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F ed e r a l r e s e r v e b a n k
OF DALLAS

Dallas, Texas, March 5, 1949
OPERATING RATIOS OF MEMBER BANKS

To Member Banks in the
Eleventh Federal Reserve District:
There are presented the operating ratios of member banks in the Eleventh Federal Reserve District
for the year 1948, with comparative figures for 1947. In the report for 1948, the asset and liability
items are averages of the amounts taken from the reports of condition as of December 81, 1947, June
30, 1948, and December 31, 1948, while earnings and expense items are the amounts reported by member
banks for the calendar year 1948. The ratios for the various groups represent unweighted averages of
the percentages for individual banks, rather than computations from the aggregates of all banks included
in the respective groups.
Net profits realized by member banks in the District declined during 1948, averaging 12.2 percent
on total capital accounts for the year as compared with 12.8 percent in 1947. The decrease in the rate of
net profits was general at banks in most deposit size-groups and reflected the substantially higher net
charge-offs during 1948. The increase in net charge-offs was due principally to the increase in reserves
for bad debt losses on loans. Under a ruling of the Commissioner of Internal Revenue on December 7,
1947, a large number of banks took advantage of the authorization to establish reserves for bad debt
losses on loans before calculation of income taxes. The ratios affected by the transfers to reserves are
listed in a footnote under the table on the inside pages.
The continued growth in loans during 1948, a further moderate increase in interest rates, and a
decline in holdings of Government securities were responsible for the sizable increase in the proportion
of total earnings derived from interest on loans. The average for all banks amounted to 58.6 percent, as
compared with 54.9 percent in 1947, with noticeable increases occurring at banks in all deposit sizegroups. The proportion of total earnings derived from interest on loans, which tended to decrease as
the size of the bank increased, was 75.2 percent at banks with deposits of less than $500,000 and 49.4 per­
cent at banks with deposits in excess of $25,000,000. The proportion of total earnings derived from
interest on Government securities declined to 22.3 percent in 1948 from 24.8 percent in 1947. This trend
was likewise common at banks in all deposit size-groups. Following the trend evident in other recent
years, the proportion of total earnings realized from service charges again declined slightly in 1948.
The upward trend in expenses at member banks continued, in 1948, but since the rate of increase
was smaller than that in total earnings, the proportion of total earnings absorbed by expenses declined
to 59.3 percent in 1948 from 60.6 percent in 1947. A decrease in this percentage occurred at banks in
six of the seven deposit size-groups, with the largest decrease at banks with deposits of less than
$500,000, the group which experienced the most pronounced increase in earnings.
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 1948 averaged only 4.1 percent of
total capital accounts, as compared with 4.0 percent in 1947. Total dividends paid during 1948 constituted
only about 45 percent of net profits after income taxes, permitting the banks to add substantially to their
capital accounts. Taxes on net income, which had increased substantially in other recent years, declined
during 1948 to average 6.9 percent of total earnings, as compared with 8.1 percent in 1947. The per­
centage in 1948 was the lowest since 1944.
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,
R. R. GILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Operating Ratios of Member Banks for the Years 1948 and 1947
E L E V E N T H FEDERAL R E S E R V E DISTRICT
BANKS WITH AVERAGE DEPOSITS (in thousands of dollars)
Under $500

$5,000 -$9,999

1948

1947

1948

1947

1948

$10,000-$24,999

1948
18

1947

20

60

60

123

125

218

220

100

83

50

9.1
8.6
6.8
3.3

14.5
12.2
10.4
3.7

4■
14.5
13.2
10.9
3.9

18.6
15.5
12.8
4.8

17.3
16.2
13.3
4.6

20.1
16.4
13.3
4.5

18.6
17.5
14.0
4.2

22.7
16.7
12.3
3.6

22.0
19.2
14.3
3.6

20.2
16.3
11.3
3.3

Your Bank

SUMMARY RATIOS
'
Percentage of Total Capital Accounts
1.
2.
3.
4.

$2,000 - $4,999

1947

12.0
11.4
9.8
3.3

1948
Number of Banks

)0 499§r T $1,000 - $1,999
—
-----------:------------1948
1948 1947*
1947

Net current earnings before income taxes.......................................... .
Profits before income taxes.................................................................
Net profits................................................................................................
Cash dividends declared........................................................................

All Groups

$25,000 and Over

1943

1947

1948

1947

48

42

38

611

594

19.0
16.8
11.0
3.6

18.0
13.5
8.9
3.5

15.7
14.9
10.1
3.2

19.3
15.5
12.2
4.1

17.9
16.5
12.8
4.0

1
2
3
4

24
1.0
.7

ft

1947*

Percentage of Total Assets
3.41
1.34
1.09

5. Total earnings.........................................................................................
6. Net current earnings before income taxes........................................
7. Net profits................................................................................................

3.13
2.8
1.23 w 1.2
.87 - .9

3.1
1.0
.8

2.91
1.22
.83

2.53
1.06
.70

2.6
1.1
.8

2.47
1.03
.55

2.3
.9
.7

2.40
.91
.50

2.4
1.0
.6

2.03
.80
.40

2.1
.8
.5

2.64
1.08
.69

1.9
.7
.5

c;
7

SOURCES AND DISPOSITION OF EARNINGS
Percentage of Total Earnings
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.

Interest on U. S. Government securities............................................
Interest and dividends on other securities.........................................
Earnings on loans..................................................................................
Other current earnings..........................................................................
Total earnings................................................................................
Service charges on deposit accounts (Included, in item 1 0 )* * ......
Trust department earnings (Included in item 1 0 )* * .......................
Salaries and wages.................................................................................
Interest on time deposits........................................................................
Other current expenses..........................................................................
Total expenses................................................................................
Net current earnings before income taxes..........................................
Net recoveries and profits (or losses — ) ..........................................
Taxes on net income..............................................................................
Net profits................................................................................................

100.0

11.8
3.0
75.2
10.0
100.0
3.9

100.0

*

—

■*
X

14.2
3.3
70.6
11.9
100.0

4.7

* *

38.7
37.4
.7
.9
23.0
29.3
68.7
61.3
31.3
38.7
1.7 — 1.3
6.1
5.4
23.9
31.6

15.3
3.7
70.5
10.5
100.0
6.0
« *
•

33.6
1.2
26.5
61.3
1

0
-4
6.^
6.4
30.9

22.2
5.8
58.7
13.3
100.0

6.7

# *

* #

32.3
33.4
.9
1.1
25.4
26.5
58.6
61.0
41.4
39.0
6.2 — 1.4
6.0
6.6
29.2
31.0

32.4
1.0
26.1
59.5

4.8
28.3

----W
.«J

20.1
5.9
62.5
11.5
100.0
6.2

18.1
3.7
67.0
11.2
100.0
5.7

—

—

23.7
26.1
6.7
6.6
56.3
52.3
13.3
15.0
100.0
100.0
7.3
7.9
7.7
—
32.7
32.9
1.2
1.3
24.7
25.6
53.6
59.8
41.4
40.2
7.0 — 2.0
6.4
7.7
23.0
30.5

—

23.2
6.5
56.3
14.0
100.0
6.7
2.2
31.4
2.3
24.7
58.4
41.6
10.2
8.1
23.3

31.5
2.6
24.9
59.0
41.0
— 4.9
9.2
26.9

25.1
6.3
53.8
14.8
100.0

7.4
3.7

25.9
29.9
6.1
6.0
51.1
45.5
16.9
18.6
100.0
100.0
7.6
7.8
2.6
2.5
31.4
31.8
3.5
3.6
27.4
27.1
62.3
62.5
37.7
37.5
7.4 — 4.7
9.2
11.6
21.1
21.2

—

30.1
34.7
3.9
3.6
49.4
44.4
16.6
17.3
100.0
100.0
4.8
5.2
2.4
2.6
29.1
29.9
4.7
4.7
26.9
27.6
60.7
62.2
39.3
37.8
10.3 — 1.9
9.9
11.8
19.1
24.1

—

22.3
24 8
5.9
57
58.6
54.9
13.2
14 6
100.0
100.0
6.6
7.1
2.8
2.7
32.3
32.7
1.7
18
25.3
26 1
59.3
60.6
40.7
39.4
7.4 — 2 6
6.9
81
26.4
28.7

3
9
10
11
12
13

14
1 c;
16
17

18
19
20
21
22

RATES OF EARNINGS ON SECURITIES AND LOANS
Percentage of U. S. Government Securities
1.6

1.5

1.4

1.5

1.5

1.5

1.5

1.4

1.4

1.4

1.5

1.5

1.6

1.5

1.5

1.4

23

3.6

4.7

3.3

3.6

3.4

3.4

2.8

2.9

2.5

2.4

2.2

2.5

2.4

2.4

2.9

3.0

24

.3

23. Interest on U. S. Government securities............................................

.1

.1

—

.1

—

—

.1

—

—

.1

—

25

4.1
4.1
.7 — .1

—

7.0
7.1
.7 — .1

26
27

Percentage of Other Securities
24. Interest and dividends on other securities........................................

Percentage of Total Securities
25. Net recoveries and profits (or losses — ) on total securities...........

— -

.1

—

.2

—

—

.1

— --

—

Percentage of Total Loans
26. Earnings on Loans................................................................................
27. Net recoveries (or losses — ) on loans..............................................

—

9.6
9.9
.4 — .1

—

8.9
8.5
.5 ' - .2

—

7.8
.5

-

7.6
.2

—

7.1
.6

— .1

7.1

6.3
6.2
— 1.2 -- .2

—

5.9
5.6
.6 — .1

—

DISTRIBUTION OF TO TA L ASSETS
Percentage of Total Assets
28.
29.
30.
31.
32.
33.

U. S. Government securities.................................................................
Other securities......................................................................................
Loans.......................................................................................................
Cash assets..............................................................................................
Real estate assets.....................................................................................
All other assets........................................................................................

OTHER RATIOS
34. Total capital accounts to total assets..................................................
35. Total capital accounts to total assets less Government
securities and cash assets...................................................... -..............
36. Total capital accounts to total deposits..............................................
37. Time deposits to total deposits.............................................................
* Revised.
** Banks reporting zero amounts were excluded in computing this average, and figures are not shown
where there were fewer than three banks in a group.

23.6
3.0
26.9
46.0
.4
.1

26.6
2.7
24.4
45.6
.5
.2

10.9

11.5

8.6

40.1
12.3
2.4

50.5
13.1

29.8

34.6
5.9
24.8
34.2
.5
—

35.4
5.1
21.7
37.2
.5
.1

38.9
7.0
21.0
32.4
.6
.1

41.2
5.9
18.0
34.4
.4
.1

37.3
7.1
23.2
31.7
.6
.1

39.0
6.5
21.4
32.6
.5

8-3

6.7

6.5

5.5

5.2

36.4

25.0
7.3
2.6

27.9
7.0
2.5

21.4
5.9
3.5

24.7
5.5

31.1 32.8
4.0
4.6
27.1 22.2
36.4 40.5
.7
.4
.1 ___ .1

2.1

6

3.3

42.5
6.1
18.8
31.8
.7
.1

37.9
3.6
25.3
32.2
.8
.2

42.7
3.2
21.9
31.2
.8
.2

36.4
6.2
23.3
33.4

—

38.4
6.9
21.8
32.1
.8
—

4.8

4.7

4.9

4.8

4.7

17.9
5.1
6.5

19.3
5.0
7.1

19.1
5.2
11.3

21.9
5.1

17.1
5.0
12.9

10.8

.1

38.5
5.4
20.2
35.3
.5
.1

28
29
30
31
32
33

4.9

6.0

5.9

34

20.8
5.1
13.1

22.4
6.5
5.0

26.2
6.3
4.8

36

.6

35
37

Note 1: Balance ^ figures used as a basis for ratios are averages of amounts reported December 31, 1947, June 30, 1948, and December 31, 1948.

rati°s

Note 2: The
I948 numbered 2, 3, 7, 20, 21, 22, and 27, as shown in the above table, are not strictly comparable with the respective ratios for
1947 due l° transfers to reserves for bad debt losses on loans.

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