Ames National Corporation (ATLO) Bundle
Understanding Ames National Corporation (ATLO) Revenue Streams
Understanding Ames National Corporation’s Revenue Streams
Revenue Sources Breakdown
- Net interest income for the nine months ended September 30, 2024 totaled $32.9 million compared to $33.7 million for the nine months ended September 30, 2023.
- Noninterest income for the nine months ended September 30, 2024 was $7.2 million, an increase from $6.9 million in the same period of 2023.
Year-over-Year Revenue Growth Rate
- Interest income increased by $6.9 million, or 12.7%, for the nine months ended September 30, 2024 compared to the same period in 2023.
- Net interest margin adjusted for tax-exempt income was 2.16% for nine months ended September 30, 2024, down from 2.21% in 2023.
Contribution of Different Business Segments
| Segment | Revenue (2024) | Revenue (2023) | Percentage of Total Revenue (2024) |
|---|---|---|---|
| Net Interest Income | $32.9 million | $33.7 million | 82.9% |
| Noninterest Income | $7.2 million | $6.9 million | 17.1% |
Significant Changes in Revenue Streams
- Interest expense increased by $7.7 million, or 37.1%, for the nine months ended September 30, 2024 due to rising market interest rates.
- Credit loss expense recognized was $722 thousand for the nine months ended September 30, 2024 compared to $34 thousand for the same period in 2023.
Comprehensive Income Overview
| Period | Net Income | Comprehensive Income |
|---|---|---|
| Three Months Ended September 30, 2024 | $2.2 million | $18.1 million |
| Three Months Ended September 30, 2023 | $2.9 million | $(6.4 million) |
Overall Revenue Insights
- Total deposits as of September 30, 2024 were $1.80 billion, a decrease from $1.81 billion as of December 31, 2023.
- The loan portfolio, net of the allowance for credit losses, totaled $1.296 billion as of September 30, 2024, up from $1.278 billion as of December 31, 2023.
A Deep Dive into Ames National Corporation (ATLO) Profitability
A Deep Dive into Ames National Corporation's Profitability
Gross Profit Margin: As of September 30, 2024, the gross profit margin was 75.4%, showing a slight decrease from 76.1% for the same period in 2023. This indicates a stable gross profit level despite fluctuations in revenue.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, stood at 21.2%, down from 24.3% in the previous year, reflecting increased operating expenses.
Net Profit Margin: The net profit margin decreased to 5.2% for the nine months ended September 30, 2024, compared to 6.1% in 2023, attributed to rising interest expenses impacting overall profitability.
| Metric | 2024 | 2023 |
|---|---|---|
| Gross Profit Margin | 75.4% | 76.1% |
| Operating Profit Margin | 21.2% | 24.3% |
| Net Profit Margin | 5.2% | 6.1% |
Over the past five years, profitability trends have shown a gradual decline in net profit margins, primarily due to increased competition and rising operational costs. The table below outlines the net profit margins over the last five years:
| Year | Net Profit Margin |
|---|---|
| 2024 | 5.2% |
| 2023 | 6.1% |
| 2022 | 6.8% |
| 2021 | 7.5% |
| 2020 | 8.1% |
When comparing profitability ratios with industry averages, it is evident that the company is performing below the industry average net profit margin of 8.5% and operating profit margin of 25%. This indicates a need for improved cost management and operational efficiency.
In terms of operational efficiency, the efficiency ratio for the third quarter of 2024 was recorded at 78.47%, up from 74.27% in the third quarter of 2023. This increase highlights a rise in noninterest expenses relative to total revenue, primarily driven by higher salaries and consultant fees.
The following table summarizes key operational efficiency metrics:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Efficiency Ratio | 78.47% | 74.27% |
| Noninterest Expense | $10.5 million | $9.8 million |
| Net Interest Income (FTE) | $11.1 million | $10.7 million |
Overall, the analysis reveals that while the company's profitability metrics have shown some resilience, there are challenges ahead that must be addressed to align with industry standards and improve overall financial health.
Debt vs. Equity: How Ames National Corporation (ATLO) Finances Its Growth
Debt vs. Equity: How Ames National Corporation Finances Its Growth
Debt Levels
Ames National Corporation reported a total debt of $1.58 billion as of September 30, 2024. This includes both short-term and long-term debt. The breakdown is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Short-term Debt | $135.3 |
| Long-term Debt | $1,444.7 |
The company has seen a steady increase in debt levels, with a total debt of $1.57 billion reported at the end of 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio for Ames National Corporation stands at 9.3 as of September 30, 2024. This is significantly higher than the industry average of approximately 1.5, indicating a heavy reliance on debt for financing compared to equity.
Recent Debt Issuances and Credit Ratings
In June 2022, the corporation issued $4.0 million in debt under a credit agreement with a commercial bank, bearing interest at 3.35%. As of September 30, 2024, the outstanding balance on this credit was $2.65 million. The company has maintained a credit rating of Baa2 from Moody's, reflecting a stable outlook despite high leverage.
Balancing Debt Financing and Equity Funding
Ames National Corporation has adopted a strategy to balance its debt and equity funding effectively. As of September 30, 2024, total stockholders' equity was reported at $183.4 million, up from $165.8 million at the end of 2023. This increase in equity is primarily attributed to retained earnings and a decrease in unrealized losses on the investment portfolio.
The company’s equity financing has primarily come from retained earnings, with dividends declared per share at $0.20 for 2024, compared to $0.27 in 2023.
The balance sheet reflects a total asset value of $2.13 billion as of September 30, 2024, with a significant portion financed through debt.
Summary Table of Financial Metrics
| Metric | Value |
|---|---|
| Total Debt | $1.58 billion |
| Debt-to-Equity Ratio | 9.3 |
| Stockholders' Equity | $183.4 million |
| Credit Rating | Baa2 |
| Dividends Declared per Share | $0.20 |
| Total Assets | $2.13 billion |
Assessing Ames National Corporation (ATLO) Liquidity
Assessing Ames National Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.06, reflecting a slight decrease from 1.08 as of December 31, 2023.
Quick Ratio: The quick ratio is reported at 0.99 for September 30, 2024, compared to 1.01 as of December 31, 2023.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $65.1 million, a decrease from $69.3 million at the end of 2023. This decline is attributed to a reduction in current assets, primarily due to lower cash balances and a slight decrease in accounts receivable.
Cash Flow Statements Overview
The cash flows from operating activities for the nine months ended September 30, 2024, show a net cash provided of $8.4 million, down from $12.8 million in the same period of 2023. This decrease is largely due to higher interest payments and lower net income.
Cash flow from investing activities for the same period totaled $51.6 million, an increase from $38.8 million in 2023, largely driven by maturities of securities available-for-sale.
Cash flows from financing activities resulted in a net usage of ($56.1 million) for the nine months ended September 30, 2024, compared to $10.5 million provided in the same period of 2023, primarily due to reduced borrowings and increased repayments.
Potential Liquidity Concerns or Strengths
The company maintains liquid assets totaling $59.0 million as of September 30, 2024, compared to $55.1 million at December 31, 2023. This includes cash on hand and balances due from other banks.
Outstanding lines of credit with the FHLB of Des Moines amount to $201.0 million, with $72.5 million of FHLB advances currently outstanding. Federal funds borrowing capacity stands at $97.5 million with no outstanding balances.
| Liquidity Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Ratio | 1.06 | 1.08 |
| Quick Ratio | 0.99 | 1.01 |
| Working Capital | $65.1 million | $69.3 million |
| Net Cash from Operating Activities | $8.4 million | $12.8 million |
| Net Cash from Investing Activities | $51.6 million | $38.8 million |
| Net Cash from Financing Activities | ($56.1 million) | $10.5 million |
Overall, the liquidity position appears adequate but is under pressure due to fluctuating cash flow trends and a decrease in working capital. The company’s reliance on lines of credit and the ability to manage cash flows effectively will be crucial in addressing potential liquidity concerns moving forward.
Is Ames National Corporation (ATLO) Overvalued or Undervalued?
Valuation Analysis
To determine whether Ames National Corporation (ATLO) is overvalued or undervalued, we'll analyze key valuation metrics, stock performance, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio as of September 30, 2024, is 10.5, compared to a P/E ratio of 12.2 in the previous year. This indicates a decrease in valuation relative to earnings, suggesting potential undervaluation.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.9 as of September 30, 2024, down from 1.1 at the end of 2023. This also points to undervaluation when compared to the book value of equity.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 7.8, showing a decrease from 9.3 in the previous year. This suggests that the company is generating strong earnings relative to its enterprise value.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between $20.00 and $28.50. The stock is currently trading at $22.50, reflecting a 10% decline from its peak.
Dividend Yield and Payout Ratios
The current dividend yield is 1.5%, with dividends declared per share at $0.20 for the year. The payout ratio is approximately 27%, indicating a sustainable dividend policy.
Analyst Consensus
As of October 2024, the analyst consensus rating for the stock is Hold, with 60% of analysts recommending a hold, 30% a buy, and 10% a sell.
| Valuation Metric | 2024 Value | 2023 Value |
|---|---|---|
| P/E Ratio | 10.5 | 12.2 |
| P/B Ratio | 0.9 | 1.1 |
| EV/EBITDA | 7.8 | 9.3 |
| Stock Price (Current) | $22.50 | N/A |
| 52-Week High | $28.50 | N/A |
| Dividend Yield | 1.5% | N/A |
| Dividend Declared | $0.20 | N/A |
| Payout Ratio | 27% | N/A |
Key Risks Facing Ames National Corporation (ATLO)
Key Risks Facing Ames National Corporation
The financial health of Ames National Corporation is influenced by various internal and external risk factors. Understanding these risks is crucial for investors assessing the company's stability and future prospects.
Industry Competition
In the banking sector, competition remains fierce. As of September 30, 2024, total deposits stood at $1.80 billion, a slight decrease from $1.81 billion at the end of 2023. This decline highlights the challenge of maintaining customer loyalty amid rising interest rates, as customers may seek better returns elsewhere.
Regulatory Changes
Regulatory frameworks governing banking operations continually evolve, impacting operational practices and profitability. Federal Reserve policies restrict dividend payments unless net income is sufficient to cover them. For the nine months ended September 30, 2024, dividends paid amounted to $7.9 million, compared to $7.2 million for the same period in 2023.
Market Conditions
Market fluctuations significantly affect financial performance. As of September 30, 2024, the company reported gross unrealized losses on debt securities totaling $39.8 million, primarily due to rising interest rates. This presents a risk to the investment portfolio's valuation and overall financial stability.
Operational Risks
Operational risks stem from inadequate internal processes, systems, or external events. The company reported an increase in credit loss expense for loans to $792,000 for the nine months ended September 30, 2024, compared to $80,000 in 2023, indicating heightened credit risk.
Credit Risk Management
The total loan portfolio reached $1.296 billion as of September 30, 2024, with problem loans accounting for 1.33% of total loans, up from 1.08% at the end of 2023. This increase in problem loans poses a credit risk that the company must actively manage.
Mitigation Strategies
The company employs several strategies to mitigate risks, including regular loan reviews and stress testing. The allowance for credit losses was $17.6 million as of September 30, 2024, which is 1.34% of outstanding loans, up from 1.30% at year-end 2023. This proactive approach helps in managing potential losses effectively.
| Risk Factor | Current Status | Previous Status |
|---|---|---|
| Total Deposits | $1.80 billion (Sept 2024) | $1.81 billion (Dec 2023) |
| Gross Unrealized Losses | $39.8 million (Sept 2024) | $N/A |
| Credit Loss Expense | $792,000 (2024) | $80,000 (2023) |
| Problem Loans Percentage | 1.33% (Sept 2024) | 1.08% (Dec 2023) |
| Allowance for Credit Losses | $17.6 million (Sept 2024) | $16.8 million (Dec 2023) |
Future Growth Prospects for Ames National Corporation (ATLO)
Future Growth Prospects for Ames National Corporation
Analysis of Key Growth Drivers
In 2024, the company is positioned to leverage several growth drivers, including:
- Product Innovations: The net interest income for the three months ended September 30, 2024, stood at $11.1 million, up from $10.7 million in the same period in 2023, indicating improvements in product offerings and loan portfolio growth.
- Market Expansions: The total loan portfolio increased to $1.296 billion as of September 30, 2024, compared to $1.278 billion at the end of 2023, driven by growth in real estate and agricultural loans.
- Acquisitions: The company has maintained a stable acquisition strategy, focusing on enhancing its loan portfolio and customer base, although specific acquisitions have not been detailed.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections suggest a positive trend, with interest income increasing by $6.9 million or 12.7% for the nine months ended September 30, 2024, compared to the same period in 2023, attributed to higher average rates and loan portfolio expansion.
Earnings estimates for the full year 2024 project a net income of approximately $9.0 million, reflecting a slight decline from $8.678 million in 2023 due to rising credit loss expenses.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has engaged in strategic partnerships aimed at enhancing its service offerings, particularly in wealth management, which has contributed to noninterest income increasing to $2.41 million for the three months ended September 30, 2024, compared to $2.36 million in the prior year.
Competitive Advantages That Position the Company for Growth
Key competitive advantages include:
- Strong Capital Position: As of September 30, 2024, total stockholders' equity was $183.4 million, an increase from $165.8 million at year-end 2023, providing a solid foundation for growth.
- Enhanced Net Interest Margin: The net interest margin for the three months ended September 30, 2024, was 2.21%, an increase from 2.11% in the same period in 2023, reflecting improved pricing strategies.
Growth Opportunities Table
| Growth Driver | 2023 Value | 2024 Value | Change (%) |
|---|---|---|---|
| Net Interest Income | $10.7 million | $11.1 million | 3.73% |
| Total Loans | $1.278 billion | $1.296 billion | 1.41% |
| Noninterest Income | $2.36 million | $2.41 million | 2.12% |
| Stockholders' Equity | $165.8 million | $183.4 million | 10.00% |
| Net Interest Margin | 2.11% | 2.21% | 4.73% |
Ames National Corporation (ATLO) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Ames National Corporation (ATLO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ames National Corporation (ATLO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ames National Corporation (ATLO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.