Chartered Bank
A chartered bank is a financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, as well as to lend money out. In the United States, the Office of the Comptroller of the Currency (OCC) is responsible for overseeing chartered banks, federal savings associations, and federal branches and agencies of foreign banks. As of 2020, the OCC supervised 1,175 chartered banks, federal savings associations, and federal branches and agencies of foreign banks. The OCC oversees all federal savings associations and national banks, along with all federal branches and agencies of foreign banks. The OCC is an independent bureau within the U.S. Department of the Treasury and is responsible for approving or denying applications for new charters for national banks and federal savings associations.
What Is a Chartered Bank?
A chartered bank is a financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, as well as to lend money out. Chartered bank specifics vary from country to country. However, in general, a chartered bank in operation has obtained a form of government permission to do business in the financial services industry. A chartered bank is often associated with a commercial bank.
Understanding a Chartered Bank
Chartered banks provide core financial intermediary services necessary in today's economy. Individuals can easily deposit their funds into various types of accounts within a chartered bank, earning interest on their temporary savings. Chartered banks maintain a float of currency so they can process customers' daily transactions, but they lend out the majority of their deposits to individuals and commercial borrowers to stimulate economic growth.
Chartered Bank Oversight
A bank’s actual charter lays out operational guidelines for the bank, along with how it will comply with relevant regulations. This might include how the bank will maintain a certain minimum capital requirement. In the United States, a charter can be either state or federally issued and conform to either state agency regulations or federal-oversight regulations, respectively.
The Office of the Comptroller of the Currency (OCC) was created by Congress in 1863 as part of the National Currency Act. The OCC oversees all federal savings associations and national banks, along with all federal branches and agencies of foreign banks. The OCC is an independent bureau within the U.S. Department of the Treasury and is responsible for approving or denying applications for new charters for national banks and federal savings associations.
Examiners from the OCC conduct on-site reviews of banks to ensure the institutions operate in a safe and sound manner. The OCC is responsible for identifying risks to the banking structure and can take actions against chartered banks for noncompliance, including issuing cease and desist orders and imposing penalties. As of 2020, the OCC supervised 1,175 chartered banks, federal savings associations, and federal branches and agencies of foreign banks.
$12.8 trillion
The total value of bank assets held by OCC-regulated institutions, which comprise 69% of all commercial banking assets in the United States.
Chartered Banks vs. Online Banks
Certain online banks may contain overseas charters; these do not conform to either state or federal regulations. In these cases, the consumer must determine if the online bank might offer Federal Deposit Insurance Corporation (FDIC) protection. The FDIC, created in 1933 to maintain public confidence and mitigate bank failure in the United States, insures deposits of up to $250,000 per member institution (as of 2020).
Examples of online banks include Axos Bank, Ally Bank, TIAA Bank, Discover Bank, and Charles Schwab Bank. As online banks can cut costs via a primarily digital footprint, many can offer above-average deposit rates and high-quality digital offerings to customers.
Related terms:
State Banking Department
A state banking department is a state-specific regulatory body that oversees the operations of financial institutions within its jurisdiction. read more
Bridge Bank
A bridge bank is a bank authorized to hold the assets and liabilities of another bank, specifically an insolvent bank. read more
Capital Requirements
Capital requirements are standardized regulations for banks and other depository institutions that determine how much liquid capital (that is, easily sold assets) they must hold for a certain level of assets. read more
Checking Account
A checking account is a deposit account held at a financial institution that allows deposits and withdrawals. Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods. read more
Commercial Bank & Examples
A commercial bank is a financial institution that accepts deposits, offers checking and savings account services, and makes loans. read more
Economic Growth
Economic growth is an increase in an economy's production of goods and services. read more
Federal Deposit Insurance Corporation (FDIC)
The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that provides insurance to U.S. banks and thrifts. read more
Financial Institution (FI)
A financial institution is a company that focuses on dealing with financial transactions, such as investments, loans, and deposits. read more
Financial Intermediary
A financial intermediary facilitates transactions between lenders and borrowers, with the most common example being the commercial bank. read more
General Examination
A general examination is a regulatory measure set up to give a detailed assessment of all aspects of a bank. read more