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FE D E R A L R E S E R V E BANK O F NEW YORK r Circular No. 3 9 5 2*1 L February 27, 1953 J Operating Ratios of Member Banks in the Second Federal Reserve District for the Year 1952 To all Member Banks in the Second Federal Reserve District : Net profits after all charges, but before dividends, for member banks in the Second Federal Reserve District averaged 7.3 per cent o f capital funds in 1952, compared with 6.9 per cent in 1951 and 7.7 per cent in 1950. The greatest increase in the rate of return on capital (item 3) occurred in the two largestsized groups of New York City banks. For these banks an increase in the rate o f return on loans (item 26) was the principal influence in raising average returns on capital to the highest levels since 1946, namely, to 6 .6 per cent for Group V I and 7.3 per cent for Group V II banks. The return on capital funds for the four groups o f banks located outside New York City showed smaller increases over 1951; profit rates for the different size-groups, however, ranged from an average o f 6.9 per cent to 7.5 per cent. The average return for the smallest-sized New York City banks (Group V ) ran counter to the generally higher profit trend in the District and declined sharply, owing to an increase in operating expenses and in net charge-offs without any compensating growth in operating income. In most banks o f the District, total current earnings reached a record level in 1952 in absolute dollar amounts. Relative to total assets (item 5) they aver aged 3.08 per cent, the highest since 1941 when 3.30 per cent was realized on a much smaller volume o f assets. Except for banks in Group V , operating expenses (item 18) as a percentage o f total earn ings were generally unchanged or lower in 1952. Consequently, net current operating earnings before income taxes either remained unchanged or improved slightly as a percentage o f total earnings (item 19) in most groups o f banks; in actual dollar volume net current operating earnings also attained peak levels. Deductions from net current operating earnings as a result o f total net losses and charge-offs accounted for about the same proportion of total earnings as in 1951, but income taxes continued to increase and net profits (item 2 2 ) as a fraction o f total earnings were generally little changed except for a rise in the largest New York City banks. As shown in the accompanying chart, loans con tinued to move upward in 1952 and attained all-time high levels. The effective rate o f return on loans (item 26) also increased slightly in most groups of banks but the rise was somewhat greater in the two largest-sized New York City groups, in which higher rates on business and security loans brought average loan earnings to 3.4 per cent (compared with 5.4 per cent for all banks in the D istrict). This combina tion increased actual loan income in this District to a peak level. As a proportion o f total earnings, loan income averaged 55.0 per cent, the highest ratio since 1929. The growth in loans and other “ risk assets” also was reflected in a further reduction in the ratio of capital accounts to total assets, less U. S. Government securities and cash (item 34). The rate o f decline in this ratio, however, was the smallest for any year since the end o f "World W ar II. The dollar amount o f interest received on U. S. Government securities also was larger in 1952 despite a falling-off in average holdings. The rise in income, which arose from the higher yields received on re placements o f maturing obligations, generally did not keep pace with the growth in total earnings and the proportion of earnings attributable to interest on Government securities (item 8 ) receded slightly in most groups o f banks. Income received on other securities, largely tax-exempt municipal obligations, accounted for a slightly larger proportion o f total earn ings because of continued net acquisitions carrying considerably larger yields. Although Government securities continued, for the second successive year, to sell in a free market at unsupported prices, net losses and charge-offs on securities (item 25) were confined in almost all groups o f banks to a maximum of Yio o f 1 per cent o f holdings (about the same as in 1951). Salary and wage payments continued to increase because o f higher wage rates and larger staffs, although relative to total earnings (item 15) they de clined moderately. Interest payments on time and savings deposits increased sharply both in absolute and relative terms as the commercial banks began to pay higher rates to their depositors. These rate in creases have apparently had some effect in discouraging withdrawals from commercial banks in this area, and time deposits continued to rise moderately in 1952. Relative to total deposits (item 36), however, they have generally declined. Income taxes also consumed a larger part o f total earnings because o f the larger payments required by the increased amounts of taxable income. Dividend payments rose in a large number of banks but relative to capital funds the average fo r the District remained unchanged at 2.5 per cent. A sizable part o f the year’s net profits, about two thirds on average, was again added to capital funds. A l l a n Sproul, President. 1 9 5 2 Average Operating Ratios o f Member Banks in the Second District, Grouped A ccordin g to Size o f Deposits and P roportion o f Loans to Total Assets All ratios are expressed in percentages and are arithmetical averages of the ratios of individual banks in each group, rather than ratios based on aggregate dollar figures Balance sheet figures used as a basis for the 1952 ratios are averages of amounts reported for Decem ber 30, 1951. June 30, 1952, and September 5, 1952. 1951 SUMMARY RATIOS 1951 715 1952 131 1952 732 Number of B a n k s.. Group average Group average Loans to total assets, per cent— 19.‘>2 Under 20 20-29.9 30-39.9 A B C 118 19 28 MANHATTAN, 40 and up D YO U ll BANK 1951 1952 32 39 224 Loans to total assets, per cent— 1952 30-39.9 40 and up C D Under 20 20- 29.9 B A 216 63 32 73 NEW YORK 48 YOUR BANK Group average Y O U R N OTES BANKS IN M AN H ATTAN , N EW Y O R K C IT Y CITY GROU P III— Deposits of $5,000,000 to 820,000.000 Line Number N ote: OUTSIDE GROUP II— Deposits of 82,000,000 to 85,000,000 GROUP I— Deposits under 82,000,000 Group average Loans to total assets, per cent— 1952 Under 20 20-29.9 30-39.9 B A C 1951 1952 262 260 36 80 40and up D YOUR BAN K 87 Loans to total assets, per cent— 1952 Under 20 20-29.9 30-39.9 40 and up B A C D 1952 52 92 1951 93 6 30 26 GROUP VI Deposits $100 million to $1 billion GROU P V Deposits under 8100 million GROU P IV— Deposits over S20,000,000 YOUR BANK GROU P VII Deposits over $1 billion 1951 1952 1951 1952 1951 9 9 10 10 9 YOUR BANK 1952 Line Number BANKS ALL BANKS Second District 9 31 P e r c e n t a g e o f Total C apital A ccou n ts 1. Net current earnings before income taxes........... 11.6 12.4 9.4 10.0 7.1 8.8 10.5 11.8 10.8 11.7 9.7 11.4 12.3 12.4 1 12.7 13.4 10.8 12.5 13.3 16.8 14.0 14.6 11.8 13.4 13.7 17.1 10.6 8.6 12.0 12.8 12.1 13.9 1 2. Profits before income taxes.................................... 9.9 10.6 8.6 9.1 6.9 8.4 8.9 10.9 9.5 10.3 8.9 10.2 10.7 10.8 2 10.5 11.1 9.3 10.5 11.3 13.1 11.1 11.4 11.0 10.3 10.7 13.2 8.6 6.0 9.9 12.1 11.4 13.5 2 7 .3 6.6 6.9 5.6 6 .5 6.6 8 .0 7.0 7 .5 7.1 7.6 7.6 7 .5 3 7 .0 7 .5 6.9 7 .3 7 .6 7.8 7 .0 7.2 7.7 6 .7 6.9 7.7 5 .2 3.1 5 .8 6.6 6 .2 7 .3 3 2 .5 2 .5 2.1 2.0 2.0 1.8 2.1 2.1 2.3 2.3 1.9 2.3 2.4 2 .5 4 2.6 2 .5 2.2 2.5 2 .5 2.7 3.1 3.2 2.6 3 .3 3.3 3.3 2.1 2.1 3.6 3.6 3.9 3 .9 4 4. Cash dividends declared ......................................... P e r c e n t a g e o f T otal A sse ts1 2.95 3.08 3.07 3.18 2.49 2.80 3.22 3.77 2.94 3.07 2.41 2.83 3.19 3.62 5 2.94 3.05 2.41 2.77 3.14 3.73 2.98 3.11 2.48 2.75 3.04 3.63 3.12 3.11 2.41 2.54 2.12 2.31 5 6. Net current earnings before income taxes........... 0.93 0.98 0.96 1.02 0.74 0.90 1.02 1.24 0.93 1.00 0.75 0.96 1.05 1.13 6 0.91 0.96 0.76 0.88 0.95 1.22 0.93 0.96 0.82 0.83 0.92 1.14 0.78 0.62 1.08 1.16 0.95 1.08 6 7. Net profits ................................................................ 0.56 0.59 0.69 0.71 0.58 0.66 0.66 0.85 0.60 0.64 0.55 0.65 0.65 0.68 7 0.51 0.54 0.47 0.52 0.54 0.59 0.48 0.48 0.56 0.42 0.47 0.53 0.37 0.22 0.55 0.61 0.48 0.57 7 26.5 26.0 25.6 25.8 39.9 33.6 22.8 15.6 27.4 27.3 46.1 31.1 23.1 16.0 8 28.1 27.2 44.1 31.3 23.3 15.8 23.2 22.3 37.1 27.8 21.4 14.8 15.4 18.6 24.1 23.6 19.6 18.9 8 7 .2 11.2 8.6 6.1 4.3 9 6.6 6.7 11.9 8.4 5.4 3.1 6.2 6 .7 14.6 7.9 6.6 4.0 4.6 5.5 6.1 6.4 4.9 4 .8 9 57.1 SOURCES A N D DISPOSITION OF EARNINGS P e r c e n t a g e o f T otal Earnings 8. Interest on U. S. Government securities............... 9. Interest and dividends on other securities............. 6 .8 6 .7 7.2 6.9 15.9 7.4 5.3 3.5 6.9 58.9 35.7 49.5 63.3 73.4 54.4 10. Earnings on loans2 ................................................. 53.8 55.0 58.1 55.0 30.3 49.3 60.9 70.0 10 51.1 52.8 30.1 46.2 58.2 69.1 54.4 55.8 33.3 46.7 57.0 67.9 55.5 44.7 46.9 54.8 57.9 10 11. Service charges on deposit accounts....................... 7.2 6 .9 5.9 5.4 5.1 6.3 5.3 5.0 6.9 6.6 7.7 6.8 6 .2 6.4 11 8.3 8 .0 8.2 8.4 8.2 6.7 7.2 7.1 6.9 8.3 6.9 6.4 10.2 9.4 3.8 3.8 2.6 2.4 11 12. Other current earnings........................................... 5.8 5.3 3.2 3.0 3.4 3.2 3.3 2.5 4.4 3.9 4.7 4.2 3.7 3.3 12 5.9 5.3 5.7 5.7 4.9 5.3 9 .0 8.1 8.1 9 .3 8.1 6.9 12.7 11.0 21.3 19.3 18.1 16.0 12 13. Total earnings ...................................................... 14. Trust department earnings3 (part of item 12)----- 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 13 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 13 3.1 2.9 — 0 .9 - - 1.1 - 1.4 1.1 0.9 1.0 1 .3 1.0 14 2 .2 2.1 2.6 2.3 1.9 1.6 4 .0 3.6 3.8 4.1 3.6 3.0 6.9 7 .0 14.3 13.4 9.2 8 .5 14 IS. Salaries and wages................................................... 31.5 31.0 32.2 31.8 35.0 33.5 32.1 28.8 31.2 30.3 32.1 30.6 29.3 30.2 15 30.8 30.2 29.0 30.4 31.5 28.6 32.6 32.7 30.8 34.1 33.1 31.2 40.1 40.7 33.2 32.9 32.4 30.9 15 16. Interest on time deposits......................................... 17. Other current expenses........................................... 13.1 14.1 13.1 14.2 14.3 13.9 12.2 16.1 14.3 15.1 15.2 14.0 16.1 14.9 16 13.9 15.4 17.5 15.6 14.4 15.4 11.2 11.9 13.6 10.4 12.1 12.9 3.2 5.8 1.0 1.2 1.9 2.4 16 23.8 22.9 23.5 22.1 21.1 21.0 23.8 22.0 23.1 22.1 21.6 21.5 21.9 23.6 17 24.0 23.1 21.9 22.2 24.1 23.1 25.2 24.6 22.2 25.2 24.6 24.5 31.1 32.6 20.5 19.9 20.5 19.8 17 68.4 68.0 68.8 68.1 70.4 68.4 68.1 66.9 68.6 6 7.5 68.9 66.1 67.3 68.7 18 68.7 68.7 68.4 68.2 70.0 67.1 69.0 69.2 66.6 69.7 69.8 68.6 74.4 79.1 54.7 54.0 54.8 53.1 18 31.6 32.0 31.2 31.9 29.6 31.6 31.9 33.1 31.4 32.5 31.1 33.9 31.3 19 30.8 33.4 30.3 30.2 31.4 25.6 20.9 45.3 46.0 45.2 46.9 19 4 .1 20 1.6 20 18. Total expenses ..................................................... 19. Net current earnings before income taxes............. 20. Net recoveries and profits4 (or losses - ) ............. - 21. Taxes on net income................................................. 22. 4.2 - 4.3 - 2.2 - 2.3 - 1.0 - 1.3 - 4.1 - 2.1 - 3.6 - 3.7 - 2.5 - 3.5 32.7 - 4.1 - 31.3 - 5.0 31.3 - 5 .0 31.6 - 4.8 31.8 - 5 .0 30.0 - 4.4 32.9 - 6.4 31.0 - 5 .9 - 6 .4 - 1.1 - 6.7 - 6.4 - 7.1 - 5.8 - 6 .3 - 5.8 - 2 .0 - 2 .8 - 8 .0 8.4 6.5 7.2 5.5 7.0 7.1 8.1 7.1 7 .6 5.6 7.5 8 .2 8 .2 21 8 .5 8 .5 7 .0 7.9 8.4 10.5 8 .8 8.9 9 .5 8 .4 8.4 9.7 8.0 7.1 15.7 19.9 19.6 20.7 21 19.4 Net profits ............................................................ 19.3 22.5 22.4 23.1 23.3 20.7 22.9 20.7 21.2 23.0 22.9 20.4 19.0 22 17.8 17.8 19.8 18.9 17.2 16.0 16.3 15.5 22.8 15.2 15.4 14.6 11.8 7.5 23.8 24.1 2 2.8 24.6 22 RATES OF RETURN O N SECURITIES AND LOANS R etu rn o n S e cu ritie s 23. Interest on U. S. Government securities............... 24. Interest and dividends on other securities............. 25. Net recoveries and profits (or losses-) on total securities5 ................................................... 1.9 — 2.0 2.0 2.1 2.0 2.1 2.1 2.2 1.9 2 .0 2 .0 2.1 2 .0 2.1 23 1.8 2.0 2.0 2 .0 2.0 1.9 1.8 1.9 1.9 1.8 1.9 1.9 1.6 1.9 1.7 1.7 1.5 1.7 23 2.3 2 .4 2.6 2.6 2.9 2 .8 2.4 2.6 2.3 2.4 3.0 2.2 2 .2 2.4 24 2.2 2.2 2.3 2.2 2.2 2.3 2.2 2.2 2 .2 1.9 2.3 2.4 3.1 3.1 2.3 2 .3 2.2 2 .2 24 0.1 t t t 0.1 t t 0.1 0.1 0.1 25 0 .2 t 0.1 t 25 0.1 - - - 0.1 - - 0.1 - 0.1 - - 0.1 - 0.1 - 0.1 - 0 .1 - 0.1 - 0 .2 - 0.1 - 0.1 - 0.1 - 0.1 - 0.1 - 0.2 - 0.1 - 0.1 - FOOTNOTES R etu rn o n L oans 26. Earnings on loans2 ................................................. 27. Net recoveries (or losses-) on loans6 ............... 5.4 5.2 - 0.1 - 0.1 5.6 - 0.1 5.8 - 0.1 5.9 - 5.7 0.1 t 5.8 - 0 .2 5.9 - 0.1 5.4 - 0.1 5.5 - 0.1 5.5 - 0.1 5 .5 t - 5 .5 5.6 26 0.1 t 27 5.1 - 5.3 5.1 5.1 t 0.1 t t 5.6 5.3 0.1 - 4 .9 5.1 5.1 4.9 t t 0.1 t t 5.4 5.0 0.1 - 0.1 4 .8 - 0 .2 4 .8 - 3.0 3.4 3.0 3.4 26 0.1 t t 0.1 t 27 DISTRIBUTION OF ASSETS 2 Interest and discount on loans plus service charges and other fees on loans. P e r c e n t a g e o f T otal A ssets 28. U. S. Government securities.................................... 39.8 38.1 37.8 36.8 48.6 44.9 34.5 27.1 40.4 38.9 55.2 42.7 35.9 28.0 28 42.1 39.8 52.8 44.0 37.0 29.7 37.7 35.5 48.0 41.6 34.4 28.1 28.7 29.6 32.8 32.7 27.8 26.0 28 29. Other securities ....................................................... 9.1 9.4 8 .5 8.3 14.6 8.8 7 .5 5.3 9.4 9.9 11.1 12.0 9 .3 7 .2 29 9 .5 9 .8 13.7 11.8 8.7 5.9 9 .4 10.0 17.0 11.8 9.9 7.0 6 .5 7 .0 6.0 6 .2 5.3 5.7 29 ........................................................................ 31.7 32.3 33.0 33.2 15.4 24.5 35.0 46.7 31.0 31.4 13.6 25.3 35.2 45.3 30 30.4 31.3 14.5 25.1 34.7 46.4 33.4 34.5 16.2 26.3 35.0 45.6 37.4 36.1 34.6 34.0 38.6 39.3 30 31. Cash assets .............................................................. 32. Real estate assets....................................................... 18.3 19.0 19.8 20.8 20.7 21.0 21.8 20.0 18.1 18.7 19.2 19.0 18.6 18.1 31 16.8 17.8 18.1 18.0 18.2 16.8 18.0 18.4 17.7 18.6 19.1 17.7 26.0 25.7 25.3 25.7 26.7 27.2 31 1.0 1.0 0 .8 0 .8 0 .6 0 .7 1.0 0 .8 1.0 1.0 0 .8 0 .9 0 .9 1.3 32 1.0 1.0 0.7 0 .9 1.1 1.1 1.2 1.2 0.9 1.3 1.1 1.2 0 .8 1.0 0 .5 0 .5 0.6 0 .5 32 30. Loans CAPITAL AND DEPOSIT RATIOS — in p e r c e n ta g e 33. Capital accounts to total assets.............................. 34. Capital accounts to total assets, less United States Government securities and cash assets................... 8 .5 8.3 10.8 10.7 10.8 11.0 10.2 10.8 8.9 8 .8 8 .0 8 .8 8 .8 9 .3 33 7 .5 7 .5 7 .5 7 .4 7.4 7.6 6 .8 6 .7 7.1 6.3 6 .9 6 .9 7.7 7 .5 9.8 9 .6 8.1 8 .0 33 34 21.9 20.9 27.4 27.0 37.9 32.8 23.3 20.5 23.6 22.5 35.1 23.4 19.6 17.4 34 19.7 18.9 28.6 20.0 16.7 14.4 16.0 15.1 21.7 16.2 14.9 12.8 19.5 19.5 24.0 23.2 17.9 17.0 35. Capital accounts to total deposits.......................... 9.4 9 .3 12.3 12.2 12.3 12.7 11.5 12.2 9.9 9.7 8 .8 9.7 9 .8 10.4 35 8.2 S .2 8 .2 8.1 8.1 8.4 7 .4 7 .3 7.7 6.8 7.5 7 .6 8.6 8.3 11.4 11.3 9 .2 9 .0 35 36. Time to total deposits............................................... 44.6 43.8 44.4 43.7 42.2 41.4 40.1 49.0 48.0 46.6 44.1 47.1 46.5 48.0 36 47.8 47.3 49.4 46.2 44.9 51.7 38.0 37.2 42.6 32.4 35.9 41.9 11.6 13.5 10.6 10.1 7 .0 7.4 36 37. Interest on time deposits......................................... 0.9 1.1 1.0 1.1 0.9 1.1 1.0 1.3 0 .9 1.1 0 .9 0 .9 1.2 1.2 37 0 .9 1.1 0.9 1.0 l.l 1.2 0 .9 1.1 0 .9 1.0 1.1 1.3 1.0 1.4 0.4 0.6 0 .6 0 .8 37 38. Total deposits ........................................................... 1,337 1,341 1,240 1,390 1,339 1,350 3,316 3,319 3,301 3,419 3,284 3,251 38 9,755 9.695 9,721 9,805 9,699 9,501 65,603 67,052 51,133 64,859 80,247 61,190 35,240 37,577 423,074 440,534 39. Capital accounts ....................................................... 161 161 150 176 155 161 324 317 282 325 316 334 39 788 778 764 784 772 791 4,709 4,806 3,694 4,380 5,660 4,717 2,916 3,041 47,580 49,096 AVERAGE BANK IN GROUP — in th o u s a n d s o f d o lla rs 1 Total expenses as a percentage of total assets may be computed by sub tracting item 6 from item 5. 2,286,873 2,380,338 38 211,168 39 207,615 3 Banks not reporting this item or reporting negligible amounts were ex cluded in computing this average, and averages are not shown where there were fewer than 3 banks in a group. 4 Transfers from and to valuation reserves, recoveries and profits on securities, loans, and all other items, less all losses and charge-offs other than recurring depreciation on banking house and fixtures which is in item 17. 5 Transfers from and to valuation reserves included. 6 Transfers from and to valuation reserves excluded. t Less than 0.05 per cent R EC EN T BANKING TRENDS IN SECOND FEDERAL RESERVE DISTRICT N E W YORK C I T Y M E M B E R B A N K S Includes deposits of states and p o lit ic a l subdivisions. A L L O T H E R M E M BER B A N K S Source:"Call” reports. Prepared by F i n a n c i a l S t a t i s t i c s D iv is io n R esea rch D ep a rtm en t
@FedFRASER