SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[Mark One]
[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

[_]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission File Number 0-32637

                            AMES NATIONAL CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

           IOWA                                                42-1039071
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of                            (I. R. S. Employer
Incorporation or Organization)                           Identification Number)

                                405 FIFTH STREET
                                AMES, IOWA 50010
                    ----------------------------------------
                    (Address of Principal Executive Offices)

       Registrant's Telephone Number, Including Area Code: (515) 232-6251

                                 NOT APPLICABLE
              ----------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes_X_ No ___

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes __X__ No _____

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

COMMON STOCK, $5.00 PAR VALUE                            3,137,066
- -----------------------------                -----------------------------------
          (Class)                            (Shares Outstanding at May 2, 2005)



                                       1



                            AMES NATIONAL CORPORATION

                                      INDEX


                                                                            Page

PART I.  FINANCIAL INFORMATION

     Item 1.   Consolidated Financial Statements (Unaudited)

               Consolidated Balance Sheets at March 31, 2005
               and December 31, 2004                                         3

               Consolidated Statements of
               Income for the three months ended
               March 31, 2005 and 2004                                       4

               Consolidated Statements of Cash Flows for the
               three months ended March 31, 2005 and 2004                    5

               Notes to Consolidated Financial Statements                    6

     Item 2.   Management's Discussion and Analysis
               of Financial Condition and Results of Operations              6

     Item 3.   Quantitative and Qualitative Disclosures
               About Market Risk                                            19

     Item 4.   Controls and Procedures                                      19



PART II. OTHER INFORMATION

     Items 1 through 6                                                      20

     Signatures                                                             21

                                       2



                AMES NATIONAL CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (unaudited)

                                                             March 31,     December 31,
ASSETS                                                         2005            2004
- ---------------------------------------------------------------------------------------
                                                                    
Cash and due from banks                                    $ 24,733,223    $ 18,759,086
Federal funds sold                                           31,070,000      19,865,000
Interest bearing deposits in financial institutions           7,340,508       9,575,174
Securities available-for-sale                               356,561,743     363,459,462
Loans receivable, net                                       424,922,071     411,638,565
Loans held for sale                                             202,000         234,469
Bank premises and equipment, net                              8,706,945       8,790,636
Accrued income receivable                                     6,471,383       6,262,424
Other assets                                                  3,451,592       1,167,971
                                                           ----------------------------
          Total assets                                     $863,459,465    $839,752,787
                                                           ============================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits
    Demand, noninterest bearing                            $ 65,577,644    $ 71,666,385
    NOW accounts                                            186,747,294     172,313,429
    Savings and money market                                188,598,917     174,358,165
    Time, $100,000 and over                                  79,171,833      69,063,977
    Other time                                              170,999,798     170,773,883
                                                           ----------------------------
          Total deposits                                    691,095,486     658,175,839

  Federal funds purchased and securities sold
    under agreements to repurchase                           58,652,611      64,072,475
  Dividend payable                                            2,352,800       1,537,162
  Deferred income taxes                                               -       2,334,670
  Accrued expenses and other liabilities                      3,773,689       2,708,701
                                                           ----------------------------
          Total liabilities                                 755,874,586     728,828,847


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Common stock, $5 par value, authorized 6,000,000 shares;
    issued March 31, 2005 and December 31, 2004 3,153,230
    shares; outstanding 3,137,066 shares                     15,766,150      15,766,150
  Additional paid-in capital                                  5,378,746      25,378,746
  Retained earnings                                          63,861,476      63,200,352
  Treasury stock, at cost, 16,164 shares                       (889,020)       (889,020)
  Accumulated other comprehensive income, net unrealized
    gain on securities available-for-sale                     3,467,527       7,467,712
                                                           ----------------------------
          Total stockholders' equity                        107,584,879     110,923,940
                                                           ----------------------------
          Total liabilities and stockholders' equity       $863,459,465    $839,752,787
                                                           ============================


                                       3


                   AMES NATIONAL CORPORATION AND SUBSIDIARIES

                        Consolidated Statements of Income
                                   (unaudited)

                                                   Three Months Ended
                                                        March 31,
                                                    2005        2004
- -----------------------------------------------------------------------
Interest and dividend income:
  Loans, including fees                        $ 6,252,751  $ 5,352,668
  Securities:
     Taxable                                     2,230,118    2,076,081
     Tax-exempt                                  1,060,849    1,051,986
  Federal funds sold                                52,567       56,873
  Dividends                                        347,451      377,196
                                               ------------------------
       Total interest income                     9,943,736    8,914,804
                                               ------------------------

Interest expense:
  Deposits                                       2,982,306    2,316,646
  Other borrowed funds                             366,593       74,528
                                               ------------------------
      Total interest expense                     3,348,899    2,391,174
                                               ------------------------

         Net interest income                     6,594,837    6,523,630

Provision for loan losses                           53,725       58,355
                                               ------------------------
         Net interest income after
           provision for loan losses             6,541,112    6,465,275
                                               ------------------------

Noninterest income:
  Trust department income                          332,509      283,871
  Service fees                                     420,156      356,931
  Securities gains, net                            134,938       31,542
  Gain on sales of loans held for sale             113,825      164,188
  Merchant and ATM fees                            145,930      149,080
  Other                                            128,236      155,321
                                               ------------------------
         Total noninterest income                1,275,594    1,140,933
                                               ------------------------

Noninterest expense:
  Salaries and employee benefits                 2,375,948    2,258,919
  Data processing                                  476,713      541,053
  Occupancy expenses                               310,175      267,977
  Other operating expenses                         644,820      584,805
                                               ------------------------
         Total noninterest expense               3,807,656    3,652,754
                                               ------------------------

         Income before income taxes              4,009,050    3,953,454

Provision for income taxes                         995,126      988,912
                                               ------------------------

         Net income                            $ 3,013,924  $ 2,964,542
                                               ========================

Basic and diluted earnings per share           $      0.96  $      0.95
                                               ========================

Dividends declared per share                        $ 0.75       $ 0.46
                                               ========================

Comprehensive income (loss)                    $ (986,261)  $ 4,871,687
                                               ========================

                                       4


                     AMES NATIONAL CORPORATION AND SUBSIDIARIES

                        Consolidated Statements of Cashflows
                                   (unaudited)


                                                                                       2005               2004
- ----------------------------------------------------------------------------------------------------------------
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                     $   3,013,924      $   2,964,542
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Provision for loan losses                                                          53,725             58,355
    Amortization and accretion                                                        157,722            128,672
    Depreciation                                                                      219,430            215,597
    Provision for deferred taxes                                                       13,808            (18,693)
    Securities gains, net                                                            (134,938)           (31,542)
    Change in assets and liabilities:
      Decrease in loans held for sale                                                  32,469            199,139
      (Increase) in accrued income receivable                                        (208,959)          (139,553)
      (Increase) in other assets                                                   (2,282,784)          (181,626)
      Increase in accrued expenses and other liabilities                            1,064,988            536,406
                                                                                  ------------------------------
          Net cash provided by operating activities                                 1,929,385          3,731,297
                                                                                  ------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of securities available-for-sale                                       (25,935,564)       (45,577,674)
  Proceeds from sale of securities available-for-sale                              11,971,370          1,465,948
  Proceeds from maturities and calls of securities available-for-sale              14,489,629         19,992,064
  Net (increase) decrease in interest bearing deposits in financial institutions    2,234,666         (2,225,038)
  Net (increase) in federal funds sold                                            (11,205,000)       (18,310,000)
  Net (increase) in loans                                                         (13,337,231)        (3,931,007)
  Purchase of bank premises and equipment                                            (135,739)          (285,684)
                                                                                  ------------------------------
          Net cash (used in) investing activities                                 (21,917,869)       (48,871,391)
                                                                                  ------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Increase in deposits                                                             32,919,647         40,211,580
  Increase (decrease) in federal funds purchased
    and securities sold under agreements to repurchase                             (5,419,864)           655,834
  Dividends paid                                                                   (1,537,162)        (1,441,204)
                                                                                  ------------------------------
          Net cash provided by financing activities                              $ 25,962,621         39,426,210
                                                                                  ------------------------------

          Net increase (decrease) in cash and cash equivalents                   $  5,974,137         (5,713,884)
CASH AND DUE FROM BANKS
  Beginning                                                                        18,759,086         31,982,144
                                                                                  ------------------------------
  Ending                                                                           24,733,223       $ 26,268,260
                                                                                  ==============================
Cash payments for:
  Interest                                                                          3,358,146          2,482,191
  Income taxes                                                                        122,947       $    130,780


                                       5

AMES NATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1.     Significant Accounting Policies

       The consolidated  financial  statements for the three month periods ended
March 31, 2005 and 2004 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
generally  accepted  accounting  principles 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 10-K. The consolidated
condensed  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.

2.     Dividends

       On February 9, 2005,  the Company  declared a cash dividend on its common
stock,  payable  on May 16,  2005 to  stockholders  of record as of May 2, 2005,
equal to $0.75 per share.

3.     Earnings Per Share

       Earnings per share  amounts were  calculated  using the weighted  average
shares  outstanding   during  the  periods   presented.   The  weighted  average
outstanding  shares  for the three  months  ended  March 31,  2005 and 2004 were
3,137,066 and 3,133,053, respectively.

4.     Off-Balance Sheet Arrangements

       The Company is party to financial instruments with off-balance-sheet risk
in  the  normal  course  of  business.   These  financial   instruments  include
commitments to extend credit and standby  letters of credit.  These  instruments
involve,  to varying  degrees,  elements  of credit risk in excess of the amount
recognized  in  the  balance  sheet.  No  material   changes  in  the  Company's
off-balance sheet arrangements have occurred since December 31, 2004.


                                       6



Item   2.  Management's  Discussion  and  Analysis of  Financial  Condition  and
           Results of Operations


Overview

       Ames National  Corporation is a bank holding company  established in 1975
that owns and operates five bank  subsidiaries  in central  Iowa.  The following
discussion  is provided for the  consolidated  operations of the Company and its
Banks, First National Bank, Ames, Iowa (First National),  State Bank & Trust Co.
(State  Bank),  Boone Bank & Trust Co. (Boone  Bank),  Randall-Story  State Bank
(Randall-Story  Bank) and United Bank & Trust NA (United  Bank).  The purpose of
this  discussion  is to focus on  significant  factors  affecting  the Company's
financial condition and results of operations.

       The Company does not engage in any  material  business  activities  apart
from its ownership of the Banks.  Products and services offered by the Banks are
for  commercial  and  consumer  purposes  including  loans,  deposits  and trust
services.  The Banks also offer investment services through a third-party broker
dealer. The Company employs ten individuals to assist with financial  reporting,
human  resources,  audit,  compliance,  marketing,  technology  systems  and the
coordination of management  activities,  in addition to 174 full-time equivalent
individuals employed by the Banks.

       The Company's  primary  competitive  strategy is to utilize  seasoned and
competent  Bank  management  and local  decision  making  authority  to  provide
customers with faster  response  times and more  flexibility in the products and
services  offered.  This  strategy  is viewed as  providing  an  opportunity  to
increase revenues through creating a competitive  advantage over other financial
institutions.  The Company  also  strives to remain  operationally  efficient to
provide  better   profitability   while  enabling  the  Company  to  offer  more
competitive loan and deposit rates.

       The principal  sources of Company revenues and cashflow are: (i) interest
and fees earned on loans made by the Banks;  (ii) securities gains and dividends
on equity  investments held by the Company and the Banks;  (iii) service charges
on deposit  accounts  maintained  at the Banks;  (iv)  interest on fixed  income
investments held by the Banks; and (v) fees on trust services  provided by those
Banks  exercising  trust  powers.  The  Company's  principal  expenses  are: (i)
interest  expense on deposit  accounts and other  borrowings;  (ii) salaries and
employee  benefits;  (iii) data processing costs associated with maintaining the
Bank's loan and deposit  functions;  and (iv) occupancy expenses for maintaining
the Banks' facilities.  The largest component  contributing to the Company's net
income is net interest income,  which is the difference  between interest earned
on  earning  assets  (primarily  loans and  investments)  and  interest  paid on
interest bearing liabilities  (primarily deposits and other borrowings).  One of
management's principal functions is to manage the spread between interest earned
on earning assets and interest paid on interest bearing liabilities in an effort
to maximize  net interest  income  while  maintaining  an  appropriate  level of
interest rate risk.

       The Company earned net income of  $3,014,000,  or $0.96 per share for the
three  months  ended March 31, 2005,  compared to net income of  $2,965,000,  or
$0.95 per share,  for the three months ended March 31, 2004,  an increase of 2%.
Security  gains of $135,000 were the largest  contributor to the higher level of
quarterly earnings as net interest income had only a marginal increase.

                                       7


The following  management  discussion and analysis will provide a summary review
of important items relating to:

   o   Challenges
   o   Key Performance Indicators and Industry Results
   o   Income Statement Review
   o   Balance Sheet Review
   o   Asset Quality and Credit Risk Management
   o   Liquidity and Capital Resources
   o   Forward-Looking Statements and Business Risks

Challenges

     Management has identified certain challenges that may negatively impact the
Company's  revenues in the future and is  attempting  to position the Company to
best respond to those challenges.

        o  Interest  rates  have  moved  above  their  historic  lows;  however,
           additional  rapid increases in interest rates may present a challenge
           to the Company.  Such an increase may negatively impact the Company's
           net interest margin if interest  expense  increases more quickly than
           interest income.  As a the result of a significant  increase in short
           term  interest  rates and the  competitive  nature  of the  Company's
           markets this past year,  the net interest  margin has fallen to 3.69%
           for the three months  ended March 31, 2005  compared to 4.09% for the
           three months  ended March 31,  2004.  The  Company's  earning  assets
           (primarily its loan and investment  portfolio) have longer maturities
           than its interest bearing  liabilities  (primarily deposits and other
           borrowings);  therefore,  in  a  rising  interest  rate  environment,
           interest  expense will increase more quickly than interest  income as
           the interest  bearing  liabilities  reprice more quickly than earning
           assets. In response to this challenge,  the Banks model quarterly the
           changes in income that would result from various  changes in interest
           rates.  Management believes Bank assets have the appropriate maturity
           and  repricing  characteristics  to optimize  earnings and the Banks'
           interest rate risk positions.

        o  The  Company's  market in central  Iowa has  numerous  banks,  credit
           unions, and investment and insurance  companies competing for similar
           business opportunities. This competitive environment will continue to
           put  downward  pressure on the Banks' net  interest  margins and thus
           affect  profitability.  Strategic planning efforts at the Company and
           Banks continue to focus on  capitalizing  on the Banks'  strengths in
           local markets while working to identify opportunities for improvement
           to gain competitive advantages.

        o  A  potential  challenge  to the  Company's  earnings  would  be  poor
           performance in the Company's equity  portfolio,  thereby reducing the
           historical  level of realized  security  gains.  The  Company,  on an
           unconsolidated basis, invests capital that may be utilized for future
           expansion in a portfolio of primarily  financial  and utility  stocks
           totaling  $23 million as of March 31,  2005.  The Company  focuses on
           stocks  that have  historically  paid  dividends  that may lessen the
           negative effects of a bear market.

                                       8


Key Performance Indicators and Industry Results

     Certain key  performance  indicators  for the Company and the  industry are
presented  in the  following  chart.  The  industry  figures are compiled by the
Federal  Deposit  Insurance  Corporation  (FDIC)  and  are  derived  from  8,975
commercial  banks and  savings  institutions  insured  by the  FDIC.  Management
reviews  these  indicators  on a quarterly  basis for purposes of comparing  the
Company's performance from quarter to quarter against the industry as a whole.

Selected Indicators for the Company and the Industry



              Quarter Ended                           Year Ended December 31,
              March 31, 2005          2004                     2003                      2002
                             ---------------------------------------------------------------------
                 Company     Company      Industry      Company   Industry      Company   Industry
                                                                     
Return on
assets             1.45%       1.56%       1.29%          1.60%      1.38%        1.78%     1.30%

Return on
equity            10.90%      11.47%      13.28%         11.16%     15.04%       11.54%    14.14%

Net interest
margin             3.69%       3.97%       3.53%          4.02%      3.73%        4.51%     3.96%

Efficiency
ratio             48.38%      46.59%      58.03%         47.18%     56.59%       44.64%    56.00%

Capital ratio     12.91%      13.62%       8.12%         14.33%      7.88%       15.46%     7.87%



Key performances indicators include:

  o  Return on Assets

     This ratio is  calculated by dividing net income by average  assets.  It is
     used to  measure  how  effectively  the  assets  of the  Company  are being
     utilized in generating income.  The Company's  annualized return on average
     assets  was 1.45% and  1.56%,  respectively,  for the three  month  periods
     ending  March 31, 2005 and 2004.  Although the  Company's  return on assets
     ratio  compares  favorably to that of the industry,  this ratio declined in
     2005 as assets grew more quickly than income.

  o  Return on Equity

     This ratio is  calculated by dividing net income by average  equity.  It is
     used to  measure  the net income or return the  Company  generated  for the
     shareholders'  equity investment in the Company.  The Company's  annualized
     return on equity ratio is below that of the industry  primarily as a result
     of the higher level of capital the Company  maintains for future growth and
     acquisitions. The Company's return on average equity was 10.90% and 10.91%,
     respectively for the three month periods ending March 31, 2005 and 2004.

                                       9


  o  Net Interest Margin

     The net interest margin for the three months ended March 31, 2005 was 3.69%
     compared to 4.09% for the three months  ended March 31, 2004.  The ratio is
     calculated  by dividing  net  interest  income by average  earning  assets.
     Earning  assets are primarily  made up of loans and  investments  that earn
     interest.  This  ratio is used to measure  how well the  Company is able to
     maintain  interest rates on earning assets above those of  interest-bearing
     liabilities,  which is the  interest  expense  paid on  deposits  and other
     borrowings. The Company's net interest margin declined 40 basis points when
     compared to March 31, 2004 but still  compares  favorably to the  industry.
     Management expects the rising interest rate environment and the competitive
     nature of the Company's market  environment to put downward pressure on the
     Company's margin for the remainder of 2005.

  o  Efficiency Ratio

     This ratio is  calculated by dividing  noninterest  expense by net interest
     income and  noninterest  income.  The ratio is a measure  of the  Company's
     ability to manage  noninterest  expenses.  The Company's  efficiency  ratio
     compares  favorably to the industry's average and was 48.38% and 48.02% for
     the three months ended March 31, 2005 and 2004, respectively.

  o  Capital Ratio

     The average capital ratio is calculated by dividing total equity capital by
     average  total  assets.  It measures  the level of average  assets that are
     funded  by  shareholders'  equity.  Given  an  equal  level  of risk in the
     financial  condition  of two  companies,  the  higher  the  capital  ratio,
     generally the more  financially  sound the company.  The Company's  capital
     ratio is significantly  higher than the industry average. The capital ratio
     declined  from  December  31, 2004 as the result of higher  interest  rates
     causing  the  capital  related to net  unrealized  gains in the Company and
     Banks' investment portfolios to decline.

Industry Results

The FDIC Quarterly Banking Profile reported the following results for the fourth
quarter of 2004:

Strong loan growth and wider net  interest  margins did not offset the  negative
effects of merger expenses at large banks and lower gains on sales of securities
and other assets in the fourth  quarter.  Insured  commercial  banks and savings
institutions  reported $31.8 billion in net income for the quarter, a decline of
$668 million  (2.1%) from the record  earnings  registered in the third quarter.
Nevertheless,  the industry's earnings were the third-highest ever reported, and
represented a $787-million  (2.5%)  improvement over the fourth quarter of 2003.
Also, the industry's net operating  (core) income,  which does not include gains
on securities  sales, set a new quarterly  record of $30.9 billion.  The average
return on assets (ROA) was 1.28% in the fourth  quarter,  marking the first time
in two years that the industry's  quarterly ROA has been below 1.30%. Fewer than
half of all insured banks and thrifts  (48.4%) had an ROA of 1% or higher in the
fourth  quarter,  but this was an  improvement  over the fourth quarter of 2003,
when only 44.8% achieved this benchmark level of  profitability.  Almost two out
of every  three  institutions  (62.1%)  had higher net income than in the fourth
quarter of 2003.


                                       10


Income Statement Review

     The following  highlights a comparative  discussion of the major components
of net income and their impact for the three month  periods ended March 31, 2005
and 2004:

Critical Accounting Policies

     The  discussion  contained  in this Item 2 and other  disclosures  included
within this report are based on the  Company's  audited  consolidated  financial
statements.  These  statements  have been prepared in accordance with accounting
principles  generally  accepted in the United  States of America.  The financial
information  contained in these  statements is, for the most part,  based on the
financial  effects  of  transactions  and  events  that have  already  occurred.
However, the preparation of these statements requires management to make certain
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses.

     The Company's  significant  accounting policies are described in the "Notes
to Consolidated  Financial Statements" contained in the Company's 10-K. Based on
its  consideration  of  accounting  policies  that  involve the most complex and
subjective estimates and judgments,  management has identified its most critical
accounting policy to be that related to the allowance for loan losses.

     The allowance for loan losses is  established  through a provision for loan
losses  that is treated as an expense and charged  against  earnings.  Loans are
charged  against the  allowance  for loan losses when  management  believes that
collectibility  of the  principal  is  unlikely.  The Company has  policies  and
procedures for  evaluating  the overall  credit  quality of its loan  portfolio,
including  timely  identification  of potential  problem  loans.  On a quarterly
basis,  management  reviews the  appropriate  level for the  allowance  for loan
losses  incorporating a variety of risk  considerations,  both  quantitative and
qualitative.   Quantitative   factors  include  the  Company's  historical  loss
experience,   delinquency  and  charge-off  trends,   collateral  values,  known
information  about  individual  loans and  other  factors.  Qualitative  factors
include the general  economic  environment in the Company's  market area and the
expected trend of the economic  conditions.  To the extent actual results differ
from forecasts and management's  judgment,  the allowance for loan losses may be
greater or lesser than future charge-offs.


AVERAGE BALANCES AND INTEREST RATES

     The  following  two tables are used to calculate the Company's net interest
margin.  The first table  includes the Company's  average assets and the related
income to  determine  the  average  yield on earning  assets.  The second  table
includes the average  liabilities  and related  expense to determine the average
rate paid on interest bearing  liabilities.  The net interest margin is equal to
the interest income less the interest expense divided by average earning assets.



                                       11

                                                                AVERAGE BALANCE SHEETS AND INTEREST RATES

                                                                     Three Months Ended March 31,
                                                             2005                                 2004
                                              ---------------------------------     --------------------------------
ASSETS                                         Average     Revenue/     Yield/       Average     Revenue/     Yield/
(dollars in thousands)                         balance     expense       rate        balance     expense       rate
                                              ---------------------------------     ---------------------------------

         Interest-earning assets
                                                                                           
Loans
Commercial                                     $ 63,604    $   918     5.77%        $ 40,780      $  531      5.21%
Agricultural                                     28,672        485     6.77%          26,705         431      6.46%
Real estate                                     307,232      4,507     5.87%         271,841       4,048      5.96%
Installment and other                            25,398        343     5.40%          22,851         343      6.00%
                                              ------------------------------        -------------------------------
Total loans (including fees)                   $424,906    $ 6,253     5.89%        $362,177      $5,353      5.91%

Investment securities
Taxable                                        $225,750    $ 2,289     4.06%        $195,356      $2,164      4.43%
Tax-exempt                                      127,949      2,007     6.27%         120,834       2,024      6.70%
                                              ------------------------------        -------------------------------
Total investment securities                    $353,699    $ 4,296     4.86%        $316,190      $4,189      5.30%

Interest bearing deposits with banks           $  4,749        $44     3.71%        $  7,252         $24      1.32%
Federal funds sold                                8,719         53     2.43%          21,388          57      1.07%
                                              ------------------------------        -------------------------------
Total interest-earning assets                  $792,073    $10,646     5.38%        $707,007      $9,623      5.44%

Non-interest-earning assets                      41,042                              51,465
                                               --------                             --------

TOTAL ASSETS                                   $833,115                             $758,472
                                               ========                             ========
<FN>
1 Average loan balances include nonaccrual loans, if any.  Interest income on nonaccrual loans has been included.
2 Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 35%.
</FN>




                                       12



                                                                AVERAGE BALANCE SHEETS AND INTEREST RATES
                                                                      Three Months Ended March 31,

                                                               2005                                  2004
                                                 ------------------------------ ----------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY              Average     Revenue/     Yield/       Average     Revenue/       Yield/
(dollars in thousands)                            balance     expense      rate         balance     expense        rate
                                                 ------------------------------ ----------------------------------------

              Interest-bearing liabilities
                                                                                                
Deposits
Savings, NOW accounts, and money markets          $335,822      $1,202      1.43%       $311,503      $  615       0.79%
Time deposits < $100,000                           170,985       1,239      2.90%        175,513       1,277       2.91%
Time deposits > $100,000                            74,115         541      2.92%         69,366         424       2.45%
                                                  ----------------------------- ----------------------------------------
Total deposits                                    $580,922      $2,982      2.05%       $556,382      $2,316       1.67%
Other borrowed funds                                69,149         367      2.12%         20,857          75       1.44%
                                                  ----------------------------- ----------------------------------------
Total Interest-bearing                            $650,071      $3,349      2.06%       $577,239      $2,391       1.66%
liabilities                                                     ------                                ------

        Non-interest-bearing liabilities
Demand deposits                                   $ 64,929                              $ 64,154
Other liabilities                                    7,550                                 8,380
                                                  --------                              --------

Stockholders' equity                              $110,565                              $108,699
                                                  --------                              --------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                              $833,115                              $758,472
                                                  ========                              ========

Net interest: income  / margin                                  $7,297      3.69%                     $7,232      4.09%
                                                                                                     =======
Spread Analysis
Interest income/average assets                    $ 10,646       5.11%                                $9,623      5.07%
Interest expense/average assets                      3,349       1.61%                                 2,391      1.26%
Net interest income/average assets                   7,297       3.50%                                 7,232      3.81%

<FN>
1 Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental tax rate of 35%.
</FN>


                                       13


Net Interest Income

     For the three  months  ended March 31,  2005 and 2004,  the  Company's  net
interest   margin   adjusted  for  tax  exempt   income  was  3.69%  and  4.09%,
respectively.  Net  interest  income,  prior to the  adjustment  for  tax-exempt
income,  for the three  months  ended March 31, 2005 and March 31, 2004  totaled
$6,595,000 and $6,524,000, respectively.

     For the quarter ended March 31, 2005, net interest income increased $71,000
or 1.2% when  compared to the same  period in 2004.  Interest  income  increased
$1,029,000 or 11.5% over that same time frame.  The increase in interest  income
was attributable to higher volume of loans and investments and a lower volume of
federal funds sold.

     Interest  expense  increased  $958,000 or 40.1% for the quarter ended March
31, 2005 when compared to the same period in 2004. The higher  interest  expense
for the quarter is  attributable  to a higher volume and rate on total  deposits
and other borrowed funds as market interest rates increased  during the quarter.
Average deposit interest rates were up significantly for all deposit  categories
with the exception of certificates of deposits under $100,000.

Provision for Loan Losses

     The  Company's  provision  for loan losses for the three months ended March
31, 2005 was $54,000 compared to $58,000 during the same period last year.

Non-interest Income and Expense

     Non-interest income increased  $135,000,  or 11.8% during the quarter ended
March  31,  2005  compared  to the same  period  in 2004.  The  increase  can be
attributed in part to a $135,000 of realized  gains on the sale of securities in
the Company's  equity portfolio in the first quarter of 2005 compared to $32,000
in the first  quarter of 2004.  Higher trust and service fees offset lower gains
on the sale of secondary market residential mortgage loans. Overdraft protection
programs  introduced in 2004 have increased the Company's service fee income and
a slow down in refinancing  activities has resulted in lower revenue on the sale
of secondary market residential mortgage loans.

     Non-interest  expense  increased  $155,000 or 4.2% for the first quarter of
2005 compared to the same period in 2004. The increase in other expenses related
to higher auditing costs and employee  salary and benefits.  The higher auditing
costs were associated with complying with Sarbanes-Oxley Act of 2002.

Income Taxes

     The  provision  for income  taxes for March 31, 2005 and March 31, 2004 was
$995,000 and  $989,000,  respectively.  This amount  represents an effective tax
rate of 24.8% for the three  months  ended March 31,  2005 versus  25.0% for the
same quarter in 2004. The Company's  marginal federal tax rate is currently 35%.
The  difference  between  the  Company's  effective  and  marginal  tax  rate is
primarily related to investments made in tax exempt securities.


                                       14

Balance Sheet Review

     As of March  31,  2005,  total  assets  were  $863,459,000,  a  $23,707,000
increase  compared to December 31, 2004.  Asset growth was funded by an increase
in  deposits  primarily  at State Bank that  created a higher  volume of federal
funds sold resulting from temporary public fund deposit balances associated with
the collection of property  taxes.  The loan portfolio grew  $13,284,000 for the
quarter ended March 31, 2005 and also contributed to the higher level of assets.

Investment Portfolio

     The investment  portfolio totaled  $356,562,000 as of March 31, 2005, lower
than the December 31, 2004 balance of  $363,459,000.  The decline was  primarily
due to a decline in market values on the Company and Banks investment portfolios
as the result of increasing market interest rates.

Loan Portfolio

     Net  loans  totaled   $424,922,000   as  of  March  31,  2005  compared  to
$411,639,000  as of December 31, 2004.  The increased  level of loans relates to
new loan originations at First National, Boone Bank, and United Bank. Commercial
and  agricultural  operating  loans  were  the  loan  categories  with  the most
significant growth.

Deposits

     Deposits  totaled  $691,095,000  as of  March  31,  2005,  an  increase  of
$32,920,000  from  December 31, 2004.  Much of the increase is related to public
fund deposits  included in the interest  bearing  checking (NOW) and savings and
money market accounts and a higher level of certificates of deposit greater than
$100,000.

Other Borrowed Funds

     Other borrowed funds as of March 31, 2005 totaled $58,653,000 consisting of
federal  funds  purchased  and  securities  sold under  agreements to repurchase
(repurchase  agreements).  Other  borrowings  as of December  31,  2004  totaled
$64,072,000.  The expected  run-off of  repurchase  agreements  funding at First
National was the primary reason for the lower level of borrowed funds.

Off-Balance Sheet Arrangements

     The Company is party to financial instruments with  off-balance-sheet  risk
in  the  normal  course  of  business.   These  financial   instruments  include
commitments to extend credit and standby  letters of credit.  These  instruments
involve,  to varying  degrees,  elements  of credit risk in excess of the amount
recognized  in  the  balance  sheet.  No  material   changes  in  the  Company's
off-balance sheet arrangements have occurred since December 31, 2004.

Asset Quality Review and Credit Risk Management

     The Company's credit risk is centered in the loan portfolio, which on March
31, 2005 totaled $424,922,000  compared to $411,639,000 as of December 31, 2004.
Net loans  comprise  49% of total  assets as of March 31,  2005.  The  object in
managing  loan  portfolio  risk is to reduce the risk of loss  resulting  from a
customer's  failure to perform  according to the terms of a  transaction  and to
quantify and manage credit risk on a portfolio  basis.  The  Company's  level of
problem loans consisting of non-accrual loans and loans past due 90 days or more
as a  percentage  of total  loans of 0.41% is below that of the  Company's  peer
group of 358 bank holding companies with assets of $500 million to $1 billion as
of December 31, 2004 of 0.56%.

                                       15


     Impaired  loans  totaled  $1,747,000  as of  March  31,  2005  compared  to
$1,976,000 as of December 31, 2004. A loan is considered impaired when, based on
current  information and events,  it is probable that the Company will be unable
to collect the scheduled payments of principal or interest when due according to
the  contractual  terms of the loan  agreement.  Impaired  loans  include  loans
accounted for on a non-accrual  basis,  accruing  loans which are  contractually
past  due 90  days  or  more  as to  principal  or  interest  payments,  and any
restructured loans. As of March 31, 2005,  non-accrual loans totaled $1,647,000,
loans  past due 90 days  still  accruing  totaled  $100,000  and  there  were no
restructured loans outstanding. Other real estate owned as of March 31, 2005 and
December 31, 2004 totaled $728,000 and $772,000, respectively.

     The allowance for loan losses as a percentage  of  outstanding  loans as of
March 31,  2005 and  December  31, 2004 was 1.51% and 1.55%,  respectively.  The
allowance  for loan and lease losses  totaled  $6,516,000  and  $6,475,000 as of
March 31, 2005 and December  31, 2004,  respectively.  Net  charge-offs  totaled
$13,000 for the most recent  quarter end compared to $20,000 for the three month
period ended March 31, 2004.

     The  allowance  for loan losses is  management's  best estimate of probable
losses  inherent in the loan  portfolio  as of the balance  sheet date.  Factors
considered in establishing an appropriate  allowance  include:  an assessment of
the financial condition of the borrower, a realistic  determination of value and
adequacy of  underlying  collateral,  the condition of the local economy and the
condition of the specific  industry of the  borrower,  an analysis of the levels
and trends of loan categories and a review of delinquent and classified loans.

Liquidity and Capital Resources

     Liquidity  management  is the  process by which the  Company,  through  its
Banks' Asset and Liability Committees (ALCO), ensures that adequate liquid funds
are  available  to meet  its  financial  commitments  on a  timely  basis,  at a
reasonable cost and within acceptable risk tolerances. These commitments include
funding  credit  obligations  to  borrowers,  funding of  mortgage  originations
pending delivery to the secondary market, withdrawals by depositors, maintaining
adequate   collateral  for  pledging  for  public  funds,   trust  deposits  and
borrowings,  paying  dividends to shareholders,  payment of operating  expenses,
funding capital expenditures and maintaining deposit reserve requirements.

     Liquidity  is derived  primarily  from core deposit  growth and  retention;
principal and interest payments on loans; principal and interest payments, sale,
maturity  and  prepayment  of  investment  securities;  net cash  provided  from
operations;  and access to other funding sources.  Other funding sources include
federal funds purchased lines,  Federal Home Loan Bank (FHLB) advances and other
capital market sources.

     As of March 31, 2005,  the level of liquidity and capital  resources of the
Company  remain at a satisfactory  level and compare  favorably to that of other
FDIC insured  institutions.  Management  believes that the  Company's  liquidity
sources  will  be  sufficient  to  support  its  existing   operations  for  the
foreseeable future.

The liquidity and capital resources discussion will cover the follows topics:

   o   Review the Company's Current Liquidity Sources
   o   Review of the Statements of Cash Flows
   o   Company Only Cash Flows
   o   Review of Commitments for Capital  Expenditures,  Cash Flow Uncertainties
       and Known Trends in Liquidity and Cash Flows Needs
   o   Capital Resources

                                       16


Review of the Company's Current Liquidity Sources

     Liquid assets of cash on hand, balances due from other banks, federal funds
sold and interest-bearing deposits in financial institutions for March 31, 2005
and December 31, 2004 totaled $63,144,000 and $48,199,000, respectively. Higher
levels of liquidity are primarily the result of large temporary public fund
deposits being held as federal fund sold.

     Other  sources of  liquidity  available  to the Banks as of March 31,  2005
include  outstanding  lines of  credit  with the  Federal  Home Loan Bank of Des
Moines,   Iowa  of  $31,000,000   and  federal  funds   borrowing   capacity  at
correspondent  banks of  $57,500,000  with no current  outstanding  federal fund
balances.  The  Company  had  securities  sold under  agreements  to  repurchase
totaling  $58,653,000 and did not have any outstanding FHLB advances as of March
31, 2005.

     Total  investments  as of March 31,  2005  were  $356,562,000  compared  to
$363,459,000 as of year end 2004. These  investments  provide the Company with a
significant  amount of liquidity  since all of the investments are classified as
available for sale as of March 31, 2005.

     The investment portfolio serves an important role in the overall context of
balance  sheet  management  in  terms  of  balancing  capital   utilization  and
liquidity. The decision to purchase or sell securities is based upon the current
assessment  of economic and  financial  conditions,  including the interest rate
environment,  liquidity and credit  considerations.  The  portfolio's  scheduled
maturities represent a significant source of liquidity.

Review of Statements of Cash Flows

     Operating  cash flows for March 31, 2005 and 2004  totaled  $1,929,000  and
$3,731,000,  respectively.  The variance in  operating  cash flows for the first
three  months of 2005 is an increase  in other  assets of  $2,283,000  primarily
related to accounts  receivable  associated  with corporate  bonds that had been
sold but have not settled as of March 31, 2005.

     Net cash used in investing  activities  through March 31, 2005 and 2004 was
$21,918,000 and $48,871,000,  respectively.  Investment  purchases nearly offset
the bond sales and  maturities  in the  portfolio for the first quarter of 2005.
The decrease in net cash used in investing  activity was  primarily due to lower
bond purchases as a significant  level of bond  purchases  occurred in the first
quarter of 2004 as federal fund sold balances were reduced.

     Net cash  provided  by  financing  activities  for March 31,  2005 and 2004
totaled $25,963,000 and $39,426,000, respectively. A higher level of deposits is
the largest  source of financing cash flows for the three months ended March 31,
2005 but was lower than the deposit  increase  recorded in 2004. As of March 31,
2005,  the Company did not have any external debt  financing,  off balance sheet
financing arrangements, or derivative instruments linked to its stock.

                                       17

Company Only Cash Flows

     The Company's  liquidity on an  unconsolidated  basis is heavily  dependent
upon dividends paid to the Company by the Banks. The Company  requires  adequate
liquidity  to pay its expenses and pay  stockholder  dividends.  For the quarter
ended March 31,  2005,  dividends  paid by the Banks to the Company  amounted to
$2,146,000  compared  to  $2,096,000  for the  same  period  in  2004.  In 2004,
dividends  paid by the  Banks to the  Company  amounted  to  $8,384,000  through
December 31, 2004 compared to $7,868,000  for the year ended  December 31, 2003.
Various  federal and state  statutory  provisions  limit the amount of dividends
banking  subsidiaries  are permitted to pay to their holding  companies  without
regulatory  approval.  Federal  Reserve policy further limits the  circumstances
under which bank holding companies may declare  dividends.  For example,  a bank
holding  company  should not continue its existing rate of cash dividends on its
common stock unless its net income is sufficient to fully fund each dividend and
its prospective rate of earnings  retention appears  consistent with its capital
needs, asset quality and overall financial condition.  In addition,  the Federal
Reserve and the FDIC have issued  policy  statements  which provide that insured
banks and bank holding  companies  should  generally pay  dividends  only out of
current  operating  earnings.  Federal  and state  banking  regulators  may also
restrict the payment of dividends by order.

     The Company has  unconsolidated  interest  bearing  deposits and marketable
investment  securities  totaling  $33,706,000  that are  presently  available to
provide additional liquidity to the Banks.

Review of Commitments  for Capital  Expenditures,  Cash Flow  Uncertainties  and
Known Trends in Liquidity and Cash Flows Needs

     No  material  capital  expenditures  or  material  changes  in the  capital
resource mix are  anticipated  at this time.  The primary cash flow  uncertainty
would be a sudden decline in deposits causing the Banks to liquidate securities.
Historically,  the  Banks  have  maintained  an  adequate  level of  short  term
marketable investments to fund the temporary declines in deposit balances. There
are no known trends in liquidity  and cash flows needs as of March 31, 2005 that
is a concern to management.

Capital Resources

     The Company's total  stockholders'  equity  decreased to $107,585,000 as of
March 31, 2005,  from  $110,924,000 at December 31, 2004. The decrease in equity
is primarily attributable to a decline in capital accounts relating to lower net
unrealized  gains on the  market  value of the  Company  and  Banks'  investment
portfolios.  At March 31, 2005 and December 31, 2004,  stockholders' equity as a
percentage  of total  assets was 12.46% and  13.21%,  respectively.  The capital
levels of the Company  currently exceed applicable  regulatory  guidelines as of
March 31, 2005.

                                       18


Forward-Looking Statements and Business Risks



     The  discussion in the  foregoing  Management  Discussion  and Analysis and
elsewhere in this Report contains forward-looking  statements about the Company,
its business and its prospects.  Forward-looking statements can be identified by
the fact that they do not relate  strictly to historical or current facts.  They
often  include use of the words  "believe",  "expect",  "anticipate",  "intend",
"plan",  "estimate" or words of similar meaning,  or future or conditional verbs
such as "will", "would", "should", "could" or "may". Forward-looking statements,
by their nature,  are subject to risks and  uncertainties.  A number of factors,
many of which are beyond the Company's  control,  could cause actual conditions,
events  or  results  to  differ   significantly  from  those  described  in  the
forward-looking  statements.  Such risks and  uncertainties  with respect to the
Company  include,  but  are  not  limited  to,  those  related  to the  economic
conditions,  particularly  in the  areas  in which  the  Company  and the  Banks
operate,  competitive products and pricing,  fiscal and monetary policies of the
U.S.  government,   changes  in  governmental  regulations  affecting  financial
institutions  (including regulatory fees and capital  requirements),  changes in
prevailing   interest  rates,   credit  risk   management  and   asset/liability
management,  the financial and securities  markets and the  availability  of and
costs associated with sources of liquidity.

     These  factors  may not  constitute  all factors  that could  cause  actual
results  to  differ  materially  from  those  discussed  in any  forward-looking
statement.  The Company operates in a continually  changing business environment
and new facts emerge from time to time.  It cannot  predict such factors nor can
it assess the impact,  if any, of such factors on its financial  position or its
results of operations.  Accordingly,  forward-looking  statements  should not be
relied  upon as a  predictor  of  actual  results.  The  Company  disclaims  any
responsibility  to  update  any  forward-looking   statement  provided  in  this
document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The  Company's  market risk is comprised  primarily  of interest  rate risk
arising from its core banking activities of lending and deposit taking. Interest
rate risk results from the changes in market  interest rates which may adversely
affect the Company's net interest income.  Management  continually  develops and
applies  strategies to mitigate this risk.  Management does not believe that the
Company's  primary  market risk exposure and how it has been managed  to-date in
2005 changed significantly when compared to 2004.

Item 4. Controls and Procedures

     The  principal  executive  officer and principal  financial  officer of the
Company have evaluated the  effectiveness of the Company's  disclosure  controls
and procedures (as such terms are defined in Rule 13a-15(e) under the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act")) as of the end of the
period  covered by this annual  report (the  "Evaluation  Date").  Based on such
evaluation,  such officers have concluded  that, as of the Evaluation  Date, the
Company's  disclosure controls and procedures are effective in bringing to their
attention  on a  timely  basis  material  information  relating  to the  Company
(including  its  consolidated  subsidiaries)  required  to be  included  in  the
Company's periodic filings under the Exchange Act.

Changes in Internal Controls

     There  was no change  in the  Company's  internal  control  over  financial
reporting  identified  in  connection  with  the  evaluation  required  by  Rule
13a-15(d) of the Exchange Act that  occurred  during the  Company's  last fiscal
quarter that has  materially  affected,  or is  reasonably  likely to materially
affect, the Company's internal control over financial reporting.


                                       19


PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

         Not applicable


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         Not applicable


Item 3.  Defaults Upon Senior Securities

         Not applicable


Item 4.  Submission of Matters to a Vote of Security Holders

         None

Item 5.  Other Information

         None

Item 6.  Exhibits

        (a) Exhibits

         31.1   Certification of Principal Executive Officer Pursuant to Section
                302 of Sarbanes-Oxley Act of 2002.

         31.2   Certification of Principal Financial Officer Pursuant to Section
                302 of Sarbanes-Oxley Act of 2002.

         32.1   Certification  of  Principal  Executive  Officer  Pursuant to 18
                U.S.C. Section 1350.

         32.2   Certification  of  Principal  Financial  Officer  Pursuant to 18
                U.S.C. Section 1350.


                                       20


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                          AMES NATIONAL CORPORATION




DATE: May 3, 2005                         By:  /s/ Daniel L. Krieger
                                               ---------------------------
                                               Daniel L. Krieger, President
                                               Principal Executive Officer




                                          By:  /s/ John P. Nelson
                                               ---------------------------
                                               John P. Nelson, Vice President
                                               Principal Financial Officer

                                       21