EXHIBIT 99.1

AMES NATIONAL CORPORATION

ANNOUNCES 2013 SECOND QUARTER EARNINGS RESULTS

Second Quarter 2013 Results:

For the quarter ended June 30, 2013, net income for Ames National Corporation (the Company) totaled $3,279,000, or $0.35 per share, compared to $3,309,000, or $0.36 per share in 2012.  Net income decreased primarily due to higher other real estate owned expenses and lower net interest income, offset in part by higher securities gains.

The Company’s management continues to be pleased with the results of the acquisition of the Garner and Klemme, Iowa offices by Reliance State Bank (the “Acquisition”) on April 27, 2012.  Reliance State Bank’s (RSB’s) net income for the quarter ended June 30, 2013 was $530,000, as compared to $369,000 for the quarter ended June 30, 2012.  The Acquisition contributed to increases in net interest income, noninterest income excluding securities gains, and noninterest expense.

Second quarter net interest income totaled $8,107,000, a decrease of $91,000, or 1.1%, compared to the same quarter a year ago, primarily due to the lower interest rates on loans and investments, offset in part by lower interest rates on deposits.  Indicative of an industry wide trend, the Company’s net interest margin decreased to 3.07% for the quarter ended June 30, 2013 from 3.38% for the quarter ended June 30, 2012.  The decrease can be attributed to lower market yields on interest earning assets which have matured and repriced in 2013 as compared to 2012.

A provision for loan losses of $60,000 was recognized in the second quarter of 2013 as compared to $64,000 in the second quarter of 2012.  Net loan charge-offs were $27,000 and $9,000 for the quarters ended June 30, 2013 and 2012, respectively.

Noninterest income for the second quarter of 2013 totaled $2,089,000 as compared to $1,731,000 for the same period in 2012.  The increase in noninterest income is primarily due to higher securities gains for the three months ended June 30, 2013 of $364,000 as compared to $11,000 for the three months ended June 30, 2012.

Noninterest expense for the second quarter of 2013 totaled $5,838,000 compared to $5,495,000 recorded in 2012.  The increase of 6.2% in noninterest expense was primarily the result of increased other real estate owned costs in 2013, primarily due to impairment write downs of $670,000 and $274,000 for the three months ended June 30, 2013 and 2012, respectively.  The efficiency ratio for the second quarter of 2013 was 57.26%, compared to 55.34% in 2012.

 

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Net interest income for the six months ended June 30, 2013 totaled $16,192,000, an increase of $281,000, or 1.8%, compared to the same period a year ago, primarily due to the lower interest rates on deposits.  The Company’s net interest margin, however, was 3.10% for the six months ended June 30, 2013, a decrease from 3.39% for the six months ended June 30, 2012.  The decrease can be attributed to lower market yields on interest earning assets which have matured and repriced, offset in part by lower rates on interest bearing liabilities in 2013 as compared to 2012.

A provision for loan losses of $74,000 was recognized for the six months ended June 30, 2013 as compared to $116,000 for the six months ended June 30, 2012.  Net loan charge-offs were $27,000 and $400 for the six months ended June 30, 2013 and 2012, respectively.

Noninterest income for the six months ended June 30, 2013 totaled $3,932,000 as compared to $3,632,000 for the same period in 2012.  The increase in noninterest income is primarily due to higher securities gains, merchant and card fees  and gains on the loans held for sale.

Noninterest expense for the six months ended June 30, 2013 totaled $10,957,000 compared to $10,334,000 recorded for the same period in 2012.  The increase of 6.0% in noninterest expense was primarily the result of higher salaries and employee benefits and higher other real estate owned costs.  The higher salaries and benefits costs were due primarily to normal salary increases and the Acquisition.  Other real estate owned costs increased due to the impairment write down mentioned previously.  The efficiency ratio for the six months ended June 30, 2013 was 54.45%, compared to 52.88% in 2012.

Balance Sheet Review:

As of June 30, 2013, total assets were $1,206,914,000, a $49,190,000 increase compared to June 30, 2012.  The increase in assets was mainly a result of the growth in deposits.

Securities available-for-sale as of June 30, 2013 increased to $602,300,000, compared to $561,083,000 as of June 30, 2012.  The increase in securities available-for-sale is primarily due to increases in U.S. government agencies and corporate bonds, offset by a decrease in U.S. government mortgage-backed securities.

Net loans as of June 30, 2013 increased 3.8% over 2012 ending at $506,139,000 compared to $487,438,000 as of June 30, 2012.  Most of this growth was due to increases in the real estate loan portfolio.  The allowance for loan losses on June 30, 2013 totaled $7,819,000, or 1.52% of gross loans, compared to $8,021,000 or 1.62% of gross loans as of June 30, 2012.  The decline in the ratios of the allowance for loan losses to gross loans was primarily due to improved credit quality of impaired loans as reflected in a decrease in the specific allowance for loan losses.  Impaired loans as of June 30, 2013, were $4,771,000, or 0.93% of gross loans, compared to $6,719,000, or 1.36% of gross loans as of June 30, 2012.

Other real estate owned was $8,989,000 as of June 30, 2013, which was $328,000 higher than June 30, 2012, primarily due to transfers from loan receivables offset by sales and impairment write downs of other real estate owned.  Due to potential changes in the real estate markets, it is at least reasonably possible that management’s assessments of fair value will change in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements.

 

Deposits totaled $1,000,457,000 on June 30, 2013, a 5.9% increase from the $945,064,000 recorded at June 30, 2012.  This increase is mainly the result of the continued growth in demand, NOW, money market and savings account balances.

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The Company’s stockholders’ equity represented 11.3% of total assets as of June 30, 2013 with all of the Company’s five affiliate banks considered well-capitalized as defined by federal capital regulations.  Total stockholders’ equity was $136,385,000 as of June 30, 2013, and $140,035,000 as of June 30, 2012.  The decrease in stockholders’ equity was primarily the result of lower fair value on the securities available-for-sale as reflected in the decrease in accumulated other comprehensive income.

Shareholder Information:

Return on average assets was 1.05% for the quarter ended June 30, 2013, compared to 1.15% for the same period in 2012.  Return on average assets was 1.11% for the six months ended June 30, 2013, compared to 1.24% for the same period in 2012.  Return on average equity was 8.98% for the quarter ended June 30, 2013, compared to the 9.52% in 2012.  Return on average equity was 9.42% for the six months ended June 30, 2013, compared to the 9.94% in 2012.  The decline in these profitability ratios is primarily attributable to lower market interest rates in 2013 compared to 2012 as new or repricing earning assets are generating less income in relation to higher average assets and equity.

The Company’s stock, which is listed on the NASDAQ Capital Market under the symbol ATLO, closed at $22.76 on June 30, 2013.   During the second quarter of 2013, the price ranged from $18.50 to $23.15.

On May 8, 2013, the Company declared a quarterly cash dividend on its common stock, payable on August 15, 2013 to stockholders of record as of August 1, 2013, equal to $0.16 per share.

Ames National Corporation affiliate Iowa banks are First National Bank, Ames; Boone Bank & Trust Co., Boone; State Bank & Trust Co., Nevada; Reliance 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”, “forecasting” 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.

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AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2013 and 2012

(unaudited)

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AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(unaudited)