December 22, 2008
I am pleased to enclose a check in the amount of $.11 per share on your preferred stock or $.11 per share on your common shares of Tri-State 1st Banc Inc. This dividend was approved by the Board of Directors of the company on November 21, 2008. The 4th Quarter dividend is 10% greater than the dividend for the 4th Quarter of 2007. The dividend is payable today, December 22, 2008, to shareholders of record on December 1, 2008.
The company has paid $.44 per share for the full year 2008. That is an increase of $.04 more than dividends paid in 2007. During these uncertain times when so many companies and the national economy are struggling, it is a pleasure to be able to report to you that your company is doing well. Not only did we maintain our dividends but they increased significantly.
Furthermore many companies find themselves in the unenviable position this year of trying to explain to their shareholders why there are steep declines in earnings, asset quality problems and declining sales and growth. With your indulgence, I would like to brag a bit about the good job being done by the fine team that we have working for the company on your behalf.
On November 24th, there was a release concerning company earnings for the first three Quarters of 2008. Earnings increased by $23, 304 or 7.4% over the same nine month period in 2007 for the Bank subsidiary. Improved Net Interest Margins in 2008 accounted for most of the 12.1% ($49,274) increase in Income Before Taxes for 1st Bank. On September 30, 2008, Total Assets of the Bank were $119.8 million compared with $103.1 million at the end of the third Quarter 2007. This is an increase in assets of $16.7 million or 16.2% on a year-to-year basis. However, Tri-State 1st Banc did report a relatively small ($14, 228) earnings decline from the prior year's 3rd Quarter due to lower total interest income resulting from lower interest rates.
It is my good fortune to be working with seasoned and highly capable leaders at our three subsidiaries who are supported by committed staff. I wrote to you last quarter about the recent addition of Stephen R. Sant as our President and CEO of 1st National Community Bank. His extensive banking background, leadership skills and community orientation are a wonderful compliment to his five experienced and highly skilled executive officers of the Bank that have been with 1st Bank collectively for 43 years. Dr. Marc Hoffrichter is President and CEO of the MDH Investment Management Inc subsidiary that he founded in 1983. He currently manages $69 million in assets for clients spread over fourteen states. Lance Lang is President and CEO of the Gateminder Corporation subsidiary with which he has been associated since inception in 1999. Gateminder now has over 125 ATM machines under management. The following comments come to you from our three dedicated Presidents.
Steve Sant reports "At a time when many banks are experiencing problems related to the economy and/or the credit crisis. 1st National Community Bank is proud that it is weathering the store quite well. Earnings are on track to exceed 2007. At the end of third Quarter, Deposits were up 20% and loans were up 12% over year-end 2007. As we approach a new year, I am excited about the prospects for 2009. As evidenced by our strong loan growth, there is no 'credit crunch' here. We look forward to helping local businesses and consumers by continuing to lend money to help them meet their financial needs. We plan to install new state-of-the-art computer systems in 2009 to help in serving our customers even better. This major investment in technology positions 1st Bank to be able to provide better products and services more effectively to our customers for years to come."
Dr. Marc Hoffichter states: "The year 2008 has proven to be historic in the virtual collapse of the financial markets, real estate, highly rate corporate & municipal bond and commodities. MDH has been able to dramatically outperform its peers by a greater margin than in any year since inception of the business. I attribute this to foresight and courage in maintaining high cash reserves throughout this tumultuous period. This dramatic outperformance has been rewarded with remarkable loyalty and stability in our client base. The unwinding of the credit excesses has a bit further to run yet in my opinion, but investment opportunities are appearing with greater frequency as the inevitable recovery of our financial markets gets close and true value becomes more evident".
Lance Lang says: "Gateminder continues to grow at a rate greater than I was able to anticipate at the beginning of the year. During 2008, we have been able to increase our ATM sites by 12%. This resulted in a significant increase in company revenues. A couple of years ago, Gateminder made a strategic decision to concentrate new business efforts toward financial institutions where larger volumes would result in lower manpower costs and a higher return per transaction. Nearly 50% of Gateminder's business currently is attributable to financial institutions and institutional customers represent the largest portion of our ATM backlog of orders. Diversity of ATM locations as well as the nature of the ATM business should provide steady growth regardless of the state of the economy. My staff and I wish the stockholders safe and happy holidays."
Peace be with you this holiday season and may God bless you and your loved ones!
Charles B. Lang