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FIRST BANK WISDOM®: A goal without a plan is just a wish.

MICHAEL LAW, Senior Group Manager, N. California Commercial p: (925) 746-2805 e: Michael.Law@fbol.com Firstbanks.com Although economic optimism is high, so are interest rates–at least from what we’ve enjoyed in the last few years. The Federal Re¬serve has already raised rates twice since December 2017, with more increases predicted in the near future. If you refer to the graph, in the last decade, rates have remained fairly steady and flat. As the economy improves, the Federal Reserve raises rates to stay in step with inflation. This creates what is known as interest rate risk. Investopedia defines interest rate risk as “the risk that an investment’s value will change due to a change in the absolute level of interest rates or in any other interest rate relationship.” As a business owner, you may be asking how this impacts your business, your cash flow, and your overall monetary strategy? Obviously, as rates continue to rise, so will any variable rate loans. If you consider t ...

Never Let the Size of Your Business Get in the Way of a Big Opportunity

Originally published in the San Francisco Business Times. Written by Tom Lynn, Senior Vice President/Senior Group Manager If your business has experienced growth, you may be considering office expansion or additional warehouse space. Or, have you decided to broaden your investment portfolio with acquisitions for owner-occupied real estate or commercial investment property? Regardless of your situation, you may have questions concerning the commercial lending process. As interest rates climb, this may be the perfect time to finalize those plans to take advantage of current borrowing rates. As your trusted advisors, we want to share some of the more common factors that are part of the consideration process when securing a commercial real estate loan: Financials. Like any loan, your financial information is crucial, so have this available, including a current balance sheet, income and expense statement (including real estate schedule, if appropriate), and three years’ worth of tax returns. ...

What’s the Value of a Meaningful Relationship with your Banker?

Shahla Gholami, Senior Vice President, Commercial Banking Team Leader It’s been said, “The best way to predict the future is to create it.*” To help create your future, you need the right strategic partnerships in place. This includes a strong partnership and meaningful relationship with your banker. While having access to various banking services, including depository accounts or lending, is important, having a relationship with your banking relationship manager could mean a lot more to you and your business than you may think. There are six areas where having a solid partnership with your banker helps your business: Act as your business partner. Most commercial banks have dedicated relationship managers who work specifically with you. Banking services are evolving and improved upon regularly, making it difficult for you to stay up-to-date on what the latest services are for your business. An experienced relationship manager will get to know your business and recommend new pr ...

What is the Value of My Deposits?

by Andrew Zinn, Senior Vice President S. California Commercial Real Estate Banks may be one of the most misunderstood institutions in the world, despite being heavily regulated. At its core, every bank has equity capital that functions as a cushion between its assets and liabilities, currently averaging just 13.55% of total assets for U.S. banks. Unlike an individual, a bank’s loans are its assets and its deposits are its liabilities. Banks lend money to generate interest income; conversely, paying out interest on their deposits. The spread between the two is known as net interest margin (“NIM”) and it’s a key financial metric upon which all banks are measured (FDIC reported in October 2017 the average NIM was 3.65%). Since the Great Recession, banks have operated in a historically-low interest rate environment. Borrowers have generally benefitted from historically-low rates, while banks have had to pay next to nothing for their deposits. Since the FED has begun raising short ...

How can I protect myself from digital deception?

Imagine that you receive an email with an urgent message asking you to verify your banking information by clicking on a link. Or maybe you get an enticing text message claiming that you've won a free vacation to the destination of your choice — all you have to do is click on the link you were sent. In both scenarios, clicking on the link causes you to play right into the hands of a cybercriminal seeking your sensitive information. Just like that, you're at risk for identity theft because you were tricked by a social engineering scam. Social engineering attacks are a form of digital deception in which cybercriminals psychologically manipulate victims into divulging sensitive information. Cybercriminals "engineer" believable scenarios designed to evoke an emotional response (curiosity, fear, empathy, or excitement) from their targets. As a result, people often react without thinking first due to curiosity or concern over the message that was sent. Since social engineering attacks appe ...

The Importance of a Holistic Trusted Advisory Team

There are many recommendations regarding who you should look to as your trusted advisor. As a business owner, the first place to start is by aligning yourself with long-term, proven trusted advisors in not one, but rather three, primary areas: accounting; legal; and banking. Additionally, and just as essential, is partnering with the “best in the business,” or those offering a holistic approach. At First Bank, we’ve worked with many multi-generational business owners on continuing the company’s legacy, often originating with their parents, grandparents, or occasionally, great-grandparents. Prior to their succession, many of these clients indicated their parents wisely advised them that the most important aspect of running a business was the proper alignment of their trusted advisory team. Undoubtedly, they attributed their success on not only what the family has built, but also the quality of their strategic partnerships. In fact, a recent survey indicated 83% of business owners sai ...

ACH Faster Payments

By Jon Moen, SVP/Director of Treasury Management The final phase (or Phase III) of Same Day ACH addresses the timing of funds availability. It’s officially been implemented across the country. As of March 16, 2018, a credit transaction sent via Same Day ACH has to be made available for cash withdrawal by 5:00 PM local time. Previously, the receiving bank (or financial institution) was required to post Same Day ACH transactions by the end of the business day. First Bank was already making funds available after receipt and processing of the Same Day ACH files, but not at the end of the business day. As you may know, Same Day ACH transactions rolled out in September 2017 for credits (allowing money to be pushed) and in September 2018 for debits (allowing money to be pulled). All financial institutions using ACH are required to receive Same Day ACH transactions (both debits and credits) even if they are not planning to offer the origination of Same Day service to their clients. This mandate requiring ...

Designing a Benefit Package for Your Small Business

If you're a small business owner, you face many challenges in growing your company. One of them is recruiting and retaining the best talent for your needs. When your primary goals are managing costs and increasing revenue, how do you sufficiently entice new recruits and reward current staff members for continually putting their best efforts forward? One way is ensuring that you provide a competitive, cost-effective benefit package comprised of both traditional and not-so-traditional benefits. Traditional benefits In order to remain competitive, nearly all employers should offer some form of health insurance and retirement savings plan. Yet according to the U.S. Department of Labor, only 55% of small employers (private companies with fewer than 100 employees) offer health coverage and just 52% offer a retirement plan.1 Health insurance Small businesses can typically choose among traditional plans or managed care/health maintenance organizations (HMOs). Traditional plans are typically more expen ...

How to Protect Your Small Business from Cyber Threats

Risk management is a key component in any successful business plan. In today's world — where data breaches are common occurrences — it's especially important for business owners to understand the digital risks they face. Are you doing all you can to mitigate the risk of a cyberattack? The importance of cybersecurity Many small-business owners may think their organizations hold little appeal to hackers due to their small size and limited scope. However, according to the Small Business Administration (SBA), this naiveté may actually make them ideal targets. Small businesses are keepers of employee and customer data, financial account information, and intellectual property. Their systems, if not adequately protected, may also inadvertently provide access to larger supplier networks. "Given their role in the nation's supply chain and economy, combined with fewer resources than their larger counterparts to secure their information, systems, and networks, small employers are an at ...

Charitable Remainder Trust

Summary: A charitable remainder trust (CRT) can be a great way for taxpayers to leverage their generosity, producing tax savings that can be used to provide greater benefits to themselves, their spouses, or others, and then to their favorite charities. Tax savings are generated because taxpayers receive income, gift, and estate tax deductions for the value of their donations, and can defer or avoid capital gains tax when appreciated assets are donated. What is a charitable remainder trust? A charitable remainder trust (CRT) is an irrevocable trust used to enable donors (called grantors) to give money or property to charities, while continuing to receive income (fixed or variable) from the property for life or for a period of time up to 20 years. The grantor, and/or other beneficiaries (the income beneficiaries) receive distributions from the trust annually, and the charities (the remainder beneficiaries) receive the assets remaining in the trust when the trust ends. The grantor gets an immediate in ...

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