2015 UBB Annual Report

4 Years Forward United Bankers’ Bancorporation, Inc. | Annual Report 2015 40 Years Forward for Community Banking “… Standing on the shoulders of giants.” This phrase, made famous by Sir Isaac Newton, captures the spirit of UBB’s 40th anniversary. Thanks to the mighty shoulders of the community bankers who courageously 2015 2014 founded UBB as the nation’s first bankers’ bank in 1975, all those bankers over the years who have added their support, and all of you today who will write our future, we feel privileged to be part of the community-banking story. Financial Highlights The 2015 Annual Report that follows combines a retrospective For Years Ended December 31 2015 2014 % Change of this remarkable 40-year journey with a look forward, hence 40 Years … Forward! Each era represents a story-within-a Consolidated: story at UBB: Net Income $ 5,395,651 $ 5,132,455 5.13% Return on Average Equity 7.04% 7.07% (0.42%) • Revolution (1975 to 1990) Return on Average Assets 0.68% 0.68% 0.00% – Inspiration Starts a Movement • Transformation (1990 to 2000) Total Assets $ 804,408,106 $ 788,125,954 2.07% – Ready for a New Direction Loans $ 440,444,263 $ 372,095,004 18.37% Total Liabilities $ 724,576,666 $ 710,465,970 1.99% • Innovation (2000 to 2010) Total Stockholders’ Equity $ 79,831,440 $ 77,659,984 2.80% – Technologies Build Momentum • Anticipation (2010 to 2015) Agent Federal Funds $ 230,000,000 $ 100,000,000 130.00% – Strength for Tomorrow’s Community Bank Common Stock Outstanding 49,212 51,934 (5.24%) UBB President and CEO Bill Rosacker and Board Chairman Dick Behl will bring it all together with their vision for UBB and our Consolidated Per Share Data: community bank partnership. Weighted Earnings $ 105.69 $ 98.83 6.94% Book Value $ 1,622.19 $ 1,495.36 8.48% So don’t skip right to those financials! Enjoy our 40th- Dividends Declared $ 10.00 $ 10.00 0.00% anniversary retrospective and outlook because we owe it all to you, oh giants of community banking! United Bankers’ Bank: Leverage Ratio 9.49% 9.30% 2.04% Tier 1 Risk-Based Capital Ratio 13.64% 15.44% (11.66%) John Peterson, SVP, Chief Marketing Officer Total Risk-Based Capital Ratio 14.81% 16.69% (11.26%) UBBI Annual Report 2015 UBBI Annual Report 2015 1 Asset Growth 1994 to 2015 First for Years Forward Your Success 4 Service Commitment UBA ID TheftSmart UNET United UNETexchange Interactive Bankers’ Image UBB Electronic Agency Check Compliance Network Exchange Services 1975 1985 1994 2002 2004 2013 2015 USource BankValue ALM Edge UNITY Human Bank Asset Liability Online Resources Valuation Management Securities Consulting Services Service Management Services Service IA 1991 WA ND 2009 MN Entered MT NE WY IL 1975 1988 1991 2000 2006 MI 2012 OR ID 2010 2009 2009 SD 1991 1975 1985 1991 2002 2008 2015 Community bankers revolt against Bill Rosacker hired to Introducing United Major capital initiative UBB stands strong with its Assets surpass big-bank encroachment and found guide new bank out of the Bankers’ Bank: New name accelerates decade of 800-plus community-bank $800 million. Independent State Bank of Minnesota, depths of the farm crisis. and logo symbolize push product and technology customers during the the nation’s first bankers’ bank. for innovation and growth. milestones. Great Recession while 2 others stand down. 3 Revolution (1975 to 1990) – Inspiration Starts a Movement “There’s always someone here to answer the phone.” Community bankers hear the distant rumble of big-bank It really irks Jillian Hawkinson, a Senior Operations thunder and know they will need an ally to help them compete Specialist at UBB, to get a case number instead of a solution Created in MN 1975 and protect the financial independence of their communities. when she contacts the help desk at other companies. So they do something that has never been done before: “There’s always someone here at UBB to answer the create a correspondent of and by community phone. When you call, you’re not going to wait or be told bankers, first for their own success. you’ll get a call back later. We’ll get to the bottom of Like any revolution, this one has “I’m just one whatever issue or questions you have right then and there.” its share of excitement, of those people. I dig in opportunity and near and I just stay there.” One reason that’s possible, Jillian said, is that she and 1977 dream-ending Anne Hofstede, UBB Chief Operating Officer, joined the her colleagues are highly trained and have broad challenges along bank just two years after it was founded and has knowledge of all the ins and outs of backroom Bill Rosacker the way. witnessed jaw-dropping changes from her front-row seat operations. “I myself am an Accredited ACH hired 1985 as head of operations at UBB. “When I started, we did Professional (AAP) and a National Check Professional everything manually with red pens, blue pens and ledger (NCP), which requires six to eight months of training 1975 1990 paper,” she laughed. “But we were quick to embrace and a grueling exam. Several others here have technology, hiring our own programmers and IT staff very 2014 either achieved their certifications or are early on. This led to a string of breakthroughs, starting with working on them. That really sets us apart.” automated ACH in the ’80s, online banking in the ’90s and Entered ND 1988 image clearing in 2007. We are now achieving our goal of real- time reporting on most transaction and management activities,” she said. But technology will never replace relationships and exceptional customer service in Anne’s world. “I grew up with a dad who was a community banker. I’ve always seen what community banks do for their towns and neighborhoods. When he passed away, I had so many people who I didn’t even know tell me how he helped them. It’s just something that I’ve always believed in.” Wanda State Bank, Wanda, MN “They were the first in the customer in 1975 and one of country and we were right there its first shareholders. “It’s nice with them.” doing business with a bank that is called the banker’s Okay, Wanda isn’t a big town. Located 130 bank, a bank owned by its miles southwest of Minneapolis, Wanda is own people,” said Don home to just 84 hardy souls. But a long Schumacher, President of history of believing in the potential of the Wanda State Bank at that hardworking farm families, business owners time. “Looking back, I’m glad and local residents of this area has created we made the investment.” loyalty that goes far beyond Wanda’s city limits. “UBB has always been on the challenging, we’ve just gotten closer to time to understand what we’re trying to cutting edge,” said Dan UBB.” Added current President Tim accomplish. They’re knowledgeable, This same faith in a long shot also extended Weber, President of the bank VanDerWal, “We get bombarded with they’re friendly and they’re personal. They to the nation’s first bankers’ bank as Wanda after Don retired in 2000. “As people wanting to sell us something truly live out the ideal of a bankers’ bank.” State Bank was UBB’s very first deposit banking has become more every day, but UBB actually takes the 4 5 “Community banks are resilient and will bounce back.” Transformation (1990 to 2000) – Ready for a New Direction “When I was hired in 1986 during the height of the farm crisis,” recalled Kevin Bostrom, UBB’s Chief Credit Officer, After shaking off the growing pains of a brand-new enterprise and surviving the ’80s farm crisis, “our loan portfolio consisted primarily of bank stock loans to Independent State Bank of Minnesota (as UBB was known then) will move from youthful upstart ag-related community banks. So not surprisingly, we struggled to mature collaborator. The new name – United Bankers’ Bank – and the distinctive yin-yang with asset quality issues of our own. However, we didn’t cut and logo symbolize the balance between a bankers’ bank that will ever evolve to meet the needs run as many other correspondents did at the time. We worked with of the ever-evolving community bank. It’s a beautiful dance that will never be finished! our customers, looking for ways to help them diversify their loan portfolios with commercial loans not related to agriculture. “What we learned then and were reminded of again during the most UNET USource BankValue Interactive Human Bank recent recession is that community banks are resilient and will bounce Electronic Resources Valuation back. Many banks we helped in the late '80s were very close to failing, Network Services Services but they fought through the challenges and are now among our best and most successful customers. They also remain family and community owned. Those are the success stories that this department is most proud of,” he said. 1990 2000 “We’ve grown a lot since those early days and have built a highly talented lending staff. We are just as comfortable now working with a bank over a billion dollars in assets as a bank under $50 New Market Bank, New Market, MN million. But we’ll never forget our roots and our faith in the strength and ingenuity of community “I like that UBB is big, but at the same banks.” time they’re small.” “We’re not afraid to tackle any type of unique credit.” Tony Girard, Commercial Lender, knows lending is the sparkplug that fires success for community banks and Bob and then Anita, along with sister Karen the communities they serve.

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