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2020 SUMMARYANNUAL REPORT

AMES NATIONAL CORPORATION AT A GLANCEBACKGROUNDAFFILIATE BANK STRUCTUREAmes National Corporation (ANC) is an Iowa-basedEach affiliate bank operates independently with abank holding company. ANC was organized andboard of directors and a bank president. Decisions areincorporated on January 21, 1975, under the laws ofmade locally, which means customers receive quickthe State of Iowa to serve as a holding company forresponses to questions, and services are customizedits principal banking subsidiary, First National Bank,to meet customer needs in each community.Ames, Iowa. In 1983, ANC acquired the stock of StateBank & Trust Co. located in Nevada, Iowa; in 1991, ANCThe affiliate banks’ lending activities consist primarilyacquired Boone Bank & Trust Co., located in Boone,of short-term and medium-term commercial,Iowa; in 1995, ANC acquired the stock of Relianceagricultural and residential real estate loans,State Bank located in Story City, Iowa; and in 2002,agricultural and business operating loans, lines ofANC chartered and commenced operations of Unitedcredit, home improvement loans and the originationBank & Trust NA, located in Marshalltown, Iowa. Inof mortgage loans for sale into the secondary market.2012, Reliance State Bank acquired an office locatedAffiliate banks also offer a variety of checking, savingsin Garner, Iowa. In 2014, First National Bank acquiredthree offices located in West Des Moines and Johnston,Iowa, and three locations in the Osceola, Iowa area in2018. In 2019, ANC acquired Iowa State Savings Bank inthe Creston, Iowa area.and time deposits accounts, cash managementMISSION STATEMENTAmes National Corporation is a results-oriented financial services holdingcompany providing leadership, counsel and support to its community affiliatebanks and superior performance for its shareholders.CORE VALUESAmes National Corporation’s foundation is built on these values which guide our actions.EXCELLENCE INTEGRITY LEADERSHIPSTABILITY TRUST COMMUNITYservices, wealth management and trust services,merchant credit card processing and safe deposit boxservices. Convenient access to funds and accountinformation is also available through: Online Banking,Video Banking, Mobile Banking, Online Bill Pay, MobileWallet, online statements and debit cards.STRATEGIC DIRECTIONThe Ames National Corporation five-year strategic plan is focused on three driving initiatives:AMES NATIONAL CORPORATION SERVICESEMPLOYEE ENGAGEMENTCONTINUOUS IMPROVEMENTANC provides various services to the affiliate banks, which include: management assistance, payroll, internalEnhance systems and activities to acquire, developContinually improve key processes to increaseauditing, human resources, compliance management, marketing assistance, loan review, technology support,and retain employees.customer engagement, employee engagementtraining and employee development. ANC employees seek to incorporate efficiencies across the affiliate banks’and shareholder value.operational functions so the affiliate bank management teams can focus on what they do best: banking andCUSTOMER ENGAGEMENTtaking care of customers’ financial needs.Develop a customer experience that supportsrelationship growth and customer acquistion.22020 Annual Report Ames National CorporationAmes National Corporation 2020 Annual Report3

LETTER TO SHAREHOLDERSThe journey of 2020 was unprecedented and unanticipated.Early in the first quarter, we realized that 2020 would bea year like no other. Though our plans and expectationsquickly changed due to the pandemic, we could not bemore proud of our affiliate bank teams and their resiliencein adjusting and adapting throughout this year.Driven by these core value promises, Ames NationalCorporation was able to reach record levels in net income,assets, loans and deposits. We are pleased to provide our2020 financial overview and highlight drivers of the recordgrowth.FINANCIAL RESULTSWe have always emphasized that it is imperative for ourorganization that decisions are made by leaders who workdirectly with customers to best understand their needs andcommunity needs.This philosophy proved to be valuable when faced withthe rapidly changing COVID-19 environment and itsvarying effects on the communities we serve. Our affiliateleadership teams were responsive, caring and diligent infinding solutions to continue to serve our employees,customers and communities while keeping health andsafety as a top priority. Digital Banking usage reached newhighs as customers took even greater advantage of ouronline and mobile delivery. In addition, affiliate bank officesremained open to continue to provide personal service.Through flexibility, innovation, discernment and empathy,our leaders responded and forged a unique path in 2020.Customers value the continuum of services provided by ourteam of experts at each life stage. We are in the long-termrelationship building business. Whether opening up a child’sfirst savings account, purchasing a first home, assisting withfinances during retirement or managing business cash flow,we know just how important relationships are as we walkalongside our customers every day, but especially throughevents like a pandemic. Although it seemed that each daybrought a new set of challenges, whether pandemic orderecho-related, we remained focused on delivering on ourcore values of:EXCELLENCE INTEGRITY LEADERSHIP STABILITY TRUST COMMUNITY42020 Annual Report Ames National CorporationNet income for 2020 totaled a record 18.9 million or 2.06per share, compared to 17.2 million or 1.86 per shareearned in 2019. The increase in earnings was primarily theresult of the Iowa State Savings Bank acquisition, growthin mortgage lending and a reduction in interest expensedue to declines in market rates. We are pleased to reportthat, as a result of the 2019 acquisition, Iowa State SavingsBank contributed 1.7 million in earnings to the bottomline in 2020 compared to just over 300,000 for a partialyear in 2019. Earnings were partially offset by a 4.4 millionincrease in the provision for loan losses in 2020 comparedto 2019. The increase in the loan loss reserve was a resultof the economic slowdown associated with the COVID-19pandemic on our loan portfolio and, to a lesser extent, loangrowth.Loan interest income was 6.2 million higher in 2020 in2019. This increase was primarily due to the Iowa StateSavings Bank acquisition, Paycheck Protection Program(PPP) loans and organic loan growth, offset in part bya reduction in interest rates. Deposit interest expensedecreased 2.4 million, mostly due to market interestrate declines. Net interest income for 2020 totaled 54.8million, a 9.6 million increase, or 21%, compared to 2019.Non-interest income for 2020 totaled 10.6 million, ascompared to 8.6 million in 2019, an increase of 23%. Thethree factors that drove growth in noninterest income werean uptick in refinancing of home loans in a low interestrate environment, security gains on investment sales andcustomers seeking wealth management and trust servicesadvice. Income from the sale of residential loans was upECONOMIC OUTLOOKnearly 1.1 million over 2019, security gains were 413,000higher in 2020 than in 2019, while Wealth Managementincome increased just over 250,000.The balance sheet for 2020 also showed record growth.Assets reached 2.0 billion, an increase of 238.5 millioncompared to 2019. Investment securities, PPP loans andorganic loan growth were the drivers of this 14% rise inassets. These assets were funded mainly due to a surgein deposits as a result of the federal government stimulusprograms. Deposits reached record levels, and totaled 1.7billion at year-end, 15% higher than year-end 2019, and thisgrowth was mainly in commercial and retail core deposits.The amount of government stimulus dollars that have beeninjected into the economy is unprecedented. Deposits heldby all FDIC insured institutions in the United States totaled 17.1 trillion as of September 30, 2020 which compares to 14.3 trillion as of September 30, 2019. This excess liquidityin the banking system has contributed to a challengingenvironment, as we work to deploy investable funds. Loanprospects and bond issuers have a significant number ofoptions which constrains funding opportunities and putsdownward pressure on yields.Despite these constraints, 2020 net loans increased 8%,to 1.1 billion, as compared to 1.0 billion in 2019. AmesNational Corporation affiliate banks extended credit for localprojects and funded nearly 80 million in PPP loans to assistbusiness owners through the economic slowdown due tothe pandemic. During the fourth quarter, the Affiliate Banksbegan the process of assisting PPP loan customers with theloan forgiveness application process and 34.1 million inloans had been granted forgiveness by the end of the year.As mentioned earlier, the Company’s provision for loanlosses increased by 4.4 million in 2020 as a precaution tosafeguard from uncertainties in the market derived fromthe pandemic. We are optimistic that consumer confidencewill rebound with the vaccine rollout which we expectto result in a more normalized economic environment.Nevertheless, boosting the loan loss reserve will help usweather uncertainties in the market and fortify the balancesheet. We are also appreciative of the diversification of ourloan portfolio. With a quality mix of commercial, agriculturaland residential loans, we believe we are well-positioned forpotential uncertain economic conditions.IN SUMMARYAs we begin 2021, we are hopeful and excited for theopportunities ahead. Our management teams will focus onthe factors that we can control. We have a talented teamof bankers that will continue to build on our past successand find opportunities to strengthen our Company. Wecontinue to set high standards for profitable growth andare focused on serving our communities. On behalf ofthe employees and board of directors, thank you for yourongoing support of Ames National Corporation, and weappreciate the opportunity to serve you.ANNUAL MEETINGWe look forward to providing you additional financialhighlights at our Annual Meeting of Shareholders whichwill be held on April 28, 2021 at 4:30 p.m. More details areavailable on page 15 of this report.We encourage you to attend the annual meeting virtually.OUR AFFILIATE BANKScontinue to support the local economy, small businessesand our customers and have begun processing applicationsfor the second Phase of the PPP in response to additionalgovernment stimulus programs.Thomas H. PohlmanChairmanJohn P. NelsonPresident & CEOAmes National Corporation 2020 Annual Report5

18.0 2.10 210 17.5 2.00 200 17.0 1.90 190 16.5 1.80 180 1.70 170 120 13 1.10 110Earnings Per Share 1,100 1,600 1,300 1,000 1,500 1,200 900 1,400 1,100 800Allowance1.50% 1.19%Closing 24.02 28.06Net Charge-Offs 0.10% 0.04%High 26.87 29.46Non PerformingLow 16.62 24.471.33% 0.48% 1,000 700 400 600 300 800 500 200 700 400 100Millions of Dollars2020 Annual Report Ames National Corporation 600 500 900Average Total Assets6 900 800Average DepositsMillions of Dollars2019 1,100 700 1,158 1,200 1,000 1,268 1,300 814 1,4002018 1,700 921 1,200 1,611 1,50020183.12% 1,8002019Dividend Yield36.41%2019 1,3002020Dividend Payout 0.992020 1,600 1,385Cash Dividends Paid2019 1,90020182020Cash Dividends Declared 0.75 1,400 1,5042020Market Price Per Share 1,7002019Loan QualityMillions of Dollars 2,0002020Per Common Share 24.02CapitalDollars 1,866ROE9.48%ROA1.01%20192018Earnings2020 130 1.202018 1.30 13.52020 14Millions of DollarsATLO Closing Price 140 1,138 1.40 160 1502020 14.5 1.60 1.50 1.83 15.5 1.86 0.99 15 17.0 16 17.2Dividends Paid PerShare 173 2202018 2.20 188 18.52019 230 209 2.30 2.06 19.02020Assets 2.0 BillionTHREE-YEAR FINANCIAL HIGHLIGHTS2019Net Income 18.9 MillionPERFORMANCERECORD 18.9FINANCIALHIGHLIGHTSAs of December 31, 2020Average LoansMillions of DollarsAmes National Corporation 2020 Annual Report7