Financial Blog Posts

Financial Blog Posts

Market Viewpoints – Summer 2024

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager

The US stock market continued its winning streak in the second quarter this year, after seeing about a 5% pullback at the start of the quarter. US stocks continue to perform very well and emerging market stocks saw a nice rebound during the second quarter after several years of underperformance. Bonds ended the quarter relatively flat, and the Barclays Aggregate Bond Index remains slightly negative in the first half of the year.


The most recent reports on inflation for June came in slightly better than expected which has helped to calm market nerves. Markets were beginning to become uneasy with the previous inflation reports running a little hotter than expected. The Federal Reserve appears to be on track to start cutting the Federal Funds Rate in September assuming inflation reports do not surprise to the upside. However, instead of the projected three interest rate cuts this year, it appears they will only cut once or twice depending on inflation data going forward.

 
Economic growth in the US continues to be positive, however it does appear to be slowing down after better-than-expected data over the last year. It is too early to cause concern, but we will be monitoring this data closely to determine if it is just an adjustment expected slow growth going forward or if it begins to slow more meaningfully.

 
International economies are improving their growth projections with Europe narrowly avoiding recessionary levels. Japan’s growth prospects continue to improve, and China has also seen increased growth in manufacturing and exports. China’s consumer spending is still weak with low consumer confidence and their property markets continue to be strained.


Unemployment has ticked up slightly but continues to remain at historically low levels. Labor markets appear to be cooling off. There are less available jobs open per worker which is showing a gradual easing to more normal employment conditions. This should continue to help wage growth slow going forward, in turn, helping to ease inflation.


As a reminder from our last article, markets have risen during election years 83% of the time going back to 1928, with positive returns in twenty out of the last twenty-four election years. During the four negative return years during an election year, economic growth and higher unemployment were the biggest culprits for negative market sentiment.The positive trend is holding up so far this year, but we do expect more volatility as elections near. This is normally short-term volatility with things getting back to more normal level after elections. We do not recommend making any investment decisions based on anticipated election outcomes.

 
We continue to be mindful of all the risks the market faces for the remainder of the year, from a Fed policy mistake, inflation remaining elevated, company earnings coming under pressure, and continued geopolitical risks. We recommend staying the course with your investment objectives with the understanding that markets go through cycles and both the stock and bond market show positive returns at higher percentage rates the longer the time-period measured.

 
Please communicate with us if any short-term cash needs arise so we can look for opportunities to be pro-active when raising cash for any necessary distributions, which helps to protect against possible short-term negative moves in the market. We appreciate the trust you have placed in us and will continue to make prudent investment decisions as we navigate the markets going forward.

Should I Earmark My Charitable Gifts or Leave Them Unrestricted?

Community Foundation Corner

Quad Cities Community Foundation

By Anne Calder, Vice President of Development

Quad Cities Community Foundation Logo

When making a charitable gift, donors often face a choice: designate the gift for a nonprofit’s overall mission or give to a specific program or project. What’s the difference between the two?

 
Nonprofits are businesses, and the cost of doing business falls into two categories. Operating expenses include the costs of management, staffing, equipment, facilities, and general expenses, while program costs are associated with specific programs, projects, or activities. For nonprofits to achieve their missions, both buckets need to be kept full.
For donors, it can be personally meaningful to support a specific program that is especially meaningful for you or a loved one. Maybe you benefited from it yourself, and you’re looking for a way to give back; maybe you’d like to support a program you’ve helped as a volunteer.

 
When donors support a nonprofit by giving unrestricted gifts to support the operation of the whole organization, they are putting their trust in the organization and leadership. Operations will always need to be funded well so that nonprofits can do their best work. When you know a nonprofit’s work, believe in their ability to carry it out, and want to support them in any way they need, an unrestricted gift will be particularly meaningful.

 
Before I make a gift, I focus on learning about a nonprofit’s mission and the impact they are making. How are they taking on the causes I care about? Are their staff and volunteers well supported in their work? Do their leaders have a vision for the future? Most importantly, do I trust the nonprofit to best use my gift to accomplish its mission?

 
When I can say yes—especially to that last question—I know the organization is a fit and a place where my generosity can make a real impact.

The Power of 1%

Dan AhlBy Dan Ahl, Associate Portfolio Manager

What if I told you that you have the potential to increase your lifetime earnings by millions of dollars with a simple method? Would you think I was trying to sell you something? Would you be worried it was a gimmick? It is not a gimmick, and I am here to give it out for free.

The secret lies within the power of 1%. Increasing your investment returns by 1% annually over the course of our lifetime can add up to millions of dollars. Let us use a Roth IRA as an example and do the math.

 
Let us imagine you were to contribute the maximum amount to a Roth IRA (currently $7k/year) for 25 years with an average annual return of 7%. Then say you were to retire and continue to let it grow for another 25 years. This results with your account holding roughly $3,100,000.


Now let us take the same example but earn an average of 8% annually instead. This now results with your account holding roughly $4,500,000. About $1,400,000 more. Not to mention that if you are doing this in a Roth IRA that is almost $1,400,000 more in tax-free money.

 
This is an over-simplified example where we assume no withdrawals of course. Any withdrawals we would take in retirement would of course reduce future dividend earnings. The point, however, remains that something as small as 1% has the power to make life altering impacts.

 
So how can you do this? If you are already contributing to a 401(k) at work (or similar employer plan) than you already have the means to achieve this. Your investment selection, though it might seem trivial on day one of your new job while listening to HR’s presentation, is a decision that may change the trajectory of your own retirement.

 
So, in the words of Jerry Maguire: “Help me help you!” Let us analyze you or a friend/family member’s 401(k) and its investment options and see if you are on the right path. There is no trick to it and no charge.

 
If you are on the right path than that is great, and you will receive a handshake and pat on the back for a job well done. If not than you might get 1% closer to your retirement goals.

The Importance of Passwords

Hannah RodgersBy Hannah Rodgers, Assistant Vice President, Trust Officer

As we go forward in the digital age, more and more of our lives are being lived behind a log-in portal. For many, all utilities are being handled via an online account, and statements are emails saved in an email account that is also password protected. This can cause strain on your loved ones when you pass, as they will need access to the information found on statements to handle your final affairs.
To ease that strain, there are strategies that can be employed to get this information to them at the time of your passing, while also protecting your digital information.


First and foremost, take stock of all relevant accounts your Executor might need to know about. Are your utilities being handled online? Are you receiving only e-statements for your financial accounts, including bank accounts, retirement accounts, and loan accounts? Do you have social media accounts that will need to be deleted? Is your phone locked with a PIN? What about your computer?


Once you have a working list of what accounts might need to be accessed, you’ll then need to determine how you are going to secure this information. There are password management software options that can create, track and save your passwords for you. Like all digitally held information, there is a hacking risk, but the chances should be minimal with a reputable password manager. There is also the concept of password splitting, where you give half of a password to one person, maybe a spouse, and half to another person, maybe an attorney you are working on your estate planning with. Unfortunately, this strategy can be rather complex, requires cooperation, and is not responsive to changes in passwords or necessary updates.


If you prefer to keep a paper list of passwords, the question then becomes where that list should be held to ensure security. Best practice would be keeping such a list at the same location as your estate planning documents so it is all available to your Executor. To ensure security, estate planning documents as well as any supplemental information, like a password list, can be held in a fireproof safe at home, with the drafting attorney, or with a potential corporate fiduciary if they are holding the original documents.


For information about the role Northwest Bank and Trust can play in your estate plan, call us at 563-388-2631.

Time Bank Announces Agreement to Acquire Northwest Bank & Trust Company

Park Ridge, IL and Davenport, IA — July 24. 2024 —  Time Bank of Park Ridge, Illinois, and Northwest Investment Corp., parent company of Northwest Bank & Trust Company (“Northwest Bank”), based in Davenport, Iowa, jointly announced today that they have entered into a definitive agreement for Time Bank’s purchase of approximately $225 million of total assets and liabilities of Northwest Bank, which has two locations in Davenport, Iowa and one location in Bettendorf, Iowa. 

Joe Slavens will continue his involvement as a strategic advisor to Time Bank. Adam Pelzer, currently Northwest Bank’s EVP, will join Time Bank as Executive Vice President and Quad Cities Market President.  The transaction is anticipated to be completed in the fourth quarter of 2024, subject to customary closing conditions, including regulatory and shareholder approvals.

Tom Carter, President, CEO & Chairman of Time Bank, said “Northwest Bank’s outstanding performance, customer service, and financial strength are impressive, and their family-led culture and deep community ties really stood out to us. We look forward to welcoming the Northwest Bank team and working together on the opportunities ahead in the Quad Cities.”

“As a family-owned and family-led bank, our business has been built on a foundation of the trusted relationships with our customers and our team,” stated Joe Slavens, Northwest Bank’s President & CEO. “We are confident that Time Bank, under the ownership and management of the Carter family, shares our values and will be good stewards of what my family has built. The combination of our organizations will provide more value to our customers and opportunities for our staff because we are bringing together two of the strongest banks in the country to continue to serve the Quad Cities.”

The transaction does not include the sale of Northwest Bank’s trust and investment management group, which will remain under the ownership and management of the Slavens family through the formation of an Illinois Trust Company named Tower Trust & Investment Company.  The transaction also does not include the sale of Northwest Bank’s subsidiary companies which include the award-winning Centennial Tax & Accounting, River Cities Development, which will own the iconic bank towers in Davenport and Bettendorf, and Stratman Solutions, a nationwide provider of financial services software solutions.

“We are excited about the opportunity to join Time Bank, a bank whose culture and ambitions will build upon our foundation of safety and soundness,” stated Pelzer. “This partnership will enhance our capabilities, allowing us to strengthen our customer relationships and enhance our service to the Quad Cities community. Together, we are positioned to be the bank our customers and community deserve. We look forward to continuing to create a positive impact in the region.”

Angkor Strategic Advisors served as financial advisor and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel to Time Bank in connection with the transaction.  Dickinson, Bradshaw, Fowler & Hagen, P.C. served as legal counsel to Northwest Investment Corp.

About Time Bank

Time Bank, with approximately $470 million in assets, is recognized as one of the strongest banks in the United States. Family-owned and operated for over 29 years, Time Bank prides itself on agility and simplicity, offering banking services without the bureaucratic complexities of larger banks. Time Bank’s owner-managed structure ensures consistent, high-quality service across the nation, catering to customers’ needs wherever they may be. With a strong financial performance and a commitment to personalized service, Time Bank stands out as a reliable and responsive banking partner. Read more at https://www.time.bank/.

About Northwest Bank & Trust Company

Northwest Bank & Trust Company is a family-led community bank with total assets of approximately $245 million that has served the Quad Cities for over 80 years. Northwest Bank offers a full suite of banking products and services. Northwest Bank provides tailored advice throughout all phases of life and continues to expand the ways it serves its customers. Its affiliates provide trust, investment management and estate planning services, tax and accounting services, and develop software solutions for financial institutions nationwide. Northwest Bank has been consistently recognized as one of the nation’s highest performing banks of its size by CB Resources, Inc. Northwest Bank and its affiliates are recipients of the QCBJ Best of Region, Quad-City Times Best of the Quad Cities, Locals Love Us, and 2023 QCBJ Fastest Growing Company and 2023 Coolest Places to Work. Read more at https://www.northwestbank.com/.

Market Viewpoints – Spring 2024

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager

The US stock market continued its winning streak in the first quarter after finishing 2023 on a strong note. Large cap US stocks continue to outperform US small caps as well as International and Emerging Markets. However, most bond markets pulled back slightly in the first quarter after an extraordinarily strong finish in the final two months of year.

Markets are still grappling with inflation, which is proving to be stickier in certain areas than the Federal Reserve would like. Shelter costs, auto insurance, travel and leisure, and energy prices continue to be the more difficult areas of inflation to tame. Markets are pricing in the probability of the Federal Reserve cutting rates three times prior to year-end at a quarter percent each cut, however if the inflation reports come in stronger than expected, the market will need to adjust its expectations. This could lead to some consolidation in stock prices if the soft-landing scenario starts to look less likely.

The US economy is still on strong footing after GDP growth in 2023 was better than expected. GDP growth expectations have increased so far this year, driven primarily by a healthy US consumer, strong labor markets, and continued low unemployment. The increase in real wages for US consumers as inflation cooled, has helped US consumer spending remain more robust than anticipated over the last year. It will be important to monitor inflation’s progress for the remainder of the year to help determine how the Fed may proceed and when they may initiate the first rate cut.

Geopolitical issues continue to dominate headlines with Russia’s war against Ukraine dragging on with no end in sight. More recently, Iran’s attack on Israel has further increased tensions in the region as the market determines if this will lead to a larger conflict. Most geopolitical events have little effect on the market. Nonetheless, this situation bears watching for potential spillover effects on energy prices and global trade, which could add to an already uncertain inflationary environment. Markets have remained resilient when faced with a multitude of risks in the headlines. This means we may see some market consolidation as markets digest future geopolitical developments.

As we discussed in our last article, election years typically see increased volatility, at least in the first half of the year, and 2024 is unlikely to be an exception. Markets have risen during an election year 83% of the time, with positive returns in twenty out of the last twenty-four election years. During the four negative return years, economic growth and higher unemployment were the biggest culprits for negative market sentiment.

 We continue to be mindful of all the risks the market faces in 2024, including a Fed policy mistake, inflation remaining elevated, company earnings coming under pressure, and continued geopolitical risks. We recommend staying the course with your investment objectives with the understanding that markets go through cycles and both the stock and bond markets show positive returns at higher percentage rates the longer the time period measured. Please communicate with us if any short-term cash needs arise so we can look for opportunities to be proactive when raising cash for any necessary distributions, which helps to protect against possible short-term negative moves in the market. We appreciate the trust you have placed in us and will continue to make prudent investment decisions as we navigate markets in 2024.

Financial Planning: More than a Calculation

Dan AhlBy Dan Ahl, Associate Portfolio Manager

What is Financial Planning? This often-used term in the financial world is frequently misunderstood and undervalued. In our eyes, the reason Financial Planning is misconstrued is that Financial Planning is not the same for everyone. It also is not a simple projection of dollars compounding at an annual average interest rate until retirement – a little time with a calculator can yield that information.

Financial planning is really a chance to learn, engage, and take control of your own story. We hear all too often from young professionals who say “What is the point? I will never be able to save enough.” We are quick to point out to those young investors, if they were to invest $200 a month from age 25 through age 65 ($96,000 over time) and average a 7% rate of return they could obtain a healthy balance of $512,000. If our younger selves were aware of those figures, we would have taken a more active role in the investment process at an earlier age.

So how are our kids and/or grandkids approaching financial planning? Recent industry research of Generation Z (individuals born between 1997-2012) shows that Gen Z has grasped the importance of beginning the savings process sooner as they have started to save at an average age of 19, compared to Boomers average age of 35. This is great news, however, savings without a plan can lead to unforeseen troubles. As an example, while Gen Z is investing into retirement accounts, such as 401(k) plans, they are overlooking the basics of creating a solid financial future such as establishing savings accounts for emergencies. As a result, 27% have taken a loan from their 401(k) plan while 34% have taken a hardship withdrawal. A counterproductive decision that can have lasting consequences on their financial future.

As I stated above Financial Planning is about more than compounding numbers. While its best to start as early as possible it is also critical to do so wisely and consider all the angles. While this is just one example, there are many more ways we see planning impact our clients’ lives. We are here to help. We have the necessary tools and expertise to put together a well-rounded financial plan. Let us know how we can help you (and your kids) today!

What Happens to my Assets if I Don’t Have a Will?

Hannah RodgersBy Hannah Rodgers, Assistant Vice President, Trust Officer

In the State of Iowa, dying without a Will (known as dying “intestate”), comes with certain guidelines on how your assets will be distributed. Jointly titled assets will become the property of the joint owner. Pay-On-Death accounts (such as select retirement accounts) can be paid upon death with a designation. Any assets titled to a Trust can be distributed through the trust. However, what about everything else?  The Iowa Probate Code might have the answer.

As directed by the State of Iowa, debtors will be first in line, and the Courts will be the final authority on the distribution of assets. For someone with a spouse and no children, the spouse stands to inherit. With a spouse and children with that spouse, the spouse will inherit. If someone has children and no spouse, the children will inherit equally. With a spouse and children from a prior relationship, the spouse is entitled to half of real property and half of the personal property; the children will divide the other half.

For questions about the role Northwest Bank and Trust can play in your estate plan, call us at 563-388-2631.

Everyone Can Give Back… Here’s How to Start

Community Foundation Corner

Quad Cities Community Foundation

By Anne Calder, Vice President of Development

Quad Cities Community Foundation Logo

In my role at the Quad Cities Community Foundation, I talk with generous people every day. No matter their age, background, or interests, people in our region are eager to get involved and give back to their community.

For many, stepping into the world of charitable giving and philanthropy can feel overwhelming. Who should I give to? How can my money do the most good? What does my community need? These questions will have different answers for everyone!

That’s why we created Your Generosity Guidebook, a resource that helps people think about what philanthropy means to them and start to carry forward their generous wishes in simple, effective ways. And for people who have already started on their philanthropic journey, the Guidebook has ideas for how to make giving even more meaningful—both for the donor and for the community they support. 

It begins with values. What is important to you and your family? What brings you joy? The journey begins here because the most rewarding giving will often incorporate your own values and experiences.

Next, identify your interests and passions—the things that inspire (or frustrate!) you. This can help link your giving to the organizations working to promote or improve your interests in the community.

By combining values and passions, you can express a mission for giving. The possibilities are infinite, but you might come up with something like, “My goal is to create safe and vibrant opportunities for people of all abilities to play, exercise, and socialize in my community.”

Mission in hand, I encourage you to connect directly with nonprofits—either through research or in a more hands-on way through site visits or volunteering, because effective philanthropy is a journey and a relationship between you and the causes you care about. No matter where you are on your journey, your local community foundations are here to offer advice and connect you with resources to make your giving as effective as possible.

Market Viewpoints – Winter 2024

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager

Both stock and bond markets closed in positive territory to end 2023 despite all the market worries throughout the year. Bonds staged a strong rally in both November and December, after turning negative earlier in the year, to break their two-year losing streak. Stocks also rallied in both November and December to finish the year on a high note after pulling back from August through October.

The Federal Reserve held rates steady at between 5.25%-5.50%, without adding an additional rate hike in the last quarter of 2023, which gave a boost to both the stock and bond markets. It seems likely the Fed will now hold interest rates steady for the first part of the year with rate cuts possible as early as March, but the likelihood is stronger they wait until at least May before starting a new rate cut cycle.

As the Fed held their own rates steady in the 4th quarter, we saw interest rates around the country decrease, spurring the bond market rally and increasing expectations that the Federal Reserve would begin its own rate cut cycle at some point in 2024. The bond market tends to increase, historically, prior to the Federal Reserve starting to reduce the Fed fund rate.

Estimates vary widely of when the Fed will choose to start cutting rates and by how much, but they are expected to cut rates several times this year. This should begin to take some pressure off markets as the Fed will be moving to a more accommodative posture assuming inflation continues to move in the right direction.

The economy proved to be much more resilient in 2023 than expected going into the year with consumer spending remaining strong, unemployment staying low, and both wage and price inflation cooling throughout the year. This led to better company earnings and strong economic growth which drove robust gains for the stock market last year. Markets are taking a more cautious approach as we move into the New Year. Election years typically see some increased volatility, at least in the first half of the year, and 2024 is unlikely to be an exception. However, chances have increased for the Federal Reserve to engineer a soft-landing of the economy without causing a recession. Recession odds are not zero, but they have come down from where they were at this time last year.

If the economy can avoid a recession this year, growth is still expected to slow meaningfully compared to last year. Lenders are becoming increasingly more cautious when underwriting new loans.

The unemployment rate remains low but has been increasing. New job openings continue to fall and are now well off from their peak. Also, revolving credit and delinquencies have been on the rise which shows that tighter Fed policy is having its intended effect to slow down the economy. The Fed now must prove that they can pivot at the right time to begin to ease financial conditions before the economy slows too much. As I mentioned previously, recession odds have been lowered but we are not out of the woods yet. There is a still a risk that consumers pull back more meaningfully this year, slowing growth and hurting company profits. There is also a risk that certain areas of inflation prove sticky and begin to move back upwards which would force the Fed to readjust their rate cut projections.

We continue to be mindful of all the risks the market faces in 2024, from a possible Fed policy mistake, inflation remaining elevated, company earnings coming under pressure, and continued geo- political risks. We recommend staying the course with your investment objectives with the understanding that markets go through cycles and both the stock and bond market show positive returns at higher percentage rates the longer the time-period measured.

Please communicate with us if any short-term cash needs arise so we can look for opportunities to be pro-active when raising cash for any necessary distributions, which helps to protect against possible short-term negative moves in the market. We appreciate the trust you have placed in us and will continue to make prudent investment decisions as we navigate markets in 2024.