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OWNERSHIP OF AT ALL INSURED SIXTH FEDERAL https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DEMAND DEPOSITS COMMERCIAL BANKS RESERVE DISTRICT AND UNITED STATES ON JANUARY 27, I960 Federal Reserve Bank of Atlanta Research Department May 13, I960 I960 SURVEY OF THE OWNERSHIP OF DEMAND DEPOSITS Individuals, partnerships, and corporations held about $8.2 billion demand deposits at all Sixth District banks in 5«6 million separate Recounts on January 27, i960, according to a survey recently completed by the Federal Reserve Bank of Atlanta. The results of the annual survey of the ownership of demand deposits showed that on January 27, i960 there were about one-half million more accounts than a year earlier, and that the dollar total of these accounts was about $1 billion greater. The average size of the account, however, declined from $1550 to $lUOO. The recent estimates are based upon reports received by the Federal Reserve Bank of Atlanta from a representative sample of member and nonmember banks in Alabama, Florida, Georgia, the southern halves of Louisiana and Mississippi, and the eastern two-thirds of Tennessee, the area included in the Sixth Federal Reserve District. The survey conducted by the Atlanta Bank was part of a nationwide survey carried out every year by the Federal Reserve System. Information secured in the survey is used extensively by the Federal Reserve System, Govern ment agencies, and private organizations in analyzing the condition of the nation's financial structure. Summary tables showing the principle findings for the Sixth District and a discussion of the survey results for the United States are attached. Table I shows the percentage distribution of the accounts by type of owner. The table shows that so far as their number of accounts is concerned, the banks deal overwhelmingly with individuals. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Over 80 percent of all accounts are personal accounts although their dollar total was only about one-third of the dollar amount for all types of accounts. On the other hand, the accounts of incorporated businesses, making up only 3 percent of the number, constituted over 32 percent of the dollar total. The importance of the accounts held by farmers declined between 1959 and i960 as it has for the preceding two years. The deposit accounts of unincorporated businesses, however, continued to become more important. Table II lists the proportion of accounts and demand deposits held by various groups and individuals at small, medium-sized and large banks. Over 5° percent of the demand deposits of banks with total deposits of less than two million dollars were held by individuals. This proportion declined sharply at larger banks, and amounted to less than 30 percent at banks with deposits over 50 million dollars. Demand deposits of corporate businesses accounted for less than 8 percent of the total at the small banks, while the proportion increased to over 36 percent at the large banks. The percentage distribution of demand deposit accounts by size of account is listed on Table III. Almost UO percent of all accounts had balances of less than $100 on January 27, i960. The total dollar amount of these accounts amounted to less than 1 percent of demand deposits, however. At the other end of the scale, accounts with balances in excess of $100,000 accounted for over one-fourth of demand deposits, but only two-tenths of one percent of the number of accounts. Corporate financial holders accounted for the greatest percentage of large accounts, while personal accounts of individuals dominated the small accounts. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TABLE I SIXTH FEDERAL RESERVE DISTRICT PERCENTAGE DISTRIBUTION OF DEMAND DEPOSIT ACCOUNTS OF INDIVIDUALS, PARTNERSHIPS, AND CORPORATIONS, 1957 - I960 (At all Insured Commercial Banks) Number of Accounts, Percent of Total 1957 1258 1222 1260 Corporate Financial 1.3 .8 .5 .5 Non-Corporate Financial 1.0 1.0 .4 .4 Corporate Non-Financial 2.2 2.5 2.9 3.0 Non-Corporate Non-Financial 5.1 5.7 6.4 6.3 Non-Profit Organizations 4.9 4.9 5.3 5.0 Farmers 6.9 5.4 4.7 4.2 78.5 79.3 79.8 80.4 « .1 .1 .1 .1 .3 • .2 Domestic Business Individuals Trust Funds of Banks Foreigners Dollar Amount of Accounts, Percent of 1251 1258 1252 1260 14.5 10.3 8.1 7.8 Non-Corporate Financial 2.0 2.5 1.5 1.7 Corporate Non-Financial 28.8 31.3 33.1 32.1 Non-Corporate Non-Financial 11.4 13.8 14.0 15.1 Non-Profit Organizations 3.7 3.8 6.1 4.0 Farmers 4.6 3.7 3.5 3.3 33.2 32.2 31.8 33.8 1.5 1.5 1.6 1.9 .3 .9 .2 .2 Domestic Business Corporate Financial Individuals Trust Funds of Banks Foreigners * Less than 5/100 of 1% https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TABLE II SIXTH FEDERAL RESERVE DISTRICT OWNERSHIP OF DEMAND DEPOSITS RELATED TO SIZE OF BANK, JANUARY 27. I960 (Percent Distribution Within Size Group) TYPE OF HOLDER SIZE OF BANK (Total Deposits in Millions of $) Under 2 2-10 10-50 Over 50 Number of Accounts Domestic Business Corporate Financial •5 .4 .3 .5 Non-Corporate Financial .8 .3 .3 .3 Corporate Non-Flnanclal 1.4 2.2 3.3 3.4 Non-Corporate Non-Flnanclal 4.3 6.4 6.4 6.6 Non-Profit Organizations 7.5 5.5 3.5 4.9 Farm Operators 9.3 6.0 1.0 3.7 76.1 79.1 84.7 80.4 .1 .1 * .1 • • .5 .1 Individuals - Personal Trust Funds of Banks Foreigners Amount of Deposits Domestic Business Corporate Financial 4.8 4.9 6.5 8.7 Non-Corporate Financial 2.5 1.4 3.6 1.4 Corporate Non-Flnanclal 7*9 19.5 28.1 36.4 14.3 16.1 14.1 15.2 4.9 5.0 3.6 3.9 Farm Operators 12.4 8.1 .6 2.4 Individuals - Personal 53.0 42.8 41.4 29.8 Trust Funds of Banks .1 2.1 1.6 2.0 Foreigners .1 .1 .5 .2 Non-Corporate Non-Flnanclal Non-Profit Organizations ♦Less Than 5/100 of 1% https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TABLE III SIXTH FEDERAL RESERVE DISTRICT OWNERSHIP OF DEMAND DEPOSIT ACCOUNTS RELATED TO SIZE OF ACCOUNT, JANUARY 27, i960 (Percent Distribution Within Size Group) Size of Account, Dollars TYPE OF HOLDER Unclassified! Number Amount Number 1,000-9,999 100-999 0-99 Amount Number Amount Number 10,000-24,999 25,000-99,999 Amount Number Amount Number Amount Over 100,000 Number Amount Domestic Business Corporate Financial 0 0 11.0 * 19.4 .4 36.5 5.7 14.9 8.5 12.6 25.2 5.6 60.2 Non-Corporate Financial 0 0 21.4 .1 33.6 2.1 37.0 17.0 5.2 12.3 1.5 11.5 1.3 57.0 Corporate Non-Financial 0 0 12.9 « 25.0 .7 39.2 9.9 11.8 11.6 8.4 26.1 2.7 51.7 Non-Corporate Non-Financial 0 0 23.5 .2 36.6 4.5 33.2 31.7 4.5 19.7 1.9 23.9 .3 20.0 Non-Profit Organizations 0 0 44.6 1.3 40.4 12.2 13.5 32.8 .9 12.4 .5 20.3 .1 21.0 Farmers 0 0 35.1 .8 41.4 15.1 22.1 51.8 1.1 14.9 .3 14.9 # 2.5 3.7 Individuals Trust Funds of Banks Foreigners Total ♦Less Than 5/100 of 1% https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 11.9 3.6 40.2 1.8 36.1 21.7 11.2 47.6 .5 12.8 .1 8.8 « 9.3 93.8 18.8 « 40.6 .3 28.1 1.7 1.6 .4 0 0 1.6 3.8 .2 1.0 39.9 .7 31.8 6.7 24.0 43.5 3.6 30.2 .5 17.9 0 0 9.5 3.0 38.1 .7 36.1 9.3 14.2 27.9 1.3 13.0 .6 18.5 .2 27.6 Ownership of Demand Deposits Demand deposits of individuals, partner ships, and corporations at insured commer cial banks rose an estimated $2.2 billion, or 2 per cent, in the year ending January 27, 1960. According to the Federal Reserve System’s most recent Survey of Demand De posit Ownership, demand deposits of nonfinancial businesses increased by the same dollar amount as the total, but the relative increase was 4 per cent. Personal demand accounts of individuals increased $600 mil lion, or 2 per cent, while demand balances of farmers declined $500 million, or 11 per cent. As in the past several years the number of demand deposit accounts held by individ uals, partnerships, and corporations rose fur ther. The 2.7 million increase in the current year was nearly one-fourth larger than in the two previous years combined. OWNERSHIP GROUPS Note.—This article was prepared by Edward P. Snyder of the Board’s Division of Research and Statis tics. For results of the January 1959 Survey see the Federal Reserve Bulletin for April 1959. Holdings of nonfinancial businesses account for about one-half of total demand deposits Table 1 Demand Deposit Accounts of Individuals, Partnerships, and Corporations January 27, 1960 [Estimates for insured commercial banks] Number Amount Increase, or decrease (—), from Jan. 28, 1959 Jan. 27. 1960 Type of holder Millions Percentage distribution Jan. 27, 1960 Increase, or decrease ( — ), from Jan. 28, 1959 Millions Per cent Billions of dollars Percentage distribution Billions of dollars Per cent 2.0 A1I holders...................................... 57.1 100.0 2.7 5.0 109.5 100.0 2.2 Domestic business............................. 6.1 10.6 0.3 5.6 64.5 58.9 2.2 3.5 Corporate.................................... Noncorporate............................. 2.1 3.9 3.8 6.9 0.3 (') 15.0 1.0 49.5 15.0 45.2 13.7 2.0 0.1 4.3 0.9 Financial business............................... Corporate.................................... Noncorporate............................. 0.4 0.2 0.2 0.8 0.4 0.4 <•) (') G) 1.2 8.3 -5.9 9.6 7.7 1.9 8.7 7.0 1.7 -0.1 0.1 -0.1 —0.6 0.8 -6.0 Nonfinancial business............. Corporate.................................... Noncorporate............................. 5.6 1.9 3.7 9.9 3.4 6.5 0.3 0.3 0.1 5.9 15.9 1.4 54.9 41.8 13.1 50.1 38.2 11.9 2.2 2.0 0.3 4.2 4.9 2.0 Nonprofit organizations................... Farm operators.................................. Individuals—personal....................... All other............................................... Trust departments of banks........ Foreigners........................................ 2.9 3.0 44.9 0.1 (J) 0.1 5.1 5.3 78.7 0.2 0.1 0.1 0.1 -0.1 2.4 0) 3.6 -4.6 5.7 3.8 -1.7 7.3 5.2 4.4 32.3 3.2 2.2 1.0 4.8 4.0 29.5 2.9 2.0 0.9 0.2 -0.5 0.6 —0.3 -0.3 (*) 4.9 -10.9 2.0 — 8.2 -10.9 -2.0 G) 0) > Increase of less than 50,000 accounts. 2 Decrease of less than 50,000 accounts. 2 Less than 50,000 accounts. * Decrease of less than $50 million. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Note.—Corporate farming enterprises are classified as corporate nonfinancial business. Details may not add to totals because of rounding. 367 REPRINTED FROM FEDERAL RESERVE BULLETIN FOR APRIL 1960 368 FEDERAL RESERVE BULLETIN • APRIL 1960 of individuals, partnerships, and corpora tions. The 4 per cent increase in the balances of these businesses in the 12 months ending January 27, 1960, appears to have reflected a continued growth in need for cash. How ever, the increase in their balances was evi dently less than the increase in their use of cash. In January 1960 demand deposits at 337 centers outside New York City and six other leading centers were turning over 6 per cent faster than they were a year earlier, and industrial production was up 10 per cent. Nonfinancial businesses also expanded their holdings of liquid assets during the year, as interest rates moved upward. A large part of these assets were invested in short-term U. S. Government securities.1 Personal deposits of individuals, which ac count for about 30 per cent of the total, in creased by $600 million in the year ending January 27, 1960, two-fifths as much as the exceptionally large growth of the preced ing 12 months. The past year’s increase ac companied a continued growth in disposable personal income, but its pace was slower than that in income. The slower growth in deposits probably reflects continued prefer ence by individuals, as well as other holder groups, for interest-bearing types of liquid assets when interest rates are relatively high. Balances of farm operators declined nearly 11 per cent this year to the lowest levels reported since the Survey was under taken on the new basis in January 1957. The decline more than offset last year’s in crease and appears to reflect the sharp reduc tion in net farm income during the year. Increased production expenses and a decline in prices received by farmers more than offset the gains in income from larger output. The relatively large decline in deposits of trust departments of banks this year offset 1 See also article “Money and Bank Credit in 1959“ in the Bulletin for February 1960, pp. 119-25. Table 2 Demand Deposits of Individuals, Partnerships, and By Federal Reserve District and by Corporations, January 27, 1960 Type of Holdfr Amount (in billions of dollars) Number (in millions) Type of holder Federal Reserve district All holders Finan cial busi ness Nonfinan- Farm busi- ators Type of holder Individ uals— per sonal All other1 All holders Finan cial busi- Nonfinancial busi- Farm Individ- ators personal All other* All districts...................... 57.1 0.4 5.6 3.0 44.9 3.1 109.5 9.6 54.9 4.4 32.3 8.4 Boston................................... New York............................ Philadelphia......................... 2.7 5.8 2.9 0. 1 0.1 P) 2.2 4.6 2.3 0.1 0.3 0.2 6.1 21.2 6.5 0.6 1.9 0.7 3.5 12.6 3.2 0.1 0.1 (9 1.5 4.3 1.9 0.5 2.3 0.6 Cleveland.............................. Richmond............................. Atlanta.................................. 4.3 5.2 5.6 P) P) P) P) P) 0.4 0.8 0.3 0.4 0.4 0.5 0. 1 0.3 0.2 3.5 4.1 4.5 0.3 0.3 0.3 8.7 6.7 8.1 0.8 0.6 0.8 4.5 2.9 3.8 0.1 0.3 0.3 2.6 2.1 2.7 0.7 0.8 0.5 Chicago................................. St. Louis................................ Minneapolis.......................... 7.5 4.2 2.5 0.1 0.8 0.3 0.2 0.6 0.5 0.4 5.7 3.2 1.7 0.4 0.2 0.2 16.9 5.0 2.9 1.4 0.3 0.2 9.0 1.9 1.1 0.8 0.5 0.5 4.5 2.0 1.0 1.2 0.3 0.2 Kansas City.......................... Dallas.................................... San Francisco...................... 4.4 4.3 7.7 0.4 0.4 0.8 0.4 0.3 0.2 3.3 3.4 6.4 0.3 0.2 0.3 7.2 7.8 12.5 0.6 0.7 1.2 3.2 3.2 6.0 0.7 0.6 0.5 2.4 3.0 4.2 0.3 0.3 0.7 0. 1 p) P) P) P) 0. 1 > Nonprofit organizations, trust departments of banks, and for eigners. 2 Less than 5(1,000 accounts. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2 Less than $50 million. Note.—Details may not add to totals because of rounding. 369 OWNERSHIP OF DEMAND DEPOSITS a part of the increase reported a year ear lier. As indicated at that time, there are few of these accounts and changes in their bal ances do not affect the total importantly. Deposit balances held by trust departments are influenced by interest rates, the condition of the stock market and capital markets gen erally, and other financial factors. De posits of foreign holders, which may also be influenced by these factors, changed little. Deposits of financial businesses, too, were almost unchanged in the year ending January 27, I960. A small reduction for noncorpo rate firms more than offset a slight increase for corporations. The degree of change in their holdings during this period reflects their sensitivity to trends in interest rates. After the reduction in their demand deposits last year, a development attributed in part to their purchases of long-term Treasury bonds offered in late January 1959, financial busi nesses appear to have kept new funds in vested as interest rates moved upward. The rise in balances of nonprofit organiza tions in the current year was about in line with the usual expectation for this holder group. The rise this year more than offset a slight decline in these balances in the year ending January 28, 1959. NUMBER OF ACCOUNTS Continued growth in the number of per sonal accounts of individuals and an increase in the number of accounts of corporate busi ness firms accounted for the over-all in crease in the number of accounts of individ uals, partnerships, and corporations in the year ending January 27, 1960. A small de cline in the number of accounts of farm operators, possibly associated with a con tinued reduction in the number of independ ent farm operators, was offset by a small in https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis crease in the number of accounts of nonprofit organizations. The number of accounts of other ownership groups changed very little during the year. Except in the case of corporate businesses, the relative change in number of accounts held by each of the more important owner ship groups was roughly proportional to the change in total deposits held by the group. Multiple-account holding by corporate busi ness firms is common and the decision to open an account may be related to many factors including the desire to establish a credit line at a particular bank and internal cash-management practices. Thus, shortTable 3 Ownership to Size of of Demand Deposits Related Bank, January 27, I960 [Percentage distribution within size group] Size of bank (total deposits, in millions of dollars) Type of holder Un der 2 210 1050 50- 250- 1,000 and 250 1,000 over Number of accounts All holders.............................. 100.0 100.0 100.0 100.0 100.0 100.0 Domestic business..................... 8.2 9.3 10.7 12.6 13.9 Corporate............................ Noncorporate...................... 1.7 6.4 2.5 6.8 Financial.............................. Nonfinancial....................... 0.6 7.6 0. 7 0.8 0.9 1.2 0.9 8.6 10.0 11.8 12.7 11.8 Nonprofit organizations........... Farm operators.......................... Individuals—personal............... All other1.................................... 3.9 6.8 5.6 7.0 6.4 7.4 12.6 5.4 7.3 7.6 5.7 4.4 4.2 4.1 3.0 14.7 7.3 2.1 1.0 1.2 1.0 69.3 77.6 82.6 82.0 80.5 82.6 0.1 0.1 0.2 0.1 0.3 0.9 Amount of deposits All holders.................. 100.0 100.0 100.0 100.0 100.0 100.0 Domestic business......... 30.5 40.2 52.3 66.5 69.5 71.4 Corporate............... Noncorporate........ 13.6 22.5 34.4 54.1 58.1 62.2 16.9 17.6 17.9 12.4 11.4 9.3 Financial................. Nonfinancial........... 3.4 5.0 8.0 10.1 12.3 9.2 27.1 35.2 44.3 56.4 57.2 62.2 Nonprofit organizations Farm operators............. Individuals—personal.. All other1........................ 5.2 4.8 5.5 4.1 4.2 5.1 1.0 0.7 20.7 10.5 1.8 0.8 43.3 43.1 38.0 24.5 22.0 18.7 0.4 1.0 3.0 2.7 3.4 5.0 1 Trust departments of banks and foreigners. Note.—Details may not add to totals because of rounding. 370 term changes in the number of accounts held by these firms are probably not very sig nificant. OTHER CLASSIFICATIONS Data on the ownership of demand deposits by Federal Reserve districts are shown in Table 2. District comparisons should be made with care since the statistics not only reflect regional differences but also are af fected by sampling errors. Table 3 shows the distribution of deposits by ownership groups within bank-size classes. A similar table, based on the 1957 Survey, was published in the Bulletin for May 1957, page 514. Comparison of the data for the two Surveys indicates that no important changes have occurred in this over-all distribution. STATISTICAL NOTE Estimates of sampling errors for various Survey statistics are shown in Table 4. These estimates are based on the 1959 and 1960 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FEDERAL RESERVE BULLETIN • APRIL 1960 Survey results. Additional computations of sampling errors for the estimates of deposit holdings and of changes in deposit holdings of the various combinations of ownership groups, such as all nonfinancial business, will be made later this year in order to pro vide measures of reliability for all Survey statistics. Table 4 Estimated Sampling Errors for Survey of Demand Deposit Ownership Standard deviations (in millions of dollars) Type of holder Deposits outstanding Jan. 28, 1959 Change in deposits, Jan. 28, 1959 to Jan. 27, 1960 Financial business: Corporate................................ Noncorporate......................... Nonfinancial business: Corporate................................ Noncorporate......................... 450 175 400 200 2,000 350 1,125 375 Nonprofit organizations............... Farm operators................................ Individuals—personal.................... Trust departments of banks......... Foreign holders............................... 250 175 550 275 50 225 175 575 275 50 Note.—All estimates rounded to nearest $25 million.
