SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 0-32637
AMES NATIONAL CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
IOWA 42-1039071
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I. R. S. Employer
Incorporation or Organization) Identification Number)
405 FIFTH STREET
AMES, IOWA 50010
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (515) 232-6251
Not Applicable
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ x ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, $5.00 PAR VALUE 3,128,982
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(Class) (Shares Outstanding at April 30, 2003)
1
AMES NATIONAL CORPORATION
INDEX
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2003
and December 31, 2002 3
Consolidated Statements of Income for the three
months ended March 31, 2003 and 2002 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 2003 and 2002 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 10
Item 4 Controls and Procedures 10
Part II. Other Information
Items 1 through 6 11
Signatures 12
Certifications 13
2
PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets (Unaudited)
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
March 31, December 31,
2003 2002
------------------------------
Assets
Cash and due from banks ........................................................ $ 26,870,928 $ 51,688,784
Federal funds sold ............................................................. 100,320,000 32,500,000
Interest bearing deposits in financial institutions ............................ 1,000,000 1,000,000
Securities available-for-sale .................................................. 254,003,860 244,575,026
Loans receivable, net .......................................................... 340,383,399 332,306,497
Bank premises and equipment, net ............................................... 8,623,103 8,726,397
Accrued income receivable ...................................................... 5,701,244 5,849,017
Other assets ................................................................... 357,811 582,849
------------------------------
Total assets ....................................................... $ 737,260,345 $ 677,228,570
==============================
Liabilities and Stockholders' Equity
Deposits:
Demand ..................................................................... $ 61,686,441 $ 62,557,937
NOW accounts ............................................................... 144,079,506 121,325,104
Savings and money market ................................................... 174,326,939 153,296,259
Time, $100,000 and over .................................................... 63,441,854 54,564,283
Other time ................................................................. 170,359,656 158,878,796
------------------------------
Total deposits ..................................................... 613,894,396 550,622,379
Federal funds purchased and securities
sold under agreements to repurchase ........................................ 13,362,019 18,325,574
Dividends payable .............................................................. 1,376,752 1,376,752
Deferred taxes ................................................................. 2,539,121 2,879,057
Accrued interest and other liabilities ......................................... 3,454,538 2,501,952
------------------------------
Total liabilities .................................................. 634,626,826 575,705,714
------------------------------
Stockholders' Equity:
Common stock, $5 par value; authorized 6,000,000 shares; issued 3,153,230
shares at March 31, 2003 and December 31, 2002; outstanding 3,128,982
at March 31, 2003 and December 31, 2002 .................................. 15,766,150 15,766,150
Surplus .................................................................... 25,354,014 25,354,014
Retained earnings .......................................................... 55,411,117 53,917,544
Treasury stock, at cost; 24,248 shares at
March 31, 2003 and December 31, 2002 .................................... (1,333,640) (1,333,640)
Accumulated other comprehensive income - net unrealized gain
on securities available-for-sale ......................................... 7,435,878 7,818,788
------------------------------
Total stockholders' equity ......................................... 102,633,519 101,522,856
------------------------------
$ 737,260,345 $ 677,228,570
==============================
3
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
Three Months Ended
March 31,
-----------------------
2003 2002
-----------------------
Interest and dividend income:
Loans ................................................... $5,556,035 $5,865,172
Securities
Taxable ............................................... 1,883,539 1,980,131
Tax-exempt ............................................ 770,300 718,954
Federal funds sold ...................................... 163,694 200,784
Dividends ............................................... 340,665 330,803
-----------------------
8,714,233 9,095,844
-----------------------
Interest expense:
Deposits ................................................ 2,625,990 2,987,959
Other borrowed funds .................................... 64,219 74,135
-----------------------
2,690,209 3,062,094
-----------------------
Net interest income ............................... 6,024,024 6,033,750
Provision for loan losses ................................... 119,745 104,219
-----------------------
Net interest income after provision for loan losses 5,904,279 5,929,531
-----------------------
Non-interest income:
Trust department income ................................. 327,329 250,730
Service fees ............................................ 358,924 357,675
Securities gains, net ................................... 365,825 188,733
Loan and secondary market fees .......................... 248,120 135,627
Other ................................................... 295,215 190,372
-----------------------
Total non-interest income ......................... 1,595,413 1,123,137
-----------------------
Non-interest expense:
Salaries and employee benefits .......................... 2,169,684 1,782,335
Occupancy expenses ...................................... 268,608 203,362
Data processing ......................................... 467,800 404,411
Other operating expenses ................................ 591,510 542,148
-----------------------
Total non-interest expense ........................ 3,497,602 2,932,256
-----------------------
Income before income taxes ........................ 4,002,090 4,120,412
Income tax expense .......................................... 1,131,765 1,179,482
-----------------------
Net income ........................................ $2,870,325 $2,940,930
=======================
Basic and diluted earnings per share ........................ $ 0.92 $ 0.94
=======================
Declared dividends per share ................................ $ 0.44 $ 0.42
=======================
Comprehensive Income ........................................ $2,487,415 $3,003,074
=======================
4
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
--------------------------
Cash flows from operating activities:
Net income ...................................................................... $ 2,870,325 $ 2,940,930
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ..................................................... 119,745 104,219
Amortization and accretion, net ............................................... 151,601 914
Depreciation .................................................................. 247,253 225,330
Provision for deferred taxes .................................................. (115,053) --
Securities gains, net ......................................................... (365,825) (188,733)
Decrease in accrued income receivable ......................................... 147,773 141,300
Decrease (increase) in other assets ........................................... 225,038 (86,360)
Increase in accrued interest and other liabilities ............................ 952,586 634,020
--------------------------
Net cash provided by operating activities ............................... 4,233,443 3,771,620
--------------------------
Cash flow from investing activities:
Purchase of securities available-for-sale ....................................... (26,888,288) (25,974,500)
Proceeds from sale of securities available-for-sale ............................. 1,290,340 6,853,042
Proceeds from maturities of securities available-for-sale ....................... 15,775,545 7,997,885
Net (increase) in interest bearing deposits in financial institutions ........... -- (350,000)
Net (increase) in federal funds sold ............................................ (67,820,000) (31,610,000)
Net decrease (increase) in loans ................................................ (8,196,647) 18,428,683
Purchase of bank premises and equipment ......................................... (143,959) (525,672)
---------------------------
Net cash used in investing activities ................................... (85,983,009) (25,180,562)
---------------------------
Cash flows from financing activities:
Increase in deposits ............................................................ 63,272,017 18,892,826
Increase (decrease) in FHLB advances, federal funds purchased
and securities sold under agreements to repurchase ............................ (4,963,555) 2,233,959
Dividends paid .................................................................. (1,376,752) (1,312,596)
---------------------------
Net cash provided by financing activities ............................... 56,931,710 19,814,189
---------------------------
Net decrease in cash and cash equivalents ............................... (24,817,856) (1,594,753)
---------------------------
Cash and cash equivalents at beginning of quarter .................................. 51,688,784 42,459,156
---------------------------
Cash and cash equivalents at end of quarter ........................................ $ 26,870,928 $ 40,864,403
===========================
Supplemental disclosures of cash flow information:
Cash paid for interest .......................................................... $ 2,781,226 $ 2,428,074
Cash paid for taxes ............................................................. 273,633 35,940
5
AMES NATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. Significant Accounting Policies
The consolidated financial statements for the three month periods ended March
31, 2003 and 2002 are unaudited. In the opinion of the management of Ames
National Corporation (the "Company"), these financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary to present
fairly these consolidated financial statements. The results of operations for
the interim periods are not necessarily indicative of results which may be
expected for an entire year. Certain information and footnote disclosure
normally included in complete financial statements prepared in accordance with
generally accepted accounting principles have been omitted in accordance with
the requirements for interim financial statements. The interim financial
statements and notes thereto should be read in conjunction with the year-end
audited financial statements contained in the Company's 10-K. The consolidated
condensed financial statements include the accounts of the Company and its
wholly-owned banking subsidiaries (the "Banks"). All significant intercompany
balances and transactions have been eliminated in consolidation.
2. Dividends
On May 13, 2003, the Company declared a cash dividend on its common stock,
payable on August 15, 2003 to stockholders of record as of August 1, 2003, equal
to $0.46 per share. Also on May 13, 2003, the Company declared an additional
special cash dividend on its common stock, payable October 1, 2003 to
stockholders of record as of September 16, 2003, equal to $0.46 per share.
3. Earnings Per Share
Earnings per share amounts were calculated using the weighted average shares
outstanding during the periods presented. The weighted average outstanding
shares for the three months ended March 31, 2003 and 2002 were 3,128,982 and
3,125,229, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements about the
Company, its business and its prospects. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include use of the words "believe", "expect", "anticipate",
"intend", "plan", "estimate" or words of similar meaning, or future or
conditional verbs such as "will", "would", "should", "could" or "may".
Forward-looking statements, by their nature, are subject to risks and
uncertainties. A number of factors, many of which are beyond the Company's
control, could cause actual conditions, events or results to differ
significantly from those described in the forward-looking statements. Such risks
and uncertainties with respect to the Company include those related to the
economic environment, particularly in the areas in which the Company and the
Banks operate, competitive products and pricing, 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 and the availability of and
costs associated with sources of liquidity.
Results of Operations for the Three Months Ending March 31, 2003 and March 31,
2002.
General
The Company earned net income of $2,870,000, or $0.92 per share for the three
months ended March 31, 2003, compared to net income of $2,941,000, or $0.94 per
share, for the three months ended March 31, 2002, a decrease of 2.4%. The
Company's return on average assets was 1.67% and 1.91%, respectively, for the
three month periods ending March 31, 2003 and 2002. The Company's return on
average equity was 11.26% and 12.26%, respectively for the three month periods
ending March 31, 2003 and 2002.
6
While net interest income was relatively unchanged for the first quarter of 2003
versus the same period in 2002, non-interest expense was significantly higher in
2003 as the result of higher overhead expenses relating to the opening of United
Bank & Trust NA (United Bank) in Marshalltown, Iowa. Overhead expenses for
United Bank totaled $324,000 for the first quarter ended March 31, 2003. The
higher non-interest expense was partially offset by higher securities gains in
the Company's stock portfolio and an increase in loan and secondary market fees
for the first quarter of 2003 versus the same period a year ago. The secondary
mortgage market activity remains brisk but it is not anticipated to remain at
current levels once interest rates stabilize or increase.
AVERAGE BALANCE SHEETS AND INTEREST RATES
The following table sets forth certain information relating to the Company's
average balance sheets and reflects the average yield on assets and average cost
of liabilities for the three month periods ended March 31, 2003 and March 31,
2002, respectively.
AVERAGE BALANCE SHEETS AND INTEREST RATES
Three Months Ended March 31,
------------------------------------------------------------
2003 2002
---------------------------- -----------------------------
ASSETS Average Revenue/ Yield/ Average Revenue/ Yield/
(dollars in thousands) Balance Expense Rate Balance Expense Rate
------------------------------------------------------------
Interest-bearing assets
Loans
Commercial ......................... $ 38,186 $ 565 5.92% $ 44,101 $ 802 7.27%
Agricultural ....................... 25,998 461 7.09% 24,604 469 7.62%
Real estate ........................ 257,491 4,215 6.55% 227,645 4,246 7.46%
Installment and other .............. 19,401 315 6.49% 20,058 348 6.94%
-----------------------------------------------------------
Total loans (including fees) ....... $341,076 $ 5,556 6.52% $316,408 $ 5,865 7.41%
Investment securities
Taxable ............................ $156,000 $ 2,003 5.14% $136,209 $ 2,083 6.12%
Tax-exempt ......................... 81,167 1,494 7.36% 75,104 1,432 7.63%
-----------------------------------------------------------
Total investment securities ........ $237,167 $ 3,497 5.90% $211,313 $ 3,515 6.65%
Interest bearing deposits with banks $ 1,000 $ 5 2.00% $ 402 $ 2 1.99%
Federal funds sold ................. 58,914 164 1.11% 49,442 201 1.63%
-----------------------------------------------------------
Total interest-earning assets ...... $638,157 $ 9,222 5.78% $577,565 $ 9,583 6.64%
Non-interest-earning assets ........ $ 49,973 $ 39,954
-------- --------
TOTAL ASSETS ....................... $688,130 $617,519
======== ========
1 Average loan balance include nonaccrual loans, if any. Interest income on
nonaccrual loans has been included. 2 Tax-exempt income has been adjusted
to a tax-equivalent basis using an incremental tax rate of 34%.
7
AVERAGE BALANCE SHEETS AND INTEREST RATES
Three Months Ended March 31,
--------------------------------------------------------------
2003 2002
--------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY Average Revenue/ Yield/ Average Revenue/ Yield/
(dollars in thousands) Balance Expense Rate Balance Expense Rate
--------------------------------------------------------------
Interest-bearing liabilities
Deposits
Savings, NOW accounts, and money markets ... $278,748 $ 752 1.08% $249,852 $ 831 1.33%
Time deposits < $100,000 ................... 165,333 1,407 3.40% 153,197 1,682 4.39%
Time deposits > $100,000 ................... 61,415 467 3.04% 46,394 475 4.10%
-------------------------------------------------------------
Total deposits ............................. $505,496 $ 2,626 2.08% $449,443 $ 2,988 2.66%
Other borrowed funds ....................... 15,116 64 1.69% 14,580 74 2.03%
-------------------------------------------------------------
Total Interest-bearing ..................... $520,612 $ 2,690 2.07% $464,023 $ 3,062 2.64%
liabilities ................................ -------- --------
Non-interest-bearing liabilities
Demand deposits ............................ $ 57,934 $ 52,687
Other liabilities .......................... 7,604 4,829
-------- --------
Stockholders' equity ....................... $101,980 $ 95,980
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ....................... $688,130 $617,519
======== ========
Net interest income ........................ $ 6,532 4.09% $ 6,521 4.52%
======== ========
Spread Analysis
Interest income/average assets ............. 9,222 5.36% 9,583 6.21%
Interest expense/average assets ............ 2,690 1.56% 3,062 1.98%
Net interest income/average assets ......... 6,532 3.80% 6,521 4.23%
1 Tax-exempt income has been adjusted to a tax-equivalent basis using an
incremental tax rate of 34%.
Net Interest Income
For the three months ended March 31, 2003, the Company's net interest margin
adjusted for tax exempt income was 4.09% compared to 4.52% for the three months
ended March 31, 2002. Net interest income, prior to the adjustment for
tax-exempt income, for the quarter ended March 31, 2003 and March 31, 2002
totaled $6,024,000 and $6,034,000, respectively. Net interest income remained
relatively unchanged despite the decline in the net interest margin as the
higher volume of earning assets and the lower cost of interest bearing
liabilities nearly offset the decline in yield on earning assets.
For the three months ended March 31, 2003, interest income decreased $382,000 or
4.2% when compared to the same period in 2002. This decrease was attributable to
lower average loan rates of 6.5% for the quarter ended March 31, 2003 versus
7.4% for the quarter ended March 31, 2002. A higher volume of loans and
investments offset some of the decline in yield for interest income.
Interest expense decreased $372,000 or 12.1% for the quarter ended March 31,
2003 when compared to the same period in 2002. The lower interest expense for
the quarter is attributable to declining interest rates paid on deposits and
other borrowed funds partially offset by a higher volume of deposits.
Provision for Loan Losses
The Company's provision for loan losses for the three months ended March 31,
2003 was $120,000 compared to $104,000 during the same period last year.
Provision expense for quarter ended March 31, 2003 related to loan growth at
United Bank while provisions for the quarter ended March 31, 2002 were primarily
related to specific reserves for problem credits.
8
Non-interest Income and Expense
Non-interest income increased $472,000, or 42.0% during the quarter ended March
31, 2003 compared to the same period in 2002. The increase can be attributed to
securities gains in the Company's equity portfolio of $366,000 in 2003 compared
gains on the sale of securities in the Company's equity portfolio of $366,000 in
2003 compared to $189,000 in first quarter 2002. Higher loan and secondary
market fees also contributed to the increase in non-interest income.
Non-interest expense increased $565,000 or 19.3% for the first quarter of 2003
compared to the same period in 2002. The increase in non-interest expense is
primarily attributable to United Bank non-interest expenses for the first
quarter of 2003 of $324,000 while the bank was not yet opened in the first
quarter of 2002. The Company's efficiency ratio, non-interest expense divided by
net interest income plus non-interest income, was 45.9% and 41.0% for the three
months ended March 31, 2003 and 2002, respectively.
Income Taxes
The provision for income taxes for March 31, 2003 and March 31, 2002 was
$1,132,000 and $1,179,000, respectively. This amount represents an effective tax
rate of 28.3% for the three months ended March 31, 2003 versus 28.6% for the
same quarter in 2002. The Company's marginal federal tax rate is currently 35%.
The difference between the Company's effective and marginal tax rate is
primarily related to investments made in tax exempt securities.
Financial Condition
Assets
For the quarter ended March 31, 2003, total assets were $737,260,000, a
$60,032,000 increase compared to December 31, 2002. This higher level of assets
is attributable to the growth in assets at United Bank of $22,110,000 and to a
higher volume of federal funds sold resulting from temporary large public fund
deposit balances associated with the collection of property taxes. Average
assets for the first quarter ended March 31, 2003 totaled $688,130,000 versus
$617,519,000 for the first quarter ended March 31, 2002.
Investment Portfolio
The increase in the volume of investment securities to $254,004,000 on March 31,
2003 from $244,575,000 on December 31, 2002 resulted from the purchase of
municipal and U.S. government treasuries and agencies bonds.
Loan Portfolio
Net loans totaled $340,383,000 as of March 31, 2003 compared to 332,306,000 as
of December 31, 2002. The increased level of loans relates primarily to new loan
originations at United Bank.
Impaired loans totaled $2,288,000 as of March 31, 2003 compared to $2,409,000 as
of December 31, 2002. A loan is considered impaired when, based on current
information and events, it is probable that the Company will be unable to
collect the scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement. Impaired loans include loans
accounted for on a non-accrual basis, accruing loans which are contractually
past due 90 days or more as to principal or interest payments, and any
restructured loans. As of March 31, 2003, non-accrual loans totaled $2,091,000,
loans past due 90 days still accruing totaled $197,000 and there were no
restructured loans outstanding. Other real estate owned as of March 31, 2003 and
December 31, 2002 totaled $251,000 and $295,000, respectively.
Net recoveries totaled $49,000 for the three months ended March 31, 2003
compared to net charge-offs of $63,000 for the three months ended March 31,
2002. The first quarter's net recoveries were related to a commercial lease
recovery and net charge-offs in the first quarter of 2002 related primarily to
consumer loans. The resulting allowance for loan losses as a percentage of
outstanding loans as of March 31, 2003 and December 31, 2002 was 1.71% and
1.70%, respectively.
The allowance for loan losses is management's best estimate of probable losses
inherent in the loan portfolio as of the balance sheet date. Factors considered
in establishing an appropriate allowance include: an assessment of the financial
condition of the borrower, a realistic determination of value and adequacy of
underlying collateral, the condition of the local economy and the condition of
the specific industry of the borrower, an analysis of the levels and trends of
loan categories and a review of delinquent and classified loans.
9
Liabilities
Deposits increased by $63,272,000 from December 31, 2002 and are $83,492,000
higher than March 31, 2002 balances. The increase in deposits is attributable to
growth in deposit volume particularly at United Bank and a large influx of
public funds invested on a short-term basis until the funds are withdrawn over
the following 60 day period. The Company's deposits typically increase
significantly at the end of the first and third quarters as local municipalities
receive local property tax payments.
Other borrowed funds as of March 31, 2003 totaled $13,362,000 and consisted
primarily of securities sold under agreements to repurchase. Other borrowing as
of December 31, 2002 totaled $18,326,000.
Liquidity and Capital Resources
The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all financial commitments and to capitalize on
opportunities for profitable business expansion. The Company's principal source
of funds is deposits including demand, money market, savings and certificates of
deposits. Other sources include principal repayments on loans, proceeds from the
maturity and sale of investment securities, federal fund purchased, repurchase
agreements, advances from the Federal Home Loan Bank and funds provided by
operations. Net cash from operating activities contributed $4,233,000 and
$3,772,000 to liquidity for the three months ended March 31, 2003 and 2002,
respectively. Liquid assets including cash on hand, balances due from other
banks, federal funds sold and interest-bearing deposits in financial
institutions increased to $128,191,000 as of March 31, 2003 compared to the
December 31, 2002 balance of $85,189,000. The increased liquid assets are
attributable to the growth in consumer and public funds deposits.
Securities available for sale increased to $254,004,000 as of March 31, 2003
from $244,575,000 as of December 31, 2002 and provide additional liquidity for
the Company.
To provide additional external liquidity, the Banks have lines of credit with
the Federal Home Loan Bank of Des Moines, Iowa of $30,732,000 and federal funds
borrowing capacity at correspondent banks of $46,000,000. As of March 31, 2003,
the Company had no outstanding borrowings of federal funds purchased or Federal
Home Loan Bank advances. Management believes that the Company's liquidity
sources will be sufficient to support existing operations for the foreseeable
future.
The Company's total stockholder's equity increased to $102,634,000 on March 31,
2003, from $101,523,000 on December 31, 2002. March 31, 2003 stockholders'
equity was 13.9% of total assets, compared to 15.0% at December 31, 2002. Total
equity increased due to the retention of earnings. No material capital
expenditures or material changes in the capital resource mix are anticipated at
this time. Management believes that, as of March 31, 2003, the Company and its
Banks meet the capital requirements to which they are subject. As of that date,
all the Company's Banks were "well capitalized" under regulatory prompt
corrective action provisions.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's market risk is comprised primarily of interest rate risk arising
from its core banking activities of lending and deposit taking. Interest rate
risk results from the changes in market interest rates which may adversely
affect the Company's net interest income. Management continually develops and
applies strategies to mitigate this risk. Management does not believe that the
Company's primary market risk exposure and how it has been managed to-date in
2003 changed significantly when compared to 2002.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company 's Principal Executive Officer and Principal Financial Officer have
evaluated the effectiveness of the Company's disclosure controls and procedures
(as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within 90
days prior to the filing date of this quarterly report (the "Evaluation Date").
Based on such evaluation, such officers have concluded that, as of the
Evaluation Date, the Company's disclosure controls and procedures are effective
in bringing to their attention on a timely basis material information relating
to the Company (including its consolidated subsidiaries) required to be included
in the Company's periodic filings under the Exchange Act.
Changes in Internal Controls
Since the Evaluation Date, there have not been any significant changes in
Company's internal controls or in other factors that could significantly affect
such controls.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
On January 24, 2003, the Company filed a Form 8-K pursuant to Item
5, announcing net earnings for the year ending December 31, 2002.
On February 14, 2003, the Company filed a Form 8-K pursuant to Item
5, announcing financial results for the three and twelve months
ended December 31, 2002 and that on February 12, 2003, the
Company's Board of Directors declared a cash dividend of $.44 per
share payable on May 15, 2003 to the holders of record as of close
of business May 1, 2003.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMES NATIONAL CORPORATION
DATE: May 14 2003 By: /s/ Daniel L. Krieger
----------------------------
Daniel L. Krieger, President
Principal Executive Officer
By: /s/ John P. Nelson
------------------------------
John P. Nelson, Vice President
Principal Financial Officer
12
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Daniel L. Krieger, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ames National
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant , including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) have presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and to the audit
committee of the registrant's board of directors (or persons fulfilling the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003 /s/ Daniel L. Krieger
-----------------------------
Daniel L. Krieger, President
(Principal Executive Officer)
13
I, John P. Nelson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ames National
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant , including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) have presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and to the audit
committee of the registrant's board of directors (or persons fulfilling the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003 /s/ John P. Nelson
------------------------------
John P. Nelson, Vice President
(Principal Financial Officer)
14