Financial Blog

Financial Blog

Market Viewpoints – Spring 2021

By Keith Bonjour, Vice President, Portfolio Manager

Keith Bonjour, Portfolio ManagerBoth the stock and bond markets have traded in a more volatile and choppy fashion in the 1st quarter of 2021, with longer term bonds pulling back more than short term bonds on renewed worries over inflation after the additional stimulus measure enacted by Congress. The recent stimulus package, called the American Rescue Plan Act of 2021, provides an additional $1.9 trillion of stimulus via stimulus checks, extending unemployment benefits, expanding tax credits, along with aid to state and municipalities as well as other payments. The additional stimulus package on top of the large stimulus provided in 2020, along with the global economy gaining momentum on reopening hopes, has created worries in the market about rising inflation and weighed heavy on bond prices in the first quarter of 2021. The Federal Reserve is continuing their accommodative stance and have indicated they are not concerned about increasing inflation expectations. The Fed has stated they feel the increase in inflation will not last with inflation coming back in line with the Fed’s 2.0% mandate in 2022 and that they still do not foresee any increases in the Fed funds rate until at least 2023.

 
With the passage of the American Rescue Plan Act of 2021, expectations have increased for GDP growth in the United States this year. The market is pricing in a strong recovery in the second half of 2021 as more Americans become fully vaccinated and both businesses and consumers begin to open their wallets due to pent up demand. Consumers are expected to increase their spending on travel and entertainment which has helped drive a shift out of some of the best performing sectors (IE: Technology) in 2020 to the worst performing sectors (IE: Energy and Travel/Leisure). The increase in inflation expectations along with government inquiries into big technology companies have also been weighing on technology stock returns this year. We continue to recommend maintaining a well-diversified portfolio to weather the volatility.

 
COVID-19 infections rates have come down in the U.S. and vaccinations have ramped up in a meaningful way. However, the increased travel this spring and states beginning to re-open and lift restrictions has caused a recent uptick in infection rates. We are also seeing a more meaningful uptick in Europe and Latin America so even with the increase in available vaccines, the various strains of the virus still pose a risk to growth assumptions this year. It will be important for the market to continue to show signs of positive earnings growth and for the economy to continue its expected strong recovery without any new lockdown measures imposed in the second half of the year. President Biden is also proposing a new infrastructure package in a two-part proposal, the American Jobs Plan and the American Families Plan, which could aid GDP growth if enacted this year. However, it will be important to see what tax hikes are in the proposal to fund the infrastructure package and what effects those tax increases may have on corporate earnings.


We continue to be mindful of risks facing the market in 2021 as COVID-19 cases are on the rise again, and stocks and bonds still trade expensive compared to their historical averages. However, central banks and governments continue to provide massive amounts of stimulus that are driving up asset prices. We continue to recommend staying the course with your investment objective and to continue to rebalance your portfolio by selling strengths and buying into weaknesses to adjust to movements in the market over time. We also recommend determining any short-term cash needs that you may be need over the next six months. Creating this cash can help protect against an increase in volatility and short-term moves in the market. We recommend maintaining a more long-term focus on investment goals and objectives, and not reacting to short term up or down movements in the market.

Welcoming Marie R. Tarbox

Marie R. Tarbox joins the IMG Team as Vice President & Trust Officer

Marie Rolling-TarboxMarie joins Northwest Bank as Vice President & Trust Officer after having spent the majority of her legal career in private practice, with the past several decades focused on estate planning. She obtained both her undergraduate and law degrees from the University of Iowa.

Marie and her husband have two children and two grandchildren. They enjoy spending time with their extended families, gardening, and, in a good year, the opportunity to attend a portion of the NCAA basketball tournaments.

We are excited for the valuable experience Marie will bring to the team and are confident she will continue to provide our clients excellent service.

Contact Marie: 563.388.2631

In the Community – Spring 2021

Our Non-Profit Community Spotlight

The Family Museum Lights a Creative Spark for Lifelong Learning

Family Museum Bettendorf

The Family Museum offers interactive and educational experiences for young children in the areas of art, science, movement, and play. With 44,000 square feet of programming space, the Museum provides hands-on exhibits, drop-in classes, preschool classes, school and community outreach, dance classes, and a variety of programs geared towards children eight and under.

Visitors to the Family Museum’s interactive exhibit gallery discover how food moves from the modern farm to the local store by caring for animals, driving a combine, and moving grain in the Farm exhibit. Guests explore the Mississippi River by adding obstacles and raising or lowering water levels as they watch their boat make its journey down a 28-foot indoor waterplay table resembling an actual stretch of the Mississippi River. Visitors chat with neighbors or wave to the mail carrier in the Town Square exhibit which includes features of everyday life. And our youngest guests make alphabet soup, wash the laundry, and splash around in the virtual pond (without getting wet!) in PlayHouse.

New for 2020 is the two-story Luckey Climber! This artistically stunning structure allows Family Museum guests to climb from the first floor to the second floor while observing photographs of clouds on the platforms on the climb up and aerial photographs on the way down. While intended for young children, all ages are welcome to climb!

The Family Museum and its non-profit foundation depend on community support to serve the children and families in our community. Northwest Bank’s Investment Management Group have provided the Family Museum Foundation with expert advice and endowment support that is both efficient and lucrative. Their advisors and investment options are always supportive and best established to support the Family Museum needs.

To learn more visit https://familymuseum.org/

Upcoming Events from our Nonprofit Partners

Annual HANDS Auxiliary Golf Outing | June 7, 2021 | Crow Valley Golf Club, Davenport, IA
Handicapped Development Center
Save the date for the annual HANDS Auxiliary Golf Outing. This years’ event will take place but will be slightly different to provide a safe environment for all participants. Contact Mary Egger at 563-391-4834 or maryegger@hdcmail.org for more information.


The Arc Charity Golf Outing | June 18, 2021 | Highland Springs Golf Course, Rock Island, IL
The Arc of the Quad Cities Area
Register online at arcqca.org.


The Catalyst Awards & Auction | July 30, 2021 | Schweibert Park, Rock Island, IL
The Arc of the Quad Cities Area
Join the Arc of the QCA in celebration of the people and organizations who have been a light in the lives of people with disabilities and ignited a passion for inclusion at The Arc’s Catalyst Awards. Visit www.arcqca.org for bidding and tickets.


Birds and You | A Putnam Museum Exhibit | Open Now!
Birds and You examines the role we all can play in protecting and preserving the birds we see every day in our backyards and fields. Visitors can expect to see a variety of taxidermy mounts, eggs, and nests while learning about the issues facing birds today. Visit www.putnam.org.

Powers of Attorney

By Marie R. Tarbox, JD, Vice President & Trust Officer

Marie Rolling-TarboxWhen people think about estate planning, they often think of it in terms of having a Will or a Trust, directing disposition of property on their death. There are, however, important estate planning tools that are critical during your lifetime. These tools are powers of attorney. There are generally two types of powers of attorney – the power of attorney for finances and the power of attorney for health care decisions. Today we focus on the power of attorney for finances.

With a power of attorney, you (the principal) name who you want to manage your financial affairs if you are unable to do so. The person you name is known as your agent or your attorney-in-fact. The power of attorney may be limited in nature, perhaps to handle a specific matter, such as a real estate closing, or it may be general, to manage all of your financial affairs. Powers of attorney may become effective on a specified future event, such as incapacity, or they may be effective from the moment of signing, and continue regardless of subsequent incapacity or disability. Powers that continue in effect after incapacity or disability known as durable powers of attorney.

Why is a power of attorney a good idea? Sometimes it is simply the convenience of having someone else act on your behalf when you are unable to do so yourself. More importantly, though, a power of attorney is the document that ensures that you are the person who determines who will act on your behalf if you are incapacitated or disabled, whether temporarily or permanently. If you become incapacitated or disabled and do not have a power of attorney in place, court proceedings will be required before someone can act on your behalf. The person who is appointed to act for you by the court may not be the person you would select, and the powers granted may not be the same as you would grant.

A power of attorney is recommended for anyone who is of legal age. Even if your accumulated assets are smaller, having a power of attorney means that your chosen person will be the person who takes care of your financial matters for you. It also means that things will be managed in a more efficient manner than through a court proceedings.

The need for a power of attorney may only be an accident or an illness away. Accidents and illnesses can happen to anyone regardless of health or wealth. Again, your power of attorney is a critical estate planning tool that affect use of your finances during your lifetime.

Contact Marie: 563.388.2631

Celebrating Community Banking Month

What makes community banking special? 

community banking monthIf the first word that comes to your mind when you think of community banking is “relationships,” you’ve identified the quintessential ingredient that Northwest Bank & Trust Company and community banks across the country take pride in. That ingredient has never been more apparent than over the past year. During the coronavirus pandemic, banks everywhere have reached out to their communities to communicate that they are open for business and ready to serve in a time of need. 

It is what we have always done at Northwest Bank & Trust Company, where our focuses exclusively remain on delivering the products and services our customers want, while our local roots and accountability ensure our interests remain tied to our Quad Cities neighbors.

At Northwest Bank, we work with our customers to help them realize their financial dreams, whether opening a business, purchasing a home, or planning for retirement. And we nurture our community by donating time and money to important causes and contributing tax dollars that help maintain local municipalities—all of which helps keep local neighborhoods viable and vibrant.

We work hard to stay attuned to the needs of this community and relevant to our customers by remaining on their corner and in their corner. This dedication to creating healthy, strong communities has helped the community banking industry flourish and maintained our well-earned reputation as true relationship lenders. 

Here are the facts:

  • Community banks are economic first responders, processing more than 57 percent or 2.8 million loans as part of the Small Business Administration’s Paycheck Protection Program, saving an estimated 33.7 million jobs.
  • Community banks outpace large banks in their average number of banks operating in both rural and urban markets by a 3:1 ratio.
  • Community banks are preferred small business lenders, with a 73 percent net satisfaction score, compared with 58 percent for large banks and 37 percent for online lenders.
  • Community banks have consistently demonstrated their safety and soundness with higher capital ratios and better loan quality than the largest financial institutions.
  • Community banks operate in areas abandoned by others—serving as the only physical banking presence in nearly one in three counties.
  • Community banks focus a relatively large share of their resources on low- and moderate-income tracts.

But it is not just about stats. When customers contact Northwest Bank, they are greeted by a talented team member who is attuned to their needs and empowered to act on their behalf.

And when our employees participate in annual donation drives for United Way or when Northwest Bank contributed over $80,000 in the past year to local organizations, we are working toward our goal to ensure economic prosperity for the community we call home. In the Paycheck Protection Program round one, we were the leading loan contributor in the QCA for our size, providing 6.7 times more loans to local businesses than any other bank or credit union in the area. That’s 6.7 more jobs protected, just another advantage of a community bank partner.

In an era where bigger is not always better, high-tech does not necessarily equate to high touch, and what we think of as “normal” is in flux, we at Northwest Bank & Trust Company pledge to never lose sight of the all-important “relationship” and the personalized service our customers expect. It has been integral to our success for almost 80 years and is how we will continue to build a legacy that endures.

How small business owners can benefit from the SBA 504 loan program

Are you a small business owner looking to purchase or construct your own building? 

SBA 504 LoansMaybe you have considered the possibility of purchasing or constructing but are hesitant due to the traditional down payment requirements, interest rate risk, or general uncertainty in the economy. If so, the SBA 504 loan program could be the perfect solution.

Through the SBA 504 loan program, you can acquire your new facility with as little as 10% down, and lock in a low, fixed interest rate for up to 25 years on up to 40% of your project costs. While these features alone make this program a very attractive option, due to provisions included in the Economic Aid Act, this program is now more beneficial than ever. For new SBA 504 loans approved between 2/1/2021 and 9/30/2021, the borrower will be eligible to receive six months of payment subsidies up to $9,000 per month, and the elimination of some fees that can generally account for up to 2% of the total loan amount. With these two temporary measures, this can result in thousands of dollars in savings for the borrower!

General Program Overview

This SBA loan program is meant to assist small business owners with the purchase, construction or refinance of owner-occupied real estate, and in some cases, the purchase of equipment. The general loan structure includes the bank providing financing equivalent to 50% of the project costs, with the SBA providing financing of up to 40% (through a certified development company “CDC”), and the borrower contributing the remaining 10% of equity. In some situations, such as a special use property or new business, the borrower equity requirement is 15%, or 20% in the case of a special use property and new business. In these situations the SBA/CDC’s funding percentage would change (i.e. 50/35/15 or 50/30/20), as the bank is always at 50% of the project costs. However, the 50/40/10 split is most common.

Key Benefits of the SBA 504 Loan Plan

One benefit of the SBA 504 program is that the business’ down payment is as little as 10%, compared to a typical down payment requirement of 20-25% on conventional CRE loans.

Additionally, the SBA/CDC portion of the loan includes a fixed interest rate for the life of the loan, which can be up to 25 years. The average 20 and 25 year fixed rates on the SBA/CDC portion are much more favorable than typical CRE loan rates. For current loan rates, contact our commercial lending team.

With recent economic relief bills, the program is even more attractive than ever right now with the recently approved payment subsidies and fee eliminations on new loans approved between 2/1/21 – 9/30/21. Below are some additional details on these savings options.

6 Months of Payment Subsidies

New borrowers approved 2/1/21 – 9/30/21 will receive six months of payment subsidies (principal, interest and fees), capped at $9,000 per month, beginning with the first payment due after the loan has been funded by a debenture guaranteed by SBA and is in regular servicing status.

Fee Elimination

New borrowers approved 2/1/21 – 9/30/21 will also be eligible for the temporary elimination of the following fees:

  • 0.5% Third Party Lender Participation fee, and
  • 1.5% CDC Processing Fee

Combined, these two measures will result in significant savings for borrowers looking to buy, build, or refinance.

If you have questions about the SBA 504 loan program, one of our loan officers would love to have a conversation with you to discuss your options. Please contact Joe Donahue or Corey Martin to learn more about this great opportunity.

Joe Donahue

Joe Donahue

Vice President ,
Commercial Loan Officer

Corey Martin

Corey Martin

Vice President ,
Commercial Loan Officer

We will be closed 11/25 for Thanksgiving Day.
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