First Bankers Trustshares, Inc.
2024 Annual Report
Corporate Information ............................................................................. 1
Board of Director Committees ................................................................ 2
Letter to Stockholders ............................................................................. 3
Selected Financial Data (unaudited) .................................................. 4-5
Management’s Report on Internal
Controls Over Financial Reporting ...................................................... 6-7
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (unaudited) ........... 8-12
Independent Auditor’s Reports ....................................................... 13-16
Consolidated Financial Statements
Balance Sheets ..................................................................................... 17
Statements of Income .......................................................................... 18
Statements of Comprehensive Income ............................................... 19
Statements of Changes in Stockholders’ Equity ................................. 20
Statements of Cash Flows ............................................................... 21-22
Notes to Consolidated Financial Statements ................................. 23-51
Board of Directors ............................................................................ 52-53
Officers .................................................................................................. 54
Corporate Information
1
Corporate Description
First Bankers Trustshares, Inc. (FBTI) is a bank holding company for First
Bankers Trust Company, N.A., 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. , a community-oriented financial institution
which traces its beginnings to 1946, operates 9 banking facilities in Adams,
Hancock, McDonough, Sangamon and Schuyler counties in West Central
Illinois and two loan production offices - one in St. Clair county Illinois and one
in St. Charles county Missouri.
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:
Allen W. Shafer, President and CEO
First Bankers Trustshares, Inc.
(217) 228-8000
Stockholder Information
Common shares authorized:
6,000,000
Common shares outstanding as of
December 31, 2024:
2,995,355
Certificate holders of record:
207*
*As of December 31, 2024
Inquiries regarding transfer requirements, lost certificates, changes of address
and account status should be directed to the corporation’s transfer agent:
Equiniti Trust Company, LLC
55 Challenger Road, 2nd Floor
Ridgefield Park, NJ 07660
Corporate Address
First Bankers Trustshares, Inc.
1201 Broadway
P.O. Box 3566
Quincy, IL 62301
Independent Auditors
RSM US LLP
201 1rd St. SE, Ste. 800
Cedar Rapids, IA 52401
General Counsel
Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, TX 75201-2784
First Bankers Trustshares, Inc. Board of Directors
Donald K. Gnuse
Board Member Emeritus, First Bankers Trustshares, Inc.
Carl W. Adams, Jr.
Chairman, Illinois Ayers Oil Company
Director, TI-Trust, Inc.
William D. Daniels
Chairman of the Board, First Bankers Trustshares, Inc.
Chairman of the Board, First Bankers Trust Company, N.A.
Member, Harborstone Group, LLC
Mark E. Freiburg
Owner, Freiburg Insurance Agency
Owner, Freiburg Development
Owner, Diamond Construction
Owner, Maxamillion, Inc.
Owner, Wink Drinks, Inc.
Director, U.S. Insurance Company of America
Charles M. Gnuse
President/CEO, United State Bank Lewistown, MO.
Arthur E. Greenbank
Former President/CEO, First Bankers Trust Company, N.A.
and First Bankers Trustshares, Inc.
Stephen C. Hassell
CEO, Atomation
Kurt J. Hofmeister
Partner North American Wiring Accessories
Kemia M. Sarraf, M. D., M.P.H.
CEO, Lodestar Consulting and Executive Coaching
Richard W. Schulte
Founding Partner, Wright & Schulte, LLC
Allen W. Shafer
President/CEO, First Bankers Trust Company, N.A.
President/CEO, First Bankers Trustshares, Inc.
Steven E. Siebers
Chairman, TI-Trust Inc.
Erin J. Wharton
Partner, Gray Hunter Stenn LLP
Secretary for the Board of Directors
Melinda K. Boyer
Executive Officers
Allen W. Shafer, President and CEO
Kelly A. Kern, SVP Finance & Accounting
First Bankers Trustshares, Inc. Stock Prices
(For the three months period ended)
Market Value
12/31/24 9/30/24
6/30/24
3/31/24 12/31/23
High
$16.99
$16.34
$17.35
$19.75
$19.00
Low
$15.75
$13.25
$13.25
$16.50
$12.85
Period End Close
$16.99
$16.00
$13.69
$17.35
$19.00
The following companies make a market in FBTI common stock:
Raymond James
222 S. Riverside Plz
Chicago, IL 60606
(800) 800-4693
Janney Montgomery Scott LLC
1717 Arch, 19th Floor
Philadelphia, PA 19103
(844) 273-2189
D.A. Davidson & Co.
75 West Front St.
Red Bank, NJ 07701
(866) 248-4051
Stifel Nicolas & Co., Inc.
501 N. Broadway
St. Louis, MO 63102
(800) 679-5446
Monroe Financial Partners
500 W Madison St
Chicago, IL 60661
(312) 327-2530
Board of Director Committees
2
The Audit and the Governance And Compensation Committees are chaired by a board member. They are given the necessary resources to lead
their committees, monitor the committee actions, and report to the full Board the committee’s activities. The committees are staffed with
employees who have been carefully chosen to support the Board member chairperson and provide the expertise and support to allow the
committee to accomplish its objective.
THE COMMITTEES
1.
Audit Committee
Chair: Charles M. Gnuse
Board Members: Arthur E. Greenbank, William D. Daniels, Kemia M. Sarraf, M.D., M.P.H. and Erin J. Wharton
The Audit Committee is comprised of independent Directors and assists the Board with its oversight of the systems and procedures
relating to the Company’s financial reporting process, internal accounting and financial controls, and risk management program. The
Committee also assists with the administration and monitoring of the internal audit process, the annual independent audit of the
Company’s annual financial statements, and the Company’s compliance with legal and regulatory requirements. The qualification,
independence and performance of the Company’s independent, registered public accounting firm, are also monitored by the
Committee.
2.
Governance And Compensation Committee (HR)
Chair: Steven E. Siebers
Board Members: Charles M. Gnuse, Richard W. Schulte, Stephen C. Hassell and Mark E. Freiburg
This is a Holding Company committee with the following responsibilities: address corporate governance matters; establish
qualifications and independence requirements for Directors; recommend nominees for election to the Board; approve a management
succession policy and review the identified candidates; oversee employee compensation and benefit plans; approve incentive
compensation arrangements; and assess the contributions of current Directors. This committee will meet at least four times a year.
Letter to Stockholders
3
Dear Stockholders of First Bankers Trustshares, Inc.,
The year 2024 brought both challenges and progress for First Bankers Trustshares, Inc. We
continue to successfully execute our strategy of growing quality loans as 2024 was the third
consecutive time of year-over-year loan growth. While we grew loans, we also improved the yield on
our loans as reflected in the improvement of our net interest margin.
Short-term interest rates remaining higher for longer, an inverted yield curve, and funds tied up in
low-yielding bonds all put pressure on the earning ability of the Company. These factors, combined
with additional provision needed for one long-time underperforming loan and expansion expenses,
resulted in net income being lower than desired.
Below are a few insights for 2024:
•
Net income: $4.18 million
•
Net loans: Reached a record $621 million
•
Deposits: Grew to a record $998 million
Additional details of the Company’s performance can be found in the following pages.
While we are disappointed in our results for 2024, we remain optimistic about the future of the
Company. We continue to invest in people and technology to drive growth and profitability. The
previously announced partnership with ATTY Financial Holdings, Inc. underscores this commitment.
In this arrangement, we leverage ATTY’s sales, marketing and technology with the Company’s
operations, compliance, and systems strengths to capitalize on providing banking services to small
and mid-size law firms.
We look forward to seeing you at the annual meeting on Tuesday, May 13, 2025. The meeting will
be held at the corporate headquarters located at 1201 Broadway, Quincy, Illinois and will begin at
9:00 a.m.
Thank you for your ongoing investment in First Bankers Trustshares, Inc.
William D. Daniels
Allen W. Shafer
Chairman of the Board
President and CEO
First Bankers Trustshares, Inc.
First Bankers Trustshares, Inc.
William D. Daniels
Chairman of the Board
Allen W. Shafer
President and CEO
Selected Financial Data (unaudited)
4
(Amounts in Thousands of Dollars, Except Per Share Data Statistics)
*
Year Ended December 31,
2024
2023
2022
2021
2020
2019
PERFORMANCE
Net income
4,182
$
5,407
$
8,823
$
8,170
$
7,843
$
8,319
$
Common stock cash dividends paid
2,517
$
2,393
$
2,316
$
2,223
$
2,101
$
1,977
$
Common stock cash dividend payout ratio
60.19%
44.26%
26.25%
27.21%
26.79%
23.77%
Return on average assets
0.37%
0.48%
0.76%
0.68%
0.75%
0.90%
Return on average adjusted common stockholders’ equity 1
3.74%
4.94%
8.33%
8.13%
8.24%
8.99%
PER COMMON SHARE
Earnings, basic and diluted
1.40
$
1.81
$
2.92
$
2.64
$
2.54
$
2.69
$
Dividends paid on common stock
0.84
$
0.80
$
0.76
$
0.72
$
0.68
$
0.64
$
Adjusted book value 2
37.59
$
37.05
$
35.78
$
33.46
$
31.54
$
29.68
$
Stock price
High
19.75
$
23.59
$
31.45
$
32.00
$
33.00
$
36.00
$
Low
13.25
$
12.85
$
22.75
$
27.75
$
24.75
$
30.25
$
Close
16.99
$
19.00
$
23.59
$
31.45
$
27.75
$
31.20
$
Price/Earnings per share (at period end)
12.1
10.5
8.1
11.9
10.9
11.6
Market price/Adjusted book value (at period end)
0.45
0.51
0.66
0.94
0.88
1.05
Weighted average number of shares outstanding
2,995,995
2,993,687
3,027,147
3,089,997
3,093,398
3,089,247
AT DECEMBER 31,
Assets
1,179,236
$
1,148,708
$
1,118,117
$
1,226,137
$
1,117,675
$
922,579
$
Investment securities
409,496
445,249
483,311
667,157
542,170
345,140
Loans held for sale
70
189
211
-
-
169
Loans (prior to allowance)
629,511
598,647
551,269
478,398
485,153
500,599
Deposits
997,641
971,432
913,551
978,624
853,302
727,656
Short-term borrowings and Federal Home
Loan Bank advances
99,238
94,917
130,478
126,273
137,904
81,572
Junior subordinated debentures
10,310
10,310
10,310
10,310
10,310
10,310
Adjusted stockholders’ equity 3
112,590
$
110,959
$
106,844
$
103,214
$
97,606
$
91,711
$
Adjusted equity to total assets 3
9.55%
9.66%
9.56%
8.42%
8.73%
9.94%
Common Equity Tier 1 capital ratio (risk based)
14.59%
14.73%
15.28%
16.14%
15.78%
14.98%
Tier 1 capital ratio (risk based)
15.92%
16.10%
16.75%
17.76%
17.45%
16.67%
Total capital ratio (risk based)
17.17%
17.35%
18.01%
19.01%
18.71%
17.93%
Leverage ratio
9.73%
10.13%
9.89%
8.62%
9.34%
10.79%
1 Return on average common stockholders’ equity is calculated by dividing net income by average common stockholders’ equity. Common stockholders’ equity is defined as equity less
accumulated other comprehensive income or loss.
2 Adjusted book value per share is calculated by dividing stockholders’ equity, excluding accumulated other comprehensive income or loss, by outstanding common shares.
3 Stockholders’ equity excludes accumulated other comprehensive income or loss.
* This table includes results of discontinued operations through June 30, 2019.
Selected Financial Data (unaudited)
5
8.99%
8.24%
8.13%
8.33%
4.94%
3.74%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2019
2020
2021
2022
2023
2024
Return on Average Adjusted
Common Stockholders' Equity
See explanation for adjusted book value and adjusted common stockholders’ equity on previous page.
0.90%
0.75%
0.68%
0.76%
0.48%
0.37%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
2019
2020
2021
2022
2023
2024
Return on Average Assets
$2.69
$2.54
$2.64
$2.92
$1.81
$1.40
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2019
2020
2021
2022
2023
2024
Earnings Per Share
1.05x
0.88x
0.94x
0.66x
0.51x
0.45x
0.25x
0.75x
1.25x
2019
2020
2021
2022
2023
2024
Market Price to Adjusted Book
Value
11.60x
10.90x
11.90x
8.10x
10.50x
12.10x
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
14.00x
2019
2020
2021
2022
2023
2024
Price/Earnings Multiples
Loans
$501
Loans
$485
Loans
$478
Loans
$551
Loans
$599
Loans
$630
$728
Deposits
$853
Deposits
$979
Deposits
$914
Deposits
$971
Deposits
$998
Deposits
-
200
400
600
800
1,000
2019
2020
2021
2022
2023
2024
Loan/Deposit Growth
(millions of dollars)
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
8
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 2024
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.
In December 2024, First Bankers Trust Company, N.A. invested $1
million in ATTY Financial Holdings, Inc. (ATTY Financial). ATTY
Financial provides a financial platform for and is focused on
marketing banking services to small and mid-sized law firms which
are provided by First Bankers Trust Company, N.A.
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.
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.
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, increasing net
interest margin, controlling operating expenses and on generating
fee income from banking operations.
Consolidated Balance Sheet Summary (Amounts in Thousands of Dollars)
*
5 Year
2024
Change
2023
Change
2022
2021
2020
2019
Change
Assets
Cash and due from banks:
Non-interest bearing
11,585
$
(10.45%)
12,937
$
(23.38%)
16,885
$
7,048
$
9,602
$
9,274
$
24.92%
Interest bearing
69,576
104.85
33,964
224.33
10,472
38,918
43,078
22,551
208.53
Securities
409,496
(8.03)
445,249
(7.88)
483,311
667,157
542,170
345,140
18.65
Federal funds sold
1,138
46.84
775
11.19
697
1,763
7,382
13,031
(91.27)
Loans held for sale
70
(62.96)
189
(10.43)
211
-
-
169
(58.58)
Net loans
621,055
5.49
588,741
8.93
540,462
466,949
472,996
488,811
27.05
Other assets
66,316
(0.80)
66,853
1.17
66,079
44,302
42,447
43,603
52.09
TOTAL
1,179,236
$
2.66%
1,148,708
$
2.74%
1,118,117
$
1,226,137
$
1,117,675
$
922,579
$
27.82%
Liabilities & Stockholders'
Equity
Deposits
997,641
$
2.70%
971,432
$
6.34%
913,551
$
978,624
$
853,302
$
727,656
$
37.10%
Short-term borrowings
69,238
6.66
64,917
(24.05)
85,478
119,950
132,581
80,533
(14.03)
Federal Home Loan Bank advances
30,000
-
30,000
(33.33)
45,000
6,323
5,323
1,039
2787.39
Junior subordinated debentures
10,310
-
10,310
-
10,310
10,310
10,310
10,310
0.00
Other liabilities
4,593
(53.82)
9,946
38.41
7,186
5,099
7,084
5,722
(19.73)
Stockholders’ equity
67,454
8.62
62,103
9.74
56,592
105,831
109,075
97,319
(30.69)
TOTAL
1,179,236
$
2.66%
1,148,708
$
2.74%
1,118,117
$
1,226,137
$
1,117,675
$
922,579
$
27.82%
* This table includes discontinued operations through June 30, 2019.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
9
At December 31, 2024, the Company had assets of $1,179,236,000
compared to $1,148,708,000 at December 31, 2023. The increase
in assets is primarily made up of an increase in loans of $32,314,000
(5.49%) and an increase in cash due from banks of $34,260,000
(73.05%) and offset by a decrease in securities of $35,753,000
(8.03%). These assets were funded by an increase in deposits of
$26,209,000 (2.70%) and an increase in short-term borrowings of
$4,321,000 (6.66%).
Approximately $14,342,000 of fixed rate long-term residential real
estate loans were sold in the secondary market during 2024, while
$17,697,000 were sold in 2023. Agricultural real estate loans of
$1,298,000 were sold in the secondary market during 2024, while
none were sold in 2023. Management continues to place emphasis
on the quality versus the quantity of the credits placed in the portfolio.
In the fourth quarter of 2023 the Company entered into an
agreement to sell the majority of its residential mortgage servicing
rights. The sale was finalized in 2024 resulting in a gain of
$1,270,000.
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 credit loss
expense (recovery), service charges, other non-interest income, and
expense and income taxes. Non-interest expense consists primarily
of employee compensation and benefits, occupancy and equipment
expenses, data processing expense 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 interest rate levels. The primary
sources of funds for lending activities include deposits, loan and
securities payments, borrowings and funds provided from operations.
For the year ended December 31, 2024, the Company reported
consolidated net income of $4,182,000, a $1,225,000 (22.66%)
decrease from 2023. Net interest income increased $1,417,000
(6.09%), other income increased $640,000 (8.19%), other expenses
increased $1,922,000 (8.00%), and income tax expense decreased
$187,000 (17.33%). The credit loss expense increased $1,547,000
(271.40%).
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
$1,118,673,000 for the year ended December 31, 2024. 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)
*
2024
Change
2023
Change
2022
2021
2020
2019
Interest income
47,917
$
18.61%
40,398
$
29.78%
31,127
$
26,875
$
30,534
$
32,761
$
Interest expense
(23,245)
35.59
(17,143)
392.90
(3,478)
(2,751)
(4,616)
(6,432)
Net interest income
24,672
6.09
23,255
(15.89)
27,649
24,124
25,918
26,329
Credit loss (expense) recovery
(2,117)
271.40
(570)
(214.00)
500
580
(2,400)
(2,400)
Net interest income after credit
loss (expense) recovery
22,555
(0.57)
22,685
(19.41)
28,149
24,704
23,518
23,929
Other income
8,452
8.19
7,812
10.97
7,040
8,329
7,519
13,153
Other expenses
(25,933)
8.00
(24,011)
(0.47)
(24,124)
(22,760)
(21,009)
(26,538)
Income before taxes
5,074
(21.77)
6,486
(41.38)
11,065
10,273
10,028
10,544
Income tax expense
(892)
(17.33)
(1,079)
(51.87)
(2,242)
(2,103)
(2,185)
(2,225)
NET INCOME
4,182
$
(22.66)%
5,407
$
(38.72)%
8,823
$
8,170
$
7,843
$
8,319
$
* This table includes results of discontinued operations through June 30, 2019.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
10
Years Ended December 31,
2024
2023
2022
(Amounts in Thousands of Dollars)
Interest income
47,128
$
39,755
$
30,457
$
Loan fees
789
643
670
Interest expense
(23,245)
(17,143)
(3,478)
NET INTEREST INCOME
24,672
$
23,255
$
27,649
$
Average earning assets
1,118,673
$
1,114,375
$
1,140,052
$
Net interest margin
2.21%
2.09%
2.43%
The yield on average earning assets for the year ended December 31,
2024 was 4.28%, while the average cost of funds for the same period
was 2.51% on average interest bearing liabilities of $927,412,000.
The yield on average earning assets for the year ended December 31,
2023 was 3.63%, while the average cost of funds for the same period
was 1.88% on average interest bearing liabilities of $910,499,000.
The increase in net interest income of $1,417,000 can be attributed
to the 0.65% increase in the yield on average earning assets, mostly
offset by the 0.63% increase in the cost of funds. Average earning
assets increased by $4,298,000, while the average interest-bearing
liabilities increased by $16,913,000.
Allowance for Credit Losses
The allowance for credit losses as a percentage of gross loans
outstanding is 1.34% as of December 31, 2024, compared to 1.65%
as of December 31, 2023. Net loan charge-offs totaled $3,567,000
for the year ended December 31, 2024 compared to $198,000 in
2023.
The amounts recorded in the credit loss (expense) recovery 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, past
credit loss experience and forecasted credit losses are considered.
Management believes that the allowance for credit losses is
adequate to provide for possible losses in the portfolio as of
December 31, 2024.
Other Income
Other income may be divided into two broad categories – recurring
and non-recurring. Service charges on deposit accounts is a major
source of recurring other income. Investment securities gains and
other income vary annually. Other income for the year ended
December 31, 2024 was $8,452,000, an increase of $640,000
(8.19%) from 2023, with a majority of the difference related to the
gain on the sale of mortgage servicing rights offset by an increase in
loss on securities sales.
Other Expense
Other expense for the year ended December 31, 2024 totaled
$25,933,000 an increase of $1,922,000 (8.00%) from 2023.
Salaries and employee benefits expense aggregated 61.22% and
61.04% of total other expense for the years ended December 31,
2024 and 2023, respectively.
Non-Accrual and Past Due Loans, Leases and Other Real Estate Owned
(Amounts in Thousands of Dollars)
As of December 31,
2024
2023
2022
2021
2020
2019
Non-accrual loans and leases
10,228
$
10,604
$
7,634
$
8,634
$
12,063
$
6,503
$
Other real estate owned (OREO)
-
80
-
400
-
377
Total non-accrual loans and OREO
10,228
$
10,684
$
7,634
$
9,034
$
12,063
$
6,880
$
Loans and leases past due 90 days
or more and still accruing interest
7
-
42
3
447
11
TOTAL
10,235
$
10,684
$
7,676
$
9,037
$
12,510
$
6,891
$
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
11
Income Taxes
The Company files its federal income tax return on a consolidated basis
with the Bank. See Note 12 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, 2024, these categories totaled
$101,573,000 or 8.61% of assets, compared to $64,319,000 or
5.60% the previous year.
As of December 31, 2024 and 2023, securities held to maturity had
$16,000 and $484,000, respectively, of gross unrealized gains and
$6,926,000 and $5,338,000, respectively, of 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.
As market interest rates move up or down, the change in the fair value
of available-for-sale securities is recognized on a tax adjusted basis as
an unrealized gain or loss, through equity as Other Comprehensive
Income. In 2024, market interest rates remained elevated though
were lower, on average, versus 2023. Gains or losses are not realized
until and unless a security is sold. No loss is realized if the security is
held to maturity. Security sales may be used for liquidity purposes,
though Management believes the Company has sufficient liquidity to
fund operations and continued growth without significant, if any,
security sales.
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
2025, 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:
Insured Deposits
Safeguarding customer deposits is one of the Company’s most
important responsibilities and priorities. The Company has a broad
base of customers, with deposits held from retail consumers,
businesses and public funds. Public Fund deposits above FDIC
insurance levels are collateralized by securities. As of December 31,
2024, 59% of deposits were insured and 79% were either insured or
collateralized by securities, compared to 57% insured and 78% either
insured or collateralized by securities as of December 31, 2023.
Through
One Year
After
One Year
through
Five Years
After
Five Years
(Amounts in Thousands of Dollars)
Interest-earning assets
329,232
$
335,481
$
377,756
$
Interest-bearing liabilities
925,247
29,603
10,310
Repricing gap (repricing
assets minus repricing
liabilities)
(596,015)
$
305,878
$
367,446
$
Through
One Year
After
One Year
through
Five Years
After
Five Years
(Amounts in Thousands of Dollars)
Interest-earning assets
215,174
$
381,095
$
493,842
$
Interest-bearing liabilities
825,776
50,114
10,310
Repricing gap (repricing
assets minus repricing
liabilities)
(610,602)
$
330,981
$
483,532
$
Repricing Period as of December 31, 2024
Repricing Period as of December 31, 2023
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
12
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 and Bank to maintain certain
minimum capital levels in relation to consolidated Company assets.
Regulations require a minimum ratio of capital to risk-weighted assets
of 8%.
The Company’s capital, as defined by regulation, was 17.17% of risk-
weighted assets as of December 31, 2024. In addition, a leverage ratio
of at least 4.00% is to be maintained. As of December 31, 2024, the
Company’s leverage ratio was 9.73%.
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.
Derivatives
The Company uses derivatives to manage exposure to market risk,
including interest rate risk. Derivatives are recorded at fair value.
Volume is measured via notional amounts, which are not exchanged,
but used as the basis on which interest and other payments are
determined. The Company uses its debt portfolio and interest rate
derivatives to manage interest rate risk exposure. As interest rates
increase, changes in the fair value of AFS securities may negatively
affect Accumulated Other Comprehensive Income (AOCI). In 2023 the
Company entered into interest rate swap hedges to reduce AOCI
sensitivity to the AFS debt securities portfolio.
Common Stock Information and Dividends
The Company’s common stock is held by 207 certificate holders as of
December 31, 2024, and is traded in a limited over-the-counter
market.
On December 31, 2024 the market price of the Company’s common
stock was $16.99. Market price is based on stock transactions in the
market. Dividends on common stock of approximately $2,547,000
were declared by the Board of Directors of the Company for the year
ended December 31, 2024, versus $2,424,000 for the year ended
December 31, 2023.
Financial Report
Upon written request of any stockholder of record on December 31,
2024, the Company will provide, without charge, a copy of its 2024
Annual Report.
Notice of Annual Meeting of Stockholders
The annual meeting of stockholders will be Tuesday, May 13, 2025 at
9:00 a.m. at the corporate headquarters, 1201 Broadway, Quincy
Illinois.
17.93%
18.71%
19.01%
18.01%
17.35%
17.17%
0.00%
5.00%
10.00%
15.00%
20.00%
2019
2020
2021
2022
2023
2024
Total Risk Based Capital Ratio
$31.20
$27.75
$31.45
$23.59
$19.00
$16.99
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
2019
2020
2021
2022
2023
2024
Closing Share Price Data
1
Independent Auditor’s Report
Audit Committee
First Bankers Trustshares, Inc.
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of First Bankers Trustshares, Inc. and its
subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2024
and 2023, the related consolidated statements of income, comprehensive income, changes in
stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated
financial statements (collectively, the financial statements).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of their operations and their
cash flows for the years then ended in accordance with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with auditing standards generally accepted in the United States of
America (GAAS), the Company’s internal control over financial reporting as of December 31, 2024, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013, and our report dated March 6, 2025 expressed an
unmodified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
We conducted our audits in accordance with GAAS. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our
report. We are required to be independent of the Company and to meet our other ethical responsibilities,
in accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue
as a going concern within one year after the date that the financial statements are issued or available to
be issued.
2
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Other Information Included in the Annual Report
Management is responsible for the other information included in the annual report. The other information
comprises selected financial data and management’s discussion and analysis of financial condition and
results of operations included in the annual report but does not include the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other information, and
we do not express an opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and consider whether a material inconsistency exists between the other information and the financial
statements, or the other information otherwise appears to be materially misstated. If, based on the work
performed, we conclude that an uncorrected material misstatement of the other information exists, we are
required to describe it in our report.
Cedar Rapids, Iowa
March 6, 2025
1
Independent Auditor’s Report
Audit Committee
First Bankers Trustshares, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited First Bankers Trustshares, Inc. and its subsidiaries’ (the Company) internal control over
financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2024, based on the criteria established in Internal Control—
Integrated Framework issued by COSO in 2013.
We have also audited, in accordance with auditing standards generally accepted in the United States of
America (GAAS), the consolidated financial statements of the Company, and our report dated March 6,
2025 expressed an unmodified opinion.
Basis for Opinion
We conducted our audit in accordance with GAAS. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of Internal Control Over Financial Reporting
section of our audit report. We are required to be independent of the Company and to meet our ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for Internal Control Over Financial Reporting
Management is responsible for designing, implementing, and maintaining effective internal control over
financial reporting, and for its assessment about the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report for FDICIA Requirements.
Auditor’s Responsibilities for the Audit of Internal Control Over Financial Reporting
Our objectives are to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects and to issue an auditor’s report that includes our opinion
on internal control over financial reporting. Reasonable assurance is a high level of assurance but is not
absolute assurance and therefore is not a guarantee that an audit of internal control over financial
reporting conducted in accordance with GAAS will always detect a material weakness when it exists.
In performing an audit of internal control over financial reporting in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Obtain an understanding of internal control over financial reporting, assess the risks that a material
weakness exists, and test and evaluate the design and operating effectiveness of internal control over
financial reporting based on the assessed risk.
2
Definition and Inherent Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process affected by those charged with
governance, management, and other personnel, designed to provide reasonable assurance regarding the
preparation of reliable financial statements in accordance with accounting principles generally accepted in
the United States of America. Because management’s assessment and our audit were conducted to meet
the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act
(FDICIA), our audit of the Company’s internal control over financial reporting included controls over the
preparation of financial statements in accordance with accounting principles generally accepted in the
United States of America and with the instructions to the Consolidated Financial Statements for Bank
Holding Companies (Form FR Y-9C). A company’s internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America,
and that the receipts and expenditures of the entity are being made only in accordance with
authorizations of management and those charged with governance; and (3) provide reasonable
assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Restriction on Use
This report is intended solely for the information and use of the Audit Committee, Board of Directors and
management of the Company, and the Federal Deposit Insurance Corporation and is not intended to be,
and should not be, used by anyone other than these specified parties.
Cedar Rapids, Iowa
March 6, 2025
Consolidated Financial Statements
17
Consolidated Balance Sheets
(Amounts in Thousands of Dollars, Except Share and Per Share Data)
December 31,
2024
2023
ASSETS
Cash and due from banks
Non-interest bearing
11,585
$
12,937
$
Interest bearing
69,576
33,964
Total cash and due from banks
81,161
46,901
Securities held to maturity (net of allowance for credit losses: 2024 $3 and 2023 $3)
116,698
115,131
Securities available for sale
292,798
330,118
Federal funds sold
1,138
775
Loans held for sale
70
189
Loans
629,511
598,647
Less allowance for credit losses
(8,456)
(9,906)
Net loans
621,055
588,741
Premises, furniture and equipment, net
11,154
11,190
Accrued interest receivable
6,093
5,989
Life insurance contracts
19,183
19,015
Goodwill and intangibles
3,080
3,084
Other assets
26,806
27,575
Total Assets
1,179,236
$
1,148,708
$
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing demands
142,029
$
190,429
$
Interest bearing demand
528,567
482,979
Savings
79,450
89,271
Time
247,595
208,753
Total deposits
997,641
971,432
Securities sold under agreements to repurchase
69,238
64,917
FHLB Advances
30,000
30,000
Junior subordinated debentures
10,310
10,310
Accrued interest payable
2,157
1,812
Other liabilities
2,436
8,134
Total Liabilities
1,111,782
1,086,605
Commitments and Contingencies (Note 9)
Stockholders’ Equity
Common stock, $1 par value; shares authorized 6,000,000; shares issued
3,605,725 and outstanding: 2024 2,995,355 and 2023 2,994,973 shares
3,606
3,606
Additional paid in capital
1,729
1,742
Retained earnings
117,666
116,031
Accumulated other comprehensive (loss)
(45,136)
(48,856)
Treasury stock, at cost: 2024 610,370 and 2023 610,752 shares
(10,411)
(10,420)
Total Stockholders’ Equity
67,454
62,103
Total Liabilities And Stockholders' Equity
1,179,236
$
1,148,708
$
See Notes to Consolidated Financial Statements.
Consolidated Financial Statements
18
Consolidated Statements of Income
(Amounts in Thousands of Dollars, Except Share and Per Share Data)
Year Ended December 31,
2024
2023
INTEREST INCOME
Loans, including fee income:
Taxable
35,528
$
28,358
$
Non-taxable
307
339
Securities:
Taxable
8,304
8,301
Non-taxable
1,732
1,560
Other
2,046
1,840
Total interest income
47,917
40,398
INTEREST EXPENSE
Deposits:
Interest bearing demand and savings
8,572
5,518
Time
10,137
7,131
Total interest on deposits
18,709
12,649
Junior subordinated debentures
867
840
Other
3,669
3,654
Total interest expense
23,245
17,143
Net interest income
24,672
23,255
Credit loss expense
2,117
570
Net interest income after credit loss expense
22,555
22,685
OTHER INCOME
Service charges on deposit accounts
1,285
1,221
Gain on sale of loans
163
312
Gain on sale of mortgage servicing rights (MSR)
1,270
-
Investment securities loss
(600)
-
Other
6,334
6,279
Total other income
8,452
7,812
OTHER EXPENSES
Salaries and employee benefits
15,876
14,656
Occupancy expense
1,254
1,279
Equipment expense
369
397
Computer processing
2,619
2,036
Professional services
798
739
Other
5,017
4,904
Total other expenses
25,933
24,011
Income before income taxes
5,074
6,486
Income taxes
892
1,079
Net income
4,182
$
5,407
$
Earnings per share of common stock, basic and diluted
1.40
$
1.81
$
Average common shares outstanding
2,995,995
2,993,687
See Notes to Consolidated Financial Statements.
Consolidated Financial Statements
19
Consolidated Statements of Comprehensive Income
(Amounts In Thousands of Dollars)
Year Ended December 31,
2024
2023
Net income
4,182
$
5,407
$
Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gains arising during the year before tax
979
2,573
Amortization of unrealized holding losses on debt securities transferred from available
for sale to held to maturity
1,630
1,571
Less: Reclassification adjustment for (losses) included in net income before tax
(600)
-
Change in unrealized gains on securities available for sale
3,209
4,144
Unrealized gains (losses) on fair value hedges:
Unrealized holding gains (losses) on fair value hedges arising during the year before tax
2,016
(2,167)
Change in unrealized gains (losses) on fair value hedges
2,016
(2,167)
Tax expense
1,505
581
Other comprehensive income, net of tax
3,720
1,396
Comprehensive income
7,902
$
6,803
$
See Notes to Consolidated Financial Statements.
Consolidated Financial Statements
20
Consolidated Statements of Changes in Stockholders' Equity
(Amounts in Thousands of Dollars, Except Share and Per Share Data)
Years Ended December 31, 2024 and 2023
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
Balance, December 31, 2022
3,606
$
1,685
$
112,121
$
(50,252)
$
(10,568)
$
56,592
$
Cumulative change in accounting principle,
net of tax
-
-
927
-
-
927
Balance at January 1, 2023 (as adjusted for
change in accounting principle)
3,606
1,685
113,048
(50,252)
(10,568)
57,519
Net income
-
-
5,407
-
-
5,407
Other comprehensive income, net of tax
-
-
-
1,396
-
1,396
Restricted stock award
-
57
-
-
148
205
Common stock dividends declared
(amount per share $0.81)
-
-
(2,424)
-
-
(2,424)
Balance, December 31, 2023
3,606
$
1,742
$
116,031
$
(48,856)
$
(10,420)
$
62,103
$
Net income
-
-
4,182
-
-
4,182
Other comprehensive income, net of tax
-
-
-
3,720
-
3,720
Restricted stock award
-
4
-
-
33
37
Restricted stock forfetures
-
(17)
-
-
(24)
(41)
Common stock dividends declared
(amount per share $0.85)
-
-
(2,547)
-
-
(2,547)
Balance, December 31, 2024
3,606
$
1,729
$
117,666
$
(45,136)
$
(10,411)
$
67,454
$
See Notes to Consolidated Financial Statements.
Consolidated Financial Statements
21
Consolidated Statements of Cash Flows
(Amounts in Thousands of Dollars)
Year Ended December 31,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
4,182
$
5,407
$
Adjustments to reconcile net income to net cash provided by operating activities:
Credit loss expense
2,117
570
Depreciation
693
752
Amortization of intangibles
4
4
Restricted stock award, net of forfeitures
(4)
205
Amortization/accretion of premiums/discounts on securities, net
1,081
2,273
Investment securities losses, net
600
-
Gain on sale of other real estate
(4)
(14)
Proceeds on sale of other real estate
84
37
Loans originated for sale
(15,521)
(17,675)
Proceeds from loans sold
15,803
18,009
Gain on sale of loans
(163)
(312)
Gain on sale of mortgage servicing rights
(1,270)
-
Deferred income tax
481
21
Decrease (increase) in accrued interest receivable and other assets
507
(1,599)
Increase in cash surrender value of life insurance contracts
(565)
(523)
(Decrease) increase in accrued interest payable and other liabilities
(3,405)
562
Net cash provided by operating activities
4,620
7,717
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in securities portfolio:
Purchases of securities available for sale
(13,241)
(9,843)
Proceeds from sales of securities available for sale
11,898
-
Proceeds from calls, maturities and paydowns of securities available for sale
37,945
43,717
Proceeds from calls, maturities and paydowns of securities held to maturity
79
6,059
Proceeds from life insurance death benefits
397
-
Increase in loans, net
(34,431)
(47,487)
Decrease in federal funds sold, net
(363)
(78)
Purchases of premises, furniture and equipment
(657)
(468)
Net cash provided by (used in) investing activities
1,627
(8,100)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net
26,209
57,881
Cash dividends paid to common shareholders
(2,517)
(2,393)
Increase (decrease) in securities sold under agreement to repurchase, net
4,321
(20,561)
Proceeds from FHLB advances
729,000
652,000
Payments on FHLB Advances
(729,000)
(667,000)
Net cash provided by financing activities
28,013
19,927
Net increase in cash and due from banks
34,260
19,544
CASH AND DUE FROM BANKS
Beginning cash
46,901
27,357
Ending cash
81,161
$
46,901
$
Consolidated Financial Statements
22
Consolidated Statements of Cash Flows (Continued)
(Amounts in Thousands of Dollars)
Year Ended December 31,
2024
2023
Supplemental disclosure of cash flow information, cash payments for:
Interest
22,900
$
15,759
$
Income taxes
1,033
393
Supplemental schedule of non-cash investing and financing activities:
Unrealized holding gains on securities available for sale
979
2,573
Amortization of unrealized holding losses on debt securities transferred from
available for sale to held to maturity
1,630
1,571
Transfer of loans to other real estate owned
-
92
Change in unrealized holding gains (losses) on fair value hedges
2,016
(2,167)
Adoption of ASC 326, reclassification from retained earnings to allowance for credit losses,
net of taxes
-
927
See Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
23
1. Nature of Business and Summary of Significant
Accounting Policies
Nature of Business
First Bankers Trustshares, Inc. (Company) is a bank holding company which
owns 100% of the outstanding common stock of First Bankers Trust Company,
N.A. (Bank), FBIL Statutory Trust II (Trust II) and FBIL Statutory Trust III (Trust
III). The Bank is engaged in banking and bank related services and serves a
market area consisting primarily of Adams, McDonough, Schuyler, Hancock
and Sangamon counties in west central Illinois and two loan production
offices - one in St. Clair county, Illinois and one in St. Charles county, Missouri.
Impact of Recently Adopted Accounting Standards
Update
On January 1, 2024, the Company adopted ASU 2023-07 Improvements to
Reportable Segment Disclosures (Topic 280). Topic 280 requires that a public
entity disclose certain information about its reportable segments.
On January 1, 2023, the Bank adopted ASU 2016-13 Financial Instruments –
Credit Losses (“Topic 236”): Measurement of Credit Losses on Financial
Instruments (ASC 326), as amended, which replaces the incurred loss
methodology with an expected loss methodology that is referred to as the
current expected credit loss (CECL) methodology. The measurement of
expected credit losses under the CECL methodology is applicable to financial
assets measured at amortized cost, including loan receivables and held-to-
maturity debt securities. It also applies to off-balance-sheet credit exposures
not accounted for as insurance (loan commitments, standby letters of credit,
financial guarantees and other similar instruments). In addition, ASC 326
made changes to the accounting for available-for-sale securities. One such
change is to require credit losses to be presented as an allowance rather than
as a write-down on available-for-sale debt securities if management does not
intend to sell or believes that it is more likely than not they will be required to
sell before recovery of its amortized cost basis.
The Bank adopted ASC 326 using the modified retrospective method for all
financial assets measured at amortized cost and off-balance-sheet credit
exposures. Results for reporting periods beginning after January 1, 2023 are
presented under ASC 326 while prior period amounts continue to be reported
in accordance with previously applicable accounting principles generally
accepted in the United States of America (GAAP) which includes a change in
terminology from “Allowance/Provision for Loan Losses” to “Allowance for
Credit Losses/Credit Loss Expense”. The Bank recorded an after-tax increase
to retained earnings of $927,000 as of January 1, 2023, for the cumulative
effect of adopting ASC 326. This transition adjustment included a decrease
of $930,000 in allowance for credit losses on loans and an increase of
$3,000 for allowance for credit losses on HTM securities.
The following table illustrates the impact of ASC 326 (amounts in thousands
of dollars):
Post- ASC 326
Adoption
Pre-ASC 326
Adoption
Pre-tax Impact
of ASC 326
Adoption
Assets:
Investments - Held-To-Maturity
State and political
subdivisions
3
$
-
$
3
$
Total allowance for credit
losses on held to maturity
securities
3
$
-
$
3
$
Loans
Commercial operating
385
846
(461)
Commercial real estate
5,357
6,298
(941)
Agricultural operating
207
470
(263)
Agricultural real estate
450
995
(545)
Construction and
development
504
203
301
Real estate secured by 1-4
and multi-family
1,233
1,329
(96)
Consumer
1,398
666
732
Total allowance for credit
losses- loans
9,534
$
10,807
$
(1,273)
$
Allowance for credit losses on
loans and held-to- maturity
securities
9,537
$
10,807
$
(1,270)
$
January 1, 2023
In March 2022, the FASB issued ASU No, 2022-01, Derivatives and Hedging
(Topic 815): Fair Value Hedging – Portfolio Layer Method, which clarifies the
guidance on fair value hedge accounting of financial rate risk portfolios of
financials assets. ASU 2022-01 updates guidance in Topic 815, to expand
scope of the current last-of-layer method to allow multiple hedged layers to be
designated for a single closed portfolio of financial assets or one or more
beneficial interest secured by a portfolio of financial instruments on a
prospective basis. Additionally, ASU 2022-01 clarifies that basis adjustments
related to existing portfolio layer hedge relationship should not be considered
when measuring credit losses on the financial assets included in the closed
portfolio. Further, ASU 2022-01 clarifies that any reversal of fair value hedge
basis adjustments associated with an actual breach should be recognized in
interest income immediately. The Company adopted ASU 2022-01 effective
January 1, 2023 and entered into a fair value hedge agreement on August 1,
2023 and adopted the portfolio layer method of accounting for this
transaction. This adoption had no impact on the Company’s consolidated
financial statements as the Company did not have any hedged assets using
the last-of-layer hedge accounting method.
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 credit losses is inherently subjective as it requires material
estimates that are susceptible to significant change. The fair value disclosure
of financial instruments is an estimate that can be computed within a range.
Notes to Consolidated Financial Statements
24
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
First Bankers Trustshares, Inc. and its wholly-owned subsidiaries, except
Trusts II and III, which do not meet the criteria for consolidation. 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, including cash items in process of
clearing. Cash flows from restricted stock awards, federal funds sold, loans to
customers, deposits and securities sold under agreements to repurchase are
reported net. Cash flows from the Company’s fair value hedges are reflected
in the same line item as the item being hedged.
Securities
Securities held to maturity are those for which the Company 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 accretion of 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
(loss), as a separate component of stockholders’ 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.
Transfers of debt securities into the held-to-maturity classification from the
available-for-sale classification are made at fair value on the date of transfer.
The unrealized holding gain or loss on the date of transfer is retained in the
the separate component of stockholders’ equity and in the carrying value of
the held-to-maturity securities. Such amounts are amortized over the
remaining contractual lives of the securities by the interest method. There
were no transfers of AFS securities to the HTM classification in 2024 or 2023.
There were no trading securities as of December 31, 2024 and 2023.
Allowance For Credit Losses – HTM Securities
Management measures expected credit losses on held-to-maturity investment
securities on a collective basis by major security type. The Company evaluates
held-to-maturity investment securities by credit rating and an external study,
that includes historical information including probability of default and loss
going back several years through economic cycles. Accrued interest
receivable on held-to-maturity investment securities is excluded from the
estimate of credit losses.
The estimate of expected credit losses considers historical credit loss
information that is adjusted for current conditions and reasonable and
supportable forecasts. Management classifies the held-to-maturity portfolio
into the following major security types: U.S. treasuries, U.S. government
agency bonds, and state and political subdivisions.
Allowance For Credit Losses – AFS Securities
A debt security available for sale is impaired if the fair value of the security
declines below its amortized cost basis. To determine the appropriate
accounting, the Company must first determine if it intends to sell the security
or if it is more likely than not that it will be required to sell the security before
the fair value increases to at least the amortized cost basis. If either of these
selling events is expected, the Company will write down the amortized cost
basis of the security to its fair value. This is achieved by writing off any
previously recorded allowance, if applicable, and recognizing any incremental
impairment through earnings. If the Company neither intends to sell the
security, before the fair value recovers to the amortized cost basis, the
Company must determine whether any of the decline in fair value has resulted
from a credit loss, or if it is entirely the result of noncredit factors.
The Company considers the following factors in assessing whether the decline
is due to a credit loss:
Extent to which the fair value is less than the amortized cost basis
Adverse conditions specifically related to the security, an industry,
or a geographic area (for example, changes in the financial condition
of the issuer, or in the case of an asset-backed debt security, in the
financial condition of the underlying loan obligors).
Payment structure of the debt security and the likelihood of the
issuer being able to make payments that increase in the future
Failure of the issuer of the security to make scheduled interest or
principal payments
Any changes to threating of the security by a rating agency
Impairment related to a credit loss must be measured using the discounted
cash flow method. Credit loss recognition is limited to the fair value of the
security. Impairment is recognized by establishing an allowance for credit
losses through credit loss expense. Impairment related to noncredit factors
is recognized in accumulated other comprehensive income (loss), net of
applicable taxes. The Company did not recognize any impairment in 2024 or
2023.
Accrued interest receivable for debt securities available for sale totaled
$1,082,000 and $1,198,000 at December 31, 2024 and 2023, and is
excluded from the estimate of credit losses as the accrued interest is written
off by reversing from interest income at the time the impairment of the related
debt security is recognized in the Consolidated Statements of Income.
Accrued interest receivable is reported in a separate line item on the
Consolidated Balance Sheets.
Federal Funds Sold
Federal funds sold consist of excess bank reserves lent in the federal funds
market. The Company’s consolidated balance sheets include federal funds
sold of $1,138,000 and $775,000 at December 31, 2024 and 2023,
respectively.
Loans and Allowance for Credit Losses
Loans held for sale: Residential real estate and agricultural loans, which are
originated and intended for resale in the secondary market in the foreseeable
future, are classified as held for sale. These loans are carried at the lower of
cost or estimated market value in the aggregate. As assets specifically
acquired for resale, the origination of, disposition of, and gain/loss on these
loans are classified as operating activities in the consolidated statements of
cash flows.
Loans held for investment: Loans that management has the intent and ability
to hold for the foreseeable future, or until pay-off or maturity occurs, are
classified as held for investment. These loans are stated at the amount of
unpaid principal adjusted for charge-offs, the allowance for credit losses on
loans, and any deferred fees and/or costs on originated loans. Interest is
credited to earnings as earned based on the principal amount outstanding.
Deferred direct loan origination fees and/or costs are amortized as an
adjustment of the related loan’s yield using the effective interest method. As
assets held for and used in the production of services, the origination and
collection of these loans is classified as an investing activity in the
consolidated statements of cash flows.
The allowance for credit losses is a significant estimate in the Company’s
Consolidated Financial Statements, affecting both earnings and capital. The
allowance for credit losses is a valuation account that is deducted from the
portfolio loans’ amortized cost bases to present the net amount expected to
be collected on the portfolio loans. Portfolio loans are charged off against the
allowance for credit losses when management believes the uncollectibility of
a loan balance is confirmed. Recoveries will be recognized up to the
aggregate amount of previously charged-off balances. The allowance or credit
losses is established through provision for credit loss expense charged to
income.
A loan’s amortized cost basis is comprised of the unpaid principal balance of
the loan, accrued interest receivable, purchase premiums or discounts, and
Notes to Consolidated Financial Statements
25
net deferred origination fees or costs. The Company has estimated its
allowance on the amortized cost basis, exclusive of government guaranteed
loans and accrued interest receivable. The Company writes-off uncollectible
accrued interest receivable in a timely manner and has elected to not
measure an allowance for accrued interest receivable. The Company presents
the aggregate amount of accrued interest receivable for all financial
instruments in a separate line item on the Consolidated Balance Sheets and
the balance of accrued interest receivable is disclosed in Note 14 Fair Value
Measurements.
The Company’s methodology influences, and is influenced by, the Company’s
overall credit risk management processes. The allowance for credit losses is
managed in accordance with GAAP to provide an adequate reserve for
expected credit losses that is reflective of management’s best estimate of
what is expected to be collected. The allowance for credit losses is measured
on a collective pool basis when similar risk characteristics exist. Loans that
do not share risk characteristics are evaluated on an individual basis. The
collateral-dependent practical expedient has been elected.
The measurement of expected credit losses is based on relevant information
about past events, including historical experience, current conditions and
reasonable and supportable forecasts that affect the collectability of the
amortized cost basis. Adjustments to historical loss information are made for
differences in current loan-specific risk characteristics such as differences in
underwriting standards, portfolio mix, delinquency level, or term, as well as for
changes in environmental conditions such as changes in unemployment
rates, property values and other relevant factors.
Ongoing impacts of the CECL methodology will be dependent upon changes
in economic conditions and forecasts, originated and acquired loan portfolio
composition, credit performance trends, portfolio duration and other factors.
The allowance for credit losses is measured on a collective (pool) basis when
similar risk characteristics exist. The Company has identified the following
portfolio segments (listed below) and measures the allowance for credit
losses for each segment using the Weighted Average Remaining Maturity
(WARM) method.
The Company’s portfolio segments are as follows:
Commercial operating
Commercial real estate
Agricultural operating
Agricultural real estate
Construction and land development
Real estate secured by 1-4 and multi-family
Consumer
The Company developed expected loss estimates based on loan
segmentation with a seven year look back at items such as payment rates,
scoring and delinquency patterns. Loss drivers vary by segment ranging from
construction delays and cost overruns for commercial construction loans, to
commodity price fluctuations for agriculture farmland, to general economic
conditions for consumer auto loans.
Loans that do not share risk characteristics are evaluated on an individual
basis. Loans evaluated individually are not also included in the collective
evaluation. When management determines that foreclosure is probable or
when the borrower is experiencing financial difficulty at the reporting date and
repayment is expected to be provided substantially through the operation or
sale of the collateral, expected credit losses are based on the fair value of the
collateral at the reporting date, adjusted for undiscounted selling costs as
appropriate.
Allowance for credit losses and fair value are disclosed by portfolio segment,
while credit quality information, individually evaluated financing receivables,
nonaccrual status and modifications of those experiencing financial difficulty
are presented by class of financing receivable. A portfolio segment is defined
as the level at which an entity develops and documents a systematic
methodology to determine its allowance for credit losses. A class of financing
receivable is defined as a further disaggregation of a portfolio segment based
on risk characteristics and the entity’s method for monitoring and assessing
credit risk. The disclosures are presented at the level of disaggregation that
management uses when assessing and monitoring the portfolio’s risk and
performance.
Given the risk characteristics and the Company’s method for monitoring and
assessing credit risk, further disaggregation of the loan portfolio is not
warranted, and therefore, the Company’s classes equal their segments.
Generally, for all classes of loans, loans are considered past due when
contractual payments are delinquent for 31 days or greater.
For all classes of loans, loans will generally be placed on nonaccrual status
when the loan has become 90 days past due (unless the loan is well secured
and in the process of collection); or if any of the following conditions exist:
It becomes evident that the borrower will not make payments, or will
not or cannot meet the terms for renewal of a matured loan,
When full repayment of principal and interest is not expected,
When the loan is graded “substandard” and the future accrual of
interest is not protected by sound collateral values,
When the loan is graded “doubtful”,
When the borrower files bankruptcy and an approved plan of
reorganization or liquidation is not anticipated in the near future, or
When foreclosure action is initiated.
When a loan is placed on nonaccrual status, payments received will be applied
to the principal balance. However, interest may be taken on a cash basis in
the event the loan is fully secured and the risk of loss is minimal. Previously
recorded but uncollected interest on a loan placed in nonaccrual status is
accounted for as follows: if the previously accrued but uncollected interest
and the principal amount of the loan is protected by sound collateral value
based upon a current, independent qualified appraisal, such interest may
remain on the Company’s books. If such interest is not protected, it is
considered a loss with the amount thereof recorded in the current year being
reversed against current earnings, and the amount recorded in the prior year
being charged against the allowance for credit losses.
For all classes of loans, nonaccrual loans may be restored to accrual status
provided the following criteria are met:
The loan is current, and all principal and interest amounts
contractually due have been made,
The loan is well secured and in the process of collection, and
Prospects for future principal and interest payments are not in
doubt.
A discussion of the risk characteristics and the allowance for credit losses by
each portfolio segment follows:
For commercial operating loans, the Company focuses on small and mid-sized
businesses with primary operations in transportation, warehousing and
manufacturing, as well as serving as building contractors, business services
companies, health care providers, financial organizations and retailers. The
Company provides a wide range of commercial loans, including lines of credit
for working capital and operational purposes, and term loans for the
acquisition of real estate, facilities, equipment and other purposes. Approval
is generally based on the following factors:
Sufficient cash flow to support debt repayment;
Ability and stability of current management of the borrower;
Positive earnings and financial trends;
Earnings projections based on reasonable assumptions;
Financial strength of the industry and business; and
Value and marketability of collateral.
Collateral for commercial loans generally includes accounts receivable,
inventory, equipment and real estate. The lending policy specifies approved
collateral types and corresponding maximum advance percentages. The value
of collateral pledged on loans typically exceeds the loan amount by a margin
sufficient to absorb potential erosion of its value in the event of foreclosure
and cover the loan amount plus costs incurred to convert it to cash.
Notes to Consolidated Financial Statements
26
The lending policy specifies maximum term limits for commercial operating
loans. For term loans, the maximum term is 7 years. Where the purpose of
the loan is to finance depreciable equipment, the term loan generally does not
exceed the estimated useful life of the asset. For lines of credit, the typical
maximum term is 365 days. However, longer maturities may be approved if
the loan is secured by readily marketable collateral.
In addition, the Company often takes personal guarantees for agriculture
loans to help assure repayment. Loans may be made on an unsecured basis
if warranted by the overall financial condition of the borrower.
Commercial real estate loans, construction and land development loans and
real estate secured by multi-family loans are subject to underwriting
standards and processes similar to commercial operating loans and to real
estate loans including the factors regarding approval of the loan noted
previously.
Collateral for these loans generally includes the underlying real estate and
improvements, and may include additional assets of the borrower. The lending
policy specifies maximum loan-to-value limits based on the category of
commercial real estate (commercial real estate loans on improved property,
raw land, land development and commercial construction). In addition, the
Company often takes personal guarantees to help assure repayment.
Agricultural operating and real estate loans are subject to underwriting
standards and processes similar to commercial loans including the approval
factors noted previously. The Company provides a wide range of agriculture
loans, including lines of credit for working capital and operational purposes,
and term loans for the acquisition of real estate, facilities, equipment and
other purposes.
Collateral for agricultural loans generally includes accounts receivable,
inventory (typically grain or livestock), equipment and real estate. The lending
policy specifies approved collateral types and corresponding maximum
advance percentages. The value of collateral pledged on loans typically
exceeds the loan amount by a margin sufficient to absorb potential erosion of
its value in the event of foreclosure and cover the loan amount plus costs
incurred to convert it to cash.
The lending policy specifies maximum term limits for agricultural loans. For
term loans, the maximum term is 7 years. Where the purpose of the loan is to
finance depreciable equipment, the term loan generally does not exceed the
estimated useful life of the asset. For lines of credit, the typical maximum term
is 365 days. However, longer maturities may be approved if the loan is
secured by readily marketable collateral.
In addition, the Company often takes personal guarantees to help assure
repayment. Loans may be made on an unsecured basis if warranted by the
overall financial condition of the borrower.
In some instances for all loans, it may be appropriate to originate or purchase
loans that are exceptions to the guidelines and limits established within the
lending policy described above and below. In general, exceptions to the
lending policy do not significantly deviate from the guidelines and limits
established within the lending policy and, if there are exceptions, they are
clearly noted as such and specifically identified in loan approval documents.
The Company generally retains short-term residential mortgage loans that are
originated for its own portfolio but sells most long-term loans to other parties
while retaining servicing rights on the majority of those loans. The market
value of real estate securing residential real estate loans can fluctuate as a
result of market conditions in the geographic area in which the real estate is
located. Adverse developments affecting real estate values in one or more of
the Company’s markets could increase the credit risk associated with its loan
portfolio. Additionally, the repayment of the loans generally is dependent, in
large part, on the borrower’s continuing financial stability, and is therefore
more likely to be affected by adverse personal circumstances.
Consumer loans typically have shorter terms, lower balances, higher yields
and higher risks of default than real estate-related loans. Consumer loan
collections are dependent on the borrower’s continuing financial stability, and
are therefore more likely to be affected by adverse personal circumstances.
Collateral for these loans generally includes automobiles, boats, recreational
vehicles and real estate. However, depending on the overall financial
condition of the borrower, some loans are made on an unsecured basis. The
collateral securing these loans may depreciate over time, may be difficult to
recover and may fluctuate in value based on condition. In addition, a decline
in the United States economy could result in reduced employment, impacting
the ability of customers to repay their obligations.
For loans categorized as “commercial,” which would include the following
segments: commercial operating, commercial real estate, agricultural real
estate, agricultural operating, construction and land development and real
estate secured by multi-family, the allowance for credit losses on loans consist
of specific and general components. The specific component relates to loans
that are classified as individually evaluated, as defined below. For those loans
that are classified as individually evaluated, an allowance is established when
the collateral value (or discounted cash flows or observable market price) of
the individually evaluated loan is lower than the carrying value of that loan.
The Company utilizes the following internal risk rating scale:
Type 1 (Substantially Risk Free)
General Statement: This rating should be assigned to loans with virtually no
credit risk, such as loans fully secured by certificates of deposit and other
deposit accounts. It may be assigned to other loans to businesses or
individuals with little or no risk.
Business Loans: A loan to a business may be rated 1 if it exhibits enough of
these characteristics to make it substantially risk free:
Bank has a high regard for the character, competence and diligence
of management.
Earnings are strong and well-assured.
There is ample liquidity.
Loans have paid as agreed.
Abundant collateral which is liquid and has well-defined market
value.
Capital position well above industry averages.
Loan structure is appropriate and documentation complete.
No adverse trends.
Loans to Individuals: Loans to individuals may be assigned a 1 rating if the
following conditions are met:
The primary source of repayment is strong and is considered likely
to remain strong throughout the life of the loan.
The loan is secured by collateral with a loan to value (LTV) of less
than 50% provided that the collateral must have well-defined
market-value, must have satisfactory liquidity and should retain
most of its value if the primary source of repayment falters.
The individual has significant liquidity and is considered likely to
remain liquid over the life of the loan.
Type 2 (Low Risk)
General Statement: This rating should be assigned to loans that have little
credit risk. Borrowers in this category have strong earnings and capital and a
secondary source of repayment that is sufficient to fully repay the loan. The
business is considered to be highly resistant to adverse changes in economic
or industry conditions.
Business Loans: Following are some characteristics of loans that should be
rated 2. A loan rated as a 2 may not exhibit all of the following characteristics,
but its strengths -- primarily the sufficiency/reliability of the sources of
repayment -- result in a loan with little credit risk. To the extent that a loan is
not characterized by one or more of the factors listed below, the deficiency is
not considered to adversely affect the likelihood of repayment in any material
way.
Bank has a high regard for the character, competence and diligence
of management.
Consistent record of earnings; the earnings stream is considered
resistant to changes in economic conditions.
Liquidity at or above industry norms.
Notes to Consolidated Financial Statements
27
Loans have paid as agreed.
Collateral margin is well within policy guidelines with satisfactory
liquidity and well-defined market value.
Capital position above industry averages.
Loan structure appropriate and documentation complete.
No adverse trends.
Loans to Individuals: Loans to individuals may be rated 2 if the individual’s
earnings stream is considered strong and reliable and the individual
maintains a conservative financial posture. The income may be from any
source, including business income, passive income, or professional income.
Individuals are considered to maintain a conservative financial posture if they
consistently leave themselves a wide margin of safety in terms of their ability
to repay debt. This margin typically manifests itself in the form of significant
liquidity, strong debt service coverage (DSC) ratios and/or quick repayment of
loans.
Type 3 (Normal Risk)
General Statement: Borrowers in this category have satisfactory earnings and
net worth. In most cases, there is collateral or guarantor support which
provides a satisfactory secondary source of repayment. The business is
considered to be capable of operating profitably throughout the normal
business cycle.
Business Loans: Loans to businesses should be rated 3 if financial strength
is typical for the industry and there is no significant adverse trends. Following
are some characteristics of 3 loans. A loan may not exhibit all of the following
characteristics, but its strengths -- primarily the sufficiency/reliability of the
sources of repayment -- result in a loan with normal levels of risk.
Management is considered to be capable and diligent.
The earnings stream is satisfactory under present conditions and
is considered likely to continue.
Satisfactory liquidity.
Loans have paid as agreed.
Collateral is considered sufficient to repay the loan in full within a
reasonable marketing time.
Capital position within a reasonable range above or below industry
average.
No material deficiencies in loan structure or documentation.
Trends typically flat or positive. No material adverse trends.
Loans to Individuals: Loans may be unsecured and still rated 3 if the
individual’s earnings stream is both strong and reliable. If earnings are not as
strong, loans should be rated 3 if the Bank’s collateral is considered sufficient
to repay the loans.
Type 4 (Above Average Risk)
General Statement: Borrowers in this category are not as strong financially as
the typical business in the same industry. There may be discernible weakness
in management, earnings, capital or the Bank’s secondary sources of
repayment. The business is considered to be susceptible to adverse changes
in economic or industry conditions.
Business Loans: Loans to businesses should be rated 4 if financial strength
is somewhat below industry averages, but the loans are expected to repay as
agreed if the company’s current financial conditions stay the same or
strengthen. Following are some examples of weaknesses which may cause a
loan to have above average levels of risk. A loan rated as a 4 will not have all
of these weaknesses, but will have one or more:
There is some question as to the strength of management.
The company is profitable in most years, but earnings are typically
below industry averages.
Liquidity may be limited as evidenced by occasional delinquencies.
There may be a less than desirable margin in collateral; the
collateral may be difficult to market; or the value of collateral may
vary significantly depending on economic conditions.
Capital position is below industry average.
May have deficiencies in loan structure, incomplete legal
documentation or missing financial information.
May have an adverse trend in sales or earnings; may be capital
account withdrawals in excess of earnings.
Loans to Individuals: Loans to individuals should be rated 4 if the bank
appears to have a satisfactory source of repayment for the loan, but there is
concern about the individual’s earnings stream, leverage or tolerance for risk.
Type 5 (Special Mention Loan)
General Statement: Borrowers in this category have readily apparent
weaknesses in their financial condition. There may be weak earnings, thin
capital or an adverse trend that is expected to continue. The borrower
currently has the capacity to repay, but is of marginal strength and is
considered to have little ability to overcome economic events that would
adversely affect the business. Loans with material documentation or
structural deficiencies may also be rated Special Mention at the discretion of
bank or loan review personnel.
Business Loans: Following are examples of weaknesses which may warrant
a Special Mention rating. Loans rated Special Mention will typically have
several of the following weaknesses:
There is often a question about the ability of management to operate
the business successfully over time.
The earnings stream is weak, with possible periods of loss.
Liquidity may be a problem as evidenced by delinquencies or
amortization periods longer than is typical for the type of collateral
securing the loan.
There may be reasonable doubt as to whether the loan would be
repaid in full from the sale of collateral. Possible issues include:
third-party claims to the collateral, difficulty in obtaining possession,
condition, marketing time and value under current market
conditions.
Capital position less than half of industry average.
Common to have deficiencies in loan structure, incomplete legal
documentation or missing financial information. Trends are flat or
negative. It is common for there to be a decline in sales, earnings
and/or capital.
Loans to Individuals: See “General Statement” for Special Mention loans.
Type 6 (Substandard)
General Statement: These loans have one or more pronounced weaknesses
which jeopardize their timely liquidation. Neither the earnings of the business
nor its realistic net worth adequately protect the Bank from possible loss.
There is a distinct possibility that the Bank will sustain some loss if the
deficiencies are not corrected.
Business Loans: Following are examples of weaknesses which may warrant
a substandard rating. Loans rated Substandard will typically have several of
the following weaknesses:
Management often considered to have made incorrect strategic
decisions or to be weak or inattentive.
Earnings stream is insufficient to repay loans on a timely basis.
Business normally has periods of loss, sometimes large.
Liquidity usually strained by operating losses.
Loans usually renegotiated or past-due.
It may be unlikely that the loan would be repaid in full from the sale
of collateral. Possible issues include: third party claims to the
collateral; difficulty in obtaining possession, condition, marketing
time and value under current market conditions.
Typical reliance upon guarantors or other secondary sources of
repayment that was not originally anticipated.
Documentation deficiencies – including lack of important financial
information – are common.
In most cases there are negative trends, such as declines in sales,
earnings and/or capital.
Loans to Individuals: Loans to individual borrowers should be rated
Substandard if there is a pronounced weakness in income, liquidity or
collateral that is likely to affect the ability of the bank to collect the debt in full.
Debt levels may be significantly above accepted guidelines relative to income.
Notes to Consolidated Financial Statements
28
Type 7 (Doubtful)
General Statement: Loans with well-defined weaknesses that make collection
or liquidation of the debt in full improbable based on current information.
Business Loans: Typical characteristics of a doubtful loan include the
following:
Large operating losses.
Collateral insufficient to repay loan.
Typical to have little or no capital. Continued viability of business is
doubtful.
Unreliable or no alternative sources of repayment.
Loss anticipated: exact loss figure cannot be determined at present.
Loans to Individuals: Borrower’s ability or willingness to repay makes
collection of the debt in full unlikely. Loans may be unsecured or have an
obvious collateral deficiency.
Type 8 (Loss)
General Statement: Loans with pervasive weaknesses so great that principal
is considered uncollectible under current circumstances. This classification
does not mean that the loan has absolutely no recovery value, but simply that
it is no longer practical to defer writing it off. Recovery is dependent on
favorable future events.
Normal characteristics:
Business has failed or is near failure.
No reliable source of repayment.
For these loans categorized as commercial or credit relationships with
aggregate exposure greater than $500,000, a loan review will be required
within 12 months of the most recent credit review. The reviews shall be
completed in enough detail to, at a minimum, validate the risk rating.
Additionally, the reviews shall determine whether any documentation
exceptions exist, appropriate written analysis is included in the loan file and
whether credit policies have been properly adhered to.
An ongoing independent review is conducted of a sampling of residential real
estate as well to assess underwriting quality and adherence to policy.
Many of the residential real estate loans underwritten by the Company
conform to the underwriting requirements of Mortgage Partnership Finance
(MPF), Fannie Mae or other secondary market aggregators to allow the bank
to resell loans in the secondary market.
The Company provides many types of consumer and other loans including
motor vehicle, home improvement, home equity, signature loans and small
personal credit lines. The lending policy addresses specific credit guidelines
by consumer loan type.
For consumer loans, this large group of smaller balance homogenous loans
are collectively evaluated for impairment. The Company applies a quantitative
factor based on historical charge-off experience in total for each of these
segments as well as a forecast of expected future losses. Accordingly, the
Company generally does not separately identify individual consumer loans for
impairment disclosures, unless such loans are the subject of a modification
agreement due to financial difficulties of the borrower or it has been identified
for another specific reason.
As of December 31, 2024 and 2023, the Bank had loan concentrations in
agribusiness of 19.48% and 20.00%, 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, 2024 and 2023.
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.
Allowance For Credit Losses – Off-Balance Sheet
Exposures
In the normal course of business, the Company has outstanding commitments
and contingent liabilities, such as commitments to extend credit and standby
letters of credit, which are not included in the accompanying consolidated
financial statements. The Company’s exposure to credit loss in the event of
nonperformance by the other party to the financial instruments for
commitments to extend credit and standby letters of is represented by the
contractual or notional amount of those instruments. The Company used a
similar methodology as the allowance for credit losses on loans.
The Company recorded no allowance for unfunded commitments upon the
adoption of the CECL accounting standard. The allowance for unfunded
commitments was not material as of December 31, 2024 and 2023.
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. There were no material changes to
premises and equipment during the year ended December 31, 2024.
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. Property is recorded at fair value less cost to sell when
acquired. 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.
Life Insurance Contracts
Bank-owned life insurance is carried at cash surrender value, net of surrender
and other charges, with increases/decreases reflected as income/expense in
the consolidated statements of income.
Goodwill
Goodwill represents the excess of cost over fair value of net assets acquired
in connection with business combinations. Goodwill is evaluated for
impairment annually or whenever events or changes in circumstances
indicate that it is more likely than not that an impairment loss has occurred.
The Company has completed its annual goodwill impairment test and has
determined that goodwill was not impaired at December 31, 2024 and 2023.
See Note 5.
Repurchase Agreements
Securities sold under agreements to repurchase, which are classified as
secured borrowings, generally mature either daily or within one year from the
transaction date. Securities sold under agreements to repurchase are
reflected at the amount of cash received in connection with the transaction.
The underlying securities are held by the Company’s safekeeping agent. The
Company may be required to provide additional collateral based on the fair
value of the underlying securities.
Notes to Consolidated Financial Statements
29
Derivative Financial Instruments
The Company utilizes interest rate swap agreements as part of its asset
liability management strategy to help manage its interest rate risk position.
The Company enters into derivative financial instruments, including interest
rate swaps with third parties.
Derivative instruments are reported in other assets or other liabilities at
estimated fair value. The accounting for changes in fair value of derivatives
depends on the intended use of the derivative, whether the Company has
elected to designate a derivative in a hedging relationship and apply hedge
accounting and whether the hedging relationship has satisfied the criteria to
apply hedge accounting.
Starting in the third quarter of 2023, the Company entered into derivative
instruments designated as fair value hedges. For derivative instruments that
are designated and qualify as a fair value hedge, the change in fair value of
the derivative instrument is reported as a component of other comprehensive
income (loss) and reclassified into earnings in the same period or periods
during which the hedged transaction affects earnings. Change in fair value of
components excluded from the assessment of effectiveness are recognized
in current earnings.
Earnings Per Share of Common Stock
Basic earnings per share of common stock is computed by dividing net income
by the weighted average number of shares outstanding during each reporting
period. Diluted earnings per share of common stock assume the conversion,
exercise or issuance of all potential 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 ended December 31, 2024 and 2023. During the years
ended December 31, 2024 and 2023, the Company purchased no shares.
Service Charge Income
Service charges on deposit accounts consist of account analysis fees (i.e., net
fees earned on analyzed business and public checking accounts), monthly
service fees, check orders, and other deposit account related fees. The
Company’s performance obligation for account analysis fees and monthly
service fees is generally satisfied, and the revenue recognized, over the period
in which the service is provided. Check orders, and other deposit account
related fees are largely transactional-based, and therefore, the Company’s
performance obligation is satisfied and related revenue recognized, at a point
in time. Payment for service charges on deposit accounts is primarily received
immediately or in the following month through a direct charge to customers’
accounts.
Other Income
Other noninterest income consists of other recurring revenue streams such
as commissions from sales of mutual funds and other investments,
investment advisor fees from the Company’s wealth management products,
safe deposit box rental fees and other miscellaneous revenue streams.
Commissions from sales of mutual funds and other investments and
investment advisor fees are recognized monthly as the sales occur. Safe
deposit box rental fees are charged to the customer on an annual basis and
recognized upon receipt of payment. The Company determined that since
rentals and renewals occur fairly consistently over time, revenue is recognized
on a basis consistent with the duration of the performance obligation.
Other Expense
Advertising costs were $349,000 and $397,000 for the years ended
December 31, 2024 and 2023, respectively.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and
tax credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. 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.
When the tax returns are filed, it is highly certain that some positions taken
would be sustained upon examinations by the taxing authorities, while others
could be subject to uncertainty about the merits of the position taken.
The Company may recognize the tax benefit from an uncertain tax-position
only if it is more likely than not that the tax position will be sustained on
examination by taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position are measured based on the largest benefit that has a greater than
50% likelihood of being realized upon ultimate settlement. Management
evaluated the Company’s tax positions and concluded that the Company had
taken no uncertain tax positions that require adjustment to the consolidated
financial statements.
The Company recognizes interest and penalties on income taxes as a
component of income tax expense.
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 of unrealized gains and losses on securities
available for sale and unrealized losses on fair value hedges.
Recent Accounting Pronouncement
In December 2023, the FASB issued ASU 2023-09, Income taxes (Topic 740):
Improvements to Income Disclosures, which provides for improvements to
income tax disclosures primarily related to the rate reconciliation and income
taxes paid information. This ASU is effective for the Company beginning after
December 15, 2024. The Company is currently evaluating the impact of this
new guidance on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement –
Reporting Comprehensive-Expense Disaggregation Disclosures (Subtopic
220-40), to improve expense disclosures by providing further disaggregation.
In January 2025, the FASB issued ASU 2025-01, Income Statement –
Reporting Comprehensive-Expense Disaggregation Disclosures (Subtopic
220-40), to clarify the effective date. These ASU’s are effective for the
Company beginning after December 15, 2026. The Company is currently
evaluating the impact of this new guidance on its consolidated financial
statements.
Reclassifications
Certain amounts in the prior year’s Consolidated Financial Statements have
been reclassified, with no effect on net income or stockholders’ equity, to
conform with the current period presentation.
Subsequent Events
The Company has evaluated all subsequent events through March 6, 2025,
the date the financial statements were available to be issued.
Notes to Consolidated Financial Statements
30
2. Securities
The amortized cost, fair values and allowance for credit losses of securities as of December 31, 2024 and 2023 are as follows. (Amounts in Thousands of Dollars):
During the year ended December 31, 2022, the Bank transferred securities classified as available for sale to the held to maturity classification. The impact of
this transfer was to move the unrealized losses of those securities from fair value to amortized cost. The amortized cost of securities at date of transfer was
$136,116,00 with unrealized losses of $23,801,000 of which $1,630,000 and $1,571,000 has been amortized for the years ended December 31, 2024 and
2023, respectively.
Gross
Gross
Allowance For
2024
Unrealized
Unrealized
Credit
Amortized Cost
Gains
(Losses)
Losses
Fair Value
SECURITIES HELD TO MATURITY
U.S. government agency bonds
84,177
$
-
$
(5,517)
$
-
$
78,660
$
State and political subdivisions
32,524
16
(1,409)
(3)
31,128
116,701
$
16
$
(6,926)
$
(3)
$
109,788
$
SECURITIES AVAILABLE FOR SALE
U.S. treasuries
1,999
$
-
$
-
$
-
$
1,999
$
U.S. government agency bonds
98,698
-
(11,801)
-
86,897
U.S. government agency mortgage backed securities
145,300
3
(18,394)
-
126,909
State and political subdivisions
30,581
83
(4,131)
-
26,533
Collateralized mortgage obligations
59,060
-
(8,600)
-
50,460
335,638
$
86
$
(42,926)
$
-
$
292,798
$
Gross
Gross
Allowance For
2023
Unrealized
Unrealized
Credit
Amortized Cost
Gains
(Losses)
Losses
Fair Value
SECURITIES HELD TO MATURITY
U.S. government agency bonds
82,956
$
-
$
(5,338)
$
-
$
77,618
$
State and political subdivisions
32,178
484
-
(3)
32,659
115,134
$
484
$
(5,338)
$
(3)
$
110,277
$
SECURITIES AVAILABLE FOR SALE
U.S. treasuries
9,994
$
-
$
(94)
$
-
$
9,900
$
U.S. government agency bonds
114,261
-
(14,157)
-
100,104
U.S. government agency mortgage backed securities
159,903
28
(19,091)
-
140,840
State and political subdivisions
29,936
143
(3,681)
-
26,398
Collateralized mortgage obligations
60,442
-
(7,566)
-
52,876
374,536
$
171
$
(44,589)
$
-
$
330,118
$
Notes to Consolidated Financial Statements
31
Fair value and unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss
position and, for which an allowance for credit loss has not been recorded for securities available for sale, as of December 31, 2024 and 2023 are summarized
as follows. (Amounts in Thousands of Dollars):
2024
Unrealized
Unrealized
Unrealized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
SECURITIES HELD TO MATURITY:
U.S. government agency bonds
$ - $ - $ 78,660 $ (5,517)
$ 78,660 $ (5,517)
State and political subdivisions
- - 30,878 (1,409)
30,878 (1,409)
$ - $ - $109,538 $ (6,926)
$109,538 $ (6,926)
SECURITIES AVAILABLE FOR SALE
U.S. government agency bonds
$ 2,705 $ - $ 84,191 $(11,801)
$ 86,896 $(11,801)
U.S. government agency mortgage backed securities
1,686 (49)
121,157 (18,345)
122,843 (18,394)
State and political subdivisions
1,882 (51)
21,302 (4,080)
23,184 (4,131)
Collateralized mortgage obligations
1,991 - 48,468 (8,600)
50,459 (8,600)
$ 8,264 $ (100)
$275,118 $(42,826)
$283,382 $(42,926)
2023
Unrealized
Unrealized
Unrealized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
SECURITIES HELD TO MATURITY:
U.S. government agency bonds
$ - $ - $ 77,618 $ (5,338) $ 77,618 $ (5,338)
$ - $ - $ 77,618 $ (5,338) $ 77,618 $ (5,338)
SECURITIES AVAILABLE FOR SALE
U.S. treasuries
$ - $ - $ 9,900 $ (94) $ 9,900 $ (94)
U.S. government agency bonds
4,823 (236) 95,281 (13,921) 100,104 (14,157)
U.S. government agency mortgage backed securities
17,603 (2,744) 121,000 (16,347) 138,603 (19,091)
State and political subdivisions
- - 23,050 (3,681) 23,050 (3,681)
Collateralized mortgage obligations
2,114 (439) 50,762 (7,127) 52,876 (7,566)
$ 24,540 $ (3,419) $ 299,993 $ (41,170) $ 324,533 $ (44,589)
Less than 12 Months
12 Months or More
Total
Less than 12 Months
12 Months or More
Total
As of December 31, 2024, the investment portfolio included 285 securities. Of this number, 269 debt securities have current unrealized losses and 257 of them
have current unrealized losses which have existed for longer than one year. All of the debt securities with unrealized losses are considered to be acceptable credit
risks. Based upon an evaluation of the available evidence, including recent changes in market rates, credit rating information and information obtained from
regulatory filings, management believes a credit loss does not exist for available for sale debt securities. Furthermore, the Company does not intend to sell such
securities and it is more likely than not that the Company will recover the amortized cost prior to being required to sell the debt securities. The company evaluates
held to maturity securities for current expected credit losses. Held to maturity securities are evaluated on a quarterly basis based on prior loss experience, credit
classifications and indications of expected losses. Based on this evaluation, the Company determined the held to maturity securities had an allowance for credit
loss of $3,000.
The following table presents the activity in the allowance for credit losses for the debt securities held to maturities for the year ended December 31:
2024
2023
Allowance for credit losses:
Balance, beginning
3
$
-
$
Provision
-
-
Adoption of ASC 326
-
3
Balance, ending
3
$
3
$
Notes to Consolidated Financial Statements
32
The amortized cost and fair value of securities as of December 31, 2024 by contractual maturity are shown below. Expected maturities may differ from contractual
maturities because the mortgages underlying the collateralized mortgage obligations may be called or prepaid without penalties. Therefore, these securities are
not included in the maturity categories in the following summary. (Amounts in Thousands of Dollars):
Amortized Cost
Fair Value
SECURITIES HELD TO MATURITY
Due in one year or less
-
$
-
$
Due after one year through five years
158
168
Due after five years through ten years
85,921
80,057
Due after ten years
30,619
29,563
116,698
$
109,788
$
SECURITIES AVAILABLE FOR SALE
Due in one year or less
18,841
$
18,610
$
Due after one year through five years
23,583
21,798
Due after five years through ten years
88,583
75,287
Due after ten years
145,572
126,643
276,579
$
242,338
$
Collateralized mortgage obligations
59,059
50,460
335,638
$
292,798
$
Information on sales, including calls and maturities, of securities available for sale during the years ended December 31, 2024 and 2023 follows, (Amounts in
Thousands of Dollars):
2024
2023
Gross gains
-
$
-
$
Gross losses
(600)
$
-
$
As of December 31, 2024 and 2023, securities with a carrying value of approximately $285,496,000 and $338,379,000, respectively, were pledged to
collateralize deposits and securities sold under agreements to repurchase and for other purposes as required or permitted by law.
3. Loans
The composition of net loans outstanding as of December 31, 2024 and 2023 are as follows. (Amounts in Thousands of Dollars):
2024
2023
Commercial operating
81,016
$
65,657
$
Commercial real estate
238,675
238,990
Agricultural operating
29,926
34,796
Agricultural real estate
92,725
84,958
Construction and land development
26,684
18,803
Real estate secured by 1-4 and multi-family
115,118
108,767
Consumer
45,367
46,676
629,511
$
598,647
$
Less allowance for credit losses
(8,456)
(9,906)
Net Loans
621,055
$
588,741
$
Notes to Consolidated Financial Statements
33
The aging of the loan portfolio, by classes of loans, as of December 31, 2024 and 2023 is summarized as follows. (Amounts in Thousands of Dollars):
2024
Current
30-59 Days
Past Due
60-89 Days
Past Due
90 Days
or More
Past Due
Total
CLASSES OF LOANS
Commercial operating
80,976
$
-
$
-
$
40
$
81,016
$
Commercial real estate
238,455
36
-
184
238,675
Agricultural operating
29,921
5
-
-
29,926
Agricultural real estate
92,468
-
75
182
92,725
Construction and land development
26,659
-
-
25
26,684
Real estate secured by 1-4 and multi-family
113,794
972
290
62
115,118
Consumer
45,241
87
39
-
45,367
627,514
$
1,100
$
404
$
493
$
629,511
$
2023
Current
30-59 Days
Past Due
60-89 Days
Past Due
90 Days
or More
Past Due
Total
CLASSES OF LOANS
Commercial operating
65,552
$
105
$
-
$
-
$
65,657
$
Commercial real estate
238,990
-
-
-
238,990
Agricultural operating
34,786
10
-
-
34,796
Agricultural real estate
84,776
-
-
182
84,958
Construction and land development
18,778
-
-
25
18,803
Real estate secured by 1-4 and multi-family
107,198
1,352
194
23
108,767
Consumer
46,377
255
44
-
46,676
596,457
$
1,722
$
238
$
230
$
598,647
$
Notes to Consolidated Financial Statements
34
The amortized cost basis of nonperforming loans, by classes of loans as of December 31, 2024 and 2023 are summarized as follows.
(Amounts in Thousands of Dollars):
Nonaccrual
Nonaccrual
Accruing Past Due
90 Days or More
Loans with no
allowance for credit
losses
Loans with
allowance for credit
losses
Total
Nonperforming
Loans
CLASSES OF LOANS
Commercial operating
-
$
123
$
4,397
$
4,520
$
Commercial real estate
-
4,926
-
4,926
Agricultural operating
-
-
-
-
Agricultural real estate
-
249
-
249
Construction and land development
-
25
-
25
Real estate secured by 1-4 and multi-family
-
254
254
508
Consumer
7
-
-
7
7
$
5,577
$
4,651
$
10,235
$
Nonaccrual
Nonaccrual
Accruing Past Due
90 Days or More
Loans with no
allowance for credit
losses
Loans with
allowance for credit
losses
Total
Nonperforming
Loans
CLASSES OF LOANS
Commercial operating
-
$
62
$
4,959
$
5,021
$
Commercial real estate
-
46
4,817
4,863
Agricultural operating
-
-
-
-
Agricultural real estate
-
254
-
254
Construction and land development
-
25
-
25
Real estate secured by 1-4 and multi-family
-
215
226
441
Consumer
-
-
-
-
-
$
602
$
10,002
$
10,604
$
2024
2023
The amount of interest income on nonaccrual loans recognized during the years ended December 31, 2024 and 2023, was $617,000 and
$450,000, respectively.
Notes to Consolidated Financial Statements
35
Changes in the allowance for credit losses, by portfolio segment, during the years ended December 31, 2024 and 2023 are summarized as follows. Allocation of
a portion of the allowance to one category does not preclude its availability to absorb losses in other categories (Amounts in Thousands of Dollars):
The Commercial Operating charge-offs of $3,398,000 in the table above were primarily due to one borrower.
Real Estate
Construction
Secured
Commercial
Commercial
Agricultural
Agricultural
and Land
by 1-4 and
Operating
Real Estate
Operating
Real Estate
Development Multi-Family
Consumer
Total
Balance, beginning
1,948
$
4,375
$
208
$
530
$
959
$
1,065
$
821
$
9,906
$
Credit loss expense
(recovery)
3,799
(1,739)
(134)
(293)
445
30
9
2,117
Recoveries of loans
charged off
2
-
6
-
4
3
45
60
5,749
2,636
80
237
1,408
1,098
875
12,083
Loans charged off
(3,398)
-
-
-
-
-
(229)
(3,627)
Balance, ending
2,351
$
2,636
$
80
$
237
$
1,408
$
1,098
$
646
$
8,456
$
Real Estate
Construction
Secured
Commercial
Commercial
Agricultural
Agricultural
and Land
by 1-4 and
Operating
Real Estate
Operating
Real Estate
Development Multi-Family
Consumer
Total
Balance, beginning prior to
adoption of ASC 326
846
$
6,298
$
470
$
995
$
203
$
1,329
$
666
$
10,807
$
Adoption of ASC 326
(461)
(941)
(263)
(545)
301
(96)
732
(1,273)
Credit loss expense
(recovery)
1,563
(978)
(4)
80
455
(171)
(375)
570
Recoveries of loans
charged off
-
-
5
-
-
21
20
46
1,948
4,379
208
530
959
1,083
1,043
10,150
Loans charged off
-
(4)
-
-
-
(18)
(222)
(244)
Balance, ending
1,948
$
4,375
$
208
$
530
$
959
$
1,065
$
821
$
9,906
$
2024
2023
Notes to Consolidated Financial Statements
36
The amortized cost basis of Collateral dependent loans by portfolio segment, as of December 31, 2024 and 2023 is summarized as follows. (Amounts in
Thousands of Dollars):
Management estimates the allowance balance using relevant available information from internal and external sources, relating to past events, current conditions,
and reasonable and supportable forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses. The cumulative loss rate
used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience beginning in 2019. As of December 31, 2024, the
Company expects the markets in which it operates to experience continued economic uncertainty around the levels of delinquencies over the next 12 months.
Management adjusted the historical loss experience for these expectations with an immediate reversion to historical loss rate beyond this forecast period.
Real Estate
Equipment
Other
Total
Allowance For
Credit Losses
Commercial
Agricultural real estate
249
$
-
$
-
$
249
$
-
$
Commercial operating
4,427
83
10
4,520
949
Commercial real estate
4,926
-
-
4,926
-
Total commercial
9,602
$
83
$
10
$
9,695
$
949
$
Consumer
Real estate secured by 1-4 and multi-family
630
$
-
$
-
$
630
$
189
$
Consumer
-
-
-
-
-
Total consumer
630
$
-
$
-
$
630
$
189
$
Total loans
10,232
$
83
$
10
$
10,325
$
1,138
$
Real Estate
Equipment
Other
Total
Allowance For
Credit Losses
Commercial
Agricultural real estate
254
$
-
$
-
$
254
$
-
$
Commercial operating
8,120
62
10
8,192
1,636
Commercial real estate
5,538
-
-
5,538
898
Total commercial
13,912
$
62
$
10
$
13,984
$
2,534
$
Consumer
Real estate secured by 1-4 and multi-family
569
$
-
$
-
$
569
$
190
$
Consumer
-
-
-
-
-
Total consumer
569
$
-
$
-
$
569
$
190
$
Total loans
14,481
$
62
$
10
$
14,553
$
2,724
$
As of December 31, 2023
Primary Type of Collateral
As of December 31, 2024
Primary Type of Collateral
Notes to Consolidated Financial Statements
37
Based on the most recent analysis performed, the risk category of loans by class of loans is as follows. (Amounts in Thousands of Dollars):
.
Revolving
As of December 31, 2024
2024
2023
2022
2021
2020
Loans
Prior
Total
Commercial Operating
Risk rating:
Pass
20,912
$
5,782
$
7,183
$
2,837
$
3,979
$
16,247
$
16,147
$
73,087
$
Special mention
508
104
-
37
1,697
81
2,427
Substandard
71
105
62
21
8
-
5,235
5,502
21,491
$
5,991
$
7,245
$
2,858
$
4,024
$
17,944
$
21,463
$
81,016
$
Commercial Real Estate
Risk rating:
Pass
17,678
$
65,196
$
48,264
$
29,712
$
13,870
$
509
$
55,270
$
230,499
$
Special mention
-
-
1,803
639
-
507
2,949
Substandard
-
68
116
4,467
-
-
576
5,227
17,678
$
65,264
$
50,183
$
34,818
$
13,870
$
509
$
56,353
$
238,675
$
Agricultural Operating
Risk rating:
Pass
4,469
$
1,440
$
2,703
$
1,382
$
954
$
14,077
$
261
$
25,286
$
Special mention
674
3,192
-
-
774
-
4,640
5,143
$
4,632
$
2,703
$
1,382
$
954
$
14,851
$
261
$
29,926
$
Agricultural Real Estate
Risk rating:
Pass
23,512
$
10,247
$
13,871
$
11,365
$
5,525
$
1,245
$
20,702
$
86,467
$
Special Mention
-
3,887
131
1,743
-
75
-
5,836
Substandard
-
-
182
173
67
-
-
422
23,512
$
14,134
$
14,184
$
13,281
$
5,592
$
1,320
$
20,702
$
92,725
$
Construction and Land Development
Risk rating:
Pass
13,191
$
12,250
$
1,028
$
177
$
13
$
-
$
-
$
26,659
$
Substandard
-
-
-
-
-
-
25
25
13,191
$
12,250
$
1,028
$
177
$
13
$
-
$
25
$
26,684
$
Real estate secured by 1-4 and multi-family
Risk rating:
Pass
7,838
$
11,240
$
28,533
$
13,817
$
11,638
$
14,753
$
25,887
$
113,706
$
Special Mention
36
84
-
-
359
-
323
802
Substandard
-
102
77
48
-
-
383
610
7,874
$
11,426
$
28,610
$
13,865
$
11,997
$
14,753
$
26,593
$
115,118
$
Totals By Risk Rating
Risk rating:
Pass
87,600
$
106,155
$
101,582
$
59,290
$
35,979
$
46,831
$
118,267
$
555,704
$
Special Mention
1,218
7,267
1,934
2,382
396
2,546
911
16,654
Substandard
71
275
437
4,709
75
-
6,219
11,786
88,889
$
113,697
$
103,953
$
66,381
$
36,450
$
49,377
$
125,397
$
584,144
$
Term Loans Amortized Cost Basis by Origination Year
Notes to Consolidated Financial Statements
38
Consumer
Delinquency status:*
Performing
18,134
$
13,665
$
8,829
$
3,267
$
726
$
-
$
746
$
45,367
$
Non-performing
-
-
-
-
-
-
-
18,134
$
13,665
$
8,829
$
3,267
$
726
$
-
$
746
$
45,367
$
Total By Performing/Non-Performing
Delinquency status:*
Performing
18,134
$
13,665
$
8,829
$
3,267
$
726
$
-
$
746
$
45,367
$
Non-performing
-
-
-
-
-
-
-
-
18,134
$
13,665
$
8,829
$
3,267
$
726
$
-
$
746
$
45,367
$
Notes to Consolidated Financial Statements
39
Revolving
As of December 31, 2023
2023
2022
2021
2020
2019
Loans
Prior
Total
Commercial Operating
Risk rating:
Pass
7,106
$
8,792
$
3,692
$
4,981
$
2,863
$
12,127
$
15,932
$
55,494
$
Special mention
571
-
-
83
91
27
26
798
Substandard
91
191
43
15
8,099
-
926
9,365
7,768
$
8,983
$
3,735
$
5,079
$
11,053
$
12,154
$
16,884
$
65,657
$
Commercial Real Estate
Risk rating:
Pass
55,654
$
56,240
$
31,418
$
14,443
$
11,519
$
9,999
$
51,659
$
230,933
$
Special mention
-
-
-
-
293
-
1,535
1,828
Substandard
-
-
5,214
-
-
-
1,015
6,229
55,654
$
56,240
$
36,632
$
14,443
$
11,812
$
9,999
$
54,209
$
238,990
$
Agricultural Operating
Risk rating:
Pass
2,834
$
4,275
$
2,129
$
1,579
$
262
$
16,683
$
4,846
$
32,607
$
Special mention
-
-
-
2,189
-
-
-
2,189
2,834
$
4,275
$
2,129
$
3,768
$
262
$
16,683
$
4,846
$
34,796
$
Agricultural Real Estate
Risk rating:
Pass
16,476
$
22,883
$
14,371
$
6,947
$
4,323
$
335
$
18,846
$
84,181
$
Special Mention
-
133
-
-
-
-
387
520
Substandard
-
185
-
72
-
-
-
257
16,476
$
23,201
$
14,371
$
7,019
$
4,323
$
335
$
19,233
$
84,958
$
Construction and Land Development
Risk rating:
Pass
13,701
$
1,790
$
681
$
1,597
$
766
$
35
$
209
$
18,778
$
Substandard
-
-
-
-
-
-
25
25
13,701
$
1,790
$
681
$
1,597
$
766
$
35
$
234
$
18,803
$
Real estate secured by 1-4 and multi-family
Risk rating:
Pass
12,386
$
29,063
$
13,190
$
12,899
$
4,207
$
8,781
$
26,865
$
107,391
$
Special Mention
-
-
92
372
-
-
369
833
Substandard
103
103
-
-
23
-
314
543
12,489
$
29,166
$
13,282
$
13,271
$
4,230
$
8,781
$
27,548
$
108,767
$
Totals By Risk Rating
Risk rating:
Pass
108,158
$
123,043
$
65,481
$
42,445
$
23,940
$
47,960
$
118,357
$
529,384
$
Watch
-
-
-
2,189
-
-
-
2,189
Special Mention
571
133
92
455
383
27
2,317
3,978
Substandard
194
479
5,257
87
8,122
-
2,280
16,419
108,922
$
123,655
$
70,830
$
45,176
$
32,446
$
47,987
$
122,954
$
551,971
$
Term Loans Amortized Cost Basis by Origination Year
Notes to Consolidated Financial Statements
40
* Performing loans are those which are accruing and less than 90 days past due. Nonperforming loans are those on nonaccrual and accruing loans that are
greater than or equal to 90 days past due.
For commercial operating, commercial real estate, agricultural operating, agricultural real estate, real estate secured by 1-4 family and multifamily, and
construction and land development loans, the Company’s credit quality indicator is internally assigned risk ratings. Each of these loans is assigned a risk rating
upon origination. The risk rating is reviewed every 12 months, at a minimum, and on an as needed basis depending on the specific circumstances of the loan.
See Note 1 for further discussion on the Company’s risk ratings.
For consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the
Company’s loan system.
Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. In the fourth quarter of 2023, the Company entered into
an agreement to sell the majority of its residential mortgage servicing rights which were related to loans with an unpaid balance of $192,306,000 as of December
31, 2023. This mortgage servicing rights sale was finalized during 2024 resulting in a gain of $1,270,000. Mortgage servicing rights are not significant as of
December 31, 2024.
In the ordinary course of business, the Bank has granted loans to directors, principal officers, and affiliated companies in which they are principal stockholders
amounting to $10,172,000 and $10,509,000 as of December 31, 2024 and 2023, respectively.
4. Premises, Furniture and Equipment
The cost, accumulated depreciation and net book value of premises, furniture and equipment as of December 31, 2024 and 2023 is summarized as follows.
(Amounts in Thousands of Dollars):
2024
2023
Land
4,101
$
4,101
$
Building and improvements
14,969
14,893
Furniture and equipment
12,309
11,741
31,379
30,735
Less accumulated depreciation
(20,225)
(19,545)
11,154
$
11,190
$
Consumer
Delinquency status:*
Performing
20,941
$
14,825
$
6,975
$
1,944
$
1,139
$
-
$
852
$
46,676
$
Non-performing
-
-
-
-
-
-
-
20,941
$
14,825
$
6,975
$
1,944
$
1,139
$
-
$
852
$
46,676
$
Total By Performing/Non-Performing
Delinquency status:*
Performing
20,941
$
14,825
$
6,975
$
1,944
$
1,139
$
-
$
852
$
46,676
$
Non-performing
-
-
-
-
-
-
-
-
20,941
$
14,825
$
6,975
$
1,944
$
1,139
$
-
$
852
$
46,676
$
Notes to Consolidated Financial Statements
41
5. Goodwill and Intangibles
Goodwill and intangible assets are summarized as follows. (Amounts in Thousands of Dollars):
As of December 31,
2024
2023
Goodwill
3,050
$
3,050
$
Other intangible assets:
Core deposit intangible
1,380
1,380
Other intangible assets
1,855
1,855
3,235
3,235
Less accumulated amortization on certain intangible assets
(3,205)
(3,201)
30
34
Total goodwill and intangible assets
3,080
$
3,084
$
The estimated future amortization of intangible assets are summarized as follows (Amounts in Thousands of Dollars):
For the years ending December 31
2025
4
$
2026
4
2027
4
2028
4
2029
4
Thereafter
10
30
$
6. Time Deposits
The aggregate amount of time deposits, each with a minimum denomination of $250,000, was approximately $59,613,000 and $71,112,000 as of December 31,
2024 and 2023, respectively.
Brokered deposits were $38,832,000 and $9,143,000 at December 31, 2024 and 2023, respectively.
A major customer is defined as one with deposits comprising greater than 5% of the Company’s total deposits. As of December 31, 2024, there were two
customers that held approximately $121,684,000 in deposits and, as of December 31, 2023, there were two customers that held approximately $133,550,000
in deposits.
In the ordinary course of business, the Bank accepts deposits from directors, principal officers, and affiliated companies in which they are principal stockholders
amounting to $26,412,000 and $20,859,000 as of December 31, 2024 and 2023, respectively.
At December 31, 2024, the scheduled maturities of time deposits are as follows. (Amounts in Thousands of Dollars):
2025
242,992
$
2026
4,063
2027
284
2028
209
2029
47
247,595
$
Notes to Consolidated Financial Statements
42
7. Federal Home Loan Bank Advances and Letters of
Credit
The Bank advances funds from and repays them to the Federal Home Loan Bank
(FHLB) as considered necessary for liquidity purposes. Outstanding advances as
of December 31, 2024 and 2023 were both $30,000,000 and had various interest
rates ranging from 4.43%-4.75%.
Long-term FHLB advances are due as follows (Amounts in Thousands of
Dollars):
2025
5,000
2026
10,000
2027
15,000
30,000
$
At December 31, 2024 and 2023, the Company had an available line of credit of
approximately $171,000,000 and $161,000,000, respectively, with FHLB in
excess of the amount that has been borrowed. The interest rates applied on any
borrowing are determined on that date. The FHLB borrowings are collateralized
by 1-4 family mortgages, commercial, commercial real estate and agricultural real
estate loans of approximately $202,000,000 and $192,000,000 as of December
31, 2024 and 2023, respectively. The Company also had a letter of credit
agreement with FHLB for approximately $845,000 as of both December 31, 2024
and 2023, respectively. There were no borrowings against the letter of credit as
of December 31, 2024 and 2023.
8. Junior Subordinated Debentures and Company
Obligated
Mandatorily
Redeemable
Preferred
Securities of Subsidiary Trusts Holding Solely
Subordinated Debentures
Junior subordinated debentures are due to FBIL Statutory Trusts II and III, which
are both 100% owned, non-consolidated subsidiaries of the Company. The
debentures were issued in 2003 and 2004, respectively, in conjunction with each
Trust’s issuance of 5,000 shares of Company Obligated Mandatorily Redeemable
(COMR) Preferred Securities. The debentures all bear the same interest rate and
terms as the preferred securities, detailed following.
The debentures are included on the consolidated balance sheets as liabilities;
however, in accordance with Federal Reserve Board regulations in effect at
December 31, 2024 and 2023, the Company is allowed, for regulatory purposes,
to include the entire $10,000,000 of the capital securities issued by the Trusts in
Tier I capital.
During 2004, FBIL Statutory Trust III issued 5,000 shares of Company Obligated
Mandatorily Redeemable (COMR) Preferred Securities. Distributions are paid
quarterly. Cumulative cash distributions are calculated at a variable annual rate
that is 265 basis points above the three-month term SOFR rate (7.27% as of
December 31, 2024). The Trust may, at one or more times, defer interest payments
on the capital securities for up to 20 consecutive quarterly periods, but not beyond
September 15, 2034. At the end of the deferral period, all accumulated and unpaid
distributions will be paid. The capital securities will be redeemed on September
15, 2034 at par plus any accrued and unpaid distributions to the date of the
redemption; however, the Trust has the option to redeem at any time at par. The
redemption may be in whole or in part, but in all cases in a principal amount with
integral multiples of $1,000.
During 2003 the Company issued 5,000 shares of (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 three-month term SOFR rate (7.56%
as of December 31, 2024). 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 at par plus any accrued and unpaid distributions to the date
of the redemption; however, the Company has the option to redeem at any time at
par. The redemption may be in whole or in part, but in all cases in a principal
amount with integral multiples of $1,000.
Holders of the capital securities have no voting rights, are unsecured and rank
junior in priority of payment to all of the Trust’s indebtedness and senior to the
Trust’s capital stock.
9. 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 financing 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 consolidated 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 as of December 31, 2024 and 2023 is as
follows. (Amounts in Thousands of Dollars):
2024
2023
Commitments to extend credit:
Unused lines of credit
$ 94,933
$ 112,444
Standby letters of credit
716
1,479
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 customer’s 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 management’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 previous summary. If the commitment is funded, the Bank
would be entitled to seek recovery from the customer. As of December 31, 2024
and 2023, 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 $458,000 and $379,000 as of December 31,
2024 and 2023, respectively. These amounts are included in loan commitments,
included in the summary of this Note, as of December 31, 2024 and 2023.
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
Notes to Consolidated Financial Statements
43
delinquent during the first 12 months of the loan, the Bank must repurchase the
loan from the subject investor. The Bank did not repurchase any loans from
secondary market investors under the terms of these loan sales agreements during
the years ended December 31, 2024 and 2023. 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 Company’s cash is maintained at
various correspondent banks. The total amount of cash on deposit and federal
funds sold exceeded federal insurance limits at four institutions by a total of
approximately $8,261,000 and $4,802,000 as of December 31, 2024 and 2023,
respectively. In the opinion of management, no material risk of loss exists due to
the financial condition of the institutions.
Contingencies
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on these consolidated
financial statements.
10. Benefits
The Company has a 401(k) plan, which is a tax qualified savings plan, to
encourage its employees to save for retirement purposes or other contingencies.
All employees, working over 1,000 hours per year, of the Company and its
subsidiaries are eligible to participate in the Plan after completion of one year of
service and attaining the age of 21. The employee may elect to contribute a
percentage of their compensation before taxes in a traditional 401(k) and/or a
percentage of their compensation after taxes using the subsidiaries’ Roth 401(k)
option. Based upon profits, as determined by the subsidiaries, a contribution may
be made by the subsidiaries. Employees are 100% vested in the subsidiaries’
contribution to the plan after five years of service. Employee contributions and
vested subsidiaries contributions may be withdrawn only on termination of
employment, retirement, death or hardship withdrawal.
Under the various Employee Incentive Compensation Plans, 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 and goals.
For the year ended December 31, 2024, the bank did not meet those goals. For
the year ended December 31, 2023, the bank met those goals. One plan, a
Deferred Incentive Compensation Plan, maintained by the Bank has been
discontinued.
The financial statements include expense related to the 401(k) Plan of $656,000
and $626,000 for the years ended December 31, 2024 and 2023, respectively. The
financial statements include expense related to the incentive compensation plans
of $402,000 and $261,000 for the years ended December 31, 2024 and 2023,
respectively.
The Company maintains a self-funded healthcare plan to provide medical benefits
to eligible employees and their dependents. Under the terms of this plan, the
Company assumes responsibility for paying claims incurred by participants,
subject to specific stop-loss insurance coverage. The plan is administered by a
third-party administrator (TPA) responsible for processing claims and ensuring
compliance with applicable laws and regulations.
To mitigate the financial risk associated with high-cost claims, the Company has
obtained stop-loss insurance. The stop-loss policy limits the Company’s liability
to generally $65,000 per participant per year and an aggregating specific
deductible for the Company of $50,000 per year. Claims exceeding these
thresholds are reimbursed by the stop-loss insurance carrier. Although the
Company has mitigated risk through stop-loss insurance, it remains contingently
liable for claims up to the specified stop-loss thresholds.
The Company had recorded a liability of $196,000 and $140,000 at December 31,
2024 and 2023, respectively, to reflect estimated claims incurred but not reported
(“IBNR”) and other obligations under the healthcare plan. This estimate is based
on historical claim activity, actuarial assumptions, and current trends in healthcare
costs. Actual claims paid could differ from these estimates.
The Company funds the healthcare plan through operating cash flows. Cash
reserves of $1,220,000 and $1,113,000 at December 31, 2024 and 2023,
respectively, were designated to meet expected claims and administrative
expenses. Administrative fees of $46,000 and $38,000 were incurred for the years
ended December 31, 2024 and 2023, respectively.
Notes to Consolidated Financial Statements
44
11. 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 its subsidiaries. The
subsidiaries’ ability to pay dividends is regulated by financial regulatory statutes.
The timing and amount of dividends will depend on earnings, capital requirements
and financial condition of the Company and its subsidiaries as well as general
economic conditions and other relevant factors affecting the Company and the
subsidiary. 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.
The Company and its subsidiaries 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 action by regulators that, if undertaken, could have a
direct material effect on the Company’s financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Bank must meet specific capital guidelines that involve
quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet
items as calculated under regulatory accounting practices. The Company and
Bank’s capital amounts and classification are also subject 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 minimum amounts and ratios (set forth
in the following table) of total, Tier I, and common equity Tier I capital (as defined
in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as
defined) to average assets (as defined). The Bank would be subject to limitations
on certain activities including payment of dividends and discretionary bonuses to
executive officers if its capital level is below the buffered ratio. Management
believes, as of December 31, 2024, 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, common equity
Tier I, 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 categories.
The Company and Bank’s actual capital amounts and ratios are also presented in the table. (Amounts in Thousands of Dollars):
Minimum Regulatory
To Be Well
Minimum Regulatory
Requirement With Capital
Capitalized under Prompt
As of December 31, 2024
Requirement
Conservation Buffer
Corrective Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total Capital (to Risk-Weighted Assets)
Company
128,931
$
17.17%
60,068
$
>
8.00%
78,840
$
>
10.500%
N/A
N/A
Bank
122,778
$
16.36%
60,044
$
>
8.00%
78,808
$
>
10.500%
75,055
$
>
10.00%
Tier I Capital (to Risk-Weighted Assets)
Company
119,539
$
15.92%
45,051
$
>
6.00%
63,822
$
>
8.500%
N/A
N/A
Bank
114,320
$
15.23%
45,033
$
>
6.00%
63,797
$
>
8.500%
60,044
$
>
8.00%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Company
109,539
$
14.59%
33,788
$
>
4.50%
52,560
$
>
7.000%
N/A
N/A
Bank
114,320
$
15.23%
33,775
$
>
4.50%
52,538
$
>
7.000%
48,786
$
>
6.50%
Tier I Capital (to Average Assets)
Company
119,539
$
9.73%
49,156
$
>
4.00%
49,156
$
>
4.000%
N/A
N/A
Bank
114,320
$
9.56%
47,813
$
>
4.00%
47,813
$
>
4.000%
59,766
$
>
5.00%
Minimum Regulatory
To Be Well
Minimum Regulatory
Requirement With Capital
Capitalized under Prompt
As of December 31, 2023
Requirement
Conservation Buffer
Corrective Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total Capital (to Risk-Weighted Assets)
Company
127,067
$
17.35%
58,589
$
>
8.00%
76,898
$
>
10.500%
N/A
N/A
Bank
119,362
$
16.30%
58,571
$
>
8.00%
76,875
$
>
10.500%
73,214
$
>
10.00%
Tier I Capital (to Risk-Weighted Assets)
Company
117,908
$
16.10%
43,942
$
>
6.00%
62,251
$
>
8.500%
N/A
N/A
Bank
110,201
$
15.05%
43,929
$
>
6.00%
62,232
$
>
8.500%
58,571
$
>
8.00%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Company
107,908
$
14.73%
32,956
$
>
4.50%
51,265
$
>
7.000%
N/A
N/A
Bank
110,201
$
15.05%
32,946
$
>
4.50%
51,250
$
>
7.000%
47,589
$
>
6.50%
Tier I Capital (to Average Assets)
Company
117,908
$
10.13%
46,542
$
>
4.00%
46,542
$
>
4.000%
N/A
N/A
Bank
110,201
$
9.47%
46,545
$
>
4.00%
46,545
$
>
4.000%
58,181
$
>
5.00%
Actual
Actual
Notes to Consolidated Financial Statements
45
12. Income Tax Matters
The components of income tax expense are as follows for the years ended December 31, 2024 and 2023. (Amounts in Thousands of Dollars):
Year Ended December 31,
2024
2023
Current
411
$
1,058
$
Deferred
481
21
892
$
1,079
$
A reconciliation between income tax expense in the statements of income and the amount computed by applying the statutory federal income
tax rate to income before income taxes is as follows. (Amounts in Thousands of Dollars):
% of Pretax
% of Pretax
Year Ended December 31,
2024
Income
2023
Income
Federal income tax at statutory rate
1,066
$
21.0%
1,362
$
21.0%
Changes from statutory rate resulting from:
State tax, net of federal benefit
67
1.3
135
2.1
Tax exempt interest income, net
(98)
(1.9)
(320)
(4.9)
Increase in cash surrender value
(157)
(3.1)
(102)
(1.6)
Other, net
14
0.3
4
-
Income tax expense
892
$
17.6%
1,079
$
16.6%
Net deferred tax assets (liabilities) consist of the following components as of December 31, 2024 and 2023. (Amounts in Thousands of Dollars):
Year Ended December 31,
2024
2023
Deferred tax assets:
Allowance for credit losses
2,221
$
2,676
$
Accrued expenses
508
541
Unrealized losses on securities available for sale, net
17,935
18,849
Unrealized losses on derivatives, net
56
625
Other
4
4
20,724
$
22,695
$
Deferred tax liabilities:
Premises, furniture and equipment
(352)
$
(378)
$
Stock dividends
(8)
(12)
Prepaid expenses
(180)
(173)
Intangibles
(638)
(616)
Fair value hedges
(16)
-
(1,194)
$
(1,179)
$
Net Deferred Tax Assets (Liabilities)
19,530
$
21,516
$
Net deferred tax assets as of December 31, 2024 and 2023 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 Dollars):
Year Ended December 31,
2024
2023
Provision for income taxes
481
$
21
$
Statement of changes in stockholders' equity, other comprehensive
1,505
581
Adoption of ASC 326
-
318
1,986
$
920
$
income, unrealized gains (losses) on securities available for sale and unrealized gains (losses) on
fair value hedges, net
Notes to Consolidated Financial Statements
46
13. Derivatives
The Company uses a variety of derivative instruments to mitigate exposure to both market and credit risks inherent in its business activities. The Company
manages these risks as part of its overall asset and liability management process and through its policies and procedures. Derivatives represent contracts between
parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a notional
amount and underlying as specified in the contract.
Derivatives are often measured in terms of notional amount, but this amount is generally not exchanged, and it is not recorded on the Company’s consolidated
balance sheet. The notional amount is the basis to which the underlying is applied to determine required payments under the derivative contract. The underlying
is referenced as interest rate, security price, credit spread, or other index.
Derivatives Designated as Hedging Instruments
The Company uses derivative instruments to hedge its exposure to economic risks, including interest rate, liquidity and credit risk. Certain hedging relationships
are formally designated and qualify for hedge accounting under GAAP. On the date the Company enters into a derivative contract designated as a hedging
instrument, the derivative is designated as either a fair value hedge, cash flow hedge, or a net investment hedge. When a derivative is designated as a fair value,
cash flow, or net investment hedge, the Company performs an assessment, at inception and, at a minimum, quarterly thereafter, to determine the effectiveness
of the derivative in the offsetting changes in the value or cash flows of the hedged item(s). As of December 31, 2024 and 2023 the Company only uses fair value
hedges.
Fair value hedges: These derivatives are interest rate swaps the Company uses to hedge the change in fair value related to interest rate changes of its underlying
mortgage-backed investment securities and mortgage loan pools. The interest rate swaps are carried on the Company’s Consolidated Balance Sheet at their fair
value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The changes in fair value of the interest rate swaps are
recorded in interest income. The unrealized gains or losses due to changes in the fair value of the interest rate swaps due to changes in benchmark interest rates
are recorded as an adjustment to the hedged instruments and offset in the same interest income line items.
The following table presents the total notional amounts and gross fair values of the Company’s derivatives as of December 31, (Amounts in Thousands of Dollars):
The following table presents the fair values hedge accounting of the Company’s derivatives in the Consolidated Statements of Income for the year ended December
31, 2024 and 2023 (Amounts in Thousands of Dollars):
There were no gains (losses) recognized in other comprehensive income reclassified into earnings as of December 31, 2024 and 2023.
(dollars in thousands)
Consolidated Balance Sheet Location
Fair Value
Notional
Amount
Fair Value
Notional
Amount
Designated as hedging instruments
Fair value hedges:
Interest rate swaps
Other Liabilities
(151)
$
100,000
$
(2,167)
$
100,000
$
2024
2023
2024
2023
(dollars in thousands)
Consolidated Income Statement Location
Fair value hedges:
Interest rate swaps
Interest Income - Securities
1,164
$
550
$
Interest Income
Notes to Consolidated Financial Statements
47
The following table shows the notional amount, carrying amount and associated cumulative basis adjustments related to the application of hedge accounting that
is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships at December 31:
14. Fair Value Measurements
The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification defines fair value, establishes a framework for measuring
fair value using a hierarchy system, and requires disclosure of fair value measurements. The hierarchy is intended to maximize the use of observable inputs and
minimize the use of unobservable inputs and includes three levels based upon the valuation techniques used. The three levels are as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing
an asset or liability.
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy, is set forth below.
Investment securities available for sale: Where quoted prices are available in an active market, securities are classified within level 1 of the valuation hierarchy.
Level 1 securities would include highly liquid government bonds and exchange traded equities. If quoted market prices are not available, then fair values are
estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency
securities, mortgage-backed agency securities, obligations of state and political subdivisions and certain corporate, asset based and other securities. In certain
cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within level 3 of the valuation hierarchy.
Derivatives:
All of the Company’s derivatives are traded in over-the-counter markets where quoted market prices are not readily available. For these derivatives, estimated fair
value is measured using internally developed models that use primarily market observable inputs, such as yield curves and option volatilities, and accordingly,
classified as Level 2. Examples of Level 2 derivatives are basic interest rate swaps and forward contracts.
Individually evaluated loans: The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered individually
evaluated and an allowance for credit losses is established. Once a loan is identified as individually evaluated, it may be measured based upon the present value
of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, if the loan is collateral dependent. Collateral may
be real estate and/or business assets including equipment, inventory and/or accounts receivable. Fair value is determined based upon appraisals by qualified
(dollars in thousands)
Notional Amounts
Carrying Amount
of Hedged
Assets/Liabilities
Cumulative Fair
Value Hedging
Adjustment in the
Carrying Amount of
Hedged
Assets/Liabilities
Government Agency
25,000
$
104
$
20
$
Mortgage-backed securities
Residential Agency
50,000
86
12
Municipals
25,000
(39)
14
Total
100,000
$
151
$
46
$
(dollars in thousands)
Notional Amounts
Carrying Amount of
Hedged
Assets/Liabilities
Cumulative Fair Value
Hedging Adjustment in
the Carrying Amount of
Hedged Assets/Liabilities
Government Agency
25,000
$
470
$
10
$
Mortgage-backed securities
Residential Agency
50,000
1,098
5
Municipals
25,000
599
10
Total
100,000
$
2,167
$
25
$
2023
2024
Notes to Consolidated Financial Statements
48
licensed appraisers hired by the Company, and are, generally, considered level 2 measurements. In some cases, adjustments are made to the appraised values
due to various factors including age of the appraisal, age of comparable included in the appraisal, and known changes in the market and in the collateral. When
significant adjustments are based on unobservable inputs, the resulting fair value measurement has been categorized as a level 3 measurement.
Other real estate owned: Other real estate owned is carried at the estimated fair value of the property, less disposal costs at the time of acquisition. The fair
value of the property is determined based upon appraisals or internal evaluations. Subsequent write-downs are based on the lower of carrying value or fair value,
less disposal costs.
There have been no changes in valuation techniques used for any assets or liabilities measured at fair value during the years ended December 31, 2024 and
2023.
ASSETS AND LIABILITES RECORDED AT FAIR VALUE ON A RECURRING BASIS
The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023, segregated by the level of
the valuation inputs within the fair value hierarchy utilized to measure fair value. (Amounts in Thousands of Dollars):
There were no transfers of assets or liabilities between levels 1, 2 and 3 of the fair value hierarchy during the years ended December 31, 2024 and 2023.
Quoted Prices in
Significant
Active Markets
Other
Significant
Fair Value Measurements
for Identical
Observable
Unobservable
as of December 31, 2024 Using:
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
Assets:
Investment securities available for sale:
U.S. treasuries
1,999
$
1,999
$
-
$
-
$
U.S. government agency bonds
86,897
-
86,897
-
U.S. government agency mortgage backed securities
126,909
-
126,909
-
State and political subdivisions
26,533
-
26,533
-
Collateralized mortgage obligations
50,460
-
50,460
-
292,798
$
1,999
$
290,799
$
-
$
Liabilities:
Derivatives
(151)
$
-
$
(151)
$
-
$
Quoted Prices in
Significant
Active Markets
Other
Significant
Fair Value Measurements
for Identical
Observable
Unobservable
as of December 31, 2023 Using:
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
Assets:
Investment securities available for sale:
U.S. treasuries
9,900
$
9,900
$
-
$
-
$
U.S. government agency bonds
100,104
-
100,104
-
U.S. government agency mortgage backed securities
140,840
-
140,840
-
State and political subdivisions
26,398
-
26,398
-
Collateralized mortgage obligations
52,876
-
52,876
-
330,118
$
9,900
$
320,218
$
-
$
Liabilities:
Derivatives
(2,167)
$
-
$
(2,167)
$
-
$
Notes to Consolidated Financial Statements
49
ASSETS AND LIABILITIES RECORDED AT FAIR VALUE ON A NONRECURRING BASIS
The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis such as when there is evidence
of impairment. Assets measured at fair value on a nonrecurring basis are included in the table below. (Amounts in Thousands of Dollars):
Quoted Prices in
Significant
Active Markets
Other
Significant
Fair Value Measurements
for Identical
Observable
Unobservable
as of December 31, 2024 Using:
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
Individually evaluated loans
3,760
$
-
$
-
$
3,760
$
Quoted Prices in
Significant
Active Markets
Other
Significant
Fair Value Measurements
for Identical
Observable
Unobservable
as of December 31, 2023 Using:
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
Individually evaluated loans
11,180
$
-
$
-
$
11,180
$
Other real estate owned
80
$
-
$
-
$
80
$
The Financial Instruments Topic of the FASB Accounting Standards Codification requires disclosure of fair value information about financial instruments, whether
or not recognized in the balance sheet, for which it is practicable to estimate that value. Certain financial instruments and all non-financial instruments are
excluded from these disclosure requirements. Accordingly, the aggregate fair value amounts presented do not 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 rate 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 similar loans sold in the secondary market.
Individually evaluated loans, net: Individually Evaluated loans’ fair value is equal to book value minus the related allowance plus estimated selling costs.
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.
Securities sold under agreements to repurchase: The fair value of securities sold under agreements to repurchase is considered to be equal to the carrying value
due to the borrowings’ short-term nature.
FHLB Advances: The fair value of FHLB Advances approximates the carrying value.
Junior subordinated debentures: It is not practicable to estimate the fair value of junior subordinated debentures as instruments with similar terms are not
available in the market place.
Commitments to extend credit: The fair value of these commitments is not material.
Derivatives: Derivatives are carried at fair market value.
Notes to Consolidated Financial Statements
50
The carrying values and estimated fair values of the Company’s financial instruments as of December 31, 2024 and 2023 are as follows. (Amounts in Thousands
of Dollars):
Fair Value
Hierarchy
Carrying Value
Fair Value
Level
2024
2023
2024
2023
Financial assets:
Cash and due from banks
1
81,161
$
46,901
$
81,161
$
46,901
$
Securities held to maturity
2
116,698
115,131
109,788
110,277
Securities available for sale
1
1,999
9,900
1,999
9,900
Securities available for sale
2
290,799
320,218
290,799
320,218
Federal funds sold
1
1,138
775
1,138
775
Loans, net
2
617,611
578,482
564,841
513,202
Individually evaluated loans, net
3
3,514
10,448
3,760
11,180
Other real estate owned
3
-
80
-
80
Accrued interest receivable
1
6,093
5,989
6,093
5,989
Financial liabilities:
Non-interest bearing demand deposits
1
142,029
$
190,429
$
142,029
$
190,429
$
Interest bearing demand deposits
1
528,567
482,979
528,567
482,979
Savings deposits
1
79,450
89,271
79,450
89,271
Time deposits
2
247,595
208,753
247,595
208,753
Securities sold under agreements to repurchase
1
69,238
64,917
69,238
64,917
FHLB Advances
2
30,000
30,000
30,000
30,000
Derivatives
2
(151)
2,167
(151)
2,167
Accrued interest payable
1
2,157
1,812
2,157
1,812
Notes to Consolidated Financial Statements
51
Note 15 - Segment Information
The Company’s activities are considered to be one operating segment. This determination was based upon factors such as the Company’s organizational structure,
the reporting package provided to the Company’s chief operating decision maker (CODM), methodology for the allocation of resources, and the level at which
budgets are reviewed and approved by the CODM. The Company is engaged in the business of providing comprehensive financial products and services to its
retail, institutional, and corporate customers with operations primarily in West Central Illinois and two loan production offices in the Metro St. Louis area.
Substantially all income is derived from a diverse base of commercial, agriculture, mortgage and consumer lending activities, investment securities, and fee
income.
The accounting policies of the reportable segment are the same as those described in Note 1 – Nature of Business and Summary of Significant Accounting
Policies.
The Company’s Chief Executive Officer is the CODM. The CODM assesses the performance for the reportable segment and decides how to allocate resources
based on net income that is reported in the consolidated statements of income. The CODM uses net income to evaluate income generated from segment assets
(return on assets) to make decisions about allocation capital, such as to the business, for acquisitions, or to pay dividends. Additionally, net income is used by
the CODM to monitor budget versus actual results on a monthly basis. See the Consolidated Statements of Income for a presentation of the Company's net
income for its one reportable segment.
Note 16 – Accumulated Other Comprehensive Income (AOCI)
The following table presents the net change in AOCI as well as the changes, and the related tax effects, of each component of AOCI.
Reclassifications from AOCI to net income, excluding taxes, for the year ended December 31, 2024 and 2023 were recorded in “Other Income” on the Consolidated
Statements of Income.
Available for Sale
Securities
Held to Maturity
Secruities
Fair Value Hedges
Total
Balance, December 31, 2022
(33,599)
$
(16,653)
$
-
$
(50,252)
$
Other comprehensive income:
Other comprehensive income (loss), before reclassifications and
taxes
2,573 1,571 (2,167)
1,977
Amounts reclassified from AOCI, before tax
- - -
-
Pre-tax net other comprehensive income (loss)
2,573 1,571 (2,167)
1,977
Income tax effect
(733) (448) 600
(581)
Other comprehensive income (loss) for the year, net of tax
1,840 1,123 (1,567)
1,396
Balance December 31, 2023
(31,759)
$
(15,530)
$
(1,567)
$
(48,856)
$
Other comprehensive income:
Other comprehensive income, before
reclassifications and taxes
979 1,630 2,016
4,625
Amounts reclassified from AOCI, before tax
600 - -
600
Pre-tax net other comprehensive income
1,579 1,630 2,016
5,225
Income tax effect
(451) (464) (590)
(1,505)
Other comprehensive income for the year, net of tax
1,128 1,166 1,426
3,720
Balance December 31, 2024
(30,631)
$
(14,364)
$
(141)
$
(45,136)
$
Board of Directors
52
First Bankers Trustshares, Inc.
William D. Daniels
Chairman of the Board
Member, Harborstone Group, LLC
Allen W. Shafer
President/CEO
Carl W. Adams, Jr.
Chairman, Illinois Ayers Oil Company
Director, TI-Trust, Inc.
Charles M. Gnuse
President/CEO, United State Bank
Lewistown, Missouri
Arthur E. Greenbank
Former President/CEO
First Bankers Trustshares, Inc.
Mark E. Freiburg
Owner, Freiburg Insurance Agency; Freiburg
Development; Diamond Construction; Maxamillion,
Inc.; Wink Drinks Inc.; Director, U.S. Insurance
Company of America
Stephen C. Hassell
CEO, Atomation
Kurt J. Hofmeister
Partner, North American Wiring Accessories
Kemia M. Sarraf, M.D., M.P.H.
CEO, Lodestar Consulting and Executive Coaching
Richard W. Schulte
Founding Partner, Wright & Schulte, LLC
Steven E. Siebers
Chairman, TI-Trust, Inc.
Erin J. Wharton
Partner, Gray Hunter Stenn LLP
Board of Directors
53
First Bankers Trust Company, N. A.
William D. Daniels
Chairman of the Board
Member, Harborstone Group, LLC
Allen W. Shafer
President/CEO
Carl W. Adams, Jr.
Chairman, Illinois Ayers Oil Company
Director, TI-Trust, Inc.
Charles M. Gnuse
President/CEO, United State Bank
Lewistown, Missouri
Arthur E. Greenbank
Former President/CEO, First Bankers Trust Company,
N. A.
Mark E. Freiburg Owner, Freiburg Insurance
Agency; Freiburg Development; Diamond
Construction; Maxamillion, Inc.; Wink Drinks, Inc.;
Director, U.S. Insurance Company of America
Stephen C. Hassell
CEO, Atomation
Kurt J. Hofmeister
Partner, North American Wiring Accessories
Kemia M. Sarraf, M.D., M.P.H.
CEO, Lodestar Consulting and Executive Coaching
Richard W. Schulte
Founding Partner, Wright & Schulte, LLC
Steven E. Siebers
Chairman, TI-Trust, Inc.
Erin J. Wharton, CPA
Partner, Gray Hunter Stenn LLP
Officers
54
First Bankers Trust Company, N.A.
Allen W. Shafer, President/Chief Executive Officer
David J. Rakers, Executive Vice President
Joseph J. Davis, Chief Credit Officer
Nicole R. Allen-Cain, Senior Vice President (ISO)
Melinda K. Boyer, Senior Vice President
Kelly A. Kern, Senior Vice President
James D. Whitaker, Regional President
Nathan J. Frese, Market President
Joel Oschwald, Market President
Dominic M. Siepp, Market President
Clay Shackleford, Market President
Steven Gnuse, Senior Vice President
Douglas R. Reed, Senior Vice President
Ashley J. Altmix, Vice President
John T. Armstrong, Vice President
Christopher Crozier, Vice President
Jennifer M. Gilker, Vice President
Tony R. Gross, Vice President
Jana Hattey, Vice President
Devan D. Hitt, Vice President
Lisa K. Hoffman, Vice President
Emilie Moody, Vice President
James R. Obert, Vice President
Sherry R. Schaffnit, Vice President
Brenda S. Seals, Vice President
Michelle M. Shortridge, Vice President
Bernie J. Venvertloh, Vice President (Treasurer)
Brooke C. Venvertloh, Vice President (Controller)
Leslie A. Westen, Vice President
Randal S. Westerman, Vice President
Megan M. Cheek, Assistant Vice President
Lyndsey Dow, Assistant Vice President
James M. Farmer, Assistant Vice President
Kelly Freeman, Assistant Vice President
David J. Garner, Assistant Vice President
Andrew Jansen, Assistant Vice President
Karen J. Koehn, Assistant Vice President
Ryne R. Lubben, Assistant Vice President
Laura J. Maas, Assistant Vice President
Andrew Marner, Assistant Vice President
Stephanie M. Miller, Assistant Vice President
Lisa M. Palmer, Assistant Vice President
John K. Predmore, Assistant Vice President
Michele M. Walgren, Assistant Vice President
Joan M. Whitlow, Assistant Vice President
April D. Willey, Assistant Vice President
Matt Wyatt, Assistant Vice President
Ronald W. Fairley, IT Officer
Terry J. Hanks, IT Officer
Hannah L. Muegge, Credit Officer
Kyle W. Beckman, Marketing Officer
Kelsi Hills, Digital Banking Officer
Dalton R. Leebold, Digital Banking Officer
Alex L. Brown, Loan Officer
Shawn P. Ryan, Loan Officer
Melisa G. Heimann, Operations Officer
Brian Johnson, Operations Officer
Kim M. Neal, Operations Officer
Jay Behrends, Retail Officer
April C. Griffin, Retail Officer
Mackenzie Haines, Retail Officer
Olivia Harris, Retail Officer
Leigh Holstein, Retail Officer
Krystal Jackson, Retail Officer
Michelle Matticks, Retail Officer
Catherine Maxwell, Retail Officer
Shannon M. Orris, Retail Officer
Rachel E. Sisay, Retail Officer
Kristel E. Williams, Retail Officer
Notes