EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE | CONTACT: | THOMAS H. POHLMAN |
PRESIDENT | ||
OR | ||
JOHN P. NELSON | ||
CFO | ||
(515) 232-6251 |
JULY 18, 2008
AMES NATIONAL CORPORATION
ANNOUNCES SECOND QUARTER 2008 FINANCIAL RESULTS
The Company had net income of $1,867,000, or $0.20 per share, for the three months ended June 30, 2008, compared to net income of $2,827,000, or $0.30 per share, for the three months ended June 30, 2007. Second quarter 2008 results included impairment charges related to the Company’s investment in Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA) preferred stock and MGIC Investment Corporation’s bonds. The carrying values of the preferred stock and the MGIC corporate bonds have been written down to their fair market value of $6.7 million and $2.8 million, respectively, as of June 30, 2008, causing a net securities loss of $1,435,000, or $0.15 per share, for the quarter. Other items that lowered income for the quarter included the provision for loan losses which was $819,000 as compared to $144,000 for June 30, 2007 and lower trust department income recorded in 2008. Management believes that additional impairment charges may be necessary on investment securities in future quarters if financial and economic conditions do not improve as perceived by bond and equity investors.
Positive income items for the quarter included net interest income that was significantly higher exceeding the second quarter of 2007 by $1,453,000 or 25%. The net interest margin for the quarter ended June 30, 2008 was 3.91%, compared to 3.31% for the second quarter of 2007. Also, net loan charge-offs for the quarter totaled $57,000, compared to net recoveries of $10,000 in the second quarter of 2007.
For the six month period ending June 30, 2008, the Company earned net income of $4,768,000, or $0.51 per share, an 11% decrease from the net income of $5,348,000, or $0.57 per share, earned a year ago. The lower earnings are primarily attributable to the net security losses and higher provisions for loan losses. Partially offsetting these expense items was an increase in net interest income for the six month period of $2,736,000 compared to the same six month period in 2007. The improvement in the net interest income is attributable to lower funding costs as market interest rates paid on deposits have been more favorable for the Company in 2008.
Impaired loans as of June 30, 2008 totaled $14,010,000, or 3% of gross loans, compared to impaired loans of $6,121,000 as of March 31, 2008. The increase in impaired loans is attributed to the default of a $9 million line of credit extended to purchase and improve land for commercial development. A recent independent appraisal confirms that the fair market value of this commercial development property adequately collateralizes the line of credit as of June 30, 2008.
The Company’s return on average assets was 0.85% and 1.33% for the three-month periods ending June 30, 2008 and 2007, respectively. The Company’s return on average equity was 6.70% for the three months ended June 30, 2008, compared to 10.09% for the same period a year ago.
Quarterly non-interest income decreased $2,147,000 primarily as the result of net security losses and lower trust department income compared to same period one year ago.
Non-interest expense rose 3% in the second quarter of 2008 primarily due to higher data processing and occupancy costs. The increased occupancy costs are primarily associated with the opening of First National Bank’s Ankeny office in May of 2007. The efficiency ratio for the three months ended June 30, 2008 rose to 58.13% from 51.68% at June 30, 2007 primarily as the result of net security losses.
Total assets totaled $872 million for the quarter ended June 30, 2008, compared to $840 million for same quarter last year, an increase of 4%. The loan portfolio grew $16 million from one year ago primarily as a result of commercial loans originated in the Ankeny market.
Loans totaled $458 million as of the end of the second quarter, 4% higher than the $441 million recorded on June 30, 2007. The loan growth was primarily in the commercial and commercial real estate portfolios. The allowance for loan losses as of June 30, 2008 and 2007 totaled $6,609,000 and $6,689,000, respectively. The allowance represents 1.42% and 1.49% of loans at June 30, 2008 and 2007, respectively.
Deposits totaled $679 million as of June 30, 2008, compared to the $671 million recorded as of June 30, 2007. Deposit balances increased primarily as the result of higher demand deposit and interest checking accounts (NOW) balances offset by lower certificate of deposit balances compared to one year ago.
Capital levels declined 3% to a $107 million compared to $110 million reported one year ago primarily as a result of a higher level of unrealized loss on securities held as available for sale. Total equity capital as of June 30, 2008 represented 12% of total assets.
Ames National Corporation stock, under the symbol ATLO, traded in the $15.12 to $22.94 range in the second quarter of 2008 and closed at $16.73 on June 30, 2008.
Ames National Corporation affiliate Iowa banks are First National Bank, Ames, Boone Bank & Trust Co., Boone, State Bank & Trust Co., Nevada, Randall-Story State Bank, Story City, and United Bank & Trust, Marshalltown.
The Private Securities Litigation Reform Act of 1995 provides the Company with the opportunity to make cautionary statements regarding forward-looking statements contained in this News Release, including forward-looking statements concerning the Company’s future financial performance and asset quality. Any forward-looking statement contained in this News Release is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, asset quality, plans and objectives may vary materially from those expressed in the forward-looking statements. The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following: economic conditions, particularly in the concentrated geographic area in which the Company and its affiliate banks operate; competitive products and pricing available in the marketplace; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions or regulatory requirements; fiscal and monetary policies of the U.S. government; changes in governmental regulations affecting financial institutions (including regulatory fees and capital requirements); changes in prevailing interest rates; credit risk management and asset/liability management; the financial and securities markets; the availability of and cost associated with sources of liquidity; and other risks and uncertainties inherent in the Company’s business, including those discussed under the heading “Risk Factors” in the Company’s annual report on Form 10-K. Management intends to identify forward-looking statements when using words such as “believe”, “expect”, “intend”, “anticipate”, “estimate”, “should” or similar expressions. Undue reliance should not be placed on these forward-looking statements. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
June 30, | June 30, | |||||||
ASSETS | 2008 | 2007 | ||||||
Cash and due from banks | $ | 22,902,276 | $ | 19,255,762 | ||||
Federal funds sold | 15,400,000 | - | ||||||
Interest bearing deposits in financial institutions | 6,138,140 | 1,010,523 | ||||||
Securities available-for-sale | 342,882,987 | 351,099,722 | ||||||
Loans receivable, net | 457,513,612 | 441,320,062 | ||||||
Loans held for sale | 2,202,265 | 2,094,327 | ||||||
Bank premises and equipment, net | 12,987,331 | 13,761,917 | ||||||
Accrued income receivable | 6,669,250 | 7,712,138 | ||||||
Deferred income taxes | 3,243,733 | 690,829 | ||||||
Other assets | 2,410,024 | 3,105,341 | ||||||
Total assets | $ | 872,349,618 | $ | 840,050,621 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
LIABILITIES | ||||||||
Deposits | ||||||||
Demand, noninterest bearing | $ | 81,306,466 | $ | 71,606,140 | ||||
NOW accounts | 169,262,133 | 154,583,055 | ||||||
Savings and money market | 162,606,100 | 160,263,988 | ||||||
Time, $100,000 and over | 97,770,417 | 106,054,915 | ||||||
Other time | 168,081,658 | 178,147,623 | ||||||
Total deposits | 679,026,774 | 670,655,721 | ||||||
Federal funds purchased and securities sold under agreements to repurchase | 39,374,666 | 49,425,759 | ||||||
Other short-term borrowings | 685,072 | 1,286,770 | ||||||
Long-term borrowings | 39,500,000 | 2,000,000 | ||||||
Dividends payable | 2,641,216 | 2,545,987 | ||||||
Accrued expenses and other liabilities | 4,219,903 | 4,064,406 | ||||||
Total liabilities | 765,447,631 | 729,978,643 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $2 par value, authorized 18,000,000 shares; 9,432,915 and 9,429,580 shares issued and outstanding at June 30, 2008 and June 30, 2007, respectively | 18,865,830 | 18,859,160 | ||||||
Additional paid-in capital | 22,651,222 | 22,588,691 | ||||||
Retained earnings | 66,169,346 | 66,114,331 | ||||||
Accumulated other comprehensive income (loss), net unrealized gain (loss) on securities available-for-sale | (784,411 | ) | 2,509,796 | |||||
Total stockholders' equity | 106,901,987 | 110,071,978 | ||||||
Total liabilities and stockholders' equity | $ | 872,349,618 | $ | 840,050,621 |
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Interest and dividend income: | ||||||||||||||||
Loans | $ | 7,331,295 | $ | 7,864,594 | $ | 15,149,526 | $ | 15,437,801 | ||||||||
Securities | ||||||||||||||||
Taxable | 2,480,918 | 2,322,316 | 4,990,127 | 4,659,405 | ||||||||||||
Tax-exempt | 1,261,287 | 1,189,988 | 2,608,128 | 2,384,314 | ||||||||||||
Federal funds sold | 90,962 | 149,213 | 134,449 | 179,390 | ||||||||||||
Dividends | 373,243 | 383,982 | 669,737 | 774,550 | ||||||||||||
Total interest income | 11,537,705 | 11,910,093 | 23,551,967 | 23,435,460 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 3,647,078 | 5,483,677 | 8,074,644 | 10,808,882 | ||||||||||||
Other borrowed funds | 533,972 | 522,757 | 1,129,599 | 1,014,917 | ||||||||||||
Total interest expense | 4,181,050 | 6,006,434 | 9,204,243 | 11,823,799 | ||||||||||||
Net interest income | 7,356,655 | 5,903,659 | 14,347,724 | 11,611,661 | ||||||||||||
Provision for loan losses | 818,995 | 143,877 | 928,694 | 153,605 | ||||||||||||
Net interest income after provision for loan losses | 6,537,660 | 5,759,782 | 13,419,030 | 11,458,056 | ||||||||||||
Non-interest income: | ||||||||||||||||
Trust department income | 393,886 | 721,320 | 831,153 | 1,104,665 | ||||||||||||
Service fees | 451,594 | 474,593 | 880,932 | 903,207 | ||||||||||||
Securities gains (losses), net | (1,435,019 | ) | 452,554 | (1,413,649 | ) | 906,077 | ||||||||||
Gain on sale of loans held for sale | 200,246 | 195,004 | 386,539 | 298,105 | ||||||||||||
Merchant and ATM fees | 160,782 | 144,611 | 314,002 | 282,285 | ||||||||||||
Other | 212,176 | 142,783 | 376,902 | 284,661 | ||||||||||||
Total non-interest income | (16,335 | ) | 2,130,865 | 1,375,879 | 3,778,999 | |||||||||||
Non-interest expense: | ||||||||||||||||
Salaries and employee benefits | 2,501,007 | 2,563,314 | 5,080,915 | 5,063,267 | ||||||||||||
Data processing | 624,485 | 557,915 | 1,170,360 | 1,108,357 | ||||||||||||
Occupancy expenses | 377,965 | 300,084 | 806,066 | 621,488 | ||||||||||||
Other operating expenses | 763,770 | 731,223 | 1,468,580 | 1,434,372 | ||||||||||||
Total non-interest expense | 4,267,227 | 4,152,536 | 8,525,921 | 8,227,484 | ||||||||||||
Income before income taxes | 2,254,098 | 3,738,111 | 6,268,988 | 7,009,571 | ||||||||||||
Income tax expense | 386,897 | 910,680 | 1,501,159 | 1,661,126 | ||||||||||||
Net income | $ | 1,867,201 | $ | 2,827,431 | $ | 4,767,829 | $ | 5,348,445 | ||||||||
Basic and diluted earnings per share | $ | 0.20 | $ | 0.30 | $ | 0.51 | $ | 0.57 | ||||||||
Declared dividends per share | $ | 0.28 | $ | 0.27 | $ | 0.56 | $ | 0.54 |