The role of active operations for “any” commercial bank is very great.

Active operations ensure the profitability and liquidity of the bank, i.e.

allow you to achieve two main goals of the activities of commercial banks.

Active operations are also of great economic importance; It is with the help of active operations that banks can direct funds released in the process of economic activity to those participants in economic turnover who need capital, ensuring the flow of capital into the most promising sectors of the economy, promoting the growth of industrial investments, the introduction of innovations, restructuring and stable growth of industrial production, expansion of housing construction. Bank loans to the population play a major social role. There is a certain relationship between the profitability and riskiness of assets and their liquidity. The riskier an asset is, the more income it can bring to the bank (profitability serves as a payment for risk) and the lower its level of liquidity (a risky asset is more difficult to sell). The riskiest assets are usually both the highest yielding and the least liquid.

We will give a classification of assets according to such qualities as profitability, liquidity, riskiness.

According to the degree of profitability, all assets are divided into two groups:

* income-generating (so-called working), for example, bank loans, a significant part of investments in securities;

2. Liquid assets are assets with an average degree of liquidity. They can be converted into cash with little delay and little risk of loss. These include demand loans and short-term loans, easily marketable bills and other short-term securities, primarily government ones.

3. Low-liquidity (and even illiquid, hopeless) assets are those assets whose probability of being converted into cash is very small or even zero. These are long-term loans from the bank, its investments in long-term securities, hard-to-sell buildings, structures, and long-overdue debts.

Up to 80% of banking assets are accounted for by credit operations and investments in securities. Revenues from these operations serve as the main sources of bank profits.

Credit operations include lending operations and operations for placing deposits in other banks (active deposit operations). Loan operations are the provision of funds by a bank on the basis of a loan agreement on the terms of repayment, payment, and urgency. These operations bring banks, as a rule, the bulk of interest income.

Bank lending operations can be classified according to the following criteria: by economic content and purpose, by category of borrowers, by security, by terms and methods of repayment, by the form of loan issuance.

* joint-stock companies and private enterprises (industrial, commercial, public utilities, agricultural, brokerage);

* credit and financial institutions (and above all banks);

* to the population;

* government and local authorities.

According to the repayment period, loans are divided into demand loans (on-call), the repayment of which the bank can demand at any time, and urgent ones. The latter are divided into short-term (from one day to one year), medium-term (from a year to three to five years) and long-term - for longer periods. The terms of medium- and long-term loans vary from country to country.

Bank loans can be repaid in two ways.

In the first case, the entire principal debt on the loan (excluding interest) must be repaid on one final date in a lump sum. The second repayment method is in installments. The loan amount is written off in installments throughout the term of the loan agreement. Payments to repay the principal amount of the debt are made, as a rule, in equal parts periodically (monthly, quarterly, semi-annually or annually). The second repayment method is usually applied to medium- and long-term loans. Interest on the loan can also be paid in a lump sum upon expiration of the loan term or in equal installments over the life of the loan.

A classic example of an active-passive account is a current account.

The loan provided on this account is called a current loan. After concluding an agreement on opening a current account, the current account is closed and all transactions are carried out on the current account. Interest on contract credit accrues periodically on a balance basis, usually quarterly. Contract credit is widely used in Germany, Belgium, Holland, and Italy.

The bank's active operations with securities include four main types.

1. Investments in securities purchased for resale in order to obtain exchange rate profit (the difference between the purchase rate and the sale rate). These securities are stored in the bank's portfolio for a short time.

4. Accounting operations. These are mainly transactions with bills of exchange. Bill discounting is the purchase of a bill of exchange by a bank (with the transfer of a bill of exchange to the bank by endorsement). By purchasing a bill of exchange from the holder of the bill, the bank receives the right to receive money on the bill upon expiration of its term. For the fact that the bank advances the drawer, giving him money immediately, although the maturity date of the bill comes, for example, in a month, the bank charges the discount interest, or discount, from the drawer who presented the bill for accounting. The discount is equal to the difference between the amount indicated on the bill and the amount paid by the bank when discounting the bill. Upon expiration of the bill, the bank presents it to the debtor for redemption (see Fig. 9.3). The meaning of this operation for the bank is to receive discount interest, and for the holder who presented the bill for accounting, to receive money on the bill before its maturity date.

There is a close relationship between passive and active operations of a commercial bank. First of all, the size and structure of active operations that ensure the receipt of income are largely determined by the resources available to banks. In this sense, passive operations that form the bank’s resource base are primary in relation to active ones. When providing loans and purchasing securities, banks are forced to constantly monitor the status of liabilities and monitor the timing of payments on obligations to depositors. If there are not enough resources, the bank has to refuse lucrative offers and sell high-yield securities. At the same time, a significant part of bank deposits arises on the basis of active operations when providing loans in non-cash form. The relationship between passive and active operations is also manifested in the fact that bank profit depends on the bank margin, i.e. the difference between the price of banking resources and the profitability of active operations.

For successful operations, the bank must ensure coordination of passive and active operations: on the one hand, avoid a significant discrepancy between the terms of liabilities and assets, for example, issuing long-term loans at the expense of short-term deposits; and on the other hand, do not immobilize short-term resources for a long period in an amount significantly exceeding the stable balance of funds in bank accounts sufficient for regular payments.

There is also a relationship between certain types of liabilities and assets. Thus, opening a bank account for a large client is accompanied by the emergence of close regular ties between the client and the bank. In order not to lose a client, the bank provides him with significant loans, invests in his securities, provides him with a variety of expense services, and performs commission transactions.

Commercial Bank- a non-state credit institution that carries out universal banking operations for legal entities and individuals (settlement and payment transactions, attracting deposits, providing loans, as well as operations on the securities market and intermediary operations).

Passive operations of a commercial bank- this is the bank’s activity to accumulate its own and borrowed funds for the purpose of their placement.

These are operations to place borrowed and own funds of a commercial bank in order to generate income and create conditions for conducting banking operations.

Active operations of a commercial bank- this is first of all credit operations, investment operations, operations on formation of property jar, settlement and cash operations, commission and intermediary(factoring, leasing, forfatting, etc.).

The main types of active operations of a commercial bank are:

Providing loans to legal entities and individuals on various conditions and for various periods;

Transactions with securities on your own behalf and at your own expense;

Investment;

REPO transactions;

Currency dealing operations;

Non-traditional operations of commercial banks.

Credit transactions - these are the lender's placement operations

free resources into various loans provided to clients on the terms of payment, urgency and repayment. Banks can place their resources on the interbank market by providing loans to other banks or opening deposit accounts with them.

Banks can purchase securities (shares, bonds) of other issuers or the state in order to generate income from them due to exchange rate differences. Credit institutions can also carry out accounting transactions with bills of exchange - purchasing bills of exchange before their due date.

Direct investments represent the direct investment of bank funds in production and the acquisition of real assets. Portfolio investment carried out in the form of purchasing securities or providing long-term cash loans. Banks enter into transactions for the purchase of securities with mandatory subsequent sale (repo transactions) of the same issue and in the same quantity after a period specified in the contract at a set price.

Foreign exchange trading operations relate to intermediary activities for the purchase and sale of currency. The bank's task in this area is to provide its clients with the opportunity to convert their foreign currency assets from one currency to another.

Non-traditional operations of commercial banks include operations that can be performed by organizations other than commercial banks:

Settlement and cash services;

Trust operations;

Leasing operations;

Active operations are operations through which banks place the resources at their disposal to generate profit and maintain liquidity. Active operations are divided into two types: credit operations and investments.

Credit transactions are a relationship between a lender and a borrower in which the former provides the latter with a certain amount of money. Credit operations are divided into active (the bank issues loans) and passive (the bank takes out loans) and can be carried out in two forms - loan and deposit.

Bank lending is carried out in strict compliance with lending principles. These include repayment of lending, urgency, security of the loan (in Russia the following types of collateral are used - collateral, bank guarantee, surety, insurance liability of the borrower for loan repayment). Bank lending is divided into direct (credit relations of business entities directly with the bank) and indirect (credit relations arise first between business entities, which subsequently apply to the bank for loans). The main types of indirect bank lending are transactions with bills of exchange, factoring, leasing.

Direct and indirect lending have their advantages and disadvantages. The advantage of direct lending is the simplicity of organizing the lending process, which has a positive effect on the organization of credit relations between the bank and the borrower. The negative factor is a slightly higher level of risk than with indirect lending.

The loan price is the bank interest rate. With this interest, the bank covers its costs and makes a profit. The interest rate is influenced by a number of factors:

– demand for credit from borrowers;

– refinancing rate of the Central Bank of the Russian Federation;

- credit term;

– type of loan;

– average interest rate on the interbank credit market;

– the state of money circulation in the country (during a period of inflation, the interest rate rises, during a period of deflation, it falls).

Bank loans can be classified according to the following criteria:

– according to loan terms, loans are divided into short-term, medium-term and long-term;

– by type of security – secured and unsecured;

– by type of borrower – agricultural, industrial, municipal, commercial, etc.;

– by areas of use – for the formation of working capital, investment, for eliminating temporary financial difficulties, export, import, etc.;

– by size – small, medium, large;

- by the method of provision - bills of exchange, using open accounts, seasonal, etc. The credit process consists of four stages.

Stage I. Assessment of the economic situation in the country, region, industry. On its basis, the bank's credit policy is developed.

Stage II. Providing a bank loan. The borrower submits the necessary documents to the bank, and a loan agreement is concluded between the bank and the borrower.

Stage III. Control over the use of credit.

Stage IV. Repayment of a bank loan and interest on it. To issue loans to customers, loan accounts are opened: a simple loan account, a special loan account, a current account.

Investment operations of banks are long-term investments of funds in order to make a profit (investments in securities).

1. Contents and classification of active bank operations

2. Structure and quality of commercial bank assets

3. Liquid assets and factors affecting bank liquidity

4. Assessment and indicators of liquidity of a commercial bank

8.1. Contents and classification of active bank operations

Active operations of banks are operations through which banks place the resources at their disposal to generate profit and maintain their liquidity, and, consequently, ensure financial stability. Active operations include operations that allocate resources.

Active operations are secondary to passive ones. This is primarily due to the fact that a commercial bank can place only those resources that it has attracted as a result of passive operations, and these are borrowed funds, and the bank must form its active operations in such a way that the timing of the return of money to the bank corresponds to the timing of its return to clients. In this case, the bank will be solvent and financially stable, which will undoubtedly additionally attract clients to it.

There are many classifications of active operations according to one principle or another. The most common classification of active operations by economic content, which consists of:

Loan operations;

Settlement operations;

Cash transactions;

Investment and stock transactions;

Currency transactions;

Warranty operations.

Lending operations are operations to provide funds to the borrower for a certain period and for a certain fee. Settlement operations - operations for crediting and debiting funds from customer accounts, including for payment of their obligations to counterparties.

Cash transactions are operations for receiving and issuing cash.

Investment and stock transactions are operations where a bank invests its funds in securities and shares of non-banking structures for the purpose of joint economic, financial and commercial activities, as well as placing funds in the form of time deposits in other credit institutions.

Foreign exchange transactions are transactions involving the purchase and sale of foreign currency and other currency values, including precious metals in coins and bars.

Guarantee transactions are transactions when the bank issues a guarantee (guarantee) for payment of the client's debt to a third party upon the occurrence of certain conditions (can be in the form of commissions).

Commercial banks carry out active operations within the limits of available resources, that is, within the boundaries of cash balances in the correspondent account and in the cash register.

General characteristics of active operations of a commercial bank are given in the following table:

Cash	Accumulation of funds in a correspondent account; Accumulation of funds in the cash register; Placement of funds in correspondent accounts in other banks; Placement of funds on deposits in other banks.
Loan portfolio	Providing loans to legal entities in national and foreign currencies (including overdue and extended); Providing loans in national currency to individuals (including overdue and extended); Providing interbank loans in national and foreign currencies (including overdue and extended).
Securities for sale	Investments in government and corporate securities for sale.
Investment portfolio	Investments in government and corporate securities for investment; Investments in the authorized capital of enterprises and organizations.
Property and intangible assets	Investments in fixed assets; Investments in inventory; Investments in intangible assets.

Thus, active operations of banks are mainly operations for issuing (placing) various types of loans. The most common type of credit issued by banks is a short-term loan to economic agents, usually to finance the purchase of inventories. This loan can be issued with or without actual collateral, but in any case, in order to obtain it, it is necessary to have reported financial documents characterizing the financial position of the borrower, so that the bank can at any time assess the likelihood of timely repayment of the loan.

8.2. Structure and quality of commercial bank assets

The asset structure is understood as the ratio of asset items of different quality on the bank’s balance sheet. The quality of a bank's assets is determined by the appropriate structure of its assets, diversification of active operations, the volume of risky assets, the volume of critical and defective assets and signs of asset variability.

There are different approaches to determining the structure of banking assets. Basically, the assets of commercial banks are divided into four = categories:

Cash and equivalent funds;

Investments in securities;

Loans;

Buildings and constructions.

The first component of bank assets is “Cash and cash equivalents.” Supervisory and regulatory authorities require banks to hold a portion of funds in cash or in the form of demand deposits in accounts with other banks. In addition, cash on hand is needed to change money, return deposits, satisfy requests for loans, and cover various operating expenses, including salaries of staff, payment for various materials and services. The article “Cash and equivalent funds” includes funds in accounts with the Central Bank and other commercial banks, banknotes and coins, as well as payment documents in the collection process. An important reserve is, of course, cash in bank safes. But the bank's management naturally strives to reduce their value to a minimum determined by security considerations. In addition, in Russia the costs of protecting and insuring cash are very significant; cash does not generate income. Funds in accounts with correspondent banks also practically do not generate income. Therefore, the item “Cash and cash equivalents” is the most liquid for the bank, but the least profitable.

As for the item “Securities”, today the majority of all investments in securities are in government securities. Investments in short-term government securities generally provide lower returns but are a highly liquid asset with zero default risk and little risk of changes in market rates. Long-term securities typically provide high returns over a long period. To increase income, banks typically invest in government bonds and, to a limited extent, in high-grade corporate bonds.

The main activity of commercial banks in terms of generating income is providing loans. By placing funds in various types of credit operations, the bank's management considers the primary task to be to obtain high income while simultaneously meeting the credit needs of clients. The degree of liquidity of a particular credit transaction is not of paramount importance.

The quality of assets is determined by their liquidity, the volume of risky assets, the share of critical and inferior assets, and the volume of income-generating assets. To ensure the bank's daily ability to meet its obligations, the structure of a commercial bank's assets must meet the qualitative liquidity requirements. For this purpose, all bank assets are divided into groups according to the degree of liquidity, depending on the maturity date. Bank assets are divided into highly liquid assets (i.e. assets that provide instant liquidity); liquid assets, long-term liquidity assets.

Instant liquidity assets (highly liquid) include: cash and cash equivalents, funds in accounts with the Central Bank, government debt obligations, funds in correspondent accounts with non-resident banks of OECD member countries in hard currency, investments in domestic foreign currency loan bonds minus funds received in payment for foreign currency shares and funds received in the bank's correspondent account from the sale of securities. These funds are classified as liquid, as they are subject to immediate withdrawal from the bank’s circulation if necessary.

Liquid assets include, in addition to the listed highly liquid assets, all loans issued by a credit institution in rubles and foreign currency with a repayment period within the next 30 days (excluding those extended at least once and newly issued loans to repay previously issued loans), and as well as other payments in favor of the credit institution, subject to transfer within the next 30 days (debtors, as well as overpayment amounts subject to return to the credit institution as of the reporting date from the required reserve fund).

Long-term liquidity assets include all loans issued by a credit institution in rubles and foreign currency with a remaining maturity of over a year, as well as 50% of guarantees and guarantees issued by a bank with a validity period of over a year, overdue loans minus loans guaranteed by the Government, secured by securities secured by precious metals. By establishing a rational structure of assets, the bank must meet liquidity requirements, and therefore, have a sufficient amount of highly liquid, liquid and long-term liquid funds in relation to liabilities, taking into account their terms, amounts and types, and comply with instant, current and long-term liquidity standards.

The instant liquidity ratio is calculated as the ratio of the amount of the bank's highly liquid assets to the amount of its liabilities on demand accounts. The current liquidity ratio is the ratio of the amount of liquid assets of a credit institution to the amount of its liabilities on demand accounts and for a period of up to 30 days. The long-term liquidity ratio is defined as the ratio of loans issued by a bank with a maturity of over a year to the capital of a credit institution and liabilities over a year.

8.3. Liquid assets and factors affecting bank liquidity

Taking into account the types of liquid assets used by the bank to fulfill its obligations, a distinction is made between liquidity accumulated by the bank (cash, highly liquid securities) and purchased, or more precisely, newly acquired (attracted interbank loans, issue of bank bills, deposit and savings certificates). Compliance with these signs of bank liquidity (timely fulfillment of obligations and without losses) is due to many internal and external factors that determine the quality of the bank’s activities and the state of the external environment.

Internal factors include:

Quality of bank assets;

Quality of funds raised;

Relationship between assets and liabilities by maturity;

Competent management;

Bank image.

The quality of a bank's assets reflects three properties: liquidity, riskiness, and profitability.

Liquidity of assets is the ability of assets to be transformed into cash without loss through their sale or repayment of obligations by the debtor (borrower), while the degree of possible losses is determined by the riskiness of the assets.

The bank's liquidity is also determined by the quality of funds raised, i.e. liquidity of liabilities, stability of deposits and moderate dependence on external borrowings.

The liquidity of liabilities characterizes the speed of their repayment, and therefore the degree of renewability for the bank while maintaining the total volume of raised funds at a certain level. The liquidity of liabilities reflects their term structure. If a bank's attracted resources are dominated by deposits or loans with short maturities, then the liquidity of liabilities is high, and accordingly this can create problems with the liquidity of the bank as a whole. In such a situation, the bank must often replace some borrowed funds with others.

The combination of assets and liabilities in amounts and terms has a serious impact on the bank's liquidity. The bank's fulfillment of obligations to the client involves agreeing on the terms for which funds are invested with those for which their depositors provided them. Ignoring this rule in the activities of a bank operating primarily on borrowed resources will inevitably lead to the impossibility of timely and complete fulfillment of the bank’s obligations to creditors.

The internal factors on which the degree of bank liquidity depends also include management, i.e. management system for the bank’s activities in general and liquidity in particular. The quality of bank management is expressed in the presence and content of banking policy; a rational organizational structure of the bank, allowing it to solve strategic and current problems at a high level; in developing an appropriate mechanism for managing the bank’s assets and liabilities; in clearly defining the content of various procedures, including those related to making the most important decisions.

Among the factors determining the liquidity of a bank is its image. A bank's positive image in market conditions allows it to gain an advantage over other banks in attracting resources and thus quickly eliminate the shortage of liquid funds. It is easier for a bank with a good reputation to ensure the stability of its deposit base. He has more opportunities to establish contacts with financially stable clients, and therefore has a higher quality of assets.

The bank's first-class image allows it to develop connections with foreign partners, which also helps to strengthen its financial condition and liquidity.

The liquidity position of banks also depends on a number of external factors. These include:

General political and economic situation in the country;

Development of the securities market and interbank market;

System of refinancing of commercial banks by the Bank of Russia;

Efficiency of the supervisory functions of the Bank of Russia.

The general political and economic situation in the country creates the prerequisites for the development of banking operations and the successful functioning of the banking system, ensures the stability of the economic basis of the activities of banks, and strengthens the confidence of domestic and foreign investors in banks. Without these conditions, banks are unable to create a stable deposit base, achieve profitability of operations, improve their tools and management system, and improve the quality of their assets.

The development of the securities market makes it possible to ensure an optimal system of liquid funds without loss of profitability, since the fastest way to convert bank assets into cash in most foreign countries is associated with the functioning of the stock market.

The development of the interbank market contributes to the rapid redistribution of temporarily free monetary resources between banks. To maintain its liquidity, a bank can raise funds from the interbank market for different periods, including for one day. The efficiency of obtaining funds from the interbank market depends on the general financial situation, the organization of the interbank market, and the authority of the bank.

Closely related to this factor is another – the Bank of Russia’s system of refinancing of commercial banks. The source of replenishment of liquid assets of a commercial bank is a loan from the Bank of Russia.

The effectiveness of the supervisory functions of the Bank of Russia determines the degree of interaction between the state supervisory authority and commercial banks in terms of liquidity management. The Bank of Russia has the right to establish certain liquidity standards, guiding banks to comply with these standards. The more accurately the established indicators reflect the real state of the bank’s liquidity, the more opportunities the bank itself and the supervisory authority have to promptly identify liquidity problems and eliminate them.

8.4. Assessment and indicators of liquidity of a commercial bank

In modern Russian practice, two methods of assessing liquidity are used: through ratios and based on cash flow. The basis of the coefficient method is the estimated liquidity indicators established by the Bank of Russia. Currently there are three such indicators:

H2- the bank's instant liquidity standard. Regulates the risk of a bank losing liquidity within one business day. Limit value 15%;

H3- the bank's current liquidity ratio. Regulates the risk of a bank losing liquidity during the 30 calendar days closest to the date of calculation of the standard. Limit value 50%;

H4- long-term liquidity ratio of the bank. Regulates the risk of a bank losing liquidity as a result of placing funds in long-term assets. Limit value 120%

Along with state regulation of bank liquidity through the establishment of economic standards, liquidity assessment is being developed in Russia based on the calculated liquid position: overall and in terms of different currencies. With this method, liquidity is understood as a flow (with the coefficient method - as a reserve).

The bank's liquid position reflects the ratio of its monetary claims and liabilities for a certain period. If during a period (by a certain date) claims on clients (assets) exceed the bank's liabilities, there will be excess liquidity; if liabilities, meaning an outflow of funds, exceed claims (receipts), there will be a lack of liquidity.

The liquidity situation is assessed as of the current date and all subsequent dates, i.e. for the future. To determine the liquid position, a restructured balance sheet is compiled, in which assets and liabilities are classified by maturity and demand.

There are two main approaches to asset management.

Fund pool method . This method is one of the simplest to use in practice.

The funds that a commercial bank places in the course of its activities come from various sources and have different qualities.

The essence of this method is to combine all available resources into a “common pot” for their further distribution among assets in accordance with the bank’s preferences. As long as the placement of funds corresponds to the achievement of the goals set by the bank, when carrying out specific active operations, it is not taken into account from what sources of funds they are carried out.

Asset Allocation Method (Fund Conversion) . The essence of this method is to compare the bank’s assets and liabilities by terms and amounts. To do this, the sources and main directions for the placement of funds are grouped and compared in such a way that funds from a certain group of liabilities are placed in certain groups of assets, taking into account the profitability of investments and maintaining the liquidity of the bank.

Active banking operations are divided into several groups.

Credit transactions

This group occupies a dominant position in the structure of active operations; it is the group that generates the greatest income.

Credit operations mean the provision of money to individuals and legal entities on the terms of repayment, urgency and payment.

These operations are regulated by the bank's credit policy. They must correspond in terms and amounts to passive transactions.

Active operations are secondary to passive ones, since banks place not only their own funds, but also those belonging to clients. If most of the liabilities are attracted for a short period, then it will not be able to issue long-term loans.

Commission and intermediary operations

Leasing operations

Leasing operations - long-term rent, based on lending. An organization that needs to buy equipment turns to the bank with a request to purchase it and then lease it.

The owner of the subject of the transaction is the bank, it is he who makes the payment, and the equipment is used by the lessee, who regularly makes payments in favor of the bank.

The disadvantage of leasing is high fees, which include, in addition to payment for credit resources, depreciation and commissions.

For the bank, the disadvantage is the fact that the leasing agreement can be concluded for a period shorter than the depreciation period of the equipment. If the lessee does not want to buy out the leased asset or renew the contract, the bank will be left with equipment that it does not need. If a new counterparty is not found, you will have to sell it at a loss for yourself, so as not to spend money on maintenance.

Factoring operations

Factoring is the acquisition of receivables. If the seller and buyer of the goods stipulate in the contract that shipment will occur now and payment later, the seller can offer the debt to the bank and immediately receive 80-90% of it. The rest will be received after the buyer pays the bank.

The bank, transferring the remaining amount to the seller, will deduct the cost of its services. When agreeing to factoring, it is worth remembering that it is always more expensive than a loan, since the bank takes a lot of risk by providing money to one person and hoping to receive it from another.

Factoring is possible with and without recourse. In the first case, if there is no payment from the buyer, the seller will have to return the money to the bank. In the second, all risks fall on the bank. Naturally, choosing the second option leads to an increase in commission.

Transactions with securities

Investment

Investment transactions mean the acquisition of securities. The level of income and risk received depends on the chosen strategy and the securities portfolio being formed. If the goal is to obtain maximum income, then the investment will be high-risk. If the bank’s priority is stability, even at the cost of reducing profits, then securities of the most reliable issuers will be purchased.

Accounting and loan

Accounting for securities, such as bills of exchange. In this case, the holder of the bill transfers it to the bank by endorsement and receives most of the amount specified in the bill, minus the cost of banking services. After the expiration of the period specified on the bill, the bank will present it for payment.