1. Financial Institutions and Banking Services
Chapter 25
Financial Institutions and Banking Services

2. Banks as a Business Banks offer services to its customers
Checking Accounts
Savings Accounts
Loans
Bank charters
Federal charter = National Bank
State charter = State Bank
In order to start a bank, owners must apply for a charter from either the state or federal government.

3. Two Types of Banks Deposit-Type Institutions Nondeposit Institutions
Accept deposits for people and businesses to use in the future.
Nondeposit Institutions
Do not accept deposits.
FDIC – Federal Deposit Insurance Corp.
Federal Agency that helps to regulate banks and other financial institutions.

4. FDIC
Protects depositor’s money in case the bank or financial institution fails, as long as it is regulated by the FDIC
Insures all accounts under the same name at each bank up to an amount of $100,000
Government Agency, but receives it’s money from the banks.
Almost 99 percent of the banks are members of the FDIC

5. Deposit-Type Banks Commercial Banks – Full-Service Banks
Offer checking accounts, provide savings accounts, make loans to individuals and businesses, and other services
In larger banks, these services may be broken into different departments.
Savings department
Trust department
Real Estate department
Investment department
Shopping Centers to Supermarkets…..
ATMs – Loans – Safe-Deposit Boxes

6. Deposit Type Banks Savings and Loan Association – Mutual Savings Bank
Normally, specialize in savings accounts and making loans for home mortgages
Presently, they are leaning more toward offering a greater variety of services, so now they are becoming savings banks.
Mutual Savings Bank
Provides a variety of services
Savings accounts and to make loans to homebuyers
Owned by its depositors
The profits of a Mutual Savings Bank go to the depositor

7. Deposit-Type Banks Credit Unions
User-Owned, Not-For-Profit, Cooperative Institution
Normally its members have something in common with one another.
Services offered
Savings deposits
Loans for a variety of purposes
Special Checking accounts
Credit Cards
Mortgages
Home Equity loans
Safe-Deposit Boxes
Investment services
Electronic banking services
Loans to small firms
Alliance – same company, government agency, labor union, profession, church, or community.
Start here 11/15 5th

8. Nondeposit Financial Institutions
Life Insurance Companies
provide financial security for dependants
Through careful investing in new and existing companies, life insurance companies can help to expand business in our economy.
Investment Companies
Allow people to choose investment opportunities for long-term growth of their money.
Start 3rd hour here on 11/15

9. Nondeposit Financial Institutions
Consumer Finance Companies
Specializes in making loans for long-lasting or durable goods, such as cars and refrigerators, and for financial emergencies.
Mortgage Companies
Provide loans for purchasing a new home or other real estate
Consumer Finance companies make loans, and therefore are part of the financial services. Do not accept savings as do banks and other financial institutions.

10. Nondeposit Financial Institutions
Check-Cashing Outlets
May cash paychecks or obtain other financial services.
CCOs offer a wide variety of services such as electronic tax filing, money orders, private postal boxes, utility bill payment, and the sale of bus and subway tokens.

11. Types of Financial Services
Accepting Deposits
Transferring Funds
Lending Money
Storing Valuables
Providing financial advice and investment services
Managing trusts
5th hour 11/16

12. Accepting Deposits
Safe storage of funds for future use is an almost universal need.
One of the main services offered by financial institutions
Interest –
The amount that the bank pays its customers to use their money.

13. Transferring Funds
Money can easily be transferred from one account to another through simply writing a check
Electronic Funds Transfer
A system through which funds are moved electronically from one account to another and from one bank to another

14. Other EFT Services Point – of – Sale Transaction
Debit Card – use at stores, gas stations, and or restaurants to pay for purchases.
Direct Deposit – your paycheck is automatically deposited in your checking or savings account.
Home Banking – payments are made and loans are obtained by customers using telephones and computers.

15. Lending Money
Many people, businesses, and governments borrow money at some time.
Individuals
pay for car or to pay for college tuition
Business
Borrow money to build a new warehouse or to buy more merchandise for resale
Banks want to make loans like this….
Majority of their revenue is from the interest they charge borrowers.
Banks also issue Credit Cards (Visa and MasterCard)

16. Storing Valuables Safe-Deposit Boxes
In the bank, an area where you can pay to store your valuables.
Jewelry
Bond and stock certificates
Birth records
List of insurance policies
will

17. Providing Financial Advice and Investment Services
Many banks can advise customers about such things as whether it is wise to buy a certain house, how to manage money better, or how to exchange U.S. currency for foreign currency.
Period 3 11/16

18. Investments Are savings that are put to work to earn more money.
Money in a savings account is a type of investment because the savings account earns interest.
Bonds are another form of investment which customers can make from either the federal or state government, businesses, or school districts.

19. Managing Trusts Trust Companies
Businesses that manage people’s money and property for them.
Normally used by young people and by elders.
Young people who inherit money may not have the skill and experience to invest wisely.
Elder people who are ill may ask the trust department of a bank to manage their money.
The bank or company then invests the money and keeps the customer informed with what is going on with their money.

20. The Federal Reserve System
Federal Reserve Bank – is a bank where individuals cannot make deposits or open an account at. Only other banks can do that. This is a bank for banks, its relationship to other banks is similar to that or your bank to you.
Federal Reserve System – supervise and regulate member banks in order to help the banks serve the public efficiently.

21. Financial Institutions and Economic Growth
Bank Services are commonly used to:
Build homes
Start new businesses
Plant crops
Finance educations
Buy goods
Pave streets
Build hospitals
Buy new business equipment

22. “Banking services are made possible through the savings you and others deposit. Deposits into banks to not sit idle in bank vaults. They are put to work. When you and others deposit money into a bank, you are create jobs and economic growth that benefit your community and society.”