building lasting relationships with premier financial ...€¦ · definition of “well...
TRANSCRIPT
ON THE NUMBERS
PUTTING PEOPLEIN HOMES
CLOSED MORTGAGES IN 2019
355
HIGH SCHOOLSCHOLARSHIPS
$11,100
FINANCIAL LITERACYPRESENTATIONS
1,850
75STUDENTS & ADULTS REACHED
BUILDING LASTING RELATIONSHIPS WITH PREMIER FINANCIAL SOLUTIONS
WITH INTEGRITY EXCELLENCE
COMPASSION ACCOUNTABILITY
RESPECT
EXPERTISE
OUR CORE
VALUES
DONATIONS
$77,896$ 5,167 AGRICULTURE RELATED$26,675 EDUCATION$46,054 COMMUNITY OUTREACH
ON
LIN
E B
AN
KIN
GC
UST
OM
ERS
4,37
6
FOCUSED
DEDICATEDEMPLOYEES
DEPOSITRELATIONSHIPS
15,451
FINANCIAL SERVICES, INC.AND SUBSIDIARY
ANNUALREPORT2019
YEARS ENDEDDECEMBER 31, 2019, 2018 AND 2017
MESSAGE FROM THE PRESIDENTDear Shareholder:
On behalf of your Board of Directors, I am excited to report record earnings exceeding budget for Mound City Financial Services, Inc. for 2019! Net income for the holding company totaled $3.96 million, a 19.64% increase over 2018. These earnings resulted in earnings per share of $15.47 compared to $12.93 per share in 2018. The net earnings represent a Return on Average Equity of 11.30%.
Capital ratios are healthy with Tier I Capital recorded at 11.35% 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 $143.96 compared to $129.99 per share at year end 2018.
Overall asset growth was 5.39%, with our year-end total bank assets of $384 million.Asset quality remains solid- however some of our Agricultural loan credits continue to feel the effects on their balance sheet of another year of low commodity prices. Non-performing assets have increased from .25% during 2017 to 1.23% of total assets two years
Barbara 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 BranchKelly L. Casper - Commercial Loan ProcessorTammy J. Christ - Retail Loan Processing - Closing SpecialistJennifer L. Dixon - Senior Customer Service Representative, Cuba CityEmmily E. Dreessens - Investment Services AssistantHope M. Francis - Customer Service RepresentativeKrystal M. Francis - Retail Loan Processing - Loan Estimate and Consumer SpecialistDeanne M. Gorman - Lobby ReceptionistDylan G. Greenhalgh - Imaging AssistantLauren E. Heilig - Loan Servicing and Imaging SpecialistBrayden M. Johnson - Customer Service RepresentiveMacy R. Johnson - Customer Service Representative, Mount HorebMary J. Klauer - Loan Servicing SpecialistLinda K. Kress - Senior Customer Service RepresentativeJessica L. Link - Loan Servicing and Imaging SpecialistDenise A. McDonald - Customer Service Representative, BelmontAllison J. Monson - Customer Service Representative, Mount HorebErika C. Nemitz - Credit AnalystCatarina R. Parks - Customer Service Representative, Mineral PointJessica J. Paulson - Customer Service Representative, BelmontVirginia E. Peake - Crop Insurance AssistantCourtney L. Pickel - Customer Service RepresentativeBrandon D. Popp - Assistant Network Administrator Trisha M. Rehlinger - Customer Service Representative Miranda K. Richards - Customer Service Representative, Mount HorebJulie A. Runde - Agriculture Loan ProcessorSamantha J. Schleicher - Accounting SpecialistShelby E. Smith - Imaging AssistantSam S. Spillane - Customer Service RepresentativeChelsey J. Straka- Customer Service Representative, Cuba CityVicki L. Stuelke - Senior Accounting SpecialistSheryl L. Tierney - Customer Service RepresentativeLori A. Tydrich- Residential Loan Quality Control SpecialistEllen K. Wedige- Senior Customer Service Representative
BOARD OF DIRECTORSBarry J. Brodbeck Steven R. Brogley Keith R. Buchert Dennis R. Cooley Donna J. Hoppenjan Robert J. Just, Jr. Richard J. Kopp Bruce B. Kroll Craig L. Trongaard
OFFICERSDonna J. Hoppenjan - President and CEOCraig L. Trongaard - Vice President and Chairman of the Board of DirectorsJohn P. Digman - Senior Vice President - Chief Financial 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 TechnologyJennie M. Pete - Agribusiness Lending Officer / Crop Insurance SpecialistVicki J. Pluemer - Personal Banking Officer Sarah K. Rogers- Branch Manager and Retail Lending Officer, Cuba City
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later in 2019. We did expense $1.1 million to the Allowance for Loan Loss during 2019 as we conservatively protect against future losses. On balance sheet loan growth demand slowed from 3.06% for 2018 to (-1.29%) in 2019; however our secondary market loans increased 3.55% during 2019. Loan growth generates loan service fee income from farm real estate, consumer mortgages & business real estate loans. The bank experienced a record earnings year of lending related fees of $2.3 million due to low interest rates and consumer demand for refinancing & buying/selling homes.
We reached over 1850 area students & adults in our Financial Literacy Presentations. We were also busy participating in community projects during Power of Community Week.
Strategic priorities for 2020 will include emphasis on deposit growth strategies, strong asset quality oversight, cybersecurity & fraud detection as we continue to offer enhanced premier financial solutions for our customers to assist them
in reaching their financial goals & dreams.
We salute Chairman of the Board- Director Craig Trongaard- in his retirement from the Board of Directors & thank him for his 15 years of service to the banking industry. Lastly, we thank you, our shareholder, for your support & loyalty that you & your families have displayed over the past 104 years so that Mound City Bank can continue our successful journey as your local decision making, independent community owned bank.
I am proud to present to you this 2019 Annual Report for Mound City Financial Services, Inc.
Sincerely,
Donna J. HoppenjanPresident 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, 2019 2018
Assets:Cash and due from banks $ 9,561,313 $ 7,686,986Federal funds sold 8,738,097 6,190,978Interest-bearing deposits 19,270,824 7,948,699
Cash and cash equivalents 37,570,234 21,826,663
Other interest-bearing deposits 2,695,000 3,675,000Securities available for sale 41,971,800 34,258,950Securities held to maturity 3,230,000 3,300,000Loans held for sale 1,386,550 593,673Loans, net 282,540,490 286,773,109Premises and equipment, net 3,408,713 3,566,541Federal Home Loan Bank stock 628,331 719,982Accrued interest receivable 2,068,209 1,966,599Other real estate owned, net - 12,217Cash value of life insurance 6,998,399 6,832,216Other assets 1,529,267 1,581,107
Total assets $ 384,026,993 $ 365,106,057
Liabilities:Demand $ 48,730,614 $ 53,461,561Savings and NOW 157,177,324 132,844,211Other time 115,198,316 110,177,339
Total deposits 321,106,254 296,483,111
Borrowed funds 18,407,355 28,999,595Subordinated debentures 5,155,000 5,155,000Accrued salary continuation 936,932 850,967Other liabilities 965,106 535,875
Total liabilities 346,570,647 332,024,548
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 32,808,804 29,232,355Accumulated other comprehensive income (loss) 603,832 (194,556)Treasury stock, at cost - 5,895 shares (3,605,794) (3,605,794)
Total stockholders' equity 37,456,346 33,081,509
Total liabilities and stockholders' equity $ 384,026,993 $ 365,106,057
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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, 2019 2018 2017
Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation 327,421 320,434 334,057Net amortization of bond premiums and discounts 126,777 210,790 241,057Net (gain) loss on sales and writedowns of other real estateowned 40,105 (8,161) 6,108Provision for loan losses 1,127,138 1,698,902 176,837Deferred tax expense (benefit) (152,483) (85,766) 363,437Net increase in cash value of life insurance (166,183) (156,193) (156,048)Loss on sales of fixed assets 5,235 - -Gain on sale of investment securities (58,763) - -Unrealized gain on equity security (466,688) - -Changes in operating assets and liabilities:
Loans held for sale (792,877) (2,173) 210,700Other assets 357,173 101,396 (677,253)Other liabilities 515,196 1,517 25,620
Net cash provided by operating activities 4,822,483 5,391,156 3,858,361
Cash flows from investing activities:Net (increase) decrease in other interest-bearing deposits 980,000 (529,000) (237,000)Sales, maturities, prepayments, and calls of securities available forsale 11,998,376 10,528,505 15,451,292Sales, maturities, prepayments, and calls of securities held-to-maturity 70,000 - -Purchases of securities available for sale (18,768,624) (11,431,364) (15,512,061)Net increase (decrease) in loans 2,796,602 (9,002,551) (17,419,140)Net (purchase) redemption of FHLB stock 91,651 (71,444) 153,962Proceeds from sales of other real estate owned 280,991 274,022 -Capital expenditures (174,828) (231,812) (291,462)
Net cash used in investing activities (2,725,832) (10,463,644) (17,854,409)
Cash flows from financing activities:Net increase (decrease) in deposits 24,623,143 (2,433,624) 22,118,665Repayments of borrowed funds (15,592,240) (4,190,139) (4,188,074)Proceeds from borrowed funds 5,000,000 8,000,000 10,000,000Dividends paid (383,983) (371,186) (371,188)
Net cash provided by financing activities 13,646,920 1,005,051 27,559,403
Net increase (decrease) in cash and cash equivalents 15,743,571 (4,067,437) 13,563,355Cash and cash equivalents at beginning of year 21,826,663 25,894,100 12,330,745
Cash and cash equivalents at end of year $ 37,570,234 $ 21,826,663 $ 25,894,100
Supplemental cash flow information:Cash paid during the year for:
Interest $ 4,227,036 $ 3,350,291 $ 2,339,952Income taxes 972,739 1,278,621 2,136,105
Supplemental schedule of noncash financing activities: -Other real estate owned acquired in settlement of loans 308,879 265,861 -
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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, 2019 2018 2017
Interest and dividend income:Loans, including fees $ 13,951,686 $ 13,362,088 $ 12,513,940Securities:
Taxable 744,361 538,730 340,637Tax-exempt 332,489 370,596 398,646
Interest-bearing deposits 288,262 235,549 83,481Federal funds sold 80,981 50,233 15,138FHLB stock dividends 38,087 27,648 21,279Other 10,054 8,940 7,485
Total interest and dividend income 15,445,920 14,593,784 13,380,606
Interest expense:Deposits 3,572,490 2,782,345 1,922,499Federal funds purchased 2,470 3,046 4,308Borrowed funds 503,927 425,862 354,693Subordinated debentures 204,510 189,857 141,186
Total interest expense 4,283,397 3,401,110 2,422,686
Net interest income 11,162,523 11,192,674 10,957,920Provision for loan losses 1,127,138 1,698,902 176,837
Net interest income after provision for loan losses 10,035,385 9,493,772 10,781,083
Noninterest income:Service fees 1,494,528 1,428,595 1,276,125Income from sale of loans 715,545 207,133 222,055Net gain on sale of securities 58,763 - -Increase in cash value of life insurance 166,183 156,229 156,048Commissions 917,610 924,430 831,090Other 962,544 413,232 419,398
Total noninterest income 4,315,173 3,129,619 2,904,716
Noninterest expense:Salaries and employee benefits 5,948,643 5,292,710 5,242,701Occupancy 688,564 692,256 705,700Computer services 476,916 461,274 399,166Other real estate owned, net 50,092 70 720Other 1,876,300 1,774,515 1,669,868
Total noninterest expense 9,040,515 8,220,825 8,018,155
Net income before income taxes 5,310,043 4,402,566 5,667,644Provision for income taxes 1,349,611 1,092,156 2,333,798
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846
Earnings per share $ 15.47 $ 12.93 $ 13.02
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, 2019 2018 2017
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846
Other comprehensive gain (loss), net of tax -Change in unrealized gain (loss) on securities, net of tax$212,229, $(37,140), and $(19,927), respectively 798,388 (139,720) (38,681)
Total comprehensive income $ 4,758,820 $ 3,170,690 $ 3,295,165
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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, 2017 $ 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) 33,081,509Net income - - 3,960,432 - - 3,960,432Other comprehensive income - - - 798,388 - 798,388Dividends to stockholders - - (383,983) - - (383,983)
Balance at December 31, 2019 $ 261,885 $ 7,387,619 $ 32,808,804 $ 603,832 $ (3,605,794) $ 37,456,346
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTSDecember 31,
2019 2018 2017 2016 2015
Statement of Operations
Interest Income 15,445,920$ 14,593,784$ 13,380,606$ 12,662,955$ 11,838,974$Interest Expense 4,283,397 3,401,110 2,422,686 1,999,092 1,863,806Net Interest Income 11,162,523 14,593,784 10,957,920 10,663,863 9,975,168Provision for Loan Losses 1,127,138 1,698,902 176,837 309,504 483,877Net Interest Income After
Provision for Loan Losses 10,035,385 9,493,772 10,781,083 10,354,359 9,491,291Noninterest Income 4,315,173 3,162,190 2,937,783 3,035,082 2,902,023Noninterest Expenses 9,040,515 8,253,396 8,051,222 8,107,404 7,870,086Income Before Income Taxes 5,310,043 4,402,566 5,667,644 5,282,037 4,523,228Provision for Income Taxes 1,349,611 1,092,156 2,333,798 1,893,593 1,606,623Net Income 3,960,432$ 3,310,410$ 3,333,846$ 3,388,444$ 2,916,605$
Statement of Condition
Total Assets 384,144,678$ 365,106,057$ 360,928,799$ 330,048,611$ 311,022,741$Federal Funds Sold 8,738,097 6,190,978 718,070 584,147 637,311Investment Securities 45,201,000 37,558,950 37,043,915 37,282,810 37,380,438Loans 284,027,040 287,366,782 280,326,821 263,295,218 249,042,428Total Deposits 321,106,254 296,483,111 298,916,735 276,978,070 257,974,216Other Borrowings 18,407,355 28,999,595 25,189,734 19,377,808 22,139,766Subordinated Debentures 5,155,000 5,155,000 5,155,000 5,155,000 5,155,000Equity (1) 36,852,514 33,276,065 30,336,841 27,365,160 24,335,101
Averages
Average Assets (2) 369,023,627$ 356,657,776$ 337,977,142$ 320,959,107$ 299,764,703$Average Loans 296,884,188 288,552,911 275,374,542 260,183,257 240,116,416Average Deposits 300,990,353 289,854,493 276,638,418 266,600,639 250,687,375Average Equity 35,064,291 31,806,453 28,851,000 25,850,130 23,049,593
Ratios
Asset Growth Rate 5.39% 1.31% 9.34% 6.16% 7.82%Loan Growth Rate -1.29% 3.06% 6.45% 5.75% 10.06%Deposit Growth 8.42% -0.81% 8.00% 7.30% 7.23%Loan to Deposit Ratio 86.78% 98.63% 94.94% 96.32% 97.73%
Return on Average Assets 1.07% 0.93% 0.99% 1.06% 0.97%Return on Average Equity 11.30% 10.58% 11.56% 13.11% 12.66%Equity to Average Assets 9.72% 9.33% 8.98% 8.53% 8.12%
Earnings per Share (weighted average) 15.47$ 12.93$ 13.02$ 13.24$ 11.39$Dividend Paid per Share 1.50$ 1.45$ 1.45$ 1.40$ 1.35$
(1) Equity, Net of Comprehensive Income(2) Average Annual Assets, Net of Comprehensive Income
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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, 2017 $ 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) 33,081,509Net income - - 3,960,432 - - 3,960,432Other comprehensive income - - - 798,388 - 798,388Dividends to stockholders - - (383,983) - - (383,983)
Balance at December 31, 2019 $ 261,885 $ 7,387,619 $ 32,808,804 $ 603,832 $ (3,605,794) $ 37,456,346
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTSDecember 31,
2019 2018 2017 2016 2015
Statement of Operations
Interest Income 15,445,920$ 14,593,784$ 13,380,606$ 12,662,955$ 11,838,974$Interest Expense 4,283,397 3,401,110 2,422,686 1,999,092 1,863,806Net Interest Income 11,162,523 14,593,784 10,957,920 10,663,863 9,975,168Provision for Loan Losses 1,127,138 1,698,902 176,837 309,504 483,877Net Interest Income After
Provision for Loan Losses 10,035,385 9,493,772 10,781,083 10,354,359 9,491,291Noninterest Income 4,315,173 3,162,190 2,937,783 3,035,082 2,902,023Noninterest Expenses 9,040,515 8,253,396 8,051,222 8,107,404 7,870,086Income Before Income Taxes 5,310,043 4,402,566 5,667,644 5,282,037 4,523,228Provision for Income Taxes 1,349,611 1,092,156 2,333,798 1,893,593 1,606,623Net Income 3,960,432$ 3,310,410$ 3,333,846$ 3,388,444$ 2,916,605$
Statement of Condition
Total Assets 384,144,678$ 365,106,057$ 360,928,799$ 330,048,611$ 311,022,741$Federal Funds Sold 8,738,097 6,190,978 718,070 584,147 637,311Investment Securities 45,201,000 37,558,950 37,043,915 37,282,810 37,380,438Loans 284,027,040 287,366,782 280,326,821 263,295,218 249,042,428Total Deposits 321,106,254 296,483,111 298,916,735 276,978,070 257,974,216Other Borrowings 18,407,355 28,999,595 25,189,734 19,377,808 22,139,766Subordinated Debentures 5,155,000 5,155,000 5,155,000 5,155,000 5,155,000Equity (1) 36,852,514 33,276,065 30,336,841 27,365,160 24,335,101
Averages
Average Assets (2) 369,023,627$ 356,657,776$ 337,977,142$ 320,959,107$ 299,764,703$Average Loans 296,884,188 288,552,911 275,374,542 260,183,257 240,116,416Average Deposits 300,990,353 289,854,493 276,638,418 266,600,639 250,687,375Average Equity 35,064,291 31,806,453 28,851,000 25,850,130 23,049,593
Ratios
Asset Growth Rate 5.39% 1.31% 9.34% 6.16% 7.82%Loan Growth Rate -1.29% 3.06% 6.45% 5.75% 10.06%Deposit Growth 8.42% -0.81% 8.00% 7.30% 7.23%Loan to Deposit Ratio 86.78% 98.63% 94.94% 96.32% 97.73%
Return on Average Assets 1.07% 0.93% 0.99% 1.06% 0.97%Return on Average Equity 11.30% 10.58% 11.56% 13.11% 12.66%Equity to Average Assets 9.72% 9.33% 8.98% 8.53% 8.12%
Earnings per Share (weighted average) 15.47$ 12.93$ 13.02$ 13.24$ 11.39$Dividend Paid per Share 1.50$ 1.45$ 1.45$ 1.40$ 1.35$
(1) Equity, Net of Comprehensive Income(2) Average Annual Assets, Net of Comprehensive Income
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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, 2019 2018 2017
Interest and dividend income:Loans, including fees $ 13,951,686 $ 13,362,088 $ 12,513,940Securities:
Taxable 744,361 538,730 340,637Tax-exempt 332,489 370,596 398,646
Interest-bearing deposits 288,262 235,549 83,481Federal funds sold 80,981 50,233 15,138FHLB stock dividends 38,087 27,648 21,279Other 10,054 8,940 7,485
Total interest and dividend income 15,445,920 14,593,784 13,380,606
Interest expense:Deposits 3,572,490 2,782,345 1,922,499Federal funds purchased 2,470 3,046 4,308Borrowed funds 503,927 425,862 354,693Subordinated debentures 204,510 189,857 141,186
Total interest expense 4,283,397 3,401,110 2,422,686
Net interest income 11,162,523 11,192,674 10,957,920Provision for loan losses 1,127,138 1,698,902 176,837
Net interest income after provision for loan losses 10,035,385 9,493,772 10,781,083
Noninterest income:Service fees 1,494,528 1,428,595 1,276,125Income from sale of loans 715,545 207,133 222,055Net gain on sale of securities 58,763 - -Increase in cash value of life insurance 166,183 156,229 156,048Commissions 917,610 924,430 831,090Other 962,544 413,232 419,398
Total noninterest income 4,315,173 3,129,619 2,904,716
Noninterest expense:Salaries and employee benefits 5,948,643 5,292,710 5,242,701Occupancy 688,564 692,256 705,700Computer services 476,916 461,274 399,166Other real estate owned, net 50,092 70 720Other 1,876,300 1,774,515 1,669,868
Total noninterest expense 9,040,515 8,220,825 8,018,155
Net income before income taxes 5,310,043 4,402,566 5,667,644Provision for income taxes 1,349,611 1,092,156 2,333,798
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846
Earnings per share $ 15.47 $ 12.93 $ 13.02
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, 2019 2018 2017
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846
Other comprehensive gain (loss), net of tax -Change in unrealized gain (loss) on securities, net of tax$212,229, $(37,140), and $(19,927), respectively 798,388 (139,720) (38,681)
Total comprehensive income $ 4,758,820 $ 3,170,690 $ 3,295,165
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MOUND CITY FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS
Mound City Financial Services, Inc. and SubsidiaryConsolidated Balance Sheets
December 31, 2019 2018
Assets:Cash and due from banks $ 9,561,313 $ 7,686,986Federal funds sold 8,738,097 6,190,978Interest-bearing deposits 19,270,824 7,948,699
Cash and cash equivalents 37,570,234 21,826,663
Other interest-bearing deposits 2,695,000 3,675,000Securities available for sale 41,971,800 34,258,950Securities held to maturity 3,230,000 3,300,000Loans held for sale 1,386,550 593,673Loans, net 282,540,490 286,773,109Premises and equipment, net 3,408,713 3,566,541Federal Home Loan Bank stock 628,331 719,982Accrued interest receivable 2,068,209 1,966,599Other real estate owned, net - 12,217Cash value of life insurance 6,998,399 6,832,216Other assets 1,529,267 1,581,107
Total assets $ 384,026,993 $ 365,106,057
Liabilities:Demand $ 48,730,614 $ 53,461,561Savings and NOW 157,177,324 132,844,211Other time 115,198,316 110,177,339
Total deposits 321,106,254 296,483,111
Borrowed funds 18,407,355 28,999,595Subordinated debentures 5,155,000 5,155,000Accrued salary continuation 936,932 850,967Other liabilities 965,106 535,875
Total liabilities 346,570,647 332,024,548
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 32,808,804 29,232,355Accumulated other comprehensive income (loss) 603,832 (194,556)Treasury stock, at cost - 5,895 shares (3,605,794) (3,605,794)
Total stockholders' equity 37,456,346 33,081,509
Total liabilities and stockholders' equity $ 384,026,993 $ 365,106,057
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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, 2019 2018 2017
Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:
Net income $ 3,960,432 $ 3,310,410 $ 3,333,846Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation 327,421 320,434 334,057Net amortization of bond premiums and discounts 126,777 210,790 241,057Net (gain) loss on sales and writedowns of other real estateowned 40,105 (8,161) 6,108Provision for loan losses 1,127,138 1,698,902 176,837Deferred tax expense (benefit) (152,483) (85,766) 363,437Net increase in cash value of life insurance (166,183) (156,193) (156,048)Loss on sales of fixed assets 5,235 - -Gain on sale of investment securities (58,763) - -Unrealized gain on equity security (466,688) - -Changes in operating assets and liabilities:
Loans held for sale (792,877) (2,173) 210,700Other assets 357,173 101,396 (677,253)Other liabilities 515,196 1,517 25,620
Net cash provided by operating activities 4,822,483 5,391,156 3,858,361
Cash flows from investing activities:Net (increase) decrease in other interest-bearing deposits 980,000 (529,000) (237,000)Sales, maturities, prepayments, and calls of securities available forsale 11,998,376 10,528,505 15,451,292Sales, maturities, prepayments, and calls of securities held-to-maturity 70,000 - -Purchases of securities available for sale (18,768,624) (11,431,364) (15,512,061)Net increase (decrease) in loans 2,796,602 (9,002,551) (17,419,140)Net (purchase) redemption of FHLB stock 91,651 (71,444) 153,962Proceeds from sales of other real estate owned 280,991 274,022 -Capital expenditures (174,828) (231,812) (291,462)
Net cash used in investing activities (2,725,832) (10,463,644) (17,854,409)
Cash flows from financing activities:Net increase (decrease) in deposits 24,623,143 (2,433,624) 22,118,665Repayments of borrowed funds (15,592,240) (4,190,139) (4,188,074)Proceeds from borrowed funds 5,000,000 8,000,000 10,000,000Dividends paid (383,983) (371,186) (371,188)
Net cash provided by financing activities 13,646,920 1,005,051 27,559,403
Net increase (decrease) in cash and cash equivalents 15,743,571 (4,067,437) 13,563,355Cash and cash equivalents at beginning of year 21,826,663 25,894,100 12,330,745
Cash and cash equivalents at end of year $ 37,570,234 $ 21,826,663 $ 25,894,100
Supplemental cash flow information:Cash paid during the year for:
Interest $ 4,227,036 $ 3,350,291 $ 2,339,952Income taxes 972,739 1,278,621 2,136,105
Supplemental schedule of noncash financing activities: -Other real estate owned acquired in settlement of loans 308,879 265,861 -
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later in 2019. We did expense $1.1 million to the Allowance for Loan Loss during 2019 as we conservatively protect against future losses. On balance sheet loan growth demand slowed from 3.06% for 2018 to (-1.29%) in 2019; however our secondary market loans increased 3.55% during 2019. Loan growth generates loan service fee income from farm real estate, consumer mortgages & business real estate loans. The bank experienced a record earnings year of lending related fees of $2.3 million due to low interest rates and consumer demand for refinancing & buying/selling homes.
We reached over 1850 area students & adults in our Financial Literacy Presentations. We were also busy participating in community projects during Power of Community Week.
Strategic priorities for 2020 will include emphasis on deposit growth strategies, strong asset quality oversight, cybersecurity & fraud detection as we continue to offer enhanced premier financial solutions for our customers to assist them
in reaching their financial goals & dreams.
We salute Chairman of the Board- Director Craig Trongaard- in his retirement from the Board of Directors & thank him for his 15 years of service to the banking industry. Lastly, we thank you, our shareholder, for your support & loyalty that you & your families have displayed over the past 104 years so that Mound City Bank can continue our successful journey as your local decision making, independent community owned bank.
I am proud to present to you this 2019 Annual Report for Mound City Financial Services, Inc.
Sincerely,
Donna J. HoppenjanPresident of Mound City Financial Services, Inc.
MOUND CITY BANK TAKES PRIDE IN BEING YOUR LOCALLY OWNED, INDEPENDENT COMMUNITY BANK
ON THE NUMBERS
PUTTING PEOPLEIN HOMES
CLOSED MORTGAGES IN 2019
355
HIGH SCHOOLSCHOLARSHIPS
$11,100
FINANCIAL LITERACYPRESENTATIONS
1,850
75STUDENTS & ADULTS REACHED
BUILDING LASTING RELATIONSHIPS WITH PREMIER FINANCIAL SOLUTIONS
WITH INTEGRITY EXCELLENCE
COMPASSION ACCOUNTABILITY
RESPECT
EXPERTISE
OUR CORE
VALUES
DONATIONS
$77,896$ 5,167 AGRICULTURE RELATED$26,675 EDUCATION$46,054 COMMUNITY OUTREACH
ON
LIN
E B
AN
KIN
GC
UST
OM
ERS
4,37
6
FOCUSED
DEDICATEDEMPLOYEES
DEPOSITRELATIONSHIPS
15,451
FINANCIAL SERVICES, INC.AND SUBSIDIARY
ANNUALREPORT2019
YEARS ENDEDDECEMBER 31, 2019, 2018 AND 2017