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FEDERAL RESERVE BANK
OF N E W YORK
[Circular No. 2 3 8 9 1
March 6,1942 J

Operating Ratios of Member Banks in the Second Federal
Reserve District for the Year 1941
To all Member Banks in the
Second Federal Reserve District:

The annual compilation of operating ratios of member banks in the Second Federal Reserve District for
1941 is presented on the following pages for your information and use. The form of presentation has been
changed somewhat this year, both as to the grouping of banks and as to the arrangement of the ratios.
As in previous years the banks outside New York City have been grouped according to the amount of
total deposits, but the number of groups has been extended to include two additional groups—banks with
deposits under $500,000 and banks with deposits over $20,000,000. Furthermore, the method of subgrouping
has also been changed. In past years it was customary to subdivide the different sized groups according to
proportion of time deposits to total deposits. For some years this appeared to be the most significant basis of
subgrouping the banks, as the proportion of bank funds employed in loans and in investments, and the proportion of current income disbursed for the principal items of expense, varied in a general way with the
character of the banks' deposits. However, a recent study made by the Research Department of this bank
indicated that the developments of recent years had largely destroyed these relationships. Banks generally
have invested much larger amounts of the funds at their disposal in United States Government securities,
regardless of the character of their deposits, and banks which formerly did a predominantly commercial banking business have, in most cases, been unable to employ so much of their funds in loans. It has been found that
a greater degree of correlation now exists between earning, expense, and profit ratios and the proportion of
total assets in the form of loans. Consequently, the groupings of banks by size have been subdivided, for
1941, according to the proportion of loans to total assets. As a result of these new groupings, individual
banks may compare their ratios with the average ratios of banks whose operations are more closely comparable with their own.
In the arrangement of the ratios, consideration has been given to their sequence in the order of probable
interest to the banker, and self-explanatory headings have been selected for the various groups of ratios. The
ratios that summarize the results of the year's operations are shown first. For example, the first group
indicates the rate of return on invested capital and dividends declared. The next group shows the ratios of
earnings and expenses to total assets, after which follows the group of ratios setting forth the sources and
the disposition of earnings in per cent of total earnings. Other groups show the rates of earnings on loans
and on securities, the distribution of assets, and certain capital and deposit ratios.
The average percentage of net profits to capital funds for all groups (ratio 2) increased in 1941 to 5.5
per cent from 4.3 per cent in 1940. The improvement in net profits was chiefly the result of a smaller percentage of losses and depreciation of assets, together with an increase in the amount of income derived from
loans. Total expenses absorbed a smaller part of total earnings owing chiefly to a reduction in the amount
of interest paid on time deposits, which was only partially offset by an increase in the amounts paid for
salaries and taxes. The lowest ratios of net current earnings and net profits to capital funds were reported
by banks with deposits of less than $500,000 that had small percentages of loans to total assets. Relatively
heavy capitalization of such banks (ratios 34 and 35) was a faetor in their low rates of earnings. The large
New York City banks had somewhat higher ratios of net current earnings to capital funds in 1941 than in
1940, but their net profits were only slightly larger, as net recoveries and profits on securities sold were
slightly smaller, and charge-offs on loans were somewhat larger.
The average ratio of total current earnings to total assets (ratio 4), which had declined for a number
of years, remained unchanged from 1940, at 3.3 per cent. A further reduction in the average rate of return
on securities was counterbalanced by an increased volume of loans, on which the rate of return, although
unchanged from 1940, was higher than on securities. The proportion of idle funds in 1941 (cash assets,
ratio 32) remained approximately the same as in the preceding year for all banks, although it declined somewhat for New York City banks. The ratio of total expenses to total assets (ratio 5) which had declined
practically every year since 1932, was unchanged from 1940, at 2.4 per cent.
As a result of rapid expansion in the volume of loans and also of investments, the ratio of capital accounts
to loans, securities, and real estate (ratio 34) declined in 1941, especially in the large New York City banks,
where it fell from 17.5 per cent in 1940 to 15,4 in 1941. The ratio of capital accounts to deposits (ratio 35)
continued the downward tendency of previous years, reflecting the persistent growth of deposits while capital
accounts remained relatively unchanged.



A

SPROUL,

President.

Average Operating Ratios of Member Banks Grouped According to Size of Deposits and Proportion of Loans to Total Assets — 1941
AH ratios are expressed in percentages and are arithmetical averages of the ratios of individual banks in each group, rather than ratios based on aggregate dollar figures
ALL BANKS
1940

1341
772

Number of Banks.

SUMMARY RATIOS

M E M B E R BANKS L O C A T E D O U T S I D E G R E A T E R NEW YORK
GROUP II—Deposits $500,000 to J2,000,000 GROUP III—Deposits $2,000,000 to £5,000,000 iBODP IV—Deposits S5.000.000 t o $20,000,000 GROUP V
lanks with
Loans to Total Assets, Per rent
L o a n s t o Total Assets, Per cent
Group
Group
Loans to Total Assets, Per cent
Loans to Total Assets, Per cent
Group
Group
Jeposits ove:
Average
40 and up Average Under 20 20-29.9 30-39.9 40 and up Average Under 20 2J-29.9 30-39.0 :0 and up Average Under 20 20-29.9 •SO-30.9 0 and up (20,000.000
Under 20 20-29.9 30-39.9
GROUP I—Deposit* under S500.000

75

334

61

85

111

177

34

47

MEMBER BANKS IN
REATER NEW YORK
ROUP VI ROUP VII
•eposits under Jeposits over
100,000,000 J100,000,000

25

M

Percentage of Total Capital Accounts

1. Net current earnings
2. Net profits
3. Cash dividends declared

7.1

6.8

7.1

5.7

3.2

3.5

4.7

7.5

7.0

4.4

5.5

7.1

9.4

7.8

6.9

6.3

7.S

11.0

7.4

4.1

6.5

8.4

11.1

7.8

6.8

5.7

1.0

4.3

5.5

4.8

3.0

2.8

4.0

6.3

5.7

5.1

4.8

5.1

7.2

5.2

5.5

4.7

4.9

5.9

B.I

5.6

5.7

6.3

7.3

4.5

4.9

5.6

1.9

1.9

1.9

1.2

1.9

1.2

O.S

1.2

1.8

1.5

1.7

2.1

2.0

1.8

1.7

1.8

1.8

2.1

2.2

1.7

2.3

3.3

2.4

2.7

1.7

4.1

3.5

3.3

3.3

3.8

3.3

3.2

3.6

4.2

3.4

2.6

3.0

3.4

4.1

3.2

2.6

2.9

3.1

3.8

3.0

2.3

2.8

3.3

3.6

2.6

3.4

1.6

2.6

2.4

2.4

2.8

2.7

2.5

2.7

3.1

2.5

2.0

2.3

2.5

2.9

2.3

1.9

2.2

2.8

2.7

2.2

1.9

2.1

2.4

2.5

1.9

2.7

1.1

0.9

0.9

0.9

1.0

0.6

0.7

0.9

1.1

0.9

0.6

0.7

0.9

1.2

0.9

0.7

0.7

0.8

1.1

0.8

0.4

0.7

0.9

1.1

0.7

0.7

0.5

0.5

0.5

0.7

0.8

0.6

0.6

0.7

0.9

0.8

0.7

0.6

0.7

0.9

0.6

0.6

0.6

0.5

0.6

0.7

0.6

0.6

0.7

0.7

0.4

0.6

0.5

47.2

50.8

52.7

61.2

36.3

46.5

59.2

71.8

54.8

31.4

47.9

57.7

70.9

50.9

31.6

46.7

55.8

66.3

4S.1

31.1

43.8

52.5

67.0

44.1

53.7

34.1

36.6

32.8

31.1

27.3

51.8

42.3

29.1

16.7

31.8

56.7

37.5

28.4

16.2

31.9

54.2

36.3

25.1

15.8

32.3

49.1

35.1

28.0

17.2

33.9

18.2

36.3

6.3

6.9

7.2

5.9

4.7

6.1

6.2

6.8

6.4

7.5

7.0

6.3

7.4

6.3

6.9

8.4

8.1

6.8

7.3

7.1

6.4

6.7

5.0

16.6

3.5

9.9

9. S

5.6

7.2

5.1

5.5

6.6

5.5

7.1

7.9

10.1

10.7

9.8

12.6

12.5

14.0

13.1

9.1

17.0

II 5

26.1

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

4.3

4.0

4.0

1.1

1.3

28.7

29.8

30.5

31.9

45.4

33.9

31.9

28.9

30.1

34.2

19.8

18.2

16.2

16.7

11.4

19.1

16.9

16.6

17.4

2.1

3.0

3.5

2.7

3.1

2.7

3.0

2.5

3.5

23.8

24.3

24.2

24.5

24.0

24.8

23.5

25.0

74.4

75.3

74.4

75.8

83.9

80.5

75.3

23.6

24.7

25.6

24.2

16.1

19.5

9.5

8.3

5.1

7.7

+0.9

16.1

16.4

20.5

16.5

Percentage of Total Assets

4.
5.
6.
7.

Total earnings
Total expenses
Net current earnings
Net profits

SOURCES AND DISPOSITION OF EARNINGS
Percentage of Total Earning*

8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.

Interest and discount on loans
Interest and dividends on securities
Service charges on deposit accounts
All other earnings
Total earnings
Trust department earnings {included in item 11) *.
Salaries and wages
Interest on time deposits.
Taxes other than real estate
All other expenses
Total expenses
Net current earnings
Net charge-offs t (net recoveries + )
Net profits

6.6
100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

2.6

2.0

2.3

2.0

2.3

2.8

2.1

4.5

3.5

5.7

4.2

31.9

29.3

27.0

28.9

28.4

30.0

29.0

27.9

30.6

34.3

31.7

28.8

27.1

80.9

19.8

17.1

17.6

16.2

17.6

21.1

18.6

16.9

13.9

16.7

21.3

16.1

10.0

13.5

10.6

S.6

1.4

3.4

3.4

3.2

4.1

3.4

3.1

3.4

3.4

3.7

3.3

3.6

3.1

2.6

4.4

2.9

5.6

6.7

23.3

22.7

24.0

23.2

23.1

23.7

21.6

23.8

24.2

24.8

24.2

23.4

24.3

24.0

25.2

28.1

30.4

27.2

73.0

74.3

80.1

73.3

70.4

73.5

74.2

75.8

73.5

70.3

74.8

82.6

75.2

72.0

70.S

71J)

80.3

68.8

24.7

27.0

25.7

19.9

76.4
23.6

26.7

29.6

26.5

25.8

24.2

26.5

29.7

25.2

17.4

•2i. 8

28.0

29.8

2S.1

19.7

31.2

5.0

20.2

4.0

3.9

+3.7

2.0

7.9

6.6

8.0

2.2

5.7

9.4

14.0

+8.8

2.7

6.4

10.S

17.0

14.5

4.5

23.0

21.8

23.6

21.6

18.8

23.0

18.5

23.6

18.5

17.1

16.7

22.3

26.2

22.1

21.6

19.5

10.0
is l

3.1
Iti.6

+0.7
31.9

100.0

11.3

•S.I

15.2

37.7

33.5

RATE5 OF EARNINGS ON LOANS AND SECURITIES
Percentage of Total Loam

22. Interest and discount on loans
23. Recoveries on loans
24. Charge-offs on loans

5.4

5.3

5.3

6.1

7.0

6.1

6.0

5.9

5.7

5.6

5.7

5.7

5.7

5.3

6.3

6.4

6.1

6.2

4.9

4.8

4.8

4.1

5.0

4.1

4.8

2.7

0.5

0.5

D.G

0.4

0.1

0.6

0.3

0.5

0.4

0.5

0.5

0.4

0.4

0.6

0.7

0.8

0.6

0.6

0.5

o.a

0.6

0.4

08

0.4

U.I

0.3

0.9

0.8

0.6

0.5

0

0.5

0.4

0.6

0.5

0.4

0.5

O.fi

0.5

0.8

0.5

0.8

0.7

0.9

0.7

0.7

0.7

0.6

0.6

1.2

1.0

0.6

3.1

2.9

2.6

3.2

3.4

3.3

3.0

3.2

2.8

2.7

2.7

2.8

1.8

2.5

2.6

2 i

2.*

2 6

2.3

2.3

2.3

2.4

2.4

2.1

2.3

1.6

0.4

0.5

0.5

0.7

0.7

0.9

0.2

0.8

0.6

0.5

0.5

0.7

0.7

0.6

0.4

0.4

0.4

06

0.4

D.S

(J 4

0.6

0.4

0.4

0.5

0.3

1.4

1.2

0.8

0.7

0.2

0.7

0.7

0.8

0.7

0.8

0.7

0.7

O.S

0.8

0.9

0.8

0.7

1.0

0.9

0.8

O.S

1.1

0.5

1.3

0.9

0.7

1.9

1.5

1.1

1.0

0.7

0.8

0.9

1.2

1.2

0.8

0.9

1.5

1.3

1.2

1.2

1.0

1.1

1.5

1.0

0.8

0.8

1.5

1 1

1.1

0.6

0.8

31.6

32.6

33.0

39.7

17.0

24.1

34.6

51.7

33.8

14.7

25.1

33.7

50.9

31.3

15.6

25.4

34.1

48.4

29.9

14.7

25.4

34.0

48.2

27.1

39.6

21.1

40.1

36.5

36.5

31.1

51.0

42.0

34.8

22.0

36.3

65.2

41.9

34.5

23.0

38.9

55.4

44.8

33.8

23.5

•10.1

49.5

43.5

39.1

25.1

38.2

25.1

37.6

3.8

3.4

3.1

2.7

1.7

2.9

2.1

3.0

3.0

2.5

2.9

3.2

3.0

3.5

2.3

3.5

1.3

3.6

3.4

2.0

3.5

3.9

3.1

24.2

27.3

27.2

26.5

30.3

30.9

28.4

23.3

26.8

27.4

29.9

28.4

22.9

26.1

26.5

26.0

27.5

24.3

26.2

32.7

27.3

22.3

23.3

10.5

11.1

12.7

10.5

9.8

11.6

11.7

9.4

8.5

11.0

10.0

6.7

8.8

17.8

7.6

6.5

9.3

Percentege of Total Securities

25.
26.
27.
28.

Interest and dividends on securities
Recoveries on securities
Profits on securities sold
Charge-offs on securities

DISTRIBUTION OF ASSETS
Percentage of Total Aiiets

29.
30.
31.
32.

Loans
Securities
Real estate assets
Cash assets

1.9

1.4

30.4

32.5

39.3

10.6

8.5

15.0

[6.2
12.4

15.4
10.1

?, 7

Percentage of Total Leans

33. Personal and retail instalment paper* (see Note)
CAPITAL AND DEPOSIT RATIOS — I n Percentage

34.
35.
36.
37.
38.

Capital accounts to loans, securities, and real estate assets.
Capital accounts to deposits
Real estate assets to capital accounts
Time deposits to total deposits
Interest on time deposits to time deposits

18.5

18.9

18.1

24.6

31.7

26.8

27.5

21.1

19.4

20.2

21.1

19.0

18.0

16.1

16.5

16.7

16.1

14.8

15.0

16.1

15.3

14.9

18 2

13.4

16.5

16.0

15.3

22.3

28.5

22.8

25.2

19.6

16.6

17.0

17.4

15.8

16.4

13.5

13.8

14.0

13.4

12.6

12.3

11.7

12.4

13.1

11.2

ID.3

30.9

28.3

26.4

16.7

7.9

19.2

13.1

19.0

23.3

18.9

24.0

25.1

24.0

32.2

20.6

30.9

40.1

34.4

33.3

29.1

34.3

36.0

31.6

19.6

18.2

57.0

56.0

54.0

52.9

33.7

49.8

50.8

5S.2

57.6

57.6

54.5

59.0

58.9

59.5

64.4

59.5

59.1

55.9

54.4

55.4

53.4

55.2

54.2

31.1)

39.0

6.3

1.4

1.2

1.1

1.4

1.4

1.3

1.4

1.4

1.1

1.0

1.1

1.1

1.3

1.0

1.0

1.0

1.0

1.0

1.0

0.9

0.9

1.1

1.0

0.9

0.8

0.5

* Banks not reporting this item, or reporting zero amounts were excluded in computing
this average, and figures are not shown where there were fewer than 3 banks in a group.
• * Not available.




Total charge-offs (including those on banking house, furniture and fixtures, etc.,
as well as on loans and securities) less profits on securities sold and recoveries.

Note: Balance sheet figures used as a basis for the ratios are averages of amounts reported
for December 31, 1940, and April 4, June 30, and September 24, 1941, except that in the
case of item 33 (personal and retail instalment paper) only June 30 figures were used.

YOUR
FIGURES
Included in
roup

)




Prepared by
FINANCIAL STATISTICS DIVISION
RESEARCH DEPARTMENT
FEDERAL RESERVE BANK
OP NEW YORK


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102