UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
November 14, 2012
Date of Report (Date of Earliest Event Reported)
 
AMES NATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
IOWA
0-32637
42-1039071
(State or Other Jurisdiction of Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
405 FIFTH STREET
AMES, IOWA 50010
(Address of Principal Executive Offices)
 
Registrant’s Telephone Number, Including Area Code:   (515) 232-6251
 
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
 
 
 
 
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
On November 14, 2012, the Board of Directors (the “Board”) of Ames National Corporation (the “Company”) approved changes to the amount of total salary to be designated as "deferred salary" under the Company’s Management Incentive Compensation Plan (the “MIC Plan”) covering certain key officers of the Company, including the Named Executive Officers as identified in the Company’s proxy statement.  Under the terms of the MIC Plan, the total salary of a participating officer is divided between "base salary", payment of which is not contingent upon the financial performance of the Company's subsidiary banks (the "Banks"), and "deferred salary", payment of which is contingent upon the financial performance of the Banks.  Payment of deferred salary is determined on a semi-annual basis and a participating officer is eligible to receive payment of some or all of the officer's deferred salary based upon a formula established by the MIC Plan that compares actual Bank performance for the two previous calendar quarters against a performance target.

The amount of total salary to be designated as "deferred salary" is determined according to a formula based upon the average assets of the Banks (as calculated for the two quarters ended September 30 of the year prior to the year for which compensation is being determined).  As revised, the formula provides that "deferred salary" will be an amount equal to $100 for each $1 million of average assets of the Bank multiplied by the allocation percentage assigned to the officer.  Previously, the formula specified that "deferred salary" was an amount equal to $250 for each $1 million of average assets of the Bank multiplied by the allocation percentage to the officer.  The effect of this change is to allocate a greater amount of total salary into the "base salary" category and away from the "deferred salary" category for which payment is at risk.  The Board believed this change was appropriate due to the growth in average assets at the Bank level since the MIC Plan’s inception in 2001, which has resulted in the amount of deferred salary as a percentage of total compensation becoming higher than the total incentive compensation at risk for officers of comparable peer banks in the State of Iowa.  This lower amount of compensation at risk will ensure a more competitive compensation package to retain and attract competent senior management at the Company.

Item 8.01
Other Events
 
On November 14, 2012, the Company announced a stock repurchase program commencing immediately.  A copy of the press release dated November 14, 2012, is attached as Exhibit 99.1.

On November 14, 2012, the Company announced the declaration of a cash dividend.  A copy of the press release dated November 14, 2012 is attached as Exhibit 99.1.
 
Item 9.01
Financial Statement and Exhibits

 
(d)
The following exhibit is furnished as part of this Report.
 
  Exhibit No. Description
 
  99.1
News Release dated November 14, 2012
 
 
Management Incentive Compensation Plan
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  AMES NATIONAL CORPORATION  
       
Date:  November 15, 2012
 
By:   /s/ Thomas H. Pohlman
 
   
Thomas H. Pohlman, President
 
   
(Principal Executive Officer)
 
 
 
Exhibit 99.1
 
PRESS RELEASE

FOR IMMEDIATE RELEASE
CONTACT:
THOMAS H. POHLMAN,
   
PRESIDENT
   
(515) 232-6251
 
November 14, 2012

AMES NATIONAL CORPORATION
APPROVES A STOCK REPURCHASE PROGRAM AND DECLARED CASH DIVIDEND

AMES, IOWA - Ames National Corporation (the “Company”) announced today that a stock repurchase program was approved at its regular meeting of the Board of Directors held November 14, 2012.  The Company has a strong capital position and this will provide an opportunity to repurchase Company stock on the open market when it is deemed to be favorably priced for repurchase.  The program authorizes the repurchase of up to 100,000 shares during the next twelve months, ending November 14, 2013, or approximately 1.1% of 9,310,913 shares of common stock outstanding as of November 13, 2012.  The Company purchased 122,002 shares in 2011 under the previously approved stock repurchase plans.  The last repurchase plans expired on November 9, 2012.  The Company has not purchased any shares in 2012.  The repurchases will be made in open market transactions at the discretion of management using Company cash.  The timing and actual number of shares purchased will depend on a variety of factors such as price, the Company’s liquidity position and other market conditions.  The program will be conducted under the provisions of SEC Rule 10b-18 which provides a “safe harbor” from liability for manipulation of the stock price by reason of the manner, timing, price and volume of purchases in the open market.  The program may be limited or discontinued at any time without notice.

Ames National Corporation will pay a cash dividend of $0.15 per share, payable on February 15, 2013 to shareholders of record as of February 1, 2013.

Ames National Corporation is listed on the NASDAQ Capital Market under the ticker symbol, ATLO.  The Company’s affiliate banks include:  First National Bank, Ames, Iowa; Boone Bank & Trust Co., Boone, Iowa; State Bank & Trust Co., Nevada, Iowa; Reliance State Bank, Story City, Iowa; and United Bank & Trust NA, Marshalltown, Iowa.  Additional information about the Company can be found at www.amesnational.com.
 
 
 
Exhibit 99.2

AMES NATIONAL CORPORATION

Ames, Iowa

November 14, 2012

MANAGEMENT INCENTIVE COMPENSATION PLAN

PURPOSE:   In the belief that properly motivated and compensated senior officers of Ames National Corporation (the "Company") or its affiliate banks (a "Bank") can be encouraged to produce superior results, this Management Incentive Compensation Plan (the "Plan") outlines a performance formula to guide the Company Compensation Committee and Bank Personnel Committees in making their recommendations to the Company Board or the Bank Board, as applicable, with respect to Deferred Salary and Performance Awards to be granted to a limited number of Senior Officer Participants.  Capitalized terms used in this Plan, unless defined when first used, shall have the definitions given to such terms in Attachment 1 hereto.
 
PLAN:  A portion of the Annual Salary of each Senior Officer Participant, referred to herein as "Deferred Salary", will be deferred each six months until earned or forfeited based on Bank performance as more fully described in Attachment 2 hereto.   The Deferred Salary may be increased or decreased based on Bank performance.   In addition, Performance Awards may be granted to a Senior Officer Participant.  Details are outlined in the following attachments:

 
1.
Definitions
 
 
2.
Deferred Salary
 
 
3.
Plan Formula
 
 
4.
Threshold, Cap and Floor Levels
 
 
5.
Company Senior Officers
 
CONCLUSION:   While this Plan attempts to capture the significant features bearing on the recommendations which a Committee is called upon to make, it is, however, only a guide and nothing contained herein shall constitute a right or privilege of any Senior Officer Participant or other personnel.  Each Committee reserves the right to consider other factors, which it deems pertinent, in making compensation recommendations with respect to the Senior Officer Participants for which it is responsible.  Nevertheless, the incentives in this Plan are a strong motivation for the Senior Officer Participants to increase earnings and enhance shareholder value.
 
 
 
 
 
Attachment 1

DEFINITIONS

ADJUSTED NET INCOME   is determined as follows:
Net Income of a Bank
Plus 
Provision for loan losses (less negative provisions)
Plus 
Off balance sheet provision for loan losses (less negative provisions)
Less 
Net charge-offs (plus net recoveries)
= 
Adjusted Net Income

ADJUSTED R.O.A. is the Adjusted Net Income of a Bank as described above divided by Average Assets of the Bank on an annualized basis.   This corresponds to the Adjusted Net Operating Income on page one of the Uniform Bank Performance Report.  That report also includes a line reflecting the influence of Sub Chapter S banks.

ANNUAL SALARY means the total salary to be paid to a Senior Officer Participant as divided between base salary and Deferred Salary.

AVERAGE ASSETS are the daily average assets of a Bank for the two preceding calendar quarters.

AWARD is the amount to be allocated to the Senior Officer Participants as authorized by the Board on the recommendation of its respective Committee.

AWARD PERCENTAGE ALLOCATION  is the percentage of the Performance Award to be allocated to a Senior Officer Participant as authorized by the Board on the recommendation of its respective Committee.  The Award Percentage Allocation is also used in determining Deferred Salary.  The maximum Award Percentage Allocation for any Senior Officer Participant is 40%.

BANK BOARD means the Board of Directors of a Bank.

BANK PERSONNEL COMMITTEE means the Personnel Committee of a Bank Board .
 
BOARD means either the Company Board with respect to Senior Officer Participants who are employees of the Company or a Bank Board with respect to Senior Officer Participants who are employees of a particular Bank.

COMMITTEE means either the Company Compensation Committee with respect to Senior Officer Participants who are employees of the Company or a Bank Personnel Committee with respect to Senior Officer Participants who are employees of a particular Bank.

COMPANY BOARD means the Board of Directors of the Company.

COMPANY COMPENSATION COMMITTEE means the Compensation Committee of the Company Board.

PERFORMANCE AWARD  is the amount to be allocated to the Senior Officer Participants of the Company or a Bank, as applicable, as authorized by the Board on the recommendation of its respective Committee.
 
SENIOR OFFICER PARTICIPANTS  are those key senior officers (designed by each Board based on the recommendation of its respective Committee) who have been given an Award Percentage Allocation and who accept the Deferred Salary arrangement established under this Plan.   The Senior Officer Participants at a Bank, will normally include senior officers whose decisions directly influence operating results.  The Senior Officer Participants at the Company will normally include the Chief Executive Officer and Chief Financial Officer of the Company and other key members of the Company's management team whose decisions directly influence operating results.
 
 
 
 
 
Attachment 2

DEFERRED SALARY

A portion of the Annual Salary of each Senior Officer Participant shall be deferred (withheld) until earned or forfeited based on Bank performance.  The amount to be deferred will be determined annually in November at the same time as the Annual Salary and Award Percentage Allocation is established for each Senior Officer Participant.  The Deferred Salary will be an amount equal to $100 for each million dollars in Average Assets of the Bank multiplied by the Award Percentage Allocation established  for the Senior Officer Participant for the new year.
 
Example
 
Example
The Average Assets of the Bank for the most recent two quarters ending September 30 th are $350 million.  The Award Percentage Allocation for the Senior Officer Participant is 20%.  The Deferred Salary is $100   x 350 x .20 or $7,000.
 
The Average Assets of a Bank for the most recent two quarters ending September 30 th are $100 million.  The Award Percentage Allocation for the Senior Officer Participant is 30%.  The Deferred Salary is $100 x 100 x .30 or $3,000.

Monthly salary is the Annual Salary less the Deferred Salary divided by 12.  One-half of the Deferred Salary will be paid, if earned, on June 15 and December 15 when entitled to Deferred Salary, based on actual Bank performance, has been determined for the preceding two calendar quarters.
 
 
 
 
 
Attachment 3

PLAN FORMULA

Each Committee will forward recommendations to its respective Board for payment of Deferred Salaries and Performance Awards to its Senior Officer Participants so that authorized payments may be made by June 15 and December 15.   The recommendations will be based on Bank performance during the two preceding calendar quarters.   The Plan formula provides for a Performance Award up to 10% of the difference between the actual Adjusted Net Income of a Bank for the two calendar quarters (not to exceed the Cap or Floor) and the Adjusted Net Income at the Threshold Level R.O.A.  If the final amount is positive (i.e., the actual Adjusted Net Income is greater than Adjusted Net Income at the Threshold Level R.O.A.), all Deferred Salary will be earned and a Performance Award will be paid out.  If the final amount is negative (i.e. the actual Adjusted Net Income is less than Adjusted Net Income at the Threshold Level R.O.A.), there will be a deduction from the Deferred Salary and no Performance Award will be paid out.   The formula is as follows:
 
1.
Actual Adjusted Net Income, but not to exceed the Cap or Floor Level for the two preceding calendar quarters.
 
$
   
           
2.
Adjusted Net Income at the Threshold Level R.O.A. for the same amount of Average Assets.
 
$
   
           
3.
Subtract the amount on Line 2 from the amount on Line 1.
 
$
   
           
4.
The total Performance Award to be allocated to the Senior Officer Participants is 10% of the amount on the Line 3.
 
$
   
 
The Performance Award to be paid to each Senior Officer Participant is determined by multiplying the total Performance Award (Line 4) by the Award Percentage Allocation established for Senior Officer Participant .
 
 
 
 
 
Attachment 4

THRESHOLD, CAP AND FLOOR LEVELS

The report of the Committee to the Board each November shall include a recommendation for the Plan criteria applicable to each Bank for the next calendar year.

 
1.
The Threshold Level R.O.A. will be based upon the Committee’s recommendation from reviewing information in the Uniform Bank Performance Report with emphasis on the Peer Group data on page 1 (Summary Ratios), but also considers the Iowa Average (last page).  The Adjusted Net Income on page 1, which may be adjusted to reflect the influence of Subchapter S banks, provides a significant Peer Group R.O.A. comparison ratio.   The Company and its Banks are expected to achieve results above the Peer Group Adjusted R.O.A.
 
 
2.
The Cap Level or ceiling represents a prudent upper limit that may be exceeded, but no benefit would accrue to the Senior Officer Participants for earnings above the Cap Level.
 
 
3.
The Floor Level will normally have the same deviation below the Threshold Level as the Cap Level is above it. 
 
 
4.
The Floor Level will normally have the same deviation below the Threshold Level as the Cap Level is above it.  The Floor, Threshold and Cap Levels for the second half of 2012 (presented as an example) are reflected below and will be reviewed by each Committee for each six month period ending March 31 st and September 30th.
 
   
           BANK R.O.A. LEVELS
 
                               
   
BBT
 
FNB
 
RSB
 
SBT
 
UBT
Floor Level
    0.68 %     0.68 %     0.68 %     0.68 %     0.68 %
Threshold Level
    1.08 %     1.08 %     1.08 %     1.08 %     1.08 %
Cap Level
    1.48 %     1.48 %     1.48 %     1.48 %     1.48 %

 
 
 

Attachment 5

COMPANY SENIOR OFFICERS

The calculation for determining Deferred Salary and Performance Awards for the Participating Senior Officers employed by the Company will be similar to that detailed in Attachments 1-4 with the following deviations:

 
1.
The Awards will be determined by aggregating the Awards established for each Bank as determined in Attachment 3 multiplied by the Participating Senior Officer's Award Percentage Allocation establish the amount of the semi-annual Award.
 
 
2.
The Performance Awards will be determined by aggregating the Performance Awards established for each Bank as determined in Attachment 3 multiplied by the Participating Senior Officer's Award Percentage Allocation 30% to establish the amount of the semi-annual Performance Award.