16 $0.16 $0.16 1st 2nd 3rd 4th 12 MISSION STATEMENT MISSION Ames National Corporation is a result-oriented financial services holding company providing leadership, counsel and support to its community affiliate banks and superior performance for its shareholders. CORPORATE CULTURE Provide an environment where our affiliates and employees can be successful and provide products and services that enhance the financial well-being of customers and shareholders. CORE VALUES Excellence: Striving to exceed expectations Integrity: Demonstrating high moral and ethical conduct Leadership: Creating and developing opportunities that benefit our employees, customers, communities, and shareholders Stability: Maintaining financial strength and a dedicated staff to successfully serve the current and future needs of our employees, customers, communities, and shareholders Trust: Acting in the best interest of our employees, customers, and shareholders Community: Dedicated to serving our communities through local decision making, community involvement and active boards of directors TABLE OF CONTENTS Ames National Corporation at a Glance . . . . . . . . . . . . . . 1 Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 10 Years on the NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . 5 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Five-Year Performance Record . . . . . . . . . . . . . . . . . . . . . 7 Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Affiliate Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11 Stock and Dividend Information . . . . . . . . . . . . . . . . . . . 12 Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . 13 SHAREHOLDER INFORMATION Company Contact Information Ames National Corporation P.O. Box 846 405 5th Street Ames, IA 50010 (515) 232-6251 | Fax (515) 663-3033 info@amesnational.com | www.amesnational.com Company Officers Thomas H. Pohlman President & CEO John P. Nelson Vice President & CFO John L. Pierschbacher Controller Kevin G. Deardorff Vice President & Technology Director Nicole J. Gebhart Vice President & Marketing Director Matthew R. Hackbart Vice President & Information Systems Asst. Manager Jennifer J. Hanson Vice President & Human Resources Director Tracy W. Laws Vice President & Auditor Timothy J. Lupardus Vice President & Information Systems Manager Joel P. Jacobsen Asst. Vice President & Compliance Officer Lori J. Hill Asst. Corporate Secretary Colin T. Richey Information Systems Officer Independent Auditors CliftonLarsonAllen LLP West Des Moines, Iowa Counsel Nyemaster Goode, P.C. Des Moines, Iowa Annual Meeting The Board of Directors of Ames National Corporation has established Wednesday, April 29, 2015, at 4:30 p.m. as the date of the Annual Meeting of Shareholders. Registration will begin at 4:00 p.m. We invite all shareholders to attend the meeting, which will be held at Reiman Gardens, 1407 University Boulevard, Ames, Iowa. Market Makers Ames National Corporation’s common stock is listed on the NASDAQ Capital Market under the symbol “ATLO.” Market makers and brokers in the stock include: First Point Wealth Management , First National Bank, Ames (515) 663-3074 Stifel Nicolaus | (515) 233-4064 Monroe Securities, Inc. | (800) 766-5560 Raymond James | (800) 800-4693 FTN Financial Group | (800) 456-5460 Stock Transfer Agent Continental Stock Transfer & Trust 17 Battery Place New York, NY 10004 (212) 509-4000 www.continentalstock.com Form 10-K and Other Information A copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K will be available on the Securities and Exchange Commission’s website at http://www.sec.gov and through a link on the Company’s website, www.amesnational.com, at Financial Information, SEC Filings on March 15, 2015. Additional information is also available by contacting John Nelson, Vice President & CFO at 515-232-6251 or info@amesnational.com. 13 Ames National Corporation 405 5th Street, Box 846 | Ames, IA 50010 t (515) 232-6251 | f (515) 663-3033 www.amesnational.com info@amesnational.com 

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