I. The Anatomy of a Bank
How are banks organized? It starts with a holding company that owns or directs the bank and its related businesses.
Top-Level Owner
Bank Holding Company (BHC)
A company that controls one or more banks.
The Core Institution
The Bank
The FDIC-insured entity where you deposit money.
Related Business
Controlled Subsidiary
e.g., Mortgage Company
Related Business
Controlled Subsidiary
e.g., Insurance Agency
Related Business
Controlled Subsidiary
e.g., Asset Management
The Concept of Control
How does a bank "control" a subsidiary? It's not always about owning stock.
1. Equity Control
The bank owns more than 50% of the subsidiary's voting stock.
2. Control via Other Basis (0% Equity)
The bank directs the subsidiary through a legal agreement, like a management contract or fiduciary role, even without owning shares.
Key ID Cards
Regulators use several unique codes to track every financial entity.
- RSSD ID: The universal Federal Reserve ID for structure.
- FDIC Certificate: The official ID for deposit insurance.
- LEI: A global ID for tracking financial transactions.
- CUSIP ID: An ID for a bank's stocks and bonds.
II. The Bank's Report Card
The Community Reinvestment Act (CRA) grades banks on how well they serve their entire community, especially low- and moderate-income areas.
Typical Distribution of CRA Ratings
This chart shows a hypothetical breakdown of how banks are rated. The vast majority achieve a "Satisfactory" rating.
1
Outstanding
Consistently excellent performance.
2
Satisfactory
Adequate and expected performance.
3
Needs to Improve
Performance is below standard.
4
Substantial Noncompliance
Significant failures to perform.
How are Banks Examined?
The type of CRA exam a bank undergoes depends on its size (total assets).
III. The Bank on Your Street
Not all bank locations are the same. Here are some of the common types you'll encounter.
Full Service Office
A standard branch with a full range of services.
Supermarket Branch
A smaller branch located inside a retail store.
Loan & Trust Office
Specializes in lending and wealth management.
Limited Service
An office with restricted hours or services.