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July 2013 | Volume 10 | Issue 7

Happy 4th of July

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Local People...Helping Local People!

First Community Bank and Trust is encouraging consumers and small business owners to bank local and keep their money in the community that they live in. Because we put local deposits back to work in the community and because we are financial first responders both in good times and in bad, customers of ours will be reinvesting in their neighborhood and making it a better place to live and work for generations to come.

By keeping their money local, consumers will realize the litany of benefits that come with banking with a community bank including a relationship-based banking experience, superior customer service, the pride that comes with reinvesting in one’s community and working with employees that are local.

“By going local and banking locally with your community bank, consumers can make a real difference in the lives of their neighbors and the future of their community,” said Greg M Ohlendorf, President and CEO of First Community Bank and Trust. “They’ll be making a hometown investment they can be proud of.  After all, the money they deposit with us will be reinvested in ways that drive their local economy, such as in the form of loans to local residents who want to buy a home or to small business owners who are looking to open shop on Main Street.”

As a small business ourselves, we thrive when our customers and communities do the same, so taking care of customers and looking out for the best interest of our community is engrained in the way we conduct our business each and every day.  A major advantage of banking with a local community bank is that we are locally owned and operated. We have local employees and local shareholders making local decision that helps us understand the unique challenges and financial needs of our communities. And when consumers call their local community bank, they’ll be reassured to know that they won’t be talking to someone halfway across the globe or even in another part of the state. Instead, they will be talking with their community banker who lives and works in the same community they do.

If you know of someone that is looking for a true community bank to call home, please have him or her give us a call. We are looking to make a relationship with local residents and businesses that will in turn make our communities stronger. We are local people…helping local people.

Local People

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Member FDIC | Equal Housing Lender An Equal Housing Lender

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First Community Investment Center News

 

The Fed Perturbs the Markets

A more positive view of the economy equals a big negative for Wall Street.

Presented by Clint Squier & Jim Ulman, Registered Representatives
Prepared by MarketingLibrary.Net Inc.

The end is in sight for QE3. On June 19, the Federal Reserve let investors know that “easing without end” will eventually end, perhaps as early as mid-2014. Wall Street had anticipated such a signal, but investors still reacted emotionally to the news, with the Dow Jones Industrial Average ceding all of its May and June gains in less than two market days. (The index fell 206 points on June 19 and 354 points on June 20.) Bears see the air quickly coming out of the rally; bulls think the rally will pause during the turbulence, then resume.1,2

Good news implied bad news. In its June 19 policy statement, the Fed presented a brighter economic outlook. It saw unemployment lessening to 6.5-6.8% in 2014. It also envisioned growth of 3-3.5% for 2014 and possibly as much as 2.6% growth in 2013.1,3
Then came the press conference after the release of that statement, at which Fed Chairman Ben Bernanke stated that the central bank could scale back its bond buying in late 2013 and end its current stimulus altogether next year, provided the economy is healthy enough. While the Fed will keep purchasing $85 billion in bonds per month in the short term and hold interest rates where they are until the jobless rate hits 6.5%, Wall Street saw a disquieting big picture: an end to the era of easy money.2,3

The Fed’s announcement hardly came out of left field, but Wall Street reacted as if it did. QE3 could not last forever; a central bank can only practice aggressive easing for so long before risking damage to an economy, and the timing of the news was pretty much in line with expectations. Still, the major U.S. and Asian benchmarks dropped around 2% on the first full market day after the news and the major European markets were down more than 3%. Gold dropped more than 6% on June 20 to $1,296 an ounce and the 10-year Treasury yield climbed to 2.42%, with the real yield of the 10-year TIPS up to 0.46% after rising 0.32% in two days.4,5,6

When & how might the Fed taper? In a new Bloomberg survey, 24 of 54 economists (44%) believe that the Fed will reduce QE3’s scale to $65 billion a month at its September policy meeting. Alternately, 28% of the economists feel tapering will start in December and 13% think we won’t see it until 2014. As to when QE3 will end, 44% of the respondents said June 2014.7
The Fed could end up winding down QE3 later than it anticipates. In fact, you could point to many statistics in this job market that don’t support tapering. Looking at job creation from December through May, payroll growth has averaged 194,000 jobs a month – not the 200,000+ the federal government would like to see. The labor participation rate (the amount of people employed + the amount of people looking for jobs) is scraping a 29-year low. Inflation is not only low, so are inflation expectations: the Cleveland Fed is forecasting average consumer inflation of 1.4% for the next 10 years.8

Who might get hurt the most when interest rates rise? Investment classes across the board took a hit in the wake of the Fed’s announcement as emotion ruled the markets. Historically, fears of rising rates and actual rising rates have tended to affect certain sectors and classes of investments more than others. The utilities and financials sectors have faced headwinds in such a climate in past decades, and it is well documented that REITs are highly sensitive to changes in the interest rate environment. The energy sector and foreign stocks have fared better when rates rise. Still, past performance is no barometer of future results and the markets hardly move on logic alone.9

Will the bull market stumble? For some long-range perspective, we’ll let Prudential Financial market strategist Quincy Krosby have the last word. As he told CNBC last week, "We haven't had a meaningful correction in the market and if this selloff continues…it doesn't mean the market is going to collapse. It is essentially recalibrating – the road to normal is going to be filled with detours.”2

Clint Squier and Jim Ulman may be reached at 708/946-2246

Jim and Clint

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This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 - bloomberg.com/news/2013-06-20/fed-seen-tapering-qe-to-65-billion-at-september-fomc-meeting.html [6/20/13]
2 - cnbc.com/id/100831276 [6/20/13]
3 - foxbusiness.com/markets/2013/06/19/wall-street-pummeled-amid-fed-woes/ [6/19/13]
4 - cnbc.com/id/100831610 [6/20/13]
5 - reuters.com/article/2013/06/20/markets-usa-bonds-idUSL2N0EW1AD20130620 [6/20/13]
6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/20/13]
7 - bloomberg.com/news/2013-06-20/fed-seen-tapering-qe-to-65-billion-at-september-fomc-meeting.html [6/20/13]
8 - marketwatch.com/story/7-charts-that-tell-the-fed-not-to-taper-qe3-2013-06-19 [6/19/13]
9 - cnbc.com/id/100831621 [6/20/13]

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HARP Refi's Available Through First eMortgage

Refinancing an underwater mortgage may seem like a long shot but, thanks to the recent extension through 2015 of the government-backed Home Affordable Refinance Program (HARP), homeowners stuck with mortgages worth more than the value of their homes could get some additional relief.

Created in 2009, HARP aimed to help homeowners with Fannie Mae or Freddie Mac backed loans who are current on their mortgages but unable to refinance because the value of their home had declined too much. From the fourth quarter of 2011 through the first quarter of 2013, roughly 1.375 million borrowers have refinanced through HARP, exceeding the original estimate of 1 million borrowers. Estimates show that there are still roughly 1.5 million HARP-eligible borrowers.

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Member FDIC | Equal Housing Lender An Equal Housing Lender | Financing Subject to Credit Approval

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First Community Gold Club News

 

Upcoming Casino Trip

Horseshoe Casino, Hammond IN – Thursday, July 25, 2013

Join us as we travel to Hammond, Indiana and the Horseshoe Casino to experience the excitement of the games, shopping and dining.

We will leave from our Peotone location at 9:00 am and from our Beecher location at 9:30 am. The bus will depart the casino at 3:40. Cost is $27 per person ($29 for non-customers) and includes transportation, buffet lunch and a $10 coupon for gaming.

To register for this trip, call Irene at First Community Bank and Trust at 946-2246.

All reservations must be paid in full by July 10, 2013.

View First Community Gold Club Web Page

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Member FDIC | Equal Housing Lender An Equal Housing Lender

Our Gold Club is for those customers who are 55 years of age or better and have at least $1,000 in any combination of accounts with our bank. Members receive increased rates on CDs, free check offers, two free dinners per year, and much more. First Community Caravan is open to anyone and can be enjoyed by customers and non-customers alike. If you are interested in signing up for our Gold Club or for one or more of our trips, contact Irene Brothers today at 708.946.2246

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2013 Customer Appreciation

 

Summer Fun

Show those pesky flies who the boss is this summer! Pick up a First Community Bank and Trust Fly Swatter to get the job done. We’re giving away these handy swatters on Friday, July 19 and Saturday, July 20th in both of our lobbies, Beecher and Peotone.

Document Disposal Days

Our next Document Disposal Day is scheduled for September 14 from 9-11 AM at our Peotone Financial Center at 650 Wilmington Rd. in Peotone. Shred your unwanted confidential papers for free. It's safe and secure.

View the entire 2013 Customer Appreciation Calendar

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Member FDIC | Equal Housing Lender An Equal Housing Lender

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