1. Seminar: Timely Topics for Today’s Business World Mr. Bernstein Banking February 23-24, 2014

2. Traditional Role of Banks Individuals (“retail”) deposit savings, earning a return of x% Banks loan money to businesses with interest rate x+5%  Banks earn a “spread” of 5% Banks lose money when a loan is not repaid  If they earn a spread of 5% and 1 in 20 loans is not repaid, they do not make money. 2 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

3. Traditional Role of Banks Banks can “leverage” by loaning out more money than they hold in deposits If a bank with 5% average spread loans out $2 for every $1 in deposits, and 1 in 20 loans is not repaid, they will lose money Government officials regulate the amount of leverage banks may use (“reserve requirements”) This leveraging allows banks to essentially create money and is an important part of a thriving economy 3 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

4. Types of Personal Banking Financial Services Checking Accounts Savings Accounts CDs Debit Cards Credit Cards Direct Deposit Overdraft Protection Bill Paying ATMs 4 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

5. Other Financial Services offered by Banks* Personal and Auto Loans Home Mortgages and Home Equity Loans* Investment and Retirement Products* Home, Life and Auto Insurance* *These products and services are typically offered by another division of the bank or even an outside partner. Your local branch office is essentially acting as a sales conduit, making a helpful introduction to another entity. 5 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

6. Why do banks offer other Services? 6 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

7. CD rates, 1965- Present (& still near zero in 2015…) 7 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

8. CD rates, 1965- present 8 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

9. Fed Funds Rate 1952- present 9 Seminar: Timely Topics for Today’s Business World Mr. Bernstein

10. Interest Rates for Savers Why are rates currently so low? Is it reasonable to assume rates likely to remain low throughout your lifetime? What is the relationship between inflation and interest rates? 10 Seminar: Timely Topics for Today’s Business World Mr. Bernstein