Welcome to Volume 8, Issue 3

By Chris Schneiderman - Greetings, and thank you for taking the time to read our 2017 year-end newsletter.  We hope the variety of articles are worthwhile reads and we always welcome your feedback. 
My article in this issue focuses on a wide array of economic data.  You can always find the standard local and state economic data in our charts throughout the newsletter; however, my focus will be on some other economic indicators that aren't talked about as often.  Unfortunately, the City of Freeport and Stephenson County continue to lose jobs.  Going back both 5 years and 2 years, the City and County have seen a decrease in the number of employed people.  However, it is difficult to find a company in Freeport that is not struggling to fulfill job force demands.  We hear it every day from our customers and it remains one of their biggest threats to growth in the coming year.  State Bank and Foresight Financial Group echo that sentiment with numerous job openings throughout the company.  We are always looking for young talent, so please pass along my name to anyone looking for a career in banking.  Now, back to the economic indicators:
The number of employed people in Illinois in October 2017 was 6,129,700 compared to 6,049,900 in October 2012.  This reflects an increase of 79,800 or 1.3%.
The number of employed people in Freeport in October 2017 was 9,709 compared to 9,892 in October 2015 and 10,412 in October 2012.
The number of employed people in Stephenson County in October 2017 was 19,974 compared to 20,351 in October 2015 and 21,370 in October 2012.
The National Prime Rate is currently 4.50%, up 1% from a year ago.  We consider this the "floating rate" and many operating lines of credit for businesses, large corporations and farmers are priced off the National Prime Rate. 
The 10-Year Treasury Bond Rate that generally dictates home mortgage rates is currently 2.35% compared to 2.60% a year ago.  Last year's 2.60% rate was somewhat of a hang-over from the election results.  Interest rates increased significantly in the few months following the election, but the 10-Year Treasury Bond rates settled back to around 2.0% by August of 2017.  Since then, we've seen a steady rise in the long-term bond rates.
Freeport currently has 111 video gaming systems; this is the same number we had last year.  The following statistics represent activity for the single month of November:  

                                                                 2017                     2016
Funds In                                          $2,146,031           $2,025,175
Funds Lost                                      $572,434              $513,899
Taxes to City of Freeport              $28,621                $25,895
The spot board corn price is currently $3.49 per bushel compared to $3.52 a year ago.  Corn reached an annual high of $4.02 in July.  The spot soybean price is currently $9.79 per bushel compared to $10.32 in 2016.  Beans reached an annual high of $10.69 in January.
Sterling Land Company publishes a monthly report of farmland sales throughout the state of Illinois. Their latest report for the past 30 days from December 14, 2017 showed the sale of 973 acres of Class A soil at an average of $12,062 per acre with an average production index of 139.2 and $80.74 per P.I. point.  The Class B soil sold for an average of $8,843 per acre with a P.I. of 125.6 and $73.27 per P.I. point.
On behalf of the entire State Bank Team, we wish everyone a Merry Christmas and a Happy New Year.  As always, we appreciate and are truly thankful for your relationship with State Bank.

Illinois Department of Employment Security: ides.illinois.gov
Illinois Department of Revenue: revenue.state.il.us
Illinois Gaming Board: igb.illinois.gov
Sterling Land Company: sterlinglandcompany.com
Federal Reserve System: federalreserve.gov
Agweb: agweb.com/crops/
Agriculture Outlook  Stephenson Co. Home Sales
 Stephenson Co. Home Sale Price
Salina Loescher
Upcoming Agribusiness Seminar AgSeminar

By Salina Loescher - For one day each winter, farmers from the surrounding areas pack the conference room at Highland Community College to learn about trending agriculture topics.  As winter is upon us, it's time to bring everyone back together for this year's Agribusiness Seminar!

The 2018 Agribusiness Seminar will be held on January 31st with registration beginning at 9:00 a.m.  Three speakers will be featured: Kevin Van Trump, Eric Snodgrass and Parry Dixon.  Topics for the day range from weather, to risk management, to global trends in agriculture.  The morning session will consist of two speakers with a question and answer session to follow each speaker.  A hearty lunch is served before a third speaker wraps up the day. 
Our local ag professionals enjoy what the seminar has to offer and we hope they walk away with useful information that can be applied to their operations.  

If you would like more information about the upcoming seminar, contact Amanda at amanda.jacobs@statebankfreeport.com or me at salina.loescher@statebankfreeport.com.  We hope to see you there!
Sales Tax Chart
Acknowledgement: Illinois Department of Revenue

By Shawn CoxNow that the majority of the crops are out of the field and into their bins, the numbers suggest another great year for production yields. However, this will mean another down year for prices.
As of the end of November, news around the world reflects continued downward pressures that are indirectly impacting corn prices. Wheat prices continue to remain soft as India, the second largest wheat import in the world, has increased tariffs to 25% on imported wheat to strengthen their own wheat prices. With India being a large importer of Russian wheat, the market may see a surplus of Russian wheat needing to be sold this year.  Also impacting the Russian wheat surplus is an Egyptian court ruling that is reinstating a ban on wheat imports containing even trace levels of the grain fungus ergot.  Both of these events are coming on the heels of Russia having a record year for wheat production.
However, not all of the world news is bad news for the future in corn. Earlier this year, China cancelled their corn storage policy and it is believed this dumped tons of old supply on China's domestic market, pushing prices down in China to help stimulate economic growth as a short term effect. This restriction was first put in place to limit the corn supply for the food and feed industries rather than the corn processing industry. China's top corn processing firm, COFCO, recently said that China will work off its massive corn stockpile in the next three to five years as the country ramps up processing capacity to use up the old stocks of grain.  It is believed that China's total corn processing capacity will hit 70 million metric tons a year by the end of 2018. This is a 40% increase over the 50 million metric tons currently being processed.  If China does reach these levels of processing, corn prices could see longer term growth.  Keep in mind this might also drive feed cost higher for those in the livestock business.
Unless a major event impacts a harvest or a trade partner makes a significant policy change, prices are anticipated to remain the same in 2018.  During times when prices remain low it is important to understand your controllable expenses and know the acres that are truly making you a profit.  For a couple of years, there have been discussions about the need to reduce cash rents as $3.20 corn doesn't cover $275 - $300/acre land rents and doesn't provide a profit to the average farming operation with average yields. This is especially true for cases that require machinery debt servicing.
An option to help improve cash flow during these times may be the need to switch to more bean acres as this crop is still producing a larger profit margin on average than corn.  One could also work to switch high cash rent leases to a flexible or sliding pay scale lease that protects the operation during these lower price markets.  Another option may be to restructure existing term debt to lower debt payment requirements. If you would like to discuss your operation and analyze which acres are making you a profit and which ones are costing you money, please feel free to contact me at shawn.cox@statebankfreeport.com or call 815-297-0900 to set up an appointment.
Black Sea Wheat Shipments to India Threatened by Import Tax Hike: timesofindia.indiatimes.com
Court Fungus Ruling Casts Shadow Over Egypt Grain Imports: af.reuters.com 
Home Sales Graph

Stephenson County Single Family/Condominium Sales 
Acknowledgement: IllinoisRealtor.org
Derrick Schubert

By Derrick Schubert -  One of the most important factors in a successful business is hiring and keeping the best employees.  Few things are more detrimental to the progression of a business than watching good people walk out the door.  Managers often give many reasons why good employees leave but the truth is: people don't leave jobs; they leave managers.  Research from the University of California found that motivated employees were 31% more productive, had 37% higher sales and were three times more creative than demotivated employees.  They were also 87% less likely to quit, according to a Corporate Leadership Council study on over 50,000 people.  There are a few things a manager can do to improve employee engagement:
  1. Don't Overwork People:  Overworking employees is a frequent trap managers fall into, however; this can be incredibly counterproductive.  It can often make the employee feel as if they're being punished for great performance.  Always keep a keen eye on balancing bigger workloads with raises, promotions or title changes to ensure the employee feels valued for their contribution.
  2. Develop Skills:  It is easy for a manager to let a high performing employee operate under minimal oversight, however; good managers pay attention and are constantly listening and giving feedback.  The most talented employees want feedback and this helps prevent boredom and complacency.
  3. Hire and Promote the Right People:  There are few things more likely to demotivate a good employee than adding the wrong people who may disrupt a good corporate culture.  Always be in tune with what a new employee, or promoting an existing employee, can add to production and the impact they will have on the existing culture.
  4. Encourage Creativity:  High performing employees are always looking for ways to improve processes and find great dissatisfaction in the answer, "because we've always done it that way."  Provide room for improvement by being open to new ideas outside of the status quo.
  5. Challenge People Intellectually:  Great employees desire to improve and accomplish tasks that seem inconceivable at first. Managers need to push these employees by setting challenging goals and then do everything in their power to help them succeed.
Travis Bradberry via Talentsmart: 9 Things That Make Good People Quit
Home Sale Price Graph
Acknowledgement: IllinoisRealtor.org
Tips to Protect You and Your Business from Security Breaches and Cyber Attacks  Security

By Andrea Moring -  As the frequency of cyber attacks and data breaches continues to increase, knowing how to protect yourself from these threats is more important than ever.  A successful cyber attack can have serious consequences to both you and your business.  It is important to be informed of the various cyber fraud schemes and threats you might encounter, such as:
  • Phishing: This directs you to a bogus website where a fraudster tries to obtain sensitive information via online forms
  • Malware: This is software specifically written to harm and infect the host system. Various forms of malware include:
    • Virus: Acts like a parasite
    • Spyware: Tracks your internet activities to gather information about your system
    • Worm: Destroys information and files saved on the
      host computer
    • Trojan: Tricks you into believing you are using a safe program and attempts to make your host system unavailable
    • Ransomware: Restricts access to your computer system until you pay a fee

Fraudsters and hackers continue their quest to take advantage of business owners and consumers by trying to trick them into giving out personal information via an email, phone call or link that can potentially install a virus, spyware or ransomware on your device.  Keep these tips in mind to protect yourself from the threats of fraudsters on your devices:

  • Make a habit of creating strong/unique passwords
  • Install antivirus software on your devices
  • Encrypt sensitive data
  • Keep all your software updated
  • Remember to stop, look and think before you click on a link  
  • Analyze emails you receive very carefully
    • Check for strange attachments or links
    • If you do not recognize the sender, hit delete
    • Hover over links to ensure they are legitimate and watch for misspellings
    • Check the sender addresses; email domains can be easily copied to look legitimate when they are not
Employment Graph
Acknowledgement: Illinois Department of Employment Security

Amanda Jacobs

By Amanda Jacobs - As your schedules fill up with the hustle and bustle of the holiday season , don't forget to add your banking cut-offs and ACH file originations to your end of year calendar.
The last day to conduct business in 2017 is Friday, December 29.  State Bank will be open normal drive through hours on Saturday, December 30; however, all transactions will be dated to the next business day, January 2, 2018. 
State Bank will be closed on Monday, December 25 and Monday, January 1.  The effective date (settlement date/posting date) and transmission date of your ACH files and transactions will be impacted since the Federal Reserve will not process transactions on these dates.  For example, if you send ACH transactions on Friday, December 22 with an effective date of Monday, December 25, the transactions will not be processed on the 25th, rather, they will be posted on the 26th.  Likewise, if you send an ACH file on Friday, December 29, we are not able to send the file until Tuesday, January 2.
To ensure payment by Friday, December 22, your ACH entries should be processed before 3:00 p.m. on Thursday, December 21.  To ensure payment by Friday, December 29, ACH entries should be processed before 3:00 p.m. on Thursday, December 28. 
Finally, keep an eye out in your mailboxes for year-end tax forms.  They should reach you by the end of January 2018.

There is a lot to remember at the end of the year, so please don't hesitate to contact me at 815-297-0900 or a
manda.jacobs@statebankfreeport.com with any questions. We are always happy to assist you in any way we can.  

As always, thank you for your continued business with State Bank, and have a happy holiday and a wonderful New Year!
Unemployment Graph
Acknowledgement: Illinois Department of Employment Security
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