Economic Commentary Highlights...

• This week is dominated by Fed speakers and data on the third quarter of 2010.
• We highlight what we will be watching in the coming weeks and months to measure effectiveness of quantitative easing.

View the entire economic commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Economic Commentary for the week of October 25, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. The above commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Market Commentary Highlights...

The “currency war” is unlikely to end anytime soon. It will take evidence of significantly stronger growth or a rise in inflation and interest rates to put an end to quantitative easing in the United States.

The most likely outcomes of the currency war include more monetary stimulus around the world and increasing measures by emerging market countries to close their doors to inflows of capital.

Emerging markets benefit from the greater global demand created by stimulative monetary policy, the rising value of their commodity-based exports, and the appreciation of their currency boosts dollar-based investment returns.

Read the entire Market Commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Market Commentary for the week of October 25, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. This commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Now is a great time to purchase or refinance if you haven’t done so already. Rates on 30-year mortgages have fallen since last spring to the lowest levels in decades. The rate decline is largely a result of investors shifting money into the safety of government-backed Treasury bonds, lowering their yield. Mortgage rates tend to track bond yields.

Mortgage Industry Trends
Mortgage buyer Freddie Mac compiles historical data on average mortgage rates across the industry, called the weekly Primary Mortgage Market Survey (PMMS). The data from that survey illustrates the current trend in rates:

• 30-Year Fixed-Rate Mortgages: For the week of April 8, the industry average for a 30-year fixed rate mortgage was at 5.21 percent. Last week (October 14), the rate dropped to 4.19 percent. That’s a historical low dating back to 1971.
• 15-Year Fixed-Rate Mortgages: For the week of April 8, the industry average for a 15-year fixed rate mortgage was at 4.52 percent. Last week (October 14), the rate dropped to 3.62 percent. That’s the lowest on record dating back to 1991.

Mortgages with LSB!
Contact LSB for actual rates and to determine if a refinance is right for you. We have a staff of experienced mortgage experts eager to help, and you can be assured they will be diligent in putting you in a mortgage program you can afford. Or, visit www.LSBmortgage.com to apply online.

LSB Mortgage
999 Home Plaza, Suite 301
Waterloo, IA 50701
Phone (319) 433-3777

Market Commentary Highlights...

This is the first time in twenty-five years that a three-month gain in the S&P 500 of 10% or more was not accompanied by net inflows into U.S. equity mutual funds and ETFs.

While individuals may have overcome, to some degree, their distrust of the durability of the economic recovery and policymakers in Washington, they remain distrustful of the integrity of the U.S. stock market. $53 billion has come out of U.S. stock mutual funds since the “flash crash” of May 6, 2010.

The structure and significant evolution of the U.S. stock market has pushed the U.S. stock market to fray at the edges. When pushed too hard, it can have a temporary breakdown.

If the current buyers strike by individual investors turns into a permanent boycott, further gains may be hard to come by.

Read the entire Market Commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Market Commentary for the week of October 18, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. This commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Economic Commentary Highlights...

• Fed Chairman Ben Bernanke is speaking in Boston on the benefits of additional quantitative easing (QE).
• Housing data, the Fed’s Beige Book and a full slate of Fed speakers on tap this week.
• While Fed policymakers have some interest in the economic data referring to the third quarter of 2010, and the current fourth quarter, they are probably much more concerned with what economic conditions will be like looking out to the third quarter of 2011.

View the entire economic commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Economic Commentary for the week of October 18, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. The above commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

October 17-23, 2010, is National Protect Your Identity Week, so Lincoln Savings Bank (LSB) wanted to remind you of a few basic things you can do to protect yourself from identity theft! The Federal Trade Commission (FTC) provides the following suggestions to help minimize
your risk of identity theft:

Protect your Social Security number
Don't carry your Social Security card or number in your wallet/purse and only give it out when absolutely necessary. Give your Social Security number only when absolutely necessary, and ask to use other types of identifiers. Your employer and financial institutions will need your Social Security number for wage and tax reporting purposes. Other businesses may ask you for your Social Security number to do a credit check if you are applying for a loan, renting an apartment, or signing up for utilities. Sometimes, however, they simply want your Social Security number for general record keeping. If you don't provide your Social Security number, some businesses may not provide you with the service or benefit you want. The decision to share is yours.

Treat your trash and mail carefully
To thwart an identity thief who may pick through your trash or recycling bins to capture your personal information, always shred your charge receipts, copies of credit applications, insurance forms, physician statements, checks and bank statements, expired charge cards that you're discarding, and credit offers you get in the mail. Put your outgoing mail containing personally identifying information in post office collection boxes and promptly remove mail from your mailbox.

To opt out of receiving prescreened offers of credit in the mail, call: 1-888-5-OPT-OUT (1-888-567-8688). Note: You will be asked to provide your Social Security number which is needed to match you with your file.

Be on guard when using the Internet
The Internet can leave you vulnerable to online scammers, identity thieves and more.
For practical tips to help you be on guard against Internet fraud, secure your
computer, and protect your personal information, visit http://www.onguardonline.gov/.

Select intricate passwords
Avoid using easily available information like your mother's maiden name, your birth date, the last four digits of your Social Security number or your phone number, a series of consecutive numbers, or a single word that would appear in a dictionary. Combinations of letters, numbers, and special characters make the strongest passwords.

Verify a source before sharing information
Don't give out personal information on the phone, through the mail, or on the Internet unless you've initiated the contact and are sure you know who you're dealing with. Identity thieves may pose as representatives of banks, businesses, and even government agencies to get people to reveal sensitive information.

Safeguard your purse and wallet
Protect your purse and wallet at all times. Don't carry your Social Security number or card and carry only the identification and the credit / debit cards you'll need.

Store information in secure locations
Keep your personal information in a secure place at home, especially if you have roommates, employ outside help, or are having work done in your house. Share personal information only with those you trust who have a legitimate need for it.

Consider whether a credit freeze is a good method of protecting your identity

• What is a credit freeze?
  

Many states, including Iowa, have laws that allow consumers to “freeze” their credit – letting a consumer restrict access to his or her credit report. If you place a credit freeze, potential creditors and other third parties will not be able to access your credit report unless you temporarily lift the freeze. This means that it’s unlikely an identity thief would be able to open a new account in your name. Placing a credit freeze does not affect your credit score.

In Iowa, there is no fee for identity theft victims to freeze their credit. All others pay $10 to place the freeze, $12 to temporarily lift, or $10 to remove the freeze altogether. A permanent freeze remains until removal is requested by the consumer. To freeze your credit, you will need to place the freeze with each of three credit reporting agencies, and paying the fee to each one.

• Who can access my credit report if I place a credit freeze?
  If you place a credit freeze, you will continue to have access to your free annual credit report and you will be able to buy your credit report and credit score. Companies you do business with will still have access to your credit report – for example, your mortgage, credit card, or cell phone company – as would collection agencies working for one of those companies. You may also continue to receive prescreened credit offers.
• Can I temporarily lift my credit freeze if I need to let someone check my credit report?
  If you want to apply for a loan or credit card, or otherwise need to give someone access to your credit report, you will need to temporarily lift the credit freeze. You do that by using a PIN provided by each credit reporting agency when you placed the credit freeze. You will have to pay a fee to lift the credit freeze. Most states currently give the credit reporting agencies three days to lift the credit freeze. This might keep you from getting “instant” credit, which may be something to weigh when considering a credit freeze.
• What does a credit freeze not do?
  While a credit freeze may keep an identity thief from opening new accounts in your name, it’s not a solution to all types of identity theft. It will not protect your existing credit cards or other accounts, or if the identity theft is already happening at the time of the freeze. It will also not protect against accounts that can be opened without a credit check.

What’s a fraud alert?
A fraud alert is another tool for people who’ve had their ID stolen – or who suspect it may have been stolen. With a fraud alert in place, businesses may still check your credit report but potential creditors must either contact you or use what the law refers to as “reasonable policies and procedures” to verify your identity before issuing credit in your name.

Identity theft insurance
Although identity theft insurance won't deter identity thieves, it can, in certain circumstances, minimize losses if an identity theft occurs. As with any product or service, be sure you understand what you're getting. Things to consider include:

• the amount of coverage the policy provides
• whether it covers any lost wages (and, if so, whether there's a cap on the wages you can claim, or a separate deductible)
• the amount of the deductible
• what might be excluded (for example, if the thief is a family member or if the thief made electronic withdrawals and transfers)
• whether the policy provides a personal counselor to help you resolve the problems of identity theft
• whether your existing homeowner's policy already contains some coverage

Be aware that one of the major "costs" of identity theft is the time you will spend to clear your name. Also be aware that many companies and law enforcement officers will only deal with you (as opposed to an insurance company representative). So, even if your policy provides you with a personal counselor, that counselor can often only guide you, as opposed to doing the work
to clear your name.

LSB Financial offers an identity theft endorsement through Allied Insurance that can be added to your homeowners, condo, or renters coverage to help you easily and affordably restore your identity if it is ever stolen. It will pay up to $25,000 with no deductible to cover expenses incurred to restore your identity, including:

• Costs of executing affidavits
• Costs of certified mail
• Lost income (maximum $250 per day, total of $5,000)
• Loan re-application fees
• Attorney fees
• Costs of long distance phone calls

Through a partnership with Worldwide Assistance, Allied also offers some of the best service available in the industry, including 24/7 assistance from experienced professionals who will:

• Assist in identifying fraudulent accounts
• Place a “fraud alert” on your credit reports
• Report your ID theft to the Federal Trade Commission
• Notify credit-reporting agencies
• Contact creditors on your behalf
• Assist in replacing driver’s license, passport, social security card and any other identification documents
• Provide an emergency cash advance when needed, if theft occurs away from home

Free credit monitoring
For no additional fee, you may also sign up for Allied’s credit monitoring service from TransUnion.

Don’t be an identity theft victim. Be a survivor. For more information, contact your local, independent LSB Financial insurance agent.

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This information is provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. http://www.mylsb.com/

Economic Commentary Highlights...

• What can the FOMC minutes tell us about quantitative easing?
• The September employment report suggested that the labor market remains sluggish, and needs a spark.
• Contrasts between developed and developing market economies have implications for the US dollar, commodities asset classes and inflation.

View the entire economic commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Economic Commentary for the week of October 11, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. The above commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Market Commentary Highlights...

For investors, the key to this reporting season may lie with revenues rather than earnings.

While companies may report solid EPS growth, the outlook for slower revenue growth in 2011 may lead to lower earnings guidance and disappointment as more companies report.

We expect more downward guidance on 2011 from corporations in the coming weeks potentially leading to a pullback in stocks as the earnings season matures.

Read the entire Market Commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Market Commentary for the week of October 11, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. This commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Market Commentary Highlights...

A one and a half (not double) dip for the economy. We expect slow, but positive economic growth supporting modest stock market gains in the fourth quarter.

One and a half chambers of Congress go to the Republican Party in the mid-term election. The return of political balance in Washington between the parties may slow the pace of legislative change and result in the gridlock the market has historically favored.

QE 1.5 from the Fed. During the fourth quarter, the Federal Reserve is likely to announce additional stimulus measures to stimulate growth.

Read the entire Market Commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Market Commentary for the week of October 4, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. This commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Economic Commentary Highlights...

• The September jobs report is the last report before the election and the November 3 FOMC meeting.
• Consumer debt pay down continues as the 2010 holiday shopping season approaches.

View the entire economic commentary. (pdf format)

Lincoln Savings Bank and LSB Financial are pleased to provide the above Economic Commentary for the week of October 4, 2010. The commentary is prepared by LPL FINANCIAL RESEARCH, the broker-dealer partner for Lincoln Savings Bank and LSB Financial. The above commentary and others like it can be found at www.mylsb.com/investments/commentary.aspx

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. www.mylsb.com

Thinking about death is never enjoyable, but planning ahead allows you to choose the items you want and compare prices while no one is under duress. You can make plans with a funeral establishment directly or through a nonprofit funeral planning or memorial society. When making plans, it is important to consider where the remains will be buried, entombed or scattered. With prearrangements, you choose whether to pay for them in advance. If you do pay for them in advance, you won’t have to worry about price increases.

Whether you make prearrangements through a nonprofit organization, purchase a prepaid funeral plan, or merely write down your preferences, give a copy of the documents to your family members and your attorney. Because wills aren’t always read or even located prior to burial, don’t put your preferences in your will. Review and revise your prearrangements every once in a while to assure that your needs are still met. Informing your family of your prearrangements and about any changes you make as the years go by, can ease a lot of stress later.

Protections for those who choose to enter into prepaid funeral contracts vary from state to state. Many states have laws and agencies to assure that your advance payments are available to pay for your funeral when needed. In some states, a particular percentage of your prepayment must be deposited into a state-regulated trust or to purchase a life insurance policy that is assigned to the funeral home.

According to the Federal Trade Commission (FTC), these are the important issues for you to consider before entering into a contract for prepaid funeral goods and services:

• What are you paying for? Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?
• What happens to the money you have prepaid? States have different requirements for handling funds paid for prearranged funeral services.
• What happens to the interest income on money that is prepaid and put into a trust account?
• Are you protected if the firm you dealt with goes out of business?
• Can you cancel the contract and get a full refund if you change your mind?
• What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.

The Funeral Rule, a rule enforced by the FTC, requires funeral directors to give you itemized prices in person and over the telephone. If you ask about arrangements in person, the funeral home must give you a written price list of goods and services offered. And if you ask about buying a casket or outer burial container, the funeral home must provide you with descriptions and prices of their selection of caskets before showing the caskets to you.

According to the FTC, under the Funeral Rule:

• You have the right to choose the funeral goods and services you want (with some exceptions).
• The funeral provider must state this right in writing on the general price list.
• If state or local law requires you to buy any particular item, the funeral provider must disclose it on the price list, with a reference to the specific law.
• The funeral provider may not refuse, or charge a fee, to handle a casket you bought elsewhere.
• A funeral provider that offers cremations must make alternative containers available.

If you decide to prearrange your funeral, be a smart shopper just like you would with any other good or service you purchase. Don’t let your emotions get in the way, and don’t let anyone play on your emotions. And if you need help, contact your state’s funeral homes and prepaid funeral contracts licensing agency.

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This information is provided with the understanding that the association is not engaged in rendering specific legal, accounting, or other professional services. If specific expert assistance is required, the services of a competent, professional person should be sought.

This information is provided as a public service by the member banks of the Community Bankers of Iowa, (515) 453-1495. Lincoln Savings Bank is a member of the Community Bankers of Iowa.