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Ames National (NASDAQ: ATLO - Get Free Report) and Mercantile Bank (NASDAQ: MBWM - Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, earnings, dividends and risk. Insider and Institutional Ownership 26.5% of Ames
Ames National offers an attractive 4.2% dividend yield, but its long-term dividend sustainability is questionable due to past cuts and volatile earnings. The bank's conservative loan-to-deposit ratio and strong capital position support short-term stability, yet growth prospects remain muted. Recent improvements in efficiency and profitability are positive, but a declining rate environment could pressure future earnings and dividends.
Ames National Grows Income in Q2
Ames National's stock price has plunged over the last six months, mostly due to a dividend cut. There is hope for an earnings revival because the fast-moving deposit costs will likely fall while the slow-moving asset yields will rise in 2025. Loan growth will likely continue at the rate seen in 2023 as the drivers are stable.
A weekly summary of dividend activity for Dividend Champions, Contenders, and Challengers. Companies which changed their dividends.
A weekly summary of dividend activity for Dividend Champions, Contenders, and Challengers. Companies which changed their dividends.
ATLO provides a reliable dividend income stream with capital preservation characteristics, making it an ideal holding for retirees and income-oriented investors. Short-term capital fluctuations resulting from rising interest rates have a limited impact on cash flows.
High agriculture commodity prices and strength in Iowa's job market will likely sustain loan growth through the end of 2023. Higher interest rates will have a lagged impact on the net interest margin.
According to the Insider Cluster Buys Screen, a Premium feature of GuruFocus, five stocks with a high GF Score and high insider buys over the past two months include Ames National Corp. ( ATLO , Financial), Warner Bros. Discovery Inc. ( WBD , Financial), Bankwell Financial Group Inc. ( BWFG , Financial), Northrim BanCorp Inc. ( NRIM , Financial) and Herbalife Nutrition Ltd.
Ames National is a consistently strong performer. A very substantial portion of its assets are invested in securities and the higher market interest rates should boost the interest income.
Ames National is a small regional bank in Iowa, with a balance sheet total of just over $2B. The loan book remains strong despite the heavy exposure in real estate loans. Less than 0.4% of the loans are past due.
As of June 30, 2021, Ames National Corporation's deposits rose to $1.83 billion from $1.64 billion on June 30, 2020.
According to the Insider Cluster Buys Screen, a Premium feature of Gurus, five stocks with high number of unique insider buys during the past month include German American Bancorp Inc. ( GABC , Financial), Simon Property Group Inc. ( SPG , Financial), Partners Bancorp ( PTRS , Financial), Ames National Corp. ( ATLO , Financial) and Acumen Pharmaceuticals Inc. ( ABOS , Financial).
When insiders purchase shares, it indicates their confidence in the company's prospects or that they view the stock as a bargain. Either way, this signals an opportunity to go long on the stock.
Ames National is trading at 1.2X tangible book value and about 10 times its normalized earnings. The bank was able to take back some of its 2020 loan loss provisions.
Charles Schwab Investment Management Inc. boosted its holdings in shares of Ames National Co. (NASDAQ:ATLO) by 5.4% in the second quarter, according to the company in its most recent Form 13F filing with the Securities & Exchange Commission. The firm owned 22,172 shares of the financial services provider’s stock after purchasing an additional 1,142 shares […]
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