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CONFIDENTIAL
March 7 ,

To:

Board o f Governors

From:

Subjects

Member bank earnings i n I9I4.6

Gerald M. Conkling,

Division of Bank Operations•
Preliminary earnings figures of member banks for
requested in the Board's wire yesterday, have been received from
the Federal Reserve Banks and shows
(1) Net profits totaled $7I|9 million, a decline of $39
million, or 5 P e r cent, from the $788 million reported
for 19U5* This amounted to 9*5 P e r cent of average
total capital accounts as compared with 10.9 in 19U5*
over one^half of the percentage deorease was due to
increased capital accounts* Net profits by class of
bank showed decreases of $58 million at central reserve city banks and $12 million at reserve city banks,
and an increase of $3* million at country banks.
(2) Net current earnings before income taxes (current earnings less current expenses) were $931 million, a new \iigh,
and #96 million higher tiian 19U5* Central reserve city
banks showed a slight decrease of f 11 million!, reserve
city banks an increase of $29 million, and country banks
an increase of #79 million, or 30 P e r cent. Current
earnings were |295 million higher than in 19^5* Partially offset by a $199- million increase in current expenses.
(3) Net recoveries and profits amounted to only $102 million,
considerably less than the $22lj. million reported in
19h5f a**d even $U million less than reported for the
first half of 1946* Although detail figures are not
available except for ihe first half of 191+6, it appears
that profits on securities sold were considerably less
than in 19^+5 an<* that losses and charge-offs showed
either little change or an increase.
(U) Cash dividends totaled $263 million, $17 million higher
than in 19U5» Apparently dividend policies were little,
if Cxny, affected by the question included on the I9U6
corporate income tax return as to whether as much as
70 per cent of net profits had been paid as dividends•




Member Bank Earnings by Class of Bank, I9h5 a*id I I .
946
(In millions of dollars)

All Member Banks

Central Reserve City Banks
New York
Chicago

Reserve City Banks

Country Banks

191*5 ] 191*6

191*5

191*6

191*5

191*6

105

111

783

890

782

9l*0

250

56

63

1*79

557

517

596

216

206

19
*

1*8

301*

333

265

31*1*

102

• 89

27

5

3

55

21

71*

52

1,058

1,033

305

233

55

50

359

351*

31*0

396

Taxes on net income
Net profits

270

28k

75

16

13

90

98

73

98

788

71*9

91
211+

158

39

37

268

256

267

298

Cash dividends l /

21*6

263

73

75

13

H*

88

96

71

78

Ratios to total capital
accounts
Net current earnings
before income taxes
Net profits

11. 5
10. 9

1L8
9.5

10. 7
10. 6

9 *5

13. 6

12 . 2

12. 5
11. 0

12. 5

11. 0
11. 0

13. 0

191*5

19^6

Earnings

2,102

2,397

1*32

1*56

Expenses

1,268

1,1*67

216

Net current earnings
before income taxes

835

931

Profits on securities
sold, and recoveries,
less losses and
charge-offs

222*

Profits before
income taxes

191*51 191*6

7.3

10. 8

9 .5

9- 6

l/ Includes interest on capital notes and debentures (such interest, and dividends on preferred stock,
are estimated for I I . )#
946



11. 2