Introduction to Finance

one-bank holding companies 
(OBHCs) 
permits a fi rm to own 
and control only one bank
multibank holding companies 
(MBHCs) 
permits a fi rm to own 
and control two or more banks

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3.7 The Bank Balance Sheet
63
fi nancial debts and obligations owed by the bank. Stockholders’ equity is the fi nancial equity 
capital supplied by the bank’s owners. Since the term 
balance sheet
is used, total assets must 
equal the sum of the bank’s liabilities and its stockholders’ equity. 
Figure 3.5
shows a repres-
entative composite balance sheet for FDIC-insured commercial banks. Here we continue to 
focus on commercial banks because of their dominant role in the banking system, and while 
the balance sheets of the three other types of depository institutions diff er somewhat in terms 
of weights for individual accounts, the account categories are similar.
Assets
The principal assets of banks and other depository institutions are cash assets, securities 
owned, loans, and bank fi xed assets.
Cash and Balances Due from Depository Institutions 
“Cash and balances 
due from depository institutions” account for less than 10 percent of FDIC-insured commercial 
bank assets. “Currency plus cash items in the process of collection” is the most important 
component and represents about one-half of the total for this account. “Balances due from 
depository institutions” is a very large component, with “balances due from Federal Reserve 
Banks” being a relatively small portion of this account. 
A certain minimum of vault cash is needed to meet the day-to-day currency requirements 
of customers. The amount of cash required may be small compared to total resources because 
FIGURE 3.5