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FEDERAL RESERVE BANK
OF NEW YORK
r Circular No. 3 0 6 6 ~
l
L
March S, 1946
J

Operating Ratios of Member Banks in the Second Federal
Reserve District for the Year 1945
To all Member Banks in the
Second Federal Reserve District:

Profits after income taxes, realized by all member banks in this District, increased during 1945, averaging 11.6 per
cent of capital funds, compared with 9.5 per cent in 1944 and 7.2 per cent in 1943.* Not all individual banks shared in
the 1945 increases, however; there were over 200 member banks in the Second District, or more than 25 per cent of the
total number, which showed decreases in net profits after income taxes. This diversity of experience will bear watch­
ing and study in the period immediately ahead, when some of the factors (such as large increases in bank holdings of
Government securities), leading to continued increases in bank earnings, may no longer be operative.
The largest gains in profits during the past year occurred in three groups of banks outside New York City with
deposits in excess of $2,000,000, and in New York City banks with deposits under $100,000,000; these groups of banks
had profit-to-capital ratios at least 2 points, or 20 per cent, higher in 1945 than in 1944. Most of the banks showing
decreases in net profits were institutions with less than $20,000,000 of deposits, although a number of the larger banks
outside New York City also had smaller profits in 1945 than in 1944.
As in recent previous years of rising net profits for the majority of banks in the District, dividends to bank stock­
holders were not generally and substantially increased in 1945. Banks continued the conservative and necessary policy
of adding a large part of their net profits (about 80 per cent on the average) to capital accounts, thereby increasing
capital funds about 9.5 per cent. The remaining 20 per cent of profits was used for dividends, which for all banks in
the District averaged only 2.1 per cent of total capital accounts (item 4 ), the same as in 1944. Despite additions to
capital funds, mostly out of earnings, the average ratio of capital accounts to total deposits declined from over 9 per
cent in 1944 to 8 per cent in 1945. The ratio of capital to all assets other than cash and Government securities (item 33),
however, rose to 43 per cent as compared with 40 per cent in 1944.
The principal reason for increased net profits of most banks (item 2) was the increase in volume of earning assets,
chiefly Government securities. There were also substantial increases in loans to finance the purchase or carrying of
Government securities, however, and, in the ease of New York City banks, some increases in industrial and commercial
loans. The average rates of return on earning assets were lower than in the previous year as reflected in the ratio of
total earnings to total assets (item 5 ), and also in the ratio showing earnings on loans (item 26). For the first time, a
ratio has been calculated to show separately the average return on U. S. Government securities (item 23) and on other
securities (item 24). Since these ratios have not been computed for previous years, for all groups of banks, no exact
comparison is available. However, the combined rate of return on Government securities and on other securities was
lower in 1945 than in 1944 for most groups of banks.
The increase in total current income of the banks was more than enough to cover increased expenses for salaries,
interest on an expanded amount of time deposits, and other increased costs of bank operations, leaving the ratio of net
current earnings to total earnings (item 19) practically unchanged from 1944 for most groups of banks. There were
sizable additions to current net earnings from profits on securities sold during the year, and from recoveries on loans
and securities that had been written down or charged off in previous years, particularly for the medium and larger size
banks. Taxes on net income were also much larger than in previous years and for all banks averaged 7.8 per cent of
gross earnings and about one fourth of net current earnings. The proportion of earnings used for income taxes
increased with the size of banks, and was highest for New York City banks having total deposits of more than
$100,000,000; for this group income taxes amounted to 19 per cent of total current earnings and 41 per cent o f net
current earnings.
The changes since the end of 1941 in assets and liabilities of member banks in the Second District, for four size
groups of banks, are shown in graphic form on the back page of this circular. The banks have been grouped according
to amount of total deposits, and identical banks for each size group have been used for each year end throughout the
period. The largest percentage changes in total resources were in the banks having total deposits under $100,000,000—
the increase in these banks being more than 100 per cent in each of the three groups, compared with about 60 per cent
in the larger banks. The expansion in total deposits in all groups, varying from 60 to 130 per cent, has been closely
related to the changes in the volume of Government securities held. Demand deposits expanded about twice as much as
time deposits in all groups except in the very largest banks where the percentage gains in demand and time deposits
were roughly the same.
Holdings of securities other than Government securities declined in all groups during most of the period but
increased moderately during 1945. A similar situation prevailed in loans, except in the largest banks where substantial
increases in loans for purchasing or carrying Government securities in connection with war financing, together with a
smaller increase in commercial and industrial loans (especially in 1945), caused a rise of approximately 70 per cent
during the four years. Capital funds increased steadily throughout the war years in all groups of banks but not in
proportion to the increase in deposits.
The ratios for your bank have been inserted in the last column of the table in order that you may readily compare
you r figures with the average ratios for banks whose size and operations are similar to yours— the group checked.
A

*

llan

S proul,

President.

These figures represent unweighted averages of the percentages for individual banks; the ratio of aggregate profits to aggregate

capital funds showed a smaller increase in 1945.



Average Operating Ratios of Member Banks Grouped According
A ll ratios are expressed in percentages and are arithmetical averages of the rati

MEM
ALL BANKS

GROUP I— Deposits under $2,000,000

1943

1945

Number of Banks..

SUMMARY RATIOS

1944

796

810

805

Loans to Total Assets, Per cen
Group
Average Under 10 10-19.9 20-29.9 30 ac
178

74

81

20

:

Percentage of Total Capital Accounts

1. Net current earnings................................................................

7.3

8.8

9 .4

7.8

7.0

7.7

10.3

2. Profits before income taxes......................................................

7.9

10.8

14.0

10.7

10.6

10.4

11.3

15

3. Net profits after income taxes.................................................

7.2

9.5

11.6

9.2

9 .4

8.8

9.3

12

4. Cash dividends declared............................................................

2.0

2.1

2.1

1.8

1.7

1.8

1.9

1

5. Total earnings...........................................................................

2.4

2.3

2.1

2.2

2 .0

2.2

2.6

2.

6. Net current earnings..................................................................

0.6

0.7

0.6

0.6

0.6

0.6

0.8

0.

7. Net profits after income taxes.................................................

0.6

0 .8

0 .8

0.8

0.8

0.7

0.8

0.

49.2

46.9

53.4

45.1

33.3

23.

1 45.0

1 52.4
8.0

10.6

15.2

8.3

4.7

0.

32.3

28.8

30.8

19.3

34.7

52.0

64.
4.

14

Percentage of Total Assets

SOURCES A N D DISPOSITION OF EARNINGS
Percentage of Total Earnings

10. Earnings on loans1.....................................................................

39.5

11. Service charges on deposit accounts.......................................

7.0

7.2

6 .4

6.4

6 .8

6.4

5.3

12. All other earnings.....................................................................
13.
Total earnings.......................................................................
14. Trust department earnings2 ( included in item 1 2 )...............

8.5

8.1

7.6

5.3

5.3

5.5

4.7

6.

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.

3.7

4.4

3.3

1.0

0 .9

1.1

0

15. Salaries and wages.....................................................................

31.5

29.6

28.4

29.6

30.7

29.4

27.3

16. Interest on time and savings deposits.....................................
17. All other expenses.....................................................................

14.8

15.1

16.4

16.4

16.3

16.5

16.0

17.

27.2

25.3

24.8

24.7

24.1

25.1

24.4

26.

18.

24.

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

73.5

70.0

69.6

70.7

71.1

71.0

67.7

68.

19. Net current earnings.................................................................

26.5

30.0

30.4

29.3

28.9

29.0

32.3

31.

20. Net recoveries3 (or losses —) .................................................
21. Taxes on net income................................... .............................

2.9

7.7

15.5

11.6

14.4

11.3

2.8

4.

2 .5

4.2

7 .8

5.7

4.6

6.6

6 .2

5.

26.9

33.5

38.1

35.2

38.7

33.7

28.9

29.

22.

Net profits after income taxes.............................................

RATES O F EARNINGS O N SECURITIES A ND O N LOANS
Percentage of Securities Held

23. Interest on U. S. Government securities..................................
25. Net recoveries and profits on securities (total)...................

\
0.2

,8
0.2

1.6

1.7

1.8

1.7

1.7

1.

3.1

[

3.3

3.5

3.1

3.4

2.

0 .4

0.3

0.3

0 .3

0.1

0.

Percentage of Total Loans
5.1

5.1

5 .0

5.6

5.7

5.6

5.5

5.

0

0.4

0 .5

0 .5

0 .7

0 .5

0.2

-0 .'

28. U. S. Government securities...................................................

47.0

56.9

61.3

57.9

60.4

58.0

50.3

41.1

29. Other securities.........................................................................

9.6

7.2

6.1

7.3

9 .4

6.4

4 .5

1.-

30. Loans ..........................................................................................

19.4

15.0

13.0

12.2

6 .7

13.5

24.5

33.!

31. Cash assets.................................................................................

22.0

19.4

18.4

21.7

22.6

21.2

19.7

23.:

32. Real estate assets.......................................................................

1.8

1 3

1.0

0.8

0.8

0 .8

0.9

0.<

18.i

27. Net recoveries (or losses — ) on loans..................................
D IS T R IB U T IO N O F ASSETTS
Percentage of Total Assets

CAPITAL A N D DEPOSIT RATIOS — in Percentage

33. Capital accounts to total assets, less Gov’ts and cash assets..

34.1

40.4

43.3

50.2

62.3

45.3

29.7

34. Capital accounts to total deposits............................................

10.8

9.3

8.0

0.9

10.3

9.7

9.6

7.<

35. Time deposits to total deposits.................................................

43.0

42.7

46.1

41.6

39.4

42.1

46.6

49.




1 Interest and discount on loans plus service charges and other fees on loans.
2 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.
3 Profits on securities sold or redeemed and recoveries on securities and on loans, less all charge-offs other than
recurring depreciation on banking house, furniture, and fixtures which is included in item 17.

ze of Deposits and Proportion of Loans to Total Assets — 1 9 4 5
lividual banks in each group, rather than ratios based on aggregate dollar figures

n k s
l o c a t e d
o u t s i d e
GREATER NEW YORK
M EM BER BANKS IN
P II— Deposita $2,000,000 to §5,000,000 GROUP III— Deposits $5,000,000 to $20,000,000 GROUP IV G R E A TE R NEW YO RK
Deposits
GROU P V GROUP VI
>
Loans to Total Assets, Per cent
Loans to Total Assets, Per cent
Group
over
Deposits under Deposits over
e Under 10 10-19.9 20-29.9 30 and up Average Under 10 10-19.9 20-29.9 30 and up §20,000,000 $100,000,000 $100,000,000

109

120

23

9

249

99

112

29

9

63

33

YOUR
FIGURES

21

7.9

9 .2

12.1

15.7

10.4

9 .5

10.4

11.4

15.9

10.3

9.9

11.1

1

13.1

14.0

15.9

14.7

15.6

14.4

15.8

17.2

20.4

16.7

16.5

15.5

2

11.5

12.0

13.2

10.4

12.7

12.1

12.9

13.3

15.3

12.8

11.7

10.8

3

1.9

2.1

2.2

2.1

2.3

2.1

2 .4

2 .5

2 .5

2.9

1.5

3.2

4

2 .0

2.2

2.5

3 .4

2.1

1.9

2.1

2.3

3 .0

1.9

2.0

1.5

5

0 .6

0 .6

0 .8

1.1

0.6

0.6

0 .6

0.7

0 .8

0.6

0.5

0 .7

6

0 .8

0 .8

0.8

0 .8

0.8

0 .8

0 .8

0 .8

0 .8

0.7

0.6

0 .7

7

57.7

45.6

34.6

20.7

51.1

60.6

48.4

37.4

23.8

50.7

48.3

49.7

8

11.2

7.6

5.6

3.5

6.8

7.9

6 .5

6.0

2.6

6.1

2.5

4.7

9

18.3

33.4

47.6

65.2

27.5

17.2

30.4

42.0

56.6

26.2

31.1

25.5

10

6 .2

6.6

6.1

5.4

6.7

6.2

6 .8

7.7

6.9

4.7

9 .4

1.9

11

6 .6

6 .8

6.1

5.2

7.9

8.1

7.9

6.9

10.1

12.3

8.7

18.2

12

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

13

2.1

1.8

1.3

0 .5

2.6

2.7

2 .5

2 .8

1.8

4 .0

7.5

12.0

14

28.2

27.9

26.5

25.0

27.4

26.3

28.0

28.1

27.0

28.3

34.8

29.9

15

19.6

17.2

17.7

15.1

17.4

19.3

16.9

14.8

11.3

14.2

8 .0

1.2

16

23.1

25.7

24.7

25.3

24.4

22.6

24.4

28.2

33.6

25.9

29.3

22.4

17

70.9

70.8

68.9

65.4

69.2

68.2

69.3

71.1

71.9

68.4

72.1

53.5

18

29.1

29.2

31.1

34.6

30.8

31.8

30.7

28.9

28.1

31.6

27.9

46.5

19

19.4

15.3

9.7

-2 .3

16.6

16.6

18.0

13.9

8.6

19.9

16.8

17.0

20

5.7

6.3

6.8

9.1

8.4

7 .8

8 .4

10.0

9.1

11.8

12.6

19.1

21

42.8

38.2

34.0

23.2

39.0

40.6

40.3

32.8

27.6

39.7

32.1

44.4

22

1.7

1.6

1.6

1.8

1.6

1.7

1.6

1.6

1.4

1.5

1.5

1.3

23

3 .0

3 .0

3.2

3 .5

3 .2

3.2

3.2

2 .8

3 .4

3.0

3.1

2 .4

24

0 .4

0 .4

0.4

0 .2

0 .4

0 .4

0 .5

0 .4

0 .6

0 .5

0 .6

0 .5

25

5 .5

5.2

4 .8

5.4

4 .8

5.0

4 .7

4 .2

5.1

3 .8

4 .0

1.7

26

0 .9

0 .5

0 .2

-0 .5

0 .5

0 .7

0 .5

0

- 0 .1

0 .2

0.1

0

27

66.2

60.4

51.6

38.2

63.9

70.0

62.9

53.1

43.8

63.3

61.0

55.6

28

8.1

6.0

6.3

3 .3

5.4

5.7

5.3

5 .8

2 .5

4.7

2.1

3 .4

29
30

6 .6

13.9

24.4

41.1

12.6

6.6

13.5

23.2

33.5

13.8

15.9

22.1

18.0

18.5

16.3

16.4

16.8

16.5

17.0

16.7

18.6

16.7

20.0

17.9

31

1.0

1.1

1.2

0 .7

1.1

1.0

1.1

1.0

1.1

1.2

0 .6

0 .6

32

61.1

36.9

21.4

17.1

40.9

56.9

34.2

20.7

14.0

34.7

37.1

26.6

33

8 .5

8.1

7.1

8.3

7.1

7.5

7.1

6 .4

5 .5

6.6

6.1

7 .3

34

4 7.9

46.4

52.3

51.9

57.1

47.0

44.1

43.5

42.0

3 4.8

23.3

4 .4

35

N ote: Balance sheet figures used as a basis for the ratios are averages of amounts reported for
December 30, 1944, June 30, 1945, and December 31, 1945.
Because of the small number of banks in Groups I V , V , and V I the subgrouping “ Loans
to Total Assets” has been omitted.




DISTRIBUTION OF AS S E TS AND L IA B IL IT IE S OF MEMBER BANKS
IN THE SECOND FEDERAL RESERVE DISTRICT, DECEMBER 31, 1941 - 194 5
B A N K S GROUPED ACCORDING TO S IZE OF DEPOSITS

T O T A L D E P O S ITS
UNDER 5 M IL L IO N

T O T A L D E P O S ITS
5 - 2 0 M IL L IO N

(3 9 8 B A N K S )
B IL L IO N S
1 .4

ASSETS

T O T A L D E P O S ITS
2 0 - 1 0 0 M IL L IO N

(2 5 9 B A N K S )

(7 0 B A N K S )
B IL L IO N S
4 .0

B ILLIO NS
3 .5

T O T A L D EP O S ITS
OVER 100 M ILLIO N
(3 4 B A N K S )
B ILLIO NS
60

.6

OTHER A S S E TS —
LOANS >4
OTHER SECURITIES
U.S.GOVT. SECURITIES *2
CASH A S S E TS

0

A
m

\w

LIABILITIES

4

*6

N ^

OTHER L IA B ILITIE S

w

.4

m

m

TIM E DEPOSITS

m
Ä & &

.2

m

'££ ■/,
•& //
/

DEMAND DEPOSITS

C A P ITA L ACCOUNTS




msmmm

1941

1942 1943

1 9 4 4 1945 1941 1942 1943

mm

1944 194-5

____________

1941 1942 1943 1944 1945

1941 1942 1943

1944 1945

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