Edgar Filing: AMES NATIONAL CORP

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [x] Filed by a party other than the Registrant [ ] Check
the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule14a-12

AMES NATIONAL CORPORATION
(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction
applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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March 20, 2003

Dear Shareholder:

You are invited to attend the 2003 Annual Meeting of Shareholders of Ames
National Corporation to be held on Wednesday, April 23, 2003 in Benton
Auditorium at the Scheman Building, Iowa State Center, Ames, Iowa. Registration
begins at 4:00 p.m. with the Annual Meeting to commence at 4:30 p.m. Immediately
following the Annual Meeting there will be a social and a dinner. Enclosed are
the Notice of Annual Meeting of Shareholders, Proxy Statement, Proxy Card and
2002 Annual Report to Shareholders.

At the Annual Meeting, four directors will be elected to the Board of Directors.
Two current members' names are being placed in nomination for re-election and
two new names will be presented to replace Robert W. Stafford and Dale F.
Collings, who will be retiring from the Board. Management will report on the
operations and activities of the Company with an opportunity to ask questions.

The social and dinner, also in the Scheman Building, are being held to celebrate
the 100th anniversary of First National Bank, Ames, Iowa. Highlights
commemorating this milestone achievement will be presented at the dinner.

Your vote is important regardless of the number of shares you own. Whether or
not you plan to attend the Annual Meeting, the Board of Directors encourages you
to mark, sign, date and return your Proxy Card as soon as possible in the
enclosed postage-paid envelope. Returning the Proxy Card will not prevent you
from voting in person at the Annual Meeting, but will assure that your vote is
counted if you are unable to attend.

On behalf of the Boards of Directors, officers and staff of Ames National
Corporation, Boone Bank & Trust Co., First National Bank, Randall-Story State
Bank, State Bank & Trust Co. and United Bank & Trust NA, we thank you for your
continued support and look forward to visiting with you at the Annual Meeting
and dinner on April 23rd.

Sincerely,

/s/ Daniel L. Krieger
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Daniel L. Krieger
President

AMES NATIONAL CORPORATION
405 Fifth Street
Ames, Iowa 50010

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

April 23, 2003

1. To elect four members of the Board of Directors.

2. To consider such other business as may properly be brought before the
Meeting.

The Board of Directors has fixed the close of business on March 19, 2003 as the
record date for the determination of the shareholders entitled to notice of and
to vote at the Meeting. Accordingly, only shareholders of record at the close of
business on that date will be entitled to vote at the Meeting.

TO INSURE YOUR REPRESENTATION AT THE MEETING, THE BOARD OF DIRECTORS REQUESTS
THAT YOU MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ENVELOPE. YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED AND, IF
YOU ARE ABLE TO ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN PERSON, YOU
MAY REVOKE YOUR PROXY AND DO SO.

By Order of the Board of Directors

/s/ John P. Nelson
-----------------------------------
John P. Nelson
March 20, 2003 Vice President and Secretary
Ames, Iowa

AMES NATIONAL CORPORATION
405 Fifth Street
Ames, Iowa 50010

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

To Be Held on April 23, 2003

This Proxy Statement is furnished to the shareholders of Ames National
Corporation, an Iowa corporation, (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on Wednesday, April 23, 2003, at 4:30
o'clock p.m., local time, at the Scheman Building, Iowa State Center, Ames,
Iowa, and at any adjournment or postponement thereof (the "Meeting"). This Proxy
Statement and form of Proxy enclosed herewith are first being sent to the
shareholders of the Company entitled thereto on or about March 20, 2003.

Only shareholders of record at the close of business on March 19, 2003 are
entitled to notice of and to vote at the Meeting. There were 3,128,982 shares of
the Company's common stock (the "Common Stock") outstanding at the close of
business on that date, all of which will be entitled to vote at the Meeting. The
presence, in person or by proxy, of the holders of a majority of such
outstanding shares is necessary to constitute a quorum for the transaction of
business at the Meeting. Holders of the shares of Common Stock are entitled to
one vote per share standing in their names on the record date on all matters to
properly come before the Meeting. Shareholders do not have cumulative voting
rights. If the holder of shares abstains from voting on any matter, or if shares
are held by a broker which has indicated that it does not have discretionary
authority to vote on a particular matter, those shares will be considered to be
present for the purpose of determining whether a quorum is present, but will not
be counted as votes cast with respect to any matter to come before the Meeting
and will not affect the outcome of any matter.

If the accompanying Proxy is properly signed and returned and is not revoked,
the shares represented thereby will be voted in accordance with the instructions
indicated thereon. If the manner of voting such shares is not indicated on the
Proxy, the shares will be voted FOR the election of the nominees for directors
named herein. Election of any nominee for director will require the affirmative
vote of a plurality of those shares voting at the Meeting in person or by proxy.

The Company will bear the cost of solicitation of proxies. In addition to the
use of the mails, proxies may be solicited by officers, directors and regular
employees of the Company, without extra compensation, by telephone, e-mail,
facsimile or personal contact. It will greatly assist the Company in limiting
expense in connection with the

Meeting if any shareholder who does not expect to attend the Meeting in person
will return a signed Proxy promptly.

A shareholder may revoke his or her Proxy at any time prior to the exercise
thereof by filing with the Secretary of the Company at the Company's principal
office at P.O. Box 846, 405 Fifth Street, Ames, Iowa 50010, Attn: Secretary,
either a written revocation of the Proxy or a duly executed Proxy bearing a
later date. A shareholder may also revoke the Proxy by attending the Meeting and
voting in person. Attendance at the Meeting without voting in person will not
serve as the revocation of a Proxy.

INFORMATION CONCERNING NOMINEES
FOR ELECTION AS DIRECTORS

The Board of Directors of the Company currently consists of nine members. The
Board of Directors is divided into three classes for the purpose of electing and
defining the terms of office of the directors. All directors are elected to
serve three-year terms, with approximately one-third of the directors being
elected on an annual basis. The terms of four directors will expire at the
Meeting. The Board of Directors has determined that, in order to provide for
three classes of directors with an equal number of directors in each class, one
director will be elected at the Meeting to serve a two year term and three
directors will be elected at the Meeting to serve three year terms. This action
will ultimately result in three classes of directors, with three directors in
each class and each director being elected to serve a three year term.

The directors to be elected at the Meeting will include one director who will
serve for a two year term expiring at the annual meeting of shareholders to be
held in 2005 and three directors who will each serve a three-year term expiring
at the annual meeting of shareholders to be held in 2006. The director serving
the two year term and the three directors serving three years terms shall each
serve until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal. The Board of Directors has no reason to
believe that any nominee will be unable to serve as a director, if elected.
However, in case any nominee should become unavailable for election, the Proxy
will be voted for such substitute, if any, as the Board of Directors may
designate.

Set forth below are the names of the four persons nominated by the Board of
Directors for election as directors at the Meeting, along with certain other
information concerning such persons. Two of the nominees are currently serving
as directors of the Company and two of the nominees are new candidates for
election to the Board of Directors.

Nominee for a Two Year Term

Betty A. Baudler Ms. Baudler has served as a director of the Company since 2000. She
Age 49 is the President of Baudler Enterprises, Inc., a sign business
located in Ames, Iowa and the former
owner and General Manager of radio
stations KASI and KCCQ located in Ames,
Iowa.
Nominees for Three Year Terms

Robert L. Cramer Mr. Cramer has served as a director of Boone Bank & Trust Co, one of
Age 62 the Company's affiliate banks, since 1999. He is the President and
Chief Operating Officer of Fareway Stores, Inc., a privately owned
company operating 81 grocery stores in Iowa and Illinois. Mr.
Cramer has not previously served as a director of the Company.

James R. Larson II Mr. Larson has served as a director of the Company since 2000. He
Age 51 is the President of ACI Mechanical, Inc., a heating and cooling
contractor located in Ames, Iowa.

Warren R. Madden Mr. Madden has served as Vice President of Business and Finance at
Age 63 Iowa State University since 1984. Iowa State University is a major
land grant university located in Ames, Iowa with an enrollment of
nearly 28,000 students. Mr. Madden has not previously served as a
director of the Company.

The Board of Directors recommends a vote FOR the election of each of the
foregoing nominees to the Board of Directors.

INFORMATION CONCERNING DIRECTORS

OTHER THAN NOMINEES

Set forth below is certain information with respect to directors of the Company
who will continue to serve subsequent to the Meeting and who are not nominees
for election at the Meeting.

Directors Whose Terms will Expire in 2004

James R. Christy Mr. Christy has served as a director of the Company since 1993. He
Age 73 is a retired Iowa State University Extension Director and former
mayor of the City of Nevada, Iowa.

Daniel L. Krieger Mr. Krieger has served as a director of the Company since 1978. He
Age 66 has been employed as President of the Company since 1999 and
previously as President of First National Bank from 1984 until
1999.

Marvin J. Walter Mr. Walter has served as a director of the Company since 1978. He
Age 62 is the President of Dayton Road Development Corporation, a real
estate development company located in Ames, Iowa.
Directors Whose Terms will Expire in 2005

Douglas C. Gustafson, DVM Dr. Gustafson has served as a director of the Company since
Age 60 1999. He is a practicing veterinarian and partner in Boone
Veterinary Hospital located in Boone, Iowa.

Charles D. Jons, MD Dr. Jons has served as a director of the Company since 1996.
Age 62 He retired in 1999 after a 20 year medical practice with
McFarland Clinic in Ames, Iowa and is
currently a self-employed health care
consultant.

None of the nominees or directors serve as a director of another company whose
securities are registered under the Securities Exchange Act of 1934 or a company
registered under the Investment Company Act of 1940. There are no family
relationships among the Company's directors and executive officers.

INFORMATION CONCERNING THE BOARD OF DIRECTORS

The Board of Directors holds regular quarterly meetings and held four such
meetings during 2002. The Board of Directors also held one special meeting
during 2002. During 2002, each of the directors of the Company attended at least
75% of all meetings of the Board of Directors and meetings of committees to
which such director was appointed.

The Board of Directors has established the Audit Committee and the Compensation
Committee as standing committees of the Board of Directors. In November 2002,
the Board of Directors established a Nominating Committee. Additional
information concerning each of the committees and the directors serving thereon
follows:

Audit Committee

The Audit Committee is responsible for review of the Company's auditing,
accounting, financial reporting and internal control functions and for the
selection and recommendation of independent accountants to the Board of
Directors. In addition, the Audit Committee is expected to monitor the quality
of the Company's accounting principles and financial reporting as well as the
independence of, and the non-audit services provided by, the Company's
independent accountants. The Board of Directors adopted a written charter for
the Audit Committee on May 8, 2002, a copy of which is included as an appendix
to this Proxy Statement.

During 2002, the Audit Committee consisted of Mr. Walter, who acted as chairman,
Dr. Jons and Ms. Baudler, all of whom are independent directors (as determined
in accordance with the definition of "independent director" established by the
National Association of Securities Dealers). The Audit Committee met on one
occasion during 2002.

Compensation Committee

The Compensation Committee determines and makes recommendations to the Board of
Directors on all elements of compensation for the Company's executive officers.
A report of the Compensation Committee appears in this Proxy Statement.

During 2002, the Compensation Committee consisted of Mr. Christy, who acted as
chairman, Dr. Gustafson and Mr. Larson. The Compensation Committee met on two
occasions during 2002.

Nominating Committee

The Nominating Committee is responsible for reviewing and recommending to the
Board of Directors the names of nominees for election as directors.

The Nominating Committee consisted of Mr. Christy, who acted as chairman, Mr.
Walter and Mr. Krieger. The Committee met once during 2002.

Director Compensation

During 2002, each director of the Company (with the exception of Mr. Krieger)
was paid a fee of $400, with the Chairman of the Board receiving $600, for each
regular Board of Directors meeting attended. Directors were not paid for
attending the special meeting of the Board of Directors. Directors were paid a
separate one-time fee of $280, with the committee chairman receiving $365, for
attending meetings of the Audit Committee and the Compensation Committee.
Directors of the Company (with the exception of Mr. Krieger) who also serve as
directors of one or more of the Company's affiliate banks (the "Banks") received
fees during 2002 for board and committee meetings attended at the Bank level.

Nominations

The Nominating Committee will consider, as part of its nomination process, any
nominee submitted by a shareholder of the Company, provided such shareholder has
complied with the procedure set forth in the Company's bylaws for the submission
of nominees. In order to submit the name of a nominee, a shareholder must
provide written notice of such nominee, accompanied by other information
concerning the nominee as specified in the bylaws, to the Secretary of the
Company no less than 120 days prior to the date of the proxy statement
distributed by the Company in connection with the prior year's annual meeting of
shareholders. A nomination with respect to the election of directors at the
annual meeting of shareholders to be held in 2004 would need to be submitted no
later than November 21, 2003. A copy of the relevant provisions of the bylaws
pertaining to nominations may be obtained by contacting the Secretary of the
Company. A shareholder who has complied with the procedure for submitting the
name of a nominee may nominate such individual at an annual meeting
notwithstanding that such individual has not been nominated for election by the
Nominating Committee.

SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS

Directors, Nominees and Named Executive Officers

The following table sets forth the shares of Common Stock beneficially owned as
of February 28, 2003 by each director of the Company, by each nominee for
director of the Company and by each executive officer of the Company or the
Banks named in the Summary Compensation Table included herein (the "named
executive officers") and by all directors and executive officers (including the
named executive officers) as a group.

Shares Beneficially Percent of Total
Name Owned (1)(2) Shares Outstanding

Betty A. Baudler 5,640 *
James R. Christy (3) 10,192 *
Dale F. Collings (4) 114,108 3.65%
Robert L. Cramer 1,620 *
Douglas C. Gustafson (5) 11,020 *
Edward C. Jacobson (6) 37,000 1.18%
Charles D. Jons, M.D (7) 4,664 *
Daniel L. Krieger (8) 115,702 3.70%
James R. Larson II 4,595 *
Warren R. Madden 0 *
Thomas H. Pohlman 2,300 *
Robert W. Stafford (9) 334,485 10.69%
Jeffrey K. Putzier (10) 1,826 *
Marvin J. Walter (11) 5,043 *
Terrill L. Wycoff (12) 39,810 1.27%

Directors and Executive
Officers (18) as a Group (13) 746,854 23.87%

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Notes:

* Indicates less than 1% ownership of outstanding shares.

(1) Shares "beneficially owned" include shares owned by or for, among others,
the spouse and/or minor children of the named individual and any other
relative who has the same home as such individual, as well as other shares
with respect to which the named individual has sole investment or voting
power or shares investment or voting power. Beneficial ownership may be
disclaimed as to certain of the shares.

(2) Except as otherwise indicated in the following notes, each named individual
owns his or her shares directly and has sole investment and voting power
with respect to such shares.

(3) Includes 3,661 shares held in his spouse's name over which he has shared
investment and voting power.

(4) Consists of 102,037 shares held in the name of Dale F. Collings and Ann L.
Collings as co-trustees of the Collings Trust u/t/a/ dtd 2-12-98 and 12,071
shares held in the name of the Collings Share GST Trust created under the
The Letsinger Trust, a Revocable Living Trust, u/t/a dated 4-2-86. Mr.
Collings has shared investment and voting power with respect to the
foregoing shares.

(5) Includes 2,500 shares held in his spouse's name over which he has shared
investment and voting power.

(6) Includes 5,350 shares held in his spouse's name over which he has shared
investment and voting power.

(7) Includes 4,370 shares held in the name of Charles D. Jons and Carolyn L.
Jons, Trustees (and their successors) of the Charles and Carolyn Jons Trust
u/t/a dtd 7-8-97 over which he has shared investment and voting power.

(8) Includes 16,500 shares held in his spouse's name over which he has shared
investment and voting power and 58,055 shares held by the Ames National
Corporation 401(k) Profit Sharing Plan with respect to which Mr. Krieger
exercises shared investment and voting power in his capacity as trust
officer of First National Bank which serves as trustee of that plan.

(9) Includes 77,876 shares held in his spouse's name, 48,000 shares held in the
name of the Richard C. Stafford Family Trust U/W of Richard C. Stafford,
Robert W. Stafford and Charlotte H. Stafford, Co-Trustees and 109,053
shares held in the name of the Charlotte H. Stafford Trust U/W of Richard
C. Stafford, Robert W. Stafford and Charlotte H. Stafford, Co-Trustees.
Richard C. Stafford is Robert W. Stafford's deceased brother. Mr. Stafford
has shared investment and voting power with respect to the foregoing
shares, but disclaims any pecuniary interest in the shares held in the two
trusts.

(10) Consists of shares held jointly with his spouse over which he has shared
investment and voting power.

(11) Includes 80 shares held in his spouse's name over which he has shared
investment and voting power.

(12) Includes 14,296 shares held in his spouse's name over which he has shared
investment and voting power.

(13) Includes, in addition to shares owned by the directors and named executive
officers, a total of 24,269 shares owned by five other executive officers
of the Company or the Banks for whom individual disclosure of share
ownership is not required. An additional 36,200 shares owned by the
Josephine F. Tope Charitable Remainder Unitrust are also included in this
total as one of the five executive officers exercises shared investment and
voting power in his capacity as trust officer of State Bank & Trust Co.
which serves as trustee of the trust.

Other Beneficial Owners

The following table sets forth certain information on each person who is known
to the Company to be the beneficial owner as of February 28, 2003 of more than
five percent of the Common Stock.

Shares Beneficially Percent of Total
Name and Address Owned Shares Outstanding
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George B. Coover (1) 210,216 6.72%
2533 Coral Brooke Drive
Sierra Vista, AZ 85650

Charlotte H. Stafford (2) 168,733 5.39%
9701 Meyer Forest Drive, Apt. 23302
Houston, TX 77096-4324
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Notes:

(1) Consists of 158,216 shares held in the name of George B. Coover in his
capacity as trustee of the Coover Family Trust - Trust A u/t/a 4/22/75 and
52,000 shares held in the name of Mr. Coover in his capacity as trustee of
the Coover Family Trust - Trust B u/t/a 4/22/75. Mr. Coover is the
brother-in-law of Robert W. Stafford.

(2) Consists of 11,680 shares held in the name of Charlotte H. Stafford in her
individual capacity, 48,000 shares held in the name of the Richard C.
Stafford Family Trust U/W of Richard C. Stafford, Robert W. Stafford and
Charlotte H. Stafford as Co-Trustees and 109,053 shares held in the name of
the Charlotte H. Stafford Trust U/W of Richard C. Stafford, Robert W.
Stafford and Charlotte H. Stafford as Co-Trustees. Ms. Stafford holds
shared investment and voting power with respect to the shares owned by the
two trusts. Ms. Stafford is the sister-in-law of Robert W. Stafford.
Beneficial ownership of the shares owned by the two trusts has also been
reported under the holdings of Robert W. Stafford, although Mr. Stafford
disclaims any pecuniary interest in such shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the 1934
Act"), requires the directors and executive officers of the Company and the
holders of more than ten percent of the Common Stock to file with the Securities
and Exchange Commission reports regarding their ownership and changes in
ownership of the Common Stock. The Company believes that during 2002 its
directors, executive officers and ten percent shareholders complied with all
Section 16(a) filing requirements, with the exception of one Form 4 reporting
one transaction that was filed late by director Charles D. Jons. In making these
statements, the Company has relied upon an examination of the copies of Forms 3
and 4 provided to the Company and on the written representations of its
directors and executive officers.

EXECUTIVE COMPENSATION

The following table sets forth certain compensation information for the
President of the Company and the four other executive officers of the Company or
the Banks who, based on their salary and bonus compensation, were the most
highly compensated for the year ending December 31, 2002. All information set
forth in this table reflects compensation earned by these individuals for
services with the Company or the Banks, as applicable, for the year ending
December 31, 2002, as well as their compensation for each of the years ending
December 31, 2001 and December 31, 2000.

Summary Compensation Table

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NAME, POSITION ALL OTHER
AND ORGANIZATION YEAR SALARY BONUS COMPENSATION (1)
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Daniel L. Krieger, 2002 $177,108 114,518 $24,170
President of the 2001 $166,115 $78,914 $19,124
Company 2000 $165,900 $58,916 $16,695

Thomas H. Pohlmann, 2002 $126,420 $79,045 $25,665
President of First 2001 $120,740 $54,522 $19,124
National BAnk 2000 $112,200 $41,400 $15,085

Terrill L. Wycoff, 2002 $122,040 $67,754 $24,356
Executive Vice President 2001 $114,240 $54,522 $18,985
of First National BAnk 2000 $104,100 $43,962 $14,541

Edward C. Jacobson, 2002 $105,000 $65,461 $20,720
Vice President and 2001 $100,860 $45,435 $16,457
Treasurer of the 2000 $ 92,700 $36,950 $12,733
Company and Senior
Vice President of First
National Bank

Jeffrey K. Putzier, 2002 $ 98,460 $25,818 $14,815
President of Boone Bank 2001 $ 92,880 $11,668 $ 9,756
& Trust Co. 2000 $ 86,400 $14,000 $10,040

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(1) Figures for 2002 consist of contributions made on behalf of the named
executive officer to the Ames National Corporation 401(k) Profit Sharing
Plan sponsored by the Company and the Banks for the benefit of their
respective employees. Figures to 2001 and 2000 consist of contributions
made on behalf of the named executive officer to the Ames National
Corporation 401(k) Profit Sharing Plan and the Ames National Corporation
Money Purchase Pension Plan sponsored by the Company and the Banks for
the benefit of their respective employees. The Money Purchase Pension
Plan was merged into the 401(k) Profit Sharing Plan effective January 1,
2002.

REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

This report describes the current compensation policy and practices as endorsed
by the Board of Directors of the Company and the boards of directors of the
Banks and the process followed in arriving at 2002 compensation provided to
Daniel Krieger, President of the Company, and the other executive officers
identified in the preceding Summary Compensation Table (collectively, the
"executive officers"). Decisions regarding the compensation of Mr. Krieger are
made by the Board of Directors of the Company upon recommendation of the
Compensation Committee of the Board. Decisions regarding the compensation of the
other executive officers are made by the board of directors of the particular
Bank by which each of the executive officers is employed upon recommendation of
the compensation committee of the particular board. Although compensation
decisions are made at the Company and Bank levels, as applicable, the Company
and the Banks all adhere to the same compensation policies and practices.
Accordingly, the following description of the compensation policy and practices
of the Compensation Committee of the Board of Directors of the Company is
equally applicable to the policy and practices of the compensation committee of
the particular Bank by which each of the executive officers is employed.

Compensation Policy and Practices

The executive compensation program of the Company has been designed to provide a
fair and competitive compensation package that will enable the Company to
compete for and retain talented executives and encourage superior performance
through the award of performance-based compensation. The executive compensation
package consists of the following components:

* base salary
* deferred salary
* performance awards
* benefits

Executive compensation decisions made by the Compensation Committee are guided
by the Management Incentive Compensation Plan (the "MIC Plan") which provides
for the allocation of total salary between base salary and deferred salary and
establishes parameters for additional performance awards. Total salary
(consisting of base salary and deferred salary) of the executive officer is
established on an annual basis by the Compensation Committee. In establishing
total salary, the Compensation Committee reviews individual performance, Company
and Bank performance (primarily in terms of profitability ratios) as compared to
peer groups on both a national and state basis and a compensation survey
prepared by the Iowa Bankers Association providing state-wide peer group
compensation data for similarly-sized institutions. No specific weight is
accorded to the various factors considered, and the total salary established is
ultimately a subjective decision on the part of the Compensation Committee. Once
total salary has been established, the MIC Plan contains a formula whereby total
salary is allocated between base salary (which is paid on a monthly basis and is
not contingent on any performance standards) and deferred salary (which is paid
only upon satisfaction of certain performance thresholds), as described below.

Under the MIC Plan, the Compensation Committee establishes on an annual basis an
earnings threshold which is used to determine the payment of deferred salary and
to define eligibility for earning additional performance awards over and above
total salary. The earnings threshold is defined by selecting a return on assets
target that the Compensation Committee views as representing sufficient
performance to enable the executive officer to earn all deferred salary and to
become eligible for additional performance awards in the event earnings exceed
the threshold. In establishing the earnings threshold, the Compensation
Committee reviews and relies primarily on national and state peer group return
on asset ratios of financial institutions of similar size. Although the MIC Plan
provides that the Company and Banks are generally expected to achieve results
above the peer group ratio, the decision concerning the appropriate earnings
threshold is ultimately a subjective decision of the Compensation Committee. The
MIC Plan also requires the Compensation Committee to establish an earnings
"floor" (below which no deferred salary will be earned) and a "ceiling" (which
limits the amount of performance award compensation which may be paid during any
year). The "floor" and "ceiling" earnings levels are also established on a
subjective basis by the Compensation Committee.

Under the MIC Plan, the entitlement to deferred salary and additional
performance awards are reviewed and determined on a semi-annual basis, comparing
the actual earnings during the two prior calendar quarters against the earnings
threshold established under the MIC Plan. If actual earnings are below the
threshold, the executive officer will receive only a portion of the deferred
salary (or no deferred salary at all if earnings are below the "floor") and no
performance award. If actual earnings exceed the threshold, the executive
officer will receive all deferred salary to which he is entitled. In addition,
the executive officer will receive his pre-determined percentage of the
performance award pool established under the MIC Plan, with such pool being an
amount equal to 10% of the amount by which the actual earnings exceed the
threshold (subject to the ceiling established by the Compensation Committee).

Each executive officer also receives on an annual basis a contribution to the
Ames National Corporation 401(k) Profit Sharing Plan (the "401(k) Plan") which
is a defined contribution plan. The Company and the Banks previously sponsored
the Ames National Corporation Money Purchase Pension Plan, but that plan was
merged into the 401(k) Plan effective January 1, 2002. Under the 401(k) Plan, an
executive officer, along with all other eligible employees of the Company and
the Banks, may defer up to fifteen percent of total compensation on an annual
basis and will receive a matching contribution from the Company or applicable
Bank in an amount of up to two percent of total compensation. An additional
contribution of five percent of total compensation (which is subject to a
different vesting schedule than the two percent contribution) is made by the
Company or applicable Bank to the account of each executive officer, as well as
to the accounts of all other eligible employees of the Company and the Banks. In
addition, the Board of Directors of the Company may make a discretionary
contribution to the 401(k) Plan which historically has been based on the
profitability of the Company and the Banks for the year. Such contribution, if
made, is allocated among all eligible employees on a pro rata basis relative to
total compensation. All contributions are subject to certain ceilings
established by applicable law.

Compensation of President

The Compensation Committee used the executive compensation practices described
above to determine Mr. Krieger's compensation for 2002. His total salary for
2002 was established at $291,626 based on a review by the Compensation Committee
of his individual performance, Company and Bank performance and the Iowa Bankers
Association 2002 Salary Survey with respect to the salaries paid to chief
executive officers of Iowa-based banks with deposits in excess of $225 million.
Under the MIC Plan, his total salary was allocated between base salary of
$177,108 and deferred salary of $44,888. He earned all deferred salary to which
he was entitled during 2002, based on actual earnings exceeding the thresholds
established by the Compensation Committee at the beginning of the year. Mr.
Krieger received performance awards in the amount of $69,630 during 2002, also
on the basis of the aggregate earnings of the Banks exceeding the earnings
threshold established by the Compensation Committee at the beginning of the
year. He also received a contribution in the amount of $24,170 to the 401(k)
Plan, the contributions having been determined in the manner described above.

The undersigned members of the Compensation Committee have submitted this
report.

James R. Christy, Chair
Douglas C. Gustafson, DVM
James R. Larson II

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

The members of the Compensation Committee are set forth in the proceeding
section. There are no members of the Compensation Committee who were officers or
employees of the Company or any of the Banks during the fiscal year, who were
previously officers or employees of the Company or the Banks, or who had any
relationship otherwise requiring disclosure hereunder.

STOCK PRICE PERFORMANCE GRAPH

The performance graph omitted herein provides information regarding cumulative,
five-year total return on an indexed basis of the Common Stock as compared with
the NASDAQ Total US Index and the SNL Midwest OTC Bulletin Board Bank Index
("Midwest OTC Bank Index") prepared by SNL Financial L.C. of Charlottesville,
Virginia. The latter index reflects the performance of 66 bank holding companies
operating principally in the Midwest as selected by SNL Financial. The indexes
assume the investment of $100 on December 31, 1997 in the Common Stock, the
NASDAQ Total US Index and the Midwest OTC Bank Index, with all dividends
reinvested. The Company's stock price performance shown in the following graph
is not indicative of future stock price performance.

The data points used in the omitted graphical presentation is as follows:

Period Ending
----------------------------------------------------------
Index 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
---------------------------------------------------------------------------------------

Ames National Corporation 100.00 147.57 168.06 126.14 130.14 158.32
NASDAQ - Total US* 100.00 140.99 261.48 157.42 124.89 86.33
SNL Midwest OTCBank Index 100.00 122.77 106.17 87.51 80.71 103.52

* Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2003. Used with permission. All rights
reserved. crsp.com.

LOANS TO DIRECTORS AND EXECUTIVE OFFICERS
AND RELATED PARTY TRANSACTIONS

Certain directors and executive officers of the Company, their associates or
members of their families, were customers of, and have had transactions with,
the Banks from time to time in the ordinary course of business, and additional
transactions may be expected to take place in the ordinary course of business in
the future. All loans and commitments included in such transactions have been
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons.
In the opinion of management of the Company, such loan transactions do not
involve more than the normal risk of collectability or present other unfavorable
features.

In June of 2002, United Bank & Trust NA ("United Bank"), the Company's new
affiliate bank located in Marshalltown, Iowa, purchased the real estate for its
new office from Leo E. Herrick, the President of United Bank, and reimbursed Mr.
Herrick for certain expenses he personally incurred related to the organization
of United Bank. Mr. Herrick originally purchased the real estate in November of
2001 for $256,221 in anticipation of organizing United Bank and sold the
property to United Bank for $263,550. The amount paid by United Bank was
intended to cover the amount expended by Mr. Herrick to purchase the real estate
and to reimburse him for $7,329 of interest he incurred on a personal loan used
to finance the acquisition. United Bank also reimbursed Mr. Herrick for $18,783
of additional expenses he had personally incurred related to the organization of
United Bank, consisting of $9,021 of accounting, legal and other professional
fees, $9,575 for insurance, utilities and other amounts incurred in maintaining
the property prior to the sale thereof to United Bank and $187 of miscellaneous
expenses. The amounts paid to Mr. Herrick by United Bank for purchase of the
real estate and the reimbursement of expenses were determined based on the
actual out-of-pocket expenses incurred by Mr. Herrick. The amounts paid to Mr.
Herrick were reviewed and approved by Mr. Krieger, President of the Company. The
transactions did not result in any profit to Mr. Herrick.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the Board of Directors in carrying out its oversight
responsibilities for the Company's financial reporting process, audit process
and internal controls. The Audit Committee also reviews the audited financial
statements and recommends to the Board of Directors that they be included in the
Company's annual report on Form 10-K. The Audit Committee is comprised solely of
independent directors.

The Audit Committee has reviewed and discussed the Company's audited financial
statements for the year ended December 31, 2002 with management and McGladrey &
Pullen, LLP, the Company's independent auditors. The Audit Committee has also
discussed with McGladrey & Pullen, LLP the matters required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards) as well as having
received and discussed the written disclosures and the letter from McGladrey &
Pullen, LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). Based on the review and
discussions with management and McGladrey & Pullen, LLP, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in the Company's annual report on Form 10-K for the year ending
December 31, 2002 for filing with the Securities and Exchange Commission.

The undersigned members of the Audit Committee have submitted this report.

Marvin J. Walter, Chair
Charles D. Jons, MD
Betty A. Baudler

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

McGladrey & Pullen LLP, Certified Public Accountants, provided accounting
services to the Company during the year ended December 31, 2002. The Board of
Directors, based on the recommendation of the Audit Committee, has selected
McGladrey & Pullen LLP to provide accounting services to the Company for the
year ending December 31, 2003. A representative of McGladrey & Pullen LLP is
expected to be present at the Meeting with the opportunity to make a statement
if he desires to do so and he is also expected to be available to respond to
appropriate questions.

The following table presents fees for professional audit services rendered by
McGladrey & Pullen, LLP for the audit of the Company's annual financial
statements for 2002 and 2001, and fees billed for other services rendered by
McGladrey & Pullen, LLP and its associated entity RSM McGladrey, Inc. during
2002 and 2001.

2002 2001
--------------------------------

Audit Fees (1) $48,550 $74,475
Audit Related Fees (2) 6,000 6,000
Tax Fees (3) 21,754 11,100
All Other Fees (4) 21,503 18,783
--------------------------------
$97,807 $110,358

(1) Audit fees consist of fees for audit of the Company's annual financial
statements, review of financial statements included in the Company's
quarterly reports on Form 10-Q and services related to the electronic
filing of the Company's periodic reports to the Securities and Exchange
Commission.

(2) Audit related fees consist of fees for audits of financial statements of
certain employee benefit plans maintained by the Company and the Banks.

(3) Tax fees consist of fees for tax consultation and tax compliance services
for the Company and certain employee benefit plans.

(4) All other fees consist of fees primarily related to consultations regarding
the employee benefit plans.

During the years ended December 31, 2002 and 2001, McGladrey & Pullen, LLP and
its associated entity RSM McGladrey, Inc. did not perform any of the
professional services with regard to financial information systems design and
implementation as described in paragraph (c)(4)(ii) of Rule 2-02 of Regulation
S-X.

The Audit Committee has considered whether the services provided by McGladrey &
Pullen, LLP and its associated entity RSM McGladrey, Inc., apart from the audit
services described under the heading "Audit Fees" above, are compatible with
maintaining the independence of McGladrey & Pullen, LLP.

PROPOSALS BY SHAREHOLDERS

In order for any proposals of shareholders pursuant to the procedures prescribed
in Rule 14a-8 under the Securities Exchange Act of 1934 to be presented as an
item of business at the Annual Meeting of Shareholders to be held in 2004, the
proposal must be received at the Company's principal executive offices no later
than November 21, 2003. Such proposals will need to comply with the regulations
of the Securities and Exchange Commission regarding the inclusion of shareholder
proposals in the Company's proxy materials. Any shareholder proposal submitted
outside the procedures prescribed in Rule 14a-8 shall be considered untimely
under the Company's bylaws unless received at the Company's principal executive
offices no later than November 21, 2003 and unless such proposal contains the
information required by the bylaws. Proposals should be submitted to the Company
at its principal executive offices at 405 Fifth Street, Ames, Iowa 50010,
Attention: Secretary. A copy of the Company's bylaws may be obtained by
contacting John P. Nelson, Vice President and Secretary, at the Company's
principal executive offices.

AVAILABILITY OF FORM 10-K REPORT

Copies of the Company's Annual Report to the Securities and Exchange Commission
(Form 10-K) including the financial statements and schedules thereto for the
year ended December 31, 2002, will be mailed when available without charge
(except for exhibits) to a holder of shares of the Common Stock upon written
request directed to John P. Nelson, Vice President and Secretary, Ames National
Corporation, P.O. Box 846, 405 Fifth Street, Ames, Iowa 50010.

OTHER MATTERS

Management of the Company knows of no other matters which will be presented for
consideration at the Meeting other than those stated in the Notice of Annual
Meeting which is part of this Proxy Statement, and management does not intend
itself to present any such other business. If any other matters do properly come
before the Meeting, it is intended that the persons named in the accompanying
Proxy will vote thereon in accordance with their judgment. The persons named in
the Proxy will also have the power to vote for the adjournment of the Meeting
from time to time.

A copy of the Annual Report to Shareholders for the year ended December 31,
2002, is mailed to shareholders together with this Proxy Statement. Such report
is not incorporated in this Proxy Statement and is not to be considered a part
of the proxy soliciting material.

To reduce expenses, the Company, in some cases, is delivering only one copy of
this Proxy Statement and the Annual Report to Shareholders to certain
shareholders who share an address, unless otherwise requested by one or more of
the shareholders at a particular address. A separate Proxy for each shareholder
is included in the voting materials. A shareholder who has received only one set
of voting materials may request separate copies of the voting materials at no
additional cost by contacting the Company at (515) 232-6251 or by writing to
Ames National Corporation, P.O. Box 846, 405 Fifth Street, Ames, Iowa 50010,
Attn: John P. Nelson, Vice President and Secretary. A shareholder may also
contact the Company at the above number or address in the event a shareholder
desires to receive separate voting materials for future annual meetings or if
shareholders who share an address desire to receive a single copy of voting
materials in lieu of the multiple copies they are now receiving.

The Report of the Compensation Committee on Executive Compensation, the Report
of the Audit Committee (including the reference to the independence of the Audit
Committee members) and the Stock Price Performance Graph contained herein are
not being filed with the Securities and Exchange Commission and shall not be
deemed incorporated by reference in any prior or future filings made by the
Company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates such information by reference.

APPENDIX

Ames National Corporation
Ames, Iowa

Audit Committee Charter

Purpose

The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its financial oversight responsibilities. The Audit Committee
should review the Company's financial reports and other financial information;
the Company's systems of internal controls and ethics policies that management
and the Board have established; and the Company's auditing, accounting and
financial reporting process. Consistent with this function, the Audit Committee
should foster adherence to, and should encourage continuous improvement of the
Company's policies, procedures and practices. The Audit Committee's primary
duties and responsibilities are to:

o Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.

o Review and appraise the audit efforts of the Company's external auditor.

o Confirm and assure the independence of the external auditor.

o Provide an open avenue of communication among the external auditor,
financial and senior management, and the Board of Directors.

Membership

The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationships that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgement as a member of the Audit Committee.
All members of the Audit Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Audit Committee
member shall have accounting or related financial management expertise. Audit
Committee members may desire to enhance their familiarity with finance and
accounting by participating in educational programs.

The members of the Audit Committee shall be elected by the Board at the annual
meeting or until their successors are elected and qualified. The Board shall
appoint the Chairperson of the Audit Committee. Meetings

The Audit Committee shall meet at least annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Audit Committee should meet at least annually with management and the external
auditor in separate executive sessions to discuss any matters that the Audit
Committee or each of these groups believe should be discussed privately. In
addition, the Audit Committee or at least its Chair should meet with the
external auditor as needed during each audit year.

Responsibilities and Duties

The Audit Committee should:

Review

o Annually review and update this Charter.

o Review the Company's annual financial statements, annual 10-K, and any
certification, report, opinion, or review rendered by the external auditor.

External Auditor

o Recommend to the Board of Directors the selection of the external auditor,
considering independent and effectiveness and approve the fees paid to the
external auditor. On an annual basis, the Audit Committee should review and
discuss with the external auditor all significant relationships the
external auditor has with the Company to determine the auditor's
independence.

o Review the performance of the external auditor and approve any proposed
discharge of the external auditor by management.

o Periodically consult with the external auditor out of the presence of
management about internal controls and the fullness and accuracy of the
Company's financial statements.

Financial Reporting Process

o In consultation with the external auditor, review the integrity of the
Company's financial reporting processes.

o Consider the external auditor's judgements about the quality and
appropriateness of the Company's accounting principals as applied in its
financial reporting.

o Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principals and practices as suggested by the
external auditor, management, or the internal auditing department.

o Establish regular and separate systems of reporting to the Audit Committee
by management and the external auditor regarding any significant judgements
made in management's preparation of the financial statements and the view
of each as to appropriateness of such judgements.

o Following completion of the annual audit, review separately with management
and the external auditor any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of work or
access to required information.

o Review any significant disagreement among management and the external
auditor in connection with the preparation of the financial statements.

o Review with the external auditor and management the extent to which changes
or improvements in financial or accounting practices, as approved by the
Audit Committee, have been implemented.

Ethical and Legal Compliance

o Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.

o Review management's monitoring of compliance with the Company's Code of
Ethical Conduct, and ensure that management has the proper review system in
place to ensure that financial statements, reports and other financial
information disseminated to governmental organizations, and the public
satisfy legal requirements.

o Review, with the organization's counsel, any legal matter that could have
significant impact on the organization's financial statements.

o Perform any other activities consistent with this Charter, the Company's
By-Laws and governing law, as the Audit Committee or the Board deems
necessary or appropriate.

This Proxy is Solicited on Behalf of the Board of Directors of the Company For
the Annual Meeting of Shareholders on April 23, 2003.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Ames National
Corporation, an Iowa corporation (the "Company"), will be held on Wednesday,
April 23, 2003, at 4:30 o'clock p.m., local time, at the Scheman Building, Iowa
State Center, Ames, Iowa, and any adjournment or postponement thereof (the
"Annual Meeting"), for the following purposes: (i) to elect four members of the
Board of Directors of the Company; and (ii) to consider such other business as
may properly be brought before the Annual Meeting.

Please mark, sign, date and return this Proxy promptly using the enclosed
envelope. If you are able to attend the meeting and wish to vote your shares in
person, you may withdraw your proxy and do so.

The undersigned hereby constitutes and appoints Robert W. Stafford, Marvin J.
Walter, and James R. Christy, or any one or more of them, the proxies and
attorneys of the undersigned, each with full power of substitution (the action
of a majority of them or their substitutes present and acting to be in any event
controlling), for and in the name, place and stead of the undersigned to attend
the Annual Meeting and to vote as directed below all shares of common stock of
the Company held of record by the undersigned on March 19, 2003, with all powers
the undersigned would possess if personally present at such meeting.

The Board of Directors unanimously recommends a vote "FOR" the nominees for
director listed below.

1. Election of Directors

Election of one director, Betty A. Baudler, for a two year term and
three directors, James R Larson II, Robert L. Cramer and Warren R.
Madden, for three year terms:

___ FOR all nominees listed above.

___ FOR all nominees listed above except ______________________.

___ WITHHOLD AUTHORITY to vote for all nominees.

2. In their discretion, upon such other matters as may properly come
before the Annual Meeting.

This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned. If no direction is given, this
Proxy will be voted FOR the nominees for director listed in the
accompanying Proxy Statement.

The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement.

Please Vote, Sign,
Date and Return __________________________________ Date _________

__________________________________ Date _________
Signature(s) of Shareholder(s)

(Please sign exactly as your name(s) appears on this Proxy. When
signing as an attorney, executor, administrator, trustee, guardian or
another representative capacity, please give your full title as such.
Proxies by a corporation should be signed in its name by an authorized
officer. Proxies by a partnership should be signed in its name by an
authorized person. If more than one name appears, all persons so
designated should sign.)

[ ] I plan to attend the Annual Meeting.
Spouse or guest attending _________________________

[ ] I plan to attend the Shareholder Dinner.
Spouse or guest attending _________________________

[ ] I am unable to attend the Annual Meeting.