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rEEDERAL Rfe^EftVE B A N K of K A N S A S CITY JUN 1 3 1957 BANKING AMP MONETARY DEVELOPMENTS IN MAY 1957 RESEARCH LIBRARY Summary* Total loans end Investments at all commercial banks Increased slightly In'May, reflecting tank acquisitions of U, S, Government securities. Total loans outstanding showed little change. Demand deposit and currency holdings of businesses and individuals declined by about the usual seasonal amount while time deposits continued'to show substantial growth, U. S, Government deposits also rose. Net borrowed reserves of member banks declined slightly over the month. Interest rates generally moved upward during the month and rates charged on prime commercial paper and on bankers1 acceptances advanced in early June, Bank credit. Preliminary estimates indicate that total loans and investments at all commercial banks Increased slightly in May, as shown in Table 1, Holdings of U, S, Government securities increased about $200 million. At city banks, these holdings had declined substantially from late April through May 22 and then in the subsequent week ending May 29, which included the $1,5 billion offering of new Treasury tax anticipation bills all of which were taken initially by banks, holdings increased by almost as much as the previous decline. At non-reporting banks, it is assumed that U. S, Government security holdings may have shown some net increase over the month. Total loans were about unchanged as increases in consumer and real estate loans offset declines in business and security loans. Holdings of other securities may have been about unchanged following increases earlier in the year. In May, however, holdings of other securities declined considerably at banks in New York City reflecting in part the redemption of maturing New York City tax anticipation notes, as is usual in this month. They continued to Increase at weekly report-• ing banks outside New York City and also presumably at other banks. In May last year> total credit declined $300 million as reductions in holdings of U, S, Government securities and other securities more than offset an $800 million loan increase. Business loans at all commercial banks declined by about $200 million in May; at weekly reporting banks the decrease was slightly larger but was probably offset in part by some seasonal expansion at non-report ing banks. This compared with little change in May last year, some increase in 1955# and general declines in most earlier years, Practically all the decline in business loans at city banks in May 1957 occurred in New York, Net loan repayments by sales finance companies totaled $175 million, as shown in Table 2, almost entirely at banks in New York, Earlier in the year, borrowing by these companies had been substantial both at banks in New York and at those outside. The seasonal industries continued to liquidate loans in May, Borrowing by metals manufacturers continued and was larger than In May last year, however, last year, borrowing Not for publication L«iu3 ,* 2 ^ iabl» 1 Estimated Changes In Loans and Investments at All Commercial Banks (In billions of dollars) Item Total loans (excluding interbank) Business Real estate Security Agricultural Consumer All other U, S, Government securities Other securities Total loans and investments (less interbank) Item Total loans (excluding interbank) 1957 1956 1957 Year ending* 1956 Apr# 25- Apr# 26* (fan, 1* May 29 May 29 May 30 Jan. 1May 30 + 0,8 + 0.1 + 2.7 + 5.0 K.2 0,1 0,1 0,2 0,1 + 0,1 + 0,1 *0,6 - 0,1 + o,5 - 0,1 + + * • + + + * • + - 0,9 -1,1 • 0,2 + 0,2 1955 1/ - 0,2 + 0.1 - 0,1 •M3.2 y + 0,2 y Jan, 1— May 25 1.6 0,8 May 29, May 30, 1956 1957 + U.o •11,9 2/+ 6,8 1,0 0,8 0,3 1.3 0,1 2 A 2,1 -W + 0,2 - 7.7 + 0,5 - 0,3 + 0,3 ••*'0,3 - 0,3 — 0,6 - 1,9 1951 1953 1952 + * + + 0,5 0,1 0,7 0,2 + 0,2 H.2 * 0,6 + 3,9 1951 1950 Jan, 1- Jan, 1* Jan* 1— May 28 May 26 May 27 J art, 1— May 30 Jan, 1, May 31 + 2<sU - 1,2 + 0,6 + 0,1* + 1,9 * 1,0 + + — + + 1,1 1,1 0,2 0,8 0o8 o,5 * 1,2 + 0,3 - 0,1 1/ m 0#3 i/ + * * + + + + + + + + + + * + + + U, S, Government securities * U.o • 0,1 - 5.0 * 0,8 * 3,9 - 0,9 Other securities + 0,lt + 0,6 + 0,3 • 0,5 + 0.1 + 0,8 * 1,2 - 0,7 - U,3 • 0,1 - 1.9 + 0,9 Business Real estate Security Agricultural Consumer All other Total loans and investments (less interbank) 0,3 o,L 0,5 0,2 1,1 0,1 1,0 0,3 o,5 0,1 o,L 0,1 1,6 0,5 o,5 0.1 H.3 o,U 0,7 0,3 0,2 0,6 y Level of business loans increased by, and real estate loans decreased by, $300 million at end of October 1955 to correct classification errors* No back figures revised; most of the misclassification probably occurred during 1955* Note* Data for May 1957 are estimates and subject to error. Preliminary data for May will be shown in the Board1s statement, "Assets and Liabilities of All Banks in the United States" available at the end of June# Not for publication had been sharp early in the month but later In May loans had declined, presumably reflecting in large part repayments by one large company from the proceeds of a bond issue. Loans outstanding to public utility concerns increased in May 1957* whereas they had declined last year. So far this year, business loans at all commercial banks have increased only nominally compared with expansion of $1,6 billion in 1956 and $1.1 billion in 1955; in many earlier years> however, these loans had declined over the first five months, At city banks (from December 26, 1956) business loans declined by $200 million, about half in New York, Net loan repayments by food processors and commodity dealers have been much larger than last year, when these repayments were unusually small, but generally comparable with other recent years. In addition, loans to trade concerns have declined whereas last year they rose. On the other hand, the level of borrowing of sales finance companies shoved some small increase whereas last year it had declined substantially. Borrowing by other groups was about half as large as last year with all businesses except public utilities showing either smaller increases or declines, Beal estate loans declined slightly at city banks in May but the rate of reduction appeared to be tapering off somewhatj assuming continued growth at non-reporting banks, loans at all commercial banks, which had shown no change so far this year, may have moved up slightly. In 1956 and 1955; these loans had increased close to $1 billion, but in earlier years, growth had been smaller. Consumer loans increased $200 million further in May, This followed a substantial rise in April and brought the total growth to $500 million so far this year, only slightly smaller than last year. Part of the large April 1957 rise, however, reflected bank purchases of consumer paper from Sears Roebuck, Loans for purchasing or carrying securities fluctuated in May but declined slightly over the month. Agricultural loans were about unchanged. So far this year, total credit at all commercial banks has declined $600 million, about a third as much as last year and half as much as in 1955. Loan growth has been nominal compared with increases of about $2,5 billion in each of the past two years. Expansion in loans since January has just about offset the'exceptionally heavy net repayments of that month. Holdings of U, S, Government securities have declined about $1 billion so far this year, about a quarter as much as in the two past years. Banks initially took practically all the $3,4 billion certificates and notes offered for cash in March and the $1,5 billion tax anticipation bills in May, (The Treasury also sold $1.1 billion of Treasury bills for cash between January and March,) Holdings of other securities have increased $500 million so far this year, about the same as in other recent years except 1956, when they declined. Not for publication - 1* - L.l*.3 Table 2 Changes In Commercial and Industrial Loans 1/ (In millions of dollars) Business of Borrower Apr.25, Apr»26, 19561957May 29, May 30, 1956 1957 1952 -381 *389 -233 *208 +~5? *929 W *1,896 * 38 tl07 • 90 *176 •116 -101 All other - total *130 T W Metals and products Textiles, apparel and leather - 35 Petroleum, coal, etc. * 8 Other manufacturing w and mining 7 Public utilities * 59 Construction - 1* All other types of * 10 business -271* -278 1953 + 51 -177 Total change -327 -290 1951 *206 Sales finance 1* -1*72 -1*72 1955 -833 -516 -607 -331 -580 #581 -110 *203 =98% -T7521* w - 1956 -521 - 81 -107 * 20 =158 Classified Unclassified 1957 -1*16 *102 Food processors Commodity dealers Trade concerns Total - 91* -136 First twenty-two weeks - 7 =CEI -287 -1*18 *617 +1,011* *966 *251 -101* *187 *273 * U3 *110 - 1*2 * 59 + 32 - 1*1* + 33 • 1*3 +261* +11*3 * 31 *111 *167 - 28 * 62 *159 +103 -11*1 * 62 * 80 * 1*7 — 62 + 5 - 21 *1,105 ~1?7 *530 * 56 2/-317 3/ -236 - 57 *198 *1,161 2/+213 • 82 * 1*3 * 55 * 1* - 50 - 1*1 -1*51*5 -1*70 - 75 +132 + 60 - 61 * - 63 -795 -230 -100 y-1,781 -700 -895 ~2j CCC certificates of interest, which are included in data, may have declined 11*70 million# 3/ CCC certificates of interest, which are included in data, may have increased $70 million* Note 1 Classified data are for a sample of about 210 banks reporting changes in their larger loans* these banks hold over 90 per cent of total commercial and industrial loans of all weekly reporting banks and nearly 70 per cent of those of all commercial banks* Data are preliminary for week of May 29, 1957* Not for publication 3 The appended table, "Loans and Investments at All Commer- . cial Banks", shows types of outstanding loans and Investments, monthly for recent years and quarterly or annually for previous years. Deposits and currency. Preliminary estimates indicate that demand deposit and currency holdings of businesses and individuals declined by about the usual seasonal amount in May, as shown in Table 3. (Changes are based on revised seasonal factors for the period beginning January 1950). At the month-end, the seasonally adjusted money supply was about one per cent above the year-ago level. So far this year, seasonally adjusted deposits and currency have increased $500 million; they declined somewhat in January and then tended to rise slightly in each of the three months, February, March, and April. The seasonally adjusted money supply also showed little change in May last year;'during the first five months of 1956, it increased $300 million* U, S. Government deposits increased $1.2 billion in May. Treasury Tax and Loan Accounts fluctuated over most of the reporting period and then increased on May 27 when payments were made for the new bills, Time deposits at commercial banks may have increased about $600 million further in May, These deposits rose over $300 million at weekly reporting banks and probably increased at about the same rate as in April at non-reporting banks. So far this year, time deposits at commercial banks have increased $2.9 billion, more than twice as much as in the comparable period of any postwar year and slightly more than in 19^5 when time deposits were showing their sharpest wartime growth. At mutual savings banks, time deposits may have increased about $100 million in May, and about $500 million in the January-May period, This was somewhat less than in the comparable period of any of the last five years. On balance, total deposits and currency increased $200 million in May, Credit at commercial and mutual savings banks increased slightly and foreign transactions added to deposits and currency. Federal Reserve holdings of U, S, Government securities declined, however, and changes in miscellaneous factors reduced deposits and currency. Bank reserves. Net borrowed reserves of all member banks averaged $450 million in May,1 slightly below the $500 million average in April, as shown in Table 4. Average borrowings dropped to $900 million from over $1 billion, but excess reserves also declined somewhat. While the change in over-all reserve positions was small, this was the result of larger offsetting changes by class of bank. Net borrowed reserves declined rather substantially ($240 million) at central reserve city banks in New York and Chicago but increased at reserve city banks ($110 million); at country banks# free reserves declined $80 million. Not for publication 6 - £.lu3 Table 3 Estimated Changes in Deposits and Currency (In billions of dollars) Item Seasonally adjusted data 1/ Demand deposits adjusted Currency outside banks Total Unadjusted data 1/ Demand deposits"*adjusted Currency outside banks Total Time deposits U, S, Government deposits Total Factors affecting deposits and currency Bank loans and investments other than United States Government securities Commercial Mutual savings Bank holdings of U. S. Government securities: Federal Reserve Commercial Mutual saving and other Gold stock and foreign deposits at F, R# Banks Other factors Apr. 2i, Apr. 2T, Jan. 1, Jan. 1, 1956195719561957May 30, May 29, May 29, May 30, 1956 1957 1956 1957 - 0.3 - 0.1 =1571 +73TT - 2.1 + O.U - 1.9 + o.U T-T3 + 0.2 TTTf + 0.7 + 1.2 +~oT5 + 0.2 + 0.1 + 0.2 + 0.3 + 1,2 2/ — 6.2 + ill - 2.0 Year ending: "Hay 29, 1957 + 1.0 + o.U +^3 T T 3 - 5.7 + 1.0 - 6.6 — - 3.6 +"77o - 0.9 + 1.2 + 1.8 + O.U + 5.9 - 0.3 May 30, 1956 + 0.9 + 0.5 T1~K • 0.9 + 0.6 TITS + 3.1 + 0.3 TXB (signs indicate effect on deposits and currency) + 0.1 TT~ +"0.1 + 0,2 1/ + 0.3 - 0.2 + 0.6 T T O + 0.3 * 1.0 + 0.6 + 0,9 + 3.1 + 2.U + 1.1 - 0.7 = - — — - - 0.9 2/ + 0.1 n 3.1 ~ o 1.1 0.2 + 0.6 - o.5 5.7 r:u U.3 0.1 + 0.2 - 1,2 $ 2.3 +13.9 TTHE + 2.5 - 1.0 - 8.3 + 0.2 • 0.8 - 7.7 - 0.5 + 0.8 + 0.2 T T O - 0.6 - 1.0 1/ * Seasonally adjusted data are for last Wednesday throughout; unadjusted data are for last Wednesday except in case of June and December call dates, when available Seasonally adjusted changes are based on revised seasonal factors for the period beginning January 1950. 2/ Less than $50 million. . .. 3/ Total includes foreign loans on gold, holdings of bankers' acceptances at the "* Federal Reserve, and loans to foreign banks; changes in these items are generally relatively small. In addition even if there were no changes in these items, changes at commercial and mutual savings banks would not add to total change which is "net" because commercial banks exclude all interbank loans, domestic and foreign; in addition, there are probably some bookkeeping discrepancies among various banking records* Note: Data for May 1957 are estimates and subject to error. Preliminary data for May will be shown in the Board's statement, "Assets and Liabilities of All Banks in the United States" available at the end of June. Not for publication Over the first five months of 1957* net borrowed reserves averaged about $250 million • compared with $400 million in the comparable period last year. In April and May, however, average net borrowed reserves were only slightly below a year ago* Member bank reserve positions fluctuated somewhat over the month, averaging about $500 million in the first two weeks, declining to less than $300 million after the mid-month when the intramonthly increase in Reserve Bank float provided a large volume of funds, and rising again to about $600 million at the month-end. Free reserves were exceptionally low at country banks late in the month. Over May, as shown in Table 5# more reserves were supplied to member banks through declines in required reserves and reductions in nonmember deposits and other Federal Reserve accounts than were absorbed through sales of System holdings of U. S, Government securities, declines in Reserve Bank float and increases in Treasury deposits at the Reserve Banks. Required reserves declined steadily throughout most of the month reflecting reductions in both Treasury deposits and in other demand deposits at member banks. On May 28, however, required reserves increased considerably reflecting credit and' deposit expansion associated with bank purchases of the new $1.5 billion tax anticipation bills on May 27. On May 28, the Treasury purchased $300 million of gold from the International Monetary Fund for redeemable notes--a transaction similar to the one that occurred in late January, The funds were promptly paid out to meet current expenditures, and the effect was an immediate increase in bank reserves. During the first five months of 1957> net borrowed reserves increased $420 million from their temporarily low level in December 1956. In the same period last year, they had increased $260 million. Currency inflows, foreign operations, and declines in required reserves supplied more funds to banks this year than last but reductions in Federal Reserve holdings of U. S, Government securities were considerably larger and declines in Reserve Bank float and changes in other miscellaneous factors absorbed more reserves than last year. System holdings of U. S. Government securities declined $60 million between April 30 and May 31 reflecting a reduction of $220 million in outright holdings and an increase of $160 million in securities held under repurchase contracts. Repurchase contracts were acquired early in May and again late in the month when reserve pressures increased. At the month-end, the level of System holdings of U, S, Government securities was about the same as in late February and early March and lower than at any time since the summer of 1952. Hot for publication - 8 - ltl*«3 Table I* Free Reserves (Excess reserves minus member bank borrowings} based on average of daily figures} in millions of dollars) ' All member Period New York Reserve City Country - 26 - 338 550 338 86 — • - 353 336 298 1*29 1*68 356 3UU 382 296 216 193 203 379 310 319 32U 205 305 360 271* 380 358 393 3l*U - 172 2l*9 2l*2 263 369 369 299 280 269 185 - 99 - 150 - 323 - 1*18 1*57 37l* 375 314 Chicago 195U* 1955* December December 159 - 215 — 50 - 161 — ~ 1956s January February March April May June July August September October November December - 255 266 1*08 533 5oU 195 139 339 213 195 1ft 36 — • - — 83 January February March April May - 117 126 316 505 t*ft - 1*1 - 123 - 101 - loll - 1*0 - 53 • 253 - 210 - 166 2ft - * 1957* Quarterly averages 1955* M r s t Second Third Fourth 198 138 17U 167 88 33 108 158 201* 192 211 91 - 300 29 16 83 - 103 - 256 - 262 - 153 - ill . 1*8 - 72 - 93 - lilt - 11*0 - 75 * 61* - 67 95 158 - 127 - 365 1 - 112 - 192 - 170 - 96 - 157 - 166 - 11*7 - 175 - 71 - 113 - 329 1*18 31*1 21U 336 278 338 365 1956* First Second Third Fourth - 1957* First - 108 - 88 - 115 - 221 316 - 361 - 326 *» 1*80 » 1*72 - 251 — 5U6 - 1*1*7 - 236 - 82 - 210 - Hit • 62 - 28 - 75 - 211 «* 126 . 211 - 185 - 1U5 - 131 - 59 - 266 355 11*7 262 169 311 23 11*9 1957* April 2l* May 1 8 15 22 June Note* 29 5 310 Ill 230 128 Data for second half of May and June are preliminary# http://fraser.stlouisfed.org/ Not for publication Federal Reserve Bank of St. Louis - 265 - 321 * 312 - 355 - 1*10 — I162 On June 5> the rate on 4-6 month prime commercial paper rose from 3-5/8 per cent to 3 - 3 A per cent and on June 6, that on bankers' acceptances rose from 3 - 1 A P e r cent to 3-3/8 per cent* The lower rate on prime commercial paper had been effective since early last October* Bates on bankers' acceptances bad increased through1 last December and then fluctuated somewhat in the spring of 1957. Not for publication Wu3 - 10 Table 5 Changes in Member Bank Reserves, with Relevant Factors (Monthly average of daily figures} in millions of dollars) Year ending May "Jan. - May May Item 1956 1957 1957 1956 1957 - 260 - 112 - 708 - 5Q5 92 - 208 • - 511 197 - 378 127 + 10U - 12 Member bank reserve balances Total Required reserves Excess reserves - 52 Effect of above factors on reserves - 60 (signs indicate effect on reserves Principal factors Currency in circulation Gold stock and foreign accounts Treasury operations Federal Reserve float Other factors 52 - 32 + - 32 73 - 77 + ho +1,130 + 9U3 - 323 + - + - 207 110 + 560 + 73 U27 Itli 587 106 + 98 - hi - 6k + 3 3 h6 + 6k 820 652 + 1+06 - 306 - 175 -1,527 -1,152 - 315 - 198 - 88 + 183 + + 101 - U6l + 118 Federal Reserve loans and investments: Total U. S e Govt, securities Outright Repurchase agreements Acceptances Discounts and advances: To member banks To others ri25 - 73 3 + U3 102 - 89 3 1/ Data for May 1957 are preliminary. Not for publication + 2 - 222 + 221 - + 28 a -1,280 -1,056 - 22k 3 + 132 1 - 281 rrn - 15 + + 6 62 22 W W Loans and Investments at All Commercial Bahks (In billions of dollars) Loans " and investments Date U 7 3 T Other" Gov't# secur- Total secur- ities loans ities W t 1918: 19h9» 1950; 1951* 1952# 1953* 195U« Dec* Dec. Dec* Dec. Dec. Dec. Dec. Dec. 31 31 31 31 31 31 31 31 116,2 lllt.2 120.1 126.6 132.5 lltl.5 1U5.5 155.7 69.2 62.6 1955: Mar. 30 June 30 Sept.28 Dec. 31 I52.ll 151.8 l56.lt 160.3 6b,2 63,3 Jan. 25 Feb. 29 Mar. 28 Apr. 25 May 30 June 30 July 25 Aug. 29 Sept.26 Oct. 31 Nov. 28 Dec. 31 158.3 157.1 158.5 158 o 7 158.1 159.3 158.3 159.8 160.7 I6l.lt 162.7 16U.5 60,9 59.2 30p 161.6 27p 161.0 2%) 161.3 2ltp 163.7 29e 163.9 57.7 1956s 1957: p e 1/ " Jan. Feb, Mar . Apr. May 67.0 62.0 61.5 63.3 63.lt 69.0 62.0 61.6 58.6 58.2 57.3 56.6 56.2 57.2 57.0 57.5 58.2 58.6 56.8 55.7 57.3 57.5 Business All ConReal SecuFarm sumer other estate rity 9,0 9.2 10.2 12.lt 13.3 lli.l lit. 7 16.3 37.9 lt2@lt lt2.9 52.2 57.6 61t.O 67.lt 70.lt 18.3 18.9 17.1 21.9 25.9 27.9 27.2 26.9 9*U 10.8 11.5 13.5 lit. 6 15.7 16.7 I8.lt 2.1 2.3 2.6 2.9 2.6 3.2 3.6 1.5 1.7 2.9 3.1 2.9 3.U 3.9 5.0 5.2 3.8 lt.8 5.8 7.U 7,5 9. It 10.9 10,9 2.9 3.1 3.U lt.2 lt.5 lt.9 17.0 16.8 16.9 16,7 71.2 7U.8 77,5 82.0 27.lt 28.9 30.5 1/33.2 19.0 19.8 20.6 1/20.8 it.l lt.5 lt,2 5.0 lt.9 lt.lt 3.9 lt.5 11.2 12.1 12.7 13.2 5.8 6.2 6.6 6.5 16.5 16.6 16.6 16.6 l6.lt 16.5 16.3 16.U 16 0 6 16.3 16.3 16.3 80,9 81.2 83.3 83.9 81.7 86.2 85.8 86.3 87.2 87*6 88.2 89.7 32.7 32.9 3U.5 3U.8 3U.8 36.1 35.8 36.lt 36.9 37.2 37.8 38.7 20.9 21.0 21.2 21.1 21,6 21,8 21.9 22.1 22.3 22.lt 22,5 22,5 14.6 lt.5 lt.5 lt.lt lt.5 lt.lt It.3 lt.0 It.l It.l lt.0 It.3 lt.lt lt.5 lt.lt It.3 lt.lt lt.3 lt.2 lt.0 It, 2 lt.0 It.l lt.2 13.3 13.3 13.5 13.7 13.9 1U.3 llt.lt llt.lt lit. 5 lit. 5 lit. 5 lit. 7 16.2 16.3 16.5 16.7 16.7 87.7 87.9 89.1 89.7 89.7 37.6 37.8 39.0 39*0 38,8 22.5 22.5 22.5 22.5 22.6 3.7 3.7 3.6 3.8 3.7 lt.2 lt.2 lt.2 It.l It.l lit.6 lit. 6 lit. 7 15.0 15.2 5a 5.6 6.1t 6.U 6.5 6.6 6.7 6.7 6.6 6.7 6.6 6.7 6.8 6.9 6.7 6.7 6.7 6.8 6.8 Preliminary Estimated Level of business loans increased by, and real estate loans decreased by ^300 million at the end of October 1955 to correct classification errors. No back figures revised} most of the misclassification probably occurred during 1955# NoteI • Data exclude interbank loans. Total loans are after and types of loans before deductions for valuation reserves. Consumer and "other loans are partly estimated for all dates. Other data are partly estimated on all but June and December dates. Data for May 29* 1957, are estimates and subject to error. Banking Section, Board of Governors June 10, 1957 Not for publication
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