Table 16. CURRENT EARNINGS AND EXPENSES DURING 1934 OF INSURED COMMERCIAL BANKS1

114,124 banks; figures for 11 State banks in the District of Columbia, 2 insured national banks in Alaska and other insured banks are not included. Figures for national banks for second half of 1934 are estimated.

* Estimated average amount during year of total assets less customers' liability on account of accept ances, acceptances of other banks and bills sold with endorsement, and securities borrowed.

tures and dividends on preferred and common stock of 185 million dollars. Assets written off during the year, however, amounted to 1,080 million dollars or approximately twice the amount available from net earnings and recoveries after payment of dividends. Such a large volume of write-offs, reflecting chiefly write-offs of losses accumulated during prior years, was made possible by the introduction of new capital funds through purchases of capital obligations by the Reconstruction Finance Corporation and by private interests. Figures are summarized in Table 17.

Table 17. NET EARNINGS AND CHANGES IN TOTAL CAPITAL ACCOUNT DURING 1934 OF INSURED_COMMERCIAL BANKS1

114,124 banks; figures for 11 State banks in the District of Columbia, 2 insured national banks in Alaska and 9 other insured banks are not included. Figures for national banks for second half of 1934 are estimated.

1 Estimated average amount during year of total assets less customers' liability on account of acceptances, acceptances of other banks and bills sold with endorsement, and securities borrowed. Exclusive of changes resulting from licensing and closing of banks.

Rates of earnings and of interest paid. The relatively low rate of gross earnings of banks during 1934 reflected in part the fact that banks were holding a large part of their funds in non-earning assets or in assets that yield a low return and in part the fact that money rates were lower than at any other time in recent years.

In comparison with earlier years, banks had a smaller proportion of their funds loaned out and a larger proportion invested in securities, particularly those with low yields. They also held larger proportions of their total available funds in the form of cash, or balances with other banks. Inasmuch as the rates of interest received by banks are higher on loans than on other forms of investment, the reduction in the proportion of funds loaned out reduced the rate of earnings on the total amount of the banks' available funds. These changes are illustrated in Table 18 which compares for banks members of the Federal Reserve System the distribution of assets and deposits and the rates of interest received on assets and paid on deposits in 19271928 and 1934.

Table 18. COMPARATIVE RATES OF INTEREST AND DISTRIBUTION OF ASSETS, 1927-28 AND 1934, BANKS MEMBERS OF THE FEDERAL RESERVE SYSTEM (In percent)

Rate of .01 per cent due chiefly to payment of interest on public funds.

The expenses of banks were likewise reduced compared with other years, due in part to reductions in the amount of salaries paid but chiefly to a decline in the rates of interest paid customers on their deposits. About one-half of the reduction in interest rates occurred prior to the Banking Act of 1933. The statutory elimination of interest on demand deposits and the reduction by regulation of interest on time deposits has been largely responsible for the remaining decrease in rates of interest paid on depos

its. Notwithstanding the reduction in expenses, net earnings from current operations were lower than in the earlier years.

Earnings and expenses of insured commercial banks not members of the Federal Reserve System. The Federal Deposit Insurance Corporation issued a call for reports of earnings, expenses and dividends for the year 1934 of insured banks not members of the Federal Reserve System. Reports submitted by 7,379 commercial banks operating throughout the year have been tabulated by size of bank. The amounts of net earnings and expenses, and of losses written off, for each $100 of available funds for banks grouped according to amounts of deposits are shown in the charts on the next page.1

Figures of net earnings from current operations for banks in various size groups are shown in Table 19. The banks with deposits of less than $100,000 had average net earnings from current operations of approximately $700. The banks with deposits ranging from $100,000 to $250,000 had average net earnings from current operations of about $1,800. These two groups of banks comprise approximately one-half of all insured banks not members of the Federal Reserve System.

Table 19. NET EARNINGS FROM CURRENT OPERATIONS DURING 1934 OF INSURED COMMERCIAL BANKS NOT MEMBERS OF THE FEDERAL RESERVE SYSTEM BANKS GROUPED BY AMOUNT OF DEPOSITS

1 Because of the small number of banks figures for this group should not be considered typical of all banks with deposits in excess of $50,000,000.

NOTE: More detailed figures are given on pages 238-42.

Rates of interest received and paid by insured commercial banks not members of the Federal Reserve System. The average rate of interest received on outstanding loans by insured commercial banks not members of the Federal Reserve System was slightly less than six percent per year. The average rate of interest and dividends received on securities held was about 3.8 percent per

1

1 Figures upon which these charts are based are given in Table 131, page 242.

EARNINGS. EXPENSES AND LOSSES. 1934
Insured Commercial Banks not Federal Reserve Members
Banks Grouped by Amount of Deposits

SIZE GROUPS IN THOUSANDS OF DOLLARS

year. The banks paid interest on time deposits at an average rate of nearly three percent per year.

Average rates of interest received on loans and securities and paid on time deposits are given in Table 20 for banks in the various size groups. Small banks received higher rates of interest on their loans than did large banks, but they obtained lower average yields on their investments. Small banks paid higher rates of interest on time deposits than did large banks.

Table 20. RATES OF EARNINGS DURING 1934 ON TOTAL AVAILABLE FUNDS, ON LOANS AND ON SECURITIES, AND OF INTEREST PAID ON TIME DEPOSITS, INSURED COMMERCIAL BANKS NOT MEMBERS OF THE FEDERAL RESERVE SYSTEM

1 Total earnings from current operations.

Because of the small number of banks, figures for this group should not be considered typical of all banks with deposits in excess of $50,000,000.

NOTE: More detailed figures are given on pages 241-42.

EXTENT OF FEDERAL INSURANCE OF DEPOSITS IN

COMMERCIAL BANKS

Membership in the Temporary Federal Deposit Insurance Fund. On January 1, 1934, when the Temporary Federal Deposit Insurance Fund went into effect, 14,412 commercial banks with total deposits of approximately 32 billion dollars were operating under licenses issued by the Secretary of the Treasury or by State banking authorities in conformity with the provisions of the executive order of the President of the United States, dated March 10, 1933. Of these banks, 12,551 were admitted to the Fund on January 1, 1934. During the year an additional 1,960 commercial banks with deposits of about 1,100 million dollars were admitted to the Fund. At the close of the year there were 14,146 licensed commercial banks members of the Fund, and 1,068 State commercial banks, excluding private banks considered