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In this issue:
ITA Annual Conference
ABA offers telebriefing on impact of regulatory reform on wealth management and institutional trust
Looking for Trust Professionals? - Try IBA's Career Center
Legislative Tool Helps you Connect with Legislators
Fixed Income Continues to Hold Investor Attention
It's A Matter of Trust - ITA Offers Brochure to Promote Choosing a Corporate Trustee
TrustCompare
Contribute to Iowa Trust Association
ITA Newsletter Subscription

ITA Annual Conference


This year's ITA Conference focuses on the theme of "Trust Banking in A Complex World." The event will be October 7-8 at the Courtyard by Marriott in Ankeny. This year's event will be two days and will feature sessions on top trust issues. Exhibitors will be on hand to display and discuss their products and services for trust departments.
This year's conference features Don Moore from Bearmoor discussing Risk-Adjusted Revenue. Nationally-noted economist from Creighton University Dr. Ernie Goss will provide attendees with a perspective on the markets and outlook for the future of the economy. Other topics include ethic with technology, farm management, disaster recovery and a Washington Update from the American Bankers Association's Sally Miller. Sue Pence from Bankers Trust will present recent updates to the trust code on day two followed by Jeff Rendel's presentation "Your Customer's Experience - Will It Win Wow or Worry."

Continuing education credit hours for CLE, CTFA and CFP are applied for. See the ITA website for complete information and registration materials.

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ABA offers telebriefing on impact of regulatory reform on wealth management and institutional trust


On August 11, ABA will offer a teleseminar targeting the trust industry. In the new financial regulatory restructuring bill, Congress has fundamentally affected the bank trust and wealth management business by introducing new regulators and new limitations on fiduciary activities.

• How will the Wealth Management & Institutional Trust business change?
• What fiduciary investment activities could be limited by the "Volcker Rule"?
• How could the Act's derivatives provisions impact fiduciary clients ability to hedge investment risks?
• What impact will the new Bureau of Consumer Financial Protection (BCFP) have on the trust and custody business?
• Would assets under management to be taken into account in determining whether an entity is systemically important?
• Scope of the exclusions from the definition of "bank" in the Bank Holding Company Act
• Exemption for single family offices from the Investment Advisers Act
• Issues relating to the custody of assets, possible securities lending limitations, and possible new fiduciary standards for Broker Dealers will also be covered

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Looking for Trust Professionals? - Try IBA's Career Center

One year after being launched in February 2009, the Iowa Bankers Career Center has become the place for employment connections in the banking industry. The new online service provided by the Iowa Bankers Association (IBA) is designed to help Iowa banks streamline their hiring process.
Both members and non-members can use the Career Center to reach qualified candidates, though IBA members receive discounted pricing on job posting packages. Employers can submit job listings online, search for qualified candidates based on specific criteria and create an online resume agent to e-mail qualified candidates daily.
For job seekers, the Career Center provides a free service to qualified candidates wishing to learn more about employers and jobs in the banking industry in Iowa and beyond. Job seekers can view available jobs online and even create a search agent to provide e-mail notifications when job postings match their criteria.
The Iowa Bankers Career Center is available online or visit www.iowabankers.com and click on "Career Center" in the Quicklinks menu.

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Legislative Tool Helps you Connect with Legislators

The Iowa Bankers Assosciation's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at the state and federal level. The Legislative Action Center is available online at www.iowabankers.com.

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Fixed Income Continues to Hold Investor Attention

by Katherine S. Montague

Following the financial crisis of 2008 and 2009, investors around the world have continued to display an increased interest in fixed income instruments. The 2010 World Wealth Report, released by Merrill Lynch and Capgemini, which looks at emerging trends in wealth management firms, indicated that the allocation to fixed income investments increased last year. As of the end of 2008, fixed income comprised 29% of global high net worth assets. By the end of 2009, this allocation grew to 31% of global assets as investors sought more steady income flows. The report also noted the expectation for this fixed income allocation to remain at 31% in 2011. Indeed, recent performance of fixed income asset classes supports this theory despite renewed concerns regarding the sustainability of a global economic recovery.

U.S. Treasuries have performed better than expected so far this year, with the Barclays U.S. Treasury Index returning 5.86% for the first two quarters. This classic flight to safety trade has caused yields to drop considerably. In fact, yields for the two-year Treasury bond sank to 0.61% in the final days of June, breaking through levels not seen since the immediate aftermath of the collapse of Lehman Brothers in the Fall of 2008. This retreat in yields is understandable, given an increasingly uncertain outlook for the global economy. The yield curve has flattened out in recent weeks, which typically accompanies weaker economic activity.

Although both the global and U.S. economies have pulled out of recession, many economic challenges remain and threaten to slow a government-supported recovery. Net job creation disappointed in May, the housing sector has yet to signal a sustainable recovery, and slowing economic growth in other parts of the world have impacted U.S. export activity. Based on demand for fixed income, these concerns have seemingly outweighed relatively encouraging economic data including consumer and business spending as well as signs of subdued inflationary pressures.

Riskier fixed income such as high yield debt, as represented by the Barclays U.S. Corporate High Yield Index, has returned 4.51% for the year. When considering this market segment, it is helpful to consider the ratio of upgrades and downgrades by bond ratings agencies to gauge the direction of this sector. For the last three months, both Moody's and Standard & Poor's have upgraded more high yield debt than downgraded and investors have seen the default rate continue a downward trend toward more normal levels.

Sales of corporate bonds have slowed year-to-date. According to Bloomberg, companies have issued the fewest bonds since 2004 while their cash reserves have climbed. Although spreads, or the additional yield investors demand over similar maturing Treasuries, have increased in the corporate bond sector, certain segments of the market remain attractive. For example, some financial sector bonds are attractively priced despite strong balance sheets because many investors are evaluating sectors as a whole rather than a specific company. The Barclays Corporate Index has returned 5.79% this year, with the industrial sector returning 6.26% and financial institutions returning 4.73%.

The international debt market remained in the spotlight at the close of the quarter. Concerns about the European sovereign debt crisis have dominated the fixed income market in recent months. Bond ratings agencies have downgraded Greece, Hungary, and Ireland; On June 30, Standard & Poor's announced that it had downgraded Spain and Moody's reported that has the country under review for a potential downgrade. While the amount of outstanding sovereign debt in these countries is not great relative to the rest of the world, the majority of their debt is held by other European countries which has stoked concerns about the impact a default would have on the European, and ultimately global, economy. As with the equity markets, performance in the international fixed income sector has lagged, with the Barclays Global Aggregate Index down 0.31% for the year. Emerging market bonds, as represented by the Barclays Global Emerging Market Index, have performed fairly well, delivering returns of 2.73% year-to-date. Many bond funds have managed to generate healthy returns so far this year by largely avoiding exposure to countries with heightened sovereign debt risk and instead focusing on countries with more attractive balance sheets.

A recent article in The Economist magazine discussed the issue of sovereign debt, emphasizing that stretched government balance sheets will result in stagflation, inflation, or default-all of which would create unique challenges for governments. Furthermore, the article argued that economic growth is the preferable way to improve debt-to-gross domestic product ratios.

This unique period in the financial market has served as an important reminder for the benefits of diversification. Different asset classes respond uniquely to market events, which makes exposure to multiple fixed income asset classes essential in a balanced fixed income portfolio.

Katherine S. Montague is a Portfolio Analyst for MainStreet Advisors, an SEC registered investment advisor investment advisory firm serving bank trust departments and independent trust companies. Ms. Montague supports the portfolio manager team with investment analysis, portfolio construction, and client service. Ms. Montague is a member of the Investment Committee, which establishes investment strategy, policy and procedure, and serves as the editor of the firm's research publications

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It's A Matter of Trust - ITA Offers Brochure to Promote Choosing a Corporate Trustee

Choosing qualified trust professionals is an important part of estate planning. How do you counsel clients and potential clients about the qualities of an effective trustee? To help you the Iowa Trust Association has produced a brochure outlining the qualities of an effective trustee and the advantages of a corporate trustee.

This cost effective brochure is 5½” x 8 ½” and can be personalized with your bank name, address, city state, phone and web address. Educate your trust clients about the qualities that make an effective trustee with these helpful brochures.

Order a supply of these brochures today. To see the complete text of the brochure, go to www.iatrust.com.

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TrustCompare

If you were asked to demonstrate how your organization's Trust Department is performing, how would you answer? In addition to the broad "assets under management number," how are you measuring the growth, profitability, resource efficiency, and success of your Trust Services?

TRUSTCOMPARE is the industry's leading performance comparative solution to help you accurately assess and improve your performance, profitability and productivity. It is the only comparative, comprehensive ratio system for measuring trust performance, allowing you to compare your core metrics to a peer group and to the universe of subscribers.

How Does It Work?

Trust information is collected from subscribers, then analyzed to provide comparative trend and benchmarking tools and management information reports. Product and service results are measured by asset, income, expense and profit. And, growth in income, fees, expenses and profit are measured at both the departmental and product level. We also offer an advanced business analytics level to provide line of business and product line profitability comparisons.

If you'd like to learn more about TRUSTCOMPARE, visit www.trustcompare.com. When you subscribe, please be sure to check the box on the subscription form that indicates state association membership. As an Iowa Trust Association member, if you elect to use TRUSTCOMPARE , you'll receive a 10% subscription discount. In addition, if enough subscribe from our state, you'll also receive an additional peer comparison at no extra charge.

If you have questions, you may contact Loyd Pohl, at elpohl@pohlconsulting.com, or 800-677-7432 ext. 225.

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Contribute to Iowa Trust Association

As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter.If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 800-2353 or dburnett@iowabankers.com. Thank you for your interest in our publication and we look forward to hearing from you!

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ITA Newsletter Subscription

If this message was forwarded to you and you would like to receive the ITA Newsletter, e-mail Darcy Burnett to subscribe.

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