First State Bank convenes its 112th annual meeting

President Bob Galt told stockholders Tuesday night that The First State Bank had "several highs and a few lows" in 2014.

Galt, the eighth president in the bank's history, talked of the untimely death of Carrol Ereaux, Director of The First State Bank and F.S. Banco, Inc., last May and what he meant to the bank.

"Carrol gave much of his time to the bank as a member of our loan committee and contributed his experience and wisdom to make our jobs easier," Galt said. "Being director was something Carrol took great pride in...as if there was anything he did that he didn't take great pride in. The bank certainly misses him, but we should all feel blessed that we the privilege to know and work with Carrol."

Galt pointed to the hard work of the bank's employees and record livestock prices as to the solid footing The First State Bank reached in 2014. He said assets topped $142 million, deposits reached nearly $120 million and the bank added $10 million to its loan portfolio, which helped bring the bank' loan total to nearly $63 million during the peak lending period.

"These new levels combined to create a healthy bottom line for your bank," Galt said, " as well as increase our net worth to an all-time high of approximately $19.6 million."

"What does this all mean," Galt asked. "To speak in plain terms, I feel that our bank is in excellent condition, and if you don't believe me, we could all take the word of the State Banking Commissioner."

Galt said that in September the State conducted a full scope Safety and Soundness exam and that "for once, things went smoothly."

"The economy continues to play a major role, both nationally and locally," he said. "Our ag producers had a Pandora's Box in 2014. When ranchers are selling their calves for $1,600 a round and bred cattle for over $3,000, things seem to be going quite well. But, on the other end were our farm producers that had to suffer through Mother Nature's bag of tricks once again and ended up with grain that even if they could sell, the elevators were either plugged, the market price had tanked."

"It was a year that tested our farmers' resolve to say the least," Galt continued. "Generally we don't complain about rain in this country, but there are several of you in the audience tonight that would have liked to see about three weeks of hot, dry weather in August and September. Again, the grind here is that this rain surely put extra pounds on calves, but also made harvest quite a challenge."

As far as the Nation's economy nearing full recovery, Galt said the banking world is beginning to see a division within the Federal Reserve. He said the Chairperson says that interest rates are going to begin their rise in late 2015 or early 2016.

"However, a few of the Fed Presidents are thinking for themselves and don't totally agree with this theory," Galt added. "Our Fed President in Minneapolis has been quite vocal, stating he feels the increase may not happen until 2018. Unless you intend to borrow money between now and then, this news is not good for our bank. The depressed interest rates make it very hard to generate profits. It still boils down to whether you are a new borrower or a net depositor. One will be glad for the low rates while others will keep eating hamburger and macaroni."

Galt pointed out several economic indicators he thought were interesting including light motor vehicle sales which reached over 16 million units for the first time since 2006, an unemployment rate of 5.8-percent (though forecasters predicted the rate up to 6-percent into 2017) and that number of mortgages underwater in 2014 is less than 4 million, down from 14 million in 2011.

Galt said that the bank faces many of the same challenges in 2015 that it did in 2014.

"Competition, regulations, economy, weather and other issues rural communities face will make sure that our day to day operations are not boring, " Galt concluded. "We will work hard to face these challenges head on."