DEPOSIT INSURANCE COVERAGE Insured deposits and the deposit insurance fund. Under the provisions of the Federal Deposit Insurance Act of 1950, protection was increased to a maximum of $10,000 for each depositor in an insured bank. If a depositor holds more than one account in the same right and capacity in an insured bank, the maximum applies to the total of all such accounts. For example, an individual who holds both a demand deposit and a savings deposit at an insured bank has no greater insurance protection than if the total amount of the two were held in a single account. On the other hand, if an individual holds an account in his own name and also holds a joint account with his wife at the same insured bank, these accounts are not held in the same right and capacity and each is therefore protected up to the legal maximum. When a depositor is also a debtor of the bank, the amount remaining in his deposit account after deduction of his indebtedness is insured up to $10,000. Because of these legal provisions concerning accounts held in a given right and capacity, the combining of accounts, and offsetting of indebtedness, the calculation of the amount of insured deposits in a bank at any given time is not a simple task. Therefore, the Corporation does not require such calculations to be made and reported by insured banks. From time to time a special call for deposit information is made by the Corporation. On these occasions the banks report the number of their deposit accounts in various size groupings. The last such call was made in 1951, and is described in Part Three of the Annual Report of the Corporation for that year. From information obtained by these special calls, and from semi-annual reports showing total deposits in insured banks, estimates are made of the amount of insured deposits. Table 1 shows for the end of each year since the beginning of Federal deposit insurance the total amount of deposits in insured banks and the estimated amount of these deposits which was insured under the prevailing provisions of law. At the end of 1952 insured deposits were estimated at $102,255 million, constituting 54.3 percent of the total deposits in insured banks. This percentage has changed slightly since maximum protection per depositor was increased from $5,000 to $10,000 by the Act of 1950. The deposit insurance fund of the Corporation increased further in 1952, and amounted to $1,363 million at the end of the year. At that date it constituted 0.72 percent of total deposits in insured banks and 1.33 percent of insured deposits. In 1934 these ratios were 0.73 and 1.61 percent, respectively. The size of the deposit insurance fund and its relationship to total and insured deposits as of December 31 of each year from 1934 through 1952 are shown in Table 1. Chart A illustrates the ratios of the fund to total and insured deposits. Table 1. INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 1 Estimates for dates prior to the change in coverage in 1950 are based on $5,000 maximum for each account; those for subsequent dates on $10,000 maximum. Estimated by applying to the deposits in the various types of account (demand deposits of individuals, partnerships, and corporations; savings and time deposits of individuals, partnerships, and corporations; government deposits; interbank deposits; and other deposits) at the regular call dates the percentages insured as shown by the reports for the nearest special call date. Participation in deposit insurance. On December 31, 1952, there were 13,645 insured banks. Including 5,663 branches, these banks did business in 19,308 locations, 329 more than at the beginning of the year. The number of insured banks at the close of the year was 12 fewer than a year before. This small decline resulted from the fact that the number of insured banks which went out of existence by absorption or voluntary liquidation was larger than the number of banks admitted to insurance. A decrease also occurred in the number of noninsured banks. The proportion of banks of deposit which are insured was 93.6 percent at the end of 1951 and 93.8 percent at the end of 1952. Of the 13,645 banks insured at the close of 1952, 206 were mutual savings banks, and 13,439 were commercial banks. However, the latter classification includes a few stock savings banks, industrial banks, and other banks specializing in certain types of deposits or assets. Chart A. RATIOS OF DEPOSIT INSURANCE FUND TO TOTAL AND INSURED DEPOSITS, ALL INSURED BANKS, DECEMBER 31, 1934-1952 Insured commercial banks constituted 96 percent of all operating commercial banks, and held 99 percent of deposits in commercial banks. Although only 39 percent of the mutual savings banks were insured, they held 74 percent of deposits in such institutions. Table 2 gives the number and deposits of all banks grouped by type of bank and insurance status. Table 2. NUMBER AND DEPOSITS OF OPERATING BANKS IN THE UNITED STATES (CONTINENTAL U. S. AND OTHER AREAS), DECEMBER 31, 1952 1 Deposits of these companies consist of uninvested trust funds and special accounts. Detailed data: See Table 105, pp. 98-99. Participation by State. In Table 3 the 48 States and District of Columbia are ranked as of December 31, 1952, according to the percentage of total banks of deposit in the State which were insured, and according to the percentage of total deposits in the State which were in insured banks. These compilations exclude trust companies not regularly engaged in deposit banking. Ten States and the District of Columbia shared top ranking in each regard, with 100 percent insurance of banks of deposit. The proportion of deposits which were in noninsured banks was greater than 2 percent in only eleven States. It was greater than 10 percent in seven States, due primarily to noninsured mutual savings banks in New England. Table 3. STATES RANKED ACCORDING TO PERCENTAGE OF BANKS OF DEPOSIT WHICH WERE INSURED AND PERCENTAGE OF DEPOSITS WHICH WERE IN INSURED BANKS, DECEMBER 31, 1952 |