More for Your Money | Adams Bank & Trust Newsletter | 2nd Quarter 2023

WHERE YOU BANK MATTERS

In times like these, where you bank matters. Amid persistent inflation, rising interest rates, and continued volatility in national and global markets, it’s crucial to partner with a bank that prioritizes your financial interest. It’s important to have a relationship with bankers and a bank you can trust. We are committed to continuing to earn your trust through transparency and by demonstrating our reliability.

Whenever bank failures make the national news, there are naturally questions and discussion at the local level about what happened and why.

It is worth remembering that not all banks are equal. They do not have the same purpose or the same values. As a privately held community bank that has been family-owned and operated since 1916, we want to provide a window into some of our best practices. After all, they have carried Adams Bank & Trust and our customers to success through more than 100 years of the ebb and flow of the economy. So, what are the pillars of our strength and stability?

We have a very diversified customer and asset base. We’re spread across many communities, which reduces the risk of a challenge in any one particular area. It helps us remain strong and safe through a variety of economic conditions, which is very important in today’s environment.

We manage interest rate risk so that future earnings are not jeopardized. Having a strong bank helps us have strong communities. It allows us to be there for our customers during times of economic uncertainty.

by TODD ADAMS chief executive officer

We voluntarily make our balance sheet easy to find on page 4 of every issue of our quarterly newsletter. We’re proud of the numbers that show our organization’s strength and stability, and we want you to feel secure in the bank’s position.

How does banking with a community bank matter to your community? Interest rates are competitive, so why should you choose one bank over another?

When you place deposits with a community bank, it allows us to reinvest in projects in your community. It opens doors for local business start-up and expansion loans. It facilitates families buying and renovating homes, improving neighborhoods. Deposits that go to banks outside your community and state don’t provide those benefits.

You may remember that public service announcement that television stations used to broadcast at curfew time, “It’s 10 o’clock. Do you know where your children are?” It’s a question worth asking about your bank, too. Do you know where your money is? With a community bank, your money is out at work, increasing opportunities and making your town a better place to live.

We want you to know that you have the expertise of your local bankers, as well as the expertise of the Adams family, standing behind you when you bank with us. As always, if you have questions or concerns, please contact your local banker and allow us to address those directly. Thank you for your continued confidence and trust.

We

are capitalized well above regulatory

thresholds. We are strongly capitalized, which provides a cushion of extra protection to help keep your deposits safe.

It is worth remembering that not all banks are equal. They do not have the same purpose or the same values.

OUR 2023 EMPLOYEE AWARDS

People notice leadership. They notice when their colleagues say, “How can I help?” rather than “That’s not my job.”

That kind of personal accountability is key to our bank culture, and we all strive to lead by example. We’re honoring the winners of our annual Employee Awards on page 3 of this issue. These individuals go the extra mile on a regular basis, and their fellow employees noticed.

They were nominated and selected because they inspire all of us with their outstanding commitment to our customers and the bank.

Our “Sting” award has been renamed the Yoakam Award to honor Harvey Yoakam’s legacy with Adams Bank & Trust and the impact he had as a mentor to our banking staff. This award recognizes team members who have had a noticeable impact on bringing new relationships to the bank.

by STEVE KRAUSE president

We know that our people are our greatest asset and strength, and that’s why we make a priority of recognizing excellence and years of service. You’ll likely see familiar faces as you look over the Employee Awards and Anniversaries.

If you feel one of our employees has delivered outstanding service, please let us know so that we can pass along the compliment.

Every year, Adams Bank & Trust presents special awards to recognize excellence in our employees. A selection committee makes the final decisions from nominations submitted by their co-workers. This is a testament to these team members’ attitude, work ethic, and leadership, and we’re very proud of them. We want to congratulate all of the winners and nominees for their outstanding service to their customers, fellow employees, and the bank.

INDIVIDUAL SERVICE EXCELLENCE -

BEST OF SUCCESS

INDIVIDUAL SERVICE EXCELLENCE -

EXEMPLARY YEARS OF SERVICE

GROWTH AWARD

JASON JONES senior vice president commercial banking

SUPPORT

KASHIA ONEAL commercial relationship coordinator

WANDA ZIMMERMAN vice president retail banking

MELANIE WASHA call center specialist

MICHELE MALLECK vice president retail banking

MATT KIRCHOFF senior vice president commercial banking

YOAKUM AWARD

KERRI ANDERSON senior vice president retail banking

JOHN BERKHAUSEN president commercial banking

ERIN HUNT credit analyst

ANGELA YOUNG mortgage processor AMBER THOMAS training & education specialist

SALES

DANIELLE JACKSON personal banker

Steve Krause, President

TERRI ROBERTS vice president mortgage banking

DANIELLA CHARLIE WORTMAN executive vice president mortgage banking MCCHESNEY trust assistant

NEBRASKA BRULE

308.287.2344

CHAPPELL 308.874.2800

GRANT

308.352.2114

IMPERIAL 308.882.4286

INDIANOLA 308.364.2215

LODGEPOLE

308.483.5211

MADRID 308.326.4223

NORTH PLATTE 308.532.5936

OGALLALA 308.284.4071

SUTHERLAND 308.386.4345

COLORADO BERTHOUD

970.532.1800

COLORADO SPRINGS

719.448.0707

FIRESTONE

303.833.3575

FORT COLLINS

970.667.4308

GREELEY 970.330.8018

LONGMONT 303.651.9053

STERLING

970.522.0698

KANSAS COLBY 785.460.7868

TOLL FREE 800.422.3488

ABTBANK.COM

ADAMS BANK & TRUST BALANCE SHEET AS OF MARCH 31, 2023

Cash in our vault, plus cash on demand from other banks where funds are deposited.

Marketable investments in bonds and other securities of the U.S. Government and its agencies.

Total of all money loaned to customers for all types of loans, such as agriculture, commercial and consumer.

Book value (after depreciation) of buildings, computers, equipments, etc.

Interest on loans earned but not collected, expenses that have been prepaid, etc.

Money on deposit by customers of the bank in the form of checking accounts, savings accounts, and certificates of deposit.

Borrowings by the bank, interest on deposits that has accrued, payable at a future date, other expenses accrued but not yet paid, deferred taxes, etc.

Par value of the investment of the stockholders for the purchase of stock.

Additional money contributed by stockholders to provide extra financial strength.

UNDIVIDED PROFITS AND RESERVES

Bank earnings left in the bank to provide added strength to meet possible future losses on loans and to replace buildings and equipment as they wear out.

SAVING FOR A CHILD’S FUTURE

Ainvestment in higher education is an important investment in a child’s future, and a 529 college savings plan is one way to begin saving for those educational goals from an early age.

But what happens if the child doesn’t go to college? What if he or she receive scholarships or financial aid that covers all college expenses? You may wonder if you’re locking in funds for something the child may not use.

If you have reservations about putting money into a 529 account that may not be needed for education, a new rule in the recently passed SECURE Act 2.0 may help address those concerns.

The new distribution rule taking effect in 2024 will allow unused college savings from a 529 plan to be transferred to a Roth IRA.

The new distribution rule taking effect in 2024 will allow unused college savings from a 529 plan to be transferred to a Roth IRA. Some limitations will apply, which we’ll describe later in the article.

What are some of the advantages of a 529 plan?

Any growth on the account will be tax-deferred, and any distribution for educational expenses will be tax-free. A child may be the beneficiary of multiple 529 plans. For example, parents could begin one plan and grandparents could begin another. You can also change the beneficiary of a 529 plan from one child to another in your family.

by JACOB HOVENDICK rjfs branch manager

In the past, if a child didn’t end up needing all the funds placed in a 529 plan for education, options were more limited. If they didn’t change the beneficiary to another child, parents could withdraw the money. But they would have owed taxes on the withdrawal, and they may also have had to pay a penalty. The new rule in the SECURE Act 2.0 opens up a different path.

What are some of the advantages of a Roth IRA?

A Roth IRA can be a powerful, flexible tool for building a retirement nest egg. Money is contributed after taxes, but it grows tax-free, and withdrawals may be made tax-free after age 59 and a half.

Many families would like to begin funding Roth IRAs for their children from young ages, giving them a leg up on saving for the future. But if the children don’t have earned income, they can’t open Roth accounts.

The rule change may offer a kind of “best of both worlds” scenario. Parents can begin saving in a 529 plan, and switch it to a Roth later if the money isn’t needed for college.

The rule change may offer a kind of “best of both worlds” scenario. Parents or grandparents can begin saving in a 529 plan and switch it to a Roth IRA later if the money isn’t all needed for college.

How are farm/ranch families able to use Roth IRAs?

Farm families have additional options for helping their children save for the future. Not only can they create

Adams Bank & Trust is not a registered broker/dealer, and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC, are not insured by bank insurance, the FDIC or other government agency, are not deposits or orbligations of the bank, are not guaranteed by the bank, and are not subject to risks, including the possible loss of principal. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.

traditional 529 education plans, but their children may also be able to have their own Roth IRA accounts earlier than most young people, if they’re earning wages helping out on the farm or ranch.

Children often begin helping out with simple chores on familyowned farms and ranches at a young age. Maybe they’re helping to clean out the barn or feed bucket calves. Families who own small businesses may be able to make similar arrangements for their children to help out and earn wages. If the parents pay their minor children wages for these chores, the wages may be considered earned income, allowing the kids to contribute to their own Roth IRA accounts.

The wages paid must be reasonable for a child’s age and the tasks being performed, and it’s important to get your tax professional’s opinion here.

What are some of the limitations on 529 plan to Roth transfers?

• The maximum amount that may be rolled over is $35,000.

• The 529 account must have been established for at least 15 years.

• Contributions and earnings within the last 5 years will not qualify to be rolled over.

• Contributions are limited to the annual Roth contribution limit which can change from year to year.

With a 15-year minimum from opening the account to rolling over funds, the rule change isn’t intended to be a wealth transfer vehicle in the short term.

However, it can be a viable backup plan if a 529 account ends up overfunded when a child has completed education. After all, being better prepared for the future is a blessing.

The rule is new and subject to change, so be sure to consult your planning professionals for guidance.

While there are limitations, the new distribution rule provides another high-quality opportunity to save for a child’s college education and give him or her a head start on a more stable financial future.

Opinions expressed are those of the author and are subject to change. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation. The material is general in nature. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. There is no assurance that any investment strategy will ultimately meet its objectives. Past performance may not be indicative of future results. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated.

For assistance in reviewing or creating your investment plan, please call any Adams Bank & Trust office or call toll free at 800.422.3488 for an appointment with a Raymond James Investment Representative.

Jacob Hovendick , RJFS Financial Advisor and Branch Manager

,

Financial Advisor

Not only can farm families create traditional 529 education plans, but their children may also be able to have their own Roth IRA accounts earlier than most young people, if they’re earning wages helping out on the farm.