Monthly Archives: June 2010

Woody and Buzz: Why We Like Toy Story

There are probably a lot of reasons why we like Woody and Buzz and Toy Story 3.  We know that the 1995 original was an instant classic.   We know that the 1999 movie was a sequel worth seeing.  And we know that 15 years after the first installment, Toy Story 3 will also certainly be worth a look. 

I will admit that seeing plastic toys run around in Computer-generated imagery (CGI) was a bit out of the ordinary the first time around, but now Slinky Dog and Mr. Potato Head are here to stay.

And so now we know that when we get Woody and Buzz we also get Tom Hanks and Tim Allen.  We know we’re going to get a movie that captivates kids and entertains adults.  We know that even if the story might be predictable, we’ll be happy as we walk out of the theater.  Ultimately, it seems like we know what we’re going to get.  And maybe that’s why we keep going back.  We’ve seen it before, we like it, and we want to see it again. 

That consistency and familiarity is what many businesses strive to create.  I like McDonald’s restaurant because, for better or worse, I know what I’m going to get.  The food always tastes the same, the restaurants—in almost every locale—are clean and inviting, and in Bluffton, the employees are always quick, very friendly and helpful.  As a consumer, I appreciate knowing what I’m going to get.

As a banker, I know that people are very careful when it comes to their finances and their personal banking.  They want to know who they’re dealing with.  They want to know they can trust the person who handles their money.  And they want to know that if they run into a problem, they can count on their banker to work with them to fix the issue.

At First National Bank, familiarity and consistency—along with friendliness and professionalism—are words we try to act on every day.  We don’t always succeed, but we continue to do our very best.  We don’t have exciting names like Mr. Pricklepants or Emperor Zurg, but you can bet you’ll hear at least one “hello” as soon as you walk in any of our branches.  And hopefully, you’ll get the same quality service no matter how or when you interact with a First National employee. 

So enjoy Toy Story 3 and hopefully we’ll see you at the Bank soon.

FDIC 

Advertisements

First National Bank and Amerifest

This past weekend, people from all over the area visited Bluffton for the first annual “Amerifest.”  This event combined the Lion’s annual classic car show, Rotary International’s Freedom Fest, and American Cancer Society’s Relay for Life.  The weekend was a success: the weather was great, someone won a Corvette in the Lion’s charity raffle, and a great fireworks display capped off the night with a bang.  Along with many other volunteers, employees at First National Bank helped play a part in all three events.  From working the duck races for Rotary International to selling raffle tickets for the Corvette drawing, they were involved in many different aspects of the weekend festivities. 

Saturday was also the day pegged by First National Bank as “Young Entrepreneurs Day.”   Area youth squeezed lemons, baked treats, and tried their hand at going into business for a day.  The effort was designed to encourage young people to be creative and get excited about earning and saving money.  Thanks to all the parents and older siblings who helped their young entrepreneurs get a sweet taste of success.   And thanks also to all of their customers who supported their efforts and probably got a blade of grass in their lemonade and drank it anyways!   I’m already looking forward to next year’s event…

Credit 101: Where to Start?

When I try to sit back and see banking from the perspective of someone who doesn’t spend every day “thinking” banking, there are very few things that seem more confusing than credit reports and credit scores.  Reading a credit report is something I do almost every day and there are still times when I’m left scratching my head.

Since I do quite a bit of reading on this topic and still have trouble finding definitive and helpful answers in one place, I’ve attempted to collect and organize them in a way that is truly informative and useful.  So, from A-Z, your alphabetized list of credit answers:

A credit score is what, exactly:  a credit score is a snapshot of your credit health and is an indication of how you manage your debt.

Basic histories of all of your debts and payments are contained within a credit report.

Credit Bureaus are the companies that gather, organize, and publish your personal credit data.  There are three main credit bureaus: Equifax, Transunion, and Experian.

Data is automatically transmitted by banks, finance companies, and other lenders to one or all of the three bureaus.  The three bureaus take the data and analyze it to create your credit history and credit score.

Every person does not have a credit score.  Credit scores measure how you handle your debt and payments, so if you do not have personal debt—i.e. credit card, car loan, home mortgage, student loans, etc.—you will not have a credit score.

FICO scores are credit bureau risk scores produced from models developed by Fair Isaac Corporation, the most well known scoring model.  Most lenders use a FICO based score when evaluating your requests for credit.

Good credit is a subjective and a moving target, but it usually means a credit score somewhere at or above 700.  Credit scores (based on the FICO model) range from 300-850 but 60% of consumers’ scores fit within a range from 650-799, according to myFICO.com.

How many different factors help determine a credit score, and how important are they?  The graph below shows the five main categories and their respective importance to your score.

Payment history: 35%, Amounts owed: 30%, Length of credit history: 15%, New credit: 10%, Types of credit used: 10%

(courtesy of myFICO.com)

Is there one quick way to improve a credit score?  Actually no, but there lots of little things you can do to improve your credit over time including paying your bills on time, keeping balances low on credit cards, resisting the urge to open new accounts just to accumulate available credit, and many more.  See here for a more comprehensive list of ideas.

Judgments, bankruptcies, collections, and tax liens all show up on credit reports and can have lasting effects on a credit score.  Even after they are paid in full or discharged, these types of occurrences may stay on a credit report for 7-10 years.

Keep a close watch on where you get your credit report and score.  There are countless companies out there advertising their “credit scores”, but they may not be using a FICO score and they may not be accurately portraying your true credit health.  Even more importantly, watch out for unscrupulous companies who are just looking to gather your personal financial information for their own purposes.  See letter ‘M’ below for a reputable resource and see the helpful table below for the name each reputable credit bureau gives to their FICO score.

Credit Reporting Agency FICO Score
Equifax BEACON® Score
Experian Experian/Fair Isaac Risk Model
TransUnion EMPIRICA®

 Lenders use credit scores and reports as part of the loan application process, but they are not the only factors taken into consideration.   The rest of your financial picture plays a major role in the evaluation of a request for credit.

Monitor your credit report and score by visiting annualcreditreport.com.  This site is government sponsored and is managed collectively by the three major bureaus to provide you free access to your report.  You are entitled to a free report from each bureau once every year.  Helpful tip #1: the report is free but you have to pay a nominal fee (approximately $5 apiece) to get your FICO score from each bureau.  Helpful tip #2: you can access all three reports at once or you can order each report separately at different times during the year so that you have more regular access to your credit history.

 Now you’ve made it to the midway point in my list.  Check back soon for the rest of the story.

FDIC 

It’s not too late for your “Young Entrepreneur”

If you have a child, grandchild, niece, nephew, neighbor kid, young sibling or youthful acquaintance, it is not too late for any of them to visit any of our branches and pick up a youth business kit.  Between now and June 26 the kits are available for youth with a savings account at the bank.  In Bluffton, the first 50 youth can get a free poster board to advertise their lemonade stand or other business enterprise.  There are still poster boards available but they are going fast.  The Bank is planning to advertise and encourage the community to come out and support its young entrepreneurs on the 26th.  This is a great chance to get youth excited about saving, earning, and being responsible with money.  At the very least make sure you are nice and thirsty on the 26th!

FDIC 

The Times they are A-Changin’

It is amazing to think about how much banking has changed in a relatively short period of time. I really started paying attention to banking when I started working at Madison Community Bank in 2002. This was my first experience with online banking. Even though online banking was supposedly created in 1994 (according to Wikipedia), it took a while for the rest of the banking world to adopt what has eventually become a banking necessity. In any case, online banking has really changed the way many people handle their everyday banking. While traditional methods of banking are still prevalent, other products and services have given people more options for managing their finances. Online banking provides instant access to bank accounts, online bill pay enables people to pay all their bills in one place online, E-statements allow constant online access to monthly bank statements, and mobile banking (via cell phone) gives people a way to do their personal banking from just about anywhere. In spite of all this technology, there is no substitute for a periodic review of your bank accounts including balancing your checkbook. While all of the online options mentioned above provide easier access to your information, it may also be easier to lose track of your daily finances since there are so many ways to conduct daily banking. And banks, while very good at what they do, are still fallible and so it is prudent to sit down and make sure your records match. Technology also creates issues with safety and security. Even though fraud and identity theft is a serious issue in the world today, online banking gives me the tools to closely track activity in my accounts because I notice much more quickly if something out of the ordinary is happening. In the past, access was much more limited and fraudulent activity was more difficult to detect. Even so, something as simple as balancing your checkbook gives you one more added measure of security to make sure activity in your account is as it should be. Accessing your bank accounts online on a daily or weekly basis is a great way to make sure your account is secure and is a great first line of defense against fraudulent activity. Banks, including First National Bank, also provide security products that add another layer of protection. Traditional checkbook balancing, while not flashy or new, is another important line of defense and is also essential to good personal banking and money management.

FDIC 

When is the Right time to Refinance?

With home mortgage rates continuing to hover near historical lows, people frequently ask me when they should refinance their home loan.  Refinancing, if done at the right time and at the right rate, can save significant dollars over a period of time.  However, there are times when it doesn’t make financial sense.  Picking the right time takes a little foresight and maybe a bit of luck.  Even though I don’t think there is one common solution for every situation, there are several factors that can help provide some perspective.

First, it makes sense to think about how long you plan to stay in your home.  If you are in the home where you plan to spend the next twenty years raising a family, it makes more sense to refinance for a smaller drop in rate.  If you are in your first home and hope to move in two or three years, the rate drop will have to be more significant for it to benefit you. 

Second, consider the closing costs.  It typically costs $2,000-$3,000 to refinance your home loan.  A general rule of thumb is to think about refinancing when the rate improvement covers your closing costs in a year or two.  For a $150,000 mortgage at 6.50%, a ¼% drop in rate to 6.25% saves about $25/month in payment, $376 in interest cost in the first year, and approximately $8,830 over the life of a 30 year fixed rate mortgage.  It would take almost eight years for this refinance example to cover $3,000 in closing costs.  So at first glance, refinancing for a ¼% savings doesn’t make much sense because the most you will save over 30 years is about $5,830 after covering closing costs.  On the other hand, refinancing from 6.50% down to 5.50% is a much different scenario.  This 1% drop with everything else being equal will save about $96/month in payment, $1,501 in interest cost in the first year, and approximately $34,711 over the life of a 30 year fixed rate loan.  Closing costs will be recovered in the first two years and even if you happen to move in a few years, the savings are still significant.

If you have a larger loan, the savings could be even more drastic and so it may make sense to refinance if the rate drop is less than 1%.  If your loan is smaller, the savings will add up more slowly and you may want to see a drop of more than 1% before you refinance.

And finally, refinancing your home at a lower rate may enable you to pay your home off more quickly at a significant savings without more money coming out of your pocket.  For example, if you have a $150,000 mortgage at 6.50% and your monthly payment (principal and interest only) is $948, you could refinance your home loan at 5.50% and pay off your mortgage in 23 years instead of 30 for about a $10 increase in your monthly payment.  Not only would you pay off your loan seven years more quickly, but you would also save approximately $76,652 in total interest cost.  This is a huge potential savings and could help you save for retirement or pay off other debt much more quickly! 

Every situation is different and there are other factors to consider.  But, if you have a home loan and haven’t thought about refinancing, now is a great time to look at your options.  First National Bank has a great team of lenders who can discuss your situation and help you think about the implications of refinancing.  Don’t hesitate to call or stop by any of our branches in Bluffton, Pandora, and Findlay to see how much you can save.

FDIC