Happy New Year from your friends at Decorah Bank!
It’s an exciting time to be a banker! The fulfilling part of banking is helping people. It is rewarding when we help a family buy a new home. It is fascinating learning about agriculture and providing credit to purchase livestock or put a crop in the field. And there is satisfaction in helping someone work through a tough situation when faced with life’s challenges. This is what being a community banker is about.
Sometimes we worry when fewer and fewer people come in the bank. Where are our customers? Many are banking online with us. Ben’s daughter received a Christmas check and that morning deposited it with her phone. To her, good customer service is ensuring our mobile banking is always up and running! These time saving tools are great and we are here to see you face to face when the need arises. You are always welcome in your bank!
There is talk of interest rates going up. The Federal Reserve just increased Fed Funds rates from 0.25% to 0.50%. The market believes this rate will go to 1.00% or so within a year. This short term rate affects savings accounts, CDs and money market accounts. Savers may receive a little more on their deposits – but unfortunately still very low. Wall Street is also projecting only slight increases in long term rates which affect fixed rate mortgages. Borrowers can still lock in 30 year mortgage rates today in the 3.75% to 4.25% range. While these rates might inch up a bit, they will continue to be historically low for some time. This is good news for folks borrowing money and not so good for savers. It could be worse. The European Central Bank just lowered their Fed Funds rate to -0.30%. A negative interest rate! Depositors in Europe have to pay to keep their money safe! The world economy is slow and currently U.S. rates are the best (and safest) around.
Decorah Bank is considered a small sized community bank. We now have over $400 million in assets on our books, our Wealth Management team manages another $200 million in assets for our customers off our books and we have originated and service another $200 million in fixed rate mortgages. While this seems like a lot of dough, it is a drop in the bucket compared to the billion and even trillion dollar financial institutions out there. For us, we are a good size. We are big enough to be able to keep up with the continual change in banking and technology and small enough to pay attention to customer and community needs. In the U.S., we are now losing, on average, one community bank a day to mergers and acquisitions. Lack of succession planning, heavy regulation and economies of scale are at play here. Other industries are facing similar challenges. Fortunately, we have good succession planning in place, some new talent, and we do business in a healthy community that supports its local businesses. We plan on sticking around for the long haul! We thank you for your business and invite you to visit us anytime in 2016 and beyond.
Wishing you the best in 2016!
Ben Grimstad & Joe Grimstad