ASSETS AND LIABILITIES OF INSURED COMMERCIAL BANKS At the close of 1952, insured commercial banks constituted 92 percent of all banks in the nation, and held 87 percent of the total assets of all banks. Asset and liability data for these banks are given in Table 21. Because insured commercial banks determine the pattern of developments for all banks, the broad picture of banking trends and the banking situation described above applies also to insured commercial banks as a separate group. Attention will therefore be directed in this section to certain matters of interest concerning which available information is more complete for insured commercial banks than for all banks. Table 21. ASSETS AND LIABILITIES, INSURED COMMERCIAL BANKS IN THE UNITED STATES (CONTINENTAL U. S. AND OTHER AREAS), DECEMBER 31, 1946-1952 (Amounts in millions) Total assets..... Cash and funds due from banks. $186,682 $177,449 $166,792 | $155,319 | $152,163 | $152,773 $147,365 39,864 35,222 88,097 86,936 33,704 61,047 65,847 61,407 67,960 U. S. Govt. obligations. 44,299 44,242 73,575 Obligations of States and subdivisions. Other securities. Loans and discounts-net Total deposits... 171,357 Business and personal. 140,639 163,172 134,915 Miscellaneous assets... capital accounts.... $186,682 $177,449 | $166,792 | $155,319 | $152,163 | $152,773 $147,365 153,498 143,194 140,688 141,889 137,029 127,480 118,929 118,074 120,260 115,024 1,921 1,774 1,748 1,533 1,452 Government and inter Maturities of United States Government obligations. Of the $62 billion of United States Government obligations held by insured commercial banks at the end of 1952, 4 percent were nonmarketable issues mostly redeemable on short notice at the option of the banks. Of the marketable issues nearly one-third were to mature within one year and over one-third between one and five years. The amounts and percentage distributions of United States Government obligations held by insured commercial banks are given in Table 22. Assets protected by Government guarantee. In addition to direct and fully guaranteed United States Government obligations, other assets have been increasingly protected in recent years by full or partial application of Federal insurance or guarantee. At the end of 1952 insured commercial banks reported $6.6 billion of loans secured by residential real estate which were insured or guaranteed by the Federal Housing Administration or by the Veterans Administration. This represented 55 percent of total residential real estate loans held by insured commercial banks. These banks also held $0.7 billion of loans to farmers directly guaranteed by the Commodity Credit Corporation. Certain other bank loans are known to be insured or guaranteed by one or another Federal Government agency. Most of the $1.5 billion of repair and modernization loans to individuals was insured by the Federal Housing Administration, and most of the $1 billion of defense production loans guaranteed by Federal agencies through the Federal Reserve banks were loans by commercial banks. Smaller amounts of business and farm loans were insured or guaranteed by the Veterans Administration, Reconstruction Finance Corporation, Export-Import Bank, and Farmers Home Administration. In total an estimated $10 billion of the loans held by insured commercial banks was either wholly or partially guaranteed or insured by the Federal Government. Therefore such protection applied to approximately 15 percent of the total loans of insured commercial banks at the year-end. Table 22. AMOUNT AND PERCENTAGE DISTRIBUTION OF UNITED STATES GOVERNMENT OBLIGATIONS HELD BY INSURED COMMERCIAL BANKS IN THE UNITED STATES (CONTINENTAL U. S. AND OTHER AREAS), DECEMBER 31, 1952 1 Reports of assets and liabilities made by the banks do not include information as to maturities of issues other than bonds, and do not separate bonds maturing within one year from the total of those maturing within five years. However, all issues of bills or certificates of indebtedness outstanding December 31, 1952, were to mature within one year, and are so classified in this table. Amounts shown here as notes and bonds maturing within one year are the amounts held by 7,092 principal commercial banks included in the Treasury Survey of Ownership for December 31, 1952. Relatively small additional amounts of notes and bonds maturing within one year and held by the remaining insured commercial banks are not separately available and are included under notes and bonds maturing between one and five years. i Federal Housing Administration debentures. Less than 0.05 percent. Reported by banks in total only. Allocation between notes and bonds is from Treasury Survey of Ownership. Relatively small amounts of Treasury savings notes held by insured commercial banks not included in the Survey are included under bonds. Table 23. TOTAL ASSETS, TOTAL LOANS, AND OTHER LOANS TO INDIVIDUALS, Total assets..... Total loans and dis $186,682 $177,449 || $166,792 $155,319 | $152,163 $152,773 | $147,365 1 All loans to individuals except business loans, loans to farmers, loans for the purpose of purchasing or carrying securities, and real estate loans. * For 1949, 1950, and 1951 single-payment loans of 3,000 or more were reported separately and amounted, respectively to 2,003 million, 2,421 million, and 2,638 million. Types of consumer loans. Banks report their consumer loans under the classification "Other loans to individuals," which includes all loans to individuals other than business, agricultural, security, or real estate loans. Table 23 gives the amount and classification of loans so reported by insured commercial banks, and for purposes of comparison the total assets and total loans of these banks, at the end of each year from 1946 to 1952. Table 24 gives the percentage growth of the same items during 1952 and for the period since 1946, and their percentage distribution at the end of 1952. Table 24. PERCENTAGES ILLUSTRATING RECENT GROWTH AND PRESENT RELATIVE 1 All loans to individuals except business loans, loans to farmers, loans for the purpose of purchasing or carrying securities, and real estate loans. 1 The total volume of single-payment loans to individuals consists principally of loans which cannot properly be classified as consumer credit. This is suggested by the fact that for years in which a breakdown is available about two-thirds of such loans were in the amount of $3,000 or more. Single-payment loans have grown in recent years at about the same rate as total loans, but not at the more rapid rate characterizing instalment loans to individuals. It may be seen from those portions of the tables dealing with instalment loans that the banks have participated in the recent rapid growth in consumer credit. Consumer instalment loans by banks have risen fourfold since 1946 and rose by nearly one-third in 1952. However, it should also be noted that consumer loans are not as yet more than a minor segment of total commercial bank credit, constituting at the end of 1952 less than 5 percent of total assets. Capital accounts. The ratio of total capital accounts to total assets of insured commercial banks was 6.7 percent at the end of 1952. This ratio was identical with that in 1951 and virtually the same as that in other recent years. INCOME OF INSURED COMMERCIAL BANKS The forms provided to banks by the various banking agencies for the reporting of earnings and dividends of each calendar year make use of an accounting process which may be described in three parts. (1) From current operating earnings, such as interest received on loans and service charges collected, are subtracted current operating expenses, such as wages and interest paid on time deposits. The result is net current operating earnings. (2) Net current operating earnings are adjusted to account for the effects of recoveries, losses, and changes in asset valuation reserves, yielding the figure for profits before income taxes. (3) Profits before income taxes are allocated among income taxes, dividends, and additions to capital. A more general view of the operating experience of banks may be obtained by rearranging the items reported so as to provide an analysis of the sources and disposition of total income. So conceived, total income includes not only current operating earnings, but also other sources of additions to undivided profits: recoveries on assets previously charged off, profits on securities sold, and transfers from asset valuation reserves. This total income is used to meet current operating expenses; to cover losses, charge-offs, and transfers to valuation reserves; to pay income taxes and dividends; and to provide for increases in bank capital. Sources and disposition of income in 1952. The sources and disposition of the total income of insured commercial banks for 1952 are shown in Chart F. Total income was $5 billion, of which over half was derived from loans and almost one-fourth from United States Government obligations. Of the total income, 30 percent was used for wages and salaries and another 30 percent for current expenses of other kinds. Charge-offs and taxes absorbed about 20 percent, leaving 20 percent for dividends to stockholders and additions to capital. Chart F. SOURCES AND DISPOSITION OF TOTAL INCOME, Trends in major sources of income. For four years prior to 1947 the largest single source of bank income was securities, predominantly United States Government obligations. The year 1947 marked a return to the situation in which income from loans exceeded that from securities. The proportion of total income derived from loans has continued to increase, and reached 55 percent in 1952. At the same time the proportion of total income derived from securities has decreased, although the 1952 figure of 27 percent was the same as that for 1951. Table 25 gives the total income of insured commercial banks for the years 1947 through 1952 classified as to sources and disposition, and Table 26 presents percentage distributions based on these figures. |