Breaking Down Ames National Corporation (ATLO) Financial Health: Key Insights for Investors

You're looking at Ames National Corporation (ATLO) right now and wondering if their recent performance signals a real shift or just a fleeting interest rate tailwind, and honestly, it's a bit of both. The headline numbers from the third quarter of 2025 are defintely compelling, showing net income surging to $4.6 million, which translates to a strong $0.51 earnings per share (EPS), a significant jump from the year prior. This is a bank leveraging its balance sheet, pushing its Net Interest Margin (NIM) up to a healthy 2.83% in Q3 2025, a clear sign their interest rate management is working. But here's the quick math on the risk: while total assets sit at a solid $2.1 billion, we can't ignore the rise in credit loss expenses to $627 thousand in the quarter, largely tied to commercial real estate and operating loan portfolios, meaning the underlying credit quality needs a closer look before you decide to buy or hold.

Revenue Analysis

If you are looking at Ames National Corporation (ATLO), the key takeaway is that their revenue picture in 2025 is defintely defined by a significant surge in their core banking profitability, the Net Interest Income (NII). The company's revenue for the last twelve months ending September 30, 2025, totaled approximately $60.57 million. This represents a strong year-over-year growth of 18.60%, a clear rebound from the more modest growth seen in 2024.

The primary revenue stream for Ames National Corporation is, predictably, Net Interest Income (NII)-the difference between what they earn on loans and investments and what they pay on deposits and borrowings. For the nine months ending September 30, 2025, NII hit $40.4 million, which is a substantial increase of 23.1% over the same period in 2024. That's the engine of the business right now.

Here's the quick math on the two main revenue segments for the first nine months of 2025:

• Net Interest Income: $40.4 million
• Noninterest Income: $7.7 million

The Noninterest Income segment, which includes fees, service charges, and wealth management, is a smaller but important piece of the pie. This segment grew by a solid 7.1% to $7.7 million for the first nine months of 2025, driven primarily by growth in wealth management income from new account relationships and increased assets under management. It's a good sign when a community bank in Iowa can grow its fee-based services.

The most significant change in the revenue profile is the dramatic improvement in the Net Interest Margin (NIM), which is the profitability measure for a bank's lending activities. The NIM for the third quarter of 2025 improved to 2.83%, up sharply from 2.21% in the third quarter of 2024. This expansion is what's truly driving the NII increase, thanks to higher yields on loans and investments, plus lower interest expenses on borrowings as market rates have eased. This is a strong, actionable signal for investors, showing effective management of funding costs.

For a deeper dive into the valuation and strategic frameworks, you should look at the full analysis in Breaking Down Ames National Corporation (ATLO) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if Ames National Corporation (ATLO) is just growing revenue or if that growth is actually translating to the bottom line. The short answer is: their profitability has seen a sharp, recent rebound in 2025, largely driven by better net interest income (NII) and disciplined cost control. This is a defintely positive trend, but we must compare it to the broader industry.

For the nine months ended September 30, 2025, Ames National Corporation reported a strong net income of $12.5 million, a significant jump that reflects an improving net interest margin (NIM) in a higher-rate environment. This improvement is critical because, for a bank, Net Interest Income is the closest thing to a 'Gross Profit' line, representing the money made from lending activities after paying interest on deposits and borrowings. Their TTM (Trailing Twelve Months) Net Profit Margin recently hit 23.7%, up sharply from 18.6% a year earlier. That's a powerful signal of earnings quality.

Here's the quick math on their recent TTM profitability ratios:

The trend is clear: profitability is accelerating. While the company saw a five-year average decline of 15.2% per year in earnings leading up to this period, the recent 43.3% earnings growth over the past year shows a major reversal. This turnaround is largely due to their ability to increase loan yields and reduce interest expense on other borrowed funds, which drove Q3 2025 Net Interest Income up to $14.0 million.

Operational efficiency is where the management team is executing well. The efficiency ratio (noninterest expense as a share of net operating revenue) is a key metric for banks; lower is better. Ames National Corporation's efficiency ratio improved dramatically to 61.76% in the third quarter of 2025, down from 77.87% in the same quarter of 2024. That's a massive operational win. The overall banking industry's efficiency ratio was around 56.2% in Q1 2025, so while ATLO is improving fast, they still have room to tighten up compared to the industry best.

• Improvement is tied to a 23.1% rise in net interest income for the first nine months of 2025.
• Noninterest expense was contained at $10.2 million in Q3 2025, a 2.5% decrease year-over-year.
• The company is showing strong cost management and operating leverage.

What this estimate hides is the credit loss expense, which was $627 thousand in Q3 2025, up from $371 thousand a year ago, primarily due to increased reserves on commercial real estate and operating loan portfolios. This is a risk to watch. Still, the overall picture is one of a regional bank successfully widening its spread and controlling costs in a dynamic rate environment. For a deeper look into the ownership structure, you should read Exploring Ames National Corporation (ATLO) Investor Profile: Who's Buying and Why?

Next step: Dig into the loan portfolio composition to assess the durability of that improved Net Interest Margin and the risk behind the rising credit loss expense.

Debt vs. Equity Structure

You need to know how Ames National Corporation (ATLO) funds its operations, and the short answer is: they rely heavily on deposits, which is normal for a bank, but their non-deposit debt is low and shrinking. This signals a very conservative, well-capitalized balance sheet, which is defintely a good thing in a shaky market.

As of the third quarter of 2025, Ames National Corporation reported total assets of approximately $2.108 billion. Their total stockholders' equity-the value owned outright by shareholders-stood at a strong $200.6 million. This equity base supports their lending and investment activities. What's interesting is their debt profile, which shows a clear focus on reducing external funding costs.

The company's debt is primarily composed of deposits, which are a bank's main liability, but when we look at their non-deposit debt (like short-term borrowings and other funds), the picture is one of deleveraging. For instance, their 'other borrowings' decreased significantly to $35.8 million as of Q1 2025, down from $90.3 million a year prior. This reduction is a deliberate move to lower funding costs and risk.

• Total Stockholders' Equity (Q3 2025): $200.6 million
• Total Assets (Q3 2025): $2.108 billion
• Other Borrowings (Q1 2025 Proxy for Non-Deposit Debt): $35.8 million

Here's the quick math on their leverage: The reported Debt-to-Equity (D/E) ratio for Ames National Corporation is approximately 0.569. This ratio measures the company's total debt (excluding deposits for this specific reported figure) relative to its equity. To be fair, a D/E ratio of 0.569 is only slightly higher than the US Regional Banks industry average of roughly 0.5 as of November 2025. This means for every dollar of shareholder equity, the company uses about 57 cents of external debt, which is a manageable level of financial leverage (the use of borrowed money to increase potential returns).

The company has been actively rebalancing its funding mix. In the third quarter of 2025, the interest expense on their 'other borrowed funds' dropped by $726 thousand compared to the same period last year, a direct result of reduced borrowings. They are letting higher-cost debt mature and replacing it with lower-cost deposits, which is a smart strategy in a declining interest rate environment.

The balance of debt financing versus equity funding is currently skewed toward a strong equity position, a hallmark of a conservative regional bank. They aren't issuing new, large-scale debt; they're paying down the old. This focus on capital strength is key for weathering any potential economic downturns, especially given the current concerns in commercial real estate. You can read more about the overall picture in Breaking Down Ames National Corporation (ATLO) Financial Health: Key Insights for Investors.

The table below summarizes the key leverage metrics:

Liquidity and Solvency

You need to know if Ames National Corporation (ATLO) can cover its short-term obligations, and for a bank, that means looking past the typical current ratio (working capital) and focusing on the quality of its liquid assets versus its deposit base. The short answer is the bank's liquidity position is defintely stable, driven by a positive cash flow from operations and a strategic reduction in higher-cost borrowings.

As of the third quarter of 2025, Ames National Corporation's balance sheet shows a strong cushion of highly liquid assets. We can approximate the bank's liquidity position by comparing its most immediate cash and short-term investments against its primary short-term liability, customer deposits.

• Cash, Cash Equivalents, and Federal Funds Sold: $113.84 million
• Short-Term Investments (Securities): $650.66 million
• Total Deposits (Primary Liability): $1.83 billion

For a non-financial company, a Current Ratio (Current Assets divided by Current Liabilities) of less than 1.0 is a red flag, but for a bank whose deposits are technically callable on demand, the metric is less useful. Still, if we approximate the Current and Quick Ratios using highly liquid assets (Cash, Investments, and Receivables of approximately $779.5 million) against the primary short-term obligations (Deposits plus reduced borrowings of approximately $1.866 billion), the ratio is about 0.42. This number simply highlights the nature of banking-long-term assets (loans) funded by short-term liabilities (deposits).

Working Capital and Funding Trends

The real story lies in the working capital (a term of art, or a simple way to say short-term funding) trends. Ames National Corporation has been actively reducing its reliance on more expensive wholesale funding. For instance, other borrowings decreased significantly to $35.8 million as of Q1 2025, down from higher levels a year prior. This reduction in borrowed funds is a clear, positive move to lower the cost of funds and improve the net interest margin (NIM), which hit 2.83% in Q3 2025. Also, the bank has $96 million of investments maturing within one year, providing a steady, near-term source of cash to redeploy or further reduce debt. That's smart balance sheet management.

Cash Flow Statements Overview

The cash flow statement for the trailing twelve months (TTM) leading up to Q3 2025 shows healthy operational strength, which is the ultimate source of liquidity for any business.

The $20.17 million in positive Operating Cash Flow (OCF) is the lifeblood here. It shows the core business is generating more than enough cash to cover its daily needs and fund capital expenditures, which were only $0.44 million TTM. The Investing Cash Flow line, showing a net inflow from securities, suggests the bank is allowing lower-yielding investments to mature, freeing up cash for other uses. This is a deliberate, tactical move to enhance liquidity and profitability. You can find more details on this in Breaking Down Ames National Corporation (ATLO) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Ames National Corporation (ATLO) and asking the core question: Is this stock a buy, a hold, or a sell right now? Based on the latest fiscal year 2025 data, the short answer is that the stock appears to be trading at a slight discount to its intrinsic value, making it a compelling value play in the regional banking space.

The key is that its valuation multiples-Price-to-Earnings (P/E) and Price-to-Book (P/B)-sit comfortably below industry averages, suggesting a potential undervaluation (the market hasn't fully appreciated the company's earnings power or asset base). One analyst view even suggests the stock is currently trading 8% below its estimated fair value.

Here's the quick math on the core valuation metrics as of November 2025:

• Price-to-Earnings (P/E): The trailing twelve months (TTM) P/E ratio is around 11.6 to 13.8. This is a defintely lower multiple than the broader S&P 500, which often signals a value stock.
• Price-to-Book (P/B): The P/B ratio is in the range of 0.85 to 0.95. A P/B below 1.0 means the stock is selling for less than the value of its net assets, a classic sign of undervaluation for a bank.
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric, which is useful for comparing companies with different debt levels, sits at 10.03.

The market is pricing Ames National Corporation (ATLO) at less than its book value. That's a good starting point.

Stock Performance and Analyst Consensus

The stock's recent performance shows a positive trajectory, but it has not been a smooth ride. Over the last 52 weeks, the stock has traded in a range from a low of $15.75 to a high of $21.49 per share. As of November 13, 2025, the price was around $21.32, near the top of its annual range, reflecting a recent uptick in investor confidence.

The general analyst sentiment is cautiously optimistic. While formal coverage may be thin, the consensus view leans toward a 'Buy' with a price target that is approximately 11.43% higher than the current market price, suggesting an expected near-term upside. This optimism is fueled by the company's strong Q2 2025 earnings, which saw net income rise to $4.5 million, or $0.51 per share, a significant jump from the prior year.

For a deeper dive into who is driving this recent buying activity, you should read Exploring Ames National Corporation (ATLO) Investor Profile: Who's Buying and Why?

Dividend Stability and Payout

Ames National Corporation (ATLO) offers a solid dividend, which is crucial for income-focused investors. The current annual dividend is $0.80 per share, translating to a dividend yield of approximately 3.79% as of late 2025. This yield is higher than the Financial Services sector average of 2.88%.

The dividend's sustainability is strong, with a payout ratio of about 44.44% of earnings. This low ratio means the company is only using a small portion of its profits to cover the dividend, leaving plenty of room for reinvestment or to weather an economic downturn. However, you should note the dividend per share has seen a recent decrease, which is a risk to monitor.

Here is a summary of the 2025 dividend data:

Risk Factors

You're looking at Ames National Corporation (ATLO) and seeing strong Q3 2025 net income of $4.6 million, which is a great sign. But as a seasoned financial analyst, I have to tell you that the real story is in the credit and balance sheet risks that are bubbling right beneath that improved profitability. You need to map these risks to clear actions now, not later.

The core challenge for Ames National Corporation is a divergence between excellent interest rate management and rapidly deteriorating asset quality. Yes, the Net Interest Margin (NIM) jumped to 2.83% in the third quarter of 2025, fueled by a successful 50% reduction in high-cost borrowings, bringing them down from $47 million to $23.5 million. That's smart treasury work. But still, the credit quality metrics are flashing red, and that's where your focus should be.

• Credit Quality Deterioration: The problem loan ratio spiked to 1.51% of total loans in Q3 2025, which is more than double the Iowa peer average of 0.66%. This indicates company-specific underwriting issues, not just a soft regional economy.
• Non-Accrual Spike: Nonaccrual loans-those not generating interest income-increased by 30% since December 2024, reaching $19.3 million in Q3 2025. This directly pressures future earnings.
• Covenant Breach: The company defintely disclosed a technical loan covenant default after its Modified Texas Ratio hit an alarming 33.33%, indicating underlying financial vulnerability, even though a waiver was secured.

Here's the quick math on the loan portfolio exposure: Ames National Corporation operates primarily in Central Iowa, so it has significant concentration risk, with Commercial Real Estate and Agricultural loans making up 41% of the total loan portfolio. This regional concentration is normal for a community bank, but the outsized problem loan ratio makes that concentration a much bigger risk factor.

Operational and External Headwinds

Beyond the internal credit issues, Ames National Corporation faces the same external headwinds as any regional bank, plus a significant interest rate risk hidden in its investment portfolio. The company's forward-looking statements highlight a broad range of risks, from shifts in fiscal and monetary policies to competitive product pricing. The most material one right now is the unrealized loss on its securities.

The bank holds a large portfolio of available-for-sale securities with $29.6 million in gross unrealized losses as of Q3 2025. This is a hidden rate risk; while these losses are excluded from regulatory capital, they represent a significant economic loss that could crystallize if the bank were forced to sell the securities for liquidity. On the operational side, the credit loss expense for the nine months ended September 30, 2025, totaled $1.7 million, a significant increase from $722 thousand in the same period a year ago, primarily due to increased specific reserves on commercial real estate and operating loans.

You can see the credit provisioning trend in the table below:

This jump in charge-offs-largely driven by one commercial loan relationship-shows that the credit risk is translating into real losses.

Mitigation and Clear Actions

What this estimate hides is the management's decisive action on the funding side, which is their primary mitigation strategy against interest rate risk. The 61.76% efficiency ratio in Q3 2025, down from 77.87% in Q3 2024, shows strong cost control, including shedding $449 thousand in consultant fees. Plus, the bank maintains a strong CET1 ratio of 13.56%, meaning they have a robust capital buffer against potential loan losses. They also signaled confidence by announcing a new stock repurchase program in August 2025, authorizing the buyback of 200,000 shares.

Your action item is simple: Keep a laser focus on the credit metrics, not just the earnings growth. The current profitability is masking a credit issue that needs to be resolved before it impacts capital. For a deeper dive into who is betting on this turnaround, you should read Exploring Ames National Corporation (ATLO) Investor Profile: Who's Buying and Why?

Growth Opportunities

Ames National Corporation (ATLO) is defintely poised for near-term earnings growth, not from massive revenue expansion, but from a sharp focus on profitability and cost control. You should know that the core story for 2025 isn't about new acquisitions, but about maximizing the yield on their existing assets and getting lean on expenses.

The company's net income for the nine months ended September 30, 2025, reached $12.5 million, translating to earnings per share (EPS) of $1.41. This is a huge jump from the $0.75 EPS in the same period of 2024. Management is forecasting full-year 2025 EPS to land in the range of $1.72 to $1.82 per share, a solid outlook driven by better interest rate dynamics.

Here's the quick math: The primary growth driver is the net interest margin (NIM)-the difference between interest income and interest expense. For the first nine months of 2025, net interest income hit $40.4 million, a 23.1% increase year-over-year. This happened because their loan and investment yields improved while their cost of funds dropped, pushing the NIM to 2.67% for the period.

• Improve loan yields and reduce borrowing costs.
• Grow wealth management income by 7.1%.
• Cut noninterest expense by 1.8% year-to-date.

Strategic Initiatives and Operational Edge

Ames National Corporation's strategic initiatives are centered on leveraging their regional footprint and improving operational efficiency, which is a classic community bank playbook. They are a regional bank holding company operating through six affiliate banks and 18 offices, primarily serving central and northern Iowa communities. That local, long-standing presence is a competitive advantage (a moat) that larger, national banks can't easily replicate.

Their focus on efficiency is paying off, with the efficiency ratio-a measure of a bank's overhead costs relative to its revenue-improving to 64.10% for the nine months ended September 30, 2025. This is a clear sign of better cost management, partly achieved by migrating to a stronger shared services model across their affiliate banks. Plus, they are investing in product innovations like upgrading their treasury management platform to improve the digital experience for business customers.

The company's loan portfolio is seeing modest, targeted growth, with net loans increasing 2.6% year-over-year to $1.31 billion as of March 31, 2025, driven mainly by the agriculture and residential real estate segments. This is a focused expansion within their core Iowa market.

Ames National Corporation is also actively returning capital to shareholders, having authorized a new share repurchase program in August 2025 for up to 200,000 shares of common stock.

For a deeper dive into who is betting on this strategy, you can read more at Exploring Ames National Corporation (ATLO) Investor Profile: Who's Buying and Why?

Valuation and Profitability Snapshot

Honesty, the market seems to be overlooking some of this performance. As of October 2025, the stock was trading below its estimated discounted cash flow (DCF) fair value of $23.88, indicating a market discount of nearly $4.30 per share from its trading price of $19.61. The company's net profit margin is strong at 23.7%, up from 18.6% a year earlier, which challenges the narrative of weak earnings quality.

Here is a summary of the 2025 financial health drivers:

The clear action for you is to watch the NIM trend in Q4 2025. If the company can sustain the 2.67% NIM or push it higher, the full-year EPS forecast of up to $1.82 is defintely achievable.