Good afternoon. Welcome to the 47th Ames National Corporation annual meeting of shareholders. My name is Tom Pohlman, and I serve as Chairman of Ames National Corporation. On behalf of the directors, officers, and employees of Ames National Corporation and their six affiliate banks, I would like to thank you for attending our annual meeting presentation. I look forward to leading you through the business meeting and providing our 2021 financial review. Joining me today is John Nelson, President & CEO of Ames National Corporation. Welcome, John.
Thanks, Tom. It's great to be here today.
We're also joined by representatives from CliftonLarsonAllen LLP, our public accounting firm. Liz Rider, audit principal, Trevor Huseman, tax principal, and Eric Ramus, audit manager. They will be available to answer questions during the Q&A session later in this presentation. Welcome, Liz, Trevor, and Eric. I would also like to introduce our affiliate bank presidents. These individuals are our local leaders who work together with their teams to drive results and encourage strong community support at each affiliate bank. Jeff Putzier, Boone Bank and Trust Company. Scott Bauer, First National Bank. Adam Snodgrass, Iowa State Savings Bank. Rick Schreier, Reliance State Bank. Steve McGill, State Bank and Trust Company, and Robert Thomas, United Bank and Trust Company. Thanks to each of you for your leadership at your banks and in your communities.
Before we begin the meeting, we have a few housekeeping items. First, throughout this presentation, you'll have the opportunity to ask questions by commenting on the right of your screen. We will provide a Q&A session at the end of the presentation. Virtual attendees are not able to ask questions live, but we encourage you to submit your questions or comments online. Also, on Ames National Corporation's homepage, you will find several reference items, including this year's meeting agenda and presentation, the first quarter 2022 press release, and last year's minutes. Our agenda will begin with a business meeting to review the proposals in which shareholders cast their votes by proxy. We will hear from President and CEO John Nelson on a recap of 2021 highlights. John will also review the results of the first quarter 2022. Finally, we will finish with questions and answers.
Let's get started on the business meeting. I would entertain a motion to approve minutes of last year's annual meeting.
Moved.
Thank you. Second?
Second.
All in favor, aye.
Aye.
Any opposed? Thank you. Tracy Laws, Inspector of Election, has determined that over 74% of the shares eligible to vote cast their votes by proxy. A quorum of shares is represented. Shareholders are voting on two proposals. First, shareholders were asked to elect five directors to the board. Four directors to serve for a three-year term and one director to serve for a one-year term. Second, we ask shareholders to ratify the appointment of CliftonLarsonAllen LLP as the company's independent registered public accounting firm for the year ending December 31, 2022. The nominees for three-year terms are David W. Benson, Michelle R. Cassabaum, John P. Nelson, and Kevin L. Swartz, each of whom is currently serving as a director of the company and is standing for reelection to the board.
The nominee for a one-year term is Jeffrey C. Baker, who has not previously served as a director of Ames National Corporation. Mr. Benson has served as a director of the company since 2011. He is an of counsel attorney with Nyemaster Goode, P.C. in Ames, Iowa, assisting clients in real estate planning, estate and trust settlement, tax planning, and charitable giving matters. He has served on the board of directors of First National Bank since 2008. Ms. Cassabaum has served as a director of the company since 2019. She is the chief operating and financial officer and is a co-founder of Twenty-First Century Rehab, P.C. A provider of physical therapy services with offices predominantly located in central Iowa. She has served on the board of directors of State Bank and Trust Company since 2004.
Mr. Nelson has served as the director of the company since 2013. He was appointed president and chief executive officer of the company in 2018 after having served as the chief financial officer and secretary of the company since 1999. He currently serves as chairman of the board of State Bank and Trust Company and United Bank and Trust Company, and is a member of the board of directors of First National Bank and Iowa State Savings Bank. Mr. Swartz has served as the director of the company since 2016. He retired in 2020, last serving as the chief executive officer of Wolfe Eye Clinic P.C., a medical clinic headquartered in Marshalltown, Iowa, that specializes in treating eye conditions. Mr. Swartz continues as a special project consultant for Wolfe Eye Clinic P.C.
Mr. Swartz has served on the board of directors of United Bank and Trust since 2003. Mr. Baker has served as the director of First National Bank since 2021. In 2020, Mr. Baker retired from the accounting and consulting firm RSM US LLP, where he specialized in banking, other financial services, entities, and public companies. In addition to his role as an audit partner, he was the firm's national director of banking services. No other nominations were received. Is there a motion to approve the nominees?
I would move to approve both of them.
Thank you, Betty. Is there a second? Thank you. Thank you, Jamie. Congratulations, and thank you to our newly elected board members. The second proposal presented was to ratify the appointment of CliftonLarsonAllen LLP as the company's independent registered public accounting firm for the year ending December 31, 2022. Is there a motion to approve the ratification of the auditor appointment?
I move to ratify CliftonLarsonAllen.
Thank you, Pat. Second?
Second.
Thank you. I hereby request that the final report of the Inspector of Elections be filed with the minutes of this meeting. This completes the business to be conducted today. Next, I would like to take an opportunity to introduce the remaining members of the company's board of directors. Betty Baudler Horras is President of Baudler Enterprises, Incorporated. Lisa Eslinger is Chief Financial and Administrative Officer, the ISU Foundation. Steve Forth is a farmer. James Larson II is the President of Larson Development Corporation. Patrick Hagan is Retired Senior Vice President and Treasurer of Fareway Stores, Incorporated. John Pierschbacher is CFO of the company, and I serve as Chairman of the Board. Thank you for your service to Ames National Corporation.
Before we move into the financial report, I'd like to recognize affiliate bank board members, John Wise and Dave Benson, who will be retiring in 2022 from United Bank and Trust and First National Bank, respectively. Thank you to our retiring affiliate bank board members for their counsel and insight during your many years of service. Next on the agenda, we will watch a video presentation of the 2021 company highlights. Following the video, John Nelson, President and CEO of Ames National Corporation, will present first quarter 2022 results and answer any questions that we have received.
Welcome to the presentation of the company's 2021 highlights. My name is John Nelson, President and CEO of Ames National Corporation. I appreciate the opportunity to provide an overview of the financial results of 2021, reflect on other events this past year, and most importantly, discuss how we are working as a team every day to enhance your shareholder value. As the effects of the pandemic persisted into 2021 calendar year, Ames National Corporation and the affiliate banks delivered on our mission to serve our customers, employees, and shareholders with strong financial performance. Our purpose has been magnified and elevated as our banks continue to support personal and business customers impacted by COVID-19. We continue to prioritize the decisions being made by leaders who work directly with customers to best understand their needs and those of the community.
Ames National Corporation saw record levels of net income, assets, loans and deposits, and capital during 2021. We would like to highlight drivers of this record-setting year. Annual net income for the company totaled $23.9 million or $2.62 per share in 2021, compared to $18.9 million or $2.06 per share in 2020. The increase in earnings is primarily the result of a decrease in provision for loan losses in 2021 compared to 2020, as uncertainties associated with the economic slowdown created by the pandemic begin to lessen. Further contributing to the improved net income was a reduction in interest expense due to decline in market interest rates. Net interest income for the year was $1.2 million higher than the prior year.
The improved net interest income is primarily attributable to the lower deposit interest expense and to the Paycheck Protection Program, otherwise known as PPP. The PPP fees of $4.3 million.
We're gonna pause for just a second so we can get the video on screen.
Welcome to the presentation of the company's 2021 highlights. My name is John P. Nelson, President and CEO of Ames National Corporation. I appreciate the opportunity to provide an overview of the financial results of 2021, reflect on other events this past year, and most importantly, discuss how we are working as a team every day to enhance your shareholder value. As the effects of the pandemic persisted into 2021 calendar year, Ames National Corporation and the affiliate banks delivered on our mission to serve our customers, employees, and shareholders with strong financial performance. Our purpose has been magnified and elevated as our banks continue to support personal and business customers impacted by COVID-19. We continue to prioritize the decisions being made by leaders who work directly with customers to best understand their needs and those of the community.
Ames National Corporation saw record levels of net income, assets, loans and deposits, and capital during 2021. We would like to highlight drivers of this record-setting year. Annual net income for the company totaled $23.9 million or $2.62 per share in 2021, compared to $18.9 million or $2.06 a share in 2020. The increase in earnings is primarily the result of a decrease in provision for loan losses in 2021 compared to 2020, as uncertainties associated with the economic slowdown created by the pandemic begin to lessen. Further contributing to the improved net income was a reduction in interest expense due to decline in market interest rates. Net interest income for the year was $1.2 million higher than the prior year. The improved net interest income is primarily attributable to the lower deposit interest expense and to the Paycheck Protection Program, otherwise known as PPP.
The PPP fees of $4.3 million recognized in 2021 compared to $2.3 million in 2020. Annual non-interest income for 2021 totaled $10.5 million, compared to $10.6 million for 2020. Total non-interest expense for the year ended December 31st, 2021 and 2020 totaled $36.6 million for both periods. Net loans increased slightly to $1.14 billion as compared to $1.13 billion as of December 31st, 2020. Loan growth would have been 5% excluding the change in PPP loans, as PPP loan balances decreased $45 million in 2021. Deposits totaled $1.88 billion as of December 31st, 2021, an increase of 9% compared to the $1.72 billion recorded as of December 31st, 2020. The growth in deposits is primarily due to an increase in core deposits, including retail and to a lesser extent, commercial funds due to government stimulus.
Changing consumer behaviors, expectations, and preferences cause us to rethink much of what we do. The need to integrate advanced technology, build relationships, and empower our team to continue to meet the wants and needs of our customers push us to be more agile and innovative. Across our affiliate banks, we have shown we are both flexible and resilient. A few noticeable highlights include First National Bank is constructing a new 5,000 sq ft bank building in the Valley Junction area of West Des Moines. Our affiliate banks partnered with small businesses to originate and service over 2,152 PPP loans, which represented over $123 million to support local businesses during the pandemic. Community investments in each of the communities we serve included financial education, monetary contributions, and volunteering our time and talents.
We continue to invest in and expand our digital offerings to enhance the customer experience. Ames National Corporation surpassed $2 billion in assets, and we want to thank our employees and customers that made this possible. As a way to connect with our affiliate banks, we plan on highlighting one bank each year in our annual report and our annual meeting. This year, we shine the light on State Bank & Trust Co. in Nevada. Today, I'd like to welcome Steve McGill, President of State Bank & Trust Co.
Thank you, John.
Dan Johnson, Executive Vice President of State Bank & Trust Co.
Hi, John.
They're gonna tell us a little bit about all the good things that are going on at State Bank & Trust. Steve, would you like to lead us off?
Yeah. You know, we've got a lot of things. It's been an interesting two years, John. We've been through a lot of challenges, a lot of changes. Really, if you look at banking over the past 10 years, we've been through a lot of changes. You go to our electronic innovations, that sort of thing, mobile deposit. The technical aspects that have been implemented in banking are really pretty phenomenal.
That's fantastic. Steve, can you tell us a little bit about the history of State Bank and Trust for those that are not familiar with that?
I came to the bank in 1999, and, like I said, they've had a rich history. There were several banks that had been through the community, but they've either been bought, sold, name changed, that sort of thing. We've been an anchor right on Main Street the entire time. We've been downtown, and there are a lot of people that come looking for us when we're down there. We, you know, we got involved in several things within the community. The thing about community banks, going back to one of Dan's comments, just to add that, our staff's involved in a lot of things in the community. Economic development, things of that nature. You sit there and you hear the number of jobs that are being created, and we've done very well in Nevada.
We mentioned the PPP loans and the impact that that had on the Nevada community. What are some of the other things that you guys are doing in the Nevada community that have a significant impact on the community?
Well, we've got State Bank's been involved a lot in many community projects over the years. We've got the SCORE Park, the, that we've been involved in. The Aquatic Center, Story County Medical Center, we've contributed to. Right now we've got, for example, a field, they call it the Field House project is on the table. We made a commitment to assist in funding that. We also, there's a group that are working on Main Street downtown, and they're refurbishing an old theater, and we've made a commitment to support that. As well as we also, you know, we've got people on our staff that are president of Main Street. We've got people that are very active in the Rotary. We just contribute a lot to that sort of thing.
Agreed. We continue to foster a culture of community involvement. Across the board, whether you're entry-level or on up to our most senior people, and includes directors as well. The investment in our community, not only with you know, investment as far as the monetary side of things, but with the time and effort. You know, you'll see, like Steve mentioned, we've got a number of people, employees that are in leadership roles within our community. State Bank & Trust is very proud of that, and we promote that because it takes time out of the office. It takes time after work, before work, and all those things. We know that investing in our community is a good thing for State Bank & Trust, and that's why we promote it so much.
Yeah. No, I think, you know, as I look across, you know, the employees across the Ames National Corporation, being able to export that financial literacy that just comes natural to us as bankers and to be able to bring that to-
Agreed
to nonprofits and to churches and all of those things that need that expertise, that's great that you're doing that in the community.
Well, like I said, John, we live in the community. We see these people every day.
Yeah.
We try to do the best we can.
Yeah. Make it a better place to live. I certainly think State Bank & Trust lives up to that, billing.
Mm-hmm.
Steve, can you tell us a little bit about your career in banking? I understand you have a big announcement to make, so can you expand on that a little bit?
Well, John, you know, my wife and I have had a lot of discussions. You know, our overall plan, I'll be 68. It's like I've told Dan, I've seen too many people in this business over the years that they basically have to carry their desk out into the parking lot for them to retire.
Yeah.
I don't wanna be that guy.
Yes.
I've made the decision that at the end of 2022, I'll retire, turn it over to Mr. Johnson here.
Yes.
Leave the bank in very capable hands. I'll still be on the board. I'll still be there to see any damage I left behind. It's a tough decision. Like I said, we've got some things we wanna do. We'll go from there.
All right. Well, Steve, I just can't thank you enough for all that you've done for Ames National Corporation, for State Bank & Trust, and the friendship we've had over the years. You're just a great leader. You're a great guy to work for and I am looking forward to working with you as a board member, and I'm glad that this is just a slowdown and not a stop. Thanks for all that you've done for us.
Well, we're leaving the bank in very capable hands. Dan and I have worked together for 14 years. Haven't always agreed at times, and at the same time, we've also fueled an environment that, when we get together for our loan committee, for example, everybody has a say so and everybody steps up to the plate.
Yeah.
He's inheriting a good staff. He's gonna have to resupplement it with some other people, but he'll get through that. There's no doubt.
Yeah.
Like I said, we're going to probably do some traveling. I've got five grandchildren.
You're ready to spoil them?
Oh, yeah. Actually, I'm ready to go do some more fishing and a little bit more hunting. Tom Pohlman, when he retired, he said that's one of the things he was looking forward to. Maybe I'll get hooked up with him.
Yeah
Going to South Dakota.
Yeah.
It's a big step.
Yeah.
It's time.
Well, thank you. Dan, can you tell us a little bit about your background and kind of what excites you about being the president of State Bank & Trust Company?
Oh, yeah.
... in the year 2022?
You bet, John. My banking career started after I graduated from Iowa State University in 1994. I joined State Bank & Trust in 2008 as an ag and commercial lender. Since that time, I have been focused on building long-term trusting relationships with clients and friends and neighbors. I'm also an Iowa native, so growing up in Iowa, I know the importance of all the things we've talked about being a community bank and a community banker. I also stay actively engaged in my family's fourth generation family farm.
Can you tell us a little bit about what has made that possible at State Bank to develop those leaders and a little bit about your leadership background and how that came to be?
Well, at State Bank & Trust Co., I don't know about the previous presidents that came out of it. I believe there's three of them and now coming to me, but when I look to this person right here to my right, Steve McGill, who has been just an outstanding leader, mentor, and role model for so many people, not only within the bank but within the community. Just looking back on the 14 years of how fast that's gone, and I'm so appreciative of the knowledge and wisdom that he shared with me. I think you can say this about many other employees as well, is the fact that there's a high level of confidence in our performance because it started at the top.
Mm-hmm.
You know, in that the leadership that Steve you know led from the front and the commitment that he shows, the dedication, it's influenced us all to be the best community bankers that we can be.
Yeah. No, I always think that when we take good care of our shareholders and our customers and our employees, and I think, Steve has just done such a good job of demonstrating that. It's when we come to work every day to do the best good that we can do for those stakeholders, it rewards itself with great financial performance as well. Well, I imagine that farming business really helps you to relate to your ag customers.
It does. It makes a big difference when you're the one writing some of those checks. I really think about putting myself in the client's position across the desk and what it means to make those critical decisions on their operation. Some of those decisions are hard.
Yeah.
You know? What we can do to be, you know, a consistent source of capital and being a candid and genuine sounding board. For us, those conversations aren't always, like I said, positive, but we wanna have the best outcome that we can have for our clients because again, it's not a transaction, it's a lifelong relationship, and that's the importance of a community bank.
Yeah. Yeah. Well, the stability that you and Steve bring to those customers that see you out in the community and doing all those things together, that's gotta provide a great peace of mind for them to know.
Right.
Not only are you a banker, but you've experienced the other side of the desk and know a lot of the answers to those questions that they might have.
Well, sure hope so anyway.
Yeah.
The big thing is just, you know, being a good listener, you know, and having accessibility, and that's. We come back to the community involvement and all the things that we do in the community is that they can see that we're there. It's a long-term commitment, long-term relationship, and, you know, ultimately, we want what's best for them.
Fantastic. Well, I would like to thank you both for joining us today. I know that as bankers, we're not exactly used to being on camera and doing all these good things, but I thought it was very important for our shareholders to see the depth of and the great leadership that we have in both Steve and Dan. One of the things that really makes my job much easier is to have, you know, great qualified leaders throughout our organization. I just wanna thank you for all you do for Ames National Corporation, for State Bank and Trust, for our employees and for our shareholders. It's been a great ride, Steve.
Just-
You keep going.
Just one thing to add, John. Like I said, in 23 years, I've worked at several different places. This has been the best one. The environment that ANC fuels allows us to work in our markets, and that's what we need as community bankers. We need the ability to react. We need the ability to serve our customers' needs. Every market is a little bit different. From Nevada, to Story City, to Creston, to Boone, it's just a different environment. With the system that we have, it allows us to do so and function very well. Thank you.
Oh, you're welcome. Thank you. We are focused on generating superior long-term shareholder returns through a combination of continuous growth and improved performance. In 2021, company stock traded approximately 6.8 million shares in the range of $22.04 to $27.90, and closed the year at $24.49. Dividends paid during 2021 were $1.03 per share. The dividend yield as of December 31st, 2021 was 4.25%. We are expecting increased volatility in the bond and equity markets as investors try to read the tea leaves on inflation, interest rates, and supply chain impediments on business profitability. Presently, economists' predictions for interest rates in 2022 are a 2% increase in short-term rates.
With the February 2022 consumer price index increasing nearly 8% over the last 12 months, the question for many is will a 2% hike in interest rates be enough to slow down the increasing momentum of higher prices started in 2021? This relationship between interest rates and inflation will likely have a significant impact on our deposit interest expense in 2022. As we navigate 2022, our team at Ames National Corporation and the affiliate banks are aligned and motivated to build on the progress and lessons learned over the past year. Our strategic priorities build on our strong foundation and position us for the future. We are stepping forward, focused on our integrated strategy and our immediate priorities to grow through the challenges we are facing.
Over the past year, Ames National Corporation has set a more ambitious agenda to build on tomorrow's bank today. Introducing and offering the best digital tools that help customers achieve their financial goals and maintaining our excellent customer service standards are at the core to this ambition. In aspiring to these ambitions, we recognize the importance of achieving a balance for all stakeholders and thank our employees, customers, and shareholders for your support.
Now, John Nelson.
Moving on to the first quarter results. Net income was $5.1 million or $0.57 a share, compared to $6 million or $0.66 a share in the first quarter of 2021. The lower earnings are primarily the result of $200,000 in PPP loan fees recognized this quarter, compared to $840,000 in the first quarter of last year. On the balance sheet, assets, loans, and deposits reached record levels. Assets for the first quarter were $2.2 billion or $85 million higher than the first quarter last year. Loans, excluding the PPP originations, were $69 million higher than the first quarter of 2021, with $59 million of PPP loans being forgiven over the past year. Deposits reached $2 billion compared to $1.9 billion last year at the end of the first quarter.
During the first quarter of 2022, the ANC stock traded in the range of $23.59-$25.55, and closed at $24.86 on March 31, 2022, with just over 1 million shares trading hands. At the February 2022 board meeting, the board voted to increase the quarterly dividend by a penny to $0.27 per share. The second quarter dividend will be made payable to shareholders on May 13, 2022. The company has been successful in buying back our stock over the past two years. Buying company shares at favorable prices benefits you, our shareholders. By improving liquidity in our stock and increasing ownership percentages for our existing shareholders, in 2020 and 2021, the company bought back 100,000 shares and 30,580 shares, respectively.
Last November, the board reauthorized the Ames National Corporation purchase plan to buy back 100,000 shares of our stock over the next 12 months. Before we move into the questions, I would encourage you to sign up to receive our annual and quarterly earnings reports by email. Please email info@amesnational.com to request that your name be added to the quarterly investor e-news. We also like to send out timely updates regarding the annual meeting. We will now move into a time for questions. We do appreciate hearing from you and certainly take your questions and concerns very seriously. We have received some questions throughout the presentation. If you have a question and would like to submit it now, please do so by commenting on the right side of the presentation screen. Do we have any questions?
If there's no questions in the room, we have some questions in the queue. Our first question relates to technology. How will technology innovations impact community banking, both now and in the future?
Well, that's a great question that I'm sure we're all asking ourselves, quite a bit. I think the growth of technology is going to be exponential in just about every industry that we have. If we were to go back 10 years and look at what our cell phones do, we'd be like, "I can't believe it," what all we can do with just a cell phone in our hands. When we look at technology, we just know that we get used to change 'cause it's gonna keep coming. What we really need to do, we need to spend quite a bit of time looking at those. We have a technology group that looks at developing technology in the financial services area to make sure we stay on top of hey, what do we need to be thinking about putting into the queue?
Really along with that, it's how do we reduce costs through technology as well. It's this combination of how do we make it for our customers, regardless of whatever channel they're using to do their banking, that we make it easy and hassle free. How can we use this technology to lower our overhead costs so that we can remain competitive in other areas of the bank by making things as easy as possible. We have done some things over the course of the last year. We are rolling out different checking account types that are gonna be standardized over the overall five affiliate banks, technology with regard to opening accounts. Technology, we're right now researching real-time payments and also FedNow is gonna be rolling out in 2023. One of the big changes is going to be happening is just transactions settling in real time.
That's gonna be one of the next big developments that we'll be seeing how we can do that in a you know a cost-effective way. Right now, our transactions settle for less than $0.01 a transaction really figuring out, you know, what we can settle transactions for in real time and getting the third-party vendors that will help us do that at reasonable cost. That's what we're looking at right now, and we'll report more of that back at our 2022 annual meeting next year.
Now we have another question, and I'll kind of paraphrase this one, but it really has to do with our Accumulated Other Comprehensive Income or our net unrealized loss on investments. They've noticed that there was a change in that from December until March thirty-first. Kind of just wondering, and you probably can't predict the future, but how that will affect the rest of 2022 and how we manage it.
In our bond portfolio, we really whatever period of time that you buy, and we usually talk about duration. It's really the length of these bonds. Whenever interest rates go up, that causes I'm not gonna pay as much for a bond that's not earning at what the market is. When interest rates go up 1%, say, for example, the average yield on our investment portfolio is 2%, and now the market is 3%. Well, what am I gonna pay for that 2%? Well, I'm not going to pay 100. You know, I'm not gonna pay par for that bond. What has happened over the first quarter is that the bond portfolio has lost about $42 million, if my memory serves me right, as a function of we have an $800 million portfolio and that interest rates moving up over 1% has caused unrealized losses in that.
The good news is we model every quarter, and that would be exactly what we would think it would be if interest rates were to go up 1%. We weren't surprised as management, we weren't surprised as a board of directors that happened. That's just a function of the math. Whenever interest rates go up, there's going to be unrealized losses. Now, the good news to that is as we reinvest money back into the market, we're gonna see, you know, significant improvement in our portfolio.
It's positive when we start thinking about our yield on the bond portfolio on the go forward as investments mature and we receive payments on our loans and we receive payments on our investments, we're plowing that back in at 4% instead of 3%. At 3% rather than 2%. That just gives you kind of a sense of how that is. It did have a significant impact on capital, but it wouldn't be unanticipated. I think the biggest surprise for me was just that interest rates went up that much, that fast. That's really. If we could wave a wand, we would much rather have those interest rates climb at a slower pace than they have. You know, we still have over 8% equity capital, even with that depreciation in the bond portfolio. I think we're in a good spot with regard to capital in spite of the unrealized losses.
Our third question relates to inflation. How concerned should investors be about inflation and the effect of inflation on our company?
Yeah. Inflation, as we all know, has a significant impact when it's as high as it is. I mentioned in the portfolio about the CPI increasing 8%, which is really significant in the scheme of historically. I think you have a couple of things to sort through when we think about inflation and its impact on the bank or even on the impact on our home budgets. It's really the idea is how much of that inflation is caused by supply chain impediments. How much of that is caused by government stimulus. You know, putting all of this money into the banking system certainly has something to do with that inflation. There are some things that are actually deflationary that are gonna offset those two things.
One of them would just be technology in itself is deflationary. The idea is when I can employ technology that lowers my costs. If you kind of think about over the last, you know, 10, 20 years, all of the different expenses that we've had that we now do through computers and cell phones and all kinds of things like that. That's a deflationary pressure. The demographics are a deflationary pressure. As the boomers retire, that's going to lower demand for goods. As population overall declines, there's not going to be as much demand for goods and services.
I don't have a crystal ball to say, "Hey, how's that gonna play out?" You know, those two factors against those two deflationary factors. I would say don't underestimate the deflationary impact that technology brings in lowering our costs. I think in the near term, when we look at 2022, it's going to be what's a little bit different about the last go around when we had, you know, high inflation in the seventies and eighties is that loan to deposit ratios in banking institutions were a lot higher then. Right now we have a surplus of deposits.
Our loan to deposit ratio is much lower, and so we won't have as much pressure as we would have had there not been so much government stimulus growing our deposits quite a bit. We will have to raise our deposit interest rates for sure. We'll try to do the best we can to, you know, have our assets repricing as quickly as our deposits to make sure that we can maintain those net interest margins. Historically, there's always been, you know, 18-month lag before the asset side can catch up with the deposit side. I have no idea if that's how it'll work out this go around, but that's what I would anticipate is the more of those assets that start repricing, then we'll see that net interest margin improve to the extent of getting those assets repriced.
We have a question related to the labor markets or unemployment. The question is: are you experiencing any problems maintaining or hiring staff? Do you see what problems you see in the future, whether hiring or higher labor costs? You know, do you think it's gonna affect the banks?
Yeah, it's a great question. I think it goes back to that demographics that I was talking about earlier is right now people have a lot of options with regard to where they work. What I can tell you is a function of how we're organized and you could really see it in the video with Steve and Dan. There's a guy that likes the place he works at, right? That's really kind of our strategy with regard to our employees is if you like your job, if you like your boss, there's a really high probability that you're gonna stay, you know, working with your existing employer.
I do believe, if inflation rates stay at 8%, it's gonna put a lot of pressure on our salaries and benefits. I think it will for all industries. I think we're positioned in a really good spot in that really maintaining the culture that we have is a great place to work. That's really the key that I think, you know, that I would say is our best counter to what we know are gonna be inflationary pressures on the salaries and benefits.
The other question we have just is really concerning the company's plans for, like, mergers and acquisitions.
Yeah. We've done four acquisitions in the last 10 years, and it's really panned out well for our earnings and for growing and doing it in a way that's profitable to our shareholders. We're not going out and doing acquisitions to come to this meeting and say, "Hey, we did an acquisition, and we're bigger to be bigger." We wanna earn respectable returns for the risks that we're gonna have to take when we do those acquisitions. I can tell you that our latest acquisition in 2019 with Iowa State Savings Bank has exceeded our expectations, and they're doing a great job down there.
We're continuing to look for those banks that we think would be a good fit with our organization. We're hopeful that we can continue the string of success that we've had over the last 10 years.
I think that wraps up the questions.
All right. Well, is there any questions in the room that anybody would like to ask before we wrap up? Feel free to, after we get done with the meeting today, to stick around and ask some questions. We can get that covered as well. All right. Well, I'll turn it over to Tom to bring us home.
Well, thank you. We really appreciate you all attending the forty-seventh annual shareholder meeting of Ames National Corporation. You can be confident that our leadership team and employees are working diligently every day to deliver strong returns to you. Thank you for your support and commitment to Ames National Corporation. We are adjourned.