Chatering new financial institutions ,Establshing new full-service branch offices, Setting up limited service facilities
Benefits of Applying for a federal (national) bank
Added prestige due to strict regulatory standards, authorities may be of better quality in times of trouble to enable long term survival, Federal banking rules can pre-empt state laws
Benefits of Applying for a state bank charter
Easier and less costly with less supervision, need not joid Fed Reserve, some stantes allow to lend a higher % of capital to a single borrower, offer certain services like real estate brokerage that national bankds can't
Questions regulartors usually ask the Organizers of a new (de novo) bank
What are the ppulation and geographic boundaries of the primary service area from which the new financial firm is expected to generate most of its loans and deposits?
Questions regulartors usually ask the Organizers of a new (de novo) bank
How many competiting banks, savings and loans, credit unions, finance companies, and insurance companies are located within the service area of the proposed new financial institution?
Questions regulartors usually ask the Organizers of a new (de novo) bank
What are the number, types, and sizes of business in the area? What are the traffic patterns in the proposed area?
External factors weighting on Decision to Seek a New Charter (2)
Level of economic activity, growth of economic activity, need for a new financial firm
Internal factors weighing on Decision to Seek a New Chater (2)
Qualifications and contacts of organizers, management quality, pledging of cpital to cover cost of new charter
Branch offices vs. new financial corp
Branches are cheaper (n onew charter or resources)
Desirable Sites for new Branches (3)
Heavy traffic count, large #'s of retail shops and stores, populations above average age, above average of population growth and density, Above-average levels of household income.
Geographic diversification
effect that reduces overall risk exposure (expected rate of return, various of E(r), covariance of E(r) from new branch and existing assets
Things to consider in the expected return of a new branch
Risk and covariance of a proposed new branche's expected return
Buen Viaje lv.2 ch 8
