1. Introduction to Depository Institutions
Day 1
Introduction to Depository Institutions
Presented by

2. Rachel Martini – Customer Relations Specialist
Introductions
Rachel Martini – Customer Relations Specialist
Lindsey Bamba – Westside Branch Manager
Introductions:
Thank you for allowing us to come and present our favorite subject, finances, with you today. My name is…I am the Customer Relations Specialist at Olympia Federal Savings. My primary responsibilities are facilitating our customer service program for the bank. I also participate in various community events and public relation programs such as financial education support to our local schools.

3. Types of depository institutions Deposit Insurance
Overview of 2 Days
Types of depository institutions
Deposit Insurance
Factors to consider when choosing a depository institution
Types of accounts
Types of services
Interest
Credit
Worksheets/Homework/Quiz

4. What do you know about banks?
Fill out the left side, labeled ‘Before,’ only.

5. Take notes:

6. What is a Depository/Financial Institution?
Depository institution – businesses that provide financial services
What is the name of one depository institution in your community?

7. Types of Depository Institutions
Three types of depository institutions are:
Commercial Banks
Community Banks
Credit Unions
For-profit (may be owned by their members, or they may be publicly held
Not-for-profit – owned by members
For-profit
Open to individuals or small local businesses who want a local depository institution
Open to anyone who wants to utilize a depository institution
Have membership qualifications – members must share a “common bond”
Offer many services but usually not as many as a bank
Offer numerous financial services
Offer numerous financial services
Usually the largest depository institutions nationwide
Local or regional - Range in size but usually found in local communities
Are often able to pay higher interest rates and charge lower fees
Each type is unique – choose what is best for you

8. Types of Depository Institutions
Which one should you choose?
Banks
Credit unions (members only)
Investment
Commercial
Community
Savings & Loan
Employer
Community
Military
The financial services industry includes many different kinds of organizations that provide many different kinds of financial services for their customers. Some of these organizations are banks, credit unions, credit card companies, insurance companies, stock brokerages, mortgage companies, and investment banks. Why are there so many? Because customers today want a variety of services! The rapid growth of technology has changed the way financial institutions do business, and it has increased the level of competition for customers. The term “financial services” became popular in the 1990s because of changes in federal banking laws. Using this term better describes all of the services and products now available from financial institutions.
Over 90 percent of the people in the United States have a bank account of some kind. It may be a transaction account, commonly called a checking account, or a savings account. (Note: Even if you only use a debit card instead of writing checks, the account is still called a checking account.) Most of these accounts are either in a bank or a credit union.
Name the types of Banks:
Investment – J. P. Morgan, Merrill Lynch, Edward Jones, Goldman Sachs
Commercial – Bank of America, US Bank, Wells Fargo, Chase, Key Bank, etc.
Community – Heritage, Timberland, Columbia, Sterling, Anchor
Savings & Loan - Olympia Federal Savings is designed to stimulate savings by individuals; which means that we protect deposits, make limited, secure investments, and provide depositors with interest. We also promote home ownership by providing local and personal loan services to everyone in our community. Along with other mutual banks, we are known for two outstanding qualities- commitment to service and independence. As part of this, we give at least 5% of our profits back to the community by supporting local non-profit organizations with grants, donations, and hours of volunteer time.
Name the types of credit unions:
Employer – WSECU, Obee, BECU, etc.
Community – Twin Star, Olympia CU, Generations, Our Community CU, etc.
Military – America’s CU, Navy Federal, etc. (USAA is not a credit union they are federal savings bank – it’s not a corporation and there are no shareholders which is similar to a credit union.)
Banks are community, regional or national for-profit business corporations owned by private investors and governed by a board of directors, sometimes chosen by stockholders.
Credit unions are not-for-profit financial cooperatives owned by their members and governed by a board of directors elected by, and from among, those members. Usually there is a common bond among the members, such as belonging to the same organization or living in the same geographical area. Credit unions accept deposits from their members and use them to make short-term loans. Deposits are regarded as purchases of shares, and all earnings of the credit union are paid out as dividends to members
Savings institutions (also called savings & loans or savings banks) specialize in real estate financing. They can be either corporations or mutuals (a type of business where making a deposit is like purchasing stock in the organization). Both types are governed by an elected board of directors instead of shareholders.

9. Location
Can be an important factor when choosing a depository institution
Physical location or only online?
Multiple locations or just one?
Locations all across the U.S. or only in your state or city/town?
Do you have transportation to get to a location?
Do you know how many locations your financial institution has?

10. Depository institutions keep your money safe
Federal Deposit Insurance Corporation (FDIC)
National Credit Union Administration (NCUA)
Offer a safe and secure place to store your money
Security (safes, secure networks, etc.)
Insurance
Insures banks and other types of institutions other than credit unions
Insures credit unions
$250,000 per depositor, per insured institution, for each account ownership type
Banks, Credit Unions and Savings Institutions operate under federal or state charters. Their deposits, up to $250,000, are insured by one of two federal agencies: the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Similar to being covered bumper-to-bumper with car insurance only the financial institution pays the premiums, not the customer.
Same as FDIC
How can insurance play a role in choosing a depository institution?

11. Businesses offer services to the public
Grocery store
Gas station
Restaurant
Clothing store
What services do these businesses offer?

12. Services offered by depository institutions
Transaction and Savings Tools
Special Needs Payment Instruments
What are three services a depository institution might offer to entice you to choose them over another?
(free checking, high interest rate, etc.)
Credit
Banks provide an essential financial function by linking depositors and borrowers. Banks, large and small, serve diverse customers, from individuals to businesses, governments and municipalities. There are more than 6,800 banks in the United States with more than 97,000 branches in communities across the nation. Banks play an important role in their communities, providing a safe place to keep money, funding for business growth and community projects and time and money for local charitable projects. Banks invest in their communities because they know the financial health of the community depends on it. A bank cannot thrive unless the people it serves thrive also.
By depositing money in a bank, customers safeguard their savings and earn interest. They also benefit from a safe, easy way to pay bills and access their deposits.
An important strength of the banking industry is its ability to adapt to the changing needs of its customers. Banks are committed to using new technologies to deliver banking services. Innovations—from ATMs and debit cards to online banking, electronic bill pay and mobile banking—have made money management more convenient and have given customers 24/7 access to their accounts.
Safe-Deposit Box
Financial Advice

13. Savings Tools Does anyone have a checking or savings account?
Accounts that help you manage your money
May or may not earn interest
The 2 most common accounts:
Checking Account
Savings Account
Does anyone have a checking or savings account?

14. Should you look for a low or high interest rate on a savings account?
Account Purposes
Checking Account
Savings Account
Provides quick access to funds for transactions
An account for money not intended to be used for daily expenses
Use deposited money anytime by:
Writing checks
Using a debit card
Withdrawing cash
Electronically transferring money
Access to money is more limited than a checking account
Should you look for a low or high interest rate on a savings account?
Some earn interest but most do not
Earn interest

15. Depository institutions offer the ability to earn interest
Interest - the price paid for using someone else’s money
You can earn interest or be charged interest
The amount of interest earned or charged is determined by the interest rate (percentage rate used to calculate interest, usually an annual rate)

16. Interest Explained What is Interest?
An amount of money banks or other financial institution pay you for keeping money on deposit with them or to use their money. Expressed as a percentage.
What is Annual Percentage Yield? (APY)
The amount of interest you will earn on a yearly basis, expressed as a percentage.
The more often your money compounds, the higher the APY, and the more interest you will receive.
Compare the APYs of different accounts, not the interest rate.

17. $100 deposited in an account earning 2% interest
Interest Rate View
Simple Interest
$100 deposited in an account earning 2% interest
$100
.02 $2
per year
Look for high interest rates when earning interest
Look for low interest rates when paying interest

18. What if You Saved $5 a Day Where can you find $5?
Show the comparison of saving $5 a day over a period of time with and without interest.
When thinking about the benefits of just a little sacrifice, you can see how it can make a difference over time.
Where can you find $5?

19. Credit Borrowing money Loans Credit cards
What is it?
What can you do?
Other Information
Borrowing money
Loans
Auto
Home
Student
Credit cards
You will pay back the money borrowed plus interest

20. Loan Services: When should I get a loan? Car Loan (Installment Loan)
Repaid over time with a set number of scheduled payments for a certain term (i.e. 48 months)
Home Loan (Mortgage Loan)
Home ownership - a long-term living commitment to be over the next 15 to 30 years. An investment that is much more reliable than anything the stock market can offer.
Credit Card
Variable interest rate. May include additional fees and finance charges.
At some point you may consider getting a loan for a car, house or for other expenditures.
A car loan, or installment loan, is repaid over time with a set number of scheduled payments for a certain term (i.e. 48 months)
A home loan, or mortgage loan, a long-term living commitment to be over the next 15 to 30 years. An investment that is much more reliable than anything the stock market can offer.
A credit card may be used for emergencies or other expenses. It is convenient to use. It has a variable interest rate depending on your credit score. May include additional fees and finance charges.
*Read the fine print. It may include more details that can cost you more than expected in the long run. (Annual fees, early termination fees, etc.)
Read the fine print. It may include more details that can cost you more than expected in the long run. (Annual fees, early termination fees, etc.)

21. How long would it take to pay off my credit card balance?
$250
$500
$1,000
Interest Rate
Years to pay off at 2%
Minimum Payment*
15%
1.58
3.67
9.83
18%
1.67
3.92
12.58
21%
4.25
19.58
24%
1.75
4.67 ?
$ int.
$1, int.
$2, int.
$ int.
$ int.
$ int.
$32.09 int.
$39.85 int.
$48.18 int.
$57.18 int.
$ int.
Show the comparison of borrowing with a variety of interest rates. If you pay 2% or the minimum each month it could potentially take you years to pay off your credit card. In some situations, you may never pay off your credit card debt.
Always consider the long-term effects when making purchases using a credit card.
Do I really need to buy those shoes?
*2% is the typical minimum payment requirement or $10, whichever is higher

22. Today’s good saving habits will pay off tomorrow!
Which option is better?
Saving? OR
Credit Card?
$19 earned
$470 earned
Show the difference between saving and spending using the two charts.
Saving and may be worth the sacrifice if you can budget for it. Remember to create a budget and stick to it so you’re not stuck paying off debt for years to come.
$1,938 earned
Saving is well worth the money. Remember to create a budget and stick to it.
Today’s good saving habits will pay off tomorrow!

23. How is my credit score calculated?
What is a credit score?
A credit score is a three digit number used by lenders to determine your creditworthiness for a mortgage, loan or credit card. Your score can affect whether or not you are approved as well as what interest rate you are charged.
How is my credit score calculated?
A credit score is a three digit number used by lenders to determine your creditworthiness for a mortgage, loan or credit card. Your score can affect whether or not you are approved as well as what interest rate you are charged.
Your credit score, also known as FICO Score, is calculated from several different pieces of credit data in your credit report. This data is grouped into five categories; payment history, amounts owed, length of credit history, new credit, and types of credit used.
Your FICO Score considers both positive and negative information in your credit report. Late payments will lower your FICO Score, but establishing or re-establishing a good track record of making payments on time will raise your score.
In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO Score.

24. $ I.O.U. Use Credit Wisely Obtaining a loan or credit card… Advantages
Build credit
Rent a car
Available for emergencies
Bonuses/Frequent flyer miles
Online purchases
Convenience
Disadvantages
Negatively affect credit
Debt accumulation
Years to repay debt
High interest rates
Repayment could be 3 to 5 times the original purchase price
When or if you obtain a loan, or extended credit, make sure you use it wisely. There are advantages and disadvantages to credit.
Advantages – Using credit wisely will help you build your credit score. Some rental car companies will pull your credit to determine if you are responsible. A credit card is useful for emergencies. When using a credit card with a ‘point rewards program’ you can redeem points for merchandise, flying miles, gift cards or cash back. A credit card is easy to use for online purchases, keeping your debit card free from potential fraud. A credit card is more convenient that applying for a personal loan without collateral.
Disadvantages – If you do not pay your bill on time or if you have too high of a balance it can negatively affect your credit score. If you are undisciplined about your borrowing or spending you can accumulate too much debt, which can be difficult to pay off. If you only pay the minimum payments it can sometimes take years to pay off. Credit cards have a much higher interest rate than personal loans, making the repayment three to five times more than the amount of the original purchase.
Make wise choices when borrowing or using a credit card. $
I.O.U.

25. Has been accepted to a university 3 hours from home
Meet Josie
Senior in high school
Has been accepted to a university 3 hours from home
Making important decisions about her future, especially regarding money
Looking for a safe place to store her money and pay her bills while at college

26. Help Josie manage her money by choosing a depository institution
Found two depository institutions in her hometown that also have branches near her college
She has summarized their information on the “Josie’s Depository Institution Comparison Chart”
Your mission:
Learn more about Josie and depository institutions to help her make the best choice

27. Josie’s Depository Institution Comparison Chart (Homework)

28. Josie’s Depository Institution Scavenger Hunt Cards

29. Josie’s Depository Institution (Page 3)

30. Questions?
Questions?