FirstF ocus
Fa l l 2 0 0 3
Buying Rental Property
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Boost Your Online Banking Power Ideas from Investment One Small Business Strategies
FirstNews
2-for-1 Ticket Offers for Sports Fans!
First National Bank is teaming up with Creighton University and The University of Nebraska at Omaha to welcome college sports to the Midwest’s newest arena — Qwest Center Omaha. As a First National Bank customer, you can be a part of the excitement! Just use your First National Bank Omaha Visa® Check or Credit Card to purchase a ticket to one of the games listed below and get a second ticket free! To take advantage of this offer, visit the Qwest Center Omaha Box Office, mention the 2-for-1 offer and use your First National Bank Omaha Visa Card.
Upcoming
Events
Bluejay Basketball
Nov. 22, 2003
San Diego 7:05 p.m. 1:05 p.m.
Maverick Hockey
Nov. 7, 2003
Lake Superior State 7:05 p.m. 7:05 p.m. 7:05 p.m. 7:05 p.m.
First National Bank has scheduled a wide range of financial seminars for this fall and winter. These educational presentations are designed to keep you informed about important issues relating to your money. If you missed any of these seminars in the past, now is your chance to attend. All seminars are free of charge and open to the public.
Kids’ Banking Seminar
Children between the ages of 6 and 12 are welcome to attend our popular Kids’ Banking Seminar on Saturday, December 6 or Saturday, January 24. The classes will offer introductory lessons about First National Bank (and banking in general) and how to save and spend money wisely. After each session, children will receive a $10 voucher to deposit into a new or existing First National savings account. To enroll your child, call our reservation line at 964-8401 or log on to our website at www.firstnational.com/forkids.
Nov. 29, 2003
St. Bonaventure
Nov. 8, 2003
Lake Superior State
Dec. 3, 2003
Bethune-Cookman 7:05 p.m.
Nov. 14, 2003
Northern Michigan
Dec. 6, 2003
Delaware State 1:05 p.m.
Nov. 15, 2003
Northern Michigan
Note: All games and times are subject to change. 2-for-1 offer and tickets are subject to availability. Free ticket(s) must be of equal or lesser value. 2-for-1 offer is good on up to four tickets (two paid and two free) per game for the same event. Tickets must be purchased at the Qwest Center Omaha Box Office using a First National Bank Omaha Visa Check or Credit Card. ■
New
Locations
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First National Bank understands that even in today’s high tech world, sometimes there’s no substitute for cash. Next time you find yourself in need of an ATM, just look for one displaying the places like:
Long-term Care Seminars
What is long-term care insurance? Who needs it? What are the costs? Get the answers to all of your questions at our Long-term Care Seminars. We are offering sessions on Tuesday, November 25 and Tuesday, January 27. For more information or to RSVP , please call 402-964-8400. Space is limited, so reserve your spot today.
• Qwest Center Omaha — No need to stop at the ATM before the game or concert. First National Bank is excited to be the exclusive provider of banking services at the Qwest Center Omaha. You’ll find convenient ATM locations throughout the Qwest Center Omaha complex. • Nebraska Furniture Mart — First National Bank has teamed with Nebraska Furniture Mart to bring you two new ATM locations. Whether you are shopping at Nebraska Furniture Mart’s main store, here in Omaha, or checking out their newest store in Kansas City, Kansas, you’ll find an ATM for your banking needs. • Memorial Stadium — Headed to Memorial Stadium for a Nebraska game? You’ll find new ATM locations inside both the East and West stadiums. These new ATM locations are in addition to the existing locations at the Stadium Ticket Office and UNL Bookstore. For a complete listing of the more than 270 locations, visit us online at www.firstnational.com or contact a Personal Banker. ■
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Buying Rental Property
Rental Real Estate — Is It for You?
What’s not to like? As the owner of residential rental property, you can look forward to a regular stream of income, tax breaks and, quite possibly, a steady rise in the value of your property. As with most business ventures, however, making money from a rental property is not a slam dunk: You have to factor in the potential impact of bad tenants, government red tape and maintenance costs.
Whether you’ve just bought your first rental property or you’re thinking about taking the plunge, you’ll stand a much greater chance of succeeding if you spend some time learning about the pleasures — and the pitfalls — of owning rental real estate. Here’s a brief overview of some of the things you should know.
Find the Right Property
As the owner of a rental property, you’ll have to report the rental income you receive on your tax return. Within limits, you can write off depreciation and other business expenses of the rental property. Consult your tax advisor for more information on the tax aspects of owning rental property.
Choose Tenants Carefully
Your first step should be to work with a real estate professional who specializes in rental property and is familiar with the areas you are interested in. Look for property with a solid, documented rental history. Make sure the property is in a stable or improving, low-crime neighborhood, preferably where real estate is appreciating in value. Also consider whether the pool of potential renters is likely to grow or decline. For example, buying property near a college may make sense since students, administrators and academic staff typically want to live close to campus. On the other hand, you may want to think twice about buying property in an area where industries and businesses are struggling financially. Hire a home inspector or an engineer to evaluate the condition of the building. If it needs work, get a contractor to prepare a quote outlining how much it will cost to make things right. If the proposed cost of repairs will take several years to recover, it may be wise to look elsewhere.
Do the Math
If the property you buy already has good tenants, then you’re in luck. However, tread carefully if you have to locate new tenants. First, familiarize yourself with the laws — the federal Fair Housing Act, for example, forbids discrimination based on race, color, national origin, religion, sex, family status or disability. Also find out what questions you can and cannot ask prospective tenants. When you interview prospective tenants, be up-front about your rules regarding issues such as pets, security deposits and paying for utilities. Carefully screening tenants early in the process can prevent headaches later on. Local laws may cap rental amounts and rent increases, so be sure to find out if these types of restrictions affect the property you’re considering.
Meeting Your Mortgage Needs
Is the asking price in line with similar properties that have recently sold in the same area? You don’t want to overpay since that will cut into your future profits. You want to have a positive cash flow. Your cash flow from the property is rental income less all expenses, including your loan payment, taxes and insurance, maintenance expenses and any property management fees. Ask the seller to show you records from previous years and add up the total operating expenses — water, electric and general maintenance costs. You can also access previous years’ expenses from your local utility companies. Once you have all the figures, you’ll be better able to see whether the income from rent will cover all your costs.
Investing in rental property is a big step, but one that’s potentially very rewarding. First National Bank offers a comprehensive range of mortgage products to meet your needs. You can choose a fixed or adjustable rate mortgage with a term that is appropriate for you. For more information, please call us at 498-5340. Outside Omaha, call 800-228-4411 extension 5340. ■
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Boost Your Online Banking Power
Looking To Add a Little Convenience to Your Busy Life?
At First National Bank, we want to make it easier for you to manage your money. That’s why we’re pleased to introduce two new services available through First National Online at www.firstnational.com. Online banking customers can now sign up to receive Priority Alerts, a simple, hassle-free way to track your First National account events via e-mail. And BillPay customers can now take advantage of MultiPay, a quick and convenient way for you to pay all of your bills on one web page.
Priority Alerts — We’ll Keep You Posted
Let’s face it, you probably have better things to do than keep track of your bank accounts. But it’s important to know what’s going on with your money. With Priority Alerts, you can sign up to receive e-mail alerts for your First National Bank checking, savings, money market, line of credit, CD, IRA and credit card accounts. Here is a sampling of the alerts that can help simplify your banking:
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Priority Alerts make it easy to track your First National Bank accounts. It’s simple to sign up and, best of all, the service is free when you’re enrolled in online banking. Sign up for Priority Alerts today at www.firstnational.com.
Statement Information Available — lets you know when your statement information is available to view online Nearing Potential Overdraft — alerts you when your checking account balance falls below your predetermined dollar amount
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Balance Update — tells you when the balance on your checking, savings or money market account falls below your predetermined dollar amount Maturity Date — reminds you that your CD or IRA will mature in 10 business days
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Interest Paid — lets you know when interest is paid to your CD or IRA Payment Due — notifies you five to 15 days before your line of credit or credit card payment is due
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Payment Posted — announces that your payment has posted to your credit card account or line of credit
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Nearing Credit Limit — tells you that your line of credit or credit card account balance is within your predetermined dollar amount Credit Advance — lets you know when a line of credit advance is deposited to your checking account
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MultiPay — Pay All Your Merchants on One Page
Did you know that over 13% of U.S. consumers are already paying bills online — compared to only 2% in 1998? What’s more, a report by Juniper Research indicates that by 2006, 52 million households will pay at least one of their bills online. The numbers shouldn’t surprise you. Paying bills online can save you both time and money. First National Bank’s Online BillPay service allows you to access, view and pay your bills over the Internet — anywhere, anytime. And now, there’s even more. We’ve just added a new feature to our BillPay service called MultiPay. With MultiPay, you can quickly and easily pay all of your bills (up to 20 payments) on one web page. And best of all, BillPay is free with our 360° Checking and Checking Plus accounts.* Other features of BillPay allow you to:
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Schedule one-time or recurring payments View payment history on all your merchants Check/change your pending payments Pay anyone, anytime — 24 hours a day, 7 days a week
At First National Bank, we are confident that our new services will help simplify your everyday life. If you already bank online, simply sign up to receive Priority Alerts and be sure to take advantage of MultiPay. If you don’t currently bank online, you can enroll today at www.firstnational.com. ■
*BillPay is $3.95 per month for all other checking accounts, up to 20 payments. Each additional payment is $.50.
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Ideas from Investment One
New Tax Law Boosts Appeal of Dividend-paying Stocks
Just as every wardrobe should contain some enduring classics, every portfolio should contain some classic, time-tested investments. Dividend-paying stocks are one such classic.
Much of the investing public ignored dividend-paying stocks during the highflying 1990s. But, historically, companies that pay dividends to stockholders have often performed better than companies that don’t. For example, from 1980-2002, dividend-paying stocks beat stocks that didn’t pay dividends by 2.7% a year.* Now there’s one more compelling reason to consider including dividend-paying stocks in a portfolio: The recent federal tax law has slashed the rate at which dividends are taxed. Before the tax cut, individual investors paid taxes on dividends at their regular tax rates, which ranged as high as 38.6%. The table shows the new, lower rates. Don’t Focus on Yield Alone. You shouldn’t use a high dividend yield as the only criteria for buying a stock. Here’s why. A $40 stock with an annual dividend of $2 has a 5% yield. If the stock price falls to $20 and the dividend is unchanged, the yield has doubled to 10%. In this case, a high dividend yield could be a sign that the company may be underperforming because its stock price has dropped significantly. Look at History. Although there are no guarantees, a company that has a history of making regular dividend payments is a good candidate to continue that practice. In addition, a company that regularly increases the size of its dividend can be attractive since growing dividend yields enhance your investment’s total return. Build a Diversified Portfolio. While dividend-paying stocks may deserve a place in your portfolio, don’t forget the importance of spreading your investment risk by spreading your investments among different asset classes. Diversification is critical to investment success.
Talk to Us
New Tax Rates on Dividends
Tax Bracket Over 15% 15% or 10% Dividend Rate 15% 5%
The 5% rate will be 0% in 2008. After 2008, tax rates revert to pre-2003 law.
Thanks to these changes, investors will be able to keep much more of their dividend income. (Certain requirements apply. Contact your tax advisor for specific information on the recent tax law.)
What They Are and Why They’re Important
Dividends are paid by publicly traded companies to their stockholders. Companies are not required to pay dividends, and many don’t. However, along with potential price appreciation, dividends have always been an important component of stock returns. When comparing stocks, investors often look at a figure called “dividend yield.” This figure represents a company’s total dividends per share over the last four quarters expressed as a percentage of its current stock price. The dividend yield of the S&P 500 (an index of 500 large-company stocks) has averaged about 4% since 1945, though it has fallen over the past decade and currently stands at approximately 1.6%.**
Do Some Research
There’s no substitute for experience, especially when it comes to investing the money you’ve worked hard to accumulate. Come see us or call for more information on how our experienced Investment One Financial Advisors can help you choose the investments that are right for you. Located at First National Bank branches, Investment One can help you put together an investment portfolio that meets your needs. Call us at 964-8400 or 888-916-8378 to set up an appointment, or simply stop by and ask to speak with an Investment One representative. ■
*Standard & Poor’s. Past performance does not guarantee future results. **“Why Is the Dividend Yield So Low?” John B. Carlson, Federal Reserve Bank of Cleveland; Standard & Poor’s. Neither PrimeVest nor any of its representatives may give tax advice.
Before you decide to include dividend-paying stocks in your portfolio, keep these points in mind.
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Securities and annuities offered through PrimeVest Financial Services, Inc., an independent registered broker/dealer. Member NASD/SIPC. Insurance products provided through Investment One Insurance Services.
Not FDIC Insured No Bank Guarantee May Lose Value Not a Deposit Not Insured by any Federal Government Agency
Small Business Strategies
It’s Up, It’s Down — Doing Business in Uncertain Times
Like many other owners of small businesses, you may have had to struggle hard to keep the lights on, the machines humming and your employees fully occupied during the recent economic slowdown. However, bad economic times don’t last forever. Will you be ready to take advantage of the opportunities that will inevitably arise once the economy recovers? What steps can you take now that will boost your bottom line and help ensure future growth? Here are some strategies to consider.
Focus on Cash Flow Understanding how to manage your cash flow can help you survive down periods and position your business for future growth. Good cash management means maximizing your cash flow at all times. Start with your cash outflows (expenditures). If you automatically pay your bills as soon as they arrive, you are giving up an opportunity to earn interest on your cash reserves. Unless you get a discount for early payment, it’s usually better to pay your bills as they come due. Consider using an automated accounts payable system to organize your payments by due date. To maximize your cash inflows (receipts), try to reduce the time it takes to convert a sale into cash. Make sure your invoices are clear and the due date stands out. Don’t wait too long before you begin pursuing accounts with outstanding balances. Here’s another tip: By refinancing high interest rate debt, you may be able to lower your overall payments and improve your cash flow at the same time. Plus, if you are thinking of expanding your business, current low interest rates make this an ideal time to borrow money to fund your growth plans. Strengthen Your Competitive Position At the start of a recovery, customers who have delayed making purchases may be ready to start buying again. Position yourself to get their business by making more sales calls and increasing spending on advertising. Moving quickly to establish a strong position in the marketplace now may give your business a head start on the competition. Thanks to the recent recession, you may find that this is a good time to buy another business or add lucrative product lines at very attractive prices. Assess Your Needs Every recession creates a pool of available talented workers. If your projections indicate that you will need additional employees to handle an anticipated upturn in business, it may be wise to start interviewing job candidates now. If you need to replace or update equipment, check bankruptcy or other liquidation sales for deals on good quality used equipment. Be sure to analyze your space requirements. Economic slowdowns tend to depress real estate prices and rental rates, so this may be an ideal time to add needed space at a bargain price. Emphasize Customer Service Customers want polite and prompt service and resent being put on hold or having to wait. You can differentiate your business from the competition by emphasizing superior customer service. If you can’t afford to hire additional employees, focus on giving your customer service staff the training, resources and support they need to provide customers with consistently positive experiences. We Can Help First National Bank is the bank for small businesses. Our staff of experienced Small Business Bankers, conveniently located across the city, can help you succeed. From banking to loans to retirement planning, First National Bank is here for you. To learn more, visit any of our 20 locations or call us at 341-0500. Outside of Omaha, call 800-228-4411. ■ 7
First Equityline Makes Fall and Winter Home Improvements Possible.
With rates so low, First Equityline has become a popular and affordable choice among First National Bank customers planning a fall or winter home improvement project. It’s also becoming the preferred way to pay off high interest debt, or pay for a winter cruise, ski trip, or even tuition. line of credit allows you to pay down your balance at any time, which means your unused credit is always available. The savings can really add up with First Equityline’s low variable rate, plus the interest you pay may be tax deductible.**
Unlock the value in your home.
First Equityline gives you the flexibility to borrow up to 100% of your home’s equity.* This revolving
Customers enjoy easy access and convenience.
First Equityline is so easy to use! Simply write a check, or use your First National Bank Visa® Check Card when making a major purchase. You can even view your account and make your payment online, absolutely free.
IT PAYS TO REMODEL
Home Improvements Bathroom Remodel Bathroom Addition Kitchen Remodel Basement Remodel Siding Replacement Window Replacement Roof Replacement Return On Investment 91% 81% 80% 79% 79% 77% 67%
First Equityline is the key to enhancing your home’s value, and so much more! Apply for First Equityline, or a low fixed-rate home equity loan today. Visit any of our 20 convenient locations or call a Personal Banker at 342.LOAN (5626) or 800.214.5160 outside Omaha.
Start planning seasonal projects and purchases now!
Whether it’s cooking in a new kitchen, entertaining in a finished rec room, or relaxing in a remodeled bathroom —
Realtor Magazine’s 2002 Cost vs. Value Report; average return on your investment national average
* First Equityline offer refers to a line of credit secured by your single family owner occupied home. Offer applies to residents of Nebraska and Harrison, Mills, and Pottawattamie Counties in Iowa. Appraisal may be required at borrower’s expense. Additional fees and closing costs are at borrower’s expense. You must carry insurance on the property that secures this line. New Money Only. Subject to credit qualifications. Some limitations will apply. Consumer lines of credit only. Approval and terms subject to credit qualifications. ** Consult your tax advisor regarding the deductibility of interest and potential tax savings.
1620 Dodge Street Omaha NE 68197
PRESORTED STANDARD U.S. POSTAGE PAID FIRST NATIONAL BANK OF OMAHA
First National Online Visit www.firstnational.com
24 Hour Banker 341-RATE (7283) 800-642-0014
Account AccessLine 342-BANK (2265) 800-444-2719
Bank Locations & Hours 341-HOUR (4687)