Commercial banks

Commercial banks allow deposits liabilities to make loans assets as well as to buy government securities. Deposits are wider in range including checkable deposits the deposits on which cheques can be written and savings deposits that deposits that are payable on demand but don't allow depositors to write cheques time deposits (deposits with a fixed term to maturity). Loans include mortgage, consumer and commercial loans.

In the USA commercial banks are the biggest group of financial intermediary: in 2006 there were 7402 with collective total assets of $10.1 trillion according to the FDIC Quarterly Banking Profile. Note that the industry has understanding a recent consolidation as a result of mergers and acquisitions simply consider that in 1984 there were 14416 commercial banks. The performance of US banks enhanced throughout most of the 1990s although it deteriorated slightly with the economic downturn in the early years of the twenty-first century. In 2006 the (ROE) return on equity of the US banking industry averaged 9.9 percent.

Activity

Discuss with the American Banker Online available. From the segment on Banks thrifts and holding companies locate the Top World Banking Companies by Assets and identify the 10 largest US depository institutions and compare their total assets value. Recognize the largest depository institution in your own country.

The balance sheet structure of US commercial banks reflects the major assets and liabilities of their business. The collective balance sheet values for US banks in 2006 are reported. Loans constituted around 58 percent of their assets compared with 62 percent in 1990 whereas investments in securities represented 16 percent of their assets. Interest-bearing deposits in its place constituted 54 percent of their liabilities.

Aggregate balance sheet values for US commercial banks