Ames National has surged 21% YTD, benefiting from widening interest rate spreads and robust net income growth. ATLO's Q4'25 net income rose 85% to $6.5 million, with ROA doubling and net interest margins improving to 3%. Deposit costs declined despite growth in deposits, while loan yields—especially real estate—rose, driving spread expansion.

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.