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COII?IDaiTTIAL Preliminary d r a f t Subject to r e v i s i o n CLASSIFICATIONS 0 ? B A M S I IT OPEMTIOIT PIT DECEMBER 3 1 . December 31» 193& 1955 Preliminary d r a f t Confidential S u b j e c t t.^ Tj^jjn^ll CLASSIFICATIONS Q] r 'i ^JATT .. ^ D£0Eivli:3ER 31, 1935 Table o f C o r i e n t s Paffi By c l a s s e s of banks 1 According to r a t i o o f demand to t o t a l d e p o s i t s 5 According to population of p l a c e s in which s i t u a t e d and a c c o r d i n g to si^e of loans -and Investments 9 According t o s i z e of d e p o s i t s 17 Banks not on the Federal Reserve Par i d s t 24 Capitalandrequirements f o r Federal. membership f o r conversion i n t o n a t Reserve i o n a l banks 27 Nonraetiiber banks ( o t h e r than mutual savings banks) with i n s u f f i c i e n t c a p i t a l f o r Federal Reserve membership 29 Banks with i n s u f f i c i e n t c a p i t a l f o r conversion n a t i o n a l brinks 35 into CLASSIFICATIONS 0 ? BAI&S Iff OPERATION; Oil DECEIS3R 3 1 , 1935 By c l a s s e s of banks Number o f banks, When the banks In o p e r a t i o n on December 31, 1935, were c l a s s i f i e d according t o membership i n the Federal Reserve System, it was found that 6 , 3 8 7 , o r 40 percent o f the 15,861 banks, were members and that the t o t a l o f 1-4,178 member and nonmember insured banks comprised approximately 89 percent of a l l banks. The number of banks in o p e r a t i o n on December 31, 1935, by c l a s s e s o f banks i s shown belows Class o f bank Commercial^/ Cash d e p o s i t o r i e s Private Morris Plan & I n d u s t r i a l Mutual Savings Branches o f f o r e i g n banks Trust C o . , without d e p o s i t s Other f i n a n c i a l i n s t i t u t i o n s without d e p o s i t s Total Percent o f t o t a l Percent o f t o t a l (commercial only)l/ Numb;bt o f banks Member banks Nonmember banks National : S t a t e Insured Uninsured Total 14,949 39 138 79 567 9 5,386 — — — — — — 77 — 5 — 7,642 2.4 6 923 15 132 i 61 57 17 510 9 2 1 74 998 — — — — — 5 15,863 5,386 1,001 7,791 1,685 100.0 3-4.0 6.3 49.1 10.6 100.0 36.0 6.7 51.1 6.2 1 / Includes 28 banks which reported no demand d e p o s i t s and 172 (uninsured nonmember) banks f o r which the d i s t r i b u t i o n o f demand and time d e p o s i t s was not r e p o r t e d . ~ By Geographic d i v i s i o n s . ~ 2 As nay be seen from the f o l l o w i n g table, the l a r g e s t numbers o f banks were l o c a t e d i n the West North Central and East North Central S t a t e s which had 3,617 and 3,24-3 banks, respectively, i n o p e r a t i o n on December 31, 1935, and i n the Middle A t l a n t i c S t a t e s which had 2,483 banks: Geographic divisioni/ Total Number o f banks Menbei banks National State Noanenber banks Insured j[Uninsured New England Middle A t l a n t i c East North Central 935 2,485 3,243 330 1,4)4 86 3 46 246 251 159 607 1,991 400 228 138 West North Central South A t l a n t i c East South Central 3,617 1,646 1,186 855 471 266 140 101 35 2,109 926 812 513 148 73 West South Central wiountain Pacific 1,673 521 557 748 224 225 64 70 48 741 205 241 120 22 43 15,863 5,386 1,001 7,791 1,685 Total 1 / New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode I s l a n d , Connecticut. Lliddle A t l a n t i c : New York, New J e r s e y , East North C e n t r a l : West North C e n t r a l : South A t l a n t i c : Pennsylvania. Ohio, Indiana, I l l i n o i s , Michigan, Wisconsin. Minnesota, Iowa, M i s s Kansas. o u r i , North Dakota, South Dakota, Nebraska, Delaware, Maryland, D i s t r i c t o f Columbia, V i r g i n i a , West V i r g i n i a , North C a r o l i n a , South C a r o l i n a , Georgia, F l o r i d a . East South C e n t r a l : Kentucky, Tennessee, Alabama, M i s s i s s i p p i . West South C e n t r a l : Arkansas, Louisiana, Oklahoma, Texas. Mountain8 Pacific: Montana, Idaho, Wyoming, Colorado, New Mexico, Utah, Nevada. Washington, Oregon, Califorala. Arizona, Ilumber o f _ " Commercial"!/ banks by geographic d i v i s i o n s . Inasmuch as a l a r g e m a j o r i t y o f the mutual savings banks, Morris plan and i n d u s t r i a l banks, cash d e p o s i t o r i e s , p r i v a t e banks and o t h e r m i s c e l l a n e o u s c l a s s e s o f nonmember banks are concentrated i n the eastern part o f the c o u n t r y , in the Hew England, Middle A t l a n t i c , and South A t l a n t i c geographic d i v i s i o n s , f o l l o w i n g t a b u l a t i o n has been prepared t o show the geographic the distribution o f commercial banks o n l y : Geographic d i v i s i o n Total Number o f commercial banks Member banks Nonmember banks Insured !Uninsured National State New England Middle A t l a n t i c East North Central 559 2,247 3,161 330 1,404 863 45 24$ 250 139 575 1,963 45 23 85 West North Central South A t l a n t i c East South Central- 3,600 1,499 1,180 855 471 266 140 101 35 2,107 870 806 498 57 73 West South Central Mount ain Pacific 1,660 520 523 748 224 225 64 70 48 741 205 236 107 21 14 14,949 5,386 998 7,642 923 Total This t a b l e snows that o v e r t w o - t h i r d s o f a l l commercial banks in the Hew England and Middle A t l a n t i c d i v i s i o n s were member banks; in the Mountain and P a c i f i c d i v i s i o n s , over o n e - h a l f were member banks, and the p r o p o r t i o n o f member banks decreased i n the West North Central and East Worth Central d i v i s i o n s t o a l i t t l e over o n e - f o u r t h . 1 / A l l o f the analyses which f o l l o w are l i m i t e d to the "commercial" banks shown in the t a b l e on page 1 ; the other c l a s s e s o f banking i n s t i t u t i o n s shorn i n the t a b l e have been excluded. - 4 - I t m i l be rioted from the above t a b u l a t i o n that over o n e - h a l f of the 923 uninsured banks were i n the West North Central s t a t e s which i n clude^ among o t h e r s , f o u r s t a t e s that have had experience with d e p o s i t guaranty laws5 Kansas, Nebraska, South Dakota, and North Dakota. f o l l o w i n g l i s t i n c l u d e s the s t a t e s having over f i f t y uninsured The commercial banks o r having o v e r o n e - f o u r t h o f t h e i r nonmember commercial banks uninsured • Number o f nonmember commercial banks percent Insured Uninsured uninsured State Kansas Texas Iowa Nebraska Rhode Island New Hampshire Maine Connecticut 254 299 438 230 264 79 76 61 51 21 15 21 2 3 16 45 7 9 9 16 78 75 36 26 4-19 o f the 923 uninsured banks, o r approximately AA percent, are i n Kansas, Texas, and Nebraska, three s t a t e s that had experience with guaranty laws. A high percentage o f the nonmember commercial b^nks i n the New England s t a t e s are uninsured, but there are comparatively few nonmember banks i n that d i v i s i o n . Deposits. Although the c l a s s i f i c a t i o n by number o f banks showed that l e s s than 4-3 p e r c e n t o f a l l commercial b^nks were member banks, the d e p o s i t s o f member banks comprised over 86 p e r c e n t o f a l l d e p o s i t s on December 31, 1935. The t o t a l d e p o s i t s of banks, by c l a s s e s o f banks, of t o g e t h e r with a comparison o f the p e r c e n t a g e / d e p o s i t s o f banks witn the percentage o f number o f banks in each c l a s s are shown as f o l l o w s : - Class of buik Member banks j National State llonneriber banks s Insured Uninsured Total 5 - Amount o f d e o o s i t s (In thousands of dollars) Percent of total deposits 2^,801,793 13,648,295 55.5 30.6 36.0 6.7 5,504,040 729,680 12.3 1.6 51.1 6.2 44,683,808 100.0 100.0 Percent of t o t a l nuriber o f commercial banks Accordiiig to r a t i o o f demand to t o t a l d e p o s i t s . Number o f buucs. m a n a l y s i s o f banks according to the r a t i o o f demand d e p o s i t s to t o t a l d e p o s i t s showed that w e l l over o n e - h a l f of the ± A > , 7 7 7 ^ c o m m e r c i a l banks had demand d e p o s i t s o f from 30 percent t o 70 p e r cent o f t o t a l d e p o s i t s . Only 493 o f the banks were p r i m a r i l y savings banks with r a t i o s o f demand d e p o s i t s to t o t a l d e p o s i t s o f l e s s than 20 percent and only 1 , 4 7 2 , o r about 10 p e r c e n t , o f the banks had demand d e p o s i t s of 90 percent o r more o f t o t a l d e p o s i t s . The c l a s s i f i c a t i o n o f the baiiKS according; to thy r a t i o o f demand d e p o s i t s t o t o t a l d e p o s i t s shown below: 1 / Exclusive o f 172 "banks f o r which the d i s t r i b u t i o n o f demand and time d e p o s i t s was not r e p o r t e d . is - 6 Ratio o f denancl d e p o s i t s to t o t a l deposits 0.0 0.1 - 9.9 p ercent t; n 10 20 - 19,9 29.9 it 30 50 - 49.9 69.9 tt 70 80 - 79.9 - 89.9 tt 90 100 - 99.9 tt tt it ti Total - Number of c o n n e r c i a l banks Nonnenbi .r banks Moi-ibei banks Total Insured Uninsured National State 28 67 13 1 3 21 45 6 6 398 1,196 191 574 10 82 180 506 17 34 4,066 4,228 1,547 1,438 325 299 2,089 2,315 105 176 1,856 1,466 616 483 113 73 1,014 779 113 131 962 510 338 186 72 20 466 227 86 77 14,777 5,386 998 7,642 lJ 751 — A comparison o f the groups i n d i c a t e s t h a t a l a r g e r p r o p o r t i o n o f the nonmember banks, p a r t i c u l a r l y the uninsured banks, have high r a t i o s o f demand t o t o t a l d e p o s i t s , than have the member banks. More than h a l f o f the 751 uninsured banks had demand d e p o s i t s o f 70 percent o r o v e r o f t o t a l d e p o s i t s , while only about 30 percent o f the 5,386 n a t i o n a l banks, 28 percent o f the 998 S t a t e nenber banks and 33 percent o f t h e 7 , 6 4 2 i n sured nonmember b*nks had a en and d e p o s i t s amounting t o 70 percent o r more of total deposits. Deposits. The f o l l o w i n g c l a s s i f i c a t i o n by r a t i o s o f demand d e - p o s i t s t o t o t a l d e p o s i t s , but showing the t o t a l d e p o s i t s i n s t e a d of the number o f banks, i n d i c a t e s a somewhat s i m i l a r d i s t r i b u t i o n i n the nonnember l / E x c l u s i v e o f 172 banks f o r which the d i s t r i b u t i o n o f demand and time d e p o s i t s was not r e p o r t e d . - 7 - groups, but i n member banks the bulk o f the d e p o s i t s was- i n the c l a s s i f i cations with high r a t i o s o f demand d e p o s i t s t o t o t a l d e p o s i t s : Ratio o f den and deposits to t o t a l deposits Member banks Total National State (In m i l l i o n s o f 0. 0 0. 1 - 78 302 percent ii 9.9 Horaieiaber banks Insured Uninsured dollars) 34 3 21 28 235 47 12 — 10. 20 - 19.9 29.9 ii 1! 618 1,782 326 916 35 2.08 243 594 14 64 30 50 - 49.9 69.9 11 It 8,351 7,272 4,478 3,717 2,032 1,973 1,788 1,472 110 70 - 79.9 89.9 11 11 5,927 9,085 4,062 7,031 1,320 1,658 517 310 86 - 99.9 11 11 10,862 309 4,152 86 6,342 56 272 46 121 44,586 24,802 13,648 5,505 631 so 90 100 Total 53 28 96 Over o n e - h a l f o f the d e p o s i t s o f State member banks were in banks having demand d e p o s i t s o f 80 percent o r over of t o t a l d e p o s i t s . The 90-99 percent r a t i o c l a s s i f i c a t i o n o f State member banks contained only 72 banks but these banks had d e p o s i t s o f §6,3^2,000,000, an average o f almost $90,000,000 per bank, as compared with average d e p o s i t s o f l e s s than §1^,000,000 f o r s t a t e member banks. all The concentration i s explained by the f a c t that the l a r g e s t a t e member banks in New York City with t o t a l d e p o s i t s o f nearly s i x b i l l i o n d o l l a r s are in t h i s high r a t i o c l a s s i f i c a t i o n . S i m i l a r l y , the high average d e p o s i t s o f the n a t i o n a l banks i n the 80-89.9 percent and 9099.9 percent r a t i o c l a s s i f i c a t i o n s are caused by the large New York banks i n these c l a s s i f i c a t i o n s . In c o n t r a s t , however, t o the c o r r e l a t i o n o f large member banks with high demand r a t i o s , the member banks which had demand d e p o s i t s o n l y , were comparatively small banks. By geographic d i v i s i o n s . 8 - Over o n e - h a l f o f the banks i n the Hew England, Middle A t l a n t i c , and East North Central d i v i s i o n s had denand d e p o s i t s o f l e s s than 50 percent o f t o t a l d e p o s i t s ; and the m a j o r i t y o f the banks i n the Mountain and Vest South Central d i v i s i o n s had demand d e p o s i t s o f 70 percent o r o v e r o f t o t a l d e p o s i t s . bonks i n each geographic d i v i s i o n The t o t a l number o f commercial i s c l a s s i f i e d by r a t i o o f denand t o t o t a l d e p o s i t s i n the f o l l o w i n g t a b l e s Geographic d i v i s i o n Number o f con:.iercial banks with the f o l l o w i n g r a t i o s o f denand d e p o s i t s t o t o t a l d e p o s i t s — Total 0 -1956 20-49% 70-100$ 50-69$ New England Middle A t l a n t i c East North Central 559 2,245 3,136 62 223 85 252 1,593 1,536 110 297 1,023 135 132 492 West North Central South A t l a n t i c East South Central 3,484 1,499 1,168 20 59 9 774 546 323 1,167 465 469 1,523 429 367 West South Central Mount ain Pacific 1,648 515 523 1 5 29 46 45 147 261 197 239 1,340 268 108 493 5,262 4,228 4,794 14,777 Total I Percent o f t o t a l number of banks with the above r a t i o s o f deiland d e p o s i t s to t o t a l d e p o s i t s New England Middle A t l a n t i c East North Central 100 100 100 11 10 3 45 71 49 20 13 33 24 6 15 •Vest North Central South A t l a n t i c East South Central 100 100 100 1 4 1 22 36 28 33 31 40 44 29 31 West South Central Mountain Pacific 100 100 100 1 6 3 9 28 16 38 46 81 52 20 Total 100 3 36 29 32 — - 9 - According to p o p u l a t i o n o f p l a c e s i n which s i t u a t e d and according to s i z e o f loans and investments Hurnber o f banks by s i z e o f loans and investments. A classification o f the commercial banks on December 31, 1935, according t o the amount o f loans ana investments d i s c l o s e d a high percentage o f small banks. More than 6,000 o f the 14,949 banks had loans and investments o f l e s s than § 2 5 0 , 0 0 0 , and 9,073 banks had loans and investments o f l e s s than $500,000. The d i s t r i b u t i o n o f banks according to s i z e o f loans and investments i s shown b e l o w : S i z e group — Loans and investments Total Nunber o f commercial banks Menber banks Nonaember banks Insured Uninsured National j S t a t e Under $150,000 150,000-250,000 250,000-500,000 3,613 2,400 3,060 407 602 1,181 78 115 172 2,596 1,538 1,587 532 145 120 500,000-1,000,000 1,000,000-2,000,000 2,000,000-5,000,000 2,483 1,623 1,071 1,235 930 633 162 139 154 1,024 522 271 62 32 13 341 272 86 203 150 45 63 76 39 68 35 1 7 11 1 14,949 5 , 386 998 7,642 923 5,000,000-10,000,000 10,000,000-50,000,000 50,000,000 and o v e r Total Percent o f t o t a l nur-iber of b-^nks Under <?250,000 250,000-500,000 500,000-1,000,000 40 21 17 19 22 23 20 17 16 54 21 13 73 13 7 1,000,000-5,000,000 5,000,000-10,000,000 1 0 , 0 0 0 , 0 0 0 and over 18 2 2 29 4 3 29 6 12 10 1 1 5 1 1 100 100 100 100 100 Total - 10 - I t w i l l be noted that the percentage o f nonmember baxiKS i n the smaller s i z e groups was p a r t i c u l a r l y h i g h . Approximately 86 percent o f the un- insured banks and 75 percent o f the insured nonmember banks had loans and investments o f l e s s than §500,000. Number of b a m s by p o p u l a t i o n o f p l a c e s i n which s i t u a t e d , A dis- t r i b u t i o n of banks according t o the s i z e o f community i n which they were s i t u a t e d showed that over o n e - h a l f o f the nonmember banks were i n towns o f l e s s than 1,000 p o p u l a t i o n and that over o n e - h a l f o f the member banks were i n towns with p o p u l a t i o n s o f l e s s than 5 , 0 0 0 . ing t o p o p u l a t i o n i s shown i n the f o l l o w i n g Population of city Total The d i s t r i b u t i o n accord- table: Number o f commercial banks Menber banks Nonnember banks National | State Insured Uninsured Under 500 500-1,000 1,000-2,500 3,020 2,615 3,143 339 676 1,279 74 96 183 2,169 1,662 1,563 438 181 118 2,500-5,000 5,000-10,000 10,000-25,000 1,849 1,361 1,170 908 738 648 132 100 111 755 488 392 54 35 19 531 342 918 280 164 354 63 49 190 178 113 322 10 16 52 14,949 5,386 998 7,642 923 25,000-50,000 50,000-100,000 100,000 and over Total Percent o f t o t a l nunber o f banks Under 1,000 1,000-2,500 38 21 19 24 17 18 50 20 67 13 2,500-5,000 5,000 and over 12 29 17 40 13 52 10 20 6 14 100 100 100 100 100 Total - 11 - Banks witn loans and investments o f l e s s than ^500,000, following table The shows that 7 , 6 5 4 o f the 9,073 brinks with loans arid investments of l e s s than &500,000 were s i t u a t e d i n towns with p o p u l a t i o n s o f l e s s than 2,5001 Population of c 'ity Under 500 500-1,000 1,000-2,500 2,500-5,000 5,000-10,000 10,000-25,000 25,000-50,000 50,000-100,000 100,000 and o v e r Total Nur ibcr o f i3oniuercinl banks having loan,*3 md investments o f l e s s th-an y500,000 Member banks Nonn ernbr;r banks Total Insured Uninsured National State 436 2,120 70 307 2,933 178 1,557 2,375 89 551 2,346 838 100 133 1,275 836 305 110 336 124 22 39 37 92 4 5 3 9,073 2,190 56 13 3 415 154 76 29 14 9 1 29 24 71 6 8 17 365 5,721 797 — — Percent o f number o f banks Under 1,000 1,000-2,500 2,500-5,000 5,000 and o v e r Total 59 26 39 38 44 36 64 23 77 12 9 6 16 7 15 5 7 6 4 7 .100 100 100 100 100 A s i m i l a r c l a s s i f i c a t i o n o f banks with loans and investments o f less than ti250,000 showed t h a t nearly 95 percent o f them were s i t u a t e d i n towns with p o p u l a t i o n s o f l e s s than 2 , 5 0 0 . In the c l a s s i f i c a t i o n shown i n the t a b l e above and i n the c a t i o n o f banks with loans and investments o f l e s s than y 2 5 0 , 0 0 0 , appear some e x c e p t i o n a l cases o f small b inks being i n the l a r g e r classifithere cities? - 12 - i t i s probable that these banks are in the o u t l y i n g or r e s i d e n t i a l t r i c t s o f the l a r g e c i t i e s . dis- An a n a l y s i s by s t a t e s o f the 168 banks with loans and investments o f l e s s than f'500,000 which were s i t u a t e d i n o f o v e r 25,000 p o p u l a t i o n i n d i c a t e s no unusual c o n c e n t r a t i o n . cities They were s c a t t e r e d among 34 s t a t e s and the D i s t r i c t o f Columbia and the o n l y s t a t e s having 10 o r more werei State Number of commercial baiucs with loans ana investments o f l e s s than $500,000 l o c a t e d i n c i t i e s o f 25,000 o r over p o p u l a t i o n 14 17 Indiana Wisconsin Minnesota Kansas Missouri 11 10 14 There were 13 member banks wita loans and investments o f l e s s than $500,000 l o c a t e d i n c i t i e s with p o p u l a t i o n o f 25,000 o r o v e r . l o c a t e d i n the f o l l o w i n g s t a t e s t Massachusetts., Rhode I s l a n d , They were Pennsylvania, Nebraska, Indiana, Kentucky, Texas, Colorado, and C a l i f o r n i a . Banks with l o a n s and j j i v e s tments oi ,000 ,000 and o v e r . The f o i l own- ing c l a s s i f i c a t i o n o f banks with loans and investments o f o v e r B1,000,000 a c c o r d i n g to the p o p u l a t i o n o f the p l a c e s i n which they were s i t u a t e d shows that comparatively few banks o f t h i s s i z e were i n the smaller towns; o n l y 222 o r about 7 p e r c e n t o f the banks o f t h i s s i z e were found t o be in towns o f l e s s than 2,500 populations - Population Oi- ui u„y 13 - Number o f commercial banks having loans and investments o f £1,000,000 o r ove r Nonmember banks Member banks rp_4_ "I iotai Insured Uninsured State National Under 2,500 2,500-5,000 5,000-10,000 222 375 552 147 236 336 14 32 47 60 98 160 1 9 9 10,000-25,000 25,000-50,000 50,000-100,000 100,000 and over 810 <433 270 731 499 260 153 330 85 57 49 187 218 113 64 184 8 3 4 30 3,393 1,961 471 897 64 Total Percent o f number o f banks Under 2,500 2,500-5,000 5,000 and over 7 11 82. 100 Total 1 i. 8 12 80 3 7 90 7 11 82 2. 14 84 100 100 100 100 As i n the case o f small banks in l a r g e c i t i e s , i t i s probable that some o f the l a r g e banks i n small p l a c e s are due t o s p e c i a l such as being i n suburban v i l l a g e s adjacent t o l a r g e c i t i e s . circumstances, For i n s t a n c e , one bank with loans and investments o f over e i g h t e e n m i l l i o n d o l l a r s i n the 250 t o 500 p o p u l a t i o n c l a s s i f i c a t i o n was the National Stock l a r d s National Bank o f National C i t y , I l l i n o i s , in the s t o c k yards d i s t r i c t a c r o s s the r i v e r from St. Louis. By geographic d i v i s i o n s . When banks with loans and investments o f l e s s than $500,000 were c l a s s i f i e d g e o g r a p h i c a l l y i t was found that the New England and Middle A t l a n t i c d i v i s i o n s had comparatively few o f the smaller banks; however, i n the West North Central and West South Central d i v i s i o n s approximately 80 percent o f the banks had loans and investments o f less $500,000• - 14 The geographic d i s t r i b u t i o n o f baxucs witn loans and investments o f l e s s than <3500,000 i s i n d i c a t e d i n the f o l l o w i n g Geographic d i v i s i o n table: Barnes having loans and Investments o f l e s s than &500*000 Percent o f t o t a l Number banics in d i v i s i o n o f banks 18 New England Middle A t l a n t i c East North Central 99 487 1,884 West North Central South A t l a n t i c East South Central 2,905 891 853 West South Central Mountain Pacific 1,312 352 290 79 Total 9,073 61 22 60 81 59 72 68 55 The f o l l o w i n g t a b l e shows that i n the West North Central and the West South Central s t a t e s , which had the l a r g e s t percentages o f small banks, about 3,800 o f the 5,260 banks i n o p e r a t i o n were s i t u a t e d i n towns with a p o p u l a t i o n o f l e s s than 2 , 5 0 0 , compared with o n l y 883 out o f a t o t a l o f 2,806 banks i n o p e r a t i o n in the New England and Middle A t l a n t i c which had comparatively few small banks. states, - Geographic d i v i s i o n 15 - Number o f commercial banks l o c a t e d i n p l a c e s with a p o p u l a t i o n o f — 5,000 Under 2,500 t o Total and over 5.000 2,500 New England Middle A t l a n t i c East North Central 559 2,247 3,161 100 783 1,872 74 381 334 385 1,083 955 West North Central South A t l a n t i c East South Central 3,600 1,499 1,180 2,742 851 798 289 209 165 569 439 217 West South Central Mount ain Pacific 1,660 520 523 1,055 311 266 250 70 77 355 139 180 14,949 8,778 1,849 4,322 Total Percent o f t o t a l number o f banks Hew England Middle A t l a n t i c East North Central 100 100 100 18 35 59 13 17 11 69 48 30 West North Central South A t l a n t i c East ^outh Central 100 100 100 76 57 68 8 .14 14 16 29 18 West South Central Mountain Pacific 100 100 100 64 60 51 15 13 15 21 27 34 Total 100 59 12 29 There was a rather c l o s e c o r r e l a t i o n between the p r o p o r t i o n o f banns i n a geographic d i v i s i o n in p l a c e s with p o p u l a t i o n o f l e s s than 2 , 5 0 0 , and the p r o p o r t i o n o f bau^s that had loans and investments of than #500,000. less The percentages are repeated below f o r comparative purposes. - Geographic d i v i s i o n 16 Percent o f t o t a l 1bulks i n d i v i s i o n — In p l a c e s with With loans and population of investments o f l e s s than 2,500 l e s s thin #500,000 New England Middle A t l a n t i c East North Central 18 22 60 18 35 59 West North Central South A t l a n t i c East S 0 uth Central 81 59 72 76 57 68 West South Central Mountain Pacific 79 68 55 64 60 51 Population per bank. The population per bank i n the West North Central s t a t e s was o n l y 3,800 as contrasted with population p e r bank o f over 10,000 i n the Middle A t l a n t i c , South A t l a n t i c and P a c i f i c d i v i s i o n s . The approximate p o p u l a t i o n p-.r b m k , based on 1935 Bureau o f Census population e s t i m a t e s , i s shown below? Geographic d i v i s i o n New England Lliddle A t l a n t i c East North Central Population per b a n k i / 15,200 12,100 8,100 West North Central South A t l a n t i c East South Central 3,800 11,600 West South Central Mountain Pacific 7,700 7,100 15,800 Total 8,500 8,900 1 / I f the mutual savings bonks ? Morris P I m and i n d u s t r i a l banks, p r i v a t e banks and the v a r i o u s otner c l a s s e s o f banking i n s t i t u t i o n s shown in the t a b l e on page 1 were included in tne c a l c u l a t i o n s the p o p u l a t i o n per bank would be lowered t o 8,000 f o r the country as a whole, t o 9,100 i n the New England S t a t e s , 11,000 in the Middle A t l a n t i c S t a t e s , and t o 10,500 in the South A t l a n t i c States. In the other geographic d i v i s i o n s the a d d i t i o n o f the other banking i n s t i t u t i o n s to the commercial banks would not m a t e r i a l l y change the population per bank. According to s i z e o f 17 - deposits. The f o l l o w i n g t a b l e shows that the d i s t r i b u t i o n o f banks according t o s i z e o f d e p o s i t s i s very s i m i l a r t o the d i s t r i b u t i o n by s i z e o f loans and inves tment s : S i z e group — Loans and investr-ients or d e p o s i t s D i s t r i b u t i o n by s i z e o f loans and investments Percent o f Number o f total b^nks D i s t r i b u t i o n by s i z e of deposits •reent o f Number o f banks total Under ^150,000 150,000-250,000 250,000-500,000 3,613 2,400 3,060 24 16 21 2,449 2,237 3,441 16 15 23 500,000-1,000,000 1,000,000-2,000,000 2,000,000-5,000,000 2,483 1,623 1,071 17 11 7 2,841 1,856 1,271 19 12 9 341 272 86 2 2 420 325 109 3 2 100 14,949 100 5,000,000-10,000,000 10,000,000-50,000,000 50,000,000 ana over Total 14,9^9 — 1± I t v a i l be noted from the above t a b l e that i n the two smallest size groups the number o f banks i n the d e p o s i t c l a s s i f i c a t i o n was l e s s than the number in the loans and investment c l a s s i f i c a t i o n , but i n the l a r g e r s i z e groups there were more banks i n the d e p o s i t c l a s s i f i c a t i o n loans and investment c l a s s i f i c a t i o n . than i n the This r e s u l t s from the f a c t that the loans and investments o f trie average bank are l e s s than i t s d e p o s i t s . In the f o l l o w i n g t a b l e the t o t a l l o a n s ana investments and t o t a l d e p o s i t s o f a l l commercial banks on December 31, 1935 are compared? - 18 - Member banks Nonmerfiber banks National State Insured Uninsured (in millions o f d o l l a r s ) Total Loans and investments Deposits Deposits percent o f loans ana investments 35,157 44,684 18,950 24,802 10,968 13,648 4,642 5,504 597 730 127.1 130.9 12.4,4 118.6 122.3 This comparison shows that the average d e p o s i t s o f a l l banks were 27 percent g r e a t e r than the average loans and investments. that i f I t seems q u i t e probable the banks were d i s t r i b u t e d i n t o s i z e groups according t o t o t a l d e - p o s i t s approximately 27 percent l a r g e r than the corresponding loans and i n vestments s i z e g r o u p s , the number o f batiks i n the corresponding groups would be about the same. Insured nonmember banks with d e p o s i t s o f ^1,000,000 o r more. Under the t erms o f the Banking Act o f 1935 insured nonmember banks having average d e p o s i t s o f $1,000,000 o r more during the year 1941 w i l l be r e q u i r e d t o the Federal Reserve System or f o r f e i t t h e i r insurance p r i v i l e g e s . join On December 31, 1935, there were 1,118 insured nonmember banks with d e p o s i t s o f y l , 0 0 0 , 0 0 0 o r more. Of these bariKS 1,042 were l o c a t e d i n 28 s t a t e s , as shown table: i n the f o l l o w i n g State Number o f insured nonnenber banks with ' deposits of #1,000 9 000 or o v e r 1 Jew England Maine Vermont Massachusetts Connecticut 11 20 2.9 32 Middle A t l a n t i c New York New J e r s e y Pennsylvania 97 66 147 East Noxth Central Ohio Indiana Illinois id i c hi gan Wisconsin 70 72 66 34 49 West North Central Minnesota Iowa Missouri Kansas 14 46 32 20 1 / Including D i s t r i c t o f ^olunbia. State Number o f insured nonnenber banks with deposits of 81.000,000 o r over South A t l a n t i c Maryland Virginia West V i r g i n i a North Carolina Georgia Florida 2.2 18 29 12 10 East South Central Kentucky Tennessee Mississippi 26 12 21 West South Central Louisiana Texas 15 14 Pacific California .36 T o t a l , 28 States T o t a l , 21 o t h e r Statesi/ DO 1,042 76 236 o f the insured nonnember beaks with d e p o s i t s o f §1,000,000 o r more on December 31 9 1935, were s i t u a t e d in the Chicago Federal Reserve d i s t r i c t , 160 i n the New York d i s t r i c t raid l48 in the Cleveland district. The insured nonmember banks with d e p o s i t s on December 31? 1935 o f §1,000,000 or more are d i s t r i b u t e d by Federal Reserve d i s t r i c t s as f o l l o w s : Federal Reserve d i s t r i c t Boston New York Philadelphia Number of insured nonmember banks with d e p o s i t s o f $1,00 •'0,000 o r over S3 160 112 Cleveland Richmond Atlanta 148 99 57 Chicago S t , Louis Minneapolis 236 78 24 Kansas City Dallas San Francisco 47 20 54 1,118 Total According to r a t i o s o f t o t a l c a p i t a l account t o t o t a l d e p o s i t s . Number o f banks. The c l a s s i f i c a t i o n o f a l l commercial banks a c c o r d - ing t o the r a t i o o f t o t a l c a p i t a l account 1 / to t o t a l d e p o s i t s d i s c l o s e d that a great m a j o r i t y o f the banks had book c a p i t a l accounts amounting to more than 10 percent o f t o t a l deposits,- 9 , 5 4 4 , o r more than o n e - h a l f o f the 14,9^9 commercial banks, nad r a t i o s o f t o t a l c a p i t a l accounts t o t o t a l d e p o s i t s o f 15 percent or o v e r . Only 420 banks, o r about 3 p e r c e n t , had c a p i t a l r a t i o s o f l e s s than 8 percent and 1,321 banks, o r approximately 9 percent 1 / Aggregate book value of c a p i t a l s t o c k , c a n i t a ! notes ,nr surplus, undivided p r o f i t s and r e s e r v e s . d-b-furps ' ^ ~"" * ~ 21 ~ o f the t o t a l , had c a p i t a l r a t i o s o f l e s s than 10 p e r c e n t . The number o f banks and a percentage d i s t r i b u t i o n o f the number o f banks in the c a p i t a l r a t i o c l a s s i f i c a t i o n s are shown i n the f o l l o w i n g t a b l e s Ratio o f book c a p i t a l account t o t o t a l deposits y. Le• Ss than 6 )ercent !l 6 - 7.9 II 8 - 9.9 II II II 10 -1-4.9 15 - 1 9 . 9 20 and over Total Number o f commercial banks Member banKs j Nonmember banks Total Ins ured Uninsured National State 60 360 901 27 154 405 1 30 73 26 153 380 6 23 43 4,084 3,577 5,967 1,691 1,424 1,685 372 247 275 1,829 1,753 3,501 192 153 506 14,949 5,386 998 7,642 923 Percent o f t o t a l number o f banks Less than 8 percent 8 - 9.9 " 10 - 1 4 . 9 15 and o v e r Total " 3 6 3 8 3 8 2 5 3 5 27 64 31 58 37 52. 24 69 21 71 100 100 100 100 100 Book c a p i t a l account and, net sound c a p i t a l * I t must be remembered that the c a p i t a l r a t i o s used i n the above t a b l e are based on the book capi t a l at December 31, r935 9 unadjusted f o r a p p r e c i a t i o n o r d e p r e c i a t i o n in s e c u r i t i e s , o r other hidden a s s e t s , o r assets c l a s s i f i e d i n r e p o r t s o f ex- amination as l o s s o r d o u b t f u l , but s t i l l c a r r i e d on the banks* books. The f o l l o w i n g comparison shows the d i s t r i b u t i o n o f insured nonmember banKS a c c o r d i n g to c a p i t a l r a t i o s , based on net souna c a p i t a l at the date o f the most r e c e n t report o f examination by the Federal Deposit Insurance Corporat i o n during 1 9 3 5 ^ , and based on book c a p i t a l at December 31, 1935. (Com- 1 / Annual Report of tne Federal Deposit Insurance Corporation f o r the year ending December 31? 1935, page 4-3. - 22 - parable data are not a v a i l a b l e f o r member banKS o r f o r uninsured nonmember b a n k s ) : Percent o f insured nounember banks with c a o i t a l r a t i o s to t o t a l d e p o s i t s ox Under 5% Over 10% 5 t o 10So Ratios based on Net sound c a p i t a l at date o f l a t e s t examination during 1935, bjr Federal Deposit Insurance Corporation!/ 87 11 2 Book c a p i t a l , Dec. 31, 1935 93 6 1 Some o f the improvement i n d i c a t e d between the examination date and December 31, 1935, may be r e a l , due t o continued r e h a b i l i t a t i o n o f banks during 1934-1935, current earnings, and the r i s e i n s e c u r i t y p r i c e s during t h i s p e r i o d ; but the comparison i n d i c a t e s that the book c a p i t a l ratios should be s c a l e d down somewhat to r e f l e c t the r a t i o d i s t r i b u t i o n based on net sound c a p i t a l . Total deposits. Another c l a s s i f i c a t i o n was made according t o t o t a l d e p o s i t s rather than according t o the number o f banks and i t was found that about 11 percent o f t o t a l d e p o s i t s were i n banks that had c a p i t a l r a t i o s o f l e s s than 8 percent and that o v e r 25 p e r c e n t o f a l l d e p o s i t s were in banks with c a p i t a l r a t i o s o f l e s s than 10 p e r c e n t . The p e r c e n t o f d e - p o s i t s i n uninsured banks that had c a p i t a l r a t i o s o f l e s s than 8 percent o r 10 p e r c e n t was s i m i l a r t o the p e r c e n t o f the number o f banks, but i n the insured nonmember and member groups the p r o p o r t i o n o f the t o t a l deposits i n banks with c a p i t a l r a t i o s o f l e s s than 8 percent o r 10 p e r c e n t was c o n s i er ably l a r g e r than the p r o p o r t i o n o f the number o f banks with lower 1 / Annual Report o f the Federal Deposit Insurance Corporation f o r the year ending December 31, 1935, p^ige 4-3. capital ratios. This i n d i c a t e s that trie l a r g e r banks had lower r a t i o s than the smaller s i z e d banics. The f o l l o w i n g t a b l e shows the d e - p o s i t s and the p e r c e n t o f t o t a l d e p o s i t s i n each c a p i t a l r a t i o Ratio o f book c r v o i t a l account t o t o t a l denosits group! Deposits ( i n m i l l i o n s o f d o l l a r s ) NonmembciX banks Mernbei: banks Total Insured Uninsured National State U iss than 6 percent ir 6 - 7.9 1! S 9.9 10 - 1 4 . 9 15 - 1 9 . 9 20 and o v e r capital It II Total 570 4,246 6,522 501 3 , m 4,373 6 926 1,614 57 190 510 6 19 25 19,406 8,550 5,390 11,796 2,898 2,123 5,609 4,301 1,193 1,861 1,228 1,658 140 123 4l6 44,684 24,802 13,649 5,504 729 Percent o f t o t a l dci p o s i t s Lesss than 8 p e r c e n t ri 8 - 9.9 10 - 1 4 . 9 15 and o v e r ii Total 11 15 15 18 7 12 5 9 4 3 4.3 31 47 20 41 4o 34 52 19 74 100 100 100 100 100 In c o n t r a s t t o the c l a s s i f i c a t i o n according t o the number o f banks, the above c l a s s i f i c a t i o n by t o t a l d e p o s i t s i n d i c a t e s that only i n the nonmember there groups were/over o n e - h a l f o f the t o t a l d e p o s i t s i n banks having r a t i o s o f over 15 p e r c e n t . capital Nearly t w o - t h i r d s o f a l l banks had book capital- r a t i o s o f over 15 p e r c - n t but l e s s than o n e - t h i r d o f a l l d e p o s i t s were in baiiKS with t h i s high r a t i o . By geographic d i v i s i o n s . As shown by the f o l l o w i n g t a b l e , 420 banks with r a t i o s o f t o t a l c a p i t a l accounts to t o t a l demosits o f l e s s than 8 p e r c e n t ~ 24 ~ were concentrated l a r g e l y i n the West North Central and the East North Central s t a t e s ; Geographic D i v i s i o n Number o f b m k s with r a t i o o f capital- account d e p o s i t s o f l e s s than 8 percent to t o t a l Nonmenbc;r banks Member banks Total Insured| Uninsured National State New England Middle A t l a n t i c East North Central 2 4 94 West North Central South A t l a n t i c East &outh Central West South Central Mountain Pacific Total 1 1 39 1 1 11 14-5 35 25 45 15 8 9 3 1 75 17 12 53 45 17 37 26 10 4 1 14 15 5 1 420 181 31 179 29 — — 2 39 — 5 16 — 4 2 Banks not on the Federal Reserve Par L i s t . On December 31* 1935, t h e r e were 2,553 nonmember commercial banks with d e p o s i t s o f v7A3,000,000 t h a t were not on the Federal Reserve par list. The banKs not on the par l i s t represented approximately 30 percent o f the number but o n l y 13 percent o f the d e p o s i t s o f a l l nonmember comm e r c i a l banks. The Boston, New York, P h i l a d e l p h i a and Cleveland Federal Reserve d i s t r i c t s did not contain a s i n g l e bank not on the par l i s t , and - 25 - i n the other 8 d i s t r i c t s 1 / i t was found that the banks not on the par l i s t were concentrated i n the Southeastern part o f the country and i n a few North Central S t a t e s , as shown below: State Number o f nonmember banks T o t a l in State Hot on par l i s t North Carolina South Carolina Georgia Florida 160 80 198 95 144 75 188 78 Tennessee Alabama Mississippi Arkansas 245 129 181 164 178 124 174 99 Louisiana North Dakota South Dakota Nebraska 116 137 124 291 104 133 100 157 Minnesota Wisconsin 465 487 392 164 2,872 2,110 T o t a l , 15 other S t a t e s 3,921 443 T o t a l , 14 States l / D u r i n g 1936 a number o f n a t i o n a l banks in the Minneapolis Federal Reserve d i s t r i c t have converted i n t o State banks and have withdrawn from the par l i s t . I n t h i s connection the f o l l o w i n g excerpt i s taken from a r e p o r t o f Mr. Preston o f the Minneapolis Federal Reserve Bank, submitted t o the Board with Mr, P e y t o n ' s l e t t e r o f October 24, 1936: "A l a r g e number o f n a t i o n a l banks v i s i t e d i n d i c a t e d that they were g i v ing s e r i o u s c o n s i d e r a t i o n t o surrendering t h e i r n a t i o n a l c h a r t e r s and o p e r a t i n g as s t a t e i n s t i t u t i o n s , thereby p e r m i t t i n g them to i n c r e a s e t h e i r earnings through the revenue derived from exchange. This exchange s i t u a t i o n i s a s e r i o u s one i n our d i s t r i c t , and I am s a t i s f i e d beyond a reasonable doubt that we have very l i t t l e chance o f o b t a i n i n g any new s t a t e members and that many n a t i o n a l banks w i l l e v e n t u a l l y surrender t h e i r charters f o r conversion i n t o s t a t e i n s t i t u t i o n s . Now i f a l l banks were permitted t o make an exchange charge, or i f a n a t i o n - w i d e arrangement could be d e v i s e d whereby the m a k e r 1 s a c c o u n t would be charged on a uniform basis o f , say, 10^ a hundred d o l l a r s , when checks were issued and transmitted out o f i t s trade t e r r i t o r y , that we would e x p e r i e n c e l i t t l e d i f f i c u l t y i n b r i n g i n g i n t o the System v i r t u a l l y a l l the State banks that could q u a l i f y . I have o f t e n wondered, whether the s u p e r v i s i n g a u t h o r i t i e s at Washington are f u l l y cognizant o f t h i s exchange s i t u a t i o n as i t e x i s t s i n the Ninth D i s t r i c t and the n e c e s s i t y f o r c o r r e c t i v e l e g i s l a t i o n . 26 By s i z e o f d e p o s i t s . The c l a s s i f i c a t i o n o f banks not on the par l i s t by s i z e o f banks showed t h a t the bonks were even smaller than the average nonmember banK. The average d e p o s i t s of nonmember banKs were on December 31, 1935, comnored with average d e p o s i t s of banks not $727,000 on the par l i s t of 0309,000. 1,590 o f the 2,?5;j baiks not on the par l i s t had d e p o s i t s of l e s s than ^250,000 and 2,190 had d e p o s i t s o f l e s s than $500,000. The c o n c e n t r a t i o n of the non-par banks i n the small s i z e groups i s shown i n the f o l l o w i n g t a b l e : Deposits ( i n thousands o f d o l l a r s ) Banks All no;iUv..:b-.r Banks A l l nonnember not on cor.r,ercial not on comerci il par l i s t b -inks par l i s t banks Hunb-r o f banks Size group - deposits Under ..1:0,000 150,000-250,000 250,000-500,000 2,237 1,734 2,098 988 602 600 209,063 338,494 734,549 89,443 116,852 206,218 500,000-1,000,000 1,000,000-5,000,000 5 , 0 0 0 , 0 0 0 and over 1,298 1,052 146 270 87 6 908,229 1,962,919 2,080,466 183,832 130,523 61,907 8,565 2,553 6,23 788,775 Total Sy p o p u l a t i o n o f town. ,720 1 , 0 0 1 o f the 2,553 banks not on the par l i s t wei\v l o c a t e d i n p l a c e s with a p o p u l a t i o n o f under 500, and 1 , 6 5 4 were, l o c a t e d i n p l a c e s with a p o p u l a t i o n o f l e s s th<^n 1 , 0 0 0 . By p o p u l a t i o n o f towns i n which s i t u a t e d the non-par b oni s are d i s t r i b u t e d as f o l l o w s j Population o f town Under 500 500 - 1,000 Number of banks not on par l i s t 1,001 653 1,000 - 2 , 5 0 0 2,500 and o v e r 569 330 Total 2,553 Capital requirements f o r Federal Reserve membership and f o r conversion i n t o national banKS. Under trie terns of s e c t i o n 9 o f tne Federal Reserve A c t , as amended, and Regulation H, t o be e l i g i b l e f o r admission to membership in the Federal Reserve System a State bank, other than a mutual savings bank, must possess s u f f i c i e n t c a p i t a l ! / t o entitle, i t t o becor:*. a n a t i o n a l banking a s s o c i a t i o n i n the p l a c e where i t i s s i t u a t e d . There are c e r t a i n exceptions t o t h i s requirement, however, two of wnich a r e : 1. banks organized p r i o r t o June 16, 1933 (the date o f the approval o f the Banking Act o f 1933) s i t u a t e d i n a p l a c e the p o p u l a t i o n of which does not exceed 3,000 i n h a b i t a n t s , and at the time of admission having a c a p i t a l of not l e s s than $25,000, may be admitted to membership, and 2. brinks (whether or not organized p r i o r to June 16, 1933) situated i n a place the population o f which does not exceed 3,000 i n h a b i t a n t s , and which aia: e n t i t l e d to the b e n e f i t s o f insurance and have a c a p i t a l o f not l e s s than $25,000, nay be admitted to membership. A mutual savings bonic must possess surplus and undivided p r o f i t s o f not l e s s than the amount of c a p i t a l required f o r the o r g a n i z a t i o n o f a n a t i o n a l bank in the place where i t i s s i t u a t e d i n order t o be e l i g i b l e f o r membership. 1 / The word " c a p i t a l " r e f e r s to c a p i t a l stock o n l y . - 28 - The minimum c a p i t a l required f o r the o r g a n i z a t i o n o f a national bonk i s as f o l l o w s : Minimum capital,,/ I f l o c a t e d i n a c i t y or town with a population $50,000 Not exceeding 6,000 inhabitants Exceeding 6,000 but not exceeding 50,000 inhabitants Exceeding 50,000 inhabitants (except as stated below) In an o u t l y i n g d i s t r i c t o f a c i t y with a population exceeding 50,000 i n h a b i t a n t s ; provided State law permits o r g a n i z a t i o n of State banks i n such l o c a t i o n with a c a p i t a l o f ^100,000 or l e s s 100,000 200,000 100,000 Banks operating branches (other than branches outside the head o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927) are subject t o the sane c a p i t a l requirements as banks operating no branches at a l l . Banks operating branches outside o f the head o f f i c e c i t y e s t a b l i s h e d since February 25, 1927, are required to have $500,000 o f c a p i t a l unless they are l o c a t e d i n a State the population of which i s l e s s than 500,000 and the l a r g e s t c i t y in which has a population o f l e s s than 50,000, in which circumstances the minimum c a p i t a l required i s $100,000; or i f l o c a t e d i n a State with a population o f l e s s than 1,000,000, the l a r g e s t c i t y in which has a population o f l e s s than 100,000, the minimum c a p i t a l requirement i s $250,000, I t i s a l s o required that the aggregate c a p i t a l o f banks with such branches must not be l e s s than the aggregate minimum required f o r the establishment of an equal number o f n a t i o n a l banks situated in the various p l a c e s i n which such bank and i t s branches are s i t u a t e d . 1 / The word " c a p i t a l " r e f e r s to c a p i t a l stock o n l y . - 29 - Honne::ber banks (other than mutual savings banks) with i n s u f f i c i e n t c a p i t a l f o r Federal Reserve membership Number of banks and t o t a l d e p o s i t s . On December 31, 1935, 2,835 banks, other than mutual savings b a n k s ! / , with d e p o s i t s of £964,000,000 had i n s u f f i c i e n t c a p i t a l to q u a l i f y f o r Federal Reserve membership. Of the 2,835 banks i n e l i g i b l e f o r membership, 319 with d e p o s i t s o f #303,000,000 were operating branches outside of the head o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927, and were thus s u b j e c t to higher c a p i t a l requirements than the remaining 2,516 barucs with deposits o f $661,000,000 which were not operating such branches. Additional c a p i t a l required f o r Federal Reserve membership. The 2,835 i n e l i g i b l e banks had t o t a l c a p i t a l o f -.90,000,000 on December 31, 1935. They would have needed #187,000,000 o f a d d i t i o n a l c a p i t a l t o q u a l i f y f o r Federal Reserve membership. The 2,516 banks operating no branches outside o f trie head o f f i c e c i t y established a f t e r February 25, 1927, had c a p i t a l o f $63,000,000 and they would have needed 358,000,000 o f a d d i t i o n a l c a p i t a l f o r Federal Reserve membership. The 319 banks with branches which were subject t o higher c a p i t a l requirements had c a p i t a l o f #27,000,000 on December 31, 1935, and would have needed a d d i t i o n a l o f n e a r l y $130,000,000 to q u a l i f y f o r membership. capital The t o t a l present cap- i t a l and t h e ' a d d i t i o n a l c a p i t a l required by the i n e l i g i b l e banks f o r Federal Reserve membership are tabulated below: 1 / On December 31, 1935, 37 o f the 567 mutual savings banks i n operation had i n s u f f i c i e n t surplus and undivided p r o f i t s to q u a l i f y f o r Federal Reserve membership. The 37 banks not e l i g i b l e f o r Federal Reserve membership had surplus and undivided p r o f i t s o f 1.52,592,000 on that date and they would have needed a d d i t i o n a l c a p i t a l funds of <'2,863,000 t o q u a l i f y f o r membership. - 30 - M d i t i o n a l capi t a1 required f o r Federal Reserve membership ( i n thousands o f d o l l a r s ) 2,516 banks o p e r a t i n g no branches o u t s i d e the head o f f i c e c i t y established a f t e r February 25, 1927 63,003 319 banks operating one or more branches o u t s i d e "the heaa o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927 26,970 129,830 89,973 187,AO2 T o t a l , 2,835 banks Ratio o f c a p i t a l t o d e p o s i t s . 57,572 The 2,835 banks with i n s u f f i c i e n t c a p i t a l t o q u a l i f y f o r Federal Reserve membership on December 3 1 , 1935, had a r a t i o o f c a p i t a l to d e p o s i t s of 9 . 3 percent and a r a t i o o f t o t a l and r e s e r v e s ) account ( c a p i t a l , surplus, nv capital undivided p r o f i t s / t o d e p o s i t s o f 15.5 p e r c e n t . I f the c a p i t a l of these banks was increased to the minimum c a p i t a l required f o r membership they would have a r a t i o o f c a p i t a l t o d e p o s i t s o f 2 8 . 7 p e r cent. Because o f the higher c a p i t a l requirements f o r banks o p e r a t i n g branches o u t s i d e the head o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927, the minimum c a p i t a l required f o r Federal Reserve membership would provide a r a t i o o f c a p i t a l t o d e p o s i t s f o r these banks o f 51.8 p e r c e n t . r a t i o s are summarized i n the f o l l o w i n g t a b l e : These - 31 - Ratio t o t o t a l d e p o s i t s of — Minimum c a p i t a l Total Present required f o r capital capital membership account 2,516 banks o p e r a t i n g no branches o u t s i d e the head o f f i c e c i t y e s t a b l i s h e d a f t e r Feb.25,1927 9.5% 319 banks operating one o r more branches o u t s i d e the head o f f i c e c i t y established after February 25, 1927 8.9 13.7 51.8 9.3 15.5 28.7 T o t a l , 2,835 banks By s i z e o f c a p i t a l stock. 18.2% From the f o l l o w i n g t a b l e i t w i l l be see: that 1,920 o f the 2 , 8 3 5 nonmember banks, o t h e r than, mutual savings banks, with i n s u f f i c i e n t c a p i t a l f o r Federal Reserve membership on December 31, 1935, were banics with c a p i t a l o f Banks with c a p i t a l stock of — Under #25,000 25,000 - 50,000 50,000-100,000 100,000-20(7,00,0 ^ 200,000 ana over Total l e s :3 th,m ^25,000i Number o f nonmember banks Banks o p e r a t i n g Bonks o p e r a t i n g no branches o u t - one o r more branches side the head o u t s i d e the head o f Total office city f i c e c i t y established e s t a b l i s h e d a f t e r a f t e r Feb. 25, 1927 Feb. 25,1927 i 1,920 1,898 22 260 359 99 351 176 29 2,835 255 103 — 2,516 96 73 29 319 By s i z e o f d e p o s i t s . 32 - 1,34-5 o f the 2,835 banks not e l i g i b l e for membership on December 31, 1935 because o f i n s u f f i c i e n t c a p i t a l had t o t a l d e p o s i t s o f l e s s than $150,000 and 2,346 o f the banks had d e p o s i t s o f l e s s than $500,000. By s i z e o f d e p o s i t s the banks are d i s t r i b u t e d as follows i Banks with t o t a l deposits of — Under ^150,000 150,000-250,000 250,000-500,000 Number o f nonmember banks Banks o p e r a t i n g no Banks operating one branches o u t s i d e o r more branches outthe head o f f i c e s i d e the head o f f i c e Total c i t y established c i t y established a f t e r Feb.25,1927 a f t e r Feb. 25, 1927 1,3^5 521 480 1,340 477 393 5 44 87 284 162 43 190 97 19 94 65 24 2,835 2,516 319 500,000-1,000,000 1,000,000-2,000,000 2 , 0 0 0 , 0 0 0 and over Total By p o p u l a t i o n o f c i t y . The f o l l o w i n g t a b l e shows that 1,851 o f the 2,835 i n e l i g i b l e banxs were l o c a t e d i n p l a c e s with a p o p u l a t i o n o f l e s s than 1,000 and 2,073 were l o c a t e d i n p l a c e s with a p o p u l a t i o n of l e s s than 3 , 0 0 0 : Population o f Under 1,000 1,000-3,000 3,000-6,000 6,000-50,000 50,000 and over Total city Total Number of nonmember banks Banks o p e r a t i n g no Banks operating one branches o u t s i d e or more branches outthe head o f f i c e s i d e the head o f f i c e c i t y established c i t y established a f t e r Feb. 25,1927 a f t e r Feb. 25, 1927 1,851 222 1,773 154 78 68 187 288 287 143 2.43 2.03 44 45 84 2,835 2,516 319 By S t a t e s . 2,1^5 o f the 2,835 banks with i n s u f f i c i e n t capital f o r Federal Reserve membership were l o c a t e d i n the 15 States named i n the t a b l e below. I t w i l l be noted that Kansas, M i s s o u r i , Minnesota, and Iowa each had more than 200 banks with i n s u f f i c i e n t c a p i t a l on December 31, 1935, t o q u a l i f y f o r Federal Reserve membership. State Number of banks Additional capital required f o r Federal Reserve mem bership ( i n thousands o f e . o l l a r s ) 5,764 6,236 5,728 5,897 4,844 5,356 Present capital Kansas Missouri Minnesota 321 284 264 Iowa Kentucky Oklahoma 211 136 138 7,116 3,078 2,356 43,909 5,722 2,544 Wisconsin Nebraska Tennessee 130 115 112 6,225 2,100 2,549 26,950 2,200 5,351 Texas Illinois Mississippi 94 75 68 2,119 2,342 2,286 1,481 1,583 7,0l4 Georgia Indiana Michigan 67 65 63 1,719 4,098 1,278 1,831 11,402 3,122 2,145 54,586 129,614 690 35,387 57,788 2,835 89,973 187,402 T o t a l , 1$ States T o t a l , 33 other S t a t e s T o t a l , United States - 34 - Banks o p e r a t i n g branches, by S t a t e s . The 319 branch banks s u b j e c t to higher c a p i t a l requirements f o r Federal Reserve membership were l o c a t e d p r i n c i p a l l y i n seven S t a t e s , Iowa, Wisconsin, North Carolina, V i r g i n i a , M i s s i s s i p p i and Louisiana. Indiana, The f o l l o w i n g t a b l e shows that the 24-5 branch banks i n the seven States needed more than e 1 0 0 , 0 0 0 , 0 0 0 o f a d d i t i o n a l c a p i t a l t o q u a l i f y f o r Federal Reserve membership under present law. State Umber of banxs Additional c a m t a l required f o r Federal Reserve membership (In.thousands o f d o l l a r s ) 4,570 41,930 4,175 25,325 3,995 9,955 Present capital Iowa Wiscousin North Carolina 93 59 27 Indiana Virginia Mississippi Louisiana 21 20 15 10 1,652 1,860 1,213 1,312 8,848 8,140 6,287 3,688 2-45 18,777 104,173 74 8,193 25,657 Total, 7 states T o t a l , 19 o t h e r stats;s T o t a l , United States 319 26,970 129,830 - 35 - Banks with i n s u f f i c i e n t c a p i t a l f o r conversion i n t o n a t i o n a l banks. Number o f banks and t o t a l d e p o s i t s . On December 31, 1935, 5,963 banks, e x c l u s i v e o f mutual savings baiucs, with d e p o s i t s o f ^1,731,420, o p e r a t i n g i n the United S t a t e s , had i n s u f f i c i e n t c a p i t a l f o r i n t o n a t i o n a l banks. These banks are c l a s s i f i e d as f o l l o w s : Classes o f banks State member banks Nonmember banks: With s u f f i c i e n t c a p i t a l f o r Federal Reserve membership but not f o r c o n v e r s i o n i n t o n a t i o n a l banks With i n s u f f i c i e n t c a p i t a l f o r Federal Reserve membership o r f o r conversion i n t o n a t i o n a l banks Total conversion Number of bank's Deposits ( i n thousands of d o l l a r s ) 237 82,524 2,891 685,193 2,835 963,703 5,963 1,731,420 - 36 - Additional c a p i t a l required f o r conversion i n t o n a t i o n a l banks. As may be seen from the f o l l o w i n g t a b l e , the 5,963 banks would have needed £252,697,000 o f a d d i t i o n a l c a p i t a l f o r conversion i n t o n a t i o n a l banks. The t o t a l c a p i t a l o f the banks on December 31, 1935, amounted t o $181,703,000 d i v i d e d between S t a t e member banks and nonmember banks as f o l l o w s ! Classes of banks 237 State member banks Nonmember banks t 2 , 8 9 1 banks with s u f f i c i e n t c a p i t a l f o r Federal Reserve membership 2,516 banKS o p e r a t i n g no branches o u t s i d e the head o f f i c e c i t y established a f t e r Feb, 25, 1927 with insufficient capital for Federal Reserve membership or f o r conversion into n a t i o n a l banks 319 banks o p e r a t i n g branches o u t s i d e the head o f f i c e c i t y e s t a b l i s h e d a f t e r Feb. 2 5 , 1927 with i n s u f f i c i e n t c a p i t a l f o r Federal Reserve membership o r f o r conversion i n t o n a t i o n a l banks T o t a l , 5,963 banks Additional capital required f o r conversion i n t o n a t i o n a l banks (In thousands o f d o l l a r s ) Present capital 7,426 5,074 84,304 60,2.46 63,003 57,572 26,970 12.9,830 181,703 252,722 The 319 nonmember batiks o p e r a t i n g brandies o u t s i d e o f the head o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927, were d e f i c i e n t more than ^129,830,000 o f c a p i t a l f o r conversion ana the 5,643 banks without such branches were short #122,892,000 o f c a p i t a l f o r conversion. - 37 - Ratio ox c a p i t a l t o d e p o s i t s . Tne 5,963 banks with i n s u f f i c i e n t c a p i t a l f o r c o n v e r s i o n i n t o n a t i o n a l banics had a r a t i o o f c a p i t a l to d e p o s i t s o f 10.5 percent and a r a t i o o f t o t a l c a o i t a l account and r e s e r v e s ) surplus,. undivided p r o f i t s / t o d e p o s i t s o f 1 6 . 5 p e r c e n t . (capital, I f the c a p i t a l o f these banks was increased t o the minimum c a p i t a l required f o r membership the banks., would have a r a t i o o f c a p i t a l to d e p o s i t s o f 2 5 . 5 p e r c e n t . r a t i o s are summarized i n tne f o l l o w i n g Classes o f banks These table: Ratio t o t o t a l d e p o s i t s o f Minimum Total Present required capital capital version account national — capital for coninto banks 237 State member banks 14.8 % 5,726 nonmember banks 10.6 25.6 16.6 10.5 16.5 25.1 T o t a l , 5,963 banks 9.0J6 15.1 % In the case o f banks operating branches o u t s i d e the head o f f i c e c i t y e s t a b l i s h e d a f t e r February 25, 1927, the r a t i o o f minimum c a p i t a l r e q u i r e d f o r conversion i n t o n a t i o n a l ounits t o t o t a l d e p o s i t s o f tne banks on December 31, 1935, woule amount t o more than 50 p e r c e n t . By s i z e o f c a p i t a l s t o c k . 40 - The d i s t r i b u t i o n o f trie 5,963 banks with i n s u f f i c i e n t c a p i t a l on December 31, 1935 f o r conversion i n t o n a t i o n a l banks shows that 1,92.0 o f trie banks had c a p i t a l o f ler.* than "'25,000 and 3,473 had c a p i t a l o f from ..-25,000 t o $50,000. Included i n the 3,473 banks with c a p i t a l o f from 025,000 to ."350,000 are 2,891 that had s u f f i c i e n t c a p i t a l f o r Federal Reserve membership but lacked s u f f i c i e n t c a p i t a l f o r conversion i n t o n a t i o n a l banks. These f i g u r e s are summarized i n the f o l - lowing t a b l e s Banks with c a p i t a l stock o f — Under -.15,000 15,000-25,000 25,000-50,000 50,000-100,000 100,000-200,000 200,000 and over Total Number o f banks State member banks Total 721 1,199 3,473 223 363 12 178 29 5,963 Nonmember banks 721 1+199 *3,250 351 2 176 2.37 *5,726 -- 29 * 2 , 8 9 1 o f these baiucs had s u f f i c i e n t c a p i t a l on December 3 1 , 1935, f o r Federal Reserve membership but not f o r c o n v e r s i o n i n t o n a t i o n a l bariKP. By s i z e o f d e p o s i t s , 39 - 2,196 o f the 5,963 banks with i n s u f f i c i e n t c a p i t a l on December 31, 1935 f o r conversion i n t o n a t i o n a l banks had t o t a l d e p o s i t s of l e s s than ^150,000, and 5,276 o f these banks ha^ d e p o s i t s o f l e s s than £>500,000* The banks are d i s t r i b u t e d by s i z e o f d e p o s i t s as follows: Banks with d e p o s i t s o f -- Number o f banks State member J Nonmember Total 1 banks bunks Under #150,000 150,000-250,000 2,196 1,599 33 64 2,163 1,535 250,000-500,000 500,000-1,000,000 1 , 0 0 0 , 0 0 0 and over 1/81 471 216 95 40 5 1,386 431 211 5,963 237 5,726 Tot.il By p o p u l a t i o n o f c i t y , 4,04-2 o f the 5,963 banks with i n s u f f i c i e n t c a p i t a l f o r conversion i n t o n a t i o n a l banks were l o c a t e d i n p l a c e s with a p o p u l a t i o n o f l e s s than 1,000* By population o f c i t i e s i n which l o c a t e d , the 5,963 banks ar~ d i s t r i b u t e d as f o l l o w s ; Population o f Under 1,000 1,000-3,000 3,000-6,000 6,000-50,000 50,000 and overTotal city Number of banks State member Nonmember Total banks banks 4,042 1,147 190 130 95 3 3,912 1,052 187 295 289 r? t 2 288 287 5,963 237 *5,726 "*The 2,891 banks with s u f f i c i e n t c a p i t a l f o r Federal Reserve membership but not f o r conversion i n t o nation ,1 banks were d i s t r i b u t e d as f o l l o w s : 2,061 i n p l a c e s with p o p u l a t i o n o f l e ^ s than 1,000 and 830 i n p l a c e s with a p o p u l a t i o n o f 1,000 t o 3,000. ~ By S t a t e s . 4o ~ The banks with i n s u f f i c i e n t c a p i t a l on D-eenber 31, 1935, f o r conversion i n t o n a t i o n a l banks ?/ere concentrated p r i n c i p a l l y in the East North Central and West North Central S t a t e s — 4,346 o f the 5,963 banks were s i t u a t e d i n 15 S t a t e s , as shown by the f o l l o w i n g Number of banks State table: Additional capital required f o r c o n version into nati o n a l banks (In thousands o f d o l l a r s ) Present capital Kansas Missouri Iowa 474 466 436 10,476 10,976 13,191 9,174 9,749 49,134 Minnesota Illinois Nebraska 431 304 276 10,124 8 , 9 45 6,465 8,426 6,630 5,885 Wisconsin Texas Indiana 273 255 250 10,914 7,142 10,081 29,411 4,558 14,669 Kentucky Michigan Ohio 237 213 204 5,946 7,509 7,894 7,804 8,191 6,856 Tennessee Oklahoma Georgia 192 181 154 4 , 8 43 3,471 4,171 7,057 3,579 3,729 T o t a l , 15 S t a t e s 4,346 122,148 174,852 T o t a l , 34 oth'..r S t a t e s ^ / 1,617 59,555 77,870 5,963 181,703 252,722 Total,United States 1 / Including the D i s t r i c t o f Columbia.
@FedFRASER