Dacotah Banks : Annual Report - 2021

CONTENTS

• 2 Letter to Shareholders

• 4 Financial Highlights & Selected Consolidated Financial Data

COMMUNITY
10
ANNUAL	GENERAL	TRANSFER
MEETING	OFFICES	AGENT
The 2022 Annual Meeting of	401 South Main Street	American Stock Transfer
Dacotah Banks, Inc. is to be	Suite 212	& Trust Company, LLC
held on Thursday,	PO Box 1496	6201 15th Avenue
May 26, 2022.	Aberdeen, SD	Brooklyn, NY 11219
57402-1496
This year's meeting will be
held virtually and will begin at	Telephone:
1:00 PM CT with access	[phone]
available beginning
at 12:30 PM CT using one of	Fax:
the following methods:	[phone]
• Go towww.dacotahbank.com,	Website:
click on "Annual Meeting" button	www.dacotahbank.com
on the home page, or
• Go towww.virtualshareholder-
meeting.com/ DBIN2022.	Email:
[e-mail]
Please note that you will need the Control Number
from your Proxy Card to gain access to the Annual
Meeting regardless of which method you use.

PRESIDENT & CEO

SHAREHOLDERS

11

CUSTOMERS

7

8

Directors, Management & Employees

EMPLOYEES

9

ROBERT FOUBERG

Dacotah Banks, Inc. is a one-bank holding company headquartered in Aberdeen, South Dakota. The Company is the sole shareholder of Dacotah Bank, a full-service commercial bank that offers banking, insurance, mortgage and trust and wealth management services throughout its thiry-two locations in Minnesota, North Dakota and South Dakota.

TO OUR SHAREHOLDERS

COMMENTS

While 2021 presented challenges to our employees, customers and communities as it played out against the continued backdrop of the Covid-19 pandemic, it also presented several opportunities to attract new employees and provide better educational experiences for employees; expand product and service offerings to new and existing customers; and make meaningful investments in the communities in which we live and work. Despite the impact of the Pandemic, and a very conservative budget forecast, the Company fared well and far exceeded that forecast, due in large part to the fee income we earned from making Paycheck Protection Program loans; and to improved loan quality stemming from good yields and commodity prices and liquidity from various federal and state Covid-19 recovery programs.

The expertise gained by our Pandemic Team in navigating 2020 paid dividends in 2021 as we were able to more quickly deploy strategy and tools to blunt various impacts of the Pandemic and maintain smooth operations throughout the year. We communicated regularly and transparently with all employees and sought their feedback through surveys and other informal methods to best address the variety of concerns they had and continue to have about the security of their families, themselves and their jobs. We elevated communication with the Boards of Directors by including additional senior executives in Board and Board Committee meetings. We maintained regular communication with shareholders and continued the virtual option for the Annual Meeting of Dacotah Banks, Inc. Shareholders.

The state of the Company is sound and our forecast for 2022 is bright. Our lending team is as strong as it has ever been and loan growth is projected at 7.62 percent; and our retail team, just a couple of years into a new structure, has been working in teams to further improve their technology platforms, training, quality assurance and banker support (primarily through the service center), and deposit growth is projected at 3.30 percent. Our Trust and Wealth Management, Insurance, Card Services and Mortgage teams have all been bolstered with new people and trust and wealth net income is projected at $1.88 million, insurance commissions and agency fees at $4.86 million, credit card income at $863,000 and fees on residential mortgages at $2.79 million.

The Company's Vision promises you, as shareholders, that we will endeavor every day to remain independent and viable in an ever-changing banking and financial services industry. I thank each of you on my own behalf and that of nearly 600 fellow Dacotah Bankers for your steadfast support and entrusting us with your investment.

President and

Chief Executive Officer

"I am truly blessed to lead nearly 600 colleagues, all of whom bring different ideas, experiences, motivations and challenges, but also a single-minded dedication to serving each other, our customers, our shareholders and our communities in every possible way every day."

THE DACOTAH BANK

VISION

The employees of Dacotah Banks, Inc. and Dacotah Bank, and the

Company's Boards of Directors establish this Vision and make the following promises:

We will be a well-capitalized Company and growing profitably at a rate that both ensures the independence and viability of the Company and enhances shareholder value.

We will provide an extraordinary and holistic customer experience and deliver the products and services they need.

We will equip and empower employees to exceed customer expectations and work in a culture that promotes effective communication and encourages teamwork.

We will make positive impacts within the communities in which we live and work.

3 | ANNUAL REPORT 2021

PERFORMANCE
2020	% Change
Net interest income .........................................................	$ 111,336	103,438	7.6%
(Reduction in) provision for loan and lease losses .........	(600)	8,800	(106.8)
Non-interest income .......................................................	26,570	24,327	9.2
Non-interest expense ......................................................	89,846	80,242	12.0
Net income ......................................................................	37,701	29,603	27.4
Per share .......................................................................	3.36	2.64	27.3
Cash dividends declared .................................................	6,722	6,068	10.8
Per share .......................................................................	0.60	0.54	11.1
AT DECEMBER 31ST
2021	2020	% Change
Total assets ......................................................................	$	3,393,129	3,103,194	9.3%
Investment securities and time deposits in banks .........	558,920	301,376	85.5
Loans, net ........................................................................	2,294,687	2,261,554	1.5
Deposits ...........................................................................	2,973,340	2,699,041	10.2
Borrowings .......................................................................	9,000	17,000	(47.1)
Stockholders' equity ........................................................	376,689	353,703	6.5
Book value per share .......................................................	33.63	31.51	6.7
Shares of common stock outstanding ............................	11,202	11,226	(0.2)

2021

FINANCIAL

HIGHLIGHTS

(Dollars in Thousands, Except Per Share Data)

SELECTED CONSOLIDATED FINANCIAL DATA

At or for the years ended December 31,

PERFORMANCE RATIOS

Return on average assets ...........................................

2021 1.14%

Return on average stockholders' equity .................... 10.27

Net interest margin ...................................................... Non-interest income to average assets ..................... Non-interest expense to average assets ................... Efficiency ratio .............................................................

ASSET QUALITY RATIOS

Nonperforming loans to total loans ............................ 0.64%Allowance for loan and lease losses to total loans ...

CAPITAL RATIOS

Tier I leverage ..............................................................

3.59 0.80 2.71 65.15

1.66

10.89%Tier I capital .................................................................. 14.32

Total capital ..................................................................

2020

2019

2018

2017

1.02

1.17

1.14 0.74

8.64

9.86

9.83 6.48

3.80

3.85

3.95 4.02

0.84

0.81

0.78 0.79

2.75

2.81

2.92 2.78

62.80

63.54

64.95 61.37

1.30 1.70

1.47 1.54

0.96 0.93 1.48 1.58

15.58

10.92 14.05 15.31

11.86 13.83 15.09

11.52 11.08 13.09 12.51 14.34 13.76