An Interview with Director Patti Temple Rocks

by Robert DiCosola

Introduction

Patti Temple Rocks has been a Director of Old Second Bancorp since 2015. She is a member of the Board’s Compensation Committee and IT Steering Commit- tee. She has had a distinguished career in the Advertising, Marketing and Communications space, and has held various leadership positions for some industry-leading corporations.

Her most recent role was Managing Director/Client Innovation Officer for Golin, a global communications agency. Previous career highlights include Vice President of Public Affairs, Brand and Reputation for The Dow Chemical Company, and Chief Reputation Officer for Leo Burnett Worldwide. Currently, Patti is Founder and Head of Temple Rocks Consulting, where she is utilizing her marketing and communications experience and expertise for clients looking for growth, both for their business and of their people.

“Patti, with your many years of experience in advertising, marketing and communications, talk to us about how that experience has translated into helpful perspectives and insights as a director for a financial institution.”

PTR: “My background is certainly different than some of the other directors, many of whom are from the financial services industry. My approach at first was to listen closely to the issues and challenges facing the Bank at the Board level, and then make contributions within my areas of expertise. I think that (Board members from) different industries are very relevant to the overall decision

making because of the different perspectives they bring. For example, I noticed that the consumer challenges facing the banking industry are similar to those facing other industries—how to market their products and services to the Millennial demographic and to Gen Z–the next generation after Millennials–and how predictive analytics can play a role in that decision-making process.”

“When you were initially approached as a possible candidate for Old Second’s Board of Directors, what were some of your thoughts out of the gate? What ultimately led you to accept the directorship?”

PTR: “I was intrigued, to say the least, as one of my long-term personal goals has been to serve on a publicly traded board of directors. I did have some concern about my lack of direct experience in financial services but I also knew that in today’s complex environment, boards are expected to ask questions and challenge the status quo to some extent, and not simply be a rubber stamp. I could tell from my conversations with the Bank’s management and other directors that there were highly capable people guiding the Bank with deep financial experience. I felt confident that I could add something differ- ent and hopefully complementary to what they already had. With that perspective, I was honored to say yes to the OSBC opportunity.”

“What would you say are three of the most critical competencies, characteristics or credentials of an effective Board member?”

PTR: “Curiosity is one of the most important…As Board members, we need to have the capacity to ask thought-provoking and challenging questions. (For example): ‘If we didn’t do that, what might happen?’

“Another important characteristic is empa- thy. As directors, we can add value by considering the perspective of customers and employees. At the end of the day, an unengaged employee base will almost always result in disappointed customers. If we can assist Bank management with insights regarding the overall customer experience, that’s a value-add.”

“The last one would be preparation. It’s never a good idea to attend a board or committee meeting blind, without advance preparation. When I first started with the Bank’s Board, there were a zillion acronyms I had to familiarize myself with, such as the OCC and OREO loans and many others that were simply not a part of my normal vocabulary. I couldn’t pretend that I knew what these were…I needed clarification so that I could be conversant and relevant to the discussion. I am very grateful that my fellow directors were very patient with me as I asked questions!”

“Diversity and Inclusion is an important reality for successful companies these days, including here at Old Second. Can you give us some examples of how D/I played an important role in a company’s success?”

PTR: “Without question, Diversity is essential to a company’s success, but not in a numbers-oriented, quota-based way. And there is no Inclusion without Diversity, and vice versa. In an effort to become more diverse, companies need to be careful to not make inappropriate hires that ultimately become bad hires—and often at no fault of the person hired. A diverse hire who is not on-boarded with care is never going to feel included in the organization. Companies need to take even greater care to make sure they have an inclusive environment to welcome the diverse hires into.

“I also believe very strongly in a broad view of Diversity. It is not simply skin color, gender or sexual preference. The best practice today is a workplace that not only looks different from the outside but is also one that values a variety of experiences and perspectives. For me, personally, I believe it is much more important to value my career experiences and insights as a working mom and a 50+ professional than simply the fact that I’m a female. One example that comes to mind is from the auto industry in the 1980’s…- Ford engineers developed ‘pregnancy bellies’ and asked their design engineers to wear them to understand how to design cars for families—including families with pregnant women. While their intentions were good and they got a lot of good PR for the effort, why not just hire some competent women engineers instead of outfitting the men?

“A workforce segment that seems to be getting overlooked these days, and a particular passion of mine, is the older worker. I’m writing a book that addresses this issue: #I’m Not- Done: It’s Time to Talk about Ageism in the Workplace. We must work to remove the stereotype that some workers lose value and relevance after a certain age.”

“What positive signs do you see going forward for the banking industry? What about challenges?”

PTR: “With the greatly improving economy, the future is looking much brighter for financial institutions. The days of banks being constantly slammed and criticized appear to be over, and trust has been established again. That’s the good news, but one of the challenges I see is providing relevant banking experiences to the generations coming up. Traditional brick-and-mortar banks simply are not an important part of their lives…Everything they do banking-wise is mobile, digital. This is very different from previous generations who still prefer one-on-one, in- person transactions. This will require entirely different approaches to what we offer and how we do it to ensure that the services the Bank provide are valued by all these age groups.”

“What makes Old Second Bank’s Mission meaningful to you?”

PTR: I would describe Old Second’s Mission in one word: authentic. You can determine a lot about a company’s culture if you would just ‘turn off the volume and watch the movie.’ I guess another way of saying that is pay attention to what I do, not just what I say. From my experience, if you did that here at the Bank, you will see an organization that truly cares about its employees, that I’m a female. One example that comes to mind is from the auto industry in the 1980’s…- Ford engineers developed ‘pregnancy bellies’ and asked their design engineers to wear them to understand how to design cars for families—including families with pregnant women. While their intentions were good and they got a lot of good PR for the effort, why not just hire some competent women engineers instead of outfitting the men?

“A workforce segment that seems to be getting overlooked these days, and a particular passion while at the same time being a growth and performance-based culture. Mission statements can’t be just flowery words on a piece of paper. There also needs to be accountability at every level of the organization.”

“Patti maintains a website (pattitemplerocks.com) which includes a number of thought-provoking blogs on a variety of topics. One that caught my eye particularly was ‘Don’t Let the Crush of Work Crush You.’ Would you elaborate on what prompted you to write that blog, and give us an executive summary on what you mean by “Don’t Let the Crush of Work Crush You.”

PTR: “In most businesses the goal is to enhance profitability and to make your numbers. This is especially apparent in the 4th quarter of the year, when the push is on to deliver and capture revenue for year-end, and clients have cash that they need to spend or lose it as the fiscal year comes to close. This makes for a particularly crazy end to the year in the agency business. I’ve walked the halls (at previous employers) and have seen the stress and exhaustion on the faces of employees who don’t have much more to give. I’ve found that in these stressful moments it’s so important to not lose the human factor. Continue to maintain empathy for those around you. When we get super busy, it’s easy to lose sight of simple, every-day courtesies—like being kind to one another and treating each other with respect.

“It’s also important to not get caught up in the stress of the moment and try to maintain a close link to what’s truly important to you. We can and should turn our focus to our customers and colleagues, but at the same time we need to take care of ourselves. I’ve also found that maintain- ing a sense of humor is essential! Being able to laugh is a gift not just to ourselves, but to others. And I believe that makes our work better.”

Russia sanctions, China trade: Wealth Economic Update Aug 4, 2017

U.S. and World News

  • moscow-155388930_360President Trump has signed a bill that imposes sanctions on Russia after Moscow ordered the U.S. to cut hundreds of diplomatic staff and said it would seize two U.S. diplomatic properties. The new sanctions are the equivalent of a “full-scale trade war” according to Russian Prime Minister Dimitry Medvedev. The sanctions mark some of the strongest action Congress has taken against Russia since the Cold War. Meanwhile, the investigation into Russian interference in the U.S. election is taking a step forward as special counsel Robert Mueller has reportedly convened a grand jury. The move would give him the power to compel witness testimony and obtain evidence. Links between the Trump campaign and Russia are subject to the investigation, although President Trump has deemed the probe a “witch hunt”.
  • A planned announcement by President Trump outlining a significant trade action against China has been postponed. It was expected that President Trump would direct U.S. Trade Representative Robert Lighthizer to open an investigation into Chinese violations of U.S. intellectual property rights and forced technology transfer. The move would bypass the World Trade Organization and is getting some rare bipartisan support; with Senate Democratic leader Chuck Schumer saying that the U.S. should skip any investigation and take immediate action against China. It is now unknown when or if this trade action will be announced.

Markets

  • Markets were generally higher this week. The S&P 500 rose 0.23% and closed at 2,477. The Dow Jones rose 1.22% for the week and closed at a new All-Time High of 22,093. Year to date, the S&P is up 11.87% and the Dow is up 13.23%.
  • Interest rates ended the week a bit lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.82% and 2.26%, respectively.
  • The spot price of WTI Crude Oil decreased by 0.38% this week, closing at $49.52 per barrel. Year to date, Oil prices have fallen 7.85%.
  • The spot price of Gold ended the week lower by 0.81%, closing at $1,259.31 per ounce. Year to date, Gold prices are up 9.74%.

 Economic Data

  • Initial jobless claims fell by 5,000 from last week, coming in at 240,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 242,000.
  • The July jobs reports came in better than expected with 209,000 jobs added, beating estimates of 180,000. The prior two months’ figures were revised upwards by 2,000, bringing the three month average for job gains to 194,000.
    • The headline unemployment rate edged down to 4.3%, in line with forecasts. The labor force participation rate ticked up 0.1% to 62.9%, making the reduction in the unemployment rate stronger.
    • Average hourly earnings increased by 0.3% in the month, meeting expectations. Over the last year, wages have grown 2.5%.
  • Headline PCE inflation was flat in the month of June, in line with consensus expectations. Over the last 12 months, headline PCE inflation has increased 1.4%.
    • Core PCE inflation (excludes food and energy, Fed’s preferred inflation measure) rose by 0.1% in June, also in line with expectations. Over the last 12 months, Core PCE inflation has increased 1.5%.

Fact of the Week

  • Since 1962, Congress has increased the nation’s debt ceiling 79 times. This amounts to once every 8 months over the last 55 years. This year, Congress must vote by mid-October to raise America’s debt ceiling or risk defaulting on its debt. (Source: Federal Reserve)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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Fed Rate, Healthcare: Wealth Economic Update July 31, 2017

U.S. and World News

  • traffic_360The Federal Reserve left interest rates unchanged at their policy meeting this week as was expected. The post-meeting statement noted that the Committee expects to begin reducing the size of its balance sheet “relatively soon” as opposed to “this year” as had been in the June statement. This implies that there will be some sort of an announcement regarding letting maturing bonds run-off the balance sheet at the Fed’s September meeting. The market is currently pricing in a 40% chance there is another rate hike before the end of the year.
  • Following failed Senate votes to repeal and replace Obamacare, Republican senators shifted their focus to a “skinny” healthcare repeal that introduces smaller changes to the Affordable Care Act. The changes included eliminating individual and employer insurance mandates and removing the medical device tax. Despite the more limited scope of the “skinny repeal”, the bill was still struck down by a vote of 51-49 as three GOP senators voted against it. In a floor speech following the defeat, Senate Majority Leader Mitch McConnell said, “it is time to move on.”

Markets

  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Interest rates ended the week a bit higher. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.83% and 2.29%, respectively.
  • The spot price of WTI Crude Oil increased by 8.63% this week, closing at $49.72 per barrel. Year to date, Oil prices have fallen 7.45%.
  • The spot price of Gold ended the week higher by 1.14%, closing at $1,269.34 per ounce. Year to date, Gold prices are up 10.62%.

 Economic Data

  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 244,000.
  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 244,000.
  • The Case-Shiller home price index rose by 0.1% in May, lower than expectations of a 0.3% increase. Prices rose in 14 of the 20 cities surveyed with Seattle (+0.9%), Las Vegas (+0.6%) and Portland (+0.5%) showing the largest monthly increases and New York City (-0.6%), Chicago (-0.4%) and Boston (-0.4%) seeing the largest decreases. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The first estimate of 2nd quarter Real GDP showed 2.6% quarter over quarter growth, slightly below expectations of 2.7%. This first print represents an acceleration of growth over the 1st quarter’s figure of 1.4%.

Fact of the Week

  • Over the last 5 years ending June 30th, the S&P 500 has had an annualized total return of 14.6% per year. If an investor were to have missed out on the 5 best performance days in that span, the average annual return was cut by 3% to 11.6% per year. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

Healthcare, McCain: Wealth Economic Update July 21, 2017

U.S. and World News

  • stethoscope-519691768_360The U.S. Senate has further delayed a vote regarding repealing and replacing Obamacare and may scrap the plan altogether. This was the result of two more GOP senators stating they would not vote for the proposal, leaving Republicans short of the votes they would need to pass the American Health Care Act. Adding to the uncertainty, Senator John McCain has been diagnosed with a brain tumor and the timing of his return is very much unknown.

Markets

  • Markets were mixed this week. The S&P 500 rose 0.55% and closed at 2,472. The Dow Jones dipped 0.23% for the week and closed at 21,579. Year to date, the S&P is up 11.61% and the Dow is up 10.59%.
  • Markets were mixed this week. The S&P 500 rose 0.55% and closed at 2,472. The Dow Jones dipped 0.23% for the week and closed at 21,579. Year to date, the S&P is up 11.61% and the Dow is up 10.59%.
  • Interest rates ended the week lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.80% and 2.23%, respectively.
  • The spot price of WTI Crude Oil fell by 1.83% this week, closing at $45.69 per barrel. Year to date, Oil prices have fallen 14.95%.
  • The spot price of Gold ended the week higher by 2.14%, closing at $1,254.97 per ounce. Year to date, Gold prices are up 9.37%.

 Economic Data

  • Initial jobless claims fell by 15,000 from last week, coming in at 233,000. The Labor Department noted that the decrease may have been a result of summer auto plant shutdowns during the July 4th holiday. The four week moving average for claims moved down to 244,000.
  • Housing starts rose by 8.3% in June, beating expectations of a 6.2% increase. The increase was led by the volatile multifamily category (+13.3%) but single-family starts also increased (+6.3%) follow three months of declines.

Fact of the Week

  • On October 3, 1995, all activity in the United States halted in anticipation of the verdict of the “Trial of the Century”; the murder trial of Hall of Fame NFL Player and Actor O.J. Simpson. After 16 months of obsessive media coverage, the nation dropped everything they were doing to watch the verdict live. Among other phenomena such as water usage plummeting (not wanting to miss the verdict while in the bathroom) and electricity consumption surging (TV sets being turned on), trading volumes on the New York Stock Exchange fell by 41% as traders were glued to their TV screens. In all, it is believed that the verdict cost the U.S. economy $480 million in productivity that day. (Source: Alan Dershowitz’s “America on Trial)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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Healthcare, Fed: Wealth Economic Update July 17, 2017

U.S. and World News

  • medical-531914364_360Senate Majority Leader Mitch McConnell stated that the Senate will vote on the Republican health care bill to replace Obamacare next week. McConnell has agreed with Ted Cruz on a bill that would allow insurance companies to sell plans that are cheaper and simpler. The two taxes on high-income households from the Affordable Care Act would remain and billions of dollars would be spent combating opioid addiction and assisting states in lowering premiums. The bill also entails the use of health savings accounts to pay insurance premiums.
  • Federal Reserve Chair Janet Yellen’s testimony had a more dovish tone as she indicated that balance sheet runoff would likely be pushed to September. However, Janet Yellen did provide a positive view on the economy, citing higher household spending, a pickup in business investment, and strength in the labor market. The Fed remains uncertain about inflation, but expects it to return to 2% in the next couple of years. Global equity markets reacted positively to testimony and the U.S. equity market has once again reached record highs.

Markets

  • Markets climbed higher this week. The S&P 500 rose 1.42% and closed at 2,459. The Dow Jones rose 1.04% for the week and closed at 21,638. Year to date, the S&P is up 11% and the Dow is up 10.84%.
  • Interest rates ended the week lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.86% and 2.33%, respectively.
  • The spot price of WTI Crude Oil surged 5.38% this week, closing at $46.61 per barrel. Year to date, Oil prices have fallen 13.24%.
  • The spot price of Gold ended the week higher by 1.35%, closing at $1,228.81 per ounce. Year to date, Gold prices are up 7.09%.

 Economic Data

  • Initial jobless claims fell by 3,000 from last week, coming in at 247,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims ticked up to 246,000.
  • The producer price index (PPI) increased by 0.1% in June and 2% year-over-year which was slightly higher than expectations and core PPI (finished goods excluding food and energy) rose 0.2%.
  • The consumer price index (CPI) decreased by 0.02% in June and now stands at 1.6% year-over-year. The lower CPI reflects lower energy prices. Core CPI (excluding food and energy) rose 0.12% in June and the year-over-year figure stands at 1.7%.
  • Retail sales fell by 0.2% in June versus expectations of a 0.1% increase and retail sales (ex-autos, gasoline, and building materials) fell 0.1% versus expectations of a 0.3% gain.
  • The University of Michigan consumer sentiment index fell 2 points to 93.1 for the preliminary July report reaching a nine-month low.

 

Fact of the Week

  • In July 2009 there were 14.6 million unemployed Americans and 2.2 million job openings. In April 2017 there were 7.1 million unemployed Americans and 6.0 million job openings (Source: Department of Labor).

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

IL Budget, G20: Wealth Economic Update July 7, 2017

U.S. and World News

  • balance-183243003_400For the first time since July of 2015, the state of Illinois has a budget after the House of Representatives overrode the governor’s vetoes. The state of Illinois’ unpaid bills reached $15 billion and the new budget is projected to bring that figure down by about $5 billion, however, according to Moody’s Investor Service this is likely not enough for Illinois to avoid being downgraded to junk status with the unpaid bill backlog and unfunded pension liability being so overwhelmingly high.
  • The G-20 summit begins today in Hamburg, Germany where tens of thousands of protesters have already begun demonstrating a day in advance as sensitive topics such as terrorism, global trade, and climate change are on the agenda and a long awaited first meeting between President Trump and Vladimir Putin. The meeting between President Trump and Vladimir Putin is not expected to go without tension after sanctions, concerns over Ukraine and Syria, and accusations of meddling in the election have transpired in the past few months.

Markets

  • Markets ended the week slightly higher. The S&P 500 rose 0.14% and closed at 2,425. The Dow Jones increased by 0.38% for the week and closed at 21,414. Year to date, the S&P is up 9.46% and the Dow is up 9.71%.
  • Interest rates rose on both the short and long ends this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.95% and 2.39%, respectively.
  • The spot price of WTI Crude Oil fell 3.80% this week, closing at $44.29 per barrel. Year to date, Oil prices have fallen 17.55%.
  • The spot price of Gold ended the week lower by 2.34%, closing at $1,212.60 per ounce. Year to date, Gold prices are up 5.67%.

 Economic Data

  • Initial jobless claims increased by 4,000 from last week, coming in at 248,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims ticked up to 243,000.
  • Nonfarm payrolls rose 222k in June which was higher than consensus expectations of 178k and prior months were revised up. The unemployment rate rose slightly to 4.4% and the labor force participation rate also increased to 62.8%. Average hourly earnings rose 0.15% and average weekly hours rose 0.1 to 34.5.
  • The ISM non-manufacturing index rose 0.5 points to 57.4 in June against expectations of a slight decline.
  • The ISM manufacturing index rose 2.9 points to 57.8 beating expectations with new orders, employment, and production all increasing for the month.

Fact of the Week

  • The total amount of money owed by every single person and country in the world is US$199 trillion, but the world has only US$80.9 trillion in cash and bank deposits. (Source: Marketwatch)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

Healthcare, IL “junk” status: Wealth Economic Update June 30, 2017

U.S. and World News

  • healthcare-587952472_360After unveiling their version of healthcare reform legislation, Senate Republican leaders decided to delay a vote until after the July 4th .  This came after the Congressional Budget Office scoring reported that the legislation in its current form would result in 22 million more people being uninsured by 2020.  Senate Republican leader Mitch McConnell said there was a ‘really good chance’ the bill will eventually pass despite the delay and a number of GOP lawmakers expressing their concerns over the bill.
  • Illinois is facing the possibility of becoming the first U.S. state to have its credit rating downgraded to ‘junk’ status by S&P. State lawmakers have until Friday night’s deadline to agree on a budget, something that hasn’t happened since 2015, before S&P stated that it will lower Illinois’ credit rating for the 4th time in the last year.

Markets

  • Markets ended the week slightly lower. The S&P 500 fell by 0.58% and closed at 2,423. The Dow Jones decreased by 0.21% for the week and closed at 21,350. Year to date, the S&P is up 9.31% and the Dow is up 9.30%.
  • Interest rates rose on both the short and long ends this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.89% and 2.30%, respectively.
  • The spot price of WTI Crude Oil popped 7.67% this week, closing at $46.31 per barrel. Year to date, Oil prices have fallen 13.79%.
  • The spot price of Gold ended the week lower by 1.20%, closing at $1,241.61 per ounce. Year to date, Gold prices are up 8.20%.

 Economic Data

  • Initial jobless claims increased by 2,000 from last week, coming in at 244,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims moved down to 242,000.
  • The Case-Shiller home price index rose by 0.3% in April, below consensus expectations of 0.5%. By city, Detroit (+1.8%) and Seattle (+1.1%) showed the largest increases, while Cleveland (-1.0%) and Boston (-0.7%) showed the largest decreases in prices. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The headline PCE index (measure of inflation) declined -0.1% in May, lower than the estimated 0.2% increase. Over the last 12 months, headline PCE inflation has risen 1.4%.
    • Core PCE (excludes food and energy, Fed’s preferred inflation method), rose 0.1% in May, in line with expectations. Over the last 12 months, Core PCE inflation has risen 1.4%.

Fact of the Week

  • Just 54% of over 18,000 adults surveyed in April 2017 own stocks (either directly or indirectly through a mutual fund or exchange traded fund) in their personal accounts or pre-tax retirement accounts. (Source: Gallup)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

UK Election, Qatar, Puerto Rico: Wealth Economic Update June 9, 2017

U.S. and World News

  • UKflag-518908074_360The decision to hold snap elections in the United Kingdom seems to have back-fired on Prime Minister Theresa May and her Conservative Party as they lost their majority with the Labour Party gaining significant ground in Thursday’s vote. In April, Theresa May decided to hold the snap general election in an attempt to gain a significant majority for her ahead of the Brexit negotiations but with the poor results there have been calls for her resignation. The split parliament could make Brexit negotiations with the UK’s European Union partners more difficult.
  • Four Arab states (Saudi Arabia, Egypt, the United Arab Emirates and Bahrain) have cut off diplomatic ties with Qatar, as well as closing air and sea routes. This marked a significant escalation of a rift between the Persian Gulf countries that has been brewing for a few months. President Trump stated that he wished to “de-escalate” the situation but appeared to support the isolation of Qatar, noting that his message against funding terror and extremism is being heeded by those other countries in the region.
  • Citizens of Puerto Rico are voting this weekend in a referendum on the island’s political status. There will be three choices on the ballot: statehood, “current territorial status” and independence. It’s not clear what would happen in the case of any of these choices winning decisively or how Congress would interpret the results. This is the island’s fifth referendum since 1898 and comes amid a crippling economic crisis.

Markets

  • Markets were mixed this week. The S&P 500 dropped by 0.27% and closed at 2,432. The Dow Jones gained 0.33% for the week and closed at a New All Time High 21,272. Year to date, the S&P is up 9.57% and the Dow is up 8.84%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.20%, respectively.
  • The spot price of WTI Crude Oil lost 3.80% this week, closing at $45.85 per barrel. Year to date, Oil prices have fallen 14.65%.
  • The spot price of Gold ended the week higher, closing at $1,267.45 per ounce. Year to date, Gold prices are up 10.45%.

 Economic Data

  • Initial jobless claims decreased by 10,000 from last week, coming in at 245,000. Most of the decreases in claims were attributed to California and Tennessee, reversing their increases last week. The four week moving average for claims moved up to 242,000.

Fact of the Week

  • The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

Climate, Illinois downgraded: Wealth Economic Update June 3, 2017

U.S. and World News

  • weather-171576532_360President Trump has announced that the United States will withdraw from the Paris Climate Accord. The landmark 2015 agreement between 195 nations aimed at fighting climate change and promoting clean energy, however Trump has been staunchly against the deal as he feels that it puts America at an economic disadvantage compared to many of the other countries in the agreement. While according to the language of the agreement makes it so the U.S. can’t officially withdraw until 2020, the administration says they will simply not enforce any of the provisions of the deal until that time. Trump added that the U.S. could begin negotiations to re-enter the Paris accord down the road or “a new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers.”
  • Standard and Poor’s has downgraded the debt rating of the State of Illinois down to BBB- from BBB, one notch above ‘Junk’ status. This was the third downgrade of Illinois’ debt by S&P in the past year. Illinois is by far the lowest rated state and it is the only state that S&P has in the BBB tier and indications are that the rating could fall further in what was described as a ‘negative credit spiral’. Gabriel Patek of S&P noted, “If lawmakers fail to reach agreement on a budget with provisions designed to reduce the state’s structural deficit, it’s likely we will again lower the ratings.”

Markets

  • Markets ended the week on a positive note. The S&P 500 rose by 1.01% and closed at 2,430. The Dow Jones gained 0.69% for the week and closed at 21,144. Year to date, the S&P is up 9.87% and the Dow is up 8.48%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.72% and 2.16%, respectively.
  • The spot price of WTI Crude Oil lost 4.14% this week, closing at $47.74 per barrel. Year to date, Oil prices have fallen 11.13%.
  • The spot price of Gold ended the week higher, closing at $1,279.17 per ounce. Year to date, Gold prices are up 11.47%.

 Economic Data

  • Initial jobless claims increased by 10,000 from last week, coming in at 248,000. Most of the increases in claims were attributed to California and Tennessee. The four week moving average for claims ticked up to 238,000.
  • The Headline PCE index (measure of inflation) rose 0.2% in April, in line with expectations. Over the last year, PCE inflation has risen 1.7%.
    • Core PCE (excludes food and energy, preferred inflation measure of the Federal Reserve) rose by 0.15% in April, slightly better than expectations of 0.1%. Core PCE has risen 1.5% over the last 12 months.
  • The Case Shiller home price index rose by 0.9% in April, in line with expectations. Prices rose in all 20 cities measured with Minneapolis (+1.3%), Detroit (+1.2%), Seattle (+1.1%) and New York (+1.1%) showing the largest monthly increases. Over the last 12 months, home prices as measured by the index have risen 5.9%.

Fact of the Week

  • Apple (AAPL) reported cash and cash equivalents of $256.8B at the end of Q1. That is enough cash to purchase any company held in the S&P 500, outside of the top 10 holdings. Alternatively, Apple could purchase all of the bottom 45 companies held in the S&P 500. (Based on Market Capitalization)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

The Fixer-Upper Mortgage

Roger Legner, Vice President—Residential Lending legnerr_in0006qc

It seems like there is at least one in every neighborhood: a home in need of some TLC. Whether it’s a property that might have been neglected due to the foreclosure process, a property that was owned by someone who allowed the home to succumb to deferred maintenance or perhaps it’s your own property and in need of a facelift, the Federal Housing Administration (FHA) 203(k) Rehabilitation Mortgage was intended to provide financing in any of these situations.

203(k) Mortgage Programs: Standard and Limited (or Streamlined)

The two programs are open to both homeowners who want to refinance and buyers interested in fixing up a home.

Both programs:

  • Require the property to be owner occupied—they are not for investors who want to flip the home
  • Have low-down-payment requirements (3.5%) and, even then, the money may be gifted to the applicant
  • Are underwritten to standard FHA credit and income guidelines
  • Can be combined with any other FHA program available that the borrower may qualify for

The standard version of the 203(k) loan is used for more substantial repairs. These include things like moving walls, adding a room or repairing structural damage, in addition to cosmetic repairs. Essentially, this loan covers restoration that will exceed $35,000.

The limited, or streamlined, program is used for more basic repairs, such as replacing or fixing a roof or furnace, replacing windows, remediating mold or lead-based paint, purchase and installation of appliances, finishing a basement or improving accessibility for disabled inhabitants, etc. It’s limited to a maximum of $35,000.00 of repairs (including contingency reserve).

Since the purpose of both loan programs is to rehabilitate homes, the mortgage proceeds cannot be used to add luxuries like a pool or new outdoor kitchen, for example.

Go in With Open Eyes and Good Estimates

When using a 203(k) loan to purchase a home in need of repair, you are well-advised to walk through the property with a licensed contractor before submitting an offer. This helps ensure all the necessary repairs are accounted for and priced into your offer. It also helps to pay close attention during the appraisal and inspection phases of the purchase as well.

The program also requires borrowers to have licensed contractors bid on the work to be done. This is not a loan program for do-it-yourselfers.

Get Fixed Up Here

“Fixer-upper loans,” as 203(k) loans are sometimes called, are not a standard product. Many banks do not offer them, because they are quite a bit more complicated to close than conventional or standard FHA mortgages.

As a community bank, we have participated in the 203(k) program for years. We see it as another way to help our communities continue thriving while supporting homeowners and properties in need of a little extra TLC. We’d be happy to discuss the specifics of this program with you

When it comes to home-related financing, you can count on us to find a solution that fits your needs and helps you move on and into the home of your dreams. Contact me, Roger Legner, at 815-361-6469 or visit us online where you can begin your mortgage application right away, if you prefer. We can’t wait to talk to you about what we can do for you today.