January 2011

A Publication Of Heritage Group Member FDIC

Aurora Broken Bow Doniphan Grand Island

Hastings St. Paul Kearney Stromsburg Loup City Wood River Neligh

CHAIRMAN’S PERSPECTIVE Nebraska . . . the Good Life (Part II)

Twenty-five years ago a ninety

Sam Moyer year old retired farm customer said

to a twenty-seven year old young banker who still had Dallas dirt on his shoes and NYC dust in his head, “Moyer, you now live in the best place in America”. After a “and why is that” from the foolish young banker, Roy Luthy proceeded to explain “cause we got fresh air, wide open spaces, all the water and we make something. We grow corn and good young people”. Pretty prophetic for a guy who probably only left the county a dozen times in his ninety plus year lifetime. The next couple of years in America will prove the old man was correct. Starting about ten years ago I wrote about the oncoming federal debt problem, social security, Medicare and Medicaid insolvency, the problems with defined benefit pensions, the broke PBGC, the onslaught of state and local public employee retirement obligations, as well as the excessive amount of private and business debt in our country. That entire time, most politicians just kicked that can down the road. Well, in November, 2010, the American people wised up. A new political party was created, the socalled Tea Party, which drew attention to these issues. A historic land slide in the House of Representatives for Republicans was the result; a modest gain for Republicans in the Senate. Still, within 60 days of the clear message being sent by the American people to Washington, that is to get our country’s fiscal house in order,

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the Congress and President together failed the American people by passing legislation that created a new $900 billion deficit. Both the Democrats (unemployment benefits, etc.) and the Republicans (extension of tax rates) delivered the spoils to their constituencies. But, neither delivered to the American people what they wanted and voted for. That is fiscal responsibility, less spending, smaller

deficits and a pay down of the $14 trillion federal debt. Mistake, big mistake. Not only for our country, but for the politicians. Who will the Tea Party and other independents vote for in 2012? Those who cut spending and deficits, and neither major party, have shown any prowess to do this! With the spigot of money from Washington hopefully being turned off, we are about to witness the greatest fiscal debacle in state and local government in the history of our country. No longer able to hide their prolific spending with federal windfalls and handouts (and due to federal mandates that came with insufficient funding), state and local governments are in for a nightmare. Most of you will say it’s about time state and local government had to actually cut (reduce) spending, lower the previous year spending like private citizens and private business. However, there is a difference between “about time” and “past time”. I think we are going to find that it is past time for a handful of states and hundreds of municipalities who have allowed their obligations (debts and promises) to grow to unsustainable levels. A new word will become part of our lexicon and that’s “Chapter 9 Bankruptcy”. The city of Hamtramck, Michigan, recently decided to file bankruptcy as the only means to renegotiate its unsustainable costs associated with city personnel. In Michigan, the legal process to file bankruptcy requires a city to obtain the approval of the governor. The governor’s office refused the request saying if

CHAIRMAN’S PERSPECTIVE Continued on page 2

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CHAIRMAN’S PERSPECTIVE Continued from page 1 we do it for you, we would have to do it for the thirty (30) more cities that are right in line. Governor Tim Pawlenty of Minnesota recently wrote an article in the Wall Street Journal espousing reform including bringing public employee compensation back in line with the private sector and ending defined benefit retirement plans for all government employees. The Indiana legislature is set to consider a new bill touted by Governor Mitch Daniels to allow Indiana municipalities to file Chapter 9 bankruptcy. In Nebraska, the problem is focused around three letters of the alphabet you are going to become very familiar with. That is CIR, which stands for the Nebraska Commission of Industrial Relations. There are several bills now in the legislative hopper to change the law surrounding the CIR to become more taxpayer friendly. The Nebraska Association of School Boards has joined the cause to reform the CIR. Governor Heineman recently stated he wants meaningful and significant changes to the CIR and would not sign a bill that just “tweaks it on the margin”. Now, here is the good news to support the good life for Nebraska. We will not be a part of the bigger nightmare. The conservative nature of our agrarian upbringing will generally prevent our state from suffering in the upcoming tidal wave. Warren Buffett is associated with a business concept that says “you will find out who is swimming naked when the tide goes out”. As a whole, I think most public institutions in Nebraska have their swimsuits well secured. Still, Nebraska will see some cities and schools with unsustainable spending patterns that will need to be modified. The legislature is convening as I write this. Send them a message. Thank them for what they have done to avoid this upcoming financial debacle, but also tell them to fix the leaks in the Nebraska dike. We have $990 million (for two years) to cut in order to balance the state budget. There is probably a like amount that needs to be cut in local city, county and school budgets. It is never fun but it has to be done. It is about setting priorities. Put the special

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interests in a rubber room and let them slug it hears from you (and also makes sure the budgets out. Better yet, why not have our two largest are balanced). newspapers in Nebraska allocate more resources Sam L. Moyer, President & CEO to provide better coverage and more transparency Heritage Bank to the public so that we can hear the real policy 402-694-3136 debate. In the end, make sure your legislator [email protected]

Heritage News Online DON’T MISS OUT

ON FUTURE ISSUES OF THIS NEWSLETTER! The January 2011 issue of The Heritage will be the last paper issue published. We are protecting the environment by “going green”. In the future our newsletter will be an electronic communication only. In order to continue to be made aware when a new issue is published, we invite you to subscribe to this FREE newsletter by clicking on the “Subscribe to Newsletter” button on our homepage at www.bankonheritage.com. It takes just a few seconds. Then we will email you when each new issue becomes available on our website, with a link directly to the latest newsletter for your convenience. There is no cost for this subscription, and we will not sell or share your email address with anyone outside of The Heritage Group. Every article within our newsletter is written from scratch by our own experts. We work hard to ensure that our newsletter provides you with timely and thought provoking information on issues of interest to all Nebraskans. Thank you for your interest, and we’ll be in touch as soon as the next issue is released. Please feel free to recommend this publication to your friends, colleagues, and acquaintances in your address book. If ever you have comments you’d like to share with us, please do so by emailing

Sam Moyer, President at [email protected]

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“What’s in it for me?” Any person who has ever attended a sales or marketing seminar has been asked to answer that question from a customer’s point Jeff Varney of view. “Why should someone do business with you?” You can list all the products and services that you like, but the ultimate question to answer is “Do you add value for your customers? What’s really in it for them?” I’d like to answer that on behalf of the Heritage Bank Relationship Managers, now that I’ve been with them for the better part of a year now. Several differentiating points quickly became apparent to me. At Heritage Bank, you benefit from knowing we want to see you prosper and grow as individuals. We will be your partner to help you achieve your goals and dreams. Whether that is to help you teach your children the value of saving money or providing financing for the comfort of a new farm or home, Heritage Bankers are here to be a part of that journey with you. Anyone can say that, but we actually do it, day in and day out by presenting new ideas, asking thought provoking questions, challenging our customers to define their goals and coming up with a game plan to achieve them together. The Heritage business model focuses on creating and maintaining wealth for all of our customers. This is accomplished through the many products and services we provide including insurance, brokerage, realty, trust, and investment banking. Customer wealth is also created through our active and thorough lending process. In our industry, the “path of least resistance” is to always say “yes” and ask few questions. Our experience has shown that approach often lands businesses, ag operations and consumers in trouble over time because there’s not a well thought out

strategy. Heritage Bankers are our customers’ trusted sounding boards when they’re looking at a new venture or acquisition, retirement plan, risk management strategy, etc. We’ll challenge you to answer the tough questions to prove to yourself, first and foremost, that it’s the right thing to do. And we’ll add our expertise along the way through that analysis. Heritage Bank is committed to creating relationships that will stand the tests of time. We strive to achieve a “win win” situation on every transaction. Our lending philosophy is based upon a firm understanding of the “five C’s” of credit; Capital, Condition, Capacity, Collateral, and Character. The Heritage Bank lending team has decades of lending experience. As a result of this philosophy, Heritage Bank is pleased to have a “5-Star” rating (the highest possible) from the independent bank rating company, Bauer Financial. Ag producers, businesses and consumers throughout Nebraska have access to one of the nation’s strongest banks. That’s priceless. There’s no substitute for a strong personal relationship with a healthy local lender. One of the comments we consistently hear from our customers is how they appreciate us calling them by name when they walk through the door. We know they have three dogs and just got back from a Colorado vacation. We pay taxes in the same counties and state you do. Our community knows we also have a vested interest in seeing our communities thrive and are willing to support activities with donations and employee volunteerism. Our Nebraska roots, family-owned structure, and solid, conservative business practices are comforting to our customers. Since opening the Heritage Bank office in Broken Bow, many families and businesses have come to understand the value added to them by Heritage

Bank. Heritage Bank empowers and teaches their Relationship Managers like me to offer more than money during the lending process. We strive to become your business partner, sounding board, advisor, risk manager, and more. Heritage Bank provides access to a wealth of talented people who have a long-standing history of being committed to farmers, industry, and individuals of central Nebraska for over 50 years. We work hard to understand our customer’s operation and tailor solutions specific to their needs. Our belief in local lending decisions partners our customers with the decision makers in our Bank. I strongly believe that Heritage Bank provides the most comprehensive financial solutions for its customers. I look forward to the opportunity to continue to establish relationships with more Custer County producers and families in the days, months, and years to come. The collective experience of our Heritage team is a valuable resource when finding the best solutions for banking, insurance, investment, trust and realty needs. One of my colleagues once said our job is to inform, educate, and provide solutions. I totally believe that if we follow that path, we can offer our customers the benefits they’re seeking better than anyone else. If you’re not currently doing business with Heritage, I would encourage you to give your current lender a score based on the points I’ve made above. Ask yourself that tough question “Am I really getting all I deserve out of my current relationship?” If not, give us a call. Our door is always open. Now is the time to make that move. Jeff Varney, President Heritage Bank, Broken Bow 308-872-6688 [email protected]

What will it do for your business? xLater cut off times Remote Deposit Capture xLower transaction costs xEnhanced cash flow What will it do for your business? xLater cut off times xReduced transportation time for deposits xLower transaction costs xEarlier funds availability xEnhanced cash flow Reduced transportation time for deposits xStreamline depositxprocesses xEarlier funds availability To learn more about how Heritage Bank can help your business gain tremendous xImproves cash management xStreamline deposit processes To learn more about how Heritage Bank can help yourrobust business check gain tremendous efficiencies by utilizing compact, yet scanners to capture a digital x Improves cash management xImage archive and research efficiencies by utilizing compact, yet robust check scanners to capture a digital xImage archive and research image ofofyour check deposits at locations, your office locations, callBank your nearest Heritage Bank image your check deposits at your office call your nearest Heritage xData security xData security or contact Kevin Henderson at 402-694-3136 or [email protected]. x Accounting system interfaces or contact Kevin Henderson at 402-694-3136 or [email protected]. xAccounting system interfaces

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Main Street Insights What’s In It For Me?

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Ag Focus

Ag lending has become a very crowded playing field. How so? Are there more banks? No, there are fewer banks. But the banks that are left have more locations than they used to. Using Heritage Bank as an example, we now have 11 locations. When I started with Heritage Bank 13 years ago, there were only five related banks, and they weren’t even called Heritage Bank yet. Sounds a little bit like agriculture, doesn’t it? Fewer fulltime farm operations, but each farm operation has grown larger. My focus in this article isn’t to discuss why this is happening or to find out how everybody feels about it. For the most part, it doesn’t matter that much. What does matter is that it is happening and that it is highly unlikely that the trend will ever be reversed. In both industries, banking and farming, we all have choices. If we don’t like what is happening, if we don’t understand the complexity of it all, or we are just getting tired of it, it may be time to make a decision to get out or retire.  It isn’t easy to make this type of decision without some help.  Rest assured, Heritage Bank has the experience and the know-how to help you make the right decision, at the right time. What about the rest of you, the ones that have embraced the changes and have accepted the challenge? The farm operation you are running today isn’t the same one that you were running 15 years ago, is it? You might have some hired help today. How’s that working out? Don’t answer

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“How is your bank helping increase your yield?”

Visit with a Heritage Banker today and

find out how we work with you to create a

comprehensive business strategy that produces more for your operation than simply financing. Expect more. Harvest results.

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When I sat down to write this article, I first took a little time to reflect on what I wanted to say and how it might be perceived by Rod Peters someone who reads it. If I wasn’t concerned about someone saying that reading my article was a big waste of time, rest assured, the article would have been done a long time ago. In all honesty, I’m shooting for a response closer to “thought-provoking or insightful”. I’d probably settle for “interesting”, but in my book, that’s about the same thing as kissing your sister. Well, let’s get after it.

Equal Housing Lender

Making a Difference that it can happen to you. Let the thought of it create some sense of urgency inside of you. Who could help pull all of this together for you? How about your lender? Who has access to all of your financial information, your tax records, knowledge of what assets you own, who you owe money to and how much, etc.? Who is in a position to know a fair amount about your personal life? Who knows all the professional people that you do business with i.e., your accountant, your attorney, your marketing advisor, etc.? Are you still with the same bank, still with the same loan officer you were with back then? Is he someone who wants to make a difference for you? Or, does he simply want to loan you money at a low enough interest rate to keep you satisfied. Simply loaning money to you at a fractionally lower interest rate than the next lender doesn’t have anything to do with making a meaningful difference in your operation. I hope by now you have figured out that identifying problems, creating solutions, and actively participating in the evaluation of opportunities will create a customer benefit that will make a difference. It can be very hard work and that’s why most bankers would rather stick to lending money rather than trying to “make a difference”.

Don’t automatically assume that a problem you are struggling with isn’t something to Aurora • Broken Bow • Doniphan • Grand Island • Hastings discuss with your Heritage Banker. If it involves Kearney • Loup City • Neligh • St. Paul • Stromsburg • Wood River your accountant, your attorney, your marketing advisor, or one of your other professional service that. I already know it can be a challenge. How about providers, your Heritage Banker is probably a your entity structure? Has that changed? If it hasn’t, good place to start. Remember, your Heritage should it? Are you comfortable with your accountant/ Banker may not have all the answers, but he tax preparer? How about your attorney or attorneys? knows where to find them. Call or stop by and I already know a lot of you don’t even have an visit with a Heritage Banker and learn how we attorney, let alone the two you will probably need in can make a difference for your operation in your lifetime. If you have been fortunate enough to 2011. Best wishes for a successful new year! accumulate some wealth in your lifetime, what steps Rod Peters, President have you taken to preserve this wealth? Don’t feel bad Heritage Bank, Kearney if you haven’t done much. You aren’t alone. But, the 308-698-5000 next time you pick up the newspaper or hear about [email protected] someone who died unexpectedly, just remind yourself

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Ask the Professionals “Who needs Long Term Care Coverage, and Why?” A Typical Consumer’s Conversation with an Expert Q: What is Long Term Care insurance exactly? A: Long term care is an insurance policy or contract that will pay for some or all of your nursing care expenses (nursing home, assisted living, home healthcare, adult day care, hospice, etc.) in the future should a need arise. Q: What would it do for me? A: Buying long-term care insurance gives you: • choices and control over your care instead of the government calling the shots • peace of mind knowing you won’t become a burden on your family members • a tool to protect your wealth so it can pass to your heirs (instead of to the nursing home) Q: I’ve never thought about what nursing care costs. I’d like to think I won’t need it, at least not for a long time. Can you give me an idea of what it runs today? A: According to the John Hancock Cost of Care Survey (2008) the costs of care on a national average: Nursing home care (private) - $202 per day Assisted living facility - $97 per day Home health care - $97 per day Adult day care - $62 per day So, you’re probably looking at a range of $35,000-73,000 a year. Ouch. Q: Why should I be thinking about Long Term Care (LTC) insurance? A: Let’s imagine that you or your spouse comes down with the flu today. Typically the healthy spouse will take care of the unhealthy one. Stop laughing men. Now, try to remember how you feel when you’re the unhealthy spouse being taken care of. In this case, there is nothing you can do about it but you know you’re a burden to your spouse. Now take that same scenario and move forward in time 20 or 30 years. Now your significant other is still trying to take care of you but is no longer physically able to and a higher level of care becomes the only option. Try to imagine how you will feel when you know you’re now a burden both emotionally and financially! LTC insurance gives you the control and power to greatly reduce the financial burden to your family. Q: Is all LTC coverage the same? A: No. LTC plans have several plan options and choices that have to be made. That is why it is important to visit with a LTC specialist. We can sit down with you and design a plan that will best fit your needs. Q: I thought I read something about the Health Care Reform Bill including a LTC plan. A: You did. The new law includes the Community Living Assistance Services and Supports (CLASS) provision, but it’s not expected to be fully operational before 2013. It will create a voluntary government program under which a participant, who must be employed at the time of purchase, could pay a monthly premium to be covered on a guaranteed-issue basis, and become eligible for modest cash benefits for their long-term care needs after five years of paying premiums. Q: So, would you recommend I wait for that? A: Generally speaking, no you shouldn’t wait for two reasons: 1. While the details haven’t been released yet, it sounds as if the daily benefit under the CLASS program will only be $50/day. That’s not enough. 2. There’s a five year waiting period once you start paying premiums. So, the soonest you could conceivably draw benefits would be 2018. What if something would happen to you in the meantime?

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Q: How do I know if I should purchase LTC? Isn’t it just for really wealthy people? A: No, LTC is available to everyone. Now, would I recommend you purchase it if you are Medicaid eligible or have less than $20,000 in assets? Not likely, but that still doesn’t disqualify you from purchasing a plan. The only thing that disqualifies you is your health. Q: What’s the ideal age when I should look at purchasing LTC? A: There’s no perfect age, but there are typically only two times people think about LTC. One time is now, when the information is fresh in your mind and you can process the information I give you and make a good business decision. The other time is when it’s too late and you no longer qualify for benefits. Wouldn’t you agree that now is the better option? Q: So I might not always qualify? A: Oftentimes by the time we need it we can no longer get coverage. LTC insurance is underwritten based on your health. Only your good health today can buy a quality LTC insurance policy. Once you become ill, it will be too late – the insurance company underwriter won’t approve your application. Don’t believe it? Here’s how the long-term care insurance application process works: 1. Complete a preliminary health questionnaire about your own health as well as that of your parents. They’re looking for preexisting conditions as well as precursors to serious medical conditions. This “pre-cut” eliminates many people – the application can’t even be submitted. 2. If you’re healthy enough to make the “pre-cut”, your application is submitted to the LTC insurance company. Their underwriting department will review your medical records and look for conditions that may make you a likely candidate for nursing home care down the road. No problem? Think again. In 2009, of all the 65 year olds who were healthy enough to get their application submitted to the insurance company, only 25% made it through underwriting to get a long-term care insurance policy. So, what used to be a purchasing decision in your 60’s should now be a decision made in your 30’s or 40’s when you are likely to be in very good health. Q: But isn’t it expensive to buy a policy at that young age for benefits you probably won’t need until your 80’s? A: Not necessarily. Long-term care insurance premiums are a function of your age, your health and the level of benefits the plan will provide. Furthermore, you can purchase a paid-up plan with inflation protection to absorb that expense up-front and get it taken care of now to ensure your benefits will be there for you when you need them. Q: So what’s the next step? A: I mentioned that there were some health questions we need to answer before we go any further. Let’s see if you prequalify while you’re trying to decide which option best fits your needs. Simply give me a call and we’ll get the ball rolling. Naturally, all information is kept strictly confidential. Q: What are the tax consequences of LTC insurance? A: You should consult with your own tax advisor about your unique situation for qualified tax advice (that’s not my field). But generally premiums are deductible if you itemize. So, for example, if you’re a farmer looking for deductible expenses, take note that the premium

Ben Berggren joined the Heritage team in 2007 as an insurance agent and loan officer. Prior to that, Ben was a long-term care insurance representative for four years. In Ben Berggren that time he worked with hundreds of clients to get them the right LTC product to protect their assets. He oversaw two teams of Platinum Services agents in Nebraska ensuring they provided quality service and appropriate recommendations to their clients.

Q: A:

Q: A:





Q: A:

on a tax qualified long-term care insurance policy is a tax-deductible expense. Buy now when you need the deduction to reduce your current tax liability…then you’re covered down the road and don’t have to worry about it any further. What’s the special Nebraska LTC program I heard about from a friend? We’ll assist you in selecting a tax-qualified long-term care insurance policy that meets the requirements of the Nebraska Partnership Program. The plain language version of this program is this: You get to keep as many assets as the long-term care insurance plan paid out on your behalf. You mentioned that there are different levels of benefits available. Which do you recommend? Purchase a policy that provides at least six years of benefits. Why six years? Today the Medicaid look-back period is five years. When you request Medicaid benefits they will look back at your financial affairs for the past five years. Any transfers of non-exempt assets during that timeframe will be disqualified. So, here’s the chronology of our solution: Day 1: You enter the nursing home. This starts the clock on the 6-year LTC policy. On day 1 you know this plan will provide benefits for six years. You now also know that the 5-year look back period will begin in exactly one year. You have 12 months to work with your attorney to restructure your assets. Your goal is to get them sheltered before the look back period starts on day 366, so that Medicaid can’t insist upon their use prior to paying out their benefits. Then, at the end of six years when the LTC plan benefits run out, your assets will be protected and you’ll be Medicaid eligible. This combination is a must-have! Long-term care insurance is the glue that will hold your financial plans together. What impact will the Health Reform Bill have on the Nebraska program? If anything, I hope it makes more people aware of the importance of LTC by the creation of the CLASS program. Hopefully it makes employers more aware of offering some type of LTC coverage to their employees. Also, in the right situation, it may allow an individual who cannot qualify for a private LTC insurance plan an opportunity to purchase some coverage. Ben Berggren, Agent Heritage Insurance 402-764-4341 [email protected]

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Insurance

Crop Insurance for Your Calf Crop

If we took a straw poll of our readers who operate a row crop farming operation and asked who carried crop Lance insurance and who didn’t, we expect Williams that an overwhelming majority would say that they buy at least some sort of crop insurance coverage. With today’s volatility and uncertainty in the market place, it only takes a small change Derrick or even a perceived small change in Clevenger the market fundamentals to cause a very large movement in price. There are 3 tools that a grain producer has to manage that price risk: 1. Purchase a revenue protection crop insurance policy; 2. Make forward cash grain sales; or 3. Purchase/sell futures contracts or options on the board of trade. Each of these, or a combination thereof, is a good tool to use to help manage price risk. The question that we ask is “What about the livestock producer?” What tools does he have to manage price risk, and protect profits? Using feeder calves as an example, there is no way of making forward cash sales. There are only two things that he can do manage price risk, and protect profits: 1. Purchase/sell futures contracts or options on the CME; or 2. Purchase a Livestock Risk Protection policy from your Heritage crop insurance agent. It’s the latter option we are going to discuss in this article, as many producers aren’t all that familiar with the product, or don’t know anyone in their local market who specializes in the product. Livestock Risk Protection (LRP for short) is an insurance policy that is administered by the RMA (Risk Management Association), and is sold

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and serviced by most of the major crop insurers throughout the US. There is coverage available for Feeder Cattle, Fed Cattle, Swine, and Lambs. It is designed to protect livestock producers against declining market prices below the producer’s selected coverage price. Other perils such as mortality and feed costs are not insured under this policy. Producers may select from a variety of coverage prices and periods so that the expiration of their coverage corresponds to the time their livestock would normally be marketed and sold. While fed cattle and swine must be marketed and sold, the producer may retain ownership of feeder cattle and lambs at the end of the coverage period. At the end of the coverage period, if the actual ending value determined by the RMA is below the coverage price, the producer may be paid an indemnity for the difference. Coverage can be placed year round.

to best achieve your goals. If you’re a livestock producer interested in learning more about this product and how it can be used to help protect your profits, call or stop in and see Lance in Hastings, Derrick in Kearney, or any of the experienced crop insurance specialists at any of our branches. Lance Williams, Agent Heritage Insurance, Hastings 402-461-2186 [email protected] Derrick Clevenger, Agent Heritage Insurance, Kearney 308-698-5000 [email protected]

It may seem like this is just like purchasing an option, and in many ways they are the same. Both are sold year round, and both of them give the producer flexibility to purchase different coverage prices to establish a floor. One benefit of using an LRP policy, using feeder cattle as an example, is that you can insure anywhere from 1 head up to 2,000 head per crop year. This allows a producer to place coverage on a specific number of calves instead being locked in to 50,000 lb contracts. Another benefit is that 13% of the premium is subsidized by the USDA. Why would you leave that money on the table? Any crop agent may be able to sell the product, but you deserve a specialist who knows the in’s and out’s of the LRP arena to help you structure your policy

Aurora • Broken Bow • Grand Island • Hastings Kearney • Neligh • Stromsburg • Wood River

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Technology Solutions

Opt Into Heritage Bank’s Debit Card Overdraft Service

Have you ever been in a store making a purchase with your Visa Debit Card and suddenly realized the check you intended to deposit a few days ago is still in your wallet? You worry and wonder if your purchase will go through. Now Heritage Bank can help put your mind at ease. Your Heritage Bank Debit card can now have a special overdraft feature that may provide a safety net in the event there are not enough funds in your account at the time you make a debit card purchase or ATM withdrawal. This new feature is called Debit Card Overdraft Service. If you want this feature added to your Heritage Bank checking account, you must notify us that you wish to opt into the service. Kevin Henderson

If you choose to opt in to Debit Card Overdraft Service your existing Debit card will work as it currently does. Although, now you will have a safety net up to your available Debit Card Overdraft Service limit that may save you from the embarrassment of having a transaction declined if you have made a mistake in your checkbook or are short on cash. You will enjoy peace of mind in case of emergency for you and your family. There

is no annual fee for the Debit Card Overdraft Service and no fee if you never need to use it. If we authorize Debit or ATM transactions that cause your account to be overdrawn, you will still incur the standard per item overdraft fee. To help prevent overdrafts and associated charges, you can set up an alert in our free Internet Banking system to remind you if your account balance falls below a certain level. Debit Card Overdraft Service Disclosures explaining all of the terms of this service are being mailed to all Heritage Bank checking customers. Please review these materials and determine if opting in is right for you. If you would like to opt-in, please complete the form and return it to any Heritage Bank branch. Should you have any questions about this new service, please contact your local Heritage Bank Personal Banker. Kevin Henderson, Director of Information & Technology Heritage Bank 402-694-3136 [email protected]

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Wealth Management Strategies

Shark Infested Waters Thanksgiving week marked yet another week with shocking Steve Arnett revelations about the investment landscape. The SEC is looking for insider trading, a big “no-no” in the financial world with severe penalties. What revelations am I talking about? Essentially, hedge funds, mutual funds, and perhaps other investment organizations get access to information you and I can’t. Not surprising, I know, and perhaps not illegal in many cases. But apparently the information-gathering has gone to excess. These financial powers, through third parties called “Expert Networks,” seek out information from a variety of sources. Perhaps the most interesting method used by expert networks to gather information is to scan want ads for mid-level managers laid off by publicly-traded companies. These mid-level managers are contacted by the Expert Network and invited to join. They then are paid a fee for talking to investment organizations about their former employer. These folks know a lot, and I’m sure much of it is “material non-public information” (which is in the definition of insider trading). Wouldn’t you like to know in advance about important issues that will affect a stock price? But you and I don’t have the research dollars to

throw into things like this. It is mostly the big boys once again tilting the playing field in their favor. On Wall Street it is a fact of life. All the big players claim to have better information than their competitors, and I’ll bet inside information is often at the root of their claim to “better” information. The good news? The SEC appears to be doing something about it by going after the big boys. And more good news is that while someone profiting by inside information affects many investors in the short run, there are ways to avoid it in the long run - the best and simplest way is to be a “buy and hold” investor. There are other traps and costs to avoid as well. Those traps include high frequency traders with fast computers linked in to the stock market in between you and the completion of your trade. Or perhaps stubbornly high expense ratios in your mutual funds or hedge funds paying “soft dollars” for research out of your pocket. While few of us are dramatically affected by the costs associated with someone getting inside information, all of these things add up, nickel and dime-ing us into oblivion. Maybe normal investors will start getting a fair shake, instead of continuing to suffer from too many financial wizards getting in on the action.

Or maybe not. Much of the system of Wall Street is set up to benefit the most selfish. Perhaps a wiser course is to call us for your investment advisory needs. We can help you navigate these shark-infested waters. We seek to avoid the conflict-ridden areas of the financial markets. I do my best make sure our playing field is level, and work hard to watch what’s on the horizon to keep you positioned appropriately to achieve your goals. Just ask the 200+ customers with $120 million in asset managed by our trust department. There’s a reason we’re growing. We would appreciate the opportunity to visit with you as well.

Steve Arnett, Trust Manager Heritage Bank 800-554-5499 [email protected] Steve Arnett manages trusts and investments for individuals, businesses and institutions. This level of service has limited availability. We can only accept a limited number of clients so we can provide the topnotch, personal service you deserve. Our minimum account size is $250,000. Please call today for a noobligation review of your current portfolio.

Investment products are not obligations of or, guaranteed or insured by the bank, the FDIC or any other government agency. Investments are subject to risk, including possible loss of principal.

Premier Club Trips Exploration—Lincoln! May 12, 2011 $40 per person

  Enjoy three fascinating stops on this fun day trip. We’ll start off with a 1-hour inside tour

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of Memorial Stadium, the pride of all the Husker Nation! Then we’re off to lunch at the Governor’s Mansion to help him celebrate his birthday! Following a tour of the remodeled mansion, we’ll head just a few blocks further south for our first-ever trip to a fascinating museum we’ll bet you’ve never seen. We’ll tour the Germans from Russia Museum in Lincoln

where a small village and artifacts depict how early settlers who emigrated to “the bottoms” of Lincoln in the 1870’s lived. Pick up points: Hastings, Doniphan, Grand Island & Aurora. Bus departs Hastings 7:30 am. Trip price includes deluxe motor coach transportation, lunch, all admissions, and Heritage Bank escort.

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