Variation in net profits by State and size of bank. The rate of net profit after taxes on total capital accounts varied considerably among different geographical areas and among banks of different sizes. Part of the variation simply reflected differences in the relative capital position of the banks. However, economic forces having to do with location and size of institution were also at work.

Of the twenty-five States in which the banks averaged a return of 10 percent or more on total capital accounts, nineteen were west of the Mississippi River and the other six were in the South. New Mexico with 14.6 percent had the highest rate. The lowest rates of net profit were in the New England and Middle Atlantic States. New Hampshire with 5.8 percent had the lowest rate. The rates for each State are shown in Chart L.

Chart L. RATE OF NET PROFIT AFTER TAXES ON TOTAL CAPITAL ACCOUNTS, INSURED COMMERCIAL BANKS, 1950

As in 1949, the rate of net profit on total capital accounts averaged the highest among banks in the $1 million to $2 million size group; banks in this group also had higher than average ratios of capital to assets. In general, the larger the bank, the smaller the average rate of net profit.

MUTUAL SAVINGS BANKS

Number, deposits, and assets of all mutual savings banks. Mutual savings banks, unlike most commercial banks, conduct a specialized type of business. Nearly all of their deposits are savings and

time deposits, and their loans and investments are largely in long-te obligations. They are organized on the cooperative principle; deposit supply the funds and are the beneficiaries of their operations.

There were 529 mutual savings banks in the United States at i end of 1950. Although mutual savings banks comprised only 4 perce of all banks in the United States at the end of 1950, and held only percent of total bank deposits, they held 36 percent of the nation savings and time deposits.

Mutual savings banks are heavily concentrated in the Northeaste States; all but 16 are located in the New England and Middle Atlant States. Within this area the savings banks do a sizeable portion of t total banking business. In New England mutual savings banks compri 40 percent of all banks, and in New York some of the oldest and large banks are organized as mutual savings institutions. In New Englan and New York State these banks held three-fourths of all savings deposit The number of mutual savings banks and their relative importance i the States where they are located are indicated in Table 29.

Table 29. NUMBER AND DEPOSITS OF ALL BANKS AND OF MUTUAL SAVINGS BANKS STATES HAVING MUTUAL SAVINGS BANKS, DECEMBER 30, 1950

Savings and time deposits of mutual savings banks reached a new high of $20 billion at the end of 1950. This represented a 4 percent increase during the year and a 30 percent expansion since December 31, 1945. In contrast, savings and time deposits of commercial banks in New England and New York State have declined during each of the last two years, and at the end of 1950 were only 14 percent above the 1945 level.

Assets of mutual savings banks totalled $22 billion at the end of 1950. Investments in real estate loans have almost doubled since 1945 and at the end of 1950 comprised over a third of their assets. Holdings of United States Government obligations declined 5 percent during 1950 to approximately their 1945 level, but still comprised nearly half of total assets. Investments in other securities were about a tenth of total assets; they decreased slightly during 1950 but were still almost twice their 1945 level. The principal assets and liabilities of all mutual savings banks at the end of 1950 are compared in Table 30 with the amounts in 1949 and in 1945.

Table 30. ASSETS AND LIABILITIES OF ALL MUTUAL SAVINGS BANKS IN THE UNITED STATES, DECEMBER, 1950, 1949, AND 1945

The maturity distribution of United States Government obligations held by mutual savings banks at the end of each of the last three years is shown in Table 31.

Number, deposits, and assets of insured mutual savings banks. During 1950 two mutual savings banks, both in Rhode Island, became insured by the Federal Deposit Insurance Corporation. This brought

to 194 the total number of mutual savings banks insured by the Corporation. At the end of 1950 these banks comprised 37 percent of all mutual savings banks and held 71 percent of their deposits.

Table 31.

MATURITIES OF UNITED STATES GOVERNMENT OBLIGATIONS HELD BY
ALL MUTUAL SAVINGS BANKS, DECEMBER, 1948-1950

1 United States savings bonds, Treasury bonds (investment series A-1965), and depositary bonds. Treasury bills are generally issued with maturities of 91 days; certificates of indebtedness have maturities of approximately one year; and Treasury notes are issued with maturities of from one to five years.

Based upon number of years to final maturity.

Less than $500,000 or .05 percent.

The proportion of mutual savings banks insured by the Corporation varies widely among the States, as shown in Table 32. In eight of the seventeen States having mutual savings banks all of them are insured by the Corporation; in three States, on the contrary, none is insured by the Corporation. Accordingly, any comparison of the characteristics of insured mutual savings banks with noninsured mutual savings banks becomes largely a paraphrase of the features of mutual savings banks in different States, particularly in New York and Massachusetts. Of all deposits in insured mutual savings banks, New York State has 81 percent; on the other hand, Massachusetts has 58 percent of all deposits in noninsured mutual savings banks.

Earnings of insured mutual savings banks. Earnings data are obtained by the Corporation for the insured mutual savings banks. During the last few years insured banks have accounted for around two-thirds of the total earnings of all mutual savings banks. Chart M shows the sources and disposition of the total income of insured mutual savings banks in 1950. Of the total income, 87 percent consisted of current operating earnings and 13 percent of profits on securities sold and recoveries on assets previously charged-off.

In 1950 total current operating earnings of insured mutual savings banks advanced to a new peak of $479 million. This was the ninth consecutive year of record earnings. Almost half of total earnings came from real estate mortgages. Income from United States Government obligations provided 38 percent of total earnings, and other securities supplied 10 percent.

Table 32. NUMBER AND DEPOSITS OF INSURED AND NONINSURED
MUTUAL SAVINGS BANKS, BY STATE, DECEMBER 30, 1950

1 Components do not necessarily add to the total because of rounding.

2 Less than $500,000.

Detailed data: See Table 103, pp. 226-27.

Income from real estate loans, which advanced 21 percent during the year, accounted for practically all of the growth in earnings. The larger volume of these loans was wholly responsible for this greater income, as the average rate of return has fallen steadily from 4.61 percent in 1945 to 4.35 percent in 1950. This decline is due largely to an increased proportion of loans which are partially or fully guaranteed by the United States Government and carry lower interest rates than most other mortgage loans. During this period, the volume of real estate loans expanded 74 percent and total income from this source increased 64 percent.

A slight decline in income from United States Government obligations during 1950 was offset by an increase in income from other securities. The average rate of income on all securities was 2.45 percent, approximately the same as in the preceding year.