Annual Meeting of Shareholders April 17, 2020
❖ Company & Bank Performance ❖ State of Community Banking Customer and Market Performance ▪ Education, Outreach, & Support ▪ ❖ Our Mission: To champion community banking 2
Company Performance presented by Bill Mitchell, President & CEO 3
Company Earnings Performance $4.121 million 2019 after-tax earnings, $19.67 per share $5.759 million 2018 after-tax earnings, $27.21 per share $895 thousand March 31, 2020 after-tax earnings, $4.27 per share 4
Company Common Stock $4.75 per share Dividend to common shareholders in January 2019 $4.75 dividend paid per share in January 2020 $14,258,000 Common dividends distributed to shareholders since 1985 $14.09 per share 7.5% year-over-year increase in common stock Book Value 5
Company Preferred Stock $4,896,000+ of Preferred shares redeemed since 2015 (36.9% of total); $4,898,000+ dividends distributed to Preferred Shareholders since the purchase from the U.S. Treasury in April 2014 $907,000+ total savings following dividend rate modification in 2016 6
Company Earnings and Dividends Net Earnings Ending Total Dividend as % of Prior Ending Book Stock Year Income per Share Shares Dividend Paid per share Net Income Value Type (1) 1985-1989 $ 38,765 $ 5.81 6,671 $ 15,010 $ 1.13 (9.21%) $ 28.82 Bank Stock 1990-1994 $ 2,181,019 $ 177.96 95,310 $ 171,069 $ 1.48 13.02% $ 52.03 Bank Stock (2) 1995-1999 $ 6,938,572 $ 60.68 150,205 $ 1,420,905 $ 2.23 21.97% $ 90.60 BHC Stock (3) 2000-2004 $ 12,558,265 $ 76.09 182,450 $ 3,276,764 $ 3.98 29.65% $ 152.40 BHC Stock (4) 2005-2009 $ (1,115,351) $ (2.62) 199,125 $ 4,819,456 $ 5.03 23.61% $ 119.94 BHC Stock (6) 2010 $ (3,374,317) $ (15.51) 217,525 $ 0 $ 0.00 0.00% $ 101.74 BHC Stock (6) 2011 $ 741,673 $ 3.41 217,525 $ 0 $ 0.00 0.00% $ 104.81 BHC Stock (6) 2012 $ 5,258,830 $ 24.18 217,525 $ 0 $ 0.00 0.00% $ 119.12 BHC Stock (6) 2013 $ 4,413,086 $ 20.29 217,525 $ 0 $ 0.00 0.00% $ 134.89 BHC Stock (5) 2014 $ 4,664,070 $ 21.83 213,625 $ 427,250 $ 2.00 9.68% $ 150.12 BHC Stock (5) 2015 $ 2,254,038 $ 10.55 213,625 $ 480,656 $ 2.25 10.31% $ 152.64 BHC Stock (5) 2016 $ 2,931,524 $ 13.84 211,854 $ 480,656 $ 2.25 21.32% $ 159.36 BHC Stock (5) 2017 $ 3,013,955 $ 14.23 211,819 $ 582,599 $ 2.75 19.87% $ 167.61 BHC Stock (5) 2018 $ 5,759,235 $ 27.21 211,696 $ 582,502 $ 2.75 19.33% $ 187.31 BHC Stock (5) 2019 $ 4,121,122 $ 19.67 209,557 $ 1,005,556 $ 4.75 17.46% $ 201.40 BHC Stock Mar-20 $ 895,039 $ 4.27 209,557 $ 995,396 $ 4.75 24.15% $ 201.09 BHC Stock $ $ 51,279,525 $ $ 14,257,819 27.80% Net income reported in 2009 and forward is the holding company on a consolidated basis. Net income reported from 1985 through 2008 is bank only due to the non-material difference between bank and holding company earnings. Total Dividend Paid does not include preferred dividends. Between 1994 and 1997 preferred dividends were paid in the amount of $410,164. Between 2009 and 2019 preferred dividends were paid in the amount of $8,599,907. Dividend per Share multiplied by Number of Shares may not reconcile due to semi-annual dividends paid and/or stock sold or redeemed during the year. (1) New Bank Stock Issue in 1993 (10:1 split); prior years reflect split equivalent (4) semi-annual common dividend paid from 2001 to 2008 (2) includes $100,000 dividend not paid to shareholders. Used to repurchase stock (5) annual common dividend paid 2009 and 2014 to 2020 (3) includes $125,000 dividend not paid to shareholders. Used to repurchase stock (6) no common dividend paid in 2010, 2011, 2012, or 2013 7
Bank Performance presented by Chris Hill, SVP & CFO 8
Bank Earnings Performance $4.184 million 2019 after-tax earnings $5.760 million in 2018 and $812.2 thousand in 2020 1.12% ROAA Second h ighest among bankers’ banks in 2019 1.57% ROAA in 2017 and 0.78% through March 31, 2020 9
Assets Under Management $7,500,000 6,750,000 Bank Assets Safekeeping Loan Participations Sold Average Agent Federal Funds $6,750,000 6,000,000 $6,000,000 5,250,000 $5,250,000 4,500,000 $4,500,000 3,750,000 $3,750,000 3,000,000 $3,000,000 2,250,000 $2,250,000 1,500,000 4,674,647 4,716,607 4,937,545 5,361,552 5,548,932 5,586,272 5,625,995 5,470,398 5,566,265 5,465,669 4,808,098 4,785,822 $1,500,000 750,000 $750,000 0 $0 (750,000) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 10 ($000’s)
Balance Sheet $500,000 615,000 Loans Cash & Equivalents Term Deposits Capital Total Assets $450,000 565,000 $400,000 515,000 $350,000 465,000 445,502 402,964 407,047 $300,000 415,000 387,791 357,089 364,805 367,367 368,545 349,104 $250,000 365,000 335,794 316,713 324,192 $200,000 315,000 $150,000 265,000 $100,000 215,000 $50,000 165,000 $0 115,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 11 ($000’s)
Capital Ratios 27.5% Risk Based Capital Ratio Regulatory Risk Based Ratio Common Equity Risk Based Ratio Regulatory Common Equity Ratio 25.0% Tier 1 Risk Based Ratio Regulatory Tier 1 Ratio Tier 1 Leverage Ratio Regulatory Leverage Ratio 22.5% Tier 1 Leverage w/o Excess Cash 20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 12 (%)
Loan Portfolio Mix $500,000 500,000 Real Estate Loans (excl. Farmland) Commercial Loans & Leases Agrucultural & Farmland Loans Bank Stock Loans $450,000 450,000 Consumer Loans & Credit Cards $400,000 400,000 $350,000 350,000 $300,000 300,000 $250,000 250,000 $200,000 200,000 $150,000 150,000 $100,000 100,000 287,406 206,529 160,408 193,206 231,396 253,796 167,031 155,519 189,740 218,041 250,715 248,121 $50,000 50,000 $0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 ($000’s) 13
Commercial Real Estate & Agricultural Loan Concentrations 600% CRE I Loans CRE II Loans Agricultural Loans 550% 480.1% 500% 450% 400% 350% 303.0% 268.4% 300% 267.1% 242.7% 237.3% 242.0% 222.8% 250% 205.4% 194.0% 174.7% 200% 153.2% 137.2% 150% 93.6% 104.1% 101.3% 85.6% 92.9% 93.7% 85.3% 71.7% 87.2% 89.6% 89.6% 86.6% 100% 50% 69.9% 67.7% 63.5% 62.8% 78.7% 71.1% 61.1% 61.4% 52.0% 43.5% 42.6% 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 14 (as a % of Total Capital)
Asset Quality $50,000 20.00% Non-Accrual & 90+ Days Past-Due Loans (BBW) Classified Loans (BBW) Other Real Estate Owned (BBW) Classified Loans & OREO (WSH) $45,000 Non Performing Loans to Total Loans (BBW) 18.00% $40,000 16.00% 14.4% $35,000 14.00% $30,000 12.00% 10.3% $25,000 10.00% $20,000 8.00% $15,000 6.00% 4.8% 4.7% $10,000 4.00% 2.1% 2.4% 2.3% $5,000 2.00% 0.2% 0.1% 0.2% 0.1% 0.1% $0 0.00% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 15 ($000’s)
Net Charge-offs and Loan Loss Reserve $36,000 Loan Loss Reserve Loan Loss Provision Expense 13.50% Net Charge-Offs Loan Loss Reserve to Total Loans $32,000 12.00% $28,000 10.50% $24,000 8.55% 9.00% $20,000 7.50% 6.56% $16,000 6.00% 4.34% $12,000 3.67% 4.50% 3.46% 2.30% 2.41% $8,000 2.14% 3.00% 2.02% 1.88% 1.84% 1.78% $4,000 1.50% $0 0.00% $(4,000) (1.50%) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-20 16 ($000’s)
The Changing Market & Strategic Plan presented by Jeff Benson, SVP & COO 17
Market Area 18
Customer and Prospect Banks Blue: Customer Red: Prospect 19
Changes in Bank Numbers & Total Assets by Asset Size CHANGES in BANK NUMBERS and TOTAL ASSETS by ASSET SIZE AZ, CO, ID, NE, NM, UT, WY Combined* TOTAL ASSETS $0-100MM $101-200MM $201-300MM $301-400MM $401-500MM $501MM-1 B $1-5B $5-10B 2013 Bank Count 183 115 63 22 15 32 20 1 2017 Bank Count 110 104 54 38 11 34 20 1 2018 Bank Count 98 97 56 35 15 34 24 2 2019 Bank Count 91 87 52 36 16 37 21 3 7 10 4 1 1 3 3 1 YOY Change in Bank #'s 19 17 2 2 5 3 1 2 3 Yr Change in Bank #'s 92 28 11 14 1 5 1 2 6 Yr Change in Bank #'s $5 Billion $4 Billion $2.5 Billion $5.2 Billion $340MM $5 Billion $3 Billion $13 Billion 2013 - 2019 Asset Change 131 Banks / 36% 15 Banks / 41% 5 Bank / 16% 1 Banks / 5% 2 Banks $11.5 Billion Total Assets $5.5 Billion Total Assets *Industrial and special purpose banks eliminated 20 (includes: AZ, CO, ID, NE, NM, UT, & WY; excludes Industrial & Special Purpose Banks)
Active Customers by Asset Size >$5B $1-5B 2% 6% $0-100MM 20% $501MM-1B 11% $401-500MM 5% $301-400MM 11% $101-200MM 26% $201-300MM 19% 21
Strategic Plan BBW created a plan for 2019-2021 to meet community bank needs How does BBW stay relevant? ▪ Banks are getting larger and needs are evolving ▪ The industry continues to consolidate ▪ Technology – we haven’t seen anything yet! ▪ Core systems continue to take core business from us 4 principal objectives Multiple tasks to accomplish 22
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