Are You Ready for Prime Time?

Denise Rogers, Assistant Vice President—Senior Director

Being a community bank, we’re able to offer services that are just more personal. Offering our customers membership into our Prime Time Club is one of them. The membership not only provides access to a variety of free or discounted services, it can be your ticket to some truly memorable experiences.

Oh, the Places You’ll Go

We try to keep a balance in our group travel experiences. In addition to the trips that involve relying on coach services and flying, we accommodate members who are only interested in day trips and those who want to drive places on their own.

The Prime Time Club brings you together with others in the community who share similar financial, social and travel interests. We’re able to buy tickets and arrange transportation at group discount rates to and from a variety of local venues: Broadway show performances at the Paramount Theatre here in Aurora to baseball games in Chicago, Wisconsin and St. Louis, Mo.

Among our more popular events are the FREE Rules of Road refresher courses, which help members prepare for their written driver’s test, and our two-day, AARP Smart Driver program. This longer course leads to a certificate you can present to your insurance company in exchange for a discount on your premiums.

Where many of our members see the greatest value, however, is in the longer trips we plan. For instance, in 2019, we will be heading East for a weeklong “Chesapeake Bay Getaway” (April 24–May 1, 2019). The Prime Time Club will also be traveling to Iceland next summer (July 27–August 2, 2019) and in the fall experience a “Pacific Coastal Cruise” (October 12–21, 2019). As with the day trips, we make all the arrangements, including booking the transportation, accommodations and day tours. For members, it’s a worry-free way of seeing the best of what the world has to offer.

Fellow Travelers

For me, one rewarding aspect of being the director of the program goes beyond interacting with the travelers; also watching everyone enjoying themselves is fulfilling. It’s seeing those who’ve joined us for the first time without knowing anyone return home having made new acquaintances and connections within the community. Traveling beyond their daily routines literally makes the world a little smaller.

Whether you would benefit from the discounted banking services, are transitioning toward a life of increased leisure time or find yourself at a time in your life where you would like to meet new people, consider joining the Prime Time Club. The Club has been offered to customers for 36+ years. Currently, we are 6,200 members strong, and there is always room for one more.

Membership Details

  • Membership is open to any Old Second customer who:
    • Is 55 years or better.
    • Has a checking or Money Manager account
    • Has combined balances of $10,000 in Old Second Bank or trust accounts.
  • Prime Time checking with interest.
  • Debit card with rewards.
  • Free services include:
    • Money orders and cashier’s checks.
    • Signature guarantees and notary services.
    • A financial counseling session.
    • ATM withdrawals at all O2 ATMs and MoneyPass® ATMs (up to three free withdrawals at non-O2 and non-MoneyPass® ATMs).
    • No fee on gift cards.
    • Newsletter regarding upcoming events.
    • Annual member luncheon.
  • Discounts include:
    • Safe deposit box rental.
    • Extended tours and one-day trips.

To learn more about how Prime Time Club membership would benefit you, visit our website or give me a call at 630-365-5193. For an idea of what we’ve been up to and to review upcoming performances, seminars and road trips, check out our calendar.

Why Volunteering Matters to Us

Old Second’s Carrie Niesman receiving the Oswego Chamber of Commerce 2017 Volunteer of the Year award from Cory Holstead- Chairman of Board – Oswego Chamber

Carrie Niesman, Vice President—Regional Manager

Recently, I had the honor of being recognized by both the Oswego Chamber of Commerce and the Illinois State Senate as a 2017 Volunteer of the Year. It’s the third time I’ve received this distinction, which just further motivates me to keep contributing toward the enhancement our communities.

How We Pay It Forward

Being an agent for positive change is important to me. I grew up here, I live and work here, and I’m raising my family here. Volunteering is my way of ensuring that everything my family and I have received from and enjoy about our area remains available to help future generations flourish. I believe in paying it all forward.

As important as community involvement is to me, I appreciate that it is also a priority to my employer. Being involved in the communities we serve is part of what makes us Old Second bankers—and an aspect of the job I thoroughly embrace.

Old Second has deep roots in this area. It has been instrumental in the development of the neighborhoods and businesses that make up our communities. The bank sponsors a number of events, supports fundraising for organizations and accommodates employees like me so we can donate our time and energy to causes and activities that benefit customers and community members. This commitment lies at the heart of our company’s core values.

It’s the bank’s support that enables me to hold a variety of board positions in the areas served by the branch offices I manage. As a member of the Chamber of Commerce in Oswego, for instance, I’m able to meet regularly with many area business owners. These relationships help me understand the current challenges and opportunities local businesses face, which enables me to customize solutions to meet their needs and be a better banker.

Passion Gets Things Done

I am as passionate about being a representative of a community bank as I am about fulfilling the missions of the organizations on whose boards I serve to make positive impacts on our communities.

To learn more about what Old Second can do for you, and how we are involved in your community, contact me at 630-385-6697. I can’t wait to discuss what we can do together.

Carrie Niesman is currently:

  • 2017–2016 Past President/Club Advisor of the Oswego Junior Women’s Club  
  • Vice Chairman of the Board of Directors for the Oswego Chamber of Commerce
  • Co-chair for the Ambassador Committee for the Oswego Chamber of Commerce
  • Ambassador for the Yorkville Area Chamber of Commerce
  • Committee Member for the W2W (Women in Business) group of the Yorkville Area Chamber of Commerce
  • Secretary on the Board of Directors for Oswego Panther Youth Basketball Association
  • Member of the Oswego Police Commission

 

The Game-Changing Benefits of Predictable Cash Flow

David Mottet , First Vice President—Commercial Lending 

To understand the dynamics of small business management, you need to look beyond your revenues and focus on how quickly cash flows through your organization. Because, if your company comes up with insufficient cash to operate at the end of the month, it really won’t matter that your business’ earnings hit a new high the month before. That’s why you need to keep your eye on your operating cash cycle to get a better gauge on the health of your cash flow.

The Lifeblood of Your Organization

The operating cash cycle represents the length of time your cash is tied up in working capital, including the inventory cycle and the accounts receivable cycle. For most businesses, it takes somewhere between 40 and 60 cents in working capital investment to generate one dollar in new revenue. This is the basic premise behind achieving sustainable growth.

Your growth capacity is determined by your working capital surplus. But the “timing of cashis also a factor. Operating cash cycles are the circulatory system of your business. If cash is not flowing smoothly through the system, the patient weakens. If cash flow stops all together, the patient’s viability is at risk.

Assessing Predictability

To gauge the strength of your current operating cash cycle, ask yourself the following questions:

  • How would your day-to-day operations be impacted if your clients made their payments within 24 hours of receiving your invoice?
  • How would truly predictable cash flow affect the ability of your company to add staff or other resources?
  • How would paying all accounts within five business days impact your ability to negotiate better prices and discounts with your vendors?

If you are like most managers, answering these questions led you to a better place than you are right now. Once you know when you will receive payment, you no longer need to juggle payables and other business obligations. You begin to control your cash flow rather than being controlled by it. That’s where the value of having a predictable cash flow leads.

The Benefits of a Predictable Cash Flow

Business owners typically realize five major benefits from achieving a predictable operating cash cycle.

  1. Reduce managerial stress. Just as with personal finances, a lack of money can lead to stress in a business. You start to worry about your employees just as you would your family.
  2. Build stronger business relationships. Once you take control of your operational cash cycle, you can begin to nurture valuable relationships with both vendors and clients. This can often lead to earning better pricing through prompt payment.
  3. Experience debt reduction. Predictable cash cycles in a business enable you to pay down term debt more quickly, as well as other short-term obligations. In time, your business can become totally debt free, and, as an owner, you become an investment and cash management client rather than strictly a borrower.
  4. Improve staffing flexibility. During times of uncertainty, the last thing a business owner wants to do is commit to paying annual salaries for new employees. Predictable operational cash flow enables you to hire with confidence as growth opportunities arise.
  5. Realize growth in sales. Businesses must have working capital to support expansion. By making operational cash cycles more predictable, one key barrier to growth is removed. Consistent cash cycles provide you with the opportunity to expand your sales more easily, given market demand.

To gain firm control of your operational cash flow and the resulting benefits of predictable payments, Old Second offers business clients access to the BusinessManager® program. This online program allows you to get cash for your accounts receivable deposited directly into your bank account by selling them to the bank at a discount. Essentially, it allows you to quickly turn your invoices into cash, makes your cash flow more predictable and enables you to negotiate better terms from your suppliers. The result is a much stronger operating cash cycle and healthier finances.

To learn more about this game-changing program and the other cash management strategies available at Old Second Bank, contact your lender to set up an appointment. We can’t wait to show you the difference it can make.

Second to None By Putting Clients First

Juwana Zanayed – First Vice President – Director of Treasury Management Sales 

When the word “second” is in your name, it isn’t really a matter of trying harder—it’s about taking a “second-to-none” approach in everything you do. For this $2.3 billion bank, that means not just keeping pace with industry innovations, but also finding ways to get the latest products and services to our clients as soon as they emerge.

Local to You

This concept of timely delivery is a key component in serving as a niche provider for mid-market businesses. Old Second’s local executive management team helps deliver solutions when the client needs them. From Aurora to Chicago, from Elgin to Joliet, Old Second has provided timely solutions for our local clients.

Businesses also want an accessible treasury provider, not a distant figure you might expect from a large bank, headquartered far away. Availability is one of the hallmarks an Old Second client can depend on, year after year.

Being local to our clients also means our business operates in the same market their business operates. We understand market forces that are unique to our geographic footprint. That firsthand knowledge of the client’s immediate market puts us at an advantage over an out-of-state decision-maker.

Consistency Works

Over 50 percent of our current commercial banking clients have been with us for more than 10 years. Such continuity in a relationship means familiarity. As a business, you don’t want to retell your story over and over. You’d rather work with a bank that already knows you, where you’ve been, how you’ve grown and where you’re headed.

Lasting relationships also mean our clients like what we’ve done for them. We like to think of the longevity of our client relationships as a signpost to the effectiveness of our solutions. Think of a product you have used for years when you could have chosen an alternative. You stick with what gets the job done. Our years of client loyalty speak to the success of our business model.

Decisive and Customized

That’s why customization to the client’s business makes sense. Our loan officers and treasury management advisors are empowered to take direction from their clients. Because we are local, accessible and have a large suite of innovative solutions, we are equipped to provide fitted solutions.

We consider many aspects of a business, including cash flow, automation processes and mechanisms of fraud prevention. And, each aspect of the business is examined in light of maximizing the client’s bottom line.

Once a specialized product suite is assembled, each client is able to manage every aspect of their business via O2 Online Banking. It’s a one-stop-shop dashboard that puts control in the client’s hands. We consider it all part of our “second-to-none” approach.

For more information on our treasury management and commercial banking services, click here, or contact a Treasury Management Advisor directly at 877-866-0202. We can’t wait to talk to you about what we can do to keep your business growing.

Borrower Assets: How Much Is Enough When Buying Real Estate?

Jeri Ott, Vice President/Mortgage Loan Originator 

While most discussions about purchasing real estate focus on having sufficient funds to make a down payment, there is more to save for than just this amount. Borrowers are required to show proof that they have sufficient additional funds saved to cover any closing costs and an amount equal to at least two months of future loan payments. This is true whether the purchase involves a primary residence or a vacation home.

Joint Ownership

Buying a property in partnership with someone else can make it more affordable. However, the reserve requirement will be the same as it would be if either individual alone made the purchase. For instance, in the case of a vacation home owned by two families, each may agree to split all expenses and payments evenly. However, the underwriting standards necessary to approve the mortgage will view each owner from the perspective of whether they could carry the entire debt on their own. Each will also be required to have sufficient reserve assets to cover two months of full payments.

A Higher Standard for Income-Producing Properties

When it comes to being approved for a mortgage against investment properties, the liquid asset reserve requirement rises to the amount needed to cover six months of mortgage and tax payments. Even though this type of property typically has rental income that will help cover the mortgage expenses, lenders are required to verify that assets exist to cover the loan should an interruption in occupancy occur.

This need to demonstrate a more substantial cash reserve—which can include bank and brokerage accounts, as well as retirement savings—can also impact homebuyers who aren’t purchasing a home for investment purposes but who are buying a property that is considered income producing. This is a common occurrence in the areas served by Old Second.

Many of our borrowers purchase homes situated on farmable land with acreage rented out to farmers. Others may be looking to acquire a horse farm with the intent of renting out the stalls they won’t be using. More recently, some of our home-buying clients have applied for mortgages on properties that have cell towers on them.

In these cases, not only are higher reserves required, the mortgages themselves may have different requirements, including a need for higher down payments and nonconventional loan structures.

Understanding Before Making an Offer

Whether the property you want to buy is your first home, an investment property or offers the potential for a steady stream of income that will help offset your mortgage payment, talking through the nuances of underwriting requirements with a lender as experienced in nonconforming home loans as they are with conventional requests is beneficial. Higher reserves, different expectations regarding debt-to-income ratios and other considerations—including how much of a down payment you need to gain access to a better interest rate—ultimately affect the amount of liquid assets you will need to have on hand and the interest rate you may be charged.

To discuss your best options for borrowing to fund your real estate purchases, call me at 630-365-5190. Let’s sit down and talk about the best loan structure for your situation.

T+2: What a Change in Settlement Dates Means to You

Brad Johnson, CFA CFP® Vice President—Investment Officer 

A seismic change hit the securities markets on Sept. 5, 2017, without causing so much as a ripple. That is the day financial companies, Old Second included, will figuratively flip a switch and begin settling stock, ETF, corporate and municipal bond, and some limited partnership transactions two business days after their trade dates. Previously, trades settled on a T+3 basis, or in three business days.

What This Means to You

With the change to T+2, when you sell exchange-traded securities you will receive your money one day sooner than in the past. As a buyer, you can expect to pay and take ownership of these securities one day earlier. Treasuries and most mutual funds are unaffected. They will continue to offer a faster settlement.

While shortening the settlement cycle seems like a big deal, it mainly will affect mindsets. It also may require a bit more planning, at least initially, to ensure cash is available to accommodate the earlier payment date.

For corporate cash managers, the shortened cycle may also mean adjustments in their liquidity strategies. However, increased efficiency should be the end-result.

Why the Change?

The change reflects the electronic nature of securities transactions. Today, there is no need to accommodate paper-based delivery of securities, which is where the processing delay originated. It’s also a move that will align the United States and Canada (which will be making the switch to T+2 at the same time) with settlement procedures already in practice on other global market exchanges.

Also, T+2 will help reduce some market, counterparty and credit risk, specifically for firms that clear transactions. With less time to settle, there is less time for things to go wrong. When they do the response and resolution should similarly occur that much faster.

Once the markets and investors have had an opportunity to adjust to T+2, a move toward T+1 is expected to follow, which would improve efficiencies further. In addition, some experts suspect that the switch could eventually lead to lower collateral requirements when securities are pledged against loans. However, we are not there just yet.

Should you have any questions about how the change to T+2 affects your trading or cash management strategies, call me at 1-630-906-5545.

Career Tips for the Class of 2017

Chris Lasse, First Vice President/Human Resource DirectorLasseC_IN097qc

With graduation comes a deluge of well-intended career advice from family, friends…and total strangers. Some of it will transcend the ages, while some may reflect a different time and employment environment. Other advice may simply not be right for you and what you want to accomplish.

As you sort through it all, here are six tips to help you make the most of your first career move and the opportunities that follow. They’re based on what we see as we pour through resumes, interview candidates and make hiring decisions.

  1. Choose passion over money. When you are excited about what you do, you tend to do it well. That passion will eventually lead to a higher paycheck over the long haul. Taking a job that holds little interest but offers a higher salary may seem like the responsible thing to do. However, it can lead to being stuck in a career path you can’t afford to exit. It can also leave you without the skills and experience needed to transition into the profession you aspired to in the first place.
  2. Know the tradeoffs of working for a large or small company. Large companies can be well-oiled recruiting and training machines. Often, however, in exchange for a company that looks good on your resume, you give up some control over the skills you acquire, what you get to do with them, the breadth of experience you gain and the positions open to you. Working for a smaller company can expose you to a wider variety of job duties. Many times, this means gaining exposure to senior-level executives and the work that they perform—things that can be off limits at bigger companies.
  3. Be realistic about the market value of your degree. As an English major, for example, your starting salary might be less than half of that of an engineering graduate. Realize your value as an entry-level candidate—don’t shortchange yourself, but be pragmatic. Factor in the long-term value of building skills and gaining experience. And, if you need a tie-breaker, always take the job with the better boss.
  4. Look beyond the title. Good entry-level jobs help train you for long-term success. For instance, we often have openings for Credit Analysts. These positions are vital to the lending process. More importantly, they can lead to any number of lucrative career paths since they offer employees the chance to build very marketable experience and skills that are currently in short supply. Consider these types of jobs, they are stepping stones to greater responsibility.
  5. Find a way to stand out. The numerous job sites—from Indeed to LinkedIn—make it easy to find and apply for positions. With one click, you and several hundred other new graduates with your same degree and level of experience can go after the same job. Find ways to be different.

When you are one in 400, make sure your resume stands out.

  • Find a way to become an employee referral. This will improve your odds of getting hired more than anything else you do.
  • Check LinkedIn for any possible connection you can make to the recruiter or someone at the hiring company.
  • Edit your resume for each job to include phrases from the posting. If an automatic parsing tool is used, you will be a perfect match. If not, you’ll catch the recruiter’s eye.
  • Craft a unique cover letter for each position to personalize your application.
  • Have a zero-tolerance policy for grammatical and spelling errors.
  1. Be strategic and have a long-term plan. This means thinking about where you want to be in 3–5 years or more. Mapping out your path will help you identify the type of experience you need and the skills you want to acquire. It not only makes you a more committed candidate, but it also keeps you focused and motivated.

Remember, the path you are on is long and likely to take unexpected turns. Our best advice is to use each stop to learn, expand your skills and gain the experience that leads to the next opportunity. We know you’ll do great.

If you are interested in making Old Second Bank your first stop after graduating, click here.

Taking the Stress Out of Closings

Alaine Bussler, Residential Closing Manager00001

David Kozuh, First Vice President—Residential Lending

Making the decision to buy a new home is thrilling, and the last thing we want is for the mortgage process to interfere with that. That’s why we make sure you know what to expect each step of the way. If you have a question or don’t understand something in a document you’ve been sent, we are here to talk you through it.

New Transparency

In the past, much of the stress in the closing process came from the way lenders were required to provide disclosure and loan documents to you. It made it harder to know how much your home—and your loan—would really cost after fees. That was typically something that came at the very last minute, without adequate time to review.

That has changed. The disclosure requirements are now much easier to read and understand. We are able to give you the first document, The Loan Estimate, three days after you apply for a mortgage, and the second document, The Closing Disclosure, three days before you close. This gives you time to review the terms and amounts you are agreeing to and enables you to ask questions if there is anything you are unsure of.

The Loan Estimate

Like its name implies, this three-page document summarizes the terms and price of your loan. It provides the information needed to develop a better understanding of your mortgage quote, including the amount you can expect to pay monthly based on the estimated closing costs.

The Closing Disclosure

The Closing Disclosure is an itemized account of the final settlement expenses and is provided three days before you close. Specifically, it confirms the final terms, how much cash you will need to bring to your closing, the loan details and the total cost of the loan. The Closing Disclosure also provides an accounting of any changes in the amounts that appeared in the Loan Estimate, along with reasons for them.

In combination, the two documents enable you to understand what, if anything, changed before agreeing to the final terms.

Big Numbers Shouldn’t Lead to Tense Times

The changes to the disclosure law essentially make the way we work with our borrowers—taking the time to answer questions and being transparent about what’s being agreed to—standard to the industry.

Give us a call, at 877-966-0202 and let’s talk about what we can do to keep your mortgage experience as stress free as possible.

 

The One Thing You Need to Know About Investing

Steve Meves, Senior Vice President/Chief Investment Officer, Wealth Managementmevess_bus009xqc

Investing is about using the money you’ve saved to purchase an asset that will hopefully appreciate over time. The key word in that last sentence is “time.” Giving your investments sufficient time to grow, regardless of what you are investing in, is the hard part. It’s also a key ingredient to building wealth.

Market Movements Are Noise

The financial markets go up and down, sometimes within the same day. But throughout history, they’ve kept climbing. The indexes we use to measure investment results—the Dow Jones Industrial Index and the S&P 500 Index—reflect this jagged climb. It’s this historical proof of resilience through wars, political mayhem and underperformance that allows professional wealth managers to remain calm in the face of sell-offs. They’ve seen the charts and looked at the data on market closes. And, they know that sell-offs end with recoveries. These recoveries may take time, but eventually they occur and have led to a resumption in the historical upward trend.

Go Long

The mistake many investors make is in assuming they need to do something when markets sell off. That’s only natural. It hurts to see your account balances decline, even if it’s a short-term occurrence. Our brains are hard wired to feel the pain of a loss—in this case money—more intensely than we feel the joy of a gain. It’s why we are intuitively risk averse. No one likes the way they feel when they lose.

When markets do sell off—whether during a day, over several weeks or even months—we all impulsively want to avoid further pain by selling. Some even want to anticipate the loss by selling before markets ever start selling off.

Taking evasive action may feel good in the short run, but it can destroy investment results in the long run, because you need to be right about the market continuing to go down when you are out of the market. More importantly, you also need to be in the market during its recoveries in order to benefit. It’s hard to know on any given day the kind of day it will be.

When Is the Right Time to Invest?

When you are an investor and take a long-term view, any time can be the right time depending on what you are investing in. Therefore, it’s advisable to have access to wealth managers who actively monitor markets daily to determine when it makes sense to pull back on investing in securities, or types of securities, and when to add more. It’s also our job to keep emotions like loss avoidance from endangering your overall goals so that your portfolio is diversified over different types of assets. That way, it’s better positioned to withstand volatility in any one type of asset.

In the end, the secret to successful investing is to remain focused on why you invest: to build wealth over time.

For more information on how our goal-driven wealth management services keep you on task over the long term, visit us here or call 630-801-2217. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

A Different Way of Investing

Rich Gartelmann CFP® Senior Vice President/Head of Wealth ManagementRich Gartlemann Bio Picture

More often than not, when people talk about their investments, they talk about how well they did versus “the market” or about how much they gained in a single stock. The problem with measuring performance this way is that investing really isn’t like a sporting event where you keep score against an opponent. The only way you “win” is if you have enough money to achieve your financial goals. If you don’t, it won’t matter that your portfolio beat the S&P 500 Index for 10 years straight.

Focus on Results, Not Numbers  

When asked about their goals, often people will say, “I just want to have a million dollars by the time I retire.” That is a big round number, but is it enough? Too much? It depends on the type of retirement you want and the sources of income you’ll have available to support you.

Similarly, there are many investors who start selling stocks and buying bonds when they turn 65, because they believe that when they hit this age they need to invest conservatively. It may be the right action and, depending upon the current market condition, it may not even be a conservative move. Interest rate risks and rising inflation rates can devastate bond investments at certain points in an economic cycle.

If a person turning 65 today is in good health and still enjoys working, they are probably not ready to retire. Even if they are looking forward to retiring, they need to think about how to manage their assets in a way that will support them for another 30 years.

Match the Investments to the Timeframe

The trick to financial planning really isn’t the math as much as determining the journey. Think about where you are in your life and what you want to achieve next. Then, decide what you hope to achieve after that and, from a financial standpoint, what you wish to achieve in the long term.

The list will change over time, and it’ll be different for everyone. However, it may include things like:

  • Buy a home
  • Earn a graduate degree
  • Start a business
  • Pay for my children’s education
  • Pay off my home
  • Buy a family vacation home
  • Eat out whenever I want
  • Travel more
  • See every professional sports team play a game at home
  • Afford health care expenses
  • Avoid estate taxes for my family
  • Support charitable causes
  • Retire early
  • Just keep doing what I love and not retire

To know what you need to afford what you want requires adding some details to your goals and a timeframe. From there, your advisor can work with you to set a dollar goal and calculate how much you need to save to achieve it, if it is an expense. Your advisor can also help you decide how much you need to invest and how to invest your savings to create enough income to achieve ongoing goals, like retirement.

When it comes to investing, we focus less on the big numbers and more on helping you achieve big results.

For more information on how we approach and deliver goal-driven wealth management services, visit us here or call 630-844-5730. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.