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It was on August 26, 1994 that Bank “Altoona” first opened its doors. And it was a humble beginning. The office actually started in a small trailer at the front of the property we occupy today. 

Over the last 23 years, it’s been very exciting to experience the growth of the bank throughout the ebbs and flows of the economy, and a pleasure to have played a small part in the success of our customers.

What a privilege to spend more than two decades working in a career I enjoyed, with people who have invested and mentored me, customers that have become friends, and a wonderful community that flourish alongside the bank. 

I am thankful for the many leadership roles I have been trusted with both at Bank Iowa and in the city, especially with the Altoona Chamber. A mentor suggested I get involved with the chamber and it was among of the best pieces of advice I’ve received. Being a part of the chamber helped me to grow, not only professionally, but personally. 

I am excited about my retirement, but will miss the daily interaction with my co-workers and customers. My husband, Gary, retired in October, and we look forward to spending more time with our family, our church, volunteering and traveling.

As Altoona celebrates 150 years, I will be volunteering with the parade and will continue to be active in the community I live in and enjoy. Please say hi when you see me around town!


Pat Stafford is Bank Iowa's former Retail & Operations Manager of Des Moines.


The cash corn price averaged $4.49/bushel in 2013 in Iowa. That same year, the state’s average cash land rental rate was $270/acre. For the most part, farmers renting land were able to make that work. It certainly wasn’t as easy as when corn prices were closer to $7.00/bushel, but it worked. 


However, 2013 was also the early days of the downturn in grain prices that continue to challenge corn and soybean farmers working to do more than just break even. Obviously, cash corn prices below $3.50 alone make life tough for farmers. But, when cash rent rates don’t fall in line with those corn prices, it exerts even more pressure on farmers’ bottom lines.


Current State of Cash Rents And Corn Prices

So, have cash rental rates fallen as much as they should have? The latest data from the Iowa State University (ISU) Extension Ag Decision Maker show the cash corn price averaged $3.24/bushel for the state of Iowa in January. The latest ISU survey data show farmers paid an average of $219/acre for cash rent in 2017. Based on the numbers alone, it adds up to a decline of around 18% in both corn prices and cash rents over that four-year period. 


But many farmers and ag lenders around the state say cash rents represent a growing share of the expenses to raise a crop, yet despite the decline, profitability is still strained. In fact, many Iowa farmers say that cash rents are one of their top concerns. Even though the numbers show a direct correlation between cash corn prices and land rents, some say the dip in rent has fallen well short of tracking the decline in corn prices. In other words, rents aren’t falling as much as many farmers feel they need to be to sustain viable profitability long term.


Factors Keeping Rents High

Demand is a major driver of cash rents that haven’t fallen nearly as much as renting farmers feel they should have. Even with higher rent costs, there’s still strong demand when a parcel of land goes up for rent. There’s a finite amount of it out there, and when multiple operators in one area are after the same rented ground, it can drive pricing higher. Though that may only happen occasionally in a given area, it can raise the price bar for other rented ground, meaning that in some cases, a high bidder or two can have a major influence on cash rental rates in general.


The available grain terminals and outlets in a specific area can also influence rental rates. Areas where demand for specific crops – like organic corn, for example – at a higher price can allow more room in some farmers’ balance sheets to pay higher cash rents. It’s another case in which local demand may outpace the market in general, thereby justifying a hike in cash rents and making it difficult for some farmers to compete. 


Surviving High Rents By Cutting Costs

Many farmers’ efforts to cut overall production costs as a way to offset the lower grain markets may include paying less for cash land rents. That’s much easier said than done, especially in areas of high land demand, especially where land doesn’t often come up for rent very often. 


One strategy is to look to other areas to cut cost and continue paying the market standard for cash rent. That may mean fine-tuning marketing strategies to squeeze enough additional revenue from each acre to cover a portion of the rental rate. Other strategies simply involve paying less for other crop inputs like chemical and fertilizer. Especially in a year when the demand for rented farmland looks to remain strong, this will likely be a more sustainable solution until grain prices rebound.


Improving The Land

Another way to prevent high cash rents from eating away at crop revenue potential is by looking at the land itself. Can you make improvements that could be used as ways to negotiate a lower rent? If you can somehow make the land better as a tenant – through drainage tile, cover crops or other practice that can improve its overall productivity – you can use that as a way to negotiate a lower cash rent. Plus, some improvements may not pay dividends until years down the road. Integrating practices that work toward those improvements shows the landowner you’re committed to the land well into the future.


Value Land Right

Another way to ensure you’re paying the right cash rent, and not a price that’s dictated primarily by a specific local demand situation is to match your rent to the productivity of the land. Following indices like the Iowa Corn Suitability Rating (CSR) and land value by soil type or slope gradient is a good way to ensure your cash rental rate is justified based on the productivity of the land. 


Communication will remain hugely important in negotiating cash rental rates this year and beyond. Especially when it comes to assigning an accurate value to land and the improvements the lessee can make to improve its long-term productivity, it’s important to always keep open lines of communication between the landowner and renter. Even when local demand spikes can drive up cash rent rates for specific land, open lines of communication can make it easier to reach a cash rent level upon which both lessor and lessee can agree.


Brennan Vaverek is an agriculture lending specialist for Bank Iowa's Humboldt location, Iowa's second largest family-owned financial institution. He can be reached at bvaverek@bankiowa.bank.


Last weekend over breakfast, the second of my four sons called out the Tooth Fairy for what he perceived to be jaw-dropping incompetence. She had completely neglected to leave his older brother any money for his lost tooth. 


Older brother had done his part. He’d suffered through the loss, delicately tucked the pearly white under this pillow, and yet come morning – nothing. 


While my first born was mildly disappointed in the fairy’s failure to visit him the night before, he was nowhere near as outraged as his younger brother. And that’s probably due to the way my two oldest boys, only one year apart in age, think about money. It’s about as far apart as you can get. Birth order, it seems, has had much greater influence over their financial perspectives than my wife and I ever could. 


One boy knows, to the penny, how much money he has at any given moment. Call him up right now, and he could tell you exactly how much more he needs before he can buy the next great Lego set to hit the shelves (and pay the sales tax, too). His older brother, not so much. 


My boys are parented by a banker and a teacher, so they’re used to unwittingly wandering into teachable moments. That morning at breakfast, we seized on the Tooth Fairy’s unexplained absence to talk about the unpredictable nature of money and the importance of saving. Even when you are positive money is coming, there are plenty of potential hiccups that can prevent that cash from making its way to you. 


Each of our sons loves to earn money. They all have that in common. They even like to work for it, although “work” is a fluid concept. Last fall, the boys got to sell pumpkins from their grandpa’s fledgling patch in Williams, Iowa. While they had tried their hand at weeding earlier in the season, they really had no idea how much actual work went into the planting, nurturing and harvesting of the Iowa State Fair-sized behemoths my dad has somehow managed to coax out of the soil. Because the boys were going to profit from the sale of the pumpkins, my wife and I thought it would be smart to sit them down and talk about all of the expense – mainly Grandpa’s blood, sweat and tears – that went into creating them. (We can’t help ourselves… teachable moment!)


The other thing the boys share is their affection for banks. We’ve talked with them often about the value of keeping that hard-earned (and not-so-hard earned) money safe under the protection of people in their hometown they can trust. They love to count their coins and dollars at home and then compare it to the bank teller’s tally when they come in to make a deposit. They also love looking over my shoulder when I check out their balance online or on my phone. It’s even more exciting when I’m making a transfer from our checking into their Young Saver accounts


You may be relieved to hear the Tooth Fairy is back in good standing at our house. She did show up that evening and even left behind an apology note for being tardy. As it turns out, she hadn’t had enough money to give the other night. She’d had to work really hard and save up enough to make her gift to our son. “Remember, it’s very important to save your money!” she wrote. Seems the Tooth Fairy, too, appreciates a teachable moment. 


Mark K Phillips is cash management services manager for Bank Iowa, Iowa's second largest family-owned financial institution. He can be reached at mkphillips@bankiowa.bank


By Jim Plagge, Bank Iowa President/CEO

Grain price discovery and establishment of crop insurance prices for the 2018 crop concluded at the end of February. But, for farmers looking to protect themselves from price risk through the growing season, it’s anything but a finish line.


Every year, the USDA Risk Management Agency sets spring prices for corn and soybeans that are used for federal crop insurance guarantees and can serve as early bellwethers for planted acreage for the two crops. In recent years, the two have maintained a relatively static ratio. The soybean-to-corn spring price ratio remains at 2.57 for 2018, the same as 2017 but well above the 20-year average of 2.25. Based on new-crop contract pricing during the month of February on the Chicago Board of Trade (CBOT), this year’s price guarantee for corn is $3.96/bushel, while the soybean price is $10.16/bushel. The spring price for corn is unchanged from 2017 and the soybean price is down 3 cents per bushel from 2017.


Though still closely watched by farmers and the grain trade as a baseline for pricing moving into spring and beyond, this year will be another in a newer, more recent trend. Traditional factors --insurance guarantees, spring prices, soybean-to-corn ratios and ultimately, marketing strategies themselves – are decoupling from one another. Though planted acreage may still reflect the crop ratio resulting from these numbers and planting conditions in much of the U.S. this spring, there’s more uncertainty than ever underpinning how these types of data will influence grain prices throughout the year. That’s a call for farmers to take action to protect themselves from downside price risk moving into the 2018 crop year, market-watchers say.


Tip #1: Consider Harvest Price Options


“Spring prices for corn and soybeans are determined by averaging the new-crop futures contract settlement prices during the month-long February price discovery period. Following the spring price discovery period, farmers may purchase revenue protection policies that provide insurance against yield declines,” says American Farm Bureau Federation Market Intelligence Director John Newton. “In the event of a crop loss, a farmer purchasing a harvest price option policy would be indemnified at the higher of the spring planting price or the price during harvest. Farmers without the harvest price option would be indemnified at the spring planting price.”


Tip #2: Lock In Prices with Options, Contracts


Selling grain on the cash market carries the obvious risk of eroding on-farm supplies, and grain ownership remains a high priority for many farmers whose marketing strategies infer a more bullish future for prices later in the year. Grain options and hedge-to-arrive contracts are both ways that farmers can lock in prices – at hopefully profitable levels – and protect themselves from future downside pricing risks without leveraging existing on-farm grain supplies.


“This year, a lot of farmers may be more apt to try to lock pricing in earlier, or at least more periodically. You just don’t know how other market factors, like trade agreements, are going to shake out. You’ve got to have some insurance for things like that,” says Dax Wedemeyer, grain market broker and analyst with U.S. Commodities in West Des Moines, Iowa. “If those guarantees can come at profitable levels, they’re more apt to put something on, like an options contract or hedge-to-arrive, especially if you’re not willing to sell on the cash market or give up grain ownership. These are ways to give you price support without pinning you down, but you can still get a higher cash price if it does go up.”


Learn more about buying options from Iowa State University Extension.


Wedemeyer’s recommendation comes amidst continued uncertainty for acreage and subsequent grain pricing moving into the 2018 growing season. The soybean-to-corn ratio, typically a key number to watch in forecasting acreage and prices, isn’t always the most reliable predictor of how prices will respond to farmers balancing the two crops.


“The projected acreage changes are not aligned with historical acreage and price relationships,” American Farm Bureau’s Newton says. “Based on historical acreage data from 1996 to 2017, when the spring price ratio was greater than 2.2, a positive change in soybean acreage is expected. Alternatively, when the spring price ratio is above 2.4, a negative acreage response is expected for corn. It’s important to note that only 35 percent and 13 percent of the deviations from trend are explained for soybeans and corn, respectively. The poor fit suggests the model is reliable only in predicting the direction of acreage changes. However, last year, when the price ratio was 2.57, soybean acreage increased by 8 percent to 90.1 million acres and corn acreage decreased 4.1 percent to 90.2 million acres.”


This year, that soybean acreage number will be a big one to watch. Though Newton says there are a lot of expectations for a larger soybean crop and smaller corn crop in 2018, U.S. Commodities’ Wedemeyer says he believes such a circumstance that could keep a lid on the soybean market.


“If soybeans go above 90 million acres, we’re not likely to see higher prices until July,” Wedemeyer says. “Farmers have to start considering where they are in relation to profitable levels. A lot of that depends on what they may have wrapped up in things like land rent.” 


The next major round of crop size projections will come in USDA’s March 29 Prospective Plantings report, which will give what’s typically seen as a more accurate estimate of crop size based on early-March farmer surveys. It will either further confirm acreage data or create more speculation and uncertainty heading into spring planting in the Midwest.


“The prospective plantings report gives the first estimate of the area farmers are expected to plant to row crops for the upcoming year based on survey responses during the first two weeks of March,” Newton says. “This report will remove some of the uncertainty on likely acreage decisions. Importantly, it will also answer a lingering question now facing the industry: Will the U.S. plant more or fewer soybeans in 2018? For this question, model results and USDA forecasts disagree.”


Tip #3: Capture Prices to Maintain Liquidity


Moving forward, how farmers integrate federal crop insurance guarantee prices and subsequent pricing into their overall management strategy should account for more than just the quest to sell grain for the highest possible price. It will be critical to capture any bullish pricing through sales to maintain liquidity, even if those prices fall short of the expectations created by years of higher prices earlier this decade. 


“It’s important to pay attention to resources and factors like how much has been borrowed, interest rates and breakeven prices. If farmers can sell new-crop corn for 40 cents higher than a couple of months ago, it’s important to capture those prices, not just look at them,” says Bank Iowa Vice President in Red Oak, Iowa, Roger Vial. “Farmers have an opportunity to have a profitable 2018; they just need to execute on it. These risk management decisions need to be made after watching all of this important information.”



Are rising interest rates friend or a foe? The answer often depends on how quickly you respond. 

After an almost unprecedented period of immobility, interest rates are finally on the move. When the Federal Reserve came through with its promised quarter-point increases in Q2 and Q4 2017, it signaled the start of what the U.S. Central Bank said would be a gradual increase over the following 12 months. You’re hard-pressed to find an economist who doesn’t forecast the same. 

For nearly everyone, rising interest rates present a double-edged sword. Fantastic for earning interest; not so great for paying it. That’s why staying close to your banker during a period of fluctuating rates is so important. Remember, the squeaky wheel gets the grease. So, if your cash management partner isn’t proactively reaching out to you, pick up the phone and insist on a conversation. 

Here are a few basic questions you might ask…


Should I be moving my money?

Every progressive financial institution needs deposits. Most banks have or will soon go over their preferred lending thresholds during what has been a huge period of loan growth. Naturally, they need the funds to back up those loans. This is what’s causing all those competitive CD and money market rate promotions you may be hearing about. Financial institutions are hopeful you will see their shiny new rates and pull your money out of the savings account you have with a competitor and bring it on over to them. Are you taking advantage?

Of course, moving money can be a hassle. Keep in mind that by having a conversation with your current banker, you may find he or she is willing to negotiate so you won’t have to leave at all. 


What can you do about FDIC limits?

If a material percentage of your business, non-profit or personal portfolio is made up of cash, this can be an important consideration, especially as financial cybercrimes continue to proliferate. As you work with your financial institution, ensure the bank has you covered from an insurance standpoint. The FDIC protects deposits up to $250,000. Ask about CDARS or ICS, each of which helps cash-strong bank clients manage their risk beyond that dollar amount. 


Is my line of credit going to reset?

The answer to that is very likely, yes. At Bank Iowa, we tend to price off of the Wall Street Journal Prime Rate. As this moves upward, so, too, will the rates on lines of credit, many of which are adjustable. Ask your banker if locking in that rate is an option so you don’t have an unexpected increase in costs associated with your credit needs. 

Make sure you understand when your line of credit is set to renew, whether the bank foresees any issues with that renewal and exactly how much more it’s going to cost you. When you get your answers, a smart follow-up question is, “How are you going to help me address my interest expense?”

Having regular conversations with your banker is a best practice. If you’re not currently doing so, take our financial wellness quiz to see if there are other to-do’s you may want to add to your list this year. 

Having those chats is especially important now, as your financial frenemy is making moves. The last thing you want to do is wake up to rising interest rates only after they’ve crept up an entire point. Call your banker today, and remember, it never hurts to have a second financial institution in mind to help secure the best outcomes from that call. 



Mark K. Phillips is cash management services manager for Bank Iowa, Iowa’s second largest family-owned financial institution. He can be reached at mkphillips@bankiowa.bank. To learn more, visit bankiowa.bank. Member FDIC. 



Quiz: These Five Questions Can Diagnose Your Financial Wellness

Money matters. It impacts our stress levels, our relationships, our ability to give back. It's why so many people started out 2018 convinced this would be the year they finally master their finances. It's a good thought, but like most resolutions, it's likely to fail (92% of them do!). 

Resolutions fail because most are grandiose. Emboldened by the crisp air and a fresh start, you vow on Jan. 1. to quit gluten cold turkey. No more gluten for you. At all. Ever. By Jan. 10, you've determined gluten is everywhere. And you really love it. Also, you've convinced yourself gluten isn't the real problem anyway, so you drop that silly goal and order fettucine alfredo for lunch, extra gluten on the side. 

Experts agree, the best way to stick with a resolution - financial or otherwise - is to make small, incremental changes. Start with this quiz to see where you're at on the financial wellness scale today. Based on your answers, set a few achievable goals. Then, get on the phone with your banker and start checking off that list, slowly and steadily. Don't forget to celebrate your successes along the way (perhaps with a little gluten). 


Do you look in the financial rear-view mirror or out the windshield?

1.  Most of what I review are statements of what has already happened. 

2.  I'm given a good mix of reports, and a few are projection-based. 

3.  The data I receive on my finances always has some modeling, predictive or prescriptive element.


Does your CPA talk to other financial partners?

1.  Not likely, I keep my relationships (insurance, bank, wealth, investment and others) separate. 

2.  Maybe, I try to keep them all informed as goals change or situations warrant. 

3.  Yes, every one of my partners is aligned and communicating on a regular basis. 


When was the last time you actually saw your banker?

1.  Never, we communicate via chat, email or phone (if we talk at all). 

2.  Not sure, but it's definitely been in the last 12 months.

3.  Within the last quarter, we meet regularly to discuss how hard my money is working for me. 


Do you know what your bank fees are?

1.  I don't, but I'm sure someone is monitoring that. 

2.  I'm aware of some, but not all. 

3.  Absolutely. I watch those line-items very carefully, and when changes are made, I ask questions. 


How is that "big dream" coming along?

1.  Not well, but that's okay. Dreams are for kids. I'm over it. 

2.  Alright. I still think I can get there. It's just harder than I'd imagined. 

3.  Extremely well. I'm so close I can taste it!


If you answered mostly 1s, you may want to sit down with your spouse, business partner, financial analyst or personal banker (maybe all four!) to chart a new course. 

If you answered mostly 2s, you are on your way to making your money work hard for you. Keep up the good work. You may want to consider setting a regular meeting with your banker to ensure you maintain this trajectory and set up a plan for taking it up a notch or two higher. 

If you answered mostly 3s, you are living a financially healthy life. You have excellent relationships with your financial partners. Recommend them to your friends and colleagues. Too often, even high-worth individuals take a status-quo stance when it comes to their banking relationship. Tell them what they're missing!


Mark K Phillips is cash management services manager for Bank Iowa, Iowa's second largest family-owned financial institution. He can be reached at mkphillips@bankiowa.bank

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