艾姆斯第二季淨收入增31.5%至593萬美元，淨息差擴闊至3.18%

EX-99.1
2
ex_965112.htm
EXHIBIT 99.1

 ex_965112.htm
 

EXHIBIT 99.1

 

 
 
 NEWS RELEASE

 
  
 
 CONTACT:

 
 
 JOHN P. NELSON

 
 

 
 
 FOR IMMEDIATE RELEASE

 
  
  
 
 CEO AND PRESIDENT

 
 

 
  
  
  
 
 (515) 232-6251

 
 

 
 
 July 17, 2026

 
  
  
  
 

 

AMES NATIONAL CORPORATION 

ANNOUNCES EARNINGS FOR THE second QUARTER OF 2026 

 

Ames, Iowa – Ames National Corporation (Nasdaq: ATLO; the “Company”) today reported net income for the second quarter of 2026 of $5.9 million, or $0.67 per share, compared to $4.5 million, or $0.51 per share, earned in the second quarter of 2025. For the six months ended June 30, 2026, net income for the Company totaled $11.9 million, or $1.34 per share, compared to $8.0 million, or $0.89 per share earned in the same period of 2025. The increase in earnings is primarily due to an increase in net interest income. Net interest income increased due to higher yields and average balances on investments, combined with a lower cost of funds driven by declining market rates and reduced borrowings.

 

INCOME STATEMENT HIGHLIGHTS (unaudited)

 

 
  
  
 
 Three Months Ended

 
  
  
 
 Six Months Ended

 
  
 

 
  
  
 
 June 30,

 
  
  
 
 June 30,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Net income (in thousands)

 
  
 $
 5,931
  
  
 $
 4,511
  
  
 $
 11,891
  
  
 $
 7,954
  
 

 
 
 Earnings per share - basic and diluted

 
  
 $
 0.67
  
  
 $
 0.51
  
  
 $
 1.34
  
  
 $
 0.89
  
 

 
 
 Return on average assets

 
  
  
 1.11
 %
  
  
 0.85
 %
  
  
 1.12
 %
  
  
 0.75
 %
 

 
 
 Return on average equity

 
  
  
 11.24
 %
  
  
 9.67
 %
  
  
 11.28
 %
  
  
 8.72
 %
 

 
 
 Efficiency ratio

 
  
  
 58.52
 %
  
  
 64.34
 %
  
  
 59.09
 %
  
  
 65.34
 %
 

 
 
 Net interest margin

 
  
  
 3.18
 %
  
  
 2.65
 %
  
  
 3.10
 %
  
  
 2.59
 %
 

 

COMPANY STOCK HIGHLIGHTS (unaudited)

 

 
  
  
  
 
 As of or for the

 
  
 

 
  
  
  
 
 three months ended

 
  
 

 
  
  
  
 
 June 30,

 
  
 

 
 
 Company Stock (ATLO)

 
  
  
 
 2026

 
  
 

 
  
  
  
  
  
 

 
 
 Closing price

 
  
  
 $29.61
  
 

 
 
 Price range

 
  
  
 $27.38 - 32.16
  
 

 
 
 Book value per common share

 
  
  
 $24.06
  
 

 
 
 Cash dividend declared

 
  
  
 $0.24
  
 

 
 
 Dividend yield

 
  
  
 
 3.24%

 
  
 

 

BALANCE SHEET HIGHLIGHTS (unaudited)

 

 
  
  
 
 June 30,

 
  
 

 
 
 (Dollars in thousands)

 
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Assets

 
  
 $
 2,122,898
  
  
 $
 2,092,844
  
 

 
 
 Loans receivable, net

 
  
  
 1,250,996
  
  
  
 1,279,644
  
 

 
 
 Deposits

 
  
  
 1,852,567
  
  
  
 1,819,205
  
 

 
 
 Stockholders' equity

 
  
  
 213,093
  
  
  
 193,029
  
 

 
 
 Capital ratio

 
  
  
 10.04
 %
  
  
 9.22
 %
 

 

1

 

 

 

Second Quarter 2026 Results:

 

Second quarter 2026 loan interest income was $664 thousand higher than second quarter 2025 and was primarily due to improved yield on the loan portfolio. Interest income from investment securities increased by $1.4 million during this same period due to higher average balances and maturities reinvested at higher rates. Interest-bearing deposits with banks and federal funds sold interest income decreased by $303 thousand during this same period due to lower average balances. Deposit interest expense decreased $906 thousand during this same period due primarily to decreases in market rates. Other borrowed funds interest expense decreased $217 thousand during the same period due primarily to reduced borrowings. Second quarter 2026 net interest income totaled $16.4 million, an increase of $2.9 million, or 21.7%, compared to the same quarter a year ago. These factors were the primary contributors to the Company’s net interest margin, on a tax-equivalent basis (a non-GAAP measure), improving to 3.18% for the quarter ended June 30, 2026 as compared to 2.65% for the quarter ended June 30, 2025 and 3.01% for the quarter ended March 31, 2026.  

 

A credit loss expense of $208 thousand was recognized in the second quarter of 2026 as compared to $108 thousand in the second quarter of 2025. Net loan charge-offs for the quarter ended June 30, 2026 totaled $255 thousand compared to net loan charge-offs of $1.1 million for the quarter ended June 30, 2025. The credit loss expense in 2026 and 2025 was primarily due to charge-offs in the commercial loan portfolio.

  

Noninterest income for the second quarter of 2026 totaled $2.7 million as compared to $2.6 million in the second quarter of 2025, an increase of 2.3%.

 

Noninterest expense for the second quarter of 2026 totaled $11.2 million compared to $10.4 million recorded in the second quarter of 2025, an increase of 7.8%. The increase reflects higher professional fees, salaries and benefits. The increase in professional fees was primarily due to $300 thousand of consultant fees for certain contract negotiations in the second quarter of 2026. The consultant fees are expected to continue throughout 2026 as negotiations are in process.  The increase in salaries and benefits was driven by anticipated bonus payouts as Company performance thresholds are met, in addition to normal increases in salaries and benefits. The efficiency ratio was 58.52% for the second quarter of 2026 as compared to 64.34% in the second quarter of 2025. The efficiency ratio continues to improve as net interest margin increases.

 

Income tax expense for the second quarter of 2026 totaled $1.8 million compared to $1.1 million recorded in the second quarter of 2025. The effective tax rate was 23% and 20% for the quarters ended June 30, 2026 and 2025, respectively. The increase in income tax expense and effective tax rate was primarily due to higher net income and lower New Markets Tax Credits. The final year of tax credits was 2025 for a majority of the New Markets Tax Credit projects. 

 

Six Months 2026 Results:

 

For the six months ended June 30, 2026 loan interest income was $806 thousand higher than the first six months of 2025 and was primarily due to improved yield on the loan portfolio. Interest income from investment securities increased $2.6 million during this same period due to higher average balances and maturities reinvested at higher rates. Interest-bearing deposits with banks and federal funds sold interest income decreased by $485 thousand during this same period due to lower average balances. Deposit interest expense decreased $2.0 million during this same period due primarily to a decrease in market rates. Other borrowed funds interest expense decreased $551 thousand during the same period due primarily to reduced borrowings. The net interest income for the six months ended June 30, 2026 totaled $31.8 million, an increase of $5.4 million, or 20.6%, compared to the same period a year ago. These factors were the primary contributors to the Company’s net interest margin improving to 3.10% for the six months ended June 30, 2026 as compared to 2.59% for the six months ended June 30, 2025.  

 

A credit loss benefit of ($139) thousand was recognized in the six months ended June 30, 2026 as compared to a credit loss expense of $1.1 million in the six months ended June 30, 2025. Net loan charge-offs for the six months ended June 30, 2026 totaled $223 thousand compared to net loan charge-offs of $1.2 million for the six months ended June 30, 2025. The credit loss benefit in 2026 was primarily due to a decline in loan balances. The credit loss expense in 2025 was primarily due to charge-offs in the commercial loan portfolio.

 

Noninterest income for the six months ended June 30, 2026 totaled $5.5 million as compared to $5.2 million in the six months ended June 30, 2025, an increase of 5.8%. The increase is primarily due to an increase in wealth management income due to growth in assets under management and an increase in estate and trust fees.

 

Noninterest expense for the six months ended June 30, 2026 totaled $22.0 million compared to $20.6 million recorded in the six months ended June 30, 2025, an increase of 6.9%. The increase reflects higher professional fees, salaries and benefits. The increase in professional fees was primarily due to $600 thousand of consultant fees for certain contract negotiations in the six months ended June 30, 2026. The consultant fees are expected to continue throughout 2026 as negotiations are in process.  The increase in salaries and benefits was driven by anticipated bonus payouts as Company performance thresholds are met, in addition to normal increases in salaries and benefits. The efficiency ratio was 59.09% for the six months ended June 30, 2026 as compared to 65.34% in the six months ended June 30, 2025. The efficiency ratio continues to improve as net interest margin increases.

 

Income tax expense for the six months ended June 30, 2026 totaled $3.5 million compared to $1.9 million recorded in the six months ended June 30, 2025. The effective tax rate was 23% and 19% for the six months ended June 30, 2026 and 2025, respectively. The lower than expected tax rate in 2026 and 2025 was primarily due to tax-exempt interest income and New Markets Tax Credits. The increase in income tax expense and effective tax rate was primarily due to higher net income and lower New Markets Tax Credits. The final year of tax credits was 2025 for a majority of the New Markets Tax Credit projects. 

 

2

 

 

Balance Sheet Review:

 

As of June 30, 2026, total assets were $2.1 billion, an increase of $30.1 million, as compared to June 30, 2025. The increase in assets was primarily due to an increase in securities available-for-sale and interest-bearing deposits in financial institutions, partially offset by a decrease in loans receivable.

 

Securities available-for-sale as of June 30, 2026 increased to $695 million from $645 million as of June 30, 2025. The increase in securities available-for-sale is primarily due to purchases in excess of maturities and lower unrealized losses in the investment portfolio. The Company's investment portfolio had an expected duration of 3.2 years as of June 30, 2026. There are approximately $102 million of investments maturing within one year at an average yield of approximately 1.8%.

 

Net loans as of June 30, 2026 decreased to $1.25 billion as compared to $1.28 billion as of June 30, 2025, a decrease of 2.2%. The decrease was primarily due to payoffs in the commercial real estate portfolio and partially offset by an increase in the 1 to 4 family residential real estate portfolio. Substandard loans were $50.7 million and $23.5 million as of June 30, 2026 and 2025, respectively. Substandard-impaired loans were $19.1 million and $18.4 million as of June 30, 2026 and 2025, respectively. The increase in substandard loans is primarily due to one large relationship secured by 1-4 family residential properties and weakening in the multi-family portfolio as some loans are experiencing a decline in occupancy rates. The increase in substandard-impaired loans is primarily due to one agricultural operating loan relationship. Loans past due 30 days or more totaled $22.5 million as of June 30, 2026, compared to $11.8 million as of June 30, 2025. The increase is primarily related to one commercial real estate loan relationship that is being restructured and one agricultural operating loan relationship classified as substandard-impaired. There are approximately $361 million of loans maturing within one year at an average yield of approximately 5.5%.

 

The allowance for credit losses on June 30, 2026 totaled $17.3 million or 1.36% of loans, compared to $17.0 million, or 1.31% of loans, as of June 30, 2025. The increase in the allowance for credit losses is primarily due to an increase in specific reserves.

 

Deposits totaled $1.85 billion as of June 30, 2026, an increase of 1.8%, compared to $1.82 billion recorded as of June 30, 2025. The increase in deposits is primarily due to higher balances in retail and commercial checking accounts and partially offset by a decrease in time deposits. Securities sold under agreements to repurchase decreased to $30.9 million as of June 30, 2026, compared to $40.1 million as of June 30, 2025. Securities sold under agreements to repurchase and deposit balances fluctuate as customers’ liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions.  Approximately 14% of deposits are tied to external indexes as of June 30, 2026. Deposit interest expense related to these deposits can be more volatile than other deposit products in a changing interest rate environment.

 

Other borrowings decreased to $16.5 million as of June 30, 2026 compared to $30.7 million as of June 30, 2025. The Company has continued to reduce borrowings as investments have matured and cash is redeployed.

 

The Company’s stockholders’ equity represented 10.0% of total assets as of June 30, 2026 with all of the Company’s six affiliate banks considered well-capitalized as defined by federal capital regulations. Total stockholders’ equity was $213.1 million as of June 30, 2026, compared to $193.0 million as of June 30, 2025. The increase in stockholders’ equity of $20.1 million was primarily the result of a decrease in unrealized losses on the investment portfolio and retention of net income in excess of dividends.

 

Share Repurchase Program

 

For the period April 1, 2026 through June 30, 2026, under the repurchase program that was announced in August 2025, which allowed for the repurchase of 200,000 shares of common stock, the Company did not repurchase any shares. There were 165,053 shares available to be repurchased under that repurchase program as of June 30, 2026.

 

Cash Dividend Announcement

 

On May 13, 2026, the Company declared a quarterly cash dividend on common stock, payable on June 15, 2026 to stockholders of record as of June 1, 2026, equal to $0.24 per share.

 

3

 

 

About Ames National Corporation

 

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; United Bank & Trust Co., Marshalltown; and Iowa State Savings Bank, Creston, Iowa.

 

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 performance and asset quality. Forward-looking statements contained in this News Release are not historical facts and are based on management’s current beliefs, assumptions, predictions and expectations of future events, including the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions, predictions and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to management and many of which are beyond management’s control. 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. Accordingly, investors are cautioned not to place undue reliance on such forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “forecasts”, “continuing,” “ongoing,” “expects,” “views,” “intends” and similar words or phrases. The risks and uncertainties that may affect the Company’s future performance and asset quality include, but are not limited to, the following: national, regional and local economic conditions and the impact they may have on the Company and its customers; 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 credit losses as dictated by new market conditions or regulatory requirements; changes in local, national and international economic conditions, including rising inflation rates; fiscal and monetary policies of the U.S. government; the imposition of tariffs and retaliatory tariffs; 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 headings “Forward-Looking Statements and Business Risks” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2025. Any forward-looking statements are qualified in their entirety by the foregoing risks and uncertainties and speak only as of the date on which such statements are made. The Company undertakes no obligation to revise or update such forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

  

4

 

 

 
 
 AMES NATIONAL CORPORATION AND SUBSIDIARIES

 
 

 
  
 

 
 
 Consolidated Balance Sheets (unaudited)

 
 

 
 
 (in thousands, except share and per share data)

 
 

 

 
  
  
 
 June 30,

 
  
  
 
 June 30,

 
  
 

 
 
 ASSETS

 
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Cash and due from banks

 
  
 $
 18,939
  
  
 $
 24,148
  
 

 
 
 Interest-bearing deposits in financial institutions and federal funds sold

 
  
  
 88,305
  
  
  
 71,063
  
 

 
 
 Total cash and cash equivalents

 
  
  
 107,244
  
  
  
 95,211
  
 

 
 
 Interest-bearing time deposits

 
  
  
 5,182
  
  
  
 6,918
  
 

 
 
 Securities available-for-sale

 
  
  
 695,251
  
  
  
 644,702
  
 

 
 
 Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock, at cost

 
  
  
 2,652
  
  
  
 3,166
  
 

 
 
 Loans receivable, net

 
  
  
 1,250,996
  
  
  
 1,279,644
  
 

 
 
 Loans held for sale

 
  
  
 892
  
  
  
 341
  
 

 
 
 Bank premises and equipment, net

 
  
  
 20,967
  
  
  
 21,239
  
 

 
 
 Accrued income receivable

 
  
  
 12,912
  
  
  
 12,166
  
 

 
 
 Other real estate owned

 
  
  
 -
  
  
  
 125
  
 

 
 
 Bank-owned life insurance

 
  
  
 3,349
  
  
  
 3,256
  
 

 
 
 Deferred income taxes, net

 
  
  
 8,157
  
  
  
 9,949
  
 

 
 
 Intangible assets, net

 
  
  
 654
  
  
  
 938
  
 

 
 
 Goodwill

 
  
  
 12,424
  
  
  
 12,424
  
 

 
 
 Other assets

 
  
  
 2,218
  
  
  
 2,765
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Total assets

 
  
 $
 2,122,898
  
  
 $
 2,092,844
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 LIABILITIES AND STOCKHOLDERS' EQUITY

 
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 LIABILITIES

 
  
  
  
  
  
  
  
  
 

 
 
 Deposits

 
  
  
  
  
  
  
  
  
 

 
 
 Noninterest-bearing checking

 
  
 $
 364,651
  
  
 $
 309,379
  
 

 
 
 Interest-bearing checking

 
  
  
 629,244
  
  
  
 629,728
  
 

 
 
 Savings and money market

 
  
  
 535,726
  
  
  
 547,277
  
 

 
 
 Time, $250 and over

 
  
  
 79,768
  
  
  
 88,692
  
 

 
 
 Other time

 
  
  
 243,178
  
  
  
 244,129
  
 

 
 
 Total deposits

 
  
  
 1,852,567
  
  
  
 1,819,205
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Securities sold under agreements to repurchase

 
  
  
 30,898
  
  
  
 40,061
  
 

 
 
 Other borrowings

 
  
  
 16,452
  
  
  
 30,652
  
 

 
 
 Accrued interest payable

 
  
  
 2,289
  
  
  
 2,472
  
 

 
 
 Accrued expenses and other liabilities

 
  
  
 7,599
  
  
  
 7,425
  
 

 
 
 Total liabilities

 
  
  
 1,909,805
  
  
  
 1,899,815
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 STOCKHOLDERS' EQUITY

 
  
  
  
  
  
  
  
  
 

 
 
 Common stock, $2 par value, authorized 18,000,000 shares; issued and outstanding 8,857,220 and 8,898,689 shares as of June 30, 2026 and 2025, respectively

 
  
  
 17,714
  
  
  
 17,797
  
 

 
 
 Additional paid-in capital

 
  
  
 12,135
  
  
  
 12,907
  
 

 
 
 Retained earnings

 
  
  
 203,667
  
  
  
 188,442
  
 

 
 
 Accumulated other comprehensive (loss)

 
  
  
 (20,423
 )
  
  
 (26,117
 )
 

 
 
 Total stockholders' equity

 
  
  
 213,093
  
  
  
 193,029
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Total liabilities and stockholders' equity

 
  
 $
 2,122,898
  
  
 $
 2,092,844
  
 

 

5

 

 

 
 
 AMES NATIONAL CORPORATION AND SUBSIDIARIES

 
 

 
  
 

 
 
 Consolidated Statements of Income (unaudited)

 
 

 
 
 (in thousands, except per share data)

 
 

 

 
  
  
 
 Three Months Ended

 
  
  
 
 Six Months Ended

 
  
 

 
  
  
 
 June 30,

 
  
  
 
 June 30,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest and dividend income:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Loans, including fees

 
  
 $
 17,331
  
  
 $
 16,667
  
  
 $
 34,147
  
  
 $
 33,341
  
 

 
 
 Securities:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Taxable

 
  
  
 4,588
  
  
  
 3,116
  
  
  
 8,597
  
  
  
 5,956
  
 

 
 
 Tax-exempt

 
  
  
 410
  
  
  
 450
  
  
  
 832
  
  
  
 903
  
 

 
 
 Other interest and dividend income

 
  
  
 949
  
  
  
 1,252
  
  
  
 1,918
  
  
  
 2,403
  
 

 
 
 Total interest and dividend income

 
  
  
 23,278
  
  
  
 21,485
  
  
  
 45,494
  
  
  
 42,603
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest expense:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Deposits

 
  
  
 6,481
  
  
  
 7,387
  
  
  
 12,816
  
  
  
 14,806
  
 

 
 
 Other borrowed funds

 
  
  
 415
  
  
  
 632
  
  
  
 865
  
  
  
 1,416
  
 

 
 
 Total interest expense

 
  
  
 6,896
  
  
  
 8,019
  
  
  
 13,681
  
  
  
 16,222
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Net interest income

 
  
  
 16,382
  
  
  
 13,466
  
  
  
 31,813
  
  
  
 26,381
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Credit loss expense (benefit)

 
  
  
 208
  
  
  
 108
  
  
  
 (139
 )
  
  
 1,070
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Net interest income after credit loss expense (benefit)

 
  
  
 16,174
  
  
  
 13,358
  
  
  
 31,952
  
  
  
 25,311
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Noninterest income:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Wealth management income

 
  
  
 1,587
  
  
  
 1,518
  
  
  
 3,183
  
  
  
 2,962
  
 

 
 
 Service fees

 
  
  
 371
  
  
  
 378
  
  
  
 749
  
  
  
 748
  
 

 
 
 Securities gains (losses), net

 
  
  
 -
  
  
  
 -
  
  
  
 (6
 )
  
  
 -
  
 

 
 
 Gain on sale of loans held for sale

 
  
  
 155
  
  
  
 150
  
  
  
 295
  
  
  
 225
  
 

 
 
 Merchant and card fees

 
  
  
 354
  
  
  
 392
  
  
  
 672
  
  
  
 740
  
 

 
 
 Other noninterest income

 
  
  
 235
  
  
  
 203
  
  
  
 594
  
  
  
 513
  
 

 
 
 Total noninterest income

 
  
  
 2,702
  
  
  
 2,641
  
  
  
 5,487
  
  
  
 5,188
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Noninterest expense:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Salaries and employee benefits

 
  
  
 7,011
  
  
  
 6,479
  
  
  
 13,788
  
  
  
 12,852
  
 

 
 
 Data processing

 
  
  
 1,522
  
  
  
 1,456
  
  
  
 3,014
  
  
  
 2,808
  
 

 
 
 Occupancy expenses, net

 
  
  
 723
  
  
  
 728
  
  
  
 1,517
  
  
  
 1,500
  
 

 
 
 FDIC insurance assessments

 
  
  
 246
  
  
  
 275
  
  
  
 486
  
  
  
 535
  
 

 
 
 Professional fees

 
  
  
 910
  
  
  
 540
  
  
  
 1,680
  
  
  
 1,025
  
 

 
 
 Business development

 
  
  
 293
  
  
  
 311
  
  
  
 636
  
  
  
 683
  
 

 
 
 Intangible asset amortization

 
  
  
 68
  
  
  
 77
  
  
  
 137
  
  
  
 154
  
 

 
 
 New market tax credit projects amortization

 
  
  
 17
  
  
  
 191
  
  
  
 34
  
  
  
 383
  
 

 
 
 Other operating expenses, net

 
  
  
 378
  
  
  
 306
  
  
  
 749
  
  
  
 686
  
 

 
 
 Total noninterest expense

 
  
  
 11,168
  
  
  
 10,363
  
  
  
 22,041
  
  
  
 20,626
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Income before income taxes

 
  
  
 7,708
  
  
  
 5,636
  
  
  
 15,398
  
  
  
 9,873
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Provision for income taxes

 
  
  
 1,777
  
  
  
 1,125
  
  
  
 3,507
  
  
  
 1,919
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Net income

 
  
 $
 5,931
  
  
 $
 4,511
  
  
 $
 11,891
  
  
 $
 7,954
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Basic and diluted earnings per share

 
  
 $
 0.67
  
  
 $
 0.51
  
  
 $
 1.34
  
  
 $
 0.89
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Dividends declared per share

 
  
 $
 0.24
  
  
 $
 -
  
  
 $
 0.48
  
  
 $
 0.20
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 Average number of shares outstanding - basic and diluted
  
  
 8,857,220
  
  
  
 8,900,515
  
  
  
 8,857,220
  
  
  
 8,908,904
  
 

 

6

 

 

ASSET QUALITY (unaudited)

 

 
  
  
  
 
 As of

 
  
 

 
  
  
  
 
 June 30,

 
  
  
  
 
 March 31,

 
  
  
  
 
 December 31,

 
  
  
  
 
 September 30,

 
  
  
  
 
 June 30,

 
  
 

 
 (Dollars in thousands)
  
  
 2026
  
  
  
 2026
  
  
  
 2025
  
  
  
 2025
  
  
  
 2025
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Loan risk rating by category (end of period):

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 Pass
  
 $
  1,097,903
  
  
 $
  1,095,929
  
  
 $
  1,119,323
  
  
 $
  1,118,151
  
  
 $
  1,111,559
  
 

 
 
 Watch

 
  
  
 
 100,499

 
  
  
  
 
 130,849

 
  
  
  
 
 120,614

 
  
  
  
 
 125,849

 
  
  
  
 
 130,071

 
  
 

 
 
 Special Mention

 
  
  
 
 -

 
  
  
  
 
 1,005

 
  
  
  
 
 1,014

 
  
  
  
 
 1,023

 
  
  
  
 
 12,976

 
  
 

 
 
 Substandard

 
  
  
 
 50,743

 
  
  
  
 
 34,814

 
  
  
  
 
 42,203

 
  
  
  
 
 29,726

 
  
  
  
 
 23,460

 
  
 

 
 
 Substandard - Impaired

 
  
  
 
 19,132

 
  
  
  
 
 19,574

 
  
  
  
 
 14,620

 
  
  
  
 
 18,819

 
  
  
  
 
 18,355

 
  
 

 
 
 Total Loans

 
  
  
 
 1,268,277

 
  
  
  
 
 1,282,171

 
  
  
  
 
 1,297,774

 
  
  
  
 
 1,293,568

 
  
  
  
 
 1,296,421

 
  
 

 
 Unallocated portfolio layer basis adjustments
  
  
 26
  
  
  
 75
  
  
  
 145
  
  
  
 176
  
  
  
 194
  
 

 
 Less allowance for credit losses
  
  
 (17,307
 )
  
  
 (17,419
 )
  
  
 (17,697
 )
  
  
 (17,950
 )
  
  
 (16,971
 )
 

 
 Loans receivable, net
  
 $
  1,250,996
  
  
 $
  1,264,827
  
  
 $
  1,280,222
  
  
 $
  1,275,794
  
  
 $
  1,279,644
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Nonperforming assets:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Non-accrual loans

 
  
 $
 
  19,606

 
  
  
 $
 
  20,087

 
  
  
 $
 
  15,133

 
  
  
 $
 
  19,342

 
  
  
 $
 
  18,885

 
  
 

 
 
 Accruing loans past due 90 days or more

 
  
  
 
 35

 
  
  
  
 
 35

 
  
  
  
 
 328

 
  
  
  
 
 174

 
  
  
  
 
 133

 
  
 

 
 
 Other real estate owned

 
  
  
 
 -

 
  
  
  
 
 212

 
  
  
  
 
 204

 
  
  
  
 
 204

 
  
  
  
 
 125

 
  
 

 
 
 Total nonperforming assets

 
  
 $
 
  19,641

 
  
  
 $
 
  20,334

 
  
  
 $
 
  15,665

 
  
  
 $
 
  19,720

 
  
  
 $
 
  19,143

 
  
 

 

 
  
  
  
 
 Three months ended

 
  
 

 
  
  
  
 
 June 30,

 
  
  
  
 March 31,
  
  
  
 
 December 31,

 
  
  
  
 September 30,
  
  
  
 
 June 30,

 
  
 

 
 (Dollars in thousands)
  
  
 
 2026

 
  
  
  
 
 2026

 
  
  
  
 
 2025

 
  
  
  
 2025
  
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 Allowance for credit losses - loans:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Beginning balance

 
 
  

 
 $
 
 17,419 

 
  
  
 $
 17,697
  
  
 $
 
 17,950 

 
  
  
 $
 16,971
  
  
 $
 
 18,004 

 
  
 

 
 
 Credit loss expense (benefit)

 
  
  
 
 143

 
  
  
  
 (310
 )
  
  
 
 (708

 
 )
  
  
 635
  
  
  
 
 75

 
  
 

 
 
 Recoveries of loans charged-off

 
  
  
 
 29

 
  
  
  
 38
  
  
  
 
 818

 
  
  
  
 351
  
  
  
 
 3

 
  
 

 
 
 Loans charged-off

 
  
  
 
 (284

 
 )
  
  
 (6
 )
  
  
 
 (363

 
 )
  
  
 (7
 )
  
  
 
 (1,111

 
 )
 

 
 
 Ending balance

 
  
 $
 17,307
  
  
 $
 17,419
  
  
 $
 17,697
  
  
 $
 17,950
  
  
 $
 16,971
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Allowance for credit losses - unfunded commitments:

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 Beginning balance
  
 $
 947
  
  
 $
 984
  
  
 $
 937
  
  
 $
 944
  
  
 $
 911
  
 

 
 Credit loss expense (benefit)
  
  
 65
  
  
  
 (37
 )
  
  
 47
  
  
  
 (7
 )
  
  
 33
  
 

 
 Ending balance
  
 $
 1,012
  
  
 $
 947
  
  
 $
 984
  
  
 $
 937
  
  
 $
 944
  
 

 

7

 

 

AVERAGE BALANCES AND INTEREST RATES (unaudited)

 

The following two tables are used to calculate the Company’s non-GAAP net interest margin on a fully taxable equivalent (FTE) basis. The first table includes the Company’s average assets and the related income to determine the average yield on earning assets. The second table includes the average liabilities and related expense to determine the average rate paid on interest-bearing liabilities. The net interest margin is equal to interest income less interest expense divided by average earning assets.

 

 
 
 AVERAGE BALANCE SHEETS AND INTEREST RATES

 
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 Three Months Ended June 30,

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 Average

 
  
  
 
 Revenue/

 
  
  
 
 Yield/

 
  
  
 
 Average

 
  
  
 
 Revenue/

 
  
  
 
 Yield/

 
  
 

 
  
  
 
 balance

 
  
  
 
 expense

 
  
  
 
 rate

 
  
  
 
 balance

 
  
  
 
 expense

 
  
  
 
 rate

 
  
 

 
 
 ASSETS

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 (dollars in thousands)

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest-earning assets

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Loans (1)

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Commercial

 
  
 $
 87,049
  
  
 $
 1,351
  
  
  
 6.21
 %
  
 $
 94,535
  
  
 $
 1,410
  
  
  
 5.97
 %
 

 
 
 Agricultural

 
  
  
 121,601
  
  
  
 1,920
  
  
  
 6.32
 %
  
  
 126,189
  
  
  
 2,075
  
  
  
 6.58
 %
 

 
 
 Real estate

 
  
  
 1,052,554
  
  
  
 13,875
  
  
  
 5.27
 %
  
  
 1,052,915
  
  
  
 12,951
  
  
  
 4.92
 %
 

 
 
 Consumer and other

 
  
  
 13,488
  
  
  
 185
  
  
  
 5.49
 %
  
  
 16,532
  
  
  
 231
  
  
  
 5.59
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Total loans (including fees)

 
  
  
 1,274,692
  
  
  
 17,331
  
  
  
 5.44
 %
  
  
 1,290,171
  
  
  
 16,667
  
  
  
 5.17
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Investment securities

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Taxable

 
  
  
 628,930
  
  
  
 4,588
  
  
  
 2.92
 %
  
  
 567,859
  
  
  
 3,116
  
  
  
 2.19
 %
 

 
 
 Tax-exempt (2)

 
  
  
 70,622
  
  
  
 519
  
  
  
 2.94
 %
  
  
 81,427
  
  
  
 570
  
  
  
 2.80
 %
 

 
 
 Total investment securities

 
  
  
 699,552
  
  
  
 5,107
  
  
  
 2.92
 %
  
  
 649,286
  
  
  
 3,686
  
  
  
 2.27
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest-bearing deposits with banks and federal funds sold

 
  
  
 97,801
  
  
  
 949
  
  
  
 3.88
 %
  
  
 108,889
  
  
  
 1,252
  
  
  
 4.60
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Total interest-earning assets

 
  
  
 2,072,045
  
  
 $
 23,387
  
  
  
 4.51
 %
  
  
 2,048,346
  
  
 $
 21,605
  
  
  
 4.22
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Noninterest-earning assets

 
  
  
 62,979
  
  
  
  
  
  
  
  
  
  
  
 64,251
  
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 TOTAL ASSETS

 
  
 $
 2,135,024
  
  
  
  
  
  
  
  
  
  
 $
 2,112,597
  
  
  
  
  
  
  
  
  
 

 

(1) Average loan balances include nonaccrual loans, if any. Interest income collected on nonaccrual loans has been included.

(2) Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 21%.

 

8

 

 

 

 
 
 AVERAGE BALANCE SHEETS AND INTEREST RATES

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 Three Months Ended June 30,

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
 
 Average

 
  
  
 
 Revenue/

 
  
  
 
 Yield/

 
  
  
 
 Average

 
  
  
 
 Revenue/

 
  
  
 
 Yield/

 
  
 

 
  
  
 
 balance

 
  
  
 
 expense

 
  
  
 
 rate

 
  
  
 
 balance

 
  
  
 
 expense

 
  
  
 
 rate

 
  
 

 
 
 LIABILITIES AND STOCKHOLDERS' EQUITY

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 (dollars in thousands)

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest-bearing liabilities

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Deposits

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Interest-bearing checking, savings accounts and money markets

 
  
 $
 1,197,474
  
  
 $
 3,760
  
  
  
 1.26
 %
  
 $
 1,188,237
  
  
 $
 4,268
  
  
  
 1.44
 %
 

 
 
 Time deposits

 
  
  
 322,127
  
  
  
 2,721
  
  
  
 3.38
 %
  
  
 332,652
  
  
  
 3,119
  
  
  
 3.75
 %
 

 
 
 Total deposits

 
  
  
 1,519,601
  
  
  
 6,481
  
  
  
 1.71
 %
  
  
 1,520,889
  
  
  
 7,387
  
  
  
 1.94
 %
 

 
 
 Other borrowed funds

 
  
  
 52,340
  
  
  
 415
  
  
  
 3.17
 %
  
  
 70,904
  
  
  
 632
  
  
  
 3.57
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Total interest-bearing liabilities

 
  
  
 1,571,941
  
  
  
 6,896
  
  
  
 1.75
 %
  
  
 1,591,793
  
  
  
 8,019
  
  
  
 2.02
 %
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Noninterest-bearing liabilities

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Noninterest-bearing checking

 
  
  
 339,390
  
  
  
  
  
  
  
  
  
  
  
 321,056
  
  
  
  
  
  
  
  
  
 

 
 
 Other liabilities

 
  
  
 12,568
  
  
  
  
  
  
  
  
  
  
  
 13,077
  
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Stockholders' equity

 
  
  
 211,125
  
  
  
  
  
  
  
  
  
  
  
 186,671
  
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 
  
 $
 2,135,024
  
  
  
  
  
  
  
  
  
  
 $
 2,112,597
  
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 
 Net interest income (FTE)(3)

 
  
  
  
  
  
 $
 16,491
  
  
  
  
  
  
  
  
  
  
 $
 13,586
  
  
  
  
  
 

 
 
 Net interest spread (FTE)

 
  
  
  
  
  
  
  
  
  
  
 2.76
 %
  
  
  
  
  
  
  
  
  
  
 2.20
 %
 

 
 
 Net interest margin (FTE)(3)

 
  
  
  
  
  
  
  
  
  
  
 3.18
 %
  
  
  
  
  
  
  
  
  
  
 2.65
 %
 

 

(3) Net interest income (FTE) is a non-GAAP financial measure.

 

Non-GAAP Financial Measures

 

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on an FTE basis. Management believes these non-GAAP financial measures are widely used in the financial institutions industry and provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on an FTE basis to GAAP (dollars in thousands).

 

 
  
  
 
 Three Months Ended June 30,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
 
 Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP:

 
  
  
  
  
  
  
  
  
 

 
 
 Net interest income (GAAP)

 
  
 $
 16,382
  
  
 $
 13,466
  
 

 
 
 Tax-equivalent adjustment (1)

 
  
  
 109
  
  
  
 120
  
 

 
 
 Net interest income on an FTE basis (non-GAAP)

 
  
  
 16,491
  
  
  
 13,586
  
 

 
 
 Average interest-earning assets

 
  
 $
 2,072,045
  
  
 $
 2,048,346
  
 

 
 
 Net interest margin on an FTE basis (non-GAAP)

 
  
  
 3.18
 %
  
  
 2.65
 %
 

 

(1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 21 percent, adjusted to reflect the effect of the tax-exempt interest income associated with owning tax-exempt securities and loans.

 

9