Commercial Bank

See Also:
Investment Banks
5 C’s of Credit (5 C’s of Banking)
Categories of Banks
Bank Statement
How to manage your banking relationship.
Certificate of Deposit (CD)
Personal Credit for Commercial Loan
Alternative Forms of Financing
What Your Banker Wants You to Know

Commercial Bank Definition

Commercial banks are the most unrestricted and common of the different bank forms. A commercial bank is often considered a financial intermediary for transactions involving anything from a savings account to a certificate of deposit (CD).

Commercial Bank Meaning

A commercial bank often deals with daily transactions between checking and savings accounts. But they also deal with term deposits and money market accounts. These banks in the past was not allowed to take part in the capital markets under the Glass-Steagall Act. This activity was typically performed by investment banks. However, since the repeal of the act there has been less and less division between the two groups.
Commercial banks create money when they accept money from businesses or individuals owning a savings account, checking account, or a CD. It then loans these funds to businesses or individuals. It makes its profit by accepting interest payments.
This means that unlike most institutions, a bank’s assets are loans and bonds that it issues, while its liabilities are the savings and checking accounts along with other deposits. This is because these liabilities are payable on demand from the account holder unless it is a term deposit in which it is payable at the end of the term.
This is also why the Federal Reserve requires commercial bank reserves to ensure that a bank always has the proper amount of funds to meet its liabilities. This commercial bank regulation came after scares during the depression in which commercial banks were unable to meet their liabilities. This is why every bank is also required to carry Federal Deposit Insurance through the Federal Deposit Insurance Corporation (FDIC).
Learn how you can be the best wingman with our free How to be a Wingman guide!
commercial bank
[box]Strategic CFO Lab Member Extra
Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
commercial bank


The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »


Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022



Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®


September 12-15th 2022