View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.



reser v e

ban k


Dallas, Texas, March 5, 1948


To Member Banks in the
Eleventh Federal Reserve District:
There are presented the operating1 ratios of member banks in the Eleventh Federal Reserve
District for the year 1947, with comparative figures for 1946. In the report for 1947, the asset and
liability items are the averages of the amounts taken from the reports of condition as of December
31, 1946, June 30, 1947, and October 6, 1947, while earnings and expense items are the amounts
reported by member banks for the calendar year 1947. The ratios for the various groups represent
unweighted averages of the percentages for individual banks, rather than the ratios computed from
the aggregates of all banks included in the respective groups.
Net profits after income taxes realized by member banks in the district declined during 1947,
averaging 12.8 percent on total capital accounts for the year, as compared with 18.4 percent in
1946. The decrease in the rate of net profits was general at banks in most deposit size-groups,
with the most pronounced declines occurring at banks having deposits in excess of $10,000,000.
The decrease in net profits reflected higher net charge-oifs and larger tax payments on net income
in 1947 than in 1946.
During 1947 a further substantial growth in loans, accompanied by a moderate increase in
interest rates, was responsible for the sizable increase in the proportion of total earnings derived
from interest on loans. The average for all banks amounted to 54.9 percent of total earnings in 1947,
as compared with 50.8 percent in 1946. While the increase occurred at banks in all deposit sizegroups, it was most pronounced at the larger banks. Banks with deposits in excess of $10,000,000
still derived less than one-half of total earnings from interest on loans. The proportion of total
earnings derived from interest on Government securities declined to 24.8 percent in 1947 from 28.5
percent in 1946. This trend was likewise common to banks in all deposit size-groups. Following
the trend evident in other recent years, the proportion of total earnings realized from service charges
declined further in 1947.
The upward trend in expenses at member banks continued during 1947, the rate of increase
being only slightly smaller than that in total earnings. While the percentage of total earnings
absorbed by expenses amounted to 60.6 percent in 1947, as compared with 60.7 percent in 1946,
increases occurred at banks in four of the seven deposit size-groups.
The conservative dividend policies being followed by the majority of member banks in this
district are indicated by the fact that dividends paid to stockholders during 1947 averaged only 4
percent on total capital accounts, as compared with 4.4 percent in 1946. Total dividends paid during
1947 constituted about one-third of net profits after income taxes, permitting the banks to add
substantially to their capital accounts. Taxes on net income increased further in 1947, averaging
8.1 percent of total earnings, as compared with 7.4 percent in 1946.
As in former years, the ratios of your bank have been entered on your confidential copy to
permit a convenient review of your operations for the past two years and a comparison with the
operations of a group of banks of similar size.
It is hoped that this information will be interesting and valuable to your bank.
Yours very truly,

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

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