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Note 1 - Significant Accounting Policies
 3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
1.
     Significant Accounting Policies
 
The consolidated financial statements for the
three
months ended
March 31, 2020
and
2019
are unaudited. In the opinion of the management of Ames National Corporation (the "Company"), these financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary to present fairly these consolidated financial statements. The results of operations for the interim periods are
not
necessarily indicative of results which
may
be expected for an entire year. Certain information and footnote disclosures normally included in complete financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the requirements for interim financial statements. The interim financial statements and notes thereto should be read in conjunction with the year-end audited financial statements contained in the Company's Annual Report on Form
10
-K for the year ended
December 31, 2019 (
the “Annual Report”). The consolidated financial statements include the accounts of the Company and its wholly-owned banking subsidiaries (the “Banks”). All significant intercompany balances and transactions have been eliminated in consolidation.
 
Goodwill: Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill resulting from acquisitions is
not
amortized, but is tested for impairment annually or whenever events change and circumstances indicate that it is more likely than
not
that an impairment loss has occurred. Goodwill is tested for impairment with an estimation of the fair value of a reporting unit.
 
Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions and selecting an appropriate control premium. At
March 31, 2020,
Company management has performed a goodwill impairment assessment and determined goodwill was
not
impaired.
 
New and Pending Accounting Pronouncements:
In
June 2016,
the FASB issued ASU
No.
2016
-
13,
Financial Instruments-Credit Losses (Topic
326
):
Measurement of Credit Losses on Financial Instruments
. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In
October 2019,
the FASB voted to approve amendments to the effective date of ASU
No.
2016
-
13
for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities. The amendment delays the effective date for our Company until interim and annual periods beginning after
December 15, 2022.
The Company continues collecting and retaining loan and credit data and evaluating various loss estimation models, along with refining the implementation of the software and its approach for determining the expected credit losses under the new guidance. The Company’s preliminary evaluation indicates the provisions of ASU
No.
2016
-
13
are expected to impact the Company’s financial statements. The Company is continuing to evaluate the extent of the potential impact.
 
In
January 2017,
the FASB issued ASU
2017
-
04,
Intangibles-Goodwill and Other (Topic
350
):
Simplifying the Test for Goodwill Impairment
. The guidance in this update eliminates Step
2
from the goodwill impairment test. For public companies, this update became effective for interim and annual periods beginning after
December 15, 2019,
with early adoption permitted for interim and annual goodwill impairment tests with a measurement date after
January 1, 2017.
ASU
2017
-
04
was adopted on
January 1, 2020
and the adoption of this guidance did
not
have a material impact on the Company’s consolidated financial statements.
 
In
August 2018,
the FASB issued ASU
No.
2018
-
13,
Fair Value Measurement (Topic
820
):
Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.
The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update became effective for interim and annual periods in fiscal years beginning after
December 15, 2019,
with early adoption permitted for the removed disclosures and delayed adoption until fiscal year
2020
permitted for the new disclosures. The removed and modified disclosures were adopted on a retrospective basis, and the new disclosures were adopted on a prospective basis. The adoption did
not
have a material effect on the Company’s consolidated financial statements.