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ANNUAL REPORT
OF THE

FEDERAL DEPOSIT INSURANCE CORPORATION




FOR THE YEAR ENDED
DECEMBER 31,1944




L E T T E B OF T R A N S M IT T A L

F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t io n ,

Washington, D. C., August 21, 19^5.

SIR: Pursuant to the provisions of subsection (r) of section
12B of the Federal Reserve Act, as amended, the Federal Deposit
Insurance Corporation has the honor to submit its annual report.
Respectfully,
L e o T. C r o w le y ,
T h e P r e s id e n t
T he Sp e a k er




of t h e

of th e

Se n a t e

H ouse

of

R e p r e se n t a t iv e s

Chairman.




FEDERAL DEPOSIT INSURANCE CORPORATION

FEDERAL DEPOSIT INSURANCE CORPORATION
N a t i o n a l P r e s s B u ild in g —
F ie ld B u ild in g —

W a sh in g to n 25,

D.

C.

C h ic a g o 3, I l l i n o i s

BOARD OF DIRECTORS
Chairman..................................................................... L eo T. Crowley
( P hillips L ee G oldsborough
Directors......................................................................
(P reston D elano
Comptroller of the Currency
OFFICIALS— AUGUST 21, 1945
W ashington 25, D . C.
Secretary...................................................................... Miss E. F. Downey
Executive Officer.......................................................... Henry W. Riley
Assistant Executive Officer.......................................... Walter F. Oakes
Special Assistant to Board of Directors.................... Alfred J. Loda
Confidential Assistant to Chairman.......................... Miss Beryl Roberts
Secretary to Chairman................................................ Miss Dorothy Dale
Special Assistant to Chairman.................................. •. Forbes Campbell
J
Special Assistant to Chairman.................................. Edward C. Tefft
Assistant to Director................................................... Albert G. Towers
Secretary to Director.................................................... Mrs. Madeline G. Von Eberhard
General Counsel........................................................... Francis C. Brown
Counsel......................................................................... Goodwin J. Oppegard
Counsel........................................................................ Irving H. Jurow
Counsel........................................................................ Russell D. Miller
Chief, Division of Examination................................. Vance L. Sailor
Mutual Savings Bank Advisor.................................. Raymond T. Cahill
Special Assistant to Board of Directors,
Federal Credit Union Section............................ C. R. Orchard
Chief, Division of Research and Statistics................ Homer Jones
Assistant Chief, Division of Research and Statistics. .Harry L. Severson
Librarian..................................................................... Miss Amy Dene Early
Director of Personnel.................................................. Carl W. Satterlee
Chief, Service Division................................................ Frank C. Bio we
Chicago 3, I llinois
Chief, Division of Liquidation................................... Wheeler McDougal
Supervising Liquidator, Division of Liquidation. . . .Ralph E. Zimmerman
Supervising Claim Agent, Division of Liquidation.. .James M. Gaffney
Supervising Accountant, Division of Liquidation.. . .H. R. Burling
Counsel........................................................................ James M. Kane
Assistant Counsel (on military leave) ........................ John L. Cecil
Fiscal Agent................................................................ W. G. Loeffler
Chief, Audit Division................................................. Mark A. Heck




v

DISTRICT OFFICES
D is t.

No.

S u p e r v is in g
E x a m in e r

A ddress

S t a t e s i n d is t r i c t

1. Leo J. Carr

Room 765, No. 10 Post
Square, Boston 9, Mass.

Maine, New Hampshire,
Vermont, Massachusetts,
Rhode Island, Connecticut

2. Leon F. Stroefer

Room 1900, 14 Wall Street, New York, New Jersey,
New York 5, N. Y.
Delaware

3. Leon F. Stroefer

City National Bank
Ohio, Pennsylvania
Building, 20 East Broad
Street, Columbus 15, Ohio

4. Lundie W. Barlow

909 State Planters Bank & District of Columbia, Mary­
Trust Company Building,
land, Virginia, West Vir­
Richmond 19, Va.
ginia, North Carolina,
South Carolina

5. W. Clyde Roberts

625 First National Bank
Building, Atlanta 3, Ga.

Georgia, Florida, Alabama,
Mississippi, Louisiana

6. Neil G. Greensides 1059 Arcade Building,
St. Louis 1, Mo.

Kentucky, Tennessee,
Missouri, Arkansas

7. Raby L. Hopkins

715 Tenney Building,
Madison 3, Wis.

Indiana, Michigan,
Wisconsin

8. Carol L. Pitman

Illinois, Iowa
741 Federal Reserve Bank
Building, 164 W. Jackson.
Blvd., Chicago 4, 111.

9. Rollin 0 . Bishop

1200 Minnesota Building,
St. Paul 1, Minn.

10. Gerhard F. Roetzel 901 Federal Reserve Bank
Building, Kansas City 6,
Missouri
11. Linton J. Davis

Federal Reserve Bank
Building, Station K,
Dallas 13, Tex.

Minnesota, North Dakota,
South Dakota, Montana
Nebraska, Kansas,
Oklahoma, Colorado,
Wyoming
Texas, New Mexico, Arizona

12. William P. Funsten Suite 1120, 315 Montgomery Idaho, Utah, Nevada,
Street, San Francisco 4,
Washington, Oregon,
Calif.
California










CONTENTS
Page
3

Summary

PART ONE
OPERATIONS AND POLICIES OF THE CORPORATION
Introduction.............................................................................................................
Suggestions for legislation......................................................................................
Deposit insurance and loan risk...........................................................................
Deposit insurance protection.................................................................................
Legal developments................................................................................................
Supervisory activities.............................................................................................
Organization and financial statements of the Corporation...............................

7
8
11
14
20
22
25

PART TWO
BANKING DEVELOPMENTS
Assets, deposits, and capital accounts.................................................................
Earnings of insured commercial banks................................................................

35
44

PART THREE
GROWTH IN BANK DEPOSITS AND IN TOTAL MONEY SUPPLY, 1940-1944
Deposits in commercial and mutual savings banks............................................
Total money supply................................................................................................

53
66

PART FOUR
LEGISLATION AND REGULATIONS
Federal legislation relating to insured banks or the Corporation...................
Report of the Corporation on absorption of exchange charges........................
Regulations of the Corporation.............................................................................
State legislation relating to bank supervision and bank operations..............

71
72
96
102

PART FIVE
STATISTICS OF BANKS AND DEPOSIT INSURANCE
Number, offices, and deposits of all operating banks........................................
Assets and liabilities of operating banks..............................................................
Examiners' evaluation of insured commercial banks.........................................
Earnings, expenses, and dividends of insured banks..........................................
Deposit insurance disbursements..........................................................................




ix

108
122
132
138
146

LIST OF CHARTS
Organization chart of the Federal Deposit Insurance Corporation...............
Map: Federal Deposit Insurance Corporation districts...................................
A.
B.
C.

Total assets of all operating banks by type of asset, 1934-1944..............
Percentage distribution of assets— all operating banks, 1934-1944..........
Percentage distribution of direct U. S. Government obligations held by
insured commercial banks, 1939-1944..........................................................
D. Ratios of net earnings, net profits, and cash dividends to average total
capital accounts— all insured commercial banks, 1934-1944.....................
E
(Map). Percentage increase in deposits of individuals, partnerships, and
corporations in commercial and mutual savings banks, June 30, 1942,
to December 31, 1944.....................................................................................
F. Percentage increases, 1939 to 1944, in income payments, and in deposits
of individuals, partnerships, and corporations, by State............................
G. Percentage increases, 1939 to 1944, in interbank deposits and in deposits
of individuals, partnerships, and corporations, by State............................
H. Deposits and currency owned by individuals and business, by type,
1939-1944.........................................................................................................

L IS T

OF

Page
iv
vii
35
37
40
46

56
61
64
67

TABLES

PART ONE
OPERATIONS AND POLICIES OF THE CORPORATION
D eposit insurance protection:
1.

2.
3.

4.

Number of depositors, amount of deposits, recoveries, and losses
in insured banks placed in receivership or merged with the financial
aid of the Corporation, 1934-1944......................................................
Payment by the Corporation and receivers of deposits in insured
banks placed in receivership, 1934-1944............................................
Disbursements by the Corporation to protect depositors in insured
banks placed in receivership or merged with the financial aid of
the Corporation, 1934-1944................... .............................................
Disbursements to protect depositors, recoveries, and losses by the
Corporation from insured banks placed in receivership or merged
with its financial aid, 1934-1944..........................................................

15
16

19

19

Supervisory activities :
5.

Action to terminate insured status of banks'charged’with engaging
in unsafe or unsound practices or violations of law or regulations,
1936-1944................................................................................................

23

Organization and financial statements of the corporation:
6.

Officers and employees of the Federal Deposit Insurance Corpora­
tion, December 31, 1944.......................................................................

26

7.

Income and expenses of the Federal Deposit Insurance Corporation,
calendar year 1944................................................................................

27




X

LIST OF TABLES

xi
Page

Organization

and financial statements of the corporation — Continued

8.

Income and expenses of the Federal Deposit Insurance Corporation
since beginning operations..............................................................................

28

9.

Assets and liabilities of the Federal Deposit Insurance Corporation,
1934-1944...............................................................................................................

28

10.

Assets and liabilities of the Federal Deposit Insurance Corporation,
December 31, 1944, and December 31, 1943...........................................

29

11.

Federal Deposit Insurance Corporation comparative balance
sheet, June 30, 1944 and 1943— from auditors’ report........................

30

PART TWO
BANKING DEVELOPMENTS
A ssets,

deposits , and capital accounts :

12.

Increase in total assets of all operating banks, 1941-1944................

36

13.

Substandard asset ratios of insured commercial banks examined in
1939-1944...............................................................................................................

38

14.

Bank holdings of United States Government obligations, direct and
guaranteed, 1941 and 1944.............................................................................

39

15.

Direct United States Government obligations held by insured
commercial banks, 1939-1944........................................................................

40

16.

Capital accounts of insured commercial banks, 1941 and 1 9 4 4 . . . .

42

17.

Capital ratios of insured commercial banks, year-end call dates,
1934-1944...............................................................................................................

43

18.

Distribution of insured commercial banks examined in 1944 ac­
cording to adjusted capital ratio and by amount of deposits.. . .

44

E arnings

of insured commercial b a n k s :

19.

Earnings, expenses, and dividends of insured commercial banks,
1942-1944...............................................................................................................

44

20.

Ratios of net profits, net earnings, and cash dividends to average
total capital accounts, all insured commercial banks, 19 34-1944..

46

21.

Distribution of insured commercial banks according to rate of
net profits on total capital accounts, 1942-1944....................................

47

22.

Amounts and rates of income received by insured commercial
banks, 1934-1944................................................................................................

48

23.

Net earnings and net profits ratios of insured commercial banks,
1944
Banks grouped by amount of deposits......................................................

49

24.

Distribution of insured commercial banks according to ratio of
net profits to total capital accounts and amount of deposits, 1 9 4 4 ..

50

PART THREE
GROWTH IN BANK DEPOSITS AND IN TOTAL MONEY SUPPLY, 1940-1944
D eposits
25.

26.

in commercial and m utual savings b a n k s :

Deposits in commercial and mutual savings banks in the United
States and possessions, by class of owner, June 30 and December
31, 1939-1944.......................................................................................................

53

Increase in deposits in commercial and mutual savings banks,
United States and possessions, by year and class of owner, 19401944.........................................................................................................................

54




LIST OF TABLES

xii

Page
D e p o s it s i n c o m m e r c ia l a n d m u t u a l s a v in g s b a n k s — Continued

27.
28.

29.

30.

31.

Assets acquired by commercial and mutual savings banks in the
United States and possessions, 1940-1944..........................................
Deposits of individuals, partnerships, and corporations in com­
mercial and mutual savings banks, by Federal Deposit Insurance
Corporation district and State, December 30, 1939, June 30, 1942,
and December 30, 1944........................................................................
Percentage increase in deposits of individuals, partnerships, and
corporations, 1940-1944, by Federal Deposit Insurance Corporation
district.....................................................................................................
Governmental deposits in commercial and mutual savings banks,
by Federal Deposit Insurance Corporation district and State,
December 30, 1939, and December 30, 1944.....................................
Interbank deposits in commercial and mutual savings banks, by
Federal Deposit Insurance Corporation district and State, Dec­
ember 30, 1939, June 30, 1942, and December 30, 1944.................

55

58

59

60

62

T o tal m o n ey s u p p l y :

32.
33.
34.
35.

Total deposits and currency, excluding interbank obligations,
June 30 and December 31, 1939-1944................................................
Total deposits and currency, excluding interbank obligations, June
30 and December 31, 1939-1944, by class of owner.........................
Classification of deposits and currency owned by individuals and
business, 1939-1944...............................................................................
Annual increase in deposits and currency owned by individuals and
business, 1940-1944...............................................................................

65
66
67
68

PART FIVE
STATISTICS OF BANKS AND DEPOSIT INSURANCE
N u m b e r , o f f ic e s , a n d d e p o s it s o f a l l o p e r a t i n g b a n k s :

Explanatory note...............................................................................................
101. Changes in number and classification of operating banks and
branches in the United States and possessions during 1944............

108
110

102.

Number of operating banks and branches, December 31, 1944
Grouped according to insurance status and class of bank, and by
State and type of office.......................................................................

112

103.

Number and deposits of operating commercial and mutual savings
banks, December 31, 1944
Banks grouped according to insurance status and by district and
State.....................................................................................................

120

A s s e t s a n d l i a b i l i t i e s o f o p e r a t in g b a n k s :

Explanatory note...............................................................................................
104. Summary of assets and liabilities of operating banks in the United
States and possessions, June 30, 1944
Banks grouped according to insurance status and type of bank___
105. Summary of assets and liabilities of operating banks in the United
States and possessions, December 30, 1944
Banks grouped according to insurance status and type of bank.. . .
106. Assets and liabilities of operating insured commercial banks,
December 30, 1944, June 30, 1944, and December 31, 1943..........



122

124

125
126

LIST OF TABLES

xiii

Page
A s s e t s a n d l i a b i l i t i e s o f o p e r a t in g b a n k s —

107.

108.

Continued

Summary of assets and liabilities of operating banks in the United
States and possessions, 1942-1944
Banks grouped according to insurance status and by type of bank..
Percentage distribution of assets and liabilities of operating insured
commercial banks, call dates, 1934-1944............................................

128
130

E x a m i n e r s ' e v a l u a t i o n o f i n s u r e d c o m m e r c ia l b a n k s :

Explanatory note..............................................................................................
109.
110.

Examiners’ appraisal of assets, liabilities, and capital of insured
commercial banks examined in 1939-1944.........................................
Examiners’ appraisal of assets, liabilities, and capital of insured
commercial banks examined in 1944
Banks grouped according to amount of deposits...............................

132
134

136

E a r n in g s , e x p e n s e s , a n d d iv id e n d s o f in s u r e d b a n k s :

Explanatory note...............................................................................................
111. Earnings, expenses, and dividends of insured banks, 1944
By class of bank.................................................................................
112. Ratios of earnings, expenses, and dividends of insured banks, 1944
By class of bank.................................................................................
113. Earnings, expenses, and dividends of insured commercial banks
operating throughout 1944
Banks grouped according to amount of deposits..............................

138
140
142

144

D e p o s it i n s u r a n c e d i s b u r s e m e n t s :

Explanatory note..............................................................................................
114. Disbursements by the Federal Deposit Insurance Corporation to
protect deposits; number and deposits of insured banks placed in
receivership or merged with the financial aid of the Corporation,
1934-1944
Banks grouped by class of bank, year of disbursement, amount of
deposits, and State..............................................................................
115. Assets and liabilities of insured banks placed in receivership and
of insured banks merged with the financial aid of the Federal
Deposit Insurance Corporation, 1934-1944
As shown by books of bank at date of closing...................................
116. Depositors and deposits of insured banks placed in receivership,
1934-1944
As shown by books of FDIC, December 31,19kk............................
117. Disbursements to protect depositors, recoveries, and losses by the
Federal Deposit Insurance Corporation from insured banks placed
in receivership or merged with the financial aid of the Corporation,
1934-1944
As shown by books of FDIC, December 31,19kk ............................




146

148

150

151

152







SUMMARY




S u m m ary

The period since the establishment of the Federal Deposit Insurance
Corporation in 1933 has been one of rising prices, continuous business
expansion and growth in total bank assets. The tempo of expansion
was greatly accelerated by our participation in the war and the
transition from an all-out war effort to peacetime economy will give
rise to banking problems decidedly different from any which the
Federal Deposit Insurance Corporation has heretofore encountered.
Federal insurance of bank deposits has been highly successful and
the Corporation recommends certain extensions of the basic principles
of deposit insurance so that the banking system and the Corporation
can make the maximum contribution to the business community in
the difficult period ahead. An increase of deposit coverage is recom­
mended combined with more flexibility in the handling of the affairs
of banks in financial difficulties. The seriousness of the declining
capital ratios of insured commercial banks is pointed out in this
report and banks are urged to increase capital by a sale of common
stock to the public. It is further suggested that it would be prudent
for banks to take advantage of present high earnings to build reserves
against the uncertainty of the future. Another recommendation is that
restraints be placed upon the development of monopolies in banking.
The Corporation believes that bank supervision should not interfere
with the proper function of bank management. Among the necessary
conditions for banks to meet the credit needs of business and to play
their proper role in maintaining a high level of production and em­
ployment after the war are: competition in the banking business,
adequate capital, and a will on the part of the banker to engage
actively in business.




3




PART ONE
OPERATIONS AND POLICIES OF THE CORPORATION







I n t r o d u c t io n

The 11-year period since the establishment of the Federal Deposit
Insurance Corporation has been one of business expansion, rising
prices, and growth in the total volume of deposits held by the banking
system. During the first part of this period the increase in bank de­
posits reflected the recovery from the depths of the great depression
of the early 1930’s; during the past four years the increase has reflected
the rapid growth in governmental expenditures for war activities. The
Federal Deposit Insurance Corporation has contributed to and bene­
fited from this large increase in business activity.
Banking developments during the past decade have followed a
pattern essentially similar to that of former periods of rising prices
and expansion in the volume of business. With progressively higher
valuations placed upon assets, banks appear in a more favorable light
and few become involved in financial difficulties. Since January 1,
1934, the Corporation has been called upon to make disbursements
totaling $260 million to protect depositors in 397 banks, most of which
were in a weak asset position when they were admitted to deposit
insurance.1 Inasmuch as there is a tendency for losses to concentrate
in periods of declining business activity, the Corporation’s experience
during a period of almost constant business expansion cannot be
assumed to represent the degree of aid which it may be required
to render to banks in financial difficulties in the future.
The Federal Deposit Insurance Corporation receives income from
two principal sources: assessments paid by insured banks at the
annual rate of one-twelfth of 1 percent of average deposits, and the
income from its holdings of Government bonds. Even though the loss
experience has been low and substantial additions have been made
to the surplus of the Corporation, deposits of insured banks have
grown so large that the resources of the Corporation are now smaller
in relation to those deposits than ever before. At the same time the
degree of protection afforded deposits by the capital of the banks
has declined markedly, since capital accounts have increased only
moderately, while deposits have doubled in the past four years.
1 Under subsection (y) of the original deposit insurance law (Section 8 of the Banking Act of 1933)
the Corporation was required to admit to insurance under the temporary Federal deposit insurance plan
every member bank of the Federal Reserve System, and every nonmember bank which was found to
be “ in solvent condition", regardless of the quality of its assets or the amount of its capital. When the
permanent insurance plan was inaugurated under the Banking Act of 1935, these banks automatically
became entitled to permanent insurance. See subsections (e) (1) and (f) (1) of the Federal deposit in­
surance law, as amended, Title 12, U. S. C., 1940 ed., sec. 264.




7

8

FEDERAL DEPOSIT INSURANCE CORPORATION

S u g ge stio n s

for

L e g isla tio n

The experience of the eleven years of operation of the Corporation
suggests that application of the principles which are embodied in the
Federal deposit insurance law should be extended in certain respects.
Insurance coverage and aid to distressed banks. The Congress,
in 1935, gave the Corporation power to aid banks in financial diffi­
culties through advances to facilitate mergers (including consolidations,
and sales with assumption of liabilities). Originally adopted as a
temporary measure, this provision operated so satisfactorily that
Congress made it permanent and this method has since been used
extensively to handle weak or insolvent banks. The use of advances
made to assist in mergers assures continuity of banking services,
thus greatly reducing the shock to the community and also decreasing
the loss to the Corporation. In addition, a merger protects all deposits
regardless of size, giving, in effect, 100 percent deposit insurance.
In some instances, however, a merger is not feasible and in such
cases owners of large bank accounts are not fully protected and one
of the chief advantages of deposit insurance, namely, unquestioned
confidence in the safety of bank deposits, is not fully attained.

The growth in bank balances over the past few years has made
increasingly inadequate a protection of only $5,000. In 1934, when the
Congress set the $5,000 limit on deposit insurance, total deposits of
insured commercial banks were about $36 billion whereas deposits of
this group of banks at the end of 1944 totaled $126 billion. While
this three-fold increase in total deposits has been accompanied by an
increase in the number of depositors, there has been a substantial
rise in the average size of deposit accounts and today a larger propor­
tion of the depositors have balances in excess of $5,000 than in 1934.
With the present limited coverage, the failure of a bank is a serious
matter for the community. A large part of the deposits used in making
payments in production and trade are in business accounts with
balances far in excess of the present insurance coverage. Freezing of
these balances may make it difficult for business concerns to meet
their payrolls and other commitments. The Corporation recommends
that Congress give consideration to the desirability of raising the
maximum amount of insurance coverage for any one depositor.
The cost to the Corporation of additional coverage is not likely
to be large. It is believed that the indirect benefits of increased
coverage resulting from the increased confidence in the safety of bank
deposits, combined with broadened powers of the Corporation to
assist banks in financial difficulties, would more than compensate
for the relatively small increase in expenditure which might be
experienced because of higher insurance coverage.



SUGGESTIONS FOB LEGISLATION

9

The experience of the Corporation has shown that insured banks
in financial difficulties should not always be paid off and liquidated,
and thus eliminated from their communities. Even though a bank is
in financial difficulties, there may be need for banking facilities in
the community and opportunity for profitable operation may still
exist. In such cases it is desirable that the Federal Deposit Insurance
Corporation and the stockholders of the banks take their losses while
provision is made for a continuity of banking services. The present
law contains two provisions which serve to permit continuity of
banking services. The law provides that the Corporation may make
loans to or purchase assets from insured banks in financial difficulties
where such action will facilitate a merger. It also provides that the
Corporation, upon the closing of an insured bank in financial diffi­
culties, may organize a new national bank to operate under the
management of the Corporation, without capital, for a temporary
period, providing continuing banking service of a limited nature to
the community where the closed bank operated.
A merger with an existing bank involves either a net reduction in
banking facilities or an extension of branch banking. In rural com­
munities there is usually no other bank with which the one in diffi­
culties can be merged and in urban communities a merger often results
in a partial monopoly and in some instances a complete monopoly.
In such cases the Corporation can best discharge its obligations to
protect depositors and to absorb the impact of banking disturbances
in the community by keeping all existing banking facilities open. It
should be possible for the sound business of a weak bank to be trans­
ferred in an orderly manner to a newly organized Deposit Insurance
National Bank as well as to an existing institution. Another difficulty
of the present law is that arrangements for effecting a merger fre­
quently involve recapitalization and other changes in the internal
affairs of the absorbing bank. The steps are usually time consuming
and delay action to protect the depositors of the affected bank. During
these delays the condition of the insolvent bank may become worse
since it continues to operate in its insolvent condition while the terms
of the merger are being arranged.
When a bank becomes involved in financial difficulties because a
limited number of large lines of credit have gone bad, the most
economical method of rehabilitation may be to remove the bad assets,
although in some instances a thorough reorganization may be required
and it may be more feasible to organize a new bank. It is therefore
suggested that the Corporation be given the power to purchase
preferred stock and to make direct advances to a bank in financial
difficulties without requiring a merger. Such advances could be
protected by imposing appropriate conditions as to change in manage­



10

FEDERAL DEPOSIT INSURANCE CORPORATION

ment. It is further suggested that subsection (e) of the Federal deposit
insurance law which provides for the organization of new national
banks be amended so that such a bank will be able to provide the
community with a complete banking service during a temporary
period not in excess of two years, and will be empowered to transfer
its business to a suitably capitalized, privately owned and managed
State or national bank sometime during the 2-year period. If no
acceptable privately capitalized bank takes over the business of the
Deposit Insurance National Bank, it would be liquidated at the end
of the 2-year period.
With increased coverage and broadened powers of reorganiza­
tion, the task of rehabilitation could be adjusted to the needs of the
particular situation. There would thus be no necessity for a hastily
conceived merger or the establishment of a new bank in order that
the banking service in the community may be maintained without
interruption. Mefgers effected or chain banks or branch offices
established under the urgency of preventing an impending bank
failure, tend to promote monopolies and it is difficult at a later date
to organize a locally owned and managed bank. An advance to
facilitate a merger, however, could still be made when it seemed best.
Restriction of banking monopoly. The business of lending money
is well suited to private initiative and is best performed under com­
petitive conditions. Monopoly in banking is a threat to American
traditions, both because it limits the opportunities to engage in the
business of banking, and because it provides an opportunity for
favoritism in the extension of credit which may foster monopolies in
other industries. The growing tendencies toward monopoly in the
banking business are serious, and prompt action should be taken to
curb them. Monopolistic practices in the banking system have con­
tributed to the growing demand for credit agencies operated by the
Federal Government. The Corporation believes that the maintenance
of genuine competition among banks is a much better solution to this
problem than the further extension of governmental lending activities.

A partial monopoly which develops when one bank obtains a
disproportionate percentage of the total banking resources of an area
may have a serious effect on the economic life of the district. Another
monopolistic tendency which has aroused customer discontent is the
agreement among banks, in some areas, to fix charges and limit serv­
ices. Bankers can do much to improve this situation by making active
efforts to fit their services to the needs of the public rather than by
relying upon restrictive agreements for profits.
Partial monopolies over large areas may develop both by means of
branch banking and through the holding company device. The
Corporation recommends that such branch banking as is permitted



SUGGESTIONS FOR LEGISLATION

11

by the laws of the respective States be strictly regulated so that no
bank will control a disproportionate percentage of the total banking
resources or offices of an area. Holding companies not only tend to
become monopolistic, but increase the problem of supervision. The
ease with which assets may be transferred from one affiliated corporate
unit to another and the possibility of the manipulation of the accounts
of these enterprises make adequate examination of affiliated banks
and the appraisal of their condition and capital position extremely
difficult. The Corporation recommends that Congress enact legislation
which will prohibit the future creation of holding companies and which
will require the liquidation of existing holding companies after al­
lowing a reasonable time for orderly distribution to their own stock­
holders of the bank stock which they now hold. The Corporation
believes that such legislation is distinctly preferable to the enactment
of further regulatory laws in the bank holding company field.
D e po sit I n su r an ce

and

L o an R isk

Bank capital. The ratio of capital to total assets is lower for banks
than for any important class of business enterprise. For more than
40 years the ratio of capital to total assets has been declining, a trend
which has been accelerated during the two world war periods. Total
assets have increased markedly while capital has grown at a much
less rapid rate, with the result that the ratio of proprietorship to
assets for all insured commercial banks is now less than 6 percent and
the downward trend is still continuing. This downward trend in the
margin of protection is unfortunate and should be reversed. A low
capital ratio tends to force a bank into pursuing an ultraconservative
lending policy because of its inability to withstand misfortune as
readily as one which is adequately capitalized, and results in failure
to meet all of the credit needs of the community. When the credit needs
of any sizeable number of communities are not satisfactorily served
by private enterprises, it is to be expected that the public will demand,
and receive, such services from governmental agencies.
The most satisfactory solution to the problem of a small amount of
proprietorship is the sale of additional capital stock to investors. The
retention of earnings is helpful in this regard but decidedly inadequate
with the sharp rise in assets which has occurred over the past three
years. The banking business is profitable and since the double assess­
ment feature on bank stock has been virtually eliminated there is no
reason why such stock should not be attractive to investors. The
experience of banks which have offered stock for sale over the past
two years has been reassuring and it is to be hoped that banks with
low capital ratios will avail themselves of the present favorable time
to provide a more adequate capital structure.



12

FEDERAL DEPOSIT INSURANCE CORPORATION

If banks wish to continue as lending institutions they must arrange
their affairs so that they can assume the risks involved in lending
operations without jeopardizing their deposits or subjecting their
stockholders to undue risk. To do this, banks should not only have
adequate capital but should also follow a policy of making periodic
additions to reserves for losses. These reserves should be accumulated
in amounts which reasonable expectation and loss experience indicate
will be adequate to cover operating losses, while the capital of the
bank should be strong enough to provide a protection against extra­
ordinary and unforeseen hazards. The attitude of the Corporation
regarding the accumulation of adequate reserves for losses has been
previously stated as follows:
“ It is desirable . . . th a t. . . each bank should make provision
on a systematic basis for losses, which can be expected to develop
in periods of readjustment, on assets acquired during the prosperous
periods. Where banks do not already follow such a practice, reserves
for losses should be set aside annually in the form of valuation
allowances, or unallocated charge-offs, or in some other manner,
against those groups of assets from which losses ordinarily arise.
Such reserves should, of course, not be regarded as a part of the
capital accounts.
*Within certain limits, the amount of reserves or loss allowances
'
set aside annually at a rate in keeping with the experience of the
bank over a reasonable period of years, or with the experience of
a comparable group of banks, and with due regard for substandard
assets, may be deducted from income in determining net income
for Federal income tax purposes by banks employing the reserve
method of charging off bad debts. Such deductions may be claimed
even though losses have not actually been ascertained during the
taxable year. The requirements of the supervisory authorities,
subject to certain limitations, also constitute sufficient ground for
the taking of losses for income tax purposes/'1
Deposit insurance versus asset insurance. Deposit insurance
should be sharply distinguished from the insurance or guarantee of
bank assets. Insurance of bank deposits by a Federal government
agency represents an exercise of the accepted governmental function
of controlling and protecting the circulating medium of the nation.
The insurance or guarantee of individual bank assets, however, is
the assumption by the Federal Government of the function of credit
extention and risk taking.

Under deposit insurance a bank management conducts its business
in traditional fashion, extending credit and assuming full risk. It is
responsible to its stockholders, and subject only to general govern­
1 Annual Report for 1942, pp. 6-7.




DEPOSIT INSURANCE AND LOAN RISK

13

mental supervision. Under a system of asset insurance banks would
collect some interest as a fee for the use of their facilities but the
standards for credit extension, and, therefore, the determination as
to whom money can be lent, would be largely made by governmental
agencies. The exercise of discretion in the extension of credit and,
eventually, the sense of duty for serving the credit needs of the com­
munities, now the responsibilities of private management, would be
dulled by reason of the inevitable shifting of these responsibilities to
the insuring agency.
This Corporation has always doubted the wisdom of extending
asset insurance and has made this position public on several occasions.
The Annual Report for 1942, for example, contained the following
statement:
“ A method of transfer of risk frequently proposed is to insure
various types of assets of the banks against loss. While certain
classes of loans, particularly real-estate mortgages, readily lend
themselves to this method of financing, the creation of a series of
governmental corporations which would insure most bank loans
has serious long run implications to the free enterprise system. Since
each corporation of this kind would of necessity be forced to super­
vise the extension of credit to avoid undue losses and since achieve­
ment of uniformity in regulations would be difficult, such a method
of finance, if generally used, would impose additional restraints
and interferences with the normal processes of business.
“ Insurance of bank assets seeks to avoid, by payment of a fee,
the risk of extending credit. The insuring Federal agencies would
be assuming the primary risk of loss in the extension of credit while
the profits would be received by banks which would not bear the
risks that are the justification for profit-taking. Under such a
general system of insurance of bank assets some of the most powerful
incentives for sound banking practices would be lacking. One of
the sound features of deposit insurance lies in the fact that the
stockholders of a bank still bear the first risk of loss since they lose
their entire stake in the business before the Federal Deposit In­
surance Corporation bears any loss. Self-interest, therefore, still
provides the primary incentive for the sound management and
operation of the bank and for prudence in the extension of credit.” 1
The extension of asset insurance with its disastrous effect on the
initiative of the bankers of this country can be prevented only if the
bankers show themselves both willing and able to satisfy the credit
needs which will arise in the post-war period. Important conditions
necessary for the banks to meet the credit needs of business are com­
petition in the banking business, adequate equity, an understanding
1 Annual Report for 1942, pp. 7-8.




14

FEDERAL DEPOSIT INSURANCE CORPORATION

that supervision will not interfere with the banks’ performance of
proper functions, and a will to engage actively in business.
At the present time a general expansion of bank loans would be
inflationary and undesirable. The immediate problem of the banks,
therefore, is to assure the public that its post-war credit needs will be
met by the banks without Government aid. When the need for credit
arises, the bankers must show initiative and willingness to meet the
needs of the public. This involves both an aggressive lending policy
and a willingness to make sound loans of types suited to the needs of
business. The Corporation believes that the bankers of the nation
can meet this challenge and that they will play their proper role in
maintaining a high level of production and employment after the war.
Deposit insurance risk and the depression problem. The
great economic problem of preventing deep or protracted business
depressions and of maintaining a reasonably high level of business
activity and employment is of the utmost importance to the success
of deposit insurance. Numerous bank failures and large losses to bank
depositors have, in the past, occurred only in periods of deep depres­
sions. If the nation is able to follow policies which prevent depressions
and severe unemployment, deposit insurance will never be subject to
inordinate stresses. On the other hand, if public policy is not such as
to prevent serious deflation and large scale unemployment, the in­
surance fund may experience strains and losses which will be ex­
ceedingly burdensome. Bank failures contributed substantially to the
depression of the 1930’s. Deposit insurance itself constitutes a sub­
stantial contribution to the prevention of deflation but is only one
part of public policy necessary to attain this end.

We hope that the Congress will give favorable consideration to
legislation looking toward a unified, consistent treatment by the
Government of the problems of unemployment and inflation. If
Government policies can conform to principles which will avoid
widespread unemployment on the one hand and inordinate price
rises on the other, deposit insurance will be able to perform its function
successfully.

D e po sit I n su r an ce P r o tectio n

Continuation of wartime prosperity during 1944 kept direct ex­
penditures by the Federal Deposit Insurance Corporation for the
protection of depositors to a low level. During the year only two banks
required an insurance disbursement: one was placed in receivership
and the other was merged with another institution. The 5,489 de­
positors in the two banks held accounts totaling $1.9 million, and



15

DEPOSIT INSURANCE PROTECTION

only 15 had accounts not fully protected by insurance or in some
other manner. Both banks were closed in May, and available statistics
indicate that the last seven months of 1944 make up the longest period
since 1870 in which there has been no bank failure in the United States.
During the eleven years of deposit insurance 397 insured banks
have been placed in receivership or merged with the financial aid of
the Corporation. Total disbursements of $260 million have been made
to protect the $499 million of deposits in these banks. It is now
estimated that of the 1,297,000 depositors only 5,000 will have any
loss on their accounts, and that their losses will be about $2.6 million,
approximately one-half of 1 percent of the total deposits. It is now
estimated that the Corporation's loss will be less than $39 million.
This favorable loss experience is due chiefly to the improvement in
economic conditions since 1934. Losses have also been reduced by
the development of the merger device in handling the affairs of weak
or insolvent banks and by the general experience gained by the Cor­
poration in liquidating assets acquired through receiverships or
mergers.
Data on deposits, disbursements, recoveries, and losses in insured
banks placed in receivership or merged with the financial aid of the
Corporation are given in Tables 1 and 4 and in Tables 114 and 117,
pages 148 and 152.
Table 1 .

N um ber

of

D e p o s ito r s ,

A m ount

of

D e p o s its ,

R e c o v e r ie s ,

and

L o s s e s in I n s u r e d B a n k s P la c e d in R e c e iv e r s h ip o r M e r g e d w it h
t h e F in a n c ia l A id o f t h e

Item

C o r p o r a tio n ,

1934-1944
Banks placed
in
receivership

Total

Banks merged
with financial
aid of FDIC

Number of banks............................................................

397

245

152

N um ber o f d epositors.................................................

1,297,217

380,510

916.707

Depositors paid in full...............................................
Depositors partially paid1..........................................
Depositors filing no claims........................................

1,250,068
4,788
42,361

333,361
4,788
42,361

916.707

A m ou n t o f deposits....................................................

$499,233,000

$109,590,000

$389,643,000

Estimated recovery by depositors............................
Estimated loss by depositors1....................................
Unclaimed deposits....................................................

496,188,000
2,614,000
431,000

106,545,000
2,614,000
431,000

389,643,000

Disbursement by F D IC .................................................

$259,696,000

$ 86,979,000

$172,717,000

Estimated loss to F D IC ................................................

$ 38,810,000

$ 18,611,000

$ 20,199,000

1 1,635 depositors will lose an estimated $2,532,000 in accounts which exceeded the limit of $5,000
insurance and were not otherwise protected; and 3,153 depositors will lose about $82,000 in accounts
which had been restricted or deferred prior to 1934 or were otherwise ineligible for insurance protection.

Methods of providing insurance protection: direct payment
of depositors. At present two procedures are followed by the Cor­

poration in carrying out its deposit insurance obligations: it may pay



16

FEDERAL DEPOSIT INSURANCE CORPORATION

insured deposits in a bank which is closed, or it may assist financially
in merging a weak or insolvent bank with another institution. The
Corporation does not have a free choice as to which method to use,
nor does it have the power to force a bank either to suspend operations
or to merge. As the insurer of bank deposits the Federal Deposit
Insurance Corporation can only terminate the insurance of a bank
found to be. financially unsound or of a bank whose management
persists in following illegal or unsound practices. The power to close
a bank and place it in receivership is reserved for the bank's board
of directors and for the State or Federal authority which chartered it.
The decision to merge a bank is made by the bank's stockholders.
When an insured bank is closed and cannot meet the demands of
its depositors, the Corporation immediately prepares to pay the
insured deposits. Promptness in the payment of claims is considered
essential to avoid adverse economic reactions in the area, to reduce
inconvenience to the depositors, and to maintain confidence in the
banking system. Payments are made in the regular business office of
the closed bank, and for the depositor the process is much like closing
an account. At the time payments are made, the depositors subrogate
the Corporation to their rights to dividends or recoveries on the
portion of their accounts paid from the insurance fund. The liability
which the Corporation assumes includes all unrestricted deposits up
to a maximum of $5,000 for each depositor after claims which the
bank has against the depositor are deducted.
Table 2.

PAYMENT BY THE CORPORATION AND RECEIVERS OF DEPOSITS IN
I n s u r e d B a n k s P l a c e d in R e c e i v e r s h i p ,

1934-1944

(Amounts in thousands of dollars)

Status of deposits

Total

Paid by
Dec. 31,
1944

Unpaid on
Dec. 31,
1944

Deposits—total.....................................................

$109,590

$105,362

$4,228

Insured.................................................................
Secured, preferred, and subject to offset..........
In excess of $5,000, not otherwise protected. .
Other uninsured............................. .....................
Unclaimed1..........................................................

87,138
11,304
9,784
933
431

86,979
11,277
6,380
707
19

159
27
3,404
226
412

Deposits, terminated receiverships—total.
Insured.............................................................
Secured, preferred, and subject to offset... .
In excess of $5,000, not otherwise protected
Other uninsured..............................................
Unclaimed1.......................................................

$45,161
35,815
5,311
3,721
191
123

$44,396
35,815
5,311
3,101
150
19

$765

Deposits, active receiverships—total..........
Insured.............................................................
Secured, preferred, and subject to offset... .
In excess of $5,000, not otherwise protected
Other uninsured..............................................
Unclaimed................... ....................................

$64,429
51,323
5,993
6,063
742
308

$60,966
51,164
5,966
3,279
557

$3,463
159
27
2,784
185
308

620
41
104

1 Unclaimed deposits indicated as paid have been placed in trust by receivers in some States to meet
claims presented after termination of receiverships.




DEPOSIT INSURANCE PROTECTION

17

The payments on uninsured deposits, as shown in Table 2, indicate
that substantial recoveries have been made on all deposits in banks
placed in receivership. At the end of 1944, 96 percent of the $110
million of deposits in these banks had been paid to the depositors
either by the Corporation or by the receivers. The largest part of the
deposits remaining unpaid at the end of the year was the uninsured
portion of accounts exceeding $5,000 and most of this, $2.8 million
of the $3.4 million, was in banks whose receiverships had not been
terminated. Further payments on these deposits will be made as the
liquidation of the assets continues.
Actual losses to depositors in banks whose receiverships had been
terminated by the end of the year, the deposits unpaid on December
31, amounted to only $0.8 million. About one-seventh of this was in
deposits which were unclaimed notwithstanding extensive efforts by
the Corporation to reach all depositors after the banks closed. Un­
claimed deposits shown as paid in Table 2 are deposits for which
reserves were established by receivers, although the depositors had
not appeared to claim them. In some States, laws governing receiver­
ships require that dividends on deposits still unclaimed when a
receivership is terminated be held in trust by a State authority. The
Corporation makes no payment on unclaimed deposits.
Methods of providing insurance protection: advances to
banks. The claims of depositors in insured banks are met directly

only when a bank is placed in receivership, but a second satisfactory
method of protecting the depositors in an unsound bank has been
provided by Congress. In 1935 the Corporation was given the power
to make loans to or purchase assets from insured banks to "facilitate
a merger or consolidation of an insured bank with another insured
bank” when "such action will reduce the risk or avert a threatened
loss to the Corporation.” 1
In such a consolidation acceptable assets of the merging bank are
transferred to the absorbing bank, and the Corporation makes
available enough cash so that the value of the assets and cash equals
the amount of the liabilities which the absorbing bank assumes. To
extend its financial aid, the Corporation may make a loan secured by
assets of one or both of the banks, or it may purchase assets from
them. The purchase of assets has been used exclusively in the mergers
of the past four years. Assets may be bought outright or, as is the
current practice, they may be bought under an agreement that any
excess recovery from their liquidation will be returned to the stock­
holders of the bank from which they were purchased. Before any
distribution is made to the stockholders the Corporation recovers the
1
For a full statement of this power see the Federal deposit insurance law, as amended, Title 12,
U.S.C., 1940 ed., sec. 264 (n)(4).




18

FEDERAL DEPOSIT INSURANCE CORPORATION

price paid for the assets, the liquidation costs, and a fair return, now
equivalent to 4 percent interest, on its funds for the time they are
outstanding.
In many ways the procedure of making advances to banks provides
a more flexible method of liquidating the affairs of an insolvent bank
than does placing it in receivership. Depositors are fully protected;
there is no break in the banking service either for the depositors or
the community; and the community does not suffer the economic
dislocations which inevitably follow a bank suspension. In addition,
the Corporation is not restricted in liquidating assets it has acquired,
as is the receiver of a closed bank. Such assets may be held until their
sale will not upset the economic stability of the community, and until
they may be liquidated advantageously from the standpoint of the
deposit insurance fund.
On the other hand advances to banks are not always feasible.
Occasionally the affairs of a bank may be in such condition that the
only solution is to place it in receivership and remove it completely
from the banking system. The procedure of making advances is
limited by law to those instances where the advance will “ facilitate
a merger” and “ avert a threatened loss” to the insurance fund.
Furthermore, action to merge an unsound bank can be taken only
with the consent and cooperation of the bank’s stockholders and of
an institution willing to absorb it.
Often the requirement that advances be made only when two
insured banks merge works against the maintenance of an adequate
competitive banking system. In a rural area there may be no bank to
absorb the unsound one. To follow the one alternative and place it
in receivership may deprive the area of all banking facilities. In an
urban community closing a bank, either by merger or suspension,
may tend to create a banking monopoly and thus to deprive the
community of the benefits of competitive banking service.
Statistical data on the two methods. Since 1934, 245 insured
banks have been placed in receivership, and 152 have been merged
with the Corporation's financial aid. Disbursements totaled $87
million to pay depositors in the banks placed in receivership and
$173 million to assist those which were merged. Deposits in the two
groups of banks were $110 million and $389 million respectively; and
the number of depositors, 380,000 and 917,000 respectively. Estimates
of the ultimate losses to the Corporation on its disbursements were,
at the end of 1944, $19 million in the receiverships and $20 million
in the mergers. Data by years concerning the two methods of protecting
depositors are given in Table 3. Assets and liabilities of insured banks
placed in receivership or merged are given in Table 115, page 150.



19

DEPOSIT INSURANCE PROTECTION

T able 3. DISBURSEMENTS BY THE CORPORATION TO PROTECT DEPOSITORS IN
I nsured B anks P laced in R eceivership or M erged w ith the
F inancial A id of the C orporation , 1934-1944
Amount of disbursements
(in thousands of dollars)

Number of banks
Year
Placed in
receiver­
ship

Total

Merged

Total

Insured
Loans made
deposits paid and assets
purchased
in receiver­
in mergers
ships

Total.............................

397

245

152

$259,696

$86,979

$172,717

1944...........................
1943...........................
1942...........................
1941...........................

2
5
20
15

1
4
6
8

1
1
14
7

1,498
7,137
10,824
23,878

399
5,465
1,612
12,276

1,099
1,672
9,212
11,602

1940...........................
1939...........................
1938...........................
1937...........................

43
60
74
75

19
32
50
50

24
28
24
25

74,232
67,792
30,474
19,202

4,895
26,184
9,082
12,045

69,337
41,608
21,392
7,157

1936...........................
1935......................
1934...........................

69
25
9

42
24
9

27
1

14,828
8,890
941

8,055
6,025
941

6,773
2,865

Recoveries on insurance disbursements. At the end of 1944
more than $195 million, 75 percent, of the Corporation's disbursement
of $260 million to protect depositors had been returned to the insurance
fund. The amount of the Corporation's recoveries and its losses are
given in Table 4 and in Table 117, page 152.
Table 4. DISBURSEMENTS TO PROTECT DEPOSITORS, RECOVERIES, AND
L osses b y the C orporation from I nsured B anks P laced in
R eceivership or M erged w ith its F inancial A id , 1934-1944
(Amounts in thousands of dollars)

Book entry Dec. 31, 1944

Total

D isbursem ents.........................................................................
Receiverships..........................................................................
Mergers....................................................................................

$259,696
86,979
172,717

Estim ated additional disbursem ents in receiverships1.

Liquidation
terminated

Liquidation
active

$48,217
35,815
12,402

$211,479
51,164
160,315

$40,446
28,404
12,042

$154,588
33,716
120,872

$159

$159

R ecoveries.................................................................................
Receiverships..........................................................................
Mergers...................................................................................

$195,034
62,120
132,914

Estimated additional recoveries.........................................
Receiverships..........................................................................
Mergers...................................................................................

$26,011
6,407
19,604

Losses by FDIC2.......................................................................
Receiverships..........................................................................
Mergers...................................................................................

$38,810
18,611
20,199

$7,771
7,411
360

$31,039
11,200
19,839

Num ber of bank s....................................................................
Receiverships..........................................................................
Mergers...................................................................................

397
245
152

230
176
54

167
69
98

$26,011
6,407
19,604

1 Estimated additional disbursements in receiverships are the insured deposits which have not been
paid. See Table 2.
2 Losses in terminated cases are the established losses; those in active cases are estimated.




20

FEDERAL DEPOSIT INSURANCE CORPORATION

Recoveries by the Corporation included $62 million, 71 percent,
of the $87 million disbursed in receiverships, and $133 million, 77
percent, of the $173 million disbursed in the mergers. Recoveries in
banks where liquidation was still in progress at the end of the year,
both receiverships and mergers, were 73 percent of the disbursement.
Recoveries in those whose liquidation had been terminated were
84 percent of the disbursement. Of the 230 banks where liquidation
had been terminated, 100 had repaid the Corporation in full, including
81 which paid interest amounting to approximately $840,000.
When a bank is placed in receivership and the amount of the de­
positors’ claims is established, or when a loan is made or assets are
purchased to aid in a merger, recoveries by the Corporation are
estimated and a reserve equal to the estimated losses is set up. The
estimates are reexamined and adjusted every six months. During the
past five years, an expanding market has made possible a high recovery
on assets acquired by the Corporation, and has resulted in a net
reduction of $19 million in the sum of the reserve for losses and the
amount of losses actually written off.
Receivership activities. The Federal Deposit Insurance Cor­
poration acts as receiver for all national banks and it may be appointed
receiver for State banks which are placed in receivership. At the end
of 1944 it was acting in this capacity for 10 national banks which
closed with deposits of $12 million and for 13 State banks which
closed with deposits of $6 million. According to its practice the Corpora­
tion obtained during the year quarterly reports from the receivers or
statutory liquidators of the remaining 46 State banks in which deposit
insurance payments had been made.

As liquidation proceedings come to a close, and particularly when
the costs of continuing the receivership exceed the expected recovery
on the unliquidated assets, the Corporation sometimes buys the
remaining assets from the receiver under competitive bidding ar­
rangements. This is done to terminate the receivership and to reduce
the expenses of liquidation. By the end of 1944, $1.1 million had been
disbursed to purchase assets from the receivers of 61 banks. Most of
these assets have been resold without loss to the Corporation.
L e g a l D eve lo pm e n ts

Absorption of exchange.1 Following the passage of H.R. 3956 by
the House of Representatives on March 2, 1944, the bill was referred
to the Committee on Banking and Currency of the Senate but no
action was taken thereon, nor on the companion bill, S. 1642, until
December 1944. Hearings were conducted by the Senate Committee,
1 For a summary of prior developments see Annual Report of the Corporation for 1943, pages 18-19.




LEGAL DEVELOPMENTS

21

starting on December 7 and continuing through December 15. The
hearings were not concluded in time to submit the bill to the Senate
prior to the adjournment and expiration of the 78th Congress. How­
ever, the provisions embodied in these two bills were offered as an
amendment to the then pending Federal Crop Insurance bill (H.R.
4911). The amendment was debated on the Senate floor on December
13 and 14, and was rejected by a vote of 25 to 45. Thereupon the
Senate hearings were closed and no further action was taken on either
of the “ absorption of exchange” bills. At the request of the Senate
Committee the Corporation submitted a report on the bills in the
form of a letter to the Chairman of the Committee, with supporting
memoranda, which appear at pages 72-94 of this report. At the close
of the hearings the Chairman of the Corporation, at the suggestion
of the Committee, addressed a further letter on January 3, 1945,
which appears at page 95 of this report.
Other legal developments affecting the Corporation or in­
sured banks. Under Public Law 346, 78th Congress, known as the

Servicemen’s Readjustment Act of 1944, approved June 22, 1944,
provision is made for the guaranteeing of loans to veterans for the
purpose of purchasing or constructing homes, farms and farm equip­
ment, and business property.
The Contract Settlement Act of 1944 (Public Law 395) was ap­
proved on July 1, 1944. The Surplus Property Act of 1944 (Public
Law 457) and the War Mobilization and Reconversion Act of 1944
(Public Law 458) were approved on October 3, 1944.
Public Law 541, approved December 22, 1944, amended Section
3656 of the Internal Revenue Code (Title 26 U.S.C., 1940 ed., Sup.
IV, section 3656) so as to authorize collectors of internal revenue to
receive not only certified checks but also cashiers’ and treasurers’
checks, as well as United States postal, bank, express, and telegraph
money orders in payment for internal revenue taxes and internal
revenue stamps. The text of this Act is given on page 71 of this report.
Regulations of the Corporation. On June 15, 1944, a number of
changes were made in the regulations relating to the payment of
assessments—former sections 302.3(a), 302.3(d), and 302.3(e) were
repealed and former sections 302.3(c) and 302.3(f) were amended and
redesignated as 302.3(a) and 302.3(b), respectively; and former
section 302.3(b) was redesignated 302.3(c). By resolution adopted on
January 27, 1944, the provisions of sections 303.1(b) and 303.2(a),
relating to advertisement of membership, and section 306.1, relating
to service of process, were amended. A new part, known as Part 309,
relating to the voluntary termination of insured status was adopted
on March 17, 1944, as an additional regulation of the Corporation.



22

FEDERAL DEPOSIT INSURANCE CORPORATION

The texts of these regulations, as amended and adopted, are given
on pages 96-102 of this report.
State legislation. A summary of State legislation in 1944 relating
to banking is given on pages 102-106 of this report.

S u p e r v iso r y A c t iv it ie s

Bank examinations. The policy of the Corporation from its
establishment has been to examine annually each insured State bank
which is not a member of the Federal Reserve System. National banks
are examined by representatives of the Office of the Comptroller of
the Currency, and State banks members of the Federal Reserve
System by representatives of that System. The information of the
Corporation relating to these banks is derived from a review of the
reports of examination furnished by those agencies. Only under
unusual circumstances, and with the prior consent of the Comptroller
of the Currency or the Board of Governors of the Federal Reserve
System, has the Corporation examined national banks or State banks
members of the Federal Reserve System.

The Corporation in 1944 was unable to conduct all the examinations
called for under its established policy. This was because of the sub­
stantial increase in the volume of bank assets, and the handicap of
a further reduction in personnel resulting from the manpower re­
quirements of the war effort. However, the number of examinations
completed, 6,378, was not far below the total for 1943, and neither
the effectiveness of the examinations conducted nor the accuracy of
the examination reports submitted is believed to have been adversely
affected by the conditions encountered during the year.
Unsafe and unsound banking practices and violations of
law or regulations. During 1944 proceedings were initiated against

one insured bank for engaging in unsafe and unsound banking practices
and were continued against six other banks. The status of these cases
at the end of the year and also a summary of all cases for the entire
period since the effective date of the Banking Act of 1935 are given
in Table 5.
The bank against which proceedings were initiated in 1944 was
charged with the following unsafe and unsound practices:
Continued operation of the bank with impairment of its capital
and with an inadequate net sound capital;
Continued operation of the bank by a management which had
failed and neglected to take proper and necessary steps to correct
the bank's unsafe and unsound condition;



23

SUPERVISORY ACTIVITIES

Large and excessive amounts of assets of substandard quality
and of doubtful value upon which substantial losses are probable;
Insufficiency of earnings and inadequacy of available capital
funds to provide for current and developing losses;
Failure to obtain financial statements and other supporting
information;
Permitting borrowers to renew their obligations with no likelihood
of repayment;
Classifying potential other real estate as loans.
Table 5.

ACTION TO TERMINATE INSURED STATUS OF BANKS CHARGED

w i t h E n g a g in g in U n s a fe o r U n s o u n d P r a c t i c e s o r V i o l a t i o n s
o f L aw o r R e g u la tio n s ,

Disposition or status

T otal banks against which action was tak en .................
Cases closed during p eriod :
Corrections made...................................................................
Insured status terminated, or date for such termination
set by Corporation, for failure to make corrections:
Banks suspended prior to or on date of termination
of insured status2............................................................
Banks continued in operation3..........................................
Banks suspended prior to setting of date of termina­
tion of insured status by Corporation..........................
Banks absorbed or succeeded by other banks4....................
Cases pending December 31, 1944:
Corrective program pending.............................................

1936-1944
Total
cases
1936-19441
130

Pending
beginning
of year
6

Started
during
year
1

20

7
3
32
63

2

5

4

1

1No action to terminate the insured status of any bank was taken before 1936. In 4 cases where
initial action was replaced by action based upon additional charges, only the later action is included.
2 Includes one national bank which, in accordance with the provisions of the law, suspended im­
mediately following the action of the Corporation in terminating its insured status.
3 O of these suspended 4 months after its insured status was terminated.
n<?
4 In all except 4 of the 63 cases the Corporation made loans to facilitate the mergers or reorganizations.
Back data— See the following Annual Reports of the Corporation: 1941, p. 188; 1942, p. 13; 1943,
p. 16.

Admission to insurance and operation of branches. During
1944 the Corporation approved applications of 106 banks for ad­
mission to insurance. Of these, 51 were new banks, including two
which succeeded discontinued branches of other insured banks, and
five which succeeded cooperative credit associations or industrial
loan companies. Of the remaining banks approved for admission to
insurance, 41 were banks in operation but not insured at the beginning
of the year, and 14 were insured banks reorganizing or withdrawing
from the Federal Reserve System. The application for admission
to insurance of one bank was disapproved.

Of the applications for admission to insurance during the year,
18 had not become effective by the end of the year. During the year
12 banks whose applications previously had been approved became



24

FEDERAL DEPOSIT INSURANCE CORPORATION

insured. Further details regarding admissions to insurance, and also
figures regarding the number of insured banks which ceased operations
or otherwise terminated their insured status, are given in Table 101,
page 110.
During 1944 the Corporation approved the establishment of 46
branch offices by 40 banks not members of the Federal Reserve
System. These offices included twelve banking facilities at military
establishments and nine conversions of absorbed banks into branches.
In three cases the Corporation disapproved the establishment of
branches.
Of the branches approved by the Corporation six had not been
established by the close of 1944. During the year 10 branches were
opened which had previously been approved by the Corporation.
In addition 117 branches, about three-fourths of which were for the
purpose of providing banking services at military establishments, were
opened by national and State banks members of the Federal Reserve
System. Approval by the Corporation was not required for the
establishment of these branches.
Capital and other financial adjustments. Insured banks
examined by the Federal Deposit Insurance Corporation are required
by law to secure the Corporation's approval to retire any part of their
capital obligations. Applications for approval of the retirement of
capital stock were filed by 612 such banks in 1944. Retirement of
obligations held by the Reconstruction Finance Corporation in
amounts aggregating $9,078,000, and of those held by others in
amounts aggregating $1,571,000, was approved. The Corporation
disapproved retirement of capital obligations amounting to $2,436,000.

During the year the Corporation approved the assumption by
insured banks of deposit liabilities of two noninsured institutions. In
two insured banks the Corporation approved the payment of certifi­
cates of beneficial interest representing deposits which had been
waived at the time of the Banking Holiday of 1933.
^Reports from banks. Semi-annual statements of deposits were
submitted by each insured bank as required by law for the purpose
of determining the amount of the insurance assessment. The Cor­
poration called for reports of assets, liabilities, and capital accounts
as of June 30 and December 30, 1944, and for reports of earnings,
expenses, and disposition of profits for the calendar year 1944, from
each insured bank required by law to submit such reports to the
Corporation. With the exception of banks in the District of Columbia
and Territorial national banks all insured banks not members of the
Federal Reserve System are required to submit such reports to the
Corporation.



SUPERVISORY ACTIVITIES

25

Summaries of the tabulations from the reports of assets, liabilities,
and capital accounts are given in the pamphlets “ Assets and Lia­
bilities of Operating Insured Banks” , Report No. 21 and Report No. 22
and in Table 104 of this report, page 126. Summaries of the reports of
earnings, expenses, and disposition of profits are given in Tables
111-113, pages 140-145 of this report.
Federal credit unions. During 1944 the Federal Deposit Insurance
Corporation continued its supervision of Federal credit unions.
Examination and supervision of these cooperative associations, or­
ganized to encourage thrift among their members and to provide
them with a limited source of credit, were transferred to the Corpora­
tion from the Farm Credit Administration by Executive Order of the
President, No. 9148, of April 27, 1942.

At the end of 1944, 4,048 credit unions held charters, but 233 of
these were not active. During the year 285 charters were canceled,
and 69 were granted to new groups. While personnel shortages again
made it impossible to examine all Federal credit unions, more than
2,900 were examined during the year.
Statements of the operations of Federal credit unions are received
twice a year. A report summarizing the statements for the calendar
year is prepared and published annually.
O r g a n iz a tio n

and

F in a n c ia l S tate m e n ts

op th e

C o r po r a tio n

Organization and staff of the Corporation. No change in the
directorship of the Corporation occurred during 1944. Mr. Leo T.
Crowley continued as Chairman; Mr. Phillips Lee Goldsborough and
Mr. Preston Delano, Comptroller of the Currency, continued as
Directors throughout the year.

On December 31, 1944, the total personnel of the Corporation
consisted of 1,546 officers and employees, compared with 1,899 at the
beginning of the year and 2,411 at the close of 1942. The number of
officers and employees in each division of the Corporation as of
December 31,1944, is given in Table 6.
On July 1, 1944, effect was given to an action by the Board of
Directors to divide the Division of Administration into two divisions:
Personnel Division, and Service Division.
An organization chart of the Corporation is shown on page iv of
this report.
Income and expenses. The income of the Corporation in 1944 was

$99.5 million, of which $80.9 million was from assessments upon in­
sured banks and $18.5 million from investments and other sources.



26

FEDERAL DEPOSIT INSURANCE CORPORATION
T able 6.

OFFICERS AND EMPLOYEES OF THE FEDERAL DEPOSIT
I nsurance C orporation , D ecember 31, 1944

Division and office

Officers and
administra­
Clerical,
tive, super­ stenographic,
visory, and and custodial
technical
employees
employees

Total

T o ta l...........................................................................................

1,546

668

878

Washington office.................................................................
Chicago office........................................................................
Field offices..........................................................................

230
260
1,056

79
10 k
U85

151
156
571

Directors.................................................................................

3

3

Executive Division.................................................................
Washington office.................................................................
Chicago office........................................................................

25
.......... 2U
1

16
16

9
8
1

Legal Division........................................................................
Washington office.................................................................
Chicago office........................................................................

30
12
18

17
8
9

13
U
9

Division of Examination.......................................................
Washington office.................................................................
District and field..................................................................

488
35
U53

344
19
325

144
16
128

Division of Liquidation.........................................................
Chicago office........................................................................
District and field..................................................................

696
93
603

203
U
3
160

493
50
US

Division of Research and Statistics.....................................
Washington office.................................................................

'36
36

18
18

18
18

Personnel Division.................................................................
Washington office.................................................................
Chicago office........................................................................

30
26
U

9
8
1

21
18
3

Service Division......................................................................
Washington office.................................................................
Chicago office........................................................................

137
9U
U
S

10
7
3

127
87
ho

Audit Division........................................................................
Chicago office........................................................................

24
2k

19
19

5
5

Fiscal and Accounting Division...........................................
Chicago office........................................................................

77
77

29
29

48
U8

Deposit insurance losses and expenses in 1944 amounted to $0.1
million and administrative expenses were $3.8 million. The surplus
of the Corporation was increased $101.3 million during the year,
consisting of $95.6 million net income in excess of expenses and
$5.7 million adjustment in surplus applicable to prior periods.
A detailed statement of the income and expenses of the Corporation
for the year 1944 is given in Table 7. A summary statement for each
year since its organization is given in Table 8.
Assets and liabilities. On December 31, 1944, the Corporation
held the following assets: assets acquired through bank suspensions
and mergers amounting at face value to a total of $56.8 million which
were carried on the books of the Corporation at a net or appraised
value of $26.1 million, United States obligations valued at $762.1
million, cash amounting to $17.8 million, and other assets amounting
to $0.3 million.



27

ORGANIZATION AND FINANCIAL STATEMENTS
T able 7.

INCOME AND EXPENSES OF THE FEDERAL DEPOSIT INSURANCE
C orporation , C alendar Y ear 1944

Income:
Deposit insurance assessments.................................................
Interest earned (less provision for amortization of premiums)
and profit on government obligations sold..........................

$ 80,940,596.80

Other income..............................................................................

783,571.49

17,761,695.92

Total income........................................................

$ 99,485,864.21

Expenses:
Deposit insurance losses and expenses.....................................
Administrative expenses (see below).......................................
Furniture, fixtures and equipment purchased and charged off

$

74,599.81
3,815,651.41
14,695.24

Total expenses......................................................

$

Net income added to surplus...........................

$ 95,580,917.75

3,904,946.46

Surplus, December 31, 1943:
As previously reported..............................................................

$413,755,022.56

Plus—net adjustments applicable to periods prior to January
1, 1944.....................................................................................

5,705,757.53

Surplus as adjusted, December 31, 1943.......

$419,460,780.09

Surplus, December 31, 1944..............................

$515,041,697.84

d is t r ib u t io n

o f a d m in is t r a t iv e

expen ses

Salaries...............................................................................................................................
Professional services.........................................................................................................
Services of other governmental agencies........................................................................
Transportation..................................................................................................................
Subsistence................................... ....................................................................................
Office rental.......................................................................................................................
Printing, stationery and supplies....................................................................................
Postage, telephone and telegraph...................................................................................
Insurance and fidelity bond premiums...........................................................................
Subscriptions.....................................................................................................................
Equipment rental.............................................................................................................
Repairs and alterations....................................................................................................
Transportation of things..................................................................................................
Miscellaneous....................................................................................................................

$

2,875,949.37
23,141.62
50.00
103,177.99
412,409.35
279,716.52
59,166.38
45,834.02
549.15
10,896.84
7,903.10
12,887.87
8,091.04
5,347.21

$

3,845,120.46

$

3,815,651.41

Less:
Inter-departmental expense transfers.........................................................................
Administrative expenses for the year ended December 31, 1944......................

29,469.05

Liabilities of the Corporation at the end of 1944 were $1.9 million.
Total capital of the Corporation consisted of $289.3 million capital
stock issued at its organization and $515.0 million accumulated
surplus. A summary of the assets and liabilities of the Corporation at
the close of each year since its organization is given in Table 9. A more
detailed statement of its assets and liabilities as of December 31,1943
and 1944, is given in Table 10.



28

FEDERAL DEPOSIT INSURANCE CORPORATION

Table 8. INCOME AND EXPENSES OF THE FEDERAL DEPOSIT INSURANCE
C o r p o r a t io n S in c e B e g i n n i n g O p e r a t i o n s 1
(In millions of dollars)
Income

Expenses

Deposit Investment
insurance
income
assess­
and
ments2
profits

Year
Total

Total

Deposit
insurance
losses and
expenses

Adminis­
trative
expenses3

37.7

1933-1944..............

592.1

470.0

122.1

77.0

39.3

1944...................
1943...................
1942...................
1941...................
1940...................
1939...................
1938...................
1937...................
1936...................
1935...................
1933-344.................

99.5
86.7
69.4
62.0
55.9
51.2
47.8
48.1
43.8
20.7
7.0

81.0
70.0
56.5
51.4
46.2
40.7
38.3
38.8
35.6
11.5

18.5
16.7
12.9
10.6
9.7
10.5
9.5
9.3
8.2
9.2
7.0

3.9
4.9
4.8
5.1
14.7
15.9
5.9
6.6
5.2
5.6
4.4

.1
.7
.8
1.4
11.1
12.5
2.9
3.9
2.7
2.9
.3

3.8
4.2
4.0
3.7
3.6
3.4
3.0
2.7
2.5
2.7
4.15

Net
income
added to
surplus

515.1
95.6
81.8
64.6
56.9
41.2
35.3
41.9
41.5
38.6
15.1
2.6

1 Figures of total expenses, deposit insurance losses and expenses, and net income added to surplus
for years prior to 1944 differ from those shown in previous Annual Reports because of revisions in esti­
mates of losses allocated to the different years.
2 Assessments collected from banks insured in the temporary insurance funds were credited in full
to their accounts at the termination of the temporary funds, and were applied toward subsequent assess­
ments under the permanent insurance fund. This procedure resulted in no income to the Corporation
from assessments for the term of the temporary insurance funds.
3 Includes furniture, fixtures and equipment purchased and charged off.
4 Includes expenses from date of organization, September 11, 1933, to December 31,1934.
6 After deducting portion of expenses and losses charged to banks withdrawing from the tem­
porary funds on June 30, 1934.

Table 9.

A s s e t s AND LIABILITIES OF THE FEDERAL DEPOSIT
I n s u r a n c e C o r p o r a tio n ,

1934-1944

(In millions of dollars)

Dec. 31

1 9 4 4 ....
1 9 4 3 ....
1942___
1 9 4 1 ....
1 9 4 0 ....
1 9 3 9 ....
1 9 3 8 ....
1 9 3 7 ....
1 9 3 6 ....
1 9 3 5 ....
1 9 3 4 ....

Cash

17.8
20.0
19.4
20.0
20.4
28.3
22.2
20.6
9.1
33.5
16.0




U. S.
Govern­ Insurance
ment se­ assets
curities

762.0
638.8
536.8
453.9
384.5
363.5
372.8
348.5
332.6
298.2
316.7

26.1
46.2
62.0
81.7
92.2
64.2
26.5
16.1
11.4
5.4
.5

Other
assets

Total
assets
and lia­
bilities

Lia­
bilities

.3
.5
.5
.1
.1
.1
.1
.1
.1
.1
.1

806.2
705.5
618.7
555.7
497.2
456.1
421.6
385.3
353.2
337.2
333.3

1.9
2.4
1.8
2.2
1.2
3.4
1.1
2.2
9.8
31.2
41.6

Capital
and
surplus

804.3
703.1
616.9
553.5
496.0
452.7
420.5
383.1
343.4
306.0
291.7

Ratio—
FDIC
Total de­
posits in capital and
surplus to
insured
deposits in
banks
insured
banks
134,662.1
111,649.8
89,868.7
71,209.3
65,287.4
57,485.8
50,790.2
48,227.8
50,280.9
45,125.1
40,059.9

.60%
.63
.69
.78
.76
.79
.83
.79
.68
.68
.73

29

ORGANIZATION AND FINANCIAL STATEMENTS

T able 10. ASSETS AND LIABILITIES OF THE FEDERAL DEPOSIT INSURANCE
C orporation , D ecember 31, 1944, and D ecember 31, 1943
1944

1943

ASSETS
Assets acquired through bank suspensions and m ergers:
Subrogated claims of depositors against closed insured banks...
Net balances of depositors in closed insured banks pending settle­
ment or not claimed, to be subrogated when paid— contra.. . .
Loans to merging insured banks, to avert deposit insurance
losses, and recoverable liquidation expenses.............................
Assets purchased from merging insured banks, to avert deposit
insurance losses, under agreements to return any excess re­
covery to selling banks................................................................
Assets purchased from merging insured banks and receivers of
closed insured banks to avert deposit insurance losses. .

$ 17,448,278.33

$ 25,805,676.76

158,676.40

841,927.72

19,744,575.59

29,412,363.96

18,849,778.67

28,041,173.53

581,623.15
$ 56,782,932.14

696,387.25
$ 84,797,529.22

Less: Reserve for losses..........................................................

30,714,169.10
$ 26,068,763.04

38,547,754.80
$ 46,249,774.42

Gash on hand and on d ep osit.............................................

17,804,318.72

19,961,081.20

United States Governm ent securities (cost less reserve for
amortization of premiums) and accrued interest receivab le..

762,064,352.35

638,776,370.88

Due from Governm ental agencies...............................................

192,217.91

292,931.08

Miscellaneous receivables..............................................................

32,338.78

109,775.64

Furniture, fixtures, and equ ipm en t...........................................

1.00

1.00

Deferred charges...............................................................................

84,161.45

73,911.69

T otal assets.................................................................

$806,246,153.25

$705,463,845.91

$

$

LIABILITIES
Current liabilities:
Accounts and assessment rebates payable.........................
Earnest money deposits and collections in suspense..........
Net balances of depositors in closed insured banks pending
settlement or not claimed— contra...................................

329,611.43
1,220,847.00
158,676.40

421,550.06
904,320.42
841,927.72

Deferred cre d its.......................................................................

143,772.35

107,619.54

Reserve for deposit insurance expenses............................

51,991.24

133,848.62

T otal liabilities.................................................

$

1,904,898.42

$

2,409,266.36

CAPITAL

Capital stock :
United States..........................................................................
Federal Reserve banks..........................................................

$150,000,000.00
139,299,556.99

$150,000,000.00
139,299,556.99

$289,299,556.99

$289,299,556.99

Surplus (see Table 7 ).....................................

$515,041,697.84

$413,755,022.56

T otal ca p ita l............................

$804,341,254.83

$703,054,579.55

T otal liabilities and ca p ita l.

$806,246,153.25

$705,463,845.91

Audit. In accordance with the Corporation’s policy of having an
annual independent audit, the accounts as of June 30, 1944, were
audited by Arthur Andersen & Co. The balance sheet of the Cor­
poration as of that date, as shown in the auditors’ report, is given in
Table 11. The auditors’ certificate is given on page 32 of this report.




30

FEDERAL DEPOSIT INSURANCE CORPORATION
T a b le 11.

FEDERAL DEPOSIT INSURANCE CORPORATION COMPARATIVE

B a l a n c e S h e e t , Ju n e 30, 1944 a n d 1943— fr om a u d it o r s ’ r e p or t
June 30
ASSETS

1944

1943

Gash on deposit, in transit and on hand.................................

$ 27,187,132.72

$ 32,112,817.18

United States Government securities and accrued interest
receivable thereon:
Principal amount $686,526,300 and $570,043,400 at June 30,
1944 and 1943, respectively, stated at cost.............................
Less— Reserve for amortization of premiums.............................

$688,931,112.31
1,169,200.52

$573,394,017.19
1,845,336.86

$687,761,911.79
2,452,367.77

$571,548,680.33
1,785,212.44

$690,214,279.56

$573,333,892.77

$ 22,160,090.58

$ 25,742,036.04

254,409.13

446,126.57

24,555,079.29

34,459,768.53

23,724,303.01
521,699.53
74,367.40

32,076,233.98
557,907.52
219,007.89

$ 71,289,948.94
35,172,158.51

$ 93,501,080.53
38,792,706.64

$ 36,117,790.43

$ 54,708,373.89

Accrued interest receivable...........................................................

Assets acquired through bank suspensions and mergers,
less collections:
Subrogated claims of depositors against closed insured banks. .
Net balances of depositors in closed insured banks pending
settlement or not claimed, to be subrogated when paid—
per contra....................................................................................
Loans made to, and assets purchased from, merging insured
banks to reduce or avert deposit insurance losses—
Loans and recoverable liquidation expenses (Note 1 )........
Assets purchased under agreement to return any excess
recoveries to the selling banks, and recoverable liquida­
tion expenses (Note 1 ).......................................................
Assets purchased, other.........................................................
Assets purchased from receivers of closed insured banks..........
Less—Reserves for losses..............................................................

Miscellaneous receivables and deferred charges:
Receivable from other governmental agencies............................
Federal Credit Union examination and supervision fees...........
Other...............................................................................................

$

376,136.12
23,411.38
101,896.55

$

485,569.92
112,445.82
93,466.62

$

Furniture, fixtures and equipment, at nominal value........ ..

501,444.05

$

691,482.36

$

1.00

$

1.00

$754,020,647.76

$660,846,567.20

NOTES:
(1) Loans to merging insured banks are evidenced by demand notes bearing interest at the rate
of 4% per annum, and the Corporation is entitled to a return of 4% per annum with respect to its in­
vestments in assets purchased from merging insured banks under agreements to return any excess re­
coveries to the selling banks. The Corporation follows the practice of taking into income only such
amounts of interest and allowable return as are realized after recovery in full of its investments (in­
cluding recoverable liquidation expenses) in the respective loans and purchased assets. The amount of
such interest realized during the year ended June 30, 1944 was $426,558.50.
(2) Under the provisions of Section 12B ot' the Federal Reserve Act, as amended by Title I of the
Banking Act of 1935 (subsection “ o” ), the Corporation is authorized and empowered to issue and to
have outstanding its notes, debentures, bonds or other such obligations in a par amount determined in
accordance with said provisions, which amount at June 30, 1944 was $974,600,000.




31

ORGANIZATION AND FINANCIAL STATEMENTS
T a b l e 11.

FEDERAL DEPOSIT INSURANCE CORPORATION COMPARATIVE

B a l a n c e S h e e t , J u n e 30, 1944 a n d 1943— f r o m a u d i t o r s ' r e p o r t — C o n tin u e d
June 30
1944

LIABILITIES
Liabilities:
Accounts payable...........................................................................
Earnest money deposits and collections in suspense, arising from
assets acquired through bank suspensions and mergers, etc..
Net balances of depositors in closed insured banks pending
settlement or not claimed—per contra....................................
Reserve for expenses of paying insured deposits........................
Deferred credits..............................................................................

$

368,132.39

1943
$

359,839.61

961,637.33

T ota l liabilities.................................................

$

Capital stock and surplus (the entire capital stock and surplus
is considered by the corporation to constitute a reserve for
future deposit insurance losses and related expenses with
respect to insured banks. The corporation estimates that
the insured deposits in operating insured banks amounted
to approximately $46 billion at June 30, 1944 and $36 billion
at June 30, 1943):
Capital stock, without nominal or par value (nonvoting
and not entitled to payment of dividends)—
Held by United States Government.................................
Held by Federal Reserve banks........................................

985,898.61

254,409.13
65,306.31
86,879.39

446,126.57
137,465.92
98,402.92

1,736,364.55

$

2,027,733.63

$150,000,000.00
139,299,556.99
$289,299,556.99

Total (credit).......................................................
Administrative expenses....................................................
Furniture, fixtures and equipment purchased.................

$ 61,110,632.07

16,881,263.65
528,465.96
140,796.65

14,319,669.93
90,758.67
222,884.66

$ 94,709,854.06
Expenses—
Deposit insurance losses and expenses applicable to
assets acquired through bank suspensions and mergers
occurring in—
Current year....................................................................
Prior years (credits, representing adjustments of
reserves for losses)......................................................

$294,587,895.18

$ 77,159,327.80

$ 75,743,945.33

$

Net increase in surplus during the years—
Income—
Deposit insurance assessments..........................................
Interest earned and net profits from sales of United
States Government securities, less provision for
amortization of premiums.............................................
Other interest received (Note 1 ).......................................
Fees from Federal Credit Unions.....................................

$289,299,556.99

$369,519,276.58

Surplus—
Balance at beginning of year....................................................

$150,000,000.00
139,299,556.99

$

1,654,168.18

1,612,099.56

(

4,404,822.11) (

4,771,231.79)

($

2,750,653.93) ($
3,977,866.46
17,191.89

3,159,132.23)
4,212,329.79
33,213,12

$

1,244,404.42

$

1,086,410.68

$ 93,465,449.64

$ 74,657,534.65

Net increase in surplus.......................................

$ 93,465,449.64

$ 74,931,381.40

Surplus at end of y ea r...................................

$462,984,726.22

$369,519,276.58

T otal capital stock and su rp lu s..................

$752,284,283.21

$658,818,833.57

$754,020,647.76

$660,846,567.20

Transfer from Farm Credit Administration with respect to
Federal Credit Unions.......................................................

273,846.75

The Secretary of the Treasury, in his discretion, is authorized to purchase such obligations of the
Corporation; and he is authorized and directed to purchase obligations of the Corporation in an amount
not to exceed $250,000,000 par value whenever, in the judgment of the Board of Directors of the Cor­
poration, additional funds are required for insurance purposes.
The Reconstruction Finance Corporation, as provided in subsection (b) of section 5e of the Recon­
struction Finance Corporation Act, as amended, shall purchase at par value such obligations of the
Corporation as are authorized to be issued, upon request of the Board of Directors of the Corporation,
whenever, in the judgment of said Board, additional funds are required for insurance purposes; pro­
vided, that the Reconstruction Finance Corporation shall not purchase or hold at any time said obligations
in excess of $250,000,000 par value. If the Reconstruction Finance Corporation fails for any reason to
purchase any of the obligations of the Corporation, the Secretary of the Treasury is authorized and
directed to purchase such obligations in an amount equal to the amount of such obligations the Recon­
struction Finance Corporation so fails to purchase.




32

FEDERAL DEPOSIT INSURANCE CORPORATION

A R T H U R A N D E R S E N & CD.
120 SOUTH LA SALLE STREET
CHICAGO 3

To

th e B o a rd o f D ir e c to r s ,
F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t i o n :

We have examined the balance sheet of the Federal D eposit I nsurance
C orporation (a corporation created under Section 12B of the Federal Reserve
Act, as amended by Title I of the Banking Act of 1935) as of June 30, 1944, and the
related statement of surplus for the year then ended, which statement of surplus
is summarized in the balance sheet. In connection therewith, we have reviewed the
system of internal control and the accounting procedures of the Corporation and,
without making a detailed audit of the transactions, have examined or tested
accounting records and other supporting evidence maintained in the general office
of the Corporation (except the records as to the closed insured banks for which
the Corporation is receiver), by methods and to the extent we deemed appropriate.
We did not examine the collateral under loans to merging insured banks nor the
documents evidencing ownership of assets purchased from merging or closed insured
banks, which collateral and assets for the most part are held by Liquidating Agents
of the Corporation at various locations throughout the country; but we reviewed
the reports of the Corporation’s internal auditors on the examinations made by
them during the year of such collateral and purchased assets. The examinations
by the internal auditors are on a rotating basis, covering the collateral under each
loan and the documents evidencing ownership of the assets purchased from each
merging or closed insured bank approximately every eighteen months. We made
a similar examination for the year ended June 30, 1943.
In our opinion, the accompanying balance sheet presents fairly the position of the
Federal Deposit Insurance Corporation at June 30, 1944 and the results of its
operations for the year ended that date.
A rth u r A n d ersen &

Chicago, Illinois,
October 20, 1944.




Co.




PART TWO
BANKING DEVELOPMENTS




A ssets, D

e p o s it s , a n d

C a p it a l A c c o u n t s

Assets of all banks.1 The upward trend of bank assets continues.
During the year 1944, total assets of all commercial and mutual
savings banks increased $25 billion, and by the end of the year had
reached the unprecedented total of $152.6 billion. This 19 percent
increase in 1944 was a continuation of the sharp upward trend which
has prevailed since the beginning of large scale war financing in 1942.
Nearly all the rise in total assets during the last three years has oc­
curred in bank holdings of Government obligations.
CHART A

T o tal A s s e t s o f a l l O p e r a t in g B a n k s b y Ty p e of A s s e t

1 9 3 4 - 1944
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

Between 1934 and 1941 business recovery was reflected in a con­
tinuous rise in bank assets, as shown in Chart A, with the exception
of the slight down-turn during the business depression of 1937-38.
Two-thirds of the $15 billion increase from the end of 1938 to the
end of 1940 was in cash and amounts due from other banks, prin­
cipally reserves with the Federal Reserve banks. The increase in
reserves was due primarily to the substantial inflow of gold from
1 In order to present a complete picture of the private banking system, the discussion in this section,
as far as possible, covers all commercial and mutual savings banks in the United States and possessions
(see page 108). However, data for insured commercial banks are in some instances more complete, and
at times it is necessary to confine the discussion to this group of banks.




35

36

FEDERAL DEPOSIT INSURANCE CORPORATION

abroad. In 1941, the $6 billion rise in total bank assets was chiefly
the result of increases in the holdings of United States Government
obligations and in the volume of loans, reflecting the intensification
of our defense activities.
In the years immediately prior to our entry into the war, bank
assets were rising at the rate of 9 percent a year. With the augmented
tempo of war financing in the middle of 1942, the rate of increase
rose sharply and there was a 19 percent gain in total assets during the
last six months of 1942. The rate of increase then declined, and has
been 18 percent a year during the last two years as shown in Table 12.
Table 12.

INCREASE IN TOTAL ASSETS OF ALL OPERATING BANKS,

1941-1944

(Amounts in millions of dollars)

Total
assets

Call date

Increase from previous
call date
Amount

December 30,
June 30, 1944
December 31,
June 30, 1943
December 31,
June 30, 1942
December 31,

1944........................................................
1943........................................................
1942........................................................
1941........................................................

1 In computing the change from
the fact that on and after June 30,
cluded in the total. Reciprocal bank
Detailed figures—See Table 107,

$152,618
139,225
127,794
116,983
109,305
92,081
91,037

$13,393
11,431
10,811
7,678
7.0
17,224
l,658i
1.8

Percentage
9-6%
8.9
9.2
18.7

December 31, 1941, to June 30, 1942, an adjustment was made for
1942, reciprocal bank balances due from other banks were not in­
balances were $614 million on June 30, 1942.
page 128.

Changes in types of assets. A marked change in the relative
importance of the various types of assets held by banks has accom­
panied the rise in total assets. The major shift has been, of course, the
increase in the volume of United States Government obligations. At
the end of 1938, these securities made up only one-fourth of all bank
assets, whereas at the end of 1944 they constituted more than one-half
of total assets, and nearly three-fourths of earning assets. Loans, on
the other hand, have declined in relative importance. Loans amounted
to $21 billion, or approximately 30 percent of all bank assets, at the
end of 1938. From 1939 to the end of 1941, the volume of loans rose
from $22 billion to nearly $27 billion. This 20 percent rise in the amount
of loans was approximately the same as the 18 percent gain in total
bank assets. After declining slightly in the early period of our par­
ticipation in the war, the volume of loans increased and on December
30, 1944, amounted to $26 billion, slightly below the peak at the end
of 1941. With the sharp rise in the volume of total assets, however,
the proportion of loans fell to 17 percent at the end of 1944. Bank
holdings of securities other than Governments have declined gradually



37

ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS

from $10 billion to $8 billion over the last decade, and have decreased
in relative importance as total assets have increased. These trends are
shown in Chart B.
CHART

B

Percentage D is t r ib u t io n o f A s s e t s - A ll O p e r a t in g Ba n k s

1934

-

1944

PERCENT OF TOTAL A SSET S

1935

1936

PERCENT O F

1937

1998

1939

1940

1941

1942

TOTAL ASSETS

1949

1944

E xam in ers’ app raisal o f assets o f in su red c o m m e r c ia l b a n k s.

As would be expected during a period of accelerated business activity,
the proportion of total assets of insured commercial banks classified
as substandard by the examiners continued to decline in 1944. This
decline was due to three factors: first, criticized assets form a smaller
proportion of total assets simply because the increase in bank assets
during the war period has been confined almost entirely to United
States Government obligations and cash; second, in a period of good
business, assets appear in a more favorable light and therefore are
not as likely to be classified substandard as formerly; and third, banks
have been able to dispose of many of these assets at favorable prices.
In 1944, substandard assets amounted to 0.7 percent of total assets,
compared with 1.2 percent in 1943, and 2.1 percent in 1942. The ratio
of substandard assets to the appraised value of assets other than cash
and United States Government obligations fell from 5.9 percent in
1942 to 3.0 percent in 1944 as the result of a decrease of nearly 50
percent in the amount of substandard assets held by insured com­
mercial banks. The downtrend of substandard asset ratios from 1939



38

FEDERAL DEPOSIT INSURANCE CORPORATION

to 1944 is shown in Table 13. Of the 12,983 insured commercial banks
examined during 1944, 2,285, or 18 percent, had no substandard
assets, as compared with 10 percent in 1943 and 5 percent in 1942.
Table 13.

SUBSTANDARD ASSET RATIOS OF INSURED

C o m m e r c ia l B a n k s E x a m i n e d i n

1939-1944

Ratio of substandard assets to—
Year

1944.....................................................................
1943.....................................................................
1942......................................................................
1941......................................................................
1940......................................................................
1939......................................................................

Appraised
value of
total assets

•69%
1.24
2.13
2.84
3.93
5.12

Appraised value
of assets other
than cash and
U. S. Government
obligations
2.98%
4.75
5.93
0)
0)
0)

Adjusted
capital
accounts

10.92%
17.84
25.26
31.12
40.35
48.21

1 U. S. Government obligations are not available separately prior to 1942.
Detailed figures—See Table 109, page 134.

As a result of the decrease in substandard assets, the ratio of such
assets to the adjusted capital accounts1has fallen from 48 percent in
1939 to 11 percent in 1944. This low ratio for all insured commercial
banks in 1944 should not obscure the fact that there are still a number
of banks in which substandard assets constitute a substantial propor­
tion of adjusted capital accounts.
Bank holdings of United States Government obligations.

From the end of 1941 through 1944, $61 billion of the $62 billion
increase in bank assets occurred in holdings of United States Govern­
ment obligations. At the close of 1944, all operating banks held $86
billion of United States Government obligations, nearly three and
one-half times the $25 billion held at the time of our entry into the
war. The largest rise for any six-month period, both in absolute and
relative amounts, occurred during the last half of 1942 when bank
holdings of Government obligations rose by $16 billion, an increase of
more than 50 percent. This reflected the heavy participation of the
banks in the first war loan drive and the large purchases during this
period of certificates of indebtedness which the Treasury began
issuing in April 1942. The banks also participated heavily in the
second war loan drive in April of 1943, and another $12 billion was
added to bank holdings during the first six months of 1943. In the
next year and a half, to the end of 1944, banks added $28 billion to
their Government portfolio, an amount approximately equal to that
added from the middle of 1942 to the middle of 1943. In the later
1 Adjusted capital accounts represent the difference between total bank assets and total bank
liabilities as appraised by the examiners (see page 133).




39

ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS

period the bulk of the banks' purchases was made between drives
since the Treasury adopted a policy of sharply restricting bank
participation in the third, fourth, fifth and six war loan drives.
From the end of 1941 to the middle of 1943, banks acquired Govern­
ments at a faster rate than the rate of increase in the Federal debt
outstanding; while during the next 18 months, the debt increased more
rapidly than holdings of the banks. From December 31, 1941, to
June 30, 1943, the amount of Governments held by banks increased
by 127 percent, whereas the interest-bearing Government debt rose
by 119 percent. From the middle of 1943 to the end of 1944, the total
outstanding debt increased by two-thirds, while bank holdings in­
creased less than one-half. At the end of 1944, all operating banks
held a slightly smaller proportion of the total Government debt
outstanding than three years earlier. When the holdings of the Federal
Reserve banks, which rose from $2 billion to $19 billion over the three
year period, are included, the proportion of the Government debt held
by the banking system rose slightly between the time of our entry
into the war and the end of 1944. The holdings of the various classes
of banks at the end of 1941 and 1944 are shown in Table 14.
Table 14.

B a n k H o l d i n g s OF UNITED STATES GOVERNMENT OBLIGATIONS,
D ir e c t and G u a ra n teed ,

1941 a n d 1944

December 31, 1941
Type of holder

Amount
(In billions)

Percent

December 30, 1944
Amount
(In billions)

Percent

T otal interest-bearing d ebt o u tsta n d in g ..

$63.8

100.0%

$230.4

Banking system—total...................................

27.8

43.6

105.1

45.6

Commercial banks......................................
Mutual savings banks................................
Federal Reserve banks...............................

21.8
3.7
2.3

34.2
5.8
3.6

78.0
8.3
18.8

33.8
3.6
8.2

100.0%

Types of Government obligations held by insured com­
mercial banks. Detailed data on the various types of Treasury issues

held by commercial and mutual savings banks are available only for
insured commercial banks. However, the data for this group of banks
are significant since they held almost 90 percent of the total of all
bank holdings of Governments at the close of 1944.
The war-time trend of insured commercial bank purchases of
Government obligations has brought a marked shift in the maturity
distribution, as shown in Chart C and Table 15. At the end of 1939,
bonds maturing in more than ten years constituted over 40 percent
of all insured commercial bank holdings of United States Government
obligations, while at the end of 1944 they constituted only 10 percent.



40

FEDERAL DEPOSIT INSURANCE CORPORATION

Concomitant with this decline in the proportion of long term maturities
has been a very sharp increase in the proportion of short term ma­
turities, particularly certificates of indebtedness.

c

ch art

P e r c e n t a g e D i s t r i b u t io n o f D ir e c t U.S. G o v 't. O b l i g a t i o n s
H e l d b y I n s u r e d C o m m e r c i a l B an k s *

1939

-

1944

PERC E N T

PERCEN T

194-0

1941

1942

1943

1944

D istribution o f b on ds based upon num ber o f years to fin e ! m aturity.

Table 15.

D i r e c t U n i t e d STATES GOVERNMENT OBLIGATIONS

H e l d b y I n s u r e d C o m m e r c ia l B a n k s ,

1939-1944

(Millions of dollars)
Bonds maturing within1
Call date

Dec. 30,
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,
June 29,
Dec. 30,

1944.....................
1944.....................
1943.....................
1943.....................
1942.....................
1942.....................
1941.....................
1941.....................
1940.....................
1940.....................
1939.....................

Total

74,919
66,141
56,192
48,880
37,994
23,062
16,945
15,291
13,344
12,530
12,153

Certifi­
cates of Treasury Treasury
indebted­
bills
notes
ness

15,303
15,469
13,220
10,315
6,729
1,978

3,972
4,709
4,637
6,557
4,462
1,536
988
1,135
662
805
571

15,781
11,835
7,673
5,717
5,800
3,732
3,159
2,758
2,756
2,699
2,388

5 years

5,918
5,650
5,791
5,497
2,865
1,765
1,551
1,471
1,458
750
837

5-103
years

26,231
20,641
17,092
11,511
10,331
5,588
3,970
3,837
3,153
3,489
3,308

After 10
years

7,714
7,837
7,779
9,283
7,807
8,463
7,277
6,090
5,315
4,787
5,049

1 The maturity distribution of insured commercial bank holdings of U. S. Government bonds is
based upon the number of years to first maturity.
8 Includes United States Savings Bonds.




ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS

41

During 1942 and the first half of 1943, insured commercial banks
added to their holdings of Treasury bills, generally maturing in 91
days after issue, which reached a peak in June of 1943, when they
held $6.6 billion, 55 percent of the total outstanding. Since that time
insured commercial bank holdings of bills have declined and on
December 30, 1944, the amount held was only $4 billion, or less than
one-fourth of the total outstanding.
Certificates of indebtedness, which have a maturity when issued
of approximately one year, formed a large part of bank acquisitions
during the first and second war loan drives and the banks also bought
these securities between drives. In the first year of their offering
insured commercial banks took a large proportion of the amount
offered and on June 30, 1943, held approximately two-thirds of the
total outstanding. Certificates of indebtedness have been included
in all the later drives, but sharp restrictions have been placed on bank
purchases. Even though insured commercial banks have steadily
added to their holdings by purchasing certificates between drives,
their proportionate holdings have gradually declined until on Decem­
ber 31, 1944, they held 50 percent of the total outstanding.
Insured commercial bank holdings of Treasury notes, issued in
maturities of from one to five years, have increased from 50 percent
of the total outstanding at the end of 1941 to nearly 70 percent at
the end of 1944. The banks have also made substantial increases in
their holdings of United States Government bonds maturing in five
to ten years. At the end of 1941, they held $4 billion of such securities,
and by December 30, 1944, holdings reached $26.2 billion. The
holdings of bonds maturing in more than ten years, however, have
remained at approximately the same level throughout the war period.
Treasury policy has tended to discourage bank acquisition of longer
maturities, and insured commercial banks now hold a considerably
smaller proportion of outstanding long term issues maturing in more
than ten years than they did before the war.
Deposits of all banks. The trend of deposits in commercial and
mutual savings banks during the war has been the counterpart of the
trend of total assets. Deposits rose $61 billion from the close of 1941
to the end of 1944, while assets increased $62 billion. At the close of
1944, total deposits of all banks amounted to $142 billion of which
$135 billion, or 95 percent, were held in all insured banks and $126
billion, or 89 percent, were held in insured commercial banks.

Total deposits of all banks rose $19 billion, or 23 percent, during
1942, most of the increase occurring in the last half of the year. There
was an $18 billion increase in deposits during 1943, and a $24 billion
increase in 1944, while the percentage increases were 18 percent and
20 percent respectively.



42

FEDERAL DEPOSIT INSURANCE CORPORATION

Nearly two-thirds of the deposit increase since the war has been in
deposits of individuals, partnerships, and corporations, while most
of the remaining increase was in deposits of the Federal Government.
The sale of bonds for war financing has in the first instance given rise
to an increase in Government deposits. Then, as expenditures have
been made, the bulk of these deposits has shifted to the accounts of
individuals and business enterprises. Interbank deposits and deposits
of State and local governments have increased moderately.
There has been considerable variation in the rate of growth of
deposits during the war in the various geographic regions and States.
The growth has been relatively high in most of the States west of the
Mississippi River and in the southern States, and relatively moderate
in the northeastern States. The geographic pattern of the growth in
deposits during the last three years has corresponded to a considerable
extent with the geographic pattern of the expansion in individual and
business incomes. A study of the deposit shifts which have occurred
is to be found in Part Three of this report.
Capital accounts of insured commercial banks. The increase
in bank capital has not kept pace with the rapid expansion in total
assets. On December 30, 1944, total capital accounts of all insured
commercial banks amounted to $8 billion. This was $1 billion above
the total at the time of our entry into the war, and only $2 billion
above the 1934 level. During the past three years, capital accounts
have increased by 17 percent, compared with an increase in total
assets of 76 percent.

Nearly all of the increase in capital during the war years has been
due to the retention of bank earnings. At the end of 1944, capital
stock made up 36 percent of total capital accounts of all insured
commercial banks, as shown in Table 16, compared with 42 percent
three years earlier.
Table 16.

CAPITAL ACCOUNTS OF INSURED COMMERCIAL BANKS,

1941 AND 1944

(Amounts in millions of dollars)
Percentage distribution
Dec. 31,
1941

Capital accounts

Dec. 30,
1944

Increase
or decrease
1941

T o ta l..............................................................

$6,845

$7,990

debentures:

2,850

2,912

+ 62

41.6

36.4

Common stock............................................
Preferred stock............................................
Capital notes and debentures.....................

2,U70
806
7U

2,660
202
50

+190
-10 A
-2h

86.0
4.5
1.1

83.8
2.5
6

Surplus...................... ....................................
Undivided profits..........................................
Reserves.........................................................

2,687
896
412

3,402
1,169
507

+715
+273
+ 95

39.3
13.1
6.0

42.6
14.7
6.3

Capital

stock,




notes,

and

$+1,145

100.0%

1944
100.0%

.

ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS

43

There has been only a moderate rise in capital stock since the end
of 1941, as the additions to common stock of $190 million have been
largely offset by the retirement of $128 million of preferred stock and
capital notes and debentures, most of which were owned by the
Reconstruction Finance Corporation. The investment of the Recon­
struction Finance Corporation in insured commercial banks reached
a peak of about $900 million in 1935. This investment now amounts
to about $250 million.
With the increasing disparity between the rate of growth in total
capital accounts of the banks and the rate of growth of assets, the
decline in the stockholders' equity relative to total assets has been
accelerated during the war years. However, due to the fact that the
greatest increase in bank assets has been in the holdings of cash and
United States Government obligations, the ratio of total capital
accounts to assets other than United States Government obligations
and cash increased moderately in this period. At the end of 1944, this
ratio was 27.6 percent or slightly above the 26.3 percent at the end
of 1934. Any expansion of bank loans during the post-war reconversion
period will bring about a decline in this ratio unless additional capital
is obtained. The ratio of total capital accounts to total assets and to
assets other than cash and Governments is shown in Table 17.
Table 17.

CAPITAL RATIOS OF INSURED COMMERCIAL BANKS
Y e a r -E n d C a l l D a te s ,

1934-1944

Total capital accounts as a percentage of—
Year

Total
assets

Assets other than
cash and U. S. Govern­
ment obligations

1944.......................................................................................
5.94%
1943.......................................................................................
6.64
1942.......................................................................................
7.39
8.91
1941.......................................................................................
'1940.......................................................................................
9.44
1939.......................................................................................
10.33
1938.......................................................................................
11.33
1937.......................................................................................
11.81
11.26
1936.......................................................................................
12.19
1935.......................................................................................
13.24
1934.......................................................................................

27.58%
28.28
25.99
22.82
24.38
25.38
25.62
25.00
24.60
26.09
26.69

Capital ratios by size of bank. Small banks generally have
higher ratios of total capital accounts to total assets than the large
banks. This is shown by the data summarized in Table 18 for the
12,983 insured commercial banks examined during 1944. Of these
banks, 2,267, or 17 percent, had adjusted capital accounts equal to
more than 10 percent of the appraised value of their assets. Of the
241 smallest banks examined during 1944, 76 percent had capital
ratios of over 10 percent, and this proportion steadily declined as the



44

FEDERAL DEPOSIT INSURANCE CORPORATION

size of the banks increased until only 4 percent of the 249 largest
banks had capital ratios of over 10 percent and nearly half had ratios
of less than 5 percent.
Table 18.

DISTRIBUTION OF INSURED COMMERCIAL BANKS EXAMINED IN

1944

A c c o r d in g t o A d j u s t e d C a p i t a l R a t i o a n d b y A m o u n t o f D e p o s it s
Banks with adjusted capital accounts per $100 of
appraised value of assets of—
All
banks

Size of bank

All bank s..............................................

$0.01
to
$4.99

$5.00
to
$7.49

$7.50
to
$9.99

$10.00
to
$14.99

$15.00
or
more

12,983

2,108

5,414

3,194

1,839

428

$250,000 or less.................................
$250,000 to $500,000.........................
$500,000 to $1,000,000.....................
$1,000,000 to $2,000,000..................

241
1,297
2,888
3,423

4
31
195
563

18
260
1,279
1,598

37
512
902
765

114
394
434
416

68
100
78
81

$2,000,000 to $5,000,000..................
$5,000,000 to $10,000,000................
$10,000,000 to $50,000,000..............
More than $50,000,000.....................

2,950
1,101
834
249

650
273
276
116

1,299
515
351
94

613
194
142
29

321
100
53
7

67
19
12
3

Banks with deposits o f—

E ar n in g s

of

I n su r ed C o m m ercial B a n k s

Insured commercial banks during 1944 had the highest level of net
profits since deposit insurance began in 1934. Net profits before taxes
in 1944 were $954 million, a gain of 25 percent over 1943 and 83 percent
over 1942. Net profits after taxes were $751 million in 1944, which
was 18 percent above 1943 and 70 percent above 1942. Operating
earnings and expenses and net profits for the three years are shown
in Table 19.
Table 19.

E a r n i n g s , EXPENSES, AND DIVIDENDS OF INSURED
C o m m e r c ia l B a n k s ,

1942-1944

(Amounts in millions of dollars)
Item

1944

1943

1942

Total current operating earnings.............................................
Total current operating expenses.............................................
Net current operating earnings.........................................

$2,215
1,357
858

$1,959
1,256
703

$1,790
1,222
568

Profits on assets sold, recoveries on assets, etc......................
Losses, charge-offs, etc..............................................................

362
266

353
290

223
271

Net profits before income taxes................................................
Taxes on net income..................................................................
Net profits after taxes...............................................................

954
203
751

766
128
638

520
79
441

Cash dividends declared and interest paid on capital...........
Net profits retained...................................................................

253
498

233
405

228
213

Number of banks.......................................................................

13,268

13,274

13,347

Detailed figures for 19M—See Table 111, page 140.




EARNINGS OF INSURED COMMERCIAL BANKS

45

Total current operating earnings have not increased as rapidly
during the last three years as earning assets, both because of the
larger proportion of assets invested in Governments which have a
lower rate of return than loans and because of a continuation of the
gradual decline in the average rate of return on loans. However, total
current operating expenses have increased more slowly than have
total current operating earnings. Total current operating expenses
took 61 percent of total current operating earnings in 1944 compared
with 68 percent in 1942. As a result, net current operating earnings
have increased during the last two years at about the same rate as
the earning assets of insured commercial banks.
Losses and charge-offs in 1944 amounted to only $266 million, the
lowest in the history of Federal deposit insurance. Recoveries on
assets and profits on securities sold or redeemed were $362 million in
1944, and for the third time since 1934, recoveries and profits exceeded
charge-offs.
Total income taxes of $203 million on earnings of insured commercial
banks in 1944 were 59 percent higher than the $128 million total for
the previous year and two and a half times the $79 million in 1942.
Income taxes amounted to 21 percent of net profits before taxes in
1944 compared with 15 percent in 1942.
The substantial rise in net profits during the war has not been
accompanied by a significant increase in cash dividends. The 1944
total of $253 million was the same as in 1941, the previous high, and
moderately above the 1942 and 1943 totals. The result of the main­
tenance of dividend payments at prewar levels during the war has
been a sharp increase in net profits retained by insured commercial
banks. In 1944, nearly $500 million, or two-thirds of net profits after
taxes, was added to total capital accounts. This compares with $405
million, or 63 percent, of net profits retained in 1943 and $213 million,
or 48 percent, retained in 1942.
Rate of net profits. Net profits after taxes of all insured commer­
cial banks in 1944 represented a return of 9.7 percent on average
total capital accounts, substantially above the 8.8 percent return in
1943 and more than 50 percent above the 6.3 percent return in 1942.
The rate of return in the last two years has been higher than at any
other time during the last decade.

The rise in the ratio of net profits to total capital accounts during
the war years is due, in large part, to the fact that total capital ac­
counts grew less rapidly than earning assets. The ratio of net earnings
to total capital accounts rose from 7.0 percent in 1942 to 8.5 percent
in 1944. An additional factor contributing to the rise in net profits
was the excess of recoveries and profits on assets over losses and



46

FEDERAL DEPOSIT INSURANCE CORPORATION

charge-offs in both 1943 and 1944. The effect of net charge-offs or
net recoveries is represented by the difference between the rate of
net earnings and the rate of net profits.
In Chart D and Table 20 ratios of net profits, net earnings, and
cash dividends to total capital accounts are shown for each year
since the beginning of deposit insurance.
CH ART D

Ratios of Net Earnings , N et P rofits and C ash D i v id e n d s T o
Average Total Capital A ccounts -A ll Insured Commercial Banks

1934

1934 j

1935

T able 20.

1936

R a t io s

1937

op

1938

1944

-

1939

1940

1941

N e t P r o f it s , N e t E a r n in g s ,

A v e r a g e T o tal C a p it a l A cc ou n ts ,

all

1942

and

1943

1944

C ash D ivid e n d s

to

I n s u r e d C om m er cia l B a n k s , 1934-1944

Ratios to average total capital accounts1
Year
Net profits
after taxes

1944....................................................
1943....................................................
1942....................................................
1941....................................................
1940....................................................
1939....................................................
1938....................................................
1937....................................................
1936.....................................................
1935....................................................
1934....................................................

9.7%
8.8
6.3
6.7
6.1
6.0
4.7
6.0
8.3
3.4
-5.5

Net operating
earnings after
taxes2
8.5%
7.9
7.0
6.9
6.6
6.9
6.6
7.3
7.0
6.5
6.5

Cash dividends
declared and interest
paid on capital

3.3%
3.2
3.3
3.7
3.6
3.6
3.5
3.5
3.6
3.4
3.0

1 Total capital accounts are averages of figures for beginning, mid-year, and year-end call dates.
a After all taxes, including income taxes which were not available separately prior to 1942.




47

EARNINGS OF INSURED COMMERCIAL BANKS

The rise in bank earnings has been general. With few exceptions,
the prosperity has been shared by all banks. Whereas, 22 percent of
the banks in 1942 and 37 percent in 1943 reported net profits after
taxes in excess of 10 percent of average total capital accounts, one-half
of the banks in 1944 had net profits in excess of 10 percent of average
total capital accounts. Conversely, the proportion of banks reporting
net losses fell from 6 percent in 1942 to 2 percent in 1943 and only
1 percent in 1944. The distribution of banks according to the rates of
net profits on total capital accounts for 1942, 1943, and 1944 is shown
in Table 21.
T a b le 2 1.

D i s t r i b u t i o n o f I n s u r e d C o m m e r c ia l B a n k s A c c o r d in g t o R a t e
of

N e t P r o f i t s o n T o t a l C a p i t a l A c c o u n t s , 1942-1944

Number
of banks

1942

1943

1944
Rate of net profits

Percentage
distribution

Number
of banks

Number
of banks

100.0%

13,141

Banks with net loss..........

117

0.9

257

2.0

749

5.7

1,288
5,062
4,475
1,618
581

9.8
38.5
34.1
12.3
4.4

2,290
5,678
3,418
1,067
435

17.4
43.2
26.0
8.1
3.3

3,963
5,647
2,129
520
218

30.0
42.7
16.1
3.9
1.6

100.0%

13,226

Percentage
distribution

AH banks1............................

100.0%

13,145

Percentage
distribution

Banks with net profits
after taxes per $100 of
total capital accounts
of — 2
$0.00 to $4.99...................
$5.00 to $9.99...................
$10.00 to $14.99...............
$15.00 to $19.99...............
$20.00 or more.................

1 Excludes banks submitting reports covering less than the full year’s operations or materially
affected by mergers.
2 Total capital accounts are averages of figures at beginning, mid-year, and year-end call dates.

Sources of earnings. Total current operating earnings increased
from $1,790 million in 1942 to $1,959 million in 1943 and to $2,215
million in 1944. The substantial rise in earning assets which caused this
increase in gross earnings has been accompanied by a marked shift
in the relative importance of the various types of assets as sources
of income. Prior to 1943, income on loans was the most important
earnings item, accounting for approximately 45 percent of total
current operating earnings in each year from 1934 to 1941. In the
war years this proportion declined and by 1944 income on loans
accounted for less than one-third of total current operating earnings.
In the last two years income on securities has exceeded income on
loans and in 1944 income on securities constituted almost one-half
of total current operating earnings.

Since 1941, the expansion of the earning assets of banks has been
confined to holdings of United States Government obligations, and
as a result, income on securities has increased rapidly, reaching $1,090
million in 1944. The average rate of return on securities, however,



48

FEDERAL DEPOSIT INSURANCE CORPORATION

continued to decline and was 1.49 percent in 1944. This decline in
recent years has been a result of both the increased holdings of Govern­
ment obligations and the concentration of these holdings in short term
issues. Total income from loans, on the other hand, has steadily
declined since 1941. While the volume of loans outstanding rose
moderately during 1944, the average rate of return fell from 3.85
percent in 1943 to 3.44 percent in 1944 resulting in a slight decline
in total income from loans.
Earnings from other sources have increased in the last two years.
The 1944 total of $427 million was 9 percent above 1943 and 14 percent
above 1941. The increase, which was primarily due to higher income
from service charges, was not, however, as rapid as the rise in total
current operating earnings. In 1944, 19 percent of gross earnings was
derived from sources other than loans and securities in contrast to
22 percent in 1941. These trends are shown in Table 22.
Table 22.

A m o u n t s AND RATES OF INCOME RECEIVED BY INSURED
C o m m e r c ia l B a n k s ,

1934-1944

Total current operating earnings
(millions of dollars) from—
Year

Loans

Securities

Other
sources

Income on
loans
per $100 of
loans1

Income on
securities
per $100 of
securities1

1944............................................
1943............................................
1942............................................
1941............................................
1940............................................
1939............................................

$698
706
817
848
769
727

$1,090
861
610
509
500
522

$427
393
364
373
363
357

$3.44
3.85
4.08
4.27
4.41
4.46

$1.49
1.52
1.782
1.95
2.16
2.38

1938............................................
1937............................................
1936............................................
1935............................................
1934............................................

705
710
663
643
691

532
572
574
548
550

347
352
330
295
278

4.36
4.28
4.34
4.40
4.63

2.56
2.68
2.66
2.87
3.17

1 Loans, securities, and deposits are averages of figures reported at beginning, middle, and end of
year by banks submitting statements of assets and liabilities.
2 For 1942, average securities are based on amounts reported at end of month in the Treasury
survey of ownership of Government securities as well as upon amounts reported at call dates.
Detailed figures for 19UU— See Tables 111-112, pages 140-143.

Expenses. Total current operating expenses amounted to $1,357
million in 1944, 8 percent above the $1,256 million in 1943. Of the
total increase of $101 million in 1944, $46 million represented an
increase in salary and wage payments. The number of officers and
employees increased 2 percent during 1944, while total salaries, wages
and fees paid rose 8 percent in 1944 as compared with 1943. Because
of the increase in the volume of time and savings deposits, interest
paid on these deposits rose to $187 million in 1944, $23 million or
14 percent higher than in 1943. This increase in 1944 reversed the
downward trend in evidence since 1934. However, the average rate
of interest paid continued to decline and was .87 percent in 1944.



49

EARNINGS OF INSURED COMMERCIAL BANKS

Earnings by size of bank. There was little relationship between
size of bank and the ratio of net profits to total capital accounts in
1944. Except for the fact that the 1,105 smallest banks, those with
deposits of $500,000 or less, had an average ratio of net profits after
income taxes to total capital accounts substantially below the ratios
of the larger banks, there appeared to be no relationship between
size of bank and the net profits ratio.

The fact that the small banks had the highest ratios of net operating
earnings to total assets, as shown in Table 23, was primarily due to
the larger proportion of earning assets held in the form of Government
securities and to their greater concentration of these holdings in short
term issues by the large banks. The higher ratio of net earnings to
total assets shown by the small banks was, however, counteracted
by their higher ratios of total capital accounts to total assets. As a
result, when net earnings are related to total capital accounts, the
smallest banks had the lowest ratios while the two groups of the
largest banks had the highest ratios.
Table 23.

N e t E a r n i n g s AND N ET PROFITS RATIOS OF INSURED
C o m m e r cia l B a n k s ,

1944

BANKS GROUPED BY AMOUNT OF DEPOSITS
Ratios to total capital accounts2
Size of bank

All ba n ks.................................... .

Number
of
banks1

13,177

Net profits
after taxes
9.46%

Net current
operating
earnings

Ratio of net
current
operating
earnings to
total assets2

10.82%

0.65%

Banks w ith deposits o f :
$500,000 or less...............................
$500,000 to $1,000,000...................
$1,000,000 to $2,000,000................
$2,000,000 to $5,000,000................

1,105
2,578
3,520
3,378

7.98
9.82
10.13
9.59

8.01
9.73
10.35
10.16

0.83
0.77
0.72
0.67

$5,000,000 to $10,000,000..............
$10,000,000 to $25,000,000. ..........
$25,000,000 to $50,000,000______
$50,000,000 to $100,000,000..........
More than $100,000,000.................

1,328
742
238
129
159

9.26
9.21
9.08
9.65
9.49

9.99
10.12
10.00
11.55
11.27

0.63
0.60
0.60
0.58
0.66

1 Excludes banks submitting reports covering less than the full year’s operations and trust companies
not engaged in deposit banking.
2 Total assets and total capital accounts are averages of figures for December 31, 1943, June 30,
1944, and December 30,1944, for banks submitting reports to the Federal Deposit Insurance Corporation
and as of December 30, 1944, for other banks.

The same picture for rate of net profits is shown by Table 24
which shows the banks grouped by rate of net profits and amount
of deposits. About half of all insured commercial banks had net
profits in excess of 10 percent of average total capital accounts.
This proportion was closely approximated in each of the size groups
except for the smallest banks with deposits of $500,000 or less, and



50

FEDERAL DEPOSIT INSURANCE CORPORATION

in this group only about one-third of the banks had net profits in
excess of 10 percent of average total capital accounts.
Table 24.

DISTRIBUTION OF INSURED COMMERCIAL BANKS ACCORDING TO RATIO

o f N e t P r o f i t s t o T o t a l C a p it a l A c c o u n t s a n d b y A m o u n t o f D e p o s its ,

1944

Banks with net profits after taxes per $100 of
total capital accounts of—2
Size of bank

Banks
All
banks1 with net
loss

$0.01
to
$4.99

$5.00
to
$9.99

$10.00
to
$14.99

$15.00
to
$19.99

$20.00
or
more

13,141

117

1,288

5,062

4,475

1,618

581

$500,000 or less...........................
$500,000 to $1,000,000...............
$1,000,000 to $2,000,000............
$2,000,000 to $5,000,000............

1,464
2,843
3,503
3,080

24
23
26
28

327
295
272
227

586
1,078
1,255
1,160

371
939
1,237
1,138

111
355
529
402

45
153
184
125

$5,000,000 to $10,000,000..........
$10,000,000 to $25,000,000........
$25,000,000 to $50,000,000
$50,000,000 to $100,000,000___
More than $100,000,000.............

1,116
661
206
127
141

7
6
1
2

99
46
8
9
5

459
304
98
52
70

396
218
78
47
51

115
68
15
13
10

40
19
6
4
5

All banks1.......................................
Banks with deposits of—

1 Excludes banks submitting reports covering less than the full year’s operations or materially
affected by mergers.
2 Total capital accounts are averages of figures at beginning, mid-year, and year-end call dates.




PART THREE
GROWTH IN BANK DEPOSITS AND IN TOTAL




MONEY SUPPLY, 1940-1944




D

e p o s it s

in

C o m m e r c ia l

and

M

utual

S a v in g s B a n k s

At the close of 1944, total deposits in commercial and mutual
savings banks in the United States and possessions amounted to
$142 billion, more than twice the amount five years earlier. Four-fifths
of the growth in deposits during the five years occurred in the latter
half of the period. From the end of 1939 to the middle of 1942 deposits
increased by $15 billion; during the next two and a half years to the
end of 1944 they increased by $59 billion. The large growth in deposits
since the middle of 1942 is the result of participation by the banks in
financing the Federal Government wartime deficit.
Growth in deposits by class of owner. About two-thirds of the
increase during the period, 1940-1944, in total deposits in commercial
and mutual savings banks was in deposits of individuals, partnerships,
and corporations. The bulk of the remainder, or more than one-fourth
of the total growth in deposits, occurred in deposits of the United
States Government. Deposits of States and political subdivisions, and
also interbank deposits, grew at a relatively moderate rate. The
amount of deposits owned by each of these groups, at each year-end
and mid-year during the 5-year period, is shown in Table 25. The
change in such deposits, by years, is shown in Table 26.
T a b le 2 5.

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS IN THE
U n it e d S t a t e s a n d P o s se s sio n s , b y C la ss of O w n e r ,
Ju n e 30 a n d D e c e m b e r 31, 1939-1944
(In millions of dollars)

Date

1944— Dec.
June
1943— Dec.
June
1942— Dec.
June

30..............
30..............
31..............
30..............
31..............
30..............

1941— Dec.
June
1940— Dec.
June
1939— Dec.

315.............
305.............
31».............
295.............
305.............

Total

$142,077
129,127
118,100
107,622
100,153
82,9873
83,6014
82,073
78,392
76,248
70,994
68,413

Interbank

$12,229
11,201
11,000
10,887
11,309
10,279*
10,8934
10,997
10,955
10,952
10,192
9,884

United
States and
States
political
Government subdivisions

Individuals,
partnerships, Certified
checks etc.2
and
corporations1

$20,834
19,591
10,433
8,080
8,467

$5,061
4,933
4,848
4,783
4,491

$102,586
91,841
90,140
82,730
74,657

$1,367
1,561
1,679
1,141
1,229

1,889
1,941
793
799
877
906

4,437
4,278
4,119
3,921
3,696
3,495

65,606
63,763
61,719
59,597
55,697
53,506

776
1,094
806
979
532
622

1 For 1942-1944, includes unclassified deposits in noninsured banks and total deposits in mutual
savings banks.
2 Certified and officers’ checks, cash letters of credit and travelers’ checks outstanding, and amounts
due to Federal Reserve banks.
8 Excluding reciprocal deposits reported by insured commercial banks. These figures are comparable
with those for subsequent dates.
4
Including reciprocal deposits reported by insured commercial banks. These figures are comparable
with those for prior dates.
6
From reports of Comptroller of the Currency. Possessions included are Alaska, Hawaii, Puerto
Rico, and the Virgin Islands. Figures for total deposits differ slightly from those in the Annual Report
of the Federal Deposit Insurance Corporation, 1941, p. 122, which are not available by class of owner.
N ote: Figures are rounded and will not necessarily add precisely to totals.




53

54

FEDERAL DEPOSIT INSURANCE CORPORATION

T a b le 2 6.

INCREASE IN DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS

B a n k s , U n it e d S t a t e s a n d P o s s e s s io n s , b y Y e a r a n d C l a s s o f O w n e r , 1 940-1944

Year

Total1

Inter­
bank1

United
States
Government

States and
political
subdivisions

Individuals,
partnerships, Certified
and
checks etc.
corporations

Amount of increase
(thousands of dollars)
1940-1944..................
1944.......................
1943.......................
1942.......................
1941.......................
1940.......................

$74,189
23,977
17,947
18,605
5,825
7,835

$2,871
1,229
-309
837
46
1,068

$19,928
10,400
1,967
6,526
1,142
-106

$1,565
213
357
213
356
426

$49,081
12,446
15,482
10,894
4,167
6,091

$745
-312
450
135
115
357

108%
20
18
23
8
11

29%
11
-3
8
(2
)
11

2,201%
100
23
336
143
-12

45%
4
8
5
9
12

92%
14
21
17
7
11

120%
-19
37
12
12
57

Percentage increase
1940-1944.................
1944.......................
1943.......................
1942.......................
1941.......................
1940.......................

1 Increase for 1944 and 1943 computed from figures excluding reciprocal deposits reported by insured
commercial banks; increase for 1942, 1941 and 1940 computed from figures including reciprocal deposits.
2 Less than one-half of 1 percent.
N ote: Figures are rounded and will not necessarily add precisely to totals.

The rate of growth in deposits of the United States Government
was far higher than the rate of growth in the deposits of individuals,
partnerships, and corporations. The latter nearly doubled during the
5-year period, rising from $54 billion to $103 billion; the former
increased by more than 20-fold, rising from less than $1 billion to
nearly $21 billion. The growth in the deposits of the United States
Government represents primarily the larger cash balance needed in
connection with the greatly increased expenditure of the Government
in wartime. However, the growth in bank deposits owned by the
Government has been relatively greater than the growth in its ex­
penditure. In 1939, the amount of Government deposits in com­
mercial and mutual savings banks was less than 10 percent of its
annual expenditure. For 1944 the deposit balance of the Government
averaged about 15 percent of its annual expenditure.
Relation, of deposit growth to war finance. The growth in
total deposits is an accompaniment of the acquisition of additional
assets by the banks. During the war period the assets acquired by the
banks have consisted almost exclusively of United States Government
obligations, and in the defense period chiefly of such obligations.

From the end of 1939 to the middle of 1942 the net increase in
assets of commercial and mutual savings banks (excluding balances
with other banks) amounted to $14.4 billion, of which three-fourths
consisted of United States Government obligations; from the middle
of 1942 to the end of 1944 the net increase amounted to $59.0 billion,
of which'95 percent consisted of United States Government obligations



DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS

55

and 4 percent of currency and reserve balances at Federal Reserve
banks. In the latter period the increase in assets of Federal Reserve
banks, accompanying the increase in commercial bank reserves and
the issue of currency, also consisted of United States Government
obligations.
From the middle of 1942 to the end of 1944 the net increase in bank
assets other than United States Government obligations, reserves at
Federal Reserve banks, and currency was less than the increase in
the banks' capital accounts and miscellaneous liabilities. The increase
in deposits was therefore slightly smaller than the increase in the
banks' holdings of Government obligations and of other assets based
on such holdings. The amount of increase in deposits, other than
interbank, was $57.1 billion; the increase in Government obligations
and assets based on such obligations was $58.3 billion (see Table 27).
T a b le 2 7 .

A s s e t s ACQUIRED BY COMMERCIAL AND MUTUAL SAVINGS BANKS
in

th e

U n it e d S t a t e s a n d P o s s e s s io n s , 1940-1944
(In millions of dollars)
Dec. 30, 1939,
to
June 30, 1942

June 30, 1942,
to
Dec. 30, 1944

Dec. 30, 1939,
to
Dec. 30, 1944

$10,878

$55,941

$66,819

1,739
967
816

-649
2,317
1,370

1,090
3,284
2,186

Total assets acquired, excluding balances
with other banks.......................................

14,400

58,979

73,379

Deduct: Increase in capital accounts and miscel­
laneous liabilities...................................................

386

1,446

1,832

Assets, capital and liabilities

United States Government obligations..................
Other loans and investments and miscellaneous
assets......................................................................
Currency and reserves with Federal Reserve banks1
Float (cash items in process of collection).............

Balance..............................................................

14,014

57,533

71,547

Increase in deposits other than interbank. . . .

14,180

57,139

71,319

1 From the end of 1939 to the middle of 1942 the increase in assets of Federal Reserve banks con­
sisted primarily of gold so that the increase in currency and reserves held by commercial banks was
based primarily upon gold; during the period from the middle of 1942 to the end of 1944 the assets ac­
quired by the Federal Reserve banks consisted almost exclusively of United States Government obliga­
tions so that for this period the increase in currency and reserves of commercial banks was based primarily
on those obligations.

Sale of Government obligations affects bank deposits in different
ways depending upon the identity of the buyers and sellers. When
Government obligations are sold by the Treasury directly to in­
dividuals or business enterprises, the immediate effect is to reduce
the deposit balances of individuals, partnerships, and corporations
and to increase the deposits of the Federal Government, leaving total
deposits unchanged. As expenditures are made by the Government
the balance is transferred back to individuals. When Government
obligations are sold by the Treasury directly to banks an expansion
takes place in the deposits of the Federal Government with no reduc


CHART E
P e r c e n t a g e I n c r e a s e in D e p o s i t s o f In d i v i d u a l s , P a r t n e r s h i p s
C o r p o r a t i o n s in C o m m e r c i a l a n d M u t u a l S a v i n g s B a n k s
J u n e 3 0 , 1 9 4 2 t o D e c e m b e r 3 1 ,1 9 4 4

OX

O*
an d

FEDERAL

29

R 36
.I.
36

CONN.

DEPOSIT

■MASS.

INSURANCE
CORPORATION

I*. •1 2 5 % -4 -9 %
50% -7 4 %
V //A

7 5 % -9 9 %

tffl

100% ,-12 4 %
125% ,-149% ,




150% and over

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS

57

tion in the deposits of others, so that total deposits are increased. As
the Government spends the money this increase is transferred to the
accounts of individuals, partnerships, and corporations. When banks
purchase Government obligations previously held by other investors
an increase takes place in the deposits of individuals, partnerships,
and corporations, with a corresponding rise in total deposits.
Some of these aspects of the acquisition of Government obligations
by the banks and the accompanying creation of bank deposits are
markedly influenced by the timing of the bond drives. Other aspects
of the flow of deposits from the Government to individuals and
business and from the latter to the Government (particularly Govern­
ment expenditures and the payment of taxes) have little relation to
the timing of the bond drives or of the purchase of Government
obligations by banks. For these reasons substantial differences may
appear, for short periods, between the amount of Government obliga­
tions purchased by the banks and the amount of growth in the de­
posits of individuals, partnerships, and corporations. However, for
the war period as a whole the entire amount of United States Govern­
ment obligations acquired by commercial and mutual savings banks,
and also the amount of Government obligations acquired by Federal
Reserve banks which is accompanied by increased reserve balances
in those banks, will appear in the growth of deposits of individuals,
partnerships, and corporations—except to the extent that the Govern­
ment maintains a larger cash balance, in the form of deposits in
commercial and mutual savings banks, in the postwar than in the
prewar period.
Change in deposits of individuals, partnerships, and cor­
porations by regions and States. For the entire nation, excluding

territories and possessions, the growth in the deposits of individuals,
partnerships, and corporations from the end of 1939 to the end of
1944 amounted to $49 billion, or 91 percent. Three-fourths of this
increase occurred during the latter half of the 5-year period.
The increase in deposits of individuals, partnerships, and cor­
porations has not been uniform throughout the country. The growth
has been relatively highest in the southern and western part of the
nation, and relatively lowest in the northeast.
The accompanying map (Chart E) shows the percentage change in
deposits of individuals, partnerships, and corporations in each State
during the 2 3^ year period from the middle of 1942 to the end of 1944.
In Table 28 the amount of these deposits in each State is shown for
the three dates, December 30,1939, June 30,1942, and December 30,
1944, with percentage changes for each of the 2 year periods between
these dates, and for the 5-year period.



58

FEDERAL DEPOSIT INSURANCE CORPORATION

T a b le 28.

DEPOSITS OF INDIVIDUALS, PARTNERSHIPS, AND CORPORATIONS IN

C o m m e r c ia l a n d M u t u a l S a v i n g s B a n k s , b y F D I C
Amount (millions of dollars)
FDIC District and State

D is t r i c t a n d S t a t e
Percentage change

Dec. 1939 June 1942 Dec. 1939
to
to
to
June 1942 Dec. 1944 Dec. 1944

Dec. 30,
1939

June 30,
1942

Dec. 30,
1944

United States
(excluding
p ossession s).........................

$53,358

$65,326

$102,045

22%

56%

91%

District 1—t o t a l. ....................
Maine......................................
New Hampshire.....................
Vermont.................................
Massachusetts........................
Rhode Island..........................
Connecticut............................

6,190
311
267
162
3,695
470
1,284

7,004
346
291
172
4,124
550
1,520

9,261
516
381
235
5,308
746
2,075

13
11
9
6
12
17
18

32
49
31
36
29
36
36

50
66
42
45
44
59
62

D istrict 2—t o ta l......................
New York...............................
New Jersey.............................
Delaware.................................

20,058
17,936
1,891
230

23,197
20,744
2,187
266

30,327
26,573
3,374
379

16
16
16
15

31
28
54
43

51
48
78
65

D istrict 3—t o ta l......................
Ohio.........................................
Pennsylvania..........................

6,834
2,192
4,642

8,320
2,974
5,346

12,330
4,872
7,457

22
36
15

48
64
40

80
122
61

District 4—to ta l......................
Maryland................................
Virginia...................................
West Virginia.........................
North Carolina.......................
South Carolina.......................
Dist. of Col.............................

2,258
755
493
250
315
124
322

2,990
876
695
328
447
179
465

5,011
1,334
1,102
529
961
392
693

32
16
41
31
42
44
44

68
52
59
62
115
119
49

122
77
123
112
205
216
115

D istrict 5—t o ta l......................
Georgia...................................
Florida....................................
Alabama.................................
Mississippi..............................
Louisiana................................

1,374
344
282
243
163
343

1,973
507
417
394
206
449

4,098
1,007
979
756
459
897

44
48
48
62
27
31

108
98
135
92
123
100

198
193
248
211
182
162

District 6—t o ta l......................
Kentucky................................
Tennessee...............................
Missouri..................................
Arkansas.................................

1,937
383
387
1,019
148

2,530
457
529
1,321
224

4,587
923
1,035
2,158
471

31
19
37
30
51

81
102
96
63
111

137
141
167
112
219

D istrict 7—to ta l......................
Indiana...................................
Michigan.................................
Wisconsin...............................

2,887
745
1,331
811

3,933
999
1,938
997

7,178
1,863
3,485
1,830

36
34
46
23

83
87
80
84

149
150
162
126

D istrict 8—t o ta l......................
Illinois.....................................
Iowa........................................

3,950
3,425
525

5,084
4,389
695

8,214
6,936
1,278

29
28
32

62
58
84

108
103
143

D istrict 9—to ta l......................
Minnesota...............................
North Dakota........................
South Dakota.........................
Montana.................................

1,023
766
68
73
116

1,213
886
93
100
133

2,399
1,584
284
226
306

19
16
36
38
15

98
79
206
125
129

135
107
317
210
164

District 10—t o ta l....................
Nebraska................................
Kansas....................................
Oklahoma...............................
Colorado.................................
Wyoming................................

1,140
235
280
302
270
53

1,511
311
403
396
339
62

3,154
688
911
774
651
130

33
33
44
31
26
18

109
121
126
95
92
108

177
193
226
156
141
145

D istrict 11— t o ta l....................
Texas.......................................
New Mexico...........................
Arizona...................................

1,198
1,077
46
74

1,698
1,533
62
102

3,563
3,172
156
236

42
42
34
38

110
107
150
131

197
194
235
218

D istrict 12—t o ta l....................
Idaho.......................................
Utah........................................
Nevada...................................
Washington............................
Oregon.....................................
California................................

4,509
79
122
33
475
263
3,537

5,873
103
162
53
718
383
4,454

11,922
278
340
96
1,541
884
8,783

30
31
33
59
51
46
26

103
169
110
80
115
131
97

164
252
180
186
224
236
148

N ote: Figures are rounded and will not necessarily add precisely to totals.




DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS

59

Table 29 shows the percentage growth of deposits of individuals,
partnerships, and corporations by Federal Deposit Insurance Cor­
poration districts listed according to rate of growth.
Table 29.

PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS, PARTNERSHIPS,
and

FDIC
District
No.

C o r p o r a t io n s ,

1940-1944,

States

by

F D I C D is t r ic t

Dec. 30, 1939,
to
June 30, 1942

June 30, 1942,
to
Dec. 30, 1944

Dec. 30, 1939,
to
Dec. 30, 1944

5.

Georgia, Florida, Alabama, Mississippi,
Louisiana................................................

44%

108%

198%

11.

Texas, New Mexico, Arizona..................

42

110

197

10.

Nebraska, Kansas, Oklahoma, Colorado,
Wyoming................................................

33

109

177

12.

Idaho, Utah, Nevada, Washington, Ore­
gon, California.......................................

30

103

164

7.

Indiana, Michigan, Wisconsin.................

36

83

149

6.

Kentucky, Tennessee, Missouri, Arkansas

31

81

137

9.

Minnesota, North Dakota, South
Dakota, Montana.................................

19

98

135

4.

Maryland, Virginia, West Virginia,
North Carolina, South Carolina, Dis­
trict of Columbia...................................

32

68

122

8.

Illinois, Iowa.............................................

29

62

108

3.

Ohio, Pennsylvania...................................

22

48

80

2.

New York, New Jersey, Delaware..........

16

31

51

1.

Maine, New Hampshire, Vermont,
Massachusetts, Rhode Island, Con­
necticut...................................................

13

32

50

The wide variation in the growth of these deposits in the various
regions and States is due to numerous factors, among which the fol­
lowing may be mentioned: the location of factories producing ma­
terials for military purposes, the relatively rapid growth in prices
of farm products, the geographic incidence of Federal taxation, and
the geographic distribution of bond purchases.
Some of the wartime conditions which influence the relative growth
of deposits have also had a similar influence on the income of the
people of the various geographic regions. The percentage increases
by States in income payments from 1939 to 1944 are compared in
Chart F with the change in the deposits of individuals, partnerships,
and corporations from the close of 1939 to the close of 1944.1 In the
dominantly agricultural States the rate of growth in deposits was
higher than in income payments, while in dominantly industrial
regions the rate of increase in deposits was smaller than in income
payments. The industrial population has continued during the war
to purchase the chief products of the agricultural regions and has
1 Income payments are from the Survey of Current Business, June 1943 and August 1945,




60

FEDERAL DEPOSIT INSURANCE CORPORATION

Table 3 0 .

GOVERNMENTAL DEPOSITS IN

B an ks, by

F e d e r a l D e p o s it I n s u r a n c e

COMMERCIAL AND MUTUAL
C o r p o r a t io n

United States Government
FDIC District and State

Amount (millions)

Percentage
increase
1939 to
1944

Dec. 30,
1939

Dec. 30,
1944

United
States
(excluding
possessions)..........................

$899

$20,763

D istrict 1—to ta l......................
Maine.....................................
New Hampshire.....................
Vermont.................................
Massachusetts........................
Rhode Island.........................
Connecticut............................

38
2
1
1
26
1
6

1,424
47
31
15
931
114
286

3684
1882
2303
2159
3539
9103
4312

D istrict 2—t o ta l......................
New York...............................
New Jersey.............................
Delaware.................................

192
165
25
1

8,739
8,105
574
60

D istrict 3—t o ta l......................
Ohio.........................................
Pennsylvania..........................

145
30
115

District 4—to ta l......................
Maryland................................
Virginia...................................
West Virginia.........................
North Carolina......................
South Carolina.......................
Dist. of Col............................

58
36
8
5
7
1
2

D istrict 5— to ta l......................
Georgia...................................
Florida....................................
Alabama.................................
Louisiana................................

59
17
10
8
4
20

D istrict 6—t o t a l......................
Kentucky................................
Tennessee...............................
Missouri..................................
Arkansas.................................

D is t r ic t

SAVINGS

and

St a t e

States and political subdivision
Amount (millions)

Percentage
increase
1939 to
1944

Dec. 30,
1939

Dec. 30,
1944

$3,467

$5,047

172
9
7
4
96
17
38

245
17
11
6
149
19
44

43
75
50
47
55
9
18

4460
4810
2181
4197

760
581
173
6

835
599
220
16

10
3
27
168

2,055
836
1,219

1322
2729
960

397
169
228

489
254
235

23
50
3

1,110
371
239
118
224
51
107

1822
927
2977
2475
3218
6571
5943

185
45
39
22
52
27

329
59
66
42
116
45
i

78
32
70
93
122
64
22

588
156
150
107
58
117

892
832
1377
1180
1520
473

217
35
53
33
29
67

411
79
108
85
50
90

89
125
103
156
70
35

54
8
19
25
2

792
144
196
402
50

1369
1789
924
1486
2738

176
29
39
88
20

325
50
76
154
44

84
71
95
75
123

District 7—to ta l......................
Indiana...................................
Michigan................................

64
21
28
15

1,136
283
547
306

1663
1258
1835
1894

273
108
121
43

444
172
195
77

63
58
62
77

D istrict 8—t o ta l......................
Illinois.....................................
Iowa........................................

98
94
5

1,977
1,758
219

1908
1773
4632

356
281
76

489
347
142

37
24
88

D istrict 9— t o ta l......................
Minnesota...............................
North Dakota........................
South Dakota.........................
Montana.................................

7
6
(*)
1
1

486
399
31
25
30

6960
7578
6701
3992
4834

128
83
4
20
20

222
103
52
28
39

73
24
1071
37
97

D istrict 10—t o ta l....................
Nebraska.................................
Kansas....................................
Oklahoma...............................
Colorado.................................
Wyoming................................

23
3
8
10
2
(*)

435
109
119
125
69
12

1761
3141
1386
1145
4329
3051

196
29
82
57
17
10

310
37
142
95
22
14

58
31
72
66
25
33

D istrict 11— t o ta l....................
Texas.......................................
New Mexico...........................
Arizona...................................

41
40
1
0)

557
516
15
26

1251
1177
2340
11086

165
136
15
13

253
215
20
18

54
58
30
37

D istrict 12—t o t a l....................
Idaho.......................................
Utah........................................
Nevada...................................
Washington............................
Oregon.....................................
California................................

119
1
(l)
(x
)
8
6
104

1,463
25
37
11
274
123
993

1126
4146
13934
5151
3450
1805
854

442
17
19
6
38
25
338

696
25
27
11
91
72
469

57
46
46
103
140
190
39

1 Less than $500,000.




2211%

i

46%

N ote: Figures are rounded and will not necessarily add precisely to totals.

61

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS

paid higher prices for those products, while purchases of industrial
products by the agricultural population have been curtailed by the
diversion of industrial production to war supplies.
CHART F

P e r c e n t a g e In c r e a s e s , 1 9 3 9 t o 1 9 4 4 , in
Income Payments, and in D e p o s i t s o f I n d i v i d u a l s ,
P a r t n e r s h ip s , and C o r p o r a t io n s , b y S t a t e s
PERCENTAGE INCREASE IN
INCOME PAYMENTS. 1939-1944

220
WASH.

A

200
180
ALA.

•

• VA.

160

•
CAL.

140

IND.

•

M D .0

120
ME

0*'°

R.I. « •

•CONN.

100

DE -•

80.

*>
•
MINN.

• N.Y

60

'

j

V * *

KAN.

• 9
ORE.

S.C.

•

0
a r iz 7

FLA.

•

IDAHO

•

N.DAK.

& •N.C. « N.MEX.

>KLA.
» KY. *C
•
S. DAK.

• COLO.
•JA.
o^°-

N .I

>PA.

MASS C

>

•M/SS.
•
TENN. , , GA.
U
1
i H • i|
A
*

AAONT.

• N.H.

40
40

60

80

100 120

140 160 180 200 220 240 260 280 300 320

PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS ,
PARTNERSHIPS, AND CORPORATIONS, DEC.3M939-DEC.31,1944

Change in governmental deposits by regions and States.

Deposits in commercial and mutual savings banks owned by govern­
ments—Federal, State, and local—at the end of 1944 were nearly
six times as large as at the end of 1939. For the 5-year period deposits
of the United States Government increased by nearly $20 billion,
and those of States and their political subdivisions by less than $2
billion. About 95 percent of the increase in United States Government
deposits occurred during the second half of the period.
The amounts of Federal and other governmental deposits, respec­
tively, held by commercial and mutual savings banks in each region
and State on December 30, 1939, and December 30, 1944, are shown
in Table 30. Percentage changes for the 5-year period are also given.



62

FEDERAL DEPOSIT INSURANCE CORPORATION

T a b le 3 1. INTERBANK DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS, BY
F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t io n D i s t r i c t a n d S t a t e
Amount (millions of dollars)
FDIC District
and State

Dec. 30,
19391

June 30, 1942, with
reciprocal deposits
Included

Percentage change3

Dec. 30,
19442

Excluded

Dec. 30,
1939,to
June 30,
1942

June 30,
1942,to
Dec. 30,
1944

Dec. 30,
1939,to
Dec. 30,
1944

19%

31%

U nited States...........

$9,880

$10,891

$10,277

$12,228

D istrict 1— t o ta l. . . .
New Hampshire.. . .
Vermont..................
Massachusetts........
Rhode Island..........
Connecticut............

416
8
6
1
353
11
37

457
10
6
1
382
13
45

435
10
6
1
362
12
44

402
9
7
1
333
12
40

10
22
-6
5
8
22
20

-8
-12
19
36
-8
5
-9

2
7
12
42
-1
28
10

D istrict 2—t o ta l. . . .
New Y ork...............
New Jersey.............
Delaware.................

4,686
4,640
42
3

4,322
4,278
41
4

4,250
4,212
35
3

4,278
4,235
40
3

-8
-8
-4
31

1
1
15

-7
-7
10
31

D istrict 3—t o t a l. . . .
Ohio.........................
Pennsylvania..........

942
201
741

1,014
279
736

904
251
653

971
323
648

11
39
-1

7
28
-1

19
78
-1

District 4—to ta l. . . .
Maryland................
Virginia...................
West Virginia..........
North Carolina.......
South Carolina.......
Dist. of Col.............

388
119
87
15
125
10
32

502
117
123
26
169
16
51

435
105
109
26
139
12
42

614
116
157
37
234
23
47

29
-1
42
76
35
51
58

41
11
43
40
68
92
11

83
10
103
146
127
191
75

D istrict 5— t o ta l. . . .
Georgia....................
Florida.....................
Alabama..................
Mississippi..............
Louisiana.................

340
100
63
45
14
118

482
150
100
68
19
145

416
127
89
56
18
126

711
210
160
78
58
205

42
49
59
53
40
22

71
65
81
40
224
63

142
146
186
113
355
99

District 6— t o ta l. . . .
Kentucky................
Tennessee................
Missouri..................
Arkansas.................

691
64
127
470
30

970
112
201
613
44

896
102
176
578
40

1,285
151
302
767
65

40
73
59
30
48

43
48
71
33
64

101
155
172
73
142

D istrict 7—t o t a l----Indiana....................
Michigan.................
Wisconsin................

284
76
127
80

369
104
158
107

357
101
153
103

440
129
180
131

30
36
24
33

23
28
18
27

60
74
47
69

D istrict 8—t o t a l. . . .
Illinois.....................
Iowa.........................

1,004
944
60

1,273
1,172
101

1,226
1,127
99

1,412
1,297
114

27
24
68

15
15
16

46
43
95

D istrict 9—t o t a l. . . .
Minnesota...............
North Dakota.........
South Dakota.........
Montana..................

177
158
3
5
12

250
220
9
7
13

238
211
8
6
13

328
280
13
8
26

41
40
197
55
14

37
33
56
29
102

94
86
362
99
131

D istrict 10— t o t a l ...
Nebraska.................
Kansas.....................
Oklahoma................
Colorado..................
Wyoming.................

240
65
39
79
51
6

338
98
65
99
69
6

313
95
59
88
65
6

516
145
100
163
97
11

41
52
68
25
35
6

65
53
70
84
48
85

132
132
187
131
100
97

D istrict 11—t o t a l ...
Texas.......................
New Mexico............
Arizona....................

321
316
3
2

391
384
5
3

358
351
4
3

685
673
9
4

22
21
58
63

92
92
108
44

134
133
230
134

D istrict 12—t o ta l. ..
Idaho.......................
Utah.........................
Nevada....................
Washington.............
Oregon.....................
California................

391
3
22
1
52
23
290

522
4
31
1
76
33
377

449
3
29
1
63
28
324

586
6
47
1
89
39
403

34
26
42
40
46
40
30

30
59
61
-38
42
41
24

74
101
129
-13
107
98
62




10%

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS

63

Change in interbank deposits by State. The rate of growth in
interbank deposits during the period from the end of 1939 to the
middle of 1942 was less than one-half, and during the period from
the middle of 1942 to the end of 1944 approximately one-third, of
the rate of growth in deposits owned by individuals, partnerships, and
corporations. However, in both periods the variation among the States
in rate of growth was greater in interbank deposits than in the deposits
of individuals, partnerships, and corporations. This is not remarkable,
since interbank deposits are directly affected by the flow of payments
throughout the nation and for this reason are particularly volatile.
From the end of 1939 to the middle of 1942 the percentage change
in interbank deposits ranged from a loss of 8 percent in New York
to an increase of 197 percent in North Dakota. From the middle of
1942 to the end of 1944 the percentage change varied from a decline
of 38 percent in Nevada to an increase of 224 percent in Mississippi.
The figures for each State are given in Table 31.

A comparison, for the 5-year period from the end of 1939 to the
end of 1944, between the change in interbank deposits and that in
deposits of individuals, partnerships, and corporations in each State
is given in Chart G. This chart indicates a fairly close relation between
the growth in the two categories of deposits. The northeastern part
of the United States, in which the rate of growth in deposits of in­
dividuals, partnerships, and corporations has been the lowest, is the
area with the smallest growth in interbank deposits; while the growth
in interbank deposits has been most rapid in the southern and western
region in which the growth in deposits owned by individuals, partner­
ships, and corporations has been the highest.

T o ta l M

oney

S u p pl y

Deposits in commercial and mutual savings banks are the major
part of the nation’s means of payment, or money supply. Checks on
demand deposit accounts are used directly in the business transactions
of the people of the nation. Time and savings deposits are held largely
as available reserves should need arise for an additional amount of
cash, or means of payment. However, bank deposits do not constitute
all the nation’s means of payment. Currency, including silver and
minor coins, is used for many transactions; the United States Govern­
ment maintains checking accounts with Federal Reserve banks; and
Footnotes to Table 31:
1 Includes reciprocal deposits.
2 Excludes reciprocal deposits in insured commercial banks.
3 Change for December 30, 1939, to June 30, 1942, derived from figures including reciprocal de­
posits; for June 30, 1942, to December 30, 1944, from figures excluding reciprocal deposits. Change
from December 30, 1939, to December 30, 1944, derived from the percentage changes for the two shorter
periods.
N ote: Figures are rounded and will not necessarily add precisely to totals.




64

FEDERAL DEPOSIT INSURANCE CORPORATION

CHART S

P e r c e n t a g e I n c r e a s e s , 1 9 3 9 t o 1 9 4 4 , in
In t e r b a n k D e p o s it s a n d in D e p o s i t s o f In d iv id u a l s ,
Pa r t n e r s h i p s , a n d C o r p o r a t i o n s , b y S t a t e s
p e rc e n ta g e in c r e a s e in
INTERBANK DEPOSITS, 1939-1944

370'
360.

N.DAK.
•
•MISS.

340.
320_
300_
280.
260.
240.
• fsJ.MEX.

220
200
KAN.

180
160

KV!
»
W /A.
.1
•

140

\.
° i—

<O

VA.

100.
M IN f
•

80

Di *

/via
60

*
OHIO.
WIS.
•

ILL.
•

ALA.

P*

LA.
•

S. DAK.

WASH
•

l
HO

•
ORE.

IND
ca
*

•
#VT.

JVRK.
Z.
•N.C.

120

40

FLA
•

TE NIJ.

J

1
MICH.
•

DEL.
•
R.f

20

N.H.

o

J/IAtt

.,

20

40

y —

,
ME.

, , , , _; _, _, -, , -, -,
__ _ _ - _- *PA.

A y.

N.J

NEV.
•

60 80 100 120 140 160 180 200 220 240 260 280 300 320
PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS,
PARTNERSHIPS, AND C OR POR ATION S, 1939 TO 1944-




65

TOTAL MONEY SUPPLY

deposits in the postal savings system are essentially similar to savings
deposits in banks. On the other hand, one class of bank deposits—
interbank—is customarily excluded from the total money supply
in order to avoid double counting.
Total money supply. At the close of 1944 the total money supply
of the nation, understood as the total of deposits and currency other
than those owned within the banking system, amounted to $156
billion. This figure is made up of the following items:
Billions of dollars
Total money supply.................................................................
Deposits in commercial and mutual savings banks..............
Deposits in the postal savings system...................................
U. S. Treasury deposits in Federal Reserve banks..............
Currency outside banks...........................................................

$156.4
129.9
2.3\
.4/
23.8

Percent of total
100%
83
«
15

At the end of 1939 the total money supply amounted to $67 billion.
The increase during the five years, 1940-1944, was $90 billion, or
$134 percent. The amounts on each June 30 and December 31 during
this period are shown in Table 32.
Table 32.

T o t a l D e p o sit s a n d C u r r e n c y , E x c l u d in g I n t e r b a n k O b l ig a t io n s ,
J u n e 30 a n d D e c e m b e r 31, 1939-1944
(In millions of dollars)

Date

1944— Dec.
June
1943— Dec.
June
1942— Dec.
June
1941— Dec.
June
1940— Dec.
June
1939— Dec.

3 0 ........
30........
31
30 ........
31 . . .
30 ........
3 1 ........
30........
3 1 ........
29........
3 0 ........

Total

$156,388
141,677
128,490
114,742
105,084
85,326
82,917
77,960
74,337
69,072
66,887

Deposits in
commercial
and mutual
savings banks

$129,847
117,926
107,100
96,734
88,844
72,708
71,076
67,437
65,296
60,802
58,529

Deposits
in postal
savings
system

$2,342
2,034
1,788
1,577
1,417
1,316
1,314
1,304
1,304
1,293
1,279

U. S. Treasury
deposits in
Federal
Reserve banks

$440
650
579
455
799
290
867
980
368
234
634

Currency
outside
banks1

$23,759
21,067
19,023
15,976
14,024
11,012
9,660
8,239
7,369
6,743
6,445

1 Includes Treasury cash other than gold.

Ownership of the money supply. Of the total money supply at
the end of 1944, over $26 billion was owned by governments—Federal,
State, and local. The remaining $130 billion may be treated as the
money supply of individuals and business, including religious, civic,
and other organizations. This figure is somewhat exaggerated, since
it includes deposits of foreigners in commercial and mutual savings
banks in the United States, currency owned by State and local
governments, United States currency held in foreign countries, and
probably some currency which has been destroyed. Table 33 shows
how much of the money supply was owned by governments, and how
much by business and individuals, on each June 30 and December 31,



FEDERAL DEPOSIT INSURANCE CORPORATION

66

from the end of 1939 to the end of 1944, and also the change in each
category during each six months of the 5-year period.
T a b le 33.

T o t a l DEPOSITS AND CURRENCY, EXCLUDING INTERBANK OBLIGATIONS,

J u n e 30 a n d D e c e m b e r 31, 1939-1944, b y C l a s s o f O w n e r
(In millions of dollars)
Change during 6 months
Owned by—
Owned by—
Date

Total
Govern­
ment1

1944—Dec. 30..............
June 30..............
1943— Dec. 31..............
June 30..............
1942— Dec. 31..............
June 30 ..............
1941— Dec. 31..............
June 30..............
1940— Dec. 31..............
June 29..............
1939— Dec. 30..............

$156,388
141,677
128,490
114,742
105,084
85,326
82,917
77,960
74,337
69,072
66,887

$26,588
25,360
16,046
13,480
13,835
6,692
7.131
5,927
5.132
4,851
5,079

Individuals
and
business2
$129,800
116,317
112,444
101,262
91,249
78,634
75,786
72,033
69,205
64,221
61,808

Total
Govern­
ment

$14,711
13,187
13,748
9,658
19,758
2,409
4,957
3,623
5,265
2,185

$1,228
9,314
2,566
-3 5 5
7,143
-4 3 9
1,204
795
281
-2 2 8

Individuals
and
business
$13,483
3,873
11,182
10,013
12,615
2,848
3,753
2,828
4,984
2,413

1 Includes deposits of the United States Government and of States and their political subdivisions
in commercial and mutual savings banks; United States Treasurer’s general account in Federal Reserve
banks, and Treasury cash other than gold.
2 Includes deposits of individuals, partnerships, and corporations, and certified checks, etc., in
commercial banks; total deposits in mutual savings banks; deposits in the postal savings system; and
currency outside the Treasury and banks.

Of the increase in the money supply during the five years, $22
billion occurred in the amount owned by governments, chiefly the
Federal Government, and $68 billion in the amount owned by in­
dividuals and business. By years the growth in deposits and currency
of individuals and business is as follows:
Billions of dollars
1940-1944..........................................................................................
1944............................................................................................... 17.3
1943................................................................................................21.2
1942............................................................................................... 15.5
1941............................................................................................... 6.6
1940............................................................................................... 7.4

$68.0

Percent
110%

15
23
20
10
12

Types of deposits and currency owned by individuals and
business. Of the $130 billion of deposits and currency owned by

individuals and business at the end of 1944, $67 billion was in the
form of demand deposits in commercial banks, $40 billion in savings
deposits in commercial and mutual savings banks and the postal
savings system, and $23 billion in the form of currency. The dis­
tribution for year-end and mid-year dates for the preceding five years
is shown in Chart H.
During the 5-year period, 1940-1944, the portion of the deposits
and currency owned by individuals and business which was in the
form of currency increased from 10 to 18 percent. The portion held



67

TOTAL MONEY SUPPLY

in demand deposits rose from 47 to 51 percent, and that in the form
of time deposits declined from 43 to 30 percent. For the three war
years, and also for the entire 5-year period, about one-fourth of the
increase in deposits and currency owned by individuals and business
was in the form of currency. The figures are given in Tables 34 and 35.
CHART H

D e p o s it s a n d

C u r r e n c y O w n e d b y In d i v i d u a l s
B u s in e s s , b y T y p e
19 3 9 - 1944

and

BILLIO N S OF D O LLA R S

B IL L IO N * OF D O L L A R S

Table 34.

CLASSIFICATION OF DEPOSITS AND CURRENCY

O w n e d b y I n d iv id u a ls a n d B u s in e s s ,
Amount (millions of dollars)
Date
Total

1944— Dec.
June
1943— Dec.
June
1942— Dec.
June
1941— Dec.
June
1940— Dec.
June
1939— Dec.

30___
30....
31___
30....
31----30....
31___
30....
31___
29....
30___

$129,800
116,317
112,444
101,262
91,249
78,634
75,786
72,033
69,205
64,221
61,808

Time and
savings
deposits1

Demand
deposits*

$39,532
35,440
32,462
29,950
28,097
26,863
27,319
27,497
27,304
27,048
26,613

$66,762
59,996
61,145
55,499
49,205
40,834
38,852
36,333
34,575
30,474
28,793

Currency3

$23,505
* 20,881
18,837
15,814
13,946
10,936
9,615
8,204
7,325
6,699
6,401

1939-1944
Percentage of total in—

Time and
savings
deposits

Demand
deposits

Currency

30%
30
29
30
31
34
36
38
39
42
43

51%
52
54
55
54
52
51
50
50
47
47

18%
18
17
16
15
14
13
11
11
10
10

1 Includes all deposits in mutual savings banks and the postal savings system.
a Includes certified checks, etc., and unclassified deposits in noninsured commercial banks.
*
Currency outside banks and the United States treasury. Currency held abroad and by State and
local governments is included.
N o t e : Figures are rounded and will not necessarily add precisely to totals.




68

FEDERAL DEPOSIT INSURANCE CORPORATION
T a b le 3 5 .

ANNUAL INCREASE IN DEPOSITS AND CURRENCY

O w n e d b y I n d i v i d u a l s a n d B u s i n e s s , 1940-1944
Amount (billions of dollars)
Year
Total

Percentage of increase in—

Time and
savings
deposits

Demand
deposits

Currency

T o ta l.....................

$68.0

$12.9

$38.0

$17.1

1944.......................
1943.......................
1942.......................
1941.......................
1940.......................

17.4
21.2
15.5
6.6
7.4

7.1
4.4
.8

5.6
11.9
10.4
4.3
5.8

4.7
4.9
4.3
2.3
.9

N o te:

.7

Time and
savings
deposits

Demand
deposits

Currency

19%

56%

25%

41
21
5

32
56
67
65
78

27
23
28
35
13

9

Figures are rounded and do not necessarily add precisely to totals.

The increase in the proportion of business and individual cash
balances held in the form of currency is due to various factors, in­
cluding the following: the relatively large rise in incomes of wageeamers, many of whom have not been accustomed to maintain
checking accounts; the inconvenience of cashing checks under wartime
conditions and the inconvenience of charge accounts under consumer
credit restrictions; the movement of population and difficulties in
establishing bank accounts and charge accounts in new places; illegal
transactions such as “ black market” sales; and the stimulus to tax
evasion resulting from high tax rates.




PART FOUR
LEGISLATION AND REGULATIONS







F e d e r a l Le g is l a t io n R e l a t in g t o In su r e d B a n k s
o r t h e C o r p o r a t io n
INTERNAL REVENUE COLLECTORS— CHECKS AND MONEY ORDERS
[Pu b l ic L a w 541— 78 t h C o n g r e ss ]
[C h a p te r 672— 2 d S ession ]

[H. R. 5565]
AN ACT
To authorize collectors of internal revenue to receive certain checks and money
orders in payment of taxes and for revenue stamps.
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That section 3656 of the Internal Revenue Code
(relating to payment of taxes by check) is amended to read as follows:
“ SEC. 3656. PAYM ENT BY CHECK AND MONEY ORDERS.
“ (a) C e r t i f i e d , C a s h ie r s ’ , a n d T r e a s u r e r s ’ C h e c k s an d M o n e y O r d e r .—
“ (1) A u t h o r i t y t o r e c e i v e . — It shall be lawful for collectors to receive for
internal revenue taxes or in payment of stamps to be used in payment of internal
revenue taxes certified, cashiers’, and treasurers’ checks drawn on National and
State banks and trust companies, and United States postal, bank, express, and
telegraph money orders, during such time and under such regulations as the
Commissioner, with the approval of the Secretary, may prescribe.
“ (2) D is c h a r g e o f l i a b i l i t y .—

‘ ‘ (A) Check Duly Paid.— No person who may be indebted to the United States
on account of internal revenue taxes or stamps used or to be used in payment
of internal revenue taxes who shall have tendered a certified, cashier’s, or
treasurer’s check or money order as provisional payment therefor, in ac­
cordance with the terms of this subsection, shall be released from the obligation
to make ultimate payment thereof until such certified, cashier’s, or treasurer’s
check or money order so received has been duly paid.
“ (B) Check Unpaid.— If any such check or money order so received is not
duly paid the United States shall, in addition to its right to exact payment
from the party originally indebted therefor, have a lien for the amount of such
check upon all the assets of the bank on which drawn or for the amount of
such money order upon all the assets of the issuer thereof; and such amount
shall be paid out of its assets in preference to any or all other claims whatsoever
against said bank or issuer except the necessary costs and expenses of ad­
ministration and the reimbursement of the United States for the amount
expended in the redemption of the circulating notes of such bank.
“ (b) O t h e r C h e c k s . —
“ (1) A u t h o r i t y t o r e c e iv e . — Collectors may receive checks in addition to
those specified in subsection (a) in payment of taxes other than those payable
by stamp during such time and under such rules and regulations as the Commis­
sioner, with the approval of the Secretary, shall prescribe.
“ (2) U l t i m a t e l i a b i l i t y . — If a check so received is not paid by the bank
on which it is drawn the person by whom such check has been tendered shall
remain liable for the payment of the tax and for all legal penalties and additions
to the same extent as if such check had not been tendered.”
Approved December 22, 1944.




71

72

FEDERAL DEPOSIT INSURANCE CORPORATION
R e p o r t o f t h e C o r p o r a t io n o n A b s o r p t io n
of

Ex c h a n g e Ch a r g e s

LETTER TO THE CHAIRM AN, SENATE COMM ITTEE ON
BANKING AND CURRENCY
April 27, 1944
F. W a g n e r , Chairman
Senate Committee on Banking and Currency
Washington, D. C.

H onorable R obert

M y dear Senator:
As requested, we are pleased to submit herein the report of this Corporation on
S. 1642 entitled “ A Bill to amend the Federal Reserve Act, as amended, to provide
that the absorption of exchange and collection charges shall not be deemed the
payment of interest on deposits” . We recommend enactment of H. R. 3956, an
identical measure, which already has been passed by the House of Representatives.
While this legislation is in the form of an amendment of the existing law, the
primary issue before the House in its consideration of the Bill was what Congress
meant to include in the term “ interest” in the 19331 and 19352 statutes prohibiting
payment of interest on demand deposits. As is obvious from the debates on the
Bill, the House concluded that in its opinion Congress never intended that ab­
sorption of exchange be included in the term “ interest” . We share this view and
in our administration of the 1935 Act, in its application to non-member insured
banks, which substantially restates the provisions of the 1933 Act applicable to
member banks, we have so construed the law.
Historically the two practices are separate and distinct and the legislative history
of both Acts clearly shows that Congress intended to regulate payment of interest
only. The evils which these statutes were designed to correct, as the hearings and
the debates in Congress show, were attributed to actual interest payments and not
to absorption of exchange or other expenses for customers. At no place in the legis­
lative record of the present statutory provisions is there any mention of absorption
of exchange.
It is a fact, however, that as respects member banks, an administrative ruling
has been made which prohibits them from absorbing exchange and this ruling is
based solely upon the interest statute. If, therefore, the interest statute does not
extend to absorption of exchange, as we believe is clear as a matter of law, the ruling
is invalid for lack of legislative authorization. But while its invalidity seems clear,
it is nevertheless being actively and continuously enforced so that it will continue to
have the force of law unless Congress enacts the pending Bill which specifically
states that absorption of exchange is not interest. As the adverse impact of the ruling
is borne principally by non-member banks, judicial relief to test the correctness of
the ruling is not available, since these institutions have no standing to question
a ruling which does not by its terms apply to them, even though its full impact falls
upon them indirectly. Although enactment of the Bill merely declares and reaffirms
the intent of the present law, failure of passage means submitting to continued
enforcement of a ruling which lacks Congressional sanction.
1 Section 19 of the Federal Reserve Act, Act of June 16, 1933, ch. 89, sec. 11(b), 48 Stat. 181, sup­
plemented by Act of August 23, 1935, ch. 614, sec. 324(a), 49 Stat. 714.
* Act of August 23, 1935, ch. 614, sec. 101, 49 Stat. 702.




ABSORPTION OF EXCHANGE CHARGES

73

Opposition to the Bill has been solicited upon the ground that its passage means
a blow to par clearance of checks. But par clearance of checks was not deterred by
the practice of paying interest on demand deposits and the interest statute was not
designed to further par clearance, but was intended only to prevent attraction of
funds to money centers for use in stock market speculation. Desire to achieve more
wide-spread par clearance is not a sufficient reason for sustaining a ruling which
misapplies the interest statute. Opposition to enactment of the Bill on this ground
is a confession that the present law is not only being misconstrued but is being
misapplied to a field in which Congress has pointedly refrained from legislating
since in 1917 it expressly authorized member and non-member banks to charge
exchange on clearings through private commercial banking channels. (Section 13 of
the Federal Reserve Act, Act of June 21, 1917, ch. 32, sec. 4, 40 Stat. 234.)
Par clearance is pertinent to this legislation only because the prohibition against
absorption operates to force banks which charge exchange to clear at par. This
circumstance demonstrates that, in enacting the interest statutes, Congress did not
intend to affect absorption of exchange because the historic bitterness engendered
by the par clearance controversy is such that some mention of the problem would
have been made in the 1933 or 1935 Congressional considerations of the interest
laws. But no mention was made. Thus, while the effect of absorption on par clear­
ance may be pertinent to a discussion favoring the enactment of the Bill, it is not
a reason which may be advanced in opposition to its passage, unless the opposition
is prepared to sacrifice the constitutional supremacy of Congress in legislative
matters in order to strike a blow at non-par banking. Furthermore, while the defeat
of the Bill would be a direct blow at banks which charge exchange, the passage of
the Bill will not spread the practice of charging exchange to any greater degree
than has been marked the past 10 years. During this period, exchange has been
absorbed by banks desiring to do so, and the interest statute was not enforced
against exchange absorption, unless covertly, until the recent ruling (September
1943) defining absorption of exchange as interest. This was the first revival of the
issue after it had been laid to rest in 1937 following its brief and uncertain career
in that year. During this 10 year period, the number of banks charging exchange
has diminished until today only slightly more than 2500 institutions impose these
charges. How, then, can the mere return to a practice so briefly interrupted tend
to increase the number of banks which charge exchange? If par clearance is jeop­
ardized by exchange absorption, we believe the facts should be fairly assembled
and the issue squarely and openly presented for Congressional consideration and
not resolved indirectly in the disguise of an interest ruling. But it must be said
that evidence thus far produced has consisted only of fearful apparitions of the
consequences of general departure from par clearance instead of facts indicating
that absorption of exchange threatens par clearance.
Opposition to the Bill is also being drummed up on the false premise that ab­
sorption of exchange has led to diversion of funds from “ normal” banking channels
and to “ unsound banking” conditions. The facts submitted in the cases cited during
the hearings on the Bill to the House Committee on Banking and Currency where
these charges were made do not support these conclusions. In five of the seven
cases we have received information from the banks involved showing affirmatively
that banking funds have not been diverted from “ normal” banking channels and
unsound banking conditions have not arisen as the result of exchange absorption.
If such conditions do occur, ordinary supervisory methods can easily effect timely
corrections. Here again the fact that unsound practices have not resulted from actual
experience in absorption of exchange charges during the past ten years is submerged
in the dreadful descriptions of possible consequences, which are wholly imaginary.
Care must be exercised that the opprobrious connotations of the terms “ unsound”



74

FEDERAL DEPOSIT INSURANCE CORPORATION

banking and “ unnatural” balances are not accepted as substitutes for facts to show
that absorption of exchange has produced either consequence.
It should be observed that exchange charges have been singled out as the one
expense which banks may not absorb for depositors without violating the interest
law, while other expenses may be absorbed with approval. The distinction is rested
on the theory that exchange charges are “ out-of-pocket” expenses. The term “ outof-pocket” expenses has no precise significance by legal definition or common usage.
It suggests expenses of the type which one may pay for “ incidentals” as distinguished
from more important expenses. Treating the term to mean expenses identifiable
only with a particular transaction as distinguished from those which are not, we
find that exchange charges are the only “ out-of-pocket” expenses which are ad­
ministratively prohibited from being absorbed. Thus all banks are permitted to
absorb their own service charges by service charge allowances in consideration of
balances maintained.
Banks today generally have established service charge schedules which allow
the theoretical earning value of their customers’ accounts to be offset against their
charges for the services which they render to customers in collecting checks de­
posited, paying checks and otherwise furnishing them depositary service. These
charges are frequently called “ activity” charges. If the allowances to the customers
for the earning value of their accounts are less than the activity charges for the
services they require, the excess is billed to the customers as service charges. How­
ever, where the earning allowances exceed the activity charges, the customers are
neither paid nor credited with the difference. These service charge credit allowances
to customers are granted in direct proportion to the size of the balances which they
maintain. This is accomplished either through schedules under which activity
allowances increase proportionately with the minimum balances maintained by
depositors or through individual analysis of costs of handling depositors’ accounts,
the latter system being generally employed by banks in handling the accounts of
their bank customers and other large depositors. The effect of these allowances
is that the banks absorb their own service charges in direct proportion to the size
of the balances which their depositors maintain. This has been held not to be a
violation of Section 19 of the Federal Reserve Act prohibiting payment of interest
on demand deposits. (January 1944 Federal Reserve Bulletin, p. 13). As banks
may absorb their own service charges without violating the regulations of either
the Federal Deposit Insurance Corporation or the Board of Governors of the Federal
Reserve System, why should member banks be prohibited from absorbing the
exchange charges which they pay to other banks? We must bear in mind that
exchange charges are service charges of the banks making the charges. When paid
out by collecting banks in connection with their depositors’ business, they are
merely one of the expenses of collecting checks and historically have been treated
as part of the expenses of bank operation.
The Federal Reserve Board has expressly ruled that member banks may pay
and absorb the intangible property taxes levied by states such as Michigan, Indiana
and Kentucky computed on their depositors’ bank balances, without violating the
interest statute. These taxes are laid on the depositors and not on the banks. They
are in every sense “ out-of-pocket” expenses as the term is used in relation to ab­
sorption of exchange. Rulings on this question follow the exception contained in
the Board’s Revision of Regulation Q, effective January 1, 1936, which provided
that:
“ The term ‘interest’ includes the payment or absorption of exchange and
collection charges which involve out-of-pocket expenses, but does not include the
payment or absorption of taxes upon deposits whether levied against the bank or the
depositor nor the payment or absorption of premiums on bonds securing deposits



ABSORPTION OF EXCHANGE CHARGES

75

where such bonds are required by or under authority of law.” (1935 Federal Reserve
Bulletin, p. 864). (Emphasis supplied).
We think, therefore, that apart from the question whether the interest statute was
designed to prevent absorption of “ out-of-pocket” expenses, it would be entirely
inconsistent to permit the prohibition against absorption of exchange to be con­
tinued since all other types of “ out-of-pocket” expenses may be absorbed. This
circumstance, as well as the fact that the Corporation has from the beginning
interpreted the interest statute governing non-member banks which it administers
as not prohibiting absorption of exchange, prompted the Federal Deposit Insurance
Corporation to caution the Federal Reserve Board on August 20, 1943 before its
controverted ruling was issued that “ the theory of the Board of Governors would
appear to require it to outlaw as well the absorption of service charges and other
expenses for depositors which all banks now incur to some degree” , that its proposed
ruling was “ simply another attempt to force par clearance upon non-member banks”
and that “ it hopes that the Board of Governors will not give rise to a situation
where two Federal agencies make conflicting decisions to the consternation of the
public” ; and to suggest that “ in such a situation we consider it singularly ap­
propriate to await precise directions from Congress” . (House Hearings, p. 599).
Even if our concept of the Congressional intent be wrong, the evidence adduced
at the hearings before the House Committee on the present Bill is abundantly
convincing that absorption of exchange by a correspondent bank pursuant to
arrangement with its bank customers involves no interest because the bank which
absorbs the exchange is usually, if not always, a complete stranger to the depositorowner of the check, who is the person ultimately benefited by the absorption. Since
the forwarding bank derives no financial benefit from the absorption because it acts
as agent for the owner of the check, and since the latter maintains no deposit in
the intermediate correspondent bank which absorbs the exchange charges, wherein
can there be a “ payment of interest on demand deposits” ? Under the most generous
construction of the law in this state of facts there is no violation of the law because
the “ payment” is not made to a “ depositor” of the bank, that is, unless the “ sins”
of the correspondent bank be attributed to the customer-bank.
Since consideration of the Bill by the House, the Board of Governors has partially
receded from its position that absorption of exchange is interest and now holds that
a bank may, without violating the law, absorb exchange charges where it does not
agree to do so as a means of soliciting new accounts or retaining existing accounts
and where the expense involved in making collection from depositors would exceed
the amount of the exchange charges. This leaves each bank subject to the uncer­
tainties of arbitrary administrative action in individual cases. Examiners may,
applying no uniform rule, permit one bank to absorb exchange in amounts which
another bank is prohibited from absorbing.
Compensation, in the sense of interest, is the benefit received by the person
compensated; thus it operates upon the recipient and is wholly independent of the
intent of the person from whom the alleged payment flows. Indeed, under the
Federal Reserve's basic theory, compensation occurs even though the party ab­
sorbing an expense for another would suffer a greater loss by collecting than by
foregoing collection. Consequently, the new thesis of “ permissible compensation”
has no basis in law and cannot be sustained upon any legal principles.
The law does not say that interest on demand deposits may be paid in small
amounts, nor that it may be paid to effect operating efficiency, nor that it may be
paid when not intended as an inducement to attract or retain deposit accounts. The
statute provides that interest on demand deposits may not be paid at all. If, as is
contended, absorption of exchange is interest, then all absorption of exchange is
prohibited. No amount of rationalization can create a distinction between per­



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FEDERAL DEPOSIT INSURANCE CORPORATION

missible absorption and prohibited absorption. Such an arbitrary distinction may
not be made by “ administrative” definition of legal terms which have well estab­
lished meanings in the law.
There are forceful affirmative reasons for urging Congress to pass this legislation.
Approximately 2500 banks in the United States derive a substantial part of their
operating revenues from exchange charges. In most instances these institutions are
small, locally-owned, independent banks operating in rural communities. In 1942
less than 100 of these banks had deposits exceeding $2 million. They are not only
small businesses, but are the financial institutions which serve small business. These
banks are required to maintain legal reserves and surplus funds on deposit with
city banks. The banking system derives substantial profit and benefit from these
interbank deposits and has been willing and is well able to absorb exchange charges
imposed by the non-par banks without passing them back to the public. Many
banks were absorbing these charges until prevented by the recent administrative
ruling, and investigation does not disclose that any unsound banking practices
resulted therefrom. Nor can it be said that these interbank balances represent a
diversion of funds from “ normal” banking channels. Interbank deposits—both as
to size and location— are determined by the necessities of banking conditions and
are dictated by the banking requirements of the depositing banks and their patrons.
There has been no evidence produced to substantiate the charge that these inter­
bank balances have deviated from normal channels in order to obtain benefits
outside the pale of normal banking service.
It is clear that if exchange absorption remains outlawed, the effect will be to
force banks to discontinue charging exchange and the customer relationships of
those which continue to do so will be, as they already have been, seriously disturbed.
There is grave danger that many of these banks will be forced to discontinue business
if they are deprived of the revenue which they have been deriving from exchange.
While the smaller banking institutions which charge exchange will be affected
severely by a continuance of the prohibition against absorption of exchange, neither
the larger banks nor the banking system as a whole will be injured by the passage
of the pending Bill which simply permits banks to absorb exchange if they desire
to do so, but places them under no compulsion so to do. The banks which are ad­
versely affected, therefore, are entitled to greater consideration by Congress than
those which have only an academic interest in the problem as is the case with most
of the banks which have opposed passage of this legislation.
We call the attention of the Committee to the fact that the Federal Deposit
Insurance Corporation has adopted a formal ruling which holds that the law (49
Stat. 702, ch. 614) prohibiting payment of interest on demand deposits by non­
member insured banks, does not prohibit absorption of exchange. This ruling
restates in codified form the position which the Corporation has taken on this issue
since 1935 when the law was first passed and reads as follows:
“ The absorption of normal or customary exchange charges by an insured
nonmember bank, in connection with the routine collection for its depositors of
checks drawn on other banks, does not constitute the payment of interest within
the provisions of Section 304.2 (a) of Part 304 of the Corporation's Rules and
Regulations.”
For the foregoing reasons, we recommend that the Bill H. R. 3956 be voted out
by your Committee and passed by the Senate. A memorandum dealing with the
principles of law involved, is enclosed for the information and use of the Committee.




By direction of the Board:
F r a n c is C. B r o w n

General Counsel

ABSORPTION OF EXCHANGE CHARGES

77

GENERAL COUNSEL’S M EMORANDUM
R e : H. R. 3956
Reason for Favoring Legislation:
The proposed Bill reverses an administrative ruling of the Board of Governors
of the Federal Reserve System which, we believe, goes beyond the field of regulation
authorized by Congress and which, under the pretense of regulating interest, is
designed to discourage and eliminate the practice of charging exchange. Our support
of the measure stems principally from our opposition to the practice of circum­
venting the legislative authority of Congress by administrative regulation, and
secondarily, from our interest as insurer of a large group of banks, not members
of the Reserve System, which feel the full impact of the ruling although without
legal right to contest its validity, and finally, from our apprehension of the con­
sequences of the campaign to compel these institutions to discontinue their practice
of charging exchange— a practice expressly authorized both by Congress and by
many state legislatures.
The Present Law:
We observe a common and single legislative purpose in the laws prohibiting the
payment of interest on demand deposits administered, as to member banks of the
Federal Reserve System, by the Board of Governors of the Federal Reserve System
(Sec. 19 of the Federal Reserve Act, as amended by Sec. 11 (b) of the Banking Act
of 1933, and Sec. 324 (a) of the Banking Act of 1935) and, as to nonmember insured
banks, by the Federal Deposit Insurance Corporation (Sec. 12B of the Federal
Reserve Act, as amended, subsec. (v), paragraph (8), added by Sec. 101 of the
Banking Act of 1935). Although some differences in the two laws exist, it is evident
that Congress used the word “ interest” in the same sense in each provision. Because
of the absence of legislative standards circumscribing the power of the Reserve
Board under Sec. 324 (a) of the 1935 Act, to determine what shall be deemed to be
a payment of “ interest” , the asserted delegation to it of legislative power to broaden
the common legal meaning of the term is of doubtful validity under decisions of the
Supreme Court of which Panama Refining Co. v. Ryan (1935) 293 U. S. 388, 79 L. ed.
446, is a typical example. There the Court said that executive regulations “ become,
indeed, binding rules of conduct, but they are valid only as subordinate rules and
when found to be within the framework of the policy which the legislature has
sufficiently defined” (p. 428). Therefore the law under which the Reserve Board
operates is necessarily on a parity with that governing the Federal Deposit Insurance
Corporation, which does not expressly contain such delegation. Regardless of the
validity of the delegation, however, the Reserve Board has not currently exercised
its power to define interest to include the practice of absorbing exchange. It has
issued a ruling in a specific case and has published general discussions of the subject
which constitute administrative “ case law” on the question of absorption of ex­
change applicable to member banks. The Board explained before the House Banking
and Currency Committee that its recent action was based not on its power of
definition but on its application of the word “ interest” to the practice of absorbing
exchange. Although applicable only to member banks, the adverse impact of this
ruling operates directly and almost exclusively upon nonmember institutions, since
principally member banks act as clearing or collecting agents or correspondents on
items forwarded for collection from nonmember banks (2529 in number) which
charge exchange on out-of-town remittances.
History of Par Clearance Controversy:
To understand the true significance, social and economic, of the question of
absorption of exchange, it is necessary briefly to review the history of the fight for



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FEDERAL DEPOSIT INSURANCE CORPORATION

and against compulsory and universal par clearance through the Federal Reserve
System. The banks which now charge exchange are located principally in sixteen
states of the south and middle west. These institutions are primarily small, inde­
pendent, locally-owned banks in important agricultural areas which have been
providing local credit accommodations and banking facilities to their communities.
The revenue which these banks derive from exchange has been a substantial, and
in many cases a vital, part of their income. They have adhered steadfastly to their
age-old practice of charging exchange on remittances out of town, notwithstanding
recurrent efforts on the part of the Federal Reserve Board in past years to force
them to remit at par on collections by member banks through the Federal Reserve
banks.
After the Federal Reserve System was set up certain Federal Reserve banks
instituted compulsory par remittance by member banks on checks sent through
them. In 1915 the Federal Reserve Board instituted a voluntary par remittance
plan. However, this failed in a number of areas because of the small percentage of
banks (25%) which agreed to remit at par. In 1916 the Federal Reserve Board
instituted compulsory par remittance which was put into effect in the face of intense
opposition on the part of many national banks in country areas, and the efforts of
a committee of the American Bankers Association to obtain postponement of the
compulsory plan failed. Although many of the larger banks favored the compulsory
plan because they were already remitting at par, the then (1916) president of the
American Bankers Association declared his sympathies with the country banks
in these words: “ The transfer of funds is a service which is as much entitled to
compensation, when made by a bank, as it is when made by an express company
or by the postal official” . A committee of the American Bankers Association reported
at the 1917 convention that it had sounded the opinion of bankers and that over
75% opposed the par collection plan. However, as the Federal Reserve Board had
observed in the preceding year, the force of competition with par clearing member
banks was driving many non-member banks onto the par list.
In 1917, section 13 of the Federal Reserve Act was amended expressly to permit
banks to make reasonable exchange charges on collections otherwise than against
the Federal Reserve banks. In accepting this amendment the non-par banks, sup­
ported by an opinion of the General Counsel of the American Bankers Association,
had understood that the amendment would permit non-member banks to charge
exchange on collections which the Federal Reserve banks were handling in the
customary agency capacity. However, the Attorney General in 1918 (31 Op. Atty.
Gen’l. 245, 251) issued an opinion to the contrary, so that non-member banks were
prohibited from charging exchange not only on collection items owned by the Federal
Reserve banks, but also on those which they were handling in an agency capacity.
This deprived banks of the clearing facilities of the Federal Reserve banks for
checks drawn on non-par banks and the situation in this respect has since remained
unchanged.
The struggle, however, between the conflicting economic philosophies raged
unabated. The Reserve Board continued its pressure upon the non-par banks by
first persuading as many banks as possible in a district to remit at par, and then,
when a majority had so agreed, announcing that all banks in the district would,
on a specified date, be put on the par list, enforcing the pronouncement by pre­
senting checks over the counter by messengers, or by postal officials, or by par banks
located in the same towns, and demanding cash settlements at par. In Brookings,
Oregon, for example, it maintained an agent for practically a year at an expense
of $3542. for the purpose of presenting such checks on the Brookings State Bank.
Brookings State Bank v. Fed. Res. Bank (D. C. Ore., 1922) 281 Fed. 222, 227. Some
non-par banks claimed that checks were accumulated and presented in large amounts



ABSORPTION OF EXCHANGE CHARGES

79

to harrass them and that this made it difficult, if not impossible, for them to meet
the payments because of the large amount of vault cash required for such purpose.
Charges of coercion and oppression were flung at certain Federal Reserve banks
and recriminations abounded. From 1920 to 1927 six suits were instituted against
Federal Reserve banks in an effort to stop this practice. Others were avoided only
by the Federal Reserve abandoning the practice. Many non-par banks, however,
yielded to this persuasion and the number of non-par banks was gradually reduced.
After unsuccessful efforts by certain banks to enjoin judicially a Federal Reserve
bank from presenting checks over the counter, state legislatures enacted laws
permitting their banks to settle by draft for such checks. These laws led to the
decision in Farmers & Merchants Bank of Monroe v. Federal Reserve Bank of Richmond
(1923) 262 U. S. 649, 67 L. ed. 1157, in which the Supreme Court, speaking through
Justice Brandeis, held that the Federal Reserve had no authority to enforce universal
par clearance, and said (pp. 664-666):
“ ***Congress did not in terms confer upon the Federal Reserve Board or the
federal reserve banks a duty to establish universal par clearance and collection
of checks; and there is nothing in the original act or in any amendment from
which such duty to compel its adoption may be inferred. The only sections which
in any way deal either with clearance or collection are 13 and 16. In neither
section is there any suggestion that the Reserve Board and the reserve banks
shall become an agency for universal clearance. On the contrary § 16 strictly
limits the scope of their clearance functions. It provides that the Federal Reserve
Board: ‘may at its discretion exercise the functions of a clearing house for such
Federal reserve banks . . . and may also require each such bank to exercise the
functions of a clearing house for its member banks/
“ There is no reference whatever to ‘par’ in § 13, either as originally enacted
or as amended from time to time. There is a reference to ‘par1 in § 16; and it is
so clear and explicit as to preclude a contention that it has any application to
non-member banks, or to the ordinary process of check collection here involved.
*

*

*

“ Moreover, the contention that Congress has imposed upon the Board the
duty of establishing universal par clearance and collection of checks through the
federal reserve banks is irreconcilable with the specific provision of the Hardwick
Amendment which declares that even a member or an affiliated non-member
may make a limited charge (except to federal reserve banks) for ‘payment of
checks and . . . remission therefor by exchange or otherwise’ . The right to make
a charge for payment of checks, thus regained by member and preserved to
affiliated non-member banks, shows that it was not intended, or expected, that
the federal reserve banks would become the universal agency for clearance of
checks.”
The importance of this issue is cogently summed up in the following quotation
from “ Deterrents to Membership in the Reserve System” , an article by B. Magruder
Wingfield, the then Assistant General Counsel for the Reserve Board, published
by the Reserve Board in a volume on “ Banking Studies” (1941), at page 277:
“ To many smaller banks, exchange charges are a source of substantial revenue
they are reluctant to do without and, in many instances, state they can not do
without. In view of these facts and the differences in Federal and State laws with
respect to par clearance, it is clear that the requirement that checks be paid in full
by member banks is an important obstacle to membership in the Reserve System,
particularly since no such requirement is applicable to nonmember insured
banks.” (Emphasis supplied).



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FEDERAL DEPOSIT INSURANCE CORPORATION

In 1920 and again in 1932 Committees of Congress held hearings at which the
par clearance controversy was aired.1 At each of these hearings numerous references
were made to the practice of charging exchange and absorption of exchange and its
inextricable relationship to par clearance was apparent. However, prior to the
hearings on the present Bills, the par clearance issue had not been directly reopened
since the Supreme Court decided the Richmond case. Today whether a bank remits
at par is essentially a matter of policy with the bank's management. In many
communities, however, this policy is largely governed by the necessities of meeting
the competition of banks which, to a large extent, do remit at par. The force of this
competition, in many instances, has extended into communities adjoining the
locations of the par institutions, and as the infiltration of national banks and state
member banks into non-par areas increases, the non-par list probably will further
contract. City banks are now generally par remitting banks, whereas in many
states non-par banks are confined to rural communities.
The forces of competition are at work. These forces have, for many years past,
led to arrangements between banks and their depositors whereby the former have
absorbed the exchange charges imposed by non-par banks on items which are col­
lected through their facilities. Correspondent banks have made similar arrangements
with their bank customers whereby they absorb exchange charges imposed on
remittances by non-par banks to the extent that the balances of their customers
justify. The correspondent banks have been able and willing to absorb this expense,
as well as the other costs of collection, and to render other services, because banks
for whom they act as correspondents maintain with them deposits of part of their
available reserves— and deposits being the banker’s principal stock in trade, these
funds have been so invested as to warrant the correspondent banks making these
arrangements. Moreover, these deposit accounts have been so maintained not only
to obtain these services but also because inter-bank balances are a necessary part
of the entire banking system ; they are required to enable a bank to furnish its
customers the full measure of banking facilities. These absorbing arrangements,
in many instances, have been confined to local areas. So far as the public is con­
cerned and from a practical standpoint, the result of these arrangements is that
the non-par banks operate on a par basis and thus have been able to meet the
competition of nearby par banks. The issue of absorption of exchange for this
reason is inextricably mingled with the whole issue of par clearance. Indeed, the
Board of Governors of the Federal Reserve System, in a letter dated October 14,
1942, addressed to the Honorable Preston Delano, Comptroller of the Currency,
dealing with the bank at Lincoln, Nebraska, which appears in the record of the
hearings on the present measure before the House Banking and Currency Com­
mittee, made the following significant statement (p. 592):
“ The Board does not believe that the problem of exchange absorption can be
considered alone. It is only a part of the whole question of par clearance with
its many involved and related questions.”
Moreover, that the question of exchange absorption cannot logically nor prac­
tically be divorced from the paramount issue of par clearance is made clear beyond
doubt by the recent action of a state bankers association which issued a circular
containing the following significant passage: “ If all banks will cease absorbing these
charges, it is predicted that it will be only a matter of time until all banks throughout
the United States will be on a par clearance basis” . In the face of this very plain
understanding by bankers as to the consequences which will flow inevitably from
the enforcement of the Federal Reserve Board’s recent ruling outlawing the ab­
sorption of exchange and the Board’s continuing pressure upon exchange charging
1 House Hearings, Committee on Banking and Currency, Par Collection of Checks, 66th Cong.,
2nd Sess.; House Hearings, Committee on Banking and Currency, To Provide a Guaranty Fund for
Depositors in Banks, 72nd Cong. 1st Session.




ABSORPTION OF EXCHANGE CHARGES

81

banks, we have been unable to accept unreservedly the Board’s statement that its
ruling was not motivated by the hope of achieving universal par clearance but only
by the desire to enforce the law prohibiting the payment of interest on demand
deposits.1 The literal acceptance of its disclaimer is rendered even more difficult in
view of the letter sent out to banks by the Reserve Board on February 18, 1944,
encouraging opposition to the pending Bill and containing the following quotation:
“ This matter of exchange charges is nothing but a ‘gouge1 a kind of racketeering
,
against the depositors of banks, and, against the commerce and industry of the
nation.” Nor can the statement readily be reconciled with the pressure campaign
against the pending Bill which has been carried on by the Reserve-Board-controlled
Federal Reserve Banks, one of which, on March 10, 1944, wrote all of the operating
banks in its district stating: “ If the Senate joins the House in enacting this legis­
lation within the next week or two, the progress made in the past thirty years in
building a par collection system will be reversed.*** The two Senators from your
State as well as the members of the Senate Committee on Banking and Currency
undoubtedly will wish to understand the significance of the Maybank Bill (S. 1642).
No one is better able to interpret its possible effects than you. As for ourselves, it
is our considered judgment that this legislation is not in the public interest.”
Moreover, the Board’s disclaimer must be viewed in light of the past history of
its attitude toward absorption of exchange. In 1936, the Board of Governors re­
quested the Federal Advisory Council for its opinion as to whether the promulgation
and enforcement of Regulation Q, with the inclusion therein of the definition out­
lawing absorption of exchange as a payment of interest, would have an adverse
effect upon membership in the Federal Reserve System; and the Federal Advisory
Council replied that it would not. (1936 Annual Report of the Federal Reserve
Board, p. 233). If the motive of the Federal Reserve Board was enforcement of the
law and not the achievement of par clearance, why, it is fair to ask, was it concerned
with the effect of its ruling forbidding absorption of exchange upon membership in
the Federal Reserve System? If the law prohibiting interest upon demand deposits
compelled such a ruling, then whether membership in the Federal Reserve System
was affected or not it would seem that the Reserve Board was required to make
that ruling. We may justly ask, would the Federal Reserve Board have persisted
in its attitude had it been advised by the Federal Advisory Council that such a
ruling would have a detrimental effect upon membership in the system? Moreover,
the Federal Advisory Council’s reply is not consistent with the Board’s present
statement that it was confronted with the unhappy possibility that such a ruling
would result in member banks withdrawing from the System.
The ruling of the Board has singled out absorption of exchange charges alone, of
all expenses identifiable with a depositor’s account, for classification as a prohibited
interest payment; while other rulings hold that other expenses, equally identifiable,
such as, intangible property taxes against depositors based upon their bank balances,
bond premiums and expenses of clearing checks, may be absorbed without violation
of the law. Thus, for example, the Federal Reserve Board has held that member
banks may pay and absorb intangible property taxes upon depositors’ bank balances
such as those levied in the states of Michigan, Indiana and Kentucky, without
i “ The Board is even more surprised at the statement in your letter that as you view the proposed
ruling it is simply another attempt to force par clearance upon nonmember banks. The Board does favor
Nation-wide par clearance, but it agrees with you that the final determination of the question is one for
appropriate legislative bodies. Consequently it must most emphatically disagree that forcing par clear­
ance was the motive of the Board’s ruling. To the contrary, the Board was confronted with the unhappy
possibility that, by making such a ruling, member banks resorting to the practice in question would
feel that they should withdraw from the Federal Reserve System. It must reiterate that its purpose in
making the ruling was solely to carry out what it believes to be its responsibility under the law, in response
to a request from the Office of the Comptroller of the Currency for a ruling in the particular case disclosed
by reports of examination made by National bank examiners.” (From letter of L. P. Bethea, Asst. Sec.,
Board of Governors of the Federal Reserve System, to Hon. Leo T. Crowley, Chairman, Federal Deposit
Insurance Corporation, dated Sept. 9,1943, Hearings on H. R. 3956 before House Committee on Banking
and Currency, 78th Cong., 2nd Sess., p. 601).




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FEDERAL DEPOSIT INSURANCE CORPORATION

violating the interest statute. It is to be noted that these taxes are laid on the
depositors and not on the banks and are in every sense “ out-of-pocket” expenses
insofar as the bank is concerned. Nevertheless, the Federal Reserve Board has ruled
that the term “ interest” includes the payment or absorption of exchange and
collection charges “ but does not include the payment or absorption of taxes upon
deposits whether levied against the bank or the depositor” . Federal Reserve Bulletin
(1935), p. 864; id. (1944), p. 13.
Interpretation of Interest-Prohibition Statute:
Mindful of this turbulent history of the par clearance issue, we pass to considera­
tion of the question whether Congress intended that absorption of exchange be
deemed the payment of interest.
What did Congress mean by the term “ interest” as used in the laws prohibiting
payment of interest on demand deposits? The laws themselves contain no definition.
The Banking Act of 1933 became law on June 16,1933. The Senate bill contained
a provision prohibiting interest payments on demand deposits; the House bill
contained only a provision for regulating interest rates on savings and time deposits.
The reports on these bills cast no light on the question under consideration here, but
we do learn from the Congressional Record that the purpose of the Senate provision
was to attract surplus bank money away from the large money markets, where it
had been used for speculative purposes, and return it to the home communities of
the banks where it could be loaned out. It was thus explained to the Senate:
“ * * *. The payment of interest on demand deposits has resulted for years and
years in stripping the country banks of all their spare funds, which have been
sent to the money centers for stock speculative purposes. * * *. If they have
abundant funds and credits they can lower the rate of interest in order to stimulate
business and industry and farming activities.
“ * * *. They have their standard rates and stick to them, and would rather
send their surplus funds to New York to be used for stock-gambling purposes at
a wonderful rate of 2 percent, reduced now, I think, to
^ percent, than to
loan to their merchants and business men at less than their standard rates. So
that this payment of interest, particularly on bank demand deposits, has resulted
in drawing the funds from the country banks to the money centers for speculative
purposes, to be polite about the matter.” (77 Cong. Rec. p. 3729).

13

And thus to the House:
“ * * *. We departed from sound banking principles. Our great banking system
was diverted from its original purposes into investment activities, and its service
devoted to speculation and international high finance. * * *. Agriculture, com­
merce, and industry were forgotten. Bank deposits and credit resources were
funneled into the speculative centers of the country for investment in stocks
operation and in market speculation. Values were lifted to fictitious levels.
Call-money rates went soaring, community bankers over the Nation were lured
away from normal and legitimate channels into a maelstrom of untried and
destructive activities.” (77 Cong. Rec. p. 3835).
It was suggested also that prohibiting the payment of interest on demand deposits
would make it easier for banks to pay their deposit insurance assessments by relieving
them of the heavy interest burden— a burden which averaged, for the 5 years prior
to 1933, an annual expenditure of approximately $250 millions.
It is significant that nowhere in the Congressional Record of the proceedings on
the 1933 Act nor in the reports of the Congressional Committees was there any



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reference to absorption of exchange, or any intimation that the provision outlawing
interest on demand deposits would affect, directly or indirectly, either the charging
or the absorption of exchange.
In the hearings before the House Banking and Currency Committee on H. R. 3956
(78th Congress)—the companion bill to S. 1642 now under consideration in the
Senate— it was disclosed (p. 497) that the Reserve Board had received numerous
inquiries from banks during 1933 and 1934 for rulings on the question whether
absorption of exchange was a violation of the interest prohibition. The Reserve
Board's 1933 Annual Report, submitted to Congress on May 28, 1934, contained
a copy of its interest Regulation Q as well as recommendations for amendments
to the law prohibiting payment of interest on demand deposits, including a recom­
mendation that the Board be given power to prescribe rules and regulations to
prevent evasions of the law. But neither the interest regulation nor the recommenda­
tions for legislation contain any reference to absorption of exchange. The Annual
Report of the Board for 1934 contained a recommendation from the Federal Ad­
visory Council regarding Regulation Q but again there was no mention of absorption
of exchange. And although extensive hearings were held in 1935 before the Banking
and Currency Committees of both Houses of Congress on the bill later enacted as
the Banking Act of 1935, again no mention was made of absorption.
The 1935 bill contained the provision that the Federal Reserve Board should
have the power to determine what should be deemed “ interest” for the purposes
of the interest statute. It was included in Title III of the bill under the heading
“ Technical Amendments” . Chairman Eccles of the Federal Reserve Board did not
touch upon these provisions in his testimony before the Senate Committee on
Banking and Currency but in testifying before the House Committee he referred
to the amendments in this Title as “ in the nature of technical improvements of a
non-controversial nature” . (House Hearings, Committee on Banking and Currency,
Banking Act of 1935, p. 185.) Again he said: “ They are largely of a technical nature” .
(Id., p. 346.) Comptroller of the Currency O'Connor in testifying upon the bill before
the Senate Committee filed a statement in explanation of the objects of the proposed
amendments contained in Title III. (Senate Hearings, Committee on Banking and
Currency, Banking Act of 1935, p. 113.) It will be observed that his explanation of
Section 323(a) of the bill, which contained the provision authorizing the Federal
Reserve Board to define what shall be deemed the payment of interest, reads as
follows: “ Authorizes Federal Reserve Board to define ‘deposit' and related terms for
reserve and interest requirements respecting deposits” . (Id., p. 116.) He further
explained that section as follows (Id., p. 168):
“ Mr. O'CONNOR...............
Section 323(a) is partly new, and authorizes the Federal Reserve Board to
define ‘deposit' and related terms for reserve and interest requirements re­
specting deposits.
Senator TOWNSEND. Who defines those deposits?
Mr. O'CONNOR. The Federal Reserve Board.
Senator BULKLEY. I think we ought to have a more full explanation of that.
I am frank to say that I do not see what that is driving at.
Senator COUZENS. Was that new over last year's act?
Senator BULKLEY. Yes.
Mr. O'CONNOR. Yes; part of it is new.
Senator BULKLEY. It is all new in the sense that it was not contained in our
omnibus bill last year.



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Mr. O’ CONNOR. I am reading from the report of the House, page 21:
Section 323(a) amends section 19 of the Federal Reserve Act so as to repeal
the rigid statutory definitions of “ demand deposits” and “ time deposits” and
authorizes the Federal Reserve Board to define for the purposes of the section
the terms: “ Demand deposits” , “ gross demand deposits” , “ deposits payable
on demand” , “ time deposits” , “ savings deposits” and “ trust funds” , to de­
termine what is to be deemed a payment of interest and to prescribe regulations
to effectuate the purposes of the section.
Oh, yes; it comes back to me now: We had a number of discussions in the Federal
Reserve Board, gentlemen, after the passage of the 1933 act, when you eliminated
the interest on demand deposits, as to what constituted a demand deposit, a
time deposit, or a savings deposit. We found great difficulty in applying the
definitions that were in the act, and we found some of the banks attempting to
circumscribe the prohibitions; and we wanted, when we found those evasions,
to keep correcting the definition until they could not evade it” .
It will be noted that not one word was said about absorption of exchange; indeed
not a word about interest. The explanation was that the provision authorized the
Federal Reserve Board to define the term “ deposit” , in view of the difficulty which
had been experienced in determining what were demand deposits. Not only was
absorption of exchange not mentioned but that portion of the authorization with
respect to the definition of the term “ interest” was not even discussed.
Similarly, in the House hearings, the Comptroller of the Currency said (House
Hearings, Committee on Banking and Currency, Banking Act of 1935, p. 661) that
“ practically all of the things I am going to talk about are technical matters * *
and he described the section which included the power of definition as follows:
“ Section 323(a), which is partly new, authorizes the Federal Reserve Board to
define ‘deposit’ and related terms for reserve and interest requirements respecting
deposits” . (id., p. 665).
In light of this background, how can it fairly be said that Congress intended to
eliminate or authorize the elimination of the absorption of exchange as a “ device”
for the indirect payment of interest on demand deposits? Nothing was said about
it at the hearings on the bill; on the contrary, the silence on that subject justifies
us in saying that Congress did not intend to authorize this elimination through the
regulation of interest payments. If the absorption of exchange was then an acute
evil and an obvious device for the indirect payment of interest on demand deposits,
as the Federal Reserve Board now asserts it then believed, how can it justify the
complete silence of every one on the subject when the 1935 bill was before Congress?
The true interpretation of the statute depends not upon what the Federal Reserve
Board claims it intended in proposing the 1935 amendment to Congress, but upon
what Congress intended in enacting it into the law. Although the problem may have
been acute to the Federal Reserve Board in 1934 and 1935, as it did not communicate
its anxiety to Congress, but on the contrary represented the amendment to be
“ technical” and “ non controversial” , neither of which descriptions fits legislation
which would permit it to disturb the practice of exchange absorption, we must
conclude that Congress did not intend to authorize its recent ruling.
The provision governing interest payments by non-member insured banks
(initially proposed to be enforced by the Federal Reserve Board but changed before
passage to the Federal Deposit Insurance Corporation) was also discussed fully by
representatives of the several banking agencies but no mention was made there of
any intention to prohibit absorption of exchange.



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85

It cannot be said that Congress, in enacting the Banking Act of 1935 and con­
tinuing therein the prohibition against the payment of interest upon demand
deposits, adopted the administrative interpretation laid down by the Federal Reserve
Board in 1934. We do not contest that the courts have held that the existence of
an administrative regulation during several re-enactments of a statute is persuasive
evidence of the Congressional approval of such administrative action. McCaughn v.
Hershey Chocolate Co. (1931) 283 U. S. 488, 492, 75 L. ed. 1183, 1187; Jones v.
Magruder (D. C. Md., 1941) 42 F. Supp. 193, 199; Railroad Federal Savings and
Loan Association v. U. S., 135 F. (2d) 290, 293 (CCA 2, 1943). But in almost all
cases it will be found that the administrative regulation was in existence a con­
siderable length of time and usually through several statutory re-enactments.
Where the regulation is only of short life, the rule is not applied. Commissioner of
Internal Revenue v. Sun Pipe Line Co., 126 F. (2d) 888 (CCA 3, 1942). The theory
upon which the rule is based is that there is a presumption that the legislature is
aware of the administrative ruling and impliedly adopts it by failing to legislate
against it. This presumption, however, is thoroughly overcome as far as the 1935
Act is concerned, since Congress actually was kept in complete ignorance of any
ruling on this subject. As an eminent authority has said: “ While the acquiescence
of the legislature seems to be of small matter where there is no evidence to the effect
that the statute or contemporaneous interpretation was called to the legislature’s
attention, it is believed that when action has been taken upon a statute by the
legislature, and where a practical and contemporaneous interpretation was called
to its attention, the failure of the legislature to change the interpretation should
be regarded as presumptive evidence in its correctness” . 2 Sutherland, Statutory
Construction (3rd ed.), 525. Even had the legislative record been such as to warrant
the conclusion that Congress did intend to adopt the Reserve Board’s views, its
rulings on the subject were so confusing and contradictory that no clarification of
the issues could have resulted. Thus, the Board had held that absorption of exchange
charges by a bank for depositors who maintained balances of $1000. or more was not
a violation of the law; this, notwithstanding the interest statute prohibits the
payment of any interest on demand deposits. Yet in another case it held that ab­
sorption of exchange charges by a bank “ up to an amount equivalent to a certain
specified percentage of the amount of the collected balance” of its correspondent
bank customers was a violation of the law (Federal Reserve Bulletin (1934), p. 395).
Furthermore, these rulings appear to have been entirely precatory to the extent
that they declared exchange absorption to be illegal, as the practice continued to
be indulged in by member banks throughout the system without interference by
the Board until 1944.
We think it cannot reasonably be said that Congress, in passing this legislation,
could have had any intention of prohibiting the long established banking practice
which was so completely wrapped up in the explosive par clearance issue without
some mention having been made of the problem in the debates, the reports on the
bills or the testimony upon which the Congressional Committees acted.
There are certain well established rules for determining legislative intent. One
of these is that penal statutes must be strictly construed and the statutes in this
case are plainly penal. The one governing insured nonmember banks carries with
it the specific penalty of $100 for each violation as well as the general penalty of
the forfeiture of deposit insurance. The one governing member banks carries the
general penalty of forfeiture of charter, in the case of national banks, and forfeiture
of membership in the Federal Reserve System, in the case of state member banks,
as well as the loss of federal deposit insurance, or the removal from office of the bank
officers responsible for the violations. Statutes which provide for forfeitures upon
their violation are penal. State of Maryland v. The B. & O. R. Co. (1845) 3 How.



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(U. S.) 534,11 L. ed. 714; Chase v. Curtis, et a l (1885) 113 U. S. 452, 28 L. ed. 1038;
Hall v. Norfolk & W. R. Co. 44 W. Va. 36, 28 S. E. 754 (1897); Vestal Co. v. Robertson,
277 111. 425, 115 N. E. 629 (1917); Manhattan Trust Co. v. Davis, 23 Mont. 273,
58 P. 718 (1899).
Another of these rules is that words having a precise and well-settled meaning
in common usage are to be understood in the same sense when used in statutes. This
rule has been applied to the use of the word “ interest” in statutes in two decisions
of the United States Supreme Court involving provisions of the Internal Revenue
Code. Deputy v. DuPont (1940) 308 U. S. 488, 84 L. ed. 416; Old Colony R. Co. v.
Commissioner of Internal Revenue (1932) 284 U. S. 552, 76 L. ed. 484.
In Deputy v. DuPont, the Court, speaking through Mr. Justice Douglas, said:
. . In the business world ‘interest on indebtedness’ means compensation for
the use or forbearance of money. In absence of clear evidence to the contrary,
we assume that Congress has used these words in that sense. In sum, we cannot
sacrifice the ‘plain, obvious and rational meaning’ of the statute even for ‘the
exigency of a hard case’ .”
In the Old Colony case the Court, speaking through Mr. Justice Roberts, said:
. . as respects ‘interest’ , the usual import of the term is the amount which one has
contracted to pay for the use of borrowed money * * *. We cannot believe that
Congress used the word having in mind any concept other than the usual, ordinary
and everyday meaning of the term, or that it was acquainted with the accountants’
phrase ‘effective rate’ of interest and intended that as the measure of the per­
mitted deduction” .
Furthermore, judicial precedents concerning interest for the purpose of deter­
mining whether usury has been practiced, establish that the question whether a
particular payment by a borrower to a lender is interest or reimbursement of an
expense, involves intent. There is no presumption of an illegal or usurious intent,
but on the contrary the burden rests upon the party seeking to impeach the trans­
action for usury to prove the illegal intent. Brown v. Robinson (1918) 224 N. Y.
301, 314, 120 N. E. 694, 698. Here, however, for purposes of administrative dis­
position, it appears that the Reserve Board has reversed the presumption and burden
of proof by ruling {Federal Reserve Bulletin (1934), p. 396)—
“ * * * that, in any case in which a member bank pays or absorbs exchange or
collection charges or other expenses in connection with any deposit payable on
demand, the burden will be upon it to show that such payment or absorption
of charges is not a device to evade the provisions of Section 19 of the Federal
Reserve Act forbidding the payment of interest on deposits payable on demand.”
The extensive hearings which were had before the House Banking and Currency
Committee on the present measure have clearly demonstrated the importance of
absorption to many bankers and the intensity of their opposition to any restriction
of this practice, which was a well known banking custom and was separate and
distinct from the payment of interest. That the two practices are different both in
origin and economic effect is borne out also by numerous witnesses who testified
at those hearings.
It is significant that just as bankers have long differentiated between the payment
of interest which they consider compensation and the absorption of exchange which
they consider expense, so have courts in usury cases similarly differentiated between
the payment of interest and exchange. Cayuga County Bank v. Hunt, 2 Hill (N. Y.)
635; Holford v. Blatchford, 2 Sandf. Ch. (N. Y.) 149.



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In Buckingham v. McLean (1851) 13 How. (U. S.) 151, 14 L. ed. 91, the Supreme
Court said:
“ The reason why the addition of the current rate of exchange to the legal rate
of interest does not constitute usury is, that the former is a just and lawful com­
pensation for receiving payment at a place where the money is expected to be
less valuable than at the place where it is advanced and lent.”
Absorption of Exchange—Administrative Interpretations:
Let us now consider the historical development of the administrative concept
that absorption of exchange constitutes payment of interest in violation of section 19
of the Federal Reserve Act.
In 1935 the Reserve Board revised its Regulation Q (effective January 1, 1936)
to include the following definition of interest:
Section 1(f)— “ The term ‘interest’ means a payment, credit, service, or other
thing of value which is made or furnished by a bank as consideration for the use
of the funds constituting a deposit and which involves the payment or absorption
by the bank of out-of-pocket expenses (i.e., expenses arising out of specific trans­
actions for specific customers and definitely attributable to such transactions as
distinguished from overhead and general operating expenses), regardless of
whether such payment, credit, service, or other thing of value varies with or
bears a substantially direct relation to the amount of the depositor’s balance.
The term ‘interest’ includes the payment or absorption of exchange and col­
lection charges which involve out-of-pocket expenses, but does not include the
payment or absorption of taxes upon deposits whether levied against the bank
or the depositor nor the payment or absorption of premiums1 on bonds securing
deposits where such bonds are required by or under authority of law.
Notwithstanding the foregoing, the payment or absorption of isolated items
of out-of-pocket expense in trivial amounts and not of a regularly recurrent
nature, where the charging of such items to customers would cause undue friction
or misunderstanding, will not be deemed to be a payment of interest, provided
that the banks acts in good faith and does not utilize the absorption of such
items as a basis for soliciting accounts or obtaining an advantage over com­
petitors and provided further that the bank maintains and makes available to
the examiners authorized to examine the bank a record showing the amounts
of such items paid or absorbed by it, the dates of such payment or absorption,
and the names of the customers for whom such items were paid or absorbed.”
At about the same time the Federal Deposit Insurance Corporation issued a
revision of its interest Regulation IV, also to become effective January 1, 1936,
containing the following definition of interest:
Section 1(f)— “ The term ‘interest’ means a payment or credit which is made or
furnished by a bank as consideration for the use of the funds constituting a deposit.
The term ‘interest’ includes any direct or indirect payment by the bank of
the purchase price of premiums given to depositors or prospective depositors in
connection with obtaining deposits.
The term ‘interest’ does not include the payment or absorption of taxes upon
deposits, whether levied against the bank or the depositor, nor payment or
1 The provision permitting banks to pay and absorb the taxes for their depositors is supported by
later specific rulings of the Board to the same effect. Why the Board permits taxes to be paid and ab­
sorbed but prohibits banks from absorbing exchange can be explained only by the fact that the former
has no bearing upon the issue of par clearance. The provision relative to bond premiums constituted a
reversal of an earlier ruling by the Board. (Federal Reserve Bulletin (1933), p. 500).




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FEDERAL DEPOSIT INSURANCE CORPORATION

absorption of premiums on surety bonds securing deposits where such bonds are
required by or under authority of law.”
The Reserve Board requested the Federal Deposit Insurance Corporation to hold
its definition of interest in abeyance and deferred until further notice the effective
date of its own definition pending discussions between the two agencies with a view
to having the Federal Deposit Insurance Corporation issue its interest regulation
in language paralleling the Reserve Board’s Regulation Q. These discussions centered
on the question whether the payment or absorption of exchange or collection charges
constituted interest and this appears to have been the first time the issue was raised
between the two agencies. Their viewpoints were irreconcilable in this respect.
On January 20, 1936 the Federal Deposit Insurance Corporation advised the
Reserve Board by letter that “ both the practice of paying interest on demand
deposits and the practice of charging for exchange and collection and absorbing
such charges where the advantage lay existed long prior to the Banking Act of 1933
and thus far Congress has expressly prohibited only the former” , and that “ in the
present state of the law and the practices we are not prepared to say that the practice
which would be proscribed by Regulation Q is unsupported by principles of banking
specially applicable to the business of exchange.”
The Reserve Board announced in its January 1937 Bulletin (p. 11) that during
the preceding year it had given exhaustive consideration to the subject and “ as a
result of this consideration, has taken action fixing February 1, 1937” as the date
on which the definition of interest in its Regulation Q would become effective. In
its March 1937 Bulletin (p. 186) it announced that the effective date had been
postponed from February 1, 1937 to May 1, 1937 at the request of the Chairmen
of the Banking and Currency Committees of both Houses of Congress. In the same
Bulletin (p. 187) there was printed the February 12,1937 press release of the Reserve
Board and the Federal Deposit Insurance Corporation jointly announcing the
amendment of the Reserve Board’s Regulation Q and of the Federal Deposit Insur­
ance Corporation’s Regulation IV, and the addition to each Regulation of the
sentence:
“ Within this regulation, any payment to or for the account of any depositor
as compensation for the use of funds constituting a deposit shall be considered
interest.”
This joint press release included the following statement:
“ The Board of Governors, in its original definition of the term ‘interest’ (sec­
tion 1(f) ), specified that such term should include the payment or absorption
of exchange or collection charges which involve out-of-pocket expenses. The
present action of the Board of Governors removes this finding or specification from
its regulation.
Henceforth under both regulations the question of what in a particular case
is a payment of interest upon a demand deposit or a device to evade the prohibi­
tion against the payment of such interest, becomes, for both agencies, a matter
of administrative determination under the general law in the light of experience
and as specific cases may develop.” (Emphasis supplied).
This release was widely interpreted to constitute an abandonment by the Board
of its previous theory that absorption of exchange could be interest.
Absorption of exchange was a dead issue from 1937 until 1943. The Reserve
Board’s Bulletins contain no rulings on the subject during this long period. Many
member banks which had notified their customers in 1936 or 1937 that because of
Regulation Q they could no longer absorb exchange, withdrew their notices. The
practice of absorption continued to be a matter of individual bank policy until



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September 1943 when the ruling in the Lincoln case was published in the Reserve
Board’s Bulletin. Between 1937 and September 1943 thousands of examinations
of member banks were conducted by national and Federal reserve bank examiners.
From this it seems clear that for over 6 years the practice was at least tolerated if
not approved by the Comptroller of the Currency and the Federal Reserve Board.1
Throughout this period the Federal Deposit Insurance Corporation consistently
held to the position that absorption of exchange by insured nonmember banks in
connection with routine collection of checks could not be considered payment of
interest.
In October 1942 the Reserve Board notified the Federal Deposit Insurance
Corporation of the fact that the Comptroller of the Currency had requested a
ruling from it on the absorption of exchange by a national bank and suggested a
conference on the subject. Conferences were held between staff members at which
the Reserve Board outlined its proposed ruling substantially as later issued. The
Federal Deposit Insurance Corporation’s representatives at these conferences
restated the Corporation’s position on the question, asserting (1) that Congress
had not intended to treat absorption of exchange charges as interest, (2) that
exchange charges could not be differentiated from many other expenses which banks
absorbed for their customers and which all agencies agreed were not interest, and
(3) that the evil which Congress sought to eradicate by the restriction against
payment of interest was not present in absorption of exchange, as the amount of
exchange absorbed varies only as the dollar amount of checks issued by depositors
in non-par banks might vary and hence there could be no competitive bidding.
The Reserve Board’s ruling was published in September 1943. This ruling was
allegedly confined to the facts of a particular case and the Federal Deposit Insurance
Corporation did not learn that it was being used generally as a precedent against
all absorption of exchange until shortly before the hearings started before the House
Banking and Currency Committee last December. It then learned that based upon
this ruling action had been taken to outlaw all absorption of exchange by member
banks. In the meantime the legal staff of the Corporation had again reviewed the
question and in November, 1943 the General Counsel advised the Board of Directors
of the Corporation that routine absorption of exchange cannot be considered a
payment of interest within the terms of the interest regulations of the Federal
Deposit Insurance Corporation. Based upon this opinion the Federal Deposit
Insurance Corporation adopted a ruling on the subject, of which a copy, together
with the General Counsel’s opinion, is attached hereto. It will be noted that this
ruling contained the qualification that it was applicable “ in the absence of facts
or circumstances establishing that the practice is resorted to as a device for the
payment of interest.”
This clause had no special significance. The purpose of including it was to follow
the wording of the law, in case the ingenuity of man devised schemes for payment
of interest under the guise or pretense of absorbing exchange. We had in mind no
hypothetical state of facts which would bring a case of absorption of exchange
within the statute prohibiting payment of interest where it is absorbed by a bank
in connection with its routine collection of checks.
1 The September 1943 ruling appears to have the practical effect of reinstating the specification
which the Reserve Board had removed from its Regulation in 1937, with the same unfortunate con­
sequences which Mr. Justice Roberts referred to in the recent case of Maknich v. So. Steamship Co.
(1944) 321 U. S. 96, 88 L. ed. 561, when he said: “ The evil resulting from overruling earlier considered
decisions must be evident. In the present case, the court below naturally felt bound to follow and apply
the law as clearly announced by this court. If litigants and lower federal courts are not to do so, the law
becomes not a chart to govern conduct but a game of chance; instead of settling rights and liabilities
it unsettles them. Counsel and parties will bring and prosecute actions in the teeth of the decisions that
such actions are not maintainable on the not improbable chance that the asserted rule will be thrown
overboard. . . . But the more deplorable consequence will inevitably be that the administration of justice
will fall into disrepute. Respect for tribunals must fall when the bar and the public come to understand
that nothing that has been said in prior adjudication has force in a current controversy” .




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FEDERAL DEPOSIT INSURANCE CORPORATION

As a result of the detailed elaboration of the practice which is contained in the
record of the hearings on this Bill before the House Committee, this Corporation
concluded that the foregoing qualification is unnecessary and possibly leaves open
to some doubt the true intention of the Corporation in making its ruling. Accord­
ingly, it recently amended its ruling to read as follows:
“ The absorption of normal or customary exchange charges by an insured
nonmember bank, in connection with the routine collection for its depositors of
checks drawn on other banks, does not constitute the payment of interest within
the provisions of Section 304.2 (a) of Part 304 of the Corporation’s Rules and
Regulations” .
No actual case of absorption of exchange has come to our attention which would
not be exempt under this latest ruling of the Corporation. However, we wish to
emphasize that this represents merely a change in phraseology and does not represent
a change in the position which this Corporation has consistently adhered to since
the enactment of the Banking Act of 1935—the Act which directed the Board of
Directors of the Corporation to prohibit, by regulation, the payment of interest
on demand deposits in insured nonmember banks.
The Federal Reserve Board’s September 1943 ruling has been the subject of a
recent “ interpretation” , promulgated by the Board, in which absorption of exchange
is declared not prohibited if not offered “ as compensation for the use of funds on
deposit.” This “ interpretation” serves only to confound the confusion precipitated
by the original ruling. Under this “ interpretation” every bank examination will give
rise to a dispute; and, in practice, will result—as is evident from what has transpired
in the few months since the September ruling—in banks ceasing all absorption.
No bank will expose itself to criticism under an “ interpretation” which furnishes
it no standard whereby it may determine whether in any given case it has crossed
the line of transgression. It serves no purpose and resolves no question to say that
“ compensation for the use of funds” is interest. This is only to state the obvious.
The question remains whether it is accurate to hold that absorption of exchange,
as known to bankers and as ordinarily practiced by them in the course of normal
service to a depositor or a correspondent bank, can ever be “ compensation for the
use of funds” and consequently interest. If exchange absorption, under any of the
circumstances in which it is customarily practiced, can be considered as interest,
how can absorption of service charges or taxes upon a depositor’s bank balance
be free of the prohibition by blanket absolution? If exchange absorption constitutes
a violation only when employed as a competitive device for “ the solicitation of
deposits” , how can absorption of service charges, when similarly employed, be given
official sanction?
Even if our concept of the Congressional intent be wrong, the evidence adduced
at the hearings before the House Banking and Currency Committee has fully
convinced us that the absorption of exchange by a correspondent bank by arrange­
ments with another bank involves no interest because the bank which absorbs the
exchange is usually a complete stranger to the depositor-owner of the check, who
is the person ultimately benefited by the absorption.
Where a correspondent bank absorbs exchange charges on items forwarded for
collection from non-par banks by another customer-bank, the amount absorbed
cannot constitute a prohibited “ payment of interest on demand deposits” because
the forwarding customer-bank acts as agent for its depositors in collecting the checks
drawn on the non-par banks and as it derives no financial benefit from the absorption
cannot be said to receive a “ payment” ; while its depositors who derive the benefit
of the absorption are not depositors of the absorbing bank as they maintain no
deposits with it.



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We wish to comment briefly at this point on one aspect of our view of the law.
The avowed purpose of the prohibition against payment of interest on demand
deposits was to curb speculative use of bank funds attracted to large money centers
by attractive interest rates. This condition resulted from the complete absence of
regulation of the use of borrowed funds for speculative purposes. The Banking Act
of 1933 took member banks out of the business of speculating in securities. It
divorced them and their officials from their securities affiliates. The Securities Act
of 1933 (Public, No. 22, 73rd Congress, 48 Stat. 74) and the Securities Exchange
Act of 1934 (Public, No. 291, 73rd Congress, 48 Stat. 881), not only brought under
government supervision the distributors of securities and stock exchanges, but also
gave the Board of Governors of the Federal Reserve System broad power to regulate
the use of credit for the purchase or carrying of securities. The Reserve Board has
exercised this power through its Regulations T and U.
But again we suggest that even in the absence of these specific safeguards, the
free absorption of exchange cannot bring about even a slight recurrence of the
attraction of bank funds to money centers. The amount of exchange absorbed
depends upon two factors over which the banks which absorb exchange have no
direct control. The first is the rate of exchange which by long usage has customarily
been charged at not over 3^ of 1 % of the aggregate amount of checks presented and
paid and is limited by law in seven states1 where 1020 non-par banks out of the
total of 2529 are situated. The second is the dollar amount of the checks which
individual customers of non-par banks will send to out of town points, a matter
which is governed entirely by the purchasing power and practices of the customers
of these banks. While the dollar volume of these checks may vary from year to
year, it will not be increased by the amount of exchange which banks may absorb
or the number of banks which absorb it. The forces of competition always have
controlled and will continue to control the exchange rate, and the economic cir­
cumstances of non-par bank customers will control the number and amounts of
their checks.
If this legislation is passed these natural laws and forces will work without inter­
ference. If any bank should make unwise engagements with its customers, the
situations can be handled with complete effectiveness, where necessary, by ordinary
bank supervisory methods as easily as other operating problems involving matters of
judgment are now handled.
For the purpose of encouraging opposition to the measure, many appeals have
been made to banks expressing fear that the program to achieve universal par
clearance would be jeopardized if the proposed law should be enacted. Any ad­
ministrative effort to compel banks to remit at par on clearings which do not pass
through the Government-controlled Federal Reserve banks is wholly illegal and
contrary to the Act of Congress expressly authorizing member banks to charge
exchange to which we have already referred. {Farmers & Merchants Bank of Monroe
v Federal Reserve Bank of Richmond, 262 U. S. 649.) In this field par clearance is
strictly a matter of voluntary choice on the part of the banking system. Compulsion
may not be used directly or indirectly, however desirable universal par remittance
may seem.
For these reasons I advise the Board of Directors of this Corporation to recom­
mend favorable action upon the Bill in question.
F r a n c is C . B r o w n

General Counsel
i Florida, Georgia, Louisiana, Mississippi, North Carolina, South Dakota and Tennessee.




FEDERAL DEPOSIT INSURANCE CORPORATION

92

RULING OF THE BOARD OF DIRECTORS OF THE
FEDERAL DEPOSIT INSURANCE CORPORATION
ADOPTED DECEM BER 6, 1943
R e : A b s o r p t io n o f E x c h a n g e C h a r g e s a s
P a y m e n t of I n t e r e s t

The Federal Deposit Insurance Corporation recently has received a number of
inquiries from insured banks concerning whether the absorption by insured non­
member banks of exchange charges imposed by other banks on checks deposited
by customers for collection or clearance constitutes a payment of interest in violation
of the Corporation’s interest regulations, Code of Federal Regulations, Title 12,
Part 304 (Section 304.2).
The Board is of the view that the absorption of exchange charges by an insured
nonmember bank in connection with its routine collection for its depositors of checks
drawn on other banks cannot be considered a payment of interest, within the terms
of the interest regulations of the Federal Deposit Insurance Corporation, in the
absence of facts or circumstances establishing that the practice is resorted to as a
device for the payment of interest.
Attached hereto is a copy of the memorandum opinion of the General Counsel
for the Corporation on this question.
November 24, 1943
M em orandum—
Q u e s t io n :

Does the Absorption by an Insured Bank of Exchange Charges Con­
stitute a Payment of Interest Prohibited by the Regulations of the Federal
Deposit Insurance Corporation?

The Federal Deposit Insurance Corporation recently has received a number of
inquiries from insured banks concerning whether the absorption by insured non­
member banks of exchange charges imposed by other banks on checks deposited
by customers for collection or clearance constitutes a payment of interest in violation
of the Corporation’s interest regulations, Code of Federal Regulations, Title 12,
P^rt 304 (Section 304.2).
The renewed inquiries concerning"this"question appear to be prompted by recent
publicity given to a ruling of the Board of Governors of the Federal Reserve System
interpreting the provisions of its Regulation Q. The interest regulations of the
Federal Deposit Insurance Corporation are applicable only to insured banks which
are not members of the Federal Reserve System, whereas Regulation Q is applicable
only to member banks of that system.
The Corporation’s interest regulations provide that with certain exceptions not
here applicable, “ no insured nonmember bank shall directly or indirectly, by any
device whatsoever, pay any interest on any demand deposit” , and that “ any pay­
ment to or for the account of any depositor as compensation for the use of funds
constituting a deposit Jshall be considered interest.” The question presented is
whether the absorption of exchange charges constitutes a “ payment to or for the
account” of the insured bank’s customers and if so, whether such payment is “ as
compensation for the use of funds constituting a deposit.” If both of these questions
are answered in the affirmative, the act of absorbing the exchange charge would be
a prohibited payment of interest; otherwise, it would not be a violation of the
regulation.



ABSORPTION OF EXCHANGE CHARGES

93

The absorption of exchange charges arises out of the collection of checks drawn
on out-of-town banks which are not cleared through the Federal Reserve banks
and for which the drawee bank makes a charge against the collecting bank. These
checks are deposited by the payees or endorsees in other insured banks which
forward them for collection to the drawee banks. The latter remit the face amount
of these checks less their charges for clearing or honoring the checks. The collecting
banks absorb the difference between the face of the checks and the amount remitted,
which is the amount of the exchange so deducted. More than 2100 insured com­
mercial banks not members of the Federal Reserve System do not clear such checks
at par and thus are listed by the Federal Reserve banks as “ non-par” banks. In
addition, many other banks, both members and nonmembers of the Federal Reserve
System which clear at par through the Federal Reserve banks, make a practice of
charging exchange on so-called “ direct sendings” , i.e., items forwarded by cor­
respondent banks directly rather than through the Federal Reserve banks.
It is our opinion that the absorption of exchange charges by an insured non­
member bank in connection with its routine collection for its depositors of checks
drawn on other banks cannot be considered a payment of interest, within the terms
of the interest regulations of the Federal Deposit Insurance Corporation, in the
absence of facts or circumstances establishing that the practice is resorted to as a
device for the payment of interest.
The reasons for this opinion are as follows:
(1)
The absorption of expenses in connection with handling a depositor’s account
under the law is not ordinarily a payment to or for the account of the depositor.
Banks customarily absorb many expenses in connection with the handling of cus­
tomers’ accounts which the law recognizes to be investments in customer good
will. Therefore, these are expended for the account of the bank rather than for the
account of its depositors, even though the depositors may derive benefit therefrom.
Thus, for valued customers, banks frequently absorb expenses such as telephone
and telegraph charges, postage, clerk and teller hire, and the cost of printing check
forms.
Most banks have installed schedules of service charges to be levied upon deposit
accounts. While numerous differences of detail obtain, the common rule underlying
such schedules is that the deposit is worth something to the bank and the bank
will absorb costs of handling the account up to the average worth of the account
on the basis of an assumed rate of return on an investment of the account. In most
cases, a basic charge is made for any account which is not kept above a certain
minimum balance. For such charge, or the maintenance of such minimum balance,
a certain number of items, i.e., checks or deposits, are handled. Items in excess of
the minimum allowed, if not compensated for by larger balances, are charged for
at published or established rates. In a large proportion of the banks which use this
“ measured” system of service charges, the larger accounts, or the more active
accounts, are also subjected to analysis to determine the cost or profit to the bank
of handling such accounts, and the customer is charged accordingly. In many other
banks all service charges are based upon account analysis regardless of size of the
account. Approximately 70 percent of the clearing houses participating in a survey
conducted by the American Bankers Association in 1938 reported use of account
analysis in levying service charges upon depositors. (“ Service Charge Survey, 1938”
Bulletin 77, January 1939, American Bankers Association.) Under this latter
system, charges are made against the account for all costs incurred by the bank in
handling the account and credit is given for the amount which the account earns
for the bank. These costs include exchange and collection costs absorbed, book­
keeping and transit costs of handling items deposited or checks or drafts drawn,



94

FEDERAL DEPOSIT INSURANCE CORPORATION

and charges for miscellaneous services such as collecting notes, handling out-oftown collections, transferring money by wire or otherwise, or providing credit
information. So long as the worth of the account to the bank exceeds the cost of
performing services, no charge is levied against the customer.
Where exchange charges are absorbed within the frame-work of schedules of
service charges, and the motive is only to establish, maintain, or strengthen customer
good will rather than to attract funds for money consideration, such absorption
cannot be differentiated from the absorption of other ordinary items of expense,
including internal expenses (such as rents, clerk hire, etc.) connected with handling
a customer’s account.
(2) Exchange charges are expenses of collecting items drawn against banks which
regularly make a practice of imposing such charges and thus are comparable to the
costs of maintaining clearing houses, hiring messengers, and other expenses of like
character connected with normal check-clearing activities which are customarily
absorbed as part of the operating expenses of banks, even though these charges
may enter into computations forming the basis for service charges which when
collected constitute operating income of the bank.
(3) The feature of progressive competitive bidding characteristic of interest is
lacking in the case of absorption of exchange charges, as the amount of the exchange
charge is fixed not by the depository bank but by the non-par drawee bank and
would not vary as between depositories regardless of the bank selected as the
collecting medium.
(4) Although the practice of absorbing exchange charges antedated the legislation
on which the Corporation’s interest regulations are predicated, no suggestion may
be found in the legislative record or history of this provision to indicate any purpose
on the part of Congress to permit any regulations of the practice of charging ex­
change in connection with the regulation of interest. Any restriction against ab­
sorption of exchange charges would naturally act as a direct deterrent to the im­
position of such charges by the many banks which now impose them. In view of
the well-known and turbulent history of the par-clearance issue and the absence of
a specific congressional mandate, it seems evident that Congress did not authorize
the Corporation to hold that the absorption of exchange charges in the ordinary
course of business constitutes payment of interest.
This opinion will not apply to cases where the particular circumstances are such
as to establish that the practice has been resorted to deliberately as a device for
the payment of compensation to a depositor for the use of his funds.




F r a n c is

C. B r o w n
General Counsel

ABSORPTION OF EXCHANGE CHARGES

95

LETTER TO THE CHAIRMAN, SENATE COM M ITTEE ON
BANKING AND CURRENCY
January 3, 1945
T h e H o norable R obert

F. W a g n e r

United States Senate
Washington, D. C.
M y dear Senator Wagner:
I am informed that the Senate Banking and Currency Committee closed the
hearings on the Maybank Bill, S. 1642 on Friday, December 15, 1944 and gave
permission to all interested parties, including this Corporation, to file statements
of their views, if they so desired, on or before December 21, 1944. It was impossible
for me to file a statement by December 21 owing to a number of pressing matters
which were occupying my time, and permission was granted me to file the statement
at a later date in order to give me a reasonable opportunity to consider the matter.
I understand that it was necessary to limit the hearings due to the fact that they
were started a few days before the Seventy-eighth Congress adjourned, and that
many witnesses desiring to testify could not be heard. I also understand that the
hearings were discontinued following the action of the Senate on the Maybank
amendment to the Crop Insurance Bill and that the Committee had no opportunity
to consider many aspects of the bill before adjournment and that it did not act
upon the measure. In view of these facts, I have concluded that there will be no
purpose in my filing a detailed statement of my views on the Maybank bill, as it
would simply be incorporated in the record without having been actually considered
by the Committee.
However, I believe a bill such as the Maybank Bill should be enacted to prevent
disruption of the time-honored business practice of nonpar banks and to permit
banks to absorb on a voluntary basis exchange charges, as well as other expenses
connected with the handling of their depositors’ accounts, in the same manner as
they have been doing for the past ten years and longer, and as many of them are
doing today. I think the present situation is particularly unfortunate because it is
common knowledge that member banks in some areas are freely absorbing exchange
charges whereas member banks in other areas are being prevented from doing so,
so that aside from having no legal foundation, the administrative rule against
absorption of exchange is not being uniformly applied to all member banks.
As even the American Bankers’ Association which opposed the Maybank-Brown
bills has recommended that the existing practice not be changed abruptly, and that
the entire problem be studied, it seems probable that the new Congress will wish
to act on this matter in some way. Therefore, I have concluded not to exercise the
privilege which you have kindly afforded me of filing a statement at this time.
However, I will be very happy to submit testimony on any measure which may be
offered in the new Congress dealing with this subject. Anyone desiring to know my
views on this subject in greater detail is referred to my testimony before the House
Banking and Currency Committee appearing in the printed hearings on the Brown
Bill (H. R. 3956) at pages 112 to 132, 150 to 155, and 669 to 694.
I would appreciate it very much if you would have this letter made a part of the
record in the event the hearings before the Senate Banking and Currency Com­
mittee of the Seventy-eighth Congress on the Maybank Bill are to be printed.
Yours very truly,




(Signed) L e o T . C r o w l e y
Chairman

FEDERAL DEPOSIT INSURANCE CORPORATION

96

R e g u l a t io n s o f t h e C o r p o r a t io n *
PART 302— ASSESSMENTS
As Amended June 15, 19kk
Section 302.1* * *.
302.2* * *.
302.3 Payment of assessments by banks whose insured status has termi­
nated— (a) Assumed deposits of terminating bank become deposits of
assuming bank. The deposit liabilities of one bank, if assumed by a second insured
bank, will, except to the extent that depositors of the first bank by affrmative action
signify their express intention to hold the first bank liable as a debtor, be presumed
for assessment purposes to cease being deposit liabilities of the first bank on the date
the assumption becomes effective, Provided, the requisite notice of assumption be
given to the depositors. The assumed deposits, for assessment purposes, are deposit
liabilities of the assuming bank from the date of assumption, whether or not the
requisite notice of assumption has been given to the depositors.
(b) Payment of assessments by assuming bank on assumed deposits of
terminating bank. Where the deposit liabilities of an insured bank are assumed
by another insured bank and the assuming bank agrees to file the certified statement
which the terminating bank is required to file, the filing of such certified statement
and the payment of the assessment thereon by the assuming bank shall be deemed
the acts of the terminating bank: Provided, the requisite notice of assumption be
given to the depositors of the terminating bank and, Provided further, That such
certified statement shall be filed separately from that required to be filed by the
assuming bank.
(c) Resumption of insured status before insurance of deposits ceases.
If a bank whose insured status has been terminated under paragraphs (1) or (2) of
subsection (i), of section 12B of the Federal Reserve Act, as amended (12 U. S. C.
264 (i) (1) and (2) ), makes application to the Corporation, before the insurance of
its deposits shall have ceased, to be permitted to continue or to resume its status
as an insured bank and if the directors grant the application, the bank will be
deemed, for assessment purposes, to continue as an insured bank and must thereafter
furnish certified statements and pay assessments as though its insured status had
not been terminated.

PART 303— ADVERTISEMENT OF MEMBERSHIP
As Amended January 27, 19kk
Section 303.0* * *.
303.1 Mandatory requirements with regard to the official signs and their
display— (a) * * *.
(b) Official sign. The official sign referred to in paragraph (a) of this section
shall be seven inches by three inches in size, and shall be of the following design:
1
A new print, revised as of July 15, 1944, is available upon request. The Rules and Regulations of
the Corporation are to be found in Chapter III, Title 12 of the Code of Federal Regulations.




REGULATIONS OF THE CORPORATION

97

D E P O S IT S IN S U R E D
BY

The Federal Deposit Insurance Corporation
WASHINGTON, D. C.

cennn
fd U U U

m a x im u m in s u r a n c e

FOR EACH DEPOSITOR

ccnnfl
$*>UUU

Any insured bank may procure the standard signs from the Corporation or may
use any other sign of the same size, wording and appearance which shall have been
approved in writing by the Corporation as conforming to the requirements of this
section. Such approval will be given only in individual cases where the standard
sign does not harmonize with the bank’s counters and fixtures or where it cannot
be adequately displayed because of the type of construction of the bank’s counters
or fixtures.
The Corporation shall furnish to banks an order blank for use in procuring the
official signs. Any bank which promptly, after receipt of the order blank, fills it in,
executes it, and properly directs and forwards it to the Federal Deposit Insurance
Corporation, Washington, D. C., shall not be deemed to have violated this regulation
on account of not displaying an official sign or signs, unless the bank shall omit to
display such official sign or signs after same have been tendered to the bank through
the instrumentality of the United States mail or otherwise.
(c) * * *.

(d) * * *.
303.2
Mandatory requirements with regard to the official advertising
statement and manner of use— (a) Insured banks to include official ad­
vertising statement in advertisements of types enumerated. Each insured
bank shall include the official advertising statement, prescribed in paragraph (b)
of this section, in advertisements issued or caused to be issued by it after November
20, 1936, of the types enumerated in paragraph (c) of this section as being of the
class in which the official statement is required to be included.
No bank which becomes an insured bank after October 26, 1936, is required to
include the official advertising statement in such advertisements until 60 days after
its first day of operation as an insured bank.
In cases where the Board of Directors of the Federal Deposit Insurance Cor­
poration shall find the application to be meritorious; that there has been no neglect
or wilful violation in the observance of this paragraph, and that undue hardship
will result by reason of its requirements, the Board of Directors may grant a tem­
porary exemption from its provisions to a particular bank upon its written ap­
plication setting forth the facts.
In cases where advertising copy not including the official advertising statement
is on hand on the date the requirements of this paragraph become operative, the
insured bank may cause the official advertising statement to be included by use
of a rubber stamp or otherwise.




98

FEDERAL DEPOSIT INSURANCE CORPORATION
PART 306—AGENTS FOR SERVICE OF PROCESS
As Amended January 2 7 ,19M

Section 306.1 Agents for service of process. The board of directors has desig­
nated an agent upon whom service of process may be made in each state, territory
and other jurisdiction in which an insured bank is located. A current list containing
the names and addresses of such agents is kept on file in the Office of the Corpora­
tion, Washington, D. C.; a current list of such agents in each Federal Deposit
Insurance district is kept on file in the office of the supervising examiner for the
district; and, the name and address of such agent for each state, territory and
jurisdiction are on file with the secretary of state or corresponding official in such
state, territory or jurisdiction. Persons desiring to serve process upon the Federal
Deposit Insurance Corporation may obtain the name and address of the proper
agent by communicating with such local official, the supervising examiner for the
district, or the Federal Deposit Insurance Corporation, Washington, D. C.

PART 309—VOLUNTARY TERMINATION OF INSURED STATUS
Adopted March 1 7 ,1 9M
Sec.
309.1 Steps to be taken and records to
be furnished the Corporation
by an insured nonmember
bank in liquidation.

Sec.
309.3 Steps to be taken and records to
be furnished the Corporation
where deposits are assumed by
another insured bank.

309.2 Steps to be taken and records to
be furnished the Corporation
by a member bank in liquida­
tion (both state and national).
Section 309.1 Steps to be taken and records to be furnished the Cor­
poration by an insured nonmember bank in liquidation (a) Whenever a non­
member bank goes into liquidation and its insured status has not been terminated
by the board1 and its deposit liabilities are not assumed by another insured bank,
it shall terminate its status as an insured bank in accordance with the provisions
of paragraph (1), subsection (i) of section 12B of the Federal Reserve Act,
as amended.2 To effect such termination the bank shall adopt a resolution in form
substantially as follows:
“ R esolved:

(1) that the status of the..................................................................
(Name of bank)

..............................................as an insured bank under the provisions of section
(City or town)

(State)

12B of the Federal Reserve Act, as amended, shall terminate ninety (90) days
from the date of the receipt by the Federal Deposit Insurance Corporation of
a copy of this resolution;3
1 Board means board of directors of the Federal Deposit Insurance Corporation.
2 The Federal Deposit Insurance Act (12 U. S. C., 264) provides in subsection (i) (1), in part, as
follows: “ Any insured bank (except a national member bank or State member bank) may, upon n ot
less than nin ety days’ w ritten n otice to the C orporation, and to the Reconstruction Finance Cor­
poration if it owns or holds as pledgee any preferred stock, capital notes, or debentures of such bank,
terminate its status as an insured bank. * * * After the termination of the insured status of any bank
* * * the insured deposits of each depositor in the bank on the date of such termination, less all sub­
sequent withdrawals from any deposits of such depositor, shall continue for a period of two years to be
insured, and the bank shall continue to pay to the Corporation assessments as in the case of an insured
bank during such period. * * *” (Bold face supplied.)
* If the bank desires to fix a later date of termination, it may do so as the law prescribes only the
minimum notice period which is 90 days.




REGULATIONS OF THE CORPORATION
(2) that............................................................................. is
(Cashier or other officer)

99

hereby

directed

to

immediately forward a certified copy of this resolution to the Federal Deposit
Insurance Corporation, Washington, D. C., which shall constitute the notice
of termination prescribed in paragraph (1), subsection (i) of said section 12B.”
Upon receipt of a certified copy of the aforesaid resolution the Corporation will
promptly advise the bank of the date of the receipt thereof, and confirm the date
of the termination of its insured status.
Thereupon, and prior to the termination date, the bank shall give notice to its
depositors of the termination of its insured status. Such notice shall be (1) mailed
to each depositor at his last address of record as shown upon the books of the bank;
(2) published in not less than two issues of a local newspaper of general circulation,
and (3) in form substantially as follows:
«
<
(Date)
N o t ic e t o D e p o s i t o r s :
P l e a s e b e a d v is e d

that the status of the..............................................................
(Name of bank)

..........................................................as an insured bank under the provisions of
(City or town)

(State)

section 12B of the Federal Reserve Act, as amended, will terminate on the..........
day o f......................................,1 9 .........
Y ou a r e F u r t h e r A d v is e d that your insured deposits in this bank on the
date of termination will continue to be insured within the limitations provided
by law.
(Name of Bank)
(Address)"

(There may be included in such notice any additional information or advice the
bank may deem desirable.)
(b) The bank shall furnish to the Corporation the following records and in­
formation:
(1) An affidavit of the mailing and an affidavit of the publication of the notice
to depositors. The affidavit of mailing should be executed by the person mailing
the notice and should state (a) the date of mailing, (b) that it was mailed to each
depositor at his last address of record as shown on the books of the bank and (c) that
a copy of the notice as mailed is attached.
(2) A certified copy of the resolutions pursuant to which the bank was placed
in liquidation and/or any other document or instrument required by law to place
the bank in liquidation.
(3) The bank shall continue to file certified statements and pay assessments
thereon for the period its deposits are insured, as provided by the Federal Deposit
Insurance Law:4 Provided, That after the bank shall have paid in full its deposit
liabilities and the assessment to the Corporation required to be paid for the semi­
annual period in which its deposit liabilities are paid in full, and after it shall under
applicable law have ceased to have authority to transact a banking business and
to have existence except for the purpose of, and to the extent permitted by law for
winding up its affairs, it shall not be required to file further certified statements
nor to pay further assessments.
(4) When the deposit liabilities of the bank shall have been paid in full, the bank
shall furnish to the Corporation an affidavit executed by two of its officers, which
* See footnote number 2.




100

FEDERAL DEPOSIT INSURANCE CORPORATION

affidavit shall state the fact that the deposit liabilities have been paid in full and
give the date of the final payment thereof.5
(5) Where the bank has unclaimed deposits the affidavit to be furnished pursuant
to the preceding paragraph, shall further state the amount of such unclaimed
deposits and the disposition made of the funds to be held to meet such claims. For
assessment purposes, the following will be considered as payment of such unclaimed
deposits, viz:
(i) the transfer of cash funds in an amount sufficient to pay such unclaimed
and unpaid deposits to the public official authorized under the law to receive
the same; or
(ii) if no provision is made by law for the transfer of funds to a public official,
the transfer of cash funds or compensatory assets to an insured bank in an amount
sufficient to pay the unclaimed and unpaid deposits in consideration of such
insured bank assuming the payment thereof: Provided, That, prior to such
transfer, the liquidating bank shall have given notice, as hereinafter provided,
to the owners of the unclaimed deposits of the intended transfer and a reasonable
time shall have elapsed after the giving of such notice to enable the depositors
to obtain their deposits. Such notice shall be mailed to each depositor and shall
be published in a local newspaper of general circulation. The notice shall advise
such depositors of the liquidation of the bank; shall request them to call for and
accept payment of their deposits; and shall state the disposition to be made of
their deposits upon their failure to promptly claim the same.
If such unclaimed and unpaid deposits are disposed of as provided in (i) above,
a certified copy of the public official’s receipt issued for such funds shall be furnished
to the Corporation. If such unclaimed and unpaid deposits are disposed of as pro­
vided in (ii) above, an affidavit of the publication and of the mailing of the notice
to depositors, together with a copy of such notice, and a certified copy of the contract
of assumption shall be furnished to the Corporation.
(6) The liquidating bank shall advise the Corporation of the date on which the
authority or right of the bank to do a banking business shall have terminated and
the method or means whereby such termination shall have been affected, that is,
whether such termination has been effected by the surrender of its charter, by the
cancellation of its authority or license to do a banking business by the supervisory
authority, or otherwise.6
309.2
Steps to be taken and records to be furnished the Corporation
by a member bank in liquidation (both state and national), (a) Whenever
a bank which is a member of the Federal Reserve System goes into liquidation and
its insured status has not been terminated by the board7 and its deposit liabilities
are not assumed by another insured bank, it shall notify its depositors of the date
of the termination of its insured status.8 Such notice shall be in the form prescribed
in the preceding section and shall be given at the time and in the manner therein
provided.
5
The issuance of a draft or officer's check does not constitute the discharge of a deposit liability
or relieve the bank of assessment until such draft or other evidence of payment has been duly presented
for payment and has been paid.
8 As the governing law of the various jurisdictions is not uniform in this respect, it is suggested
that the applicable statute be consulted and that this Corporation be advised of the manner in which
the termination or cancellation of such authority has been effected.
7 See footnote number 1.
8 Said subsection (i) (2) provides, in part, as follows: “ Whenever a member bank shall cease to be
a member of the Federal Reserve System, its status as an insured bank shall, without notice or other
action by the board of directors, terminate on the date the bank shall cease to be a member of the Federal
Reserve System, with like effect as if its insured status had been terminated on said date by the board
of directors after proceedings under paragraph (1) of this subsection.” Section 10, subsection (c) of
regulation H of the Board of Governors of the Federal Reserve System provides, in part, as follows:
“ A bank's withdrawal from membership in the Federal Reserve System is effective on the date on which
the Federal Reserve bank stock held by it is duly canceled.”




REGULATIONS OF THE CORPORATION

101

(b) The bank shall furnish to the Corporation the records and information
mentioned in, and comply with the requirements of, subsection (b) of the preceding
section.
309.3
Steps to be taken and records to be furnished the Corporation
where deposits are assumed by another insured bank.9 (a) Whenever the
deposit liabilities of an insured bank are assumed by another insured bank, the bank
whose deposits are assumed or the assuming bank as its agent shall give notice to
its depositors of such assumption. Such notice shall be (1) mailed to each depositor
at his last address of record as shown upon the books of the bank; (2) published in
not less than two issues of a local newspaper of general circulation, and (3) in form
substantially as follows:
(Date)
N o t ic e t o D e p o s i t o r s :
P l e a s e b e a d v i s e d that the deposit liabilities shown on the books of the
undersigned bank as of the close of business o n ....................................... 19___
have been assumed by the
(Name of assuming bank)

(city or town)

(State)

and that the status of the undersigned bank as an insured bank will therefore
terminate as provided in section 12B (i) (4) of the Federal Reserve Act,
as amended.
Y ou

a r e f u r t h e r a d v is e d

that.............................................................................
(Name of assuming bank)

is an insured bank and that your deposits will continue to be insured by the
Federal Deposit Insurance Corporation in the manner and to the extent provided
in said Act.
.................................................. 10

(Name of bank)
(Address)’ *

(There may be included in such notice any additional information or advice
the bank may deem desirable.)
The bank shall furnish to the Corporation an affidavit of mailing and an affidavit
of publication of the notice to depositors. The affidavit of mailing should be in the
form prescribed in paragraph (1), subsection (b) of section 309.1.
(b)
The liquidating bank shall continue to file certified statements and pay
assessments thereon for the period its deposits are insured, as provided by the
Federal Deposit Insurance Law: Provided, That if the liquidating bank, or the
assuming bank as its agent, has given the requisite notice to the depositors of the
assumption of the deposit liabilities within thirty days after such assumption takes
effect, then the liquidating bank shall file a final certified statement, which statement
shall be executed to reflect its average daily deposit liabilities for the semiannual
period in which its deposit liabilities are assumed and shall pay to the Corporation
the normal assessment thereon.1
1
9 Said subsection (i) (4) provides, in part, as follows: “ Whenever the liabilities of an insured bank
for deposits shall have been assumed by another insured bank or banks, the insured status of the bank
whose liabilities are so assumed shall terminate on the date of receipt by the Corporation of satisfactory
evidence of such assumption with like effect as if its insured status had been terminated on said date by
the board of directors after proceedings under paragraph (1) of this subsection: Provided, That if the
bank whose liabilities are so assumed gives to its depositors notice of such assumption within 30 days
after such assumption takes effect by publication or by any reasonable means, in accordance with regula­
tions to be prescribed by the board of directors, the insurance of its deposits shall terminate at the end
of 6 months from the date such assumption takes effect, and such bank shall thereupon be relieved of all
future obligations to the Corporation, including the obligation to pay future assessments.”
1 If this notice is given by the assuming bank as agent for the liquidating bank, it may add its own
0
name designating itself as agent.
1 See section 302.3 of part 302 of these Rules and Regulations.
1




102

FEDERAL DEPOSIT INSURANCE CORPORATION

(c) The Corporation will consider receipt of the following as satisfactory evidence
of such assumption:
(1) A certified copy of the resolution (a) duly authorizing the bank’s officers
to enter into a contract for the sale of the bank’s assets to another insured bank
upon the consideration of the assumption by it of the deposit liabilities, and (b)
duly placing the bank in liquidation.
(2) A certified copy of the assumption agreement, provided it contains an express
undertaking by an insured bank to pay the deposit liabilities of the bank going into
liquidation.
(d) The bank shall furnish to the Corporation the information called for in
paragraph (6), subsection (b) of section 309.1.

St a t e Le g is l a t io n R e l a t in g
and b a n k

to bank

Su p e r v is io n

O p e r a t io n s

Regular sessions of State legislatures were held during 1944 in nine states. All
but ten State legislatures held extra or special sessions which were devoted prin­
cipally to the enactment of war legislation. Many of the legislatures enacted statutes
beneficial to persons in military service and protecting others in their dealings with
them, such as acts relating to proof of wills of persons in military service, appoint­
ment of conservators or interim trustees, and acts validating actions taken under
powers of attorney of such persons. The Legislatures of Kentucky and Mississippi
enacted statutes (Kentucky Ch. 15, Mississippi Ch. 253) for the purpose of con­
forming their laws to Executive Order No. 9112 of March 26, 1942, and Federal
Reserve Regulation V so as to exclude from statutes prescribing bank loan limita­
tions loans which are guaranteed by commitments to purchase same given by
Federal Reserve banks, the United States or agencies thereof (including wholly
owned corporations).
Some of the more important subjects dealt with by State legislation during 1944
are listed below.
AFFECTING BANKING AND SUPERVISORY AUTHORITY

Internal functions:
Abolishing the office of general attorney for the banking department, directing
the Attorney General to advise the department on legal matters, and au­
thorizing the State Comptroller, with Attorney General’s approval, to employ
special counsel in litigation....................................................Mississippi (Ch. 260)
Increasing from two-thirds to three-fifths the percentage of votes required for
action by the banking board in discharging various duties. .New York (Ch. 52)
Banks in financial difficulties:
Amending provisions relating to circumstances under which superintendent may
take possession of banking institutions..................................New York (Ch. 40)
Providing that on petition of superintendent showing that a bank has ceased to
transact business, or not completed voluntary dissolution, or abandoned and
forfeited its charter and has distributed its assets a court may order such bank
dissolved and terminated. Providing for the disposition of securities of such
banks deposited with the superintendent after the expiration of prescribed
period....................................................................................... New York (Ch. 40)



STATE LEGISLATION

103

Banks in financial difficulties:— Continued
Providing that statements executed and acknowledged by superintendent and
setting forth extracts from records of or relating to banking organizations in his
possession shall be received in evidence with the same effect as the original
..................................................................................................... New York (Ch. 40)
Other:
Making the commissioner of banking and insurance the lawful attorney for
service of process against foreign banking institutions and national banks
pertaining to any trust or estate in respect to which such bank is acting in a
fiduciary capacity................................................................. New Jersey (Ch. 209)
Amending law relating to the destruction of reports and documents received by
the banking department and declaring that reproductions thereof shall be
deemed for any purpose to be equivalent of the original___ New York (Ch. 23)
Authorizing the superintendent to deduct from allowed claims for unclaimed
deposits a service charge of one percent, plus any court allowed costs and
fees............................................................................................. New York (Ch. 40)
Permitting the superintendent of banks to levy assessments against banking
organizations at rates lower than those previously specified.. New York (Ch. 25)
OPERATIONS OF BANKS OF DEPOSIT

Limitations on loans, investments and deposits:
Excepting from the loan limitations loans and discounts secured by Federal or
State securities when maximum par value of such securities that may be loaned
is fixed by the Comptroller....................................................Mississippi (Ch. 253)
Providing that industrial banks may not deal in bonds or notes which are in
default as to either principal or interest when acquired, but permits the holding
of such bonds or notes not in default when acquired..........New York (Ch. 247)
Amending the law relating to limitation on amount of deposits..........................
................................................................................................. Mississippi (Ch. 255)
Amending method of computing the maximum deposits which a bank or trust
company may hold......................................................... Rhode Island (Ch. 1523)
Checks:
Providing that stop-payment order must be in writing to be effective against
local banks, and providing for renewal thereof every six months......................
................................................................................................. Mississippi (Ch. 256)
Providing that no bank or trust company shall be liable for non-payment through
mistake or error of a check unless the depositor proves actual damage thereby
................................................................................................. Mississippi (Ch. 257)
Reducing the time in which a depositor must notify his bank of a raised or forged
check against his account in order to hold the bank liable. .Virginia (Ch. 18)
Security and pledge of assets:
Permitting the State Treasurer to require deposit of United States or state bonds
as security for deposits of public moneys in banking institutions..................
................................................................................................. New Jersey (Ch. 79)



104

FEDERAL DEPOSIT INSURANCE CORPORATION

Security and pledge of assets:— Continued
Removing the qualification of “ market” in respect to the value of securities
deposited by foreign banking corporations as applied to the amount of such
securities in excess of that required to be deposited which may be withdrawn
................................................................................................. New York (Ch. 21)
Permitting banks, industrial banks, and trust companies to act as financial agents
of the United States Government and as depositories of public money of the
United States. Permitting such institutions to pledge assets to secure such de­
posits and to secure the faithful performance of duties as such agent..............
................................................................................................... New York (Ch. 13)
Other:
Amending the law relating to annual transfer of earnings to surplus..................
................................................................................................. Mississippi (Ch. 254)
Prescribing period during which records and files of a bank must be preserved
................................................................................................. Mississippi (Ch. 258)
Authorizing the establishment and maintenance of branch banking offices or
agencies upon approval of application by bank commissioner..............................
................................................................................................... New Jersey (Ch. 30)
Repealing the authority of safe deposit companies to maintain branches in place
outside the state but permitting certain such companies owned by other banking
institutions to open branches where such other institutions have a branch
................................................................................................... New York (Ch. 15)
Amending requirements relating to applications to change location of an office
(other than the principal place of business) of a safe deposit company..............
................................................................................................... New York (Ch. 26)
Amending law relating to change of location of place of business of licensed
lenders..................................................................................... New York (Ch. 26)
Providing for guaranteed bank loans to certain war veterans for the purpose of
re-establishing themselves in small businesses or professions..............................
................................................................................................. New Jersey (Ch. 126)
Permitting state officials having public funds deposited in banks to participate
in and consent to certain amendments to the certificate of incorporation of
such banks................................................................................. New Jersey (Ch. 13)
Allowing banks and trust companies having shares of capital stock to fix the par
value thereof at not less than $1.00 per share......................New Jersey (Ch. 25)
Repealing Act relating to the creation of corporations to receive assets of banks
................................................................................................... New York (Ch. 12)
Amending law relating to qualifications of directors of safe deposit companies
................................................................................................. New York (Ch. 151)
Regulating and licensing check cashing agencies.................. New York (Ch. 593)
Providing that wages owing to bank employees for services shall, under certain
circumstances, be preferred claims against banks.............. New York (Ch. 40)
Requiring bank directors to cause an examination to be made of their bank only
once a year............................................................................... Virginia (Ch. 17)
Legalizing business transacted by banks or cash depositories on any day other
than Sunday..................................................................... South Carolina (Ch. 499)



STATE LEGISLATION

105

Other:— Continued
Providing for the assignment of accounts receivable without notice......................
................................................................................................... Virginia (Ch. 223)..
SAVINGS BANKS, TRUST FUNDS, AND FIDUCIARY INSTITUTIONS

Common trust funds and legal investments:
Authorizing banks to establish common trust funds and prescribing conditions
precedent to investment of fiduciary funds..............................Virginia (Ch. 369)
Changing time for valuing common trust funds held by trust companies..........
................................................................................................. New York (Ch. 158)
Prohibiting fiduciary bank or trust company from purchasing own stock for
estate under its management unless expressly authorized by the trust instrument
but permitting such fiduciary to hold such shares originally received directly
from the testator or donor if considered a proper investment under the prudent
man rule................................................................................... Kentucky (Ch. 13)
Revising the requirements relating to the legality of railroad mortgage bonds as
legal investments for savings banks......................................New Jersey (Ch. 104)
Permitting board of managers of savings banks in determining whether invest­
ments meet legal requirements, to rely on statistical, financial or other in­
formation in publications accepted as reliable by the commissioner. Providing
that investments, legal when made, shall continue to be legal, but requiring
that securities illegal when exchanged under reorganization or recapitalization
must be disposed of within the prescribed period..............New Jersey (Ch. 104)
Permitting savings banks to invest in mortgages on real property in adjoining
states......................................................................................... New York (Ch. 24)
Reducing the amount of stock of certain national banks which a savings bank or
trust company may hold as investment or as security for loans......................
........................................................................................... Rhode Island (Ch. 1379)
Authorizing savings banks and trust companies to invest in notes or bonds secured
by mortgages issued under Title III of the Servicemen’s Readjustment Act of
1944................................................................................................. Maine (Ch. 925)
Deposits:
Providing that until six months after the war deposits of a savings bank in any
other bank shall not exceed 10 percent of its deposits, nor the capital stock
and surplus of such depository......................................Rhode Island (Ch. 1389)
Other:
Permitting banks and trust companies acting as fiduciaries to cause securities held
in such capacity to be registered and held in the name of a nominee..................
......................Kentucky (Ch. 11), New Jersey (Ch. 114), New York (Ch. 215)
Providing for cancellation of bonds without surety given by banks or trust com­
panies where the assets of estate have been distributed to persons entitled
thereto and discharging the fiduciary from all liability on such bonds..............
................................................................................................. New Jersey (Ch. 181)
Providing that the deposit required of trust companies may consist of United
States guaranteed securities, as well as United States securities, and requiring
that such deposit be equal to the par value but not less than market value of
10 percent of the capital stock of the trust company___ New York (Ch. 21)



106

FEDERAL DEPOSIT INSURANCE CORPORATION

Other:— Continued
Providing for discretionary orders of the Supreme Courts in litigation involving
mortgage and bond holders who object to modification of the terms of such
bonds by trust companies................................................... New York (Ch. 128)
Including trust companies, except members of the Federal Reserve System, among
the banks which are required to maintain a reserve fund. Member banks must
maintain the reserves required by Federal law.......... Rhode Island (Ch. 1522)
Permitting two or more savings banks in the same county to merge or consolidate
into a single savings bank....................................................New Jersey (Ch. 22)
Regulating the pensioning of officers and employees of savings banks, exempting
such pensions from execution or attachment, and including the time spent in
military service in computing the length of service under such pensions..........
................................................................................................. New Jersey (Ch. 147)
Authorizing savings banks, credit unions, and savings and loan associations to
establish death, disability, and retirement plans for employees...........................
........................................................................................... Rhode Island (Ch. 1495)
Adopting Uniform Trust Receipts A ct....................................Virginia (Ch. 368)
Requiring banks and other fiduciary institutions to furnish information to Family
Court upon request relative to funds of persons chargeable with support of
others and persons asking for such support... .South Carolina (Act No. 509)
BANKS IN FINANCIAL DIFFICULTIES OR RECEIVERSHIP

Authorizing surviving directors as trustees on dissolution of dissolved banks and
trust companies to sell or distribute assets of inter vivos trusts held by the
institution as trustee prior to dissolution and validating instruments previously
executed by such directors in such actions.........................New Jersey (Ch. 176)
Authorizing the State Treasury to dispose of bonds, mortgages, and stocks of
corporations standing in his or the state's name received in liquidation of claims
against insolvent banks..........................................................New Jersey (Ch. 15)
Amending the law relating to the disposition of contents of safe deposit boxes of
banks in the possession of superintendent..........................New York (Ch. 40)
Amending law relating to payment of dividends by superintendent of banks to
creditors of banks in his possession. Providing that no creditor shall be entitled
to receive interest on dividends because of delay in their payment..................
................................................................................................... New York (Ch. 40)
CREDIT UNIONS AND SMALL LOANS

Authorizing credit unions to sell to members negotiable checks drawn by or on
it and payable by or through a trust company or national bank......................
......................................................................................... Rhode Island (Ch. 1493)
Restricting the pledge of shares or deposits in a credit union..................................
................ ...........................................................................Rhode Island (Ch. 1494)
Revising the small loan law............................................................. Virginia (Ch. 370)




PART FIVE
STATISTICS OF BANKS AND DEPOSIT INSURANCE




o

00

Table 101.

and

D eposits

of

A l l O p e r a t in g B a n k s

Table 102. Number of operating banks and branches, December 31, 1944

Table 103. Number and deposits of operating commercial and mutual savings banks,
December 31, 1944

INSURANCE

Grouped according to insurance status and class of bank, and by State and type
of office

DEPOSIT

Changes in number and classification of operating banks and branches in the
United States and possessions during 1944

FEDERAL

N u m b e r , O f fices ,

Banks grouped according to insurance status and by State




savings banks, with a few exceptions, accept only savings
deposits, while most banks classified as commercial banks
also accept checking accounts and other deposits subject
to withdrawal on demand. However, a few banks included
in the commercial group hold only savings and time
deposits. Trust companies are included with commercial

CORPORATION

The line of demarcation between banks and other types
of financial institutions is not always clear. In these tables
provision of deposit facilities for the general public is the
chief criterion. However, trust companies not engaged in
deposit banking are included because uninvested trust
funds may be insured by the Federal Deposit Insurance

The data in the tables which follow relate to banks
operating in the continental United States and in Alaska,
Hawaii, Puerto Rico, and the Virgin Islands, including
branches of foreign banks which engage in a general
deposit business in this area.

Noninsured banks: Board of Governors of the Federal
Reserve System; State banking authorities; Rand McNally
Bankers Directory; and Polk’s Bankers Encyclopedia.

109




Insured banks: records of the Federal Deposit Insurance
Corporation; Office of the Comptroller of the Currency;
and Board of Governors of the Federal Reserve System.

BANKS

The traditional distinction between commercial banks
and mutual savings banks has been followed. Mutual

Sources of data:

O OPERATING
F

A bank is classified as an insured bank when its deposits
are insured by the Federal Deposit Insurance Corporation.
All banks members of the Federal Reserve System are
required by law to be insured banks. Other banks may be
admitted to deposit insurance upon meeting conditions
prescribed by law.

Banks members of the Federal Reserve System are
separated into two groups: national and State. All na­
tional banks in the continental United States are required
to be members of the Federal Reserve System; State
chartered banks may become members of the Federal
Reserve System upon meeting certain conditions. None of
the six national banks in the possessions is a member of
the Federal Reserve System; four have been admitted to
deposit insurance.

DEPOSITS

Banks are classified on the following bases:
Insurance status
Commercial and mutual savings
Membership in the Federal Reserve System

banks since most institutions known as trust companies
accept checking accounts.
NUMBER, OFFICES, A D
N

Corporation, and credit unions which accept deposits are
excluded. A more detailed statement of institutions
included and excluded is given in the Annual Report of
the Corporation for 1943, pages 59-60.

T able 101.

CHANGES IN NUMBER AND CLASSIFICATION OF OPERATING BANKS AND BRANCHES
in t h e U n ite d S ta te s a n d P o s s e s s io n s D u r in g

1944
Mutual savings banks

Commercial banks and trust companies

All banks

Type of change

Total

In­
Non­
sured insured

Total

Noninsured
Trust
Not
Total
mem­ Banks com­
panies
bers
of de­ not ac­
F. R.
posit cepting
System
deposits

Total
National State

Non­
In­
sured2 insured

14,167
14,206

13,268
13,274

5,025
5,040

1,786
1,695

6,457
6,539

816
847

83
85

543
545

192
184

351
361

-41

+2

-43

-39

-6

-15

+91

-82

-31

-2

-2

+8

-10

Banks beginning deposit operations
New banks
. .
....
..
.....................
Financial institutions becoming banks of deposit

70
65
5

61
56
5

9
9

70
65
5

61
56
5

8
8

5
5

48
43
5

9
9

Banks ceasing deposit o p e ra tio n s......................................
Suspended banks not reopened or succeeded
Merged with financial aid of FDIC—net decrease
Other mergers and absorptions—net decrease....................
Other liquidations
....

111
1
1
74
35

96
1
1
67
27

15

109
1
1
72
35

95
1
1
66
27

32

9

54
1

12

2

2

1

1

1
26
5

8
1

32
21

4
8

2

2

1

1

+39
+4
+35

-39
-4
-35

+ 30
+4
+26

+ 30
+4
+ 26

-30
-4
-26

+9

-9

+9

-9

-2
-2

+2
+2

-2
-2

-2
-2

+2
+2

Net change during y e a r............................................................
Changes resulting fr o m —

Noninsured banks becom in g insured .
Successions to noninsured banks
Admissions to insurance, operating banks^

.

....

.

. .

Insured banks becom in g noninsured
Succession to insured bank
Other changes in classification am ong banks
National banks succeeding State banks
State banks succeeding national banks
Admissions to F R System
Withdrawals from F R System
.

+9
+ 13
-4
.
.

Changes n ot involving num ber in any class:
Successions
. ......................
Changes in title location, or name of location
............




7
8

5
58

5
56

2

5
57

5
55

17

+ 95
-6
+ 108
-7

-104
-7
+4
-108
+7

2
13

3
25

2

1

1

CORPORATION

1,250
1,293

INSURANCE

13,460
13,458

DEPOSIT

BANKS
N um ber o f banks, Decem ber 31, 1944....................................... 14,710
Num ber o f banks, D ecem ber 31, 1943....................................... 14,751

FEDERAL

Insured1
Members F. R.
System

BRANCHES
N um ber o f branches, D ecem ber 31, 1944.
N um ber o f branches, D ecem ber 31, 1943.

4,141
4,000

3,974
3,839

167
161

4,001
3,864

3,875
3,744

1,815
1,742

1,080
1,049

980
953

125
119

+ 141

+ 135

+6

+ 137

+ 131

+ 73

+31

+27

Branches opened for bu siness.............................
Facilities provided as agents of the government.
Absorbed banks converted into branches............
Branches replacing offices closed or relocated. . .
Other branches opened..........................................

174
96
36

166
95
33

8
1
3

22
13
7

37

4

164
95
32
1
36

95
73
12

41

170
96
34
1
39

10

2

47
9
13
1
24

Branches d isco n tin u e d ..........................................
Facilities provided as agents of the government.
Other branches discontinued.................................

33
16
17

33
16
17

33
16
17

33
16
17

22
16
6

2

9

2

9

-2
+2

+ 11
+ 3
-1
+9

-11
-1
-1
-9

Net change during y ear...........................................

1
1

140
136

99
95

41
41

+6

+4

+4

6
1
2

4

2

2

1

1

3

2

1

1

+2

-2

Changes resulting fro m —

1

+2

Branches o f banks adm itted to in su ran ce............

-2

Other changes in classification am on g branches.
Branches transferred as result of absorption............
From State banks to national banks.........................
Admissions to F. R . System.......................................
1
11

1
11

1
5

2

4

1
1

1
1

ALL BANKING OFFICES
1,417
1,454

18,168
18,070

17,143
17,018

6,840
6,782

2,866
2,744

7,437
7,492

941
966

84
86

683
681

291
279

392
402

+ 100

+137

-37

+ 98

+ 125

+ 58

+ 122

-55

-25

-2

+ 2

+ 12

-10

Offices opened.
Banks............
Branches........

244
70
174

227
61
166

17
9
8

240
70
170

225
61
164

103
8
95

27
5
22

95
48
47

15
9
6

Offices closed .
Banks..........
Branches------

111

144

129
96

15
15

142
109
33

128
95
33

54
32
22

11
9
2

63
54
9

12
12

+ 39
+39

-39
-39
+2
-2

+ 28
+30
-2

+9

+ 106

-87
+30
-2

-28
-30
+2

+9

+ 95
+ 11

-104
-11

Net change during y ear.........
Changes resulting fr o m -

Changes in classification.............................
Noninsured banks to insured banks...........
Insured banks to noninsured banks............
Noninsured branches to insured branches.
Among insured banks...................................
Among branches of insured banks..............

33

-2
+2




2
2

2

2

2

2

2
2

1
1

1
1

+ 11
+9

-11
-9

+2

-2

111

1 Includes 10 trust companies not engaged in deposit banking on December 31, 1944 and 11 on December 31, 1943.
2 Includes three mutual savings banks, members of the Federal Reserve System, for December 31, 1944 and December 31, 1943.
* Operating at beginning of year.
Back figures— See the Annual Report for 1943, pp. 68-69, and earlier reports.

4
4

BANKS

17,434
17,297

O OPERATING
F

18,851
18,751

N um ber o f offices, D ecem ber 31, 1944.
N um ber o f offices, Decem ber 31, 1943.

DEPOSITS

Changes n o t involving num ber in any class:
Branches transferred as result of absorptions...
Changes in title, location, or name of location. .

NUMBER, OFFICES, A D
N

1

2

Table 102.

NUMBER OP OPERATING BANKS AND BRANCHES, DECEMBER

31, 1944

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OP BANK, AND BY STATE AND TYPE OF OFFICE

Members F. R.
System
Total
National State

Trust
Not
com­
mem­ Banks panies Total
of de­ not ac­
bers
F. R.
posit cepting
System
deposits

94.4
93.7
93.4
96.1
96.9

42.6
35.4
30.7
61.4
70.7

291
192
141
51
99

392
351
319
32
41

93.0
91.7
91.5
94.5
97.6

94.9
93.9
93.6
96.9
98.5

42.6
35.4
30.7
61.4
70.7

6.4
12.5
10.3
18.2
2.9

6.4
12.5
10.3
18.2
2.9

98.4
98.2
98.1

98.4
98.2
98.1

100.0

100.0

100.0

100.0

95.9
85.7
77.8

95.9
85.7
77.8

3
6

100.0

100.0

100.0

100.0

157
140
125
15
17

91.9
91.2
90.3

91.9
91.2
90.3

100.0

100.0

100.0

100.0

6,840
5,025
A,691
33k
1,815

2,866
1,786
1,583
203
1,080

7,437
6,457
5,881
576
980

941
816T
772
44
125

84
83
82
1

83
140

United S ta tes...................................... 18,741
All banks............................................ 14,670
Unit banks...................................... 13,UO
Banks operating branches..............
1,230
Branches.............................................
4,071

17,427
13,455
12,293
1,162
3,972

1,314 18,058 17,136
1,215 14,127 13,263
1,147 12,980 12,152
1,111
68
1,147
3,873
99
3,931

6,840
5,025
4,691
334
1,815

2,866
1,786
1,583
203
1,080

7,430
6,452
5,878
574
978

843
786
751
35
57

79
78
77

683
543

7
5
3

98
30

5
5
5

Possessions
All banks
Unit banks
Banks operating branches
Branches..............

110
40
29

7
5
3

11

2
2

70

7
5
3

103
35
26
9
68

110
40
29
70

2

4
4
4

245
217
208
9
28

241
213
204
9
28

11

21

1

1

1

2

9
68

18
17
16

131
130
129

4
4
4

1

1

2
2

11
5

2
2

2

2

2

2

683
543
460

460

83
140

State
Alabam a . ..
All banks .
Unit banks
Banks operating branches
Branches
A rizon a........
All banks
Unit banks
Banks operating branches
Branches
Arkansas........
All banks. . .
Unit banks
Banks operating branches
Branches...........................




245
217
208
9
28
49
14
9

5
35
247
226
207
19
21

241
213
204

9
28

47
12
7
5
35
227
206
187
19
21

2
2
2

20
20
20

49
14
9
5
35
247
226
207
19
21

47
12
7
5
35
227
206
187
19
21

92
66
59
7
26
34
5
3

1

2

2

29
55
51
47
4
4

15
15
15

1

17
17
17

3
3
3

CORPORATION

92.5
91.5
91.3
93.8
96.0

1,417 18,168 17,143
1,250 14,167 13,268
1,173 13,009 12,155
1,113
77 1,158
3,875
167
4,001

INSURANCE

392
351
319
32
41

17,434
13,460
12,296
1,16 A
3,974

DEPOSIT

291
192
141
51
99

18,851
14,710
Unit banks...................................... 13,469
Banks operating branches..............
1,241
Branches.............................................
4,141

United States and possessions.......

Com­ Mutual
All
In­
Non­
sured2 insured banks mercial savings
banks banks

FEDERAL

Non­
Total Insured insured Total

Insured banks
as percentages of—

Noninsured

Insured1
State and type of bank or office

Mutual savings banks

Commercial banks and trust companies

All banks

1,066
186
155
SI
880

15
14
13

C olora d o ................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

154
150
1U6

138
134
ISO
h
4

16
16
16

C on n e cticu t.........................
All banks.............................
Unit banks......................
Banks operating branches
Branches.............................

208
189
181

112
101
U
7
11

96
88
87

D elaware...............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

56
42

52
39
32
7
13

D istrict o f C o lu m b ia .........
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

55

U

4

8

1
1

1,081
200
168
32
881

1,066
186
155
SI
880

807
91
82
9
716

154
150
1U
6
U
4

138
134
ISO
U
4

81
77
73
U
4

15
15
15

136
117
109

110
99
92
7

59
51
U
6
5
8

16
13

4
3

53
40
S3
7
13

52
39
32
7

9

55
21
9

55
21
9

55
21
9

12

12

12

34

12

34

34

34

F lorid a...................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

190
171
156
15
19

183
165
151
U
18

1

190
171
156
15
19

183
165
151
1U
18

G eorg ia ..................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

393
350
SSO

76
74
72

393
350
330

43

317
276
258
18
41

I d a h o .....................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

89
46
89
7
43

88
45
38
7
43

1

Illin ois...................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

844
838
832

828
822
816

16
16
16




S
U
8

14
21

20

6

6

6

6

2
1
1

7
6
5
1

11

2

43

1
1

89
46
39
7
43

88
45
38
7
43

844
838
832

828
822
816

2

20

6

6

6

6

U
2

1

98.6
93.0
92.S
96.9
99.9

16
16
16

89.6
89.3
89.0

89.6
89.3
89.0
100.0

100.0

70
70
70

53.8
53.4
51.9
87.5
57.9

80.9
84.6
8U
.U
87.5
57.9

92.9
92.9
9U.1
87.5
92.9

98.1
97.5
97.0

1

25
17
16

11

1
1
1

1

13
13
13

32
22

18

U

27
9
U
5
18

24
9

68
56
U
6

5
5
5

5
6

15

10

12

12

31
57
16
10
6

19

12

9

3
7

10

10

10

41
356
350
SU

6

6

2
2
2

1
1

3
2

3
2

1

1
1

1
1

1

1

10

78
47
35

72
72
72

8

13

317
276
258
18
41

42
42

98.6
93.0
92.S
96.9
99.9

100.0

7
124

9
9
9

4
3
2

100

2
1

220
217

3

21

19
18

1

2
2

1
1
1

348
348

3U
8

80.7
78.9
78.2
90.0
95.3
98.9
97.8
97.U

100.0

2
124
124
12 U

96.3
96.5
96.8
93.3
94.7

98.9
97.8
97.k

1

100.0

96.3
96.5
96.8
93.3
94.7
80.7
78.9
78.2
90.0
95.3

76
74
72

21U
S

3
3
S

100.0
100.0

100.0
4
3

100.0
100.0

100.0
100.0

110

U

100.0

100.0
100.0

1
1

104

100.0

100.0
11
11
11

5
5
5

100.0

100.0

98.1
98.1
98.1

98.1
98.1
98.1

100.0

100.0

100.0

100.0

2.8
2.8
2.8

113

19

6
5
u

BANKS

8

8

116
76
61
15
40

100.0

12

O OPERATING
F

1

19

143
19

DEPOSITS

1,081
200
168
32
881

NUMBER, OFFICES, A D
N

C alifornia..............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

Table 102.

NUMBER OF OPERATING BANKS AND BRANCHES, DECEMBER

31, 1944— Continued

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE
All banks

Commercial banks and trust companies
Insured1

Non­
Total Insured insured

Iowa........................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

807
650
534
116
157

738
586
474

Kansas...................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

625
619
613

455
449
6

6

6

Kentucky..............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

428
392
87 U
18
36

398
363

Louisiana..............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................
Maine.....................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

163
98
73
25
65




6

571
495
449
46
76

75

112

152

US

170
170
170

137
124
116

807
650
534
116
157

45

547
472
427
45
75
738
586
474
152

1
1

625
619
61S

455
449
443

182
176
170

292
245

13

118
103
100
3
15

S4
47

1
1

99
98
97

63
63
63

576
425
314

8

95.7
95.2
94.9
97.8
98.7

95.8
95.4
95.1
97.8
98.7

91.4
90.2

91.4
90.2

151

69
64
60
4
5

235
235
235

168
168
168

211

96.6
96.8

72.8
72.5
72.3

72.8
72.5
72.8

6

100.0

6

100.0

100.0
100.0

93.0
92.6
92.5
94.4
97.2

93.0
92.6
92.5
94.4
97.2

99.5
99.3
99.2

99.5
99.3
99.2
100.0

111

111

17
35

18

10

212
149
118

211
148
117

212
149
118

211

135
108

63

63

63

63
32
25
7
31
40
35

40
17
7

SI

119
63
45
18
56

31

129
66

18
*
28
63

75.0
75.0
75.0

88.8

96.6
96.8

112

398
363
346
17
35

SI

20

19
18

88.8

428
392
37 k
\
18
36

sue

Com­ Mutual
In­
All
Nonsured2 insured banks mercial savings
banks banks

148
117
31
63
113
57
89
18
56

93
90

3

81

260
250
240
10

27

10

23

100.0
100.0

73.0
64.3
61.6
72.0
86.2

CORPORATION

550
475
430

Trust
Not
com­
mem­ Banks panies Total
Total
bers
of de­ not ac­
F. R.
posit cepting
National State
System
deposits

INSURANCE

575
499
453
46
76

Noninsured

Members F. R.
System

100.0

87.6
86.4
90.7
78.8
88.9

DEPOSIT

Indiana..................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

Total

Insured banks
as percentages o f-

FEDERAL

State and type of bank or office

Mutual savings banks

17.6
18.8
20.0

Maryland...............................

Massachusetts.......................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

546
388
321
67
158

312
188
147
41
124

Michigan.................................
All banks...............................
Unit banks........................
Banks operating branches.
Branches...............................

624
445
su
51
179

Minnesota..............................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................
M ississippi..............................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

257
202
172
SO
55

252
197
167
30
55

5
5
5

Missouri..................................
All banks............................ .
Unit banks........................
Banks operating branches.
Branches...............................

599
594
590
4
5

568
563
559
4
5

31
31
31

Montana.................................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

111
111

28
85

75
63
59
4
12

234
200
174
26
34

323
197
155
42
126

312
188
147
41
124

193
124
105
19
69

582
411
363
48
171

42
34
31
3
8

624
445
394
51
179

582
411
363
48
171

139
75
63

679
673
671

651
645
643

28
28
28

678
672
670

2

2

2

6

6

28
96

14]
10
7
3
4

259
174

255
171
144
27
84

146

146

60
17

120
91
75
16
29

3

7
43
76
30

n

16
46

43
34
28
6

3

57.1
48.5
45.8
61.2
78.5

96.6
95.4
94.8
97.6
98.4

8

93.3
92.4
92.1
94.1
95.5

93.3
92.4
92.1
94.1
95.5

27
27
27

95.9
95.8
95.8

95.9
95.8
95.8
100.0

9
8

1

64

650
644
642

190
184
182

25
25
25

435
435
485

2

2

6

6

257
202
172
30
55

252
197
167
SO
55

25
23

599
594
590
4
5

568
563
559
4
5

85
80
76
4
5

96
96

111
111

111
111

111
111

111

111

111

111

41
41
41

33
33
S3

37
37
37

Nebraska............... .................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

420
415

420
415

5
5

359
354
349
5
5

5
5

359
354
349
5
5

134
130
126
4
4

17
17
17

208
207
206

Nevada.....................................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

26
9
4
5
17

26
9
4
5
17

26
9
4
5
17

26
9
4
5
17

19
6
3
3
13




410

22

23

3

223
191
166
25
32

1

2

100.0
224
171
143

100.0

100.0

387
387
387

1
1
3

2

1
1
1

29
29
29

100.0

94.8
94.8
94.7

94.8
94.8
94.7
100.0

100.0

53

100.0

100.0

28

98.1
97.5
97.1

100.0

21
2
2

98.1
97.5
97.1

100.0

100.0
100.0

53
53
53

100.0
100.0

100.0

100.0

85.5
85.3
85.1

85.5
85.3
85.1

100.0

100.0

100.0

100.0

100.0
100.0

100.0
100.0

100.0

100.0

100.0
100.0
100.0

100.0
100.0

100.0
100.0

60.0
30.0
28.6
33.3
80.0

115

34
26
23

3

2

BANKS

206
183
161

61
61
61

12

223
191
166
25
32

11

237
153
139
14
84

410

15

10
7
5

98.5
98.3
98.6
96.4
98.8

1
1
1

2

6

15
3

95.1
94.6
95.4
90.3
96.0

2

9

12

25 1
10
7

100.0

10

O OPERATING
F

270
174

DEPOSITS

284
184
153
31
100

NUMBER, OFFICES, A D
N

All banka..............................
Unit banks........................
Banks operating branches.
Branches...............................

Table 102.

N u m b e r o f O p e r a t in g B a n k s a n d B r a n c h e s , D e c e m b e r

31, 1944— Continued

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE
Commercial banks and trust companies

All banks

Insured1

1
1

500
367
307
60
133

480
351
29h
57
129

474
345
288
57
129

49
41

49
41

49
41

49
41

7

7
8

7

8

7
8

1
1

1,355
696
588
108
659

1,342
684
578
106
658
369

17 U

376
227
178

149

147

149

147

10

178
153
137
16
25

170
147
133
lh
23

178
153
137
16
25

170
147
133

42
42

New Jersey............................
All banka............................
Unit banks......................
Banks operating branches
Branches.............................

508
375
315
60
133

New M e x ico..........................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................
New Y o r k ..............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

1,545
827
678
1U9
718

1,532
815

N orth C arolin a....................
All banks.............................
Unit banks......................
Banks operating branches
Branches.............................

376
227
178

369

222

N orth D a k o ta ......................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

3
U

U
9

1
1

3h

668

1U7
717

U
8

S
h

U
9

n

222

262
220

196

n

U
7

98.8
98.3
98.0

92.9
91.7
90.5

100.0
100.0

100.0
100.0

100.0

100.0
100.0
100.0
100.0
100.0

74
52

U
5

23

5
5
5

100.0

21
14

588
403
36h
39
185

607
190

1U
0

147
91
7h
17
56

55
45

19
9
7
2

295
168
128

2

22

17A

U
8

138
73
26
65

22
21

98.4
97.9
97.5

1
1

2h
42

86.6
87.7
88.9
50.0
50.0

2
2

1
1

52.7
53.3
53.8
33.3
33.3

7

8
6

7

50
417

10

U
0

127

128
105
91

U

23

190
131
90
hi
59

190
131
90

hi

59

100.0

100.0

100.0
100.0
100.0

99.2
98.5
98.5
98.7
99.9

99.0
98.3

98.1
97.8
97.8
98.0
98.7

98.1
97.8
97.8
98.0
98.7

95.5
96.1
97.1
87.5
92.0

95.5
96.1
97.1
87.5
92.0

100.0
100.0
100.0
100.0
100.0

CORPORATION

2

3
3

43
42
hi

INSURANCE

58
57
56

107

Com­ Mutual
All
In­
Non­
sured2 insured banks mercial savings
banks banks

53
52
51

67
65
63
2

58
57
56

10 h




Trust
Not
com­
mem­ Banks panies Total
of de­ not ac­
bers
F. R.
posit cepting
National State
System
deposits

DEPOSIT

110

New H a m p sh ire..................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

Noninsured

Members F. R.
System

NonTotal Insured insured Total

Insured banks
as percentages o f-

FEDERAL

State and type of bank or office

Mutual savings banks

379
373
367

6

6

6

6

O regon ...................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

143
71
6k
7
72

139
67
60
7
72

4
4
k

142
70
63
7
72

138

Pennsylvania........................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

1,167
1,042
985
57
125

1,143
1,022
968
5k
121

24
20
17
3
4

1,146
1,035
982
53

1,122
1,015
965
50
107

R hode Isla n d .......................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

82
35

31
19
13

71
26

13
47

51
16
9
7
35

12

45

South C arolin a....................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

179
146
137
9
33

153
120
111

26
26
26

179
146
137
9
33

South D a k o ta ......................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

209
164
lk l
23
45

208
163
IkO
23
45

T ennessee..............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

355
296
27k

344
285
263

22

22

59

59

T ex as......................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

884
857
831
26
27

815
788
762
26
27




22

9
33

39
171
11
11
11

6

60
U

834
663
62k
39
171

390
384
378

379
373
367

6

111

n

12

6

279
240
232

206
200

19 k

15
15
15

158
158
158

9
9
9

2
2
2

6

6
66

59
7
72

92
24

8
8

21

8

3
719
666

139
101

6kl

86

38
34
30
k
4

2
2
2

264
248
238

22

20
2

10
3

17
7
2

2

1
2

10

18

7

153
120

50

8
6
k

95
92
89
3
3

5
10

11
9

8
1

8
1
2

2

26
26
26

9
33

18
k
28

208
163
IkO
23
45

58
36
32
k

24
24
2k

22

126
103
8k
19
23

95
70
63
7
25

19
8
7
I
11

230
207
193
lk
23

7
7
7

59

344
285
263
22
59

884
857
831
26
27

815
788
762
26
27

463
436

102
102

250
250
250

68
68

1
1

68

1

1
1

209
164

1

1U1

23
45

11
11
11

355
296

27k
22

69
69
69

U
10
26
27

2

2

102

1
1
1

4
4
k

85.5
82.2
81.0
100.0
100.0

99.5
99.4
99.3

11
9

71.8
61.5
6 k.S
58.3
77.8

85.5
82.2
81.0

3
3
3

62.2
45.7
k0.9
53.8
74.5

99.5
99.4
99.3
100.0
100.0

96.9
96.3
96.0

96.9
96.3
96.0

100.0

21
11

21
7
3
k
14

97.9
98.1
98.3
9k.3
96.4

100.0

16

51
16
9
7
35

97.9
98.1

21
7
3
k
14

2
2
2

100.0

100.0
100.0

10

22

97.2
94.3
93.7

100.0

15
38

111

1
1
1

100.0

25
53

3

1
1
1

100.0
100.0

100.0
100.0

18
15
3
4

8

2
2
2

97.2
97.1
97.1

97.2
94.4
93.8

3
3
3

100.0
100.0

97.2
97.1
97.1

3
3
3

16
16
16

98.1
97.6
97.5

100.0
100.0

267
246
233
13
21

98.1
97.7
97.5
100.0
100.0

288
177
159
18
111

100.0
100.0

92.2
91.9
91.7

92.2
91.9
91.7

100.0

100.0

100.0

100.0
100.0

100.0

100.0
100.0
100.0

100.0

100.0

100.0
100.0
100.0
100.0
100.0

117

390
384
378

850
679

BANKS

O klah om a.............................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

16
16
16

O OPERATING
F

837
666
627
39
171

DEPOSITS

853
682
6k3
39
171

NUMBER, OFFICES, A D
N

O h io .......................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

Table 1 02 .

N u m b e r o f O p e r a tin g B a n k s AND B r a n c h e s ,

December 31, 1944— Continued
00

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE
All banks

Commercial banks and trust companies
Insured1

Non­
Total Insured insured

Vermont..................................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

98
80
72

97
79
71

18

18

Virginia...................................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

401
312
267
15
>
89

401
312
267
h5
89

Washington............................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

232
128
115
13
104

229
125

West Virginia........................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

178
178
178

Wisconsin...............................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

702
559




8

m
88
143

8

112
13

77
57
50
7

77
57
50
7

20

15

81
72
65
7
9

80
71

41
39
37

401
312
267
U
5

401
312
267
k5
89

120
10

226
123

136
41

20

229
126

6k
7
9

llh
12

111
12

173
173
173

178
178
178

173
173
172

690
548
U
61
87
142

698
555
U67

687
545
k58
87
142

104

103

88

143

103

27
23

20

156
130
26

3
4

38
31
26
5
7

Com­ Mutual
All
In­
Non­
sured2 insured banks mercial savings
banks banks

100.0
100.0
100.0

100.0
100.0

100.0

100.0
100.0
100.0

100.0

99.0
98.8
98.6

98.8
98.6
98.5

100.0

100.0
100.0

100.0

78
64
57
7
14

167
118
90
28
49

16
15
lk

100.0
100.0

100.0
100.0

100.0

100.0

100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0

100.0
100.0

100.0

100.0
100.0

98.7
97.7
97.k

98.7
97.6
97.k

95

1
1

74
67
6k
3
7

76
76
76

30
30
30

67
67
67

97.2
97.2
97.2

97.2
97.2
97.2

503
384
306
78
119

98.3
98.0
97.9
98.9

98.4
98.2
98.1
98.9
99.3

33
8

in

96
92
k
15

100.0
100.0
100.0
100.0

100.0

75.0
75.0
75.0

CORPORATION

20

50
7
20

77
57

Trust
Not
com­
mem­ Banks panies Total
Total
bers
of de­ not ac­
F. R.
posit cepting
National State
System
deposits

INSURANCE

77
57
50
7

Noninsured

Members F. R.
System

DEPOSIT

Utah.........................................
All banks..............................
Unit banks........................
Banks operating branches.
Branches...............................

Total

Insured banks
as percentages o f-

FEDERAL

State and type of bank or office

Mutual savings banks

W y o m in g ..............................
All banka............................
Unit banks......................
Banks operating branches
Branches.............................

98.3
98.2
98.2
100.0
100.0

98.3
98.2
98.2
100.0
100.0

Hawaii4..................................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

21.1
17.6
15.3
50.0
50.0

1.9

11.1

21.1

17.6
13.3
50.0
50.0

1.9

11.1

14.3

66.7

66.7

Puerto R ic o ..........................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................
Virgin Islands5....................
All banks............................
Unit banks......................
Banks operating branches
Branches.............................

50.0
100.0
100.0

50.0
100.0

100.0

O OPERATING
F

1 Includes 10 trust companies not engaged in deposit banking: 2 national banks, 1 each in Illinois and Kansas; 3 State banks members of the Federal Reserve System, 1 each
in California, Illinois and Massachusetts; and 5 State banks not members of the Federal Reserve System, 1 each in Florida, Missouri and Wisconsin, and 2 in Pennsylvania
2 Includes 3 mutual savings banks, members of the Federal Reserve System.
3 Includes 4 national banks, 3 among insured banks not members of the Federal Reserve System, and 1 among noninsured banks.
4 Includes, among noninsured banks, 1 national bank operating 21 branches.
5 Includes, among insured banks not members of the Federal Reserve System, 1 national bank operating 1 branch.
Back figures— See the Annual Report for 1943, pp. 70-75, and earlier reports.

BANKS

119




DEPOSITS

14.3

NUMBER, OFFICES, A D
N

Possessions
Alaska3...................................
All banka............................
Unit banks......................
Banks operating branches
Branches.............................

T a b le 1 0 3 .

NUMBER AND DEPOSITS OF OPERATING COMMERCIAL AND MUTUAL SAVINGS BANKS, DECEMBER 31, 1944
BANKS GROUPED ACCORDING TO INSURANCE STATUS AND BY DISTRICT AND STATE
Deposits (in thousands of dollars)

Number of banks
Commercial banks and
trust companies

Mutual savings banks

Mutual savings banks

Noninsured
All
banks

Total

In­
sured1 Banks
of de­
posit

In­
sured

Nonin­
sured

All
banks

Total

Insured

Nonin­
sured

Total

Insured

Nonin­
sured

13,268

816

83

543

192

351 142,076,855 128,701,304 125,751,795

2,949,509 13,375,551

8,910,338

4,465,213

14,127

13,263

786

78

543

192

351 141,444,810 128,069,259 125,713,909

2,355,350 13,375,551

8,910,338

4,465,213

40

40

5

30

5

897
1,258
1,724
1,068
1,089
1,508
1,503
1,488
1,101
1,625
912
537

543
1,101
1,714
1,058
1,089
1,508
1,495
1,488
1,100
1,625
912
534

488
1,069
1,678
1,019
999
1,417
1,428
1,408
1,065
1,366
841
490

50
29
34
36
87
77
53
75
33
246
68
28

5
3
2
3
3
14
14
5
2
13
3
16

105,288
7,480,449
992,910
57,622

4,129,970
82,880

9,976

State
Alabama
Arizona
Arkansas
California
Colorado

217
14
226
200
150

217
14
226
200
150

213
12
206
186
134

17
5
16

Connecticut........
Delaware.............
Dist. of Columbia
Florida
Georgia

189
42
21
171
350

117
40
21
171
350

99
39
21
165
276

Possessions

632,045

632,045

37,886

594,159

11,407,131
44,754,338
15,955,147
7,130,226
5,851,735
7,038,995
9,282,299
12,170,679
3,470,471
4.460.656
5,157,611
15,397,567

7,171,873
37,191,009
14,962,237
6,830,217
5,851,735
7,038,995
9,240,776
12,170,679
3,365,742
4,460,656
5,157,611
15,259,774

6,729,684
36,058,267
14,916,074
6,708,301
5,809,075
6,991,923
9,117,470
12,069,613
3,289,587
4,292,693
5,073,867
14,695,241

442,189
1,132,742
46,163
121,916
42,660
47,072
123,306
101,066
76,155
167,963
83,744
564,533

1,031,336
288,077
633,393
10,827,241
845,468

1,031,336
288,077
633,393
10,827,241
845,468

1,025,768
288,077
629,069
10,769,982
840,237

4,324
57,259
5,231

2.463.657
464,640
855,710
1,409,795
1,464,446

1,481,117
401,066
855,710
1,409,795
1,464,446

1,304,667
399,981
855,710
1,404,146
1,440,931

FDIC District
District
District
District
District
District
District
District
District
District
District
District
District

1 ............
2 ............
3 ............
4 ............
5 ............
6
7 ............
8
9
10
11
12




16
153
10
3

338
4

8

6

2

1

i

3

3

354
157
10
10

7

4
2
3
9

17
1

1

3
74

3

72
2

2

70
2

4,235,258
7,563,329
992,910
300,009
41,523

31,547

104,729

104,729

137,793

137,793

982,540
63,574

18,865

242,387

5,568

176,450
1,085
5,649
23,515

963,675
63,574

CORPORATION

14,167

United States. . . 14,670

INSURANCE

United States and
possessions........ 14,710

DEPOSIT

Trust
Total
com­
panies
not ac­
cepting
deposits

FEDERAL

FDIC District
and State

Commercial banks and
trust companies

1
11
19
64
168

Kentucky..........
Louisiana..........
Maine................
Maryland..........
Massachusetts..

392
149
98
184
388

392
149

363
148
57
171
188

24
1
9
2
9

5

Michigan...........
Minnesota.........
Mississippi........
Missouri............
Montana............

445
673

445
672

411
644
197
563

26
27
5
29

2

Nebraska...........
Nevada..............
New Hampshire
New Jersey.......
New M exico___

415
9
107
375
41

415
9
65
351
41

354
9
57
345
41

53

8

8
3

3

New Y ork.........
North Carolina.
North Dakota. .
Ohio...................
Oklahoma..........

827
227
153
682
384

684

227
153
679
384

222

12
4
5
16
9

1
1

Oregon...............
Pennsylvania. . .
Rhode Island. . .
South Carolina.
South Dakota. .

71
1,042
35
146
164

70
1,035
26
146
164

1,015
16

Tennessee..........
Texas.................
U tah..................
Vermont............
Virginia..............

296
857
57
80
312

296
857
57
72
312

Washington. . . .
West Virginia...
Wisconsin..........
W yoming..........

128
178
559
57

126
178
555
57

202
594
111

Possessions
Alaska................
Hawaii...............
Puerto R ico. . . .
Virgin Islands..

66

174
197

202
594
111

111

147
663
373

66

5
4

1

1

32
10
191

6
3

26
7
191

8
1

1

1

2

2
18
7
26
1

2
2
3

285
788
57
71
312

7
68

3
4
8

131

131

3

3

1
7
9

1
7

42
2

4
1

123
173
545
56

22

120
163

1

14
3
12
1

8
2

2

4

3

9

8

1
2
1

5

329,146
10,376,731
2,411,112
1,692,882
1,148,613

6,751
25,769
27,224
75,297
131,210

1,277,380
1,319,177
591,822
1,887,870
6,762,882

1,277,380
1,319,177
415,752
1,587,861
4,202,610

1,257,635
1,318,430
384,918
1,510,403
4,077,598

19,745
747
30,834
77,458
125,012

4,442,975
2,290,292
626,981
3,508,102
405,248

4,354,045
2,278,316
619,800
3,493,238
405,248

88,930
11,976
7,181
14,864

985,418
120,971
432,220
4,246,024
202,029

985,418
120,971
198,309
3,870,446
202,029

958.482
120,971
185,720
3,864,125
202,029

26,936

32,800,004
1,549,320
381,887
6,173,545
1,181,405

1,132,061
9,607,242
898,076
514,773
288,315

1

32,705

23,167

9,538

176,070
300,009
2,560,272

19,431
57,622

156,639
242,387
2,560,272

104,729

104,729

12,589
6,321

233,911
375,578

356,272

31,789,904
1,527,964
319,168
6,162,943
1,176,819

1,010,100
21,356
62,719
10,602
4,586

7,124,177

7,124,177

174,360

174,360

1,125,354
8,788,692
682,603
514,773
288,315

1,119,122
8,753,131
585,299
499,986
286,855

6,232
35,561
97,304
14,787
1,460

6,707
818,550
215,473

6,707
818,550

1,620,120
4,667,505
454,501
258,474
1,586,415

2

42
24

335,897
10,402,500
2,438,336
1,768,179
1,279,823

39,924,181
1,549,320
381,887
6,347,905
1,181,405

3

335,897
10,402,500
2,471,041
1,768,179
1,279,823

4,442,975
2,395,021
626,981
3,508,102
405,248

4

1,620,120
4,667,505
454,501
191,482
1,586,415

1,611,981
4,583,761
454,501
191.482
1,586,415

8,139
83,744
66,992

66,992

2,014,344
736,138
2,368,283
168,542

1,883,258
736,138
2,359,465
168,542

1,867,890
727,823
2,352,313
168,542

15,368
8,315
7,152

131,086

131,086

8,818

8,380

51,473
461,079
115,156
4,337

51,473
461,079
115,156
4,337

20,381
13,248

31,092
447,831
115,156
80

4,257

233,911
19,306

215,473

438




121

1 Includes 10 trust companies not engaged in deposit banking: 2 each in Illinois and Pennsylvania and 1 each in California, Florida, Kansas, Massachusetts, Missouri and
Wisconsin.
Back figures—See the following Annual Reports: 1943, pp. 76-77; 1942, pp. 76-77; 1941, pp. 108-109.

BANKS

45
822
472
586
449

O OPERATING
F

46
838
495
650
619

DEPOSITS

46
838
499
650
619

!ER, OFFICES, A D
N

Idaho.................
Illinois...............
Indiana..............
Iow a..................
Kansas...............

Table 104.

and

L ia b il it ie s

of

O p e r a t in g B a n k s

12
2

A ssets

Summary of assets and liabilities of operating banks in the United States and
possessions, June 30, 1944
Banks grouped according to insurance status and type of bank

Summary of assets and liabilities of operating banks in the United States and
possessions, December 30, 1944

Table 106. Assets and liabilities of operating insured commercial banks, December 30,1944,
June 30, 1944 and December 31, 1943

Banks grouped according to insurance status and by type of bank

Percentage distribution of assets and liabilities of operating insured commercial
banks, call dates, 1934-1944

Statements of assets and liabilities are submitted by
insured commercial banks upon either a cash or an
accrual basis, depending upon the bank's method of
bookkeeping. Assets reported represent aggregate book



of the loan. Such loans are reported gross if, under contract,
the payments do not immediately reduce the unpaid
balances of the loan but are assigned or pledged to assure
repayment at maturity.

CORPORATION

Table 108.

INSURANCE

Table 107. Summary of assets and liabilities of operating banks in the United States and
possessions, 1942-1944

DEPOSIT

Banks grouped according to insurance status and type of bank

FEDERAL

Table 105.

value, on the date of call, less valuation allowances and
premiums.

Other insured
Corporation.

banks:

Federal

Deposit

Insurance

Noninsured banks: State banking authorities; Rand
McNally Bankers Directory; and Polk's Bankers Encyclo­
pedia.

BANKS




State banks members of the Federal Reserve System:
Board of Governors of the Federal Reserve System.

O OPERATING
F

Instalment loans are ordinarily reported net if the
instalment payments are applied directly to the reduction

National banks and State banks in the District of
Columbia not members of the Federal Reserve System:
Office of the Comptroller of the Currency.

LIABILITIES

Since June 30, 1942, demand balances with and demand
deposits due to banks in the United States exclude
reciprocal interbank deposits. Reciprocal interbank de­
posits arise when two banks maintain deposit accounts
with each other.

Sources of Data:

AD
N

In the case of banks with one or more domestic branches,
the assets and liabilities reported are consolidations of
figures for the head office and all domestic branches. In
the case of a bank with foreign branches, net amounts due
from its own foreign branches are included in “ Other
assets” , and net amounts due to its own foreign branches
are included in “ Other liabilities” .

Data for noninsured trust companies not accepting
deposits are excluded. Data for some noninsured com­
mercial banks are omitted because of unavailability of
reports. On December 30, 1944, 83 noninsured trust
companies and 30 noninsured commercial banks were
excluded. Because of these exclusions, the number of
noninsured banks in the following tables does not agree
with the number shown in the previous section.

ASSETS

Assets and liabilities held in or administered by a
savings, bond, insurance, real estate, foreign, or any
other department of a bank, except a trust department,
are consolidated with the respective assets and liabilities
of the commercial department. “ Deposits of individuals,
partnerships, and corporations” include trust funds de­
posited by a trust department in a commercial or savings
department. Other assets held in trust are not included
in statements of assets and liabilities.

Total deposits shown in these tables are not the same
as the deposits upon which assessments paid to the Federal
Deposit Insurance Corporation are based. The assessment
base is slightly lower due to certain deductions which
may be claimed.

T able 104.

SUMMARY OF ASSETS AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS, JUNE 30, 1944
BANKS GROUPED ACCORDING TO INSURANCE STATUS AND TYPE OF BANK
(Amounts in thousands of dollars)
Mutual savings banks

Commercial banks
Asset, liability or capital account item

All
banks

Total

Insured1

Noninsured

Total

Insured

N oninsured

545,968

542,877

380,628

162,249

73,227,763
67,103,707
3,393,594
2,388,042
342,420

1,781,076
1,611,406
70,327
44,634
26,263
28,446

8,557,824
7,300,590
164,794
961,160
131,280

5,377,663
4,751,980
119,590
491,932
14,161

3,180,161
2,548,610
45,204
469,228
117,119

Loans, discounts, and overdrafts (including rediscounts)....................

25,487,832

21,071,435

,/20,732,091

339,344

4,416,397

J 3,111,443

1,304,954

Miscellaneous assets—total............................................................................
Bank premises owned, furniture and fixtures................................................
Other real estate— direct and indirect............................................................
All other miscellaneous assets..........................................................................

1,892,165
1,092,660
331,019
468,486
139,226,086

1,496,999
1,569,155
987,839
971,648
171,882
179,871
353,469
401,445 ,
125,385,978 £22,647,434

72,156
16,191
7,989
47,976
2,738,544

323,010
104,821
151,148
67,041
13,840,108

248,827
77,949
120,277
/
50,601
J 9,118,561

74,183
26,872
30,871
16,440
4,721,547

129.127.408

12.473.274
2,474,537
850,126
389,098
121,542
12.473.274
720,016
162,818
10,266
220,671 J

8.234.962

4.238.312

129.127.408

116,654,134 •'114,179,597
57,364,373
58,214,499
20,543,888
20,932,986
4,811,792
4.933.334
18,864,831
19,584,847
11,038,203
11,201,021
1,550,679
1,560,945
5,831
226,502

8.234.962

4.238.312

Miscellaneous liabilities— total......................................................................
Rediscounts and other borrowed money........................................................
All other miscellaneous liabilities....................................................................
Total liabilities (excluding capital accounts)....................................

824,268
86,692
737,576
129,951,676

778,509
86,440
692,069
117,432,643

757,250
84,240
673,010
114,936,847

21,259
2,200
19,059
2,495,796

45,759
252
45,507
12,519,033

20,494
25,265
252
25,013 ..........20,494
4,258,806
8,260,227

CAPITAL ACCOUNTS
Capital accounts— total...................................................................................
Capital stock, notes, and debentures.............................................................
Surplus
..
............................................................................................
Undivided profits, including all other capital accounts...............................
Total liabilities and capital accounts..................................................

9,274,410
2,995,981
4,203,295
2,075,134
139,226,086

7.953.335
2,991,265
3,271,672
1,690,398
125,385,978

7,710,587
2,894,735
3,190,416
1,625,436
122,647,434

242,748
96,530
81,256
64,962
2,738,544

1,321,075
4,716
931,623
384,736
13,840,108

462,741
858,334
4,716
665,281 ........266,342
196,399
188,337
4,721,547
9,118,561

Number of banks included...................................................................................

14,608

14,064

13,269

795

544

LIABILITIES
Deposits—total....................................................................................................
Demand deposits of individuals, partnerships, and corporations...............
Time deposits of individuals, partnerships, and corporations.....................
States and political subdivisions......................................................................
United States Government..............................................................................
Interbank............................................................................................................
Certified and officers’ checks, cash letters of credit, etc..............................
Not classified, including postal savings..........................................................

1 Includes 10 trust companies not engaged in deposit banking.
Back figures— See the following Annual Reports: 1943, pp. 78-79; 1942, pp. 78-79; 1941, pp. 122-125.




192

352

CORPORATION

27,190,581

75,008,839
68,715,113
3,463,921
2,432,676
368,683
28,446

INSURANCE

27,736,549

83,566,663
76,015,703
3,628,715
3,393,836
499,963
28,446

DEPOSIT

28,279,426

Securities— total.................................................................................................
United States Government obligations, direct and guaranteed...................
Obligations of States and political subdivisions............................................
Other bonds, notes, and debentures...............................................................
Corporate stocks................................................................................................

FEDERAL

ASSETS
Gash, balances with other banks, and cash items in process of col-

T a b le 1 0 5 .

SUMMARY OF A s s e t s AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS, DECEMBER 30, 1944
BANKS GROUPED ACCORDING TO INSURANCE STATUS AND TYPE OF BANK
(Amounts in thousands of dollars)
Commercial banks
Asset, liability or capital account item

All
banks

Total

Insured1

Mutual savings banks

Noninsured

Total

Insured

Noninsured

581,188

583,835

399,579

184,256

United States Government obligations, direct and guaranteed..................
Obligations of States and political subdivisions............................................
Other bonds, notes, and debentures..............................................................

82,053,067
75,896,226
3,423,732
2,385,706
347,403

2,230,876
2,056,562
76,329
46,026
26,878
25,081

9,559,461
8,327,763
126,986
970,101
134,611

6,112,598
5,508,720
95,789
493,394
14,695

3,446,863
2,819,043
31,197
476,707
119,916

Loans, discounts, and overdrafts (including rediscou nts)....................

26,079,480

21,707,210

i 21,354,758

352,452

4,372,270

J 3,110,134

1,262,136

M iscellaneous assets— t o t a l............................................................................
Bank premises owned, furniture and fixtures...............................................
Other real estate— direct and indirect............................................................
All other miscellaneous assets.........................................................................
T ota l assets.................................................................................................

1,783,700
1,057,751
242,137
483,812
152,617,916

1,511,125
1,459,031
955,941
940,042
145,109
139,049
410,075 .
379,940
137,829,775 <134,613,165

52,094
15,899
6,060
30,135
3,216,610

272,575
101,810
97,028
73,737
14,788,141

204,954
75,677
,
75,454
/
53,823
J 9,827,265

67,621
26,133
21,574
19,914
4,960,876

LIABILITIES
Deposits—to ta l................................................................................................... 142,076,855
Demand deposits of individuals, partnerships, and corporations...............
Time deposits of individuals, partnerships, and corporations.....................
States and political subdivisions.....................................................................
United States Government.............................................................................. [142,076,855
Interbank...........................................................................................................
Certified and officers’ checks, cash letters of credit, etc..............................
Not classified, including postal savings......................................................... J

128,701,304 Jl25,751,795
65,131,825
64,148,968
23,814,595
23,362,909
5,060,616
4,943,810
20,828,457
19,861,966
12,229,376
12,074,356
1,366,668
1,354,421
269,767
5,365

2,949,509
13,375,551
982,857
451,686
116,806
966,491 [ 13,375,551
155,020
12,247
264,402

J 8,910,338

4.465.213

8,910,338

4.465.213

926,049
124,486
801,563
143,002,904

891,356
123,893
767,463
129,592,660

871,103
121,549
749,554
126,622,898

20,253
2,344
17,909
2,969,762

34,693
593
34,100
13,410,244

24,715
90
24,625
8,935,053

9,978
503
9,475
4,475,191

CAPITAL ACCOUNTS
C apital accou n ts— t o ta l...................................................................................
Capital stock, notes, and debentures.............................................................
Surplus ..................................................................................................
Undivided profits, including all other capital accounts...............................
T ota l liabilities and capital a c c o u n ts..................................................

9,615,012
3,014,030
4,470,157
2,130,825
152,617,916

8,237,115
3,009,177
3,485,846
1,742,092
137,829,775

* 7,990,267
2,912,455
3,401,995
1,675,817
134,613,165

246,848
96,722
83,851
66,275
3,216,610

1,377,897
4,853
984,311
388,733
14,788,141

892,212
4,853
699,772
187,587
9,827,265

485,685

..... 284,539*

Number of banks included..................................................................................

14,597

14,054

13,268

786

543

192

351

1 Includes 10 trust companies not engaged in deposit banking.
Back figures—See Table 104 and the following Annual Reports: 1943, pp. 78-79; 1942, pp. 78-79; 1941, pp. 122-125.




201,146
4,960,876

BANKS

M iscellaneous liabilities— t o ta l.....................................................................
Rediscounts and other borrowed money........................................................
All other miscellaneous liabilities....................................................................
T ota l liabilities (excluding capital a cco u n ts)....................................

O OPERATING
F

29,746,309

84,283,943
77,952,788
3,500,061
2,431,732
374,281
25,081

LIABILITIES

30,327,497

93,843,404
86,280,551
3,627,047
3,401,833
508,892
25,081

AD
N

30,911,332

ASSETS

ASSETS
Cash, balances w ith other banks, and cash item s in process of col-

T a b le 1 0 6 .

A s s e t s AND LIABILITIES OF OPERATING INSURED COMMERCIAL BANKS, DECEMBER 30, 1944,

16
2

Ju n e 30, 1944 a n d D e c e m b e r 31, 1943
(Amounts in thousands of dollars)

ASSETS

Dec. 30,
1944

27,190,581
1,467,749
12,811,799

27,191,292
1,447,018
12,834,452

8,721,213
64,241
17,936
4,107,643

67,103,707

6,156,841
3,423,732
2,385,706

6,124,056
3,393,594
2,388,042

162,541
184,862

158,123
184,297

Total securities..............................

82,053,067

73,227,763

Loans, discounts, and overdrafts (including
rediscounts)— total................................. 21,354,758
Commercial and industrial loans (including
7,921,036
open market paper)....................................
Loans secured by agricultural commodities,
covered by purchase agreements of the
805,503
Commodity Credit Corporation...............
Other agricultural loans (excluding loans on
917,363
farm land).........................................




20,732,091
7,407,284

77,908,261
57,364,373
20,543,888

76,918,566
58,346,160
18,572,406

1,354,421

1,550,679

1,668,876

Governm ent deposits—to ta l........................... 24,811,141
United States Government— demand:
War loan and Series E bond accounts........ 19,455,586
303,205
Other accounts...............................................
103,175
United States Government—time...................
5,365
Postal savings....................................................
States and political subdivisions— demand. . . 4,520,308
423,502
States and political subdivisions—time..........

23,682,454

14,823,570

Deposits of individuals, partnerships, and
87,511,877
corporations— t o ta l......................
64,148,968
Demand.....................................................
23,362,909
Time..........................................................

8,382,577 Certified and officers’ checks, cash letters
of credit and travelers’ checks o u t­
68,615
standing, and am ounts due to Fed­
20,398
eral Reserve b a n k s.................................
4,438,232

9,665,368
285,343
117,206
4,636,858
7,097
13,220,074
4,353,497
7,673,192
395,059
316,032
5,790,533
16,775,686
6,159,925 Interbank deposits— t o t a l............................... 12,074,356 11,038,203 10,704,765
9,743,462
Banks in the United States— demand............. 11,063,174 U0,030,896
1,619,819
63,861
57,136
52,672
Banks in the United States—time...................
2,501,430
893,382
2938,813
947,651
Banks in foreign countries— demand..............
4,060
11,358
10,859
Banks in foreign countries—time....................
5,984,550
3,287,646
T ota l deposits.............................................. 125,751,795 114,179,597 104,115,777
2,342,211
O
Demand....................................................... 101,793,313 93,051,9U 81+,956,088
Time............................................................ 23,958,1*82 21,127,657 19,159,689
153,983
200,710
676,488
757,250
871,103
M iscellaneous liabilities—to ta l........
Bills payable, rediscounts, and other liabilities
64,678,099
45,679
84,240
121,549
for borrowed money.......................
55,006
58,232
72,693
Acceptances outstanding.........................
41,695
44,040
48,357
Dividends declared but not yet payable
45,449
45,499
46,728
Income collected but not earned............
18,843,488
197,759
245,245
278,974
Expenses accrued and unpaid................
290,900
279,994
302,802
Other liabilities.........................................
7,777,748

58,693,549

504,101

598,466

970,155

906,787

18,431,347
331,631
101,853
5,831
4,404,201
407,591

T ota l liabilities (excluding capital
126,622,898 114,936,847 104,792,265
a ccou n ts).....................................

CORPORATION

Other securities— total................................
Obligations of States and political subdivisions
Other bonds, notes, and debentures1. . .
Corporate stocks:
Federal Reserve banks........................
Other corporate stocks........................

Dec. 31,
1943

Dec. 30,
1944

INSURANCE

4,708,982
15,468,690
11,835,200
620,564
5,650,408
20,019,989
6,046,361
1,790,461
963,052

June 30,
1944

LIABILITIES AND CAPITAL

DEPOSIT

Obligations of the United States Govern­
75,896,226
ment— total........................................
Direct:
3,972,299
Treasury bills............................................
15,302,996
Treasury certificates of indebtedness. . .
15,780,732
Treasury notes..........................................
763,842
United States savings bonds...................
5,917,794
Other bonds maturing in 5 years or less
25,467,314
Other bonds maturing in 5 to 10 years.
5,796,636
Bonds maturing in 10 to 20 years..........
1,917,000
Bonds maturing after 20 years...............
977,613
Guaranteed obligations...............................

Dec. 31,
1943

FEDERAL

Cash, balances with other banks, and cash
items in process of collection— total. . 29,746,309
1,625,675
Currency and coin.............................................
Reserve with Federal Reserve banks.............. 14,259,603
Demand balances with banks in the United
States (except private banks and Amer­
9,732,661
ican branches of foreign banks)................
64,239
Other balances with banks in the United States
17,088
Balances with banks in foreign countries
4,047,043
Cash items in process of collection..........

June 30,
1944

Consumer loans to individuals:
Retail automobile instalment paper............
Other retail, repair and modernization in­
stalment loans.............................................
Personal instalment cash loans....................

174,164

169,333

191,742
317,571
1,204,933
2,269,381

172,911
312,608
1,207,383
2,220,652

2,264,758

2,296,144

7,453,726
7,710,587
7,990,267
Capital accoun ts—t o t a l...................................
2,874,548
2,894,735
2,912,455
Capital stock, notes, and debentures..............
3,089,817
3,190,416
3,401,995
Surplus................................................................
1,129,712
1,006,406
1,169,389
191,913
Undivided profits...............................................
495,724
482,955
506,428
310,389
1,205,670
1,414,365
T otal liabilities and capital accounts 134,613,165 122,647,434 112,245,991
921,583

449,614
3,156,607
737,930
59,374
884,782

468,271
3,153,238
743,728
61,303
1,044,980

448,577
3,203,587
785,826
57,939
860,182

Loans and securities— t o ta l................. 103,407,825

93,959,854

83,521,587

1,079,091
868,882
71,160
63,522

1,143,530
895,051
76,597
91,671

1,201,282
914,292
79,977
122,728

75,527

80,211

Loans to brokers and dealers in securities. . . .
Other loans for the purpose of purchasing or

353,469

62,801
216,599
11,930
88,610

51,660
205,919
11,792
84,098

25,622,389
680,101

17,570,199
655,191

299,489
30,127

275,981
40,499

23,442,333

14,852,101

22,569,642

13,936,664

845,005
25,712
1,974

897,046
16,901
1,490

13,269

13,274

T otal assets............................................... 134,613,165 122,647,434 112,245,991
Number of banks...................................................

13,268

13,269

13,274 Number of banks........................

13,268

127




BANKS

1 Includes obligations of United States government corporations and agencies not guaranteed by the United States government.
2 Revised.
Back figures—See the following Annual Reports: 1943, pp. 80-81; 1942, pp. 80-81; 1941, pp. 126-129; 1940, pp. 144-147; 1938, pp. 164-167.

O OPERATING
F

379,940

18,541,870

LIABILITIES

M iscellaneous assets— to ta l.............................
Customers’ liability on acceptances out­
standing.......................................................
Income accrued but not collected....................
Prepaid expenses
Other assets........................................................

84,285 Secured and preferred liabilities—t o t a l. . . . 24,843,282
Deposits secured by pledged assets pursuant
to requirements of law.............................. 23,846,867
331,830
Deposits preferred under provisions of law
901,915
but not secured by pledge of assets.........
44,625
Borrowings secured by pledged assets............
93,743
179,435
Other liabilities secured by pledged assets. . . .
757
11,920
95,850

26,632,106

AD
N

Bank prem ises, fu rn itu re and fixtures, and
other real estate— t o ta l.........................
Bank premises....................................................
Furniture and fixtures.......................................
Real estate owned other than bank premises. .
Investments and other assets indirectly repre­
senting bank premises or other real estate.

MEMORANDA
Pledged assets and securities loaned—total 27,727,300
United States Government obligations, direct
and guaranteed, pledged to secure lia­
26,831,454
bilities
561,779
Other assets pledged to secure liabilities........
Assets pledged to qualify for exercise of fidu­
ciary or corporate powers, and for pur­
300,421
poses other than to secure liabilities........
33,646
Securities loaned................................................

ASSETS

Real estate loans:
On farm land..................................................
On residential properties...............................
On other properties........................................
Loans to banks...................................................
All other loans (including overdrafts).............

160,456

Table 107.

SUMMARY OF ASSETS AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS,

1942-1944

BANKS GROUPED ACCORDING TO INSURANCE STATUS AND BY TYPE OF BANK
(Amounts in thousands of dollars)
Asset, liability or capital account item

June 30, 1942
ALL BANKS

IN SU RED

December 31, 1942
NON IN SU RED

ALL BANKS

to
oo

June 30, 1943

N O N IN SU R E D

ALL BANKS

N O N IN SU R E D

109.305.505
28,809,564
46,036,206
8,286,363
23,961,174
2,212,198

97.713.102
27,723,412
41,572,955
7,037,939
19,647,248
1,731,548

11.592.403
1,086,152
4,463,251
1,248,424
4,313,926
480,650

116.983.581
26,771,369
57,912,891
7,914,650
22,294,293
2,090,378

105.414.414
25,707,425
52,805,608
6,775,165
18,405,526
1,720,690

11.569.167
1,063,944
5,107,283
1,139,485
3,888,767
369,688

T otal liabilities and capital a c c o u n ts ..
Total deposits............................................
Miscellaneous liabilities............................
Total capital accounts..............................

92.081.685
82,986,623
665,434
8,429,628

80.765.023
73,026,710
603,606
7,134,707

11.316.662
9,959,913
61,828
1,294,921

109.305.505
100,152,825
638,689
8,513,991

97.713.102
89,868,741
587,315
7,257,046

11.592.403
10,284,084
51,374
1,256,945

116.983.581
107,621,968
657,726
8,703,887

105.414.414
97,321,366
606,085
7,486,963

11.569.167
10,300,602
51,641
1,216,924

Number of banks included.......................... .

14,827

13,456

1,371

14,731

13,403

1,328

14,666

13,363

1,303

ALL
COM M ER CIA L

IN SU RED
COM M ERCIAL

NON IN SU RED
COMM ERCIAL

ALL
CO M M ERCIAL

IN S U R E D
C O M M ERCIAL

N O N IN SU R E D
C O M M ERCIAL

ALL
CO M M ERCIAL

IN S U R E D
COM M E R C IA L

N O N IN SU R E D
CO M M ERCIAL

T otal assets..................................................
Cash and amounts due from other banks
United States Government obligations1. .
Other securities.........................................
Loans, discounts, and overdrafts............
Miscellaneous assets.................................

80.394.510
24,914,120
26,457,825
6,982,370
20,303,587
1,736,608

78.709.455
24,381,860
25,936,082
6,790,346
19,922,804
1,678,363

1.685.055
532,260
521,743
192,024
380,783
58,245

97.368.511
28,139,627
41,483,606
6,815,643
19,248,743
1,680,892

95.459.111
27,593,375
40,711,697
6,632,557
18,906,869
1,614,613

1.909.400
546,252
771,909
183,086
341,874
66,279

104.555.146
26,049,517
52,627,666
6,532,988
17,704,857
1,640,118

102.405.464
25,537,614
51,541,848
6,348,275
17,392,157
1,585,570

2.149.682
511,903
1,085,818
184,713
312,700
54,548

T otal liabilities and capital a c c o u n ts ..
Total deposits............................................
Miscellaneous liabilities............................
Total capital accounts..............................

80.394.510
72,588,851
622,388
7,183,271

78.709.455
71,162,431
594,204
6,952,820

1.685.055
1,426,420
28,184
230,451

97.368.511
89,478,713
604,225
7,285,573

95.459.111
87,820,427
582,450
7,056,234

1.909.400
1,658,286
21,775
229,339

104.555.146
96,475,864
617,011
7,462,271

102.405.464
94,582,458
593,666
7,229,340

2.149.682
1,893,406
23,345
232,931

14,280

13,403

877

14,185

13,347

838

14,121

13,302

819

Number of banks included..........................

ALL
M UTUAL
SA V IN G S

IN S U R E D
M U TU A L
SAVIN GS

N ON IN SU RED
M UTU AL
SAVIN GS

A LL
M U TU A L
SAV IN G S

IN S U R E D
M UTUAL
SA V IN G S

N O N IN SU R E D
M UTUAL
SA V IN G S

ALL
M U TU A L
S A VIN G S

IN S U R E D
M UTUAL
SA V IN G S

N O N IN SU R E D
MUTUAL
SAV IN G S

T otal assets.........................................................
Cash and amounts due from other banks.. . .
United States Government obligations1.........
Other securities.................................................
Loans, discounts, and overdrafts....................
Miscellaneous assets.........................................

11.687.175
753,240
3,881,884
1,655,498
4,829,088
567,465

2.055.568
143,320
686,409
421,621
692,324
111,894

9.631.607
609,920
3,195,475
1,233,877
4,136,764
455,571

11.936.994
669,937
4,552,600
1,470,720
4,712,431
531,306

2.253.991
130,037
861,258
405,382
740,379
116,935

9.683.003
539,900
3,691,342
1,065,338
3,972,052
414,371

12.428.435
721,852
5,285,225
1,381,662
4,589,436
450,260

3.008.950
169,811
1,263,760
426,890
1,013,369
135,120

9.419.485
552,041
4,021,465
954,772
3,576,067
315,140

T otal liabilities and capital a c c o u n ts..........
Total deposits....................................................
Miscellaneous liabilities....................................
Total capital accounts......................................

11.687.175
10,397,772
43,046
1,246,357

2.055.568
1,864,279
9,402
181,887

9.631.607
8,533,493
33,644
1,064,470

11.936.994
10,674,112
34,464
1,228,418

2.253.991
2,048,314
4,865
200,812

9.683.003
8,625,798
29,599
1,027,606

12.428.435
11,146,104
40,715
1,241,616

3.008.950
2,738,908
12,419
257,623

9.419.485
8,407,196
28,296
983,993

Number of banks included..................................

547

53

494

546

56

490

545

61

484




CORPORATION

11.316.662
1,142,180
3,717,218
1,425,901
4,517,547
513,816

INSURANCE

80.765.023
24,525,180
26,622,491
7,211,967
20,615,128
1,790,257

DEPOSIT

92.081.685
25,667,360
30,339,709
8,637,868
25,132,675
2,304,073

FEDERAL

T otal assets.................................................
Cash and amounts due from other banks
United States Government obligations1. .
Other securities.........................................
Loans, discounts, and overdrafts............
Miscellaneous assets.................................

December 31, 1943

June 30, 1944

December 30, 1944

A LL B AN K S

IN SU RE D

Total assets..................................................
Cash and amounts due from other banks
United States Government obligations1. .
Other securities..........................................
Loans, discounts, and overdrafts............
Miscellaneous assets..................................

127.794.459
28,570,225
66,156,026
7,444,630
23,652,670
1,970,908

120.609.856
27,750,323
62,537,544
6,592,571
21,916,838
1,812,580

7.184.603
819,902
3,618,482
852,059
1,735,832
158,328

139.226.086
28,279,426
76,015,703
7,550,960
25,487,832
1,892,165

131.765.995
27,571,209
71,855,687
6,749,739
23,843,534
1,745,826

7.460.091
708,217
4,160,016
801,221
1,644,298
146,339

152.617.916
30,911,332
86,280,551
7,562,853
26,079,480
1,783,700

144.440.430
30,145,888
81,404,946
6,760,719
24,464,892
1,663,985

8.177.486
765,444
4,875,605
802,134
1,614,588
119,715

Total liabilities and capital accounts..
T otal deposits............................................
Miscellaneous liabilities............................
Total capital accounts...............................

127.794.459
118,099,719
733,447
8,961,293

120.609.856
111,649,837
698,381
8,261,638

7.184.603
6,449,882
35,066
699,655

139.226.086
129,127,408
824,268
9,274,410

131.765.995
122,414,559
782,515
8,568,921

7.460.091
6,712,849
41,753
705,489

152.617.916
142,076,855
926,049
9,615,012

144.440.430
134,662,133
895,818
8,882,479

8.177.486
7,414,722
30,231
732,533

Number of banks included............................

214,632

13,458

21,174

14,608

13,461

1,147

14,597

13,460

1,137

A LL
COM M ERCIAL

IN SURED
COMMERCIAL

N O N IN SU R E D
COM M E RCIAL

ALL
C OM M E RCIAL

IN S U R E D
CO M M ERCIAL

N O N IN SU R E D
COM M ER CIA L

ALL
COM M ERCIAL

IN S U R E D
COM M ERCIAL

N O N IN SU R E D
C O M M ERCIAL

Total assets........................................................
Cash and amounts due from other banks.. .
United States Government obligations1.......
Other securities...............................................
Loans, discounts, and overdrafts..................
Miscellaneous assets.......................................

114.734.158
27,766,100
60,059,086
6,145,420
19,170,886
1,592,666

112.245.991
27,191,292
58,693,549
5,984,550
18,843,488
1,533,112

2.488.167
574,808
1,365,537
160,870
327,398
59,554

125.385.978
27,736,549
68,715,113
6,293,726
21,071,435
1,569,155

122.647.434
27,190,581
67,103,707
6,124,056
20,732,091
1,496,999

2.738.544
545,968
1,611,406
169,670
339,344
72,156

137.829.775
30,327,497
77,952,788
6,331,155
21,707,210
1,511,125

134.613.165
29,746,309
75,896,226
6,156,841
21,354,758
1,459,031

3.216.610
581,188
2,056,562
174,314
352,452
52,094

Total liabilities and capital accounts.......
Total deposits..................................................
Miscellaneous liabilities.................................
Total capital accounts....................................

114.734.158
106,349,452
697,676
7,687,030

112.245.991
104,115,777
676,488
7,453,726

2.488.167
2,233,675
21,188
233,304

125.385.978
116,654,134
778,509
7,953,335

122.647.434
114,179,597
757,250
7,710,587

2.738.544
2,474,537
21,259
242,748

137.829.775
128,701,304
891,356
8,237,115

134.613.165
125,751,795
871,103
7,990,267

3.216.610
2,949,509
20,253
246,848

Number of banks included................................

214,087

13,274

2813

14,064

13,269

795

14,054

13,268

786

IN S U R E D
M U TU A L
S A V IN G S

N O N IN SU R E D
M U TU AL
S A VIN G S

ALL
M U TU A L
SA V IN G S

N O N IN SU R E D

IN S U R E D
M UTUAL
S A V IN G S

N O N IN SU R E D
MUTUAL
SAV IN G S

13.060.301
804,125
6,096,940
1,299,210
4,481,784
378,242

8.363.865
559,031
3,843,995
608,021
3,073,350
279,468

4.696.436
245,094
2,252,945
691,189
1,408,434
98,774

13.840.108
542,877
7,300,590
1,257,234
4,416,397
323,010

9.118.561
380,628
4,751,980
625,683
3,111,443
248,827

4.721.547
162,249
2,548,610
631,551
1,304,954
74,183

14.788.141
583,835
8,327,763
1,231,698
4,372,270
272,575

9.827.265
399,579
5,508,720
603,878
3,110,134
204,954

4.960.876
184,256
2,819,043
627,820
1,262,136
67,621

Total liabilities and capital accounts.........
Total deposits....................................................
Miscellaneous liabilities...................................
Total capital accounts......................................

13.060.301
11,750,267
35,771
1,274,263

8.363.865
7,534,060
21,893
807,912

4.696.436
4,216,207
13,878
466,351

13.840.108
12,473,274
45,759
1,321,075

9.118.561
8,234,962
25,265
858,334

4.721.547
4,238,312
20,494
462,741

14.788.141
13,375,551
34,693
1,377,897

9.827.265
8,910,338
24,715
892,212

4.960.876
4,465,213
9,978
485,685

Number of banks included..................................

545

184

361

544

192

352

543

192

351

1 Includes both direct and guaranteed obligations.
2 Revised.
Back figures— See the Annual Report for 1941 pp. 122-125.




BANKS

Total assets.........................................................
Cash and amounts due from other banks.. . .
United States Government obligations1.........
Other securities.................................................
Loans, discounts, and overdrafts....................
Miscellaneous assets.........................................

O OPERATING
F

ALL
M UTUAL
S A V IN G S

ALL BANKS

LIABILITIES

N O N IN SU RE D
M U TU A L
SA V IN G S

NO N IN SU RED

AD
N

IN SU RE D
M UTU AL
SAVIN GS

ALL BANKS

ASSETS

A LL
M U TU A L
SAVIN GS

N O N IN SU R E D

to

T a b le 1 08 .

PERCENTAGE DISTRIBUTION OF ASSETS AND LIABILITIES OF OPERATING INSURED COMMERCIAL BANKS

C a l l D a t e s , 1934-1944
________________________________________________________________________________________________________________________________________________________
1938

1937

1936

1935

1934

^
CO

1939

Asset or liability item

Total assets ...........................................................................
Cash, balances with other banks, and cash items

Dec. 31

100.0%

100.0%

June 29
100.0%

Dec. 31

June 30

Dec. 31

June 30

Dec. 31

June 30

Dec. 31

June 30

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Dec. 30
100.0%

27.2

26.2

28.0

26.5

27.5

30.1

30.2

32.6

34.7

39.5

41.4

39.7

38.6

37.8

37.3

37.8

37.0

35.5

23.7
5.2
7.5
1.6

25.4
5.2
7.1
1.4

26.1
5.5
7.3
1.4

26.1
5.2
7.0
1.2

27.6
5.2
7.4
1.2

26.3
4.9
7.4
1.1

25.5
4.9
7.1
1.1

25.3
4.8
6.6
1.1

24.9
4.9
6.4
1.1

25.6
5.3
6.0
.9

25.3
5.3
5.5
.9

24.6
5.2
4.9
.8

Loans, discounts, and overdrafts (including re­
discounts) ................................................................

35.0

31.5

30.7

28.9

28.2

28.4

31.0

30.9

28.9

28.2

27.0

26.7

Miscellaneous assets— to ta l...........................................
Bank premises owned, furniture and fixtures...............
Other real estate— direct and indirect1.........................
All other miscellaneous assets.........................................

5.5
2.7
1.0
1.8

5.3
2.6
1.0
1.7

4.8
2.6
1.1
1.1

4.4
2.3
1.1
1.0

4.2
2.2
1.1
.9

3.9
2.1
1.0
.8

3.9
2.1
1.0
.8

3.8
2.1
1.0
.7

3.7
2.2
.9
.6

3.8
2.0
1.1
.7

3.4
1.9
1.0
.5

3.1
1.7
.9
.5

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

82.5

84.0

85.3

86.7

87.0

87.6

87.2

87.1

87.3

87.7

88.0

88.8

34.4

36.0

38.1

39.5

40.0

41.6

41.3

40.8

40.5

41.3

41.6

43.0

26.1
5.5
3.9
1.5
10.2
.9

25.1
5.6
3.6
1.1
10.7
1.9

26.0
6.2
1.7
.8
11.6
.9

24.6
6.0
1.7
.5
12.6
1.8

24.2
6.2
2.1
.4
12.5
1.6

24.0
5.8
1.7
.2
12.6
1.7

25.4
6.4
1.2
.2
11.2
1.5

25.8
6.0
1.5
.2
11.3
1.5

25.8
6.3
1.0
.2
12.2
1.3

24.7
6.2
1.5
.2
12.8
1.0

24.1
6.2
1.2
.1
13.4
1.4

22.9
5.4
1.3
.1
15.1
1.0

23.1
.2
2
2.9

22.8
.1
22.7

21.6
.1
21.5

1.1
.1
1.0

1.2
.1
1.1

1.1
.1
1.0

1.2

1.1
.1
1.0

.9

1.0

1.0

1.2

.9

1.0

1.0

.9
.1
.8

14.4
7.7
4.5
2.2

13.2
7.2
4.1
1.9

13.1
7.1
4.0
2.0

12.2
6.5
3.8
1.9

11.8
6.0
3.9
1.9

11.3
5.5
3.9
1.9

11.6
5.6
4.0
2.0

11.8
5.6
4.2
2.0

11.8
5.6
4.2
2.0

11.3
5.3
4.1
1.9

1 .0
1
5.0
4.0
2.0

10.3
4.6
3.9
1.8

13,896

14,137

14,175

14,123

14,059

13,970

13,885

13,795

13,723

13,659

13,569

13,535

United States Government obligations, direct and

Total liabilities and capital accounts.............................
Deposits— total
.............................................................
Demand deposits of individuals, partnerships, and
corporations...............................................................
Time deposits of individuals, partnerships, and
corporations...............................................................
States and political subdivisions.....................................
United States Government..............................................
Postal savings .................................................................
Interbank...........................................................................
Certified and officers’ checks, cash letters of credit, etc.
Miscellaneous liabilities—total.....................................
nf’ViOT V in rrn w P n TYinnPV

All other miscellaneous liabilities...................................
Capital accounts—total...................................................
Capital stock, notes, and debentures.............................
Surplus...............................................................................
Undivided profits, including all other capital accounts

Number of banks included......................................................




CORPORATION

24.2
40.3

INSURANCE

24.1
39.1

DEPOSIT

21.5
38.0

FEDERAL

June 30

1940

1943

1942

1941

1944

June 29
T otal assets.............................................................................................................

June 30

Dec. 31

June 30

Dec. 31

June 30

Dec. 31

June 30

Dec. 30

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

34.3

33.6

31.0

28.9

24.9

24.2

22.2

22.0

Corporate stocks...............................................................................................

34.2
24.1
5.1
4.3
.7

36.0
26.5
4.9
4.0
.6

36.5
27.3
4.8
3.8
.6

41.6
33.1
4.4
3.6
.5

49.6
42.7
3.7
2.8
.4

56.6
50.3
3.4
2.5
.4

57.6
52.3
2.9
2.1
•
3

59.7
54.7
2.8
1.9
.3

61.0
56.4
2.5
1.8
.3

Loans, d iscounts, and overdrafts (including rediscou n ts)....................

25.9

26.0

27.2

27.6

25.3

19.8

17.0

16.8

16.9

15.9

M iscellaneous assets— t o t a l............................................................................
Bank premises owned, furniture and fixtures..............................................
Other real estate—direct and indirect............................................................
All other miscellaneous assets.........................................................................

2.9
1.6
.8
.5

2.6
1.4
.7
.5

2.5
1.5
.6
.4

2.3
1.4
.5
.4

2.1
1.3
.4
.4

1.7
1.1
.3
.3

1.5
1.0
.2
.3

1.4
.9
.2
.3

1.2
.8
.1
.3

1.1
.7
.1
.3

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

89.7
45.8
21.2
5.4
.9
.1
14.9
1.4

89.9
47.1
20.8
5.5
.9
.1
14.4
1.1

90.4
47.6
19.7
5.4
2.3
.1
13.9
1.4

90.4
49.8
18.9
5.5
2.3
.1
12.8
1.0

92.0
49.3
16.5
4.6
8.6

92.3
52.1
16.5
4.6
7.6

92.8
52.1
16.5
4.2
9.0

93.1
46.7
16.8
3.9
15.4

93.5
47.6
17.4
3.7
14.8

11.7
1.3

10.4
1.1

9.5
1.5

9.0
1.3

9.0
1.0

M iscellaneous liabilities— t o ta l.....................................................................
Rediscounts and other borrowed money........................................................
All other miscellaneous liabilities....................................................................

.8

.8

.8

.7

.8

.6

.6

.6

.8

.8

.8

.7

.8

.6

.6

.6

.6
.1
.5

.6
.1
.5

Capital accou n ts— t o ta l...................................................................................
Capital stock, notes, and debentures.............................................................
Surplus...............................................................................................................
Undivided profits, including all other capital accounts...............................

10.1
4.4
3.8
1.9

9.5
4.1
3.6
1.8

9.3
3.9
3.6
1.8

8.9
3.7
3.5
1.7

8.8
3.6
3.5
1.7

7.4
3.0
2.9
1.5

7.1
2.8
2.8
1.5

6.6
2.6
2.7
1.3

6.3
2.4
2.6
1.3

5.9
2.2
2.5
1.2

13,480

13,438

13,423

13,427

13,403

13,347

13,302

13,274

13,269

13,268

Number of banks included......................................................................................

BANKS

100.0%

89.1
44.1
22.5
5.5
1.2
.1
14.9
.8

T otal liabilities and capital a cco u n ts .............................................................

O OPERATING
F

100.0%

Deposits—t o ta l...................................................................................................
Demand deposits of individuals, partnerships, and corporations...............
Time deposits of individuals, partnerships, and corporations.....................
States and political subdivisions.....................................................................
United States Government.......................... ...................................................
Postal savings....................................................................................................
Interbank...........................................................................................................
Certified and officers’ checks, cash letters of credit, etc..............................

LIABILITIES

37.2

34.8
24.3
5.3
4.5
.7

AD
N

36.4

Securities—t o ta l................................................................................................
United States Government obligations, direct and guaranteed..................

ASSETS

Cash, balances w ith other banks, and cash item s in process of co l­
lection .......................................................................................................

Dec. 31

1 Includes direct only prior to December 31, 1938.
2 Includes circulating notes outstanding.




CO

CO

to

E x a m i n e r s ' E v a l u a t i o n o f I n s u r e d C o m m e r c ia l B a n k s

Table 110.

Examiners’ appraisal of assets, liabilities, and capital of insured commercial
banks examined in 1944
Banks grouped according to amount of deposits

CORPORATION




appraised value of assets regarded as suitable for bank
investment; and (2) substandard, which represents the
appraised value of assets believed by the examiners to
involve a substantial degree of risk, or to be otherwise
undesirable for bank investment. For a description of the
procedure followed in examiners’ evaluation of assets, see
the Annual Report of the Corporation for 1938, pages
61-78.
Appraised value of United States Government obliga­
tions exceeds book value because the excess of redemption
value of United States Savings Bonds over book value is

INSURANCE

The tables in this section present a summary of the
evaluation of bank assets and liabilities made by exam­
iners of the Federal supervisory agencies. Since bank
examinations are made at various dates during the year,
these tables differ from those in the previous sections,
which are based on reports submitted by the banks for
specified dates. These tables have been prepared from
reports of examination available during the year and do
not cover precisely the banks examined in that year.
The figures for 1944 include 12,945 insured commercial
banks operating at the close of the year and 38 banks

DEPOSIT

Examiners’ appraisal of assets, liabilities, and capital of insured commercial
banks examined in 1939-1944

FEDERAL

Table 109.

greater than the examiners' deductions of unamortized
premiums on other United States Government bonds
purchased above par. Appraised value of other securities
and of loans and discounts do not include assets not
shown on the books. Assets not on the books, other than
United States Government obligations, are included in
the appraised value of fixed and miscellaneous assets.
Evaluation of Liabilities and Capital

Evaluation of Assets
Book value of assets is the net value, after deduction

Examiners’ deductions from total assets represent

the difference between the appraised value and book
value of assets shown on the books.

133




BANKS

Appraised value of total assets represents the value
of all assets as determined by examiners and is segregated
into two groups: (1) not criticized, which represents the

Adjusted capital accounts equal book value of total
capital accounts plus the value of assets not shown on
the books, less examiners' deductions from total assets,
and less liabilities not shown on the books. The term
“ adjusted capital accounts" corresponds to the term
“ net sound capital” used in the Annual Reports of the
Corporation for the years 1939-1943.

COMMERCIAL

Assets not on the books represent the determinable
sound value of assets which are not included in the bank's
statement of assets or are carried at nominal values.

Book value of capital accounts refers to the net
worth or equity of the stockholders (including holders
of capital notes and debentures) shown on the books at
the time of examination.

O INSURED
F

of valuation and premium allowances, at which the assets
are carried on the books of the banks at the time of
examination.

Adjusted liabilities include all liabilities shown on
the books and such others as have been determined by
the examiners.

EXAMINERS’ EVALUATION

which ceased operations or were taken over by other banks
during the year. Figures for 307 insured banks operating
at the close of the year were not included in the tabula­
tions: 10 because they were not engaged in deposit
banking, and 297 because reports of examination were,
for various reasons, not available for tabulation. For
252 banks the figures are derived from reports of examina­
tion made in the last three months of 1943.

CO

4^
Table 109.

E x a m in e r s ’ A p p r a is a l o f A s s e t s , L i a b ilit ie s , a n d C a p it a l o f I n s u r e d C o m m e r c ia l B a n k s E x a m in e d in

1939-1944

(Amounts in thousands of dollars)
1939

1940

1941

65,184,983
36,777
255,876
64,965,884
62,1+13,890
2,552,1+91+

71,697,320
19,851
174,037
71,543,134
69,512,512
2,030,622

Cash and due from b a n k s.................................................................................

18,643,164

23,308,292

24,107,119

U. S. G overnm ent obligations—book v a lu e .................................................
Appraised value1..................................................................................................

8

8

102,021,738
26,346
97,144
101,950,940
100,690,81+3
1,260,097

1944

118,843,675
20,897
54,193
118,810,379
117,981+,985
825,391+

24,618,882

25,342,868

26,036,187

26,799,729
26,807,855

50,067,210
50,073,639

65,089,147
65,096,303

221,315,369
221,234,173
2
20,027,268
1,206,905

222,758,101
222,698,345
221,659,1+91
1,038,851+

225,759,640
225,722,984
*21+,970,1+12
752,572

6,682,798
6,651,951
6,031+,558
617,393

6,055,350
6,040,897
5,578,71+3
1+62,151+

5,805,695
5,800,937
5,1+99,037
301,900

Loans and discou nts— book v a lu e ...................................................................
Appraised value...................................................................................................
Not criticized.....................................................................................................
Substandard......................................................................................................

16,055,860
15,898,191
11+,669,527
1,228,661,

17,037,342
16,924,352
15,870,628
1,053,721+

19,544,145
19,467,422
18,618,309
81+9,113

20,136,352
20,071,927
19,303,969
767,958

18,290,697
18,251,118
17,710,001
51+1,117

19,562,561
19,539,481
19,180,11+1+
359,337

Fixed and m iscellaneous assets— book v a lu e ...............................................
Appraised value...................................................................................................
Not criticized.....................................................................................................
Substandard......................................................................................................

2,240,032
2,177,196
1,61+2,691+
531>,502

2,081,248
2,034,895
1,571+,979
1+59,916

2,286,416
2,245,609
1,816,672
1+28,937

2,212,195
2,173,689
1,81+1+,811+
328,875

2,265,613
2,242,418
1,985,592
256,826

2,350,085
2,337,471
2,173,311+
161+,157

T ota l liabilities— book v a lu e .............................................................................
Other liabilities—book value..............................................................................
Liabilities not on the books................................................................................
Adjusted total liabilities.....................................................................................

51,781,865
50,976,656
805,209
10,436
51,792,301

58,627,148
57,919,547
707,601
12,927
58,640,075

65,012,512
64,218,740
793,772
6,084
65,018,596

73,529,826
72,755,007
774,819
7,362
73,537,188

94,882,516
94,087,113
795,403
4,491
94,887,007

111,242,503
110,177,295
1,065,208
7,563
111,250,066

T ota l capital accoun ts— book v a lu e ...............................................................
Assets not on the books......................................................................................
Examiners’ deductions from total assets..........................................................
Liabilities not on the books................................................................................
Adjusted capital accounts..................................................................................

6,472,560
38,996
340,697
10,436
6,160,423

6,557,835
36,777
255,876
12,927
6,325,809

6,684,808
19,851
174,037
6,084
6,524,538

6,920,130
20,089
145,741
7,362
6,787,116

7,139,222
26,346
97,144
4,491
7,063,933

7,601,172
20,897
54,193
7,563
7,560,313




CORPORATION

O ther securities— b ook valu e............................................................................
Appraised value...................................................................................................
Not criticized.....................................................................................................
Substandard......................................................................................................

INSURANCE

8

80,449,956
20,089
145,741
80,324,304
78,610,078
1,711+,226

1943

DEPOSIT

Substandard......................................................................................................

58,254,425
38,996
340,697
57,952,724
51+,982,653
2,970,071

Total assets—book v a lu e....................................................................................
Assets not on the books......................................................................................
Examiners’ deductions........................................................................................
Appraised value...................................................................................................

1942

FEDERAL

Asset, liability or capital item

Adjusted capital accounts per $100 of—
Appraised value of total assets....................
Book capital...................................................

Substandard loans and discounts per $100 of—
Appraised value of loans and discounts...................

Number of banks.

$9.74
96.46

$9.12
97.60

$8.45
98.08

$6.93
98.95

$6.36
99.46

5.12
48.21

3.93
40.35

2.84
31.12

2.13
25.26

1.24
17.84

.69
10.92

7.73

6.23

4.36

3.83

2.9

1.84

13,505

13,437

13,308

13,303

13,207

12,983

1 Appraised value is in excess of book value due to the excess of redemption value of U. S. Savings Bonds not shown on the books over examiners’ deductions of unamortized
premiums on U. S. Government obligations purchased above par.
2 Prior to 1942 U. S. Government obligations not available separately, included under other securities.

O INSURED
P
COMMERCIAL
BANKS

135




EXAMINERS’ EVALUATION

Substandard assets per $100 of—
Appraised value of total assets. . . .
Adjusted capital accounts..............

$10.63
95.18

CO

Oi
T a b le 1 1 0 .

EXAMINERS’ APPRAISAL OF ASSETS, LIABILITIES, AND CAPITAL OF INSURED COMMERCIAL BANKS EXAMINED IN 1944
BANKS GROUPED ACCORDING TO AMOUNT OF DEPOSITS
(Amounts in thousands of dollars)

Asset, liability or capital item

$250,000
Af 1 O
DO
U 1Q
1 CD

$1,000,000
to
$2,000,000

$2,000,000
to
$5,000,000

$5,000,000
to
$10,000,000

$10,000,000
to
$50,000,000

More than
$50,000,000

8,121,511
1,557
5,404
8,117,664
8,038,280
79,384

17,851,335
3,112
13,417
17,841,030
17,680,274
160,756

74,752,498
8,467
22,234
74,738,731
74,342,459
396,272

53,777
40
57
53,760
52,820
940

555,719
469
502
555,686
548,363
7,323

2,324,557
1,701
1,406
2,324,852
2,301,135
23,717

5,298,445
2,744
3,556
5,297,633
5,245,057
52,576

9,885,833
2,807
7,617
9,881,023
9,776,597

26,036,187

22,440

200,549

747,529

1,543,449

2,597,352

1,935,285

4,072,948

14,916,635

U. S. Governm ent obligations—book value
Appraised value1.............................................

65,089,147
65,096,303

16,124
16,151

209,365
209,694

1,009,900
1,011,353

2,468,966
2,471,132

4,900,364
4,902,412

4,351,255
4,351,956

9,925,487
9,925,857

42,207,686
42,207,748

Other securities— book value.......................
Appraised value...............................................
Not criticized.................................................
Substandard..................................................

5,805,695
5,800,937
5,499,037
301,900

1,898
1,893
1,690
203

23,390
23,370
21,497
1,873

121,706
121,590
115,455
6,135

318,016
317,701
304,300
13,401

710,094
709,460
680,303
29,157

559,668
558,950
536,181
22,769

1,011,901
1,011,245
965,209
46,036

3,059,022
3,056,728
2,874,402
182,326

Loans and d iscou nts—book v a lu e ..............
Appraised value...............................................
Not criticized.................................................
Substandard..................................................

19,562,561
19,539,481
19,180,144
359,337

12,513
12,482
11,889
593

116,383
116,047
111,141
4,906

421,853
420,951
405,252
15,699

904,539
902,478
869,790
32,688

1,542,601
1,538,908
1,480,541
58,367

1,152,740
1,150,099
1,108,232
41,867

2,515,380
2,509,166
2,437,274
71,892

12,896,552
12,889,350
12,756,025
133,325

2,350,085
2,337,471
2,173,314
164,157

802
794
650
144

6,032
6,026
5,482
544

23,569
23,429
21,546
1,883

63,475
62,873
56,386
6,487

135,422
132,891
115,989
16,902

122,563
121,374
106,626
14,748

325,619
321,814
278,986
42,828

1,672,603
1,668,270
1,587,649
80,621

111,242,503
110,177,295
1,065,208
7,563
111,250,066

46,208
46,037
171
12
46,220

499,767
498,687
1,080
60
499,827

2,136,012
2,132,185
3,827
138
2,136,150

4,903,583
4,895,176
8,407
256
4,903,839

9,169,727
9,145,860
23,867
462
9,170,189

7,559,347
7,535,770
23,577
200
7,559,547

16,704,103
16,612,289
91,814
2,427
16,706,530

70,223,756
69,311,291
912,465
4,008
70,227,764

Gash and due fro m b a n k s.............................

Fixed and m iscellaneous assets— book value
Appraised value.............................................
Not criticized...............................................
Substandard................................................
T ota l liabilities— book v a lu e ......................
Total deposits................................................
Other liabilities— book value.......................
Liabilities not on the books.........................
Adjusted total liabilities...............................




104,426

CORPORATION

118,843,675
20,897
54,193
118,810,379
117,98^,985
825,394

T ota l assets— book v alu e...............................
Assets not on the books.................................
Examiners’ deductions....................................
Appraised value...............................................
Not criticized.................................................
Substandard..................................................

INSURANCE

$500,000
to
$1,000,000

DEPOSIT

$250,000
to
$500,000

FEDERAL

Banks with deposits of—
All
banks

7,601,172
20,897
54,198
7,563
7,560,313

7,569
40
57
12
7,540

55,952
469
502
60
55,859

188,545
1,701
1,406
138
188,702

394,862
2,744
3,556
256
393,794

716,106
2,807
7,617
462
710,834

562,164
1,557
5,404
200
558,117

1,147,232
3,112
13,417
2,427
1,134,500

4,528,742
8,467
22,234
4,008
4,510,967

A djusted capital accou n ts per $100 o f—
Appraised value of total assets.......................
Book capital.................................................

$6.36
99.46

$14.03
99.62

$10.05
99.83

$8.12
100.08

$7.43
99.73

$7.19
99.26

$6.88
99.28

$6.36
98.89

$6.04
99.61

S ubstandard assets per $100 o f—
Appraised value of total assets.......................
Adjusted capital accounts...............................

.69
10.92

1.75
12.47

1.32
13.11

1.02
12.57

.99
13.35

1.06
14.69

.98
14.22

.90
14.17

.53
8.78

S ubstandard loans and discou nts per
$100 o f—
Appraised value of loans and discounts.........

1.84

4.75

4.23

3.73

3.62

3.79

3.64

2.87

1.03

12,983

241

1,297

2,888

3,423

2,950

1,101

834

249

Number of banks..............................................

COMMERCIAL
BANKS

137




O INSURED
F

1 Appraised value is in excess of book value due to the excess of redemption value of U. S. Savings Bonds not shown on the books over the examiners’ deductions of unamortized premiums 011 U. S. Government bonds purchased above par.

EXAMINERS’ EVALUATION

T ota l capital accou n ts— book v a lu e ............
Assets not on the books.................................
Examiners' deductions from total assets.......
Liabilities not on the books...........................
Adjusted capital accounts...............................

E a r n in g s , E x p e n se s ,

Table 111.

and

D iv id e n d s

op

I n su r e d B a n k s

Earnings, expenses, and dividends of insured banks, 1944
By class of bank

Table 112.

Ratios of earnings, expenses, and dividends of insured banks, 1944
By class of bank

Table 113.




Earnings, expenses, and dividends of insured commercial banks operating
throughout 1944
Banks grouped according to amount of deposits

Reports of earnings, expenses, and dividends are
submitted to the Federal supervisory agencies on either
a cash or an accrual basis. This year income taxes are
shown separately, for the first time, for all classes of
insured banks.

Averages of assets and liabilities are based upon the
beginning, middle, and year-end call report data and
include figures for banks which reported on one or two
call dates only. Consequently, the assets and liability
averages are not strictly comparable with the earnings
data, but the differences are not large enough to affect
the totals significantly. Some further incomparability is
also introduced by shifts between classes of banks during
the year.

State banks members of the Federal Reserve System:
Board of Governors of the Federal Reserve System.
Other insured banks:
Corporation.

Federal

Deposit

Insurance

O INSURED
F

National banks and State banks not members of the
Federal Reserve System in the District of Columbia:
Office of the Comptroller of the Currency.

DIVIDENDS

S ou rces o f d a ta :

EARNINGS, EXPENSES, A D
N
BANKS

139




Earnings data are included for all insured banks op­
erating at the end of the year. Earnings for national banks
reporting for the first half of the year only are also included.

T a b le 1 1 1 .

EARNINGS, EXPENSES, AND DIVIDENDS OP INSURED BANKS, 1944
BY CLASS OF BANK
(Amounts in thousands of dollars)
Insured commercial banks

Insured commercial banks

National

State

Not
members
F. R.
System

78,234
109,659
127,640

251
2,827
638

86,575
10,093
20,658

1,350,760
239,102
384,706

5,920
1,252
1,640

1,903
14,838

12,842
186,422
1,101
96,926

65
351
11
381

3,359
35,724

41,778
387,883

67
2,153

111,254

209,134

855,932

2,293

43,636
9,967
13,582
11,684
8,403

101,473
31,423
30,677
14,763
24,610

360,666
92,683
129,598
84,069
54,316

1,060
95
236
155
574

33,704
13,296
9,807
10,601

113,691
17,625
68,179
27,887

265,438
110,386
70,001
85,051

443
53
89
301

78,485
112,486
128,278

35,064
37,387
71,978

18,138
66,944
35,783

25,283
8,155
20,517

1,356,680
240,354
386,346

722,285
121,873
207,821

404,206
65,595
129,592

230,189
52,886
48,933

12,907
186,773
1,112
97,307

6,377
96,807
452
53,800

3,135
47,168
515
29,035

3,395
42,798
145
14,472

41,845
390,036

24,404
210,751

10,531
118,635

6,910
60,650

Net current operating earnin gs..........................................

858,225

479,650

267,321

Recoveries and profits—to ta l...............................................
Profits on securities sold or redeemed..................................

361,726
92,778
129,834
84,224
54,890

193,870
50,290
68,846
50,240
24,494

124,220
32,521
47,406
22,300
21,993

On securities............................................................................

265,881
110,439
70,090
85,352

142,418
67,556
41,023
33,839

89,759
29,587
19,260
40,912

Salaries and wages—employees.......................................
Fees paid to directors and members of executive, dis­
count, and other committees.........................................
Interest on time and savings deposits..................................
Interest and discount on borrowed money..........................
Taxes other than on net income...........................................
Recurring depreciation on banking house, furniture and
fixtures.............................................................................
Other current operating expenses.........................................




(*)

CORPORATION

538
26,359

341,443
130,633
132,557
2,423
21,875

INSURANCE

8,213
2,780
1,448
19
250

671,527
329,700
189,084
6,309
25,569

DEPOSIT

2,206,692
1,087,473
679,260
17,301
107,125

1,201,935
629,920
359,067
8,588
59,931

C urrent operating expenses— t o t a l....................................

Operating
legs than
full year2

295,709
127,550
141,262

2,214,905
1,090,253
680,708
17,320
107,375

Interest and dividends on securities.....................................
Interest and discount on loansf.............................................
Service ch&rges find other fees on bctnks’ lo&ns «
. ..
Service charges on deposit accounts................................
Other service charges, commissions, fees, and collection
and exchange charges.....................................................
Trust department
..
......................................
Other current operating earnings.........................................

Operating
throughout
the year

FEDERAL

Members F. R. System
Total

Insured
mutual
savings
banks1

Non-operating profit..............................................................

95,845 1

9,932

-12,218

95,228

617

531,102

301,782

121,186

196,916

951,160

2,910

Taxes on net income— total.................................................
Federal.....................................................................................
State........................................................................................

202,821
187,032
15,789

120,431
111,675
8,756

63,284
57,461
5,823

19,106
17,896
1,210

122
122

202,071
186,342
15,729

750
690
60

Net profits after taxes............................................................

751,249

410,671

238,498

102,080

196,794

749,089

2,160

Dividends and interest on capital— total........................
Dividends declared on preferred stock and interest paid
on capital notes and debentures...................................
Cash dividends declared on common stock........................

253,193

144,001

82,000

27,192

132,912

252,079

1,114

13,645
239,548

5,294
138,707

4,392
77,608

3,959
23,233

482
*132,430

13,635
238,444

10
1,104

Net additions to capital from profits...............................

498,056

266,670

156,498

74,888

63,882

497,010

1,046

Average assets and liabilities5
Assets— total............................................................................
Cash and due from banks.....................................................
U. S. Government obligations..............................................
Other securities.......................................................................
Loans and discounts..............................................................
All other assets.......................................................................

123,168,863
28,042,727
67,231,161
6,088,482
20,310,112
1,496,381

70,378,946
16,528,328
38,665,434
3,447,852
10,936,478
800,854

38,529,099
7,951,948
21,652,390
1,682,079
6,743,473
499,209

14,260,818
3,562,451
6,913,337
958,551
2,630,161
196,318

9,164,873
449,751
4,723,004
628,821
3,115,939
247,358

Liabilities and capital— total..............................................
Total deposits.........................................................................
Demand deposits..................................................................
Time and savings deposits..................................................
Borrowings and other liabilities...........................................
Total capital accounts...........................................................

123,168,863
114,682,390
9S,267,11k
21,1*15,276
768,280
7,718,193

70,378,946
65,801,156
5 k,293,819
11,507,337
472,607
4,105,183

38,529,099
35,672,528
29,992,910
5,679,618
249,974
2,606,597

14,260,818
13,208,706
8,980,385
k,228,321
45,699
1,006,413

9,164.873
8,280,998

26,436
121,926

11,247
71,336

18,811
36,115

1,276
9,719

56,146
228,067

348
1,310

5,025

1,786

6,457

192

13,177

91

56,494
229,377 1

Number of banks, December 30..............................................

13,268

141




BANKS

1 Includes 3 mutual savings banks, members of the Federal Reserve System.
* Includes banks operating less than full year and trust companies not engaged in deposit banking.
* Interest and dividends paid depositors of mutual savings banks are shown as a deduction from net profits.
4 Interest and dividends paid depositors. See footnote 3.
6 Averages of figures reported at beginning, middle, and end of year.
N o t e : Minus (-) indicates non-operating loss.
Back figures—See the Annual Report for 1943, pp. 96-97, and earlier reports.

8,280,998
23,974
859,901

O INSURED
F

Number of active officers, December 30.................................
Number of other employees, December 30.............................

DIVIDENDS

34,461

954,070

EARNINGS, EXPENSES, A D
N

51,452

Net profits before income taxes..........................................

Table 112.

R a t io s

of

E a r n in g s , E x p e n s e s ,

and

D iv id e n d s

of

I n s u r e d B a n k s , 1944

BY CLASS OF BANK

Members F. R. System
Total
State

Insured
mutual
savings
banks1

$100.00
52.41
30.59
4.99
12.01

$100.00
49.10
29.09
3.81
18.00

$100.00
38.26
39.53
6.41
15.80

$100.00
43.13
47.77

Current operating expenses— t o t a l............................................................................................
Salaries, wages, and fees............................................................... ..............................................
Interest on time and savings deposits.........................................................................................
Other current operating expenses.................................................................................................

61.25
28.88
8.43
23.94

60.09
27.96
8.05
24.08

60.19
29.53
7.02
23.64

67.42
30.82
12.53
24.07

29.28
11.04

Net current operating earn in gs..................................................................... ...........................

38.75

39.91

39.81

32.58

70.72

A m ou n ts per $100 o f total assets*
Current operating earnings— total...................................................................................................
Current operating expenses—total...................................................................................
Net current operating earnings........................................................................................................
Recoveries and profits—total ........................................................................................................
Losses and charge-offs— total .........................................................................................................
Net profits before income taxes.......................................................................................................
Net profits after income ta x e s .......................................................... ............ ...............................

1.80
1.10
.70
.29
.22
.77
.61

1.71
1.03
.68
.27
.20
.75
.58

1.74
1.05
.69
.32
.23
.78
.62

2.39
1.61
.78
.31
.24
.85
.72

3.23
.95
2.28
1.11
1.24
2.15
2.15

A m ou n ts per $100 o f total capital accounts*
Net current operating earnings......................................................................................... .
Recoveries and profits— total .............................................................................. ..........................
Losses and charge-offs— total...........................................................................................................
Net profits before income taxes ....................................................................................................
Income taxes on net income............................................................................................................
Net profits after income taxes....................................................................................................
Cash dividends d eclared.................................................................... . ...........................................
Net additions to capital from profits...............................................................................................

11.12
4.69
3.45
12.36
2.63
9.73
3.28
6.45

11.68
4.72
3.47
12.93
2.93
10.00
3.51
6.49

10.26
4.76
3.44
11.58
2.43
9.15
3.15
6.00

11.05
4.34
3.35
12.04
1.90
10.14
2.70
7.44

24.32
11.80
13.22
22.90
.01
22.89
<15.46
7.43




9.10

(a
)

18.24

CORPORATION

$100.00
49.22
31.52
4.85
14.41

INSURANCE

A m ou n ts per $100 o f current operating earnings
Current operating earnings—t o t a l...........................................................................................
Interest and. dividends on securities............................................................................................
Income on loans .......................................................................................................................
Service charges on deposit accounts............................................................................................
Other current operating earnings.................................................................................................

DEPOSIT

National

Not
members
F. R.
System

FEDERAL

Insured commercial banks

A K.
Q
4*0o
2,38

3.44
1.49
.12
.87

3.36
1.50
.11
.84

2.90
1.41
.09
.83

5.13
r.66
.24
1.01

Assets and liabilities per $100 of total assets*
Assets— total..............................
Cash and due from banks.................................................
U. S. Government securities.............................................
Other securities..............................
Loans and discounts.........................................
All other assets..................................

100.00
22.77
54.59
4.94
16.49
1.21

100.00
23.48
54.94
4.90
15.54
1.14

100.00
20.64
56.20
4.37
17.50
1.29

JL U
u .lfU
9A* 7
Q0
Sft
A A
R ft
A 79
O. iL
*
1ft AA
±o .44
1 3ft
Xtoo

Liabilities and capital— total...............................
Total deposits............................................
Demand deposits.....................................
Time and savings deposits...................................
Borrowings and other liabilities....................................
Total capital accounts...................................................

100.00
93.11
75.72
17.39
'.62
6.27

100.00
93.50
77.15
1ft.0
00
.67
5.83

100.00
92.58
77.8 A
1U.7U
.65
6.77

inn ah
1AA A
A
lvU»uu
lUv«UU
Q9 A9
Q .uo
fi ft
yu Q
62.97 ............... * **
29 >65
yo.s 6
Q
9
9ft
•o£
7.06
9.38

Number of banks, December 30.......................................

13,268

5 025

1 786

1VA
Q9
X

O INSURED
F
BANKS

143




1AA A
lU .UA
U U
AQ
1
4.*71
p;i O
D .O
-L
ftA
0 .O
D
fin
04 .U
U
9 •(U
u 7A

DIVIDENDS

1 Includes 3 mutual savings banks, members of the Federal Reserve System.
* Interest and dividends paid depositors of mutual savings banks are shown as a deduction from net profits.
Asset and liability items are averages of figures reported at beginning, middle, and end of year.
4 Interest and dividends paid depositors. See footnote 2.
Back figures— See the Annual Report for 1943, pp. 98-99.

a A^n
0,40 i

\J

EARNINGS, EXPENSES, A D
N

Special ratios3
Income on loans per $100 of loans..........................
Income on securities per $100 of securities.................................
Service charges per $100 of demand deposits.......................
Interest paid per $100 of time and savings deposits.....................

Table 113.

EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT

1944

BANKS GROUPED ACCORDING TO AMOUNT OP DEPOSITS
(Amounts in thousands of dollars)

Total1

$500,000
or
less

$500,000
to
$1,000,000

$1,000,000
to
$2,000,000

$2,000,000
to
$5,000,000

$5,000,000 $10,000,000 $50,000,000
More than
to
to
to
$100,000,000
$10,000,000 $50,000,000 $100,000,000

111,570
42,665
46,726
510
7,804

218,126
93,825
83,099
1,147
16,306

183,276
86,179
61,348
844
13,880

381,787
181,877
114,718
1,891
26,538

154,321
77,502
43,321
672
8,020

1,100,533
586,788
304,015
11,788
30,951

78,234
109,659
127,640

1,508
39
361

4,923
29
1,474

9,607
268
3,990

13,031
1,574
9,144

7,882
3,518
9,625

12,487
16,103
28,173

4,256
8,515
12,035

24,540
79,613
62,838

1,350,760
239,102
384,706

8,062
3,201
856

30,807
11,042
3,697

74,352
23,015
11,176

145,821
35,962
28,291

123,805
24,561
28,943

257,695
42,282
71,656

99,084
15,232
29,944

611,134
83,807
210,143

12,842
186,422
1,101
96,926

156
957
4
522

665
4,818
11
1,876

1,586
13,111
26
4,869

2,769
27,085
46
10,254

1,808
23,750
45
8,532

2,603
41,893
224
18,818

693
13,369
99
7,439

2,562
61,439
646
44,616

41,778
387,883

270
2,096

980
7,718

2,426
18,143

5,239
36,175

4,479
31,687

8,663
71,556

3,198
29,110

16,523
191,398

Net current operating earnin gs..................................

855,932

3,462

14,748

37,218

72,305

59,471

124,092

55,237

489,399

Recoveries and profits— t o ta l.......................................

360,666
92,683
129,598
84,069
54,316

1,300
236
196
575
293

5,033
1,113
1,047
1,961
912

12,866
3,177
3,065
4,142
2,482

26,079
6,044
8,254
7,206
4,575

23,650
5,425
8,112
6,019
4,094

60,118
14,171
22,482
13,319
10,146

19,109
3,723
9,234
3,442
2,710

212,511
58,794
77,208
47,405
29,104

265,438
110,386
70,001
85,051

714
199
337
178

2,659
973
994
692

8,106
3,356
2,491
2,259

19,501
8,295
5,647
5,559

17,960
8,339
4,595
5,026

45,616
19,827
9,842
15,947

14,385
6,741
2,814
4,830

156,497
62,656
43,281
50,560

Other current operating earnings..................................
C urrent operating expenses— t o t a l............................
Salaries and wages—employees.....................................
Fees paid to directors and members of executive,
discount, and other committees............................
Interest on time and savings deposits..........................
Interest and discount on borrowed money..................
Taxes other than on net income...................................
Recurring depreciation on banking house, furniture
and fixtures..............................................................
Other current operating expenses.................................

Profits on securities sold or redeemed..........................

Losses and charge-offs— t o ta l......................................
On loans...........................................................................
All other...........................................................................




CORPORATION

45,555
15,583
20,275
277
2,994

INSURANCE

11,524
3,054
5,758
172
632

Interest and discount on loans......................................
Service charges and other fees on banks’ loans..........
Service charges on deposit accounts.............................
Other service charges, commissions, fees, and col*
lection and exchange charges................................

DEPOSIT

2,206,692
1,087,473
679,260
17,301
107,125

Current operating earnings— t o t a l............................

FEDERAL

Banks with deposits of—.2

95,228

586

2,374

4,760

6,578

5,690

14,502

4,724

56,014

Net profits before income taxes.

951,160

4,048

17,122

41,978

78,883

65,161

138,594

59,961

545,413

Taxes on net income— total.
Federal....................................
State........................................

202,071
186,342
15,729

600
558
42

2,246
2,094
152

5,551
5,185
366

10,634
10,042
592

10,010
9,450
560

25,810
24,465
1,345

13,768
12,949
819

133,452
121,599
11,853

Net profits after taxes................................................

749,089

3,448

14,876

36,427

68,249

55,151

112,784

46,193

411,961

Dividends and interest on capital— total................
Dividends declared on preferred stock and interest
paid on capital notes and debentures..............
Cash dividends declared on common stock.............

252,079

1,003

4,187

10,337

19,658

15,495

32,596

13,956

154,847

13,635
238,444

102

901

325
3,862

807
9,530

1,390
18,268

1,398
14,097

2,904
29,692

2,373
11,583

4,336
150,511

Net additions to capital from profits....................

497,010

2,445

10,689

26,090

48,591

39,656

80,188

32,237

257,114

Number of active officers, December 3 0 ....
Number of other employees, December 30.

56,146
228,067

2,019
1,120

5,780
4,320

9,636
10,791

11,984
22,262

6,357
20,023

7,885
45,145

2,363
18,150

106,256

13,177

1,105

2,578

1,520

3,378

1,328

980

129

159

Number of banks, December i

O INSURED
F
BANKS

145




DIVIDENDS

1 This group of banks is the same as the group shown in Table 111 under the heading “ Operating throughout the year/*
* Deposits are as of December 30, 1944.

10,122

EARNINGS, EXPENSES, A D
N

Non-operating profit.....................

D e p o s it I n s u r a n c e D

Table 114.

is b u r s e m e n t s

State

Depositors and deposits of insured banks placed in receivership, 1934-1944
A s shown by books of FDIC, December SI, 194b

Disbursements to protect depositors, recoveries, and losses by the Federal
Deposit Insurance Corporation from insured banks placed in receivership or
merged with the financial aid of the Corporation, 1934-1944
As shown by books of FDIC, December SI, 191*1+

Disbursements by the Federal Deposit Insurance payment from the receiver because of their preferred
Corporation to protect depositors are made whenever status. Unpaid depositors are primarily those whose

insured banks because of financial difficulties are placed claims are disputed, and those whose claims although not
in receivership or are merged with the aid of the Corpora- filed are not yet legally barred from payment by FDIC.



CORPORATION

Table 117.

INSURANCE

Table 116.

DEPOSIT

Table 115. Assets and liabilities of insured banks placed in receivership and of insured
banks merged with the financial aid of the Federal Deposit Insurance Cor­
poration, 1934-1944
As shown by books of bank at date of closing

FEDERAL

Disbursements by the Federal Deposit Insurance Corporation to protect
depositors; number and deposits of insured banks placed in receivership or
merged with the financial aid of the Corporation, 1934-1944
Banks grouped by class of bank, year of disbursement, amount of deposits, and

tion. In receiverships the disbursement is the amount paid
by the Corporation on insured deposits. In mergers the
Corporation’s disbursement is the amount loaned to
merging banks, or the price paid for assets purchased
from them.

DISBURSEMENTS

Sources of data:

Books of bank at date of closing; and books of FDIC,
December 31,1944.

147




Deposits of insured banks placed in receivership as
given in tables with data taken from the books of FDIC
at the end of the year, will differ from the deposits in
tables with data taken from books of bank at date of
closing. This is because the former include deposits
discovered or reclassified after the date of a bank’s
closing.

INSURANCE

Depositors eligible for insurance protection are all
depositors except those holding only accounts which were
restricted or deferred prior to 1934, and those whose
deposits were made after the termination of a bank’s
insured status. Depositors not eligible for insurance
protection are those whose total accounts are thus ex­
cluded from insurance, and those whose accounts are
barred from payment by FDIC because the accounts were
not claimed before the expiration of the period set by law.
Depositors paid by FDIC are all those who receive
any payment from the Corporation. Depositors fully
paid by other methods are those who receive no pay­
ment from FDIC, but do receive full compensation for
their accounts by offset, by sale of security, or by direct

secured, not preferred, and not subject to offset

are those not covered by insurance or other specific
arrangement. They may be paid in full, however, by the
receiver as common claims.

DEPOSIT

Depositors and deposits in insured banks placed in
receivership have been grouped in Table 116 to show the
ways in which depositors’ claims against these banks
were met. Because the claim of a single depositor may
be paid in several ways, the number of depositors cannot
be correlated with the amount of deposits in the various
categories as given in the table.

Insured deposits are the deposits for which FDIC is
legally liable. This includes the net amount due each
depositor after deductions of offset, of amounts in excess
of $5,000, and of amounts not eligible for insurance
protection as described in preceding paragraphs. Secured
deposits are those covered by pledge of specific assets.
Preferred deposits are those which, under Federal or
State law, are paid from proceeds of the liquidation before
common claims against the bank are met. Deposits sub­
ject to offset are those met by claims which the bank
holds against the depositor. Deposits uninsured, un­

Table 114.

DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION TO PROTECT DEPOSITORS; NUMBER AND DEPOSITS

op I n s u r e d B a n k s P la c e d in R e c e iv e r s h ip o r M e r g e d w it h t h e F in a n c ia l A id o f t h e C o r p o r a tio n ,

1934-1944

BANKS GROUPED BY CLASS OF BANK, YEAR OF DISBURSEMENT, AMOUNT OF DEPOSITS, AND STATE

Total

Receiver­
ships1

Mergers1

Receiver­
ships

Total

397

77,993
99,405
82,298

14,787
20,928
51,264

63,206
78,477
31,034

312

Calendar year
193 4
193 5
193 6
193 7

941
8,890
14,828
19,202

941
6,025
8,055
12,045

2,865
6,773
7,157

1938.
1939.
1940.
1941.

30,474 |
67,792
74,232
23,878

9,082
26,184
4,895
12,276

21,392
41,608
69,337
11,602

1942.
1943.
1944.

10,824
7,137
1,498

1,612
5,465
399

9,212
1,672
1,099

Banks with deposits o f$100,000 or less......................
$100,000 to $250,000............
$250,000 to $500,000............

4,956
12,852
14,323

4,309
11,542
10,210

647
1,310
4,113

106
108
58

$500,000 to $1,000,000...
$1,000,000 to $2,000,000.
$2,000,000 to $5,000,000.

24,011
26,545
42,317

13,878
8,961
12,409

10,133
17,584
29,908

49
35
25

20,135
114,557

25,670

20,135
88,887

$5,000,000 to $10,000,000. .
$10,000,000 to $50,000,000.
More than $50,000,000. . . .




245

152

Receiver­
ships1

Mergers2

499,233

109,590

389,643

218

94,716
179,081
225,436

19,474
26,538
63,578

75,242
152,543
161,858

9
25
69
75

24
42
50

1,966
13,320
27,528
33,346

1,966
9,091
11,241
14,961

4,229
16,287
18,385

74
60
43
15

50
32
19

59,724
157,779
142,389
29,721

10,296
32,740
5,657
14,730

49,428
125,039
136,732
14,991

4

19,011
12,534
1,915

1,816
6,636
456

17,195
5,898
1,459

6,358
17,609
20,657

4,947
13,918
12,463

1,411
3,691
8,194

36,807
49,319
77,568

17,591
11,747
16,279

19,216
37,572
61,289

51,791
239,124

32,645

51,791
206,479

65

20

20 I
5
2I

21
6

8
6
1

24
9
5

CORPORATION

172,717

Total

INSURANCE

86,979

Mergers

DEPOSIT

259,696

Class of bank
National banks....................................
State banks members F. R. System.
Banks not members F. R. System...

All banks.

Deposits (in thousands of dollars)

FEDERAL

Number of banks involving
disbursement

Disbursement by FDIC
(in thousands of dollars)

1,236

Florida...............
Georgia..............
Illinois...............
Indiana..............
Iow a...................

300
862
3,273
4,334
1,462

Kansas...............
Kentucky..........
Louisiana..........
Maryland..........
Massachusetts..

974 I
4,614 1

Michigan...........
Minnesota.........
Mississippi........
Missouri............
Montana............

5,340
640
257
4,920

94
841

* 861

3,109 f
l
1,571 |
I
8
I
I

North Dakota. .
Ohio...................
Oklahoma..........
Oregon...............
Pennsylvania. . .

2,649
1,610 I
1,218 I
962
47,386 |

South Carolina..
South Dakota. .
Tennessee..........
Texas.................
Vermont............
Virginia..............
Washington
West Virginia...
Wisconsin..........
1 Data from books of FD IC , December 31, 1944.
2 Data from books of bank at date of closing.




1
I
I
I
|

97
17
2,053
1,243
1,077

2
8
14
18

482
3,329
668
735

492
1,285

139
640
257
4,335
186
469
25,097
10,834
1,156

2,374
1,571
5,201
585
27
118
54,143
56,598
292

1
5
1
2

217
998
1,637
3,932
498

274
29
4,772
5,778
5,018

9
22
3
5
2

5
18
3

4
4
3
2

539
3,953
1,652
828

694
3,997

2

1,233
7,950
1,652
4,569
3,019

7
5
3
45

3
5
3
34
3

4

160
818
334
5,116
215

12,244

11
1

12,404
818
334
7,001
298

1
26
22
4

538
296
184,511
138,826
2,290

30,916
13,286
1,420

6

4
4
1
37
25

4
11
3

2

10,121

85
962
37,265

135
2,411
1,278
2,512
3,444

135
2,388
1,164
2,468
3,258

23
114
44
186

1
23
12
17
3

1
22
8
16

2,887
935
1,458
6,384

511

2,376
935

6
1
3
30

3

1,458
5,096

1,288

8
1,526

428
1,078

491
1,027
6,409
9,710
5,516

18
2
5
8

1,262

101
1,168

1
1
8
3
3

6

1,387
1,610
1,133

529
1,168
1,078
8
1,526

1
7
6
15
3

29
2
7
1
25

I

1
1

2
3
20

11

538

1,885
83
296
153,595
125,540
870
2,278

2
1
17

3,830
2,345
2,226
1,114
67,430

14,340

567
1.114
53,090

1
4
1
1

136
2,988
1,943
3,318
3,725

136
2,862
1,621
3,241
3,375

126
322
77
350

4,735
1,538
2,006
8,698

629
2,006
5,964

4,106
1,538

3
1
10

1,552
2,345
1,659

3,741
3,019

2,734

DISBURSEMENTS

Nebraska...........
New Hampshire
New Jersey.......
New York.........
North Carolina.

213
469
118
79,240
67,432
1,448

2
5
1
1
2

203
845
1,220
3,091
385

668 I

143

INSURANCE

237
841
861
8
1,236

DEPOSIT

State
Alabama............
Arkansas............
California..........
Colorado............
Connecticut

T able 115.

ASSETS AND LIABILITIES OF INSURED BANKS PLACED IN RECEIVERSHIP AND OF INSURED BANKS MERGED WITH
t h e F in a n c ia l A id o f t h e F e d e r a l D e p o s it I n s u r a n c e C o r p o r a tio n ,

1934-1944

AS SHOWN BY BOOKS OF BANK AT DATE OF CLOSING
Liabilities and capital accounts

Assets

Total

U. S. Gov­
ernment
obligations

Other
securities

Loans,
discounts,
and
overdrafts

Banking
house,
furniture &
fixtures

Other
real
estate

Other
assets

Total

Total
deposits

Other
liabilities

R .F . C.
capital

Private
capital
stock

Other
capital
accounts1

$105,577,803 $74,923,118 $73,477,580 $229,247,826 $22,225,616 $59,539,990 $13,360,756 $578,352,689 $497,017,139 $11,468,774 $25,130,464 $37,145,961 $7,590,351
$65,569,217

$5,375,616 $12,293,686

$8,330,507 $140,290,048 $107,374,564 $10,122,023

$5,896,246 $12,254,299 $4,642,916

603,519
698,440
902,215
1,293,683

273,638
510,479
1,955,104
2,307,696

1,329,865
6,842,116
6,454,624
11,107,699

79,365
459,055
459,700
486,995

120,319
242,274
734,874
837,966

69,565
1,597,403
273,559
1,010,689

2,661,327
12,323,948
12,974,788
19,283,376

1,951,992
8,700,485
11,039,098
14,715,286

104,963
2,111,886
93,695
1,132,758

90,000
223.000
788.000
755,250

432,100
950,000
1,069,350
2,498,815

82,272
338,577
-15,355
181,267

1938
1939
1940
1941

1,610,297
3,329,557
1,018,215
6,462,157

451,570
1,052,424
452,574
3,493,431

2,215,638
4,855,519
1,519,677
1,810,346

6,574,061
21,839,422
3,314,762
5,398,218

412,911
1,845,901
694,900
91,311

2,125,022
7,221,558
435,526
106,615

530,408
3,781,385
523,899
449,458

13,919,907
43,925,766
7,959,553
17,811,536

10,124,255
32,557,805
5,599,438
14,627,158

1,213,354
4,695,820
455,788
298,526

1,052,900
2,249,996
422,750
195,500

1,059,200
2,775,001
1,045,533
1,582,000

470,198
1,647,144
436,044
1,108,352

1942
1943
1944

500,513
2,910,826
196,220

119,650
968,872
117,700

52,364
405,011
41,090

777,953
1,846,467
84,030

70,685
772,493
2,300

55,222
414,310

25,030
63,677
5,434

1,601,417
7,381,656
446,774

1,379,526
6,274,311
405,210

1,520
13,582
131

81,750
32,500
4,600

140.000
675.000
27,300

-1,379
386,263
9,533

$5,030,249 $438,062,641 $389,642,575

$1,346,751 $19,234,218 $24,891,662 $2,947,435

1934
1935
1936
1937

404,834
3,109,830
4,717,074

233,395
2,071,296
2,495,254

1,403,807
2,080,059
3,520,186

2,256,417
8,917,554
8,678,629

608,467
1,277,605
562,181

1,184,658
926,359

10,808
325,362
186,497

4,917,728
18,966,364
21,086,180

4,228,816
16,287,262
18,384,923

140
19,769
262,651

310,000
609,200

315,000
1,664,000
1,808,400

373,772
685,333
21,006

1938
1939
1940
1941

8,133,887
27,451,442
30,227,874
3,167,243

7,018,796
27,929,162
17,183,076
801,273

10,377,037
16,266,036
17,987,527
2,835,309

20,896,236
44,289,765
60,687,428
8,178,623

2,873,257
5,142,882
4,553,388
798,028

3,913,009
15,459,743
22,840,095
1,014,582

2,380,489
1,049,600
458,831
197,669

55,592,711
137,588,630
153,938,219
16,992,727

49,428,383
125,038,946
136,731,549
14,990,768

168,674
679,659
157,766
57,508

3,726,463
6,103,500
7,186,655
289,000

2,697,650
6,381,000
8,666,162
1,111,250

-428,459
-614,475
1,196,087
544,201

1942
1943
1944

4,159,617
1,216,987
368,633

3,547,766
2,903,771
585,251

2,275,392
555,383
230,282

7,731,137
1,675,734
367,086

759,861
274,331

1,824,586
15,844
67,428

354,362
34,523
32,108

20,652,721
6,676,573
1,650,788

17,195,146
5,897,691
1,459,091

584

913,400
96,000

1,748,200
300.000
200.000

795,391
382,882
-8,303

i Includes surplus, undivided profits, and reserve funds minus operating deficit, if any, as shown by books. Minus (-) indicates net operating deficit.
N o t e : One insured bank was placed in receivership and one was merged with the financial aid of FDIC during 1944. The Brownsville State Bank, Brownsville, Indiana, (Case 245)
suspended operations on May 12, 1944, and was placed in receivership. The Indiana State banking authority was named receiver for this State bank which was not a member of the
Federal Reserve System. The First National Bank of Susquehanna, Susquehanna, Pennsylvania, (Case 152) with 4,589 accounts, was merged with The First and Farmers National
Bank and Trust Company, Montrose, Pennsylvania, on May 27, 1944. A disbursement of $1,098,842 was made by the Corporation in connection with this merger. Data for individual
insured banks placed in receivership and for those merged with the financial aid of FDIC before 1944 are given in earlier annual reports.




CORPORATION

MERGJ 3RS
$82,957,421 $64,769,040 $57,531,018 $163,678,609 $16,850,000 $47,246,304
Total

INSURANCE

1934
1935
1936
1937

185,056
1,974,181
2,194,712
2,238,648

DEPOSIT

RECEI VERSHIPS
$22,620,382 $10,154,078 $15,946,562
Total

FEDERAL

Cash and
due from
banks

T a b le 1 1 6 .

DEPOSITORS AND DEPOSITS OF INSURED BANKS PLACED IN RECEIVERSHIP, 1934-1944
AS SHOWN BY BOOKS OF FDIC, DECEMBER

Eligible for insurance protection

Unpaid

Not eligible
for
insurance
protection

Unpaid

Secured
and
preferred

Subject
to
offset

Total
Total

Paid

In excess
of
insurance
maximum

Other

289,106

36,233

12,810

$158,676

$4,983,028

$6,320,584

$9,784,177

$1,364,379

15,545
32,275
41,831
74,151

11,262
23,422
30,924
56,813

937
2,986
4,677
7,761

2,761
1,509
22
78

585
4,358
6,208
9,499

1,966,373
9,090,632
11,240,970
14,961,275

944,764
6,028,994
8,055,590
12,047,836

941,008
6,024,650
8,055,563
12,044,562

3,756
4,344
27
3,274

831,832
538,951
659,381
1,140,812

91,005
561,288
660,363
1,084,311

30,607
1,935,853
1,048,034
642,707

68,165
25,546
817,602
45,609

1938
1939
1940
1941

43,700
90,212
20,671
38,594

31,765
72,212
15,681
29,885

7,390
6,245
2,937
1,709

20
3,917
8
11

4,525
7,838
2,045
6,989

10,296,261
32,739,801
5,656,748
14,730,243

9,087,499
26,259,973
4,895,745
12,278,587

9,082,444
26,184,011
4,894,723
12,276,408

5,055
75,962
1,022
2,179

340,557
576,440
182,441
391,711

526,183
1,921,758
341,818
793,302

252,043
3,949,352
221,323
997,814

89,979
32,278
15,421
268,829

1942
1943
1944

5,717
16,914
900

4,210
12,173
759

562
933
96

631
3,808
45

314

1,816,180
6,635,864
455,725

1,613,939
5,519,353
405,624

1,612,049
5,464,979
398,831

1,890
54,374
6,793

59,824
261,079

80,906
244,334
15,316

60,561
611,098
34,785

950

T ota l

42,361 $109,590,072 $87,137,904 $86,979,228

Only one insured bank was placed in receivership in 1944. For name of bank and other information see Note to Table 115.
Back figures—See the Annual Report for 1943, p. 105, and earlier reports.

N o te:




DISBURSEMENTS

380,510

1934
1935
1936
1937

INSURANCE

Paid by
FDIC

Fully paid
by other
methods

Uninsured, unsecured,
not preferred, and not
enhio/>f
nffaot

Insured

DEPOSIT

Amount of deposits

Number of depositors

Total

31, 1944

or
to

DISBURSEMENTS TO PROTECT DEPOSITORS, RECOVERIES, AND LOSSES BY THE FEDERAL DEPOSIT INSURANCE CORPORATION FROM

I n s u r e d B a n k s P la c e d in R e c e iv e r s h ip o r M e r g e d w it h t h e F in a n c ia l A id o f t h e C o r p o r a tio n ,
AS SHOWN BY BOOKS OF FDIC, DECEMBER

1934-1944

31, 1944

FEDERAL

Table 117.

(Amounts in thousands of dollars)

1934

$259,696 1
86,979 f
172,717 1

1937

1938

1939

1940

1941

1942

1943

1944

$8,890
6,025
2,865

$14,828
8,055
6,773

$19,202
12,045
7,157

$30,474
9,082
21,392

$67,792
26,184
41,608

$74,232
4,895
69,337

$23,878
12,276
11,602

$10,824
1,612
9,212

$7,137
5,465
1,672

$1,498
399
1,099

6,020

12,123
6,548
5,575

15,050
9,225
5,825

25,466
7,710
17,756

44,708
13,730
30,978

54,636
3,407
51,229

21,353
11,954

9,076
1,243
7,833

4,779
3,215
1,564

1,130

4,194
1,826

$941
941

1936

616
616

71
21
50

195,034
62,120
132,914

Estimate of losses by F D IC ..........................................
Receiverships1..............................................................
Mergers........................................................................

38,810
18,611
20,199

208
208

2,786
1,770
1,016

2,635
1,471
1,164

3,770
2,579
1,191

2,892
1,214
1,678

12,409
9,568
2,841

11,167
653
10,514

1,339
219
1,120

917
292
625

Banks placed in receivership or merged—liquidation
terminated
Disbursement by F D IC .................................................
Receiverships...............................................................
Mergers........................................................................

48,217
35,815
12,402

521
521

5.149
5.149

7,393
6,921
472

8,085
7,694
391

8,489
5,977
2,512

12,780
7,195
5,585

2,743
1,264
1.479

675
675

2,382
419
1.963

Recoveries by F D IC ......................................................
Receiverships...............................................................
Mergers........................................................................

40,446
28,404
12,042

429
429

3.641
3.641

5,881
5,475
406

6,052
5,704
348

7,650
5,324
2,326

11,366
5,846
5,520

2,621
1,142
1.479

488
488

2,318
355
1.963

Losses by F D IC .............................................................
Receiverships...............................................................
Mergers........................................................................

7,771
7,411
360

1.508
1.508

1,512
1,446

2,033
1,990
43

839
653
186

1,414
1,349
65

122
122

187
187

64
64




66

201

929

CORPORATION

Recoveries by F D IC ......................................................
Receiverships...............................................................
Mergers........................................................................

INSURANCE

All banks placed in receivership or merged
Disbursement by F D IC .................................................
Receiverships...............................................................
Mergers........................................................................

1935

DEPOSIT

Banks placed in receivership or merged in Total

Banks placed in receivership or merged—liquidation
active
211,479
51,164
160,315

420
420

3,741
876
2,865

7,435
1,134
6,301

11,117
4,351
6,766

21,985
3,105
18,880

55,012
18,989
36,023

71,489
3,631
67,858

23,203
11,601
11,602

8,442
1,193
7,249

7,137
5,465
1,672

1,498
399
1,099

Recoveries by F D IC ......................................................
Receiverships...............................................................
Mergers........................................................................

154,588
33,716
120,872

264
264

2,379
553
1,826

6,242
1,073
5,169

8,998
3,521
5,477

17,816
2,386
15,430

33,342
7,884
25,458

52,015
2,265
49,750

20,865
11,466
9,399

6,758
888
5,870

4,779
3,215
1,564

1,130
201
929

Estimate of losses by F D IC .........................................
Receiverships1.............................................................
Mergers........................................................................

31,039
11,200
19,839

116
116

1,278
262
1,016

1,123
25
1,098

1,737
589
1,148

2,053
561
1,492

10,995
8,219
2,776

11,045
531
10,514

1,152
32
1,120

853
228
625

616
616

71
21
50

397

9

25

69

75

74

60

43

15

20

5

2

Receiverships...................................................................
Mergers............................................................................

245
152

9

24
1

42
27

50
25

50
24

32
28

19
24

8
7

6
14

4
1

1
1

Liquidation terminated.................................................
Receiverships...............................................................
Mergers........................................................................

230
176
54

7
7

18
18

52
39
13

47
38
9

54
42
12

32
20
12

13
8
5

2
2

5
2
3

Liquidation active..........................................................
Receiverships...............................................................

167
69
98

2
2

7
6
1

17
3
14

28
12
16

20
8
12

28
12
16

30
11
19

13
6
7

15
4
11

5
4
1

2
1
1




DISBURSEMENTS

1 Estimates of losses for banks placed in receivership are based on total insured deposits, unpaid as well i i paid. The disbursements in the receiverships as given in the table
are the amounts paid on insured deposits by December 31, 1944. For amounts unpaid on insured deposits sc s Table 116, page 151.

INSURANCE

Number of banks.........................................................

DEPOSIT

Disbursement by F D IC .................................................
Receiverships...............................................................
Mergers........................................................................

C
R

C
O







INDEX




INDEX

Page

Absorption of exchange charges. See Exchange charges, absorption of.
Absorptions, consolidations, and mergers:
Of insured banks, 1934-44. See Mergers of insured banks with financial
aid of the Corporation, Terminations of insurance.
Of operating banks, 1944............................................................................... 110-111
Adjusted capital account. See Capital of banks.
Adjusted liabilities. See Assets and liabilities of insured commercial banks,
examiners’ appraisal.
Admissions to insurance:
Applications approved and disapproved....................................................... 23-24
By class of bank, 1944................................................................................... 110-111
Applications from banks:
For admission to insurance............ ................................................................. 23-24
For approval of assumption of deposit liabilities of other banks...............
24
For approval of capital retirement or reduction...........................................
24
24
For approval of establishment of branches...................................................
For approval of repayment of waived deposits............................................
24
Appraised value of assets. See Assets and liabilities of insured commercial
banks, examiners’ appraisal.
Assessments on insured banks for deposit insurance:
Amount..............................................................................................................
Basis o f ...............................................................................................................
By banks whose insured status has terminated............................................

28
7
96

Asset insurance.......................................................................................................

12-14

Assets and liabilities of closed banks. See Receivership, insured banks
placed in.
Assets and liabilities of insured commercial banks, examiners’ appraisal:
Banks examined in 1939-1944....................................................................... 134-135
Banks examined in 1944, grouped by amount of deposits......................... 136-137
Definitions of terms used:
Adjusted liabilities......................................................................................
133
Appraised value...........................................................................................
133
Book value...................................................................................................
133
Examiners’ deductions...............................................................................
133
Substandard.................................................................................................
132
Uncriticized............................................................................................... 132-133
’ Sources of data..................................................................................................
133
Assets and liabilities of operating banks (see also Assets and liabilities of
insured commercial banks, examiners’ appraisal; Capital of banks;
Deposits):
Acquired, 1940-1944.........................................................................................
55
All banks, June 30 and December 30, 1944................................................124, 125
Commercial banks, June 30 and December 30, 1944................................ 124, 125
Insured commercial banks:
Call dates, December 30, 1944, to December 31, 1943..........................
126
Reports o f.................................................................................................... 24-25
Mutual savings banks, June 30 and December 30, 1944.......................... 124, 125
Noninsured banks, June 30 and December 30, 1944................................. 124, 125
Sources of data........................................ .........................................................
123
Types of assets, 1934-1944............................................................................... 35-37
Assets and liabilities of the Federal Deposit Insurance Corporation.............. 26-31




157

158

FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Assets purchased by the Federal Deposit Insurance Corporation:
From banks in receivership to facilitate liquidation....................................
From banks merged with financial aid of the Corporation. See Mergers of
insured banks with financial aid of the Corporation.
Liquidation o f ....................................................................................................

29
18

Assets of insured banks, quality of. See Assets and liabilities of insured
commercial banks, examiners’ appraisal.
Assets pledged to secure bank obligations...........................................................

127

Bank supervision (see also Examinations of banks):
Activities of the Federal Deposit Insurance Corporation in 1944............. 22-24
State legislation regarding, during 1944...................................................... 102-106
Banking monopoly............................................................................................... 9, 10-11
Banking offices, establishment of:
Banks beginning operations, 1944..................................................................
110
Branches, establishment approved by Corporation.....................................
24
Branches opened, 1944.....................................................................................24, 110
Banking offices, number of. See Class of bank, banking data presented by.
Banking practices. See Unsafe and unsound banking practices.
Banks beginning operations. See Banking offices, establishment of.
Banks ceasing operations, 1944.............................................................................

110

Banks closed because of financial difficulties (see also Mergers of insured banks
with financial aid of the Corporation; Receiverships, insured
banks placed in ):
Depositors protected by the Federal Deposit Insurance Corporation:
Fully protected, in insured banks placed in receivership, or merged
with the financial aid of the Corporation.......................................... 14-16
Number o f ...................................................................................................
15
Number of, in insured banks merged with financial aid of the
Corporation...........................................................................................
15
Number of, in insured banks placed in receivership..............................15, 151
Insured banks placed in receivership or merged with financial aid of
the Corporation:
Deposits protected................................................................................15-17, 151
Disbursements by the Corporation in connection with...................15-16, 151
Loss to depositors........................................................................................ 15, 17
Loss to Federal Deposit Insurance Corporation................................15,18, 19
Number and deposits of, 1934-1944.................................................. 15, 148-149
Suspensions:
Number, 1944................................................ * ...........................................
110
23
Of banks charged with unsafe and unsound banking practices............
Banks in financial difficulties (see also Banks closed because of financial
difficulties):
Methods of handling under existing law ........................................................ 15-16
Recommendations of the Corporation............................................................ 9-10
Banks, number of. See Number of operating banks and branches.
Banks operating branches. See Banking offices, establishment of; Number
of operating banks and branches.
Board of Directors of the Federal Deposit Insurance Corporation...............iv, v, 25
Board of Governors of the Federal Reserve System:
Actions on absorption of exchange charges and enforcement of par clear­
ance. See Exchange charges, absorption of.
Data obtained from ................................................................... 22, 109, 123, 139
Review of examination reports submitted b y .........................................
22



INDEX

159
Page

Book value of bank assets and liabilities. See Assets and liabilities of insured
commercial banks, examiners’ appraisal; Assets and liabilities of
operating banks; Capital of banks.
Branches. See Banking offices, establishment of; Classification of banks and
banking offices; Number of operating banks and branches.
Capital of banks (see also Assets and liabilities of operating banks; Earnings,
expenses, and dividends of insured banks):
Adequacy o f.................................................................................................. 11, 42-44
Definition of terms used in examiners’ appraisal o f:
Adjusted capital accounts..........................................................................
133
Book value of capital accounts.................................................................
133
Net sound capital.......................................................................................
133
Examiners’ appraisal, insured commercial banks, 1944:
Grouped by adjusted capital ratio...........................................................
44
Grouped by amount of deposits............................................................. 136-137
Examiners’ appraisal, insured commercial banks, 1939-1944 ....... ............
134
Of insured banks placed in receivership........................................................
150
Ratios to assets:
Insured banks, 1944.........................................................................137, 143, 145
Insured commercial banks, by years....................................................... 43, 135
Retirements approved by the Corporation..................................................
24
Total capital accounts:
Commercial and mutual savings banks, insured and noninsured,
June 30 and December 30, 1944....................................................... 124, 125
Insured commercial banks.................................................. 42-43, 127, 134-137
Unsafe and unsound practices......................................................................... 22-23
Charge-offs on bank assets. See Earnings, expenses, and dividends of insured
banks.
Class of bank, banking data presented by:
Admissions to and terminations of insurance............................................. 110-111
Assets and liabilities....................................................................................... 124-125
Banks which suspended operations................................................................
148
Deposits.......................................................................................... 120-121, 124, 125
Earnings of insured banks.......................................................................44, 140-141
Insured banks placed in receivership or merged with financial aid of the
Corporation............................................................................................
148
Number of banking offices.............................................................110-111, 112-119
Number of banks............................................................ 110-111, 112-119, 120-121
Classification of banks and banking offices.......................................................108, 109
Closed banks. See Banks ceasing operations; Banks closed because of financial
difficulties; Receivership, insured banks placed in.
Commercial banks. See Assets and liabilities of insured commercial banks,
examiners’ appraisal; Assets and liabilities of operating banks;
Capital of banks; Deposits; Earnings, expenses, and dividends of
insured banks; Number of operating banks and branches.
Comptroller of the Currency:
Data obtained from.........................................................................22, 109, 123, 139
Director of Corporation.................................................................................iv, v, 25
Examination of insured banks b y ...................................................................
22
Review of reports of examinations made b y .................................................
22
Consolidations. See Absorptions, consolidations, and mergers.
Consumer loans. See Instalment loans.
Criticized assets. See Assets and liabilities of insured commercial banks,
examiners’ appraisal.
Currency, amount of. See Money supply, 1939-1944.
Demand deposits. See Assets and liabilities of operating banks; Deposits,
classified by type of deposit.



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FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Deposit Insurance National Banks......................................................................

9-10

Depositors (see also Insurance coverage):
Claims against closed insured banks. See Receivership, insured banks
placed in.
Losses. See Banks closed because of financial difficulties; Receivership,
insured banks placed in.
Protected in insolvent or hazardous banks suspended or merged. See
Banks closed because of financial difficulties.
Deposits:
Amount of, banks grouped by:
148
Banks which received financial aid from the Corporation....................
Banks which suspended operations..........................................................
148
Insured commercial banks examined in 1944........................................136-137
Insured commercial banks operating throughout 1944..........................
144
Classified by type of deposit:
Commercial and mutual savings banks, June 30 and December 31,
1939-1944...............................................................................................
53
Commercial banks, June 30 and December 30, 1944.......................... 124, 125
Insured banks placed in receivership, 1934-1944....................................
151
Insured commercial banks, call dates, December 1944 to December
1942.........................................................................................................
126
Demand. See Deposits, classified by type of deposit.
Growth...........................................................................................................41, 53-63
Governmental, December 30, 1939 and 1944................................................ 60, 61
Insured and otherwise protected:
In banks merged with financial aid of the Corporation........................ 14-15
In banks placed in receivership.................................................... 14-15, 16, 151
Interbank (see also Deposits, classified by type of deposit):
By FDIC district and State, December 31, 1939, June 30, 1942, and
December 30, 1944............................................................................... 62, 63
Percentage increase..................................................................................... 62, 64
Of individuals and business, by type, 1939-1944.......................................... 66-67
Of individuals, partnerships, and corporations (see also Deposits, classified
by type of deposit):
By FDIC district and State, December 30, 1939, June 30, 1942, and
December 30, 1944................................................................................
58
Percentage increase................................................................... 56, 58, 59, 61, 64
Paid and unpaid in closed insured banks......................................................15, 151
Payments of, to insured depositors. See Receivership, insured banks
placed in.
Postal savings deposits. See Deposits, classified by type of deposit.
Preferred. See Deposits, secured and preferred.
Protected by the Corporation. See Deposits, insured and otherwise
protected.
Public funds. See Deposits, classified by type of deposit.
Savings and time. See Deposits, classified by type of deposit.
Secured and preferred:
Insured banks placed in receivership, 1934-1944................................... 15, 151
Insured commercial banks, call dates, December 30, 1944, to Decem­
ber 31, 1943............................................................................................
127
Sources of data..................................................................................................
147
Subject to offset. See Receivership, insured banks placed in.
Uninsured deposits of insured banks placed in receivership...................... 16, 151
Unsecured. See Receivership, insured banks placed in.
Deposits in:
All commercial and mutual savings banks:
December 31, 1944.........................." ...................................................... 120, 125
June 30, 1944...............................................................................................
124
June 30 and December 31, 1942-1944.................................................... 128-129
June 30 and December 31, 1939-1934, by class of owner......................
53
Percentage change, 1940-1944, by class of owner...................................
54
All commercial banks:
Call dates, December 30, 1944 to December 31, 1943...........................
126
December 30, 1944................................................................................... 120, 125
June 30, 1944...............................................................................................
124



INDEX

161
Page

Deposits in:— Continued
All insured banks:
June 30, 1944...............................................................................................
124
December 30, 1944................................................................................... 120, 125
All mutual savings banks:
December 30, 1944...................................................................................120, 125
June 30, 1944...............................................................................................
124
Banks located in each State and possession, December 30, 1944............ 120-121
Banks for which the Corporation is receiver.................................................
20
Banks which received financial aid from the Corporation............14-15, 148, 150
Insured banks merged with financial aid of the Corporation. .*.14-15, 148, 150
Insured banks placed in receivership...............................................14-15, 148, 151
Insured commercial banks:
At time of examination. See Assets and liabilities of insured com­
mercial banks, examiners' analysis.
Call dates, December 30, 1944 to December 31, 1943...........................
126
December 30, 1944................................................................................... 120, 125
June 30, 1944...............................................................................................
124
Insured mutual savings banks:
December 30, 1944................................................................................... 120, 125
June 30, 1944...............................................................................................
124
Noninsured banks:
December 30, 1944................................................................................... 120, 125
June 30, 1944...............................................................................................
124
Suspended banks...............................................................................................
148
Depreciation. See Earnings, expenses, and dividends of insured banks.
Depressions and deposit insurance.......................................................................
Dividends:
To depositors in mutual savings banks.........................................................
To stockholders of operating insured banks. See Earnings, expenses, and
dividends of insured banks.

14
141

Earnings, expenses, and dividends of insured banks:
Insured commercial banks:
Amounts, 1942-1944...................................................................................
44
Amounts by class of bank, 1944...............................................................
140
Amounts by size of bank, 1944.................................................................
49
Discussion o f ............................................................................................... 44-50
Rates of income received, 1934-1944........................................................
48
Rates of net earnings and net profits....................................................... 45-47
Ratios to average total capital accounts..................................................
46
Ratios to total current earnings................................................................
142
Insured mutual savings banks, 1944..............................................................
140
Sources of data..................................................................................................
139
Sources of earnings........................................................................................... 47-48
Employees:
Federal Deposit Insurance Corporation........................................................
26
Insured commercial banks, December 30, 1944............................................
141
141
Insured mutual savings banks, December 30, 1944.....................................
Examinations of banks (see also Assets and liabilities of insured commercial
banks, examiners’ appraisal; Capital of banks):
Banks cited for unsafe and unsound practices..............................................
23
Banks examined by the Federal Deposit Insurance Corporation.............. 22, 109
Data from reports of examination................................................................132-137
Definition of terms...........................................................................................
133
Effect of war on ................................................................................................
22
Procedure.........................................................................................................132-133
Review of examinations made by Comptroller of Currency and Federal
Reserve banks.......................................................................................
22
Exchange charges, absorption of:
Congressional action......................................................................................... 20-21
Letters to Chairman, Senate Committee on Banking and currency___72-76, 95
Memorandum of General Counsel of the Corporation................................ 77-91



16 2

FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Exchange charges, absorption o f:— Continued
Relation to par clearance of checks..................................................... 73, 77-82, 91
Rulings by Board of Directors of the Corporation......................76, 87-90, 92-94
Ruling of Board of Governors of the Federal Reserve System........74-75, 87-90
Expenses of banks. See Earnings, expenses, and dividends of insured banks.
Expenses of the Federal Deposit Insurance Corporation. See Federal Deposit
Insurance Corporation.
Failures of banks. See Banks closed because of financial difficulties.
Federal bank supervisory authorities. See Bank supervision; Board of
Governors of the Federal Reserve System; Comptroller of the
Currency; Federal Deposit Insurance Corporation.
Federal credit unions..............................................................................................

25

Federal Deposit Insurance Corporation:
Actions by:
On absorption of exchange charges. See Exchange charges,
absorption of.
On applications from banks. See Applications from banks.
To terminate insured status of banks......................................................
23
Assessments on insured banks......................................................... 7, 23, 25, 27, 28
Assets and liabilities...............................................................................26-29, 30-31
Audit................................................................................................................... 29-32
Banks examined by, and submitting reports t o ............................................
22
Bank supervision by. See Bank supervision.
Board of Directors..........................................................................................iv, v, 25
Borrowing power............................................................................................... 30-31
Capital................................................................................................................27, 31
Claims held against suspended and merged banks....................................... 29, 30
Depositors protected by. See Banks closed because of financial difficulties.
Disbursements for protection of depositors...................................... 7, 19, 152-153
Districts............................................................................................................. vi, vii
Divisions............................................................................................................ iv, 26
Employees..........................................................................................................
26
Examination of banks. See Examinations of banks.
Expenses............................................................................................................ 26-28
Income............................................................................................................... 25-28
Insured banks receiving financial aid from. See Banks closed because of
financial difficulties.
Insured deposits. See Deposits, insured and otherwise protected.
Investments.......................................................................................................
30
Liquidation of assets of insured banks in financial difficulties. .15, 17-18, 19-20
Loans to and purchase of assets from insured banks. See Mergers of
insured banks with financial aid of the Corporation.
Losses incurred:
During 1944.................................................................................................
27
During 1934-1944................................................................... 15, 19, 28, 152-153
Reserve for............................................................................................. 20, 29, 30
Officers............................................................................................................. v, vi, 26
Organization and staff..................................................................................iv, 25, 26
Payments to insured depositors................................................................15-17, 151
Policies............................................................................................................... 8-20
Powers..............................................................................................................8-10, 17
Protection of depositors. See Banks closed because of financial difficulties.
Purchase of assets to facilitate completion of liquidation of banks in
receivership............................................................................................. 17-18
Receiver for insured banks..............................................................................20, 150
Recoveries from banks in financial difficulties................................19-20, 152-153
Regulations:
Amended or adopted in 1944.....................................................................
21
Advertisement of FDIC membership....................................................... 96-97
Agents for service of process.....................................................................
98
Assessments..................................................................................................
96
Voluntary termination of insured status..................................................98-102



INDEX

163
Page

Federal Deposit Insurance Corporation:— Continued
Reports from banks.......................................................................................... 24-25
Reserves for losses................................................................................. 12, 20, 29, 30
Supervisory activities. See Bank supervision.
Surplus................................................................................................................27, 31
Federal Deposit Insurance Corporation Districts:
Banks classified b y ............................................................................................
120
States and possessions served..........................................................................vi, vii
Federal Reserve Act. See Exchange charges, absorption of.
Federal Reserve Bulletin. See Exchange charges, absorption of.
Federal Reserve System. See Board of Governors of the Federal Reserve
System.
Fixed and miscellaneous assets. See Assets and liabilities of insured com­
mercial banks, examiners’ appraisal; Assets and liabilities of
operating banks; Receivership, insured banks placed in.
Holding companies.................................................................................................

10-11

Insolvent or hazardous banks. See Bank supervision; Banks closed because of
financial difficulties; Banks in financial difficulties.
Instalment loans, how reported............................................................................

123

Insurance coverage:
In closed banks. See Deposits, insured and otherwise protected.
Recommendation of the Corporation.............................................................

8

Insurance of bank assets........................................................................................ 12-13
Insurance status, banks classified by:
Assets and liabilities o f.................................................................................. 124, 125
Deposits o f .......................................................................................................120-121
Number o f ....................................................................................................... 110-121
Suspensions o f ................................................................................................. 148-149
Insured banks. See:
Absorptions, consolidations, and mergers;
Admissions to insurance;
Assets and liabilities of operating banks;
Assets and liabilities of insured commercial banks, examiners’ appraisal;
Banking offices, establishment o f;
Banks ceasing operations;
Banks closed because of financial difficulties;
Capital of banks;
Class of bank, banking data presented by;
Deposits;
Deposits in;
Earnings, expenses and dividends of insured banks;
Employees;
Examinations of banks;
Mergers of insured banks with financial aid of the Corporation;
Mutual savings banks;
Number of operating banks and branches;
Receivership, insured banks placed in;
Securities;
States, banking data classified by;
Terminations of insurance;
Unsafe and unsound banking practices.
Insured commercial banks not members of the Federal Reserve System.
See Class of bank, banking data presented by.
Insured commercial banks submitting reports to the Federal Deposit In­
surance Corporation............................................................................. 24-25
Insured deposits. See Deposits, insured and otherwise protected.



1 64

FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Insured mutual savings banks. See Mutual savings banks.
Insured State banks members of the Federal Reserve System. See Class of
bank, banking data presented by.
Interbank deposits. See Deposits, interbank.
Interest: See Earnings, expenses, and dividends of insured banks.
Investments of banks. See Assets and liabilities of insured commercial banks,
examiners’ analysis; Assets and liabilities of operating banks;
United States Government obligations; Unsafe and unsound
banking practices.
Investments of the Federal Deposit Insurance Corporation............................ 29-30
Law, violations of by insured banks.................................................................... 22, 23
Legislation related to deposit insurance and banking (see also Exchange
charges, absorption o f):
Federal, enacted in 1944.................................................................................. 21, 71
Recommended by the Corporation................................................................. 8-11
State, enacted in 1944.................................................................................... 102-106
Liquidation, banks placed in ............................................14-15, 19, 110, 148-149, 150
Loans by banks:
Amounts and types. See Assets and liabilities of operating banks.
Examiners’ evaluation. See Assets and liabilities of insured commercial
banks, examiners’ appraisal.
Interest on. See Earnings, expenses, and dividends of insured banks.
Loans to insolvent or hazardous insured banks by Federal Deposit Insurance
Corporation. See Mergers of insured banks with financial aid of
the Corporation.
Losses:
Of banks:
Charged off. See Earnings, expenses, and dividends of insured banks.
Reserves fo r.................................................................................................
Of depositors. See Banks closed because of financial difficulties; Receiver­
ship, insured banks placed in.
Of the Federal Deposit Insurance Corporation. See Federal Deposit
Insurance Corporation.

12

Mergers. See Absorptions, consolidations, and mergers; Mergers of insured
banks with financial aid of the Corporation.
Mergers of insured banks with financial aid of the Corporation (see also
Banks closed because of financial difficulties; Banks in financial
difficulties):
Banks cited for unsafe and unsound practices.............................................
23
Classification of banks merged........................................................................
148
Collections by Corporation on assets purchased or held as col­
lateral....................................................................................... 17-20, 152-153
Deposits protected............................................................................................
15
Disbursements by Corporation...............................................19, 148-149, 152-153
Loans and assets purchased by the Corporation..........................................
19
Losses incurred by Corporation........................................................19, 28, 152-153
Name and location of bank merged, 1944......................................................
150
Number of banks merged......................................................... 15, 19,148,149,153
Procedure...................................................................................................9-10, 17-18
Repayments to Corporation.............................................................. 19-20,152-153
Money supply, 1939-1944:
Amount, June 30 and December 31, by type...............................................
65
Increase by 6-month periods...........................................................................
66
Owned by government and by individuals and business............................
66
Owned by individuals and business, by typ e................................................ 66-68



INDEX

165
Page

Monopoly in banking.......................................................................................... 9, 10, 11
Mutual savings banks:
Insured:
Assets and liabilities, June 30 and December 30, 1944....................... 124, 125
Deposits..................................................................................... 120-121, 124, 125
Earnings, expenses, and dividends......................................... 140-141, 142-143
Number...................................................................................................... 110-121
Insured and noninsured:
Assets and liabilities, June 30 and December 30, 1944....................... 124, 125
Classification................................................................................................
109
Deposits, by State, December 30, 1944................................................. 120-121
Number...................................................................................................... 110-121
National banks. See Class of bank, banking data presented by; Comptroller
of the Currency.
Net earnings of insured commercial banks. See Earnings, expenses, and
dividends of insured banks.
Net profits of insured commercial banks. See Earnings, expenses, and divi­
dends of insured banks.
Net sound capital of insured commercial banks. See Capital of banks.
New banks. See Banking offices, establishment of.
Noninsured banks. See:
Absorptions, consolidations, and mergers;
Admissions to insurance;
Assets and liabilities of operating banks;
Banks closed because of financial difficulties;
Capital of banks;
Class of bank, banking data presented by;
Deposits;
Number of operating banks and branches.
Number of operating banks and branches:
All banks:
Admissions to insurance...................................................................... 23-24, 110
Approved for admission to insurance....................................................... 23-24
Changes during 1944................................................................................ 110-111
December 30, 1944, by class of bank, FDIC district, and States and
possessions........................................................................................... 120-121
June 30 and December 30, 1944............................................................. 124-125
Terminations of insurance....................................................................... 110-111
All banks and branches:
Changes during 1944................................................................................ 110-111
December 31, 1944, by class of bank and States and possessions... .112-119
Banks operating branches............................................................................. 112-119
Branches:
Changes during 1944..................................................................................
Ill
December 31, 1944, by class of bank and States and possessions... .112-119
Commercial banks:
Admissions to insurance...........................................................................110-111
Changes during 1944................................................................................ 110-111
December 30, 1944, by class of bank, FDIC district, and States and
possessions........................................................................................... 120-121
June 30 and December 30, 1944............................................................. 124-125
Insured commercial banks:
Applications approved and disapproved.................................................. 23-24
Call dates, December 30, 1944, to December 31, 1943..........................
126
Changes during 1944................................................................................ 110-111
December 30, 1944, by FDIC district, and States and possessions. .120-121
Examined in 1944, by amount of deposits..............................................
137
Operating throughout 1944, by amount of deposits..............................
145
Mutual savings banks. See Mutual savings banks.



166

FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Number of operating banks and branches (continued):
Noninsured banks:
Changes during 1944................................................................................ 110-111
December 30, 1944, by class of bank, FDIC district, and States and
possessions............................................................................................120-121
June 30 and December 30, 1944............................................................. 124-125
Unit banks, December 30, 1944, by class of bank and States and pos­
sessions................................................................................................. 112-119
Officers, active, of insured banks. See Employees.
Officers and employees of the Federal Deposit Insurance Corporation..........

v, 26

Operating banks. See Number of operating banks and branches.
Par clearance of checks. See Exchange charges, absorption of.
Payments to depositors in closed insured banks. See Receivership, insured
banks placed in.
Polk's Bankers Encyclopedia, data obtained from .......................................... 109,123
Possessions, banks and branches located in:
Deposits o f .......................................................................................................120-121
Number o f .......................................................................................112, 119, 120, 121
Postal savings deposits. See Deposits, classified by type of deposit.
Preferred deposits. See Deposits, secured and preferred.
Profits. See Earnings, expenses, and dividends of insured banks.
Protection of depositors. See Banks closed because of financial difficulties;
Deposits, insured and otherwise protected.
Public funds. See Deposits, classified by type of deposit.
Purchase of bank assets by Corporation. See Assets of banks purchased by
the Federal Deposit Insurance Corporation.
Rand McNally Bankers Directory, data obtained from................................. 109,123
Real estate, loans on. See Assets and liabilities of operating banks.
Receivership, insured banks placed in (see also Banks closed because of
financial difficulties):
Activities of Corporation as receiver o f.........................................................20, 150
150
Assets and liabilities of, at dates of suspension, 1934-1944........................
Depositors:
Extent of protection by insurance......................................................14-16, 151
Methods of protection................................................................................ 15-19
Number eligible for protection, paid and unpaid...................................
151
Payments t o .......................................................................................... 15-16, 151
Deposits:
Insured, paid and unpaid by December 31, 1944.................................. 16, 151
Not eligible for insurance protection....................................................... 16, 151
Paid and unpaid, December 31, 1944......................................................16, 151
Secured, preferred, and subject to offset................................................. 16, 151
Unclaimed accounts................................................................................... 16, 151
Uninsured.................................................................................................... 16, 151
Liquidation o f.................................................................... 15, 19, 110, 148-149, 150
Losses by Corporation on depositors' claims paid........................................
19
Name and location of, during 1944................................................................
150
Number of banks..............................................................................................18, 148
Payments to depositors............................................................................. 15-16, 151
Purchase of assets from .................................................................................... 17-18
Receivers..................................................................................................146-147, 150
Sources of data................................................................................................ 146-147
Reconstruction Finance Corporation, capital of insured banks held by:
Amount. See Capital of banks.
Retirements approved by Federal Deposit Insurance Corporation...........
24



INDEX

167
Page

Recoveries:
By banks on assets charged off. See Earnings, expenses, and dividends of
insured banks.
By Federal Deposit Insurance Corporation on disbursements in closed
banks........................................................................................ 19-20, 152-153
Regulations. See Federal Deposit Insurance Corporation.
Reports from banks................................................................................................ 24-25
Reserves:
In bank assets and liabilities. See Assets and liabilities of operating banks.
Of Federal Deposit Insurance Corporation........................................12, 20, 29, 30
Risk bearing and the operations of banks........................................................... 11-14
Savings and time deposits. See Deposits, classified by type of deposit.
Secured and preferred deposits. See Deposits, secured and preferred; Re­
ceivership, insured banks placed in.
Securities (see also United States Government obligations):
Examiners’ appraisal of, method used...........................................................
132
Held by Federal Deposit Insurance Corporation.................................... 28, 29, 30
Held by insured banks placed in receivership, 1934-1944...........................
150
Held by insured commercial banks: See Assets and liabilities of insured
commercial banks, examiners’ analysis,
geld by operating banks, See Assets and liabilities of operating banks,
interest on securities held by banks. See Earnings, expenses, and divi­
dends of insured banks.
Rate of income on .............................................................................................
48
Size of banks, banks classified by. See Deposits, amount of, banks grouped by.
State banks members of the Federal Reserve System. See Class of bank,
banking data presented by.
State banks not members of the Federal Reserve System. See Class of bank,
banking data presented by.
State bank supervisory authorities:
Data obtained from ........................................................................................109, 123
State legislation regarding............................................................................. 102-103
State legislation regarding bank supervision and bank operations..............102-106
States, banking data classified by:
Deposits, December 30, 1944:
Commercial banks, insured and noninsured..........................................120-121
Mutual savings banks, insured and noninsured................................... 120, 121
Number of operating banks or offices, December 31, 1944:
All banking offices, by class of bank and type of office....................... 112-119
All banks....................................................................................................120-121
Commercial banks, insured and noninsured..........................................120-121
Mutual savings banks, insured and noninsured....................................120-121
Suspensions, receiverships, and mergers........................................................
149
Stockholders of banks:
Losses of. See Banks closed because of financial difficulties.
Net profits of insured commercial banks, available for. See Earnings,
expenses, and dividends of insured banks.
Substandard assets. See Assets and liabilities of insured commercial banks,
examiners’ analysis.
Supervision. See Bank supervision.
Suspensions. See Banks closed because of financial difficulties; Receivership,
insured banks placed in.
Taxes paid by insured banks. See Earnings, expenses, and dividends of in­
sured banks.



168

FEDERAL DEPOSIT INSURANCE CORPORATION
Page

Terminations of insurance:
For unsafe and unsound banking practices and violations of law or
regulations.............................................................................................
23
Number, 1944........................................................................................... 23, 110-111
Voluntary termination of insured status, regulation of the Corporation. .98-102
Time and savings deposits. See Deposits, classified by type of deposit.
Total money supply. See Money supply, 1939-1944.
Trust companies:
Classification o f............................................................................................... 108-109
Number not engaged in deposit banking.................................... 120-121, 124, 125
Unit banks. See Number of operating banks and branches.
United States Government obligations (see also Assets and liabilities of
insured commercial banks, examiners’ analysis; Assets and lia­
bilities of operating banks):
Acquired by commercial and mutual savings banks, 1939-1944................
Held by Federal Deposit Insurance Corporation.................................... 28,
Held by the banking system, 1941 and 1944................................................
Types held by insured commercial banks, 1939-1944..................................
Unsafe and unsound banking practices:
Actions of the Corporation..............................................................................
Number of banks cited.....................................................................................
Types of, for which banks were cited............................................................

54-56
29, 30
38-39
39-41
23
23
§2-23

Unsecured deposits. See Receivership, insured banks placed in.
Violations of law or regulations............................................................................

22-23

War:
Bank supervision and the war........................................................................
22
Effects of wartime changes on the banks...................................................... 53-68
Growth in bank assets and deposits, 1940-1944...........................................
55





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102