Chapter12-ManagingandPricingDepositServices12-CHAPTER12MANAGINGANDPRICINGDEPOSITSERVICESGoalofThisChapter:Thischapterhasmultiplegoals.Oneofthemostimportantistolearnaboutthedifferenttypesofdepositsfinancialinstitutionsofferand,fromtheperspectiveofamanager,todiscoverwhichtypesofdepositsareamongthemostprofitabletooffertheircustomers.Wealsowanttoexplorehowaninstitution’scostoffundingcanbedeterminedandexaminethedifferentmethodsopentoinstitutionstopricethedepositsanddeposit-relatedservicestheyselltothepublic.KeyTopicsinThisChapterTypesofDepositAccountsOfferedTheChangingMixofDepositsandDepositCostsPricingDepositServicesConditionalDepositPricingRulesforDepositInsuranceCoverageDisclosureofDepositTermsLifelineBankingChapterOutlineI.Introduction:TheImportanceofDepositsandtheChallengeofManagingDepositsII.TypesofDepositsOfferedbyBanksandOtherDepositoryInstitutionsA.Transaction(PaymentsorDemand)Deposits1.Noninterest-BearingTransactionDeposits2.Interest-BearingTransactionDepositsa.NOWAccountsb.MoneyMarketDepositAccounts(MMDAs)c.SuperNOWsB.Nontransaction(SavingsorThrift)Deposits1.PassbookSavingsDeposits2.StatementSavingsDeposits3.TimeDepositsC.RetirementSavingsDeposits1.IndividualRetirementAccounts(IRAs)2.KeoghPlans3.RothIRAsIII.InterestRatesOfferedonDifferentTypesofDepositsA.TheCompositionofDeposits1.TrendtowardInterest-BearingandNontransactionDeposits2.TheImportanceofCoreDeposits3.ChangesintheRelativeImportanceofOtherTypesofDepositsB.TheOwnershipofDepositsC.CostofDifferentDepositAccountsIV.PricingDeposit-RelatedServicesV.PricingDepositsatCostPlusProfitMarginA.EstimatingDepositServiceCostsB.AnExampleofPooledFundsCostingVI.UsingMarginalCosttoSetInterestRatesonDepositsA.ConditionalPricingVII.PricingBasedontheTotalCustomerRelationshipandChoosingaDepositoryA.TheRoleThatPricingandOtherFactorsPlayWhenCustomersChooseaDepositoryInstitutiontoHoldTheirAccountsVIII.Basic(Lifeline)Banking:KeyServicesforLow-IncomeCustomersIX.Summary