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art fJ
RSSD ID Jt9 ) 9 amp3 i] ----------bull1-----------
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FRY-6 OMB Nu mber 7100-0297 Approval expires December 31 2015 COPY Page 1 of2
Board of Govern ors of the Federal Reserve System
Annual Report of Holding Companies-FR Y-6
Report at the close of business as of the end of fiscal year
This Report is required by law Section 5(c)(1)(A) of the Bank Holding Company Act (12 USC sect 1844 (c)(1)(A)) Section B(a) of the International Banking Act (12 USC sect 3 106(a)) Sections 11 (a)(1) 25 and 25A of the Federal Reserve Act (12 USC sectsect 248(a)(1) 602 and 6 11a) Section 21113(c) of Regulation K (12 CFR sect 21113(c)) and Section 2255(b) of Regulation Y (12 CFR sect 2255(b)) and section 10(c)(2)(H) of the Home Owners Loan Act Return to the appropriate Federal Reserve Bank the original and the number of copies specified
This report fonm is to be filed by all top-tier bank holding compashynies and top-tier savings and loan holding companies organized under US law and by any foreign banking organization that does not meet the requirements of and is not treated as a qualifyshying foreign banking organization under Section 21123 of Regulation K (12 CFR sect 21123) (See page one of the general instructions for more detail of who must file) The Federal Reserve may not conduct or sponsor and an organization (or a person) is not required to respond to an infonmation collection unless it displays a currently valid OMB control number
NOTE The Annual Report of Holding Companies must be signed by one director of the top-tier holding company This individual should also be a senior official of the top-tier holding company In the event that the top-tier holding company does not have an individual who is a senior official and is also a director the chairshyman of the board must sign the report
1Allan J Boyken Name of the Holding Company Director and Official
President TiOe of the Holding Company Director and Official
attest that the Annual Report of Holding Companies (including the supporting attachments) for this report date has been preshypared in conformance with the instructions issued by the Federal Reserve System and are true and correct to the best of my knowledge and belief
With respect to information regarding individuals contained in this
Date of Report (top-tier holding companys fiscal year-end)
December 31 2014 Month I Day I Year
Reporters Legal Entity I dentifie r (LEI) (20-Character LEI Code)
Reporters Name Street and Mailing Address
Titonka Bancshares Inc Legal TIOe of Holding Company
PO Box 309 (Mailing Address of the Holding Company) Street I PO Box
Titonka IA 50480 City State Zip Code
173 Main Street North Titonka IA 50480 Physical Location (if different from mailing address)
report the Reporter certifies that it has the authority to provide this information to the Federal Reserve The Reporter also certifies that it has the authority on behalf of each individual Allan J Boyken President
Name noe
515-928-2142
to consent or object to public release of information regarding that individual The Federal Reserve may assume in the absence of a request for confidential treatment submitted in accordance with the Boards Rules Regarding Availability of Information 12 CFR 261 that the Reporter and individual consent t ublic ase of all details in the report ce ing that indi middot
Date of Signa ture
515-928-2042 Area Code I FAX Number
allanboykentsbbankcom E-mail Address
Address (URL) for the Holding Companys web page
For holding companies f1Q1 registered with the SE Indicate status of Annual Report to Shareholders
181 is included with the FR Y-6 report
D will be sent under separate cover
D is not prepared
C
For Federal Reserve Bank Use Only
Person to whom questions about this report should be directed
Area Code I Phone Number I Extension
Does the reporter request confidential treatment for any portion of this
submission
D Yes Please identify the report items to which this request applies
D In accordance with the instructions on pages GEN-2 and 3 a letter justifying the request is being provided
D The information for which confidential treatment is sought is being submitted separately labeled Confidential
[8J No
Public reporting burden for this information collection Is estimated to vary from 13 to 101 hours per response with an average of 525 hours per response including time to gather and maintain data In the required form and to review instructions and complete the information collection Send comments regarding this burden estimate or any other aspect of this collection of Information including suggestions for reducing this burden to Secretary Board of Governors of the Federal Reserve System 20th and C Streets NW Washington DC 20551 and to the Office of Management and Budget Paperwork Reduction Project (7100-0297) Washington DC 20503
102014
Bancshares IA
Savings Titonka IA
Boyken Agency Titonka IA
Form FRmiddotY-6
Titonka Bancshares Inc
Titonka Iowa
December 31 2014
Report item 1 See attached financial report of Titonka Bancshares Inc as of December 31 2014 and 2013
Report item 2a Organization chart
Titonka Inc Titonka United States of America
an Iowa corporation
Titonka Bank United States of America
20 shares 100 ownership an Iowa corporation
Report Item 2b Domestic Branch Listing (see attached
Report Item 3 Securities Holders (see attached
Report Item 4 Insiders (see attached
Insurance Inc United States of America
1000 shares 100 ownership an Iowa corporation
Steps
Effective DataAttlon Date
Form FRY-6 Titonka Bancshares Inc
Titonka Iowa Fiscal year ending December 31 2014
Report Item 2b Domestic Branch Listing
Results A list of branches for your depository institution TITONKA SAVINGS BANK (ID_RSSD 334648) This depository institution is held by TITONKA BANCSHARES INC (1209837) of TITONKA IA
The data are as of 12312014 Data reflects information that was received and processed through 0107 2015
Reconciliation and Verification
1 In the Data Action column of each branch rrm enter one or more of the actions specified below 2 If required enter the date in the Effective Date column
Actions OK If the branch information is correct enter OK in the Data Action column Change If the branch information is incorrect or incomplete revise the data enter Change in the Data Action column and the date when this information first became valid in the Effective Date column Close If a branch listed was sold or closed enter Close in the Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete in the Data Action column
Add If a reportable branch Is missing insert a row add the branch data and enter Add in the Data Action column and the opening or acquisition date in the Effective Date column
If printing this list you may need to adjust your page setup in MS Excel Try using landscape orientation page scaling andor legal sized paper
Submission Procedure
When you are finished send a saved copy to your FRB contact See the detailed instructions on this site for more information
If you are e-mailing this to your FRB contact put your institution name city and state in the subject line of the e-mail
Note
To satisfy the FR Y-10 reporting requirements you must also submit FR Y-1 O Domestic Branch Schedules for each branch with a Data Action of Change Close Delete or Add
The FR Y-1O report may be submitted in a hard copy format or via the FR Y-1 O Online application - httpsy1 Oonlinefederalreservegov
bullFDIC UNINUM Office Number and ID_RSSD columns are for reference only Verification of these values is not required
Branch Service Type
Branch
ID RSSD Popular Name Street Address City State Zip Code County Country
FDIC
U NINUM Office
Number Head Office
Head Office
ID_RSSD
ok Full Service (Head Office) 334648
TITONKA
SAVINGS BANK 173 MAIN STREET NORTH TITONKA IA 50480-0309 KOSSUTH
UNITED
STATES 11316 0 TITONKA
SAVINGS BANK 334648
ok Full Service 1189760
FOREST CITY
BRANCH 101 HIGHWAY 69 NORTH FOREST CITY IA 50436 WINNEBAGO
UNITED STATES 39179 2
TITONKA SAVINGS BANK 334648
ok Full Service 488541
THOMPSON
BRANCH 11723 HIGHWAY 9 THOMPSON IA 50478 WINNEBAGO
UNITED
STATES 280129 3
TITONKA
SAVINGS BANK 334648
Form FR Y-6
Titonka Bancshares Inc
Fiscal Year ending December 31 2014
Report Item 3 Securities holders
(1 )(a)(b)(c ) and (2)(a)(b)( c)
Current shareholders wi th mnership control or holdings of 5 or more with power to vote as of Shareholders not listed in 3(1)(a) through 3(1)(c ) that had ownership control or holdings of 5 or fiscal year ending 12312014 more with power to vote during the fiscal year ending 12312014
(1) (a) (1) (b) (1) (c )
Name amp Address Country of Citizenship Number and Percentage of
City State Country or Incorporation Each Class of Voting Securities
Allan J Boyken Revocable Bank
Slack Trust
Titonka Iowa
USA 36070 shares - 4770 of
voting common stock voted by
Truslee Allan J Boyken
Allan J Boyken
Titonka Iowa
USA 150 shares - 5000 of
voting preferred stock
F Joy Boyken 201 O Trust
Titonka Iowa
USA 8838 shares-1169 of
voting common stock voled by
Trustee Allan J Boyken
Aaron T Boyken
Tilonka Iowa
USA 12800 sharesmiddot1693 of
voting common stock
Marshall S Boyken
Tulsa Oklahoma
USA 6550 shares - 866 of
voting common stock
Lucas W Boyken
Clarion1 Iowa
USA 6250 shares - 827 of
voling common slack
Quentin R Boyken
Des Moines Iowa
USA 4 108 shares - 543 of
voting common stock
150 shares -5000 of
voling preferred stock
Nf
(2) (a) (2) (b) (2) (c )
Name amp Address Country of Citizenship Number and Percentage of
(City Stale Country) or Incorporation Each Class of Voting Securities
middotmiddot
SlateCountry
2
Company
none
none
Form FR Y-6
Titonka Bancshares Inc Titonka Iowa Fiscal year ending December 31 2014
Report item 4 Insiders
4a Principal qccupaion 3a 3b 3c Percentage of Voting
Name City and if othertha n With Bank 1111e and Position 1111e and Position wlth TIUe and Poslllon with shares Jn Bank HodifigCOmpany with Bank Holding Co Subsidiaries other Businesses Holding
Allan J Boyken Banker PresldenUDirector Trust OfficerDlrector none 36070 shares voting common 11tonka Iowa 11onka Savings Bank Treasurer 11onka Savings Bani( 4770 of outstanding USA PresidenUDreclorTreasurer of held in the Alan J Boyken
Boyken Insurance Agency Inc Revocable Bank Stock Trust voted by Allan J Boyken
150 shares-5000 of voting preferred slocilt
4b Percentage of Voting shares In Subsidiaries
20 shares of Titonka Savings Bank 100 of
outstanding (voted by Allan J Boyken for11tonka
Bancshares Inc)
1000 shares of Boyken Insurance Agency lnc
100 of outstanding (voted by Allan J Boyken for
11onka Bancshares Inc)
4c Names of oher
Companies if more than 25 or more of
voling securities
none
F Joy Boyken 2010 Trust none none none none 8838 shares voting common none 11onka Iowa 1169 of outstanding voled by USA Trustee Allan J Boyken
Aaron Boyken Banker SecretaryDirector Chief Technology OfficerDirector of none 12800 shares voting common none none 11tonka Iowa 11tonka Savings Bank Assistant Treasurer Titonka SaVings Bank 1693 of outstanding USA SecretaryDirector of
Boyken Insurance Agency Inc
Quentin R Boyken Attorney Director Director Shareholder 4108 shares voting common none Des Moines Iowa Vice President Titonka Savings Bank Belin McCormlck PC 543 of outstanding USA
150 shares-5000 of voting preferred stock
Marshal S Boyken C1vl1 Engineer none none Director 6550 shares volng common none none Tulsa Oklahoma US Dept of Energy 866 of outstanding USA
Lucas W Boyken Executive none none Vice President 6250 shares voling common none none Clarion Iowa Hagie Manufacturing Co 827 of outstanding USA
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
Bancshares IA
Savings Titonka IA
Boyken Agency Titonka IA
Form FRmiddotY-6
Titonka Bancshares Inc
Titonka Iowa
December 31 2014
Report item 1 See attached financial report of Titonka Bancshares Inc as of December 31 2014 and 2013
Report item 2a Organization chart
Titonka Inc Titonka United States of America
an Iowa corporation
Titonka Bank United States of America
20 shares 100 ownership an Iowa corporation
Report Item 2b Domestic Branch Listing (see attached
Report Item 3 Securities Holders (see attached
Report Item 4 Insiders (see attached
Insurance Inc United States of America
1000 shares 100 ownership an Iowa corporation
Steps
Effective DataAttlon Date
Form FRY-6 Titonka Bancshares Inc
Titonka Iowa Fiscal year ending December 31 2014
Report Item 2b Domestic Branch Listing
Results A list of branches for your depository institution TITONKA SAVINGS BANK (ID_RSSD 334648) This depository institution is held by TITONKA BANCSHARES INC (1209837) of TITONKA IA
The data are as of 12312014 Data reflects information that was received and processed through 0107 2015
Reconciliation and Verification
1 In the Data Action column of each branch rrm enter one or more of the actions specified below 2 If required enter the date in the Effective Date column
Actions OK If the branch information is correct enter OK in the Data Action column Change If the branch information is incorrect or incomplete revise the data enter Change in the Data Action column and the date when this information first became valid in the Effective Date column Close If a branch listed was sold or closed enter Close in the Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete in the Data Action column
Add If a reportable branch Is missing insert a row add the branch data and enter Add in the Data Action column and the opening or acquisition date in the Effective Date column
If printing this list you may need to adjust your page setup in MS Excel Try using landscape orientation page scaling andor legal sized paper
Submission Procedure
When you are finished send a saved copy to your FRB contact See the detailed instructions on this site for more information
If you are e-mailing this to your FRB contact put your institution name city and state in the subject line of the e-mail
Note
To satisfy the FR Y-10 reporting requirements you must also submit FR Y-1 O Domestic Branch Schedules for each branch with a Data Action of Change Close Delete or Add
The FR Y-1O report may be submitted in a hard copy format or via the FR Y-1 O Online application - httpsy1 Oonlinefederalreservegov
bullFDIC UNINUM Office Number and ID_RSSD columns are for reference only Verification of these values is not required
Branch Service Type
Branch
ID RSSD Popular Name Street Address City State Zip Code County Country
FDIC
U NINUM Office
Number Head Office
Head Office
ID_RSSD
ok Full Service (Head Office) 334648
TITONKA
SAVINGS BANK 173 MAIN STREET NORTH TITONKA IA 50480-0309 KOSSUTH
UNITED
STATES 11316 0 TITONKA
SAVINGS BANK 334648
ok Full Service 1189760
FOREST CITY
BRANCH 101 HIGHWAY 69 NORTH FOREST CITY IA 50436 WINNEBAGO
UNITED STATES 39179 2
TITONKA SAVINGS BANK 334648
ok Full Service 488541
THOMPSON
BRANCH 11723 HIGHWAY 9 THOMPSON IA 50478 WINNEBAGO
UNITED
STATES 280129 3
TITONKA
SAVINGS BANK 334648
Form FR Y-6
Titonka Bancshares Inc
Fiscal Year ending December 31 2014
Report Item 3 Securities holders
(1 )(a)(b)(c ) and (2)(a)(b)( c)
Current shareholders wi th mnership control or holdings of 5 or more with power to vote as of Shareholders not listed in 3(1)(a) through 3(1)(c ) that had ownership control or holdings of 5 or fiscal year ending 12312014 more with power to vote during the fiscal year ending 12312014
(1) (a) (1) (b) (1) (c )
Name amp Address Country of Citizenship Number and Percentage of
City State Country or Incorporation Each Class of Voting Securities
Allan J Boyken Revocable Bank
Slack Trust
Titonka Iowa
USA 36070 shares - 4770 of
voting common stock voted by
Truslee Allan J Boyken
Allan J Boyken
Titonka Iowa
USA 150 shares - 5000 of
voting preferred stock
F Joy Boyken 201 O Trust
Titonka Iowa
USA 8838 shares-1169 of
voting common stock voled by
Trustee Allan J Boyken
Aaron T Boyken
Tilonka Iowa
USA 12800 sharesmiddot1693 of
voting common stock
Marshall S Boyken
Tulsa Oklahoma
USA 6550 shares - 866 of
voting common stock
Lucas W Boyken
Clarion1 Iowa
USA 6250 shares - 827 of
voling common slack
Quentin R Boyken
Des Moines Iowa
USA 4 108 shares - 543 of
voting common stock
150 shares -5000 of
voling preferred stock
Nf
(2) (a) (2) (b) (2) (c )
Name amp Address Country of Citizenship Number and Percentage of
(City Stale Country) or Incorporation Each Class of Voting Securities
middotmiddot
SlateCountry
2
Company
none
none
Form FR Y-6
Titonka Bancshares Inc Titonka Iowa Fiscal year ending December 31 2014
Report item 4 Insiders
4a Principal qccupaion 3a 3b 3c Percentage of Voting
Name City and if othertha n With Bank 1111e and Position 1111e and Position wlth TIUe and Poslllon with shares Jn Bank HodifigCOmpany with Bank Holding Co Subsidiaries other Businesses Holding
Allan J Boyken Banker PresldenUDirector Trust OfficerDlrector none 36070 shares voting common 11tonka Iowa 11onka Savings Bank Treasurer 11onka Savings Bani( 4770 of outstanding USA PresidenUDreclorTreasurer of held in the Alan J Boyken
Boyken Insurance Agency Inc Revocable Bank Stock Trust voted by Allan J Boyken
150 shares-5000 of voting preferred slocilt
4b Percentage of Voting shares In Subsidiaries
20 shares of Titonka Savings Bank 100 of
outstanding (voted by Allan J Boyken for11tonka
Bancshares Inc)
1000 shares of Boyken Insurance Agency lnc
100 of outstanding (voted by Allan J Boyken for
11onka Bancshares Inc)
4c Names of oher
Companies if more than 25 or more of
voling securities
none
F Joy Boyken 2010 Trust none none none none 8838 shares voting common none 11onka Iowa 1169 of outstanding voled by USA Trustee Allan J Boyken
Aaron Boyken Banker SecretaryDirector Chief Technology OfficerDirector of none 12800 shares voting common none none 11tonka Iowa 11tonka Savings Bank Assistant Treasurer Titonka SaVings Bank 1693 of outstanding USA SecretaryDirector of
Boyken Insurance Agency Inc
Quentin R Boyken Attorney Director Director Shareholder 4108 shares voting common none Des Moines Iowa Vice President Titonka Savings Bank Belin McCormlck PC 543 of outstanding USA
150 shares-5000 of voting preferred stock
Marshal S Boyken C1vl1 Engineer none none Director 6550 shares volng common none none Tulsa Oklahoma US Dept of Energy 866 of outstanding USA
Lucas W Boyken Executive none none Vice President 6250 shares voling common none none Clarion Iowa Hagie Manufacturing Co 827 of outstanding USA
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
Steps
Effective DataAttlon Date
Form FRY-6 Titonka Bancshares Inc
Titonka Iowa Fiscal year ending December 31 2014
Report Item 2b Domestic Branch Listing
Results A list of branches for your depository institution TITONKA SAVINGS BANK (ID_RSSD 334648) This depository institution is held by TITONKA BANCSHARES INC (1209837) of TITONKA IA
The data are as of 12312014 Data reflects information that was received and processed through 0107 2015
Reconciliation and Verification
1 In the Data Action column of each branch rrm enter one or more of the actions specified below 2 If required enter the date in the Effective Date column
Actions OK If the branch information is correct enter OK in the Data Action column Change If the branch information is incorrect or incomplete revise the data enter Change in the Data Action column and the date when this information first became valid in the Effective Date column Close If a branch listed was sold or closed enter Close in the Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete in the Data Action column
Add If a reportable branch Is missing insert a row add the branch data and enter Add in the Data Action column and the opening or acquisition date in the Effective Date column
If printing this list you may need to adjust your page setup in MS Excel Try using landscape orientation page scaling andor legal sized paper
Submission Procedure
When you are finished send a saved copy to your FRB contact See the detailed instructions on this site for more information
If you are e-mailing this to your FRB contact put your institution name city and state in the subject line of the e-mail
Note
To satisfy the FR Y-10 reporting requirements you must also submit FR Y-1 O Domestic Branch Schedules for each branch with a Data Action of Change Close Delete or Add
The FR Y-1O report may be submitted in a hard copy format or via the FR Y-1 O Online application - httpsy1 Oonlinefederalreservegov
bullFDIC UNINUM Office Number and ID_RSSD columns are for reference only Verification of these values is not required
Branch Service Type
Branch
ID RSSD Popular Name Street Address City State Zip Code County Country
FDIC
U NINUM Office
Number Head Office
Head Office
ID_RSSD
ok Full Service (Head Office) 334648
TITONKA
SAVINGS BANK 173 MAIN STREET NORTH TITONKA IA 50480-0309 KOSSUTH
UNITED
STATES 11316 0 TITONKA
SAVINGS BANK 334648
ok Full Service 1189760
FOREST CITY
BRANCH 101 HIGHWAY 69 NORTH FOREST CITY IA 50436 WINNEBAGO
UNITED STATES 39179 2
TITONKA SAVINGS BANK 334648
ok Full Service 488541
THOMPSON
BRANCH 11723 HIGHWAY 9 THOMPSON IA 50478 WINNEBAGO
UNITED
STATES 280129 3
TITONKA
SAVINGS BANK 334648
Form FR Y-6
Titonka Bancshares Inc
Fiscal Year ending December 31 2014
Report Item 3 Securities holders
(1 )(a)(b)(c ) and (2)(a)(b)( c)
Current shareholders wi th mnership control or holdings of 5 or more with power to vote as of Shareholders not listed in 3(1)(a) through 3(1)(c ) that had ownership control or holdings of 5 or fiscal year ending 12312014 more with power to vote during the fiscal year ending 12312014
(1) (a) (1) (b) (1) (c )
Name amp Address Country of Citizenship Number and Percentage of
City State Country or Incorporation Each Class of Voting Securities
Allan J Boyken Revocable Bank
Slack Trust
Titonka Iowa
USA 36070 shares - 4770 of
voting common stock voted by
Truslee Allan J Boyken
Allan J Boyken
Titonka Iowa
USA 150 shares - 5000 of
voting preferred stock
F Joy Boyken 201 O Trust
Titonka Iowa
USA 8838 shares-1169 of
voting common stock voled by
Trustee Allan J Boyken
Aaron T Boyken
Tilonka Iowa
USA 12800 sharesmiddot1693 of
voting common stock
Marshall S Boyken
Tulsa Oklahoma
USA 6550 shares - 866 of
voting common stock
Lucas W Boyken
Clarion1 Iowa
USA 6250 shares - 827 of
voling common slack
Quentin R Boyken
Des Moines Iowa
USA 4 108 shares - 543 of
voting common stock
150 shares -5000 of
voling preferred stock
Nf
(2) (a) (2) (b) (2) (c )
Name amp Address Country of Citizenship Number and Percentage of
(City Stale Country) or Incorporation Each Class of Voting Securities
middotmiddot
SlateCountry
2
Company
none
none
Form FR Y-6
Titonka Bancshares Inc Titonka Iowa Fiscal year ending December 31 2014
Report item 4 Insiders
4a Principal qccupaion 3a 3b 3c Percentage of Voting
Name City and if othertha n With Bank 1111e and Position 1111e and Position wlth TIUe and Poslllon with shares Jn Bank HodifigCOmpany with Bank Holding Co Subsidiaries other Businesses Holding
Allan J Boyken Banker PresldenUDirector Trust OfficerDlrector none 36070 shares voting common 11tonka Iowa 11onka Savings Bank Treasurer 11onka Savings Bani( 4770 of outstanding USA PresidenUDreclorTreasurer of held in the Alan J Boyken
Boyken Insurance Agency Inc Revocable Bank Stock Trust voted by Allan J Boyken
150 shares-5000 of voting preferred slocilt
4b Percentage of Voting shares In Subsidiaries
20 shares of Titonka Savings Bank 100 of
outstanding (voted by Allan J Boyken for11tonka
Bancshares Inc)
1000 shares of Boyken Insurance Agency lnc
100 of outstanding (voted by Allan J Boyken for
11onka Bancshares Inc)
4c Names of oher
Companies if more than 25 or more of
voling securities
none
F Joy Boyken 2010 Trust none none none none 8838 shares voting common none 11onka Iowa 1169 of outstanding voled by USA Trustee Allan J Boyken
Aaron Boyken Banker SecretaryDirector Chief Technology OfficerDirector of none 12800 shares voting common none none 11tonka Iowa 11tonka Savings Bank Assistant Treasurer Titonka SaVings Bank 1693 of outstanding USA SecretaryDirector of
Boyken Insurance Agency Inc
Quentin R Boyken Attorney Director Director Shareholder 4108 shares voting common none Des Moines Iowa Vice President Titonka Savings Bank Belin McCormlck PC 543 of outstanding USA
150 shares-5000 of voting preferred stock
Marshal S Boyken C1vl1 Engineer none none Director 6550 shares volng common none none Tulsa Oklahoma US Dept of Energy 866 of outstanding USA
Lucas W Boyken Executive none none Vice President 6250 shares voling common none none Clarion Iowa Hagie Manufacturing Co 827 of outstanding USA
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
Form FR Y-6
Titonka Bancshares Inc
Fiscal Year ending December 31 2014
Report Item 3 Securities holders
(1 )(a)(b)(c ) and (2)(a)(b)( c)
Current shareholders wi th mnership control or holdings of 5 or more with power to vote as of Shareholders not listed in 3(1)(a) through 3(1)(c ) that had ownership control or holdings of 5 or fiscal year ending 12312014 more with power to vote during the fiscal year ending 12312014
(1) (a) (1) (b) (1) (c )
Name amp Address Country of Citizenship Number and Percentage of
City State Country or Incorporation Each Class of Voting Securities
Allan J Boyken Revocable Bank
Slack Trust
Titonka Iowa
USA 36070 shares - 4770 of
voting common stock voted by
Truslee Allan J Boyken
Allan J Boyken
Titonka Iowa
USA 150 shares - 5000 of
voting preferred stock
F Joy Boyken 201 O Trust
Titonka Iowa
USA 8838 shares-1169 of
voting common stock voled by
Trustee Allan J Boyken
Aaron T Boyken
Tilonka Iowa
USA 12800 sharesmiddot1693 of
voting common stock
Marshall S Boyken
Tulsa Oklahoma
USA 6550 shares - 866 of
voting common stock
Lucas W Boyken
Clarion1 Iowa
USA 6250 shares - 827 of
voling common slack
Quentin R Boyken
Des Moines Iowa
USA 4 108 shares - 543 of
voting common stock
150 shares -5000 of
voling preferred stock
Nf
(2) (a) (2) (b) (2) (c )
Name amp Address Country of Citizenship Number and Percentage of
(City Stale Country) or Incorporation Each Class of Voting Securities
middotmiddot
SlateCountry
2
Company
none
none
Form FR Y-6
Titonka Bancshares Inc Titonka Iowa Fiscal year ending December 31 2014
Report item 4 Insiders
4a Principal qccupaion 3a 3b 3c Percentage of Voting
Name City and if othertha n With Bank 1111e and Position 1111e and Position wlth TIUe and Poslllon with shares Jn Bank HodifigCOmpany with Bank Holding Co Subsidiaries other Businesses Holding
Allan J Boyken Banker PresldenUDirector Trust OfficerDlrector none 36070 shares voting common 11tonka Iowa 11onka Savings Bank Treasurer 11onka Savings Bani( 4770 of outstanding USA PresidenUDreclorTreasurer of held in the Alan J Boyken
Boyken Insurance Agency Inc Revocable Bank Stock Trust voted by Allan J Boyken
150 shares-5000 of voting preferred slocilt
4b Percentage of Voting shares In Subsidiaries
20 shares of Titonka Savings Bank 100 of
outstanding (voted by Allan J Boyken for11tonka
Bancshares Inc)
1000 shares of Boyken Insurance Agency lnc
100 of outstanding (voted by Allan J Boyken for
11onka Bancshares Inc)
4c Names of oher
Companies if more than 25 or more of
voling securities
none
F Joy Boyken 2010 Trust none none none none 8838 shares voting common none 11onka Iowa 1169 of outstanding voled by USA Trustee Allan J Boyken
Aaron Boyken Banker SecretaryDirector Chief Technology OfficerDirector of none 12800 shares voting common none none 11tonka Iowa 11tonka Savings Bank Assistant Treasurer Titonka SaVings Bank 1693 of outstanding USA SecretaryDirector of
Boyken Insurance Agency Inc
Quentin R Boyken Attorney Director Director Shareholder 4108 shares voting common none Des Moines Iowa Vice President Titonka Savings Bank Belin McCormlck PC 543 of outstanding USA
150 shares-5000 of voting preferred stock
Marshal S Boyken C1vl1 Engineer none none Director 6550 shares volng common none none Tulsa Oklahoma US Dept of Energy 866 of outstanding USA
Lucas W Boyken Executive none none Vice President 6250 shares voling common none none Clarion Iowa Hagie Manufacturing Co 827 of outstanding USA
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
SlateCountry
2
Company
none
none
Form FR Y-6
Titonka Bancshares Inc Titonka Iowa Fiscal year ending December 31 2014
Report item 4 Insiders
4a Principal qccupaion 3a 3b 3c Percentage of Voting
Name City and if othertha n With Bank 1111e and Position 1111e and Position wlth TIUe and Poslllon with shares Jn Bank HodifigCOmpany with Bank Holding Co Subsidiaries other Businesses Holding
Allan J Boyken Banker PresldenUDirector Trust OfficerDlrector none 36070 shares voting common 11tonka Iowa 11onka Savings Bank Treasurer 11onka Savings Bani( 4770 of outstanding USA PresidenUDreclorTreasurer of held in the Alan J Boyken
Boyken Insurance Agency Inc Revocable Bank Stock Trust voted by Allan J Boyken
150 shares-5000 of voting preferred slocilt
4b Percentage of Voting shares In Subsidiaries
20 shares of Titonka Savings Bank 100 of
outstanding (voted by Allan J Boyken for11tonka
Bancshares Inc)
1000 shares of Boyken Insurance Agency lnc
100 of outstanding (voted by Allan J Boyken for
11onka Bancshares Inc)
4c Names of oher
Companies if more than 25 or more of
voling securities
none
F Joy Boyken 2010 Trust none none none none 8838 shares voting common none 11onka Iowa 1169 of outstanding voled by USA Trustee Allan J Boyken
Aaron Boyken Banker SecretaryDirector Chief Technology OfficerDirector of none 12800 shares voting common none none 11tonka Iowa 11tonka Savings Bank Assistant Treasurer Titonka SaVings Bank 1693 of outstanding USA SecretaryDirector of
Boyken Insurance Agency Inc
Quentin R Boyken Attorney Director Director Shareholder 4108 shares voting common none Des Moines Iowa Vice President Titonka Savings Bank Belin McCormlck PC 543 of outstanding USA
150 shares-5000 of voting preferred stock
Marshal S Boyken C1vl1 Engineer none none Director 6550 shares volng common none none Tulsa Oklahoma US Dept of Energy 866 of outstanding USA
Lucas W Boyken Executive none none Vice President 6250 shares voling common none none Clarion Iowa Hagie Manufacturing Co 827 of outstanding USA
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
Independent Compilation Report Accountants
Financial Statements
Contents
Balance Sheets 2
Statements of Income and Comprehensive Income 3
Statements of Stockholders Equity 4
Statements of Cash F[ows 5
Notes to Financial Statements 6-9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
McGladrey LLP
McGladrey
Independent Accountanfs Compilation Report
To the Board of Directors Titonka Bancshares Inc Titonka Iowa
We have compiled the accompanying balance sheets of Titonka sancshares Inc as qfD_ecember 31 2p14 and 2013 and the related statements of income and comprehensive income st9ckhqJders equity and cash flows for the years then ended We have not audited or reviewed the accompanying financial staiements and accordingly do not express an opinion or provide any assurance about whethedegrine middot financial statements are in accordance with accounting principles generally accepted-in the United Sfates of America
middot
middot Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements
Our responsibility is to conduct the compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants The opjective of a compilatipn is to assist management in presenting financial informati9n in the to rm of firiariCial statements without undertaking to obtain or provide any assurance thaf there are no material modifications that should be made to the financial statements
middotmiddotmiddot
Ttie accompanyingmiddotfinaniial statements include the investments in the Companys subsidiaries Titonka Savings Bankand Boyken Insurance Agency Inc on the equity basis Accounting principles generally accepted in the United States of America require preparation of consolidated financial statements tomiddot reflect all the accounts and activities of the subidiaries together with tbe parent The CQ[llpanyi method middot middot middot middot middot of presentation has no effect on reported stockh6iders equity or net incbme
r- -n-gt middot
Mason City Iowa January 21 2015
1
Member of the RSM International network of independent accounting tax and consulting firms
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
$ 20808060
$
$ 20808060
Titonka Bancshares Inc
Balance Sheets December 31 2014 and 2013 See Independent Accountants Compilation Report
2014 2013 Assets
Cash and cash equivalents at Titonka Savings Bank including certificates of deposit 2014 $413073 and 2013 $403973
l ent in Titonka Savings Bank lnves mefltln_Royken Insurance Agency Inc middot Accrued interest receivable middot Other assets Duefrom subsidiary income taxes Income tax refund claims receivable Deferred taxes
Liabilities and Stockholders Equity
Liabilities bull Line of credit and noteS payable
Due to subsidiary incommiddote faxes Other liabilities
Stockholders Equity middot Class Apreferred voting 8 curnulative par $1000 per sh ie bull bull bull middot middot authorized 750 shares issued 2014 and 2013 300shares
dividends paid to December 31 2014 Class A common voting $10 par value authorized 200ooo sharesmiddot
issued 75616 shares Class B common non-voting no par value 19800000 shares
authorized issued 2014 and 2013 7485984 shares Retained earnings Accumulated other comprehensive income (loss)
middotsee Notes to Financial Statements
$ 846894 18423747
535838 633
13817 4361
45787 936983
4275806
300000
756160
15016705 459389
16532254
$ 807937
16577883 543794
729 14 32
9406 74517
877065
$ middot 18906163
1820711 $ 2305562 22427 9254
2432668 2279758 4634574
300000
756160
14354104 (1 138675) 14271589
$ 18906163
2
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
2284665 (3 136922)
middot
Titonka Bancshares Inc
Statements of Income and Comprehensive Income Years Ended December 31 2014 and 2013 middot See Independent Accountants Compilation Report
Operating income Equity in net income of Titonka Savings Bank Equity in net income of Boyken Insurance Agency Inc
middotmiddot1-
$
2014
822801 67044
889845
$
2013
869346 40888
910234
Operating expenses Salaries and benefits Deferred compensation Professional fees Officers life insurance net Other middot
79911 155 146
5108 2670 1045
243880
90267 75733 12186
2670 1500
182356
Operating income 645965 727878
Financial income (expense) Interest income Interest (expense)
9647 (89900) (80253)
16274 (105913)
(89639)
Income before income tax 565712 638239
Federal and state income tax expense (benefit) including deferred taxes 2014 $(59918) and 2013 $(29248) (120889) (98029)
Net income 686601 736268
Other comprehensive income Unrealized holding gains (losses) on investment securities
available for sale net Total other comprehensive income (loss)
1598064 1598064
(3873 190) (3873 190)
Net comprehensive income (loss) middot $ $
See Notes to Financial Statements
3
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
$
(24000) $
Titonka Bancshares Inc
Statements ofStockholders Equity Years Ended December i1 2014 and 2013
middot See lndependentAccou tants middotcompilation Report middotAccumulated
Class B Other Cass A Voting Class A Voting Non-Voting Retained Comprehensive Preferred Stock cci on Stock Common Stockmiddot Earnings Income (Loss) Total
Balance December 31 2012 $ 750000 $ 756 160 $ $ 13677836 2734515 $ 17918511 Net income 736268 736268 Other comprehensive income unrealized
(losses) on securities net of reclassification net of tax (3873 190) (3873 190)
Redemption of voting preferred stock at par (450000) (450000) Cash dividends on preferred stock (60000) (60000)
Balance December 31 2013 300000 756 160 14354 104 (1138675) 14271589 Net income 686601 686601 Other comprehensive income unrealized
gains on securities net of reclassification net of tax 1598064 1598064
Cash dividends on preferred stock (24000) Balance December 31 2014 $ middot 300000 $ 756160 $ $ 15016705 459389 $ 16532254
See Notes to Financial Statements
4
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
bull$ 92136 $ 101503 ======== ==================
(89701)
bull $
Titonka Bancshares Inc
Statements of Cash Flows Years Ended December 31 2014and 2013 See Independent Accountants Compilation Report
2014 201 Cash Flows from Operating Activities
Net income $ 686601 $ 736268 Adjustments to reconcile net income to net cash provided by
operating activities (Equity) in net income of subsidiaries less dividends
received 2014 $650000 and 2013middot$625000 (239845) (285234) Deferred taxes middot (59918) (29248) Change in assets and liabilities
Decrease-in accrued interest receivable 97 580 ( Increase) decreas in due from subsidiaries 5045 (9406) Decrease in other assets 1015Decrease in income tax refund claims receivable 28730 262 (Decrease) in due to subsidiaries (26827) (11937) Increase in other liabilities 152910 80141
Net cash provided by operating activities 547)308 481426
Cash Flows from Financing Activities Principal payments on note payable (484851) middot(183 170) Redemption of voting preferred stock (450QOO) Cash dividends paid (24oooimiddotmiddot (6dOOO)
bull N t cash (used ii)) fi anCing activities (508851) (693 170)
Inerease (decrease) in cash and cash equivalents 38957 (211744)
Cash and Cash Equivalents Beginning 80793 1019681
Ending $
Supplemental Disdosures middotofCash Flow Information bullCash payments for (receipts of) Interest
807937
Income taxes net of (refunds) $ $
See Notes to Financial Statements middot
5
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 1 Significant Accounting Policies
Nature of _b[Jsiness Tifonka Bancshlt01res Inc (the Company) is a bank holding company which owns 100 of Boyken Insurance Agency Inc and Titonka Savings Bank both of Titonka Iowa Boyken Insurance Agency lncmiddotprovides insurance seNices in its local market and Titonka Savings Bank provides banking seNices in its local market
Significant accounting policies
Accounting estimates and assumptions The financial statements havemiddotbeen prepared In conformity with generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB) References to GAAP issued by the FASB in these foqtnotes are to the FASB
Accounting Standwds Codificationtrade sometimes referred to as the Codification or ASC In pregtparing middot the financial statements management is required to make estimates and assumptions hat affect the
reported amounts iJf assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the middotrepomiddotrting period Actual results could differ from those estimates
Comprehensive income Comprehensive income consists of net income and other comprehensive income Other comprehensive income includes the net change in riet unrealized gains and losses on middot middotmiddotthe bank subsidiars middotavailable-for-sale securities
Cash and cash equivalents The Company considers all certificates of deposit purchasedmiddotwith amiddot maturity of three months or less to be cash equivalents
Investments inTitonka Savings Bank and Boyken Insurance Agency Inc The Company [s accounting for its invetments in Titonka Savings Bank and Boyken Insurance Agency Inc wholly owned subsidiaries by the equity method of accounting und r which the net income of the subsidiaries is recognized as income in the Companys statement of income and added to the investment accounts Dividends received from the subsidiaries are treated as a reduction of the investnientaccounts The subsidiary banks other comprehensive income is recognized as a separate component of stockholders _equity
Income taxes Deferred taxes are providecl on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax ljatJiliti sltire recpgnized for taxable temporary differences Temporary differences are the middotdifferences between the reported amounts of assets and liabilities and their tax bases Deferred tax assets are reduced by a valuation allowance when in the opinion ofmanagement it is more likely than not that some portion or all of the deferred tax assets will not be realized Deferredtax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment Deferred taxes have not been provided on the undistributed earnings of Titonka Savings Bank or Boyken Insurance Agency Inc since the companies file consolidated income tax returns At
December 31 2014 and 2013 the recorded deferred tax asset relates to deferred compensation agreements with certain middotofficers and directors
Management evaluated the Companys tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements Therefore the Company has not recognized any adjustments for unrecognized income tax benefits during the year ended December 31 2014 Corporate tax returns for the years ended 2011 through 2014 remain open to examination by taxing authorities
6
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
$171894563 $ 173053404
$ 171894563
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 2 Investment in Titonka Savings Bank
Condensed statements of conditions of Titonka Savings Bank are as folloys at 9ecember 31
2014 2013 Assets
Cash and due from banks $ 3860140 $ 5 186585 Investment securities 88628549 94256850 Loans_ net 69065817 6)801878 Bank premises and equ ipment at depreciated cost 7515742 8137191 _Other assets 2824315 3670900
Liabilities Deposits $ 143077908 bull $148738174 Other liabilities 10392908 ]737347
153470816 156475_521 -
Stockholders equity Common stock 480000 gtbull 480000 surp1amiddots 7520000 7520000 Retained earnings 996435 9716558 Accumulated otherC mpreheri iVdeg income (loss) 459389 (1 138675)
18423747 16577883
$ 173053404
Condensed statements of income of Titonka Savings Bank are as follows for the years ending middotmiddot Decernber 31
Income 2014 2013
Interest income Other income
Expenses Interest expense Other expenses
$ 5265801 1120752 6386553
697634 4866118 5563752
$ 5325451 548437
5873888
747659 4256883 5004542
Net income $ 822 801 $ 869 346
7
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
540198
540198
337
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 3 Investment in Boyken Insurance Agency Inc
Condensed balance sheets of Boyken Insurance Agency Inc are as follows as of December 31
2014 2013 Assets
Cash $ 272468 $ 312988 Accounts receivable 266499 247194 Other assets 1231 2051
$ $ 562233
Liabilities Accounts Payable $ 4360 $ 18439
Sto kholdersEquity Common stock 10000 10060 Rel ined earnings 525838 533794
535838 543794
$ $ 562233
Condensed tatement of income of Boyken Insurance Agency Inc are asfoloJs for the years ended middot middot middot middot middot Deceniber 31 middot
2014 2013 Income
Commissions earned $ 468739 $ 388270 Interest income 234
468973 388607 Expenses
Operating expenses - 359537 322443 Income taxes 42392 25276
401929 347719
Net income $ 67 044 $ 40888
8
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9
$
$
36614 38468 40415 42461 44611
518142 720711
Titonka Bancshares Inc
Notes to Financial Statements See Independent Accountants Compilation Report
Note 4 Line of Credit and Notes Payable
Line of credit The Company has a $2500000 line of credit with Bankers Bank with a balance outstanding of $1 100000 and $1550000 at December 31 2014 and 2013 respectively Interest is due quarterly with the unpaid principal and any accrued interest due May 15 2015 Interest accrues at The middotWall Street Journal Prime Rate plus 75 with a minimum of 400 (Currently 400) The note is collateralized by 20 shares of Titonka Savings Bank common stock
Notes payable The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $2q1 854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of$12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
The Company has a note payable with a former shareholder with an outstanding balance of $240237 and $251854 at December 31 2014 and 2013 respectively The note was issued in connection with the redemption of the former shareholders common stock in the Company in December 2009 The note is payable in semiannual payments of $12033 with interest at 5 and final payment due December 22 2028 The note is unsecured
At December 31 2014 the scheduled maturities of the notes payable are as follows
2015 2016 2017 2018 2019 Thereafter
Note 5 Deferred Compensation
The Company has a deferred compensation plan in which it credits phantom stock units to selected employees and directors The value of each phantom stock unit is based on the Companys book value per share of common stock outstanding The Company has accrued obligations for vested units of approximately $1502000 and $1403000 at December 31 2014 and 2013 respectively Expense recorded under the plan totaled approximately $99000 and $22000 for the years ended December 31 2014 and 2013 respectively
In addition the Company has a deferred compensation plan for its President that will make 120 monthly payments of $10000 to the President commencing with the employees expected retirement on May 1 2015 At December 31 2014 the Company has accrued approximately $924000 under this plan and expense recorded under the plan totaled approximately $56000 and $51000 for December 31 2014 and 2013 respectively
9