The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
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 1948 Number of Banks 1947 )0 499§r T $1,000 - $1,999 — -----------:------------1948 1948 1947* 1947 1948 1947 1948 1947 1948 $10,000-$24,999 18 20 60 60 123 125 218 220 100 83 50 12.0 11.4 9.8 3.3 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 Net current earnings before income taxes.......................................... . Profits before income taxes................................................................. Net profits................................................................................................ Cash dividends declared........................................................................ $5,000 -$9,999 1948 SUMMARY RATIOS ' Percentage of Total Capital Accounts 1. 2. 3. 4. $2,000 - $4,999 1947 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 - 46.^ 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 23. Interest on 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 .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.