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FEDERAL

RESERVE

BANK

OF D A L L A S

February 20, 1926.

To the Member Bank Addressed:
The Federal Advisory Council at its meeting on December 1, 1925, gave consideration
to the cause and probable effect of the present trend toward lower ratios of capital assets to
current liabilities in the banking institutions of this country.
The chart on the inside page discloses that there has been a downward trend in the pro­
portion of capital funds of national banks to deposit liabilities, and that the ratio in 1925
reached its lowest point since 1865.
On the following page there is a table which shows, by Federal reserve districts, the
ratio of capital to deposits of national banks. An examination of this table discloses that
there is considerable variation in the ratios for the various districts.. The ratios for banks
in reserve cities as of June 80, 1925, show a variation from 18 to 22, and the variation among
country banks is from 14 to 23.
It will be noted that the average ratio for banks in reserve cities of the Eleventh Federal
Reserve District is the same as the average for banks in all reserve cities. On the other hand,
the ratio for country banks in this district is not only considerably above the general average,
but is higher than that for any other Federal reserve district. It is probable that this high ratio
can be accounted for by the large number of banking institutions in the rural sections of this
district. It must be borne in mind that an abnormally high ratio may be undesirable, as well
as an abnormally low ratio.
It is thought that banks in this district would be interested in giving close study to
this trend, and other interesting facts which the table and chart disclose.
Yours very truly,

r

Chairman of the Board and Federal Reserve Agent.

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

INVESTED CAPITAL PER $100 OF INDIVIDUAL DEPOSITS, NATIONAL BANKS,
OCTOBER 31, 1914, AND JUNE 30, 1925
All Banks
October 31, June 30,
1914
1925

Banks in Reserve Cities*
October 31, June 30,
1914
1925

Country Banks
October 31, June 30,
1914
1925

T o ta l................. .........

$84

$18

$37

$18

$32

$17

Boston ..................... .........

38

19

31

17

43

20

New York ............... ..... .

33

17

28

13

26

14

Philadelphia ........... .........

33

21

37

22

32

21

Cleveland ................. .........

36

20

45

22

31

19

Richmond ................. .........

39

21

44

22

36

21

Atlanta ....... ........... ...... .

46

17

43

18

46

17

Chicago ................... .........

30

16

31

15

27

17

St. Louis ................. .........

41

19

51

20

35

18

Minneapolis ............. .........

23

14

27

14

21

14

Kansas C ity ............. .........

29

14

29

14

30

15

Dallas ............ .......... .........

49

21

42

18

53

23

San Francisco......... .........

33

15

38

15

29

15

....

37
36

18
16

....
.....

....
....

New York C ity .......
City of Chicago ..... ...................

* Exclusive of the cities of New York and Chicago.

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