Benton Financial Corporation 2016 Annual Report
Report to Stockholders Dear Fellow Shareholders: Benton Financial Corporation exists to serve its clients and communities while earning a fair profit for shareholders. This Corporation has stood the test of time through the commitment of our people. With each passing year, we get safer and stronger. Fowler State Bank s 85 th Anniversary was an impressive success. The Bank was fortunate to accomplish growth in significant areas. Earnings per share increased 18% to $2.69. Net earnings for 2016 were $1,953,072. This resulted in a return on average equity capital of 9.41%, an increase of 10.8% over 2015. Return on assets was a very good 1.27%. The Balance Sheet also improved in 2016. Average total assets grew an impressive $7.7 million (5.3%). Average loans were up $5.2 million (8.0%). This growth enhanced the Bank s operating income. The allowance for loan losses increased and stands at 2.93% of total outstanding loans. Average capital improved 6.7% and ended the year at 13.26% of total assets. Capital to assets of 13.26% is significantly above the Well Capitalized ratio, as defined by the Federal Deposit Insurance Corporation (FDIC). In our continuing endeavor toward a New Generation of Shareholders, cash dividends to shareholders increased two cents. Many employees and directors continue to acquire shares through the Benton Financial Corporation Employee and Director Stock Ownership Plan. Liquidity was provided to shareholders by repurchasing 20,702 shares. Fowler State Bank is excited to share that as we move into 2017, we will be rolling out several innovative and technological advancements for our customers. A complete overhaul of our website, www.fowlerstatebank.com, is underway and expected to go live sometime in the 2 nd quarter of this year. This redesigned website will deliver a more streamlined experience for our customers, with a focus on providing a complete online banking experience in order to better meet the connected consumer s needs. Improvements to our online banking platform are in process, which will offer our customers increased mobile banking products and services. All of these enhancements will help us to better serve our existing customers, and further position Fowler State Bank to reach the new generation of modern consumers. The future of banking is all about capital and talent. This Corporation is blessed with both. The continued support and encouragement of our shareholders is apparent and greatly appreciated. Sincerely, Steven T. Pettet President & CEO
FINANCIAL HIGHLIGHTS 2016 2015 2014 PER SHARE Basic earnings $2.69 $2.28 $2.13 Cash dividends.77.75.74 Book value 29.50 29.11 27.69 PERFORMANCE RATIOS Return on average equity capital 9.41% 8.49% 8.55% Return on average assets 1.27% 1.13% 1.12% EARNINGS Net interest income $6,038,136 $5,696,287 $5,451,916 Provision for loan losses 250,000 100,000 0 Net income 1,953,072 1,649,743 1,569,966 Cash dividends 549,734 543,420 537,308 BALANCE SHEET AVERAGES Total assets $154,279,759 $146,526,523 $140,375,232 Loans (net) 69,789,303 64,612,359 59,643,549 Noninterest bearing balances 12,723,100 14,756,646 22,053,764 Interest bearing balances 104,353,840 98,934,555 87,551,298 Total deposits 117,076,940 113,691,201 109,605,062 Equity capital (net of unrealized gains) 20,745,480 19,440,313 18,367,553 OTHER Weighted average shares outstanding 725,150 722,843 737,359 FIVE YEAR RECORD Net Income Dividend Capital Earnings Per Per Per Year Amount Share(1) Amount Share Amount Share(2) 2012 $ 1,860,016 $ 2.47 $ 536,728 $ 0.72 $ 18,973,271 $ 25.55 2013 $ 1,501,858 $ 2.02 $ 544,275 $ 0.74 $ 18,125,373 $ 24.65 2014 $ 1,569,966 $ 2.13 $ 537,308 $ 0.74 $ 19,975,434 $ 27.69 2015 $ 1,649,743 $ 2.28 $ 543,420 $ 0.75 $ 21,193,911 $ 29.11 2016 $ 1,953,072 $ 2.69 $ 549,734 $ 0.77 $ 20,935,990 $ 29.50 (1) Based on average shares outstanding (2) Based on year-end outstanding shares
PLEASE NOTE: The financial statements in this Annual Report are not a replacement for the Audited Financial Statements of the Company. The Audited Financial Statements contain much more detail. Audited Financial Statements are available upon request from the Company; simply call (765) 884-1200, (800) 439-3951 or visit the Bank s webpage at www.fowlerstatebank.com. If you have questions about the Audited Financials, please feel free to contact Steven T. Pettet, President & CEO or Steven K. Brunton, Executive Vice President & CFO at (765) 884-1200 or (800) 439-3951.
Balance Sheet Summary December 31, 2016, 2015 and 2014 Assets 2016 2015 2014 Cash and equivalents $ 4,171,030 $ 3,372,614 $ 4,788,893 Investments 79,600,116 73,453,123 71,174,290 Loans, net of allowance for loan losses of $2,150,365 and $2,094,787 and $2,034,887 71,149,577 66,351,239 63,761,945 Premises and equipment 417,881 490,272 585,129 Interest receivable 1,469,095 1,376,786 1,407,637 Other assets 1,109,752 988,234 877,352 Total assets $ 157,917,451 $ 146,032,268 $ 142,595,246 Liabilities and Stockholders' Equity Noninterest bearing deposits $ 13,287,116 $ 13,506,890 $ 24,169,181 Interest bearing deposits 105,079,865 98,767,174 85,534,868 Total deposits 118,366,981 112,274,064 109,704,049 Borrowings 18,100,000 11,198,985 11,400,000 Interest payable 71,424 72,131 74,927 Other liabilities 443,056 1,293,177 1,440,836 Total liabilities 136,981,461 124,838,357 122,619,812 Preferred stock, no par value 0 0 0 Common stock, no par value 1,808,167 1,856,484 1,837,121 Capital surplus 1,871,467 1,867,019 1,692,344 Retained earnings 17,142,110 16,269,530 15,163,207 Accumulated other comprehensive income 114,246 1,200,878 1,282,762 Total stockholders' equity 20,935,990 21,193,911 19,975,434 Total liabilities and stockholders' equity $ 157,917,451 $ 146,032,268 $ 142,595,246
Income Statement Summary December 31, 2016, 2015 and 2014 2016 2015 2014 Interest Income Cash and equivalents $ 12,353 $ 16,069 $ 14,388 Loans receivable 4,200,897 3,961,935 3,752,759 Investment securities 2,355,510 2,222,627 2,235,254 Total interest income 6,568,760 6,200,631 6,002,401 Interest Expense Deposits 367,706 375,228 378,786 Borrowings 162,918 129,116 171,699 Total interest expense 530,624 504,344 550,485 Net Interest Income 6,038,136 5,696,287 5,451,916 Provision for loan loss 250,000 100,000 - Net Interest Income After Provision for Loss 5,788,136 5,596,287 5,451,916 Other Income Service charges 297,918 298,371 319,683 Gains (losses) on securities 428,312 379,460 72,008 Other income 277,176 296,063 264,048 Total other income 1,003,406 973,894 655,739 Other Expenses Salaries and employee benefits 2,631,419 2,929,274 2,489,537 Premises, equipment and operating 773,348 772,896 792,291 Other expenses 1,072,229 955,354 1,001,423 Total other expenses 4,476,996 4,657,524 4,283,251 Income Before Income Tax 2,314,546 1,912,657 1,824,404 Income tax expense 361,474 262,914 254,438 Net Income $ 1,953,072 $ 1,649,743 $ 1,569,966
Statement of Equity Summary December 31, 2016, 2015 and 2014 Common Stock Unrealized Shares Capital Retained Gain (Loss) Outstanding Amount Surplus Earnings AFS Securities Total Balance January 1, 2014 735,217 $ 1,875,482 $ 1,534,249 $ 14,653,501 $ 62,141 $ 18,125,373 Net income 1,569,966 1,569,966 Other comprehensive income 1,220,621 1,220,621 Cash dividends ($0.74 per share) (537,308) (537,308) Issuance of Stock 8,350 25,329 216,821 242,150 Purchase of Stock (22,229) (63,690) (58,726) (522,952) (645,368) Balance December 31, 2014 721,338 $ 1,837,121 $ 1,692,344 $ 15,163,207 $ 1,282,762 $ 19,975,434 Net income 1,649,743 1,649,743 Other comprehensive income (81,884) (81,884) Cash dividends ($0.75 per share) (543,420) (543,420) Issuance of Stock 6,691 19,363 174,675 194,038 Purchase of Stock - Balance December 31, 2015 728,029 $ 1,856,484 $ 1,867,019 $ 16,269,530 $ 1,200,878 $ 21,193,911 Net income 1,953,072 1,953,072 Other comprehensive income (1,086,632) (1,086,632) Cash dividends ($0.77 per share) (549,734) (549,734) Issuance of Stock 2,315 6,230 60,905 67,135 Purchase of Stock (20,702) (54,547) (56,457) (530,758) (641,762) Balance December 31, 2016 709,642 $ 1,808,167 $ 1,871,467 $ 17,142,110 $ 114,246 $ 20,935,990
22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 $31.00 $29.00 $27.00 $25.00 $23.00 $21.00 $19.00 $17.00 $15.00 Shareholder's Equity 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Book Value per share 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ $0.78 $0.76 $0.74 $0.72 $0.70 $0.68 $0.66 $0.64 $0.62 $0.60 $0.58 Earnings per share 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dividend per share 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
BENTON FINANCIAL CORPORATION DIRECTORS AND OFFICERS STEVEN K BRUNTON, Director, Exec Vice President & CFO MICHAEL E FISCHBACH, Director and Vice Chairman JOHN S FREELAND, Director and Chairman RICK J MICKLE, Director STEVEN T PETTET, Director, President & CEO SUZANNE M SOULIGNE, Director JOHN C WRIGHT, Director SHERYL D RICHERT, Secretary CYNTHIA L EBERHARDT, Asst. Secretary Steven T. Pettet FOWLER STATE BANK OFFICERS & STAFF President & CEO Pamela S. Benner Linda I. Brewer Linda K. Brouillette Steven K. Brunton Kassey L. Budreau Kim M. Datzman Traci L. Davies Cynthia L. Eberhardt Lori A. Francis Mary Lou Hardebeck Michelle E. Huff Kevin K. Lange Rick J. Mickle Anne M. Molter Sheryl D. Richert Diane L. Ross Marie L. Rowe Martha L. Salla Betsy M. Sanford Assistant Auditor Cashier & Assistant Trust Officer Vice President Executive Vice President & CFO Vice President & Human Resource Manager Chief Technology Officer & Assistant Vice President Vice President Vice President Assistant Vice President & Compliance Officer Assistant Cashier Loan Operations Officer Loan Officer Senior Vice President & Investment Officer Senior Trust Officer & Vice President Vice President Assistant Vice President & Mortgage Loan Coordinator Assistant Vice President & Loan Officer Assistant Cashier Financial Operations Manager Marissa F. Arthur Laura S. Lee PART TIME Anne K. Hanson Morgan O. Matson K. Rene Adwell Amy M. Hardebeck Charlotte D. Merritt Kristin L. Kuntz Amy N. Jessie Linda K. Ringle James D. Remsburg Lisa M. Kimberlin Courtney A. Rooze Sandra S. Sylvester Gayle S. Lee Ronnie G. Slavens Delaney J. Williams Christopher C. Williams Courtney J. Rice Joy L. Rountree Maureen J. Senesac Curt A. Puetz Gisele M. Dewing Gloria L. Hofmeyer WILLIAMSPORT BRANCH KENTLAND BRANCH Vice President and Branch Manager PART TIME Sharon F. Strickland Vice President and Branch Manager PART TIME F. Kay Goetz Ruth A. Slavens
Fowler State Bank www.fowlerstatebank.com 300 East 5 th Street PO Box 511 Fowler, IN 47944 765-884-1200 Toll Free: 800-439-3951 510 State Road 28 PO Box 157 Williamsport, IN 47993 765-762-5504 Toll Free: 800-439-2802 406 South Grant Ave. Fowler, IN 47944 765-884-3241 607 East Lincoln PO Box 27 Kentland, IN 47951 219-474-5444 Toll Free: 800-207-3615