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Interest Rates to Remain Low
Interest rates will remain at exceptionally low levels despite signs the economy is recovering, Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee yesterday. Bernanke explained that the economy is still struggling in the wake of the financial crisis, with high unemployment and a troubled housing market. He added that inflationary pressure, the main driver of a tighter monetary policy, is likely to remain subdued.
“The Federal Open Market Committee continues to anticipate that economic conditions -- including low rates of resource utilization, subdued inflation trends, and stable inflation expectations -- are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” he said.
Check to Check
A new study finds more than 50% of people have difficulty covering monthly expenses. In addition, 9% said they have taken a loan against their retirement account during the past year and 12% had household expenses that exceeded income. Almost 50% of people surveyed don’t have enough savings set aside to cover expenses for 3 months if they became sick, lost their job or had some other emergency.
Minnesota Bankers to Visit Legislators
The Minnesota Bankers Association (MBA) will welcome banking professionals from around the state to St. Paul on Tuesday, February 16, for the MBA Bank Day at the Capitol. The MBA holds the event annually to provide bankers an opportunity to hear legislative leaders speak about current industry and state issues, and meet with their elected officials. Natasha Schroeder, Executive Vice President, Compliance, Security and BSA Officer for Americana Community Bank will represent ACB at the 2010 Bank Day at the Minnesota State Capitol.
The day will begin at 9:30 a.m. at the Hilton Garden Inn with remarks from state political leaders. The tentative list of those scheduled to appear includes Minnesota House Minority Leader Kurt Zellers, Minnesota Senate Majority Leader David Senjem, Minnesota House Majority Leader Tony Sertich, Minnesota Senate Commerce Committee Chair Linda Scheid, Minnesota Senate Commerce Committee Chair Joe Atkins, and Minnesota Senate Commerce Committee Vice Chair Dan Sparks.
After a break for lunch, Dr. Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis, will deliver the keynote address. This will be Dr. Kocherlakota's first public speech in his current role with the Federal Reserve Bank of Minneapolis.
Following the keynote address, bankers will move to the Capitol for afternoon meetings with their local legislators and to attend various committee hearings.
The Minnesota Bankers Association is the state's largest trade association devoted exclusively to the representation of commercial banks. The MBA was founded in 1889 and represents 95% of Minnesota's chartered banks. The MBA is proud to support our member banks as they work to ensure vital communities throughout the state. For more information, please visit our Web site at www.minnbankers.com.
Greetings from the President
Dear Clients, Partners, Friends, and Associates,
Hello. I would like to take this opportunity to introduce myself and my plan for Americana Community Bank. First though, I would like to say thank you for the many well-wishes and congratulatory comments I received regarding my recent promotion. “Thank You!”
Americana Community Bank is a family owned and locally run community bank. I am proud to say that I am a member of the family. I am the son of the owner, Bob Dittrich. As many of you know from your own businesses, when you are part of a family run business the entire staff become extended family. However, actual blood relatives that serve in the bank with me are my wife of 10 years, Jody; my sister, Katherine; my nephew, Sam; and as Bank Directors, my parents, Bob and Pat. It is likely you will hear from these folks and others in the “extended” family in future editions of this letter.
I have worked for ACB for 13 years as of this past June. I am excited, happy, proud, and ready to be given the honor of serving as President and CEO for this organization. During the recent MLB All-Star Game, one of baseball’s current top players, Albert Pujols, was asked if a player of his caliber still gets nervous on the grand stage of an All-Star game. Albert responded, “My father told me, if you ain’t nervous, you ain’t ready.” As soon as I heard this, it resonated with me. I think he was talking about how being nervous gives you a heightened sense of awareness. It gives you a competitive edge, while being over-comfortable or over-confident can be a bad thing in sports. I think this is true for business as well. I think he was also referring to the fact that being nervous means you care, about how you perform, about the results of your efforts, and about how you present yourself in the given situation. So…I guess I’m ready!
As you are all aware, this economy has given our communities challenges the likes of which most of us have not seen in our professional lives. But with the team I have to work with here at ACB, despite the nerves (or maybe because of them), I feel confident and ready to meet the challenges presented to us and our communities.
Americana Community Bank is proud to be a part of the communities we serve. It’s fun for me to be a part of the community banking world, even in these turbulent times, because I know that what we are doing in our communities helps them grow, prosper, and even fulfill dreams. It is truly an honor to work with clients who make a real difference in their communities. Employees of Americana Community Bank have been key fabric of their communities for 126 years and I am honored to carry the torch for a time as we strive to continue for generations more. Please come in, work with our community bankers, and let us show you what old fashioned service with modern technology and conveniences is all about. If you like what we’re doing, let us know. If not, share with us how we can serve you and our community better. Feel free to contact me or any of our bankers to let us know what you are thinking.
ACB Announces Adam Dittrich New President, CEO
Chanhassen, MN—Americana Community Bank (ACB) has announced the promotion of Adam Dittrich to the position of President/CEO. Dittrich, a native of New Ulm, MN and currently a Victoria, MN resident, will oversee all functions for the five branch community bank and serve on their Board of Directors.
“Adam's promotion is an integral part of the bank's plan to remain independent and family-owned for generations to come,” said Robert Dittrich, Americana Community Bank Chairman of the Board. “His business instinct and natural leadership ability are a valuable asset to our organization and the communities we serve as he helps us manage the connections between the financial resources provided by the ACB team and our customers.”
Most recently the Chief Financial Officer for the bank, Adam Dittrich has 13 years of experience in the financial services industry. Dittrich has also served in bank positions ranging from teller to Senior Information Technology manager.
A relationship-oriented banking professional, Dittrich remains committed to ensuring that Americana Community Bank continues its long-standing history of excellent service and putting the customer first. According to Adam Dittrich, “Americana Community Bank will continue to be the local bank business owners and individuals can count on for the best in financial services. It is our intent to maintain involvement in our communities and dedication to the customers served by all five of our full service locations.”
Typosquatters Lurking on the Internet
Typosquatting is a little known danger lurking on the internet. Typosquatting (which is illegal) is simply giving a website a name that closely resembles an actual website. People become victims of typosquatting by misspelling a word, transposing letters, forgetting to put a dot after the www or before the com part of an internet address, or guessing at what a website name may be (example: using .com, when the real site is .net.) Typosquatting can be obvious – you find yourself on a website that is not where you wanted to be. This can be relatively harmless if the site is used to generate revenue for the scammer (who gets per click advertising when links are clicked.) However, this can be dangerous, if the site links to an adult or unsafe website. Typosquatting can also be hard to detect. Scammers do design sites to closely resemble real websites. The purpose can be identity theft or to upload viruses and other malware onto your computer. Typosquatters can target anyone, from businesses to children’s websites. The best way to protect yourself from typosquatting is doing a search if you don’t know the address for a website you are looking for, don’t guess. And always remember, if something doesn’t seem right on a website, don’t enter any personal information, click on any links, or download anything.
Commercial vs. Investment Banking
We, as a financial industry and as a country and world economy, are experiencing some tumultuous times. The failure of Lehman Brothers (one of the nation's largest investment banks), the failure of Washington Mutual (the nation's largest savings bank), the government's take-over of AIG (the nation's largest insurance company), and the $700 billion rescue plan to buy up troubled mortgage debt are but only some of the shocking events to rock the financial world recently. While the headlines are startling, I want to inform you about one of the less attention-getting events that we will be dealing with over the next several months and years.
That event is the blurring of the separation between investment banking and commercial banking as we've known them for over 80 years. Back in 1933 during the Great Depression, the Glass Steagle Act was enacted. One of its provisions was to separate commercial banking (makes commercial loans and accepts demand deposits) from investment banking. (Another provision was the creation of the FDIC which insures your deposit accounts, now up to $250,000.)
Americana Community Bank is a commercial bank (CB), as are several thousand other banks in the nation. We are part of a highly regulated industry with state and federal charters and regulatory oversight provided by the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC, and state banking departments. We are subject to volumes of laws and regulations, we make quarterly reports to the regulators (these reports are public information), and we are examined regularly by examiners who determine our safety and soundness and our compliance with rules and regulations.
Investment banks (IB), on the other hand, are where capital formation takes place in the form of both debt and equity securities. Some regulation is present in this part of the financial industry, primarily from the Securities and Exchange Commission (SEC), but it is much less rigorous, and there is much less oversight than commercial banks experience.
During the current credit crisis, huge changes have affected five of the largest investment banks (IBs) in the nation. Bear Stearns (IB) was acquired by JP Morgan Chase (CB); Merrill Lynch (IB) was acquired by Citigroup (CB); Lehmann Brothers (IB) declared bankruptcy; and Goldman Sachs (IB) and Morgan Stanley (IB) were both granted bank holding company status (CBs) by the Federal Reserve. In effect, a large portion of the screen that previously existed between investment banks and commercial banks has tumbled down.
In the months ahead, the financial industry is sure to have additional regulation and oversight placed on it so that the quagmire we are in won't be repeated. Certainly corporate governance and transparency will be addressed, as will mortgage underwriting criteria. Mortgage derivatives and credit swaps will also likely be regulated. These and other changes, as they affect the previous separation between investment banks and commercial banks, will be interesting to follow.
In an Uncertain Economy, Hold Your Advisors Close
For a small business owner, today’s economy is about as
uncertain as it gets. Markets are in turmoil. Customers are
skittish and afraid to commit. Vendors are wary and
preoccupied. Financing is tight. Everyone around you, it
seems, is cutting back or pulling in until things sort
themselves out.
As a precaution when times are uncertain, cutting back in
many arenas may, in fact, be the prudent thing to do. But a
mistake many small business owners will make is to cut back
on their use of outside professional advisors. They’ll do so
because:
-
Outside advisors are seen as an “extra,” a nice thing to
have when business is looking to grow or change, but an
expensive “luxury” when the immediate future looks
uncertain.
-
Outside advisors are seen as expensive, so cutting back
on them will significantly help the bottom line. Even
where there’s no specific fee for calling on them, the
fear is that these advisors will try to sell the
business something they can’t afford just now.
-
Outside advisors are seen as “easy” to cut back on –
most other cuts probably
feel more
painful, whether they are or not.
Unfortunately, this logic can lead them (and you) into the
same kind of trap businesses fall into when they decide to
cut back on their marketing budget because sales are down,
usually for the same reasons listed above. The truth is,
when sales are down, that’s typically when a small business
needs to ramp
up its marketing.
To put the situation differently: you can afford broad-brush
marketing when times are good, but when sales falter, your
marketing programs need to become laser-focused. The same is
true of legal decisions, purchasing decisions, accounting
decisions, benefits decisions and financial decisions. It’s
when times are good that you can probably afford to muddle
through without the benefit of advice. When times are
uncertain, your decisions need to be dead on target.
The reality is that the value of trustworthy professional
advice goes up precisely when your company’s economic
circumstances go down. Because very often, the best thing
they can do for you is say, “Relax. Don’t panic. This too
shall pass.”
With that and the current economic turmoil in mind, here are
some specific suggestions on how you might particularly
benefit from conferring with your trusted advisors in these
uncertain times.
Start with the big picture
You’ve got a business plan in place. As a first step, call
in your business consultant and/or financial planner and
review the plan – chances are good that the plan itself is
still good, and that there‘s no need to panic or start over.
Most likely, all that’s necessary is to adopt a few “getting
through it” tactics while leaving the overall strategy in
place.
It is possible, however, that the current uncertainty will
uncover some ways in which your original list of priorities
and objectives was off base. In this case, your business
advisor can help you retool the plan in a logical and
unhurried way.
It’s also possible that the economic uncertainties may
present opportunities for growth or expansion that weren’t
there when the plan was developed. Your business consultant
and financial planner can point out these opportunities to
you, evaluate them objectively so you don’t get into
fire-sale frenzy, and help you incorporate the right ones
into the overall plan smoothly and intelligently.
The big picture key: don’t let the uncertainties in the
economy scare you into short-term remedies that will
undermine your long-term prosperity, or tempt you into
short-term profits that will put your enterprise at risk
down the road.
Review your external finances
Uncertain economies are also a good time to sit down with
your banker and review your portfolio of banking services
with an eye to restructuring where you can reduce or defer
costs. Perhaps your circumstances have changed anyway since
many of your cash-management and loan arrangements were
originally made, and now would be a good time to see if
restructuring can help you reduce or defer costs while
business is declining or uncertain. Can loans be
consolidated, or are other loan types more appropriate at
your current stage of growth? Has your relationship grown to
the point where you are entitled to a higher level of
services and/or reduced fees for your services? Are there
cash-management products that would reduce or eliminate
short-term debt?
Review your internal finances
Similarly, your accounting system might yield a few diamonds
in the rough under the watchful eye of your CPA –
opportunities that were hidden during the hustle of good
times but that now might be (painfully) clear. Are there
costs that are redundant or off-kilter? How is your debt
structured, and can you reduce or restructure it in a way
that smoothes out or reduces your cash flow? How are your
payables and receivables being managed, and how does their
performance measure up to other firms in your line of work?
Are your budgets and their assumptions leading you to make
decisions that are more costly than they need to be?
Review your internal operations
Depending on your type of business, tough and uncertain
times might well be a golden opportunity for you to call in
your business advisor to examine your company’s operations.
Similar to the financial side, there may be operational
efficiencies that are unnoticed when business is humming,
but that become more obvious when the pace of operations
slows down. Among other things, your advisor can help you
look hard at work flows and scheduling, workforce management
and performance, and whether sales and production cycles are
in sync.
Review your legal situation
If your type of business makes you vulnerable to lawsuits,
you’ll want to keep your legal advisors closely involved in
your decisions when times are uncertain. You truly want no
surprises here. And if major company changes are underway –
such as an ownership transition and/or a sale of assets –
you want to be especially sure you are protecting yourself
from being taken advantage of. The other side may put too
much emphasis on the uncertainty resulting from current
economic circumstances and not enough on the long-term value
of the assets in play, and your legal advisors can help even
out the balance of the discussion.
Review your advisors
Finally, take advantage of the uncertain economy to review
your team of advisors. As you were going through the list
above, did you hesitate when thinking about calling in your
lawyer or accountant or financial planner or business
planner? Were you worried that their advice would be more
oriented toward maximizing their fees rather than your best
interests? The old adage that “you find out who your true
friends are when times are toughest” applies to business
advisors as well.
Looking forward
The best way to prepare for the next round of economic
uncertainty – and there is always a next round – is to
gather a team of advisors you can trust, and
stay in touch with
them on a regular basis so they’re always current with
your business strategy and your business health. That way,
when the next boomlet busts, you won’t hesitate to hold
those advisors close.
Securing Your Retirement
Are you worried about your financial future? With the recent events on Wall Street, consumers everywhere are looking for secure alternatives for their personal retirement savings. When you open an Individual Retirement Account (IRA) at Americana Community Bank, you can roll your funds over from an employer sponsored retirement plan, tax free, and know that your future is safe and secure.
To set up your IRA, simply stop into any ACB branch and talk to your banker. We'll help you get started. Once your account is open, find out how easy it is to move (rollover) your existing retirement account. With an IRA, you wont have to worry about the ups and downs of the stock market, and your funds will always stay protected, thanks to the FDIC.
Recent legislation has temporarily increased FDIC insurance on deposit accounts (for instance, checking and savings) to $250,000 from $100,000 per individual. Bank held retirement accounts (IRAs)are also insured up to $250,000. Did you know that since the FDIC was created 75 years ago, not a single penny of insured money has been lost? Rest assured that once your account is opened, your investment will never be in jeopardy again.
To learn more about FDIC insurance, call your branch and find out how your accounts are protected, or visit http://www.fdic.gov/.
ACB: Safe and Secure
With the recent failure of some banks, including the IndyMac Bank in California, chances are that you have seen, heard or read in the media about the stability of banks, particularly small banks. We understand that the economic challenges may be a source of confusion and uncertainty. However, if there's one thing that you don't need to worry about, it's your banking.
Please rest assured that Americana Community Bank is a safe and secure choice. As community bankers, we seek to be common sense lenders, avoid high-risk activities, remain true to the longstanding fundamentals of responsible banking, serve the long-term interests of our customers, and actively participate in the communities we serve.
Did you know that since the FDIC was founded 75 years ago that no individual has ever lost a penny of FDIC-insured funds? State or federal examiners inspect Americana Community Bank each year, helping to ensure that our bank is safe, strong and secure. As an Americana Community Bank customer, your savings, checking and CD deposits are insured by the FDIC for at least $100,000. You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories. These categories include Single Accounts, Joint Accounts, certain Retirement Accounts and Revocable Trust Accounts. Revocable Trust Accounts include Payable Upon Death Accounts and Living Trusts. Examples of how accounts can be named and to what extent they may be insured can be found in FDIC brochures available at your ACB branch or at www.fdic.gov/deposit/deposits/insuringdeposits.
Please call your local ACB branch or stop in and we'll be glad to answer any questions you have.
Bank Security and FDIC Insurance
Recently, because of the failure of IndyMac Bank in California and a few other banks (including a bank in Staples, MN), there have been some articles in the press regarding the stability of banks, particularly small banks.
I'd like to assure our valued customers that Americana Community Bank (ACB) is a safe and sound institution. We are examined every year by either state or federal examiners. As with all banks, the ratings that we receive for the different types of examinations they perform are confidential, except for our CRA (Community Reinvestment Act) rating, so we can't disclose our safety & soundness rating to the public. In fact, there are bank rating services that claim to have enough knowledge to rank banks for the public. However, those services base their rankings on inadequate data, as they cannot have access to information actually gathered by the FDIC during their examinations. I want to assure you, based on my 27 years of being an FDIC examiner before I was named President and CEO of ACB, that we are in sound condition.
All banks are currently going through a slump due to the decline in the real estate market, in general, and the housing market, in particular. We are not, however, involved in the real estate markets in California, Florida, Nevada, Michigan and other places where huge drops in real estate values have occurred. We did not stretch ourselves, as other banks have, by going into previously fast-growing markets that were far flung from the markets we know or the expertise we have.
Much press has been given to "sub-prime" lending, which has caused huge losses for many banks. In this arena, many mortgage brokers approved and sold loans that were underwritten without verification of income or without qualification of the borrowers' ability to make payments on their ARMs (adjustable rate mortgages) after the term of the "teaser" rate expired. These brokers, who are mostly paid on a commission basis, were only interested in the transaction--not in establishing a lasting relationship. We, on the other hand, are a "community bank" that strives to develop long-lasting relationships with our customers by helping them to make the financial choices that will benefit them in the long run. We did not and do not engage in "sub-prime" lending.
You may wonder about making sure that all of your deposits are FDIC insured. I'm sure that you are aware of the basics of FDIC insurance (e.g. $100,000 insurance for each depositor, $250,000 insurance for IRAs, etc.), but there are also ways to increase the amount of insurance by using joint ownership accounts, payable-on-death (POD) accounts, and others. I'd like to refer you to the employees in your ACB branch for more information regarding FDIC insured deposits. In addition, each of our branches would be happy to share FDIC issued brochures explaining how your deposits can be insured to greater levels. Also, http://www.fdic.gov/edie/ is a link on the FDIC website that can be used to calculate the amount of your insured deposits.
In closing, Americana Community Bank is a place where your deposits are safe. If you'd like to speak with an ACB banker, feel free to call your local branch or just stop by. We're ready and happy to help you!
Fair Competition?
Once upon a time, there were three butcher shops that all operated and competed in the same community. Butcher Shop A had quality products, provided excellent customer service, supported the community, and paid its fair share of income taxes. Butcher Shop B also provided good products and served the community, but it paid no income taxes. Butcher Shop C was sanctioned by the government, bought its meat at a discount, paid only a fraction of the income taxes paid by Butcher Shop A, and was supported by the government in the event of loss.
Now I ask you, is this fair competition?
While the scenario described above is only an analogy, this type of unfair competition actually exists in the financial institution industry.
Like Butcher Shop A, community banks provide high quality products and excellent customer service, support the communities they serve, and pay their fair share of income taxes. Credit unions, on the other hand, pay no income taxes on the profits they generate. The Farm Credit Services (known locally as AgStar) is a government sponsored enterprise (GSE) that receives its funds at a discount (through U.S. Government bonds) and pays income tax on only a portion of the net income that it generates. Losses they incurred in the 1980s were only recently repaid in 2006.
Now I ask you again, is this fair competition?
I just wanted to share something with you about which I thought you should be aware.
Mortgage Brokers vs. Bankers
The recent rise in mortgage foreclosures has created confusion and concern among consumers, and we want to clarify a couple things. First, many risky, nontraditional loans were made by non-bank mortgage companies and brokers who aren't held to strict regulations and who set unrealistic borrower terms and conditions. Second, many of these loans were made in the "subprime" loan market, meaning that the mortgage was designed to assist borrowers who were rebuilding their credit history, resulting in interest rates higher than the overall market rates.
You don't need perfect credit to borrow from a bank, but a loan that's beyond your ability to repay or that subjects you or a bank to undue risk isn't in anyone's best interest. Please contact your bank representative with mortgage lending questions or for more information.
Health Savings Accounts
Health savings accounts (HSAs), are tax-advantaged savings accounts that work in conjunction with a high-deductible health plan. HSAs provide numerous benefits, including:
| Ownership | Your HSA is yours to take with you, wherever you go--even if you leave your current employer. |
| Control | You are empowered to decide which qualified medical expenses you want to use your HSA for and when. |
| Flexibility | HSA dollars can pay for items identified on health insurance plans, as well as other items identified by the IRS, such as dental, vision, orthodontia and over the counter medicine--items individuals are currently and routinely paying for with post-tax dollars. |
| Tax Savings | All HSA contributions are tax deductible. Interest or other earnings on the assets are tax-free and your money accrues tax deferred. |
| Savings and Investments | Unused HSA dollars carry over, year to year. And, rather than spending your HSA funds, you may choose to continue investing for future expenses. At age 65, any unused HSA funds may be withdrawn from the account for non-medical expenses, without penalty. |
