Prep 2016 Flashcards
What is a market?
All the potential customers sharing a particular need or want an able to exchange to satisfy that need or want
What are the five types of products strategies?
Expansion contraction modification re-positioning training up or down
What are the five adopter categories?
Innovators early adopters early majority late majority laggards
Name the distribution channels.
Branches phone ATM online banking plastic cards mobile banking virtual branches/video intermediaries
Who does the Federal Reserve regulate?
Bank holding companies and member state banks
Who does the FDIC regulate?
State commercial banks who are not fed members and state savings associations
Who does the OCC regulate?
National banks
Who does the NCUA regulate?
Credit unions
Who does the OTS regulate
Federal charter savings and loans
What is the Graham Leach Bliley act?
Requires financial institutions to explain their information sharing practices to their customers and to safeguard sensitive data.
Applies to customer privacy protections and disclosures.
Also known as the financial services modernization act of 1999
What is the truth in savings act?
Establishes uniformity in the disclosure of terms and conditions regarding interest and fees when giving out information on or opening a new savings account
Enables consumers to make informed decisions about their accounts at depository institutions through the use of disclosures
Implemented by Reg DD
Applies to consumer, not commercial/business, deposit accounts
When is a consumer entitled to receive disclosures through the truth in savings or Reg DD requirements?
When account is opened,
Upon request,
when the terms of the accounts are changed,
when a periodic statement is sent; and
for most time accounts before the account matures
What are a few key triggering terms for Reg DD?
Profit
Free
Annual percentage yield
If you state annual percentage yield, Reg DD says you must then….for a fixed rate account?
Include the interest rate and disclose the period of time that the interest rate will be in effect
If you state annual percentage yield, Reg DD says you must then….for a variable rate account?
Include the interest rate and
the fact that the interest-rate an annual percentage yield may change,
How the interest rate is determined,
the frequency with which the interest rate may change, and
any limitation on the amount the interest rate may change.
What does regulation Z cover?
It covers advertising loan products and/ or terms but only applies to consumer loans
Regulation Z must provide?
- Clear, accurate, and balanced information
- Rate of interest must clearly be stated as an APR and include number of payments, amount of payments, amount of any finance charge, and amount/percentage of any down payment
3 The terms of repayment including an example, the APR, and amount/percentage of any down payment must be disclosed
If an advertisement mentions the word dwelling or is discussing any type of dwelling you must include?
The equal housing lender/equal housing opportunity logo
Non-deposit investment products are?
- Not FDIC insured
- product is not a deposit or other obligation of or guaranteed by the bank
- product is subject to investment risks including possible loss of principal
When must the FDIC logo be included?
All advertisements except ads for loans, nine deposit investment products, and any other non-insured product/service
UDAAP stands for what?
Unfair/Deceptive/Abusive Acts and Practices
Under UDAAP written disclosures in the Textor fine print of a footnote maybe ______ to correct a missing headline.
Insufficient
What is the difference between a contest and a lottery
Valuable consideration
A bank is required to retain evidence of compliance with regulations DD for how many years?
Two years
What is regulation Z?
The truth in lending act is implemented by regulation Z.
To promote the informed use of consumer credit by requiring disclosures about its terms and costs
Regulation Z prohibits…
Specific acts and practices in connection with an extension of credit secured by a consumers dwelling
Certain practices relating to payments made to compensate mortgage brokers and other loan originators.
A radio advertisement that promotes home-improvement loans requires what disclosure?
Equal housing lender
What are the three types of market data?
Customer profile
Marketplace profile
Competitive profile
What is primary data?
Data collected for a specific need
What is secondary data?
Data collected for a general purpose
What is qualitative data?
Information about how people
What is quantitative data
Statistical information which can be applied to a larger population
What are the six steps for a customer experience in sales research study?
- Define the problem
- plan the research project
- Collect data
- Analyze data
- Report the research results
- Integrate data into planning
What is the internal sales process steps?
Recruiting
training
motivating
monitoring
What is market segmentation?
Dividing abroad target market into subsets of consumers who have common needs and applications for the relevant goods and services
Uses products or services to meet diverse customer needs
What is market penetration?
A measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service
What is The definition of return on investment (ROI)?
The measure of the economic performance calculated by comparing incremental profit driven by the investment made (lift)
How do you calculate return on investment? (ROI)
ROI=(incremental profit - marketing investment)/marketing investment
What is the calculation for ROE return on equity?
Net income / average total equity
How do you calculate return on assets ROA?
Net income/average total assets
How do you calculate spread?
Earning asset yield - cost of funds rate
How do you calculate profit margin?
Net income / total income
How do you calculate earnings per-share?
Net income/number of shares outstanding
How do you calculate loan to deposit ratio?
Not loans / total deposits
How do you calculate net interest income?
Interest income – interest expense
How do you calculate earning assets to total assets?
Interest producing assets/total assets
How do you calculate yield on earning assets?
Gross interest income/average earning assets (earning asset yield)
???? Ask about this
How do you calculate the cost of interest-bearing liabilities?
Interest expense/interest-bearing funds (cost of funds rate)
What is strategic planning?
The vision and mission of the bank or firm
What is marketing planning?
The tactical methodology for reaching the strategic goals
What is marketing?
Marketing is an organizational function and a set of processes for creating communicating and delivering value to customers and for managing customer relationships in ways that deliver benefit for the organization and its stakeholders
What are the components of marketing mix?
Product
price
promotion
place (distribution)
What drives the marketing concept?
- declining sales or market share
- slow growth
- A change in buying patterns
- increased competition
- increased budgetary pressures
What are a few marketing strategies?
Market penetration
market expansion
product expansion diversification
What are segmentation strategies?
Geographic
demographic psychographic
volume
benefit
What are budgeting methods?
- Percentage method
- competitive parity
- method incremental
- method objective and task method
What is the percentage method for budgeting?
Allocating a fixed percentage of the anticipated revenue to the budget
?? Check
What is the competitive parity method for budgeting?
A retailers budget is raised or lowered based on the actions of competitors
What is the incremental method for budgeting?
A traditional budgeting that that whereby the budget is prepared by taking the current. Budget or actual performance as a base with incremental amount then been added for a new budget period
What is the objective and task method for budgeting?
Built by examining each goal or objective in the tasks necessary to reach these objectives in order to build a budget
The challenge is the difficulty of accurately assessing the cost necessary to accomplish the goals
Fed funds are best described as:
Overnight borrowings that banks deposit with the Federal Reserve
What is brand?
Brand is the identification of the sum total of the customers experience with an organization
What is the number one driver of intended customer loyalty?
A customer experience has a greater impact on customer retention when compared to location and advertising
What is brand promise?
Relevant differentiating benefits the brand promises to deliver
What is Brand experience?
Consumer perceptions of what the brand delivers
What is brand value?
Monetary premium that results from consumer commitment to a brand
What is strategic branding?
Converts your desired image and reputation into memorable experiences that impact perceptions of your institution
What is public relations?
A way for companies organizations or people to enhance their reputations
Working with the media and other organizations to create goodwill
What are examples of public relations goals?
Raise awareness in the community Enhance credibility Motivate your staff Build customer loyalty Improve your image/boost your reputation
What are the components of public relations?
Research Media relations publicity employee relations community relations special events marketing communications
What is social media?
Websites and applications that enable users to create and share content or participate in social networking
What is search marketing?
The process of gaining traffic in visibility from search engines through both paid and unpaid efforts.
Encompasses both search engine optimization and search engine marketing.
Lifestyle segment factors
Age
Income
Marital status
Children living at home / no children at home
What is marketing planning?
The marketing plan is a way to focus your resources on the greatest opportunities in the marketplace in order to meet or exceed your goals.
What are the 5 steps of the marketing planning process?
- Identify key areas of focus
- Understand your market
- Build your marketing plan
- Implement marketing plans
- Evaluate and report
What is the calculation for ROI?
ROI = r-c / c
Revenue - cost / cost
Equation for loan spread:
Spread = Weighted average rate of each loan type - cost of funds
Equation for first year revenue on a loan of a campaign:
First year revenue = Spread x balance of loans
Calculation for net 1st year revenue.
Spread x balance
Spread = loan yield - interest paid
Spread on deposit acct
Loan yield - interest paid
Spread on loan =
WAR - COF = spread.
Spread x balance of loans = first year loan revenue
ROAA
Return on average assets
= net income / average total assets
ROAE
Return on average equity
= net income / average total equity
Net interest margin
Net interest income / average earning assets
Yield on earning assets
Interest and dividend income / average earning assets
What is cost of funds?
How much it cost to find your bank
What is the equation for cost of funds?
Interest expense / average interest bearing liabilities and non-interest-bearing deposits
What is the definition of efficiency ratio?
How much it cost to create one dollar revenue
What is the equation for an efficiency ratio?
Operating expense / net interest income + non interest income
Calculation for expense ratio
Operating expenses / average assets
Assets =
Liabilities + equity
What potential issues to look for in a balance sheet?
- Periodic large changes in balances
- Concentration risk
- Asset quality / past due loans
- Equity / capital adequacy.
Net income =
Net income = revenue - expense.
Revenue is
The income generated by the bank
Interest income and non-interest income
Expenses represent…
Cost of the bank operations
Interest expense and non-interest expense
Income statement - most important is….
Net income. Are we making money?
What to look for in the income statement.
Large. Over. Changes and balances Extraordinary or one time benefits or expenses Charge-offs or provisioning Tax efficiency Net income
Balance sheet risk types
Liquidity risk
capital risk
credit risk and
interest rate risk
What does EVE stand for and what does it mean?
Economic value of equity represents the value of assets on the balance sheet
Product profitability
A marketing tool to determine organizational resources required to deliver products to customers versus the revenue per the product
Organizational profitability
Management tool to assist in improving organization performance by measuring the results of organizational units the reflect how the institution is managed
What is funds transfer pricing?
Determining the spread of an account by matching the interest income or interest expense to a market instrument such as an FHLB borrowing of the same duration
