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Apole, Fhremond C.

FM3A

1. How do you regulate non-bank financial service firms competing with banks?

A non-bank financial institution (NBFI) is afinancial institution that does not have a

fullbanking license or is not supervised by a national or international banking regulatory agency. NBFIs

facilitate bank-relatedfinancial services,such asinvestment,risk pooling,contractual savings,

andmarket brokering.Examples of these includeinsurance firms,pawn shops,cashier's check

issuers,check cashing locations,payday lending,currency exchanges,andmicroloan organizations.

2. What is the structure of Federal Reserve System compared to BSP?

The Federal Reserve System is composed of five parts:

1. The presidentially appointed Board of Governors (or Federal Reserve Board), anindependentfederal government agency located inWashington, D.C.

2. TheFederal Open Market Committee (FOMC), composed of the seven members of the FederalReserve Board and five of the twelve Federal Reserve Bank presidents, which overseesopen

market operations,the principal tool of U.S. monetary policy.

3. Twelve regionalFederal Reserve Banks located in major cities throughout the nation, whichdivide the nation into twelve Federal Reserve districts. The Federal Reserve Banks act as fiscal

agents for the U.S. Treasury, and each has its own nine-member board of directors.

4. Numerous other private U.S. member banks, which own required amounts of non-transferablestock in their regional Federal Reserve Banks.

5. Various advisory councils.

http://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Risk_poolhttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Stockbrokerhttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Pawn_shophttp://en.wikipedia.org/wiki/Cashier%27s_checkhttp://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/Payday_loanhttp://en.wikipedia.org/wiki/Bureau_de_changehttp://en.wikipedia.org/wiki/Microfinancinghttp://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_governmenthttp://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_governmenthttp://en.wikipedia.org/wiki/Washington,_D.C.http://en.wikipedia.org/wiki/Federal_Open_Market_Committeehttp://en.wikipedia.org/wiki/Open_market_operationshttp://en.wikipedia.org/wiki/Open_market_operationshttp://en.wikipedia.org/wiki/Federal_Reserve_Bankhttp://en.wikipedia.org/wiki/Federal_Reserve_Bankhttp://en.wikipedia.org/wiki/Open_market_operationshttp://en.wikipedia.org/wiki/Open_market_operationshttp://en.wikipedia.org/wiki/Federal_Open_Market_Committeehttp://en.wikipedia.org/wiki/Washington,_D.C.http://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_governmenthttp://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_governmenthttp://en.wikipedia.org/wiki/Microfinancinghttp://en.wikipedia.org/wiki/Bureau_de_changehttp://en.wikipedia.org/wiki/Payday_loanhttp://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/Cashier%27s_checkhttp://en.wikipedia.org/wiki/Pawn_shophttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Stockbrokerhttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Risk_poolhttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Financial_institution

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3. Illustrate organizational chart of a smaller community banks as compared to bigger community banks.

Small community banks

Chief Financial Officer

In a community bank, the audit department is overseen by the chief financial officer. It

is her responsibility to marshal the banks financial statements at the end of the fiscal year.

Misrepresenting any portion of these statements can lead to fines and other regulatory

sanctions against the bank. Additionally, should a community bank decide to go public, its

financial statements are reported to the United States Securities and Exchange Commission. Any

oversights the audit department fails to catch can become a material weakness reported to

investors.

Audit Committee

The CFO will put together an audit committee to oversee the internal examination

process. The committee will vote on the audit schedule, strategy and the comprehensiveness of

the exams. This committee will be made up of bank officers representing each area being

audited, including deposits, operations, lending, compliance, business development and

information technology.

Internal Auditors

The audit department will be composed of one or more internal auditors. The internal

auditor is the person who physically performs the exam. He will contact a department to be

audited as dictated by the committee. He selects a sample of that departments work and

requests the most current copy of departmental procedures. He will examine the work to

ensure that it not only follows the appropriate procedures, but that it is in line with the

regulations that govern the bank.

Support Staff

Depending on the size of the bank, the audit department will use support staff to

enhance its functions. Support staff will perform a variety of tasks from collecting files to making

copies to typing reports. An audit department at a large community bank with several branches

will require more staff because the amount of paperwork and detail needed to perform the

review is larger than a community bank with a single location.

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Big community banks

4. What is an electronic banking system services?

Personal Internet Banking

The same technology that allows you to browse, chat, and send email also lets you do

your banking from your PC. PNBs Internet Banking service offers you convenience and security.

What you can do:

Monitor account balances Transfer funds to family and friends Pay your bills Schedule payments and fund transfers in advance and program recurring transactions Order checkbooks View statement of account online Get notification via email to help you monitor your transactions

Phone Banking

Phone Banking allows you to do your banking transactions from the comfort of your

home or office.

What you can do:

Check your account balances Inquire your last transactions/remittance

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Transfer funds to family and friends Pay your bills Order checkbooks without going to the bank Request for a copy of your statement of account which can be sent through email Report lost/stolen ATM card/passbook

Mobile Banking

Banking just got better. Now you can do your banking transactions anytime you need to,

from wherever you happen to be. Using your mobile phone, you can enjoy the convenience and

security of PNBs Mobile Banking service.

What you can do:

Inquire on your account balances and last transactions/remittances Transfer funds to family and friends Pay your bills

Automated Teller Machine

Get access to your cash and to banking transactions any time of the day through PNBs

nationwide network of ATMs.

What you can do:

Withdraw cash from your ATM accounts affiliated with Bancnet, Megalink, andExpressnet networks

Inquire your account balances Get a cash advance using your VISA card with PLUS logo (at the back of the card)

5. What is the difference between E-banking and E-commerce?E-Banking and E-Commerce refer to electronic mode of doing business. This is the age of

computers and internet and it is making its presence felt in all walks of life. Banking and trading

have not remained aloof and have embraced advancements gleefully to make both banking and

buying and selling easier, fast and more convenient for people. The difference between e

banking and e commerce is self-evident and is clear from the phrases. However, there are

overlapping as e banking is often involved in many cases of e commerce.

E-Banking

E banking or online banking is nothing but allowing a customer to use internet to access

his account anytime he wishes sitting in the comfort of his home or office or anywhere else. E

banking, which started slowly has today become a need and also allows banks to cut down on

expenditure involved with extra staff. Customers are happy as they are not required to go to the

bank physically for various reasons and can conduct financial transactions even in the middle of

night when the banks are closed. This has led to a revolution of sorts and has in fact given a

boost to trade and commerce.

E-Commerce

E commerce is the name given to trading activities that are conducted using the power

of internet. E commerce is simply online transactions. Buying and selling of goods and services

using money through internet. E commerce can be between businesses to businesses when it is

called B2B or business to consumer when it is called B2C.

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6. What are the factors to consider in putting a new branch?

Desirable Sites for New Branches

Among the most desirable sites for full-service branch offices today are those with at least some of the

following characteristics:

1. Heavy traffic count (for example, 30,000 to 40,000 cars per day), indicating a large flow of vehicular

traffic (and potential customers) passing near the proposed site, but even at peak times (e.g., on Friday

afternoons) customers must be able to easily see and access the office and its drive-up windows.

2. Large numbers of retail shops and stores present in the surrounding neighborhood, which usually

generate a substantial volume of loan and deposit business.

3. Populations that are of above-average age(particularly those individuals 45 years of age and older)

who often have substantial amounts of savings and need advice on how to invest those savings.

4. A surrounding area that encompasses substantial numbers of business owners, managers, and

professional men and women at work or in residence.

5. A steady or declining number of service facilities operated by financial-service competitors, leaving a

substantial volume of business that a new branch might be able to attract.

6. Above-average population growth, usually favorable to establishing a branch office in an area.

7. Above-average population density (i.e., a greater number of persons per square mile around the

proposed site).

8. A relatively high target ratio of population per branch; measured by:

In the United States, for example, there is an average of about 4,000 people per branch office. However,

some nations have even higher average population-per-branch ratios. For example, Austria andGermany count more than 10,000 people per bank branch, while Japan estimates more than 8,000

people per branch office. The larger the population served by each office, the more financial services is

likely to be purchased, expanding revenues and enhancing operating efficiency

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9. Above-average levels of household income, with higher-income groups usually offering branch offices

the opportunity to sell more services. For offices designed primarily to attract deposits, key branch sites

to look for usually include neighborhoods with relatively high median incomes, heavy concentrations of

retail stores, older-than-average resident populations, and high proportions of homeowners rather than

renters. On the other hand, financial firms seeking more checking accounts through their branches

generally should enter neighborhoods with high levels of family income as well as areas where retail

stores are concentrated. Higher levels of savings deposits are usually to be found in markets where

there is an above -average proportion of older heads of households (including retired individuals) and a

large proportion of residence who own their own homes.

For branches primarily created to generate loan demand from household customers, residential

areas with a heavy proportion of young families and substantial new home construction, along with

concentrations of retail stores and high traffic flow, are particularly desirable locations. In contrast,

commercial loan demand is usually focused upon central city office locations where a lending

institutions credit analysts and loan approval committees are normally housed.