Do You Know Your Credit Score?

Posted by Handshake 2.0 at 6:17 AM on August 14, 2013:

By Kevin T. Reeder, Loan Officer, First Bank & Trust Company

Surprisingly, many people are unaware of their credit scores and how they affect their access to borrowed funds. Most lending institutions make use of credit reports in determining whether or not an individual will receive a loan and, if the loan is made, the borrowing terms he or she will receive. Being aware of what constitutes your credit report can help you enhance your score and ensure you receive the best available terms from your lender.

How does your credit score look?Three major credit reporting agencies, Equifax, Experian, and TransUnion, collect information reported by various financial institutions (credit card companies, banks, etc.) to produce a credit report. Credit scores range from approximately 350-850 with the most credit-worthy borrowers receiving scores above 750. Your score is affected by such factors as payment history (e.g., late payments), amounts owed, length of credit history, and number of credit accounts. Public information such as lawsuits and bankruptcy can also negatively affect your score and can stay on your report for seven to ten years.

Fair or not, a complicated formula of these factors condenses your entire financial history into a single number which lenders use in making their loan decisions. A low score could result in a high interest rate on your mortgage through secondary market lenders such as Freddie Mac and Fannie Mae, or it could limit the borrowing capacity of your small business.

What is the best way to enhance your score?  The most simple and effective way to increase your credit score is to always make your payments on time.

Whether it’s the mortgage on your house or the line of credit for your business, making payments on time will keep you in good standing with your lending institution. As mandated under the Fair Credit Reporting Act, you can keep an eye on your credit score by requesting a free annual report from each of the major credit reporting agencies at annualcreditreport.com. In some cases, a late payment could be mistakenly reported, or an unpaid medical bill could be dragging down your score.

By keeping track of your credit score and making sound credit decisions, you will ensure that you receive the best terms from your lender.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, andbusiness loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Finding Your Investment Sweet Spot: Volatility, Returns and the Efficient Frontier

Posted by Handshake 2.0 at 6:50 AM on June 5, 2013:

By Charles B. (C. J.) Carter, CFA, Trust Investment Officer and Brandon Brooks, Trust Investment Analyst, First Bank & Trust Company

Finding your investment "sweet spot" involves consideration of multiple factors.

Investors need to carefully consider the effects of volatility when constructing the appropriate investment plan. In an investing context, historical volatility refers to variation of the price of a financial asset over time, which is commonly measured by standard deviation. There are numerous sources of risk, and volatility can be used to measure the sum total of risks associated with a financial asset.

Finding just the right mix of risk and returnInvestment portfolios commonly consist of multiple asset classes, including equities, fixed income (bonds), hard assets and “alternative” investments. Understanding the inter-relationships of various asset classes and their historical volatility as well as the correlation of returns for those asset classes is useful in constructing the optimal investment portfolio. It should be noted that historical volatility and asset class correlations can differ materially from future volatility and asset correlations, due to the ever-changing confluence of economic and other forces that influence investor behavior. 

Most investors are aware of the adage, “higher risk, higher reward.” In effect, taking more risk implies the ability to accept higher volatility of returns over the investment time horizon. The right amount of volatility in a portfolio depends on the investor’s unique circumstances. If an investor is dependent on the returns from the portfolio to partially or fully pay for living expenses, then he or she is more likely to prefer a portfolio with lower volatility for more consistent returns.

Conversely, if investors have a longer time horizon and is currently not dependent on returns from the portfolio, they will likely be more able to accept increased volatility in their investment returns. However, a critical difference exists between having the ability to accept more volatility and the willingness to accept more volatility. Some investors are not comfortable seeing their investment returns vary considerably, regardless of whether they have more ability to take risk. In such cases, the willingness to accept volatility will outweigh one’s ability to accept higher volatility. 

The efficient frontier can be represented graphically to convey historical data illustrating the relative risks and returns associated with various investment asset mixes.

A skilled investment advisor can create a profile for most clients in about an hour and help them find their sweet spot on the “efficient frontier” - just the right mix of risk and return to help them meet their objectives.

For more information, please contact Charles B. (C. J.) Carter at First Bank and Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, andbusiness loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Character Leads 5 C's of Credit in Small Business Lending

Posted by Handshake 2.0 at 6:32 AM on May 2, 2013:

By Allan M. Bookout, First Bank & Trust Company

Young bankers pursuing a career in business lending or credit are taught early in their training about the "5 C's of Credit": character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).

Business lending requires mutual trustWhile most of the 5 C's involve numbers, ratios or percentages - and it is true more focus is on numbers in business lending today than a generation or two ago - character has not been forgotten. In fact, in small business lending, character is often the most important C.

What does character mean to a bank and for you? While "integrity" is an excellent synonym for character, as it involves truth and honesty which are paramount in banking relationships, let me offer "trust" as another key concept.  

A positive relationship between a bank and a borrower is anchored in mutual trust. From the bank’s side, your banker needs to be able to:

  • trust that the financial information you provide is accurate
  • trust that the values you place on your assets are realistic, not inflated
  • trust that you have disclosed all of your debts
  • trust that you are providing all relevant information, not just what is favorable
  • trust that you are not hiding negative information
  • trust that you will always tell the truth

While trust is essential, so is the tone of interactions between the borrower and the banker. If you try to intimidate your banker, you may sometimes get what you want, but this can be detrimental to a long-term, mutually beneficial relationship. We are expected to respect everyone who walks in our doors. Likewise, respect from customers is appreciated and helpful.

Character, one of the 5 C's of Credit, can lead to exceeding others' expectations and building trust. Just as banks try to exceed their customers’ expectations with every interaction, when business owners exceed their bank’s expectations, good things tend to happen.

Have a question about small business loans for First Bank & Trust Company? Please contact Allan Bookout, Vice President, Commercial Lending Officer, First Bank & Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

3 Tips for Preparing a Business Loan Application

Posted by Handshake 2.0 at 8:15 AM on February 27, 2013:

From Jim McAlister, Regional Manager, First Bank & Trust Company:

Want to help your banker help you with loan requests? Provide the most current and accurate financial information possible.

Tips for preparing a business loan applicationTip #1

Provide a current and detailed personal financial statement. Current means within the last 3-6 months.  Ask your banker to provide an acceptable personal financial statement form that can be saved on your desktop (password protected).  Include an addendum if you need to. Update your PFS at least twice a year. Be sure to have all owners of assets on the PFS to sign and date the statement.

Tip #2

Track your balance sheet and income statement information monthly. Affordable software programs such as QuickBooks are available to do so. Your bookkeeper or CPA partner may also provide an affordable option. The discipline of tracking your numbers monthly demonstrates to your banker that you are on top of the numbers.

Tip #3

Complete your personal and business income tax returns on time. Provide a copy of your tax returns to your banker if the terms of your loan require annual tax return reporting. Many business owners today extend their reporting to October. When you do extend your tax returns, this means your banker is using information that is nearly a year old to make a credit decision. This is why having current interim financial reporting (Tip #2 above) is so important.

These resources on business bank loans from First Bank & Trust Company may also be of interest:

Have a question about business loans for First Bank & Trust Company? Please contact From Jim McAlister, Regional Manager, First Bank & Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

How Do I Measure the Performance of My Investment Portfolio?

Posted by Handshake 2.0 at 1:43 PM on January 24, 2013:

A series of question and answers on banking from client First Bank & Trust Company.

Question:

How do I measure the performance of my investment portfolio?

Answer from George F. Taylor, Senior Vice President and General Counsel, First Bank & Trust Company:

How Do I Measure the Performance of My Investment Portfolio?Preparing for tax time always prompts stories about how the Dow Jones or S&P 500 indices performed the preceding year. These are widely recognized benchmarks for how “the market” is doing, but are they appropriate for most investors? 

If you’re invested in mutual funds that don’t match the asset allocation, market capitalization, or geographic concentration of these indices, the comparison may not be helpful.  A few other performance related issues to consider are:

  1. Did you add or withdraw funds from your portfolio during the year?
  2. Is an asset concentration (e.g., low basis stock that is 10% or more of the portfolio) skewing your results? 
  3. Are bonds in the portfolio?

A professional investment advisor can help you make an apples-to-apples comparison and identify some of the biggest factors that impact your performance.

Every year, ask yourself and your investment advisor whether you have the appropriate mix of bonds, stocks and possibly “alternatives” to match your goals and risk tolerance.

Once your asset allocation is set, returns of the portfolio (vs. the benchmark or “the market”) should reflect the risk in your portfolio and be comparable to the risk and return of the benchmark(s).  Asset and sector concentrations relative to the positions of the benchmarks,  low quality securities in your mutual funds, and funds that have succumbed to “style drift” are issues that should be covered as well when discussing performance with your investment advisor. 

Have a question about banking for First Bank & Trust Company? Please contact George F. Taylor, Senior Vice President and General Counsel or Charles (C. J.) Carter, CFA, Assistant Vice President/Portfolio Manager at First Bank and Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Banks Can Help with Estate Planning

Posted by Handshake 2.0 at 7:40 AM on September 27, 2012:

From C. J. Carter with First Bank & Trust Company:

Trusts originated in the middle ages when English noblemen went off to fight in the Crusades and left their possessions in the hands of “trustees” who were usually friends or senior officials of the church. Today, bank trust departments manage many different types of assets such as real estate,  businesses, and marketable securities for individuals, families and organizations.

Banks Can Help with Estate PlanningTrusts are legal entities that own the assets placed in the trusts but trust departments can also manage assets that are not held in a trust. Trust departments have a high level of fiduciary responsibility and therefore manage assets in a prudent manner in accordance with the established plan. 

Basic estate planning involves deciding how assets will be managed and distributed in the event an individual is incapacitated or upon that person's death.  For some, a simple will, power of attorney and a living will or medical power of attorney are all that is necessary to manage assets. For others, various types of trusts are also utilized to carry out an estate plan and meet financials goals. A few examples of commonly used trusts are spend thrift trusts which are used to establish restrictions on how heirs can access their inheritance, trusts for minors, and trusts for the benefit of a surviving second spouse with remainder interests vesting with children from the first marriage. 

A financial and estate plan needs to fit a person's unique circumstances.  In order to determine the appropriate plan, an advisor conducts an in-depth interview to identify goals, objectives and risk tolerances. A typical trust officer would be able to provide both financial planning and estate planning services. Other professionals such as financial advisors and estate attorneys also offer these services but a bank trust officer is proficient in both areas. 

If your bank has a trust department, ask to speak with a trust officer about establishing an estate and financial plan.  If you are already working with a financial advisor, ask him or her about creating an estate plan or ask that they refer you to a local estate planning professional. If your bank does not have a trust department or you are not currently working with a financial advisor, ask your banker to recommend a local estate planning and financial professional with whom you could meet. 

Charles (C. J.) Carter, CFA, is Assistant Vice President/Portfolio Manager at First Bank and Trust Company.

Read more from First Bank & Trust Company on Handshake 2.0.

First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Considering Switching Banks? 13 Questions to Ask

Posted by Handshake 2.0 at 4:50 AM on August 7, 2012:

From Kelly Kendrick, Assistant Vice President of First Bank and Trust Company:

When considering switching your account from one bank to another, take these questions to ask the prospective bank:

  1. Questions to ask a bankDo you offer both personal and business accounts?
  2. What are the fees on the type of account I want?
  3. What variety of accounts do you offer?  For example, do you have multiple account options such as money market accounts or certificates of deposit?
  4. Do you offer online banking? If so, do you offer online bill pay?
  5. Do you offer check cards?  If so, is there any cost for the card?
  6. Where are your ATM locations?
  7. Is your bank part of a larger ATM network where I could access cash throughout the country and abroad?
  8. What is the minimum balance requirement on the account?
  9. Do you offer overdraft protection?
  10. What is your overdraft fee?
  11. If I have the need to frequently visit the bank, where are your branch locations?
  12. What are your hours of operation?  Do you have extended drive-thru hours?  Are you open on Saturdays?
  13. What other services are available to add on to my account such as remote deposit, mobile banking, payroll processing, the ability to create ACH debit/credit, or credit card processing?

Remember to be specific and to tell the banker exactly what you want out of your account and what functions you need it to have.  The more you share, the better he or she can help you and the happier you will be with your new account.

Read more from First Bank & Trust Company on Handshake 2.0.

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First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Why It's Good Business to Know a Good Banker

Posted by Handshake 2.0 at 8:06 AM on July 18, 2012:

From Kelly Kendrick, Assistant Vice President of First Bank and Trust Company:

In Three Reasons to Build a Relationship with a Banker Now, I shared with you why you may consider developing a relationship with a banker. 

Anne Giles Clelland, Handshake Media, and Kelly Kendrick, First Bank and Trust Company

If you still aren’t convinced, here are three more reasons to add a banker to your circle of trusted advisors:

  1. Bankers are active and involved in the communities in which they work and live. As a result, they are also well-connected.  They could personally know your “dream client” and may be willing to do a mutual introduction.  By knowing you and your business, they could also be a potential referral source for new customers.
  2. Bankers can help you surround yourself with a “dream team” network of professional advisors such as CPAs, attorneys, trust officers, wealth management advisors and other consultants.  These professionals will work together to help you and your business succeed.
  3. Bankers keep up to date on the economic environment and regulatory environment.  Your banker may be a wealth of information for questions you may have about the economy or business environment.  With many changes taking place by way of new regulations, your banker can keep you up to date on new regulations, how they affect your bank and how they affect you. 

Regardless of whether you’re in the market for a bank loan or not, most bankers are willing to share advice and to support you as a fellow member of the business community.  A good relationship with a banker can be a huge advantage to you as a business owner and can play an important role in your success.

You're invited to read more from First Bank & Trust Company on Handshake 2.0.

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First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Need a Bank Loan? Then You Need Skin in the Game

Posted by Handshake 2.0 at 7:00 AM on June 15, 2012:

From First Bank & Trust Company:

Diverse sources attribute coining of the phrase "skin in the game" to Warren Buffet, although the New York Times reports he denies first use.  According to Investopedia,  Warren Buffett did use the phrase to refer to a situation in which highly-ranking insiders used their own money to buy stock in the company they were running. Putting money into a project, company or activity shows commitment and is the ultimate vote of confidence.

When applying for a business loan, why do you have to put money in to your company, your investment or your project?  Why can’t the bank just loan 100%? 

Business bank loans take a teamBecause you should have "skin in the game."

  • Not confident or don’t believe in it enough to put your own money in?  Why then should a bank be confident they get back what they put in?
  • Risk sharing -  A bank may be more willing to take on a little risk when you share the risk. 
  • By putting your own money in, there’s less of a chance you’ll walk away from it.
  • When you put money in, this reduces your debt service and allows you to more easily qualify for a loan.  Therefore, less stress is put on the business to turn an immediate profit so it can service the debt load.
  • The more money you put into it, the less interest you will pay to the Bank.
  • Putting money in will ultimately help your financial situation by adding to your net worth.

If you have "skin in game" when you apply for a business loan, you and your bank can be on the same team.

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First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

You're invited to read more from First Bank & Trust Company on Handshake 2.0.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.

Questions to Consider Before Investing in Rental Property

Posted by Handshake 2.0 at 10:10 AM on May 3, 2012:

"If I had a way of buying a couple hundred thousand single family homes and had a way of managing them... I would load up on them..."
- Warren Buffett on CNBC, Februrary 27, 2012

From First Bank & Trust Company:

Questions to Consider Before Investing in Rental PropertyWhile most real estate investors can't afford a Warren Buffett-like purchase of "a couple hundred thousand single family homes," with home mortgage rates at all-time lows, many who haven't invested in real estate property before are beginning to consider it. 

  • Is your local real estate market a good place to rent or sell?
  • Who is your target market? Singles? Families? Students? Grad Students? Retirees? Your target market will determine the location in which you choose to search for and purchase real estate.
  • Location, Location, Location. Are properties available in a location valued by your target market?
  • Where is your competition? Can you choose a better, more competitive location?
  • Once you select a property to consider for purchase, what is its condition? Is there any deferred maintenance - such as the roof? What repairs are needed and how much will they cost?
  • Are there any environmental issues? What used to be located on or around that property?
  • Is the property insurable? Talk with your insurance agent - can you get insurance through your current provider for your target market? If you plan to offer student housing, ask specifically. Some agencies won’t underwrite policies on student housing.
  • How much do you have to put down? Typically a bank will require a minimum 20% cash down payment based on either the sales price or appraisal, whichever is lower.
  • Do the cash flow numbers work? Make sure you can get enough rent to cover your mortgage payment and take care of operating expenses. Consider and plan for operating expenses such as advertising, cleaning and maintenance, management fees, insurance, legal and professional fees (CPA/attorney work), repairs, taxes, and utilities.
  • Can you manage your monthly debt payment after expenses?
  • Do you have a plan for vacancy or major non-recurring expenses? It is always a good idea to keep a savings/escrow account to cover 3 months of expenses for your investment.
  • Will you hire a property management company or manage it yourself? Are you ready to handle leasing the property, repairs and maintenance calls?
  • Are you going to own the property in your personal name or work with your attorney to develop an LLC that will directly own the property for liability purposes?

If we can help you answer these questions or others about investing in rental property, please don't hesitate to contact us, 540-260-9060. 

Of further interest:

Investing in Rental Property: Doing the Numbers
Investing in Rental Property: Getting Ready
Guide to Managing Rental Property in Blacksburg, Virginia

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First Bank and Trust CompanyFirst Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia - serving Blacksburg, Christiansburg and surrounding areas - northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.

You're invited to read more from First Bank & Trust Company on Handshake 2.0.

First Bank & Trust Company is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.