Bank Management Test 1

Front 1

Riegle-Neal Interstate Banking and Branching Efficiency Act

Back 1

Federal law passed in 1994 that permits bank holding companies to acquire banks nationwide and authorized interstate branching and mergers beginning June 1, 1997.

Front 2

Gramm-Leach-Bliley (Financial Services Modernization) Act

Back 2

A federal law approved in 1999 permitting common ownership of banks, securities firms, and insurers through financial holding companies or subsidiaries if well capitalized and well managed and granted regulatory approval.

Hint 2

None

Front 3

CAMELS Rating

Back 3

A system that assigns a numerical rating to a depository institution based on examiner judgment regarding its:
Capital adequacy
Asset condition
Management quality
Earnings record
Liquidity position
and
Sensitivity to market risk

Hint 3

None

Front 4

Convergence

Back 4

The bringing together of firms from different industries to create conglomerate firms offering multiple services.

Front 5

Consolidation

Back 5

Acquisitions of firms in the same industry as the acquiring firm.

Hint 5

None

Front 6

Economies of Scale

Back 6

Cost savings achieved when a firm expands in size and becomes more efficient in using productive resources to produce goods and services.

Front 7

Economies of Scope

Back 7

Employing the same management, staff, and facilities to offer multiple products or services, thereby helping to reduce the per-unit cost of production and delivery of goods or services.

Front 8

Glass-Steagall Act

Back 8

Law passed in 1933 that legally mandated the separation of commercial and investment banking, imposed interest rate ceilings on bank deposits, authorized the creation of the Federal Deposit Insurance Corporation (FDIC), and granted federally chartered banks the power to branch throughout a state, provided that state grants similar powers to its own statechartered banks.

Hint 8

None

Front 9

Securities and Exchange Commission

Back 9

A federal oversight board created by the Securities and Exchange Act of 1934 that requires public companies to file financial reports and disclose relevant information about their financial condition to the public and to prevent the issuance of fraudulent or deceptive information in the offering of new securities to the public.

Front 10

Depository Institutions Deregulation and Monetary Control Act

Back 10

Law passed in 1980 requiring that federal interest rate ceilings on deposits sold to the public be phased out so that deposit interest rates could more closely reflect prevailing market conditions

Hint 10

None

Front 11

FDIC Improvement Act

Back 11

A law passed in 1991 to recapitalize the Federal Deposit Insurance Corporation (FDIC) and exercise closer regulation over troubled depository institutions.

Hint 11

None

Front 12

Check 21 Act

Back 12

Allows the conversion of paper checks into electronically transferable payment items

Front 13

Roll of Banking

Back 13

The primary purpose of the ever-changing financial system is to encourage individuals and institutions to save and to transfer those savings to those individuals and institutions planning to invest in new projects, causing the economy to grow, new jobs to be created, and living standards to rise.
It also provides a variety of supporting services essential to modern living. These include payment services, risk protection, liquidity services, and credit services.

Hint 13

None

Front 14

Forces impacting industry, not only banks, but other institutions

Back 14

(1) Service Proliferation (widening service menus)
(2) Rising Competition
(3) Government Deregulation
(4) An Increasingly Interest-Sensitive Mix of Funds
(5) Technological Change and Automation
(6) Consolidation and Geographic Expansion
(7) Convergence
(8) Globalization

Hint 14

None

Front 15

Managing bank — bank rating based on

Back 15

The feel of the bank

Front 16

Importance of regulations to industry, why we need it?

Back 16

Financial-service institutions are among the most heavily regulated of all industries due, in part, to their key roles in attracting and protecting the public’s savings, providing credit to a wide range of borrowers, and creating money to serve as the principal medium of exchange in a modern economy.

Front 17

Various structure in banking industry

Back 17

Unit Banks: Banks that offer the full range of their services from one office, though a small number of services (such as taking deposits or cashing checks) may be offered from limited-service facilities, such as drive-up windows and ATMs.

Branch Banking: An arrangement in which a bank offers a full range of services from multiple locations, including a head office and one or more branch offices.

Internet Banking: The offering of information and selected services through the Internet by banks and other financial-service firms.

Bank Holding Company: A corporation chartered for the purpose of holding the stock (equity shares) of one or more banks.

Hint 17

None

Front 18

Why bank wants to get larger

Back 18

Larger institutions generally play a wider range of roles and offer more services.

Front 19

Implications for a new bank manager

Back 19

Today — implications for new bank manager? What areas? (ATM, virtual, what implications? Issues that are important — staffing, expense control, asset quality, sales orientation)

Front 20

Where banks are headed in future?

Back 20

Banks will continue to grow, but not as fast

Front 21

Ideals about future banking industry

Back 21

Whatever service facilities move to dominance in the future, these delivery vehicles are likely to be scrutinized more closely for performance and efficiency and configured for marketing multiple services more effectively.