In addition mmdas impose mini mum balance

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denomination of the amount of each check. In addition, MMDAs impose mini- mum balance requirements on depositors. The Federal Reserve does not require banks to hold cash reserves against MMDAs. Accordingly, banks generally pay higher rates on MMDAs than on NOW accounts. Other savings deposits (item 31) are all savings accounts other than MMDAs (i.e., regular passbook accounts) with no set maturity and no check-writing privileges. Like MMDAs, savings accounts currently carry zero reserve requirements. 7 Super-NOW accounts have very similar features to NOW accounts but require a larger minimum balance. net write-offs Actual loan losses less loan recoveries. earning assets Investment securities plus net loans and leases. NOW account Negotiable order of withdrawal ac- count is similar to a demand deposit but pays interest when a minimum balance is maintained. MMDAs Money market de- posit accounts with retail savings ac- counts and some lim- ited checking account features. other savings deposits All savings accounts other than MMDAs.
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Appendix 2B Commercial Banks’ Financial Statements and Analysis 9 Some banks separate foreign from domestic deposits on the balance sheet (item 32). Foreign deposits are not explicitly covered by FDIC-provided deposit insur- ance guarantees. These deposits are generally large and held by corporations with a high level of international transactions and activities. The major categories of time deposits are retail certificates of deposit (CDs) and wholesale CDs. Retail CDs (item 33) are fixed-maturity instruments with face val- ues under $100,000. Although the size, maturity, and rates on these CDs are nego- tiable, most banks issue standardized retail CDs. Wholesale CDs (item 35) were created by banks in the early 1960s as a contractual mechanism to allow depositors to liquidate their position in these CDs by selling them in the secondary market rather than having to hold them to maturity or requesting that the bank cash in the deposit early (which involves a penalty cost for the depositor). Thus, a deposi- tor can sell a relatively liquid instrument without causing adverse liquidity risk exposure for the bank. Consequently, the unique feature of wholesale CDs is not so much their large minimum denomination size of $100,000 or more but the fact that they are negotiable instruments. That is, they can be resold by title assign- ment in a secondary market to other investors. This means, for example, that if IBM had bought a $1 million three-month CD from J.P. Morgan Chase, but for unexpected liquidity reasons needed funds after only one month passed, it could sell this CD to another outside investor in the secondary market. This does not impose any obligation on J.P. Morgan Chase in terms of an early funds withdrawal request. Wholesale CDs obtained through a brokerage or investment house rather than directly from a customer are referred to as brokered deposits.
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