Differences in Big Banks and Small Banks Danielle

Differences in Big Banks and Small Banks Danielle Hess ECON 308 - Money and Banking Longwood University Banks to be Compared Data Analysis Introduction • Oak Ridge Financial Services: - Area: North Carolina - Assets (in thousands): $344, 854 - Liabilities (in thousands): $319, 803 ***For quarterly period ended June 30 th, 2013 • Shore Bancshares: - Area: Maryland - Assets (in thousands): $1, 561, 679 - Liabilities (in thousands): $1, 367, 617 ***For quarterly period ended September 30 th, 2019 • Thomasville Bancshares: - Area: Georgia - Assets (in thousands): $323, 659, 678 - Liabilities (in thousands): $291, 658, 850 ***For quarterly period ended September 30 th, 2008 When deciding to deposit your money, you should be comparing multiple banks, in which you compare interest rates, branch locations, and reputation of said bank. It may be difficult to decide whether to put your money in a small or a big bank. The real question is: what is the difference? This project will answer how the balance sheets between small and large banks differ. Difference in Small Banks and Large Banks • Wells Fargo: - Area: US; Executive Office in California - Assets (in millions): $1, 927, 415 - Liabilities (in millions): $1, 749, 534 ***For quarterly period ended September 30 th, 2019 • Bank of America: - Area: US; Executive Office in North Carolina - Assets (in millions): $2, 412, 223 - Liabilities (in millions): $2, 412, 223 ***For quarterly period ended September 30 th, 2019 • Capital One: - Area: US; Executive Office in Virginia - Assets (in millions): $371, 148 - Liabilities (in millions): $371, 148 ***For quarterly period ended September 30 th, 2019 Comparison Small Banks-Assets Big Banks-Assets 7% Small Banks Big Banks 1. 2. 3. Oak Ridge Financial Services Shore Bancshares Thomasville Bancshares Wells Fargo Bank of America Capital One What We Are Comparing • % of assets that are loans • % of assets that are cash • % of assets that are securities availablefor-sale • % of liabilities that are total deposits How We Are Comparing 8% 24% 5% Small Banks: Also known as “community banks” Have less than $1 billion in assets Operate in a small area Comprises 90% of the 7000 commercial banks Big Banks: Divided into “regional” (one area) and “superregional” (across most of US) Have assets above $1 billion % Assets-Loans % Assets-Cash % Assets-Securities % Assets-Other 52% 18% % Assets-Loans % Assets-Cash % Assets-Securities % Assets-Other 80% 6% Shown by the graphs above, the general distribution of balance sheets between small and big banks is very different. Small banks have 80% of their assets being in loans, compared to 52% in big banks. Big banks have more marketable securities, highly liquid investments including common stock and bonds. The biggest difference seen is the amount of deposits. Small banks have 95% of their liabilities in deposits, while big banks have 65%. This is because they have issued more shares of stock and have more loans than small banks. Keeping less deposits means banks will have less to lend. Bigger banks tend to venture in other areas of financing, so lending and keeping deposits is not all they do. • • • (2017, February 5). Retrieved from https: //www. sec. gov/ About Us. (n. d. ). Retrieved from https: //oakridgefinancial. com/About. Us. aspx References • Comparing balance sheets and income statements from each company's latest 10 -Q (quarterly financial reports) fillings available on sec. gov Conclusion Based on information found on sec. gov, big and small banks have vastly different balance sheets. Although the sample size of this research project was small, comparing three of the largest banks to some of the smallest gives a good representation of how different they operate. Many people prefer to use small banks that traditionally have better customer service and more local branches. However, using a larger bank gives customers more options on what to do with their money, as well as branches across the United States.