Assets
Cash and due from banks
Cash is the currency (USD, CAD, etc.) and coins that ABC Bank has. Every bank is required to maintain the minimum cash balances to meet the reserve requirement and customer demands.
Due from banks consist of ABC Bank's demand deposits maintained in other banks to facilitate the transfer of funds.
Interest-bearing deposits with banks
Interest-bearing deposits are deposits with other banks that pays ABC Bank interest.
Securities
Trading securities are securities that ABC Bank intends to sell in the short term for a profit with the expectation that the price has increased before the sell.
Investment securities are securities such as equities or fixed income instruments that ABC bank purchased with the intention of holding them for investment.
Reverse repos
Reverse repurchase agreement (reverse repo) is the purchase of securities under an agreement to sell them with a higher price in the near future.
Loans
Retail loans are loans obtained from retail lenders. It can include personal & business loans such as automobile loans, mortgages, credit cards and lines of credit, etc. that ABC Bank offers.
Wholesale loans are loans obtained from wholesale lenders. In this case, the lender - ABC Bank offers loans to brokers at discounted rate. The broker will then adds the charge to this wholesale rate.
Allowance for loan losses is the estimate of the loan & loan payment that ABC Bank is unlikely to collect.
Other assets
Customers’ liability under acceptances is the negotiable piece of paper ABC Bank holds that the acceptance issuer needs to pay ABC Bank on a specified date (usually 90 days after the issuance).
Derivatives are products with the value derived from an underlying asset or a group of assets (stocks, bonds, currencies, interest rates, commodities, and indexes).
Premises and equipment are the property that ABC Bank needs to conduct the business - offices and equipments. They are long-term, tangible capital asset.
Goodwill is an intangible asset that reflects the excess purchase price of the target company by ABC Bank. Goodwill = Purchase price of the target company - (Fair market value of assets of the target - Fair market value of liabilities of the target)
Liabilities
Deposits
Personal deposits include the deposits that individual customers made at ABC Bank - such as checking account, savings account, and certificate of deposit, etc.
Business and government deposits include the deposits that business and government clients made at ABC Bank - such as checking account, savings account, and certificate of deposit, etc.
Bank deposits consist of the deposits that other banks held at ABC Bank.
Other liabilities
Acceptances issued by ABC Bank is a form of payment that is guaranteed by ABC Bank.
Short sale is the sale of a security without owning it. In order to short sell the security, ABC Bank needs to borrow the security first.
Repurchase agreement (repo) is a form of short-term borrowing that ABC Bank first sell the securities and then buy them back at a higher price in the near future.
Derivatives are products with the value derived from an underlying asset or a group of assets (stocks, bonds, currencies, interest rates, commodities, and indexes).
Subordinated debentures
Subordinated debentures are unsecured loan that ranks below other senior loans that ABC Bank take. If ABC Bank default, subordinated debt owners will not be paid out until senior bondholders are fully paid back.
Equity
Preferred shares are ABC Bank's shares that distribute dividends before the common shares dividends are issued. If ABC Bank went to bankruptcy, preferred shareholders are entitled to get paid from ABC Bank's assets prior to common shareholders.
Common shares are shares issued by ABC Bank that represent the ownership of ABC Bank for shareholders. During liquidation, common shareholders will only receive payment after creditors and preferred stockholders of ABC Bank are paid.
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