Structure of Commercial Banks

Commercial banks are also called business or consumer banks. These banks provide services to the public that consist of checking, savings and money market accounts, and other traditional banking services, such as safety deposit boxes.

In 1933, Congress enacted the Glass-Steagall Act in an effort to avoid another banking collapse. This law forced banks into two separate business entities, the securities business and commercial banking. As a result, security banks dealt with investment business and commercial banks provided financial services directly to businesses and consumers.

Stockholders own commercial banks that elect a board of directors. The boards of directors are responsible for making the commercial bank profitable and creating polices to facilitate that goal.

The board selects the bank's officers, who are responsible for creating a business strategy based on the boards recommendations. The bank officers include the president, vice president, treasurer and secretary.

The bank officers appoint department managers, who head up each banking division. These divisions vary from bank to bank, but most include some form of the following: loan, credit, auditing, trust, consumer banking and business. Within each division, there are a president and various vice president.

The loan division oversees a variety of commercial loans including home mortgages and auto and personal loans.

The credit division is responsible for unsecured debt, such as credit cards.

The audit division makes sure that all government regulations and bank procedures are followed. They also oversee the internal security of the bank.

The trust division monitors legal trusts to make sure they follow government and legal guidelines. Trusts are overseen by a trustee who manages property, assets and the trust holder’s requirements for the beneficiaries.

Consumer banking supports the retail division of the bank. This includes working with other executive divisions to solve banking issues and to execute policy.

The business department handles everything to do with business accounts. This includes loans, checking, savings and other business-related banking.

The retail division of a commercial bank interfaces with the public the most. The corner bank is a part of a retail division in a commercial bank. Retail banks are run by a bank manager, who oversees the various departments within the bank, such as business, loans and consumer banking. Each department is supported by a corresponding executive division.

The retail division helps consumers open and manage accounts, apply for loans and provide other banking services. Bank tellers are normally the first person a consumer meets when doing business with a bank.

Commercial banks engage in a number of banking services. They process payments, oversee installment loans, provide notary services, safe-keep items in safe deposit boxes and issue bank drafts and checks. The larger commercial banks also underwrite products such as bonds and direct investors to their partner investment bank.