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F E D E R A L R E S E R V E BANK
OF NEW YORK
["Circular No. 2 6 0 0 1
L
March 27, 1943
J

Operating Ratios of Member Banks in the Second Federal
Reserve District for the Year 1942
To all Member Banks in the
Second Federal Reserve
District:

Wartime developments are plainly reflected in the record of operations of member banks in this District
during the past year. Large increases in holdings of United States Government securities, reduced loans,
lower average rates of income on earning assets, increased expenses, and smaller net profits for a large
majority of the banks of the District, all reflect the impact of the early stages of this country's participation in the war.
As the data on the following pages indicate, the average ratio of net profits to total capital funds for all
member banks declined by 1/5 from 1941 to 1942, even though they enlarged their holdings of Government
securities considerably; the average rate was 4.4 per cent in 1942 as compared with 5.5 per cent in 1941
(item 2). The reduction in net profits appears to have been chiefly the result of increased expenses—larger
disbursements for salaries and wages, some increase in taxes, and increases in other expenses, including Federal Deposit Insurance Corporation assessments against the increased volume of deposits—which were only
partially offset by reduced interest payments on time deposits (items 13-17). Another factor was a considerable reduction in recoveries and profits taken on securities sold, reflecting the more stable market conditions
which prevailed during 1942, especially for Government securities (items 22 and 23).
Bank earnings were affected also by a lower average rate of return on their assets (item 4), which for
many groups of banks more than offset the effects of an increased volume of earning assets. There were
repayments of loans, on which relatively high interest rates had been received, especially by the smaller banks,
while the increased investments in Government securities yielded lower rates of return. As a result of this
type of shift in earning assets, the most severe shrinkage in net current earnings and in net profits appeared
in the smallest banks. The large banks in New York City and in other parts of the District were an exception
to the general rule; their average rates of income on earning assets, which were already at low levels, showed
little further shrinkage, and their expense ratios did not increase as much as those of the smaller banks.
Furthermore, the loan volumes of the large New York City banks were well maintained (probably because of
substantial participations in large loans to war contractors). Consequently, contrary to the general trend,
New York City banks with deposits over $100 million showed an increase from 5.6 to 6.0 per cent in the ratio
of net profits to total capital funds, and banks outside New York City with deposits over $20 million showed
an increase in their average rate of profits from 4.5 to 5.4 per cent.
Average net current earnings for all groups of banks, before charge-offs, declined from 7.1 per cent of
capital funds in 1941 to 6.1 per cent in 1942, the lowest figure in the 11 years for which this ratio has been
computed. The ratio of net current earnings to total assets also declined to a new low level, falling from 0.9
per cent in 1941 to 0.6 per cent in 1942. Here again the smaller banks showed the largest reductions in these
ratios.
Member banks in this District generally showed a tendency to follow conservative policies with respect
to their dividend declarations in 1942. The large New York City banks and the largest banks outside New
York City, which in recent years had been paying the highest dividend rates on their capital funds, reduced
their dividend disbursements in the aggregate in 1942. In other groups of banks, where dividend disbursements already were at lower rates, there was little change.
The rapid growth in the percentage of total assets invested in securities (items 28 and 29) was accompanied by a further decline in the proportion of cash assets (item 32), despite the reduction in loans (item
30). This expansion in investments and the accompanying growth in deposits are reflected in further
declines in the ratios of capital accounts to earning assets (item 33), and to deposits (item 35).
It will be noted that a few new items have been added this year: item 15, showing taxes on net income;
item 28, showing the per cent of total assets invested in Government securities; and item 34, showing the
ratio of capital accounts to "risk assets" (assets other than cash and Government securities).
The ratios for your bank have been inserted in the last column of the table in order that you may readily
compare your figures with the average ratios for banks whose size and operations are similar to yours—the
group checked in red.




AT.T.A-W

SPROUL,

President.

Average Operating Ratios of Member Banks Grouped According to Size of Deposits and Proportion of Loans to Total Assets — 1942
All 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
M E M B E R B A N K S IN
GREATER NEW YORK
GROUP V
Banks with
GROUP VI GROUP VII
Loans to Total Assets, Per cent
Loans to Total Assets, Per cent
Loans to Total Assets, Per cent
Group
Loans to Total Assets, Per cent
Group
Group
Group
Deposits over Deposits under deposits over
Average
Average
Average
Average
Under 20 20-29.9 30-39.9 40 and up
Under 20 20-29.9 30-39.9 40 and up
Under 20 20-29.9 30-39.9 40 and up
Under 20 20-29.9 30-39.9 40 and up $20,000,000 $100,000,000 $100,000,000
MEMBER

ALL B A N K S

1941

SUMMARY RATIOS
Percentage of Total Capital Accounts
1. Net current earnings
2. Net profits
3. Cash dividends declared
Percentage of Total Assets
4. Total earnings
5. Net current earnings
6. Net profits

772

Number of Banks.

16.
17.

81

105

68

76

193

49

70

42

32

122

31

50

25

16

31

34

18

6.1

3.9

2.6

2.7

3.4

6.1

5.7

4.9

5.4

5.5

6.7

6.7

5.5

6.3

7.2

8.6

6.8

4.7

6.5

8.2

9.2

7.8

5.9

6.1

1

4.4

2.0

2.7

1.2

1.6

3.1

4.3

4.0

4.5

3.6

4.9

4.9

4.7

4.8

4.7

5.8

4.6

4.5

4.4

4.2

6.1

5.4

3.9

6.0

2

1.8

1.3

1.5

1.6

1.0

1.3

1.7

1.6

1.6

1.8

1.8

1.8

1.7

1.9

1.6

2.0

2.1

1.7

2.3

1.7

2.8

2.4

1.8

3.7

3

2.9

3.3

2.9

3.0

3.3

3.8

3.1

2.7

2.9

3.2

3.6

2.9

2.6

2.8

3.0

3.6

2.8

2.2

2.8

3.0

3.4

2.4

3.0

1.6

4

0.6

0.6

0.5

0.5

0.5

0.9

0.7

0.7

0.6

0.7

0.8

0.7

0.6

0.7

0.7

0.8

0.6

0.5

0.7

0.7

0.9

0.7

0.6

0.5

5

0.5

0.4

0.6

0.2

0.2

0.5

0.5

0.5

0.6

0.5

0.6

0.5

0.5

0.5

0.4

0.5

0.4

0.4

0.4

0.3

0.5

0.4

0.4

0.5

6

36.1

33.9

54.9

44.4

28.6

17.6

36.6

57.2

39.6

28.9

17.5

37.0

56.6

38.9

26.0

17.1

35.9

51.2

36.0

28.4

17.8

38.6

24.6

42.8

7

52.7

47.9

54.6

30.2

45.0

57.7

73.3

50.0

30.5

46.7

57.2

69.2

46.5

28.3

44.2

57.7

65.1

44.7

29.1

43.5

53.8

64.5

40.2

49.3

31.6

8

7.2

7.0

5.5

8.0

4.2

7.2

4.3

6.5

6.0

6.9

6.3

6.5

7.6

6.9

7.5

8.2

8.1

7.5

8.0

6.9

8.5

7.1

5.1

14.3

3.2

9

9.0

9.0

6.0

6.9

6.4

6.5

4.8

6.9

6.3

6.8

7.6

6.8

8.9

8.2

9.4

8.1

9.7

11.9

11.7

13.6

9.3

10.6

16.1

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

100.0

100.0

100.0

100.0

100.0

100.0

4.0

3.8

2.1

2.6

1.2

2.4

2.2

2.1

1.8

2.5

1.5

2.3

3.9

4.1

4.8

2.4

3.1

5.3

30.5

31.5

34.0

42.1

34.0

34.1

30.2

31.0

32.0

31.7

30.3

29.3

30.3

29.5

30.2

31.7

29.9

31.7

33.8

32.4

29.5

28.7

30.6

16.2

15.1

16.0

9.0

18.6

17.5

15.3

16.5

16.9

16.4

16.1

16.6

16.1

19.2

15.8

15.8

12.5

14.8

16.4

14.3

15.6

11.9

2.4

2.5

1.6

2.2

2.6

3.3

2.4

1.6

1.9

2.6

4.0

2.0

1.8

1.5

1.9

3.7

2.0

1.5

1.7

2.1

|27.7

....

11.8

22.4

10

100.0

100.0

11

11.6

13.5

12

39.2

33.5

13

10.5

6.0

1.1

14

3.8

1.8

4.2

6.1

15

1

;

28.4

29.3

30.7

29.0

30.1

28.2

27.8

26.3

27.8

28.8

28.5

28.2

26.4

28.5

27.8

30.9

28.8

28.6

28.3

28.4

31.8

29.9

32.5

26.6

16

74.4

77.4

81.8

83.4

83.8

84.3

77.0

77.7

76.8

77.8

77.8

78.4

76.6

76.9

76.0

77.2

77.0

77.3

80.3

76.7

75.6

76.2

72.8

81.9

67.3

17

25.6

22.6

18.2

16.6

16.2

15.7

23.0

22.3

23.2

22.2

22.2

21.6

23.4

23.1

24.0

22.8

23.0

22.7

19.7

23.3

24.4

23.8

27.2

18.1

32.7

18

5.1

5.7

8.0

1.6

9.7

8.7

10.1

5.2

3.6

3.3

8.0

6.8

5.7

3.7

4.9

8.4

7.0

6.8

0.1

7.3

13.5

7.9

7.5

4.8

0.8

19

20.5

16.9

10.2

18.2

6.5

7.0

12.9

17.1

19.6

18.9

14.2

14.8

17.7

19.4

19.1

14.4

16.0

15.9

19.6

16.0

10.9

15.9

19.7

13.3

31.9

20

+

2.6

2.3

2.8

3.4

2.9

2.6

2.6

2.4

2.6

2.5

2.5

2.3

2.2

2.4

2.2

2.2

2.1

2.0

2.0

2.1

2.0

2.1

1.9

1.9

1.4

21

0.5

0.2

0.3

0.3

0.3

0.1

0.5

0.3

0.3

0.3

0.3

0.2

0.2

0.2

0.2

0.2

0.2

0.3

0.2

0.2

0.3

0.2

0.1

0.1

0.1

22

0.8

0.2

0.2

0.1

0.3

0.4

0.1

0.2

0.2

0.2

0.2

0.1

0.2

0.2

0.2

0.2

0.2

0.3

0.2

0.3

0.3

0.3

0.3

0.2

0.2

23

1.1

0.5

0.7

0.3

0.9

0.7

0.7

0.5

0.5

0.5

0.6

0.5

0.5

0.5

0.4

0.6

0.6

0.6

0.4

0.6

0.8

0.5

0.2

0.4

0.2

24

25

5.3
!

5.0

5.6

5.6

5.5

5.5

5.9

5.4

5.6

5.4

5.2

5.3

5.0

5.1

5.0

5.1

5.0

4.7

4.7

4.8

4.7

4.5

3.9

4.5

2.3

0.5

0.5

0.4

0.2

0.4

0.4

0.6

0.5

0.7

0.4

0.4

0.4

0.5

0.6

0.4

0.4

0.3

0.5

0.6

0.6

0.4

0.3

0.4

0.2

0.2

26

0.6

0.6

0.7

0.3

0.6

0.8

1.2

0.6

0.7

0.5

0.6

0.6

0.6

0.5

0.5

0.8

0.6

0.8

0.6

0.8

0.9

0.6

1.0

0.6

0.3

27

30.8

22.9

21.6

25.9

27.5

16.2

28.6

40.7

30.2

23.1

18.4

32.6

44.2

34.7

25.4

19.7

34.8

44.8

36.5

29.3

19.0

38.5

28.3

40.7

28

13.2

14.9

26.9

19.9

9.0

9.2

14.7

18.7

16.7

14.1

8.3

13.5

17.0

14.4

11.3

8.9

11.7

12.7

11.8

12.8

7.4

8.2

6.7

6.5

29

33.0

28.7

32.5

15.3

24.4

35.1

47.1

14.2

24.8

34.4

46.8

27.0

14.1

24.8

34.1

47.7

23.8

33.0

20.9

30

3.1

2.5

2.2

2.4

1.5

2.5

2.5

2.4

2.2

2.2

2.8

2.5

2.8

2.3

3.1

3.0

2.9

2.9

2.6

3.3

2.7

3.0

2.9

1.5

1.2

31

27.2

24.6

27.4

33.8

28.3

25.9

24.9

24.5

23.7

25.6

25.0

23.4

23.1

22.1

22.8

25.8

21.5

23.2

25.6

23.1

20.8

22.6

26.0

29.8

30.2

32

18.1

16.0

23.4

26.8

25.9

21.9

20.3

17.5

18.2

17.5

18.1

16.2

14.4

15.1

15.0

14.5

12.3

13.0

13.2

13.4

12.4

12.2

11.4

13.7

12.5

33

**

28.7

34.9

39.4

40.5

36.0

25.8

30.3

41.7

30.4

26.4

21.4

27.1

37.2

28.0

21.8

16.6

26.0

35.6

26.0

20.3

16.2

24.3

24.5

30.6

34

15.3

13.9

20.8

23.0

23.3

19.6

18.0

15.4

16.3

15.2

16.0

14.3

12.6

13.4

13.1

12.0

10.8

11.1

10.8

11.5

11.0

10.4

9.2

10.8

9.6

35

54.0

48.9

47.4

28.5

46.5

51.1

54.0

52.4

50.7

51.6

51.7

55.9

54.6

57.9

53.8

53.0

53.3

48.4

48.2

47.9

49.3

48.8

33.3

24.7

5.2

36

1.1

1.0

1.3

0.9

1.3

1.4

1.3

1.1

1.0

1.0

1.1

1.2

1.0

1.0

1.0

1.0

0.9

0.9

0.8

0.9

1.0

0.9

0.8

0.7

0.5

37

|36.5

1 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.
2 Includes charge-offs for recurring depreciation on banking house, furniture, and fixtures for
1942—previously included in item 19.




330

FIGURES

31.1

23. Profits on securities sold
24. Charge-offs on securities

37. Interest on time deposits to time deposits

17

YORK

0.7

RATES OF EARNINGS ON SECURITIES AND ON LOANS
Percentage of Total Securities
21. Interest and dividends on securities
22. Recoveries on securities

36. Time deposits to total deposits

15

NEW

0.9

18. Net current earnings
19. Net charge-offs3 (net recoveries -f- )
20. Net profits

CAPITAL AND DEPOSIT RATIOS — I n Percentage
33. Capital accounts to securities, loans, and real estate assets.
34. Capital accounts to risk assets4
35. Capital accounts to deposits

18

GREATER

3.3

expenses2

Percentage of Total Loans
25. Interest and discount on loans
26. Recoveries on loans
27. Charge-offs on loans
DISTRIBUTION OF ASSETS
Percentage of Total Assets
28. U. S. Government securities.
29. Other securities
30. Loans
31. Real estate assets
32. Cash assets

8

OUTSIDE

GROUP III—Deposits 82,000,000 to $5,000,000 GROUP IV—Deposits $5,000,000 to $20,000,000

1.9

Total earnings
Trust department earnings (included in item 10J1
Salaries and wages
Interest on time deposits
Taxes on net income
All other expenses2
Total

58

LOCATED

5.5

9. Service charges on deposit accounts.
10. All other earnings
12.
13.
14.
15.

786

BANKS

GROUP II—Deposits $500,000 to $2,000,000

7.1

SOURCES AND DISPOSITION OF EARNINGS
Percentage of Total Earnings
7. Interest and dividends on securities.
8. Interest and discount on loans

11.

1942

GROUP I—Deposits under $500,000

29.7

14.6

25.2

34.9

47.3

27.8

3 All charge-offs other than recurring depreciation on banking house, furniture, and fixtures,
less profits on securities sold and recoveries.
4 Total assets less U . S. Government securities and cash assets.
** Not computed.

Note: Balance sheet figures used as a basis for the ratios are averages of amounts reported
for December 31, 1941, and April 4, June 30, and December 31, 1942.




Prepared by
F I N A N C I A L STATISTICS DIVISION
RESEARCH D E P A R T M E N T
FEDERAL RESERVE B A N K
OF N E W Y O R K

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