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What changed in AMES NATIONAL CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of AMES NATIONAL CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+179 added−168 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-12)

Top changes in AMES NATIONAL CORP's 2025 10-K

179 paragraphs added · 168 removed · 155 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

43 edited+0 added−0 removed151 unchanged
Biggest changeThree of the eleven directors are female. All directors own Company stock and participate in the Director Stock Incentive Plan adopted by each of the Banks if they serve as a director of one of the Banks. The Company CEO is excluded from the Director Stock Incentive Plan. Certain transactions in Company stock are prohibited, including short-selling and hedging.
Biggest changeThe Company has established an age limitation policy for directors. Three of the eleven directors are female. All directors own Company stock and participate in the Director Stock Incentive Plan adopted by each of the Banks if they serve as a director of one of the Banks. The Company CEO is excluded from the Director Stock Incentive Plan.
Commercial and Agricultural Operating Lines - These loans are typically made to businesses and farm operations with terms up to twelve months. The credit needs are generally seasonal with the source of repayment coming from the entity’s normal business cycle. Cash flow reviews are completed to establish the ability to service the debt within the terms of the loan.
Commercial and Agricultural Operating Lines - These loans are typically made to businesses and farm operations with terms typically up to twelve months. The credit needs are generally seasonal with the source of repayment coming from the entity’s normal business cycle. Cash flow reviews are completed to establish the ability to service the debt within the terms of the loan.
The principal sources of Company revenue are: (i) interest and fees earned on loans made or held by the Company and Banks; (ii) interest on investments, primarily on bonds, held by the Banks; (iii) fees on wealth management services; (iv) service charges on deposit accounts maintained at the Banks; (v) merchant and card fees; (vi) gain on the sale of loans; and (vii) securities gains.
The principal sources of Company revenue are: (i) interest and fees earned on loans made or held by the Company and Banks; (ii) interest on investments, primarily on bonds, held by the Banks; (iii) fees on wealth management services; (iv) service charges on deposit accounts maintained at the Banks; (v) merchant and card fees; (vi) gain on the sale of loans; and (vii) securities gains (losses).
As of December 31, 2024, the Banks exceeded all of their regulatory capital requirements and were designated as “well capitalized” under federal guidelines. See Note 15 to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Prompt Corrective Action.
As of December 31, 2025, the Banks exceeded all of their regulatory capital requirements and were designated as “well capitalized” under federal guidelines. See Note 15 to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Prompt Corrective Action.
The major employers in Clarke County are Hormel Foods, Miller Products Co., SIMCO Drilling Equipment, Inc., Clarke County Hospital, and Lakeside Casino. Loan services primarily include commercial and consumer types of credit, including operating lines, equipment loans and real estate loans. Boone Bank is located in Boone, Iowa with a population of 12,400.
The major employers in Clarke County are Hormel Foods, Miller Products Co., SIMCO Drilling Equipment, Inc., Clarke County Hospital, and Lakeside Casino. Loan services primarily include commercial and consumer types of credit, including operating lines, equipment loans and real estate loans. Boone Bank is located in Boone, Iowa with a population of 12,500.
Each executive officer has served in his current position for the past five years with the exception of Justin C. Clausen, Dan E. Johnson, Robert A. Thomas and Michael A. Wilson. Mr. Clausen was appointed as Chief Financial Officer of the Company on July 5, 2024. Mr. Johnson was appointed President of State Bank on January 16, 2023. Mr.
Each executive officer has served in his current position for the past five years with the exception of Justin C. Clausen, Dan E. Johnson, and Michael A. Wilson. Mr. Clausen was appointed as Chief Financial Officer of the Company on July 5, 2024. Mr. Johnson was appointed President of State Bank on January 16, 2023. Mr.
Such plans must require that any company that controls the undercapitalized institution must provide certain guarantees that the institution will comply with the plan until it is adequately capitalized. As of December 31, 2024, each of the Banks was categorized as “well capitalized” under regulatory prompt corrective action provisions. Restrictions on Dividends.
Such plans must require that any company that controls the undercapitalized institution must provide certain guarantees that the institution will comply with the plan until it is adequately capitalized. As of December 31, 2025, each of the Banks was categorized as “well capitalized” under regulatory prompt corrective action provisions. Restrictions on Dividends.
Boone is the county seat of Boone County. The major employers are Fareway Stores, Inc., Iowa National Guard, Union Pacific Railroad, Boone County Hospital and CDS Global. Boone Bank provides lending services to the agriculture, commercial and real estate markets. State Bank is located in Nevada, Iowa with a population of 7,000. Nevada is the county seat of Story County.
Boone is the county seat of Boone County. The major employers are Fareway Stores, Inc., Iowa National Guard, Union Pacific Railroad, Boone County Hospital and CDS Global. Boone Bank provides lending services to the agriculture, commercial and real estate markets. State Bank is located in Nevada, Iowa with a population of 7,100. Nevada is the county seat of Story County.
These loans are secured by a junior mortgage on the residential real estate and normally do not exceed a loan-to-market value ratio of 90% with the interest adjusted quarterly. Residential first mortgage loans, home equity term loans and home equity lines of credit represent approximately 23% of the loan portfolio.
These loans are secured by a junior mortgage on the residential real estate and normally do not exceed a loan-to-market value ratio of 90% with the interest adjusted quarterly. Residential first mortgage loans, home equity term loans and home equity lines of credit represent approximately 25% of the loan portfolio.
Approximately 23% of the loan portfolio consists of loans made for 1-4 family residential purposes. 6 Consumer Loans. Consumer loans are typically available to finance consumer purchases, such as automobiles, household furnishings and boats. These loans are made on both a secured and an unsecured basis. Approximately 1% of the loan portfolio consists of loans made for consumer purposes.
Approximately 25% of the loan portfolio consists of loans made for 1-4 family residential purposes. 6 Consumer Loans. Consumer loans are typically available to finance consumer purchases, such as automobiles, household furnishings and boats. These loans are made on both a secured and an unsecured basis. Approximately 1% of the loan portfolio consists of loans made for consumer purposes.
There are no employment contracts between the Company and any of its employees as of December 31, 2024. As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain talent.
There are no employment contracts between the Company and any of its employees as of December 31, 2025. As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain talent.
United Bank is located in Marshalltown, Iowa with a population of 27,600. The major employers are Iowa Veterans Home, Marshalltown School District, JBS Swift & Co., Emerson Process Management/Fisher Division, Lennox Industries and UnityPoint Health. Marshalltown is the county seat of Marshall County.
United Bank is located in Marshalltown, Iowa with a population of 27,900. The major employers are Iowa Veterans Home, Marshalltown School District, JBS Swift & Co., Emerson Process Management/Fisher Division, Lennox Industries and UnityPoint Health. Marshalltown is the county seat of Marshall County.
Approximately 22% of the loan portfolio consists of loans made for agricultural purposes. 1-4 Family Residential Loans. 1-4 family residential loans are typically available to finance homes, home improvements and home equity lines of credit. These loans are made on a secured basis.
Approximately 23% of the loan portfolio consists of loans made for agricultural purposes. 1-4 Family Residential Loans. 1-4 family residential loans are typically available to finance homes, home improvements and home equity lines of credit. These loans are made on a secured basis.
The major employers in the Des Moines metro market are Principal Financial Group, Wells Fargo, UnityPoint Health, MercyOne Medical, Nationwide Insurance, Amazon, Hy-Vee Food Inc. and John Deere. First National maintains two offices in Osceola, Iowa with a population of 5,600. Osceola is the county seat of Clarke County.
The major employers in the Des Moines metro market are Principal Financial Group, Wells Fargo, UnityPoint Health, MercyOne Medical, Amazon, Hy-Vee Food Inc., Casey's and John Deere. First National maintains two offices in Osceola, Iowa with a population of 5,600. Osceola is the county seat of Clarke County.
The annual indexation of the reserve requirement exemption amount and the low reserve tranche for 2024 is required by statute but will not affect depository institutions' reserve requirements, which will remain zero. Currently the Board has no plans to re-impose reserve requirements but retains the right to do so.
The annual indexation of the reserve requirement exemption amount and the low reserve tranche for 2025 is required by statute but will not affect depository institutions' reserve requirements, which will remain zero. Currently the Federal Reserve Board has no plans to re-impose reserve requirements but retains the right to do so.
Total assets as of December 31, 2024 and 2023 were approximately $270.3 million and $254.7 million, respectively. 5 Business Strategy and Operations As a multi-bank holding company for six community banks, the Company emphasizes strong personal relationships to provide products and services that meet the needs of the Banks’ customers.
Total assets as of December 31, 2025 and 2024 were approximately $282.7 million and $270.3 million, respectively. 5 Business Strategy and Operations As a multi-bank holding company for six community banks, the Company emphasizes strong personal relationships to provide products and services that meet the needs of the Banks’ customers.
Each of the Banks is in compliance with capital level requirements as of December 31, 2024. Basel III Capital Requirements.
Each of the Banks is in compliance with capital level requirements as of December 31, 2025. Basel III Capital Requirements.
The Banks compete for loans primarily by offering competitive interest rates, experienced local lending personnel and quality products and services. As of December 31, 2024, there were 49 FDIC insured institutions having approximately 125 locations within Boone, Clarke, Hancock, Marshall, Polk, Story, Taylor and Union County, Iowa where the Banks' offices are located.
The Banks compete for loans primarily by offering competitive interest rates, experienced local lending personnel and quality products and services. As of December 31, 2025, there were 48 FDIC insured institutions having approximately 123 locations within Boone, Clarke, Hancock, Marshall, Polk, Story, Taylor and Union County, Iowa where the Banks' offices are located.
While its primary emphasis is in agricultural lending, Iowa State Bank also provides the traditional lending services typically offered by community banks. It conducts business from its main office located in Creston and full-service offices located in Creston and Lenox. As of December 31, 2024, Iowa State Bank had capital of $24.3 million and 34 full-time equivalent employees.
While its primary emphasis is in agricultural lending, Iowa State Bank also provides the traditional lending services typically offered by community banks. It conducts business from its main office located in Creston and full-service offices located in Creston and Lenox. As of December 31, 2025, Iowa State Bank had capital of $27.2 million and 34 full-time equivalent employees.
First National, Boone Bank, State Bank, United Bank and Iowa State Bank offer wealth management services typically found in a commercial bank with trust powers, including the administration of estates, conservatorships, personal and corporate trusts and agency accounts. Assets under management amount to $456.3 million and $416.0 million as of December 31, 2024 and 2023, respectively.
First National, Boone Bank, State Bank, United Bank and Iowa State Bank offer wealth management services typically found in a commercial bank with trust powers, including the administration of estates, conservatorships, personal and corporate trusts and agency accounts. Assets under management amount to $510.4 million and $456.3 million as of December 31, 2025 and 2024, respectively.
Commercial real estate, multi-family and agricultural real estate loans represent approximately 54% of the loan portfolio.
Commercial real estate, multi-family and agricultural real estate loans represent approximately 52% of the loan portfolio.
First National is headquartered in Ames, Iowa with a population of 65,700. The major employers are Iowa State University, Ames Laboratory, Iowa Department of Transportation, Mary Greeley Medical Center, Ames Community Schools, City of Ames, Danfoss and McFarland Clinic. First National maintains three offices in the Des Moines metro area with a population of approximately 740,000.
First National is headquartered in Ames, Iowa with a population of 69,000. The major employers are Iowa State University, Iowa Department of Transportation, Mary Greeley Medical Center, Ames Community Schools, City of Ames, Danfoss and McFarland Clinic. First National maintains three offices in the Des Moines metro area with a population of approximately 779,000.
United Bank had net income for the years ended December 31, 2024 and 2023 of approximately $1.1 million and $1.0 million, respectively. Total assets as of December 31, 2024 and 2023 were approximately $130.3 million and $118.5 million, respectively. Iowa State Savings Bank, Creston, Iowa. Iowa State Bank is an Iowa, state-chartered, FDIC insured commercial bank.
United Bank had net income for the years ended December 31, 2025 and 2024 of approximately $1.5 million and $1.1 million, respectively. Total assets as of December 31, 2025 and 2024 were approximately $122.9 million and $130.3 million, respectively. Iowa State Savings Bank, Creston, Iowa. Iowa State Bank is an Iowa, state-chartered, FDIC insured commercial bank.
It offers a broad range of deposit and loan products, as well as wealth management services to customers located in the Marshalltown and surrounding Marshall County area. It conducts business from its main office and a full-service office, both located in Marshalltown. As of December 31, 2024, United Bank had capital of $10.6 million and 17 full-time equivalent employees.
It offers a broad range of deposit and loan products, as well as wealth management services to customers located in the Marshalltown and surrounding Marshall County area. It conducts business from its main office and a full-service office, both located in Marshalltown. As of December 31, 2025, United Bank had capital of $11.9 million and 16 full-time equivalent employees.
Approximately 53% of the loan portfolio consists of loans made for commercial purposes.
Approximately 51% of the loan portfolio consists of loans made for commercial purposes.
It conducts business from its main office located in Story City and a full-service office located in Garner. As of December 31, 2024, Reliance Bank had capital of $24.9 million and 32 full-time equivalent employees. Reliance Bank had net income for the years ended December 31, 2024 and 2023 of approximately $1.9 million and $1.7 million, respectively.
It conducts business from its main office located in Story City and a full-service office located in Garner. As of December 31, 2025, Reliance Bank had capital of $28.1 million and 31 full-time equivalent employees. Reliance Bank had net income for the years ended December 31, 2025 and 2024 of approximately $2.5 million and $1.9 million, respectively.
It has an experienced staff of bank officers including many who have spent the majority of their banking careers with First National and who emphasize long-term customer relationships. 4 As of December 31, 2024, First National had capital of $89.7 million and 117 full-time equivalent employees.
It has an experienced staff of bank officers including many who have spent the majority of their banking careers with First National and who emphasize long-term customer relationships. 4 As of December 31, 2025, First National had capital of $104.5 million and 114 full-time equivalent employees.
It has a strong presence in agricultural, commercial and residential real estate lending. As of December 31, 2024, State Bank had capital of $16.4 million and 21 full-time equivalent employees. State Bank had net income for the years ended December 31, 2024 and 2023 of approximately $933 thousand and $1.4 million, respectively.
It has a strong presence in agricultural, commercial and residential real estate lending. As of December 31, 2025, State Bank had capital of $19.4 million and 20 full-time equivalent employees. State Bank had net income for the years ended December 31, 2025 and 2024 of approximately $2.4 million and $933 thousand, respectively.
First National had net income for the years ended December 31, 2024 and 2023 of approximately $5.2 million and $5.5 million, respectively. Total assets as of December 31, 2024 and 2023 were approximately $1.11 billion and $1.14 billion, respectively. State Bank & Trust Co., Nevada, Iowa. State Bank is an Iowa, state-chartered, FDIC insured commercial bank.
First National had net income for the years ended December 31, 2025 and 2024 of approximately $10.0 million and $5.2 million, respectively. Total assets as of December 31, 2025 and 2024 were approximately $1.109 billion and $1.107 billion, respectively. State Bank & Trust Co., Nevada, Iowa. State Bank is an Iowa, state-chartered, FDIC insured commercial bank.
Thomas was appointed as President of United Bank on July 1, 2020. Mr. Wilson was appointed as Chief Lending Officer of the Company on November 9, 2023. Name Age Position with the Company or Bank and Principal Occupation and Employment During the Past Five Years Scott T. Bauer 62 President and Director of First National. Justin C.
Wilson was appointed as Chief Lending Officer of the Company on November 9, 2023. Name Age Position with the Company or Bank and Principal Occupation and Employment During the Past Five Years Scott T. Bauer 63 President and Director of First National. Justin C.
Iowa State Bank had net income for year ended December 31, 2024 and 2023 of approximately $2.0 million.
Iowa State Bank had net income for year ended December 31, 2025 and 2024 of approximately $2.9 million and $2.0 million, respectively.
Total assets as of December 31, 2024 and 2023 were approximately $198.6 million and $201.7 million, respectively. Boone Bank & Trust Co., Boone, Iowa. Boone Bank is an Iowa, state-chartered, FDIC insured commercial bank.
Total assets as of December 31, 2025 and 2024 were approximately $196.4 million and $198.6 million, respectively. Boone Bank & Trust Co., Boone, Iowa. Boone Bank is an Iowa, state-chartered, FDIC insured commercial bank.
Clausen 37 Chief Financial Officer and Secretary of the Company; previously Chief Accounting Officer and Controller of the Company. Dan E. Johnson 53 President and Director of State Bank; previously Senior Loan Officer of State Bank. John P. Nelson 58 Chief Executive Officer, President and Director of the Company.
Clausen 38 Chief Financial Officer and Secretary of the Company; previously Chief Accounting Officer and Controller of the Company. Dan E. Johnson 54 President and Director of State Bank; previously Senior Loan Officer of State Bank. John P. Nelson 59 Chief Executive Officer, President and Director of the Company.
The Presidents of the Banks and the human resources officers are responsible for compensation, recruitment, development and retention. The Company annually reviews a succession plan for key employees. The Company employs approximately 268 employees, of which 93% are full-time employees and the remaining 7% are part-time employees. Of the 268 employees, 120 employees were considered officers of the Company.
The Presidents of the Banks and the human resources officers are responsible for compensation, recruitment, development and retention. The Company annually reviews a succession plan for key employees. The Company employs approximately 260 employees, of which 95% are full-time employees and the remaining 5% are part-time employees. Of the 260 employees, 122 employees were considered officers of the Company.
As of December 31, 2024, approximately 65% of our current workforce was female and 35% was male. Approximately 4% of our workforce consisted of ethnically diverse employees as of December 31, 2024. There are no labor unions involved with the Company and we consider our relationship with our employees to be satisfactory.
As of December 31, 2025, approximately 62% of our current workforce was female and 38% was male. Approximately 5% of our workforce consisted of ethnically diverse employees as of December 31, 2025. There are no labor unions involved with the Company and we consider our relationship with our employees to be satisfactory.
The Company contributed over $244 thousand to various charitable and community organizations in 2024. Company employees volunteered approximately 16,300 hours serving various charitable organizations in our Banks’ communities. A number of our employees serve in leadership positions for nonprofit or community service organizations.
The Company contributed over $312 thousand to various charitable and community organizations in 2025. Company employees volunteered approximately 11,000 hours serving various charitable organizations in our Banks’ communities. A number of our employees serve in leadership positions for nonprofit or community service organizations.
Generally, reserves of 3% had to be maintained against total transaction accounts of $644.0 million or less (subject to an exemption not in excess of the first $36.1 million of transaction accounts). A reserve of $18.237 million plus 10% of amounts in excess of $644.0 million had to be maintained in the event total transaction accounts exceeded $644.0 million.
Generally, reserves of 3% had to be maintained against total transaction accounts of $645.8 million or less (subject to an exemption not in excess of the first $37.8 million of transaction accounts). A reserve of $18.24 million plus 10% of amounts in excess of $645.8 million had to be maintained in the event total transaction accounts exceeded $645.8 million.
As of December 31, 2024, Boone Bank had capital of $10.3 million and 19 full-time equivalent employees. Boone Bank had net income for the years ended December 31, 2024 and 2023 of approximately $616 thousand and $740 thousand, respectively. Total assets as of December 31, 2024 and 2023 were approximately $156.7 million and $149.4 million, respectively.
As of December 31, 2025, Boone Bank had capital of $13.1 million and 18 full-time equivalent employees. Boone Bank had net income for the years ended December 31, 2025 and 2024 of approximately $1.1 million and $616 thousand, respectively. Total assets as of December 31, 2025 and 2024 were approximately $160.4 million and $156.7 million, respectively.
Corporate Governance The Board of Directors has separated the CEO and Board Chair positions, with the Board Chair being a director who is independent under the NASDAQ governance standards. Nine of the eleven board members are independent directors. All directors serving on Board committees are independent under NASDAQ governance standards. The Company has established an age limitation policy for directors.
Corporate Governance The Board of Directors has separated the CEO and Board Chair positions, with the Board Chair being a director who is independent under the NASDAQ governance standards. Nine of the eleven board members are independent directors. All directors serving on Board committees are independent under NASDAQ governance standards, with the exception of John L. Pierschbacher.
Director and Chairman of First National, State Bank and United Bank and Director of Iowa State Bank. Jeffrey K. Putzier 63 President and Director of Boone Bank. Richard J. Schreier 57 President and Director of Reliance Bank. Adam R. Snodgrass 44 President and Director of Iowa State Bank. Robert A.
Director and Chairman of First National, State Bank and United Bank and Director of Iowa State Bank. Jeffrey K. Putzier 64 President and Director of Boone Bank. Richard J. Schreier 58 President and Director of Reliance Bank. Adam R. Snodgrass 45 President and Director of Iowa State Bank. Robert A. Thomas 66 President and Director of United Bank. Michael A.
Thomas 65 President and Director of United Bank; previously Senior Loan Officer of United Bank. Michael A. Wilson 60 Chief Lending Officer of the Company; Director and Chairman of Reliance Bank and State Bank.; previously Executive Vice President of Innovation and Corporate Services of the Company and Chief Lending Officer with Bankers Trust. 15
Wilson 61 Chief Lending Officer of the Company; Director and Chairman of Reliance Bank and State Bank.; previously Executive Vice President of Innovation and Corporate Services of the Company and Chief Lending Officer with Bankers Trust. 15
A significant portion of compensation of the executive officers is dependent on the Company’s operating results. Executive officer performance is evaluated annually. The Company provides a limited amount of perquisites to its executive officers.
Certain transactions in Company stock are prohibited, including short-selling and hedging. A significant portion of compensation of the executive officers is dependent on the Company’s operating results. Executive officer performance is evaluated annually. The Company provides a limited amount of perquisites to its executive officers.
Total assets as of December 31, 2024 and 2023 were approximately $307.5 million and $313.3 million, respectively. United Bank & Trust Co., Marshalltown, Iowa. United Bank is an Iowa, state-chartered, FDIC insured commercial bank. It was chartered as a national bank in 2002 and converted to a state charter in 2022.
Total assets as of December 31, 2025 and 2024 were approximately $284.9 million and $307.5 million, respectively. United Bank & Trust Co., Marshalltown, Iowa. United Bank is an Iowa, state-chartered, FDIC insured commercial bank.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

20 edited+15 added−4 removed122 unchanged
Biggest changeTariffs, retaliatory tariffs imposed in response by trading partners and a potential trade war resulting from those actions could affect the economy and stock prices in the United States and could impact the costs of goods paid by customers, all of which could affect our deposit levels and concentration, the demand for loans and other products and services and the ability of our customers to repay outstanding loans, which could adversely affect our financial condition and the results of operations. 16 Credit Risks The Company ’ s business depends on our ability to successfully manage credit risk.
Biggest changeIn addition, political tensions as a result of trade policies could reduce trade volume, investment and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could adversely affect our business, results of operations and financial condition. 16 Credit Risks The Company ’ s business depends on our ability to successfully manage credit risk.
In addition, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures. An impairment charge of goodwill or other intangibles could have a material adverse impact on the Company ’ s results of operations and financial condition.
In addition, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures. 20 An impairment charge of goodwill or other intangibles could have a material adverse impact on the Company ’ s results of operations and financial condition.
The implementation of such changes could have a material adverse effect on our financial condition and results of operations. 20 The Company ’ s accounting policies and methods require management to make estimates about matters that are inherently uncertain. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
The implementation of such changes could have a material adverse effect on our financial condition and results of operations. The Company ’ s accounting policies and methods require management to make estimates about matters that are inherently uncertain. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
Commercial real estate loans were a significant portion of our total loan portfolio as of December 31, 2024. The market value of real estate securing these loans can fluctuate significantly and potentially adversely in a short period of time as a result of market conditions in the geographic area in which the real estate is located.
Commercial real estate loans were a significant portion of our total loan portfolio as of December 31, 2025. The market value of real estate securing these loans can fluctuate significantly and potentially adversely in a short period of time as a result of market conditions in the geographic area in which the real estate is located.
As noted above, a period of depressed economic activity could adversely affect our business, financial condition and results of operation by, among other things, increasing the likelihood of borrower defaults on loan obligations, reducing collateral values and weakening demand for the Banks’ loan and deposit services.
As noted above, a period of depressed economic activity could adversely affect our business, financial condition and results of operations by, among other things, increasing the likelihood of borrower defaults on loan obligations, reducing collateral values and weakening the demand for the Banks’ loan and deposit products.
Because we have grown in part through acquisitions, goodwill and intangible assets are included in the consolidated assets reflected in our financial statements. Goodwill and intangible assets were $13.5 million as of December 31, 2024.
Because we have grown in part through acquisitions, goodwill and intangible assets are included in the consolidated assets reflected in our financial statements. Goodwill and intangible assets were $13.2 million as of December 31, 2025.
Liquidity and Interest Rate Risks Fair values of investments in the Company ’ s securities portfolio may adversely change. As of December 31, 2024, the fair value of our securities portfolio, consisting primarily of fixed income debt securities, was approximately $648.5 million.
Liquidity and Interest Rate Risks Fair values of investments in the Company ’ s securities portfolio may adversely change. As of December 31, 2025, the fair value of our securities portfolio, consisting primarily of fixed income debt securities, was approximately $656.0 million.
In response, the FOMC has initiated a series of increases in the short-term federal funds interest rate in an effort to dampen economic activity and bring the rate of inflation back to the FOMC’s target range of two to three percent.
In response, the FOMC initiated a series of increases in the short-term federal funds interest rate, beginning in 2022 and continuing through 2023, in an effort to dampen economic activity and bring the rate of inflation back to the FOMC’s target range of two to three percent.
Changes in technology could be costly or difficult to implement. The financial services industry is continually undergoing technological changes with frequent introductions of new technology-driven products and services. In addition to improving customer services, the effective use of technology increases efficiency and enables financial institutions to reduce costs.
The financial services industry is continually undergoing technological changes with frequent introductions of new technology-driven products and services. In addition to improving customer services, the effective use of technology increases efficiency and enables financial institutions to reduce costs.
Consequently, a change in the supply or demand for our common stock, or other events affecting our business, may have a more significant impact on the price of our stock than would be the case for more actively traded companies. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Consequently, a change in the supply or demand for our common stock, or other events affecting our business, may have a more significant impact on the price of our stock than would be the case for more actively traded companies.
A significant portion of our loan portfolio consists of loans to borrowers who are directly or indirectly affected by the health of the Iowa agricultural economy, which has recently been under stress due to low commodity and livestock prices and higher input costs caused by inflation.
A significant portion of our loan portfolio consists of loans to borrowers who are directly or indirectly affected by the health of the Iowa agricultural economy, which has recently been under stress due to low commodity and livestock prices, higher input costs caused by inflation and potential losses of foreign markets due to disruptions in trade relationships.
Higher inflation may affect the Company ’ s interest rates, credit loss expenses and general operating expenses. Consumer inflation, as measured by the Consumer Price Index for All Urban Consumers (“CPI”) has increased 2.9% and 3.4% for the years ended December 31, 2024 and 2023, respectively.
Continuing inflationary pressures may affect the Company ’ s interest rates, credit loss expenses and general operating expenses. Consumer inflation as measured by the Consumer Price Index for All Urban Consumers (“CPI”) has increased 2.7% and 2.9% for the years ended December 31, 2025 and 2024, respectively.
The fair value of the securities portfolio has a net unrealized loss of $52.0 million as of December 31, 2024, resulting primarily from the negative impact of increased interest rates on the fair value of the portfolio.
The fair value of the securities portfolio has a net unrealized loss of $24.2 million as of December 31, 2025, resulting primarily from the negative impact of increased interest rates on the fair value of the portfolio.
Adverse publicity about us, whether or not true, may also result in harm to our business. Should any events or circumstances that could undermine our reputation occur, there can be no assurance that the additional costs and expenses that we may incur in addressing such issues would not adversely affect our financial condition and results of operations.
Should any events or circumstances that could undermine our reputation occur, there can be no assurance that the additional costs and expenses that we may incur in addressing such issues would not adversely affect our financial condition and results of operations. 21 Changes in technology could be costly or difficult to implement.
Many of our competitors have substantially greater resources to invest in technological improvements and there is a risk we could become less competitive if we are unable to take advantage of these improvements due to the cost limitations, difficulties in implementation or otherwise. 21 A breach of information security, compliance breach, or error by one of the Company ’ s agents or vendors could negatively affect the Company ’ s reputation and business.
Many of our competitors have substantially greater resources to invest in technological improvements and there is a risk we could become less competitive if we are unable to take advantage of these improvements due to the cost limitations, difficulties in implementation or otherwise.
These rate increases have the potential to overly reduce economic activity and tip the domestic economy into a recessionary period of slower or negative growth.
The continuation of elevated interest rates has the potential to overly reduce economic activity and, potentially, tip the domestic economy into a recessionary period of slower or negative growth.
Identity theft, successful unauthorized intrusions and similar unauthorized conduct could result in reputational damage and financial losses to the Company. Security breaches involving us, the Banks or any third parties with which we do business could expose us to liability and litigation, adversely affecting our reputation and operating revenues.
Security breaches involving us, the Banks or any third parties with which we do business could expose us to liability and litigation, adversely affecting our reputation and operating revenues.
In particular, the national economy is facing challenges due to inflationary pressures that began building during late 2021 and has persisted through 2024, resulting in significant upward pressure on consumer and wholesale prices.
In particular, the national economy continues to face challenges due to inflationary pressures that begin building during late 2021 and, although improved, have persisted through 2025, resulting in continuing upward pressure on consumer and wholesale prices.
Elevated levels of inflation create upward pressure on the cost of hiring, training, and retaining employees, other general operating expense and interest rates.
Although inflationary pressures in the economy have now moderated from the higher rates of inflation experienced during 2021 through 2023, elevated levels of inflation can create upward pressure on the cost of hiring, training and retaining employees, other general operating expenses and interest rates.
We depend on data processing, communication and information exchange on a variety of computing platforms and networks over the Internet.
A breach of information security, compliance breach, or error by one of the Company ’ s agents or vendors could negatively affect the Company ’ s reputation and business. We depend on data processing, communication and information exchange on a variety of computing platforms and networks over the Internet.
Removed
Our challenge will be keeping wages competitive and maintaining general operating expenses at their current levels, while balancing a potential decrease in our net interest income due to the greater sensitivity to the repricing of our interest-bearing liabilities than our interest-earning assets in the short-term.
Added
Although the FOMC began reducing the federal funds rate in late 2024 and during 2025, interest rates continue to remain at relatively high levels on a historic basis, as the FOMC has now paused its reductions and adopted a “data-driven” approach under which future cuts will be dependent on favorable data regarding inflation and labor market conditions.
Removed
Our credit loss expenses may be negatively impacted by our borrowers' ability to service their debt if inflation is prolonged. The trade policies of the new presidential administration are evolving and could lead to disruptions in major trade relationships that could negatively impact our customers.
Added
If higher rates of inflation persist, our challenge will be keeping wages competitive and maintaining general operating expenses at their current levels, while also managing our credit loss expense which may be negatively impacted by our customers’ ability to service their debt obligations.
Removed
The new presidential administration has stated its intention to scrutinize the United States’ trade relationships with its economic partners, indicated an interest in renegotiating trade agreements, and begun to implement tariffs with some of the United States’ major trading partners, all of which could lead to a disruption of those trading relationships and trade wars.
Added
Developments with respect to global trade policies, including changing tariffs and the imposition of new or increased tariffs and related uncertainty thereof, could have a material adverse effect on the Company ’ s customers and thereby negatively impact its business, results of operations or financial condition.
Removed
These statements and actions by the administration have signaled a change in the United States’ economic policies, and it is not clear which policies will be implemented and what effect these policies could have on the local, national and global economy.
Added
There continues to be significant uncertainty about the future relationship between the United States and its foreign trading partners, including with respect to trade policies, treaties, trade agreements, government regulations, sanctions, tariffs, and application thereof.
Added
For example, in April 2025, the U.S. government began imposing tariffs intended to address trade deficits and inconsistent economic treatment of importation between the U.S. and other countries. In response, a number of countries, including China, have announced retaliatory tariffs against certain imports from the U.S., among other measures.
Added
Although we are continuing to evaluate the impact of these evolving developments on our customer base, we cannot provide any assurance about the ultimate outcome or impact of these developments or other changes in trade policies, including the imposition of new or increased tariffs between the U.S. and other countries.
Added
Furthermore, changes to trade policies, retaliatory measures, or prolonged uncertainty in trade relationships could increase the cost of, and reduce demand for, our products and services, as well as negatively affecting our customers’ ability to service debt, both of which could adversely impact our business.
Added
Identity theft, successful unauthorized intrusions and similar unauthorized conduct could result in reputational damage and financial losses to the Company. Use of artificial intelligence may result in reputational harm or liability, or could otherwise adversely affect the Company ’ s business.
Added
Artificial intelligence, including generative artificial intelligence, is or may be integrated into our products and services or those developed by our third-party partners. The development and use of AI presents potential risks and challenges to our business and may require significant additional investments in infrastructure, personnel and training.
Added
There can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business or customers, including our efficiency or profitability. As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption and use, and therefore our business.
Added
Artificial intelligence algorithms may be flawed - for example datasets may contain biased information or otherwise be insufficient - and inappropriate or controversial data practices could impair the acceptance of artificial intelligence solutions and result in burdensome new regulations.
Added
If the analyses that products integrating artificial intelligence assist in producing for us or our third-party partners are deficient, biased or inaccurate, we could be subject to competitive harm, potential legal liability and brand or reputational harm. The use of artificial intelligence may also present ethical issues.
Added
If we or our third-party partners offer artificial intelligence enabled products that are controversial because of their purported or real impact on human rights, privacy, or other issues, we may experience competitive harm, potential legal liability and brand or reputational harm.
Added
In addition, we expect that governments will continue to assess and implement new laws and regulations concerning the use of artificial intelligence, which may affect or impair the usability or efficiency of our products and services and those developed by our third-party partners.
Added
Adverse publicity about us, whether or not true, may also result in harm to our business.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed7 unchanged
Biggest changeThe Ankeny office is located in Ankeny, Iowa. The West Glen office is located in West Des Moines, Iowa and is leased from the Company. The Valley Junction office is located in West Des Moines, Iowa. The Downtown Osceola and Jefferies Drive offices are located in Osceola, Iowa.
Biggest changeThe Ankeny office is located in Ankeny, Iowa. The West Glen office is located in West Des Moines, Iowa and is leased from the Company. The Valley Junction office is located in West Des Moines, Iowa. The Downtown Osceola and Jefferys Drive offices are located in Osceola, Iowa.
The West Glen office owned by the Company is subject to a $2.5 million mortgage.
The West Glen office owned by the Company is subject to a $1.9 million mortgage.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed2 unchanged
Biggest changeTotal Number Maximum of Shares Number of Purchased as Shares that Total Part of May Yet Be Number Average Publicly Purchased of Shares Price Paid Announced Under Period Purchased Per Share Plans The Plan October 1, 2024 to October 31, 2024 (1) - $ - - 100,000 November 1, 2024 to November 30, 2024 (1) and (2) - $ - - 100,000 December 1, 2024 to December 31, 2024 (2) 43,057 $ 16.35 43,057 56,943 Total 43,057 43,057 (1) The Stock Repurchase Plan adopted in November 2023 expired in November 2024 without any purchases being made thereunder and 100,000 shares remained available for purchase under this plan prior to its expiration.
Biggest changeTotal Number Maximum of Shares Number of Purchased as Shares that Total Part of May Yet Be Number Average Publicly Purchased of Shares Price Paid Announced Under Period Purchased Per Share Plans The Plan October 1, 2025 to October 31, 2025 18,682 $ 20.98 18,682 181,318 November 1, 2025 to November 30, 2025 16,265 $ 20.98 16,265 165,053 December 1, 2025 to December 31, 2025 - $ - - 165,053 Total 34,947 34,947
The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended December 31, 2024.
The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended December 31, 2025.
The Company does not maintain or sponsor any equity compensation plans covering the directors, its executives or employees of the Company or the Banks. On November 13, 2024, the Board of Directors approved a Stock Repurchase Plan which provided for the repurchase of up to 100,000 shares of the Company’s common stock.
The Company does not maintain or sponsor any equity compensation plans covering the directors, its executives or employees of the Company or the Banks. On August 13, 2025, the Board of Directors approved a Stock Repurchase Plan which provided for the repurchase of up to 200,000 shares of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On February 28, 2025, the Company had approximately 224 shareholders of record and approximately 3,876 additional beneficial owners whose shares were held in nominee titles through brokerage or other accounts.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On February 27, 2026, the Company had approximately 215 shareholders of record and approximately 7,035 additional beneficial owners whose shares were held in nominee titles through brokerage or other accounts.
The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “ATLO”. Trading in the Company’s common stock is, however, relatively limited. The closing price of the Company’s common stock was $18.77 on February 28, 2025.
The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “ATLO”. Trading in the Company’s common stock is, however, relatively limited. The closing price of the Company’s common stock was $27.01 on February 27, 2026.
This Stock Repurchase Plan replaced the previous Stock Repurchase Plan (approved in November 2023) that expired in November 2024. The Company purchased 43,057 shares in 2024 and did not purchase any shares in 2023 under the Stock Repurchase Plans that were in effect during 2024 and 2023.
This Stock Repurchase Plan replaced the previous Stock Repurchase Plan (approved in November 2024) that was completed in July 2025. The Company purchased 91,890 shares in 2025 and 43,057 shares in 2024 under the Stock Repurchase Plans that were in effect during 2025 and 2024.
The Company declared aggregate annual cash dividends in 2024 and 2023 of approximately $8.4 million and $9.7, respectively, or $0.94 per share in 2024 and $1.08 per share in 2023. In February 2025, the Company declared a quarterly cash dividend of approximately $1.8 million, or $0.20 per share, payable on June 13, 2025.
The Company declared aggregate annual cash dividends in 2025 and 2024 of approximately $5.3 million and $8.4 million, respectively, or $0.60 per share in 2025 and $0.94 per share in 2024.
Removed
(2) A successor Stock Repurchase Plan was approved and became effective on November 14, 2024 and authorized the purchase of up to 100,000 shares. This plan is scheduled to expire on November 12, 2025. A total of 43,057 shares were purchased under this plan during December 2024.
Added
In February 2026, the Company declared a quarterly cash dividend of approximately $2.1 million, or $0.24 per share, payable on March 13, 2026, to shareholders of record at the close of business on February 27, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+8 added−8 removed125 unchanged
Biggest changeYears Ended December 31, (dollars in thousands, except per share amounts) 2024 2023 2022 STATEMENT OF INCOME DATA Interest income $ 82,607 $ 74,301 $ 61,553 Interest expense 37,631 29,676 8,309 Net interest income 44,976 44,625 53,244 Credit loss expense (benefit) 592 789 (874 ) Net interest income after credit loss expense (benefit) 44,384 43,836 54,118 Noninterest income 9,837 9,215 9,687 Noninterest expense 41,980 40,162 38,644 Income before provision for income tax 12,241 12,889 25,161 Provision for income taxes 2,023 2,072 5,868 Net income $ 10,218 $ 10,817 $ 19,293 DIVIDENDS AND EARNINGS PER SHARE DATA Cash dividends declared $ 8,444 $ 9,712 $ 9,739 Cash dividends declared per share $ 0.94 $ 1.08 $ 1.08 Basic and diluted earnings per share $ 1.14 $ 1.20 $ 2.14 Weighted average shares outstanding 8,991,286 8,992,167 9,033,410 BALANCE SHEET DATA Total assets $ 2,133,180 $ 2,155,481 $ 2,134,926 Net loans 1,303,917 1,277,812 1,226,011 Deposits 1,846,682 1,811,831 1,897,957 Stockholders' equity 174,706 165,788 149,098 Equity to assets ratio 8.19 % 7.69 % 6.98 % FINANCIAL PERFORMANCE Net income $ 10,218 $ 10,817 $ 19,293 Average assets 2,127,051 2,140,034 2,134,947 Average stockholders' equity 169,732 153,530 168,752 Return on assets (net income divided by average assets) 0.48 % 0.51 % 0.90 % Return on equity (net income divided by average equity) 6.02 % 7.05 % 11.43 % Net interest margin (net interest income divided by average earning assets)* 2.22 % 2.20 % 2.62 % Efficiency ratio (noninterest expense divided by noninterest income plus net interest income) 76.59 % 74.60 % 61.41 % Dividend payout ratio (dividends per share divided by net income per share) 82.46 % 90.00 % 50.47 % Dividend yield (dividends per share divided by closing year-end market price) 4.87 % 5.06 % 4.57 % Equity to assets ratio (average equity divided by average assets) 7.98 % 7.17 % 7.90 % * See page 32 for further discussion of this Non-GAAP financial measure. 27 The following discussion is provided for the consolidated operations of the Company and its Banks.
Biggest changeYears Ended December 31, (dollars in thousands, except per share amounts) 2025 2024 2023 STATEMENT OF INCOME DATA Interest income $ 87,093 $ 82,607 $ 74,301 Interest expense 31,431 37,631 29,676 Net interest income 55,662 44,976 44,625 Credit loss expense 1,037 592 789 Net interest income after credit loss expense 54,625 44,384 43,836 Noninterest income 11,170 9,837 9,215 Noninterest expense 41,929 41,980 40,162 Income before provision for income tax 23,866 12,241 12,889 Provision for income taxes 4,839 2,023 2,072 Net income $ 19,027 $ 10,218 $ 10,817 DIVIDENDS AND EARNINGS PER SHARE DATA Cash dividends declared** $ 5,323 $ 8,444 $ 9,712 Cash dividends declared per share** $ 0.60 $ 0.94 $ 1.08 Basic and diluted earnings per share $ 2.14 $ 1.14 $ 1.20 Weighted average shares outstanding 8,895,197 8,991,286 8,992,167 BALANCE SHEET DATA Total assets $ 2,133,540 $ 2,133,180 $ 2,155,481 Net loans 1,280,222 1,303,917 1,277,812 Deposits 1,854,667 1,846,682 1,811,831 Stockholders' equity 207,894 174,706 165,788 Equity to assets ratio 9.74 % 8.19 % 7.69 % FINANCIAL PERFORMANCE Net income $ 19,027 $ 10,218 $ 10,817 Average assets 2,104,305 2,127,051 2,140,034 Average stockholders' equity 191,287 169,732 153,530 Return on assets (net income divided by average assets) 0.90 % 0.48 % 0.51 % Return on equity (net income divided by average equity) 9.95 % 6.02 % 7.05 % Net interest margin (net interest income divided by average earning assets)* 2.75 % 2.22 % 2.20 % Efficiency ratio (noninterest expense divided by noninterest income plus net interest income) 62.74 % 76.59 % 74.60 % Dividend payout ratio (dividends per share divided by net income per share)** 28.04 % 82.46 % 90.00 % Dividend yield (dividends per share divided by closing year-end market price)** 2.61 % 5.72 % 5.06 % Equity to assets ratio (average equity divided by average assets) 9.09 % 7.98 % 7.17 % * See page 32 for further discussion of this Non-GAAP financial measure. ** Beginning in August 2025 the dividends were declared and paid in the same quarter.
The amount of expense and the corresponding level of allowance for credit losses for loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors.
The amount of expense and the corresponding level of allowance for credit losses for loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors.
These conditions may make it more difficult for some of our commercial real estate borrowers to service their loan obligations and can lead to reductions in the value of the real estate securing those loans, raising the potential for more frequent and larger charge-offs against the allowance for credit losses and the need to increase credit loss expense to replenish the allowance.
These conditions may make it more difficult for some of our borrowers to service their loan obligations and can lead to reductions in the value of the real estate securing those loans, raising the potential for more frequent and larger charge-offs against the allowance for credit losses and the need to increase credit loss expense to replenish the allowance.
Management’s process for obtaining and validating the fair value of investment securities is discussed in Note 16 of the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report. 39 Investment Maturities as of December 31, 2024 The investments in the following table are reported by contractual maturity.
Management’s process for obtaining and validating the fair value of investment securities is discussed in Note 16 of the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report. 39 Investment Maturities as of December 31, 2025 The investments in the following table are reported by contractual maturity.
As of December 31, 2024, commercial real estate loans have a pooled reserve of 1.45%. 45 Other factors considered when determining the adequacy of the pooled reserve include historical losses; watch, substandard and substandard-impaired loan volume; the ability to collect past due loans; loan growth; loan-to-value ratios; loan administration; collateral values; and economic factors.
As of December 31, 2025, commercial real estate loans have a pooled reserve of 1.45%. 45 Other factors considered when determining the adequacy of the pooled reserve include historical losses; watch, substandard and substandard-impaired loan volume; the ability to collect past due loans; loan growth; loan-to-value ratios; loan administration; collateral values; and economic factors.
As of December 31, 2024, the most likely impact of these financial instruments on revenues, expenses, or cash flows of the Company would come from unidentified credit risk causing higher credit loss expense in future periods. These financial instruments are not expected to have a significant impact on the liquidity or capital resources of the Company.
As of December 31, 2025, the most likely impact of these financial instruments on revenues, expenses, or cash flows of the Company would come from unidentified credit risk causing higher credit loss expense in future periods. These financial instruments are not expected to have a significant impact on the liquidity or capital resources of the Company.
The timing of these credit commitments varies with the underlying borrowers; however, the Company believes it has satisfactory liquidity to fund these obligations as of December 31, 2024. The primary cash flow uncertainty would be a sudden decline in deposits causing the Banks to liquidate securities.
The timing of these credit commitments varies with the underlying borrowers; however, the Company believes it has satisfactory liquidity to fund these obligations as of December 31, 2025. The primary cash flow uncertainty would be a sudden decline in deposits causing the Banks to liquidate securities.
The increase in stockholders’ equity was primarily the result of a decrease in unrealized losses on the investment portfolio and the retention of net income in excess of dividends. The capital levels of the Company currently exceed applicable regulatory guidelines to be considered “well capitalized” as of December 31, 2024.
The increase in stockholders’ equity was primarily the result of a decrease in unrealized losses on the investment portfolio and the retention of net income in excess of dividends. The capital levels of the Company currently exceed applicable regulatory guidelines to be considered “well capitalized” as of December 31, 2025.
The Company completed a quantitative assessment of goodwill as of October 1, 2024 which indicated that goodwill was not impaired. Subsequently, the Company determined there were no adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded that there is no impairment of goodwill as of December 31, 2024.
The Company completed a quantitative assessment of goodwill as of October 1, 2025 which indicated that goodwill was not impaired. Subsequently, the Company determined there were no adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded that there is no impairment of goodwill as of December 31, 2025.
As of December 31, 2024, management believes that the level of liquidity and capital resources of the Company remain at a satisfactory level and compare favorably to that of other FDIC insured institutions and that the Company's liquidity sources will be sufficient to support its existing operations for the foreseeable future.
As of December 31, 2025, management believes that the level of liquidity and capital resources of the Company remain at a satisfactory level and compare favorably to that of other FDIC insured institutions and that the Company's liquidity sources will be sufficient to support its existing operations for the foreseeable future.
Historically, the Banks have maintained an adequate level of short-term marketable investments to fund the temporary declines in deposit balances. There are no other known trends in liquidity and cash flow needs as of December 31, 2024, that are of concern to management.
Historically, the Banks have maintained an adequate level of short-term marketable investments to fund the temporary declines in deposit balances. There are no other known trends in liquidity and cash flow needs as of December 31, 2025, that are of concern to management.
The high level of competition in the local markets may continue to put downward pressure on the net interest margin of the Company. Currently, the Company’s primary market in Ames, Iowa, has fifteen banks, five credit unions and several other financial investment companies.
The high level of competition in the local markets may put downward pressure on the net interest margin of the Company. Currently, the Company’s primary market in Ames, Iowa, has fifteen banks, five credit unions and several other financial investment companies.
Of particular relevance are the economic conditions in the concentrated geographic area in central, north-central and south-central Iowa in which the Banks conduct their operations. ● Uncertainties related to the policies of the new presidential administration, including the possibility of tariffs imposed on significant trading partners, the imposition of retaliatory tariffs, the potential for disruption of major trade relationships, new immigration policies and enforcement efforts, and reductions in federal employment levels, contracts and real estate holdings as part of the administration's effort to streamline the federal bureaucracy. ● The potential for decline in commercial real estate values resulting from reduced occupancy and/or rental rates and higher operating costs due to inflation, negatively impacting the ability of our commercial real estate borrowers to repay their loan obligations and reducing the value of the real estate collateral securing such loans. ● Factors adversely affecting the agricultural economy in Iowa, including the effects of tariffs and retaliatory tariffs, depressed commodity and livestock prices and higher input costs due to inflation, negatively impacting the ability of our agricultural borrowers to repay their loan obligations and reducing collateral values for such loans. ● Adequacy of the allowance for credit losses and changes in the level of non-performing assets and charge-offs. ● Inflation, interest rates, securities market and monetary fluctuations. ● Changes in the fair value of securities available-for-sale and management’s evaluation of credit losses of such securities. ● The effects of and changes in trade and monetary and fiscal policies and laws, including the changes in assessment rates established by the Federal Deposit Insurance Corporation for its Deposit Insurance Fund and interest rate policies of the Federal Open Market Committee of the Federal Reserve Board. ● Changes in sources and uses of funds, including loans, deposits and borrowings, including the ability of the Banks to maintain unsecured federal funds lines with correspondent banks. ● Changes imposed by regulatory agencies to increase capital to a level greater than the level currently required for well capitalized financial institutions. 49 ● Political instability, acts of war or terrorism, natural disasters and pandemics. ● The timely development and acceptance of new products and services and perceived overall value of these products and services by customers. ● Revenues being lower than expected. ● Changes in consumer spending, borrowings and savings habits. ● Changes in the financial performance and/or condition of the Company’s borrowers. ● Credit quality deterioration, which could cause an increase in the allowance for credit losses. ● Technological changes and operational and reputational risks related to breaches of data security and cyber-attacks. ● The ability to increase market share and control expenses. ● Changes in the competitive environment among financial or bank holding companies and other financial service providers. ● The effect of changes in laws and regulations with which the Company and the Banks must comply, including developments and changes related to the implementation of the Dodd-Frank Act and the effect of any Federal tax reform on the operations of the Company and its customers. ● Changes in the securities markets. ● The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the FASB, International Financial Reporting Standards and other accounting standard setters. ● The costs and effects of legal and regulatory developments, including the resolution of regulatory or other governmental inquiries and the results of regulatory examinations or reviews. ● The ability of the Company to successfully integrate the operations of financial institutions it has acquired or may acquire in the future. ● The Company’s success at managing the risks involved in the foregoing items.
Of particular relevance are the economic conditions in the concentrated geographic area in central, north-central and south-central Iowa in which the Banks conduct their operations. ● Uncertainties related to U.S. trade policies, including tariffs imposed on significant trading partners, the imposition of retaliatory tariffs, the potential for disruption of major trade relationships, new immigration policies and enforcement efforts, and reductions in federal employment levels, contracts and real estate holdings as part of the administration's effort to streamline the federal bureaucracy. ● The potential for decline in commercial real estate values resulting from reduced occupancy and/or rental rates and higher operating costs due to inflation, negatively impacting the ability of our commercial real estate borrowers to repay their loan obligations and reducing the value of the real estate collateral securing such loans. ● Factors adversely affecting the agricultural economy in Iowa, including the effects of tariffs and retaliatory tariffs, potential loss of foreign markets, depressed commodity and livestock prices and higher input costs due to inflation, negatively impacting the ability of our agricultural borrowers to repay their loan obligations and reducing collateral values for such loans. ● Adequacy of the allowance for credit losses and changes in the level of non-performing assets and charge-offs. ● Inflation, interest rates, securities market and monetary fluctuations. ● Changes in the fair value of securities available-for-sale and management’s evaluation of credit losses of such securities. ● The effects of and changes in trade and monetary and fiscal policies and laws, including the changes in assessment rates established by the Federal Deposit Insurance Corporation for its Deposit Insurance Fund and interest rate policies of the Federal Open Market Committee of the Federal Reserve Board. ● Changes in sources and uses of funds, including loans, deposits and borrowings, including the ability of the Banks to maintain unsecured federal funds lines with correspondent banks. ● Changes imposed by regulatory agencies to increase capital to a level greater than the level currently required for well capitalized financial institutions. 49 ● Political instability, acts of war or terrorism, natural disasters and pandemics. ● The timely development and acceptance of new products and services and perceived overall value of these products and services by customers. ● Revenues being lower than expected. ● Changes in consumer spending, borrowings and savings habits. ● Changes in the financial performance and/or condition of the Company’s borrowers. ● Credit quality deterioration, which could cause an increase in the allowance for credit losses. ● Technological changes and operational and reputational risks related to breaches of data security and cyber-attacks, and the potential integration of artificial intelligence components into our processes or those of our third-party partners. ● The ability to increase market share and control expenses. ● Changes in the competitive environment among financial or bank holding companies and other financial service providers. ● The effect of changes in laws and regulations with which the Company and the Banks must comply, including developments and changes related to the implementation of the Dodd-Frank Act and the effect of any Federal tax reform on the operations of the Company and its customers. ● Changes in the securities markets. ● The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the FASB, International Financial Reporting Standards and other accounting standard setters. ● The costs and effects of legal and regulatory developments, including the resolution of regulatory or other governmental inquiries and the results of regulatory examinations or reviews. ● The ability of the Company to successfully integrate the operations of financial institutions it has acquired or may acquire in the future. ● The Company’s success at managing the risks involved in the foregoing items.
Loans to any one borrower are limited by applicable state and federal banking laws. 37 Maturities and Sensitivities of Loans to Changes in Interest Rates as of December 31, 2024 The contractual maturities of the Company's loan portfolio are as shown below.
Loans to any one borrower are limited by applicable state and federal banking laws. 37 Maturities and Sensitivities of Loans to Changes in Interest Rates as of December 31, 2025 The contractual maturities of the Company's loan portfolio are as shown below.
As of December 31, 2024, the majority of the loans were originated directly by the Banks to borrowers within the Banks’ principal market areas. There are no foreign loans outstanding during the years presented.
As of December 31, 2025, the majority of the loans were originated directly by the Banks to borrowers within the Banks’ principal market areas. There are no foreign loans outstanding during the years presented.
Management believes that the allowance for credit losses as of December 31, 2024 remains adequate based on its analysis of the non-performing assets and the portfolio as a whole.
Management believes that the allowance for credit losses as of December 31, 2025 remains adequate based on its analysis of the non-performing assets and the portfolio as a whole.
Some Banks also offer investment services through a third-party broker-dealer. The Company employs 26 individuals to assist the Banks with financial reporting, human resources, marketing, audit, compliance, technology systems, property appraisals, training and the coordination of management activities, in addition to 240 full-time equivalent individuals employed by the Banks.
Some Banks also offer investment services through a third-party broker-dealer. The Company employs 27 individuals to assist the Banks with financial reporting, human resources, marketing, audit, compliance, technology systems, property appraisals, training and the coordination of management activities, in addition to 233 full-time equivalent individuals employed by the Banks.
Such losses could result in an accelerated level of charge-offs and the need to increase provision expenses, thus resulting in reduced earnings. ● Our portfolio of commercial real estate loans is facing challenging conditions resulting from a combination of reduced occupancy and higher operating costs due to the continuing inflationary pressures in the economy and is primarily responsible for the increase in our substandard loans during 2024.
Such losses could result in an accelerated level of charge-offs and the need to increase provision expenses, thus resulting in reduced earnings. ● Our portfolio of multi-family and commercial real estate loans are facing challenging conditions resulting from a combination of reduced occupancy and higher operating costs due to the continuing inflationary pressures in the economy and is primarily responsible for the increase in our substandard loans during 2025.
The liquidity and capital resources discussion will cover the following topics: ● Review of the Company’s Current Liquidity Sources ● Review of the Consolidated Statements of Cash Flows ● Review of Company Only Cash Flows ● Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flow Needs ● Capital Resources Review of the Company’s Current Liquidity Sources Liquid assets of cash on hand, balances due from other banks, interest-bearing deposits in financial institutions and federal funds sold for December 31, 2024 and 2023 totaled $101.2 million and $55.1 million, respectively.
The liquidity and capital resources discussion will cover the following topics: ● Review of the Company’s Current Liquidity Sources ● Review of the Consolidated Statements of Cash Flows ● Review of Company Only Cash Flows ● Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flow Needs ● Capital Resources Review of the Company’s Current Liquidity Sources Liquid assets of cash on hand, balances due from other banks, interest-bearing deposits in financial institutions and federal funds sold for December 31, 2025 and 2024 totaled $126.8 million and $101.2 million, respectively.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following financial data of the Company for the three years ended December 31, 2022 through 2024 is derived from the Company's historical audited financial statements and related footnotes.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following financial data of the Company for the three years ended December 31, 2023 through 2025 is derived from the Company's historical audited financial statements and related footnotes.
The Company considers non-performing loans to generally include nonaccrual loans, loans past due 90 days or more and still accruing and other loans that may or may not meet the former non-performing criteria. 44 The allowance for credit losses related to these non-performing loans was approximately $98 thousand and $118 thousand at December 31, 2024 and 2023, respectively.
The Company considers non-performing loans to generally include nonaccrual loans, loans past due 90 days or more and still accruing and other loans that may or may not meet the former non-performing criteria. 44 The allowance for credit losses related to these non-performing loans was approximately $1.1 million and $98 thousand at December 31, 2025 and 2024, respectively.
In response, we are carefully monitoring the commercial real estate loan portfolio through regular loan reviews, stress testing and sensitivity analysis. Loan reviews include monitoring past due rates, non-performing trends, concentrations, loan-to-value ratios and other qualitative factors.
In response, we are carefully monitoring the multi-family and commercial real estate loan portfolios through regular loan reviews, stress testing and sensitivity analysis. Loan reviews include monitoring past due rates, non-performing trends, concentrations, loan-to-value ratios and other qualitative factors.
Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flow Needs Commitments to extend credit totaled $232.0 million as of December 31, 2024 compared to a total of $262.7 million at the end of 2023.
Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flow Needs Commitments to extend credit totaled $239.7 million as of December 31, 2025 compared to a total of $232.0 million at the end of 2024.
The Company requires adequate liquidity to pay its expenses and pay stockholder dividends. In 2024, dividends from the Banks amounted to $10.2 million compared to $10.0 million in 2023. Various federal and state statutory provisions limit the amount of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval.
The Company requires adequate liquidity to pay its expenses and pay stockholder dividends. In 2025, dividends from the Banks amounted to $13.5 million compared to $10.2 million in 2024. Various federal and state statutory provisions limit the amount of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval.
Noninterest expense for the Company consists of all operating expenses other than interest expense on deposits and other borrowed funds. Salaries and employee benefits are the largest component of the Company’s operating expenses and comprise 60% and 59% of noninterest expense in 2024 and 2023, respectively.
Noninterest expense for the Company consists of all operating expenses other than interest expense on deposits and other borrowed funds. Salaries and employee benefits are the largest component of the Company’s operating expenses and comprise 62% and 60% of noninterest expense in 2025 and 2024, respectively.
A total of 43,057 shares of common stock were repurchased under stock repurchase plans in 2024 and no shares of common stock were repurchased in 2023. Also see Part II, Item 5 - Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, included elsewhere in this Annual Report.
A total of 91,890 shares of common stock were repurchased under stock repurchase plans in 2025 and 43,057 shares of common stock were repurchased in 2024. Also see Part II, Item 5 - Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, included elsewhere in this Annual Report.
The Company's loan policies are robust and are updated as needed to align with strategic objectives and risk management priorities. Commercial real estate and multi-family real estate represent approximately 42% of the loan portfolio as of December 31, 2024.
The Company's loan policies are robust and are updated as needed to align with strategic objectives and risk management priorities. Commercial real estate and multi-family real estate represent approximately 40% of the loan portfolio as of December 31, 2025.
No one municipality or agency represents a concentration within this segment of the investment portfolio. Omaha, Nebraska, sewer revenue bonds with a fair value of $5.3 million (approximately 2.1% of the fair value of the government municipalities and subdivisions) represent the largest exposure to any one municipality or subdivision for the Company as of December 31, 2024.
No one municipality or agency represents a concentration within this segment of the investment portfolio. Omaha, Nebraska, sewer revenue bonds with a fair value of $5.6 million (approximately 2.4% of the fair value of the government municipalities and subdivisions) represent the largest exposure to any one municipality or subdivision for the Company as of December 31, 2025.
Non-performing Assets The following table sets forth information concerning the Company's non-performing assets for the past three years ended December 31, 2024 (dollars in thousands) : 2024 2023 2022 Nonperforming assets: Nonaccrual loans $ 14,772 $ 13,811 $ 14,722 Loans 90 days or more past due 736 109 - Total nonperforming loans 15,508 13,920 14,722 Securities available-for-sale - - - Other real estate owned - - - Total nonperforming assets $ 15,508 $ 13,920 $ 14,722 Ratio of nonaccrual loans to total loans outstanding 1.12 % 1.07 % 1.19 % Ratio of allowance for credit losses to nonaccrual loans 115.48 % 121.47 % 106.62 % The accrual of interest on nonaccrual and other non-performing loans is generally discontinued at 90 days or when, in the opinion of management, the borrower may be unable to meet payments as they become due.
Non-performing Assets The following table sets forth information concerning the Company's non-performing assets for the past three years ended December 31, 2025 (dollars in thousands) : 2025 2024 2023 Nonperforming assets: Nonaccrual loans $ 15,133 $ 14,772 $ 13,811 Loans 90 days or more past due 328 736 109 Total nonperforming loans 15,461 15,508 13,920 Securities available-for-sale - - - Other real estate owned 204 - - Total nonperforming assets $ 15,665 $ 15,508 $ 13,920 Ratio of nonaccrual loans to total loans outstanding 1.17 % 1.12 % 1.07 % Ratio of allowance for credit losses to nonaccrual loans 116.94 % 115.48 % 121.47 % The accrual of interest on nonaccrual and other non-performing loans is generally discontinued at 90 days or when, in the opinion of management, the borrower may be unable to meet payments as they become due.
The Company's investment portfolio had an expected duration of 3.1 years and 3.6 years as of December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, the Company’s investment securities portfolio included securities issued by 258 and 272 government municipalities and agencies located within 30 states with a fair value of $245.6 million and $269.9 million, respectively.
The Company's investment portfolio had an expected duration of 3.0 years and 3.1 years as of December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, the Company’s investment securities portfolio included securities issued by 243 and 258 government municipalities and agencies located within 30 states with a fair value of $236.9 million and $245.6 million, respectively.
The investment portfolio provides the Company with a significant amount of liquidity since all investments are classified as available-for-sale as of December 31, 2024 and 2023. The investments have pretax net unrealized losses of $52.0 million and $62.3 million as of December 31, 2024 and 2023, respectively.
The investment portfolio provides the Company with a significant amount of liquidity since all investments are classified as available-for-sale as of December 31, 2025 and 2024. The investments have pretax net unrealized losses of $24.2 million and $52.0 million as of December 31, 2025 and 2024, respectively.
Capital Resources The Company’s total stockholders’ equity increased to $174.7 million at December 31, 2024, from $165.8 million at December 31, 2023. As of December 31, 2024 and 2023, stockholders’ equity as a percentage of total assets was 8.2% and 7.7%, respectively.
Capital Resources The Company’s total stockholders’ equity increased to $207.9 million at December 31, 2025, from $174.7 million at December 31, 2024. As of December 31, 2025 and 2024, stockholders’ equity as a percentage of total assets was 9.7% and 8.2%, respectively.
There were $736 thousand and $109 thousand of loans greater than 90 days past due and still accruing interest as of December 31, 2024 and 2023, respectively.
There were $328 thousand and $736 thousand of loans greater than 90 days past due and still accruing interest as of December 31, 2025 and 2024, respectively.
For the years December 31, 2024 and 2023, the Company's non-GAAP net interest margin was 2.22% and 2.20%, respectively, computed on an FTE basis. For further information, refer to the Non-GAAP Financial Measures section of this report. Net interest income during 2024 and 2023 totaled $45.0 million and $44.6 million, respectively, representing a 0.8% increase in 2024 compared to 2023.
For the years December 31, 2025 and 2024, the Company's non-GAAP net interest margin was 2.75% and 2.22%, respectively, computed on an FTE basis. For further information, refer to the Non-GAAP Financial Measures section of this report. Net interest income during 2025 and 2024 totaled $55.7 million and $45.0 million, respectively, representing a 23.8% increase in 2025 compared to 2024.
Net unrealized losses on the investment portfolio are excluded from regulatory capital. From time to time, the Company’s board of directors has authorized stock repurchase plans. Stock repurchase plans allow the Company to proactively manage its capital position and return excess capital to shareholders.
Net unrealized losses on the investment portfolio are excluded from regulatory capital for the purposes of calculating required capital ratios per regulatory standards. From time to time, the Company’s board of directors has authorized stock repurchase plans. Stock repurchase plans allow the Company to proactively manage its capital position and return excess capital to shareholders.
Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP: 2024 2023 Net interest income (GAAP) $ 44,976 $ 44,625 Tax-equivalent adjustment (1) 531 609 Net interest income on an FTE basis (non-GAAP) 45,507 45,234 Average interest-earning assets $ 2,052,978 $ 2,059,506 Net interest margin on an FTE basis (non-GAAP) 2.22 % 2.20 % (1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 21 percent for the years ended December 31, 2024 and 2023, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. 32 Income Statement Review The following highlights a comparative discussion of the major components of net income and their impact for the last two years.
Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP: 2025 2024 Net interest income (GAAP) $ 55,662 $ 44,976 Tax-equivalent adjustment (1) 459 531 Net interest income on an FTE basis (non-GAAP) 56,121 45,507 Average interest-earning assets $ 2,038,021 $ 2,052,978 Net interest margin on an FTE basis (non-GAAP) 2.75 % 2.22 % (1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 21 percent for the years ended December 31, 2025 and 2024, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. 32 Income Statement Review The following highlights a comparative discussion of the major components of net income and their impact for the last two years.
The average balances of non-performing loans for the years ended December 31, 2024 and 2023 were $14.4 million and $13.2 million, respectively. For the years ended December 31, 2024 and 2023, interest income, which would have been recorded under the original terms of nonaccrual loans, was approximately $963 thousand and $768 thousand, respectively.
The average balances of non-performing loans for the years ended December 31, 2025 and 2024 were $16.9 million and $14.4 million, respectively. For the years ended December 31, 2025 and 2024, interest income, which would have been recorded under the original terms of nonaccrual loans, was approximately $1.9 million and $963 thousand, respectively.
The current economic environment, characterized by elevated short-term interest rates in response to inflationary pressures in the economy and the potential for a period of slower or negative economic growth resulting from efforts to dampen economic activity, has heightened the level of challenges, risks and uncertainties facing our business, including the following: ● Market interest rates may remain elevated during 2025 in response to inflationary pressures on the economy which could adversely affect our net interest income, net interest margin and earnings; ● We may experience a potential slowdown in demand for our products and services, including the demand for traditional loans, although we believe the decline may be offset, in whole or in part, due to changes in inflation and interest rates; ● We may experience an increase in risk of delinquencies, defaults and foreclosures, as well as declining collateral values and further impairment of the ability of our borrowers to repay their loans, all of which may result in additional credit charges and other losses in our loan portfolio; ● Goodwill is currently evaluated for impairment quarterly and goodwill has been determined to not be impaired as of December 31, 2024.
The current economic environment, characterized by elevated short-term interest rates in response to inflationary pressures in the economy and the potential for a period of slower or negative economic growth resulting from efforts to dampen economic activity, combined with uncertainties related to changes in U.S. trade policies, has heightened the level of challenges, risks and uncertainties facing our business, including the following: ● We may experience a potential slowdown in demand for our products and services, including the demand for traditional loans, although we believe the decline may be offset, in whole or in part, due to the easing of inflationary pressures and the recent trend toward lower market interest rates; ● We may experience an increase in risk of delinquencies, defaults and foreclosures, as well as declining collateral values and further impairment of the ability of our borrowers to repay their loans, all of which may result in additional credit charges and other losses in our loan portfolio; ● Goodwill is currently evaluated for impairment quarterly and goodwill has been determined to not be impaired as of December 31, 2025.
The Company’s level of non-performing loans as a percentage of loans of 1.17% as of December 31, 2024, is higher than the Iowa State Average peer group of FDIC insured institutions as of December 31, 2024, of 0.47%.
The Company’s level of non-performing loans as a percentage of loans of 1.19% as of December 31, 2025, is higher than the Iowa State Average peer group of FDIC insured institutions as of December 31, 2025, of 0.53%.
The decrease in income tax expense and lower than expected tax rate in 2024 and 2023 was primarily due to a higher proportion of tax-exempt interest income and New Markets Tax Credits to pretax income. 36 Balance Sheet Review The Company’s assets are comprised primarily of loans and investment securities.
The increase in income tax expense was due to higher taxable income. The lower than expected tax rate in 2025 and 2024 was primarily due to tax-exempt interest income and New Markets Tax Credits. 36 Balance Sheet Review The Company’s assets are comprised primarily of loans and investment securities.
The higher balance of liquid assets as of December 31, 2024 primarily relates to increased deposits at the Federal Reserve Bank. Other sources of liquidity available to the Banks as of December 31, 2024 include available borrowing capacity with the FHLB of $245.3 million and federal funds borrowing capacity at correspondent banks of $97.0 million.
The higher balance of liquid assets as of December 31, 2025 primarily relates to increased deposits at the Federal Reserve Bank. Other sources of liquidity available to the Banks as of December 31, 2025 include available borrowing capacity with the FHLB of $291.9 million and federal funds borrowing capacity at correspondent banks of $106.3 million.
As of December 31, 2024, the Company had outstanding FHLB advances and other borrowings of $47.0 million, no federal funds purchased, and securities sold under agreements to repurchase of $52.4 million. Total investments as of December 31, 2024, were $648.5 million compared to $736.4 million as of year-end 2023.
As of December 31, 2025, the Company had outstanding FHLB advances and other borrowings of $21.4 million, no federal funds purchased, and securities sold under agreements to repurchase of $38.8 million. Total investments as of December 31, 2025, were $656.0 million compared to $648.5 million as of year-end 2024.
Net cash (used in) financing activities for the years ended December 31, 2024 and 2023 totaled ($40.2) million and ($11.1) million, respectively.
Net cash (used in) financing activities for the years ended December 31, 2025 and 2024 totaled ($40.0) million and ($40.2) million, respectively.
The following table sets forth information regarding changes in the Company's specific reserve on loans individually evaluated for credit losses and loans individually evaluated for credit losses for the most recent three years (dollars in thousands) : 2024 2023 2022 Specific reserve on loans individually evaluated for credit losses $ 98 $ 118 $ 95 Loans individually evaluated for credit losses $ 14,772 $ 13,794 $ 14,386 Percentage increase (decrease) in specific reserve on loans individually evaluated for credit losses -17 % 24 % -93 % Percentage increase (decrease) in loans individually evaluated for credit losses 7 % -4 % 17 % Allocation of the Allowance for Credit Losses The following table sets forth information concerning the Company’s allocation of the allowance for credit losses for the most recent three years (dollars in thousands) : 2024 2023 2022 Amount % * Amount % * Amount % * Balance at end of period applicable to: Real Estate Construction $ 482 5 % $ 408 5 % $ 730 4 % 1-4 family residential 3,890 23 % 3,333 22 % 3,028 23 % Multi-family 2,188 15 % 2,542 15 % 2,493 15 % Commercial 4,932 27 % 5,236 28 % 4,742 29 % Agricultural 1,584 12 % 1,238 13 % 1,625 13 % Commercial 1,759 7 % 1,955 7 % 1,153 6 % Agricultural 1,805 10 % 1,607 9 % 1,705 9 % Consumer and other 418 1 % 457 1 % 221 1 % $ 17,058 100 % $ 16,776 100 % $ 15,697 100 % * Percent of loans in each category to total loans.
The following table sets forth information regarding changes in the Company's specific reserve on loans individually evaluated for credit losses and loans individually evaluated for credit losses for the most recent three years (dollars in thousands) : 2025 2024 2023 Specific reserve on loans individually evaluated for credit losses $ 1,123 $ 98 $ 118 Loans individually evaluated for credit losses $ 15,133 $ 14,772 $ 13,794 Percentage increase (decrease) in specific reserve on loans individually evaluated for credit losses 1046 % -17 % 24 % Percentage increase (decrease) in loans individually evaluated for credit losses 2 % 7 % -4 % Allocation of the Allowance for Credit Losses The following table sets forth information concerning the Company’s allocation of the allowance for credit losses for the most recent three years (dollars in thousands) : 2025 2024 2023 Amount % * Amount % * Amount % * Balance at end of period applicable to: Real Estate Construction $ 518 5 % $ 482 5 % $ 408 5 % 1-4 family residential 4,002 25 % 3,890 23 % 3,333 22 % Multi-family 2,208 16 % 2,188 15 % 2,542 15 % Commercial 5,131 24 % 4,932 27 % 5,236 28 % Agricultural 1,586 12 % 1,584 12 % 1,238 13 % Commercial 1,959 7 % 1,759 7 % 1,955 7 % Agricultural 1,931 10 % 1,805 10 % 1,607 9 % Consumer and other 362 1 % 418 1 % 457 1 % $ 17,697 100 % $ 17,058 100 % $ 16,776 100 % * Percent of loans in each category to total loans.
The revenue bonds are to be paid from 15 and 16 revenue sources in 2024 and 2023, respectively.
The revenue bonds are to be paid from 15 revenue sources in 2025 and 2024.
Asset Quality Review and Credit Risk Management The Company’s credit risk is centered in the loan portfolio, which on December 31, 2024, totaled $1.30 billion as compared to $1.28 billion as of December 31, 2023, an increase of 2.0%. Net loans comprise approximately 61% of total assets as of the end of 2024.
Asset Quality Review and Credit Risk Management The Company’s credit risk is centered in the loan portfolio, which on December 31, 2025, totaled $1.28 billion as compared to $1.30 billion as of December 31, 2024, a decrease of 1.8%. Net loans comprise approximately 60% of total assets as of the end of 2025.
The Company has unconsolidated cash and interest-bearing deposits totaling $992 thousand that is available as of December 31, 2024 to provide additional liquidity to the Banks.
The Company has unconsolidated cash and interest-bearing deposits totaling $3.0 million that is available as of December 31, 2025 to provide additional liquidity to the Banks.
The average yield on loans was 299 and 254 basis points higher in 2024 and 2023, respectively, in comparison to the average tax-equivalent investment portfolio yields. Types of Loans The Company's loan portfolio consists of real estate, commercial, agricultural and consumer loans.
Loans are the primary contributor to the Company’s revenues and cash flows. The average yield on loans was 293 and 299 basis points higher in 2025 and 2024, respectively, in comparison to the average tax-equivalent investment portfolio yields. Types of Loans The Company's loan portfolio consists of real estate, commercial, agricultural and consumer loans.
The Company’s credit loss expense for the year ended December 31, 2024 was $592 thousand compared to a credit loss expense of $789 thousand for the previous year. Net loan charge-offs totaled $453 thousand for the year ended December 31, 2024 compared to net loan charge-offs of $213 thousand for the previous year.
The Company’s credit loss expense for the year ended December 31, 2025 was $1.0 million compared to a credit loss expense of $592 thousand for the previous year. Net loan charge-offs totaled $357 thousand for the year ended December 31, 2025 compared to net loan charge-offs of $453 thousand for the previous year.
Noninterest income during the years ended 2024 and 2023 totaled $9.8 million and $9.2 million, respectively. The increase in noninterest income in 2024 compared to 2023 is primarily due to an increase in wealth management income due to growth in assets under management and new account relationships.
Noninterest income during the years ended 2025 and 2024 totaled $11.2 million and $9.8 million, respectively. The increase in noninterest income in 2025 compared to 2024 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.
The following is an additional breakdown of the Company's commercial real estate and multi-family real estate portfolios (in thousands) : December 31, 2024 December 31, 2023 Total Percent of Total Loans Total Percent of Total Loans Real estate - multi-family $ 200,209 15.2% $ 195,536 15.8% Real estate - commercial Owner-Occupied All Purposes 183,530 13.9% 174,441 14.0% Non-Owner Occupied Retail or Other 57,971 4.4% 69,711 5.6% Non-Owner Occupied Hotel 39,567 3.0% 36,267 2.9% Non-Owner Occupied Office 34,813 2.6% 36,316 2.9% Non-Owner Occupied Warehouse 34,612 2.6% 42,531 3.4% Total real estate - commercial 350,493 26.5% 359,266 28.9% Total real estate - commercial and multi-family $ 550,702 41.7% $ 554,802 44.7% 46 Liquidity and Capital Resources Liquidity management is the process by which the Company, through its Banks’ Asset and Liability Committees (ALCO), ensures adequate liquid funds are available to meet its financial commitments on a timely basis, at a reasonable cost and within acceptable risk tolerances.
The following is an additional breakdown of the Company's commercial real estate and multi-family real estate portfolios (in thousands) : December 31, 2025 December 31, 2024 Total Percent of Total Loans Total Percent of Total Loans Real estate - multi-family $ 205,232 15.8 % $ 200,209 15.2 % Real estate - commercial Owner-Occupied All Purposes 166,250 12.8 % 183,530 13.9 % Non-Owner Occupied Retail or Other 50,141 3.9 % 57,971 4.4 % Non-Owner Occupied Hotel 36,676 2.8 % 39,567 3.0 % Non-Owner Occupied Warehouse 31,692 2.4 % 34,612 2.6 % Non-Owner Occupied Office 28,361 2.2 % 34,813 2.6 % Total real estate - commercial 313,120 24.1 % 350,493 26.5 % Total real estate - commercial and multi-family $ 518,352 39.9 % $ 550,702 41.7 % 46 Liquidity and Capital Resources Liquidity management is the process by which the Company, through its Banks’ Asset and Liability Committees (ALCO), ensures adequate liquid funds are available to meet its financial commitments on a timely basis, at a reasonable cost and within acceptable risk tolerances.
Review of the Consolidated Statements of Cash Flows Net cash provided by operating activities for the years ended December 31, 2024 and 2023 totaled $14.3 million and $19.2 million, respectively. The change in net cash provided by operating activities in 2024 was primarily due to payments of accrued interest on borrowings.
Review of the Consolidated Statements of Cash Flows Net cash provided by operating activities for the years ended December 31, 2025 and 2024 totaled $21.3 million and $14.3 million, respectively. The change in net cash provided by operating activities in 2025 was primarily due to higher net interest income.
As the following chart indicates, the Company’s non-performing assets have increased by 11.4% from December 31, 2023 and total $15.5 million as of December 31, 2024.
As the following chart indicates, the Company’s non-performing assets have increased by 1.0% from December 31, 2024 and total $15.7 million as of December 31, 2025.
Net cash provided by investing activities for the years ended December 31, 2024 and 2023 was $72.0 million and $19.1 million, respectively. The change in net cash provided by investing activities in 2024 was primarily due to maturities of securities available-for-sale and partially offset by growth in the loan portfolio.
Net cash provided by investing activities for the years ended December 31, 2025 and 2024 was $44.2 million and $72.0 million, respectively. The change in net cash provided by investing activities in 2025 was primarily due to purchases of securities available-for-sale, partially offset by a decrease in loans and maturities of securities available-for-sale.
The change in net cash (used in) financing activities in 2024 was due primarily to fewer proceeds from other borrowings between periods and partially offset by an increase in deposits. 47 Review of Company Only Cash Flows The Company’s liquidity on an unconsolidated basis is heavily dependent upon dividends paid to the Company by the Banks.
The change in net cash (used in) financing activities in 2025 was due primarily due to a decrease in net payments on other borrowings between periods, a smaller increase in deposits between periods, and a larger decrease in securities sold under agreements to repurchase. 47 Review of Company Only Cash Flows The Company’s liquidity on an unconsolidated basis is heavily dependent upon dividends paid to the Company by the Banks.
Total assets decreased to $2.13 billion in 2024 compared to $2.16 billion in 2023, or 1.0%. The decrease was primarily due to a decrease in securities available-for-sale and partially offset by an increase in loans and interest-bearing deposits in financial institutions.
Total assets increased to $2.134 billion in 2025 compared to $2.133 billion in 2024, or 0.02%. The increase was primarily due to an increase in interest-bearing deposits in financial institutions, decrease in unrealized losses on securities available-for-sale and partially offset by a decrease in loans receivable.
It is not anticipated at the present time that loans held for sale will become a significant portion of total assets. Investment Portfolio Total investments as of December 31, 2024 were $648.5 million, a decrease of $87.9 million or 11.9% from the prior year end.
It is not anticipated at the present time that loans held for sale will become a significant portion of total assets. Investment Portfolio Total investments as of December 31, 2025 were $656.0 million, an increase of $7.4 million or 1.1% from the prior year end.
As of December 31, 2024 and 2023, the investment portfolio comprised 30% and 34% of total assets, respectively. The decrease in investments during 2024 is primarily due to maturities in excess of purchases. The decrease is offset in part by lower unrealized losses in the investment portfolio.
As of December 31, 2025 and 2024, the investment portfolio comprised 31% and 30% of total assets, respectively. The increase in investments during 2025 is primarily due to lower unrealized losses in the investment portfolio.
The following table summarizes the outstanding amount of, and the average rate on, borrowed funds as of December 31, 2024 and 2023 (dollars in thousands) . 2024 2023 Average Average Balance Rate Balance Rate Federal funds purchased and repurchase agreements $ 52,412 3.14 % $ 53,994 2.83 % Other borrowings 46,952 4.42 % 110,588 4.63 % Total $ 99,364 3.74 % $ 164,582 4.04 % Average Annual Borrowed Funds The following table sets forth the average amount of and the average rate paid on borrowed funds for the years ended December 31, 2024 and 2023 (dollars in thousands) . 2024 2023 Average Average Balance Rate Balance Rate Federal funds purchased and repurchase agreements $ 45,075 3.21 % $ 48,602 2.80 % Other borrowings 83,370 5.01 % 84,316 4.56 % Total $ 128,445 4.38 % $ 132,918 3.92 % 43 Off-Balance-Sheet Arrangements The Company is party to financial instruments with off-balance-sheet risk in the normal course of business.
The following table summarizes the outstanding amount of, and the average rate on, borrowed funds as of December 31, 2025 and 2024 (dollars in thousands) . 2025 2024 Average Average Balance Rate Balance Rate Federal funds purchased and repurchase agreements $ 38,799 2.96 % $ 52,412 3.14 % Other borrowings 21,352 3.90 % 46,952 4.42 % Total $ 60,151 3.29 % $ 99,364 3.74 % Average Annual Borrowed Funds The following table sets forth the average amount of and the average rate paid on borrowed funds for the years ended December 31, 2025 and 2024 (dollars in thousands) . 2025 2024 Average Average Balance Rate Balance Rate Federal funds purchased and repurchase agreements $ 41,868 3.07 % $ 45,075 3.21 % Other borrowings 30,660 4.13 % 83,370 5.01 % Total $ 72,528 3.52 % $ 128,445 4.38 % 43 Off-Balance-Sheet Arrangements The Company is party to financial instruments with off-balance-sheet risk in the normal course of business.
Average Deposits by Type The following table sets forth the average balances for each major category of deposit and the weighted average interest rate paid for deposits during the years ended December 31, 2024 and 2023 (dollars in thousands) . 2024 2023 Average Average Amount Rate Amount Rate Non-interest bearing checking deposits $ 340,868 0.00 % $ 373,704 0.00 % Interest bearing checking deposits 618,728 1.97 % 609,965 1.61 % Money market deposits 361,723 1.65 % 395,351 1.45 % Savings deposits 187,427 0.64 % 207,314 0.59 % Time certificates 307,229 4.12 % 255,434 3.01 % $ 1,815,975 $ 1,841,768 Deposit Maturity The following table shows the amounts and remaining maturities of time certificates of deposit that had balances in excess of the FDIC insurance limit of $250 thousand as of December 31, 2024 and 2023 (in thousands) . 2024 2023 3 months or less $ 39,710 $ 31,537 Over 3 through 6 months 20,620 15,808 Over 6 through 12 months 15,227 16,427 Over 12 months 9,439 3,961 Total $ 84,996 $ 67,733 42 The following table shows the amounts and remaining maturities of the portion of estimated time deposits in excess of FIDC Insurance Limits as of December 31, 2024 and 2023 ( in thousands ). 2024 2023 3 months or less $ 26,573 $ 21,942 Over 3 through 6 months 23,538 11,174 Over 6 through 12 months 16,124 18,355 Over 12 months 11,172 7,701 Total $ 77,407 $ 59,172 Borrowed Funds Borrowed funds that may be utilized by the Company are comprised of the Federal Reserve Bank Term Funding Program (BTFP), FHLB advances, federal funds purchased and securities sold under agreements to repurchase (repurchase agreements).
Average Deposits by Type The following table sets forth the average balances for each major category of deposit and the weighted average interest rate paid for deposits during the years ended December 31, 2025 and 2024 (dollars in thousands) . 2025 2024 Average Average Amount Rate Amount Rate Noninterest-bearing checking deposits $ 324,803 0.00 % $ 340,868 0.00 % Interest-bearing checking deposits 623,477 1.59 % 618,728 1.97 % Money market deposits 364,549 1.46 % 361,723 1.65 % Savings deposits 181,621 0.58 % 187,427 0.64 % Time certificates 333,106 3.78 % 307,229 4.12 % $ 1,827,556 $ 1,815,975 Deposit Maturity The following table shows the amounts and remaining maturities of time certificates of deposit that had balances in excess of the FDIC insurance limit of $250 thousand as of December 31, 2025 and 2024 (in thousands) . 2025 2024 3 months or less $ 42,557 $ 39,710 Over 3 through 6 months 13,179 20,620 Over 6 through 12 months 18,228 15,227 Over 12 months 11,835 9,439 Total $ 85,799 $ 84,996 42 The following table shows the amounts and remaining maturities of the portion of estimated time deposits in excess of FDIC Insurance Limits as of December 31, 2025 and 2024 ( in thousands ). 2025 2024 3 months or less $ 33,011 $ 26,573 Over 3 through 6 months 12,020 23,538 Over 6 through 12 months 21,107 16,124 Over 12 months 14,601 11,172 Total $ 80,739 $ 77,407 Borrowed Funds Borrowed funds that may be utilized by the Company are comprised of FHLB advances, federal funds purchased and securities sold under agreements to repurchase (repurchase agreements).
As of December 31, 2024, gross loans totaled approximately $1.32 billion, which equals approximately 71.5% of total deposits and 61.9% of total assets. The Iowa State Average Report (consisting of 232 banks in the State of Iowa) loan to deposit ratio as of December 31, 2024 was 78%.
As of December 31, 2025, gross loans totaled approximately $1.30 billion, which equals approximately 70.0% of total deposits and 60.8% of total assets. The Iowa State Average Report (consisting of 227 banks in the State of Iowa) loan to deposit ratio as of December 31, 2025 was 80%.
The revenue sources that represent 5% or more, individually, as a percent of the total revenue bonds are summarized in the following table (in thousands) : 2024 2023 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value Revenue bonds by revenue source Sales tax $ 27,404 $ 25,327 $ 29,409 $ 27,284 Water 19,373 17,967 20,394 18,968 College and universities, primarily dormitory revenues 16,207 14,685 16,944 15,340 Sewer 12,205 11,024 12,771 11,465 Leases 7,936 7,364 8,060 7,421 Other 32,262 30,311 35,402 33,064 Total revenue bonds by revenue source $ 115,387 $ 106,678 $ 122,980 $ 113,542 41 Deposits Total deposits were $1.85 billion and $1.81 billion as of December 31, 2024 and 2023, respectively.
The revenue sources that represent 5% or more, individually, as a percent of the total revenue bonds are summarized in the following table (in thousands) : 2025 2024 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value Revenue bonds by revenue source Sales tax $ 24,183 $ 23,296 $ 27,404 $ 25,327 Water 18,456 17,748 19,373 17,967 College and universities, primarily dormitory revenues 15,390 14,589 16,207 14,685 Sewer 11,054 10,468 12,205 11,024 Leases 7,042 6,761 7,936 7,364 Other 30,044 29,161 32,262 30,311 Total revenue bonds by revenue source $ 106,169 $ 102,023 $ 115,387 $ 106,678 41 Deposits Total deposits were $1.855 billion and $1.847 billion as of December 31, 2025 and 2024, respectively.
For example, real estate loan interest income increased $5.6 million in 2024 compared to 2023. Increased volume of real estate loans increased interest income in 2024 by $1.1 million and higher interest rates increased interest income in 2024 by $4.5 million.
For example, real estate loan interest income increased $2.7 million in 2025 compared to 2024. Decreased volume of real estate loans decreased interest income in 2025 by $507 thousand and higher interest rates increased interest income in 2025 by $3.2 million.
The following table sets forth information regarding net charge-offs to average loans outstanding by loan type during the years ended December 31, 2024 and 2023 (in thousands). 2024 2023 Net Net charge-offs charge-offs Net (recoveries) Net (recoveries) charge-offs Average to average charge-offs Average to average (recoveries) Loans loans (recoveries) Loans loans Net charge-offs (recoveries): Real estate Construction $ - $ 64,619 0.00 % $ - $ 62,056 0.00 % 1-4 Family residential (13 ) 296,073 0.00 % (5 ) 287,062 0.00 % Multi-family - 198,980 0.00 % - 190,525 0.00 % Commercial - 353,580 0.00 % (5 ) 347,267 0.00 % Agricultural - 159,577 0.00 % - 160,199 0.00 % Commercial 464 89,932 0.52 % 28 85,914 0.03 % Agricultural - 118,947 0.00 % 198 93,813 0.21 % Consumer and other 2 16,763 0.01 % (3 ) 16,403 -0.02 % Totals $ 453 $ 1,298,471 0.03 % $ 213 $ 1,243,239 0.02 % Pooled reserves for loan categories range from 0.81% to 2.41% of the outstanding loan balances as of December 31, 2024.
The following table sets forth information regarding net charge-offs to average loans outstanding by loan type during the years ended December 31, 2025 and 2024 (in thousands). 2025 2024 Net Net charge-offs charge-offs Net (recoveries) Net (recoveries) charge-offs Average to average charge-offs Average to average (recoveries) Loans loans (recoveries) Loans loans Net charge-offs (recoveries): Real estate Construction $ 43 $ 59,655 0.07 % $ - $ 64,619 0.00 % 1-4 Family residential (21 ) 313,779 -0.01 % (13 ) 296,073 0.00 % Multi-family - 202,170 0.00 % - 198,980 0.00 % Commercial - 327,282 0.00 % - 353,580 0.00 % Agricultural - 159,241 0.00 % - 159,577 0.00 % Commercial 335 92,920 0.36 % 464 89,932 0.52 % Agricultural - 124,977 0.00 % - 118,947 0.00 % Consumer and other - 16,259 0.00 % 2 16,763 0.01 % Totals $ 357 $ 1,296,283 0.03 % $ 453 $ 1,298,471 0.03 % Pooled reserves for loan categories range from 0.84% to 2.36% of the outstanding loan balances as of December 31, 2025.
(2) Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 21% for the years ended December 31, 2024 and 2023. 33 Average Balances and Interest Rates (continued) 2024 2023 Average Revenue/ Yield/ Average Revenue/ Yield/ balance expense rate balance expense rate LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities Deposits Savings, interest-bearing checking and money markets accounts $ 1,167,878 $ 19,351 1.66 % $ 1,212,630 $ 16,794 1.38 % Time deposits 307,229 12,660 4.12 % 255,434 7,677 3.01 % Total deposits 1,475,107 32,011 2.17 % 1,468,064 24,471 1.67 % Other borrowed funds 128,445 5,620 4.38 % 132,918 5,205 3.92 % Total interest-bearing liabilities 1,603,552 37,631 2.35 % 1,600,982 29,676 1.85 % Noninterest-bearing liabilities Noninterest-bearing checking 340,868 373,704 Other liabilities 12,899 11,818 Stockholders' equity 169,732 153,530 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,127,051 $ 2,140,034 Net interest income (FTE) (3) $ 45,507 $ 45,234 Net interest spread (FTE) 1.70 % 1.79 % Net interest margin (FTE) (3) 2.22 % 2.20 % (3) Net interest income (FTE) is a non-GAAP financial measure.
(2) Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 21% for the years ended December 31, 2025 and 2024. 33 Average Balances and Interest Rates (continued) 2025 2024 Average Revenue/ Yield/ Average Revenue/ Yield/ balance expense rate balance expense rate LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities Deposits Savings, interest-bearing checking and money markets accounts $ 1,169,647 $ 16,283 1.39 % $ 1,167,878 $ 19,351 1.66 % Time deposits 333,106 12,597 3.78 % 307,229 12,660 4.12 % Total deposits 1,502,753 28,880 1.92 % 1,475,107 32,011 2.17 % Other borrowed funds 72,528 2,551 3.52 % 128,445 5,620 4.38 % Total interest-bearing liabilities 1,575,281 31,431 2.00 % 1,603,552 37,631 2.35 % Noninterest-bearing liabilities Noninterest-bearing checking 324,803 340,868 Other liabilities 12,934 12,899 Stockholders' equity 191,287 169,732 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,104,305 $ 2,127,051 Net interest income (FTE) (3) $ 56,121 $ 45,507 Net interest spread (FTE) 2.30 % 1.70 % Net interest margin (FTE) (3) 2.75 % 2.22 % (3) Net interest income (FTE) is a non-GAAP financial measure.
Moreover, changes in U.S. trade policy could create further volatility for commodities prices as the volume of exports of agricultural products to these foreign markets could be adversely impacted. Lastly, uncertainty regarding governmental mandates affecting ethanol production could reduce the demand for corn in the Company’s trade area, thus introducing further price volatility for this commodity.
Moreover, changes in U.S. trade policy could create further volatility for commodities prices as the volume of exports of agricultural products to these foreign markets could be adversely impacted.
Noninterest expense during the years ended 2024 and 2023 totaled $42.0 million and $40.2 million, respectively. The increase in noninterest expense is primarily due to normal increases in salaries and benefits and $799 thousand of consultant fees for certain contract negotiations included in professional fees in 2024.
Noninterest expense during the years ended 2025 and 2024 totaled $41.9 million and $42.0 million, respectively. The decrease in noninterest expense is primarily due to $799 thousand of consultant fees for certain contract negotiations completed in 2024 and cost savings reflected in 2025.
The credit loss expense in 2024 was primarily due to growth in the loan portfolio and charge-offs in the commercial loan portfolio. The credit loss benefit in 2023 was primarily due to growth in the loan portfolio and charge-offs in the agriculture loan portfolio.
The credit loss expense in 2025 was primarily due to an increase in specific reserves in the commercial real estate and operating loan portfolios. The credit loss expense in 2024 was primarily due to growth in the loan portfolio and charge-offs in the commercial loan portfolio.
Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates. 40 The following table summarizes the total general obligation and revenue bonds in the Company’s investment securities portfolios as of December 31, 2024 and 2023 identifying the state in which the issuing government municipality or agency operates (in thousands) : 2024 2023 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value Obligations of states and political subdivisions: General Obligation bonds: Iowa $ 51,515 $ 47,768 $ 59,721 $ 55,827 Texas 25,859 23,995 29,199 26,721 Nebraska 19,256 17,005 19,660 17,202 Oregon 9,167 8,651 9,885 9,299 Connecticut 8,698 8,089 8,700 8,183 Washington 7,885 7,184 9,632 8,860 Other (2024: 15 states; 2023: 15 states) 28,351 26,192 32,698 30,257 Total general obligation bonds $ 150,731 $ 138,884 $ 169,495 $ 156,349 Revenue bonds: Iowa $ 43,859 $ 41,320 $ 48,645 $ 45,953 Texas 14,764 13,266 14,794 13,193 Nebraska 9,042 8,029 9,397 8,238 Other (2024: 23 states; 2023: 23 states) 47,722 44,063 50,144 46,158 Total revenue bonds $ 115,387 $ 106,678 $ 122,980 $ 113,542 Total obligations of states and political subdivisions $ 266,118 $ 245,562 $ 292,475 $ 269,891 As of December 31, 2024 and 2023, the revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as community school facilities, college and university dormitory facilities and water utilities.
Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates. 40 The following table summarizes the total general obligation and revenue bonds in the Company’s investment securities portfolios as of December 31, 2025 and 2024 identifying the state in which the issuing government municipality or agency operates (in thousands) : 2025 2024 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value Obligations of states and political subdivisions: General Obligation bonds: Iowa $ 42,660 $ 40,987 $ 51,515 $ 47,768 Texas 25,281 24,405 25,859 23,995 Nebraska 18,865 17,562 19,256 17,005 Oregon 8,424 8,225 9,167 8,651 Connecticut 8,697 8,461 8,698 8,089 Other (2025: 17 states; 2024: 15 states) 36,557 35,284 36,236 33,376 Total general obligation bonds $ 140,484 $ 134,924 $ 150,731 $ 138,884 Revenue bonds: Iowa $ 38,576 $ 37,657 $ 43,859 $ 41,320 Texas 14,733 13,961 14,764 13,266 Nebraska 8,667 8,096 9,042 8,029 Washington 5,506 5,183 5,691 5,113 Other (2025: 22 states; 2024: 22 states) 38,687 37,126 42,031 38,950 Total revenue bonds $ 106,169 $ 102,023 $ 115,387 $ 106,678 Total obligations of states and political subdivisions $ 246,653 $ 236,947 $ 266,118 $ 245,562 As of December 31, 2025 and 2024, the revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as community school facilities, college and university dormitory facilities and water utilities.
The Company reported net income of $10.2 million for the year ended December 31, 2024 compared to $10.8 million for the year ended December 31, 2023. This represents a decrease in net income of 5.5% when comparing 2024 with 2023.
The Company reported net income of $19.0 million for the year ended December 31, 2025 compared to $10.2 million for the year ended December 31, 2024. This represents an increase in net income of 86.2% when comparing 2025 with 2024. The increase in earnings in 2025 from 2024 is primarily due to an increase in net interest income.
Refer to the net interest income discussion following the tables for additional detail (dollars in thousands). 2024 2023 Average Revenue/ Yield/ Average Revenue/ Yield/ balance expense rate balance expense rate ASSETS Interest-earning assets Loans (1) Commercial $ 89,932 $ 5,612 6.24 % $ 85,914 $ 4,888 5.69 % Agricultural 118,947 8,909 7.49 % 93,813 6,396 6.82 % Real estate 1,072,829 50,424 4.70 % 1,047,109 44,792 4.28 % Consumer and other 16,763 846 5.05 % 16,403 734 4.47 % Total loans (including fees) 1,298,471 65,791 5.07 % 1,243,239 56,810 4.57 % Investment securities Taxable 603,831 12,014 1.99 % 654,718 12,674 1.94 % Tax-exempt (2) 93,768 2,525 2.69 % 111,401 2,901 2.60 % Total investment securities 697,599 14,539 2.08 % 766,119 15,575 2.03 % Other interest-earning assets 56,908 2,808 4.93 % 50,148 2,525 5.04 % Total interest-earning assets 2,052,978 $ 83,138 4.05 % 2,059,506 $ 74,910 3.64 % Noninterest-earning assets Cash and due from banks 19,754 21,236 Premises and equipment, net 22,070 20,904 Other, less allowance for loan losses 32,249 38,388 Total noninterest-earning assets 74,073 80,528 TOTAL ASSETS $ 2,127,051 $ 2,140,034 (1) Average loan balance includes nonaccrual loans, if any.
Refer to the net interest income discussion following the tables for additional detail (dollars in thousands). 2025 2024 Average Revenue/ Yield/ Average Revenue/ Yield/ balance expense rate balance expense rate ASSETS Interest-earning assets Loans (1) Commercial $ 92,920 $ 5,833 6.28 % $ 89,932 $ 5,612 6.24 % Agricultural 124,977 8,552 6.84 % 118,947 8,909 7.49 % Real estate 1,062,127 53,091 5.00 % 1,072,829 50,424 4.70 % Consumer and other 16,259 872 5.36 % 16,763 846 5.05 % Total loans (including fees) 1,296,283 68,348 5.27 % 1,298,471 65,791 5.07 % Investment securities Taxable 568,838 12,956 2.28 % 603,831 12,014 1.99 % Tax-exempt (2) 78,844 2,185 2.77 % 93,768 2,525 2.69 % Total investment securities 647,682 15,141 2.34 % 697,599 14,539 2.08 % Other interest-earning assets 94,056 4,063 4.32 % 56,908 2,808 4.93 % Total interest-earning assets 2,038,021 $ 87,552 4.30 % 2,052,978 $ 83,138 4.05 % Noninterest-earning assets Cash and due from banks 19,056 19,754 Premises and equipment, net 21,176 22,070 Other, less allowance for credit losses 26,052 32,249 Total noninterest-earning assets 66,284 74,073 TOTAL ASSETS $ 2,104,305 $ 2,127,051 (1) Average loan balance includes nonaccrual loans, if any.
Loan Portfolio Net loans as of December 31, 2024 totaled $1.30 billion, an increase of 2.0% from the $1.28 billion as of December 31, 2023. Loans increased primarily due to increases in the 1 to 4 family residential real estate and agricultural operating loan portfolios. Loans are the primary contributor to the Company’s revenues and cash flows.
Loan Portfolio Net loans as of December 31, 2025 totaled $1.28 billion, a decrease of 1.8% from the $1.30 billion as of December 31, 2024. Loans decreased primarily due to a decline in the commercial real estate loan portfolio and partially offset by an increase in the 1-4 family residential and multi-family real estate portfolios.
Loans classified as substandard and substandard-impaired increased $18.0 million to $49.7 million in 2024 primarily due to downgrades in the commercial real estate and commercial operating loan portfolios. Some commercial real estate loans are experiencing a decline in occupancy rate and collateral valuation.
Loans classified as substandard and substandard-impaired increased $7.2 million to $56.8 million in 2025 primarily due to weakening in the multi-family and agricultural loan portfolios. Some multi-family real estate loans are experiencing a decline in occupancy rate, while the weakening in the agricultural loan portfolio is primarily due to one agricultural loan relationship.
The decrease in return on average equity and return on average assets when comparing 2024 to 2023 was primarily a result of a reduction in earnings.
The Company’s return on average equity for 2025 was 9.95% compared to 6.02% in 2024. The return on average assets for 2025 was 0.90% compared to 0.48% in 2024. The increase in return on average equity and return on average assets when comparing 2025 to 2024 was primarily a result of an increase in earnings.
The BTFP allows for borrowing from the Federal Reserve Bank up to the par value of the pledged collateral. FHLB advances are loans that can mature daily or have longer maturities for fixed or floating rates of interest. Federal funds purchased are borrowings from other banks that mature daily.
Borrowed funds are an alternative funding source to deposits and can be used to fund the Company’s assets and unforeseen liquidity needs. FHLB advances are loans that can mature daily or have longer maturities for fixed or floating rates of interest. Federal funds purchased are borrowings from other banks that mature daily.
Rate sensitive certificates of deposits in excess of $250,000 are subject to somewhat higher volatility with regard to renewal volume as the Banks adjust rates based upon funding needs. In the event a substantial volume of certificates is not renewed, the Company believes it has sufficient liquid assets and borrowing lines to fund significant runoff.
While 88.6% of the Banks’ certificates of deposit mature in the next year, it is anticipated that many of these certificates will be renewed. Rate sensitive certificates of deposits in excess of $250,000 are subject to somewhat higher volatility with regard to renewal volume as the Banks adjust rates based upon funding needs.
Balances fluctuate as customer 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 December 31, 2024. Deposit interest expense related to these deposits can be more volatile than our other deposit products in a changing interest rate environment.
The increase of $8.0 million between the periods can be primarily attributed to increases in commercial demand and interest-bearing checking accounts. Balances fluctuate as customer 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 December 31, 2025.
The Company’s primary source of funds is customer deposits. The Banks attempt to attract noninterest-bearing deposits, which are a low-cost funding source. In addition, the Banks offer a variety of interest-bearing accounts designed to attract both short-term and longer-term deposits from customers.
In addition, the Banks offer a variety of interest-bearing accounts designed to attract both short-term and longer-term deposits from customers. Interest-bearing accounts earn interest at rates established by Bank management based on competitive market factors and the Company’s need for funds.
The following table sets forth, on a tax-equivalent basis, a summary of the changes in net interest income resulting from changes in volume and rates (in thousands). 2024 Compared to 2023 Volume Rate Total (1) Interest income Loans Commercial $ 236 $ 488 $ 724 Agricultural 1,838 675 2,513 Real estate 1,122 4,510 5,632 Consumer and other 16 96 112 Total loans (including fees) 3,212 5,769 8,981 Investment securities Taxable (1,005 ) 345 (660 ) Tax-exempt (472 ) 96 (376 ) Total investment securities (1,477 ) 441 (1,036 ) Other interest and dividend income 335 (52 ) 283 Total interest-earning assets 2,070 6,158 8,228 Interest-bearing liabilities Deposits Savings, interest-bearing checking and money market (639 ) 3,196 2,557 Time deposits 1,761 3,222 4,983 Total deposits 1,122 6,418 7,540 Other borrowed funds (180 ) 595 415 Total interest-bearing liabilities 942 7,013 7,955 Net interest income-earning assets $ 1,128 $ (855 ) $ 273 (1) The change in interest due to both volume and yield/rate has been allocated to change due to volume and change due to yield/rate in proportion to the absolute value of the change in each. 35 Net Interest Income The Company’s largest contributing component to net income is net interest income, which is the difference between interest earned on earning assets and interest paid on interest-bearing liabilities.
The following table sets forth, on a tax-equivalent basis, a summary of the changes in net interest income resulting from changes in volume and rates (in thousands). 2025 Compared to 2024 Volume Rate Total (1) Interest income Loans Commercial $ 188 $ 33 $ 221 Agricultural 438 (795 ) (357 ) Real estate (507 ) 3,174 2,667 Consumer and other (26 ) 52 26 Total loans (including fees) 93 2,464 2,557 Investment securities Taxable (725 ) 1,667 942 Tax-exempt (412 ) 72 (340 ) Total investment securities (1,137 ) 1,739 602 Other interest and dividend income 1,642 (387 ) 1,255 Total interest-earning assets 598 3,816 4,414 Interest-bearing liabilities Deposits Savings, interest-bearing checking and money market 29 (3,097 ) (3,068 ) Time deposits 1,022 (1,085 ) (63 ) Total deposits 1,051 (4,182 ) (3,131 ) Other borrowed funds (2,116 ) (953 ) (3,069 ) Total interest-bearing liabilities (1,065 ) (5,135 ) (6,200 ) Net interest income-earning assets $ 1,663 $ 8,951 $ 10,614 (1) The change in interest due to both volume and yield/rate has been allocated to change due to volume and change due to yield/rate in proportion to the absolute value of the change in each. 35 Net Interest Income The Company’s largest contributing component to net income is net interest income, which is the difference between interest earned on earning assets and interest paid on interest-bearing liabilities.
The percentage of noninterest expense to average assets was 1.97% in 2024, compared to 1.88% during 2023. Provision for Income Taxes The provision for income taxes for 2024 and 2023 was $2.0 million and $2.1 million, respectively. This amount represents an effective tax rate of 17% and 16%, respectively.
Provision for Income Taxes The provision for income taxes for 2025 and 2024 was $4.8 million and $2.0 million, respectively. This amount represents an effective tax rate of 20% and 17%, respectively. The Company's federal income tax rate was 21% for the years ended December 31, 2025 and 2024.

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