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FEDERAL RESERVE BANK OF DALLAS Typical Operating Ratios of Member Banks in the El eventh Federal Reserve District for the Years 1929, 1934, 1935, and 1936 This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) ANALYSIS OF MEMBER BANKS’ EARNINGS AND EXPENSES Typical operating ratios of member banks in the Eleventh Federal Reserve District, for the years 1929, 1934, 1935, and 1936, are presented on the following pages. For the purpose of this study member banks were arranged according to the volume of their loans and investments and ratios were computed for each of the six groups into which the banks were divided. These group ratios will enable each bank to compare its ratios with those for the group having a similar volume of loans and investments. In 1936 Eleventh District member banks, taken as a whole, reported larger net profits than in 1935. This increase was brought about in part by larger net earnings from current operations, but was due mainly to the fact that the amount of losses charged off in 1936 was much less than the charge-offs in 1935. All groups of banks participated in the improve ment shown in net profits, as is indicated by the higher ratios of net profits to capital and surplus. For all banks included in the compilation net profits averaged 10.91 per cent of capital and surplus as compared with 8.40 per cent in 1935. Among the several groups this ratio varied from 4.70 per cent for banks with loans and investments of less than $150,000 to 12.04 per cent for the group having loans and investments above $5,000,000. Gross earnings from current operations showed a further expansion in 1936, reflect ing chiefly the larger income on loans and investments. The higher earnings on loans and investments, however, were occasioned by the larger volume of these assets, as the average rate of return declined from 4.53 per cent in 1935 to 4.36 per cent in 1936. Total current expenses also increased but by a smaller amount than gross earnings from current operations; consequently, the ratio of total current expenses to gross earnings from current operations declined slightly to 66.02 per cent, as compared with 66.23 per cent in 1935. Although the amount of interest paid on deposits was again reduced in 1936, the saving was more than offset by the higher salary costs and other expenses. Net earn ings from current operations showed a further improvement, being 33.98 per cent of gross earnings from current operations as compared with 33.77 per cent in 1935. The ratio of net earnings from current operations to capital and surplus rose from 10.88 per cent in 1935 to 11.41 per cent in 1936. Base figures covering capital, surplus, gross deposits, time deposits, and loans and investments were obtained from averages of the figures shown on the condition reports rendered as of June 30 and December 31 of each year. All other figures were obtained from the semi-annual earnings and dividend reports. “ Loans and investments” include loans and discounts, bills of exchange, overdrafts, United States Government securities (direct and fully guaranteed), and other stocks, bonds, and securities. May 22, 1987. T Y P IC A L O P E R A T IN G R A T IO S MEMBER BANKS IN THE ELEVENTH DISTRICT W ITH LOANS A N D INVESTMENTS UNDER $150,000 RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: 1. 2. 3. 4. 5. 6. 7. 8'. 1934 1935 1936 84.59 15.41 40.82 4.44 34.61 79.87 20.13 1929 85.81 14.19 37.73 3.49 32.03 73.25 26.75 85.09 14.91 37.36 2.66 31.33 71.35 28.65 7.95 81.20 18.80 10.00 81.35 18.65 8.30 1.37 9.67 3.65 .34 3.09 7.08 2.59 8.78 1.54 10.32 3.86 .27 3.23 7.36 2.96 .77 7.85 1.82 43.26 139.97 1.03 8.39 1.93 44.89 156.07 6.46 4.54 7.15 28.58 .24 117 7.22 4.70 6.22 26.25 .18 110 Interest and discount on loans and investments........... 87.93 Other current earnings............... ....... ............................... 12.07 35.92 Salaries and wages............................................................. 5.44 Interest paid on gross deposits........... ........................... 28.02 Other expenses................................................................... 69.38 Total current expenses ( 3 + 4 + 5 ) - - ....-............................ 30.62 Net earnings from current operations.............. ......... ...... Net losses ‘^charge-offs, less recoveries, profits on 24.14 20.50 securities sold, etc.)........................................................ 93.52 100.37 9. Total current expenses and net losses (6 + 8 ).................. — .37 6.48 10. Net additions to profits________ __ _________ ______ — RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 7.44 11. Interest and discount on loans and investments______ 9.15 1.26 1.35 12. Other current earnings..-..................... ............— ....... ..... 10.41 8.79 13. Total earnings from current operations (11+12).......—. 3.74 3.59 14. Salaries and wages................ ..... ...................................... .56 .39 15. Interest paid on gross deposits...................................... . 2.92 3.04 16. Other expenses.................................................................. 7.02 17. Total current expenses (14 + 1 5 + 1 6 )— ........................... 7.22 3.19 1.77 18. Net earnings from current operations.............................. 19. Net losses (charge-offs, less recoveries, profits on 2.51 1.80 securities sold, etc.)_________________ _________ ___ 8.82 9.73 20. Total current expenses and net losses (17+19) .— ........... .68 — .03 21. Net additions to profits.......... ..... ......................... ...... ...... 34.21 41.63 22. Capital, surplus, profits, and reserves................. ........... 104.01 134.63 23. Gross deposits................................. ....... ..... ..... ................ OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and 4.58 10.21 surplus............................................................................. — .08 2.16 25. Net additions to profits to capital and surplus............. 6.92 6.22 26. Time deposits to gross deposits....................................... 28.72 30.00 27. Capital and surplus to gross deposits............................ .29 .54 28. Interest on deposits to gross deposits............................ 121 118 Number of banks....................................................................... T Y P IC A L O P E R A TIN G R A T IO S MEMBER BANKS IN THE ELEVENTH DISTRICT W ITH LOANS AN D INVESTMENTS FROM $150,000 TO $249,999 RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: 1934 1935 1936 82.16 88.43 Interest and discount on loans and investments--------17.84 11.57 Other current earnings.................................... ...... ......... 36.18 32.29 Salaries and wages............................................................. 7.44 5.78 Interest paid on gross deposits— .................................. 32.22 26.68 Other expenses.................................................................... 74.18 66.41 Total current expenses ( 3 + 4 + 5 ) ............................ ........ 25.82 33.59 Net earnings from current operations........... .... ....... ...... Net losses (charge-offs, less recoveries, profits on 33.91 22.45 securities sold, etc.)........... ....... .................................... 108.09 88.86 9. Total current expenses and net losses (6 + 8 )................... — 8.09 11.14 10. Net additions to profits.......................................- ............. RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 6.80 8.81 11. Interest and discount on loans and investments.... 1.15 1.48 12. Other current earnings.............. ....... ....... —....... ........ 8.28 9.96 13. Total earnings from current operations (11+ 12)........... 3.22 2.99 14. Salaries and wages................. ........................................... .74 .48 15. Interest paid on gross deposits....................................... 2.67 16. Other expenses................................................................... 2.66 6.14 6.62 17. Total current expenses (14+15 + 16)............................... 2.14 3.34 18. Net earnings from current operations.............................. 19. Net losses (charge-offs, less recoveries, profits on 2.81 securities sold, etc.)......... ................ ......... 2.23 8.95 20. Total current expenses and net losses (17+19) .............. 8.85 21. Net additions to profits .... 1.11 — .67 22. Capital, surplus, profits, and reserves........................... 34.99 27.93 23. Gross deposits___ 132.62 103.06 OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and surplus............... 6.74 13.48 25. Net additions to profits to capital and surplus............ — 2.11 4.47 26. Time deposits to gross deposits 7.24 9.07 27. Capital and surplus to gross deposits 23.94 24.10 28. Interest on deposits to gross deposits .72 .36 Number of banks.......................................... 129 95 82.00 18.00 34.55 4.54 30.14 69.23 30.77 82.60 17.40 35.39 4.04 29.41 68.84 31.16 11.40 80.63 19.37 2.03 70.87 29.13 7.39 1.62 9.01 3.11 .41 2.72 6.24 2.77 7.71 1.62 9.33 3.30 .38 2.74 6.42 2.91 1.03 7.27 1.74 34.46 143.83 .19 6.61 2.72 34.04 160.54 8.97 5.65 8.71 21.49 .28 123 9.53 8.90 7.94 19.01 .23 104 1. 2. 3. 4. 5. 6. 7. 8. 1929 T Y P IC A L O P E R A T IN G R A T IO S MEMBER BANKS IN THE ELEVENTH DISTRICT W ITH LOANS A N D INVESTMENTS FROM $250,000 TO $499,999 RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: 1929 1934 Interest and discount on loans and investments........... 88.49 83.59 Other current earnings............... ........ ......... ..................... 11.51 16.41 Salaries and wages............................... ........ .............. ..... 29.75 32.97 Interest paid on gross deposits___________ _________ 10.85 8.02 Other expenses................................................................... 24.09 28.39 Total current expenses (3 + 4 + 5 )......... ........................... 64.69 69.38 Net earnings from current operations................. ..... ....... 35.31 30.62 Net losses (charge-offs, less recoveries, profits on securities sold, etc.)_______ ____ ____ ________ ______ 15.73 43.31 80.42 9. Total current expenses and net losses ( 6 + 8 )............ ...... 112.69 10. Net additions to profits________ __ ___ ______________ 19.58 — 12.69 RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 11. Interest and discount on loans and investments........... 8.05 6.43 12. Other current earnings _________ ___________ ____ _____ 1.05 1.26 13. Total earnings from current operations (11 + 12)___ __ 7.69 9.10 14. Salaries and wages................................. ................... ....... 2.53 2.71 15. Interest paid on gross deposits-— ................. ................ .99 .62 16. Other expenses............. ...... .... ..... .............................. ..... 2.19 2.18 5.89 17. Total current expenses (14+15 + 16)............................... 5.33 3.21 18. Net earnings from current operations............................ 2.36 19. Net losses (charge-offs, less recoveries, profits on 3.33 securities sold, etc.)___ _______ __________ _____ ____ 1.43 7.32 8.66 20. Total current expenses and net losses (17 + 19) .............. 21. Net additions to profits.._________________________ ___ 1.78 — .97 22. Capital, surplus, profits, and reserves ..................... 25.25 28.98 23. Gross deposits....... .................... ................................. ..... 127.11 103.34 OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and surplus.............. ......... ............................... .................... 9.15 14.56 — 3.79 25. Net additions to profits to capital and surplus___ ___ 8.07 26. Time deposits to gross deposits....... ............................... 11.76 9.25 20.25 27. Capital and surplus to gross deposits................. .......... . 21.35 28. Interest on deposits to gross deposits............................ .48 .96 Number of banks..................................................... ................ 130 189 1. 2. 3. 4. 5. 6. 7. 8. 1935 1936 83.24 16.76 32.40 7.01 28.57 67.98 32.02 83.27 16.73 33.09 5.78 28.09 66.96 33.04 5.93 73.91 26.09 2.56 69.52 30.48 6.68 1.35 8.03 2.60 .56 2.30 5.46 2.57 6.78 1.36 8.14 2.69 .47 2.29 5.45 2.69 .48 5.94 2.09 29.20 139.64 .21 5.66 2.48 29.23 152.92 10.11 8.23 11.90 18.22 .40 130 10.75 9.91 10.57 16.38 .31 149 T Y P IC A L O P E R A T IN G R A T IO S MEMBER BANKS IN THE ELEVENTH DISTRICT W ITH LOANS A N D INVESTMENTS FROM $500,000 TO $999,999 RATIOS EXPRESSED IN PERCENTAGES OF GROSS 1934 1929 EARNINGS FROM CURRENT OPERATIONS: 1. Interest and discount on loans and investments........... 85.27 88.33 2. Other current earnings................. ... ................................. 14.73 11.67 3. Salaries and wages............ ................................................ 30.54 26.73 10.99 4. Interest paid on gross deposits.................................. . 14.54 5. Other expenses................................... .......... ..................... 26.35 22.82 67.88 64.09 6. Total current expenses (3 + 4 + 5 ) ....... ........................ . 32.12 35.91 7. Net earnings from current operations............ ................. 8'. Net losses (charge-offs, less recoveries, profits on 13.37 32.90 securities sold, etc.) ................................. ........ ..... . 77.46 9. Total current expenses and net losses ( 6 + 8 )........... ....... 100.78 22.54 10. Net additions to profits.............................. ...................... — .78 RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 7.44 11. Interest and discount on loans and investments........... 5.75 12. Other current earnings____ ____ ________ ______________ .98 .99 8.42 13. Total earnings from current operations (11+ 12)........... 6.74 2.25 14. Salaries and wages............................................................. 2.06 1.22 .74 15. Interest paid on gross deposits....................................... 1.92 16. Other expenses................ ................................................... 1.78 5.39 17. Total current expenses (1 4 + 1 5 + 1 6 )............................... 4.58 3.03 18. Net earnings from current operations.................... .......... 2.16 19. Net losses (charge-offs, less recoveries, profits on 1.13 securities sold, etc.)___ _____ _______ ______________ 2.22 6.52 20. Total current expenses and net losses (17+19). - .......... 6.80 1.90 21. Net additions to profits................. ........... .................. ....... — .06 21.47 22. Capital, surplus, profits, and reserves........................... 23.34 104.62 23. Gross deposits ....... ......... .... ....................... ..................... 122.72 OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and 16.68 surplus.......... ..... ..... ....... ..... ...... .......... ................ - ..... 10.85 10.47 25. Net additions to profits to capital and surplus............. — .26 12.76 26. Time deposits to gross deposits------ ------- ----- —--- ----17.11 27. Capital and surplus to gross deposits................ ............ 17.33 16.27 28'. Interest on deposits to gross deposits......................... 1.17 .60 Number of banks................................................................. — 156 79 1935 1936 86.01 13.99 30.70 9.39 26.24 66.33 33.67 84.98 15.02 31.40 7.79 25.61 64.80 35.20 15.63 81.96 18.04 3.73 68.53 31.47 6.09 .99 7.08 2.17 .67 6.04 1.07 7.11 2.23 .56 1.82 4.61 2.50 1.86 4.70 2.38 1.10 5.80 1.28 20.46 142.56 .27 4.88 2.23 22.34 144.53 11.65 6.24 15.08 14.35 .47 75 13.24 11.83 12.65 13.09 .38 80 T Y P IC A L O P E R A TIN G R A T IO S MEMBER BANKS IN THE ELEVENTH DISTRICT W ITH LOANS AND INVESTMENTS FROM $1,000,000 TO $4,999,999 RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: 1934 1935 1936 82.90 86.75 Interest and discount on loans and investments............ 17.10 13.25 Other current earnings.................................. ......... ....... — 28.94 23.05 Salaries and wages............................................................. 16.29 21.71 Interest paid on gross deposits....................................... 25.60 23.15 Other expenses................................................................... 70.83 67.91 Total current expenses (3 + 4 + 5 ) .................................... 32.09 29.17 Net earnings from current operations............................. Net losses (charge-offs, less recoveries, profits on 30.72 13.40 securities sold, etc.) _________ ___ _____ ___ _______ 101.55 81.31 9. Total current expenses and net losses (6 + 8 )..—.........—18.69 — 1.55 10. Net additions to profits ............................. ................. RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 5.18 6.99 11. Interest and discount on loans and investments.......... 1.07 1.07 12. Other current earnings........ ........... ...................... ....... .. 6.25 8.06 13. Total earnings from current operations (11 + 12)........... 1.86 1.81 14. Salaries and wages............... .................. ...... ......... .......... 1.02 1.75 15. Interest paid on gross deposits............ ................... ...... 1.87 1.60 16. Other expenses................................. .................... ..... ....... 4.43 5.48 17. Total current expenses (1 4 + 1 5 + 1 6 )...... ................... .. . 1.82 2.58 18. Net earnings from current operations....... ................... 19. Net losses (charge-offs, less recoveries, profits on 1.92 1.08 securities sold, etc.).............. ..—................. ............... 6.35 6.56 20. Total current expenses and net losses (17+19) .............. — .10 1.50 21. Net additions to profits ....................................... ........... 20.14 18.32 22. Capital, surplus, profits, and reserves___________ ___ 107.72 143.11 23. Gross deposits..................................... .............— ...... - ...... OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and 10.22 16.84 surplus..-............. ......... .... .... .................... .......... — .54 9.81 25. Net additions to profits to capital and surplus.......... . 25.27 23.77 26. Time deposits to gross deposits............................... ...... 12.47 14.27 27. Capital and surplus to gross deposits...... .................... .71 1.63 28. Interest on deposits to gross deposits— ........ ..... ...... 63 100 Number of banks. 80.79 19.21 29.90 14.13 26.19 70.22 29.78 80.45 19.55 29.24 10.60 27.43 67.27 32.73 11.69 81.91 18.09 5.45 72.72 27.28 4.99 1.19 6.18 1.85 .87 1.62 4.34 1.84 4.98 1.21 6.19 1.81 .65 1.70 4.16 2.03 .72 5.06 1.12 20.13 151.25 .34 4.50 1.69 20.13 168.24 10.57 6.42 24.52 11.51 .58 75 11.86 9.88 18.97 10.15 .39 77 1929 1. 2. 3. 4. 5. 6. 7. 8. T Y P IC A L O P E R A TIN G R A T IO S M BER BANKS IN THE ELEVEN DISTRICT WITH LOANS AND INVESTM EM TH ENTS OF $5,000,000 AND OVER RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: 1934 1935 1. Interest and discount on loans and investments........... ....... 3. Salaries and wages................ - .................. — ...........-...... 4. Interest paid on gross deposits....................................... 5. Other expenses.............. ....... ................................ ....... 6. Total current expenses ( 3 + 4 + 5 ) _ .............. ...... 7. Net earnings from current operations........ .... .... ......... 8. Net losses (charge-offs, less recoveries, profits on 46.14 6.85 securities sold, etc.)---------- -------- ------- — ..... ............ 107.74 77.06 ........... 9. Total current expenses and net losses (6 + 8 ).....— — 7.74 22.94 10 . Net additions to profits.............................. ......... RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND INVESTMENTS: 6.02 4.07 11. Interest and discount on loans and investments........... .93 .85 12. Other current earnings................................-----......... ........ 4.92 6.95 13. Total earnings from current operations (11 + 12)........... 1.35 1.19 14. Salaries and wages............... .................... — ..................... 2.09 .67 15. Interest paid on gross deposits..................................... 1.44 1.17 16. Other expenses............................................................... . 3.03 4.88 17. Total current expenses (1 4 + 1 5 + 1 6 )..................... -......... 1.89 18. Net earnings from current operations....... ........... —........ 2.07 19. Net losses (charge-offs, less recoveries, profits on 2.27 .47 securities sold, etc.)............ .................. ........ ................ 20. Total current expenses and net losses (17 + 19)____ __ _ 5.30 5.35 21. Net additions to profits............. ........................................ — .38 1.60 22. Capital, surplus, profits, and reserves............................ 15.34 16.90 23. Gross deposits............ .......................... ............................. 141.36 111.90 OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and surplus............. ....... .... 16.60 12.62 25. Net additions to profits to capital and surplus............. — 2.54 12.78 26. Time deposits to gross deposits.................. .................... 27.27 20.76 27. Capital and surplus to gross deposits......... ......... ........ 11.14 10.58 28. Interest on deposits to gross deposits.................. 1.87 .47 Number of banks. 25 30 80.01 19.99 25.97 11.20 25.80 62.97 37.03 80.48 19.52 27.38 8.40 29.13 64.91 35.09 3.98 66.95 33.05 1.53* 63.38 36.62 3.65 .91 4.56 1.18 .51 1.18 2.87 1.69 3.46 .84 4.30 1.18 .36 1.25 2.79 1.51 2. Other current earnings............ ~..................... ♦Net recoveries. 1929 86.63 13.37 19.40 30.12 20.69 70.21 29.79 82.71 17.29 24.14 13.62 23.84 61.60 38.40 .18 3.05 1.51 16.83 145.46 11.62 10.37 18.30 9.99 .35 26 1936 .06* 2.73 1.57 15.40 154.78 11.53 12.04 15.06 8.46 .23 30 T Y P IC A L O P E R A T IN G R A T IO S ALL MEMBER BANKS IN THE ELEVENTH DISTRICT RATIOS EXPRESSED IN PERCENTAGES OF GROSS EARNINGS FROM CURRENT OPERATIONS: . 1 Interest and discount on loans and investments............ . 2 . Other current earnings................................................... — 3. Salaries and wages............................................................. 4. Interest paid on gross deposits....................................... 5. Other expenses................................................................... 6. Total current expenses ( 3 + 4 + 5 ) ..................................... 7. Net earnings from current operations............................— 8'. Net losses (charge-offs, less recoveries, profits on securities sold, etc.)........................................................ 9. Total current expenses and net losses (6 + 8 )................... 10 . Net additions to profits........ ......................... ................... RATIOS EXPRESSED IN PERCENTAGES OF LOANS AND 11. Interest and discount on loans and investments___ __ 12. Other current earnings___________ ___________________ 13. Total earnings from current operations (11+12)........... 14. Salaries and wages............................................................. 15. Interest paid on gross deposits....................................... 16. Other expenses................................................................... 17. Total current expenses (14 + 1 5 + 1 6 )............................... ....... 18. Net earnings from current operations................ — 19. Net losses (charge-offs, less recoveries, profits on securities sold, etc.).............................................. ...... — 20 . Total current expenses and net losses (17 + 19 )......... ..... 21 . Net additions to profits........ ............................................ 22. Capital, surplus, profits, and reserves............................ 23. Gross deposits.................................................................... OTHER RATIOS EXPRESSED IN PERCENTAGES: 24. Net earnings from current operations to capital and surplus................................... ......................................... 25. Net additions to profits to capital and surplus............. 26. Time deposits to gross deposits................... ...... ........... . 27. Capital and surplus to gross deposits............. .......... 28. Interest on deposits to gross deposits............ ............... Number of banks...................................................................... 1935 1936 83.11 16.89 27.68 12.90 25.57 66.15 33.85 81.32 18.68 28.81 10.81 26.61 66.23 33.77 81.38 18.62 29.39 8.26 28.37 39.69 11.58 105.84 79.50 — 5.84 20.50 ^VESTMENTS: 4.75 6.79 .96 1.00 5.71 7.79 1.58 1.83 .74 1.71 1.46 1.75 3.78 5.29 1.93 2.50 7.72 73.95 26.05 1.49 67.51 32.49 4.53 1.04 5.57 1.61 .60 1.48 3.69 1.88 4.36 .99 5.35 1.57 .44 1.52 3.53 1.82 .90 6.19 1.60 18.57 108.61 2.26 6.04 —.33 19.93 138.85 .43 4.12 1.45 19.93 146.07 .08 3.61 1.74 18.66 156.89 16.05 10.26 21.95 14.34 1.58 722 10.96 — 1.89 20.37 12.71 .53 513 10.88 8.40 18.68 11.84 .41 546 11.41 10.91 15.18 10.16 .28 550 1929 87.21 12.79 23.47 22.00 22.45 67.92 32.08 1934 66.02 33.98
