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.The predominant liabilities for savings institutions are: C. small time and savings deposits and FHLB borrowings..The U.S. Central Credit Union and the corporate credit union: pool funds and provide investment services to local credit unions..Traditionally, most credit union members had a common employer, but increasingly the required commonality is a common location of either residenceor workplace. T.Which one of the following has the highest concentration of mortgage-related assets on the balance sheet? A. Savings institutions
Cash assets are held to meet reserve requirements and to provide liquidity. Total cash assets (primarily vault cash, currency in the process of collection, correspondent balances and reserves at the Fed) comprised 4.39% of assets.Investment securities generate revenue and provide banks with liquidity. They comprise about 25-30% of assets.U.S. government securitiesmade up about 36% of the investment portfolio (in 2007) and about 10% of total assets. This investment portfolio is very safe and liquid.Loansare the highest earning asset on the bank balance sheet. They are also the largest category. Real estate loans are the highestOther assets include premises and equipment, other real estate owned, etc. They accounted for about 18.6% of total assets.Commercial Bank Assets: Credit (default) risk is the risk that loans are not repaid. Liquidity risk is the risk that depositors will demand more cash than banks can immediately provide. Interest rate risk is the risk that interest rate changes erode net worth. Credit, liquidity, and interest rate risk all contribute to a commercial bank’s level of insolvency risk.Commercial Bank Liabilities: Transaction accounts are the sum of noninterest-bearing demand deposits and interest-bearing checking accounts. Interest bearing deposit accounts are called negotiable order of withdrawal (NOW) accounts.Non-transaction depositsinclude savings account, MMDAs and CDs. Large time deposits, Non-deposit liabilities, EquityOff-balance-sheet asset: When an event occurs, this item moves onto the asset side of the balance sheet or income is realized on the income statement.Off-balance-sheet liability:When an event occurs, this item moves onto the liability side of the balance sheet or an expense is realized on the income statement.Economies of scalerefer to the degree to which a firm’s average unit costs of producing financial services fall as its output of services increase. Cost economies of scaleresult from fixed costs spread over larger output as the bank grows. Diseconomies of scaleoccur when the costs of joint production of FI services are higher than they would be if they were produced independently.