The bank keeps a small amount of your money in their vault. The amount the bank is required to keep on hand is determined by the Federal Reserve Bank of the United States ("the Fed") as part of its monetary policy to control the amount of credit.
The bulk of your money is loaned out to individuals for things such as homes, cars, and consumer loans. It is also loaned out to businesses for new equipment and operating expenses.
They invest it and loan it out to others at a profit.