losses on loans of insured commercial banks were $88 million and those on securities $123 million, up 3 percent and 21 percent, respectively, compared with 1951. The larger loss on securities in 1952 may be attributed in part to the sale of securities at the lower market prices prevailing in 1952. Of the losses on loans, approximately three-fourths were charged to reserve accounts, the same proportion as in other recent years. Of the losses on securities, however, only one-fifth were covered by reserves and the remainder was charged to capital accounts.

Table 28. NUMBER AND PERCENTAGE OF INSURED COMMERCIAL BANKS REPORTING RESERVES FOR BAD DEBTS PURSUANT TO SECTION 23(K)1 OF THE INTERNAL REVENUE CODE, AND AMOUNT OF RESERVES SO HELD, December 31, 1948-1952, WITH BANKS OPERATING THROUGHOUT 1952 GROUPED BY AMOUNT OF DEPOSITS FOR

1 Reserves for bad-debt losses on loans, set up in accordance with Section 23(K)1 of the Internal Revenue Code; these comprise the major portion of total valuation reserves for loans, which totaled $908,935,000 on December 31, 1952.

i Components do not add to total because of rounding.

Less than 0.05 percent.

Net profits. The substantial increase in net current operating earnings in 1952, along with relative stability in net charge-offs on assets, lifted net profits before income taxes to a record $1,685 million. Of this amount, income taxes absorbed $695 million, leaving net profits after taxes of $990 million.

The higher level of net profits before income taxes in 1952 resulted in both a larger tax base and a higher average rate of income tax, as a consequence of which income taxes rose by 24 percent over those of 1951. Notwithstanding this sharp advance in income taxes, net profits after taxes were 9 percent greater than in 1951, and higher than in any previous year. Net profits after taxes in 1952 were equal to 8.07 percent of total capital accounts.

As in previous years, the rates of net profit varied considerably among different geographical areas and among banks of different size groups. Of the 13 States, including the District of Columbia, with rates of net profit below 8.0 percent, all except Wisconsin and New Mexico were in the Northeast section of the United States. At the same time, all but one of the 10 States with rates of net profit of 10 percent or more were west of the Mississippi river. Average rates of net profit of banks in the various States are presented in Chart I.

Chart I. RATES OF NET PROFITS AFTER TAXES ON TOTAL CAPITAL ACCOUNTS, INSURED COMMERCIAL BANKS, 1952

The rate of net profit on total capital accounts varied only moderately among banks grouped by size. Relatively small banks, but not the smallest, averaged the highest rate, or 9.57 percent. Banks in the smallest and the largest size groups averaged the lowest rates, 7.60 and 7.64 percent respectively. Rates of net profit in banks grouped by amount of deposits are shown in Chart J.

Disposition of net profits. For the tenth consecutive year dividend payments increased, reaching a total of $442 million in 1952. This distribution was 45 percent of net profits after taxes, about the same proportion as in 1951, and within the range of 40 to 46 percent thus distributed in every year since 1947. Dividends in 1952 were equal to 3.60 percent of total capital accounts, similar to other recent years.

The proportion of net profits distributed to stockholders varied among banks in the different size groups. Each of the groups of banks with deposits of less than $10 million paid out about one-third of net profits after taxes. In the larger size groups the proportion of net profits thus distributed advanced with increases in size of bank, and averaged over one-half among banks with deposits of more than $100 million. The rate of dividends on total capital accounts varied accordingly, as shown in Chart J, modified only by the moderate differences in rates of net profit among the different size groups of banks. Because of concentrated ownership and tax considerations, smaller banks usually disburse a smaller proportion of their profits in the form of dividends than do larger banks.

Chart J. RATES OF NET PROFIT AND CASH DIVIDENDS,
INSURED COMMERCIAL BANKS, 1952

Profits not distributed to stockholders are, of course, retained in capital accounts. The disbursement of 45 percent of net profits in 1952 meant that 55 percent was held as additions to capital. The retention of profits has for many years been the principal source of growth in bank capital.

MUTUAL SAVINGS BANKS

Mutual savings banks are organized on a cooperative basis, without capital stock, according to the applicable laws of the States in which they operate. Earnings resulting from their operation are distributed to depositors in the form of dividends or retained in surplus.

Chart K. PERCENTAGES OF TOTAL DEPOSITS AND TIME DEPOSITS OF ALL BANKS HELD BY MUTUAL SAVINGS BANKS, DECEMBER 31, 1952

Nearly all of the deposits of mutual savings banks are savings and time deposits, and their loans and investments consist largely of longterm obligations. Mutual savings banks comprise less than 4 percent of all banks in the United States; but they hold almost 12 percent of total bank deposits and 35 percent of savings and time deposits.

There is a marked geographical concentration of mutual savings banks, all but 28 of the 529 banks being located in nine northeastern States. Within this area the savings banks hold a substantial proportion of total bank deposits. In the New England States and in New York State one-fourth to one-half of all bank deposits, and one-half to over three-fourths of all savings and time deposits, are in mutual savings banks. The percentages of bank deposits held by mutual savings banks in the 17 States having such banks are shown in Chart K.

Assets and deposits of all mutual savings banks. Deposits of all mutual savings banks totaled almost $23 billion at the end of 1952, and their surplus accounts exceeded $2 billion. Real estate loans of over $11 billion, and United States Government obligations of over $9 billion, constituted the main uses of these funds. Other securities totaling $3 billion and cash of nearly $1 billion comprised most of the remaining assets. Assets and liabilities of all mutual savings banks in the United States from December 31, 1946, to December 31, 1952, are presented in Table 29.

Table 29. ASSETS AND LIABILITIES, MUTUAL SAVINGS BANKS,
DECEMBER 31, 1946-1952

The increase in deposits since 1946 has been invested principally in real estate loans. In the 6-year period ending with 1952 these loans