1. Slide 1 SPECIALIZED BANK SERVICES 9.1 9.1 International Banking 9.2 9.2 9.2 Insurance and Brokerage 9.3 9.3 9.3 Cash Management 9.4 9.4 9.4 Trusts 9

2. Slide 2 Lesson 9.1 INTERNATIONAL BANKING Identify three types of financial institutions engaged in international banking Describe international services offered by banks GOALS

3. Slide 3 STRUCTURE OF INTERNATIONAL SERVICES Foreign banks U.S.-based international banking Other types of international operations Special considerations Financial risk – hard to get reliable information Currency risk – Value of currency can fluctuate Country risk – political, social, legal and economic conditions

4. Slide 4 INTERNATIONAL SERVICES Trade financing Letters of credit – Letter given by bank on behalf of buyer Drafts and wires – Similar to a check, order given from one party to another International collections - Foreign currency exchange – Must exchange money to do business in another country

5. Slide 5 INTERNATIONAL SERVICES - continued Trade consulting U.S. export-import (Ex-Im) bank Overseas private investment corporation (OPIC) Small business administration (SBA)

6. Slide 6 Lesson 9.2 INSURANCE AND BROKERAGE Explain the effects of the Gramm-Leach- Bliley Act of 1999 List typical insurance and brokerage products available from financial institutions GOALS

7. Slide 7 A NEW ERA The old world: Glass-Steagall Act: Response to the Great Depression, Banks could not own brokerage firms. Banks could no longer compete with other financial services The new world: Gramm-Leach-Bliley ACT (GLBA) Banks could now could pursue insurance and securities businesses. Consumers can prohibit sharing of private information to third party. (opt-out) Limits and regulation: State laws concerning banks are accountable to the nation. Prevents states from making laws that can be detrimental to the interest of the nation

8. Slide 8 PERSONAL INSURANCE PRODUCTS Auto insurance Credit insurance Disability insurance Life insurance Health insurance Homeowner’s insurance Mortgage disability insurance Title insurance

9. Slide 9 BUSINESS INSURANCE Commercial liability Short-term disability Long-term disability Health insurance Officers’ liability Property Workers’ compensation

10. Slide 10 BROKERAGE SERVICES Brokerage refers to bringing together parties interested in making a transaction, such as buying and selling shares of stock. A broker charges a fee to execute the transaction. Banks now offer full investment services.

11. Slide 11 Lesson 9.3 CASH MANAGEMENT Explain why banks are in a good position to offer cash management services List several cash management services banks perform for businesses GOALS

12. Slide 12 SYSTEM IN PLACE FOR CASH MANAGEMENT Every business needs to disburse and collect cash to complete business transactions. Banks are in a good position to provide cash management services to businesses for a number of reasons. Experience Business knowledge Technology Industry expertise

13. Slide 13 CASH MANAGEMENT Accounting services Bank collection services Information services Credit card services Capital services

14. Slide 14 ACCOUNTING SERVICES Payroll: All functions of payroll are managed Accounts payable: Short term debt usually 60 days or less Accounts receivable: services or merchandise sold on credit collected by bank

15. Slide 15 BANK COLLECTION SERVICES Deposit service: Customers can make deposits in various ways Lockbox service: Accounts receivable are deposited directly to bank Zero-balance accounts: Accounts are reconciled daily Automated Clearing House (ACH) Network: Highly efficient electronic banking system

16. Slide 16 INFORMATION SERVICES Electronic Data Interchange (EDI) Computer-to-computer exchange of business information Banks can advise and provide services

17. Slide 17 CREDIT CARD SERVICES Credit card processing Stored-value card: Also known as smart card, Card itself holds value with in magnetic strip Credit analysis

18. Slide 18 CAPITAL SERVICES Capital investments: Expenses incurred for business use, example: printing press, fleet of trucks Financing: Advise clients on how to keep debt-to-equity ratio low Factoring: Buying debt at a discount

19. Slide 19 Lesson 9.4 TRUSTS Explain what trust services are Identify important types of trust services banks provide GOALS

20. Slide 20 WHAT ARE TRUST SERVICES? A trust is an arrangement by which one party holds property on behalf of another party for certain defined purposes. The donor, or settlor, is the person who creates a trust. The beneficiary is the person for whose benefit the property is held. Corpus, or res, refers to the property that is held.

21. Slide 21 TRUST SERVICE PRODUCTS Retirement planning: IRA, 401(k), variable annuity Estate planning: Family arranges transfer of assets Estate settlement: Value, taxes, filing, distribution of assests Testamentary trust: Estate is managed for the heirs Charitable remainder trust: Money given to charity Living trust: Setting up while a person is living. Describes transfer of property.

22. Slide 22 RETIREMENT PLANNING IRA: Great way to save for retirement. Regular IRA: Money taxed when withdrawn Roth IRA: Money taxed at time of investment 401(k) plan: Employees retirement account Variable annuity: Similar to regular IRA only more flexible. Tax deferred growth

23. Slide 23 ESTATE PLANNING Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate is the total property, real and personal, that an individual owns. The cornerstone of any estate plan is a will, a document by which the individual gives instructions as to what is to happen upon his or her death in regard to property and remains. Probate is a court proceeding that settles an estate’s final debts and formally passes legal title to property from the decedent to his or her heirs.

24. Slide 24 ESTATE SETTLEMENT Identifying and valuing the estate assets Paying creditors, estate expenses, and taxes Preparing and filing the necessary tax documents with federal and/or state authorities Distributing assets to beneficiaries

25. Slide 25 TESTAMENTARY TRUST Testamentary trusts are established by a will and take effect at the donor’s death. They receive the assets of the estate to hold and manage for the benefit of the heirs.

26. Slide 26 CHARITABLE REMAINDER TRUST A charitable remainder trust (CRT) is an irrevocable trust designed to convert the highly appreciated assets of a trustor into a lifetime income stream without generating estate and capital gains taxes.

27. Slide 27 LIVING TRUST A living trust is a legal document that provides an expedient way to transfer property at a person’s death.