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Financial InformationTo Our Shareholders, Customers, and Friends:
Every so often, a year comes along that will stand out and be talked about for some time. It seems that 2012 was one of those remarkable years. As we look back, the year 2012 will be remembered for a presidential election, continued low interest rates, and most of all, a drought and record heat. Fortunately, those events did not negatively affect the performance of the bank in 2012. The past year was a good one, as the bank achieved all-time highs in assets, size, net income, and shareholder equity. For your review is the comparative data for the years 2011 and 2012, prepared by our external auditor, Crowe Horwath LLP. Total assets at year’s end reached $282,512,499, which is an increase of $16,843,993, or 6.34%. The growth of the bank is being driven by deposits. Total deposits were $237,974,588 at the end of the year, an increase of $15,463,709. A portion of these deposits were offset by loan growth, with loans at a record high of $161,975,781. In this low interest rate environment, it is difficult to obtain a yield in securities to justify the future interest rate risk. For this reason, the amount of fed funds has risen, even though the yield to the bank is very low. For the first time in the bank’s history, net income surpassed $3,000,000. The 2012 net income was $3,012,938, or $169,880 more than 2011. Considering this greater income level and the potential for higher tax rates in the future, the bank increased cash dividends to $1,200,000, or $7.50 per share. This amounted to a 2012 dividend which exceeded the previous year’s by $240,000. Even with a larger dividend payout, the shareholder equity increased to $43,323,940 on December 31, 2012. The book value per share at year end was $270.78. Agriculture remains the dominant factor in the performance of the local economy and the bank. For the farmers in our area, 2012 began in a positive way. Regional weather data revealed we had nine days in March with temperatures of at least eighty degrees, and rainfall measuring only six-tenths of an inch. Major fieldwork occurred starting in mid-March, and the corn and soybean crop were planted at a rapid pace. All crops looked promising until June. However, over the course of fifty-five days beginning June 15, we had fifty-two days with temperatures exceeding ninety degrees. During the critical pollination and ear fill of the corn crop, we had ten consecutive days of one hundred degree weather. Rainfall was also very limited during the fifty-five day time span. The extreme heat and lack of rain devastated the corn crop. The fall delivery price of corn went from $4.88 on June 15 to $8.64 on August 21. Soybean prices varied from $13.10 to $17.28 during this same period. The level of prices we saw in August has since retracted somewhat but still remains above historical averages. The rainfall we received in early August allowed our soybean crops to be a lot better than the corn yields. In addition, there were more risk management tools such as crop insurance used by the farmers today as compared to those who faced the droughts of the 1980’s and 1990’s. As a result, the ag economy has remained strong, with land prices climbing to record levels. We continue to be optimistic yet cautious in the future of agriculture. The bank benefits greatly from the experience of our employees and Board of Directors, and we thank them for their hard work and dedication. In 2012, we celebrated the retirement of Billie Taylor, who served as a bank teller for 18 ½ years. We wish Billie well in the years ahead. Finally, we want to thank our shareholders, our customers, and the community for their continued support. We look forward to meeting the challenges of 2013. Sincerely, Jan D. Ridgely |
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