First Bankers Trustshares, Inc.
Annual Report 2014

Plain-text annual report

First Bankers Trustshares, Inc. 2014 Summary Annual Report Corporate Information ............................................................................. 1 Letter to Shareholders ............................................................................. 2 Select Financial Data ........................................................................ 3 – 4 Management’s Reports .................................................................... 5 – 6 Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................. 7 – 11 Board of Directors ................................................................................. 12 Officers .................................................................................................. 13 Corporate Information Corporate Description First Bankers Trustshares, Inc. (FBTI) is a bank holding company for First Bankers Trust Company, N.A., First Bankers Trust Services, Inc., FBIL Statutory Trust II and FBIL Statutory Trust III. The Company was incorporated on August 25, 1988 and is headquartered in Quincy, Illinois. First Bankers Trustshares’ mission, through its subsidiaries, is to provide comprehensive financial products and services to its retail, institutional, and corporate customers. First Bankers Trust Company, N.A. is a community-oriented financial institution, which traces its beginnings to 1946, operates 10 banking facilities in Adams, Hancock, McDonough, Sangamon and Schuyler counties in West Central Illinois. First Bankers Trust Services, Inc. is a national provider of fiduciary services to individual retirement accounts, personal trusts, and employee benefit trusts. The Trust Company is headquartered in Quincy, Illinois and operates facilities in Chicago, IL, St. Peters, MO, Phoenix, AZ, Philadelphia, PA and Springfield, IL. FBIL Statutory Trust II and FBIL Statutory Trust III were capitalized in September 2003 and August 2004, respectively, for the purpose of issuing Company Obligated Mandatorily Redeemable Preferred Securities. For additional financial information contact: Brian A. Ippensen, Treasurer First Bankers Trustshares, Inc. (217) 228-8000 Stockholder Information Common shares authorized: Common shares outstanding as of December 31, 2014: Certificate holders of record: *As of December 31, 2014 6,000,000 3,079,521 228* Inquiries regarding transfer requirements, lost certificates, changes of address and account status should be directed to the corporation’s transfer agent: AST Shareholder Services 6201 15th Avenue Brooklyn, NY 11219 Corporate Address First Bankers Trustshares, Inc. 1201 Broadway P.O. Box 3566 Quincy, IL 62305 Independent Auditors McGladrey LLP 201 N. Harrison, Suite 300 Davenport, IA 52801 General Counsel Hunton & Williams, LLP 1445 Ross Ave., Suite 3700 Dallas, TX 75202 First Bankers Trustshares, Inc. Board of Directors David E. Connor Chairman Emeritus, First Bankers Trustshares, Inc. Carl Adams, Jr. President, Illinois Ayers Oil Company Scott A. Cisel Executive Adviser to Accenture’s North America Energy Practice William D. Daniels Member, Harborstone Group, LLC Mark E. Freiburg Owner, Freiburg Insurance Agency & Freiburg Development President, Freiburg, Inc. Donald K. Gnuse Chairman of the Board, First Bankers Trustshares, Inc. Chairman of the Board, First Bankers Trust Company, N.A. Chairman of the Board, First Bankers Trust Services, Inc. Arthur E. Greenbank President/CEO, First Bankers Trust Company, N.A. President/CEO, First Bankers Trustshares, Inc. Phyllis J. Hofmeister Secretary, Robert Hofmeister Farm John E. Laverdiere Laverdiere Construction, Inc., President LCI Concrete, Inc., Vice President/Manager Steven E. Siebers Secretary of the Board, First Bankers Trustshares, Inc. Secretary of the Board, First Bankers Trust Company, N.A. Secretary of the Board, First Bankers Trust Services, Inc. Attorney at Law, Scholz, Loos, Palmer, Siebers & Duesterhaus Merle L. Tieken T-C Building Corporation, President M&M Developments Corporation, Owner Dennis R. Williams Chairman of the Board, Quincy Newspapers, Inc. Executive Officers Arthur E. Greenbank, President and CEO Brian A. Ippensen, Treasurer Steven E. Siebers, Secretary First Bankers Trustshares, Inc. Stock Prices (For the three months period ended) Market Value High Low Period End Close 12/31/14 $24.00 $21.00 $22.76 09/30/14 $22.25 $20.07 $21.50 06/30/14 $20.30 $19.50 $20.10 03/31/14 $19.50 $18.90 $19.50 12/31/13 $19.50 $18.60 $19.00 The following companies make a market in FBTI common stock: Raymond James 225 S. Riverside Plaza, 7th Floor Chicago, IL 60606 (800) 800-4693 Wells Fargo Advisors 510 Maine, 9th Floor Quincy, IL 62301 (800) 223-1037 Stifel Nicolas & Co., Inc. 227 W. Monroe, Suite 1850 Chicago, IL 60606 (800) 745-7110 Monroe Securities, Inc. 100 N. Riverside Plaza, Suite 1620 Chicago, IL 60606 (312) 327-2530 Corporate Information | Summary Annual Report 2014 1 Letter to Shareholders Dear Shareholders of First Bankers Trustshares, Inc., The past year, 2014, was a very good year as measured by most standard banking ratios. From the standpoint of net income, it was a record year with our Company earning over $7.2 million for the full year ending December 31, 2014. Assets and deposits were at or near record levels while assets under management at our Trust subsidiary (First Bankers Trust Services, Inc.) exceeded $6 billion in what was a very good year for them. They added resources to both our St. Louis and Quincy offices as they continued to profitably grow this national company. The Bank, (First Bankers Trust Company, N. A.) also had a record year contributing record earnings. During the last couple of years, the Bank purchased two brokerage businesses and added them to our existing brokerage operation. These businesses have performed very well and are currently contributing significant fee income to our bottom line. We enter 2015 with bright prospects. Asset quality remains very good. Earnings are strong and we have ideas and plans for future growth both at the Bank and Trust Company. We look forward to talking with you at our annual meeting on Tuesday, May 12, 2015 at the Corporate Headquarters located at 12th & Broadway in Quincy, Illinois. The meeting will begin at 9:00 a.m. Donald K. Gnuse Chairman of the Board Arthur E. Greenbank President/CEO Sincerely, Donald K. Gnuse Chairman of the Board First Bankers Trustshares, Inc. Arthur E. Greenbank President/CEO First Bankers Trustshares, Inc. 2 Summary Annual Report 2014 | Letter to Shareholders Select Financial Data (Amount in thousands of dollars, except per share data statistics) Year Ended December 31, 2014 2013 2012 2011 2010 2009 PERFORMANCE Net income Common stock cash dividends paid Common stock cash dividend payout ratio 1 Return on average assets 1 Return on average common stockholders’ equity 2 PER COMMON SHARE Earnings, basic and diluted Dividends (paid) on common stock Book value 3 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 Junior subordinated debentures Preferred stock Stockholders’ equity 4 Total equity to total assets 4 Tier 1 capital ratio (risk based) Total capital ratio (risk based) Leverage ratio $ 7,245 $ 5,695 $ 6,840 $ 6,057 $ 6,440 $ 5,885 $ 1,355 $ 1,325 $ 1,232 $ 944 $ 943 $ 942 18.96% 0.87% 11.48% 23.27% 0.70% 9.79% 18.26% 0.87% 12.84% 17.67% 0.75% 11.26% 16.28% 0.88% 13.54% 17.90% 0.89% 13.79% $ 2.32 $ 1.82 $ 2.19 $ 1.73 $ 1.89 $ 1.71 $ 0.44 $ 0.43 $ 0.41 $ 0.31 $ 0.31 $ 0.31 $ 21.09 $ 19.22 $ 17.84 $ 16.05 $ 14.65 $ 13.08 $ 24.00 $ 23.33 $ 17.67 $ 14.73 $ 14.67 $ 12.17 $ 18.90 $ 17.43 $ 14.03 $ 12.00 $ 10.73 $ 8.00 $ 22.76 $ 19.00 $ 17.43 $ 14.03 $ 13.40 $ 10.73 9.8 1.08 10.4 0.99 8.0 0.98 8.1 0.87 7.1 0.91 6.3 0.82 3,079,521 3,079,521 3,079,521 3,079,037 3,076,278 3,072,843 $ 842,305 $ 775,640 $ 804,568 $ 721,854 $ 690,644 $ 623,896 298,042 274,227 327,325 281,635 278,729 282,135 87 475,534 667,668 77,048 10,310 10,000 88 442,498 627,789 60,934 10,310 10,000 499 406,803 658,498 51,985 15,465 10,000 454 375,390 584,499 48,769 15,465 10,000 - 337,558 570,436 43,104 15,465 10,200 183 292,344 511,769 38,717 15,465 10,100 $ 74,952 $ 69,193 $ 64,933 $ 59,446 $ 55,286 $ 50,287 8.90% 13.90% 14.97% 9.67% 8.92% 13.59% 14.66% 9.39% 8.07% 14.60% 15.60% 9.44% 8.24% 14.68% 15.54% 9.99% 8.00% 14.70% 15.43% 9.83% 8.06% 15.44% 16.60% 9.88% Note: A 3-for-2 common stock split occurred on August 26, 2013. All common shares reported, including per share data, in this annual report have been retroactively adjusted for this split as if it occurred at the beginning of the earliest period presented. 1 Excludes preferred stock dividends/accretion. 2 Return on average common stockholders’ equity is calculated by dividing net income, excluding preferred stock dividends/accretion, by average common stockholders’ equity. Common stockholders’ equity is defined as equity less preferred stock and accumulated other comprehensive income or loss. 3 Book value per share is calculated by dividing stockholders’ equity, excluding preferred stock and accumulated other comprehensive income or loss, by outstanding common shares. 4 Stockholders’ equity includes preferred stock and excludes accumulated other comprehensive income or loss. Select Financial Data | Summary Annual Report 2014 3 Return on Average Assets Return on Average Common Equity 1.00% 0.80% 0.89% 0.88% 0.87% 0.87% 0.75% 0.70% 13.79% 13.54% 12.84% 11.26% 11.48% 9.79% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Earnings Per Share Price/Earnings Multiples $1.71 $1.89 $1.73 $2.19 $1.82 $2.32 7.1X 6.3X 8.1X 8.0X 10.4X 9.8X 12 10 8 6 4 2 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Market Price to Book Value Loan/Deposit Growth 0.91X 0.87X 0.98X 0.99X 0.99X 1.08X 700 600 500 400 300 200 100 - $584 $658 $628 $570 $375 $407 $442 $476 $512 $401 $292 $338 2010 2011 2012 2013 2013 2014 2009 2010 2011 2012 2013 2014 0.60% 0.40% 0.20% 0.00% $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1.45 1.25 1.05 0.85 0.65 0.45 0.25 4 Summary Annual Report 2014 | Select Financial Data Management’s Report on First Bankers Trust Company First Bankers Trust Company, National Association Corporate Statement First Bankers Trust Company, N. A. (the Bank) is a community-oriented financial institution that provides banking services in six communities, including five county seats through ten branches in West Central Illinois, to meet the needs of the communities served. We have diversified our business through many thousands of customers including many individuals and numerous small businesses within these communities. The Bank attracts deposits from the general public and uses these deposits, along with other borrowings and funds to originate residential mortgage loans, consumer loans, small business loans and agricultural loans for these markets. We provide value to these relationships through our cutting edge banking products and high level services. We simultaneously manage our costs in order to stay competitive with our pricing. The Bank has been providing these services for nearly seven decades and prides itself on the success achieved. Arthur E. Greenbank President/CEO Arthur E. Greenbank  President/CEO  First Bankers Trust Company, N. A.  Management’s Report | Summary Annual Report 2014 5           Management’s Report on First Bankers Trust Services, Inc. First Bankers Trust Services, Inc. Corporate Statement First Bankers Trust Services, Inc. provides fiduciary services to individuals and corporate clients across the United States, a multitude of custodial and trust support to individual retirement accounts, personal trusts, farm service relationships and employee benefit trusts. In 2014, our assets under management surpassed $6.2 billion through our continual marketing efforts of new relationships and excellence in client administration. We continue to see a changing competitor environment with established organizations leaving and new faces arriving. Our steady presence and highly experienced staff have made First Bankers Trust Services one the premier, fiduciary service providers. 2014 marks the tenth year of First Bankers Trust Services as a separate entity, wholly owned by First Bankers Trustshares, Inc. During 2014, we introduced our new corporate logo and enhanced our website and marketing materials. From humble beginnings in 1956 as a trust department of a bank, and through today, we continue to serve each of our clients with the respect and dedication so deserving of the task they have entrusted to us to accomplish. We look forward to the opportunity and challenges of 2015 and beyond. Brian A. Ippensen President/CEO Brian A. Ippensen President/CEO First Bankers Trust Services, Inc. 6 Summary Annual Report 2014 | Management’s Report 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. provides an analysis of the consolidated financial statements and focuses upon those factors which had a significant influence on the overall 2014 performance. The discussion should be read in conjunction with the Company’s consolidated financial statements and notes thereto appearing in the Combined Proxy and Consolidated Financial Statements. 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 business of the Company is that of a community-oriented financial institution offering a variety of financial services to meet the needs of the communities it serves. Consolidated Assets (Amounts in Thousands of Dollars) 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, business loans and agricultural loans in its primary market area. The Company also invests in investment securities consisting primarily of U.S. government or agency obligations, mortgage- backed securities, financial institution certificates of deposit, and other liquid assets. In addition, the Company conducts Trust Operations nationwide through its sales representatives. 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 trust and banking operations. 2014 Change 2013 Change 2012 2011 2010 2009 5 Year Change Assets Cash and due from banks: Non-interest bearing Interest bearing Securities Federal funds sold Loans held for sale Net loans Other assets TOTAL Liabilities & Stockholders' Equity Deposits Short-term borrowings Federal Home Loan Bank advances Junior Subordinated Debentures Other liabilities Stockholders’ equity TOTAL $ 11,307 5.90% $ 10,677 (25.13%) $ 14,261 $ 12,104 $ 9,363 $ 9,119 23.99% 14,548 122.34 6,543 298,042 8.68 274,227 5,006 175.51 87 467,357 45,958 (1.14) 7.38 (2.30) 1,817 88 435,247 47,041 (53.60) (16.22) (11.84) (82.36) 8.67 2.72 14,102 9,073 25,681 8,497 327,325 281,635 278,729 282,135 71.21 5.64 2,061 499 3,238 454 2,167 293 1608.53 - 183 (52.46) 400,525 370,203 332,538 287,700 45,795 45,147 42,166 35,969 62.45 27.77 $ 842,305 8.59% $ 775,640 (3.60%) $ 804,568 $ 721,854 $ 690,644 $ 623,896 35.01% $ 667,668 6.35% $ 627,789 (4.66%) $ 658,498 $ 584,499 $ 570,436 $ 511,769 30.46% 77,048 26.45 60,934 17.21 51,985 48,769 37,604 30,217 154.98 - 10,310 8,229 79,050 - - 23.91 12.98 - - - - 5,500 8,500 (100.00) 10,310 6,641 69,966 (33.33) (29.80) 1.17 15,465 15,465 15,465 15,465 (33.33) 9,460 8,954 5,057 5,269 69,160 64,167 56,582 52,676 56.18 50.07 $ 842,305 8.59% $ 775,640 (3.60%) $ 804,568 $ 721,854 $ 690,644 $ 623,896 35.01% Management’s Discussion and Analysis | Summary Annual Report 2014 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations At December 31, 2014, the company had assets of $842,305,000 compared to $775,640,000 at December 31, 2013. The increase in assets is primarily made up of a $32,110,000 (7.38%) increase in net loans and a $23,815,000 (8.68%) increase in securities. The growth was funded by a $39,879,000 (6.35%) increase in deposits and a $16,114,000 (26.45%) increase in repurchase agreements. The growth in the gross loan portfolio was primarily made up of growth in residential real estate loans of $15,018,000 and agricultural loans of $10,989,000. Approximately $22,705,000 of fixed rate long-term residential real estate loans were sold in the secondary market during 2014 while $49,907,000 were sold in 2013. Agricultural real estate loans totaling $838,000 were sold in the secondary market during 2014, while $1,336,000 were sold in 2013. 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 maintaining 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 balances 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 compensation and benefits, occupancy and equipment expenses and general and administrative expenses. Prevailing economic conditions as well as federal regulations 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 investments and the level of personal income and savings within the institution’s market. In addition, growth of deposit balances is influenced by the perceptions of customers regarding the stability of the financial services industry. Lending activities are influenced by the demand for housing, competition from other lending institutions, as well as lower interest rate levels, which may stimulate loan refinancing. The primary sources of funds for lending activities include deposits, loan payments, borrowings and funds provided from operations. For the year ended December 31, 2014, the Company reported consolidated net income of $7,245,000, a $1,550,000 (27.22%) increase from 2013. Net interest income after provision for loan losses for the periods being compared increased $3,378,000 or 18.51%. Other operating income increased $618,000 (4.47%) and other operating expenses increased $1,241,000 (5.07%) from 2013. 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 $773,051,000 for the year ended December 31, 2014. A combination of interest bearing and non-interest bearing deposits, securities sold under agreement to repurchase, other borrowings and capital funds are employed to finance these assets. Consolidated Income Summary (Amounts in Thousands of Dollars) 2014 Change 2013 Change 2012 2011 2010 2009 5 Year Growth Rate Interest income Interest expense $ 26,947 6.85% $ 25,219 (3.79)% $ 26,212 $ 27,155 $ 25,930 $ 26,153 3.04% (4,145) (24.98) (5,525) (16.99) (6,656) (7,888) (8,932) (9,663) (57.10%) Net interest income $ 22,802 15.78% $ 19,694 0.71% $ 19,556 $ 19,267 $ 16,998 $ 16,490 Provision for loan losses Net interest income after provision for loan losses Other income Other expenses Income before taxes Income tax expense NET INCOME (1,170) (18.75) (1,440) - (1,440) (1,640) (1,080) (1,080) $ 21,632 18.51% $ 18,254 0.76% $ 18,116 $ 17,627 $ 15,918 $ 15,410 14,432 (25,707) 4.47 5.07 13,814 (24,466) 0.04 13,808 10,643 11,164 9,093 10.89 (22,064) (19,889) (17,899) (16,116) $ 10,357 36.24% $ 7,602 (22.90)% $ 9,860 $ 8,381 $ 9,183 $ 8,387 (3,112) 7,245 $ 63.19 27.22% (1,907) 5,695 $ (36.85) (16.74)% (3,020) 6,840 $ (2,324) 6,057 $ (2,743) 6,440 $ (2,502) 5,885 $ 38.28% 8.33% 40.38% 58.72% 59.51% 23.49% 24.38% 23.11% 8 Summary Annual Report 2014 | Management’s Discussion and Analysis Years Ended December 31, (Amounts in Thousands of Dollars) 2014 2013 2012 Interest income Loan fees Interest expense $ 26,443 $ 24,601 $ 25,485 504 (4,145) 618 (5,525) 727 (6,656) NET INTEREST INCOME $ 22,802 $ 19,694 $ 19,556 Average earning assets $ 773,051 $ 745,363 $ 721,709 Net interest margin 2.95% 2.64% 2.71% The yield on average earning assets for the year ended 2014 was 3.49% while the average cost of funds for the same period was 0.64% on average interest bearing liabilities of $645,704,000. The yield on average earning assets for the year ended 2013 was 3.38%, while the average cost of funds for the same period was 0.87% on average interest bearing liabilities of $635,614,000. The increase in the net interest income of $3,108,000 can be attributed to the 3.71% increase in average earning assets, the 0.23% decrease in average cost of funds, and the 0.11% increase in yield on earning assets. Provision for Loan Losses The allowance for loan losses as a percentage of gross loans outstanding is 1.72% as of December 31, 2014, compared to 1.64% as of December 31, 2013. Net loan charge-offs totaled $244,000 for the year ended December 31, 2014 compared to $467,000 in 2013. The amounts recorded in the provision for loan losses are determined from management’s quarterly evaluation of the quality of the loan portfolio. In this review, such factors as the volume and character of the loan portfolio, general economic conditions and past loan loss experience are considered. Management believes that the allowance for loan losses is adequate to provide for possible losses in the portfolio as of December 31, 2014. 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, 2014 was $14,432,000, an increase of $618,000 (4.47%) from 2013. This is attributed to an increase in trust services income of $1,206,000, which was partially offset by a decrease in security gains of $627,000. Other Expense Other expense for the period ended December 31, 2014 totaled $25,707,000, an increase of $1,241,000 (5.07%) from 2013 year- end totals. Salaries and employee benefits expense aggregated 60.66% and 58.71% of total other expense for the years ended December 31, 2014 and 2013, respectively. Non-Accrual and Past Due Loans, Leases and Other Real Estate Owned (Amounts in Thousands of Dollars) As of December 31, Non-accrual loans and leases Other real estate owned (OREO) 2014 2013 2012 2011 2010 2009 $ 2,679 $ 8,279 $ 4,511 $ 5,218 $ 5,856 $ 3,449 - 203 105 210 1,757 230 Total non-accrual loans and OREO $ 2,679 $ 8,482 $ 4,616 $ 5,428 $ 7,613 $ 3,679 Loans and leases past due 90 days or more and still accruing interest TOTAL 157 332 147 186 591 199 $ 2,836 $ 8,814 $ 4,763 $ 5,614 $ 8,204 $ 3,878 Management’s Discussion and Analysis | Summary Annual Report 2014 9 Income Taxes The Company files its federal income tax return on a consolidated basis with the Bank. See Note 13 in the Combined Proxy and Consolidated 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 obligations on a timely basis. Bank liquidity must thus be considered 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 federal funds sold are a primary source of asset liquidity. On December 31, 2014, these categories totaled $39,595,000 or 4.70% of assets, compared to $27,848,000 or 3.59% the previous year. As of December 31, 2014, securities held to maturity included $209,000 of gross unrealized gains and no 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 amortization of premium and accretion of discount. Closely related to the management of liquidity is the management of rate sensitivity (management of variable rate assets and liabilities), which focuses on maintaining 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 mechanisms such that the net interest margin should maintain acceptable levels in 2015, regardless of the changes in interest rates that may occur. The following table shows the repricing period for interest-earning assets and interest-bearing liabilities and the related repricing gap: Repricing Period as of December 31, 2014 Through One Year After One Year through Five Years After Five Years (Amounts in Thousands of Dollars) Interest-earning assets $ 190,890 $ 280,482 $ 321,845 Interest-bearing liabilities 535,985 106,230 10,310 Repricing gap (repricing assets minus repricing liabilities) $ (345,095) $ 174,252 $ 311,535 Repricing Period as of December 31, 2013 Through One Year After One Year through Five Years After Five Years (Amounts in Thousands of Dollars) Interest-earning assets Interest-bearing liabilities Repricing gap (repricing assets minus repricing liabilities) $ 209,246 $ 220,993 $ 294,934 489,051 116,955 10,310 $ (279,805) $ 104,038 $ 284,624 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 enterprises by the effects of inflation. Some reasons for these disparate effects are: a) premises and equipment for banks represent a relatively small proportion of total assets; b) a bank’s assets 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 interest income is how well a bank is positioned to cope with changing interest rates. 10 Summary Annual Report 2014 | Management’s Discussion and Analysis Capital The ability to generate and maintain capital at adequate levels 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%. 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. The Company’s capital, as defined by the regulations, was 14.97% of risk-weighted assets as of December 31, 2014. In addition, a leverage ratio of at least 4.00% is to be maintained. As of December 31, 2014, the Company’s leverage ratio was 9.67%. Common Stock Information and Dividends The Company’s common stock is held by 228 certificate holders as of December 31, 2014, and is traded in a limited over-the-counter market. On December 31, 2014 the market price of the Company’s common stock was $22.76. Market price is based on stock transactions in the market. Dividends on common stock of approximately $1,386,000 were declared by the Board of Directors of the Company for the year ended December 31, 2014. Risk Based Capital Ratios Closing Share Price Data 15.43% 15.54% 15.60% 14.66% 14.97% 20.00% 15.00% 16.38% 10.00% 5.00% 0.00% $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 $22.76 $17.43 $19.00 $13.40 $14.03 $10.73 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Financial Report Upon written request of any shareholder of record on December 31, 2014, the Company will provide, without charge, a copy of its 2014 Combined Proxy and Consolidated Financial Statements. Notice of Annual Meeting of Stockholders The annual meeting of stockholders will be May 12, 2015 at 9:00 a.m. at the corporate headquarters, 1201 Broadway, Quincy, Illinois. Management’s Discussion and Analysis | Summary Annual Report 2014 11 Board of Directors First Bankers Trustshares, Inc. First Bankers Trust Company, N. A. First Bankers Trust Services, Inc. Donald K. Gnuse Chairman of the Board Arthur E. Greenbank President/CEO Donald K. Gnuse Chairman of the Board Arthur E. Greenbank President/CEO Donald K. Gnuse Chairman of the Board Brian A. Ippensen President Steven E. Siebers Secretary Scholz, Loos, Palmer, Siebers, & Duesterhaus, Attorney at Law Steven E. Siebers Secretary Scholz, Loos, Palmer, Siebers, & Duesterhaus, Attorney at Law Steven E. Siebers Secretary Scholz, Loos, Palmer, Siebers, & Duesterhaus, Attorney at Law Carl W. Adams, Jr. Illinois Ayers Oil Company, President Carl W. Adams, Jr. Illinois Ayers Oil Company, President Scott A. Cisel Executive Adviser to Accenture’s North America Energy Practice Scott A. Cisel Executive Adviser to Accenture’s North American Energy Practice Carl W. Adams, Jr. Illinois Ayers Oil Company, President Phyllis J. Hofmeister Robert Hofmeister Farm, Secretary William D. Daniels Harborstone Group, LLC, Member William D. Daniels Harborstone Group, LLC, Member Mark E. Freiburg Freiburg Insurance Agency & Freiburg Development, Owner Freiburg, Inc., President Mark E. Freiburg Freiburg Insurance Agency & Freiburg Development, Owner Freiburg, Inc., President Phyllis J. Hofmeister Robert Hofmeister Farm, Secretary Phyllis J. Hofmeister Robert Hofmeister Farm, Secretary John E. Laverdiere Laverdiere Construction, Inc., President LCI Concrete Inc., Vice President/Manager John E. Laverdiere Laverdiere Construction, Inc., President LCI Concrete Inc., Vice President/Manager Merle L. Tieken T-C Building Corporation, President M&M Developments Corporation, Owner Kemia M. Sarraf, MD, M.P.H. President & Founder of genHKids, Inc. Dennis R. Williams Quincy Newspapers, Inc., Chairman Merle L. Tieken T-C Building Corporation, President M&M Developments Corporation, Owner Dennis R. Williams Quincy Newspapers, Inc., Chairman 12 Summary Annual Report 2014 | Board of Directors Officers First Bankers Trust Company, N. A. First Bankers Trust Services, Inc. INFORMATION TECHNOLOGY OFFICERS Nicole R. Allen-Cain Ronald W. Fairley Terry J. Hanks Andrew W. Marner John K. Predmore RETAIL OFFICERS Jason T. Cale W. Kay Divan Susan L. Farlow Janna L. Lockman Cynthia MacKenzie Debora A. McClelland Jeremy W. Melvin Kimberly M. Neal Eric L. Roon Dennis L. Royalty Rachel Y. St. Clair Kelly R. Seifert Sally E. Vigezzi ACCOUNTING OFFICER Brooke C. Venvertloh COMPLIANCE OFFICER Christine A. Baker Kristen E. Krietmeyer CREDIT OFFICER Dan J. Brink HUMAN RESOURCES OFFICER Laura J. Maas PRESIDENT/CEO Arthur E. Greenbank REGIONAL PRESIDENTS Gregory A. Curl East Region Jason L. Duncan North Region David J. Rakers West Region SENIOR VICE PRESIDENTS Thomas J. Frese (CFO/COO) Dennis R. Iversen Gretchen A. McGee VICE PRESIDENTS Timothy W. Corrigan (Auditor) Mark A. DiMarzio Pamela L. Eftink Steven K. Fryman Jennifer M. Gilker Charles D. Grace Ryan G. Goestenkors Kathleen D. McNay James R. Obert Marvin E. Rabe Douglas R. Reed Nancy S. Richards Hugh K. Roderick Sherry R. Schaffnit Jeanette L. Schinderling Linda K. Tossick (Controller) Brent R. Voth Patricia J. Westerman Randal S. Westerman James D. Whitaker David A. Young ASSISTANT VICE PRESIDENTS John T. Armstrong Sherry A. Bryson Maria D. Eckert James M. Farmer David J. Garner Lisa K. Hoffman Ryne R. Lubben Karen J. Koehn Jayson E. Martin Afton R. Mast Michelle M. Shortridge Michele Walgren Leslie A. Westen Joan M. Whitlow PRESIDENT/CEO Brian A. Ippensen VICE PRESIDENTS Merri E. Ash Steven P. Eckert Michele R. Foster Patricia D. Goestenkors Julie E. Kenning Danielle C. Montesano Larry E. Shepherd TRUST OFFICERS Teresa L. Daggett Paul R. Edwards, III Donald J. Fitzgerald Robin L. Fitzgibbons Joseph E. Harris Susan D. Knoche Teresa F. Kuchling Marilyn H. Marchetti W. Diane McHatton Ashley Melton Blake R. Mock Mary A. Schmidt Kimberly A. Serbin Linda J. Shultz Deborah J. Staff Karen C. Sutor Martha E. Wert ASSISTANT VICE PRESIDENT John P. Shelton ASSISTANT TRUST OFFICERS John T. Cifaldi Zachary W. Clark Emily J. Coniglio Marilyn J. Crim Marissa J. Ermeling Jennifer L. Gordley Kelle M. Ponce` Brenda K. Martin Jacob E. Newton Sherri A. Zuspann Officers | Summary Annual Report 2014 13 

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