ITA Quarterly Newsletter - February 2020

February 28, 2020

Greetings [FIRST]:

ITA President's Message

Welcome to ITA 2020.  I appreciate the opportunity to serve as your president this year.  And I want to thank Brad VanHeuvelen for his service as president of the organization this past year.

As is the case each year, two of the events not to miss will be the peer group discussions, which take place April 15th and September 30th.  Due to popular demand we are arranging for call-in participation in both of these peer group meetings.  Since the September 30th meeting is the day before the Annual Meeting, we hope most people will attend in person since they should be planning to be in town for the annual conference, which starts the next day.

If you haven’t participated in a peer group meeting I certainly would encourage you to do so.  These meeting gives you the chance to discuss and gain insight into the issues that your peers are facing, which are probably the same issues you are dealing with, too.  There is an agenda published before the sessions so you will have an idea of what is going to be discussed.  But don’t make the mistake of thinking that is all that will be discussed; the discussions are somewhat organic and far reaching. The sessions usually cover topics beyond the scope of the agenda.  And please don’t be bashful about submitting any questions or thoughts you might have for discussions in advance of the meetings. Again, if you have concerns or issues with something most likely your peers do as well.

One change we made last fall was to combine the small and large bank peer group meetings into one.  It seems the discussion agendas for each group always seem to be relevant to members of the other group as well.  The feedback has been positive and we think you will enjoy the new format.

And I would point out the peer groups discuss both administration and operations issues.  Due to the call-in option, while many of your operations people may not be planning to attend the annual conference that doesn’t mean they cannot participate in the peer group sessions.  Please encourage your operations staff members to take advantage of the peer group meeting to discuss topics relevant to operations.

Again, thank you for the opportunity to serve as your president; I’ll try to keep the executive orders to a minimum.   

Craig Schrader, Vice President Trust, West Bank and President of the Iowa Trust Association


Trust Briefs: Family Squabble at Iowa Supreme Court

By Eric LeSher, Trust Officer for Raccoon Valley Bank

Trust Briefs is a series of articles and commentary about current topics and issues involving trusts, estates, guardianships and conservatorships.

 “The most important asset an individual or family has and should do everything in their power to maintain is family harmony.” Yes, I do believe that and yes, I have taken steps to ensure that family harmony is maintained when my family members and I move on to that life beyond the grave. Recently, a case was decided by the Iowa Supreme Court that at its core was a family squabble over who would get and benefit from some farmland (Struve v Struve, Case No.18-0316).

Case:
George E. Struve, Petitioner by substitute petitioners Dianne Lawrence, Paul Struve, and Ronald Struve, Appellants v Perry Struve and Clayton Struve

Facts:
George Struve (“George”), whose wife had died in 2014, completed certain transactions in the fall of 2015 with his son, Perry, and his grandson, Clayton whereby he entered into a below-market-rate lease agreement to farm George’s land and to gift some land to Perry and Clayton and to write a new will to reflect this gifted land. In September 2016, the substitute petitioners filed a petition seeking relief alleging their brother, Perry, and nephew, Clayton had committed elder abuse against George by unduly influencing him to enter into those transactions.

Issue:
Did the district court error when they concluded that the substitute petitioners failed to prove an entitlement to statutory relief?

Holding:
The district court’s denial of the petition was correct. The Supreme Court of Iowa concluded and agreed with the district court’s ruling that the substitute petitioners failed to establish that their father was a “vulnerable elder” subject to “financial exploitation” within applicable Iowa Code.

Rationale:
In order to be entitled to relief, the substitute petitioners were required to prove beyond a preponderance of the evidence that their father was a vulnerable elder subject to elder abuse. The required elements include: 1) the person allegedly suffering the abuse must be over sixty years old, AND 2) the person allegedly suffering the abuse is unable to protect himself or herself from elder abuse as a result of one of the following: age, mental condition, or physical condition. George was indeed over sixty years old as I’m sure was stipulated to by both parties. However, the parties did not agree as to whether George was able to protect himself.

In order to support their position, the substitute petitioners relied primarily on a cognitive-function evaluation done by a Dr. Daniel Troxel in October 2016, about a year after the transactions in question, whereby the doctor diagnosed George with progressive dementia. Dr. Troxel reevaluated George in October 2017 and concluded that George was in continued decline. Dr. Troxel further provided a retrograde assessment and found George MIGHT have been mildly impaired at the time of the transactions in question.

Perry and Clayton on the other hand were able to offer multiple instances and evidence to the contrary including, but not limited to: 1) contemporaneous medical evidence contrary to Dr. Troxel’s opinion, 2) George’s medical records between May 2014 and May 2016 showing memory and judgement within normal limits with no mention of dementia, 3) reports of nursing home staff of George having clear comprehension, 4) George’s conduct during the relevant time showing not mental health impairment, 5) testimony from others who interacted with and who had known George for a long time citing no concern of his mental health, 6) the substitute petitioners themselves treating George as though he could handle his own affairs, and probably most important 7) George, after complaining to his attorney that he was tired of his family’s bickering over his farmland, taking the initiative to establish a voluntary limited conservatorship in July 2016 to protect himself and to stop the children from bothering him regarding the disposition of his farmland.

Disposition:
The Supreme Court of Iowa found that although Dr. Troxel’s testimony was relevant, it was not dispositive. They concluded that the district court was correct in ruling that the preponderance of the evidence supported the conclusion that George was not a vulnerable elder.


Land and equipment update

Tim Meyer, General Manager Iowa, Steffes Group, Inc.

Our Equipment Market

Through all this, in our auction world, we see the effects played out in the market conditions.  Just like we said in our Spring Letter most of it came true.  One thing that has been a little surprising is a lowering interest rate market as some compared it to perhaps a fear of a rising interest rate market.  Otherwise, as we speak today the machinery market can mostly be described as level and stable.  The land market overall in our markets has been “steady and firm”.  Right now the goal for Fall on Farm Machinery would be to hold the line.  We feel there is a good demand and an attentive audience who will look to farm auctions to fill their equipment needs.  The market will have quality selections and those sellers who stand by their equipment and have been good about the maintenance of their equipment will have a better chance at a successful auction.  Buyers will be rewarded with great value and there will be a good audience for that type of equipment.  On the other hand, if there’s a story, or perhaps a little age, or not quite the proper look, you’ll be seeing a much colder reception in regard to the buying crowds.  We continue to look for abnormal disparity in pricing based on condition.  

Our Real Estate Market
We believe there are still more buyers than sellers and the market seems to be impervious to any negativity in most of our areas.  It’s been a short story and not much to tell.  It’s steady to stronger in most markets other than North Central Iowa.  However, this area has remained steady from the Spring market prices.  One success story is we are seeing more successful investor buyers outbidding owner/operators as we progress through the year.  Whether this is because investors are being more aggressive, or farmers are being more cautious it is too hard to tell.  If we look at concerns, it would have to be sustaining prices on straight pasture ground without recreational value.  We also see a large disparity between highly productive ground vs medium-quality ground regarding specific CSR values.  

Overall, we don’t look for any significant changes in the real estate market through the end of the year.  Check out our website for current auctions as well as auctions completed.  We should have a good handle on the market by the end of the year as we are setting out to sell over 7,000 acres before year-end.  Thank you for reading, we look forward to seeing and talking with you in the future.  
A New Era of Active Management Looms
Yoram Lustig, T.Rowe Price

The surge in popularity of passive investment strategies has been one of the most notable developments in markets since the financial crisis. This has led to frequent—and often intense—debate over the merits of active investing versus tracking an index. However, these discussions frequently ignore the context in which passive investment strategies have grown and the specific risks associated with them. As the global economy moves into the next phase, investors may be forced to reevaluate how they use passive investments—and what returns they can expect from them.

It is not difficult to understand why passive investments have become so popular. For one thing, they are relatively easy to manage—investing in a passive strategy does not require the same effort as researching, selecting, and monitoring good managers (and firing bad ones). In addition, the fees of passive investments are typically cheaper than those of active funds, although some large investors may negotiate fees on active mandates that are comparable to passive strategies. As passive strategies typically follow an index, underperformance risk is also lower than with active strategies. And perhaps most importantly, passive strategies have delivered strong performance over the past decade as asset prices have rallied since the financial crisis.
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What's a Defensive Stock in 2020?
Capital Group, home of American Funds

What’s a defensive stock? It’s a simple question that used to have a simple answer. In years past, defensive stocks were reliable, conservative, boring investments in the consumer staples, utilities and health care sectors. These companies generated steady cash flows, paid solid dividends and didn’t have “dot-com” in their names.

More recently, however, there’s been a discernable shift in investor views of what constitutes a defensive stock. Many businesses that were previously considered defensive — including food, tobacco and telecommunications firms — have been disrupted by technology advancements, changing consumer behavior and fierce competition in a global economy.

As investors search for defensive stocks ahead of the next recession, they may find that a broader definition is warranted
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Legislative Tool Helps you connect with Legislators

The Iowa Bankers Association'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 at the IBA website.

Contribute to the 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) 987-7365. Thank you for your interest in our publication and we look forward to hearing from you.

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Contacts                     

Iowa Trust Association

If you have any questions, please contact the Iowa Trust Association at 800-987-7365

Darcy Burnett, CMP
Senior Education Coordinator
dburnett@iowabankers.com

  Iowa Trust Association
8800 NW 62nd Avenue |  Johnston, Iowa | 50131-6200
(800) 987-7365 | www.iatrust.com

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