Table of Contents
2
Corporate Information
Letters To Shareholders
Selected Financial Data
Company Profile
Management’s Report
Management’s Discussion and
Analysis of Financial Condition
and Results of Operations
Page 3
Pages 4
Pages 5 - 6
Pages 7 - 11
Page
12
Pages 13 - 18
Independent Auditor’s Report
Page 19
Consolidated Financial Statements:
Balance Sheets
Statements of Income
Statements of Changes in
Stockholders’ Equity
Statements of Cash Flows
Notes to Consolidated
Financial Statements
First Bankers Trust Company, N.A.
Directors and Officers
Page
Page
20
21
Page 22
Pages 23 - 24
Pages 25 - 40
Page
41
3
CORPORATE INFORMATION
Corporate Description
First Bankers Trustshares, Inc. (FBTI) is a bank holding company for First
Bankers Trust Company, N.A., FBIL Statutory Trust I and FBIL Statutory Trust II.
The company was incorporated on August 25, 1988 and is headquartered in
Quincy, Illinois.
Board of Directors
First Bankers Trustshares, Inc.
David E. Connor
Chairman Emeritus, First Bankers Trustshares, Inc.
First Bankers Trustshares’ mission, through its subsidiaries, is to provide compre-
hensive financial products and services to its retail, institutional, and corporate
customers in the Tri-State area of West Central Illinois and Northeastern Missouri.
Carl Adams, Jr.
President, Illinois Ayers Oil Company
As a community oriented financial institution, the Bank, which traces its begin-
nings to 1946, operates five banking facilities located in Quincy, Illinois, one facil-
ity in Mendon, Illinois in northern Adams County and facilities located in Chicago,
Illinois, Philadelphia, Pennsylvania and Phoenix, Arizona that provide trust servic-
es.
FBIL Statutory Trust I and FBIL Statutory Trust II were capitalized in September
2000 and 2003, respectively, for the purpose of issuing Company Obligated
Mandatorily Redeemable Preferred Securities.
For additional financial information contact:
Joe J. Leenerts, Senior Vice President/Treasurer
First Bankers Trustshares, Inc.
Telephone (217) 228-8000
Stockholder Information
Common shares authorized: 6,000,000
Common shares outstanding:
2,048,574
Stockholders of record:
*As of December 31, 2003
260*
William D. Daniels
Chairman of the Board, First Bankers Trustshares, Inc.
Member, Harborstone Group, LLC.
Mark E. Freiburg
Owner, Freiburg Insurance Agency and Freiburg Development
Company, President, Freiburg, Inc.
Donald K. Gnuse
President & Chief Executive Officer, First Bankers Trustshares, Inc.
Chairman of the Board, First Bankers Trust Company, N.A.
Arthur E. Greenbank
President & Chief Executive Officer, First Bankers Trust Company, N.A.
Phyllis J. Hofmeister
Secretary/Treasurer, Robert Hofmeister, Inc.
Steven E. Siebers
Secretary of the Board, First Bankers Trustshares, Inc.
Attorney, Scholz, Loos, Palmer, Siebers & Duesterhaus
Dennis R. Williams
Chairman of the Board, Quincy Newspapers, Inc.
Inquiries regarding transfer requirements, lost certificates, changes of address and
account status should be directed to the corporation’s transfer agent:
EXECUTIVE OFFICERS
First Bankers Trust Company, N.A.
(Attn: Julie Kenning)
1201 Broadway
P.O. Box 3566
Quincy, IL 62305-3566
Corporate Address
First Bankers Trustshares, Inc.
P.O. Box 3566
Quincy, IL 62305-3566
Independent Auditors
McGladrey & Pullen, LLP
220 N. Main, Suite 900
Davenport, IA 52801
General Counsel
Jenkens & Gilchrist
A Professional Corporation
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Donald K. Gnuse
President and CEO
Steven E. Siebers
Secretary
Joe J. Leenerts
Senior Vice President/Treasurer
FIRST BANKERS TRUSTSHARES, INC. Stock Prices
(For the Three Months Period Ended)
Market Value
High
Low
Period End Close
12/31/03
$ 15.80
$ 15.00
$ 15.40
09/30/03
$ 17.00
$ 14.80
$ 15.75
06/30/03
$ 16.00
$ 14.50
$ 15.25
03/31/03
$ 16.00
$ 14.00
$ 14.00
12/31/02
$ 14.75
$ 14.00
$ 14.75
The following companies make a market in FBTI common stock:
Wachovia Securities
Maine Center, 535 Maine
Quincy, IL 62301
Phone (800) 223-1037
Monroe Securities, Inc.
47 State Street
Rochester, NY 14614
Phone (585) 546-5560
Howe Barnes Investments, Inc.
135 South LaSalle Street
Chicago, IL 60603
Phone (800) 800-4693
Stifel Nicolas & Co. Inc
Sears Tower
233 Wacker Drive, Suite 850
Chicago, IL 60606-6300
Phone (800) 745-7110
Baird Patrick Co.
20 Exchange Place
New York, NY 10005
Phone (800) 421-0123
LETTER TO SHAREHOLDERS
4
William D. Daniels, Chairman
Donald K. Gnuse, President and Chief Executive Officer
Dear Shareholders,
The Year 2003, as in previous years, proved to be a rewarding
The commercial lending department also continued to gener-
year for shareholders. Return on average stockholders’ equity of
16.31% was again a strong financial return for your investment
portfolio. Stated on a per share basis, each share earned $1.52 for
the year, compared to $1.49 for the previous year 2002. Due to
this continued strong earnings performance your Board of
Directors, at their December board meeting, voted to increase the
cash dividend for the tenth year in a row.
While many of our employees are shareholders, we would
like to focus for a moment on the “investment” in our employees
and the communities we serve. As recorded in our financial
report, $8,218,000 was expended during 2003 to generate over
$20,281,000 in gross revenue. Approximately 54% of that
expense was related to employee salary and benefit costs. Those
earnings flow from employees through to their families and in
turn support their budgets for homes, automobiles, children’s edu-
cation, and support for their churches and charities to name but a
few recipients. In summary, a profitable enterprise like First
Bankers Trustshares, benefits everyone – shareholders, employees
and the communities in which we all live.
Looking at what made the Year 2003 such a good year we
simply point to the increase in our trust and mortgage services
revenue. Trust revenue increased over 20% when compared to
last year’s revenue. The increase in new markets and the delivery
of new product offerings provided the emphasis for this growth.
Our mortgage lending department was stellar in its efforts to
maintain quality customer service while managing the dramatic
increase in new home and refinanced loans during 2003. We wish
to express special thanks to our Home Loan Center staff members
for dedicating long, and late hours of work, to meet our cus-
tomers’ request to refinance or purchase their homes and in fact,
help many of them to become first-time homebuyers.
ate new opportunities with enhanced loan income while at the
same time assisting in developing additional commercial business-
es within our community. In summary, our diversification of
financial services continues to exhibit resiliency in generating
strong earnings while building our capital base for more opportu-
nities in the future.
Turning to the Year 2004, our outlook continues to be opti-
mistic. After two years of intensive planning and preparation of
volumes of documents and regulatory filings, only one regulator
approval remains a necessary action to form our new Trust
Company, First Bankers Trust Services, Inc. Upon final regulato-
ry approval, your holding company will own two subsidiaries – a
trust company and a bank. Both of these companies will be oper-
ating with separate boards of directors and staff members.
In closing, we would point out that due to the ever increasing
financial services competition in our local marketplace we contin-
ue to be very active in seeking acquisitions and merger opportuni-
ties to enhance our earnings and shareholder value. Should we
recommend a purchase or merger opportunity, you, as sharehold-
ers, will be the first to be advised and turned to for support.
Thank you for your continued investment in First Bankers
Trustshares, Inc.
William D. Daniels
Chairman
Donald K. Gnuse
President/CEO
5
SELECTED FINANCIAL DATA
(Amount in thousands of dollars, except per share data statistics)
PERFORMANCE
Net income
Preferred stock cash dividends paid
Common stock cash dividends paid
Common stock cash dividend payout ratio
Return on average assets
Return on common stockholders’ equity1
PER COMMON SHARE2
Earnings, basic and diluted
Dividends (Paid)
Book value3
Stock price
High
Low
Close
Price/Earnings per share (at period end)
Market price/Book value (at period end)
Weighted average number of
shares outstanding
AT DECEMBER 31,
Assets
Investment securities
Loans held for sale
Loans
Deposits
Short-term borrowings and Federal
Home Loan Bank advances
Note payable
Company obligated mandatorily
redeemable preferred securities
Stockholders’ equity4
Total equity to total assets4
Tier 1 capital ratio (risk based)
Total capital ratio (risk based)
Leverage ratio
YEAR ENDED DECEMBER 31,
2003
2002
2001
2000
1999
1998
$ 3,123 $ 3,242 $ 3,457 $ 3,007 $ 2,710 $ 2,618
$ - $ - $ - $ - $ - $ 32
$ 533 $ 510 $ 464 $ 361 309 $ 204
7.89%
1.21%
20.27%
13.42%
1.15%
16.40%
12.01%
1.11%
16.43%
11.40%
1.14%
17.23%
15.73%
1.06%
17.81%
17.07%
.97%
16.31%
$ 1.52 $ 1.49 $ 1.34 $ 1.17 $ 1.05 $ 1.02
$ .26 $ .22 $ .18 $ .14 $ .12 $ .08
$ 9.86 $ 8.61 $ 8.66 $ 7.51 $ 6.49 $ 5.62
$ 17.00 $ 16.50 $ 20.00 $ 19.00 $ 13.75 $ 11.50
$ 14.00 $ 14.00 $ 14.00 $ 13.13 $ 11.50 $ 8.50
$ 15.40 $ 14.75 $ 14.25 $ 19.00 $ 13.13 $ 11.50
10.1 9.9 10.6
11.3
1.56 1.71 1.65 2.53 2.02 2.05
12.5
16.2
2,048,574 2,175,059 2,579,230 2,579,230 2,579,230
2,545,358
$ 315,670 $ 311,920 $ 310,668 $ 298,497 $ 258,503 $ 236,323
72,680 68,884
53,582
74
841
453
156,439 125,867
221,808
199,477 187,721
258,413
54,567 76,062
1,175
2,178
201,931 189,531
258,170 256,609
71,897
417
176,455
244,362
24,114
-
23,200
4,500
23,473
-
26,828
-
38,436
2,780
27,495
3,980
-
10,000
$ 20,206 $ 17,636 $ 22,324 $ 19,357 $ 16,737 $ 14,349
-
5,000
5,000
5,000
6.40%
10.90%
13.14%
8.12%
5.65%
10.05%
10.98%
7.18%
7.19%
13.06%
14.03%
8.68%
6.48%
12.31%
13.25%
8.84%
6.47%
9.43%
10.53%
6.45%
6.07%
9.70%
10.92%
6.03%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
SELECTED FINANCIAL DATA
6
Return On Average Assets
Return On Average Common Equity
1.21%
1.14%
1.11%
1.15%
1.06%
0.97%
20.27%
17.23%
16.43%
16.40%
17.81%
16.31%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1998
1999
2000
2001
2002
2003
1998
1999
2000
2001
2002
2003
Earnings Per Share
Price/Earnings Multiples
$1.49
$1.52
$1.34
$1.02
$1.05
$1.17
1998
1999
2000
2001
2002
2003
Market Price To Book Value
2.53X
2.05X
2.02X
1.65X
1.71X
1.56X
3.0X
2.5X
2.0X
1.5X
1.0X
0.5X
0.0X
18.0 X
16.0 X
14.0 X
12.0 X
10.0 X
8.0 X
6.0 X
4.0 X
2.0 X
0.0 X
16.2 X
12.5 X
11.3 X
10.6 X
9.9 X
10.1 X
1998
1999
2000
2001
2002
2003
Loan/Deposit Growth
Loans
Deposits
$199
$156
$188
$126
$300
$250
$200
$150
$100
$50
$0
$244
$176
$257
$258
$258
$190
$202
$222
1998
1999
2000
2001
2002
2003
1998
1999
2000
2001
2002
2003
7
COMPANY PROFILE
First Bankers Trust believes in developing a quality relationship with each of the bank’s customers. This can only be achieved by offering
quality products through a highly effective delivery system of services. Trust means quality relationships, quality products and quality
services. Trust is our first priority in all areas: Consumer Lending, Business Lending, Mortgage Lending, Deposit and Customer Services
and the Trust Department itself.
Trusted by Customers
Consumer Lending
Individual consumers have many
choices available to satisfy their car,
truck, boat and RV loan needs within
the regional marketplace. Nationwide
consumer credit services are also avail-
able over the Internet and with the
manufacturers themselves.
Hugh Roderick
This places a great deal of impor-
tance on making good credit decisions
in a very short period of time at competi-
tive rates and terms. To remain competitive in the market,
gain the confidence of local dealers and consumers, and
enjoy the benefits of repeat business, the bank strives to
maintain a high level of customer satisfaction with its prod-
uct and service.
At First Bankers Trust customers are more than a credit
score. A qualified loan specialist reviews the merits of
each individual borrower to ensure the terms and conditions
of the loan meet the financial needs of the customer.
License and title services are also provided to assist the cus-
tomer in the purchase of their vehicle. First Bankers Trust
offers credit life and vehicle warranty insurance to protect
the customer’s new investment.
Hugh Roderick, Consumer Lending Manager, and his
staff have developed an excellent rapport with area dealers
and a growing base of repeat business by being responsive
to and meeting the needs of each dealer and individual.
After retirement, Ron and Betty Bryan wanted to hit the
open road. They purchased a 35-foot Winnebago with the
idea of travel in mind, and First Bankers Trust assisted them
with their purchase.
When Mona Pyatt’s three children no longer required the
services of car seats in a huge minivan, she wanted to get a
smaller and more easily maneuverable car. She was able to
get a car with a smaller turning radius through a quick turn-
around on a loan.
COMPANY PROFILE
8
decision authority allows the department to focus on meet-
ing the credit needs of our business and farming customers
quickly and efficiently. This focus on customer service has
helped First Bankers Trust to become one of the largest
commercial banks in the market.
Trusted in the Local Economy
Commercial Lending
The Commercial Lending depart-
ment of First Bankers Trust supports
the financing needs of some of the
largest corporations in the tri-state area.
The Commercial Lending
Department has the knowledge and
experience to handle any type of busi-
ness and agricultural lending situation:
small business start-ups, major renova-
tions to existing businesses, operational
line of credit, letters of credit, equipment purchases or lease
financing, inventory purchases, real estate purchases, indus-
try-specific loans and major construction loans.
David Rakers
Senior Vice President David Rakers directs a growing
Commercial loan and Agricultural loan service. Dave and
his staff of ten lending professionals take the time to meet
with each customer, at his or her convenience, to discuss the
customer’s credit needs and to design a financing plan that
meets the customer’s cash flow requirements. Local loan
Dale Koontz has been building on trust for over 30 years.
When his sons Scott and Tim returned to live in Quincy
after graduating from college, Dale expanded the building
business to include them with help from First Bankers
Trust. Tim adds: “From our customer’s point of view it is a
real benefit to have a local bank that can make the lending
decisions locally too.”
Dr. Richard Shatz also learned that getting help from a bank
to establish a new medical practice wasn’t difficult. He
asked about local banks: “Everyone said to go to First
Bankers Trust. So I did. They were great.”
9
COMPANY PROFILE
Trusted in the Community
Mortgage Lending
The purchase of a home is one of
the most rewarding and at the same
time one of the most stressful of times.
Lanse Tomlinson, Senior Vice
President of Mortgage Lending, with
the eleven employees of the Home
Loan Center, has made the ability to
finance a home easier. First Bankers
Trust has an array of home financing
alternatives that can meet the needs of almost any home
buying situation. First time homebuyer programs, VA/FHA
financing, and 15 to 30 year fixed rate financing are some
of the financing alternatives that are available.
Lanse Tomlinson
During 2003, First Bankers Trust assisted over 1,300
families in the purchase or refinancing of their most valu-
able asset, their home. The Home Loan Center staff went
the extra mile to ensure the customers received the funding
they requested in the time frame they required.
Communication is the key. First Bankers Trust Home Loan
Center staff of professionals kept the customer informed
during each step of the funding process. This commitment
to customer service is one of the major reasons First Banker
Trust is one of the leading home financing sources in the
local market.
Customers concerned with problems associated with
mailing their mortgage loan payment to a service provider
outside the local area can take advantage of First Bankers
Trust local servicing alternative. First Bankers Trust offers
competitive long term fixed rate financing while allowing
the customer to make a payment at any of First Bankers
Trust’s six locations.
Customers who are looking to refinance their home or
who would like to use the equity in their existing home to
make improvements, buy a car or take a vacation trust First
Bankers Trust to provide the financing to achieve their
dream.
Eric and Marsha Lundberg had planned their dream home
in Hull, Illinois, for a long time. The Bank helped them
complete the rural home on two acres of land where the
Lundberg’s also have a straw business. Eric says that he
would someday like to buy a farm and that First Bankers
Trust would be part of that dream too.
James and Peggy Genenbacher did buy a farm, and First
Bankers Trust made their 540-acre dream come true. James
grew up in farming, and he was impressed that the Bank
understood what we need and the background of farming.
COMPANY PROFILE
10
Trusted for Reputation and Services
Customer Services
Gretchen McGee, Vice President of
Retail Banking, and her staff of dedi-
cated customer service oriented profes-
sionals at five branch locations in
Quincy and one in Mendon, provide
service for the deposit needs of our
consumer and business customers. Our
products include accounts for checking,
interest bearing checking, money mar-
ket, savings and certificate of deposits,
and a full array of deposit products and services to meet the
needs of every customer.
Gretchen McGee
First Bankers Trust deposit customers can take advan-
tage of the bank’s many product delivery methods: lobby
banking, drive-up banking, ATM banking, telephone bank-
ing, bank-by-mail, night drop service and on-line banking.
Additional services complete the array of conveniences
available to our customers: automatic transfers, loan pay-
ments, deposit interest payments along with electronic bill
payment, check image statements, debit card, overdraft pro-
tection, personal line of credit and credit cards.
Business customers can take advantage of state of the
art on-line banking and cash management services. Check
image statements, placed on a CD-Rom with a file of all
checks paid for each account the customer has with the
bank, are included in the service offerings. Business cus-
tomers can go on-line to make their federal and state
income tax payment, review items to be posted to the
account, and transfer monies between accounts, thereby
maximizing the use of their available cash.
Many of the deposit services offered in the market pro-
vide the same functionality; what sets First Bankers Trust
apart from its competition is our focus on providing the
very best in customer service.
For Art and Susan Pierson, the services of a bank are a mat-
ter of trust, especially for a creative business like Media
Development and Andrew Whitney Productions. Art
became accustomed to effective online services when he
lived in Chicago, and both he and Susan appreciate the any-
time day or night, home or office, features of express inter-
net service. “We trust First Bankers Trust to take care of us
and our banking needs.”
For David and Angela Wedding, www.firstbankers.com, the
online banking service, means that paying bills and review-
ing accounts is a lot easier. They can download information
into their accounting software and handle the activity of
their two businesses in a way that’s easy and convenient as
well as trustworthy.
11
COMPANY PROFILE
Trust in People, Product and Systems
The Trust Department
The banking system in this country
has undergone countless changes over
the past 50 years, and the majority of
banking regulations have been written
in an effort to protect the consumer.
This has meant a more complicated sys-
tem of compliance through economic
cycles and changes in business manage-
ment and technology. Arthur E.
Arthur E. Greenback
Greenbank, President and CEO of First Bankers Trust
Company, a native of Quincy who has been with the Bank
since 1992 and who brought 15 years of managerial experi-
ence from his work at Harris Bank in Chicago, develops the
bank’s vision of the future and leads the bank in the com-
pletion of its strategic plan.
Joe J. Leenerts, Executive Vice
President, Chief Operations Officer and
Chief Financial Officer of the bank,
joined the bank in 1986 and uses his 27
years of experience in the financial
service industry to manage the day-to-
day operations of the Bank. The bank
serves over 9,000 consumer and busi-
ness deposit customers and provides for
the credit needs of over 8,000 business,
Joe J. Leenerts
consumer and mortgage customers. These customers gener-
ate over 1,500,000 transaction requests annually. Over
5,000,000 checks were processed for the customer with over
130,000 statements produced.
Each of these customers entrusts us with his or her most
vital financial information. How do we meet the customer’s
service standards? We earn this trust each and every day by
providing the best in confidential quality customer service
to each and every customer. This commitment to customer
service excellence begins with the bank’s Board of
Directors and is embraced by each member of the staff.
Meeting the financial services needs of our customers is
not our job; it is our profession.
The Trust Department is an integral part of the bank’s
financial success and has passed the $1.2 billion dollar
threshold in total assets under management and administra-
tion. The department provides traditional trust services for
estates, trusts created under a will and guardianships.
Nearly 15 years ago, the Trust Department began providing
Employee Benefit Trust Services as trustee for Employee
Stock Ownership Plans (ESOPs). ESOPs are qualified
retirement plans, like a 401(k), but invested primarily in the
stock of the plan sponsor. This benefit plan provides a form
of ownership to the employee. Additionally, the department
also manages 401(k), profit sharing, pension, stock incen-
tive plans, and self directed IRAs to plan sponsors and indi-
viduals in more than 30 states across the nation, with sales
offices in Chicago, Phoenix, and Philadelphia.
Brian Ippensen, Vice President and
Trust Officer, leads the administrative
staff in handling the complex issues
surrounding its many trust services.
Brian’s training as a Certified Public
Accountant and his experience in
employee benefits has made him a
sought out speaker on this topic.
A current trust customer, Bill
Donius, President and CEO of Pulaski
Brian Ippensen
Bank had this to say about the Trust Department: “We’re
delighted with the excellent service that we have received
from First Bankers Trust. They are certainly on top of their
business and produce a high quality result with a reasonable
price.” The Trust department services the needs of Pulaski
Bank’s Employee Stock Ownership Plan and a Deferred
Compensation Plan. Pulaski Bank is a $430 million bank
serving the customers of metropolitan St. Louis and Kansas
City, Missouri.
In 2004 the Trust Department will become a wholly
owned subsidiary of First Bankers Trustshares, Inc. The
department’s success, with the focus on trust services for its
traditional customers and on its employee benefit trust serv-
ices, made the decision an easy one. The Trust Company
can better focus on its strength and market potential as a
stand-alone entity.
MANAGEMENT’S REPORT
12
To The Stockholders:
Management of First Bankers Trustshares, Inc. has pre-
pared and is responsible for the integrity and consisten-
cy of the financial statements and other related infor-
mation contained in this Annual Report. In the opinion
of Management, the financial statements, which neces-
sarily include amounts based on Management esti-
mates and judgements, have been prepared in conform-
ity with accounting principles generally accepted in the
United States of America and appropriate to the cir-
cumstances.
In meeting its responsibility, First Bankers Trustshares
maintains a system of internal controls and procedures
designed to provide reasonable assurance that assets
are safeguarded, that transactions are executed in
accordance with established policies and practices, and
that transactions are properly recorded so as to permit
preparation of financial statements that fairly present
financial position and results of operations in conform-
ity with accounting principles generally accepted in the
United States of America. Internal controls and proce-
dures are augmented by written policies covering stan-
dards of personal and business conduct and an organi-
zation structure providing for division of responsibility
and authority.
The effectiveness of, and compliance with, established
control systems are monitored through a continuous
program of internal audit and credit examinations. In
recognition of cost-benefit relationships and inherent
control limitations, some features of the control sys-
tems are designed to detect rather than prevent errors,
irregularities and departures from approved policies
and practices. Management believes the system of
controls has prevented or detected, on a timely basis,
any occurrences that could be material to the financial
statements and that timely corrective actions have been
initiated when appropriate.
First Bankers Trustshares engaged the firm of
McGladrey & Pullen, LLP, Independent Auditors, to
render an opinion on the consolidated financial state-
ments. To the best of our knowledge, the Independent
Auditors were provided with access to all information
and records necessary to render their opinion.
The Board of Directors exercises its responsibility for
the financial statements and related information
through the Audit Committee, which is composed
entirely of outside directors. The Audit Committee
meets regularly with Management, the internal auditing
staff and the Independent Auditors to assess the scope
of the annual audit plan and to discuss audit, internal
control and financial reporting issues, including major
changes in accounting policies and reporting practices.
The Independent Auditors also meet with the Audit
Committee, without Management being present, to
afford them the opportunity to discuss the adequacy of
compliance with established policies and procedures
and the quality of financial reporting.
Donald K. Gnuse
President and Chief Executive Officer
Joe J. Leenerts
Senior Vice President/Treasurer
and Chief Financial Officer
13
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Introduction
The following discussion of the financial condition and
results of operations of First Bankers Trustshares, Inc. pro-
vides an analysis of the consolidated financial statements
included in this annual report and focuses upon those fac-
tors which had a significant influence on the overall 2003
performance.
The discussion should be read in conjunction with the
Company’s consolidated financial statements and notes
thereto appearing elsewhere in this Annual Report.
The Company was incorporated on August 25, 1988, and
acquired First Midwest Bank/ M.C.N.A. (the Bank) on June
30, 1989. The Bank acquisition was accounted for using
purchase accounting. Prior to the acquisition of the Bank,
the Company did not engage in any significant business
activities.
Financial Management
The primary business of the Company is that of a communi-
ty-oriented financial institution offering a variety of finan-
cial services to meet the needs of the communities it serves.
The Company attracts deposits from the general public and
uses such deposits, together with borrowings and other
funds, to originate one-to-four family residential mortgage
loans, consumer loans, small business loans and agricultural
loans in its primary market area. The Company also invests
in mortgage-backed securities, investment securities consist-
ing primarily of U.S. government or agency obligations,
financial institution certificates of deposit, and other liquid
assets.
The Company’s goal is to achieve consistently high levels
of earning assets and loan/deposit ratios while maintaining
effective expense control and high customer service levels.
The term “high level” means the ability to profitably
increase earning assets. As deposits have become fully
deregulated, sustained earnings enhancement has focused on
“earning asset” generation. The Company will focus on
lending money profitably, controlling credit quality, net
interest margin, operating expenses and on generating fee
income from services.
Consolidated Assets
(Amounts in thousands of dollars)
Assets
Cash and due from banks:
Non-interest bearing
Interest bearing
Securities
Federal funds sold
Loans held for sale
Net loans
Other assets
Total Assets
Liabilities &
Stockholders’ Equity
Deposits
Short-term borrowings
Federal Home Loan
Bank advances
Note payable
Company obligated
manditorily redeemable
preferred securities
Other liabilities
Stockholders’ equity
Total Liabilities &
Stockholders’ Equity
2003
Change
2002
Change
2001
2000
1999
1998
5 Year
Growth
Rate
$ 9,586 (14.79)% $ 11,250 30.34 % $ 8,631 $ 7,555 $ 6,964 $ 5,710 67.88 %
5,424 (76.08)
7,274 (25.43)
53,582 (1.81)
13,500 -
453 (61.45)
219,545 9.98
13,580 48.77
17,228 16,163
76,062 71,897 72,680 68,884 (22.21)
9,500 18,700 13,425 20,600 (34.47)
74
841 (46.14)
174,504 154,520 124,007 77.04
9,359 9,007 50.77
22,674 31.61
54,567 (28.26)
13,500 42.11
1,175 (46.05)
199,626 6.63
9,128 (7.33)
2,178
187,219
9,850
981
9,261
417
$ 315,670 1.20% $ 311,920 .40 % $ 310,668 $ 298,497 $ 258,503 $ 236,323 33.58 %
$ 258,413 .09 % $ 258,170 .61 % $ 256,609 $ 244,362 $ 199,477 $ 187,721 37.66 %
10,473 17,828 26,436 13,495 (62.10)
5,114 21.76
4,200 (59.90)
19,000 -
- (100.00)
19,000 46.15
4,500 -
13,000 9,000 12,000 14,000 35.71
2,780 3,980 -
-
-
10,000 100.00
2,139 (13.12)
21,004 13.00
5,000 -
2,462 (13.64)
18,588 (18.24)
5,000 5,000
- 100.00
2,851 2,972 2,538 2,641 (19.01)
22,735 19,335 15,272 14,486 45.00
-
$ 315,670
1.20 %
$ 311,920
.40 %
$ 310,668
$ 298,497
$ 258,503
$ 236,323
33.58 %
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
14
At December 31, 2003, the Company had assets of
$315,670,000 compared to $311,920,000 at December 31,
2002. The reduction in cash and due from banks (55.75%),
securities (1.81%) and the increase in deposits (.09%) were
the primary sources used to fund the increase in gross loan
outstanding (9.84%) and the purchase of $4,000,000 in
Bank Owned Life Insurance. In addition, the Company’s
long term debt position was extinguished with the funds
generated by the issuance of $5,000,000 of Trust Preferred
Securities.
Demand for the Bank’s lending products, including com-
mercial lines of credit, residential real estate, and consumer
loans have traditionally been moderately strong.
Commercial (9.32%), consumer (18.35%), residential real
estate (6.36) and tax exempt (28.20%) lending experienced
growth during 2003. Approximately $10,768,000 of fixed
rate long-term residential real estate loans were sold in the
secondary market during 2003 while $13,294,000 was sold
in 2002. Agricultural real estate loans totaling $1,414,000
were sold in the secondary market during 2003, while
$385,000 was sold in 2002. In addition, under the
Company’s student loan program, approximately $341,000
in student loans was sold to Sallie Mae during 2003 com-
pared to $298,000 sold in 2002. Management continues to
place emphasis on the quality versus the quantity of the
credits placed in the portfolio.
In addition to lending, the Company has focused on main-
taining and enhancing high levels of fee income for its
existing services and new services. Generation of fee
income will be a goal of the Company and should be a
source of continued revenues in the future.
Results of Operations Summary
The Company’s earnings are primarily dependent on net
interest income, the difference between interest income and
interest expense. Interest income is a function of the bal-
ances of loans, securities and other interest earning assets
outstanding during the period and the yield earned on such
assets. Interest expense is a function of the balances of
deposits and borrowings outstanding during the same period
and the rates paid on such deposits and borrowings. The
Company’s earnings are also affected by provisions for loan
losses, service charges, trust income, other non-interest
income and expense and income taxes.
Non-interest expense consists primarily of employee com-
pensation and benefits, occupancy and equipment expenses,
amortization and general and administrative expenses.
Prevailing economic conditions as well as federal regula-
tions concerning monetary and fiscal policies as they pertain
to financial institutions significantly affect the Company.
Deposit balances are influenced by a number of factors
including interest rates paid on competing personal invest-
ments and the level of personal income and savings within
the institution’s market. In addition, growth of deposit bal-
ances is influenced by the perceptions of customers regard-
ing the stability of the financial services industry. Lending
activities are influenced by the demand for housing, compe-
tition from other lending institutions, as well as lower inter-
est rate levels, which may stimulate loan refinancing. The
primary sources of funds for lending activities include
deposits, loan payments, borrowing and funds provided
from operations.
For the year ended December 31, 2003, the Company
reported consolidated net income of $3,123,000, a $119,000
(3.67%) decrease from 2002. Net interest income for the
periods being compared decreased $385,000 or 3.83%.
Other income increased $645,000 (18.70%) and other
expenses increased $88,000 (1.08%) over 2002 totals.
Analysis of Net Income
The Company’s assets are primarily comprised of interest
earning assets including commercial, agricultural, consumer
and real estate loans, as well as federal funds sold, interest
bearing deposits in banks and securities. Average earning
assets equaled $303,538,000 for the year ended December
31, 2003. A combination of interest bearing and non-inter-
est bearing deposits, long term debt, federal funds pur-
chased, securities sold under agreement to repurchase, other
borrowings and capital funds are employed to finance these
assets.
15
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
Consolidated Income Summary
(Amounts in thousands of dollars)
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision
for loan losses
Other income
Other expense
Income before taxes
Income tax expense
Net income
2003
Change
2002
Change
2001
2000
1999
1998
5 Year
Growth
Rate
$ 16,187 ( 9.02)% $ 17,792 (12.16)% $ 20,255 $ 19,839 $ 16,414 $ 15,414
(10,967) (11,059) (8,204) (7,884)
(6,530) (15.74)
$ 9,288 $ 8,780
$ 9,657 (3.83)
$ 8,210 $ 7,530
(660) (240) (240) (144)
(1,285) 29.80
(7,750) (29.33)
$ 10,042 8.12%
(990) 50.00
5.01 %
(17.17)%
28.25 %
792.36
3,449 (11.50)
(8,130) 7.51
$ 8,372 (7.51)% $ 9,052 4.91 % $ 8,628 $ 8,540 $ 7,970 $ 7,386
3,897 2,700 2,552 2,231
4,094 18.70
(7,562) (6,951) (6,474) (5,795)
(8,218) 1.08
$ 4,248 (2.81)% $ 4,371 (11.93)% $ 4,963 $ 4,289 $ 4,048 $ 3,822
(1,125) (.35)
(1,506) (1,282) (1,338) (1,204)
$ 3,123 (3.67)% $ 3,242 (6.22)% $ 3,457 $ 3,007 $ 2,710 $ 2,618
(1,129) (25.03)
13.35 %
83.51
41.81
11.15 %
(6.56)
19.29 %
For the Years Ended December 31,
(Amounts in thousands of dollars)
2002
$ 17,270
522
(7,750)
2001
$ 19,980
275
(10,967)
2003
$ 15,186
1,001
(6,530)
$ 9,657
$ 10,042
$ 9,288
$ 303,538
$ 289,637
$ 285,259
3.18%
3.47%
3.26%
Interest Income
Loan Fees
Interest Expense
Net Interest
Income
Average Earning
Assets
Net Interest
Margin
The yield on average earning assets for the year ended 2003
was 5.33% while the average cost of funds for the same
period was 2.59% on average interest bearing liabilities of
$251,845,000. The yield on average earning assets for the
year ended 2002 was 6.14%, while the average cost of
funds for the same period was 3.17% on average interest
bearing liabilities of $244,760,000. The decrease in net
interest income of $385,000 can be attributed to the 81 basis
points decline in earning asset yield. The increase in net
average earning assets of $6,816,000 and the decrease in
cost of funds of 58 basis points was not enough to off set
the decrease in net interest income caused by the reduction
in earning asset yields.
Provision for Loan Losses
The allowance for loan losses as a percentage of net loans
outstanding is 1.02% at December 31, 2003, compared to
1.14% at December 31, 2002. Net loan charge-offs totaled
$1,327,000 for the year ended December 31, 2003 com-
pared to $997,000 in 2002.
The amounts recorded in the provision for loan losses are
determined from management’s quarterly evaluation of the
The amounts recorded in the provision for loan losses are
quality of the loan portfolio. In this review, such factors as
determined from management’s quarterly evaluation of
the quality of the loan portfolio. In this review, such
the volume and character of the loan portfolio, general eco-
factors as the volume and character of the loan portfolio,
nomic conditions and past loan loss experience are consid-
general economic conditions and past loan loss
ered. Management believes that the allowance for loan
experience are considered. Management believes that the
losses is adequate to provide for possible losses in the port-
allowance for loan losses is adequate to provide for
folio at December 31, 2003.
possible losses in the portfolio at December 31, 2003.
Other Income
Other Income
Other income may be divided into two broad categories -
recurring and non-recurring. Trust fees and service charges
on deposit accounts are the major sources of recurring other
income. Investment securities gains and other income vary
annually. Other income for the period ended December 31,
2003 was $4,094,000, an increase of $645,000 (18.70%)
from 2002. The securities gains of $192,000 were generat-
ed from the implementation of an investment strategy that
was directed to the enhancement of earnings for future peri-
ods.
Other Expense
Other expenses for the period ended December 31, 2003
totaled $8,218,000, an increase of $88,000 (1.08%) from
2002 year end totals. Salaries and employee benefits
expense aggregated 53.95% and 53.86% of total other
expense for the year ended December 31, 2003 and 2002
respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
16
Non-accrual, Restructured and Past Due Loans and Leases and Other Real Estate Owned
(Amounts in thousands of dollars)
At December 31,
Non-accrual loans and leases
Other real estate owned
Total non-performing assets
Loans and leases past due 90 days or more and still accruing interest
Total non-performing assets and 90-day past due loans and leases
Interest income as originally contracted on non-accrual
and restructured loans and leases
Interest income recognized on non-accrual and
restructured loans and leases
Reduction of interest income due to non-accrual
and restructured loans and leases
Reduction in basic and diluted earnings per share due to
non-accrual and restructured loans and leases
Income Taxes
The Company files its Federal income tax return on a con-
solidated basis with the Bank. See Note 16 to the consoli-
dated financial statements for detail of income taxes.
Liquidity
The concept of liquidity comprises the ability of an enterprise
to maintain sufficient cash flow to meet its needs and obliga-
tions on a timely basis. Bank liquidity must thus be consid-
ered in terms of the nature and mix of the institution’s sources
and uses of funds.
Bank liquidity is provided from both assets and liabilities.
The asset side provides liquidity through regular maturities of
investment securities and loans. Investment securities with
maturities of one year or less, deposits with banks and feder-
al funds sold are a primary source of asset liquidity. On
December 31, 2003, these categories totaled $34,656,000 or
10.98% of assets, compared to $49,366,000 or 15.83% the
previous year.
As of December 31, 2003, securities held to maturity includ-
ed $298,000 of gross unrealized gains and $1,000 of gross
unrealized losses on securities which management intends to
hold until maturity. Such amounts are not expected to have a
material effect on future earnings beyond the usual amortiza-
tion of premium and accretion of discount.
2003
2002
2001
2000
1999
1998
206
$ 189 $ 104 $ 148 $ 242 $ 147 $ 88
-
$ 395 $ 145 $ 317 $ 242 $ 260 $ 88
31
$ 596 $ 203 $ 746 $ 731 $ 518 $ 119
169 -
429 489
113
41
201
58
258
$ 9
$ 7
$ 16
$ 26
$ 10
$ 9
-
-
-
-
-
-
$ 9
$ 7
$ 16
$ 26
$ 10
$ 9
$ .00
$ .00
$ .00
.01
$ .00
$ .00
Closely related to the management of liquidity is the man-
agement of rate sensitivity (management of variable rate
assets and liabilities), which focuses on maintaining a stable
net interest margin, an important factor in earnings growth
and stability. Emphasis is placed on maintaining an evenly
balanced rate sensitivity position to avoid wide swings in
margins and minimize risk due to changes in interest rates.
The Company’s Asset/Liability Committee is charged with
the responsibility of prudently managing the volumes and
mixes of assets and liabilities of the subsidiary Bank.
Management believes that it has structured its pricing mech-
anisms such that the net interest margin should maintain
acceptable levels in 2003, regardless of the changes in inter-
est rates that may occur. The following table shows the
repricing period for interest-earning assets and interest-bear-
ing liabilities and the related repricing gap (Amounts in thou-
sands of dollars):
Interest-earning assets
Interest-bearing liabilities
Repricing gap
(repricing assets minus
repricing liabilities)
Interest-earning assets
Interest-bearing liabilities
Repricing gap
(repricing assets minus
repricing liabilities)
As of December 31, 2003
Repricing Period
After one
Year through
Five years
$ 129,738
65,631
Through
One year
$ 130,474
170,662
After
Five years
$ 40,291
5,000
$ (40,188)
$ 64,107
$ 35,291
As of December 31, 2002
Repricing Period
After one
Year through
Five years
$ 124,085
78,448
Through
One year
$ 126,442
163,444
After
Five years
$ 44,865
5,000
$ (37,002)
$ 45,637
$ 39,865
17
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
Asset Liability Management
Since changes in interest rates may have a significant impact
on operations the Company has implemented, and currently
maintains, an asset liability management committee at the
Bank to monitor and react to the changes in interest rates and
other economic conditions. Research concerning interest rate
risk is supplied by the Company from information received
from a third party source. The committee acts upon this
information by adjusting pricing, fee income parameters,
and/or marketing emphasis.
Common Stock Information and Dividends
The Company’s common stock is held by 260 shareholders as
of December 31, 2003, and is traded in a limited over-the-
counter market.
On December 31, 2003 the market price of the Company’s
common stock was $15.40. Market price is based on stock
transactions in the market. Cash dividends on common stock
of $553,000 were declared by the Board of Directors of the
Company for the year ended December 31, 2003.
Closing Share Price Data
$19.00
$14.25
$14.75
$15.40
$13.13
$11.50
1998
1999
2000
2001
2002
2003
$20.00
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
Effects of Inflation
Until recent years, the economic environment in which the
Company operates has been one of significant increases in
the prices of most goods and services and a corresponding
decline in the purchasing power of the dollar.
Banks are affected differently than other commercial enter-
prises by the effects of inflation. Some reasons for these dis-
parate effects are a) premises and equipment for banks repre-
sent a relatively small proportion of total assets; b) a bank’s
asset and liability structure is substantially monetary in
nature, which can be converted into a fixed number of dollars
regardless of changes in prices, such as loans and deposits;
and c) the majority of a bank’s income is generated through
net interest income and not from goods or services rendered.
Although inflation may impact both interest rates and volume
of loans and deposits, the major factor that affects net inter-
est income is how well a bank is positioned to cope with
changing interest rates.
Capital
The ability to generate and maintain capital at adequate lev-
els is critical to the Company’s long term success. A common
measure of capitalization for financial institutions is primary
capital as a percent of total assets.
Regulations also require the Company to maintain certain
minimum capital levels in relation to consolidated Company
assets. Regulations require a ratio of capital to risk-weighted
assets of 8.00 percent.
The Company’s capital, as defined by the regulations, was
13.14 percent of risk-weighted assets at December 31, 2003.
In addition, a leverage ratio of at least 4.00 percent is to be
maintained. At December 31, 2003, the Company’s leverage
ratio was 8.12 percent.
Risked Based Capital Ratios
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
14.03%
13.25%
13.14%
10.92%
10.53%
10.98%
1998
1999
2000
2001
2002
2003
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULT OF OPERATIONS
18
Financial Report
Upon written request of any shareholder of record on
December 31, 2003, the Company will provide, without
charge, a copy of its 2003 Annual Report including financial
statements and schedules.
The Company filed a Form 15 with the Securities and
Exchange Commission to discontinue the filing of quarterly
(10-Q) and annual (10-K) reports based on the Company’s
number of stockholders, however, the Company does pre-
pare similar reports to those required under the Securities
Exchange Act of 1934.
Notice of Annual Meeting of Stockholders
The annual meeting of stockholders will be May 11, 2004 at
9:00 A.M. at the Quincy Holiday Inn, 201 South 3rd Street,
Quincy, Illinois.
19
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
First Bankers Trustshares, Inc.
Quincy, Illinois
We have audited the accompanying consolidated balance sheets of First Bankers Trustshares, Inc. and subsidiaries
as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’
equity and cash flows for the years ended December 31, 2003, 2002 and 2001. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial state-
ments based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall finan-
cial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of First Bankers Trustshares, Inc. and subsidiaries as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for the years ended December 31, 2003, 2002 and 2001, in con-
formity with accounting principles generally accepted in the United States of America.
Davenport, Iowa
February 13, 2004
McGladrey & Pullen, LLP is a member firm of RSM International –
an affiliation of separate and independent legal entities
FINANCIAL SUMMARY
20
FIRST BANKERS TRUSTSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of dollars, except share and per share data)
Assets
Cash and due from banks (Note 3)
Non-interest bearing
Interest bearing
Securities held to maturity (Note 4)
Securities available for sale (Note 4)
Federal funds sold
Loans held for sale
Loans (Note 5 and 9)
Less allowance for loan losses
Net loans
Premises, furniture and equipment, net (Note 6)
Accrued interest receivable
Life insurance contracts
Other assets
TOTAL ASSETS
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing demand
Interest bearing demand
Savings
Time (Note 7)
Total Deposits
Short-term borrowings (Note 8)
Federal Home Loan Bank advances (Note 9)
Note payable (Note 10)
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely
subordinated debentures (Note 11)
Accrued interest payable
Other liabilities
TOTAL LIABILITIES
Commitments and Contingencies (Note 12)
Stockholders’ Equity (Note 14)
Preferred stock, Series A, nonvoting, variable rate,
cumulative, no par value, $50 stated value; authorized
50,000 shares; issued and outstanding none
Common stock, $1 par value; shares authorized
6,000,000; Shares issued 2,579,230 and
outstanding 2,048,574
Additional paid in capital
Retained earnings
Accumulated other comprehensive income
Treasury stock, at cost - 530,656 shares
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
December 31,
2003
2002
$ 9,586
5,424
$ 15,010
$ 7,231
46,351
13,500
453
221,808
(2,263)
$ 219,545
$ 3,727
1,364
4,100
4,389
$ 315,670
$ 11,250
22,674
$ 33,924
$ 8,700
45,867
13,500
1,175
201,931
(2,305)
$ 199,626
$ 4,082
1,632
-
3,414
$ 311,920
$ 51,234
66,978
30,407
109,794
$ 258,413
5,114
19,000
-
$ 43,978
72,824
29,267
112,101
$ 258,170
4,200
19,000
4,500
10,000
834
1,305
$ 294,666
5,000
1,002
1,460
$ 293,332
-
-
2,580
2,251
22,804
798
(7,429)
$ 21,004
2,580
2,251
20,234
952
(7,429)
$ 18,588
$ 315,670
$ 311,920
See notes to consolidated financial statements
21
FINANCIAL SUMMARY
FIRST BANKERS TRUSTSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands of dollars, except per share data)
Interest income:
Loans, including fee income:
Taxable
Non-taxable
Securities:
Taxable
Non-taxable
Federal funds sold
Interest bearing deposits in banks
Other
Total interest income
Interest expense:
Deposits:
Interest bearing demand and savings
Time
Total interest on deposits
Short-term borrowings
Federal Home Loan Bank advances
Note payable
Company obligated mandatorily redeemable
preferred securities
Total interest expense
Net interest income
2003
Years Ended December 31,
2002
2001
$ 13,651
171
$ 13,897
198
$ 14,874
138
1,270
737
130
132
96
$ 16,187
2,460
822
146
188
81
$ 17,792
3,275
854
468
557
89
$ 20,255
$ 887
3,955
$ 4,842
83
912
102
591
$ 6,530
$ 9,657
$ 1,440
4,609
$ 6,049
158
854
159
530
$ 7,750
$ 10,042
$ 2,646
6,714
$ 9,360
553
528
-
526
$ 10,967
$ 9,288
Provision for loan losses (Note 5)
Net interest income after provision for loan
losses
$ 1,285
$ 990
$ 660
$ 8,372
$ 9,052
$ 8,628
Other income:
Trust department
Service charges on deposit accounts
Gain on sale of loans
Investment securities gains, net
Other
Total other income
Other expenses:
Salaries and employee benefits
Occupancy expense, net
Equipment expense
Computer processing
Professional services
Amortization of goodwill
Other
Total other expenses
Income before income taxes
Income taxes (Note 16)
Net income
Earnings per share of common stock, basic and diluted
$ 1,671
1,079
154
192
998
$ 4,094
$ 4,434
535
636
454
273
-
1,886
$ 8,218
$ 4,248
1,125
3,123
$ 1.52
$ 1,387
880
135
85
962
$ 3,449
$ 4,379
551
699
391
197
-
1,913
$ 8,130
$ 4,371
1,129
3,242
$ 1.49
$ 1,445
863
155
446
988
$ 3,897
$ 4,069
519
633
351
132
134
1,724
$ 7,562
$ 4,963
1,506
3,457
$ 1.34
See notes to consolidated financial statements
FINANCIAL SUMMARY
22
FIRST BANKERS TRUSTSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in thousands of dollars, except share and per share data)
Years Ended December 31, 2003, 2002 and 2001
Preferred
Stock
$ -
Common
Stock
$ 2,580
Additional
Paid In
Capital
$ 2,251
Retained
Earnings
$ 14,526
Accumulated
Other
Comprehensive
Income (Loss)
$ (22)
Treasury
Stock
$ -
Comprehensive
Income
Total
$ 19,335
-
-
-
3,457
-
-
3,457
3,457
-
-
-
-
433
-
-
433
$ 3,890
433
-
$ -
-
$ 2,580
-
$ 2,251
(490)
$ 17,493
-
$ 411
-
$ -
(490)
$ 22,735
-
-
-
3,242
-
-
3,242
3,242
-
-
-
-
541
-
541
$ 3,783
541
-
-
-
-
-
(7,429)
-
$ -
-
$ 2,580
-
$ 2,251
(501)
$ 20,234
-
$ 952
-
$ (7,429)
(7,429)
(501)
$ 18,588
-
-
-
3,123
-
-
3,123
3,123
-
-
-
-
(154)
-
(154)
$ 2,969
(154)
-
$ -
-
$ 2,580
-
$ 2,251
(553)
$ 22,804
-
$ 798
-
$ (7,429)
(553)
$ 21,004
Balance, December 31, 2000
Comprehensive income:
Net income
Other comprehensive income,
net of tax, (Note 2)
Comprehensive income
Dividends declared on common
stock (amount per share $.19)
Balance, December 31, 2001
Comprehensive income:
Net income
Other comprehensive income,
net of tax, (Note 2)
Comprehensive income
Purchase of 530,656 shares of
common stock for the treasury
Dividends declared on common
stock (amount per share $.23)
Balance, December 31, 2002
Comprehensive income:
Net income
Other comprehensive (loss),
net of tax, (Note 2)
Comprehensive income
Dividends declared on common
stock (amount per share $.27)
Balance, December 31, 2003
See notes to consolidated financial statements
23
FINANCIAL SUMMARY
FIRST BANKERS TRUSTSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of dollars)
Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses
Amortization of goodwill
Depreciation
Amortization/accretion of premiums/discounts on
securities, net
Investment securities (gains), net
Loans originated for resale
Proceeds from loans sold
Gain on sale of loans
Deferred income taxes
(Increase) decreas e in accrued interest receivable
and other assets
(Decrease) in accrued interest payable
and other liabilities
Net cash provided by operating activities
Cash Flows From Investing Activities
Activity in securities portfolio:
Purchases
Sales of securities available for sale
Calls, maturities and paydowns
Increase in loans, net
(Increase) decrease in federal funds sold
Purchases of premises, furniture and equipment
Purchase of life insurance contracts
Increase in cash value of life insurance contracts
Net cash provided by (used in) investing activities
2003
$ 3,123
Years Ended December 31,
2002
$ 3,242
2001
$ 3,457
1,285
-
662
990
-
748
660
134
673
1,069
(192)
(11,801)
12,677
(154)
(119)
445
(85)
(12,974)
14,112
(135)
(64)
154
(446)
(18,472)
16,866
(155)
(118)
(101)
743
(308)
(343)
$ 6,106
(380)
$ 6,642
(147)
$ 2,298
$ (81,079)
5,345
75,595
(21,495)
-
(307)
(4,000)
(100)
$ (26,041)
$ (4,626)
7,998
18,632
(13,696)
(4,000)
(734)
-
-
$ 3,574
$ (34,315)
3,856
27,286
(13,544)
9,200
(1,068)
-
-
$ (8,585)
Cash Flows From Financing Activities
Net increase in deposits
Issuance of note payable
Principal payments on note payable
Purchase of treasury stock
Cash dividends paid on common stock
Increase (decrease) in short-term borrowings
Proceeds from Federal Home Loan Bank advances
Repayments of Federal Home Loan Bank advances
Proceeds from issuance of preferred securities of
subsidiary trust
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and due from banks
Cash and Due From Banks:
Beginning
Ending
$ 243
-
(4,500)
-
(533)
914
-
-
$ 1,561
6,000
(1,500)
(7,429)
(510)
(6,273)
6,000
-
$ 12,247
-
-
(464)
(7,355)
8,000
(4,000)
4,897
$ 1,021
$ (18,914)
-
$ (2,151)
$ 8,065
-
$ 8,428
$ 2,141
$ 33,924
$ 15,010
$ 25,859
$ 33,924
$ 23,718
$ 25,859
(continued)
FINANCIAL SUMMARY
24
FIRST BANKERS TRUSTSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of dollars)
Supplemental disclosure of cash flow information,
Cash payments for:
Interest
Income taxes
Supplemental schedule of noncash investing and
financing activities:
Net change in accumulated other comprehensive income
(loss), unrealized gains (losses) on securities available
for sale, net
Transfer of loans to other real estate owned
Years Ended December 31,
2003
$ 6,698
$ 1,090
2002
$ 8,182
$ 1,433
2001
$ 11,485
$ 1,544
$ (154)
$ 291
$ 541
$ 299
$ 433
$ 169
See notes to consolidated financial statements
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
First Bankers Trustshares, Inc. (the “Company”) is a bank holding company providing bank and bank related services
through its wholly-owned subsidiaries, First Bankers Trust Company, N.A. (Bank), FBIL Statutory Trust I, and FBIL
Statutory Trust II, to a market area consisting primarily of Adams and adjacent Illinois counties, and Marion, Lewis and
Shelby counties in Missouri. Trust services are provided through trust offices located in Quincy and Chicago, Illinois,
Philadelphia, Pennsylvania and Phoenix, Arizona.
Significant Accounting Policies
The accounting and reporting policies of First Bankers Trustshares, Inc. and its subsidiaries conform to generally accepted
accounting principles and general practices within the banking industry. The following is a summary of the more significant
of these policies.
Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The allowance for loan losses is inherently subjective as it requires
material estimates that are susceptible to significant change. The fair value disclosure of financial statements is an estimate
that can be computed within a range.
Basis of Consolidation
The consolidated financial statements include the accounts of First Bankers Trustshares, Inc. and its wholly-owned sub-
sidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Presentation of Cash Flows
For purposes of reporting cash flows, cash and due from banks includes cash on hand and amounts due from banks, includ-
ing cash items in process of clearing. Cash flows from federal funds sold, loans to customers, deposits, and short-term bor-
rowings are reported net.
Trust Department Assets
Trust assets, other than cash deposits held by the Bank, are not assets of the Bank and, accordingly are not included in these
consolidated financial statements.
Securities
Securities held to maturity are those for which the Bank has the ability and intent to hold to maturity. Securities meeting
such criteria at the date of purchase and as of the balance sheet date are carried at amortized cost, adjusted for amortization
of premiums and discounts, computed by the interest method over their contracted lives.
Securities available for sale are accounted for at fair value and the unrealized holding gains or losses, net of their deferred
income tax effect, are presented as increases or decreases in accumulated other comprehensive income, as a separate compo-
nent of equity.
Realized gains and losses on sales of securities are based upon the adjusted book value of the specific securities sold and are
included in earnings.
There were no trading securities at December 31, 2003 and 2002.
Loans
Loans are stated at the principal amount outstanding, net of an allowance for loan losses. Interest on loans is credited to
operations as earned, based upon the principal amount outstanding.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
It is the Bank’s policy to discontinue the accrual of interest income on any loan when, in the opinion of management, there is
reasonable doubt as to the timely collection of interest or principal. Interest on these loans is credited to income only when
the loan is removed from nonaccrual status. Nonaccrual loans are returned to an accrual status when, in the opinion of man-
agement, the financial position of the borrower and other relevant factors indicate there is no longer any reasonable doubt as
to the timely payment of principal or interest.
The Bank grants agribusiness, commercial, residential, and consumer loans to customers throughout the Bank’s market area.
The Bank’s policy for requiring collateral is consistent with prudent lending practices and anticipates the potential for eco-
nomic fluctuations. Collateral varies but may include accounts receivable, inventory, property, equipment and income-pro-
ducing commercial properties. It is the Bank’s policy to file financing statements and mortgages covering collateral pledged.
As of December 31, 2003 and 2002, the Bank had loan concentrations in agribusiness of 7.07% and 8.13%, hotel and motel
industry of 3.76% and 4.66% and senior housing industry of 2.91% and 2.46%, respectively of outstanding loans. The Bank
had no additional industry loan concentrations, which, in management’s judgment, were considered to be significant. The
Bank had no foreign loans outstanding as of December 31, 2003 and 2002.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged
against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb losses inherent in existing loans and commit-
ments to extend loans based on evaluations of the collectibility and prior loss experience. The evaluations take into consid-
eration such factors as changes in the nature and volume of the portfolio, overall portfolio quality, loan concentrations, spe-
cific problem loans and commitments, and current and anticipated economic conditions that may affect the borrower’s ability
to pay.
Loans are considered impaired when, based on current information and events, it is probable the Bank will not be able to
collect all amounts due under the loan agreement. The portion of the allowance for loan losses applicable to impaired loans
is computed based on the present value of the estimated future cash flows of interest and principal discounted at the loan’s
effective interest rate or on the fair value of the collateral for collateral dependent loans. The entire change in present value
of expected cash flows of impaired loans is reported as bad debt expense in the same manner in which impairment initially
was recognized or as a reduction in the amount of bad debt expense that otherwise would be reported. The Bank recognizes
interest income on impaired loans on a cash basis.
Transfers of Financial Assets
Transfers of financial assets are accounted for as sales, only when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee
obtains the right to pledge or exchange the assets it received, and no condition both constrains the transferee from taking
advantage of its right to pledge or exchange and provides more than a modest benefit to the transferor, and (3) the Company
does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity
or the ability to unilaterally cause the holder to return specific assets.
Credit Related Financial Instruments
In the ordinary course of business, the Bank has entered into commitments to extend credit, including commitments under
lines of credit and standby letters of credit. Such financial instruments are recorded when they are funded.
Sale of Loans
As part of its management of assets and liabilities, the Company periodically sells residential real estate, agricultural and stu-
dent loans. Loans which are expected to be sold in the foreseeable future are classified as held for sale and are recorded at
the lower of aggregate cost or market value. At December 31, 2003 and 2002, loans held for sale consist of residential real
estate loans.
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Premises, Furniture and Equipment
Premises, furniture and equipment are stated at cost less accumulated depreciation. Depreciation is determined using the
straight-line method over the estimated useful lives of the assets.
Other Real Estate Owned
Other real estate owned (OREO), which is included with other assets, represents properties acquired through foreclosure, in-
substance foreclosure or other proceedings. Any write-down to fair value at the time of the transfer to OREO is charged to
the allowance for loan losses. Property is evaluated regularly to ensure that the recorded amount is supported by the current
fair value. Subsequent write-downs to fair value are charged to earnings.
Intangibles
Goodwill equal to $334,000 at December 31, 2003 and 2002 represents the unamortized cost of the investment in the Bank
in excess of the fair value of net assets acquired. In July 2001, the Financial Accounting Standards Board issued Statement
No. 142, Goodwill and Other Intangible Assets. Statement No. 142 eliminates the amortization of goodwill and other intan-
gibles that are determined to have an indefinite life; and requires, at a minimum, annual impairment tests for goodwill and
other intangible assets that are determined to have an indefinite life. For the Company, the provisions of the Statement were
effective January 1, 2002. Implementation of Statement No. 142 has impacted the Company’s consolidated financial state-
ments in that yearly goodwill amortization of $134,000 is no longer recorded.
Earnings Per Share of Common Stock
Basic earnings per share of common stock is computed by dividing net income, after deducting preferred stock dividends, by
the weighted average number of shares outstanding during each reporting period. Diluted earnings per share of common
stock assumes the conversion, exercise or issuance of all potential common stock (common stock equivalents) unless the
effect is to reduce the loss or increase the income per common share from continuing operations. The Company had no
common stock equivalents as of and for the years ending December 31, 2003, 2002, and 2001.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differ-
ences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differ-
ences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in the tax laws and rates on the date of enactment.
Current Accounting Developments
FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No.
51, (FIN 46) establishes accounting guidance for consolidation of variable interest entities (VIE) that function to support the
activities of the primary beneficiary. Prior to the implementation of FIN 46, VIEs were generally consolidated by an enterprise
when the enterprise had a controlling financial interest through ownership of a majority of voting interest in the entity. The
provisions of FIN 46 were effective immediately for all arrangements entered into after January 31, 2003. In December 2003,
the FASB issued a revision to FIN 46 (FIN 46R) which clarified certain implementation issues and revised implementation
dates for VIEs created before January 31, 2003. Under the new guidance, special effective date provisions apply to enterpris-
es that have fully or partially applied FIN 46 prior to issuance of the revised Interpretation. Otherwise, application of FIN 46R
(or FIN 46) is required in financial statements of entities that have interests in special purpose entities effective for the first
annual period beginning after December 15, 2004.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
An unintended consequence of this standard is requiring some companies to conclude deconsolidation is necessary for cer-
tain transactions involving the issuance of trust preferred securities. Based upon its interpretation of FIN 46, the Company
continues to consolidate its wholly-owned subsidiary trust entities involved with the issuance of its trust preferred securities,
but will deconsolidate for the year ending December 31, 2005. Such deconsolidation will have no effect on reported earn-
ings or stockholders’ equity. A portion of these securities currently qualify for treatment as Tier 1 capital for the Company.
In July 2003, the Board of Governors of the Federal Reserve System issued a supervisory letter instructing bank holding
companies to continue to include the trust preferred securities in Tier 1 capital for regulatory capital purposes until notice is
given to the contrary. There can be no assurance that the Federal Reserve will continue to permit institutions to include trust
preferred securities in Tier 1 capital for regulatory capital purposes. As of December 31, 2003, assuming the Company was
not permitted to include the trust preferred securities issued by the trusts in its Tier 1 capital, the Company would still
exceed the regulatory required minimums for capital adequacy purposes (see Note 11 of Notes to Consolidated Financial
Statements).
The interpretations of FIN 46 and its application to various transaction types and structures are evolving. Management con-
tinuously monitors emerging issues related to FIN 46, some of which could potentially impact the Company’s financial state-
ments.
2. COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity during a period from transactions and other events from non-
owner sources. Comprehensive income is the total of net income and other comprehensive income, which for the Company
is comprised entirely of unrealized gains and losses on securities available for sale.
Other comprehensive income is comprised as follows (Amounts in thousands of dollars):
Year ended December 31, 2003
Unrealized gains (losses) on securities available for sale:
Unrealized holding (losses) arising during the year
Less reclassification adjustment for gains
included in net income
Other comprehensive loss
Before tax
Tax expense
(benefit)
Net of tax
$ (55)
$ 20
$ (35)
192
$ (247)
73
$ (93)
119
$ ( 154)
Year ended December 31, 2002
Unrealized gains on securities available for sale:
Unrealized holding gains arising during the year
Less reclassification adjustment for gains
included in net income
Other comprehensive income
Year ended December 31, 2001
Unrealized gains on securities available for sale:
Unrealized holding gains arising during the year
Less reclassification adjustment for gains
included in net income
Other comprehensive income
$ 954
$ 360
$ 594
85
$ 869
32
$ 328
53
$ 541
$ 1,146
$ 437
$ 709
446
$ 700
170
$ 267
276
$ 433
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain a reserve balance with the Federal Reserve Bank of St. Louis. The total of the reserve bal-
ance was approximately $327,000 and $3,357,000 at December 31, 2003 and 2002, respectively.
4. SECURITIES
The amortized cost and fair values of securities held to maturity as of December 31, 2003 and 2002 are as follows (Amounts
in thousands of dollars):
U.S. Government agencies and corporations
State and political subdivisions
U.S. Government agencies and corporations
State and political subdivisions
Amortized
Cost
$ 111
7,120
$ 7,231
Amortized
Cost
$ 160
8,540
$ 8,700
2003
Gross
Unrealized
Gains
$ 4
294
$ 298
2002
Gross
Unrealized
Gains
$ 8
245
$ 253
Gross
Unrealized
(Losses)
$ -
(1)
$ (1)
Gross
Unrealized
(Losses)
$ -
-
$ -
Fair
Value
$ 115
7,413
$ 7,528
Fair
Value
$ 168
8,785
$ 8,953
The amortized cost and fair values of securities available for sale as of December 31, 2003 and 2002 are as follows
(Amounts in thousands of dollars):
U.S. Government agencies and corporations
State and political subdivisions
Corporate securities
Collateralized mortgage obligations
U.S. Government agencies and corporations
State and political subdivisions
Corporate securities
Collateralized mortgage obligations
Amortized
Cost
$ 34,108
8,014
435
2,507
$ 45,064
Amortized
Cost
$ 30,922
8,334
1,434
3,643
$ 44,333
2003
Gross
Unrealized
Gains
$ 790
505
15
-
$ 1,310
2002
Gross
Unrealized
Gains
$ 1,118
349
26
44
$ 1,537
Gross
Unrealized
(Losses)
$ (7)
-
-
(16)
$ (23)
Gross
Unrealized
(Losses)
$ -
(2)
-
(1)
$ (3)
Fair
Value
$ 34, 891
519
8,
450
2, 491
$ 46,351
Fair
Value
$ 32,040
8,681
1,460
3,686
$ 45,867
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
30
4. SECURITIES (Continued)
All securities which have unrealized losses as of December 31, 2003 have been in the unrealized loss position for less than
12 months. Those securities are summarized as follows:
Securities held to maturity:
State and political subdivisions
Securities available for sale:
U.S. Government agencies and
Corporations
Collateralized mortgage obligations
Gross
Fair
Value
Unrealized
Losses
$ 307 $ (1)
$ (7)
$ 1,928
2,334
(16)
$ 4,262 $ (23)
For all the above investment securities, the unrealized losses are generally due to changes in interest rates and, as such, are
considered to be temporary, by the Company.
The amortized cost and fair value of securities as of December 31, 2003 by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because the corporate securities and mortgages underlying the collateral-
ized mortgage obligations may be called or prepaid without penalties. Therefore, these securities are not included in the
maturity categories in the following summaries (Amounts in thousands of dollars):
Securities held to maturity:
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Securities available for sale:
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Corporate securities
Collateralized mortgage obligations
Amortized
Cost
$ 1,041
2,019
1,949
2,222
$ 7,231
Amortized
Cost
$ 4,996
20,952
8,397
7,777
$ 42,122
435
2,507
$ 45,064
Fair
Value
$ 1,056
2,105
2,047
2,320
$ 7,528
Fair
Value
$ 5,105
21,338
8,704
8,263
$ 43,410
450
2,491
$ 46,351
Information on securities sold during the years ended December 31, 2003, 2002 and 2001 follows (Amounts in thousands of
dollars):
Proceeds from sales:
Securities available for sale
Securities held to maturity
Gross gains
Gross losses
2003
$ 5,345
-
$ 192
$ -
2002
$ 7,998
-
$ 104
$ 19
2001
$ 3,856
-
$ 219
$ -
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SECURITIES (Continued)
As of December 31, 2003 and 2002 securities with a carrying value of approximately $47,390,000 and $37,274,000 respec-
tively, were pledged to collateralize deposits and securities sold under agreements to repurchase and for other purposes as
required or permitted by law.
5. LOANS
The composition of net loans outstanding as of December 31, 2003 and 2002 are as follows (Amounts in thousands of dol-
lars):
Commercial
Agricultural
Tax exempt
Real estate, mortgage
Consumer
Other
Less: Allowance for loan
losses
Net loans
2003
$ 115,229
15,680
4,237
40,727
45,353
582
$ 221,808
2002
$ 105,405
16,416
3,305
38,290
38,321
194
$ 201,931
(2,263)
$ 219,545
(2,305)
$ 199, 626
Nonaccrual, impaired loans and loans past due 90 days or more and still accruing interest were not material at December 31,
2003 and 2002.
Activity in the allowance for loan losses during the years ended December 31, 2003, 2002 and 2001 is summarized below
(Amounts in thousands of dollars):
Balance, beginning of year
Provision for loan losses
Loan charge-offs
Recoveries of loans charged off
Balance, end of year
2003
$ 2,305
1,285
(1,370)
43
$ 2,263
2002
$ 2,312
990
(1,045)
48
$ 2,305
2001
$ 1,951
660
(337)
38
$ 2,312
Mortgage loans serviced for others are not included in the accompanying consolidated statements of financial condition.
The unpaid principal balances of these loans totaled $76,449,000 and $46,534,000 at December 31, 2003 and 2002, respec-
tively.
In the ordinary course of business, the Bank has loans with directors, principal officers, their immediate families and affiliat-
ed companies in which they are principal stockholders (hereafter referred to as related parties). The Bank believes that all
such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time
for comparable loans with other persons and that such loans do not present more than a normal risk of collectibility or pres-
ent other unfavorable features. An analysis of the changes in the aggregate amount of these loans during 2003 and 2002 is
as follows (Amounts in thousands of dollars):
Balance, beginning of year
Advances
Repayments
Balance, end of year
2003
$ 2,639
4,060
(3,333)
$ 3,366
2002
$ 3,320
4,959
(5,640)
$ 2,639
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32
6. PREMISES, FURNITURE AND EQUIPMENT
The cost, accumulated depreciation and net book value of premises, furniture and equipment as of December 31, 2003 and
2002 is summarized as follows (Amounts in thousands of dollars):
Land
Building and improvements
Furniture and equipment
Less accumulated depreciation
7. TIME DEPOSITS
2003
$ 942
3,635
4,565
$ 9,142
( 5,415)
$ 3,727
2002
$ 926
3,555
4,884
$ 9,365
(5,283)
$ 4,082
The aggregate amount of time deposits, each with a minimum denomination of $100,000, was approximately $27,420,000
and $23,540,000 at December 31, 2003 and 2002, respectively.
At December 31, 2003, the scheduled maturities of time deposits are as follows (Amounts in thousands of dollars):
2004
2005
2006
2007
2008
$ 55,918
26,808
14,958
9,146
2,964
$ 109,794
8. SHORT TERM BORROWINGS
Short-term borrowings outstanding consist of securities sold under agreements to repurchase in the amount of $5,114,000
and $4,120,000 as of December 31, 2003 and 2002, respectively. These borrowings generally mature within 180 days from
the date of issuance.
Other information concerning securities sold under agreements to repurchase is summarized as follows (Amounts in thou-
sands of dollars):
Average daily balance during the year
Average interest rate during the year
Average interest rate at year end
Maximum month end balance during the year
Securities underlying the agreements at year end:
Carrying value
Fair value
2003
$ 2,747
3.02%
2.14%
$ 5,114
2002
$ 4,423
3.50%
2.50%
$ 6,173
$ 7,286
$ 7,342
$ 6,255
$ 6,572
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. FEDERAL HOME LOAN BANK ADVANCES
Federal Home Loan Bank (FHLB) advances are summarized as follows at December 31, 2003 and 2002:
Maturity in year ending
December 31:
2004
2006
2008
2003
2002
Weighted
Average
Interest Rate
4.90%
4.55
4.89
Balance Due
(Amount in
thousands)
$ 8,000
9,000
2,000
$ 19,000
Weighted
Average
Interest Rate
4.90%
4.55
4.89
Balance Due
(Amount in
thousands)
$ 8,000
9,000
2,000
$ 19,000
At December 31, 2003, the advances maturing in 2008 have call features that could be implemented in 2004. First mortgage
loans of approximately $31,317,000 and $31,667,000 as of December 31, 2003 and 2002, respectively, are pledged as collat-
eral on FHLB advances.
10. NOTE PAYABLE
At December 31, 2002, the Company had a note payable due to a Bank with quarterly payments at LIBOR plus 175 basis
points, which was due March 27, 2005. Principal was payable in 2 installments of $500,000 each, beginning March 27, 2003,
and annually thereafter, plus a final payment equal to all unpaid principal and interest at maturity. The note was secured by
170,000 shares of common stock of the Bank. At December 31, 2003, the Company has repaid this note payable.
11. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
TRUSTS HOLDING SOLELY SUBORDINATED DEBENTURES
During 2003 the Company issued 5,000 shares of Company Obligated Mandatorily Redeemable (COMR) Preferred
Securities of FBIL Statutory Trust II Holding Solely Subordinated Debentures. Distributions are paid quarterly. Cumulative
cash distributions are calculated at a variable annual rate that is 295 basis points above the 3 month LIBOR rate (4.11% as
December 31, 2003). The Company may, at one or more times, defer interest payments on the capital securities for up to 20
consecutive quarterly periods, but not beyond September 17, 2033. At the end of the deferral period, all accumulated and
unpaid distributions will be paid. The capital securities will be redeemed on September 17, 2033; however, the Company
has the option to shorten the maturity date to a date not earlier than September 17, 2008 at par plus any accrued and unpaid
distributions to the date of the redemption. If a special event occurs prior to September 17, 2008, providing the Company
the right of redemption in whole, but not in part, the redemption price will vary depending on how close to the issue date the
redemption occurs. The redemption price is a maximum of 104.3% of the principal amount of the debentures at March 17,
2004 declining by approximately 30 basis points each quarter until September 17, 2007 and thereafter at which time the
redemption price will be at par. Any accrued and unpaid distributions to the date of redemption must also be paid.
During 2000 the Company issued 5,000 shares of Company Obligated Mandatorily Redeemable (COMR) Preferred
Securities of FBIL Statutory Trust I Holding Solely Subordinated Debentures. Distributions are paid semi-annually.
Cumulative cash distributions are calculated at a 10.60% annual rate. The Company may, at one or more times, defer inter-
est payments on the capital securities for up to 10 consecutive semi-annual periods, but not beyond September 7, 2030. At
the end of the deferral period, all accumulated and unpaid distributions will be paid. The capital securities will be redeemed
on September 7, 2030; however, the Company has the option to shorten the maturity date to a date not earlier than
September 7, 2010. The redemption price begins at 105.300% to par and is reduced by 53 basis points each year until
September 7, 2020 when the capital securities can be redeemed at par. Any accrued and unpaid distributions to the date of
the redemption must also be paid.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
34
11. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
TRUSTS HOLDING SOLELY SUBORDINATED DEBENTURES (Continued)
Holders of the capital securities have no voting rights, are unsecured and rank junior in priority of payment to all of the
Company’s indebtedness and senior to the Company’s capital stock.
The debentures are included on the balance sheet at December 31, 2003 and 2002 as liabilities. For regulatory purposes,
approximately $6,735,000 and $5,000,000 of the capital securities were allowed in the calculation of Tier I capital with the
remainder allowed as Tier II capital as of December 31, 2003 and 2002, respectively. See discussion in Note 1 of Notes to
Consolidated Financial Statements regarding current accounting developments relating to the inclusion of trust preferred
securities in Tier I capital for regulatory purposes.
12. COMMITMENTS AND CONTINGENCIES
Financial instruments with off-balance sheet risk:
The Bank, in the normal course of business, is a party to financial instruments with off-balance sheet risk to meet the financ-
ing needs of its customers. These financial instruments include unused lines of credit and standby letters of credit. Those
instruments involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consol-
idated balance sheets.
The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for unused
lines of credit and standby letters of credit is represented by the contractual amounts of those instruments. The Bank uses
the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
A summary of the Bank’s commitments at December 31, 2003 and 2002 is as follows (Amounts in thousands of dollars):
Unused lines of credit
Standby letters of credit
2003
$ 35,684
1,863
2002
$ 28,809
883
Unused lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in
the contract. The agreements generally have fixed expiration dates or other termination clauses and may require payment of
a fee. Since many of the agreements are expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each customers’ credit worthiness on a case-by-case
basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based upon manage-
ment’s credit evaluation of the counter-party. Collateral varies but may include accounts receivable, inventory, property,
equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have
terms of one year, or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. The Bank holds collateral, as detailed above, supporting those commitments if
deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third
party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank
could be required to make is represented by the contractual amount shown in the summary above. If the commitment is
funded the Bank would be entitled to seek recovery from the customer. At December 31, 2003 and 2002 no amounts have
been recorded as liabilities for the Bank’s potential obligations under these guarantees.
The Company has executed contracts for the sale of mortgage loans in the secondary market in the amount of $453,000 and
$1,175,000 at December 31, 2003 and 2002, respectively. These amounts are included in loans held for sale at the respective
balance sheet dates.
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (Continued)
A portion of residential mortgage loans sold to investors in the secondary market are sold with recourse. Specifically, certain
loan sales agreements provide that if the borrower becomes 60 days or more delinquent during the first six months following the
first payment due, and subsequently becomes 90 days or more delinquent during the first 12 months of the loan, the Bank must
repurchase the loan from the subject investor. In the opinion of management, the risk of recourse to the Bank is not significant
and, accordingly, no liability has been established.
Concentration of credit risk:
Aside from cash on hand and in-vault, the majority of the Company’s cash is maintained at US Bank, N.A., Commerce Bank,
N.A., and the Federal Home Loan Bank of Chicago. The total amount of cash on deposit and federal funds sold exceeded federal
insurance limits at the respective institutions by approximately $8,363,000, $6,997,000, and $3,256,000, respectively as of
December 31, 2003. In the opinion of management, no material risk of loss exists due to the financial condition of the institu-
tions.
13. BENEFITS
The Bank’s retirement plan, which covered substantially all full time employees (working over 20 hours per week) after comple-
tion of one year of service and attaining the age of 21 was terminated effective December 31, 2001. Monies associated with the
plan were transferred into the Company’s 401K plan. The Bank contributed an amount adequate to fund the Target Benefit as
determined by various plan assumptions. The Target Benefit was 17.5% of total compensation and is based on the employee’s
highest consecutive five years of compensation while a participant.
The Bank has a 401K plan, which is a tax qualified savings plan, to encourage its employees to save for retirement purposes or
other contingencies. Substantially all full time (working over 1000 hours per year) employees of the Bank are eligible to partici-
pate in the Plan on the later of January 1st or July 1st after completion of one year of service and attaining the age of 21. The
employee may elect to contribute up to 15% of their compensation before taxes. Based upon profits, as determined by the Bank,
a contribution may be made by the Bank. Employees are 100% vested in the Bank’s contribution to the plan after five years of
service. Employee contributions and vested Bank contributions may be withdrawn only on termination of employment, retire-
ment, or death.
Under the Employee Incentive Compensation Plan, the Bank is authorized at its discretion, pursuant to the provisions of the plan,
to establish on an annual basis, a bonus fund, which will be distributed to certain employees, based on their performance. The
Employee Incentive Compensation Plan does not become effective unless the Bank exceeds established income levels.
Contributions to the target benefit plan for the years ended December 31, 2001 totaled $63,000. Contributions to the 401(k) plan
for the years ended December 31, 2003 and 2002 totaled $180,000 and $204,000, respectively. No contributions to the 401K
Plan were made in 2001. There were no contributions made to the incentive compensation plan for the years ended December 31,
2003 or 2002. Contributions made to the incentive compensation plan for the year ended December 31, 2001 was $143,000.
14. DIVIDENDS AND REGULATORY CAPITAL
The Company’s stockholders are entitled to receive such dividends as are declared by the Board of Directors. The ability of the
Company to pay dividends in the future is dependent upon its receipt of dividends from the Bank. The Bank’s ability to pay divi-
dends is regulated by banking statutes. The timing and amount of dividends will depend on earnings, capital requirements and
financial condition of the Company and the Bank as well as general economic conditions and other relevant factors affecting the
Company and the Bank.
Under the provisions of the National Bank Act the Bank may not, without prior approval of the Comptroller of the Currency,
declare dividends in excess of the total of the current and past two year’s earnings less any dividends already paid from those
earnings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
36
14. DIVIDENDS AND REGULATORY CAPITAL (Continued)
The Company and Bank are subject to various regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital ade-
quacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific cap-
ital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as cal-
culated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also sub-
ject to qualitative judgments by the regulators and components, risk weightings, and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain mini-
mum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weight-
ed assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December
31, 2003, that the Company and Bank meet all capital adequacy requirements to which they are subject.
The most recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be categorized as adequately or well capitalized the Bank
must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have changed the Bank’s category.
The Company’s and Bank’s actual capital amounts and ratios are also presented in the table. (Amounts in thousands of dol-
lars):
dollars):
Actual
For Capital
Adequacy Purposes
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
As of December 31, 2003
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total Capital
(to Risk Weighted Assets)
Company
Bank
Tier I Capital
(to Risk Weighted Assets)
Company
Bank
Tier I Capital
(to Average Assets)
Company
Bank
$32,072
$29,661
13.14%
12.19%
>$19,531
>$19,460
>8.00%
>8.00%
N/A
>$24,324
N/A
>10.00%
$26,607
$27,461
10.90%
11.29%
>$9,765
>$9,730
>4.00%
>4.00%
N/A
>$14,595
N/A
>6.00%
$26,607
$27,461
8.12%
8.43%
>$13,113
>$13,032
>4.00%
>4.00%
N/A
>$16,290
N/A
>5.00%
As of December 31, 2002
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total Capital
(to Risk Weighted Assets)
Company
Bank
Tier I Capital
(to Risk Weighted Assets)
Company
Bank
Tier I Capital
(to Average Assets)
Company
Bank
$24,360
$27,879
10.98%
12.61%
>$17,744
>$17,690
>8.00%
>8.00%
N/A
>$22,112
N/A
>10.00%
$22,302
$25,821
10.05%
11.68%
>$8,873
>$8,845
>4.00%
>4.00%
N/A
>$13,267
N/A
>6.00%
$22,302
$25,821
7.18%
8.35%
>$12,429
>$12,377
>4.00%
>4.00%
N/A
>$15,471
N/A
>5.00%
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. PARENT COMPANY ONLY FINANCIAL STATEMENTS
PARENT COMPANY ONLY BALANCE SHEETS
(Amounts in thousands of dollars)
Assets
Cash
Investment in First Bankers Trust Company
Investment in FBIL Statutory Trust I
Investment in FBIL Statutory Trust II
Other assets
Total assets
Liabilities and stockholders’ equity
Liabilities:
Subordinated debentures
Note payable
Other
Total liabilities
Total stockholders’ equity
TOTAL LIABILITIES AND
STOCKHOLDER’S EQUITY
December 31,
2003
$ 2,118
28,988
160
155
399
$ 31,820
2002
$ 828
27,516
160
-
138
$ 28,642
$ 10,310
-
506
$ 10,816
$ 21,004
$ 5,155
4,500
399
$ 10,054
$ 18,588
$ 31,820
$ 28,642
PARENT COMPANY ONLY STATEMENTS OF INCOME
(Amounts in thousands of dollars)
Income:
Dividends received from First Bankers Trust Company
Dividends received from FBIL Statutory Trust I
Dividends received from FBIL Statutory Trust II
Interest
Total income
Expenses:
Interest
Salary and benefits
Other
Total expenses
Income (loss) before income tax benefits and equity in
undistributed earnings of subsidiaries
Income tax (benefit)
Income (loss) before equity in undistributed earnings
of subsidiaries
Equity in undistributed earnings of First Bankers Trust
Company
Net income
2003
$ 1,900
16
2
5
$ 1,923
$ 710
90
125
$ 925
Years Ended December 31,
2002
$ 2,125
16
-
16
$ 2,157
2001
$ -
16
-
99
$ 115
$ 705
51
128
$ 884
$ 547
22
134
$ 703
$ 998
(499)
$ 1,273
(335)
$ (588)
(235)
$ 1,497
$ 1,608
$ (353)
1,626
$ 3,123
1,634
$ 3,242
3,810
$ 3,457
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
38
15. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
(Amounts in thousands of dollars)
Cash flows from operating activities
Net income
Adjustments:
Equity in undistributed earnings of subsidiaries
Changes in assets and liabilities
(Increase) decrease in other assets
Increase (decrease) in other liabilities
Net cash provided by (used in) operating activities
Cash flows from investing activities
Capital infusion, FBIL Statutory Trust II
Cash flows from financing activities
Proceeds from issuance of notes payable
Principal payments on note payable
Purchase of treasury stock
Cash dividends paid on common stock
Proceeds from issuance of subordinated debentures
Net cash provided by (used in) financing activities
Net increase (decrease) in cash
Cash beginning
Cash ending
16. INCOME TAX MATTERS
2003
Years Ended December 31,
2002
2001
$ 3,123
$ 3,242
$ 3,457
(1,626)
(1,634)
(3,810)
(261)
87
$ 1,323
6
(98)
$ 1,516
(45)
(151)
$ (247)
$ (155)
$ -
$ -
$ -
(4,500)
-
(533)
5,155
$ 122
$ 1,290
828
$ 2,118
$ 6,000
(1,500)
(7,429)
(510)
-
$ (3,439)
$ (1,923)
2,751
$ 828
$ -
-
-
(464)
-
$ (464)
$ (711)
3,462
$ 2,751
The components of income tax expense are as follows for the years ended December 31, 2003, 2002 and 2001
(Amounts in thousands of dollars):
Current
Deferred
2003
$ 1,244
(119)
$ 1,125
Years Ended December 31
2002
$ 1,193
(64)
$ 1,129
2001
$ 1,624
(118)
$ 1,506
A reconciliation between income tax expense in the statements of income and the amount computed by applying the statuto-
ry federal income tax rate to income before income taxes is as follows (Amounts in thousands of dollars):
Federal income tax at statutory rate
Changes from statutory rate
resulting from:
State tax, net of federal benefit
Amortization of goodwill
Tax exempt interest income, net
State income tax refund, net of federal
income tax benefit
(Under) accrual of provision
and other, net
Income tax expense
2003
Amount
% of
Pretax
Income
2002
Amount
% of
Pretax
Income
2001
Amount
$ 1,444
34.0 % $ 1,483
34.0 % $ 1,687
% of
Pretax
Income
34.0 %
112
-
(281)
2.6
-
( 6.6)
114
-
(314)
2.6
-
(7.2)
116
45
(291)
2.3
.9
(5.9)
(145)
( 3.4)
(143)
(3.3)
-
-
(5)
$ 1,125
(14)
(0.1)
26.5 % $ 1,129
(0.3)
(51)
25.8 % $ 1,506
(1.0)
30.3 %
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. INCOME TAX MATTERS (Continued)
Net deferred tax assets consist of the following components as of December 31, 2003 and 2002 (Amounts in thousands of
dollars):
Deferred tax assets:
Allowance for loan losses
Accrued expenses
Deferred tax liabilities:
Premises, furniture and equipment
Unrealized gains on securities available for sale, net
Stock dividends
Net deferred tax assets
2003
$ 905
144
$ 1,049
$ (139)
(489)
(115)
$ (743)
$ 306
2002
$ 894
140
$ 1,034
$ (278)
(582)
(80)
$ (940)
$ 94
Net deferred tax assets are included in other assets on the accompanying consolidated balance sheets.
The net change in deferred income taxes is reflected in the financial statements as follows (Amounts in thousands of dol-
lars):
Provision for income taxes
Statement of changes in stockholders equity,
accumulated other comprehensive income (loss),
unrealized gains (losses) on securities available for sale,
net
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
2003
$ (119)
Years Ended December 31,
2002
$ (64)
2001
$ (118)
(93)
$ (212)
328
$ 264
267
$ 149
FASB Statement No. 107 “Disclosures about Fair Value of Financial Instruments” requires disclosure of fair value informa-
tion about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to
independent markets, and in many cases, could not be realized in immediate settlement of the instrument. Statement No.
107 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented are not intended to represent the underlying value of the Company.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash and due from banks and federal funds sold: The carrying amounts reported in the balance sheets for cash and due from
banks and federal funds sold equal their fair values.
Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable instruments.
Loans and loans held for sale: For variable loans fair values are equal to carrying values. The fair values for all other types
of loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar
terms to borrowers with similar credit quality. The fair value of loans held for sale is based on quoted market prices of simi-
lar loans sold in the secondary market.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
40
17. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Accrued interest receivable and payable: The fair value of accrued interest receivable and payable is equal to its carrying
value.
Deposits: The fair values for demand and savings deposits equal their carrying amounts, which represent the amount
payable on demand. Fair values for time deposits are estimated using a discounted cash flow calculation that applies interest
rates currently being offered on time deposits to a schedule of aggregated expected monthly maturities on time deposits.
Short-term borrowings: The fair value of short-term borrowings is considered to equal carrying value due to the borrowings
short-term nature.
Federal Home Loan Bank advances and Company obligated mandatorily redeemable preferred securities: The fair value of
Federal Home Loan Bank advances and fixed rate Company obligated mandatorily redeemable preferred securities is esti-
mated using discounted cash flow analyses, using interest rates currently being offered for similar borrowings. The fair
value of variable rate Company obligated mandatorily redeemable preferred securities equals their carrying value.
Note payable: The fair value for the variable rate note payable is equal to its carrying value.
Commitments to extend credit: The fair value of these commitments is not material.
The carrying values and estimated fair values of the Company’s financial instruments as of December 31, 2003 and 2002 are
as follows (Amounts in thousands of dollars):
Financial assets:
Cash and due from banks
Securities held to maturity
Securities available for sale
Federal funds sold
Loans
Accrued interest receivable
Financial liabilities:
Non-interest-bearing demand deposits
Interest-bearing demand deposits
Savings deposits
Time deposits
Short-term borrowings
Federal Home Loan Bank advances
Note payable
Company obligated mandatorily redeemable
preferred securities of subsidiary trust
holding soley subordinated debentures
Accrued interest payable
Carrying
Value
$ 15,010
7,231
46,351
13,500
222,261
1,364
$ 51,234
66,978
30,407
109,794
5,114
19,000
-
2003
2002
Fair
Value
Carrying
Value
Fair
Value
$ 15,010
7,528
46,351
13,500
222,852
1,364
$ 51,234
66,978
30,407
111,674
5,114
19,904
-
$ 33,924
8,700
45,867
13,500
203,106
1,632
$ 43,978
72,824
29,267
112,101
4,200
19,000
4,500
$ 33,924
8,953
45,867
13,500
203,930
1,632
$ 43,978
72,824
29,267
114,133
4,200
20,347
4,500
10,000
834
11,014
834
5,000
1,002
5,625
1,002
41
FIRST BANKERS TRUST COMPANY, N.A. DIRECTORS & OFFICERS
BOARD OF DIRECTORS – FIRST BANKERS TRUST COMPANY, N.A.
William D. Daniels, Chairman
Member
Harborstone Group, LLC.
Donald K. Gnuse
President & Chief Executive Officer
First Bankers Trustshares, Inc.
Steven E. Siebers, Secretary
Attorney
Scholz, Loos, Palmer, Siebers, & Duesterhaus
Carl Adams, Jr.
President
Illinois Ayers Oil Company
Mark E. Freiburg
Owner
Freiburg Insurance Agency
& Freiburg Development
Merri E. Ash
Trust Officer
Director of Marketing Trust
Patricia A. Brink
Vice President
Cashier
Sherry A. Bryson
Assistant Vice President
Branch Manager
Timothy W. Corrigan
Assistant Director
Information Services
Kjersti L. Cory
Trust Officer
Daron D. Duke
Vice President
Business / Ag Lending
Jane A. Fischer
Vice President
Sales Development
Thomas J. Frese
Manager - Internal Audit
Donald K. Gnuse
Chairman of the Board
Arthur E. Greenbank
President
Chief Executive Officer
Marcia L. Hardin
Assistant Vice President
Business Lending
Brian A. Ippensen
Vice President
General Manager Trust
Arthur E. Greenbank
President & Chief Executive Officer
First Bankers Trust Company, N.A.
Merle Tieken
President
Gem City Electric
Phyllis J. Hofmeister
Secretary/Treasurer
Hofmeister Farms
OFFICERS
Peggy J. Junk
Vice President
Residential Lending
James M. Keller
Consumer Lending Officer
Julie E. Kenning
Trust Operations Officer
Lois J. Knapp
Branch Manager
Joe J. Leenerts
Executive Vice President
Chief Operating and Financial Officer
David J. McCaughey
Assistant Vice President
Manager - Fixed Asset / Security
Gretchen A. McGee
Vice President
Retail Banking Manager
Kathleen D. McNay
Vice President
Human Resources
Janiece M. Neiswender
Branch Manager
James R. Obert
Vice President
Business Lending
Dianna S. Orr
Branch Manager
Pamela K. Pfanner
Deposit Account Officer
Manager - Deposit Accounting
Dennis R. Williams
Chairman of the Board
Quincy Newspapers, Inc.
Marvin E. Rabe
Vice President
Business / Ag Lending
David J. Rakers
Senior Vice President
Manager - Business Lending
Douglas R. Reed
Vice President
Business Lending
Linda D. Reinold
Customer Service Officer
Hugh R. Roderick
Assistant Vice President
Manager - Consumer Lending
Norman E. Rosson
Senior Vice President
Trust Officer
Jeanette L. Schinderling
Branch Manager
Kimberly A. Serbin
Trust Officer
Linda J. Shultz
Trust Officer
Deborah J. Staff
Trust Officer
Lansing M. Tomlinson
Senior Vice President
Manager - Residential Lending
Linda K. Tossick
Assistant Controller
Brent R. Voth
Vice President
Information Services
First Bankers Trustshares, Inc.
P.O. Box 3566
Quincy, Illinois 62305-3566
Phone: 217-228-8000
Internet: http://www.firstbankers.com
E-Mail: fbti@firstbankers.com
An Equal Opportunity Employer