Ames National Corporation — Third Quarter 2026 Earnings Summary

Financial Performance

• Net income for the third quarter of 2026 was $7.0 million ($0.80 per share), compared to $4.6 million ($0.51 per share) in the third quarter of 2025.
• Net income for the nine months ended September 30, 2026, totaled $18.9 million ($2.14 per share), compared to $12.5 million ($1.41 per share) in the same period of 2025.
• Net interest income for the third quarter was $17.0 million, an increase of $2.9 million (20.7%) year-over-year.
• Net interest income for the nine months ended September 30, 2026, was $48.8 million, an increase of $8.3 million (20.6%) year-over-year.
• Net interest margin on a tax-equivalent basis improved to 3.38% in the third quarter of 2026 from 2.83% in the third quarter of 2025.
• Net interest margin for the nine months ended September 30, 2026, was 3.19%, compared to 2.67% in the prior year period.
• Return on average assets was 1.35% for the third quarter of 2026, up from 0.88% in the same quarter of 2025.
• Return on average equity was 13.18% for the third quarter of 2026, compared to 9.31% in the third quarter of 2025.
• Efficiency ratio improved to 54.97% in the third quarter of 2026 from 61.76% in the third quarter of 2025.
• Noninterest income for the third quarter was $3.5 million, a 36.7% increase from $2.5 million in the prior year quarter.
• Noninterest income for the nine months ended September 30, 2026, was $9.0 million, a 15.9% increase from $7.7 million in the prior year period.
• Noninterest expense for the third quarter was $11.2 million, an increase of 9.6% from $10.2 million in the prior year quarter.
• Noninterest expense for the nine months ended September 30, 2026, was $33.3 million, an increase of 7.8% from $30.9 million in the prior year period.
• Credit loss expense was $66 thousand for the third quarter of 2026, compared to $627 thousand in the third quarter of 2025.
• Net loan charge-offs totaled $745 thousand for the third quarter of 2026, compared to net loan recoveries of $344 thousand in the third quarter of 2025.
• A credit loss benefit of $73 thousand was recognized for the nine months ended September 30, 2026, compared to a credit loss expense of $1.7 million in the same period of 2025.
• Income tax expense was $2.1 million for the third quarter of 2026 (23% effective rate) compared to $1.2 million (20% effective rate) in the third quarter of 2025.
• Income tax expense was $5.6 million for the nine months ended September 30, 2026 (23% effective rate) compared to $3.1 million (20% effective rate) in the same period of 2025.

Guidance and Future Outlook

• Consultant fees totaling $600 thousand in the third quarter and $1.2 million for the nine months are expected to continue throughout 2026 as contract negotiations remain in process.
• The company noted that approximately $100 million of investments are maturing within one year at an average yield of approximately 1.9%.
• Approximately $376 million of loans are maturing within one year at an average yield of approximately 5.6%.

Business Segments and Product Lines

• Wealth management income increased due to estate and trust fees from estates concluding administration and continued growth in assets under management.
• Other noninterest income increased due to $235 thousand in insurance proceeds received for storm-related property damage.
• Loan interest income increased due to improved yield on the loan portfolio.
• Interest income from investment securities increased due to higher average balances and maturities reinvested at higher rates.
• Deposit interest expense decreased due to lower market rates.
• Other borrowed funds interest expense decreased due to reduced borrowings.
• Professional fees increased due to consultant fees for contract negotiations.
• Salaries and benefits increased due to anticipated bonus payouts and normal salary increases.

Market and Competitive Landscape

• Total assets decreased to $2.1 billion as of September 30, 2026, from $2.1 billion in September 2025, primarily due to loan payoffs and decreased interest-bearing deposits in financial institutions.
• Net loans decreased to $1.26 billion as of September 30, 2026, from $1.28 billion in September 2025, driven by payoffs in multi-family and commercial real estate portfolios.
• Deposits totaled $1.831 billion as of September 30, 2026, a decrease of 0.1% from September 2025, with decreases in public funds and time deposits offset by increases in retail and commercial checking and money market accounts.
• Securities available-for-sale increased to $671 million as of September 30, 2026, from $651 million in September 2025.
• Other borrowings decreased to $1.5 million as of September 30, 2026, from $23.5 million in September 2025.
• Approximately 14% of deposits are tied to external indexes.

Risks and Challenges

• Substandard loans increased to $52.0 million as of September 30, 2026, from $29.7 million in September 2025, primarily due to one large relationship secured by 1-4 family residential properties and weakening in the multi-family portfolio due to declining occupancy rates.
• Substandard-impaired loans decreased to $16.5 million as of September 30, 2026, from $18.8 million in September 2025, due to loan payoffs in commercial real estate partially offset by downgrades in an agricultural operating loan relationship.
• Loans past due 30 days or more totaled $10.0 million as of September 30, 2026, compared to $10.3 million in September 2025.
• The allowance for credit losses decreased to $16.7 million (1.31% of loans) as of September 30, 2026, from $18.0 million (1.39% of loans) in September 2025, primarily due to a decline in specific reserves and outstanding loan balances.
• Deposit interest expense related to external index-tied deposits can be more volatile in a changing interest rate environment.
• Securities sold under agreements to repurchase fluctuate based on customer liquidity needs, prevailing market interest rates, competition, and economic conditions.

Management Commentary and Tone

• Management attributed the increase in earnings primarily to an increase in net interest income driven by higher yields, higher average investment balances, and a declining cost of funds.
• Management noted the efficiency ratio continues to improve as the net interest margin increases.
• The effective tax rate increased due to higher net income and the expiration of New Markets Tax Credits, with the final year of credits for most projects being 2025.
• The company stated that all six affiliate banks are considered well-capitalized as defined by federal capital regulations.

Other Key Points

• A quarterly cash dividend of $0.24 per share was declared on August 12, 2026, payable on September 15, 2026, to stockholders of record as of September 1, 2026.
• Under the share repurchase program announced in August 2025, the company did not repurchase any shares between July 1, 2026, and September 30, 2026.
• There were 165,053 shares available to be repurchased under the program as of September 30, 2026.
• Stockholders' equity increased to $205.8 million as of September 30, 2026, from $200.6 million in September 2025, primarily due to retention of net income in excess of dividends, partially offset by unrealized losses on the investment portfolio.
• Subsequent to September 30, 2026, a substandard-impaired and nonaccrual agricultural loan relationship of $3 million was paid in full.
• Approximately $300 thousand of nonaccrual interest was collected and recognized in October 2026.
• The company's investment portfolio had an expected duration of 3.1 years as of September 30, 2026.