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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARY YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016 2018 ANNUAL REPORT
Transcript of FOCUSED MOUND CITY FINANCIAL SERVICES, INC. ON THE …€¦ · definition of “well...
MOUND CITYFINANCIAL SERVICES, INC.
AND SUBSIDIARY
YEARS ENDED DECEMBER 31,
2018, 2017 AND 2016
2018ANNUAL REPORT
ON THE NUMBERS
PUTTING PEOPLEIN HOMES
CLOSED MORTGAGES IN 2018
264
HIGH SCHOOLSCHOLARSHIPS
$12,100
FINANCIAL LITERACYPRESENTATIONS
1,700
70STUDENTS & ADULTS REACHED
BUILDING LASTING RELATIONSHIPS WITH PREMIER FINANCIAL SOLUTIONS
WITH INTEGRITY EXCELLENCE
COMPASSION ACCOUNTABILITY
RESPECT
EXPERTISE
OUR CORE
VALUES
DONATIONS
$54,534$ 5,365 AGRICULTURE RELATED$24,725 EDUCATION$24,444 COMMUNITY OUTREACH
ON
LIN
E B
AN
KIN
GC
UST
OM
ERS
3,90
9
FOCUSED
DEDICATEDEMPLOYEES
DEPOSITRELATIONSHIPS
14,900
MESSAGE FROM THE PRESIDENTDear Shareholder:
On behalf of your Board of Directors, I am pleased to report outstanding earnings for 2018 which proved to be our 3rd best year of earnings on record. 2018 was just short of our record earnings year in 2016 by $78,000 and 2017 by $23,000 respectively for Mound City Financial Services, Inc.
The bank’s earnings resulted in net income for the holding company of $3.31 million or $12.93 per weighted share, compared to $3.334 million and $13.02 per weighted share in 2017. These net earnings represent a Return on Average Equity of 10.58%.
Capital ratios are healthy with Tier I Capital recorded at 10.74% for the holding company. The Tier I ratio as well as the Risk Based Capital ratios are all significantly above the regulators’ definition of “well capitalized”. Book value increased to $129.99 compared to $118.51 per share at year-end 2017.
Asset quality remains good- however some of our Agricultural loan credits are feeling the effects on their balance sheet of another year of low commodity prices. Non-performing assets did increase from .25% of total assets to 1.02% due to an Ag credit which we expensed an additional $1.5 million to
Jennie M. Pete - Agribusiness Lending Officer / Crop Insurance SpecialistVicki J. Pluemer - Personal Banking Officer Sarah K. Rogers - Branch Manager and Retail Lending Officer, Cuba CityBarbara L. Skaife - Marketing OfficerJeffrey W. Stange - Vice President - Business BankingGretta M. Stilson - Vice President - Retail Lending
STAFFSandra C. Adams - Retail Lending UnderwriterAbby E. Althaus - Customer Service Representative, BelmontTaylor J. Anderson - Customer Service Representative, Mineral PointGail B. Bertling - Customer Service RepresentativeBarbara J. Bratton - Lobby ReceptionistJade L. Brindley - Accounting SpecialistSarah L. Brindley - Customer Service Representative, Mineral PointAmanda K. Brown - Senior Customer Service Representative, Motor BranchTammy J. Christ - Retail Loan ProcessorJennifer L. Dixon - Senior Customer Service Representative, Cuba CityEmmily E. Dreessens - Investment Services AssistantHope M. Francis - Customer Service RepresentativeKrystal M. Francis - Retail Loan ProcessorDeanne M. Gorman - Lobby ReceptionistLauren E. Heilig - Loan Servicing and Imaging SpecialistBrayden M. Johnson - Customer Service Representive, Mineral PointMacy R. Johnson - Customer Service Representative, Mount HorebStephanie J. Kent - Customer Service Representative, Cuba CityMary J. Klauer - Loan Servicing SpecialistMcKenna A. Kopras - Customer Service Representative, Mount HorebLinda K. Kress - Senior Customer Service RepresentativeDenise A. McDonald - Customer Service Representative, BelmontEmily K. Mickelson - Customer Service Representative, Mount HorebErika C. Nemitz - Credit AnalystJessica J. Paulson - Customer Service Representative, BelmontVirginia E. Peake - Crop Insurance AssistantCourtney L. Pickel - Customer Service RepresentativeBrandon D. Popp - Assistant Network Administrator Benjamin C. Price - Business Loan ProcessorTrisha M. Rehlinger - Customer Service Representative Julie A. Runde - Ag Loan ProcessorSam S. Spillane - Customer Service Representative, Cuba CityVicki L. Stuelke - Senior Accounting SpecialistSheryl L. Tierney - Customer Service RepresentativeLori A. Tydrich - Retail Loan ProcessorEllen K. Wedige - Senior Customer Service Representative
BOARD OF DIRECTORSBarry J. Brodbeck Robert J. Just, Jr. Steven R. Brogley Richard J. Kopp Keith R. Buchert Bruce B. Kroll Dennis R. Cooley Craig L. TrongaardDonna J. Hoppenjan
OFFICERSDonna J. Hoppenjan - President and CEOCraig L. Trongaard - Vice President and Chairman of the Board of DirectorsJohn P. Digman - Vice President- Chief Operating OfficerPeter J. Mumm - Senior Vice President- Chief Lending OfficerNancy A. Salzmann - Vice President- Retail Banking
Chad C. Bahr - Assistant Vice President - Agribusiness Lending Lori B. Bahr - Vice President- Trust OfficerKate J. Barth - Loan Operations SupervisorShane S. Bowdish - Vice President - Business Banking, Mount HorebLexie L. Buschor - Assistant Vice President- Retail Lending George W. Byykkonen - Vice President - LPL Financial AdvisorSally M. Carey - Branch Manager and Retail Lending Officer, BelmontPatricia A. Cullen - Assistant Vice President - Internal AuditorKathy S. Digman - Executive AssistantSarah A. Frisch - Branch Manager and Personal Banking Officer, Mount HorebDiane M. Genthe - Vice President - OperationsKari M. Geyer - Human Resources OfficerMolly R. Heimerdinger - Portfolio ManagerSarah J. Imobersteg - Personal Banking OfficerTyler J. Kennicker - Investment Representative, Mineral Point and Mount HorebDonald J. Loeffelholz - Business Banking OfficerAmanda L. McWilliams - Assistant Vice President - Retail Lending, Mount HorebTodd J. Michek - Branch Manager and Retail Lending Officer, Mineral PointJeffrey A. Miesen - Vice President - Agribusiness LendingJennifer J. Mullikin - Accounting SupervisorDiedre L. Neis - Customer Service Representative SupervisorCara C. Nodorft - Personal Banking OfficerSarah R. Olson - Compliance OfficerJustin J. Olthafer - Assistant Vice President - Information Technology
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our Allowance for Loan Loss. This 1.02% compares to 3.39% of non-performing assets in 2009 during the last economic downturn. Overall asset growth was 1.31%, with our year-end total bank assets of $358 million. Loan growth is strong but has slowed from 6.45% in 2017 to 3.06% for 2018.
This loan growth generates loan service fee income for farm real estate, consumer mortgages & business real estate loans. Strong asset quality oversight, including the close monitoring of our agricultural loan portfolio, along with cybersecurity & compliance continue to be strategic priorities.
We reached over 1500 area students & adults in our Personal Economics Financial Literacy Program. Our Trust & Investment Wealth Management Services have also been busy meeting with clients & presenting at seminars to market area residents on a variety of topics.
A continued emphasis in 2019 will be on deposit growth strategies utilizing technology to garner greater market share in our local communities as we continue to offer enhanced premier
financial solutions for our customers to assist them in reaching their financial goals & dreams.
Mound City Bank takes pride in being your locally owned, independent community bank. We are grateful for your continued support and loyalty as our shareholder.
I am proud to present to you this 2018 Annual Report for Mound City Financial Services, Inc.
Sincerely,
Donna J. Hoppenjan
President of Mound City Financial Services, Inc.
MOUND CITY BANK TAKES PRIDE IN BEING YOUR LOCALLY OWNED, INDEPENDENT COMMUNITY BANK
MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS
Mound City Financial Services, Inc. and SubsidiaryConsolidated Balance Sheets
December 31, 2018 2017
Assets:Cash and due from banks $ 7,686,986 $ 7,039,939Federal funds sold 6,190,978 9,718,070Interest-bearing deposits 7,948,699 9,136,091
Cash and cash equivalents 21,826,663 25,894,100
Other interest-bearing deposits 3,675,000 3,146,000Securities available for sale 34,258,950 33,743,915Securities held to maturity 3,300,000 3,300,000Loans held for sale 593,673 591,500Loans, net 286,773,109 279,735,321Premises and equipment, net 3,566,541 3,655,163Federal Home Loan Bank stock 719,982 648,538Accrued interest receivable 1,966,599 1,815,228Other real estate owned, net 12,217 12,217Cash value of life insurance 6,832,216 6,676,023Other assets 1,581,107 1,710,794
Total assets $ 365,106,057 $ 360,928,799
Liabilities:Demand $ 53,461,561 $ 47,727,838Savings and NOW 132,844,211 128,438,730Other time 110,177,339 122,750,167
Total deposits 296,483,111 298,916,735
Borrowed funds 28,999,595 25,189,734Subordinated debentures 5,155,000 5,155,000Accrued salary continuation 850,967 768,933Other liabilities 535,875 616,392
Total liabilities 332,024,548 330,646,794
Stockholders' Equity:Common stock - No par value, $1 stated value
Authorized - 600,000 shares; issued - 261,885 shares;outstanding - 255,990 shares 261,885 261,885
Additional paid-in capital 7,387,619 7,387,619Retained earnings 29,232,355 26,293,131Accumulated other comprehensive loss (194,556) (54,836)Treasury stock, at cost - 5,895 shares (3,605,794) (3,605,794)
Total stockholders' equity 33,081,509 30,282,005
Total liabilities and stockholders' equity $ 365,106,057 $ 360,928,799
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Cash Flows
Years Ended December 31, 2018 2017 2016
Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation 320,434 334,057 346,492Net amortization of bond premiums and discounts 210,790 241,057 235,254Net (gain) loss on sales and writedowns of other real estateowned (8,161) 6,108 6,109Provision for loan losses 1,698,902 176,837 309,504Deferred tax expense (benefit) (85,766) 363,437 (98,999)Net increase in cash value of life insurance (156,193) (156,048) (134,779)Changes in operating assets and liabilities:
Loans held for sale (2,173) 210,700 (532,200)Other assets 101,396 (677,253) 225,748Other liabilities 1,517 25,620 147,113
Net cash provided by operating activities 5,391,156 3,858,361 3,892,686
Cash flows from investing activities:Net increase in other interest-bearing deposits (529,000) (237,000) (740,000)Sales, maturities, prepayments, and calls of securities available forsale 10,528,505 15,451,292 13,594,083Purchases of securities available for sale (11,431,364) (15,512,061) (14,054,689)Net increase in loans (9,002,551) (17,419,140) (14,030,094)Net (purchase) redemption of FHLB stock (71,444) 153,962 -Purchase of Company-owned life insurance - - (1,500,000)Proceeds from sales of other real estate owned 274,022 - -Capital expenditures (231,812) (291,462) (199,985)
Net cash used in investing activities (10,463,644) (17,854,409) (16,930,685)
Cash flows from financing activities:Net increase (decrease) in deposits (2,433,624) 22,118,665 18,823,854Net decrease in federal funds purchased - - (6,076,000)Repayments of borrowed funds (4,190,139) (4,188,074) (9,685,988)Proceeds from borrowed funds 8,000,000 10,000,000 13,000,000Dividends paid (371,186) (371,188) (358,385)
Net cash provided by financing activities 1,005,051 27,559,403 15,703,481
Net increase (decrease) in cash and cash equivalents (4,067,437) 13,563,355 2,665,482Cash and cash equivalents at beginning of year 25,894,100 12,330,745 9,665,263
Cash and cash equivalents at end of year $ 21,826,663 $ 25,894,100 $ 12,330,745
Supplemental cash flow information:Cash paid during the year for:
Interest $ 3,350,291 $ 2,339,952 $ 1,999,092Income taxes 1,278,621 2,136,105 1,658,100
Supplemental schedule of noncash financing activities: -Other real estate owned acquired in settlement of loans 265,861 - -
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Income
Years Ended December 31, 2018 2017 2016
Interest and dividend income:Loans, including fees $ 13,362,088 $ 12,513,940 $ 11,900,818Securities:
Taxable 538,730 340,637 297,677Tax-exempt 370,596 398,646 393,560
Interest-bearing deposits 235,549 83,481 41,449Federal funds sold 50,233 15,138 5,614FHLB stock dividends 27,648 21,279 17,398Other 8,940 7,485 6,439
Total interest and dividend income 14,593,784 13,380,606 12,662,955
Interest expense:Deposits 2,782,345 1,922,499 1,545,569Federal funds purchased 3,046 4,308 2,285Borrowed funds 425,862 354,693 339,518Subordinated debentures 189,857 141,186 111,720
Total interest expense 3,401,110 2,422,686 1,999,092
Net interest income 11,192,674 10,957,920 10,663,863Provision for loan losses 1,698,902 176,837 309,504
Net interest income after provision for loan losses 9,493,772 10,781,083 10,354,359
Noninterest income:Service fees 1,428,595 1,276,125 1,308,960Income from sale of loans 207,133 222,055 394,959Increase in cash value of life insurance 156,229 156,048 134,779Commissions 924,430 831,090 764,933Other 445,803 452,465 431,451
Total noninterest income 3,162,190 2,937,783 3,035,082
Noninterest expense:Salaries and employee benefits 5,292,710 5,242,701 5,269,486Occupancy 692,256 705,700 749,519Computer services 461,274 399,166 392,835Other real estate owned, net 70 720 (7,175)Other 1,807,086 1,702,935 1,702,739
Total noninterest expense 8,253,396 8,051,222 8,107,404
Net income before income taxes 4,402,566 5,667,644 5,282,037Provision for income taxes 1,092,156 2,333,798 1,893,593
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444
Earnings per share $ 12.93 $ 13.02 $ 13.24
Weighted average shares outstanding 255,990 255,990 255,990
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Comprehensive Income
Years Ended December 31, 2018 2017 2016
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444
Other comprehensive loss, net of tax -Change in unrealized loss on securities, net of tax$(37,140), $(19,927), and $(109,813), respectively (139,720) (38,681) (213,168)
Total comprehensive income $ 3,170,690 $ 3,295,165 $ 3,175,276
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Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Stockholders' Equity
Common Additional Retained
AccumulatedOther
Comprehensive TreasuryTotal
Stockholders'Stock Paid-in Capital Earnings Income (Loss) Stock Equity
Balance at January 1, 2016 $ 261,885 $ 7,387,619 $ 20,291,391 $ 206,036 $ (3,605,794) $ 24,541,137Net income - - 3,388,444 - - 3,388,444Other comprehensive loss - - - (213,168) - (213,168)Dividends to stockholders - - (358,385) - - (358,385)
Balance at December 31, 2016 261,885 7,387,619 23,321,450 (7,132) (3,605,794) 27,358,028Net income - - 3,333,846 - - 3,333,846Other comprehensive loss - - 9,023 (47,704) - (38,681)Dividends to stockholders - - (371,188) - - (371,188)
Balance at December 31, 2017 261,885 7,387,619 26,293,131 (54,836) (3,605,794) 30,282,005Net income - - 3,310,410 - - 3,310,410Other comprehensive loss - - - (139,720) - (139,720)Dividends to stockholders - - (371,186) - - (371,186)
Balance at December 31, 2018 $ 261,885 $ 7,387,619 $ 29,232,355 $ (194,556) $ (3,605,794) $ 33,081,509
FINANCIAL HIGHLIGHTS
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FINANCIAL HIGHLIGHTSDecember 31,
2018 2017 2016 2015 2014
Statement of Operations
Interest Income 14,593,784$ 13,380,606$ 12,662,955$ 11,838,974$ 11,243,949$Interest Expense 3,401,110 2,422,686 1,999,092 1,863,806 1,854,782Net Interest Income 14,593,784 10,957,920 10,663,863 9,975,168 9,389,167Provision for Loan Losses 1,698,902 176,837 309,504 483,877 472,741Net Interest Income After
Provision for Loan Losses 9,493,772 10,781,083 10,354,359 9,491,291 8,916,426Noninterest Income 3,162,190 2,937,783 3,035,082 2,902,023 2,615,977Noninterest Expenses 8,253,396 8,051,222 8,107,404 7,870,086 7,638,557Income Before Income Taxes 4,402,566 5,667,644 5,282,037 4,523,228 3,893,846Provision for Income Taxes 1,092,156 2,333,798 1,893,593 1,606,623 1,357,938Net Income 3,310,410$ 3,333,846$ 3,388,444$ 2,916,605$ 2,535,908$
Statement of Condition
Total Assets 365,106,057$ 360,928,799$ 330,048,611$ 311,022,741$ 288,495,993$Federal Funds Sold 6,190,978 718,070 584,147 637,311 618,995Investment Securities 37,558,950 37,043,915 37,282,810 37,380,438 34,941,576Loans 287,366,782 280,326,821 263,295,218 249,042,428 229,135,309Total Deposits 296,483,111 298,916,735 276,978,070 257,974,216 240,578,564Other Borrowings 28,999,595 25,189,734 19,377,808 22,139,766 19,589,766Subordinated Debentures 5,155,000 5,155,000 5,155,000 5,155,000 5,155,000Equity (1) 33,276,065 30,336,841 27,365,160 24,335,101 21,764,083
Averages
Average Assets (2) 356,657,776$ 337,977,142$ 320,959,107$ 299,764,703$ 279,745,145$Average Loans 288,552,911 275,374,542 260,183,257 240,116,416 219,697,110Average Deposits 289,854,493 276,638,418 266,600,639 250,687,375 238,209,744Average Equity 31,806,453 28,851,000 25,850,130 23,049,593 20,662,524
Ratios
Asset Growth Rate 1.31% 9.34% 6.16% 7.82% 3.16%Loan Growth Rate 3.06% 6.45% 5.75% 10.06% 7.06%Deposit Growth -0.81% 8.00% 7.30% 7.23% -0.15%Loan to Deposit Ratio 98.63% 94.94% 96.32% 97.73% 95.18%
Return on Average Assets 0.93% 0.99% 1.06% 0.97% 0.91%Return on Average Equity 10.58% 11.56% 13.11% 12.66% 12.28%Equity to Average Assets 9.33% 8.98% 8.53% 8.12% 7.78%
Earnings per Share (weighted average) (3) 12.93$ 13.02$ 13.24$ 11.39$ 9.91$Dividend Paid per Share (3) 1.45$ 1.45$ 1.40$ 1.35$ 1.30$
(1) Equity, Net of Comprehensive Income(2) Average Annual Assets, Net of Comprehensive Income(3) Stock Dividend (9 for 1)
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
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Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Stockholders' Equity
Common Additional Retained
AccumulatedOther
Comprehensive TreasuryTotal
Stockholders'Stock Paid-in Capital Earnings Income (Loss) Stock Equity
Balance at January 1, 2016 $ 261,885 $ 7,387,619 $ 20,291,391 $ 206,036 $ (3,605,794) $ 24,541,137Net income - - 3,388,444 - - 3,388,444Other comprehensive loss - - - (213,168) - (213,168)Dividends to stockholders - - (358,385) - - (358,385)
Balance at December 31, 2016 261,885 7,387,619 23,321,450 (7,132) (3,605,794) 27,358,028Net income - - 3,333,846 - - 3,333,846Other comprehensive loss - - 9,023 (47,704) - (38,681)Dividends to stockholders - - (371,188) - - (371,188)
Balance at December 31, 2017 261,885 7,387,619 26,293,131 (54,836) (3,605,794) 30,282,005Net income - - 3,310,410 - - 3,310,410Other comprehensive loss - - - (139,720) - (139,720)Dividends to stockholders - - (371,186) - - (371,186)
Balance at December 31, 2018 $ 261,885 $ 7,387,619 $ 29,232,355 $ (194,556) $ (3,605,794) $ 33,081,509
FINANCIAL HIGHLIGHTS
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FINANCIAL HIGHLIGHTSDecember 31,
2018 2017 2016 2015 2014
Statement of Operations
Interest Income 14,593,784$ 13,380,606$ 12,662,955$ 11,838,974$ 11,243,949$Interest Expense 3,401,110 2,422,686 1,999,092 1,863,806 1,854,782Net Interest Income 14,593,784 10,957,920 10,663,863 9,975,168 9,389,167Provision for Loan Losses 1,698,902 176,837 309,504 483,877 472,741Net Interest Income After
Provision for Loan Losses 9,493,772 10,781,083 10,354,359 9,491,291 8,916,426Noninterest Income 3,162,190 2,937,783 3,035,082 2,902,023 2,615,977Noninterest Expenses 8,253,396 8,051,222 8,107,404 7,870,086 7,638,557Income Before Income Taxes 4,402,566 5,667,644 5,282,037 4,523,228 3,893,846Provision for Income Taxes 1,092,156 2,333,798 1,893,593 1,606,623 1,357,938Net Income 3,310,410$ 3,333,846$ 3,388,444$ 2,916,605$ 2,535,908$
Statement of Condition
Total Assets 365,106,057$ 360,928,799$ 330,048,611$ 311,022,741$ 288,495,993$Federal Funds Sold 6,190,978 718,070 584,147 637,311 618,995Investment Securities 37,558,950 37,043,915 37,282,810 37,380,438 34,941,576Loans 287,366,782 280,326,821 263,295,218 249,042,428 229,135,309Total Deposits 296,483,111 298,916,735 276,978,070 257,974,216 240,578,564Other Borrowings 28,999,595 25,189,734 19,377,808 22,139,766 19,589,766Subordinated Debentures 5,155,000 5,155,000 5,155,000 5,155,000 5,155,000Equity (1) 33,276,065 30,336,841 27,365,160 24,335,101 21,764,083
Averages
Average Assets (2) 356,657,776$ 337,977,142$ 320,959,107$ 299,764,703$ 279,745,145$Average Loans 288,552,911 275,374,542 260,183,257 240,116,416 219,697,110Average Deposits 289,854,493 276,638,418 266,600,639 250,687,375 238,209,744Average Equity 31,806,453 28,851,000 25,850,130 23,049,593 20,662,524
Ratios
Asset Growth Rate 1.31% 9.34% 6.16% 7.82% 3.16%Loan Growth Rate 3.06% 6.45% 5.75% 10.06% 7.06%Deposit Growth -0.81% 8.00% 7.30% 7.23% -0.15%Loan to Deposit Ratio 98.63% 94.94% 96.32% 97.73% 95.18%
Return on Average Assets 0.93% 0.99% 1.06% 0.97% 0.91%Return on Average Equity 10.58% 11.56% 13.11% 12.66% 12.28%Equity to Average Assets 9.33% 8.98% 8.53% 8.12% 7.78%
Earnings per Share (weighted average) (3) 12.93$ 13.02$ 13.24$ 11.39$ 9.91$Dividend Paid per Share (3) 1.45$ 1.45$ 1.40$ 1.35$ 1.30$
(1) Equity, Net of Comprehensive Income(2) Average Annual Assets, Net of Comprehensive Income(3) Stock Dividend (9 for 1)
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Income
Years Ended December 31, 2018 2017 2016
Interest and dividend income:Loans, including fees $ 13,362,088 $ 12,513,940 $ 11,900,818Securities:
Taxable 538,730 340,637 297,677Tax-exempt 370,596 398,646 393,560
Interest-bearing deposits 235,549 83,481 41,449Federal funds sold 50,233 15,138 5,614FHLB stock dividends 27,648 21,279 17,398Other 8,940 7,485 6,439
Total interest and dividend income 14,593,784 13,380,606 12,662,955
Interest expense:Deposits 2,782,345 1,922,499 1,545,569Federal funds purchased 3,046 4,308 2,285Borrowed funds 425,862 354,693 339,518Subordinated debentures 189,857 141,186 111,720
Total interest expense 3,401,110 2,422,686 1,999,092
Net interest income 11,192,674 10,957,920 10,663,863Provision for loan losses 1,698,902 176,837 309,504
Net interest income after provision for loan losses 9,493,772 10,781,083 10,354,359
Noninterest income:Service fees 1,428,595 1,276,125 1,308,960Income from sale of loans 207,133 222,055 394,959Increase in cash value of life insurance 156,229 156,048 134,779Commissions 924,430 831,090 764,933Other 445,803 452,465 431,451
Total noninterest income 3,162,190 2,937,783 3,035,082
Noninterest expense:Salaries and employee benefits 5,292,710 5,242,701 5,269,486Occupancy 692,256 705,700 749,519Computer services 461,274 399,166 392,835Other real estate owned, net 70 720 (7,175)Other 1,807,086 1,702,935 1,702,739
Total noninterest expense 8,253,396 8,051,222 8,107,404
Net income before income taxes 4,402,566 5,667,644 5,282,037Provision for income taxes 1,092,156 2,333,798 1,893,593
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444
Earnings per share $ 12.93 $ 13.02 $ 13.24
Weighted average shares outstanding 255,990 255,990 255,990
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Comprehensive Income
Years Ended December 31, 2018 2017 2016
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444
Other comprehensive loss, net of tax -Change in unrealized loss on securities, net of tax$(37,140), $(19,927), and $(109,813), respectively (139,720) (38,681) (213,168)
Total comprehensive income $ 3,170,690 $ 3,295,165 $ 3,175,276
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS
Mound City Financial Services, Inc. and SubsidiaryConsolidated Balance Sheets
December 31, 2018 2017
Assets:Cash and due from banks $ 7,686,986 $ 7,039,939Federal funds sold 6,190,978 9,718,070Interest-bearing deposits 7,948,699 9,136,091
Cash and cash equivalents 21,826,663 25,894,100
Other interest-bearing deposits 3,675,000 3,146,000Securities available for sale 34,258,950 33,743,915Securities held to maturity 3,300,000 3,300,000Loans held for sale 593,673 591,500Loans, net 286,773,109 279,735,321Premises and equipment, net 3,566,541 3,655,163Federal Home Loan Bank stock 719,982 648,538Accrued interest receivable 1,966,599 1,815,228Other real estate owned, net 12,217 12,217Cash value of life insurance 6,832,216 6,676,023Other assets 1,581,107 1,710,794
Total assets $ 365,106,057 $ 360,928,799
Liabilities:Demand $ 53,461,561 $ 47,727,838Savings and NOW 132,844,211 128,438,730Other time 110,177,339 122,750,167
Total deposits 296,483,111 298,916,735
Borrowed funds 28,999,595 25,189,734Subordinated debentures 5,155,000 5,155,000Accrued salary continuation 850,967 768,933Other liabilities 535,875 616,392
Total liabilities 332,024,548 330,646,794
Stockholders' Equity:Common stock - No par value, $1 stated value
Authorized - 600,000 shares; issued - 261,885 shares;outstanding - 255,990 shares 261,885 261,885
Additional paid-in capital 7,387,619 7,387,619Retained earnings 29,232,355 26,293,131Accumulated other comprehensive loss (194,556) (54,836)Treasury stock, at cost - 5,895 shares (3,605,794) (3,605,794)
Total stockholders' equity 33,081,509 30,282,005
Total liabilities and stockholders' equity $ 365,106,057 $ 360,928,799
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS
Mound City Financial Services, Inc. and SubsidiaryConsolidated Statements of Cash Flows
Years Ended December 31, 2018 2017 2016
Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:
Net income $ 3,310,410 $ 3,333,846 $ 3,388,444Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation 320,434 334,057 346,492Net amortization of bond premiums and discounts 210,790 241,057 235,254Net (gain) loss on sales and writedowns of other real estateowned (8,161) 6,108 6,109Provision for loan losses 1,698,902 176,837 309,504Deferred tax expense (benefit) (85,766) 363,437 (98,999)Net increase in cash value of life insurance (156,193) (156,048) (134,779)Changes in operating assets and liabilities:
Loans held for sale (2,173) 210,700 (532,200)Other assets 101,396 (677,253) 225,748Other liabilities 1,517 25,620 147,113
Net cash provided by operating activities 5,391,156 3,858,361 3,892,686
Cash flows from investing activities:Net increase in other interest-bearing deposits (529,000) (237,000) (740,000)Sales, maturities, prepayments, and calls of securities available forsale 10,528,505 15,451,292 13,594,083Purchases of securities available for sale (11,431,364) (15,512,061) (14,054,689)Net increase in loans (9,002,551) (17,419,140) (14,030,094)Net (purchase) redemption of FHLB stock (71,444) 153,962 -Purchase of Company-owned life insurance - - (1,500,000)Proceeds from sales of other real estate owned 274,022 - -Capital expenditures (231,812) (291,462) (199,985)
Net cash used in investing activities (10,463,644) (17,854,409) (16,930,685)
Cash flows from financing activities:Net increase (decrease) in deposits (2,433,624) 22,118,665 18,823,854Net decrease in federal funds purchased - - (6,076,000)Repayments of borrowed funds (4,190,139) (4,188,074) (9,685,988)Proceeds from borrowed funds 8,000,000 10,000,000 13,000,000Dividends paid (371,186) (371,188) (358,385)
Net cash provided by financing activities 1,005,051 27,559,403 15,703,481
Net increase (decrease) in cash and cash equivalents (4,067,437) 13,563,355 2,665,482Cash and cash equivalents at beginning of year 25,894,100 12,330,745 9,665,263
Cash and cash equivalents at end of year $ 21,826,663 $ 25,894,100 $ 12,330,745
Supplemental cash flow information:Cash paid during the year for:
Interest $ 3,350,291 $ 2,339,952 $ 1,999,092Income taxes 1,278,621 2,136,105 1,658,100
Supplemental schedule of noncash financing activities: -Other real estate owned acquired in settlement of loans 265,861 - -
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our Allowance for Loan Loss. This 1.02% compares to 3.39% of non-performing assets in 2009 during the last economic downturn. Overall asset growth was 1.31%, with our year-end total bank assets of $358 million. Loan growth is strong but has slowed from 6.45% in 2017 to 3.06% for 2018.
This loan growth generates loan service fee income for farm real estate, consumer mortgages & business real estate loans. Strong asset quality oversight, including the close monitoring of our agricultural loan portfolio, along with cybersecurity & compliance continue to be strategic priorities.
We reached over 1500 area students & adults in our Personal Economics Financial Literacy Program. Our Trust & Investment Wealth Management Services have also been busy meeting with clients & presenting at seminars to market area residents on a variety of topics.
A continued emphasis in 2019 will be on deposit growth strategies utilizing technology to garner greater market share in our local communities as we continue to offer enhanced premier
financial solutions for our customers to assist them in reaching their financial goals & dreams.
Mound City Bank takes pride in being your locally owned, independent community bank. We are grateful for your continued support and loyalty as our shareholder.
I am proud to present to you this 2018 Annual Report for Mound City Financial Services, Inc.
Sincerely,
Donna J. Hoppenjan
President of Mound City Financial Services, Inc.
MOUND CITY BANK TAKES PRIDE IN BEING YOUR LOCALLY OWNED, INDEPENDENT COMMUNITY BANK
MOUND CITYFINANCIAL SERVICES, INC.
AND SUBSIDIARY
YEARS ENDED DECEMBER 31,
2018, 2017 AND 2016
2018ANNUAL REPORT
ON THE NUMBERS
PUTTING PEOPLEIN HOMES
CLOSED MORTGAGES IN 2018
264
HIGH SCHOOLSCHOLARSHIPS
$12,100
FINANCIAL LITERACYPRESENTATIONS
1,700
70STUDENTS & ADULTS REACHED
BUILDING LASTING RELATIONSHIPS WITH PREMIER FINANCIAL SOLUTIONS
WITH INTEGRITY EXCELLENCE
COMPASSION ACCOUNTABILITY
RESPECT
EXPERTISE
OUR CORE
VALUES
DONATIONS
$54,534$ 5,365 AGRICULTURE RELATED$24,725 EDUCATION$24,444 COMMUNITY OUTREACH
ON
LIN
E B
AN
KIN
GC
UST
OM
ERS
3,90
9
FOCUSED
DEDICATEDEMPLOYEES
DEPOSITRELATIONSHIPS
14,900
