2 0 1 4 A N N U A L R E P O R T

Transcription

2 0 1 4
A N N U A L
R E P O R T
D A C O TA H B A N K S , I N C .
contents
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Letter to Shareholders
Financial Highlights
Selected Consolidated Financial Data
Dacotah Bank Philanthropy
Financial Statements
Directors and Management
general offices
transfer agent
401 South Main Street
Suite 212
P.O. Box 1496
Aberdeen, South Dakota 57402-1496
Telephone: (605) 225-4850
Fax: (605) 225-4929
Website: www.dacotahbank.com
Email: [email protected]
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
annual meeting
The annual stockholders’ meeting will
be held Thursday, May 28, 2015 at 1:00 pm,
at the Dakota Event Center (DEC) in Aberdeen, SD.
Rolla
Bowbells
Belcourt
Minot
Jamestown
Valley City
M I N N E SOTA
Dickinson
Regent
Hettinger
New Effington
Lemmon
Bison
Mobridge
Aberdeen (2)
Cresbard
Faulkton
Sisseton
Roslyn
Morris
Chokio
Webster
Henry
Watertown
Clark
Willow Lake
Brookings
Rapid City (2)
Sioux Falls (4)
Custer
Dacotah Banks, Inc. is a one-bank holding company headquartered in Aberdeen, South Dakota. The Company is the sole
shareholder of Dacotah Bank, a full-service commercial bank that offers banking, mortgage, insurance and trust and wealth
management services throughout its thirty-four locations in Minnesota, North Dakota and South Dakota.
BANKING
Dacotah Bank offers something for every person or business.
We work to find the precise features and benefits that fit
each client’s unique financial needs.
INSURANCE
Protecting families, businesses, or farms and ranches from
loss requires experience. Dacotah Insurance has served over
three generations of local customers for 50 years – a Trusted
Choice independent agency.
MORTGAGE
When our clients make their biggest investment for their
family or their business, we are there with memorable
customer service and a commitment to no surprises.
TRUST AND
W E A LT H M A N A G E M E N T
We help clients plan for the future, build net worth, and
secure wealth. We manage money, farmland, and oil and
gas interests.
To Our Shareholders
We are pleased to report that during a year of
continued very low interest rates, Dacotah Banks,
Inc. experienced slightly improved earnings and
maintained its strong capital levels. The Company
was able to improve its net interest yield on
earning assets from 3.86 to 3.96 by controlling
the cost of funding and increasing net loan
growth. Maintaining and improving net interest
margins is very important for the Company and
like banks that provide traditional deposit and
loan products.
In a very low interest rate environment, there
is no incentive to grow assets by increasing
deposits unless quality loans can be found to
absorb the increased deposits. By the end of
2014, the Company had experienced very nice
loan growth, increasing its loan portfolio by $121
million to over $1.68 billion, an increase of 7.75%.
Compounding this positive result are the facts that
deposits grew by only 1.6%, and the investment
portfolio decreased by 12.3%, which allowed
the Company to hold down the cost of funding
the loan growth. As the loan portfolio grew and
loan ratios increased, the Company increased its
allowance for loan and lease losses from $21.27
million to $24.06 million, an increase of 13.12%.
Controlled growth and success in finding quality
relationship-driven loans from within our foot print
have resulted in higher margins, slightly improved
earnings, stronger reserves and stronger capital
ratios. Though growth over the past two years
has been at a much slower pace than normal
the Company remains committed to growth and
we believe that with over $2.1 billion in assets
we are well-positioned to compete in the current
environment of increased operating expenses and
bank consolidation.
According to the Federal Deposit Insurance
Corporation (“FDIC”), there were 6,589 insured
institutions at the end of September 2014
compared to 8,680 at the end of 2006. Nearly
25% of the banks and saving associations that
existed before the financial crisis are gone, mostly
through consolidation. In addition, only one new
bank has been chartered in the entire country
over the four years ended December 31, 2014.
We remain open to acquisition possibilities while
concentrating on growing and improving our
three lines of business: banking; insurance; and
trust and wealth management.
FINANCIAL PERFORMANCE
The Company’s net income in 2014 was $18.59
million representing the highest earnings year
ever, but just over a 1% improvement over 2013’s
earnings of $18.38 million. Earnings were short
of the budget by about $1.5 million. Significant
items that were short of budget include net
interest income and fees on the sale or servicing
of real estate mortgages. The 7.75% increase in
loans contributed nicely to net interest income
and interest expense was very close to budget;
however, interest income was significantly below
budget as competitive pressures forced loan rates
lower in a number of our markets.
After years of low mortgage rates, the refinancing
of existing home mortgages slowed significantly
during 2014. Fees on the sale of mortgages
collected in 2014 amounted to only 58% of fees
collected in 2013. On the bright side, provisions
for loan and lease losses were $4.1 million during
3 | DACOTAH BANK ANNUAL REPORT 2014
2014, less than the $5.3 million in provisions
during 2013.
The Company’s loan-to-asset and loan-to-deposit
ratios were both higher at the end of 2014,
76.3% and 87.7% respectively compared to
73.0% and 82.8% respectively at the end of
2013. Even though there was pressure on loan
interest rates, the Company’s net interest yield on
earning assets improved. The increase in net loan
volume of $117 million together with a very small
increase in deposits resulted in an actual decrease
in the lower yielding investment portfolio. The
change in asset mix contributed to the improved
net interest yield on earning assets of 3.96%
compared to 3.86% for 2013.
GROWTH
The Company’s total assets at the end of 2014
were $2.173 billion compared to $2.111 billion
at the end of 2013. The 2.9% asset growth was
driven by loan growth as deposits grew only
1.6% from $1.86 billion at the end of 2013 to
$1.89 billion at the end of 2014. Loans grew
7.75% compared to 5.4% in commercial banks
nationwide.
Following a trend of several years, our depositors
chose more liquid deposit products and
certificates of deposits dropped from 31% to
27% of total deposits. Continued low interest
rates influenced deposit customers’ decision to
avoid certificates of deposit as the Company
managed deposit growth in a very competitive
lending environment.
In keeping with the Company’s vision of growth,
construction is nearing completion on the new
bank building in Jamestown, North Dakota. A
small staff operating out of temporary offices has
been servicing the community during construction
of the new building. The area is experiencing
a growth spurt and the Jamestown staff is
participating by actively accepting deposits and
making loans. It is expected that the new building
will be ready for occupancy around June 1, 2015.
STRENGTH
Solid earnings and moderate growth during 2014
further strengthened the Company’s capital. On
a consolidated basis, the Company’s tier one
leverage ratio improved to 10.19% from 9.88%
at the end of 2013. Tier 1 risk based capital and
total risk based capital ratios which react to loan
growth remain nearly unchanged at 11.90% and
13.15% respectively compared to 12.04% and
13.29% respectively at the end of 2013.
Loan quality was maintained as the portfolio
grew. In recent years, the Company has
made substantial investments in personnel
and technology to enhance oversight and
maintenance of the loan portfolio. At the end
of 2014 non-performing loans represented only
.76% of total loans compared to 1.06% at the
end of 2013. The Company’s allowance for loan
and lease losses at the end of 2014 was $24.06
million compared to $21.27 million at the end
of 2013.
SHAREHOLDER VALUE
The Company’s Boards of Directors and
management review and approve the Company’s
Vision Statement annually. The following is an
excerpt from the current Vison Statement:
By December 31, 2016, Dacotah Banks, Inc.
will be a well-capitalized, profitably growing
private bank offering banking, mortgage,
insurance and trust services; with $2.5 billion in
assets; and with the organization and structure
in place to assure proper risk management,
effective management succession and oversight
of a banking and financial services company
with $3 billion in assets.
This portion of the Vision Statement clearly
conveys the belief that the best way to provide
continued shareholder value is through growth
and through preparation for growth.
To succeed today, a bank’s growth must include
more than year-over-year growth in assets,
deposits and loans. Growth must also include
the added services and added management tools
needed to compete in a consolidating industry.
Over time the Company’s Boards of Directors
and management have been willing to make
the investment in technology and personnel
that often times do not add value immediately,
but that will in the future. In recent years the
Company has made significant investments in risk
management technology and risk management
specialists, and as a result we believe we are
less exposed to future fraud losses and losses
due to asset quality issues. Large investments
in data warehouse technology and personnel
are beginning to provide managers with tools
to better manage products and services for an
increasingly diverse customer base. A document
imaging project that began several years ago has
been successful and has resulted in a company
that is increasingly paperless.
Over time, the Company has originated
mortgage loans and then sold them into the
secondary market along with the rights to
service them. Recently the Company has made
investments in technology and personnel that
will allow us to retain the servicing rights. At
this point and into the near future, the servicing
activity will operate at a loss; however, over
a longer period of time it is expected to be
profitable and it will allow us to maintain better
contact with our mortgage borrowers.
The above are examples of preparation for growth
and illustrate a willingness to spend now for future
benefits that will keep us competitive. We believe
we are well-positioned to grow and compete.
Dividends paid during 2014 totaled $3.50 per
share, the highest in the history of the Company.
Payment of cash dividends in 2014 marks the
26th consecutive year of cash dividend payments.
The book value per share of the Company’s stock
increased 7.1% from $188.71 on December 31,
2013 to $202.05 on December 31, 2014.
COMMENTS ON 2014
The Company’s loan officers and market
presidents contributed significantly to the
Company’s success in loan growth during the
year. At year end, gross loans had grown 7.75%
over year end 2013. During the same period, all
commercial banks in the nation experienced
loan growth of just 5.4%. Conservative deposit
pricing resulted in slower than normal deposit
growth for the Company. Deposits increased just
1.6% over year end 2013 while US commercial
banks collectively experienced deposit growth of
6.2%. The strong loan growth and conservative
approach to deposit pricing contributed to a net
interest yield on earning assets of 3.96% which
compares very favorably with the 3.09% average
for all commercial banks.
The Company’s Boards of Directors and
management routinely engage in succession
planning at all levels of the Company, including
Board Member succession. During 2013,
following a study of the expertise and experience
of current Board Members and the needs of
Board Committees, the Company’s Board of
Directors decided to add at least one member
to each of the Boards of Directors during 2014
or 2015. Following a search, Paula Kay Carlson,
Aberdeen, South Dakota and Elizabeth Lewis,
Sioux Falls South Dakota were added to the
Dacotah Bank Board of Directors and the Dacotah
Banks, Inc. Board of Directors, respectively.
Ms. Carlson is the chief loan program and services
officer for Great Lakes Educational Loan Services,
Inc., an affiliate of Great Lakes Higher Education
Corporation. The Company, headquartered in
Madison, Wisconsin has an office in Aberdeen
and other operating centers around the country.
With over 1,800 employees, 140 of which are
in Aberdeen, Great Lakes provides student loan
services throughout out the nation. Carlson
is also president of South Dakota Education
Access Foundation, a non-profit foundation that
provides funding to all South Dakota universities
and colleges to expand access to postsecondary
education. Paula’s extensive financial services
background will serve the Company well.
Ms. Lewis is a lawyer with the law firm of
Woods, Fuller, Schultz and Smith P.C. Lewis,
originally from Britton, South Dakota, received
her bachelor’s degree in political science from
Northern State University and her law degree
from the University of South Dakota. Her practice
is concentrated in the areas of real estate, secured
transactions (UCC), banking and commercial law
and environmental law. Lewis represents owners,
developers, landlords and tenants in commercial
and residential transactions. She is also involved
with land use and developmental issues. Elizabeth
brings to the Company a strong business law
background and a deep understanding of
banking regulation.
After 22 years of service on the Dacotah Banks,
Inc. Board of Directors, Watertown, South
Dakota attorney J. Douglas Austin announced
his retirement effective at the end of 2014. We
wish Doug well and thank him for his many
years of dedicated service.
The Dacotah Banks, Inc. Board of Directors also
dealt with management succession as it planned
for changes to the management team that took
place at year end. On December 31, 2014 after
nearly forty-eight years of service, Mr. Rodney
Fouberg retired as Chairman of Dacotah Banks,
Inc. and Dacotah Bank. At the pleasure of the
shareholders Mr. Fouberg plans to remain a director
of the Company. On January 1, 2015, Mr. Richard
Westra assumed the role of Chairman of Dacotah
Banks, Inc. and Dacotah Bank and Mr. Joe Senger
was appointed by the Dacotah Banks Inc. Board of
Directors to replace Mr. Westra as president and
chief executive officer of the Company.
Mr. Senger has spent 38 years in the banking and
financial services industry and is highly qualified to
lead the Company’s day-to-day activities. He has
been with the Company for 12 years following
experience as a manager with Farm Credit Services
and as a market regional president with US Bank,
both in Aberdeen, South Dakota. Mr. Senger now
also serves as a member of both the Dacotah
Banks, Inc. and Dacotah Bank Boards of Directors.
Our 2013 letter announced that three new
communities had been added to the Company’s
foot print. The purchase of Donnelly Bancshares
and its affiliate, United Farmers and Merchants
State Bank provided a presence in Morris and
Chokio, Minnesota and an application had
been approved to establish a full service bank
in Jamestown, North Dakota. The new locations
in Minnesota have been assimilated and the
staffs are focused on growing our share in those
markets. Jamestown staff has been in business in
temporary quarters for several months and a new
building is nearing completion.
LOOKING AHEAD
As we look ahead, we believe we need to be
prepared for rising interest rates, continuing
poor grain prices and low oil prices. For over
seven years, the Prime Rate has been 3.25% and
the target fed funds rate has ranged from zero
to .25%. We have performed well during the
prolonged period of low rates. Should rates go up
as predicted, we believe we are well-positioned
and will probably benefit from the rate increase.
Prolonged low farm commodity prices are a
concern. Following a few years of high yields
and historically high grain prices, the last two
years have seen good yields, but dramatically
lower prices. Crop input costs and cash rents
remain high which causes concern as the lower
commodity prices persist. Farm balance sheets in
general remain strong throughout the Company’s
foot print and operators for the most part have
and will work their way through the slump in
income which we believe could last another year
or two.
The Company’s markets in the oil producing
region of North Dakota have provided a nice
source of loans for the past several years. As
the price of oil has dropped, requests for new
business loans have slowed; however, loan
demand continues for housing and investment in
retail services. The Company has made no loans
directly to the exploration and drilling industry,
but rather has concentrated on service companies
and multi-family housing, both of which will be
needed in the long-term.
We will continue to find ways to grow the
Company and increase shareholder value. As
has been the case for several years, our organic
growth will largely depend on loan growth.
Overall, loans are budgeted to increase 3.47%
from the end of 2014 to the end of 2015.
Competition for loans is expected to remain very
strong, the result of which will be continued
pressure to reduce interest rates on loans.
Consolidation of the industry continues and
during 2014 the Company was given the
opportunity to consider the purchase of a
few small banks. None of the offered banks
were a good fit; however, we will continue
to assess opportunities and will remain open
to pursuing opportunities that will enhance
value. If appropriate acquisition opportunities
do not materialize, we have ample opportunity
to grow organically. A number of our existing
communities are growing and provide good
opportunity for organic growth, especially some
of the markets entered over the past few years.
We operate in wonderful communities and we
do our best to assist in the well-being of those
places and the people that live in and around
them. This report features examples of the many
efforts made by the Company and its employees
to enhance the economies and the quality of life
in our communities.
In closing, we again thank J. Douglas Austin
for his 22 years of outstanding service as a
Board Member and we extend a welcome to
new Board Members Elizabeth Lewis and Paula
Kay Carlson. We also thank the Company’s
shareholders for their confidence and the
Company’s Boards of Directors for their guidance
and oversight. We also thank and recognize
a great team of professionals that operate
the Company day-by-day, creating value for
our shareholders and opportunities for the
communities in which we do business.
Messrs. Westra and Senger, on behalf of the
Company’s shareholders and employees, thank
Mr. Fouberg for nearly a half century of service
to our customers, communities, employees and
shareholders. In retirement, you remain ever
present and still focused on and engaged in the
life and success of the Company and exploring
new relationships and new opportunities.
Joseph A. Senger
President and CEO
Richard L. Westra
Chairman of the Board
Rodney W. Fouberg
Chairman of the Board
1984-2014
DACOTAH BANK ANNUAL REPORT 2014 | 4
FINANCIAL STATEMENTS
Financial Highlights
(Dollars in Thousands, Except Per Share Data)
performance 2014
Net interest income............................................. $ 76,880
Provision for loan losses....................................... 4,050
Non-interest income .......................................... 16,859
Non-interest expense.......................................... 60,571
Net income......................................................... 18,591
Per share.......................................................... 16.57
Cash dividends declared....................................... 3,930
Per share............................................................. 3.50
Net interest margin............................................. 3.96%
Return on average assets...................................... 0.89
Return on average equity.................................... 8.46 at december 31ST
2014
2013
73,386
5,250
16,679
56,707
18,382
16.43
3,580
3.20
3.86
0.90
8.93
2013
Total assets.......................................................... $ 2,172,801 2,110,822
Investment securities and deposits with banks....... 301,475 343,613
Loans, net............................................................ 1,657,916 1,540,424
Deposits.............................................................. 1,890,339 1,860,232
Borrowings......................................................... 37,000
20,000
Stockholders’ equity............................................ 224,073 211,736
Book value per share........................................... 202.05
188.71
Shares of common stock outstanding................... 1,109
1,122
Tier I leverage ratio............................................. 10.19%
9.88
Total risk-based capital........................................ 13.15
13.29
% Change
4.8%
(22.9)
1.1
6.8
1.1
0.9
9.8
9.4
2.6
(1.1)
(5.3)
% Change
2.9%
(12.3)
7.6
1.6
85.0
5.8
7.1
(1.2)
3.1
(1.1)
selected consolidated financial condition data
December 31,
20142013201220112010
(Dollars in Thousands)
Total assets.................................................................. $ 2,172,801 2,110,822 2,065,053 1,905,762 1,805,538
Loans, net .................................................................. 1,657,9161,540,4241,474,3301,365,8301,344,971
Federal funds sold....................................................... ----
10,000
Investment securities................................................... 294,582332,519357,818325,556280,587
Deposits...................................................................... 1,890,3391,860,2321,825,5601,679,4201,587,636
Borrowings................................................................. 37,00020,00021,00525,00930,428
Stockholders’ equity.................................................... 224,073211,736199,564184,082167,725
selected consolidated oper ation data
Years Ended December 31,
20142013201220112010
(Dollars in Thousands, Except Per Share Data)
Interest income............................................................... Interest expense.............................................................. Net interest income........................................................ Provision for loan losses.................................................. Net interest income after provision for loan losses........... Non-interest income:
Income from fiduciary activities................................. Service charges on deposit accounts........................... Insurance commissions............................................... Fees on sale of residential mortgages........................... Other........................................................................ Total non-interest income......................................... Non-interest expense:
Salaries and employee benefits.................................... Occupancy, furniture and equipment, net................... Other........................................................................ Total non-interest expense........................................ Income before income taxes........................................... Income tax expense........................................................ Net income.................................................................... Per share of common stock:
Net income............................................................... Cash dividends declared ............................................ $ 84,102
82,993
84,802
86,656
88,585
7,222 9,60716,05520,00224,659
76,88073,38668,74766,65463,926
4,0505,2506,7505,3006,100
72,83068,13661,99761,35457,826
1,7931,7781,202 912 765
3,7523,8493,9564,2594,166
4,383
4,1694,0683,8893,870
9601,6602,6341,8972,256
5,9715,2234,1094,1523,379
16,85916,67915,96915,10914,436
38,42435,31631,69230,77629,624
6,8046,6646,1435,8615,973
15,34314,72712,74814,30812,910
60,57156,70750,58350,94548,507
29,11828,10827,38325,51823,755
10,5279,7269,5298,9728,690
18,591
18,382
17,854
16,546
15,065
$16.5716.4316.0314.8713.54
$3.503.203.002.602.00
selected financial r atios
At or for the years ended December 31,
2014 2013 201220112010
performance r atios
Return on average assets......................................... 0.89%
0.900.930.910.88
Return on average stockholders’ equity................... 8.46
8.939.319.379.23
Net interest margin................................................. 3.963.863.843.924.02
Non-interest income to average assets..................... 0.810.810.830.830.84
Non-interest expense to average assets..................... 2.892.762.642.802.83
Efficiency ratio....................................................... 64.6262.9559.7162.3161.90
asset quality r atios
Nonperforming loans to total loans......................... 0.76%
1.061.611.74 1.29
Allowance for loan losses to total loans.................... 1.431.361.271.321.18
Allowance for loan losses to net charge-offs............. 19.07x
7.41
3.13 5.76
12.75
capital r atios
Tier I leverage ratio................................................ 10.19%
9.889.619.178.89
Tier I risk-based capital........................................... 11.9012.0411.7111.9111.12
Total risk-based capital............................................ 13.1513.2912.8913.1612.24
Dacotah Bank Scholars
T
HREE FACULTY MEMBERS from Northern State
University and South Dakota State University
were named Dacotah Bank Scholars in 2014.
Dacotah Bank provides financial support for each
university to share banking and agricultural programs
to increase the number of agricultural bankers. NSU
shares curriculum and resources in banking and financial
services with SDSU. And SDSU, in turn, shares its
agricultural economics and agribusiness programs with
NSU students.
Dacotah Bank has made a $240,000 renewable
commitment for three years to support the collaboration
between the universities. The announcement was made
during a ceremony on the NSU campus as part of an
October South Dakota Board of Regents meeting.
“Dacotah Bank is pleased to establish the Dacotah
Bank Scholars in banking and financial services, and in
agricultural economics and agricultural business,” said
Richard Westra, Dacotah Bank chairman of the board.
“We look forward to the future growth and development
of this collaborative effort and the positive impact it will
have on the students and both universities.”
Rodney Fouberg, Dacotah Bank board member and
former chairman of the board, said the collaboration is
what attracted the bank to the program. “It makes sense
to use resources available at NSU and SDSU to enhance
the educational experience. We expect that students
studying banking, ag economics and agribusiness will
be even better prepared when they begin their careers.
When students broaden their education, Dacotah Bank
benefits,” Fouberg said.
Nicole Klein is the SDSU Dacotah Bank Scholar in
agribusiness and agricultural economics. Todd Muehler
and Robert Preston are the NSU Dacotah Bank
Scholars in banking and financial services. Klein
is a professor of agricultural marketing and
farm and ranch management. Muehler and
Preston are assistant professors of banking
and financial services.
Muehler said he’s honored to be part of this joint venture.
“It took a great deal of vision to see this private-public
partnership. I would like to see more of this kind of
collaboration,” he said. Muehler, who grew up in rural
North Dakota, joined NSU in 2013. He holds a bachelor
of business administration degree and a law degree from
the University of North Dakota. He was admitted to the
bar in North Dakota and Minnesota. Muehler was a law
clerk for the United States District Court in Bismarck,
N.D., and then began his 20-year career in the financial
services industry, with an emphasis in trust management.
“It’s a wonderful opportunity to enhance our ability to
collaborate on a needed resource for the community,”
said Preston, Dacotah Bank Scholar from NSU. He
has a B.A. in economics and master of business
administration from the University of Minnesota, as
well as a law degree from William Mitchell College of
Law in St. Paul, Minn. Preston began teaching at NSU
in 2012. In his career, he has consulted for more than
150 banks and financial institutions in a wide variety of
legal, operational, and managerial capacities. He has
served as a bank examiner, internal auditor, CEO, CFO,
and COO of several financial organizations.
SDSU President David Chicoine said the collaboration
will build a better South Dakota. “Working directly with
the stakeholders, such as Dacotah Bank that will be
employing our graduates, we were able to put the right
people, places, and partners together,” Chicoine said.
“The collaboration makes it possible to translate and
transfer knowledge where it’s needed most.” Referring
to the two schools’ mascots, Chicoine used levity to
summarize the new program, “We want to show that
Jackrabbits and Wolves can play well together,” he said.
The Dacotah Bank Scholars
are responsible for leading the
collaboration and its promotion,
student recruitment and advising,
engagement with industry, and
course and curricula development. This
collaboration will allow students to
benefit from the curriculum at both
institutions. The new offerings will add
value to graduates, better preparing
them as they enter the workforce.
Farm Rescue
F
ARM RESCUE BEGAN IN 2005 as a one-man
operation, guided by a dream and a strong
sense of purpose. Bill Gross works as an airline
pilot, but was looking for a way to give back
to the region. He knew that if producers can’t harvest
their crops due to health issues or natural disasters,
their income is essentially wiped out for the year. The
continuation of viable farms is the organization’s focus
-- viable operations that comprise the backbone and
strength of rural communities and businesses.
The organization has helped over 300
farm families since their first season in
2006. In 2014, they helped 50 families
from North Dakota, South Dakota, Iowa,
Minnesota and Montana.
Dacotah Bank, one of America’s largest ag lenders,
has been a major sponsor of Farm Rescue since 2007.
“Supporting Farm Rescue is the right thing to do,” said
Dawn Serfoss, Dacotah Bank’s public relations specialist,
“Our commitment to giving back always has been part of
our focus. Dacotah Bank was created over 60 years ago
to serve rural communities.”
There are many medical situations such as broken bones,
surgeries and cancer, as well as farm accidents, and
natural disasters that keep farmers from their fields. But
the help that Farm Rescue provides is very specific. The
organization works on the ground helping only with
planting, harvesting and maintenance. “As a result of
the assistance provided by Farm Rescue, farm families
can survive potentially devastating circumstances. This
enables them to keep the family business intact, which
in turn helps the economic well-being of communities.
The tangible and intangible benefits of Farm Rescue
assistance are far-reaching in terms of communities and
families,” said Gross.
In 2014, the Gary and Judy Pesall family was wondering
how they would manage their crops after Gary had heart
surgery. The Webster couple contacted Farm Rescue. The
crew of workers from Farm Rescue brought their own
equipment and helped put the crops in the ground.
Gross said the changing number of farms has impacted
how people assist each other in times of hardship.
“While neighbors sometimes help one another during
a time of crisis, the reality today is that fewer farms
and neighbors exist than a generation ago. Farms have
also increased in acreage size, requiring a greater time
commitment from farmers to plant and harvest their
own crop, much less a neighbor’s crop. The assistance
Farm Rescue provides allows the family to focus on
recovery. Neighbors are also free to focus on their own
planting, haying or harvesting to ensure their livelihood
is maintained. We help relieve the burden on the family,
neighbors and surrounding community.”
Gross continues to work as a Boeing 747 Captain
for UPS Airlines, flying worldwide. He receives no
compensation from Farm Rescue and acts as a volunteer
on the board of directors and as the Chairman and
President of the organization.
Junior Achievement
DACOTAH BANK JUNIOR ACHIEVEMENT VOLUNTEERS
Chad Bergan
Shirley Stein
Amanda Grife
Bob Compton
Barb Ulmer
Donna Larson
Kristen Fauth
VaLynda Weller
Matthew Smith
Rod Fouberg
Andrew Jallo
Kip Hanson
Alex Grieben
Lauri Hopwood
Tia Hutt
Jessica Hagen
B.J. Wiest
Kristina McVicker
Nancy Kappes
Brandy Small
Jennifer Pendley
Pam Martyn
Dave Bangasser
Whitney Meyer
Durran Schmidt
Alicyn Grenz
J
UNIOR ACHIEVEMENT PROVIDES CLASSROOM
INSTRUCTION on aspects of work and money. It
is committed to the principles of entrepreneurship
and free-market economics. Volunteers teach
young children how they can impact the world around
them as individuals, workers and consumers. To older
students, JA teaches economic and workforce issues.
Rodney Fouberg, volunteer and outgoing Dacotah Banks,
Inc. chairman of the board, said the program enhances
the experience of students particularly in the areas of
community and personal finance. “We are committed
people behind a movement that seeks to educate and
inspire young people to succeed in the global economy,”
Fouberg said.
Fouberg has been involved with JA since it began in
Aberdeen. “I am a board member of JA South Dakota
and have been involved since I was a volunteer in one
of the pilot classrooms when Aberdeen was being
considered as a JA community.” he said.
At JA South Dakota, funding is secured
through businesses, individuals,
foundations and special events. An
example of one of those special events is
the annual Bowl-A-Thon. Dacotah Bank is
a lane sponsor for area JA Bowl-a-thons.
The JA organization is almost 100 years old. It was
founded nationally in 1919 and began its first chapter in
South Dakota in 1968. The organization has grown from
1,663 South Dakota JA students in 1990 to serving over
48,900 today. Over 2,000 South Dakota adults volunteer
in state classrooms. Dacotah Bank is this year’s Lead
Sponsor for the Sioux Falls area, helping serve almost
23,000 students last year. Dacotah Bank, as a whole,
gave $17,400 in 2014 through local and corporate
giving, as well as individual employee donations.
JA volunteers receive the materials and training to
fully engage students through hands-on activities.
Programs teach students about workforce readiness,
entrepreneurship and financial literacy. JA programs are
provided at no cost to schools and in cooperation with
the school districts.
South Dakota Public Broadcasting
S
OUTH DAKOTA PUBLIC BROADCASTING
IS A FAMILY OF MEDIA that produces and
broadcasts commercial-free programs and
community outreach projects. With stations,
transmitters, and the Internet, the entire state is served
with public radio and television. Dacotah Bank has been
a major underwriter of SDPB for many years.
The television network provides instructional
programming for use in schools and public television for
all of South Dakota on a seven day a week schedule, as
well as cultural programs.
SDPB broadcasts 65 hours of educational
children’s programming every week with
more than 150 hours yearly of general
local programming.
The stations and SDPB’s website, SDPB.org, have full
coverage of the South Dakota State Legislature and
all South Dakota High School Activities Association
sanctioned tournaments.
“High school athletics and fine arts in our local schools
are critical to the vitality of a student body’s health
and community engagement with their educators and
administrators,” said Paul McDonald, Dacotah Bank’s
vice president of marketing.
“Our financial support of SDPB’s broadcasting of young
people performing music and competing on teams
at the state’s highest level is rewarding in many ways.
Communities and their alumni rally around hometown
spirit and pride. The whole state celebrates the talent and
future of these bright, young adults,” McDonald said.
SDPB Education and Outreach provides resources for
teachers, literacy workshops for parents and childcare providers through the Ready to Learn program,
continuing education courses for college students and
adults, and local educational television programs, as well
as conducting other outreach projects for all citizens of
South Dakota.
The fundraising complement to SDPB is Friends of
South Dakota Public Broadcasting. It is a 501 (c)(3)
organization dedicated to supporting SDPB's mission
of lifelong learning by using direct mail, fundraising
drives, telemarketing, underwriting and grants to pay for
programming and programming services for the network.
“South Dakota Public Broadcasting appreciates our
partnership with Dacotah Bank, which makes it possible
for SDPB to cover our high school student athletes
and artists who compete in 32 different SDHSAA
Championships, everything from football, basketball and
volleyball to all-state band, chorus, and debate,” said
Ryan Howlett, CEO of Friends of SDPB. “Each year nearly
a million parents, relatives and loved ones watch on
television and online from all 50 states and 14 countries.
Without Dacotah Bank, that wouldn’t happen.”
The state network is affiliated with the Public Broadcasting
System (PBS), and other regional program suppliers. KUSD
TV's studio production center in Vermillion is utilized for
production of programs about South Dakota, student
training, production of Instructional Television, and for
satellite delivered teleconferences.
Educational television as we know it today was helped
into creation by National Educational Television. NET was
an American educational broadcast television network
that was owned by the Ford Foundation and later
co-owned by the Corporation for Public Broadcasting.
Operating from May 16, 1954, to October 4, 1970, it
was replaced on October 5, 1970, by its direct successor,
the Public Broadcasting Service.
In the history of public television in South Dakota,
KUSD TV went on the air in 1961. It was a lowpowered station and the first educational
television station in the state. It is now
the flagship station for South Dakota's
public television network. In 1967 the
State Legislature provided matching funds for
a federal grant which enabled a transmitter
relocation and a major power increase for the
station. By 1978, the entire state had coverage
from the television network.
Dacotah Bank Tree Donations
L
ANDSCAPE TREES CAN GIVE A HOUSE THE
WOW FACTOR or they can sap its curb appeal.
Home owners are advised to take care when
selecting tree species and varieties.
One rule of thumb is that the trees that reach maturity
the earliest are often the most weak.
“A fast-growing mature tree can turn into a liability for
the next homeowner, even if its life span hasn’t elapsed,”
said Aaron Kiesz, Aberdeen City Forester.
Some of the most beautiful trees can cause upheavals
in sidewalks, exploit foundation or sewer pipe cracks,
and drop messy fruits on the lawn. It’s important to
investigate a tree’s life span as well as growth shape,
maximum height and root system. It may not help to
look at what the neighbors have because the most
common trees in household yards can also be some of
the worst offenders in lowering property values.
The Silver Maple has weak, brittle wood that easily breaks
during storms. Its shallow root system invades cracked
sewage pipes, and is notorious for cracking and heaving
driveways and walkways. Poplars can send up hundreds
of tiny trees that grow off its extensive root system.
Homeowners with American Elm trees may remember
how its namesake disease took down many trees locally.
“We plant a much wider variety of tree species to try
and avoid a similar situation. In a monoculture, like we
had with American Elm, it was just primed for disease.”
Kiesz said.
The city of Aberdeen uses care when choosing trees
to plant. Because owners of new homes are required
to purchase boulevard trees at the time of obtaining
a building permit, many of the older neighborhoods
receive new tree plantings from the city. Some newer
plantings can be seen on South First and Second Streets.
The city beautification project is underwritten in part by
Dacotah Bank.
Dacotah Bank chairman of the board Richard Westra
said the commitment to the tree program helps promote
cleaner air, reduce environmental stress, higher property
values, and a more beautiful community in which to live.
“Elm disease has taken a heavy toll on our boulevard
trees here in Aberdeen over the past several years. In
the near future we may take heavy losses with our
high population of Green Ash. Dacotah Bank remains
committed to issues that have a positive impact on our
quality of life here in Aberdeen and helping the City of
Aberdeen restore these trees supports that continued
commitment,” Westra said.
The ongoing efforts have earned
Aberdeen the Tree City USA designation
for over 30 years by the National Arbor
Day Foundation.
Kiesz said some of his favorite tree species include
Hackberry, American Linden, and Bur Oak. American
Linden, which is also known as lime or basswood, was
considered sacred in the Dark Ages. It has an oval shape
with light gray, smooth bark, and grows between 50
and 70 feet tall. Linden leaves have a silver backing. The
tree becomes fragrant in late June when its small, light
yellow flowers blossom.
Another good choice is Honey Locust, but select the
thorn-less and pod-less variety. The tree is tough and
adaptable, as well as tolerant of pollution, salt and
drought.
The city is able to meet its $25,000 budget for new trees
with the annual help of Dacotah Bank.
Always interested in community beautification
and upkeep, Dacotah Bank invests in community
infrastructure. Dacotah Bank has been providing funds
for neighborhood trees since 2006.
Valley City Wellness Center
I
N 2014, THE VALLEY CITY HEALTH, WELLNESS
AND PHYSICAL EDUCATION CENTER moved to
the top of the list as a significant investment critical
to the long-term viability of Valley City and Barnes
County. The center is a joint venture between Valley City
State University, Valley City Parks and Recreation and the
Sheyenne Valley Community Foundation. The $17 million
project will benefit the college community as well as
Valley City and surrounding communities. Dacotah Bank
pledged $100,000 to the project in 2014.
“We are at a unique time when Valley City-Barnes
County is growing and thriving,” said market president
Dick Gulmon. “We are seeing increased activity in
our business community. Building a community-based
Wellness Center provides an innovative, accessible
program to serve the entire region. Individuals and
businesses are investing in our community and we
should too. Never before have I experienced such
excitement over a project for our community and future
effects on quality of life and quality of place. I am so
proud of Dacotah Bank and to work for a company that
is committed to the success, needs and viability of our
communities. Dacotah Bank is a leader in that way in
every market it serves.”
The city voters approved the project at the polls in
November 2014. Funding will come from a combination
of grants, private donations, student activity fees, a
portion of a 1/2 percent sales tax already in place, and
a loan from Dacotah Bank. President of the Sheyenne
Valley Community Foundation George Gaukler said,
“Without Dacotah Bank’s support, the Wellness Center
would not be possible.”
“Without question, we need a wellness center in
Valley City,” said Larry Robinson, Executive Director of
Advancement for the VCSU Foundation. “With so much
emphasis on wellness and heathy living, a center providing
a wide array of services has become a central part of
communities across the country. From the beginning,
Valley City State University has been in complete
agreement that such a facility must be a community-based
facility, providing services to all constituencies.”
The Wellness Center is important to private
business to recruit and retain talent.
The Parks and Recreation department will relocate and
run all programs at the center. This will include the
present Fitness Center, making it handicapped accessible.
VCSU will use the space for several of its programs
including physical education teaching, athletic training
and exercise science programs.
Mercy Hospital may use the facility for various
programs including physical therapy, cardiac
rehabilitation and ongoing wellness programs for
chronic illnesses like diabetes.
The 62,000 square-foot center includes multi-purpose
gym, swimming pool with 4 lap lanes and zero depth
entry, hot tub, drop-in child watch and indoor play areas.
There will also be 9,600 square feet of dedicated cardio
space as well as weight training, running/walking track,
classrooms, health services, social/common areas and
locker rooms for men, women and families.
The community considers the Wellness Center a
“game changer.” It is a tremendous investment in the
community, and it will serve Valley City-Barnes County
residents and VCSU students for years to come.
Prairie Family Business Association
T
HE PRAIRIE FAMILY BUSINESS ASSOCIATION
was founded in 1993 as South Dakota Family
Business Initiative with the goal of enhancing
the long-term survival and success of family
businesses. The association works to involve and
educate their members, as well as building alliances with
complementary organizations. Educational programs
including webinars, conferences, peer groups, retreats
and tours are provided to support best business practices
for family businesses. Members enjoy the unique
comradery of peers which allows them to exchange
knowledge and experience.
“It takes hard work, persistence and determination
for a family business to succeed. Families need to be
innovative and face challenges that stem from both
personal and professional situations created by the
overlapping of the family system and the business
system,” said Beth Adamson, director of the association.
“Despite these obstacles, family
businesses are the backbone of our
Midwestern economic engine. They
provide the majority of employment
opportunities, revenue generation and
economic growth.”
Adamson has been the director since 2001. For the
past 14 years, she has worked with business-owning
families and professional advisors in the areas of family
communication, business development, and family
ownership. She received her certificate in Family Business
Advising from the Family Firm Institute in 2004. Adamson
has eighteen years of experience in sales, management
and management training with the United States
Chamber of Commerce.
The keynote speaker at a recent PFBA conference, Dave
Austad, owner and president of Austad’s Golf in Sioux
Falls, SD, presented his view of family business as the
second generation leader of Austad’s Golf. He spoke
about watching his father build a very successful business
from the kitchen table, struggling with sibling roles in
the business and shared ownership. As Austad prepares
the third generation for leadership roles, he stressed the
importance of open and clear communication with all
family members about leadership and management, the
importance of educating family members on the role of
ownership, and the importance of keeping employees
informed of your transition plans.
Dacotah Bank has provided financial support to PFBA for
over a decade and continues to be a Generation sponsor.
“Membership and participation in the Prairie Family
Business Association is a ‘must’ for any family business to
be successful in working together for many generations
to come,” said Pam Lewis, employee benefits sales
manager at Dacotah Insurance. “Prairie Family Business
Association is very important to Dacotah Bank since we
have served thousands of family owned businesses and
farms for generations with financing, insurance and
business banking programs.”
Governor’s Giant Vision
T
HE GOVERNOR’S GIANT VISION AWARDS were
created to nurture entrepreneurs. Many people
have great ideas but don’t know how to bring
them to fruition. The Governor’s Giant Vision
is a competition that helps people refine their ideas,
create business plans and practice pitching their idea to
investors. The project can also net some needed capital
for startup costs. Businesses can win up to $20,000 and
students up to $5,000.
A panel of business experts reviews all entries and selects
up to ten qualifiers to attend the final competition in
Sioux Falls. Qualifiers give presentations and discuss
their ideas with seasoned business and financial
experts. Selection of winners is based on the viability
of the business proposal, including considerations of
potential competition, likelihood of success, market size
and profitability. The judges give heavier weighting to
business proposals that have the potential to advance
employment or the economic base in South Dakota.
The contest is a program of the South
Dakota Chamber of Commerce and
Industry and the Governor’s Office
of Economic Development. It gives
entrepreneurs the opportunity to
develop ideas, write a business plan
and make a formal presentation. The
Governor’s Giant Vision celebrates its
11th year in 2015.
Those entering the Governor’s Giant Vision Business
Competition submit a written business plan that
outlines the business idea, potential markets, production
requirements and other standard items. All South
Dakotans with ideas for their own business are
encouraged to apply each year. The competition is
open to entrepreneurs with new ideas that they believe
would benefit from the review and analysis process of
the competition. Existing companies may enter, but only
those that have been in business three years or less and
have annual sales revenues under $300,000.
Dacotah Bank contributes annually to the competition.
The broad goal of the program is to encourage people
to explore being a business owner and to create a viable
future while also expanding South Dakota’s economy.
While the prize money will help the finalists, the
contacts and rigor required to be a qualifier will prepare
each entrepreneur to advance their business idea. Ten
qualifiers are selected each year.
“As a sponsor of the Governor’s Giant Vision Business
Competition, Dacotah Bank is providing an opportunity
for South Dakota small business owners to share their
ideas, dreams and visions with a group of well-rounded
business experts from across the state,” said Dave
Bangasser, southeastern regional president for Dacotah
Bank. “As a past judge for the competition, it has been
rewarding to see the passion that each participant
has for their individual business, and their desire to
see their business succeed. I have a renewed respect
and appreciation for the dedication of entrepreneurs.
Small business is the lifeblood of our economy, and
competitions such as the Giant Vision are a great way
of supporting their efforts. Dacotah Bank is proud to
be a partner with such a meaningful program.”
L to R: David Owen,
President, South Dakota
Chamber of Commerce
and Industry
2014 $20,000 Business
Competition Winner
Craig Arnold, Nanofiber
Separations, Rapid City
Governor Dennis Daugaard
South Dakota Veterans Home
T
HE SOUTH DAKOTA STATE VETERANS HOME
has been providing medical care to veterans for
well over 100 years. The South Dakota Veterans
Home began life as the Dakota Soldiers’ Home. It
was created by the Territorial Legislature in 1889 and
built on 193 acres in the southern Black Hills region, near
Hot Springs.
The new home was secured with state and federal funds.
J. Scull Construction is constructing the new home and
expectations are for it to be completed in 2015. The new
building is a 133,000 square feet facility with 100 beds
(52 skilled nursing beds on the main level and 48 nonskilled or residential living beds on the upper level). The
living spaces will be broken into neighborhoods housed
in eight wings.
In 1998, the State dedicated the South Dakota Veterans
Home to Medal of Honor recipient Michael J. Fitzmaurice.
The home seeks to provide a quality
Fitzmaurice received the Medal of Honor for conspicuous
gallantry and intrepidity of action at the risk of his life
living environment, along with quality
above and beyond the call of duty in Vietnam in 1971. A
medical support, in an independent
Michael J. Fitzmaurice State Veterans Home Endowment
living and long-term care setting for
Fund has been created to build a permanent endowment
eligible South Dakota Veterans and their
from which investment income will be used for activities,
spouses, widows, or widowers.
programs and equipment to enhance the quality of life
for the residents of the home. Dacotah Bank, was one of
first contributors, and has pledged $20,000 over three
“Dacotah Bank is pleased to be able to help with funding
years to the fund. The home’s goal is $3 million dollars as of equipment for the new Veterans Home,” said Rick
a permanent fund.
Rylance, western regional president for Dacotah Bank.
“The new facility is going to be a great addition in helping
A new building for housing veterans is currently under
the veterans with a comfortable environment in which to
construction. The home seeks to “preserve the old and
live. South Dakota takes care of its veterans and Dacotah
add conveniences of the new, making a true home
Bank is happy to be a small part of that effort.”
environment,” according to the organization’s literature.
4-H Character Counts
S
OUTH DAKOTA’S 4-H CHARACTER COUNTS
PROGRAM is a statewide program to support
and partner with communities to teach youth
and adults character building traits.
The program is built on the consensus that no matter
how diverse opinions, personalities and backgrounds are,
there are ethical principles that clearly define humans at
their best. The six character traits the program teaches
are trustworthiness, respect, responsibility, fairness,
caring and citizenship. These principles are important
because they are the foundation of the participation
expectations for youth and adults involved in 4-H.
The Character Counts program was developed by the
Josephson Institute of Ethics in 1992. In 1996, Character
Counts was started in South Dakota under the direction
of the SDSU Extension service and supported by the
South Dakota 4-H Foundation. In partnership with the
South Dakota State University 4-H Foundation, the
project offers resources and training to communities and
schools across the state. Local coalitions design and carry
out programs to fit their needs.
South Dakota was one of the first states to adopt
Character Counts into 4-H and Extension. Extension 4-H
Youth Advisors reach each of South Dakota’s 67 counties
and work with the project as needs are identified. Over
2,500 adults and 700 young people have been trained
to teach the Character Counts framework to youth
across the state. Now recognized as a leader in character
education, South Dakota has become a state to watch.
Character Counts uses tried-and-true teaching methods
to introduce the character principals into classrooms and
youth groups ranging from elementary to high schools.
Discussion groups, role playing, art projects, and many
other teaching methods are used. The language of the
program is consistent and easy to understand. When it
is repeated throughout all grades and throughout the
community, the repetition is a proven learning method.
“When we sponsored 4-H Character Counts in the Clark
Elementary, we involved our staff in helping children
learn the importance of the six character traits,” said
Tom LaBrie market president at the Dacotah Bank in
Clark. “Our staff was challenged to bring real life
learning opportunities to the classroom to help mold the
character of our youth. These same categories apply in
our workplace, so it was a positive reinforcement of how
we should all act in our daily lives. When the children
saw us in public afterwards, they were reminded of these
elements and created a bond between us. As instructors,
we knew we were being ‘watched’ as we (adults) always
are and it helped reinforce these characteristics in our
business and personal lives.”
Dacotah Bank contributed over $10,000
last year to the program.
United Way
T
HE UNITED WAY’S VISION is a world where
all individuals and families achieve their human
potential through education, income stability
and healthy lives. United Way improves lives by
mobilizing the caring power of communities around the
world to advance the common good.
The organization’s current 10 year goals are to improve
education and cut the number of high school dropouts
— 1.2 million students every year — in half; help people
achieve financial stability and get 1.9 million working
families — half the number of lower-income families
who are financially unstable — on the road to economic
independence; and promote healthy lives by increasing
by one-third the number of youth and adults who are
healthy and avoid risky behaviors.
The United Way considers their core
strengths to be a national network,
committed partners and public
engagement capacity.
It exists as a not-for-profit organization that unites funds
collected community wide and human services agencies.
It makes it easier on community members who can
contribute in one spot and know they are addressing
all the human services needs in their surroundings. On
average 25 percent of member agencies’ budgets come
from funds contributed through the annual campaign.
United Way helps everyone work together as one
community to identify and impact the issues that affect
so many.
“It truly takes participation from all of us,” said Bob
Compton, Dacotah Bank senior vice president human
resources and chairman of the Aberdeen campaign. “The
United Way’s aim is to provide a stable funding resource
to address needs through a consolidated ‘ask’ from the
agencies. Just as so many people tithe to their respective
churches, the United Way provides the opportunity
to tithe back to your community. When community
members give, more children will be cared for, more
senior citizens will receive a balanced meal, more families
and troubled youth will receive needed guidance and
support, more needy citizens will be cared for and
clothed in times of need.”
Make-A-Wish
Clockwise L to R: Hudson wished to go to the
Pro Bowl. Morgan wished to go to Walt Disney
World. Ayren wished to go to Walt Disney World.
Jordan wished to meet The Piano Guys.
M
AKE-A-WISH GRANTS THE WISHES OF
CHILDREN with life-threatening medical
conditions to enrich the human experience
with hope, strength and joy. Nationally, the
organization estimates it grants a wish every 38 minutes.
They believe that a wish experience can be a gamechanger with improved health status, enhanced state of
mind and stronger community.
Wishes are more than just a nice thing. And they are
far more than gifts or singular events in time. Wishes
impact everyone involved - wish kids, families, volunteers,
donors, sponsors, medical professionals and communities.
For wish kids, just the act of making their wish come true
can give them the courage to comply with their medical
treatments. Parents might finally feel like they can be
optimistic. According to a 2012 Wish Impact Study that
surveyed wish kids, parents, health professionals, and
volunteers, a wish come true empowers children to fight
harder against their illnesses.
condition that has placed the child’s life in jeopardy).
The way they craft wishes is by sending wish teams
to learn the child’s one true wish. These committed
volunteers connect with the wish children, awaken their
imaginations and help them envision an experience with
the power to change lives. Then the wish granters and
staff create an unforgettable experience driven by the
child’s creativity.
Local chapters are generally organized by state. In
Dacotah Territory there is one in each of our three states.
The Minnesota chapter of Make-A-Wish opened in 1983,
with South Dakota following the next year and North
Dakota getting on board in 1985.
Dacotah Bank is proud to provide support for this
magical charity. “Make-A-Wish is a unique organization
that has the privilege of touching lives that have been
through so much pain,” said Jennifer Pendley, Dacotah
Bank customer service representative from Watertown.
“A wish is an opportunity to put a little bit of hope and
The organization relies on medical professionals, parents
happiness into a child’s life. It is a pure joy that Dacotah
and children themselves for referrals. Children who
Bank has been able to partner with Make-A-Wish in
have reached the age of 2½ and are under the age
making five dreams come true over the last several years
of 18 at the time of referral – and have not received a
with more to come.”
wish from another wish-granting organization – may be
“We are grateful to Dacotah Bank for your investment to
eligible for a wish.
help us toward our vision of granting every eligible child’s
The child’s medical eligibility is determined with the
wish,” Paul Krueger, president and CEO of Make-A-Wish
help of the treating physician. To receive a wish, the
South Dakota. “You are helping to give hope, strength
child must be diagnosed with a life-threatening medical
and joy to deserving kids and their families.”
condition (i.e., a progressive, degenerative or malignant
Relay for Life
R
ELAY FOR LIFE IS A COMMUNITY BASED
FUNDRAISING EVENT of the American Cancer
Society. More than 5,200 Relay For Life events
take place in 24 countries. As the American
Cancer Society's most successful fundraiser and the
organization's signature event, the mission of Relay For
Life is to raise funds to improve cancer survival, decrease
the incidence of cancer, and improve the quality of life
for cancer patients and their caretakers.
Each Relay For Life event is special to its community,
but the movement's true power lies in the combined
commitment of thousands of participants, volunteers,
and supporters to help the American Cancer Society save
lives from cancer.
Each A Relay For Life event is organized under a
volunteer Relay Committee, and implemented by
volunteers. It is often a multi-day public gathering,
spanning all day and night either indoors or outdoors,
and many people bring tents and camp out around the
walking tracks. Currently, almost 4 million people take
part in Relay events.
At Relay For Life events, communities across the globe
come together to honor cancer survivors, remember
loved ones lost, and fight back against a disease that
has already taken too much. There are 14 million cancer
survivors who will celebrate another birthday this year.
Children’s Home Society
T
HE CHILDREN’S HOME SOCIETY helps
coordinate domestic and international adoptions
and works for child welfare worldwide. Respected
for their legacy of excellence in adoption
services, the society believes that every child deserves a
permanent, loving family. Today the need for adoption is
most urgent for older children, sibling groups, children
with a history of abuse and neglect, and children with
known medical and special needs.
With their coordination comes ongoing adoptive
support. Children’s Home Society offers educational and
cultural events, travel, search and background services,
and opportunities to connect to the larger adoption
community. The society recognizes that adoption is a
lifelong journey and believes that all members of the
adoption circle should have access to education, support
and resources at every stage of life.
The services are child centered with the best interest
of the child at the center of their work. The program
operates on the belief that all children deserve and need
permanent families.
They are committed to using best practices that provide
thorough, ethical, transparent and inclusive services
throughout the adoption process. The organization
strives to provide quality services that meet the needs of
children and families and set an example of excellence
for the adoption community.
Established in 1893, Children's Home Society is South
Dakota's oldest human services, nonprofit organization.
The mission is to protect, support and enhance the lives
of children and families.
Programs include emergency shelter, residential
treatment and education for children ages 4-14, foster
care and adoption services, as well as prevention and
education resources.
While serving victims of domestic violence and child
abuse, it is also part of the society’s mission to partner
with caring parents to help children with emotional or
behavioral problems. Children’s Home Society is licensed
by the South Dakota Department of Social Services.
Dacotah Bank gives generously to the
Children’s Home Society and supports the
idea that all children deserve a family.
The 2014 Christmas season marked the 13th year the
society has partnered with children’s book author Tom
Roberts to produce his stories. His newest story, Return to
The Farm - A Christmas Journey, is a tale of his childhood
memories of Christmas on a farm near Ipswich, SD.
The Christmas book series promotion has raised over
$971,000.
Boys and Girls Clubs
T
HE BOYS AND GIRLS CLUB’S MISSION is to
enable all young people, especially those whose
need is greatest, to reach their full potential as
productive, caring, responsible citizens. Boys
and Girls Clubs provide a safe place to learn, grow
and develop ongoing relationships with caring, adult
professionals, as well as providing life-enhancing
programs and character development experiences. Boys
and Girls clubs provide services nationwide to over 4
million kids from more than 4,100 clubs.
The clubs offer evidence-based programs
and advocate for positive outcomes for
youth in the areas of academic success,
healthy lifestyle, and good citizenship
and character.
Activities are varied. As an example, the Boys and Girls
Club of Brookings has an Art Room that helps youth
have fun and educational activities enabling them to
expand their imaginations and creativity. Programs
include painting projects, creative poster contests,
pottery clubs, music making, drama club, keyboarding
club, guitar club, songwriting club, beading and jewelry
making. Youth can also put on short plays and puppet
shows and play the piano and organ.
The Brookings location also hosts Club 5, a program that
focuses on daily homework help in a positive, supportive
environment. Club 5 youth meet every day for an hour
and receive help in a low staff to youth ratio classroom.
Project Green educates youth about the importance of
recycling and keeping our earth clean. Members are
given the opportunity to learn about recycling methods,
how pollution impacts our world, and what they can do
to help out.
“One of the strategic goals of the Boys and Girls Club
of the Aberdeen Area is to be the leader in youth
development by creating collaborations with communities,
schools and other youth organizations,” said Bryan
Schmidt, board president of Boys and Girls Club of the
Aberdeen Area. “Our collaboration with Dacotah Bank,
both financially and through the bank’s encouragement
and support of employee participation in community
service, has allowed the club and their board to continue
to focus on its mission of enabling all young people.”
The Sioux Empire Boys and Girls Club in Sioux Falls
has the Money Matters program. It promotes financial
responsibility and independence among Club members
ages 13 to 18. Participants learn how to manage a
checking account, create a budget, save and invest, start
small businesses and pay for college.
The club also offers a healthy lifestyle option called
Smart Moves. It offers more than simply emphasizing
a “Say No” message. The program teaches young
people ages 6 to 15 how to say no by involving them
in discussion and role-playing, practicing resistance
and refusal skills, assertiveness, strengthening decisionmaking skills and analyzing media and peer influence.
There is a very low cost for membership, which on
average is about $20 per year.
Dacotah Bank has provided volunteer, financial
and executive support to all Boys and Girls clubs in
Dacotah Territory.
Independent Auditor’s Report
The Stockholders and Board of Directors
Dacotah Banks, Inc.
Aberdeen, South Dakota
Report on the Financial Statements
The the
Stockholders
andconsolidated
Board of Directors
We have audited
accompanying
financial statements of Dacotah Banks, Inc. and subsidiary, which comprise the consolidated
The
Stockholders
and Board of Directors
Dacotah
Banks, Inc.
balance sheets
as of December
31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, changes in
Dacotah Banks,
Inc.
Dakota
stockholders’Aberdeen,
equity, andSouth
cash flows
for each of the years in the three-year period ended December 31, 2014, and the related notes to the
financial statements.
Management’s Responsibility for the Financial Statements
We have audited the accompanying consolidated balance sheets of Dacotah Banks, Inc. and subsidiaries
auditedfor31,
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consolidated
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Aberdeen,
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2012 Dakota
March 30, 2012
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Aberdeen,
South Dakota
April 14, 2014
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24 Second Ave. S.W. | P.O. Box 430 | Aberdeen, SD 57402-0430 | T 605.225.8783 | F 605.225.0508 | EOE
24 Second Ave. S.W. | P.O. Box 430 | Aberdeen, SD 57402-0430 | T 605.225.8783 | F 605.225.0508 | EOE
1
1
Consolidated Balance Sheets
DECEMBER 31, 2014 AND 2013
(Dollar Amounts in Thousands)
2014
2013
ASSETS
Cash and cash equivalents
Cash due from banks $66,006 $
67,333
Interest-bearing deposits in bank
21,80036,300
Total cash and cash equivalents Time deposits in banks Securities Loans held for sale Loans, net of allowance for loan and lease losses Interest receivable Premises and equipment, net Foreclosed assets Investment in life insurance contracts
Deferred income tax asset
Goodwill
Intangible assets Other assets Total assets 87,806 103,633
6,893 11,094
294,582 332,519
- 866
1,657,916 1,539,558
18,755 17,810
46,520 45,570
1,658 3,252
36,54935,410
11,74210,160
6,4136,413
2,514 3,268
1,453 1,269
$2,172,801 $ 2,110,822
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
$1,890,339 $ 1,860,232
Deposits Borrowings 37,000 20,000
Interest payable 2,462 3,372
Accrued expenses and other liabilities 18,927 15,482
Total liabilities STOCKHOLDERS’ EQUITY
Common stock, $4 par value; 5,000,000 shares
authorized, 1,428,598 shares issued and outstanding Capital surplus Retained earnings Accumulated other comprehensive income Treasury stock, 319,602 shares in 2014 and
306,156 shares in 2013, at cost Total stockholders’ equity Total liabilities and stockholders’ equity
1,948,728 1,899,086
5,714 5,714
12,016 11,545
221,946 207,285
(291) (1,374)
(15,312) (11,434)
224,073 211,736
$ 2,172,801 $ 2,110,822
See Notes to Consolidated Financial Statements
Consolidated Statements of Income
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
201420132012
INTEREST INCOME
Loans $ 79,339 $ 78,063 $ 79,398
Securities
Taxable 3,547 3,661 4,133
Exempt from federal income taxes 1,016 1,089 1,038
Deposits in banks 114 82 88
Federal funds sold 86 98 145
84,102 82,99384,802
INTEREST EXPENSE
Deposits 6,610 8,983 15,344
Borrowings 612 624 711
7,222 9,607 16,055
NET INTEREST INCOME 76,880 73,386 68,747
PROVISION FOR LOAN AND LEASE LOSSES 4,050 5,250 6,750
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES 72,830 68,136 61,997
NON-INTEREST INCOME
Income from fiduciary activities 1,793 1,778 1,202
Service charges on deposit accounts 3,752 3,849 3,956
Insurance commissions 4,383 4,169 4,068
Fees on sale of residential mortgages 960 1,660 2,634
Other income 5,971 5,223 4,109
16,859 16,679 15,969
NON-INTEREST EXPENSES
Salaries and employee benefits 38,424 35,316 31,692
Occupancy, net 4,641 4,372 3,967
Furniture and equipment 2,163 2,292 2,176
FDIC assessment 1,321 1,385 310
Other expenses 14,022 13,342 12,438
60,571 56,707 50,583
INCOME BEFORE INCOME TAXES 29,118 28,108 27,383
INCOME TAX EXPENSE 10,527 9,726 9,259
NET INCOME $ 18,591 $ 18,382 $ 17,854
PER SHARE OF COMMON STOCK
Net income - basic $ 16.57 $
16.43
$
16.03
3.50 $
3.20 $
3.00
Cash dividends declared See Notes to Consolidated Financial Statements.
$
Consolidated Statements of Comprehensive Income
NET INCOME 201420132012
$ 18,591 OTHER COMPREHENSIVE INCOME
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period
Tax (expense) benefit
$ 18,382
$ 17,854
1,679
(5,644)
689
(596)
1,987
(241)
Other comprehensive income (loss)
1,083
(3,657)
448
Comprehensive Income
$19,674
$14,725
$18,302
Consolidated Statements of Stockholders’ Equity
BALANCE, DECEMBER 31, 2011 Total
$ 184,082 CommonCapital
Stock
Surplus
$ 5,714 $ 10,188
Net income 17,854 - -
Other comprehensive income
448
-
-
Executive incentive stock awards
319
-
242
Sale of treasury stock, net 205
-
274
Cash dividend declared, $3.00 per share
(3,344)
- -
BALANCE, DECEMBER 31, 2012 199,564 Net income 18,382
Other comprehensive loss
(3,657)
Executive incentive stock awards 5,714 10,704
- -
-
-
320
-
242
Sale of treasury stock, net 707 - 599
Cash dividend declared, $3.20 per share (3,580)
- -
BALANCE, DECEMBER 31, 2013 211,736
5,714 11,545
Net income 18,591 - -
Other comprehensive income 1,083
- -
Executive incentive stock awards 182
-
143
Purchase of treasury stock, net
(3,589)
-
328
Cash dividend declared, $3.50 per share (3,930)
- -
BALANCE, DECEMBER 31, 2014 See Notes to Consolidated Financial Statements.
$ 224,073 $ 5,714
$ 12,016
Consolidated Statements of Stockholders’ Equity (continued)
Retained
Earnings
Accumulated
OtherShares
Comprehensive
Treasury
Income (Loss)
Stock
Common Treasury
$ 177,973 $
1,835 $ (11,628) 17,854--
1,429 316
-
-
-
448
-
-
-
-
-
77
-
(4)
-
-
(69)
-
-
-
-
1,429 312
(3,344)
-
192,483 2,283 -
(11,620)
18,382--
-
-
-(3,657)
-
-
-
-
-
78
-
(6)
-
-
108
-
-
-
-
1,429
306
-
-
-
-
-
-
39 -
(1)
-
15
(3,580)
-
207,285
(1,374)
18,591 - - -
-
-(3,917)
-
-
(11,434) 1,083 (3,930)--
221,946
(291)
(15,312) -
1,429 320
Consolidated Statements of Cash Flows
201420132012
OPERATING ACTIVITIES
Net income $ 18,591 $ 18,382 $ 17,854
Adjustments to reconcile net income to
net cash from operating activities:
Provision for loan and lease losses 4,050 5,250 6,750
Depreciation and amortization 6,361 7,018 6,896
Executive incentive stock awards 182 320
319
Provision for deferred income taxes (2,178) (1,448) (390)
Loss on sale of premises and equipment and foreclosed assets
136217 Increase in investment in life insurance contracts (1,139)(1,095) (1,206)
Decrease (increase) in loans held for sale 866 2,953 (932)
(Increase) decrease in interest receivable (945) (261)
1,037
(Increase) decrease in other assets, net (184)
2,832 1,144
Decrease in interest payable (910) (1,941) (1,416)
Increase in accrued expenses and other liabilities 3,445 1,749 3,089
Net cash from operating activities 28,275 33,976 33,145
INVESTING ACTIVITIES
Proceeds from maturities and calls of securities available
for sale, interest-bearing deposits with banks and federal funds sold 165,280 127,731 171,471
Purchases of securities available for sale and
interest-bearing deposits with banks (123,145) (95,336) (206,875)
Net increase in loans (122,865) (63,181) (115,328)
Proceeds from sale of premises and equipment
44108 -
Purchases of premises and equipment (4,909) (4,388) (3,128)
Proceeds from sale of foreclosed assets 1,905 1,423 540
Purchase of investment in life insurance contracts
-
-(24,800)
Purchase of subsidiary bank, net of cash acquired
-(3,063)
Purchase of subsidiary insurance agency, net of cash aquired
(575)Net cash used by investing activities (83,690) (37,281) (178,120)
FINANCING ACTIVITIES
Increase in non-interest-bearing deposits, net 39,922 16,222 123,879
Increase in interest-bearing deposits, net 64,355 64,512 104,677
Decrease in certificates of deposits, net (74,170) (81,268) (82,416)
Repayments of borrowings (3,000) (13,005) (4,004)
Advances of borrowings
20,00012,000
(Purchase) sale of treasury stock, net (3,589) 707 205
Dividends paid to stockholders (3,930) (3,580) (3,344)
Net cash from financing activities 39,588 (4,412) 138,997
NET CHANGE IN CASH AND CASH EQUIVALENTS (15,827) (7,717) (5,978)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 103,633 111,350 117,328
CASH AND CASH EQUIVALENTS, END OF YEAR See Notes to Consolidated Financial Statements.
$ 87,806 $ 103,633 $ 111,350
Consolidated Statements of Cash Flows (continued)
Supplemental disclosures of cash flow information:
201420132012
Cash payments for:
Interest
$ 8,132
$ 11,518
$ 17,471
Income taxes 11,875
11,554
8,351
Supplemental schedule of non-cash investing and financing activities:
201420132012
Other real estate acquired in settlement of loans
$
457
$
2,422
$
1,010
Notes to Consolidated Financial Statements
NOTE 1 – PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activity
Dacotah Banks, Inc. (Company) is the parent holding company of Dacotah Bank which provides a full range of banking services to
individuals and businesses through its market locations in Aberdeen, Brookings, Clark, Custer, Faulkton, Lemmon, Mobridge, Rapid
City, Sioux Falls, Sisseton, Watertown, and Webster, South Dakota, Dickinson, Hettinger, Jamestown, Minot, Rolla, and Valley City, North
Dakota, and Morris, Minnesota. Trust services are provided to individuals and businesses throughout the Bank’s footprint and general
insurance operations are conducted in fifteen of the thirty-four locations. The Company’s primary deposit products are demand deposits
and certificates of deposit, and its primary lending products are commercial, agricultural, real estate mortgage, and consumer loans.
Basis of Presentation and Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiary bank. All significant intercompany accounts
and transactions have been eliminated in consolidation. The Company and subsidiary bank employ, in all material respects, similar
accounting policies.
Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management
is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A material
estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan and
lease losses.
Significant Group Concentrations of Credit Risk
Most of the Company’s loans are with customers primarily located in Minnesota, North Dakota, and South Dakota. Concentrations of
credit are present in the agricultural and commercial sectors. Due to the significant economic impact of these sectors on the markets
served by the Company, all loans, regardless of type, are impacted when significant events occur within these industry sectors. Loans for
agricultural purposes comprised approximately 46% and 43% of total loans as of December 31, 2014 and 2013. Loans for commercial
purposes, including commercial real estate, comprised approximately 33% and 35% of total loans as of December 31, 2014 and 2013.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash and cash equivalents include cash and balances due from banks, federal funds sold and
interest-bearing deposits in banks, all of which have original maturities of three months or less.
Time Deposits in Banks
Interest-bearing deposits in banks that are not classified as cash and cash equivalents mature within five years and are carried at cost.
Securities
The Company’s securities are all classified and accounted for as securities available for sale. Securities classified as available for sale are those
debt securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Securities available for sale
are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Premiums
and discounts are recognized in interest income using the interest method over the terms of the securities. Gains or losses on the sale and
calls of securities are recorded on the trade date and are determined using the specific identification method.
The Company is required to hold Federal Reserve Bank stock in order to be a member of the Federal Reserve Bank System and, because
of its borrowing arrangement with the Federal Home Loan Bank; the Company is required to own Federal Home Loan Bank stock. Since
ownership in these institutions is restricted, these securities are carried at cost and evaluated periodically for impairment.
Notes to Consolidated Financial Statements (continued)
The Company adheres to required recognition and presentation of other-than-temporary impairment. The guidance specifies that (a) if a
company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the
debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When
an entity does not intend to sell the security, and it is more likely than not, the entity will not have to sell the security before recovery of its
cost basis, it will recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining
portion in other comprehensive income.
Fair Value Measurements
The Company determined the fair value of certain assets in accordance with a framework for measuring fair value under generally
accepted accounting principles.
Fair value is defined as the exchange price that would be received for an asset in the principal or most advantageous market for the asset in
an orderly transaction between market participants on the measurement date. Valuation techniques maximize the use of observable inputs
and minimize the use of unobservable inputs. The fair value hierarchy prioritizes the valuation inputs into three broad levels.
Level 1 inputs consist of quoted prices in active markets for identical assets that the reporting entity has the ability to access at the
measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset. Level
3 inputs are unobservable inputs related to the asset.
Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net
unrealized losses, if any, are recognized through a valuation allowance by charges to income.
Loans
Loans are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan and lease losses, and
unearned discount.
Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is discontinued at the time the loan is 90 days
delinquent unless the credit is well secured and in process of collection. Past due status is based on contractual terms of the loan. Loans are
placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All current year interest
accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. All prior year interest
accrued but not collected is charged-off against the allowance for loan and lease losses. The interest on these loans is accounted for on the
cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and
interest amounts contractually due are brought current and future payments are reasonably assured.
The Company has determined that the accounting for nonrefundable fees and costs associated with originating or acquiring loans does not
have a material effect on their financial statements. As such, these fees and costs have been recognized during the period they are collected
and incurred, respectively.
Allowance for Loan and Lease Losses
The allowance for loan and lease losses, ALLL, is established and maintained by a provision for loan and lease losses against the Company’s
earnings. The ALLL is an estimate of uncollectible amounts used to reduce the carrying value of loans and leases to the amount that is
expected to be collected. In accordance with generally accepted accounting principles Dacotah Bank maintains a prudent, conservative,
but not excessive, allowance for loan and lease losses. Loan and lease losses are charged against the ALLL when management believes the
uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALLL.
Dacotah Bank has designed and implemented an ALLL methodology and system to reasonably estimate its loan and lease losses as of each
quarter and year-end. The determination of the amounts of the ALLL and provisions for loan and lease losses are based on management’s
current judgments about the credit quality of the loan portfolio, and consider all known relevant internal and external factors that affect
loan collectability as of the reporting date. Losses are charged-off in the period in which loans or portions thereof are determined to be
uncollectible.
ALLL estimates are based on a comprehensive, well-documented, and consistently applied analysis of the loan portfolio. An appropriate
ALLL covers estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses
inherent in the remainder of the loan and lease portfolio. This evaluation is inherently subjective as it requires estimates that are susceptible
to significant revision as more information becomes available.
To account for loans and the ALLL required, Dacotah Bank has separated loans into two distinct groups. Named after the accounting
principles that prescribe them, Dacotah Bank measures individually-impaired loans according to Accounting Standards Codification (ASC)
Subtopic 310-40 (Formally FAS 114). Those loans not considered to be impaired are measured using ASC Subtopic 450-20 (Formally
FAS 5).
In general, loans are impaired when, based on current information and events, it is probable that the Company will be unable to collect all
amounts due, both principal and interest, according to the contractual terms of the original loan agreement.
Individually impaired loans have risk characteristics that are unique to the individual borrower and the Company applies measurement
methods on a loan-by-loan basis. For loans that are individually evaluated and determined to be impaired, estimates reflect one of three
measurement methods as of the evaluation date: (1) the present value of expected future cash flows discounted at the loan’s effective interest
rate, (2) the loan’s observable market price, or (3) the fair value of the collateral if the loan is collateral dependent.
The Company groups non-impaired loans into homogenous groups based on similar risk characteristics using the loan groups established
in the Call Report.
Quantitative factors, in the form of historical loss rates, are applied to each of the loan groups based on a 20-quarter, equally-weighted
trailing average of net charge-offs. The most recent quarterly data included in the 20-quarter pool is the prior quarter’s Call Report
information.
Qualitative Factors, or “environmental factors,” are utilized to provide a forward-looking loss estimate based on management’s subjective
input. Environmental factors are used to reflect changes in the collectability of the portfolio not captured by the historical loss data. These
factors augment actual loss experience and help to estimate the probability of loss within a loan portfolio based upon emerging or inherent
risk trends.
Dacotah Bank uses the nine factors outlined in the 2006 Interagency Guidance for the allowance for loan and lease losses. Changes to any
qualitative factor are the result of input provided by market staff, Credit Administration or management.
Management has determined that the development of well-supported and appropriate environmental factors for homogenous loan pools
when determining the ALLL requires 1) meaningful and thoughtful consideration of all of the environmental factors to which a particular
portfolio is currently vulnerable, 2) the ability to segment the loan portfolio into pools that behave similarly under certain economic
conditions, 3) the development of supportable values for all environmental factors, and 4) the ability to fully understand the fundamental
behaviors and underlying risk of each portfolio sector.
Credit Related Financial Instruments
In the ordinary course of business, the Company has entered into commitments to extend credit and standby letters of credit. Such
financial instruments are recorded when they are funded.
Transfers of Financial Assets
Transfers of financial assets are accounted for as sales 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 – put presumptively beyond the reach of the
transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it
from taking advantage of that right) to pledge or exchange the transferred assets, 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.
Investment in Life Insurance Contracts
Investment in life insurance contracts is stated at cash surrender value of various insurance policies. The income of the investment is
included in non-interest income.The life insurance policies are intended to provide funding for salary continuation contracts for executive
officers of the Company and its subsidiary.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation for buildings and improvements is provided generally
by the straight-line method based on estimated useful lives of 10 to 50 years. Depreciation for furniture, fixtures and equipment is provided
generally by the double-declining balance method based on estimated useful lives of five to seven years.
Foreclosed Assets
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the lower of the unrecovered loan balance
or fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically
performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses
from operations and changes in the valuation allowance are included in net expenses from foreclosed assets.
Goodwill and Other Intangible Assets
Intangible assets consist of goodwill and core deposits associated with the acquisition of banks and insurance agencies. Goodwill is not subject to
amortization. Core deposits are amortized on an accelerated basis over 5 to 15 years.The Company assesses goodwill for impairment annually,
and more frequently in certain circumstances. Goodwill is assessed for impairment on a reporting unit level by applying a fair-value-based test
using discounted estimated future net cash flows. Impairment exists when the carrying amount of the goodwill exceeds its implied fair value.
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax return. The Company files separate state income tax returns. It is
the policy of the Company to allocate federal income taxes or credits to each subsidiary on the basis of the subsidiary’s taxable income or
loss included in the consolidated return.
The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense
reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or
excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under
this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and
liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on technical merits, that the tax position will be realized or sustained upon examination. The
term more likely than not means a likelihood of more than 50%; the terms examined and upon examination also include resolution
of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially
and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement
with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met
the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is
subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available,
it is more likely than not that some portion or all of a deferred tax asset will not be realized.
The Company recognizes interest and penalties on income taxes as a component of income tax expense.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs was approximately $1,120, $1,025 and $936 for the years ended December
31, 2014, 2013 and 2012.
Comprehensive Income
The Company recognizes and includes revenue, expenses, gains and losses in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components of comprehensive income.
Earnings per Common Share
Basic earnings per share represent income available to common stockholders divided by the weighted-average number of common shares outstanding during the period.
Earnings per common share have been computed based on the following:
201420132012
Average number of common shares outstanding (in thousands)
1,122
1,119
1,114
Reclassifications
Certain reclassifications of amounts previously reported have been made to the accompanying financial statements to maintain consistency between periods presented. The reclassifications had no impact on net income or stockholders’ equity.
Subsequent Events
The Company has evaluated subsequent events through the date of the independent auditor’s report which is the date the financial statements were available to be issued.
NOTE 2 - ACQUISITION OF DONNELLY BAUCSHARES, INC. AND UNITED FARMERS & MERCHANTS STATE BANK
AND UNITED AMERICAN AGENCY, LLC
On September 13, 2013, Dacotah Banks, Inc. purchased 100% of the outstanding common stock of Donnelly Bancshares, Inc., a one bank
holding company. Donnelly Bancshares, Inc. had one wholly-owned subsidiary, United Farmers & Merchants State Bank (UFMSB) with
locations in Chokio and Morris, Minnesota. Donnelly Bancshares, Inc. was merged into Dacotah Banks, Inc. and UFMSB was merged into
Dacotah Bank. Both mergers were tax-free liquidations. The acquisition initiated the Company’s presence into Minnesota.
The cash purchase price was allocated to the fair values of acquired assets and liabilities as follows:
Assets Acquired
Cash and due from banks
Federal funds sold
Certificates of deposit
Securities and FHLB stock
Loans
Interest receivable
Premises and equipment, net
Other assets
Core deposit intangible
Liabilities Acquired
Deposits
Interest payable
Accrued expenses and other liabilities
Total purchase price
$ 2,000
7,558
4,308
8,972
13,538
222
1,907
801
1,198
40,504
(35,206)
(30)
(205)
(35,441)
$ 5,063
The core deposit intangible will be amortized on a sum of the years digits basis over 50 months, resulting in amortization of $471 and
$139 in 2014 and 2013.
In conjunction with this acquisition, the Company acquired certain loans for which there was evidence of deterioration of credit quality
since origination and for which it was probable that not all contractually required payments would be collected.These loans were recorded
at their estimated net fair value as follows:
Contractually required payments
Credit quality discount
Cash flows expected to be collected
Accretable yield discount
$ 13,872
(139)
13,733
(195)
Fair value of loans acquired
$ 13,538
On September 13, 2013, the Dacotah Bank purchased 100% of the outstanding common stock of United American Agency, LLC, a
company licensed and operating as an insurance agency in Minnesota. The company was owned 100% by UFMSB and was acquired at
the same time as the bank noted above.
The cash purchase price was allocated to the fair values of acquired assets and liabilities as follows:
Assets Acquired
Cash and due from banks
Other assets
Insurance files
Goodwill
Liabilities Acquired
Accrued expenses and other liabilities
$ 119
152
381
155
807
(113)
Total purchase price
$ 694
The insurance files intangible will be amortized on the straight line basis over 10 years, resulting in amortization of $38 in 2014.
The accompanying consolidated financial statements include the operations for United Farmers & Merchants State Bank and United
American Agency, LLC for the period from acquisition to December 31, 2014.
NOTE 3 – RESTRICTION ON CASH AND DUE FROM BANKS
Based on the type and amount of deposits received, the Company must maintain an appropriate amount of noninterest bearing cash balances in accordance with Federal Reserve Bank reserve requirements. The total of those reserve requirements was satisfied with vault cash.
NOTE 4 - SECURITIES
Debt and equity securities have been classified in the consolidated balance sheet according to management’s intent. The carrying amounts
of securities as of December 31, 2014 and 2013 consist of the following:
Securities available for sale, at fair value Investments in government corporations, at cost 2014 2013
$ 282,912 11,670 $ 294,582 $ 321,715
10,804
$ 332,519
The amortized cost and fair value of securities available for sale with gross unrealized gains and losses are as follows:
GrossGross
AmortizedUnrealizedUnrealized Fair
Cost Gains LossesValue
DECEMBER 31, 2014
Securities Available For Sale
U.S. Government and Federal Agency $ 169,939
State and Municipal 51,825
Mortgage-Backed 60,429
Other 1,172
$
$ 283,365 $ 1,053 DECEMBER 31, 2013
Securities Available For Sale
U.S. Government and Federal Agency $ 218,912 $
State and Municipal 56,151 Mortgage-Backed 47,811 Other 973 37 | DACOTAH BANK ANNUAL REPORT 2014
$ 323,847 113 $ 1,197
$ 168,855
334 61 52,098
606 248 60,787
- - 1,172
$
$ 1,506 564 $
475 313 - 1,352 $
$ 282,912
2,396 $ 217,080
368 56,258
720 47,404
- 973
3,484 $ 321,715
Investment securities with a carrying value of $185,168 and $179,088 as of December 31, 2014 and 2013, respectively, were pledged to
secure public deposits and for other purposes required by law.
The amortized cost and fair value of debt securities by contractual maturity at December 31, 2014 follows:
Amortized Cost Fair
Value
Within one year $ 20,483 $ 20,551
Over one through five years 219,255 218,607
Over five through ten years 35,191 35,298
Over ten years 8,436 8,456
$ 283,365 $ 282,912
Mortgage-backed obligations are included in the preceding table based on management’s estimates of remaining life, after considering
prepayments.
There were no sales of securities during 2014, 2013 and 2012.
Information pertaining to securities with gross unrealized losses at December 31, 2014 and 2013 aggregated by investment category and
length of time that individual securities have been in a continuing loss position follows:
Less Than Twelve Months
Over Twelve Months
Gross Gross
Unrealized Fair Unrealized Fair
Losses ValueLossesValue
DECEMBER 31, 2014
Securities available for sale
U.S. Government and Federal Agency $
244 $ 72,290 $
953 $ 61,274
State and Municipal 51 12,216 10 1,246
Mortgage-Backed 64
17,858184
8,021
$
359 $ 102,364 $ 1,147 $ 70,541
Less Than Twelve Months
Over Twelve Months
Gross Gross
Unrealized Fair Unrealized Fair
LossesValueLossesValue
DECEMBER 31, 2013
U.S. Government and Federal Agency $ 2,290 $ 113,812 $
106 $ 7,929
State and Municipal 270 15,944 98 1,699
Mortgage-Backed484
22,602236
4,696
$ 3,044 $ 152,358 $
440 $ 14,324
At December 31, 2014, no securities had unrealized losses with aggregate depreciation of 5% or more from the Company’s amortized
cost basis caused by interest rate changes. At December 31, 2013, eleven securities had unrealized losses with aggregate depreciation
of 5% or more from the Company’s amortized cost basis caused by interest rate changes. In analyzing an issuer’s financial condition,
management considers whether the securities are issued by federal state and municipal governments or their agencies, whether
downgrades by bond rating agencies have occurred, and industry analysts’ reports. Because the Company does not intend to sell the
investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their
amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.
NOTE 5 - LOANS
A summary of the balances of loans follows:
2014 2013
Commercial
$ 260,980 $ 245,371
Commercial real estate 301,391 308,716
Agricultural
772,596676,008
Residential real estate 293,321 274,990
Consumer 53,867 56,043
Total loans 1,682,155 1,561,128
Allowance for loan and lease losses (24,059) (21,270)
Accretable yield discount
(70)(161)
Credit quality discount
(110)(139)
$1,657,916 $ 1,539,558
Total loans, net Commercial and agricultural lending are the primary lending activities of the Company as evidenced by the fact that 79% of the portfolio
is comprised of the same. While the Company’s philosophy is to provide this credit on a secured basis, the primary driver of repayment is
cash flow.
The Company has maintained a diversified loan portfolio. At December 31, 2014 and 2013, there were no customer loan concentrations
that exceeded 1.5% of total loans. However, a substantial portion of the Company’s customers’ ability to honor their loan agreements is
influenced by the agricultural economy in the Company’s rural markets and the commercial economy in the more populated markets such
as Rapid City and Sioux Falls, South Dakota and Dickinson and Minot, North Dakota.
Total loans to directors, executive officers and principal stockholders of the Company’s common stock including their affiliates were
$10,930 and $3,197 at December 31, 2014 and 2013. Management believes that such loans were made in the ordinary course of business
on substantially the same terms and conditions, including interest rates and collateral as those prevailing at the same time for comparable
transactions with other customers and do not represent more than a normal risk of collection.
Included in loans are overdrafts of $1,628 and $3,686 as of December 31, 2014 and 2013, respectively.
Changes in the allowance for loan and lease losses are as follows:
2014 2013 2012
Balance, beginning of year $ 21,270 $ 18,892 $ 18,180
Provision for loan and lease losses 4,050 5,250 6,750
Recoveries 427 598 724
Loans charged off (1,688) (3,470) (6,762)
Balance, end of year 39 | DACOTAH BANK ANNUAL REPORT 2014
$ 24,059 $ 21,270 $ 18,892
The following tables present the activity in the allowance for loan and lease losses for the years ended December 31, 2014 and 2013 and
the recorded investments in loans and impairment methods as of December 31, 2014 and 2013 by portfolio segment.
Commercial Residential
DECEMBER 31, 2014
Commercial
Real Estate
Agricultural
Real Estate
Consumer
Total
Balance, beginning of year $
5,602
$
5,403
$
4,867
$
4,140
$
1,258
$
21,270
Provision for loan
and lease losses
658
1,596
2,999
(1,573)
370
4,050
Loans charged off
(656)
(135)
(406)
(265)
(226)
(1,688)
Recoveries 204
2 38 111
72 427
Balance, end of year
Individually evaluated for
impairment
$
5,808
$
6,866
$
7,498
$
2,413
$
1,474
$2,340$1,054$1,953$ 695$
$
24,059
440$6,482
Collectively evaluated for
impairment 3,468
5,812
5,545
1,718
1,034
17,577
$
5,808
$
6,866
$
7,498
$
2,413
$
1,474
$
24,059
$
8,080
$
9,586
$
41,268
$
6,164
$
698
$
65,796
Loans
impairment
impairment
252,900
291,805
731,328
287,157
53,169 1,616,359
260,980
301,391
772,596
293,321
53,867
$
$
$
$
$
$ 1,682,155
Commercial Residential
DECEMBER 31, 2013
Commercial
Real Estate
Agricultural
Real Estate
Consumer
Total
Balance, beginning of year $
4,915
$
5,290
$
3,788
$
3,354
$
1,545
$
18,892
Provision for loan
and lease losses
2,512
380
1,164
1,348
(154)
5,250
Loans charged off
(2,010)
(271)
(232)
(716)
(241)
(3,470)
Recoveries 185
4 147 154 108 598
$
5,602
$
5,403
$
4,867
$
4,140
$
1,258
$
21,270
impairment
$
2,333
$
553
$
443
$
2,289
$
217
$
5,835
impairment 3,269
4,850
4,424
1,851
1,041
15,435
$
5,602
$
5,403
$
4,867
$
4,140
$
1,258
$
21,270
$
9,298
$
9,489
$
19,948
$
11,278
$
463
$
50,476
Loans
impairment
impairment
236,073
299,227
656,060
263,712
55,580 1,510,652
245,371
308,716
676,008
274,990
56,043
$
$
$
$
$
$ 1,561,128
Credit Quality Indicators
The Company maintains a risk rating system designed and implemented to assist the loan officers, management, and Board of Directors in
measuring asset quality. A key element in the analysis of credit risk and associated portfolio management is the assignment of the appropriate
risk rating grade.The risk rating as assigned, determines the level of credit approval authority required, the degree of monitoring expected,
and important information pursuant to the management of the portfolio. Individual loan grades shall be assigned to commercial, commercial
real estate, agricultural, and other loan types in accordance with the Company’s loan rating system.These loans shall be evaluated on a caseby-case basis pursuant to the Company’s underwriting principles and ongoing performance. Risk rating grades shall thereon be assigned
in accordance with the likelihood of default and loss associated with the loan. Consumer (installment and residential mortgage) loans shall
not be reviewed on a case-by-case basis; rather, assigned a pass grade (4) in the absence of detrimental criteria negatively affecting the credit.
The risk rating system utilizes a “dual” loan grading system that first grades individual credits based on the objective/financial performance
compared to RMA industry standard data. Metrics used vary within different sectors (agriculture, commercial & industrial, commercial
real estate, etc.) and NAICS classifications. The second set of components of all loan grades are subjective adjustments.
The Company’s risk ratings range from Grade 1 (extremely low risk) to Grade 9 (Loss).
1 – 4 Pass Rated: These grades represent desirable credit quality and include ratings of Superior Quality, Excellent Quality, Good Quality, and Satisfactory
Quality.
5 – Pass/Watch: Mid-grade loans showing average financial condition but may be susceptible to changing economic conditions that would raise risk to a minor
concern. Normal comfort levels can be achieved through monitoring financial statements & collateral coverage.
6 – Special Mention: Loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may
result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely
classified and do not expose an institution to sufficient risk to warrant adverse classification.
7 – Substandard: Loans inadequately protected by the current sound worth and paying capacity of the obligor or the collateral pledged, if any. Loans so
classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the
bank will sustain some loss if the deficiencies are not corrected.
8 – Doubtful: Loans classified Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses
make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.
9 – Loss: Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification
does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even
though partial recovery may be affected in the future.
Based on the most recent analysis performed, the risk category of loans by portfolio segment as of December 31, 2014and 2013 was as follows:
Credit risk profile by internally assigned grade – Commercial, Commercial Real Estate and Agricultural
Special
Pass
MentionSubstandardDoubtful Total
DECEMBER 31, 2014
Commercial
$
242,677$13,095$ 5,041$ 167$
260,980
Commercial Real Estate
281,951
17,0772,363
-
301,391
Agricultural
695,262
52,338
24,988
8
772,596
$
1,219,890$82,510$32,392$
175$
1,334,967
Special
Pass
MentionSubstandardDoubtful Total
DECEMBER 31, 2013
Commercial
$
220,047$19,675$ 5,340$ 309$
245,371
292,500
12,5153,701
-
308,716
Agricultural
609,161
54,487
12,301 59
676,008
$
1,121,708$86,677$21,342$
368$
1,230,095
Credit risk profile by class based on payment activity – Residential and Consumer
Residential real estate and consumer loans are managed on a pool basis due to their homogeneous nature. Loans that are delinquent 90 days
or more or are not accruing interest are considered nonperforming. The following tables present the recorded investments in residential
real estate and consumer loans based on payment activity as of December 31, 2014 and 2013:
Non
Performingperforming Total
DECEMBER 31, 2014
Residential Real Estate$
288,869$ 4,452$
293,321
Consumer
53,399 468
53,867
$
342,268$ 4,920$
347,188
Non
Performingperforming Total
DECEMBER 31, 2013
Residential Real Estate$
270,162$ 4,828$
274,990
Consumer
55,765 278
56,043
$
325,927$ 5,106$
331,033
The following tables summarize the aging of the past due loans by portfolio segment as of December 31, 2014 and 2013:
Still Accruing
30-89 Days
Over 90 Days
Nonaccrual
Past Due
Past Due
Balance
DECEMBER 31, 2014
Commercial$ 1,290$
-$ 2,507
Commercial Real Estate 234
-1,457
Agricultural1,492 3991,831
Residential Real Estate 7861,4273,025
Consumer 497
1 467
Total$ 4,299$ 1,827$ 9,287
Still Accruing
30-89 Days
Over 90 Days
Nonaccrual
Past Due
Past Due
Balance
DECEMBER 31, 2013
Commercial$ 765$
86$ 3,880
Commercial Real Estate 153
-1,765
Agricultural 741 1342,272
Residential Real Estate2,741 1964,632
Consumer 430 18 260
Total$ 4,830$
434$12,809
The following table summarizes individually impaired loans by portfolio sement as of December 31, 2014 and 2013:
UnpaidAverage
Interest
RecordedPrincipal Related RecordedIncome
DECEMBER 31, 2014
Investment
Balance (1)
Allowance
Investment Recognized
With no related allowance recorded
Commercial
$ 2,017$ 2,017$
Commercial Real Estate4,7224,722
Agricultural
28,672
28,672
Residental Real Estate2,9662,966
Consumer 20 20
-$ 2,166$
-2,797
-
28,681
-4,868
- 75
-
-$38,587$
-
$38,397$38,397$
UnpaidAverage
Interest
Investment
Balance (1)
Allowance
Investment
Recognized
DECEMBER 31, 2014
With an allowance recorded
Commercial
$ 6,063$ 6,099$ 2,340$ 5,694$
Commercial Real Estate4,8644,8641,0542,414
Agricultural
12,596
12,5961,9535,800
Residental Real Estate3,1983,198 6956,593
Consumer 678 678 440 540
-
-
$27,399$27,435$ 6,482$21,311$
(1) Represents the borrower’s loan obligation, gross of any previously charged-off amounts.
Unpaid
Average
Interest
DECEMBER 31, 2013
Investment
Balance (1)
Allowance
Investment Recognized
With no related allowance recorded
Commercial
$ 2,947$ 2,947$
Commercial Real Estate6,2006,200
Agricultural
17,982
17,982
Residental Real Estate4,1814,181
Consumer 66 66
-$ 3,531$
-5,217
-
17,285
-4,804
- 243
-
-$31,080$
-
$31,376$31,376$
UnpaidAverage
Interest
Investment
Balance (1)
Allowance
Investment
Recognized
DECEMBER 31, 2013
With an allowance recorded
Commercial
$ 6,351$ 6,595$ 2,333$ 7,095$
Commercial Real Estate3,2893,333 5533,805
Agricultural1,9662,119 4431,776
Residental Real Estate7,0977,5092,2897,599
Consumer 397 426 217 553
-
-
$19,100$19,982$ 5,835$20,828$
The following table represents the effects of the troubled debt restructuring during the years ended December 31, 2014 and 2013.
The loans were added due to extension of maturity, a reduction of the stated interest rate or a permanent reduction of the recorded
investment in the loan.
During 2014 one residential real estate loan was added as trouble debt restructuring due to interest rate reduction below market rate and
all other additions were due to extended maturity date and other structural changes resulting in reduced payments.
During 2013 all additions to trouble debt restructuring were due to extended maturity date and other structural changes resulting in
reduced payments.
Number of Unpaid Principal
Prior to
At Year
December 31, 2014
Modifications
Balance
Modification
End
Troubled debt restructurings
Commercial Business
Agricultural
Residential Real Estate
that subsequently defaulted
Commercial Business
2$ 174$
99$
99
63,424 37 39
2 158 21 48
10$ 3,756$ 157$ 186
1$
1
27$
86
27$
12
27
12
December 31, 2013
Number of Unpaid Principal
Modifications
Balance
Commercial Business
Agricultural
Consumer
that subsequently defaulted
Commercial Business
Agricultural
Prior to Modification
At Year
End
10$ 1,046$ 309$ 309
4 491 34 34
82,500 37 37
122,426 585 585
1
2
-
35$ 6,465$ 965$ 965
1$
1
20$
90
-$
1
1
There are no commitments to lend additional funds to borrowers owing loans whose terms have been modified in troubled debt
restructurings as of December 31, 2014.
NOTE 6 - PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation of premises and equipment follows:
2014 2013
Land $ 7,085 $ 6,683
Buildings and improvements 62,467 60,403
Furniture, fixtures and equipment 22,950 24,917
92,502 92,003
Accumulated depreciation and amortization (45,982) (46,433)
$ 46,520 $ 45,570
Depreciation and amortization charged to occupancy and furniture and equipment expense in the consolidated statements of income
amounted to $3,925 in 2014, $3,821 in 2013, and $3,550 in 2012.
NOTE 7- GOODWILL AND INTANGIBLE ASSETS
The summary of the net carrying amount of the intangible assets as of December 31, 2014, 2013 and 2012 follows:
2014 2013 2012
Core deposit intangible $ 4,409 $ 4,409
$ 3,211
Accumulated amortization 2,8752,2701,995
1,5342,1391,216
Insurance files
Accumulated amortization
2,0162,0161,635
1,036887757
9801,129 878
Goodwill 6,6156,615 6,460
Accumulated amortization 202 202 202
6,413 6,413 6,258
$ 8,927
$ 9,681 $ 8,352
There were no impairment losses related to the intangible assets during the years ended December 31, 2014 and 2013. Impairment
testing is performed annually on goodwill. If certain factors become present that could lead to impairment of core deposit intangible and
insurance files, impairment testing will be performed at that time. Amortization expense for intangible assets was $754, $405, and $254
for the years ended December 31, 2014, 2013 and 2012.
At December 31, 2014, the estimated amortization expense for intangible assets for the succeeding five years is as follows:
2015 2016 2017 2018 2019 $ 612
476
331
277
271
NOTE 8 - DEPOSITS
A summary of the balances of deposits follows:
2014 Demand $ 520,874 $ Interest checking 278,070 Money market accounts 341,741 Dacotah Gold money market accounts 241,552 Certificates of deposit, $250,000 and over 69,046 Other certificicates of deposit 439,056 2013
480,952
281,529
283,331
232,148
73,001
509,271
$ 1,890,339 $ 1,860,232
At December 31, 2014, the scheduled maturities of certificates of deposit were as follows:
2015
2016 2017 2018 2019
Thereafter $ 246,522
97,733
92,720
48,662
22,465
-
$ 508,102
NOTE 9 - BORROWINGS
Borrowings consist of Federal Home Loan advances totaling $37,000 and $20,000 as of December 31, 2014 and 2013. The contractual
maturities of the borrowings are as follows: 2015 - $3,000; 2016 - $6,000; 2017 - $6,000; 2018 - $2,000; 2019 - $10,000; 2021 - $5,000;
2022 - $5,000.
The Federal Home Loan Bank (FHLB) advances outstanding at December 31, 2014, mature from June 2015 through September 2022. All
advances have fixed rate interest, ranging from 0.84% to 5.50%. The Company maintains a collateral pledge agreement with the Federal
Home Loan Bank of Des Moines covering secured advances whereby the Company has agreed to retain, free of all other pledges, liens, and
encumbrances, agricultural, residential, and commercial real estate loans totaling $510,070 and $349,214 as of December 31, 2014 and 2013.
The pledged loans are discounted at a factor of 135% to 200% when aggregating the amount of loans required by the pledge agreement. In
addition, these borrowings are collateralized by Federal Home Loan Bank stock of $9,184 and $8,470 as of December 31, 2014 and 2013.
The net excess of pledged collateral over the outstanding indebtedness was $214,096 as of December 31, 2014.
As of December 31, 2014 and 2013, the Company pledged loans totaling $84,878 and $102,248 for an available borrowing line of $71,963
and $91,610 under the Federal Reserve Bank’s Borrower in Custody (BIC) program.
The Company also had an unsecured federal funds purchased borrowing capacity of $75,000 and $60,000 at December 31, 2014 and 2013,
respectively.
NOTE 10 – EMPLOYEE BENEFIT PLANS
The Dacotah Banks, Inc. 401(k) Savings Plan covers substantially all employees of the Company and its subsidiary. Contributions to this
defined contribution plan are based on percentages of eligible employee salaries. Amounts contributed under the plan shall not exceed
the maximum amounts deductible for federal income tax purposes. Charges to employee benefits expense for the plan in the consolidated
statements of income amounted to $2,000 in 2014, $1,831 in 2013, and $1,756 in 2012.
The Company has salary continuation contracts with executive officers of the Company and its subsidiary. Effective January 1, 2013,
the contracts were amended which substantially increased the payments to the officers or their beneficiaries. The total amount accrued
was $12,238 and $9,881 as of December 31, 2014 and 2013. The provision for salary continuation expense amounted to $2,549, $2,475,
and $838 in 2014, 2013, and 2012. Retirement payments of $192, $223, and $191 were made in 2014, 2013 and 2012. The Company has
life insurance policies in place to provide funding for these benefits. Cash surrender value of these policies was $36,549 and $35,410 at
December 31, 2014 and 2013.
The Dacotah Banks, Inc. 2003 Stock Incentive Plan (the “Stock Plan”) authorized the issuance of up to 100,000 common shares for the
grant of stock options and several other types of stock-based awards. The Company awarded 1,047 and 2,093 treasury shares in the form
of fully vested incentive stock grants to executive officers of the Company in 2014 and 2013. The fair market value of the stock award was
$174 and $153 per share for a total of $182 and $320 at December 31, 2014 and 2013. There were 86,728 and 87,775 unissued common
shares remaining under the Stock Plan at December 31, 2014 and 2013.
NOTE 11 - INCOME TAXES
Income tax expense for the three years ended December 31, 2014, 2013 and 2012 were:
2014 2013
2012
Current
Federal $ 11,157 $ 9,728 $ 8,749
State 1,548 1,446 1,170
12,705 11,174 9,919
Deferred
Federal (2,178) (1,448) (390)
$
$ 10,527 9,726 $
9,529
Deferred income taxes are provided for the temporary differences between the financial reporting and the tax bases of the Company’s
assets and liabilities.Temporary differences comprising the net deferred tax asset, included in other assets on the consolidated balance sheet
are as follows:
2014
Assets Liabilities Total 2013
Allowance for loan and lease losses $ 8,644 $
- $ 8,644 $ 7,821
Property and equipment - 2,134 (2,134) (2,661)
Accrued salary continuation provision 4,397 - 4,397 3,633
Unrealized (gain) loss on
securities available for sale 162 - 163 758
Other 707 34 672 609
$ 13,910 $
2,168 $ 11,742 $ 10,160
The Company has determined that it is not necessary to establish a valuation reserve for the deferred tax asset since it is more likely than
not that the deferred tax asset of $13,910 will be principally realized.
The consolidated effective tax rates are reconciled to the statutory rate as follows:
Federal statutory income tax rate State income taxes, net of federal income
tax benefit Tax-exempt income Non-deductible expenses incidental to
business acquisitions New market tax credit Other, net 2014 2013 2012
35.0% 35.0% 35.0%
3.4 (1.7) 3.3 (1.8) 2.8
(1.7)
0.2 -
(0.7)
0.1 (1.2) (0.8) 0.1
(1.2)
(0.2)
36.2% 34.6% 34.8%
Income taxes payable of $2,049 and $1,213 is included in accrued expenses and other liabilities at December 31, 2014 and 2013. The
Company complies with the accounting standards relating to uncertainty in income taxes.The Company had no unrecognized tax benefits
as of December 31, 2014 and 2013. The Company recognized no interest and penalties on the underpayment of income taxes during the
years ended December 31, 2014, 2013 and 2012, and had no accrued interest and penalties on the balance sheet as of December 31, 2014
and 2013. The Company has no tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
significantly increase with the next twelve months. The Company’s tax returns are subject to examination for the past three years by the
Federal and State tax authorities.
NOTE 12 - MINIMUM REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators
that, if undertaken, could have a direct material effect on the financial statements of the Company and Bank. 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 Company’s and Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The capital amounts and classification of the Company and Bank are also subject to qualitative judgments
by the regulators about 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 the Bank to maintain minimum
amounts and ratios of Total and Tier I capital to risk-weighted assets and of Tier I capital to average assets. As of December 31, 2014 and
2013, management believes the Company and the Bank met all capital adequacy requirements to which they are subject.
As of December 31, 2014 and 2013, the regulatory financial reports filed with the Federal Deposit Insurance Corporation categorized the
Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, a bank must
maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions
or events since the notification that management believes have changed the Bank’s category.
The actual capital amounts and ratios for the Company and its bank subsidiary are presented in the following table (in thousands):
For Capital To Be Well
ActualAdequacy Purposes: Capitalized:
AmountRatio
Amount Ratio
Amount Ratio
DECEMBER 31, 2014
Total Capital
(to Risk Weighted Assets)
Company $238,041 13.2% >$144,791 8.0% N/A N/A
Bank $235,681 13.0% >$145,207 8.0% >$181,509 10.0%
Tier I Capital
Company Bank $215,400 $212,975 11.9% 11.7% >$72,395 >$72,603 4.0% N/A 4.0% >$108,905 N/A
6.0%
Tier I Capital
(to Average Assets)
5.0%
DECEMBER 31, 2013
Total Capital
Company Bank $224,932 $220,250 13.3%
13.0% >$135,399 >$135,828 8.0% N/A 8.0% >$169,785 N/A
10.0%
Tier I Capital
6.0%
Tier I Capital
(to Average Assets)
5.0%
NOTE 13 - OPERATING LEASES
The Company leases office space and bank premises under leases classified as operating leases.
Future minimum rental payments required under the above operating leases as of December 31, 2014 are as follows:
2015 $
2016 2017 2018 2019 Thereafter $
160
157
142
142
142
427
1,170
At the conclusion of the initial term and any succeeding renewal term, these leases will automatically renew for an additional year.
Rent expense for the above leases was as follows:
2014 2013 2012
Bank premises $ 18 $
Office space 159 18 $
156 17
147
Total 174 164
$ 177 $
$
NOTE 14 - LITIGATION
The Company and the Bank are defendants in various matters of litigation incidental to their business. In the opinion of management,
based upon the opinion of legal counsel, disposition of these matters will not materially affect the consolidated financial position of the
Company as of December 31, 2014 and 2013.
NOTE 15 - OFF-BALANCE-SHEET ACTIVITIES
The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such
commitments involve, to varying degrees, elements of credit and interest risk in excess of the amount recognized in the balance sheet.
The Company’s exposure to credit loss is represented by the contractual amount of these instruments. The Company uses the same credit
policies in making commitments as it does for on-balance-sheet instruments.
At December 31, 2014 and 2013, the following financial instruments were outstanding whose contract amounts represent credit risk:
Contract Amount
2014 2013
Commitments to grant loans $ 367,135 $ 357,407
Standby letters of credit 10,862 11,360
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The
commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily
represent future cash requirements.The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s
credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment.
Unfunded commitments under revolving credit lines and overdraft protection agreements are commitments for possible future extensions
of credit to existing customers. These lines-of-credit are uncollateralized and usually do not contain a specified maturity date and may not
be drawn upon to the total extent to which the Company is committed.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.
Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have
expiration dates within one year.The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan
facilities to customers. The Company holds collateral supporting those commitments if deemed necessary.
NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. The
fair value of a financial instrument is the price that would be received to sell an asset in an orderly transaction between market participants
at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted
market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. These techniques are significantly affected by the assumptions used,
including the discount rate and estimate of future cash flows. Accordingly the fair value estimates may not be realized in an immediate
settlement of the instrument.
Fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been
a significant decrease in the volume and level of activity for the asset, a change in valuation technique or the use of multiple valuation
techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the
measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment.
Fair value is a reasonable point within a range that is most representative of fair value under current market conditions.
In accordance with this guidance, the Company groups its financial assets generally measured at fair value in three levels, based on the
markets in which the assets are traded and the reliability of the assumptions used to determine fair value.
• Level 1: Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability
•
•
to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active
exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or
liabilities.
Level 2: Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.The valuation may be based on quoted prices for similar assets or liabilities in active markets, quoted prices
for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to
observable market data for substantially the full term of the asset or liability.
Level 3: Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities. Level 3 assets and liabilities may include financial instruments whose value is determined using pricing
models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value
requires significant management judgment or estimation.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level or input that is significant to the fair
value measurement.
At December 31, 2014 and 2013, the Company had no liabilities measured at fair value on a recurring basis. The following table sets
forth assets measured at fair value on a recurring basis at December 31, 2014 and 2013:
DECEMBER 31, 2014
Available-for-sale securities Quoted Prices in Active Markets
(Level 1) DECEMBER 31, 2013
Available-for-sale securities Other Observable
Inputs
(Level 2) Unobservable
Inputs
(Level 3) Total
$
-
$ 282,912 $
-
$
282,912
$
-
$ 321,715 $
-
$
321,715
The fair value of available-for-sale securities is estimated based on third-party pricing services information derived from comparison to
similar securities traded in active markets.
Under certain circumstances the Company may make adjustments to fair value for assets and liabilities although they are not measured
at fair value on an ongoing basis. The Company only had Level 3 financial assets measured at fair value on a nonrecurring basis, which is
summarized below:
Impaired loans
Foreclosed assets
Total assets
20142013
RangeRange
ValuationUnobservable(Weighted (Weighted
Technique
Input
Average)
Average)
2014
2013
$59,314
$44,641
Collateral
Valuation
Discount from
Market Value
0-100%
9%
0-100%
14%
1,658
3,252
Collateral
Valuation
Discount from
Market Value
0-59%
9%
0-48%
5%
$60,972
$47,893
The specific reserves for collateral-dependent impaired loans are determined based on the fair value of collateral method. Under the fair
value of collateral method, the specific reserve is equal to the difference between the carrying value of the loan and the fair value of the
collateral less estimated selling costs. When a specific reserve is required for an impaired loan, the impaired loan is essentially measured at
fair value. When an estimate of fair value is used for other collateral supporting commercial loans based on an assumption not observable
in the marketplace, such valuations have been classified as Level 3.
The fair value of foreclosed assets and collateral was determined based on appraisals with further adjustments made to the appraised values
due to various factors, including the age of the appraisal, age of comparables included in the appraisal, and known changes in the market
and in the collateral. As these significant adjustments are based on unobservable inputs, the resulting fair value measurements have been
categorized as Level 3 measurements.
The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:
20142013
CarryingFairCarrying Fair
ValueValueValue Value
Financial Assets
Cash and cash equivalents
Time deposits in banks
Loans held for sale
Loans, net
Interest receivable
Investments in life insurance contracts
Total financial assets
Financial Liabilities
Deposits
Borrowings
Interest payable
Total financial liabilities
$
87,806
$ 87,806
$ 103,633
$ 103,633
6,8936,893 11,09411,094
282,912282,912 321,715321,715
-- 866866
1,657,9161,652,012 1,539,5581,534,016
18,75518,755 17,81017,810
36,54936,549 35,41035,410
$
2,030,086
$
2,024,544
2,090,831
$
1,890,339
$1,890,683
$ 1,860,232
$ 1,863,602
37,00037,49820,00020,434
2,4622,4623,3723,372
$
1,929,801
$
2,084,927
$
$
1,930,643
$
1,883,604
$1,887,408
The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
Cash and cash equivalents and time deposits in banks - The carrying amounts approximate fair values.
Securities available for sale - Fair values for securities available for sale are based on third-party pricing services information derived from
comparison to similar securities traded in active markets.
Loans held for sale – Fair values of loans held for sale are based on commitments on hand from investors or prevailing market prices.
Loans - For all variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying
values. Fair values for fixed rate loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. Fair values for impaired loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
Investments in life insurance contracts - The carrying amounts approximate fair value.
Deposits - The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date
(carrying amounts).The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their
fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that
applies their marginal cost using wholesale funds rates based on the expected duration of the certificate of deposit.
Borrowings - The fair value of the borrowings is based on the discounted value of the cash flows. The discount rate is estimated using the
rates currently offered for fixed rate advances of similar remaining maturities.
Accrued interest - The carrying amounts of accrued interest approximate fair value.
Off-balance-sheet instruments – Fair values of off-balance sheet, credit-related financial instruments are based on fees currently charged
to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The
carrying amount and fair value of off-balance sheet instruments is not significant.
NOTE 17 - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
Balance Sheets
December 31,
2014 2013
ASSETS
Investment in subsidiary bank $ 221,103 $ 206,685
Cash
2,8685,319
Loans 1,053 900
Foreclosed assets
877Investments in life insurance contracts
1,3201,243
Oter asset
2,1531,949
$ 229,374 $ 216,097
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Other liabilities $
STOCKHOLDERS’ EQUITY
Common stock, $4 par value; 5,000,000 shares
authorized, 1,428,598 shares issued and outstanding Capital surplus Retained earnings Accumulated other comprehensive income (loss) Treasury stock, 319,602 shares in 2014 and
306,156 shares in 2013 Total stockholders’ equity 5,301 $
4,361
5,714 5,714
12,016 11,545
221,946 207,285
(291)(1,374)
(15,312)(11,434)
224,073 211,736
$ 229,374 $ 216,097
Income Statements
Years Ended
December 31,
2014 2013
Dividend income from subsidiary bank $ 5,300 $ 8,700
Management fees and other income 3,190 3,147
Total income 8,490 11,847
Salaries and employee benefits expense Other expenses Total expenses 2,374 974 3,348 Income before income taxes and equity in
undistributed earnings of subsidiary 5,1428,368
Income tax expense
2,334
1,145
3,479
170
115
Income before equity in undistributed
earnings of subsidiary
5,257 8,538
Equity in undistributed earnings of subsidiary 13,334 9,844
Net income 55 | DACOTAH BANK ANNUAL REPORT 2014
$ 18,591 $ 18,382
Statements Of Cash Flows
Years Ended
December 31,
2014 2013
OPERATING ACTIVITIES
Net income $ 18,591 $ 18,382
Adjustments to reconcile net income to
net cash from operating activities:
Equity in undistributed earnings of subsidiary (13,334)(9,844)
Depreciation and amortization 222267
Increase in investment in life insurance contracts
(77) (75)
Executive incentive stock awards 182320
Increase in other assets, net (250) (53)
9401,030
Increase in other liabilities, net Net Cash From Operating Activities 6,27410,027
INVESTING ACTIVITIES
Net (increase) decrease in loans (153)
75
Purchases of premises and equipment, net (176) (209)
Purchase of foreclosed assets
(877) Purchase of subsidiary bank-
(5,063)
Net Cash Used By Investing Activities FINANCING ACTIVITIES
(Purchase) sale of treasury stock, net Dividends paid (1,206) (5,197)
(3,589) 707
(3,930) (3,580)
Net Cash Used By Financing Activities (7,519) (2,873)
NET CHANGE IN CASH (2,451) 1,957
CASH, BEGINNING OF YEAR CASH, END OF YEAR 5,3193,362
$ 2,868
$5,319
Dacotah Banks, Inc. Directors
Rodney W. Fouberg
(1984*)
Chairman of
the Board
Aberdeen, SD
Bradford J.
Wheeler (1997*)
President
Wheeler
Manufacturing,
Inc.
Lemmon, SD
Kent E. Edson
(1996*)
Retired
President and
Chief Financial
Officer
Aberdeen, SD
Arthur R. Russo
(1985*)
Partner
RhodesAnderson
Insurance
Aberdeen, SD
Richard L. Westra
(2005*)
President and
Chief Executive
Officer
Aberdeen, SD
Catherine O.
Dutenhoffer
(2012*)
Co-owner
Evolution
Powersports
Watertown, SD
Incoming
Board Member
Robert J. Fouberg
Secretary
William S. Lamont
(1985*)
Planning
Consultant
Lamont
Associates
Aberdeen, SD
Robert B. Lamont,
II (2001*)
Private Investor
Aberdeen, SD
Elizabeth A. Lewis
(2014*)
Attorney
Woods, Fuller,
Shultz & Smith
P.C.
Sioux Falls, SD
J. Douglas Austin
(Retired December
31, 2014)
Joseph A. Senger
(2015*)
Executive
Vice President
*Year first elected.
Dacotah Banks, Inc. Management
Rodney W. Fouberg
Chairman of the
Board
Richard L. Westra
President and
Chief Executive
Officer
Joseph A. Senger
Executive Vice
President
Chad D. Bergan
Senior Vice
President and
Chief Financial
Officer
Bob L. Compton
Senior Vice
President
Human
Resources
Robert J. Fouberg
Senior Vice
President Risk
Management
and General
Counsel
Dacotah Bank Directors
Rodney W. Fouberg
Richard L. Westra
Donna M. Boekelheide Paula Kay Carlson
Farming
Northville, SD
Chief Loan Program
and Services Officer
Great Lakes
Educational Loan
Services Inc.
Aberdeen, SD
Kent E. Edson
Robert J. Gruman
JoAnn R. Hooper
Dale A. Melius
Chairman of
the Board
Aberdeen, SD
Retired President
and Chief Financial
Officer
Aberdeen, SD
President and Chief
Executive Officer
Aberdeen, SD
Business Consultant
Bob Gruman
Consulting
Certified Public
Accountant
Valley City, ND
Farming
Faulkton, SD
Robert J. Fouberg
Secretary
Arthur R. Russo
Partner
RhodesAnderson
Insurance
Aberdeen, SD
Joseph A. Senger
Executive
Vice President
Dacotah Bank Steering Committee
Richard L. Westra
President and
Chief Executive
Officer
Joseph A. Senger
Executive Vice
President
Chad D. Bergan
Senior Vice
President and
Chief Financial
Officer
Bob L. Compton
Senior Vice
President Human
Resources
Robert J. Fouberg
Senior Vice
President Risk
Management and
General Counsel
Thomas Heisler, Jr
Senior Vice
President
Insurance
Services
Michael K. Hollan
Senior Vice
President
Operations and
Technology
Steven M. Schaeffer
Senior Vice
President Trust
Paul R. McDonald
Vice President
Marketing
Diana L. Pfister
Vice President
Compliance
Stacy J. Sandvig
Vice President
Treasury
Dacotah Bank Management
regional presidents
David W. Bangasser
Sioux Falls, SD
Southeast Region
Bradley D. Moore
Aberdeen, SD
Mid-Dakota
Region
Richard J. Rylance
Rapid City, SD
Western Region
Daniel R. Vollmer
Rolla, ND
Northern Region
market presidents
Travis J. Ellison
Lemmon, SD
David J. Gibson
Brookings, SD
Richard A. Gulmon
Valley City, ND
Kip J. Hansen
Watertown, SD
Casey L. Henderson
Jamestown, ND
Dwight D. Hossle
Faulkton, SD
Thomas R. LaBrie
Clark, SD
G.W. Melgaard
Minot, ND
Daniel N. Menking
Webster, SD
Jeff C. Moore
Dickinson, ND
Darrell D. Schlepp
Mobridge, SD
Kevin B. Wegehaupt
Sisseton, SD
Larry D. Ringgenberg John V. Scherbenske
Morris, MN
Hettinger, ND
Aberdeen Downtown
308 S Main Street
PO Box 1210
Aberdeen, SD 57402-1210
P - (605) 225-5611
F - (605) 229-5409
Cresbard
207 Main Street
PO Box 167
Cresbard, SD 57435
P - (605) 324-3601
F - (605) 324-3249
Aberdeen East Bank
3312 Sixth Avenue SE
PO Box 1500
Aberdeen, SD 57401-1500
P - (605) 225-1300
F - (605) 622-2467
Custer
35 S Sixth Street
PO Box 4060
Custer, SD 57730
P - (605) 673-5800
F - (605) 673-2562
Belcourt
4324 Highway 281
PO Box 840
Belcourt, ND 58316
P - (701) 477-6143
F - (701) 477-8671
Dickinson
410 West Villard
Dickinson, ND 58602
P - (701) 225-1200
F - (701) 225-9474
Bison
101 E Main Street
PO Box 99
Bison, SD 57620
P - (605) 244-5261
F - (605) 244-5264
Bowbells
15 Main Street SE
Bowbells, ND 58721
P - (701) 377-2386
F - (701) 377-2430
Brookings
1441 6th Street
Brookings, SD 57006
P - (605) 692-8600
F - (605) 692-4350
Chokio
209 Main St
Chokio, MN 56221
P - (320) 324-7161
F - (320) 324-7165
Clark
113 N Commercial Street
PO Box 298
Clark, SD 57225
P - (605) 532-3626
F - (605) 532-3962
Faulkton
105 8th Avenue South
PO Box 248
Faulkton, SD 57438
P - (605) 598-6211
F - (605) 598-4412
Henry
111 Main Street
PO Box 38
Henry, SD 57243
P - (605) 532-3672
F - (605) 532-3675
Hettinger
121 North Main Street
PO Box 309
Hettinger, ND 58639
P - (701) 567-4531
F - (701) 567-4534
Jamestown
2510 8th Avenue SW
PO Box 2175
Jamestown, ND 58401
P - (701) 952-6600
F - (701)-952-6604
Lemmon
321 Main Avenue
PO Box 359
Lemmon, SD 57638
P - (605) 374-3853
F - (605) 374-5998

Minot
1121 South Broadway
Minot, ND 58702
P - (701) 852-1200
F - (701) 852-1298
Sioux Falls 57th & Cliff
1209 East 57th Street
Sioux Falls, SD 57108
P - (605) 334-8500
F - (605) 334-3379
Mobridge
320 Main Street
Mobridge, SD 57601
P - (605) 845-3673
F - (605) 845-7037
Sioux Falls Phillips Centre
300 S Phillips Avenue, Suite #100
Sioux Falls, SD 57104-6323
P - (605) 331-4000
F - (605) 334-6724
Morris
4 Atlantic Ave
PO Box 380
Morris, MN 56267
P - (320) 589-3361
F - (320) 589-1525
Sioux Falls Silver Valley
1707 S Marion Road
Sioux Falls, SD 57106-3624
P - (605) 361-5636
F - (605) 362-1331
New Effington
PO Box 177
New Effington, SD 57255-0177
P - (605) 637-5251
F - N/A
Rapid City
3535 Fifth Street
PO Box 4508
Rapid City, SD 57709-4508
P - (605) 342-3100
F - (605) 343-0599
Rapid City Downtown
125 Main Street
Rapid City, SD 57709-4508
P - (605) 394-9000
F - (605) 341-4425
Regent
24 Main Avenue S
PO Box 308
Regent, ND 58650
P - (701) 563-4316
F - (701) 563-4355
Rolla
15 East Main
PO Box 789
Rolla, ND 58367
P - (701) 477-3175
F - (701) 477-3178
Roslyn
506 Main Street
PO Box 167
Roslyn, SD 57261
P - (605) 486-4516
F - (605) 486-4518
©2015 Dacotah Banks, Inc. All rights reserved.
Sioux Falls Town Centre
3302 E 10th Street
Sioux Falls, SD 57103
P - (605) 336-7700
F - (605) 336-3303
Sisseton
321 Veterans Avenue
Sisseton, SD 57262
P - (605) 698-3978
F - (605) 698-7913
Valley City
240 3rd Street NW
Valley City, ND 58072
P - (701) 845-2712
F - (701) 845-0781
Watertown
1310 Ninth Avenue SE
PO Box 207
Watertown, SD 57201
P - (605) 886-0645
F - (605) 886-0918
Webster
600 Main Street
Webster, SD 57274
P - (605) 345-3306
F - (605) 345-3234
Willow Lake
111 Garfield Street
Willow Lake, SD 57278
P - (605) 625-3316
F - (605) 625-3317

2 0 1 4 A N N U A L R E P O R T

Transcription

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