Question

1. What are the differences between community banks, regional banks, and money-center banks? Contrast the business activities, location, and markets of each of these bank groups.


2. What are the major uses of funds for commercial banks in the UAE? What are the primary risks to a bank caused by each use of funds? Which of the risks is most critical to the continuing operation of the bank?

3. The following balance sheet accounts (in millions of dollars) have been taken from the annual report for a U.S. bank. Arrange the accounts in balance sheet order and determine the value of total assets. Based on the balance sheet structure, would you classify this bank as a community bank, regional bank, or a money center bank? ( explain why )



Assets
Cash $ 2,660
Fed funds sold       110
Investment securities    5,334
Net loans 29,981
Intangible assets       758
Other assets    1,633
Premises    1,078
Total assets $41,554

Liabilities and Equity
Demand deposits $ 5,939
NOW accounts 12,816
Savings deposits    3,292
Certificates of deposit    9,853
Other time deposits    2,333
Short-term borrowing    2,080
Other liabilities       778
Long-term debt    1,191
Equity    3,272
Total liability and equity $41,554

Answer 1

Ans 1) Difference between Money center banks, Regional Banks and community bank

Money center bank- These are he banks which do not transact with the public . It borrow lends money to the other commercial Banks and government.

Regional Banks- These are the banks which performs commercial banking transactions within a specified region (e.g state wise). it lends and accepts deposits from the local public of a particular region.

community bank-These are the banks which serves banking services to the particular community by which it is owned. It lends money to the particular community of which it is belongs.

Ans 2) Measure uses of  funds for commercial banks in the UAE

Banks most uses of funds are giving loans for generating interest income for the bank. Since UAE 's Economy is based on the oil and Petroleum industry which yields good amount of return also , bank of the country will also invest in this industry by giving loans to oil and Petroleum companies or by investing directly in the industry.

Ans 3) Balance sheet

• Particulars	Amount (in Million dollars)
  Assets
  Property	1078
  Trading assets	2770
  Loans to customers	29981
  Investment securities	5334
  Other assets	2391
  Total	41554
  Liabilities
  Loans from the central bank	1191
  Deposits from customers	34233
  Trading liabilities	2080
  Misc. debt	778
  Equity
  Common and preferred shares	3272
  Total	41554

• Based on the balance sheet structure it is this is an regional bank , its Loans and Cash reserves are more which is not seen in community bank because it has less borrowing due to serving to particular community.