Mgt. of Fin'l Institutions



Management of Financial Institutions

Business 405 Section 1 (TTh, 11:00-12:15 p.m.)

Clark 158

Fall 2004

Credits: 3 Semester Hours

Prerequisite(s): Pre-Business Core (see catalog)

Instructor: James Taylor; Office: Smith 353; Phone: x2696; Email: taylorja@byui.edu

Office Hours: MTWTh 9:15-10:50, and F 10:00-11:00, other times by appointment.

Messages may be left via voice mail, email, or with the Business Management secretary’s office (SMI)

Required Texts: Bank Management & Financial Services, Sixth edition, McGraw Hill, Peter S. Rose

Calculator: Students are required to have a calculator that handles basic business and financial functions, including time value of money calculations and cash flow analysis (IRR, NPV, & Pmt), such as the HP 10BII, or 12C.

Course Description:

The course covers management of credit institutions including banks, savings and loans, mutual funds, commercial and consumer finance companies and investment banks. The course deals with regulation of institutions, balance sheet management, loan policy, investments, domestic and international banking institutions.

Course Objectives: Each student will be able to:

1. Understand how banks are organized and regulated, the services they provide, and how the bank’s activities are reflected in financial statements.

2. Understand the risks inherent in financial institutions and how they manage risks regarding the relationship of assets and liabilities, interest rates, credit risk, and issues regarding loan portfolio management.

3. Understand the issues surrounding the sources and uses of funds for banks, the pricing of deposits, the impact of services and fee income, non-deposit liabilities, and equity capital position.

4. Understand bank lending, including loan policies, pricing, documentation and relationship management.

Grading:

Unit Exams (4) 300 points (75 points each)

Current Even Write-Ups 30 points (10 points each)

Final Report/Presentation 50 points (10 points each)

Quizzes 50 points (5 points each)

Excel Assignments 24 points (3 points each)

Excel Final 30 points

Cases & Other In-Class Exercises 12 points (1 point each)

Homework exercises 54 points (3 points each)

Total 550 points

Grading Scale:

93-100% -- A 73-76.99% -- C

90-92.99% -- A- 70-72.99% -- C-

87-89.99% -- B+ 67-69.99% -- D+

83-86.99% -- B 63-66.99% -- D

80-82.99% -- B- 60-62.99% -- D-

77-79.99% -- C+ 0-59.99% -- Fail

NOTES:

Exams: Four unit exams of 75 points each will be held at the testing center. The exams will use a variety of question types, including multiple choice, fill-in-the-blank, calculations, and essay questions. Exams will include material from the text as well as from classroom discussion. The exams will be oriented toward the basic understanding and application of terms and concepts.

Current Event Write-Ups: You will be required to find an article in the business press that pertains to the assigned topic. After identifying your name and class, you should provide the author, date, and source of your article. Then, using #11 font, standard 1-inch margins, and 1.5 spacing, submit a one-page essay with the following sections:

1. Summary - A brief summary of the article. One paragraph, do not plagiarize.

2. Application - An explanation of how it illustrates or relates to the concepts or terms covered in class in the text.

3. Analysis - Most importantly, your own opinions or editorial comments regarding the article and topic. Do not give me two sentences on the order of “I really liked this article” and “I think I can use this in my daily life.” I expect something that reflects independent thinking, analysis, and application. Describe, for example how the subject may apply to your future job, the impact it might have, whether the author is mistaken or correct, what changes should be made, how business might better address the subject, etc.

Note – Please attach a copy of the article to your write-up.

Homework Exercises: Homework problems will be assigned for most of the chapters that will be covered. The homework assignments are due at the BEGINNING of class. I would suggest two copies – one to turn in and one to take notes on during class discussion. For full credit, the student must have attempted a solution to each problem. Accuracy will also impact the grading on homework. While students may work together on homework, the final product must be produced independently

In-Class Work: Much of the classroom discussion will be based on assignments worked on during class and handed in at the end of the class period. For a student to receive credit, he or she must be in class when the assignment is provided, and must contribute in the solution and discussion.

Quizzes – Approximately ten quizzes will be taken. Quizzes will be based on reading assignments and may be formatted as multiple choice, fill in the blank, essay, or calculations.

Excel Work – Students will be required to perform various assignments in excel. Excel assignments will be submitted via e-mail to the instructor before class-time on the day they are due. While students may work in groups to study and solve problems, each excel assignment is to be produced and completed independently.

Excel Final – During the final period, the class will be in one of the computer labs. Students will be provided with a list of questions or problems. The student will be required to work independently and create spreadsheet solutions in Excel to answer the question or solve the problem.

Project: With three or four of your classmates, select a local financial institution. Contact the manager, and gather information regarding the institution. Interview the manager. Prepare a report and presentation outlining how your financial institution relates to each of the areas covered during the semester. For example, how is the institution organized, how is it regulated, how or where does it obtain its funding, how does it manage risk, what are its loan policies, etc. Presentations will be made during the last two days of class.

Class Policies:

• Attendance - Attendance is important. Although attendance is not recorded, please be aware that some test material will come solely from in-class lectures. In addition, there will be many in-class assignments for which students can receive credit only be being present during class time.

• Absence - If you miss a class for any reason, it is your responsibility to contact a classmate or the instructor (during office hours) to determine if any assignments were made or schedules changed.

• Extra Credit – There is no extra credit.

• Late Work - Late homework assignments will be accepted, but will be marked down by 50% and must be turned in by the end of the next day. No assignments will be accepted after the final day of class. Assignments can be turned in early if you are worried about meeting the delivery time, the amount of money on your copy card, or whether the printer will be working.

• Emergencies - If an assignment is late due to a medical emergency or family emergency, please contact the Instructor via voice mail, email, etc. and we will work out a reasonable schedule for completion of the assignment. You may turn in class work early if you plan to miss a class for personal (non-emergency) reasons.

• Grading – Updates to class grades will be available on the web site. If you prefer the instructor to use something other than the last four digits of your social security number as a reference for your work, please provide your own substitute four digit code.

• Study habits – You are expected to spend 2 to 3 hours studying outside of class for each hour of time in class.

• Food – No food is allowed in class.

• Cell Phones – As a courtesy, please turn your cell phone off before class starts.

• Leaving Early – If you will have to leave class early, please notify the instructor before the beginning of class.

• Plagiarism & cheating – The student will receive an F in the class and the possibility of dismissal from school for cheating or plagiarism on ANY assignment.

• Honor Code - Code of Honor and Grooming standards will be observed in the classroom and in the testing center.

• IN COMPLIANCE WITH APPLICABLE DISABILITY LAW, QUALIFIED STUDENTS WITH A DISABILITY MAY BE ENTITLED TO “REASONABLE ACCOMMODATION.” IT IS THE STUDENT’S RESPONSIBILITY TO DISCLOSE TO APPROPRIATE PERSONNEL IN THE SSD OFFICE ANY SPECIAL NEED HE OR SHE MAY HAVE AND TO PROVIDE THE APPROPRIATE DOCUMENTATION OF THE DISABILITY. THE SSD OFFICE IS LOCATED INSIDE THE LEARNING ASSISTANCE CENTER, MCKAY LIBRARY 1ST FLOOR.

Class Schedule: The following represents a tentative schedule for this class. The instructor reserves the right to make changes, deletions, corrections, or additions during the course. You will be given notice in advance of any changes.

Assignments are from required text, unless otherwise noted. Key: P=Problems & Projects at end of each chapter; IE=Internet Exercises at the end of each chapter; S&P=Standard & Poor’s Market Insight Challenge; CE= Current Event write-up; Excel=Microsoft excel exercises provided by the instructor; Other=Special assignment from Instructor

|Date |Discussion Topic |Chapter Reading Assignment |Assignment(s) due |Special Notes: |

| | | |today: | |

|August |

|31 Tues |Introduction—Course Review | | | |

|September | | | | |

|2 Thurs |Banks & Services |Ch. 1 | | |

|7 Tues |Banks & Services |Ch. 1 |Ch.1-P: 2,4,5,7,8; | |

| |Bank Regulation |Ch. 2 |IE:2,3 | |

|9 Thurs |Bank Regulation |Ch. 2 |Ch.2-P:1,3,4,5,6 | |

|14 Tues |Bank Organization & Structure |Ch. 3 |CE: “Redlining” | |

|16 Thurs |Bank Organization & Structure |Ch. 3 |Make Bank Visits | |

|21 Tues |Financial Statements |Ch. 4 |Other- Report back | |

|23 Thurs |Financial Statements |Ch. 4 |Ch.4-P: 1,2,3,8,9,10 | |

| |Measuring/Evaluating Performance |Ch. 5 | | |

|28 Tues |Measuring/Evaluating Performance |Ch. 5 | | |

|30 Thurs |Measuring/Evaluating Performance |Ch. 5 |Ch.5-P: 1,5,7,12,13 |Exam 1 Chap 1-5 |

| |Review | | |(Testing Center) |

| | | | |Open 9/30 Close 10/1 |

|October | | | | |

|5 Tues |Asset/Liability Management |Ch. 6 | | |

|7 Thurs |Asset/Liability Management |Ch. 6 | | |

|12 Tues |Financial Futures |Ch. 7 |Ch.6-P: | |

| | | |1,2,6,7,10,11,12,13,14,| |

| | | |15,16,17,18 | |

|14 Thurs |Financial Futures, Options, Hedges |Ch. 7 |Ch.7-P: | |

| |Other Risk Management Tools |Ch. 8 |3,4,5,6,7,8,13,14 | |

|19 Tues |Other Risk Management Tools |Ch. 8 |Ch.8-P: 1,2,5 |Exam 2 Chap 6-8 |

| |Review | | |(Testing Center) |

| | | | |Open 10/19 Close 10/20 |

|21 Thurs |Investment Function in Banking |Ch. 9 |CE: “Accounting for | |

| | | |Derivatives” | |

|26 Tues |Liquidity & Reserve Management |Ch. 10 |Ch.9-P: | |

| | | |1,2,3,7,11,12,13 | |

|28 Thurs |Managing & Pricing Deposits |Ch. 11 |Ch.10-P: 1,2,3,5,6 | |

|November | | | | |

|2 Tues |Managing Non-Deposit Liabilities |Ch. 12 |Ch.11-P: 1,2,3,4, IE: | |

| | | |3,4 | |

|4 Thurs |NO CLASS – Bus.Conference | | | |

|9 Tues |Sources of Fee Income |Ch. 13 |Other: Ch 12 table | |

| | | |Ch.13-P: 1,2 | |

| | | |IE: 1,2, | |

|11 Thurs |Management of Capital |Ch. 14 |Ch.14-P: 2,3,6,7, |Exam 3 Ch 9-14 |

| | | | |(Testing Center) |

| | | | |Open 11/11 Close 11/12 |

|16 Tues |Lending Policy & Procedure |Ch. 15 |Excel: #1 | |

|18 Thurs |Lending Policy & Procedure |Ch. 15 |Excel: #2 | |

|23 Tues |Loans to Business |Ch. 16 |Excel: #3 | |

|25 Thurs |NO CLASS – Thanksgiving | | | |

|30 Tues |Loans to Business |Ch. 16 |CE: “Lender Liab.” | |

|December | | | | |

|2 Thurs |Loans to Business |Ch. 16 |Excel: #4 | |

|7 Tues |Consumer Loans |Ch. 17 |Excel: #5 | |

|9 Thurs |Consumer Loans |Ch. 17 |Excel: Misc Problems |Exam 4 Ch 15,16,17 & Other |

| |Project Presentations | | |Topics |

| | | | |(Testing Center) |

| | | | |Open 12/9 Close 12/10 |

|14 Tues |Project Presentations | | | |

|17 Fri |Final – Excel Problems | | |5:50-7:50 p.m. |

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