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Economic Data
Chris SchneidermanCommunity Initiatives
By Chris Schneiderman - As you have probably heard or read about, there are many local, grassroots, community initiatives being discussed, planned, and implemented in Freeport. Dedicated Freeporters are coming together, not to simply discuss change, but to take a proactive and hands-on approach to making it happen. A few of the most recent initiatives include City Centre Freeport, Collaborate Freeport, and Shifting Gears. A brief synopsis of each is explained below:

City Centre Freeport is a group that wants to determine the condition of downtown buildings and utilities, revitalize unused second and third floor space above downtown retailers, encourage growth in existing businesses while supporting new start-ups, and finally, examine opportunities for permanent art fixtures and other streetscape updates to downtown. These plans are hoped to be financially accomplished via grant funding, private and public funding, and downtown tax increment financing district funding.
Collaborate Freeport is a group of business leaders, municipal leaders, community development organizations, and impassioned citizens who have partnered with a5 Inc. to brand and market Freeport to potential residents, tourists, and businesses.
Shifting Gears is a group of dedicated community members who are conducting feasibility research for a multi-purpose track that could be used for racecars, motorcycles, BMX, snowmobiles, monster trucks, four-wheelers, tractor pulls, go-carts, and recreational camping.
All of these initiatives will need human capital, monetary capital, and a collaborative effort among various organizations within our city to succeed. State Bank believes in these initiatives, and thus we have dedicated our employees and financial capital to assist with their success. Supporting the well-being of our community has been part of our mission statement from day one, and we will continue to do so at all times. If you would like more information about any of these initiatives, please call or email me, search for the initiatives on the web, or find them on your favorite social media source. As always, thank you for your dedication and loyalty to not only State Bank, but to the success of Freeport. You are all a vital part of our city's employment base and economic success.
Ag Update

By Andrew Garnhart -   Over the past twelve months, I have had many of my non-banking colleagues ask how the industry is handling the sharp commodity price retracement. My answer: about as well as you would expect when revenue potential decreases 50% and expenses remain flat. Few industries are so heavily influenced by outside, uncontrollable forces like weather, foreign markets, and unpredictable geopolitical situations. Welcome to the commodity-based business world where cyclicality is normal and unpredictability is predictable.
There is no doubt we are beginning to see signs of stress on agricultural balance sheets as a result of reduced profitability. 2015 was the first year that we saw challenges across the board, and 2016 is shaping up to be much the same. Working capital is being chewed up quicker than it was created during the boom years, while debt to finance new equipment or real estate has increased. Leverage ratios are also steadily on the rise. Family living costs, specifically health insurance, have done nothing but increase. Bottom line: there is little room for error at this point.
With that being said, I do not believe we are heading for an "Ag Crisis" like we saw in the 1980's. The majority of operations are still very well capitalized and interest rates remain at all-time lows, while long-term debt is locked in at incredibly low rates. Domestic and foreign demand for our products is strong and ethanol production has created a new dynamic in the corn market. The task at hand is to become as efficient as ever and still maximize revenue (max yield x max price)! Great managers will rise to the top in challenging times and prove to be better in the long-term.
State Bank is committed to the agricultural industry and provides countless products and services to meet your operation's needs. Please call if we can be of service. Thank you, as always, for your business!

Shawn Cox     
When To Sell  
By Shawn Cox -  As a commercial banker, I am sometimes asked about the things that should be considered when a business owner is ready to retire or just wants to pursue a new passion. There are plenty of reasons a business owner may want to sell their business, and whatever the reason, the owner should plan for the exit well in advance if conditions allow for it. Here are some practical steps to consider taking:
  1. Determine a realistic price range. You don't want to price your business too low or you'll lose out. If you price it too high, you'll scare away buyers. There are several ways to come up with a good price range. For example, you can base the price on the value of the business assets (buildings, equipment, furniture, accounts receivable, inventory) and add in an amount for goodwill the business has developed (customer list and potential earnings), or you can use an industry formula based on a multiple of average earnings.
  2. Understand the tax consequences. Make sure you are working with a CPA or other tax expert so you understand what tax liability you will be creating with the sale. Your tax liability will be impacted by two key factors: whether you sell the assets or the whole business entity, and how your business is legally set up (Corporation or Sole Proprietorship).
  3. Spruce up your business. This doesn't mean cleaning up the landscaping or the workshop, this means clean up your financial statements. Have your company audited a couple years in a row prior to the sale. Reliable and accurate financials ease a potential buyer's and a banker's mind and allow them to make a confident decision.
  4. Seek potential buyers. You may look to someone close to you; for example, a long-time employee, a friend, a customer, or a family member could be a strong prospect. More than likely, you'll need to reach out to a bigger pool of prospects, so you may want to look at a business broker or business sale websites, but you should expect to pay a substantial commission for the service.
  5. Negotiate a deal that meets your needs. There are plenty of options that provide flexibility to meet your needs for the next leg of your life's journey. While you are working out the terms of the sale, you will want to consider some key points: do you want a lump sum, a down payment with contractual payments from the buyer, or stock in the new company? Negotiating a deal can minimize your tax liabilities, while providing you a stable nest egg for whatever comes next.
  6. Sign the sales agreement. Put the deal in writing. Your agreement should include a list and value of the assets being sold. Add any contracts the buyer is assuming and include protections that assure you'll be paid the full sale price. Make sure you work with a business lawyer so all your bases are covered on the closing date.
These are just some practical steps to take when considering selling any business. You may also want to consider working with a financial advisor to invest your cash from the sale, city personnel for any zoning changes that may need to take place, or a licensed appraiser that specializes in ongoing business valuations. There are agencies that provide a wide range of programs to help you sell your business. If you have any questions or are looking to sell your business please feel free to contact me at 815-297-0900 or .

Acknowledgement: The Complete Guide to Selling a Business, Fred Steingold
Is Your Email at Risk? Salina Loescher   
By Salina Loescher- With fraud on the rise and computer hackers getting better and quicker at invading email accounts, employees and businesses need to be conscious and take the proper precautions to protect themselves and their businesses. Many of the ways businesses, small or large, conduct transactions are electronic.
Anything done electronically is considered a risk, so ensure you know your customer when conducting business through email and never assume that fraud will not happen to you.

According to the Federal Bureau of Investigation, companies across the globe have lost more than $1 billion from October 2013 to June 2015 as a result of hackers manipulating email systems into wiring large sums of money. The most common way hackers get into another person's email is by planting malicious software into a computer, unbeknownst to the person. This allows them access to a company's emails and passwords without businesses even knowing it. Hackers will then monitor email traffic for a period of time. They do this to replicate an employee's writing style, making it harder to detect potential fraudulent activity. This hacking technique makes it easy for the hacker to initiate a wire so payment can be rerouted to a different bank account the hacker controls.

It doesn't matter whether your business is large or small, everyone is at risk. Studies show that smaller businesses are a bigger target because they might not have the budget to support proper security or proper training to detect an email breach. These helpful tips below, if followed, could greatly reduce your risk of becoming a victim:
  1. Businesses should work together with their financial institution to understand and use best practices consistently.
  2. Never put full account numbers or sensitive information in an email.
  3. Always know who you are emailing and look at email addresses closely. Hackers can change one letter in an email address, which is easily undetected, and redirect messages to a fraudulent inbox.
  4. Always confirm and validate new payment instructions that are received via email even if the email is internal.
  5. Contact the vendor or client directly to confirm any requests for payments, the amount, and method of payment changes if there are any.
  6. Train staff properly so they know what to look for and how to handle a fraudulent email.
  7. Make sure your bank calls you back after a wire has been requested to confirm amounts and who is receiving the wire.
Unfortunately, fraud will never be eliminated, but frequent training and following proper precautions when conducting business through email can lower your risk of becoming a victim. If you have any questions please feel free to contact me at 815-297-0900 or .

Acknowledgement: "Hackers Trick Email Systems Into Wiring Them Large Sums," The Wall Street Journal

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1718 S. Dirck Drive
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