The assets or resources are composed of all the items which are in possession of or due to the bank, and it relies upon these assets to meet the liabilities which it owes to others.

Loans and Discounts. These include the amount of credit extended by the bank to its customers. These obligations are in the form of promissory notes or accepted drafts. They may be secured by stocks, bonds, and other collateral, or based merely on the credit standing of the makers, acceptors, or indorsers. Some of these advances are payable on demand and so may be called for payment whenever the bank is in need of funds. In addition to loans extended to customers, the bank also grants credit to outside firms in buying their commercial paper on the open market. These claims are sometimes entered separately as "bills purchased."

Overdrafts. These may be regarded as loans obtained from the bank, usually without security, interest, or consent. An overdraft occurs when a customer writes a check to an amount which exceeds the sum credited to his account. The amount paid by the bank in excess of the customer's balance is known as an overdraft. It is evidenced merely by an entry in the books of the bank, but not in a note or other formal instrument. National banks are prohibited from voluntarily allowing overdrafts to their customers.

Customers' Liability under Letters of Credit and on Account of Acceptances. Foreign trade is financed largely through drafts drawn on banks which accept them in behalf of their customers. They in turn assure their bank that it will be fully reimbursed before the acceptances fall due. The obligation to reimburse is expressed either in the form of contracts for letters of credit or acceptance agreements which clearly define the liability of the customers to the bank. This account is therefore an offset to the item "letters of credit and acceptances outstanding" of the bank's liabilities.

United States Bonds and Certificates of Indebtedness. The bank is required to invest in certain classes of United States bonds if it wishes to issue its notes for circulation. It is also compelled to hold either of these classes of obligations as security for deposits which the United States government carries with the bank. States and municipalities also require banks acting as depositories to hold government issues as security. In addition, banks voluntarily invested in Liberty Bonds and Victory Notes, during the war, because of patriotic motives, and have continued to hold these obligations because of their ready marketability.

Bonds, Securities, etc., Other Than United States. These items are held by a bank as outright investments or as acquisitions resulting from nonpayment of loans for which these securities have served as collateral.

Stocks, Other Than Federal Reserve Bank Stock. These stocks have also been obtained from borrowers defaulting in their obligations. National banks are forbidden directly to purchase stocks because of the instability of their value. National banks may, however, purchase a certain amount of stock of corporations engaged in foreign banking.

Stock of the Federal Reserve Bank. Each member of the Federal Reserve system must subscribe to the stock of the Reserve bank of its district to an amount equaling 6 per cent of its own capital and surplus, but only one-half of this sum has been called by the Federal Reserve Board.

Banking House, Furniture and Fixtures. These items represent the general equipment of the bank.

Real Estate Owned Other Than Banking House. As a commercial bank is obliged to pay most of its deposits on demand, its investments, in turn, must have short maturity. A national bank is therefore hot allowed to purchase real estate for any other purpose than actual use in conducting its business. At times it is forced to accept real estate pledged for loans on which the borrowers have defaulted.

Due from Branches. Subject to limitations, banks may conduct domestic and foreign branches which thus represent a certain amount of invested capital.

Lawful Reserve with the Federal Reserve Bank. This represents the balance which the bank carries with the district Federal Reserve bank for the purpose of maintaining the required reserve against deposits.

Items with Federal Reserve Bank in Process of Collection. This account includes checks, drafts, and other items which have been remitted to the district Federal Reserve bank for collection. From one to eight days are allowed for the collection and payment of items drawn on any locality in the United States, and in accordance with this time schedule each Federal Reserve bank credits the account of its members with the amount of items left for collection. Thus all items in process of collection are really deferred credits with the Federal Reserve bank, and only when paid become cash credits or lawful reserve.

Cash in Vault. A bank needs a certain amount of till money to cash the checks of customers and to meet their current demands, such as for pay-roll purposes.

Net Amount Due from Other Banks, Bankers, and Trust Companies. These institutions are correspondents collecting out-of-town items not forwarded through the agency of the Federal Reserve system. A bank usually carries a deposit balance with each correspondent, which credits the account when collection items are actually paid.

Exchanges for the Clearing House. These will be presented for payment to the other members of the clearing house on the following morning.

Checks on Other Banks in the Same City. As not all banks belong to the clearing house, checks drawn on these institutions must be presented through messengers.

Redemption Fund with the Treasurer of the United States. A national bank which issues notes for circulation (national-bank notes) must contribute a fund amounting to 5 per cent of these notes in order that the Treasury Department can redeem them when presented by the holders.

Due from the Treasurer of the United States. In the course of its daily business, a bank receives government paper money which has been mutilated while in circulation. Such bills are forwarded to the Treasury, which in exchange returns new ones.

Interest Earned but Not Collected. When a bank grants loans to its customers, they pay the interest usually at maturity, although it gradually accumulates or accrues during the entire period for which the loan runs. Thus interest returns on loans and also on investments are regarded as accrued assets, although payment has not actually been made.