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Phishing happens when a cybercriminal contacts a consumer by email, telephone or text message posing as a legitimate person or institution. The goal is to lure consumers into providing sensitive data, such as personally identifiable information, banking or credit card details and passwords. The fraudsters then use this information to access the consumers’ accounts or steal their identity.
 

How to spotting a phishing scam

The following red flags can help you spot a phishing scam before you get hooked:
  • If the offer is too good to be true, it probably is.
  • Beware of offers or requests that instruct you to act immediately.
  • Pause before clicking hyperlinks. Hovering over a link shows you the actual URL where you will be directed when you click; if it’s an unusual or misspelled website, don’t click.
  • Never open attachments in an email you weren’t expecting or if it seems at all suspicious.
  • If the message is from someone you don’t recognize, it’s better to ignore it.
  • If the message is from someone you recognize, but something feels off (maybe they are requesting a wire transfer), double check by giving your contact a call.
 

How to preventing falling victim

Below are three important ways to safeguard yourself from phishing attacks:
  1. When in doubt, call. If an email, text or call you receive from a bank or other institution you do business with seems suspicious in any way, call using a phone number you know is legitimate. Remember, reputable businesses will never ask you disclose information they already know. 

  2. Keep your security software up to date. Security patches for devices, browsers and other software are released regularly in response to vulnerabilities that hackers will inevitably discover and exploit. The minute an update is available, download and install it. Also install and periodically update firewalls and antivirus software. 

  3. Use a secure access code. Secure access codes, like the one provided by Bank Iowa to protect our customers from hackers, are recommended by the Federal Trade Commission (FTC). To require a secure access code each time someone attempts to access your online banking, clear your cookies from your Internet browser. This will prompt the secure access code upon login. Next, click "Do Not Register Device" to ensure you will need a code the next time you log in.
 

How to report phishing attempts

If you receive a phishing email, text or call, you can take the following steps to report the incident and possibly prevent someone else from falling victim:
  • Forward phishing emails to spam@uce.gov.
  • File a scam/phishing complaint with the FTC at ftc.gov/complaint.
  • Visit identitytheft.gov. Victims of phishing could become victims of identity theft; there are steps you can take to minimize your risk.
  • You can also report phishing to the Anti-Phishing Working Group at reportphishing@apwg.org. This group of Internet service providers, security companies, financial institutions and law enforcement agencies use reports to fight phishing.
 
To learn more about how to avoid phishing scams, take this interactive quiz from the FTC.


There isn’t a soul on earth, nor in business, who relishes the idea of moving financial institutions. But perhaps it’s time for that to change. That’s because many of the pain points people conjure up when entertaining a switch have been resolved. 

So, you’re looking for one good reason to make a move? Here are three. 

  1. On Your Terms – Introductory rates are, by their very nature, fleeting and not a good enough reason to leave your current banking relationship. Many banks, however, are reimagining incentives for new customers and are offering longer-term benefits that can make a move very much worth your while. Consider paying less attention to promotions du jour and more to things like the promise of customized service, evidence of active listening and bankers with proven histories of placing clients in products that truly meet their unique needs.
  2. Fresh Set of Eyes – My friend recently came to me for advice. He was unhappy in his job for a long time and needed help finding something else. I told him not to run from his job, but to run to a better opportunity. The same is true in banking as many who leave their financial partner do so because they are unhappy. But what if you ran to the new opportunity a new bank could provide you? Partnering with a new financial institution puts your financial wellness in the hands of new people, and potentially expands your financial network. The fresh perspectives, innovative ideas, and frankly, the drive to prove you made the right move can accelerate the achievement of your financial goals dramatically.
  3. Not Your Grandfather’s Switch Kit – For many moons, financial institutions have been bragging up the value of their switch kits, services that claim to make moving accounts from one institution to another easy as pie. Sadly, those kits rarely live up to the hype. Thanks to the advent of new technology, however, today’s switch kits have been digitally transformed. They are anticipatory; they are custom; and many have been tailored to specifically serve the needs of business customers. Plus, they are often geared toward seamlessly integrating all of your financial accounts and services so that the most tedious of your financial tasks become easier, simpler – or disappear entirely. 

Aside from the time and diligence a switch takes, there are the personal connections that complicate matters even more. Customers and their bankers can develop a close enough working relationship that it begins to resemble a friendship. If you have a situation like this, you should give your banker a chance to make things better. You may be surprised how the prospect of losing your relationship can open up new opportunities for an even richer partnership. 

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 www.bankiowa.bank. Member FDIC. 


When was the last time you logged into a secure online account while sipping a latte at your favorite coffee shop? If you’re anything like most Americans, the answer is probably not that long ago. While having “anytime, anywhere” access to your financial accounts is convenient, there are plenty of potential threats lurking in the background of public WiFi networks.


The 2017 Norton Wi-Fi Risk Report found 92 percent of Americans have potentially put their personal information at risk while using public WiFi. Among them, 32 percent have accessed their bank account or other financial information. What’s more, 19 percent said they had entered personally identifiable information (PII), such as their Social Security number or birthday, while using public WiFi.


Why is this a potentially dangerous practice?


Because encryption and other security protocols are often lax or nonexistent on public WiFi networks, they could be ripe for attack by cybercriminals looking to steal sensitive information. 


Encryption is key to keeping personal data secure online. It scrambles the information you send over the Internet into a code so it’s not accessible to others. Most routers are shipped from the factory with encryption turned off by default, and there’s no surefire way to tell if a public WiFi network has it turned on.


If you use an unsecure network to log into an unencrypted website (one without an “s” following “http” in the URL), your personal information, including login credentials, could be up for grabs by cybercriminals. Once they have your information, hackers can use it to gain access to your other accounts, including websites that store your financial information.


How can I stay safe while using a public WiFi network?


Take the following steps to protect your information when using a public WiFi network:


  • Only visit secure websites. To ensure information you submit to a website is being encrypted, look for the “s” at the end of “https” on any website you visit. If there’s no “s,” avoid using the site. Whatever you do, don’t log in or provide any information to an unsecure website.
  • Do not use the same password for different online accounts. Using the same password for multiple accounts opens you up for much greater impact if someone gains access to one of your accounts.
  • Log out of your online accounts when you are finished. Staying permanently signed into accounts makes it easier for hackers who could be eavesdropping on your online activity to access your personal information. 


For more tips on protecting your personal information when using public WiFi networks, watch this video from the Federal Trade Commission (FTC). 



Nine trillion dollars in household wealth and assets is expected to land in the laps of Gen Xers and millennials within the next 10 years. Are they ready? 


What about the transfer of business ownership? Are the Gen Xers and millennials among us primed to take over the family venture? Do they even want to? 


In Iowa, many of our family businesses have roots in agriculture, an exceedingly important industry to not only the state, but the world. When it comes to handing over the reins to the world’s most important food source, can our planet afford to cross its collective fingers and hope the sons and daughters of America’s farmers are able and willing to accept them?


It all starts with conversation. Every business owners, small and large, ag and non-ag alike, need to get a chat with the next generation on the calendar. It’s not difficult to understand why many people avoid it. For family-owned businesses especially, these talks can be at best awkward, at worst heartbreaking. Some find it easier to have an independent advisor participate or even lead the dialogue to keep emotions from getting in the way of an effective succession planning exercise. 


Like any good conversation, listening is critical. Whether you decide to approach your planning alone or with an advisor, you want to come to the discussion with at least a basic list of questions to ask the individual(s) you are considering as the next leaders of your business. Here are a few to consider:


Is the family business something you would consider as a career?

It may seem like a no-brainer, but too often business owners assume incorrectly that the company will be ushered into its next era by children or close relatives. You want to be assured this is indeed the case before you begin your succession planning. Ask the question straight out.


How would you like to contribute to the company?

It’s possible the individual you have in mind for taking over your business has no real desire to lead. Perhaps he or she would like to contribute from the front lines rather than the executive suite. 


Are you prepared to go through the hiring process just like any other leader of the business would? 

Too often, children or relatives of business owners assume their position without having to demonstrate their talent. Showing off their skills can happen within your company walls, of course, but you may want them to prove their talents and leadership capabilities elsewhere to gain an independent view of their ability to be hard-working and strategic. Addressing this sooner rather than later can set both sides of the leadership generation up for success. 

Once you have the outcomes of a solid level-set conversation, you can begin building out a thorough and simple-to-execute succession plan. Over the coming months, we’ll delve a little deeper into some of the components that should be included in such a plan. 


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 www.bankiowa.bank. Member FDIC. 

 
Read our 2017 Annual Report here.


Breakeven Prices, Enterprise Budgets Key Machinery Cost Factors


There are things in life you can change and things you can’t. 


The grain market is one of the latter. In a time with so much uncertainty like today, it is sometimes easy to get caught up in those things over which you have no control. Rather than wrestling with things that we can’t control, it’s important to focus on the things we can.


Managing your own crops and input costs is something you can control. Keeping a close eye on crop input efficiency, including machinery, is one good step to take to restore or sustain profitability on your farm. As a variable you can control, it’s something to which you should devote attention and effort instead of factors like market variables that are out of your control.


What follows are two necessary calculations to account for in making your next machinery purchase.


Know your breakeven price


Efficiently managing machinery costs more efficiently as a way to improve your operation’s financial performance starts by getting a firm grasp on your crop breakeven price. The crop breakeven price is a value comprising your total cost per acre divided by expected crop yield. It’s a value similar to your breakeven yield (total per acre cost divided by expected price), and it shows your relative profit potential and general competitiveness. Your breakeven prices, which can help guide marketing plans and determine exactly what prices you need to generate positive revenue, should include costs that typically go on cash flow statements. 


For corn and soybean farmers, enterprise budgets can help determine the overall breakeven price you need in order to generate revenue. Enterprise budgets take into account expected bushels and both variable and fixed costs. Those costs include:

- Seed

- Fertilizer

- Crop nutrients

- Herbicides

- Grain drying

- Transportation

- General machinery

- Labor

- Operating capital interest

- General overhead and living expenses


Include opportunity cost


Once you’ve laid out all the specific line items on the cost side of the equation and your expected yield, you can then calculate what your breakeven price is. If those costs exceed your available market price, look at ways to cut back on some of the variable costs. Machinery is one category, for example, where you can make adjustments throughout the growing season. 


Then look beyond those hard numbers and consider your opportunity costs to get a feel for not just how your current inputs can be streamlined, but what to avoid cutting altogether in an effort to get more efficient. When you look beyond those hard numbers and to opportunity costs, you can get a feel for not just how your current inputs can be streamlined, but what to avoid cutting altogether in an effort to get more efficient.


“Opportunity costs are typically included in enterprise budgets. If we want to benchmark a farm's costs to those from other farms, it is important to include both cash and opportunity costs in your enterprise budgets. If your operation owns 50 percent of your crop acreage and the operations you are comparing with only own on average 25 percent of their crop acreage, you would not be comparing apples to apples if you did not include opportunity costs for owned land when making the comparisons,” according to Purdue University Center for Commercial Agriculture ag economist Michael Langemeier*. “By including opportunity costs in your enterprise budget, you can determine whether you are fully covering the costs of all inputs. For instance, you would like to know what return you are receiving for your owned land and machinery.”


Consider other ownership variables


For your machinery lineup, look to both the cost of ownership as well as operating and opportunity costs. That includes variables like depreciation and interest costs, which can be broken down per acre. 


“Specifically, you can compute depreciation by dividing crop machinery investment by the average length of life of your machinery and equipment, and interest by multiplying crop machinery investment per acre by an intermediate term interest rate,” Langemeier says. “Of course, these are only proxies for machinery ownership costs. More detailed computations could be obtained using a management or economic depreciation schedule.”


These steps can start the process of determining how and where you can make changes to your machinery lineup to get more efficient and maximize the return on your overall machinery investment. Having a basis of comprehensive information on your machinery inputs by following this process can help you not only take concrete steps to streamline your machinery lineup and cut overall costs, but also make informed decisions for things like acreage and plantings.


“In addition to estimating breakeven prices, enterprise budgets can be used to make cropping decisions for the upcoming year,” according to Langemeier. “In the short-run, a farm should continue to produce if it is covering variables costs. In the long-run, all costs need to be covered.”


* Langemeier, M. "Projected Corn and Soybean Breakeven Prices." farmdoc daily (8):66, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 13, 2018.


When I was growing up, a child of the 80s, people who paid with plastic seemed to be in a higher echelon. Credit equaled status. Today, that may be changing. It’s cash, not credit, that carries the real cachet.

Even as technology seems intent on pulling us away from paper money and toward digital coins, Americans appear to be enjoying a renewed love affair with cash. Why? I suppose it could be the frequent cameo appearances of “fat stacks” in music and YouTube videos. But more likely, it’s a Millennial-driven distaste for debt. 

For many in the younger generation, sliding a card into the waiter’s book is a terrible way to finish off a meal. Watching their parents get into credit card debt – and struggling with their own massive student loan burden – has left something of a bad taste in their mouths. Just one out of three Millennials carries plastic. And, if they do carry a card, it’s most likely debit or prepaid (each of which is really just cash in plastic form). 

For businesses, changing attitudes about money may shift the way they, too, value cash. 

Paying employees by check, for instance, is becoming less popular. Not only do workers appreciate not having to make a deposit; they also like getting that cash faster. It’s one of the reasons we’re seeing dramatic month-over-month increases in use of the ACH system. 

As more Millennials launch and lead businesses, will their debt and risk aversion be a positive or a negative? Some young people have seen as many as three major stock market crashes already. They may have a hard time trusting public markets with their investment dollars

The increasingly loud cry for credit card surcharges among retailers is another area we see the impact of cash love among consumers. The last thing retailers want to do is chase away business, especially the brick and mortar type. If they are willing to charge a fee for using a credit card in their store, they must be pretty confident their customers are okay paying with cash. 

Millennials are also said to prefer experiences over stuff. Chances are pretty good this will have an impact in both business-to-consumer and business-to-business sectors. Employee incentives, for instance, may shift from gold watches to more PTO. 

If you are a business leader who believes Americans’ renewed love affair with cash is likely to impact your financial outlook, make a call to the cash management leaders at your bank. They are studying the trends, watching the shifts and managing the evolving cash needs of their clients every day. With a front-row seat to the impact of changing attitudes about money, they are in a terrific position to make your cash work for you.

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. 


Cut through the chatter: There is still revenue potential, even in a down grain market.

Corn and soybean planting is exciting and nerve-racking at the same time. It’s a race to get crops in the ground at the right times to maximize early yield potential. 


But this spring, there’s a lot of news and speculation that could distract farmers from their No. 1 job of getting their crops in the ground. It’s a good time to sharpen your focus, tune out the “noise” and take care of what’s important. Make sure you’re watching the markets for ways to cover cash needs. Then, take action before prices put too much strain on your revenue potential.


Market ‘buzz’ factors


Late-March USDA Prospective Plantings data had an immediately bullish reaction from the trade. The federal government said it expects larger soybean plantings this spring. Corn and soybeans both saw declines in expected acreage, but the net result is a soybean planting number (89 million acres) slightly higher than corn plantings (88 million acres). Lower acreage numbers for both crops and a soybean crop projected larger than corn helped buoy prices. New crop corn futures contracts moved above $4.00/bushel, and soybeans pushed well into the $10.50 range.


While the USDA data initially “fed the bulls,” the potential trade war with China could keep a lid on the gains that smaller overall crop sizes could otherwise create. The prospect of tariffs that could increase the cost of U.S. soybeans and corn by as much as 25% could threaten to pull the rug out from under the slow, incremental grain price gains leading up to planting. News like this comes and goes, but the trade sometimes reacts more sharply to the news than the event itself. 


Headlines like these create a lot of chatter in agriculture. But at a time when crop producers are five years into a market downturn and facing continued revenue challenges, it’s important to tune it out and focus on what you can control.


Keeping a sharp pencil


Four-dollar corn is a far cry from the $6 to $8/bushel prices of a few years ago. With prices like those, the average farmer didn’t have much incentive to “keep a sharp pencil.” But, times are a changin’. And keep in mind, corn at the $4/bushel level is a marked improvement over what we’ve experienced in recent history. Farmers should not ignore these prices, nor cross their fingers and hope the rebound continues. This is especially important for farms with immediate financial needs. 


There’s a big difference between sentiment and action. Four-dollar corn may not signify the most profitable level in the world. But if you have unmet cash needs on your farm, and the recent uptick in prices is enough to help you meet those needs, it may be a good time to take advantage. 


Current opportunities


Today, there are some signs pointing to a better year in 2018. But, it will require executing on some of the plans we’ve made and the decisions we’ve been weighing. Moving into the growing season, it will be of utmost importance to watch prices and, when we see opportunity, quickly and confidently make smart marketing decisions to generate the necessary revenue. As I advise the farmer’s in our area, don’t spend all your time and energy listening, watching and talking. 


Be decisive, take action


Now is a time for action in capturing any rallies the market offers. Cutting through the chatter and keeping a close eye on your bottom line will pay off in the long run. What’s more, it will put your operation in the best possible position when grain markets eventually bounce back.


Have a safe and productive spring planting season!


Roger Vial is a Regional Senior Lender for Bank Iowa's Red Oak location. He can be reached at rvial@bankiowa.bank. Member FDIC.

As you may have heard, the Bank Secrecy Act has been amended in order to clarify and strengthen customer due diligence requirements for financial institutions. This includes explicit instructions regarding identifying beneficial owners of legal entity customers. If you’re curious as to what this new regulation is all about, and how it may affect you, we’ve got answers.


When are these new rules effective?

May 11, 2018.


Do these rules apply to all financial institutions?

Yes, all financial institutions will be implementing this rule and putting it into effect on May 11, 2018. For purposes of this rule, covered financial institutions are federally regulated banks and federally insured credit unions, mutual funds, brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities.


Why were the Customer Due Diligence rules issued?

These rules were issued to further aid the government in the fight against crimes to evade financial measures designed to combat terrorism and other national security threats.


Who does the beneficial ownership portion of the rule apply to?

The rule applies to a bank’s covered legal entity customers. Covered legal entity customers include corporations, limited liability companies, general & limited partnerships, and other entities (including statutory trusts) created by filing a public document with the Secretary of State or similar office.


Who is considered a beneficial owner and what information will be collected?

Banks are required to ask for identifying information such as name, address, date of birth, social security number and copies of identification documents for:

  • Each individual that has beneficial ownership (25% or more) in the legal entity; and
  • One individual that has significant managerial responsibility for the legal entity


When must beneficial owners be identified?

Beneficial owners must be identified EACH time a new account is opened for a covered legal entity customer on or after May 11, 2018. A new account is defined as: All formal banking relationships including a deposit, loan, safe deposit, cash management, or trust account.

Legal entity customers will also be asked for beneficial ownership information any time there are changes regarding the beneficial owners, ownership structure, or nature of their business.


What if I’m opening an account on behalf of a legal entity?

You will be required to provide the appropriate documentation regarding the beneficial owners and certify that this information is true and accurate to the best of your knowledge. This is required to be completed prior to the account being opened.


What else do I need to know?

The most important thing to remember is that this regulation is for your protection and to continue assisting the government in fighting financial crime. At Bank Iowa, we proudly support all efforts to maintain the security of our customers and our country.


Still have questions? Contact any Bank Iowa location as we’d be happy to discuss this new requirement to ensure a smooth account opening process for legal entity customers after the effective date of this rule.

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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