| Term | Definition |
|---|
| loans | commercial banks assets |
| deposits, depository instituions | commercial banks liabilities |
| 4 types of loans | 1 business or commercial and industrial 2 commercial and residentail real estate 3 indiviudal 4 all other loans |
| • What is their main revenue source? | -loans, investment securities-liquidity |
| Credit risk | loans no repaid |
| Liquidity risk- | depositors will demand more cash than banks can immediately provide |
| Interest risk | interest rate changes erode net worth |
| Insolvency risk | credit, liquidity, and interest all contribute to level |
| NOW | transaction accounts are checkable deposides that either bear no interest or are interested bearing |
| loan commitment | agreement to loan to max amt to borrower at given interest rate terms over some period in the future |
| letters of credit | - guarantee that FL's sell to underwrite the future performance of the buyers of the guarantees |
| trust services | assets for indiv or corps only in largest banks |
| Correspondent Banking | banking services to other banks that don't have staff to do it themselves |
| Correspondent Banking | check clearing/collection, foreign exchange, hedging, large loan and security issuances |
| Reasons for mergers and acquisitions | number of banks has decresed, the search by banks to exploit potential cost and revenue economies of scale and scope |
| Small | < $1 bil in asset size, specialize in retail or consumer banking, loans to retail, deposites to consumers and small bus |
| large | wholesale commercial banking act, lending to all , sometiems call money center banks *citigroup, morgan chase) –engage in retail and wholesale banks, larger corps |
| FDIC | deposits of comm banks, acts as reciever and liquid if bank closed, mgs insureance fund |
| Office of the Comptroller of the currency | oldest, charter nat banks and clsoe, approve or dis of merger apps of natl banks |
| Fed Reserve System | nat chartered banks automatically members |
| State authorities | may choose to be state chartered than natl, functions similar to OCC |
Combine with other sets
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