For detailed statistics as to number and offices of operating banks see Tables 101-104 of this report, pages 84-97. Deposits of insured and noninsured banks by States are shown in Table 105, pp. 98-99.

ACTION TO PROTECT DEPOSITORS IN FAILING BANKS

Disbursements for protection of depositors in 1952. During 1952 the Federal Deposit Insurance Corporation provided financial aid to protect depositors of three insured banks which were in financial difficulty. In each of the cases the deposit liabilities of the failing bank were assumed by another insured bank. The Corporation took over those assets of the failing banks which were unacceptable to the assuming banks and advanced to each of the failing banks cash equal to the difference between its deposit liabilities and its acceptable assets.

The three distressed banks to which the Corporation made disbursements in 1952 had deposits totaling $3.2 million, and the cash provided by the Corporation amounted to $1.3 million as of December 31, 1952. There were approximately 6,750 deposit accounts in the three banks. No depositor suffered any loss, nor was there any break in the continuity of banking service for the communities.

Defalcations greatly in excess of their surety bonds were the direct cause of the difficulties of all three banks. In two of the banks most of the shortage was represented by customers' overdrafts concealed by officers of the banks through manipulation of the records.

Disbursements for protection of depositors, 1934-1952. From the beginning of deposit insurance to the end of 1952 the Corporation made disbursements to protect depositors in 420 banks. These banks had about 1.4 million deposit accounts and deposits of almost $541 million. For the protection of the depositors in these banks the Corporation disbursed $276 million, exclusive of payoff and liquidation expenses and advances for the protection of assets.

Of the 420 cases in which the Corporation made disbursements, 245 banks were placed in receivership and 175 were absorbed by other insured banks. No insured bank has been placed in receivership since May 1944, and all receiverships were terminated prior to 1952. Of the 175 absorption cases, 168 have been terminated. Three cases were terminated and three new cases added during 1952.

Recoveries and losses of depositors. The depositors of the 420 banks received $539 million, or 99.6 percent of their total deposits. In the 245 receivership cases deposits totaled $110 million, of which $108 million, or more than 98 percent, was paid. All of the $431 million of deposits involved in the 175 absorption cases was made available to depositors.

Table 4 shows for each year the number of depositors and their losses, and the disbursements of the Corporation and its losses. Further details regarding the payment of deposits in closed insured banks are given in Table 5.

Table 4. LOSSES TO DEPOSITORS AND TO THE FEDERAL DEPOSIT INSURANCE CORPORATION IN INSURED BANKS IN FINANCIAL DIFFICULTIES,

BY YEARS, 1934-1952

1 Number of depositors in receivership cases; number of deposit accounts in absorption cases. Includes losses due to failure of depositors to claim insured deposits.

Sum of losses in the cases in which the disbursement by the Corporation was not repaid in full, including estimated loss in 7 cases not fully liquidated at the end of 1952. Excludes interest collected in cases in which the disbursement by the Corporation was fully recovered, gains or losses on assets purchased by the Corporation from liquidations, and nonrecoverable expenses incurred in paying depositors' claims.

Principal disbursements only. Does not include expenses and advances for protection of assets. Also excludes excess collections paid to absorbed banks as an additional purchase price; for this reason the figures differ from those published in previous Annual Reports of the Corporation.

• Estimated.

Detailed data: See Tables 119-122, pp. 140-144.

Recoveries and losses of the Corporation, 1934-1952. The total disbursements of the Corporation in connection with failing insured banks have been somewhat larger than the principal disbursements mentioned above and shown in Table 4. The principal disbursements are those incurred for the direct purpose of meeting the claims of depositors in the failing banks: payment of insured deposits in receivership cases, and loans to or purchases of assets of banks in absorption cases. Other disbursements which are involved in the transactions for protection of depositors are nonrecoverable payoff expenses in the receivership cases, and liquidation expenses and advances for protection of assets in the absorption cases. In addition to the direct transactions for protection of depositors, the Corporation has in some cases purchased the residual assets of receiverships or of absorbed banks.

Table 5. NUMBER OF DEPOSITORS, AMOUNT OF DEPOSITS, RECOVERIES, AND LOSSES IN INSURED BANKS PLACED IN RECEIVERSHIP OR ABSORBED WITH THE FINANCIAL AID OF THE CORPORATION, 1934-1952

1 Includes 55,262 depositors who failed to claim their insured deposits. Includes payments by Federal Deposit Insurance Corporation and by the receivers. For detail see Table 5, p. 12, of the Annual Report of the Corporation for 1951.

Includes $175,386 of insured deposits which depositors failed to claim. Detailed data: See Tables 119-122, pp. 140-144.

The recoveries of the Corporation in transactions for protection of depositors have consisted largely of recoveries on principal disbursements, but have included also recoveries of liquidation expenses and advances in the absorption cases. The Corporation has also received interest or an allowable return on its disbursements in some of the cases. Receipts in transactions to facilitate termination of liquidations may also be divided among those made on principal and those of other kinds. If, for any category of transactions, principal recoveries are subtracted from principal disbursements, the loss on principal is obtained. However, it is the difference between total disbursements and total recoveries and income for a given category of transactions which represents the net loss of funds from such transactions. The net loss of funds may be either greater or less than the loss on principal. The net loss of funds in transactions for the protection of depositors has exceeded the loss on principal disbursements in receivership cases and has been less than the loss on principal in the absorption cases. In the transactions to facilitate termination of liquidations, recoveries and income, including the estimated recoverable value of assets not yet disposed of, exceed disbursements. Consequently there is expected to be a net gain, rather than a net loss of funds, on these transactions.

Deposit insurance disbursements through the close of 1952 and recoveries and income of the Corporation are presented in Table 6, classified according to the kind of transaction and nature of disbursement with which they were associated. As shown there, the Corporation has recovered over $247 million of its $276 million of principal disbursements

for the protection of depositors in failing insured banks. Based upon the current appraised value of the remaining unliquidated assets acquired from those banks, an additional recovery of $1 million can be expected, leaving an estimated loss on principal of a little less than $28 million, or 10 percent. However, other disbursements which were not recovered were less than $1 million, and the Corporation collected nearly $9 million in interest or allowable return on its disbursements. The net loss of funds in transactions for the protection of depositors was thus $20 million, or 7 percent of principal disbursements of $276 million for this purpose.

Table 6. ANALYSIS OF DISBURSEMENTS AND RECOVERIES OF THE FEDERAL DEPOSIT INSURANCE CORPORATION IN TRANSACTIONS FOR PROTECTION OF DEPOSITORS AND TO FACILITATE TERMINATION OF LIQUIDATIONS, 1934-1952

1 Book value of remaining unliquidated assets less reserve for losses. The total amount for both types of transactions, $2,025,139, is designated in Table 10 as "Assets acquired through bank suspensions and absorptions".

Interest on subrogated claims in 58 of the receivership cases in which receivers paid 100 percent dividends on creditors' claims.

Interest on loans and allowable return on purchase price in 91 absorption cases in which collections exceeded the Corporation's disbursements and recoverable expenses. In 65 of these cases full interest or allowable return was collected and excess collections of $1,519,000 returned to the banks. Profit plus net income (income on assets less liquidation expenses).

Excess of receipts.

In the 245 banks which were placed in receivership the Federal Deposit Insurance Corporation paid out $87 million to depositors. These depositors assigned their claims against the receiverships to the Corporation to the extent of its payment. Dividends received by the Corporation on these subrogated claims amounted to $73 million, resulting in a loss on principal of $14 million, or 16 percent of the amount disbursed. Nonrecoverable payoff expenses of nearly $1 million were only partially offset by interest received, so that the net loss of funds exceeded the loss on principal by $0.4 million.

In the 175 absorption cases to the close of 1952 the Corporation disbursed $189 million for the protection of depositors by means of loans to or the purchase of assets from distressed banks. Recoveries of $175 million on this principal disbursement had been realized by the end of 1952, and additional recoveries of $1 million were expected in the seven active liquidations. There was therefore an estimated loss on principal disbursements in absorption cases of $13 million, or 7 percent of the amount disbursed. In these cases the Corporation recovered in full its $32 million of advances for the protection of assets and its $13 million of liquidation expenses, and also received interest or allowable return of $8 million. The net loss of funds in absorption cases was therefore smaller by $8 million than the loss on principal.

In 93 of the absorption cases principal disbursements of the Corporation were recovered in full and in 91 of these some interest or allowable return was collected. In 65 of these cases collections from assets liquidated exceeded the Corporation's principal disbursement plus interest or allowable return and the excess was returned to representatives of the shareholders of the absorbed banks. These excess collections, which amounted to $1.5 million, are not included in the Corporation's disbursements nor in its recoveries and income shown in Table 6.

The net loss of funds relative to the amount of the principal disbursements for protecting depositors has differed markedly between receivership and absorption cases. In the 245 receivership cases the net loss of funds was $15 million, representing 17 percent of principal disbursements for the protection of depositors of $87 million. In the 175 absorption cases the net loss of funds, as estimated at the end of the year, was $5 million, or only 3 percent of the $189 million of principal disbursements for the protection of depositors. Total deposits in the receivership cases were $110 million, and in the absorption cases $431 million. Net losses of funds therefore averaged 13 percent of total deposits in the banks involved in receivership cases and 1 percent in absorption cases. The much higher loss ratio in receivership cases is primarily a reflection of the fact that banks with very poor asset conditions have been placed in receivership, whereas failing banks with less serious asset deterioration have been merged with other banks.

Table 7 gives the losses of the Corporation on principal disbursements for protection of depositors as estimated at the close of each of the past nine years.

Losses and recoveries by the Reconstruction Finance Corporation. Losses by the Federal Deposit Insurance Corporation in some cases were less than those which would normally occur with banks having a similar degree of asset deterioration, due to prior investment of public funds in these banks through the Reconstruction Finance