I don't see why you would not offer mortgages. The point of a bank is to have a healthy net interest margin on the funds that they are borrowing and the funds

I don't see why you would not offer mortgages. The point of a bank is to have a healthy net interest margin on the funds that they are borrowing and the funds they are loaning out. Mortgages are like having a long term contract where that margin is secured. Also, think about it. If you are not making mortgages, you're going to be looking at more consumer-focused later credit stage loans. Commercial real estate, construction, small business loans. All of these are loans that are more difficult to write and typically carry higher loss rates. When I look for banks to invest in, I am typically looking for banks that write mostly single family mortgages because they are more secure than those lending to local businesses/developments. Also, I think you are confusing most banks with the dealer broker model - Bear/Lehman/Merrill/Goldman/Morgan Stanley. Those banks had massive amounts of overnight lending. Commercial banks like JPM, Wells, and BoA did not. That's why they are able to thrive and consolidate during the crisis. A great bank will have sticky deposits -- low yield Savings accounts, checking accounts. Not high yield CDs.