Ames National Corp.
ATLO
#8343
Rank
$0.25 B
Marketcap
$28.57
Share price
-0.31%
Change (1 day)
70.36%
Change (1 year)

Ames National Corp. - 10-Q quarterly report FY


Text size:
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, 2002

[_] 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 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 3,125,229
- --------------------------------------------------------------------------------
(Class) (Shares Outstanding at April 30, 2002)

1
AMES NATIONAL CORPORATION

INDEX

Page

Part I. Financial Information

Item 1. Consolidated Financial Statements (Unaudited)

Consolidated Statements of Financial Condition at
March 31, 2002 (Unaudited) and December 31, 2001 3

Consolidated Statements of Income for the
three months ended March 31, 2002 and 2001 (Unaudited) 4

Consolidated Statements of Cash Flows for the
three months ended March 31, 2002 and 2001 (Unaudited) 5

Notes to Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 6 - 10

Item 3. Quantitative and Qualitative Disclosures
About Market Risk 10

Part II. Other Information

Items 1 through 6 11

Signatures 12


2
PART 1.  FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)


AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets
<TABLE>

(unaudited) March 31, December 31,
Assets 2002 2001
------------------------------
<S> <C> <C>
Cash and due from banks .................................................. $ 40,864,403 $ 42,459,156
Federal funds sold ....................................................... 60,960,000 29,350,000
Interest bearing deposits in financial institutions ...................... 600,000 250,000
Securities available-for-sale ............................................ 225,187,867 213,778,175
Loans receivable, net .................................................... 304,510,264 323,043,166
Bank premises and equipment, net ......................................... 7,483,997 7,183,655
Accrued income receivable ................................................ 5,836,053 5,977,353
Other assets ............................................................. 324,837 238,477
------------------------------
Total assets ................................................. $ 645,767,421 $ 622,279,982
==============================

Liabilities and Stockholders' Equity

Deposits:
Demand ............................................................... $ 51,991,931 $ 62,796,265
NOW accounts ......................................................... 131,319,934 108,509,319
Savings and money market ............................................. 145,667,064 138,342,052
Time, $100,000 and over .............................................. 49,064,946 47,716,458
Other time ........................................................... 152,358,206 154,145,161
------------------------------
Total deposits ............................................... 530,402,081 511,509,255

FHLB advances ............................................................ -- 1,000,000
Federal funds purchased and securities sold under agreements to repurchase 13,830,133 10,596,174
Dividends payable ........................................................ 1,312,596 1,312,596
Deferred taxes ........................................................... 1,224,826 1,188,670
Accrued interest and other liabilities ................................... 3,685,309 3,051,289
------------------------------
Total liabilities ............................................ 550,454,945 528,657,984
------------------------------

Stockholders' Equity:
Common stock, $5 par value; authorized 6,000,000 shares;
issued 3,153,230 shares at March 31, 2002 and December 31, 2001 .... 15,766,150 15,766,150
Treasury stock, at cost; 28,001 shares at
March 31, 2002 and December 31, 2001 .............................. (1,530,805) (1,530,805)
Surplus .............................................................. 25,393,028 25,393,028
Retained earnings .................................................... 51,025,345 49,397,011
Accumulated other comprehensive income - net unrealized gain
on securities available-for-sale ................................... 4,658,758 4,596,614
------------------------------

Total stockholders' equity ................................... 95,312,476 93,621,998
------------------------------
$ 645,767,421 $ 622,279,982
==============================
</TABLE>

3
AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income
<TABLE>

Three Months Ended
(unaudited) March 31,
2002 2001
-----------------------
<S> <C> <C>
Interest and dividend income:
Loans ................................................... $5,865,172 $7,268,782
Securities .............................................. 2,699,085 3,097,922
Federal funds sold ...................................... 200,784 92,424
Dividends ............................................... 330,803 230,351
-----------------------
9,095,844 10,689,478
-----------------------
Interest expense:
Deposits ................................................ 2,987,959 5,129,377
Other borrowed funds .................................... 74,135 397,162
-----------------------
3,062,094 5,526,539
------------------------

Net interest income ............................... 6,033,750 5,162,939

Provision for loan losses ................................... 104,219 77,678
-----------------------
Net interest income after provision for loan losses 5,929,531 5,085,261
-----------------------

Noninterest income:
Trust department income ................................. 250,730 230,748
Service fees ............................................ 357,675 353,315
Securities gains, net ................................... 188,733 486,525
Other ................................................... 325,999 324,925
-----------------------
Total noninterest income .......................... 1,123,137 1,395,513
-----------------------

Noninterest expense:
Salaries and employee benefits .......................... 1,782,335 1,693,114
Occupancy expenses ...................................... 203,362 213,601
Data processing ......................................... 404,411 439,657
Other operating expenses ................................ 542,148 522,382
-----------------------
Total noninterest expense ......................... 2,932,256 2,868,754
-----------------------

Income before income taxes ........................ 4,120,412 3,612,020

Income tax expense .......................................... 1,179,482 1,031,962
-----------------------

Net income ........................................ $2,940,930 $2,580,058
=======================

Basic and diluted earnings per share ........................ $ 0.94 $ 0.83
=======================

Declared dividends per share ................................ $ 0.42 $ 0.40
=======================

Comprehensive Income ........................................ $3,003,074 $4,703,475
=======================
</TABLE>

4
AMES NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows
<TABLE>
Three Months Ended
March 31,
----------------------------
(unaudited) 2002 2001
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................................... $ 2,940,930 $ 2,580,058
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ..................................................... 104,219 77,678
Amortization and accretion, net ............................................... 914 (11,720)
Depreciation .................................................................. 225,330 176,316
Provision for deferred taxes .................................................. -- (111,000)
(Gain) Loss on sale of securities available-for-sale .......................... (188,733) (486,525)
(Increase) decrease in accrued income receivable .............................. 141,300 420,116
Decrease (increase) in other assets ........................................... (86,360) 695,019
(Decrease) increase in accrued interest and other liabilities ................. 634,020 1,020,869
----------------------------
Net cash provided by operating activities ............................... 3,771,620 4,360,811
----------------------------

Cash flow from investing activities:
Purchase of securities available-for-sale ....................................... (25,974,500) (9,800,493)
Proceeds from sale of securities available-for-sale ............................. 6,853,042 7,932,315
Proceeds from maturities of securities available-for-sale ....................... 7,997,885 13,769,595
Net decrease (increase) in interest bearing deposits in financial institutions .. (350,000) 98,174
Net decrease (increase) in federal funds sold ................................... (31,610,000) (30,785,000)
Net decrease (increase) in loans ................................................ 18,428,683 (1,327,195)
Purchase of bank premises and equipment ......................................... (525,672) (294,807)
----------------------------
Net cash used in investing activities ................................... (25,180,562) (20,407,411)
----------------------------

Cash flows from financing activities:
Increase in deposits ............................................................ 18,892,826 27,390,882
Increase (decrease) in FHLB advances, federal funds purchased
and securities sold under agreements to repurchase ............................ 2,233,959 (12,996,833)
Dividends paid .................................................................. (1,312,596) (1,248,917)
----------------------------
Net cash provided by financing activities ............................... 19,814,189 13,145,132

Net decrease in cash and cash equivalents ............................... (1,594,753) (2,901,468)
----------------------------
Cash and cash equivalents at beginning of quarter .................................. 42,459,156 28,775,032
----------------------------
Cash and cash equivalents at end of quarter ........................................ $ 40,864,403 $ 25,873,564
============================

Supplemental disclosures of cash flow information:
Cash paid for interest .......................................................... $ 2,428,074 $ 4,505,670
Cash paid for taxes ............................................................. 35,940 21,458
============================
</TABLE>

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, 2002 and 2001 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 8, 2002, the Company declared a cash dividend on its common stock,
payable on July 1, 2002 to stockholders of record as of June 17, 2002, equal to
$0.44 per share. Also on May 8, 2002, the Company declared an additional cash
dividend on its common stock, payable August 15, 2002 to stockholders of record
as of August 1, 2002, equal to $0.44 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, 2002 and 2001 were 3,125,229 and
3,122,293, 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.

General

The Company earned net income of $2,941,000, or $0.94 per share for the three
months ended March 31, 2002, compared to net income of $2,580,000, or $0.83 per
share, for the three months ended March 31, 2001, an increase of 14%. The
Company's return on average assets was 1.91% and 1.69%, respectively, for the
three month periods ending March 31, 2002 and 2001.

The improvement in net income can be primarily attributed to lower interest
expense partially offset by lower interest income and security gains. The lower
interest expense for the quarter is attributable to declining interest rates on
deposits and other borrowed funds in addition to a lower volume of borrowed
funds. The decrease in interest expense was partially offset by lower interest
income on loans as loan rates and volume declined for the quarter ended March
31, 2002 versus the first quarter of 2001.


6
AVERAGE BALANCE SHEET 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, 2002 and March 31,
2001, respectively.

ASSETS
(Dollars in Thousands)
<TABLE>

AVERAGE BANALANCE SHEET AND INTEREST RATES

Three Months Ended March 31,
---------------------------------------------------------------
2002 2001
------------------------------ ------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans
Commercial ........................... $ 44,101 $ 802 7.27% $ 52,824 $ 1,182 8.95%
Agricultural ......................... 24,604 469 7.62% 29,274 674 9.21%
Real estate .......................... 227,645 4,246 7.46% 243,258 4,913 8.08%
Installment and other ................ 20,058 348 6.94% 25,261 499 7.90%
------------------------------------------------------------
Total loans (including fees) ... $316,408 $ 5,865 7.41% $350,617 $ 7,268 8.29%

Investment securities
Taxable .............................. $136,209 $ 2,083 6.12% $155,912 $ 2,491 6.39%
Tax-exempt ........................... 75,104 1,432 7.63% 66,110 1,266 7.66%
---------------------------------------------------------------
Total investment securities .... $211,313 $ 3,515 6.65% $222,022 $ 3,757 6.77%

Interest bearing deposits with banks ... $ 402 $ 2 1.99% $ 251 $ 3 4.78%
Federal funds sold ..................... 49,442 201 1.63% 7,420 92 4.96%
---------------------------------------------------------------
Total interest-earning assets .. $577,565 $ 9,583 6.64% $580,310 $ 11,120 7.66%

Noninterest-earning assets
Cash and due from banks .............. $ 24,029 $ 19,472
Premises and equipment, net .......... 7,386 5,211
Other, less allowance for loan losses 8,539 7,089
-------- --------
Total noninterest-earning assets $ 39,954 $ 31,772
-------- --------

TOTAL ASSETS ........................... $617,519 $612,082
======== ========
<FN>
1 Average loan balances 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 rate of 34%.
</FN>
</TABLE>

7
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<TABLE>

AVERAGE BALANCE SHEET AND INTEREST RATES

Three Months Ended March 31,
----------------------------------------------------------------
2002 2001
------------------------------ -------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing liabilities
Deposits
Savings, NOW accounts, and money markets ..... $249,852 $ 831 1.33% $216,747 $ 1,780 3.28%
Time deposits < $100,000 ..................... 153,197 1,682 4.39% 159,123 2,327 5.85%
Time deposits > $100,000 ..................... 46,394 475 4.10% 64,871 1,022 6.30%
----------------------------------------------------------------
Total deposits ........................... $449,443 $ 2,988 2.66% $440,741 $ 5,129 4.65%
Other borrowed funds ............................. 14,580 74 2.03% 28,843 398 5.52%
----------------------------------------------------------------
Total Interest-bearing liabilities ....... $464,023 $ 3,062 2.64% $469,584 $ 5,527 4.71%
-------- --------

Noninterest-bearing liabilities
Demand deposits ................................ $ 52,687 $ 48,695
Other liabilities .............................. 4,829 5,804
-------- --------
Stockholders' equity ..................... $ 95,980 $ 87,999
-------- --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $617,519 $612,082
======== ========

Net interest income ...................... $ 6,521 4.52% $ 5,593 3.86%
======== ========

Spread Analysis
Interest income/average assets ................. 9,583 6.21% $ 11,120 7.27%
Interest expense/average assets ................ 3,062 1.98% 5,527 3.81%
Net interest income/average assets ............. 6,521 4.23% 5,593 3.86%
<FN>

1 Tax-exempt income has been adjusted to a tax-equivalent basis using an
incremental rate of 34%.
</FN>
</TABLE>

Net Interest Income

For the three months ended March 31, 2002, the Company's net interest margin
adjusted for tax exempt income was 4.52% compared to 3.86% for the three months
ended March 31, 2001. Net interest income, prior to the adjustment for
tax-exempt income, for the quarter ended March 31, 2002 and March 31, 2001
totaled $6,034,000 and $5,163,000, respectively. This 16.9% increase resulted
primarily from declining interest rates on deposits and other borrowed funds in
addition to a lower volume of borrowed funds.

For the three months ended March 31, 2002, interest income decreased $1,594,000
or 14.9% when compared to the same period in 2001. This decrease was
attributable to lower average loan rates of 7.4% as of the quarter ended March
31, 2002 versus 8.3% for the quarter ended March 31, 2001. Additionally, lower
loan volume has contributed to lower loan income as loan demand has slowed and
the refinancing of the Banks' loans with competing financial institutions has
increased.

Interest expense decreased $2,464,000 or 44.6% for the quarter ended March 31,
2002 when compared to the same period in 2001. The lower interest expense for
the quarter is attributable to declining interest rates paid on deposits and
other borrowed funds as well as a lower volume of borrowed funds.

8
Provision for Loan Losses

The Company's provision for loan and lease losses for the three months ended
March 31, 2002 was $104,000 compared to $78,000 during the same period last
year. Provision expense for quarters ended March 31, 2002 and 2001 were utilized
to increase specific reserves for impaired loans.

Noninterest Income and Expense

Noninterest income decreased $272,000, or 19.5% during the quarter ended March
31, 2002 compared to the same period in 2001. The decrease can be attributed to
securities gains in the Company's equity portfolio of $189,000 in 2002 compared
to $487,000 in first quarter 2001.

Noninterest expense increased $64,000 or 2.2% for the first quarter of 2002
compared to the same period in 2001. The increase in noninterest expense is
attributable to an increase of $89,000 or a 5.3% in salaries and benefits.

Income Taxes

The provision for income taxes for March 31, 2002 and March 31, 2001 was
$1,179,000 and $1,032,000, respectively. This amount represents an effective tax
rate of 28.6% for both quarters. 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, 2002, total assets were $645,767,000, a
$23,487,000 increase compared to December 31, 2001 totals. This higher level of
assets is attributable to significant 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, 2002
totaled $617,519,000 versus $612,082,000 for the first quarter ended March 31,
2001.

Investment Portfolio

The increase in the volume of investment securities to $225,188,000 on March 31,
2002 from $213,778,000 on December 31, 2001 resulted from the purchase of U.S.
government agencies and corporate bonds.

Loan Portfolio

Net loans as of March 31, 2002 totaled $304,510,000, a decrease of $18,533,000
from outstanding balances as of December 31, 2001. The decreased level of loans
relates to lower loan demand and significant market competition for loans.

Impaired loans totaled $2,890,000 as of March 31, 2002 compared to $3,489,000 as
of December 31, 2001. 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, 2002, non-accrual loans totaled $2,557,000,
loans past due 90 days still accruing totaled $333,000 and there were no
restructured loans outstanding. Other real estate owned as of March 31, 2002 and
December 31, 2001 totaled $123,000 and $159,000, respectively.

Net charge offs were $76,000 for the three months ended March 31, 2002 as
compared to $63,000 in net charge offs for the three months ended March 31,
2001. Losses related primarily to consumer loans in the first quarter of 2002
and commercial loans for first quarter of 2001. The resulting allowance for loan
losses as a percentage of outstanding loans as of March 31, 2002 and December
31, 2001 was 1.77% and 1.66%, 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 $18,893,000 from December 31, 2001 and are $9,582,000
higher than March 31, 2001 balances. The increase in deposits from year-end is
attributable to a large influx of public funds invested on a short-term basis
until the funds are withdrawn over the following 30 to 60 day period. The
increase in deposits from March 31, 2001 is attributable to new deposit account
growth and increased property tax collections. 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, 2002 totaled $13,830,000 and consisted
primarily of securities sold under agreements to repurchase. Total other
borrowing as of December 31, 2001 totaled $11,596,000.

Stockholders Equity

Stockholders equity increased to $95,312,000 as of March 31, 2002 as earnings
and unrealized gains on securities available for sale continued to augment the
company's strong capital base.

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 $3,771,000 and
$4,361,000 to liquidity for the three months ended March 31, 2002 and 2001,
respectively. Liquid assets including cash on hand, balances due from other
banks, federal funds sold and interest-bearing deposits in financial
institutions increased to $102,424,000 as of March 31, 2002 compared to the
year-end 2001 balance of $72,059,000. The increased liquid assets are
attributable to public fund deposits, proceeds from maturing and callable
investment securities and declining loan volume.

Securities available for sale increased to $225,188,000 as of March 31, 2002
from $213,778,000 as of December 31, 2001 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 $46,750,000 and federal funds
borrowing capacity at correspondent banks of $46,000,000. As of March 31, 2002,
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 $95,312,000 on March 31,
2002, from $93,622,000 on December 31, 2001. March 31, 2002 stockholders' equity
was 14.8% of total assets, compared to 15.0% at December 31, 2001. Total equity
increased due to the retention of earnings and from appreciation in the Company
and Banks' stock and bond portfolios. No material capital expenditures or
material changes in the capital resource mix are anticipated at this time.
Management believes that, as of March 31, 2002, 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
2002 changed significantly when compared to 2001.


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

None

(b) Reports on Form 8-K

On January 15, 2002, the Company filed a Form 8-K
pursuant to Item 5, announcing net earnings for the
year ending December 31, 2001.



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 9, 2002 By: /s/ Daniel L. Krieger
----------------------------
Daniel L. Krieger, President

By: /s/ John P. Nelson
----------------------------
John P. Nelson
Principal Financial Officer



12