Ames National Corporation
Annual Report 2018

Plain-text annual report

2018 SUMMARY ANNUAL REPORT TABLE OF CONTENTS 02 Ames National Corporation at a Glance 15 Balance Sheets 04 Board of Directors and Management Team 16 Statements of Income 06 Welcome President & CEO, John P. Nelson 17 Shareholder Information 18 Affiliate Boards 20 Community Involvement 08 Letter to Shareholders 12 Financial Highlights 13 Performance Record AFFILIATE BANKS: MISSION STATEMENT Ames National Corporation is a results-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 AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 1 BACKGROUND Ames National Corporation (ANC) is an Iowa-based bank holding company. ANC 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, ANC acquired the stock of the State Bank & Trust Co. located in Nevada, Iowa; in 1991, ANC 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, ANC acquired the stock of the Reliance State Bank located in Story City, Iowa; and in 2002, ANC chartered and commenced operations of United Bank & Trust NA, located in Marshalltown, Iowa. In 2012, Reliance State Bank acquired an office located in Garner, Iowa. In 2014, First National Bank acquired three offices located in West Des Moines and Johnston, Iowa, and 2018 AMES NATIONAL CORPORATION HEADLINES • Recognized Ames National Corporation as a Winning Company by 2020 Women on Boards (3/18) • Announced a Dividend Increase and a Special Dividend (2/15/18) • First National Bank signed a Merger Agreement with Clarke County State Bank in Osceola (4/18) • Ranked in the Top 200 Publicly Traded Banks by American Banker Magazine (5/3/18) • Ranked as the 7th largest Iowa commercial bank holding company based on total three locations in the Osceola, Iowa area in 2018. Today, each Affiliate Bank is operated as a wholly-owned deposits (6/18) subsidiary of ANC. • CEO, Thomas Pohlman, retired and was featured in the Iowa Banking Magazine (7/18) AFFILIATE BANK STRUCTURE • John Nelson named ANC President & CEO (7/18) Each Affiliate Bank operates independently with a board of directors and a bank president. Decisions are made locally, which means customers receive quick responses to questions, and services are customized • First National Bank completed the acquisition of Clarke County State Bank (9/18) to meet customer needs in each community. The principal sources of revenue for ANC are: • Interest and fees earned on loans made and held by ANC and Affiliate Banks • Interest on investments, fees on wealth management services, service charges on deposit accounts maintained by Affiliate Banks, merchant and card fees, gain on sale of loans and securities gains ANC SERVICES LOCATION INFORMATION ANC provides various services to the Affiliate Banks, which Executive Office The Affiliate Banks’ lending activities consist primarily of short-term and medium-term commercial, include: management assistance, payroll, internal auditing 405 5th Street agricultural and residential real estate loans, agricultural and business operating loans, lines of credit, services, human resources services, compliance management, Ames, Iowa 50010 home improvement loans and the origination of mortgage loans for sale into the secondary market. marketing assistance, loan review, technology support, training (515) 232-6251 Affiliate Banks also offer a variety of checking, savings and time deposits accounts, cash management and employee development. ANC employees handle the back www.amesnational.com services, wealth management and trust services, merchant credit card processing and safe deposit box room operations that make ANC more efficient so the Affiliate services. Convenient access to funds and account information is also available through: Online Banking, Bank teams can focus on what they do best: banking and taking Video Banking, Mobile Banking, Online Bill Pay, Mobile Wallet, online statements and debit cards. care of customers’ financial needs. 2 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 3 AMES NATIONAL CORPORATION AT A GLANCE AMES NATIONAL CORPORATION BOARD OF DIRECTORS BOARD OF DIRECTORS BACK ROW, LEFT TO RIGHT: FRONT ROW, LEFT TO RIGHT: • John L. Pierschbacher, Chief Financial • Lisa M. Eslinger, Chief Financial and Administrative Officer of ANC Officer, Iowa State University Foundation • Thomas H. Pohlman, Chairman • Kevin L. Swartz, Chief Executive Officer, • Steven D. Forth, Farmer • Richard O. Parker, Attorney, Parker Law Firm • John P. Nelson, President & CEO of ANC • Patrick G. Hagan, Senior Vice President and Treasurer of Fareway Stores, Inc. Wolfe Clinic PC • Betty A. Baudler, President, Baudler Enterprises, Inc. • David W. Benson, Partner, Nyemaster Goode Attorneys at Law • James R. Larson, II, President, Larson Development Corporation COMPANY MANAGEMENT TEAM • John P. Nelson, President & CEO • Tracy W. Laws, Vice President & Controller • John L. Pierschbacher, CFO • Matthew R. Hackbart, Vice President & • Kevin G. Deardoff, Senior Vice President & Information Systems Asst. Manager Technology Director • Joel P. Jacobsen, Vice President & Compliance Officer • Nicole J. Rasmussen, Vice President & • Wendy S. Current, Training & Development Officer Strategic Engagement Officer • Jennifer J. Hanson, Vice President & Human Resources Director • Timothy J. Lupardus, Vice President & Information Systems Manager • Amanda Petersen, Auditor • Lori J. Hill, Accounts Payable Officer • Doug S.H. Kinsey, Information Systems Technician • Penny J. Blackburn, Information Systems Technician 4 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 5 PRIORITIES 1. DELIVERING Superior Shareholder Value 2. EMPOWERING Employees through local Decision-Making 3. ATTRACTING and Retaining Talented Employees Who Care 4. PROVIDING Exceptional Client Experiences that Make their Financial Lives Better “ A good leader inspires by example, communicates vision and encourages continual improvement. This type of leadership is critical to our success. ” “As we embrace exciting new technology that helps our clients meet their financial goals, we never lose sight of the personal relationships that make us solution finders and partners.” “Our clients can trust that we will provide financial solutions that are in their best interest. We seek long-term relationships that are mutually beneficial for our employees, clients and shareholders.” BACKGROUND AND EXPERIENCE Current Role: • President & CEO Ames National Corporation (July 2018-Present) • ANC Director (2013-Present) Previous Experience: • ANC Chief Financial Officer (1999-2018) • ANC Auditor (1993-1999) • Federal Deposit Insurance Corporation Commissioned Bank Examiner (1990-1993) John brings extensive expertise in leadership, banking, accounting and financial regulations. EDUCATION Bachelors Of Business Administration Iowa State University Major: Finance Minor: Economics — 1989 Iowa School of Banking — 1995 Certified Public Accountant — 1999 COMMUNITY INVOLVEMENT • Graduate School of Banking at Colorado — Instructor • Gilbert Community Schools — Member of the Board of Education • Cardinal Turkson Foundation — Treasurer and Director PERSONAL PHILOSOPHY Be humble and put the needs of others ahead of your own. - JOHN P. NELSON • Martha’s House of Hope — Treasurer and Director • Leadership Ames — Graduate 6 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 7 WELCOME PRESIDENT & CEO JOHN P. NELSON LETTER TO SHAREHOLDERS We are pleased to provide you the 2018 Ames FINANCIAL RESULTS National Corporation Annual Report and share a continuing story of growth and profitability. As we reflect on the 2018 results, we sincerely appreciate your ongoing participation in our success and are grateful for the opportunity to serve you. The following report will provide an overview on financial results, drivers of these results, community involvement and our strategic focus. “ We sincerely appreciate your ongoing participation in our success and are grateful for the opportunity to serve you. ” Financial results surpassed our expectations, and Ames National Corporation reached many milestones during 2018. The Company had forecasted earnings for 2018 in the range of $1.70 to $1.76 per share. For the year ended December 31, 2018, net income totaled a record $17,014,000 or $1.83 per share, compared to $13,697,000 or $1.47 per share earned in 2017. There were three primary drivers of the improvement in earnings. First, loan interest income grew by approximately $4 million, or 12%. Second, our provision for loan losses decreased by 58% compared to last year due to the decrease in the net charge offs and specific reserve levels. Finally, and most notably, our income tax expense decreased $3.2 million, or 42%, as a result of the new lower corporate income tax rate. The increase in earnings was offset by a $2.4 million rise in interest expense on deposits. The Federal Reserve increased the federal funds rate four times in 2018, from 1.50% to 2.50% over the year. As a result, our Affiliate Banks were responsive to our clients and provided higher rates on checking, savings and certificates of deposit. A boost in loan interest rates will lag behind given the timing of loan renewals. Even with this shift in the yield curve, we are pleased to report that the Company’s net interest margin remained relatively stable at 3.23% at year-end 2018 compared to a year ago. In reviewing non-interest income results, it is important to note the contributions of Wealth Management, which consists of Investment Services and Financial Management & Trust Services. Wealth Management reported a 9% increase in income and a growing number of relationships. The 2016 acquisition of an Ames-based financial planning company has proven to be beneficial both to the bottom-line as well as to relationship expansion. The Company continues to see Wealth Management Services as significant area of growth as the team delivers an exceptional financial management experience at each stage of life for our clients. Credit quality continues to be an essential driver of success. Our Affiliates are focused on effectively monitoring and managing credit quality and client relationships, which support profitability. Net loan charge offs were .03% of total outstanding loans, well below the average for Iowa banks for the year ended December 31, 2018. Overall, economic conditions remain favorable in the communities we serve. Company management is seeing weakness in the Iowa agricultural economy as a result of the current low grain prices; however, favorable yields in 2018 are generally providing break even cash flows for most of the Company’s agricultural borrowers. AS OF DECEMBER 31, 2018: ASSETS $1.5 BILLION NET INCOME $17 MILLION RETURN ON ASSETS (ROA) 1.23% RETURN ON EQUITY (ROE) 10.09% ATLO CLOSING PRICE $25.42 DECLARED DIVIDENDS PER SHARE: $1.17 8 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 9 Assets, loans and deposits reached record highs in As we think strategically about employee and leadership initiatives as well as an ongoing focus on enhancing our benefits package, we are confident we 2018. Total assets were $1.5 billion, an $81 million customer engagement, we must keep our core values can provide a positive environment that engages our team members. rise compared to December 31, 2017. Net loans as of excellence, integrity, leadership, stability, trust and of December 31, 2018 grew 15%, to $890 million community at the center of our decision-making. Here as compared to $772 million last year and deposits are five key strategies important to building strong totaled $1.2 billion at year-end 2018, compared to relationships and expanding in the markets we serve: $1.1 billion recorded at December 31, 2017. This balance sheet growth can be mainly attributed to the acquisition of Clarke County State Bank (CCSB) in Osceola, Iowa by the Company’s largest affiliate bank, First National Bank, Ames, in September 2018. The acquired assets totaled approximately $103 million. • Define clear expectations for the Personal Banking, Business Banking and Trust and Wealth Management customer journeys. Each of • Maintain our focus on strong credit quality. Without excellent credit quality, a bank spends too much time and energy working on problems instead of taking advantage of opportunities. We take our responsibility of being good financial partners with our clients very seriously so they are well-positioned to succeed. • Grow through acquisition. We couldn’t be more pleased with the growth we have experienced in the past six years through acquisition, and we continue to see more opportunities for the future. Acquisitions provide increased revenue potential through a larger client base, diversified portfolios and expanded service offerings. our communities is unique, and therefore, require All of these principles will be essential to our Strategic Planning process. Through collaboration with our unique growth and retention plans to helping Board of Directors, Management Team and employees, we will develop and implement a five-year strategic clients succeed. We must find the right balance plan in 2019. We are looking forward to bringing our leaders together to think strategically about the unique between high tech and personal interactions. ways we will serve our clients, employees and shareholders in this ever-changing financial industry. The addition of CCSB to First National Bank is a • Expand our Mobile Banking solutions. Mobile good fit with their stable loan and deposit client usage is definitely trending upward. “Over 55% of base, a quality group of bankers, and improved all adults now utilize mobile banking, and 60% of geographic footprint for the Company. The consumers under age 34 consider mobile deposit synergies created between CCSB and First National to be a “must have” or “nice to have” feature.”1 We Bank with customer service and community are dedicated to making smart technology choices involvement are also crucial components in this that simplify banking for clients and make online strategic acquisition. STRATEGIC FOCUS processes seamless. As the number of digital channels and evolving customer expectations are becoming more and more complex, we must deliver tools and options that customize our clients’ We have high expectations for continual improvement and profitability. In our 2017 Annual experiences. Report, we highlighted two top priorities for our team as we work to enhance your shareholder value – Employee and Customer Engagement. These priorities have not changed. We know that to continue to grow and thrive, we must be committed to understanding our clients’ financial goals and supporting our team members who help our clients reach those financial goals. • Build an exceptional employee experience. BAI Banking Outlook findings show that what is most important to employees and how they “derive the most satisfaction is through their company’s work environment (54%), followed by ethics and values and career development tied at (49%); compensation ranks fourth in importance at 43%.”2 We are committed to helping our employees succeed by utilizing their strengths. Through expanded training and development efforts and IN SUMMARY We want to thank our employees for their dedication to making Ames National Corporation the strong and growing organization it is today. Clients value consistency, and the expertise and longevity we have at Ames National Corporation are distinct and valuable attributes. Please mark your calendar and plan to join us on Tuesday, April 23 as we celebrate a year of accomplishments for Ames National Corporation at our 44th Annual Meeting of Shareholders at Reiman Gardens. We encourage you to contact us if you have any questions. Thomas H. Pohlman Chairman John P. Nelson President & CEO 10 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION 1 Nikitas, Steve. “Trendwatch 2018: Year of the Customer.” Harland Clarke. January 2018. 2 Bianucci, Debbie. “Winning the Talent War in 2019.” BAI Executive Report. December 2018. www.BankingStrategies.com AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 11 FINANCIAL HIGHLIGHTS PERFORMANCE RECORD 2018 2017 2016 2015 2014 FIVE-YEAR FINANCIAL HIGHLIGHTS FOR THE YEAR PERFORMANCE Net Income (in thousands) $17,014 $13,697 $15,735 $15,015 $15,251 Return on Average Assets Average Equity Efficiency Ratio PER COMMON SHARE DATA Basic and Diluted Earnings Cash Dividends Declared 1.23% 10.09% 55.90% 1.00% 8.02% 1.18% 9.38% 1.13% 9.44% 52.70% 51.95% 53.59% 1.21% 10.09% 53.37% $1.83 $1.17 $1.47 $0.88 $1.69 $0.84 $1.61 $0.80 $1.64 $0.72 Dividend Payout Ratio 63.93% 59.86% 49.70% 49.69% 43.90% Dividend Yield 4.6% 3.2% 2.6% 3.3% 2.8% AT DECEMBER 31 BALANCE SHEET DATA (in thousands) Total Assets Net Loans Deposits $1,455,687 $1,375,060 $1,366,453 $1,326,747 $1,301,031 $890,461 $771,550 $752,182 $701,328 $658,441 $1,221,084 $1,134,391 $1,109,409 $1,074,193 $1,052,123 Stockholders' Equity $172,865 $170,753 $165,105 $161,250 $154,674 AVERAGE TOTAL ASSETS Millions of Dollars 2014 2015 2016 2017 2018 $1,263 $1,325 $1,331 $1,369 $1,385 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 AVERAGE DEPOSITS Millions of Dollars 2014 2015 2016 2017 2018 $1,021 $1,073 $1,073 $1,118 $1,158 LOAN QUALITY Allowance for loan losses to total loans Net charge-offs (recoveries) to average outstanding loans Non performing loans to total loans CAPITAL Tier 1 Leverage Capital Ratio Total Equity/Total Assets Market Price per Share Closing High Low 1.30% 1.45% 1.38% 1.40% 1.32% $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 0.03% 0.09% 0.00% (0.01)% 0.03% 0.38% 0.62% 0.67% 0.27% 0.37% AVERAGE LOANS Millions of Dollars 11.3% 11.9% $25.42 $32.15 $24.51 12.1% 12.4% $27.85 $37.45 $26.60 12.0% 12.1% $33.00 $35.30 $22.54 11.3% 12.2% $24.29 $26.43 $22.01 11.0% 11.9% $25.94 $26.87 $20.24 2014 2015 2016 2017 2018 $584 $682 $727 $772 $814 $100 $200 $300 $400 $500 $600 $700 $800 $900 12 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 13 PERFORMANCE RECORD FIVE-YEAR FINANCIAL HIGHLIGHTS EARNINGS PER SHARE Dollars 2014 2015 2016 2017 2018 $1.64 $1.61 $1.69 $1.47 $1.83 $.00 $.20 $.40 $.60 $.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 BOOK VALUE PER SHARE Dollars 2014 2015 2016 2017 2018 $16.61 $17.32 $17.73 $18.34 $18.60 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 $17.00 $17.50 $18.00 $18.50 $19.00 $19.50 DECLARED DIVIDENDS PER SHARE Dollars CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ASSETS Cash and due from banks Interest bearing deposits in financial institutions Securities available-for-sale December 31, 2018 December 31, 2017 $ 30,384,066 $ 26,397,550 26,057,513 43,021,953 458,971,162 495,321,664 Federal Home Loan Bank (FHLB) Federal Reserve Bank (FRB) stock, at cost 3,191,200 3,021,200 Loans receivable, net Loans held for sale Bank premises and equipment, net Accrued income receivable Other real estate owned Bank-owned life insurance Deferred income taxes Other intangible assets, net Goodwill Other assets Total assets 890,461,479 771,549,655 401,287 - 15,813,196 15,399,146 9,415,570 829,603 2,773,729 3,974,564 2,677,884 9,618,621 1,117,477 8,382,391 385,509 - 2,542,533 1,091,462 6,732,216 1,214,371 $ 1,455,687,351 $ 1,375,059,650 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Deposits Demand, non-interest bearing $ 230,113,170 $ 227,332,347 NOW accounts Savings and money market Time, $250,000 and over Other time Total deposits Securities sold under agreements to repurchase Federal Home Loan Bank (FHLB) advances and other borrowings Dividends payable Accrued expenses and other liabilities Total liabilities STOCKHOLDERS’ EQUITY Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 9,293,305 and 9,310,913 shares as of December 31, 2018 and 2017, respectively 366,178,715 418,384,284 40,014,550 322,392,945 389,630,180 38,838,782 166,393,120 156,196,433 1,221,083,839 1,134,390,687 40,674,486 14,600,000 2,137,460 4,326,502 37,424,619 26,500,000 2,048,401 3,942,801 1,282,822,287 1,204,306,508 18,586,610 18,621,826 20,461,724 20,878,728 137,891,821 131,684,961 (4,075,091) (432,373) 172,865,064 170,753,142 2014 2015 2016 2017 2018 $0.72 $0.80 $0.84 $0.88 $1.17 Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) Total stockholders’ equity $.00 $.15 $.30 $.45 $.60 $.75 $.90 $1.05 $1.20 Total liabilities and stockholders’ equity $ 1,455,687,351 $ 1,375,059,650 14 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 15 CONDENSED CONSOLIDATED SHAREHOLDER STATEMENTS OF INCOME (unaudited) INFORMATION INTEREST AND DIVIDEND INCOME: Loans Securities Taxable Tax-exempt Other interest and dividend income Total interest and dividend 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 NON-INTEREST INCOME: Wealth management income Service fees Securities gains, net Gain on sale of loans held for sale Merchant and card fees Gain on foreclosure of other real estate owned Other non-interest income Total non-interest income NON-INTEREST EXPENSE: Salaries and employee benefits Data processing Occupancy expenses, net FDIC insurance assessments Professional fees Business development Intangible asset amortization Data conversion costs Other operating expenses, net Total non-interest expense Income before income taxes INCOME TAX EXPENSE NET INCOME Basic and diluted earnings per share Declared dividends per share Years Ended December 31 2018 2017 $ 38,013,249 $ 34,048,310 6,188,403 4,582,970 942,341 49,726,963 6,841,807 761,389 7,603,196 42,123,767 639,316 41,484,451 3,344,579 1,425,361 - 780,947 1,427,334 162,862 759,854 7,900,937 6,130,696 5,015,696 599,733 45,794,435 4,439,305 1,141,774 5,581,079 40,213,356 1,519,596 38,693,760 3,060,599 1,515,998 505,139 783,776 1,375,402 - 751,853 7,992,767 17,821,753 15,994,036 3,478,640 2,008,331 404,514 1,482,911 1,166,688 430,537 228,854 943,182 27,965,410 21,419,978 4,406,100 17,013,878 1.83 1.17 $ $ $ $ $ $ 3,298,080 2,018,553 427,781 1,231,778 1,033,026 369,580 - 1,031,703 25,404,537 21,281,990 7,584,801 13,697,189 1.47 0.88 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 PROFESSIONAL EXPERTS 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 Tuesday, April 23, 2018, 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 Fig Partners, LLC | (404) 601-7200 Raymond James | (800) 800-4693 STOCK TRANSFER AGENT Continental Stock Transfer & Trust 1 State Street, 30th Floor 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 or about March 14, 2019. Additional information is also available by contacting John L. Pierschbacher, CFO at 515-232-6251 or info@amesnational.com. 16 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 17 AFFILIATE BANKS Back Row (Left to Right): Gary K. Lorenz Philip A. Hodgin Thomas H. Pohlman John P. Nelson Scott T. Bauer Front Row (Left to Right): James R. Larson, II John R. Linch Betty A. Baudler Horras David W. Benson Lisa M. Eslinger David J. Selene (Not pictured) Net Income (in Millions) Assets (in Millions) 2018 2017 2016 $9.0 $842 $7.2 $7.8 $756 $755 Affiliate Bank: First National Bank Contact Information: (515) 232-5561 | www.FNB247.com Charter: National Organized: 1903 Offices: Ten locations in Ames, Ankeny, Johnston, Murray, Osceola and West Des Moines, Iowa Number of Employees: 138 Capital: $79 Million Back Row (Left to Right): Dan E. Johnson John P. Nelson Richard O. Parker James M. Kurtenbach Front Row (Left to Right): Laurie L. Henry Stephen C. McGill Michelle R. Cassabaum Affiliate Bank: State Bank & Trust Co. Contact Information: (515) 382-2191 | www.bankSBT.com Charter: State Organized: 1939 Offices: One location in Nevada, Iowa Number of Employees: 19 2018 2017 2016 Capital: $18.4 Million Net Income (in Millions) Assets (in Millions) $2.5 $163 $1.7 $2.3 $159 $161 Back Row (Left to Right): Patrick J. McMullan Patrick G. Hagan Richard D. Blomgren Kevin N. Houston Front Row (Left to Right): Jeffrey K. Putzier John P. Nelson Michael P. Carr Net Income (in Millions) Assets (in Millions) 2018 $1.7 $126 2017 $1.5 $134 2016 $1.8 $134 Affiliate Bank: Boone Bank & Trust Co. Contact Information: (515) 432-6200 | www.boonebankiowa.com Charter: State Organized: 1883 Offices: Two locations in Boone, Iowa Number of Employees: 22 Capital: $14.1 Million Back Row (Left to Right): Gary G. Vulgamott Steven D. Forth Elaine C. Tekippe Bill J. Paulus Michael M. Hrubes Front Row (Left to Right): Harold E. Thompson Richard J. Schreier John P. Nelson Neil W. Fell Net Income (in Millions) Assets (in Millions) 2018 $3.1 $226 2017 $2.5 $220 2016 $2.7 $223 Affiliate Bank: Reliance State Bank Contact Information: (515) 733-4396 | www.RSBiowa.com Charter: State Organized: 1928 Offices: Two locations in Story City and Garner, Iowa Number of Employees: 32 Capital: $30.2 Million Back Row (Left to Right): John S. Wise John P. Nelson Martin L. Mitchell Middle Row (Left to Right): Douglas W. Beals Kevin L. Swartz Front Row (Left to Right): Kathy L. Baker Curtis A. Hoff Robert A. Thomas Affiliate Bank: United Bank & Trust, N.A. Contact Information: (641) 753-5900 | www.ubtna.com Charter: National Organized: 2002 Net Income (in Millions) Assets (in Millions) 2018 $1.1 $108 2017 $1.0 $108 2016 $1.3 $111 Offices: Two locations in Marshalltown, Iowa Number of Employees: 20 Capital: $13.8 Million 18 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AMES NATIONAL CORPORATION | 2018 ANNUAL REPORT 19 COMMUNITY INVOLVEMENT EMPLOYEES VOLUNTEERED OVER 600 HOURS PER MONTH OVER 100ORGANIZATIONS SERVED IN 2018 Living our core values is weaved throughout our corporate culture and there is no better example of our employees’ dedication to community than by highlighting the many ways that they choose to serve. Each community is unique and our Affiliate Banks are play integral roles in helping our community members live more productive, educated and enriched lives. We truly believe that the success our company is measured by the success of our stakeholders – our clients, community, business partners, employees and shareholders. We recognize our civic responsibility and appreciate all of our employees’ efforts to support the communities that help us grow. 20 2018 ANNUAL REPORT | AMES NATIONAL CORPORATION AREAS OF SUPPORT 17 Locations serving 10 Communities FINANCIAL LITERACY AND EDUCATION COMMUNITY AND ECONOMIC DEVELOPMENT COMMUNITY ARTS AFFORDABLE HOUSING AND ECONOMIC REVITALIZATION HEALTH AND HUMAN SERVICES YOUTH PROGRAMS Ames National Corporation 405 5th Street, Box 846 | Ames, IA 50010 p (515) 232-6251 | f (515) 663-3033 www.amesnational.com info@amesnational.com 

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