ANNUAL REPORT

OF THE

FEDERAL DEPOSIT INSURANCE CORPORATION

FOR THE YEAR ENDED 

DECEMBER 31,1944

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
LETTEB OF TRANSM ITTAL

F e d e r a l D e p o sit In su ra n ce C o rp o ra tio n , 

Washington, D. C., August 21, 19^5.

SIR: Pursuant to the provisions of subsection (r) of section 

12B of the Federal Reserve Act, as amended, the Federal Deposit 

Insurance Corporation has the honor to submit its annual report.

Respectfully,

L e o T. C r o w le y , Chairman.

T he P resident of the Senate

T he Speak er of the H ouse of R epresentatives

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Federal Reserve Bank of St. Louis
FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
FEDERAL DEPOSIT INSURANCE CORPORATION

N a t i o n a l P r e s s B u ild in g — W a s h in g t o n 2 5 , D. C .

F ie ld B u ild in g — C h ic a g o 3, I l l i n o i s

BOARD OF DIRECTORS

Chairman.....................................................................

Directors......................................................................

Leo T. Crowley

( Phillips Lee Goldsborough

(P reston Delano

Comptroller of the Currency

OFFICIALS—AUGUST 21, 1945

Washington 25, D . C.

Secretary...................................................................... Miss E. F. Downey

Executive Officer.......................................................... Henry W. Riley

Assistant Executive Officer.......................................... Walter F. Oakes

Special Assistant to Board of Directors.................... Alfred J. Loda

Confidential Assistant to Chairman.......................... Miss Beryl Roberts

Secretary to Chairman................................................ Miss Dorothy Dale

Special Assistant to Chairman.................................. •J. Forbes Campbell

Special Assistant to Chairman.................................. Edward C. Tefft

Assistant to Director................................................... Albert G. Towers

Secretary to Director.................................................... Mrs. Madeline G. Von Eberhard

General Counsel........................................................... Francis C. Brown

Counsel......................................................................... Goodwin J. Oppegard

Counsel........................................................................ Irving H. Jurow

Counsel........................................................................ Russell D. Miller

Chief, Division of Examination................................. Vance L. Sailor

Mutual Savings Bank Advisor..................................

Special Assistant to Board of Directors,

Raymond T. Cahill

Federal Credit Union Section............................ C. R. Orchard

Chief, Division of Research and Statistics................ Homer Jones

Assistant Chief, Division of Research and Statistics. .Harry L. Severson

Librarian..................................................................... Miss Amy Dene Early

Director of Personnel.................................................. Carl W. Satterlee

Chief, Service Division................................................ Frank C. Bio we

Chicago 3, Illinois

Chief, Division of Liquidation................................... Wheeler McDougal

Supervising Liquidator, Division of Liquidation. . . .Ralph E. Zimmerman

Supervising Claim Agent, Division of Liquidation.. .James M. Gaffney

Supervising Accountant, Division of Liquidation.. . .H. R. Burling

Counsel........................................................................ James M. Kane

Assistant Counsel (on military leave) ........................ John L. Cecil

Fiscal Agent................................................................ W. G. Loeffler

Chief, Audit Division................................................. Mark A. Heck

v

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Federal Reserve Bank of St. Louis
DISTRICT OFFICES

D is t . S u p e r v is in g 

No. E x a m in e r

1. Leo J. Carr

2. Leon F. Stroefer

3. Leon F. Stroefer

4. Lundie W. Barlow

5. W. Clyde Roberts

6. Neil G. Greensides

7. Raby L. Hopkins

8. Carol L. Pitman

9. Rollin 0. Bishop

10. Gerhard F. Roetzel

11. Linton J. Davis

A d d r e s s

Room 765, No. 10 Post 

Square, Boston 9, Mass.

Room 1900, 14 Wall Street, 

New York 5, N. Y.

City National Bank 

Building, 20 East Broad 

Street, Columbus 15, Ohio

909 State Planters Bank & 

Trust Company Building, 

Richmond 19, Va.

625 First National Bank 

Building, Atlanta 3, Ga.

1059 Arcade Building,

St. Louis 1, Mo.

715 Tenney Building, 

Madison 3, Wis.

741 Federal Reserve Bank 

Building, 164 W. Jackson. 

Blvd., Chicago 4, 111.

1200 Minnesota Building, 

St. Paul 1, Minn.

901 Federal Reserve Bank 

Building, Kansas City 6, 

Missouri

Federal Reserve Bank 

Building, Station K, 

Dallas 13, Tex.

St a t e s in d is t r ic t

Maine, New Hampshire, 

Vermont, Massachusetts, 

Rhode Island, Connecticut

New York, New Jersey, 

Delaware

Ohio, Pennsylvania

District of Columbia, Maryland, Virginia, West Virginia, North Carolina, 

South Carolina

Georgia, Florida, Alabama, 

Mississippi, Louisiana

Kentucky, Tennessee, 

Missouri, Arkansas

Indiana, Michigan, 

Wisconsin

Illinois, Iowa

Minnesota, North Dakota, 

South Dakota, Montana

Nebraska, Kansas, 

Oklahoma, Colorado, 

Wyoming

Texas, New Mexico, Arizona

12. William P. Funsten Suite 1120, 315 Montgomery Idaho, Utah, Nevada, 

Street, San Francisco 4, Washington, Oregon, 

Calif. California

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
Summary

CONTENTS

Page

3

PART ONE

OPERATIONS AND POLICIES OF THE CORPORATION

Introduction............................................................................................................. 7

Suggestions for legislation...................................................................................... 8

Deposit insurance and loan risk........................................................................... 11

Deposit insurance protection................................................................................. 14

Legal developments................................................................................................ 20

Supervisory activities............................................................................................. 22

Organization and financial statements of the Corporation............................... 25

PART TWO 

BANKING DEVELOPMENTS

Assets, deposits, and capital accounts................................................................. 35

Earnings of insured commercial banks................................................................ 44

PART THREE

GROWTH IN BANK DEPOSITS AND IN TOTAL MONEY SUPPLY, 1940-1944

Deposits in commercial and mutual savings banks............................................ 53

Total money supply................................................................................................ 66

PART FOUR 

LEGISLATION AND REGULATIONS

Federal legislation relating to insured banks or the Corporation................... 71

Report of the Corporation on absorption of exchange charges........................ 72

Regulations of the Corporation............................................................................. 96

State legislation relating to bank supervision and bank operations.............. 102

PART FIVE

STATISTICS OF BANKS AND DEPOSIT INSURANCE

Number, offices, and deposits of all operating banks........................................ 108

Assets and liabilities of operating banks.............................................................. 122

Examiners' evaluation of insured commercial banks......................................... 132

Earnings, expenses, and dividends of insured banks.......................................... 138

Deposit insurance disbursements.......................................................................... 146

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Federal Reserve Bank of St. Louis
LIST OF CHARTS

Page

Organization chart of the Federal Deposit Insurance Corporation............... iv

Map: Federal Deposit Insurance Corporation districts................................... vii

A. Total assets of all operating banks by type of asset, 1934-1944.............. 35

B. Percentage distribution of assets— all operating banks, 1934-1944.......... 37

C. Percentage distribution of direct U. S. Government obligations held by 

insured commercial banks, 1939-1944.......................................................... 40

D. Ratios of net earnings, net profits, and cash dividends to average total 

capital accounts—all insured commercial banks, 1934-1944..................... 46

E (Map). Percentage increase in deposits of individuals, partnerships, and 

corporations in commercial and mutual savings banks, June 30, 1942, 

to December 31, 1944..................................................................................... 56

F. Percentage increases, 1939 to 1944, in income payments, and in deposits

of individuals, partnerships, and corporations, by State............................ 61

G. Percentage increases, 1939 to 1944, in interbank deposits and in deposits

of individuals, partnerships, and corporations, by State............................ 64

H. Deposits and currency owned by individuals and business, by type, 

1939-1944......................................................................................................... 67

L IS T OF TA B L E S 

PART ONE

OPERATIONS AND POLICIES OF THE CORPORATION

Deposit insurance protection:

1. Number of depositors, amount of deposits, recoveries, and losses 

in insured banks placed in receivership or merged with the financial

aid of the Corporation, 1934-1944...................................................... 15

2. Payment by the Corporation and receivers of deposits in insured 

banks placed in receivership, 1934-1944............................................ 16

3. Disbursements by the Corporation to protect depositors in insured 

banks placed in receivership or merged with the financial aid of

the Corporation, 1934-1944................... ............................................. 19

4. Disbursements to protect depositors, recoveries, and losses by the 

Corporation from insured banks placed in receivership or merged

with its financial aid, 1934-1944.......................................................... 19

Supervisory activities:

5. Action to terminate insured status of banks'charged’with engaging 

in unsafe or unsound practices or violations of law or regulations, 

1936-1944................................................................................................ 23

Organization and financial statements of the corporation:

6. Officers and employees of the Federal Deposit Insurance Corporation, December 31, 1944....................................................................... 26

7. Income and expenses of the Federal Deposit Insurance Corporation, 

calendar year 1944................................................................................ 27

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Page

Organization and financial statements of the corporation— Continued

8. Income and expenses of the Federal Deposit Insurance Corporation

since beginning operations.............................................................................. 28

9. Assets and liabilities of the Federal Deposit Insurance Corporation,

1934-1944............................................................................................................... 28

10. Assets and liabilities of the Federal Deposit Insurance Corporation,

December 31, 1944, and December 31, 1943........................................... 29

11. Federal Deposit Insurance Corporation comparative balance

sheet, June 30, 1944 and 1943— from auditors’ report........................ 30

PART TWO 

BANKING DEVELOPMENTS

Assets, deposits, and capital accounts:

12. Increase in total assets of all operating banks, 1941-1944................ 36

13. Substandard asset ratios of insured commercial banks examined in

1939-1944............................................................................................................... 38

14. Bank holdings of United States Government obligations, direct and

guaranteed, 1941 and 1944............................................................................. 39

15. Direct United States Government obligations held by insured

commercial banks, 1939-1944........................................................................ 40

16. Capital accounts of insured commercial banks, 1941 and 1 9 4 4 .... 42

17. Capital ratios of insured commercial banks, year-end call dates,

1934-1944............................................................................................................... 43

18. Distribution of insured commercial banks examined in 1944 according to adjusted capital ratio and by amount of deposits.. . . 44

Earnings of insured commercial bank s:

19. Earnings, expenses, and dividends of insured commercial banks,

1942-1944............................................................................................................... 44

20. Ratios of net profits, net earnings, and cash dividends to average

total capital accounts, all insured commercial banks, 1934-1944.. 46

21. Distribution of insured commercial banks according to rate of

net profits on total capital accounts, 1942-1944.................................... 47

22. Amounts and rates of income received by insured commercial

banks, 1934-1944................................................................................................ 48

23. Net earnings and net profits ratios of insured commercial banks,

1944

Banks grouped by amount of deposits...................................................... 49

24. Distribution of insured commercial banks according to ratio of

net profits to total capital accounts and amount of deposits, 1944.. 50

PART THREE

GROWTH IN BANK DEPOSITS AND IN TOTAL MONEY SUPPLY, 1940-1944

D eposits in commercial and mutual savings banks:

25. Deposits in commercial and mutual savings banks in the United

States and possessions, by class of owner, June 30 and December

31, 1939-1944....................................................................................................... 53

26. Increase in deposits in commercial and mutual savings banks,

United States and possessions, by year and class of owner, 1940-

1944......................................................................................................................... 54

LIST OF TABLES xi

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xii LIST OF TABLES

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D e p o s it s in c o m m e r c ia l a n d m u t u a l s a v in g s b a n k s— Continued

27. Assets acquired by commercial and mutual savings banks in the 

United States and possessions, 1940-1944.......................................... 55

28. Deposits of individuals, partnerships, and corporations in commercial and mutual savings banks, by Federal Deposit Insurance 

Corporation district and State, December 30, 1939, June 30, 1942,

and December 30, 1944........................................................................ 58

29. Percentage increase in deposits of individuals, partnerships, and 

corporations, 1940-1944, by Federal Deposit Insurance Corporation 

district..................................................................................................... 59

30. Governmental deposits in commercial and mutual savings banks, 

by Federal Deposit Insurance Corporation district and State, 

December 30, 1939, and December 30, 1944..................................... 60

31. Interbank deposits in commercial and mutual savings banks, by 

Federal Deposit Insurance Corporation district and State, December 30, 1939, June 30, 1942, and December 30, 1944................. 62

T o t a l m o n e y s u p p l y :

32. Total deposits and currency, excluding interbank obligations,

June 30 and December 31, 1939-1944................................................ 65

33. Total deposits and currency, excluding interbank obligations, June

30 and December 31, 1939-1944, by class of owner......................... 66

34. Classification of deposits and currency owned by individuals and 

business, 1939-1944............................................................................... 67

35. Annual increase in deposits and currency owned by individuals and 

business, 1940-1944............................................................................... 68

PART FIVE

STATISTICS OF BANKS AND DEPOSIT INSURANCE

N u m b e r , o f f ic e s, a n d d e p o s it s of a l l o p e r a t in g b a n k s :

Explanatory note............................................................................................... 108

101. Changes in number and classification of operating banks and 

branches in the United States and possessions during 1944............ 110

102. Number of operating banks and branches, December 31, 1944

Grouped according to insurance status and class of bank, and by

State and type of office....................................................................... 112

103. Number and deposits of operating commercial and mutual savings 

banks, December 31, 1944

Banks grouped according to insurance status and by district and

State..................................................................................................... 120

A ssets a n d l ia b il it ie s of o p e r a t in g b a n k s :

Explanatory note............................................................................................... 122

104. Summary of assets and liabilities of operating banks in the United 

States and possessions, June 30, 1944

Banks grouped according to insurance status and type of bank___ 124

105. Summary of assets and liabilities of operating banks in the United 

States and possessions, December 30, 1944

Banks grouped according to insurance status and type of bank... . 125

106. Assets and liabilities of operating insured commercial banks, 

December 30, 1944, June 30, 1944, and December 31, 1943.......... 126

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A s se ts a n d l ia b il it ie s o f o p e r a t in g b a n k s— Continued

107. Summary of assets and liabilities of operating banks in the United 

States and possessions, 1942-1944

Banks grouped according to insurance status and by type of bank.. 128

108. Percentage distribution of assets and liabilities of operating insured 

commercial banks, call dates, 1934-1944............................................ 130

E x a m in e r s ' e v a l u a t io n o f in s u r e d c o m m e r c ia l b a n k s :

Explanatory note.............................................................................................. 132

109. Examiners’ appraisal of assets, liabilities, and capital of insured 

commercial banks examined in 1939-1944......................................... 134

110. Examiners’ appraisal of assets, liabilities, and capital of insured 

commercial banks examined in 1944

Banks grouped according to amount of deposits............................... 136

E a r n in g s, e x p e n s e s , a n d d iv id e n d s of in s u r e d b a n k s :

Explanatory note............................................................................................... 138

111. Earnings, expenses, and dividends of insured banks, 1944

By class of bank................................................................................. 140

112. Ratios of earnings, expenses, and dividends of insured banks, 1944

By class of bank................................................................................. 142

113. Earnings, expenses, and dividends of insured commercial banks 

operating throughout 1944

Banks grouped according to amount of deposits.............................. 144

D e p o s it in s u r a n c e d is b u r s e m e n t s :

Explanatory note.............................................................................................. 146

114. Disbursements by the Federal Deposit Insurance Corporation to 

protect deposits; number and deposits of insured banks placed in 

receivership or merged with the financial aid of the Corporation, 

1934-1944

Banks grouped by class of bank, year of disbursement, amount of

deposits, and State.............................................................................. 148

115. Assets and liabilities of insured banks placed in receivership and 

of insured banks merged with the financial aid of the Federal 

Deposit Insurance Corporation, 1934-1944

As shown by books of bank at date of closing................................... 150

116. Depositors and deposits of insured banks placed in receivership, 

1934-1944

As shown by books of FDIC, December 31,19kk............................ 151

117. Disbursements to protect depositors, recoveries, and losses by the 

Federal Deposit Insurance Corporation from insured banks placed 

in receivership or merged with the financial aid of the Corporation, 

1934-1944

As shown by books of FDIC, December 31,19kk............................ 152

LIST OF TABLES xiii

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
SUMMARY

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
Summary

The period since the establishment of the Federal Deposit Insurance 

Corporation in 1933 has been one of rising prices, continuous business 

expansion and growth in total bank assets. The tempo of expansion 

was greatly accelerated by our participation in the war and the 

transition from an all-out war effort to peacetime economy will give 

rise to banking problems decidedly different from any which the 

Federal Deposit Insurance Corporation has heretofore encountered.

Federal insurance of bank deposits has been highly successful and 

the Corporation recommends certain extensions of the basic principles 

of deposit insurance so that the banking system and the Corporation 

can make the maximum contribution to the business community in 

the difficult period ahead. An increase of deposit coverage is recommended combined with more flexibility in the handling of the affairs 

of banks in financial difficulties. The seriousness of the declining 

capital ratios of insured commercial banks is pointed out in this 

report and banks are urged to increase capital by a sale of common 

stock to the public. It is further suggested that it would be prudent 

for banks to take advantage of present high earnings to build reserves 

against the uncertainty of the future. Another recommendation is that 

restraints be placed upon the development of monopolies in banking.

The Corporation believes that bank supervision should not interfere 

with the proper function of bank management. Among the necessary 

conditions for banks to meet the credit needs of business and to play 

their proper role in maintaining a high level of production and employment after the war are: competition in the banking business, 

adequate capital, and a will on the part of the banker to engage 

actively in business.

3

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
PART ONE

OPERATIONS AND POLICIES OF THE CORPORATION

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
I n t r o d u c tio n

The 11-year period since the establishment of the Federal Deposit 

Insurance Corporation has been one of business expansion, rising 

prices, and growth in the total volume of deposits held by the banking 

system. During the first part of this period the increase in bank deposits reflected the recovery from the depths of the great depression 

of the early 1930’s; during the past four years the increase has reflected 

the rapid growth in governmental expenditures for war activities. The 

Federal Deposit Insurance Corporation has contributed to and benefited from this large increase in business activity.

Banking developments during the past decade have followed a 

pattern essentially similar to that of former periods of rising prices 

and expansion in the volume of business. With progressively higher 

valuations placed upon assets, banks appear in a more favorable light 

and few become involved in financial difficulties. Since January 1, 

1934, the Corporation has been called upon to make disbursements 

totaling $260 million to protect depositors in 397 banks, most of which 

were in a weak asset position when they were admitted to deposit 

insurance.1 Inasmuch as there is a tendency for losses to concentrate 

in periods of declining business activity, the Corporation’s experience 

during a period of almost constant business expansion cannot be 

assumed to represent the degree of aid which it may be required 

to render to banks in financial difficulties in the future.

The Federal Deposit Insurance Corporation receives income from 

two principal sources: assessments paid by insured banks at the 

annual rate of one-twelfth of 1 percent of average deposits, and the 

income from its holdings of Government bonds. Even though the loss 

experience has been low and substantial additions have been made 

to the surplus of the Corporation, deposits of insured banks have 

grown so large that the resources of the Corporation are now smaller 

in relation to those deposits than ever before. At the same time the 

degree of protection afforded deposits by the capital of the banks 

has declined markedly, since capital accounts have increased only 

moderately, while deposits have doubled in the past four years.

1 Under subsection (y) of the original deposit insurance law (Section 8 of the Banking Act of 1933) 

the Corporation was required to admit to insurance under the temporary Federal deposit insurance plan 

every member bank of the Federal Reserve System, and every nonmember bank which was found to 

be “ in solvent condition", regardless of the quality of its assets or the amount of its capital. When the 

permanent insurance plan was inaugurated under the Banking Act of 1935, these banks automatically 

became entitled to permanent insurance. See subsections (e) (1) and (f) (1) of the Federal deposit insurance law, as amended, Title 12, U. S. C., 1940 ed., sec. 264.

7

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Federal Reserve Bank of St. Louis
8 FEDERAL DEPOSIT INSURANCE CORPORATION

Suggestions for L egislation

The experience of the eleven years of operation of the Corporation 

suggests that application of the principles which are embodied in the 

Federal deposit insurance law should be extended in certain respects.

Insurance coverage and aid to distressed banks. The Congress, 

in 1935, gave the Corporation power to aid banks in financial difficulties through advances to facilitate mergers (including consolidations, 

and sales with assumption of liabilities). Originally adopted as a 

temporary measure, this provision operated so satisfactorily that 

Congress made it permanent and this method has since been used 

extensively to handle weak or insolvent banks. The use of advances 

made to assist in mergers assures continuity of banking services, 

thus greatly reducing the shock to the community and also decreasing 

the loss to the Corporation. In addition, a merger protects all deposits 

regardless of size, giving, in effect, 100 percent deposit insurance. 

In some instances, however, a merger is not feasible and in such 

cases owners of large bank accounts are not fully protected and one 

of the chief advantages of deposit insurance, namely, unquestioned 

confidence in the safety of bank deposits, is not fully attained.

The growth in bank balances over the past few years has made 

increasingly inadequate a protection of only $5,000. In 1934, when the 

Congress set the $5,000 limit on deposit insurance, total deposits of 

insured commercial banks were about $36 billion whereas deposits of 

this group of banks at the end of 1944 totaled $126 billion. While 

this three-fold increase in total deposits has been accompanied by an 

increase in the number of depositors, there has been a substantial 

rise in the average size of deposit accounts and today a larger proportion of the depositors have balances in excess of $5,000 than in 1934. 

With the present limited coverage, the failure of a bank is a serious 

matter for the community. A large part of the deposits used in making 

payments in production and trade are in business accounts with 

balances far in excess of the present insurance coverage. Freezing of 

these balances may make it difficult for business concerns to meet 

their payrolls and other commitments. The Corporation recommends 

that Congress give consideration to the desirability of raising the 

maximum amount of insurance coverage for any one depositor.

The cost to the Corporation of additional coverage is not likely 

to be large. It is believed that the indirect benefits of increased 

coverage resulting from the increased confidence in the safety of bank 

deposits, combined with broadened powers of the Corporation to 

assist banks in financial difficulties, would more than compensate 

for the relatively small increase in expenditure which might be 

experienced because of higher insurance coverage.

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Federal Reserve Bank of St. Louis
SUGGESTIONS FOB LEGISLATION 9

The experience of the Corporation has shown that insured banks 

in financial difficulties should not always be paid off and liquidated, 

and thus eliminated from their communities. Even though a bank is 

in financial difficulties, there may be need for banking facilities in 

the community and opportunity for profitable operation may still 

exist. In such cases it is desirable that the Federal Deposit Insurance 

Corporation and the stockholders of the banks take their losses while 

provision is made for a continuity of banking services. The present 

law contains two provisions which serve to permit continuity of 

banking services. The law provides that the Corporation may make 

loans to or purchase assets from insured banks in financial difficulties 

where such action will facilitate a merger. It also provides that the 

Corporation, upon the closing of an insured bank in financial difficulties, may organize a new national bank to operate under the 

management of the Corporation, without capital, for a temporary 

period, providing continuing banking service of a limited nature to 

the community where the closed bank operated.

A merger with an existing bank involves either a net reduction in 

banking facilities or an extension of branch banking. In rural communities there is usually no other bank with which the one in difficulties can be merged and in urban communities a merger often results 

in a partial monopoly and in some instances a complete monopoly. 

In such cases the Corporation can best discharge its obligations to 

protect depositors and to absorb the impact of banking disturbances 

in the community by keeping all existing banking facilities open. It 

should be possible for the sound business of a weak bank to be transferred in an orderly manner to a newly organized Deposit Insurance 

National Bank as well as to an existing institution. Another difficulty 

of the present law is that arrangements for effecting a merger frequently involve recapitalization and other changes in the internal 

affairs of the absorbing bank. The steps are usually time consuming 

and delay action to protect the depositors of the affected bank. During 

these delays the condition of the insolvent bank may become worse 

since it continues to operate in its insolvent condition while the terms 

of the merger are being arranged.

When a bank becomes involved in financial difficulties because a 

limited number of large lines of credit have gone bad, the most 

economical method of rehabilitation may be to remove the bad assets, 

although in some instances a thorough reorganization may be required 

and it may be more feasible to organize a new bank. It is therefore 

suggested that the Corporation be given the power to purchase 

preferred stock and to make direct advances to a bank in financial 

difficulties without requiring a merger. Such advances could be 

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Federal Reserve Bank of St. Louis
10 FEDERAL DEPOSIT INSURANCE CORPORATION

ment. It is further suggested that subsection (e) of the Federal deposit 

insurance law which provides for the organization of new national 

banks be amended so that such a bank will be able to provide the 

community with a complete banking service during a temporary 

period not in excess of two years, and will be empowered to transfer 

its business to a suitably capitalized, privately owned and managed 

State or national bank sometime during the 2-year period. If no 

acceptable privately capitalized bank takes over the business of the 

Deposit Insurance National Bank, it would be liquidated at the end 

of the 2-year period.

With increased coverage and broadened powers of reorganization, the task of rehabilitation could be adjusted to the needs of the 

particular situation. There would thus be no necessity for a hastily 

conceived merger or the establishment of a new bank in order that 

the banking service in the community may be maintained without 

interruption. Mefgers effected or chain banks or branch offices 

established under the urgency of preventing an impending bank 

failure, tend to promote monopolies and it is difficult at a later date 

to organize a locally owned and managed bank. An advance to 

facilitate a merger, however, could still be made when it seemed best.

Restriction of banking monopoly. The business of lending money 

is well suited to private initiative and is best performed under competitive conditions. Monopoly in banking is a threat to American 

traditions, both because it limits the opportunities to engage in the 

business of banking, and because it provides an opportunity for 

favoritism in the extension of credit which may foster monopolies in 

other industries. The growing tendencies toward monopoly in the 

banking business are serious, and prompt action should be taken to 

curb them. Monopolistic practices in the banking system have contributed to the growing demand for credit agencies operated by the 

Federal Government. The Corporation believes that the maintenance 

of genuine competition among banks is a much better solution to this 

problem than the further extension of governmental lending activities.

A partial monopoly which develops when one bank obtains a 

disproportionate percentage of the total banking resources of an area 

may have a serious effect on the economic life of the district. Another 

monopolistic tendency which has aroused customer discontent is the 

agreement among banks, in some areas, to fix charges and limit services. Bankers can do much to improve this situation by making active 

efforts to fit their services to the needs of the public rather than by 

relying upon restrictive agreements for profits.

Partial monopolies over large areas may develop both by means of 

branch banking and through the holding company device. The 

Corporation recommends that such branch banking as is permitted

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Federal Reserve Bank of St. Louis
SUGGESTIONS FOR LEGISLATION 11

by the laws of the respective States be strictly regulated so that no 

bank will control a disproportionate percentage of the total banking 

resources or offices of an area. Holding companies not only tend to 

become monopolistic, but increase the problem of supervision. The 

ease with which assets may be transferred from one affiliated corporate 

unit to another and the possibility of the manipulation of the accounts 

of these enterprises make adequate examination of affiliated banks 

and the appraisal of their condition and capital position extremely 

difficult. The Corporation recommends that Congress enact legislation 

which will prohibit the future creation of holding companies and which 

will require the liquidation of existing holding companies after allowing a reasonable time for orderly distribution to their own stockholders of the bank stock which they now hold. The Corporation 

believes that such legislation is distinctly preferable to the enactment 

of further regulatory laws in the bank holding company field.

D eposit I nsurance and L oan R isk

Bank capital. The ratio of capital to total assets is lower for banks 

than for any important class of business enterprise. For more than 

40 years the ratio of capital to total assets has been declining, a trend 

which has been accelerated during the two world war periods. Total 

assets have increased markedly while capital has grown at a much 

less rapid rate, with the result that the ratio of proprietorship to 

assets for all insured commercial banks is now less than 6 percent and 

the downward trend is still continuing. This downward trend in the 

margin of protection is unfortunate and should be reversed. A low 

capital ratio tends to force a bank into pursuing an ultraconservative 

lending policy because of its inability to withstand misfortune as 

readily as one which is adequately capitalized, and results in failure 

to meet all of the credit needs of the community. When the credit needs 

of any sizeable number of communities are not satisfactorily served 

by private enterprises, it is to be expected that the public will demand, 

and receive, such services from governmental agencies.

The most satisfactory solution to the problem of a small amount of 

proprietorship is the sale of additional capital stock to investors. The 

retention of earnings is helpful in this regard but decidedly inadequate 

with the sharp rise in assets which has occurred over the past three 

years. The banking business is profitable and since the double assessment feature on bank stock has been virtually eliminated there is no 

reason why such stock should not be attractive to investors. The 

experience of banks which have offered stock for sale over the past 

two years has been reassuring and it is to be hoped that banks with 

low capital ratios will avail themselves of the present favorable time 

to provide a more adequate capital structure.

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12 FEDERAL DEPOSIT INSURANCE CORPORATION

If banks wish to continue as lending institutions they must arrange 

their affairs so that they can assume the risks involved in lending 

operations without jeopardizing their deposits or subjecting their 

stockholders to undue risk. To do this, banks should not only have 

adequate capital but should also follow a policy of making periodic 

additions to reserves for losses. These reserves should be accumulated 

in amounts which reasonable expectation and loss experience indicate 

will be adequate to cover operating losses, while the capital of the 

bank should be strong enough to provide a protection against extraordinary and unforeseen hazards. The attitude of the Corporation 

regarding the accumulation of adequate reserves for losses has been 

previously stated as follows:

“ It is desirable . . . that. . . each bank should make provision 

on a systematic basis for losses, which can be expected to develop 

in periods of readjustment, on assets acquired during the prosperous 

periods. Where banks do not already follow such a practice, reserves 

for losses should be set aside annually in the form of valuation 

allowances, or unallocated charge-offs, or in some other manner, 

against those groups of assets from which losses ordinarily arise. 

Such reserves should, of course, not be regarded as a part of the 

capital accounts.

*''Within certain limits, the amount of reserves or loss allowances 

set aside annually at a rate in keeping with the experience of the 

bank over a reasonable period of years, or with the experience of 

a comparable group of banks, and with due regard for substandard 

assets, may be deducted from income in determining net income 

for Federal income tax purposes by banks employing the reserve 

method of charging off bad debts. Such deductions may be claimed 

even though losses have not actually been ascertained during the 

taxable year. The requirements of the supervisory authorities, 

subject to certain limitations, also constitute sufficient ground for 

the taking of losses for income tax purposes/'1

Deposit insurance versus asset insurance. Deposit insurance 

should be sharply distinguished from the insurance or guarantee of 

bank assets. Insurance of bank deposits by a Federal government 

agency represents an exercise of the accepted governmental function 

of controlling and protecting the circulating medium of the nation. 

The insurance or guarantee of individual bank assets, however, is 

the assumption by the Federal Government of the function of credit 

extention and risk taking.

Under deposit insurance a bank management conducts its business 

in traditional fashion, extending credit and assuming full risk. It is 

responsible to its stockholders, and subject only to general govern1 Annual Report for 1942, pp. 6-7.

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DEPOSIT INSURANCE AND LOAN RISK 13

mental supervision. Under a system of asset insurance banks would 

collect some interest as a fee for the use of their facilities but the 

standards for credit extension, and, therefore, the determination as 

to whom money can be lent, would be largely made by governmental 

agencies. The exercise of discretion in the extension of credit and, 

eventually, the sense of duty for serving the credit needs of the communities, now the responsibilities of private management, would be 

dulled by reason of the inevitable shifting of these responsibilities to 

the insuring agency.

This Corporation has always doubted the wisdom of extending 

asset insurance and has made this position public on several occasions. 

The Annual Report for 1942, for example, contained the following 

statement:

“A method of transfer of risk frequently proposed is to insure 

various types of assets of the banks against loss. While certain 

classes of loans, particularly real-estate mortgages, readily lend 

themselves to this method of financing, the creation of a series of 

governmental corporations which would insure most bank loans 

has serious long run implications to the free enterprise system. Since 

each corporation of this kind would of necessity be forced to supervise the extension of credit to avoid undue losses and since achievement of uniformity in regulations would be difficult, such a method 

of finance, if generally used, would impose additional restraints 

and interferences with the normal processes of business.

“ Insurance of bank assets seeks to avoid, by payment of a fee, 

the risk of extending credit. The insuring Federal agencies would 

be assuming the primary risk of loss in the extension of credit while 

the profits would be received by banks which would not bear the 

risks that are the justification for profit-taking. Under such a 

general system of insurance of bank assets some of the most powerful 

incentives for sound banking practices would be lacking. One of 

the sound features of deposit insurance lies in the fact that the 

stockholders of a bank still bear the first risk of loss since they lose 

their entire stake in the business before the Federal Deposit Insurance Corporation bears any loss. Self-interest, therefore, still 

provides the primary incentive for the sound management and 

operation of the bank and for prudence in the extension of credit.” 1

The extension of asset insurance with its disastrous effect on the 

initiative of the bankers of this country can be prevented only if the 

bankers show themselves both willing and able to satisfy the credit 

needs which will arise in the post-war period. Important conditions 

necessary for the banks to meet the credit needs of business are competition in the banking business, adequate equity, an understanding

1 Annual Report for 1942, pp. 7-8.

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14 FEDERAL DEPOSIT INSURANCE CORPORATION

that supervision will not interfere with the banks’ performance of 

proper functions, and a will to engage actively in business.

At the present time a general expansion of bank loans would be 

inflationary and undesirable. The immediate problem of the banks, 

therefore, is to assure the public that its post-war credit needs will be 

met by the banks without Government aid. When the need for credit 

arises, the bankers must show initiative and willingness to meet the 

needs of the public. This involves both an aggressive lending policy 

and a willingness to make sound loans of types suited to the needs of 

business. The Corporation believes that the bankers of the nation 

can meet this challenge and that they will play their proper role in 

maintaining a high level of production and employment after the war.

Deposit insurance risk and the depression problem. The

great economic problem of preventing deep or protracted business 

depressions and of maintaining a reasonably high level of business 

activity and employment is of the utmost importance to the success 

of deposit insurance. Numerous bank failures and large losses to bank 

depositors have, in the past, occurred only in periods of deep depressions. If the nation is able to follow policies which prevent depressions 

and severe unemployment, deposit insurance will never be subject to 

inordinate stresses. On the other hand, if public policy is not such as 

to prevent serious deflation and large scale unemployment, the insurance fund may experience strains and losses which will be exceedingly burdensome. Bank failures contributed substantially to the 

depression of the 1930’s. Deposit insurance itself constitutes a substantial contribution to the prevention of deflation but is only one 

part of public policy necessary to attain this end.

We hope that the Congress will give favorable consideration to 

legislation looking toward a unified, consistent treatment by the 

Government of the problems of unemployment and inflation. If 

Government policies can conform to principles which will avoid 

widespread unemployment on the one hand and inordinate price 

rises on the other, deposit insurance will be able to perform its function 

successfully.

D eposit I nsurance P rotection

Continuation of wartime prosperity during 1944 kept direct expenditures by the Federal Deposit Insurance Corporation for the 

protection of depositors to a low level. During the year only two banks 

required an insurance disbursement: one was placed in receivership 

and the other was merged with another institution. The 5,489 depositors in the two banks held accounts totaling $1.9 million, and

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DEPOSIT INSURANCE PROTECTION 15

only 15 had accounts not fully protected by insurance or in some 

other manner. Both banks were closed in May, and available statistics 

indicate that the last seven months of 1944 make up the longest period 

since 1870 in which there has been no bank failure in the United States.

During the eleven years of deposit insurance 397 insured banks 

have been placed in receivership or merged with the financial aid of 

the Corporation. Total disbursements of $260 million have been made 

to protect the $499 million of deposits in these banks. It is now 

estimated that of the 1,297,000 depositors only 5,000 will have any 

loss on their accounts, and that their losses will be about $2.6 million, 

approximately one-half of 1 percent of the total deposits. It is now 

estimated that the Corporation's loss will be less than $39 million. 

This favorable loss experience is due chiefly to the improvement in 

economic conditions since 1934. Losses have also been reduced by 

the development of the merger device in handling the affairs of weak 

or insolvent banks and by the general experience gained by the Corporation in liquidating assets acquired through receiverships or 

mergers.

Data on deposits, disbursements, recoveries, and losses in insured 

banks placed in receivership or merged with the financial aid of the 

Corporation are given in Tables 1 and 4 and in Tables 114 and 117, 

pages 148 and 152.

Table 1. N u m b e r o f D e p o s it o r s , A m o u n t o f D e p o s its , R e c o v e r i e s , a n d 

L o s s e s in I n s u r e d B a n k s P l a c e d in R e c e iv e r s h ip o r M e r g e d w it h 

t h e F in a n c ia l A id o f t h e C o r p o r a t io n , 1934-1944

Item Total

Banks placed 

in

receivership

Banks merged 

with financial 

aid of FDIC

Number of banks............................................................ 397

1,297,217

1,250,068

4,788

42,361

$499,233,000

496,188,000

2,614,000

431,000

$259,696,000

$ 38,810,000

245

380,510

333,361

4,788

42,361

$109,590,000

106,545,000

2,614,000

431,000

$ 86,979,000

$ 18,611,000

152

916.707

916.707

Number of depositors.................................................

Depositors paid in full...............................................

Depositors partially paid1..........................................

Depositors filing no claims........................................

Am ount of deposits....................................................

Estimated recovery by depositors............................

Estimated loss by depositors1....................................

$389,643,000

389,643,000

Unclaimed deposits....................................................

Disbursement by FDIC.................................................

Estimated loss to FDIC................................................

$172,717,000 

$ 20,199,000

1 1,635 depositors will lose an estimated $2,532,000 in accounts which exceeded the limit of $5,000 

insurance and were not otherwise protected; and 3,153 depositors will lose about $82,000 in accounts 

which had been restricted or deferred prior to 1934 or were otherwise ineligible for insurance protection.

Methods of providing insurance protection: direct payment

of depositors. At present two procedures are followed by the Corporation in carrying out its deposit insurance obligations: it may pay

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16 FEDERAL DEPOSIT INSURANCE CORPORATION

insured deposits in a bank which is closed, or it may assist financially 

in merging a weak or insolvent bank with another institution. The 

Corporation does not have a free choice as to which method to use, 

nor does it have the power to force a bank either to suspend operations 

or to merge. As the insurer of bank deposits the Federal Deposit 

Insurance Corporation can only terminate the insurance of a bank 

found to be. financially unsound or of a bank whose management 

persists in following illegal or unsound practices. The power to close 

a bank and place it in receivership is reserved for the bank's board 

of directors and for the State or Federal authority which chartered it. 

The decision to merge a bank is made by the bank's stockholders.

When an insured bank is closed and cannot meet the demands of 

its depositors, the Corporation immediately prepares to pay the 

insured deposits. Promptness in the payment of claims is considered 

essential to avoid adverse economic reactions in the area, to reduce 

inconvenience to the depositors, and to maintain confidence in the 

banking system. Payments are made in the regular business office of 

the closed bank, and for the depositor the process is much like closing 

an account. At the time payments are made, the depositors subrogate 

the Corporation to their rights to dividends or recoveries on the 

portion of their accounts paid from the insurance fund. The liability 

which the Corporation assumes includes all unrestricted deposits up 

to a maximum of $5,000 for each depositor after claims which the 

bank has against the depositor are deducted.

Table 2. PAYMENT BY THE CORPORATION AND RECEIVERS OF DEPOSITS IN

I n s u r e d B a n k s P la c e d in R e c e iv e r s h ip , 1934-1944

(Amounts in thousands of dollars)

Status of deposits Total

Paid by 

Dec. 31, 

1944

Unpaid on 

Dec. 31, 

1944

Deposits—total.....................................................

Insured.................................................................

Secured, preferred, and subject to offset..........

In excess of $5,000, not otherwise protected. .

Other uninsured..................................................

Unclaimed1..........................................................

Deposits, terminated receiverships—total.

Insured.............................................................

Secured, preferred, and subject to offset... . 

In excess of $5,000, not otherwise protected

Other uninsured..............................................

Unclaimed1.......................................................

Deposits, active receiverships—total..........

Insured.............................................................

Secured, preferred, and subject to offset... . 

In excess of $5,000, not otherwise protected

Other uninsured..............................................

Unclaimed................... ....................................

$109,590

87,138

11,304

9,784

933

431

$45,161

35,815

5,311

3,721

191

123

$64,429

51,323

5,993

6,063

742

308

$105,362

86,979

11,277

6,380

707

19

$44,396

35,815

5,311

3,101

150

19

$60,966

51,164

5,966

3,279

557

$4,228

159

27

3,404

226

412

$765

620

41

104

$3,463

159

27

2,784

185

308

1 Unclaimed deposits indicated as paid have been placed in trust by receivers in some States to meet 

claims presented after termination of receiverships.

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DEPOSIT INSURANCE PROTECTION 17

The payments on uninsured deposits, as shown in Table 2, indicate 

that substantial recoveries have been made on all deposits in banks 

placed in receivership. At the end of 1944, 96 percent of the $110 

million of deposits in these banks had been paid to the depositors 

either by the Corporation or by the receivers. The largest part of the 

deposits remaining unpaid at the end of the year was the uninsured 

portion of accounts exceeding $5,000 and most of this, $2.8 million 

of the $3.4 million, was in banks whose receiverships had not been 

terminated. Further payments on these deposits will be made as the 

liquidation of the assets continues.

Actual losses to depositors in banks whose receiverships had been 

terminated by the end of the year, the deposits unpaid on December 

31, amounted to only $0.8 million. About one-seventh of this was in 

deposits which were unclaimed notwithstanding extensive efforts by 

the Corporation to reach all depositors after the banks closed. Unclaimed deposits shown as paid in Table 2 are deposits for which 

reserves were established by receivers, although the depositors had 

not appeared to claim them. In some States, laws governing receiverships require that dividends on deposits still unclaimed when a 

receivership is terminated be held in trust by a State authority. The 

Corporation makes no payment on unclaimed deposits.

Methods of providing insurance protection: advances to

banks. The claims of depositors in insured banks are met directly 

only when a bank is placed in receivership, but a second satisfactory 

method of protecting the depositors in an unsound bank has been 

provided by Congress. In 1935 the Corporation was given the power 

to make loans to or purchase assets from insured banks to "facilitate 

a merger or consolidation of an insured bank with another insured 

bank” when "such action will reduce the risk or avert a threatened 

loss to the Corporation.” 1

In such a consolidation acceptable assets of the merging bank are 

transferred to the absorbing bank, and the Corporation makes 

available enough cash so that the value of the assets and cash equals 

the amount of the liabilities which the absorbing bank assumes. To 

extend its financial aid, the Corporation may make a loan secured by 

assets of one or both of the banks, or it may purchase assets from 

them. The purchase of assets has been used exclusively in the mergers 

of the past four years. Assets may be bought outright or, as is the 

current practice, they may be bought under an agreement that any 

excess recovery from their liquidation will be returned to the stockholders of the bank from which they were purchased. Before any 

distribution is made to the stockholders the Corporation recovers the

1 For a full statement of this power see the Federal deposit insurance law, as amended, Title 12, 

U.S.C., 1940 ed., sec. 264 (n)(4).

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18 FEDERAL DEPOSIT INSURANCE CORPORATION

price paid for the assets, the liquidation costs, and a fair return, now 

equivalent to 4 percent interest, on its funds for the time they are 

outstanding.

In many ways the procedure of making advances to banks provides 

a more flexible method of liquidating the affairs of an insolvent bank 

than does placing it in receivership. Depositors are fully protected; 

there is no break in the banking service either for the depositors or 

the community; and the community does not suffer the economic 

dislocations which inevitably follow a bank suspension. In addition, 

the Corporation is not restricted in liquidating assets it has acquired, 

as is the receiver of a closed bank. Such assets may be held until their 

sale will not upset the economic stability of the community, and until 

they may be liquidated advantageously from the standpoint of the 

deposit insurance fund.

On the other hand advances to banks are not always feasible. 

Occasionally the affairs of a bank may be in such condition that the 

only solution is to place it in receivership and remove it completely 

from the banking system. The procedure of making advances is 

limited by law to those instances where the advance will “facilitate 

a merger” and “avert a threatened loss” to the insurance fund. 

Furthermore, action to merge an unsound bank can be taken only 

with the consent and cooperation of the bank’s stockholders and of 

an institution willing to absorb it.

Often the requirement that advances be made only when two 

insured banks merge works against the maintenance of an adequate 

competitive banking system. In a rural area there may be no bank to 

absorb the unsound one. To follow the one alternative and place it 

in receivership may deprive the area of all banking facilities. In an 

urban community closing a bank, either by merger or suspension, 

may tend to create a banking monopoly and thus to deprive the 

community of the benefits of competitive banking service.

Statistical data on the two methods. Since 1934, 245 insured 

banks have been placed in receivership, and 152 have been merged 

with the Corporation's financial aid. Disbursements totaled $87 

million to pay depositors in the banks placed in receivership and 

$173 million to assist those which were merged. Deposits in the two 

groups of banks were $110 million and $389 million respectively; and 

the number of depositors, 380,000 and 917,000 respectively. Estimates 

of the ultimate losses to the Corporation on its disbursements were, 

at the end of 1944, $19 million in the receiverships and $20 million 

in the mergers. Data by years concerning the two methods of protecting 

depositors are given in Table 3. Assets and liabilities of insured banks 

placed in receivership or merged are given in Table 115, page 150.

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DEPOSIT INSURANCE PROTECTION 19

Table 3. DISBURSEMENTS BY THE CORPORATION TO PROTECT DEPOSITORS IN

Insured Banks Placed in Receivership or M erged with the

Financial A id of the Corporation, 1934-1944

Year

Number of banks Amount of disbursements 

(in thousands of dollars)

Total

Placed in 

receivership

Merged Total

Insured 

deposits paid 

in receiverships

Loans made 

and assets 

purchased 

in mergers

Total............................. 397 245 152 $259,696 $86,979 $172,717

1944........................... 2 1 1 1,498 399 1,099

1943........................... 5 4 1 7,137 5,465 1,672

1942........................... 20 6 14 10,824 1,612 9,212

1941........................... 15 8 7 23,878 12,276 11,602

1940........................... 43 19 24 74,232 4,895 69,337

1939........................... 60 32 28 67,792 26,184 41,608

1938........................... 74 50 24 30,474 9,082 21,392

1937........................... 75 50 25 19,202 12,045 7,157

1936........................... 69 42 27 14,828 8,055 6,773

1935...................... 25 24 1 8,890 6,025 2,865

1934........................... 9 9 941 941

Recoveries on insurance disbursements. At the end of 1944 

more than $195 million, 75 percent, of the Corporation's disbursement 

of $260 million to protect depositors had been returned to the insurance 

fund. The amount of the Corporation's recoveries and its losses are 

given in Table 4 and in Table 117, page 152.

Table 4. DISBURSEMENTS TO PROTECT DEPOSITORS, RECOVERIES, AND

L osses by the Corporation from I nsured Banks Placed in

Receivership or M erged with its Financial A id, 1934-1944

(Amounts in thousands of dollars)

Book entry Dec. 31, 1944 Total Liquidation

terminated

Liquidation

active

Disbursements......................................................................... $259,696 $48,217 $211,479

Receiverships.......................................................................... 86,979 35,815 51,164

Mergers.................................................................................... 172,717 12,402 160,315

Estimated additional disbursements in receiverships1. $159 $159

Recoveries................................................................................. $195,034 $40,446 $154,588

Receiverships.......................................................................... 62,120 28,404 33,716

Mergers................................................................................... 132,914 12,042 120,872

Estimated additional recoveries......................................... $26,011 $26,011

Receiverships.......................................................................... 6,407 6,407

Mergers................................................................................... 19,604 19,604

Losses by FDIC2....................................................................... $38,810 $7,771 $31,039

Receiverships.......................................................................... 18,611 7,411 11,200

Mergers................................................................................... 20,199 360 19,839

Number of banks.................................................................... 397 230 167

Receiverships.......................................................................... 245 176 69

Mergers................................................................................... 152 54 98

1 Estimated additional disbursements in receiverships are the insured deposits which have not been 

paid. See Table 2.

2 Losses in terminated cases are the established losses; those in active cases are estimated.

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20 FEDERAL DEPOSIT INSURANCE CORPORATION

Recoveries by the Corporation included $62 million, 71 percent, 

of the $87 million disbursed in receiverships, and $133 million, 77 

percent, of the $173 million disbursed in the mergers. Recoveries in 

banks where liquidation was still in progress at the end of the year, 

both receiverships and mergers, were 73 percent of the disbursement. 

Recoveries in those whose liquidation had been terminated were 

84 percent of the disbursement. Of the 230 banks where liquidation 

had been terminated, 100 had repaid the Corporation in full, including 

81 which paid interest amounting to approximately $840,000.

When a bank is placed in receivership and the amount of the depositors’ claims is established, or when a loan is made or assets are 

purchased to aid in a merger, recoveries by the Corporation are 

estimated and a reserve equal to the estimated losses is set up. The 

estimates are reexamined and adjusted every six months. During the 

past five years, an expanding market has made possible a high recovery 

on assets acquired by the Corporation, and has resulted in a net 

reduction of $19 million in the sum of the reserve for losses and the 

amount of losses actually written off.

Receivership activities. The Federal Deposit Insurance Corporation acts as receiver for all national banks and it may be appointed 

receiver for State banks which are placed in receivership. At the end 

of 1944 it was acting in this capacity for 10 national banks which 

closed with deposits of $12 million and for 13 State banks which 

closed with deposits of $6 million. According to its practice the Corporation obtained during the year quarterly reports from the receivers or 

statutory liquidators of the remaining 46 State banks in which deposit 

insurance payments had been made.

As liquidation proceedings come to a close, and particularly when 

the costs of continuing the receivership exceed the expected recovery 

on the unliquidated assets, the Corporation sometimes buys the 

remaining assets from the receiver under competitive bidding arrangements. This is done to terminate the receivership and to reduce 

the expenses of liquidation. By the end of 1944, $1.1 million had been 

disbursed to purchase assets from the receivers of 61 banks. Most of 

these assets have been resold without loss to the Corporation.

L egal D evelopments

Absorption of exchange.1Following the passage of H.R. 3956 by 

the House of Representatives on March 2, 1944, the bill was referred 

to the Committee on Banking and Currency of the Senate but no 

action was taken thereon, nor on the companion bill, S. 1642, until 

December 1944. Hearings were conducted by the Senate Committee,

1 For a summary of prior developments see Annual Report of the Corporation for 1943, pages 18-19.

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LEGAL DEVELOPMENTS 21

starting on December 7 and continuing through December 15. The 

hearings were not concluded in time to submit the bill to the Senate 

prior to the adjournment and expiration of the 78th Congress. However, the provisions embodied in these two bills were offered as an 

amendment to the then pending Federal Crop Insurance bill (H.R. 

4911). The amendment was debated on the Senate floor on December

13 and 14, and was rejected by a vote of 25 to 45. Thereupon the 

Senate hearings were closed and no further action was taken on either 

of the “absorption of exchange” bills. At the request of the Senate 

Committee the Corporation submitted a report on the bills in the 

form of a letter to the Chairman of the Committee, with supporting 

memoranda, which appear at pages 72-94 of this report. At the close 

of the hearings the Chairman of the Corporation, at the suggestion 

of the Committee, addressed a further letter on January 3, 1945, 

which appears at page 95 of this report.

Other legal developments affecting the Corporation or insured banks. Under Public Law 346, 78th Congress, known as the 

Servicemen’s Readjustment Act of 1944, approved June 22, 1944, 

provision is made for the guaranteeing of loans to veterans for the 

purpose of purchasing or constructing homes, farms and farm equipment, and business property.

The Contract Settlement Act of 1944 (Public Law 395) was approved on July 1, 1944. The Surplus Property Act of 1944 (Public 

Law 457) and the War Mobilization and Reconversion Act of 1944 

(Public Law 458) were approved on October 3, 1944.

Public Law 541, approved December 22, 1944, amended Section 

3656 of the Internal Revenue Code (Title 26 U.S.C., 1940 ed., Sup. 

IV, section 3656) so as to authorize collectors of internal revenue to 

receive not only certified checks but also cashiers’ and treasurers’ 

checks, as well as United States postal, bank, express, and telegraph 

money orders in payment for internal revenue taxes and internal 

revenue stamps. The text of this Act is given on page 71 of this report.

Regulations of the Corporation. On June 15, 1944, a number of 

changes were made in the regulations relating to the payment of 

assessments—former sections 302.3(a), 302.3(d), and 302.3(e) were 

repealed and former sections 302.3(c) and 302.3(f) were amended and 

redesignated as 302.3(a) and 302.3(b), respectively; and former 

section 302.3(b) was redesignated 302.3(c). By resolution adopted on 

January 27, 1944, the provisions of sections 303.1(b) and 303.2(a), 

relating to advertisement of membership, and section 306.1, relating 

to service of process, were amended. A new part, known as Part 309, 

relating to the voluntary termination of insured status was adopted 

on March 17, 1944, as an additional regulation of the Corporation.

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22 FEDERAL DEPOSIT INSURANCE CORPORATION

The texts of these regulations, as amended and adopted, are given 

on pages 96-102 of this report.

State legislation. A summary of State legislation in 1944 relating 

to banking is given on pages 102-106 of this report.

Supervisory A ctivities

Bank examinations. The policy of the Corporation from its 

establishment has been to examine annually each insured State bank 

which is not a member of the Federal Reserve System. National banks 

are examined by representatives of the Office of the Comptroller of 

the Currency, and State banks members of the Federal Reserve 

System by representatives of that System. The information of the 

Corporation relating to these banks is derived from a review of the 

reports of examination furnished by those agencies. Only under 

unusual circumstances, and with the prior consent of the Comptroller 

of the Currency or the Board of Governors of the Federal Reserve 

System, has the Corporation examined national banks or State banks 

members of the Federal Reserve System.

The Corporation in 1944 was unable to conduct all the examinations 

called for under its established policy. This was because of the substantial increase in the volume of bank assets, and the handicap of 

a further reduction in personnel resulting from the manpower requirements of the war effort. However, the number of examinations 

completed, 6,378, was not far below the total for 1943, and neither 

the effectiveness of the examinations conducted nor the accuracy of 

the examination reports submitted is believed to have been adversely 

affected by the conditions encountered during the year.

Unsafe and unsound banking practices and violations of

law or regulations. During 1944 proceedings were initiated against 

one insured bank for engaging in unsafe and unsound banking practices 

and were continued against six other banks. The status of these cases 

at the end of the year and also a summary of all cases for the entire 

period since the effective date of the Banking Act of 1935 are given 

in Table 5.

The bank against which proceedings were initiated in 1944 was 

charged with the following unsafe and unsound practices:

Continued operation of the bank with impairment of its capital 

and with an inadequate net sound capital;

Continued operation of the bank by a management which had 

failed and neglected to take proper and necessary steps to correct 

the bank's unsafe and unsound condition;

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SUPERVISORY ACTIVITIES 23

Large and excessive amounts of assets of substandard quality 

and of doubtful value upon which substantial losses are probable;

Insufficiency of earnings and inadequacy of available capital 

funds to provide for current and developing losses;

Failure to obtain financial statements and other supporting 

information;

Permitting borrowers to renew their obligations with no likelihood 

of repayment;

Classifying potential other real estate as loans.

Table 5. ACTION TO TERMINATE INSURED STATUS OF BANKS CHARGED 

w it h E n g a g in g in U n s a fe o r U n s o u n d P r a c t i c e s o r V i o l a t i o n s 

o f L a w o r R e g u l a t i o n s , 1936-1944

Disposition or status

Total

cases

1936-19441

Pending 

beginning 

of year

Started

during

year

Total banks against which action was taken................. 130 6 1

Cases closed during period:

Corrections made................................................................... 20

Insured status terminated, or date for such termination 

set by Corporation, for failure to make corrections: 

Banks suspended prior to or on date of termination 

of insured status2............................................................ 7

Banks continued in operation3.......................................... 3

Banks suspended prior to setting of date of termination of insured status by Corporation.......................... 32

Banks absorbed or succeeded by other banks4.................... 63 2

Cases pending December 31, 1944:

Corrective program pending............................................. 5 4 1

1 No action to terminate the insured status of any bank was taken before 1936. In 4 cases where 

initial action was replaced by action based upon additional charges, only the later action is included.

2 Includes one national bank which, in accordance with the provisions of the law, suspended immediately following the action of the Corporation in terminating its insured status.

3 On<? of these suspended 4 months after its insured status was terminated.

4 In all except 4 of the 63 cases the Corporation made loans to facilitate the mergers or reorganizations.

Back data—See the following Annual Reports of the Corporation: 1941, p. 188; 1942, p. 13; 1943,

p. 16.

Admission to insurance and operation of branches. During 

1944 the Corporation approved applications of 106 banks for admission to insurance. Of these, 51 were new banks, including two 

which succeeded discontinued branches of other insured banks, and 

five which succeeded cooperative credit associations or industrial 

loan companies. Of the remaining banks approved for admission to 

insurance, 41 were banks in operation but not insured at the beginning 

of the year, and 14 were insured banks reorganizing or withdrawing 

from the Federal Reserve System. The application for admission 

to insurance of one bank was disapproved.

Of the applications for admission to insurance during the year, 

18 had not become effective by the end of the year. During the year 

12 banks whose applications previously had been approved became

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24 FEDERAL DEPOSIT INSURANCE CORPORATION

insured. Further details regarding admissions to insurance, and also 

figures regarding the number of insured banks which ceased operations 

or otherwise terminated their insured status, are given in Table 101, 

page 110.

During 1944 the Corporation approved the establishment of 46 

branch offices by 40 banks not members of the Federal Reserve 

System. These offices included twelve banking facilities at military 

establishments and nine conversions of absorbed banks into branches. 

In three cases the Corporation disapproved the establishment of 

branches.

Of the branches approved by the Corporation six had not been 

established by the close of 1944. During the year 10 branches were 

opened which had previously been approved by the Corporation. 

In addition 117 branches, about three-fourths of which were for the 

purpose of providing banking services at military establishments, were 

opened by national and State banks members of the Federal Reserve 

System. Approval by the Corporation was not required for the 

establishment of these branches.

Capital and other financial adjustments. Insured banks 

examined by the Federal Deposit Insurance Corporation are required 

by law to secure the Corporation's approval to retire any part of their 

capital obligations. Applications for approval of the retirement of 

capital stock were filed by 612 such banks in 1944. Retirement of 

obligations held by the Reconstruction Finance Corporation in 

amounts aggregating $9,078,000, and of those held by others in 

amounts aggregating $1,571,000, was approved. The Corporation 

disapproved retirement of capital obligations amounting to $2,436,000.

During the year the Corporation approved the assumption by 

insured banks of deposit liabilities of two noninsured institutions. In 

two insured banks the Corporation approved the payment of certificates of beneficial interest representing deposits which had been 

waived at the time of the Banking Holiday of 1933.

^Reports from banks. Semi-annual statements of deposits were 

submitted by each insured bank as required by law for the purpose 

of determining the amount of the insurance assessment. The Corporation called for reports of assets, liabilities, and capital accounts 

as of June 30 and December 30, 1944, and for reports of earnings, 

expenses, and disposition of profits for the calendar year 1944, from 

each insured bank required by law to submit such reports to the 

Corporation. With the exception of banks in the District of Columbia 

and Territorial national banks all insured banks not members of the 

Federal Reserve System are required to submit such reports to the 

Corporation.

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SUPERVISORY ACTIVITIES 25

Summaries of the tabulations from the reports of assets, liabilities, 

and capital accounts are given in the pamphlets “Assets and Liabilities of Operating Insured Banks” , Report No. 21 and Report No. 22 

and in Table 104 of this report, page 126. Summaries of the reports of 

earnings, expenses, and disposition of profits are given in Tables 

111-113, pages 140-145 of this report.

Federal credit unions. During 1944 the Federal Deposit Insurance 

Corporation continued its supervision of Federal credit unions. 

Examination and supervision of these cooperative associations, organized to encourage thrift among their members and to provide 

them with a limited source of credit, were transferred to the Corporation from the Farm Credit Administration by Executive Order of the 

President, No. 9148, of April 27, 1942.

At the end of 1944, 4,048 credit unions held charters, but 233 of 

these were not active. During the year 285 charters were canceled, 

and 69 were granted to new groups. While personnel shortages again 

made it impossible to examine all Federal credit unions, more than 

2,900 were examined during the year.

Statements of the operations of Federal credit unions are received 

twice a year. A report summarizing the statements for the calendar 

year is prepared and published annually.

Organization and Financial Statements op the C orporation

Organization and staff of the Corporation. No change in the 

directorship of the Corporation occurred during 1944. Mr. Leo T. 

Crowley continued as Chairman; Mr. Phillips Lee Goldsborough and 

Mr. Preston Delano, Comptroller of the Currency, continued as 

Directors throughout the year.

On December 31, 1944, the total personnel of the Corporation 

consisted of 1,546 officers and employees, compared with 1,899 at the 

beginning of the year and 2,411 at the close of 1942. The number of 

officers and employees in each division of the Corporation as of 

December 31,1944, is given in Table 6.

On July 1, 1944, effect was given to an action by the Board of 

Directors to divide the Division of Administration into two divisions: 

Personnel Division, and Service Division.

An organization chart of the Corporation is shown on page iv of 

this report.

Income and expenses. The income of the Corporation in 1944 was 

$99.5 million, of which $80.9 million was from assessments upon insured banks and $18.5 million from investments and other sources.

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26 FEDERAL DEPOSIT INSURANCE CORPORATION

Table 6. OFFICERS AND EMPLOYEES OF THE FEDERAL DEPOSIT

Insurance C orporation, D ecember 31, 1944

Division and office Total

Officers and 

administrative, supervisory, and 

technical 

employees

Clerical, 

stenographic, 

and custodial 

employees

T otal........................................................................................... 1,546 668 878

Washington office................................................................. 230 79 151

Chicago office........................................................................ 260 10 k 156

Field offices.......................................................................... 1,056 U85 571

Directors................................................................................. 3 3

Executive Division................................................................. 25 16 9

Washington office................................................................. .......... 2U 16 8

Chicago office........................................................................ 1 1

Legal Division........................................................................ 30 17 13

Washington office................................................................. 12 8 U

Chicago office........................................................................ 18 9 9

Division of Examination....................................................... 488 344 144

Washington office................................................................. 35 19 16

District and field.................................................................. U53 325 128

Division of Liquidation......................................................... 696 203 493

Chicago office........................................................................ 93 U3 50

District and field.................................................................. 603 160 US

Division of Research and Statistics..................................... '36 18 18

Washington office................................................................. 36 18 18

Personnel Division................................................................. 30 9 21

Washington office................................................................. 26 8 18

Chicago office........................................................................ U 1 3

Service Division...................................................................... 137 10 127

Washington office................................................................. 9U 7 87

Chicago office........................................................................ US 3 ho

Audit Division........................................................................ 24 19 5

Chicago office........................................................................ 2k 19 5

Fiscal and Accounting Division........................................... 77 29 48

Chicago office........................................................................ 77 29 U8

Deposit insurance losses and expenses in 1944 amounted to $0.1 

million and administrative expenses were $3.8 million. The surplus 

of the Corporation was increased $101.3 million during the year, 

consisting of $95.6 million net income in excess of expenses and 

$5.7 million adjustment in surplus applicable to prior periods.

A detailed statement of the income and expenses of the Corporation 

for the year 1944 is given in Table 7. A summary statement for each 

year since its organization is given in Table 8.

Assets and liabilities. On December 31, 1944, the Corporation 

held the following assets: assets acquired through bank suspensions 

and mergers amounting at face value to a total of $56.8 million which 

were carried on the books of the Corporation at a net or appraised 

value of $26.1 million, United States obligations valued at $762.1 

million, cash amounting to $17.8 million, and other assets amounting 

to $0.3 million.

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ORGANIZATION AND FINANCIAL STATEMENTS 27

Table 7. INCOME AND EXPENSES OF THE FEDERAL DEPOSIT INSURANCE

Corporation, Calendar Y ear 1944

Income:

Deposit insurance assessments................................................. $ 80,940,596.80

Interest earned (less provision for amortization of premiums)

and profit on government obligations sold.......................... 17,761,695.92

Other income.............................................................................. 783,571.49

Total income........................................................ $ 99,485,864.21

Expenses:

Deposit insurance losses and expenses..................................... $ 74,599.81

Administrative expenses (see below)....................................... 3,815,651.41

Furniture, fixtures and equipment purchased and charged off 14,695.24

Total expenses...................................................... $ 3,904,946.46

Net income added to surplus........................... $ 95,580,917.75

Surplus, December 31, 1943:

As previously reported.............................................................. $413,755,022.56

Plus—net adjustments applicable to periods prior to January

1, 1944..................................................................................... 5,705,757.53

Surplus as adjusted, December 31, 1943....... $419,460,780.09

Surplus, December 31, 1944.............................. $515,041,697.84

d is t r i b u t io n o f a d m i n i s t r a t i v e e x p e n s e s

Salaries............................................................................................................................... $ 2,875,949.37

Professional services......................................................................................................... 23,141.62

Services of other governmental agencies........................................................................ 50.00

Transportation.................................................................................................................. 103,177.99

Subsistence................................... .................................................................................... 412,409.35

Office rental....................................................................................................................... 279,716.52

Printing, stationery and supplies.................................................................................... 59,166.38

Postage, telephone and telegraph................................................................................... 45,834.02

Insurance and fidelity bond premiums........................................................................... 549.15

Subscriptions..................................................................................................................... 10,896.84

Equipment rental............................................................................................................. 7,903.10

Repairs and alterations.................................................................................................... 12,887.87

Transportation of things.................................................................................................. 8,091.04

Miscellaneous.................................................................................................................... 5,347.21

$ 3,845,120.46

Less:

Inter-departmental expense transfers......................................................................... 29,469.05

Administrative expenses for the year ended December 31, 1944...................... $ 3,815,651.41

Liabilities of the Corporation at the end of 1944 were $1.9 million. 

Total capital of the Corporation consisted of $289.3 million capital 

stock issued at its organization and $515.0 million accumulated 

surplus. A summary of the assets and liabilities of the Corporation at 

the close of each year since its organization is given in Table 9. A more 

detailed statement of its assets and liabilities as of December 31,1943 

and 1944, is given in Table 10.

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28 FEDERAL DEPOSIT INSURANCE CORPORATION

Table 8. INCOME AND EXPENSES OF THE FEDERAL DEPOSIT INSURANCE

C o r p o r a t io n Sin c e B e g in n in g O p e r a t io n s 1

(In millions of dollars)

Year

Income Expenses

Net 

income 

added to 

Total surplus

Deposit

insurance

assessments2

Investment

income

and

profits

Total

Deposit 

insurance 

losses and 

expenses

Administrative

expenses3

1933-1944.............. 592.1 470.0 122.1 77.0 39.3 37.7 515.1

1944................... 99.5 81.0 18.5 3.9 .1 3.8 95.6

1943................... 86.7 70.0 16.7 4.9 .7 4.2 81.8

1942................... 69.4 56.5 12.9 4.8 .8 4.0 64.6

1941................... 62.0 51.4 10.6 5.1 1.4 3.7 56.9

1940................... 55.9 46.2 9.7 14.7 11.1 3.6 41.2

1939................... 51.2 40.7 10.5 15.9 12.5 3.4 35.3

1938................... 47.8 38.3 9.5 5.9 2.9 3.0 41.9

1937................... 48.1 38.8 9.3 6.6 3.9 2.7 41.5

1936................... 43.8 35.6 8.2 5.2 2.7 2.5 38.6

1935................... 20.7 11.5 9.2 5.6 2.9 2.7 15.1

1933-344................. 7.0 7.0 4.4 .3 4.15 2.6

1 Figures of total expenses, deposit insurance losses and expenses, and net income added to surplus 

for years prior to 1944 differ from those shown in previous Annual Reports because of revisions in estimates of losses allocated to the different years.

2 Assessments collected from banks insured in the temporary insurance funds were credited in full 

to their accounts at the termination of the temporary funds, and were applied toward subsequent assessments under the permanent insurance fund. This procedure resulted in no income to the Corporation 

from assessments for the term of the temporary insurance funds.

3 Includes furniture, fixtures and equipment purchased and charged off.

4 Includes expenses from date of organization, September 11, 1933, to December 31,1934.

6 After deducting portion of expenses and losses charged to banks withdrawing from the temporary funds on June 30, 1934.

Table 9. A s s e t s AND LIABILITIES OF THE FEDERAL DEPOSIT 

I n s u r a n c e C o r p o r a t io n , 1934-1944

(In millions of dollars)

Dec. 31 Cash

U. S.

Government securities

Insurance

assets

Other

assets

Total 

assets 

and liabilities

Liabilities

Capital

and

surplus

Total deposits in 

insured 

banks

Ratio— 

FDIC 

capital and 

surplus to 

deposits in 

insured 

banks

1944.... 17.8 762.0 26.1 .3 806.2 1.9 804.3 134,662.1 .60%

1943.... 20.0 638.8 46.2 .5 705.5 2.4 703.1 111,649.8 .63

1942___ 19.4 536.8 62.0 .5 618.7 1.8 616.9 89,868.7 .69

1941.... 20.0 453.9 81.7 .1 555.7 2.2 553.5 71,209.3 .78

1940.... 20.4 384.5 92.2 .1 497.2 1.2 496.0 65,287.4 .76

1939.... 28.3 363.5 64.2 .1 456.1 3.4 452.7 57,485.8 .79

1938.... 22.2 372.8 26.5 .1 421.6 1.1 420.5 50,790.2 .83

1937.... 20.6 348.5 16.1 .1 385.3 2.2 383.1 48,227.8 .79

1936.... 9.1 332.6 11.4 .1 353.2 9.8 343.4 50,280.9 .68

1935.... 33.5 298.2 5.4 .1 337.2 31.2 306.0 45,125.1 .68

1934.... 16.0 316.7 .5 .1 333.3 41.6 291.7 40,059.9 .73

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ORGANIZATION AND FINANCIAL STATEMENTS 29

Table 10. ASSETS AND LIABILITIES OF THE FEDERAL DEPOSIT INSURANCE

Corporation, D ecember 31, 1944, and D ecember 31, 1943

1944 1943

$ 17,448,278.33 $ 25,805,676.76

158,676.40 841,927.72

19,744,575.59 29,412,363.96

18,849,778.67 28,041,173.53

581,623.15 

$ 56,782,932.14

696,387.25 

$ 84,797,529.22

30,714,169.10 

$ 26,068,763.04

38,547,754.80 

$ 46,249,774.42

17,804,318.72 19,961,081.20

762,064,352.35 638,776,370.88

192,217.91 292,931.08

32,338.78 109,775.64

1.00 1.00

84,161.45 73,911.69

$806,246,153.25 $705,463,845.91

$ 329,611.43 

1,220,847.00

$ 421,550.06 

904,320.42

158,676.40 841,927.72

143,772.35 107,619.54

51,991.24 133,848.62

$ 1,904,898.42 $ 2,409,266.36

$150,000,000.00

139,299,556.99

$150,000,000.00

139,299,556.99

$289,299,556.99 $289,299,556.99

$515,041,697.84 $413,755,022.56

$804,341,254.83 $703,054,579.55

$806,246,153.25 $705,463,845.91

ASSETS

Assets acquired through bank suspensions and mergers: 

Subrogated claims of depositors against closed insured banks... 

Net balances of depositors in closed insured banks pending settlement or not claimed, to be subrogated when paid—contra.... 

Loans to merging insured banks, to avert deposit insurance

losses, and recoverable liquidation expenses.............................

Assets purchased from merging insured banks, to avert deposit 

insurance losses, under agreements to return any excess recovery to selling banks................................................................

Assets purchased from merging insured banks and receivers of 

closed insured banks to avert deposit insurance losses. .

Less: Reserve for losses..........................................................

Gash on hand and on deposit.............................................

United States Government securities (cost less reserve for 

amortization of premiums) and accrued interest receivable..

Due from Governmental agencies...............................................

Miscellaneous receivables..............................................................

Furniture, fixtures, and equipm ent...........................................

Deferred charges...............................................................................

Total assets.................................................................

LIABILITIES

Current liabilities:

Accounts and assessment rebates payable.........................

Earnest money deposits and collections in suspense..........

Net balances of depositors in closed insured banks pending 

settlement or not claimed—contra...................................

Deferred credits.......................................................................

Reserve for deposit insurance expenses............................

Total liabilities.................................................

CAPITAL

Capital stock:

United States..........................................................................

Federal Reserve banks..........................................................

Surplus (see Table 7 ).....................................

Total capital............................

Total liabilities and capital.

Audit. In accordance with the Corporation’s policy of having an 

annual independent audit, the accounts as of June 30, 1944, were 

audited by Arthur Andersen & Co. The balance sheet of the Corporation as of that date, as shown in the auditors’ report, is given in 

Table 11. The auditors’ certificate is given on page 32 of this report.

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30 FEDERAL DEPOSIT INSURANCE CORPORATION

T ab le 11. FEDERAL DEPOSIT INSURANCE CORPORATION COMPARATIVE

B alan ce Sh e e t , Ju n e 30, 1944 and 1943— from au dito r s’ report

June 30

ASSETS 1944 1943

Gash on deposit, in transit and on hand................................. $ 27,187,132.72 $ 32,112,817.18

United States Government securities and accrued interest

receivable thereon:

Principal amount $686,526,300 and $570,043,400 at June 30,

1944 and 1943, respectively, stated at cost............................. $688,931,112.31 $573,394,017.19

Less—Reserve for amortization of premiums............................. 1,169,200.52 1,845,336.86

$687,761,911.79 $571,548,680.33 

Accrued interest receivable........................................................... 2,452,367.77 1,785,212.44

$690,214,279.56 $573,333,892.77

Assets acquired through bank suspensions and mergers,

less collections:

Subrogated claims of depositors against closed insured banks. . $ 22,160,090.58 $ 25,742,036.04 

Net balances of depositors in closed insured banks pending 

settlement or not claimed, to be subrogated when paid—

per contra.................................................................................... 254,409.13 446,126.57

Loans made to, and assets purchased from, merging insured 

banks to reduce or avert deposit insurance losses—

Loans and recoverable liquidation expenses (Note 1)........ 24,555,079.29 34,459,768.53

Assets purchased under agreement to return any excess 

recoveries to the selling banks, and recoverable liquidation expenses (Note 1 )....................................................... 23,724,303.01 32,076,233.98

Assets purchased, other......................................................... 521,699.53 557,907.52

Assets purchased from receivers of closed insured banks.......... 74,367.40 219,007.89

$ 71,289,948.94 $ 93,501,080.53 

Less—Reserves for losses.............................................................. 35,172,158.51 38,792,706.64

$ 36,117,790.43 $ 54,708,373.89

Miscellaneous receivables and deferred charges:

Receivable from other governmental agencies............................ $ 376,136.12 $ 485,569.92

Federal Credit Union examination and supervision fees........... 23,411.38 112,445.82

Other............................................................................................... 101,896.55 93,466.62

$ 501,444.05 $ 691,482.36

Furniture, fixtures and equipment, at nominal value........ .. $ 1.00 $ 1.00

$754,020,647.76 $660,846,567.20

NOTES:

(1) Loans to merging insured banks are evidenced by demand notes bearing interest at the rate 

of 4% per annum, and the Corporation is entitled to a return of 4% per annum with respect to its investments in assets purchased from merging insured banks under agreements to return any excess recoveries to the selling banks. The Corporation follows the practice of taking into income only such 

amounts of interest and allowable return as are realized after recovery in full of its investments (including recoverable liquidation expenses) in the respective loans and purchased assets. The amount of 

such interest realized during the year ended June 30, 1944 was $426,558.50.

(2) Under the provisions of Section 12B ot' the Federal Reserve Act, as amended by Title I of the 

Banking Act of 1935 (subsection “ o” ), the Corporation is authorized and empowered to issue and to 

have outstanding its notes, debentures, bonds or other such obligations in a par amount determined in 

accordance with said provisions, which amount at June 30, 1944 was $974,600,000.

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ORGANIZATION AND FINANCIAL STATEMENTS 31

T a b le 11. FEDERAL DEPOSIT INSURANCE CORPORATION COMPARATIVE 

B a l a n c e Sh e e t , J u n e 30, 1944 a n d 1943— f r o m a u d it o r s ' r e p o r t— C ontinu ed

June 30

LIABILITIES 1944 1943

Liabilities:

Accounts payable........................................................................... $ 368,132.39 $ 359,839.61

Earnest money deposits and collections in suspense, arising from

assets acquired through bank suspensions and mergers, etc.. 961,637.33 985,898.61 

Net balances of depositors in closed insured banks pending

settlement or not claimed—per contra.................................... 254,409.13 446,126.57

Reserve for expenses of paying insured deposits........................ 65,306.31 137,465.92

Deferred credits.............................................................................. 86,879.39 98,402.92

Total liabilities................................................. $ 1,736,364.55 $ 2,027,733.63

Capital stock and surplus (the entire capital stock and surplus 

is considered by the corporation to constitute a reserve for 

future deposit insurance losses and related expenses with 

respect to insured banks. The corporation estimates that 

the insured deposits in operating insured banks amounted 

to approximately $46 billion at June 30, 1944 and $36 billion 

at June 30, 1943):

Capital stock, without nominal or par value (nonvoting 

and not entitled to payment of dividends)—

Held by United States Government................................. $150,000,000.00 $150,000,000.00

Held by Federal Reserve banks........................................ 139,299,556.99 139,299,556.99

$289,299,556.99 $289,299,556.99

Surplus—

Balance at beginning of year.................................................... $369,519,276.58 $294,587,895.18

Net increase in surplus during the years—

Income—

Deposit insurance assessments.......................................... $ 77,159,327.80 $ 61,110,632.07

Interest earned and net profits from sales of United 

States Government securities, less provision for

amortization of premiums............................................. 16,881,263.65 14,319,669.93

Other interest received (Note 1)....................................... 528,465.96 90,758.67

Fees from Federal Credit Unions..................................... 140,796.65 222,884.66

$ 94,709,854.06 $ 75,743,945.33

Expenses—

Deposit insurance losses and expenses applicable to 

assets acquired through bank suspensions and mergers 

occurring in—

Current year.................................................................... $ 1,654,168.18 $ 1,612,099.56

Prior years (credits, representing adjustments of

reserves for losses)...................................................... ( 4,404,822.11) ( 4,771,231.79)

Total (credit)....................................................... ($ 2,750,653.93) ($ 3,159,132.23)

Administrative expenses.................................................... 3,977,866.46 4,212,329.79

Furniture, fixtures and equipment purchased................. 17,191.89 33,213,12

$ 1,244,404.42 $ 1,086,410.68

$ 93,465,449.64 $ 74,657,534.65

Transfer from Farm Credit Administration with respect to

Federal Credit Unions....................................................... 273,846.75

Net increase in surplus....................................... $ 93,465,449.64 $ 74,931,381.40

Surplus at end of year................................... $462,984,726.22 $369,519,276.58

Total capital stock and surplus.................. $752,284,283.21 $658,818,833.57

$754,020,647.76 $660,846,567.20

The Secretary of the Treasury, in his discretion, is authorized to purchase such obligations of the 

Corporation; and he is authorized and directed to purchase obligations of the Corporation in an amount 

not to exceed $250,000,000 par value whenever, in the judgment of the Board of Directors of the Corporation, additional funds are required for insurance purposes.

The Reconstruction Finance Corporation, as provided in subsection (b) of section 5e of the Reconstruction Finance Corporation Act, as amended, shall purchase at par value such obligations of the 

Corporation as are authorized to be issued, upon request of the Board of Directors of the Corporation, 

whenever, in the judgment of said Board, additional funds are required for insurance purposes; provided, that the Reconstruction Finance Corporation shall not purchase or hold at any time said obligations 

in excess of $250,000,000 par value. If the Reconstruction Finance Corporation fails for any reason to 

purchase any of the obligations of the Corporation, the Secretary of the Treasury is authorized and 

directed to purchase such obligations in an amount equal to the amount of such obligations the Reconstruction Finance Corporation so fails to purchase.

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32 FEDERAL DEPOSIT INSURANCE CORPORATION

ARTHUR A N D ER SEN & CD.

120 SOUTH LA SALLE STREET

CHICAGO 3

To t h e B o a r d o f D i r e c t o r s ,

F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t io n :

We have examined the balance sheet of the Federal Deposit Insurance

Corporation (a corporation created under Section 12B of the Federal Reserve 

Act, as amended by Title I of the Banking Act of 1935) as of June 30, 1944, and the 

related statement of surplus for the year then ended, which statement of surplus 

is summarized in the balance sheet. In connection therewith, we have reviewed the 

system of internal control and the accounting procedures of the Corporation and, 

without making a detailed audit of the transactions, have examined or tested 

accounting records and other supporting evidence maintained in the general office 

of the Corporation (except the records as to the closed insured banks for which 

the Corporation is receiver), by methods and to the extent we deemed appropriate. 

We did not examine the collateral under loans to merging insured banks nor the 

documents evidencing ownership of assets purchased from merging or closed insured 

banks, which collateral and assets for the most part are held by Liquidating Agents 

of the Corporation at various locations throughout the country; but we reviewed 

the reports of the Corporation’s internal auditors on the examinations made by 

them during the year of such collateral and purchased assets. The examinations 

by the internal auditors are on a rotating basis, covering the collateral under each 

loan and the documents evidencing ownership of the assets purchased from each 

merging or closed insured bank approximately every eighteen months. We made 

a similar examination for the year ended June 30, 1943.

In our opinion, the accompanying balance sheet presents fairly the position of the 

Federal Deposit Insurance Corporation at June 30, 1944 and the results of its 

operations for the year ended that date.

A r t h u r A n d e r s e n & Co.

Chicago, Illinois,

October 20, 1944.

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Federal Reserve Bank of St. Louis
PART TWO

BANKING DEVELOPMENTS

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A sse t s, D e po sits, a n d C a p it a l A cc o u n ts

Assets of all banks.1The upward trend of bank assets continues. 

During the year 1944, total assets of all commercial and mutual 

savings banks increased $25 billion, and by the end of the year had 

reached the unprecedented total of $152.6 billion. This 19 percent 

increase in 1944 was a continuation of the sharp upward trend which 

has prevailed since the beginning of large scale war financing in 1942. 

Nearly all the rise in total assets during the last three years has occurred in bank holdings of Government obligations.

CHART A

Total As se ts o f a l l O perating Ba n k s b y Ty p e of A s s e t

1934- 1944

BILLIONS OF DOLLARS BILLIONS OF DOLLARS

Between 1934 and 1941 business recovery was reflected in a continuous rise in bank assets, as shown in Chart A, with the exception 

of the slight down-turn during the business depression of 1937-38. 

Two-thirds of the $15 billion increase from the end of 1938 to the 

end of 1940 was in cash and amounts due from other banks, principally reserves with the Federal Reserve banks. The increase in 

reserves was due primarily to the substantial inflow of gold from

1 In order to present a complete picture of the private banking system, the discussion in this section, 

as far as possible, covers all commercial and mutual savings banks in the United States and possessions 

(see page 108). However, data for insured commercial banks are in some instances more complete, and 

at times it is necessary to confine the discussion to this group of banks.

35

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36 FEDERAL DEPOSIT INSURANCE CORPORATION

abroad. In 1941, the $6 billion rise in total bank assets was chiefly 

the result of increases in the holdings of United States Government 

obligations and in the volume of loans, reflecting the intensification 

of our defense activities.

In the years immediately prior to our entry into the war, bank 

assets were rising at the rate of 9 percent a year. With the augmented 

tempo of war financing in the middle of 1942, the rate of increase 

rose sharply and there was a 19 percent gain in total assets during the 

last six months of 1942. The rate of increase then declined, and has 

been 18 percent a year during the last two years as shown in Table 12.

Table 12. INCREASE IN TOTAL ASSETS OF ALL OPERATING BANKS, 1941-1944

(Amounts in millions of dollars)

Call date Total

Increase from previous 

call date

assets

Amount Percentage

December 30, 1944........................................................ $152,618

139,225

127,794

116,983

109,305

92,081

91,037

$13,393

11,431

10,811

7,678

17,224

l,658i

9-6%

June 30, 1944 8.9

December 31, 1943........................................................ 9.2

June 30, 1943 7.0

December 31, 1942........................................................ 18.7

June 30, 1942 1.8

December 31, 1941........................................................

1 In computing the change from December 31, 1941, to June 30, 1942, an adjustment was made for 

the fact that on and after June 30, 1942, reciprocal bank balances due from other banks were not included in the total. Reciprocal bank balances were $614 million on June 30, 1942.

Detailed figures—See Table 107, page 128.

Changes in types of assets. A marked change in the relative 

importance of the various types of assets held by banks has accompanied the rise in total assets. The major shift has been, of course, the 

increase in the volume of United States Government obligations. At 

the end of 1938, these securities made up only one-fourth of all bank 

assets, whereas at the end of 1944 they constituted more than one-half 

of total assets, and nearly three-fourths of earning assets. Loans, on 

the other hand, have declined in relative importance. Loans amounted 

to $21 billion, or approximately 30 percent of all bank assets, at the 

end of 1938. From 1939 to the end of 1941, the volume of loans rose 

from $22 billion to nearly $27 billion. This 20 percent rise in the amount 

of loans was approximately the same as the 18 percent gain in total 

bank assets. After declining slightly in the early period of our participation in the war, the volume of loans increased and on December 

30, 1944, amounted to $26 billion, slightly below the peak at the end 

of 1941. With the sharp rise in the volume of total assets, however, 

the proportion of loans fell to 17 percent at the end of 1944. Bank 

holdings of securities other than Governments have declined gradually

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ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS 37

from $10 billion to $8 billion over the last decade, and have decreased 

in relative importance as total assets have increased. These trends are 

shown in Chart B.

CHART B

Percentage Dist r ib u tio n of A s s e t s- A ll Operating Ban ks

1934 - 1944

PERCENT OF TOTAL A SSET S PERCENT OF TOTAL ASSETS

1935 1936 1937 1998 1939 1940 1941 1942 1949 1944

Exam iners’ appraisal o f assets o f insured com m ercial banks. 

As would be expected during a period of accelerated business activity, 

the proportion of total assets of insured commercial banks classified 

as substandard by the examiners continued to decline in 1944. This 

decline was due to three factors: first, criticized assets form a smaller 

proportion of total assets simply because the increase in bank assets 

during the war period has been confined almost entirely to United 

States Government obligations and cash; second, in a period of good 

business, assets appear in a more favorable light and therefore are 

not as likely to be classified substandard as formerly; and third, banks 

have been able to dispose of many of these assets at favorable prices.

In 1944, substandard assets amounted to 0.7 percent of total assets, 

compared with 1.2 percent in 1943, and 2.1 percent in 1942. The ratio 

of substandard assets to the appraised value of assets other than cash 

and United States Government obligations fell from 5.9 percent in

1942 to 3.0 percent in 1944 as the result of a decrease of nearly 50 

percent in the amount of substandard assets held by insured commercial banks. The downtrend of substandard asset ratios from 1939

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38 FEDERAL DEPOSIT INSURANCE CORPORATION

to 1944 is shown in Table 13. Of the 12,983 insured commercial banks 

examined during 1944, 2,285, or 18 percent, had no substandard 

assets, as compared with 10 percent in 1943 and 5 percent in 1942.

Table 13. SUBSTANDARD ASSET RATIOS OF INSURED

C o m m e r c ia l B a n k s E x a m in e d in 1939-1944

Ratio of substandard assets to—

Year Appraised 

value of 

total assets

Appraised value 

of assets other 

than cash and 

U. S. Government 

obligations

Adjusted

capital

accounts

1944..................................................................... •69% 2.98% 10.92%

1943..................................................................... 1.24 4.75 17.84

1942...................................................................... 2.13 5.93 25.26

1941...................................................................... 2.84 0) 31.12

1940...................................................................... 3.93 0) 40.35

1939...................................................................... 5.12 0) 48.21

1 U. S. Government obligations are not available separately prior to 1942. 

Detailed figures—See Table 109, page 134.

As a result of the decrease in substandard assets, the ratio of such 

assets to the adjusted capital accounts1 has fallen from 48 percent in 

1939 to 11 percent in 1944. This low ratio for all insured commercial 

banks in 1944 should not obscure the fact that there are still a number 

of banks in which substandard assets constitute a substantial proportion of adjusted capital accounts.

Bank holdings of United States Government obligations.

From the end of 1941 through 1944, $61 billion of the $62 billion 

increase in bank assets occurred in holdings of United States Government obligations. At the close of 1944, all operating banks held $86 

billion of United States Government obligations, nearly three and 

one-half times the $25 billion held at the time of our entry into the 

war. The largest rise for any six-month period, both in absolute and 

relative amounts, occurred during the last half of 1942 when bank 

holdings of Government obligations rose by $16 billion, an increase of 

more than 50 percent. This reflected the heavy participation of the 

banks in the first war loan drive and the large purchases during this 

period of certificates of indebtedness which the Treasury began 

issuing in April 1942. The banks also participated heavily in the 

second war loan drive in April of 1943, and another $12 billion was 

added to bank holdings during the first six months of 1943. In the 

next year and a half, to the end of 1944, banks added $28 billion to 

their Government portfolio, an amount approximately equal to that 

added from the middle of 1942 to the middle of 1943. In the later

1 Adjusted capital accounts represent the difference between total bank assets and total bank 

liabilities as appraised by the examiners (see page 133).

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ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS 39

period the bulk of the banks' purchases was made between drives 

since the Treasury adopted a policy of sharply restricting bank 

participation in the third, fourth, fifth and six war loan drives.

From the end of 1941 to the middle of 1943, banks acquired Governments at a faster rate than the rate of increase in the Federal debt 

outstanding; while during the next 18 months, the debt increased more 

rapidly than holdings of the banks. From December 31, 1941, to 

June 30, 1943, the amount of Governments held by banks increased 

by 127 percent, whereas the interest-bearing Government debt rose 

by 119 percent. From the middle of 1943 to the end of 1944, the total 

outstanding debt increased by two-thirds, while bank holdings increased less than one-half. At the end of 1944, all operating banks 

held a slightly smaller proportion of the total Government debt 

outstanding than three years earlier. When the holdings of the Federal 

Reserve banks, which rose from $2 billion to $19 billion over the three 

year period, are included, the proportion of the Government debt held 

by the banking system rose slightly between the time of our entry 

into the war and the end of 1944. The holdings of the various classes 

of banks at the end of 1941 and 1944 are shown in Table 14.

Table 14. B a n k H o ld in g s OF UNITED STATES GOVERNMENT OBLIGATIONS, 

D i r e c t a n d G u a r a n t e e d , 1941 a n d 1944

Type of holder

December 31, 1941 December 30, 1944

Amount 

(In billions) Percent Amount (In billions) Percent

Total interest-bearing debt outstanding.. $63.8 100.0% $230.4 100.0%

Banking system—total................................... 27.8 43.6 105.1 45.6

Commercial banks...................................... 21.8 34.2 78.0 33.8

Mutual savings banks................................ 3.7 5.8 8.3 3.6

Federal Reserve banks............................... 2.3 3.6 18.8 8.2

Types of Government obligations held by insured commercial banks. Detailed data on the various types of Treasury issues 

held by commercial and mutual savings banks are available only for 

insured commercial banks. However, the data for this group of banks 

are significant since they held almost 90 percent of the total of all 

bank holdings of Governments at the close of 1944.

The war-time trend of insured commercial bank purchases of 

Government obligations has brought a marked shift in the maturity 

distribution, as shown in Chart C and Table 15. At the end of 1939, 

bonds maturing in more than ten years constituted over 40 percent 

of all insured commercial bank holdings of United States Government 

obligations, while at the end of 1944 they constituted only 10 percent.

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40 FEDERAL DEPOSIT INSURANCE CORPORATION

Concomitant with this decline in the proportion of long term maturities 

has been a very sharp increase in the proportion of short term maturities, particularly certificates of indebtedness.

ch art c

P e rce n ta g e D is tr ib u tio n o f D ire ct U.S. G ov't. O b lig a t io n s 

H e ld b y In s u re d C o m m e r c ia l Banks *

1939 - 1944

PERCENT PERCENT

194-0 1941 1942 1943 1944

Distribution o f bonds based upon num ber o f years to fin e! m aturity.

Table 15. D i r e c t U n it e d STATES GOVERNMENT OBLIGATIONS 

H e l d b y I n s u r e d C o m m e r c ia l B a n k s , 1939-1944

(Millions of dollars)

Call date Total

Certificates of 

indebtedness

Treasury

bills

Treasury

notes

Bonds maturing within1

5 years 5-103

years

After 10 

years

Dec. 30, 1944.....................

June 30, 1944.....................

Dec. 31, 1943.....................

June 30, 1943.....................

Dec. 31, 1942.....................

June 30, 1942.....................

Dec. 31, 1941.....................

June 30, 1941.....................

Dec. 31, 1940.....................

June 29, 1940.....................

Dec. 30, 1939.....................

74,919

66,141

56,192

48,880

37,994

23,062

16,945

15,291

13,344

12,530

12,153

15,303

15,469

13,220

10,315

6,729

1,978

3,972

4,709

4,637

6,557

4,462

1,536

988

1,135

662

805

571

15,781

11,835

7,673

5,717

5,800

3,732

3,159

2,758

2,756

2,699

2,388

5,918

5,650

5,791

5,497

2,865

1,765

1,551

1,471

1,458

750

837

26,231

20,641

17,092

11,511

10,331

5,588

3,970

3,837

3,153

3,489

3,308

7,714

7,837

7,779

9,283

7,807

8,463

7,277

6,090

5,315

4,787

5,049

1 The maturity distribution of insured commercial bank holdings of U. S. Government bonds is 

based upon the number of years to first maturity.

8 Includes United States Savings Bonds.

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ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS 41

During 1942 and the first half of 1943, insured commercial banks 

added to their holdings of Treasury bills, generally maturing in 91 

days after issue, which reached a peak in June of 1943, when they 

held $6.6 billion, 55 percent of the total outstanding. Since that time 

insured commercial bank holdings of bills have declined and on 

December 30, 1944, the amount held was only $4 billion, or less than 

one-fourth of the total outstanding.

Certificates of indebtedness, which have a maturity when issued 

of approximately one year, formed a large part of bank acquisitions 

during the first and second war loan drives and the banks also bought 

these securities between drives. In the first year of their offering 

insured commercial banks took a large proportion of the amount 

offered and on June 30, 1943, held approximately two-thirds of the 

total outstanding. Certificates of indebtedness have been included 

in all the later drives, but sharp restrictions have been placed on bank 

purchases. Even though insured commercial banks have steadily 

added to their holdings by purchasing certificates between drives, 

their proportionate holdings have gradually declined until on December 31, 1944, they held 50 percent of the total outstanding.

Insured commercial bank holdings of Treasury notes, issued in 

maturities of from one to five years, have increased from 50 percent 

of the total outstanding at the end of 1941 to nearly 70 percent at 

the end of 1944. The banks have also made substantial increases in 

their holdings of United States Government bonds maturing in five 

to ten years. At the end of 1941, they held $4 billion of such securities, 

and by December 30, 1944, holdings reached $26.2 billion. The 

holdings of bonds maturing in more than ten years, however, have 

remained at approximately the same level throughout the war period. 

Treasury policy has tended to discourage bank acquisition of longer 

maturities, and insured commercial banks now hold a considerably 

smaller proportion of outstanding long term issues maturing in more 

than ten years than they did before the war.

Deposits of all banks. The trend of deposits in commercial and 

mutual savings banks during the war has been the counterpart of the 

trend of total assets. Deposits rose $61 billion from the close of 1941 

to the end of 1944, while assets increased $62 billion. At the close of 

1944, total deposits of all banks amounted to $142 billion of which 

$135 billion, or 95 percent, were held in all insured banks and $126 

billion, or 89 percent, were held in insured commercial banks.

Total deposits of all banks rose $19 billion, or 23 percent, during 

1942, most of the increase occurring in the last half of the year. There 

was an $18 billion increase in deposits during 1943, and a $24 billion 

increase in 1944, while the percentage increases were 18 percent and 

20 percent respectively.

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Nearly two-thirds of the deposit increase since the war has been in 

deposits of individuals, partnerships, and corporations, while most 

of the remaining increase was in deposits of the Federal Government. 

The sale of bonds for war financing has in the first instance given rise 

to an increase in Government deposits. Then, as expenditures have 

been made, the bulk of these deposits has shifted to the accounts of 

individuals and business enterprises. Interbank deposits and deposits 

of State and local governments have increased moderately.

There has been considerable variation in the rate of growth of 

deposits during the war in the various geographic regions and States. 

The growth has been relatively high in most of the States west of the 

Mississippi River and in the southern States, and relatively moderate 

in the northeastern States. The geographic pattern of the growth in 

deposits during the last three years has corresponded to a considerable 

extent with the geographic pattern of the expansion in individual and 

business incomes. A study of the deposit shifts which have occurred 

is to be found in Part Three of this report.

Capital accounts of insured commercial banks. The increase 

in bank capital has not kept pace with the rapid expansion in total 

assets. On December 30, 1944, total capital accounts of all insured 

commercial banks amounted to $8 billion. This was $1 billion above 

the total at the time of our entry into the war, and only $2 billion 

above the 1934 level. During the past three years, capital accounts 

have increased by 17 percent, compared with an increase in total 

assets of 76 percent.

Nearly all of the increase in capital during the war years has been 

due to the retention of bank earnings. At the end of 1944, capital 

stock made up 36 percent of total capital accounts of all insured 

commercial banks, as shown in Table 16, compared with 42 percent 

three years earlier.

Table 16. CAPITAL ACCOUNTS OF INSURED COMMERCIAL BANKS, 1941 AND 1944

(Amounts in millions of dollars)

Capital accounts Dec. 31, 

1941

Dec. 30, 

1944

Increase 

or decrease

Percentage distribution

1941 1944

T otal.............................................................. $6,845 $7,990 $+1,145 100.0% 100.0%

Capital stock, notes, and debentures: 2,850 2,912 +62 41.6 36.4

Common stock............................................ 2,U70 2,660 +190 86.0 83.8

Preferred stock............................................ 806 202 -10 A 4.5 2.5

Capital notes and debentures..................... 7U 50 -2h 1.1 .6

Surplus...................... .................................... 2,687 3,402 +715 39.3 42.6

Undivided profits.......................................... 896 1,169 +273 13.1 14.7

Reserves......................................................... 412 507 +95 6.0 6.3

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ASSETS, DEPOSITS, AND CAPITAL ACCOUNTS 43

There has been only a moderate rise in capital stock since the end 

of 1941, as the additions to common stock of $190 million have been 

largely offset by the retirement of $128 million of preferred stock and 

capital notes and debentures, most of which were owned by the 

Reconstruction Finance Corporation. The investment of the Reconstruction Finance Corporation in insured commercial banks reached 

a peak of about $900 million in 1935. This investment now amounts 

to about $250 million.

With the increasing disparity between the rate of growth in total 

capital accounts of the banks and the rate of growth of assets, the 

decline in the stockholders' equity relative to total assets has been 

accelerated during the war years. However, due to the fact that the 

greatest increase in bank assets has been in the holdings of cash and 

United States Government obligations, the ratio of total capital 

accounts to assets other than United States Government obligations 

and cash increased moderately in this period. At the end of 1944, this 

ratio was 27.6 percent or slightly above the 26.3 percent at the end 

of 1934. Any expansion of bank loans during the post-war reconversion 

period will bring about a decline in this ratio unless additional capital 

is obtained. The ratio of total capital accounts to total assets and to 

assets other than cash and Governments is shown in Table 17.

Table 17. CAPITAL RATIOS OF INSURED COMMERCIAL BANKS 

Y e a r -E n d C a l l D a t e s , 1934-1944

Total capital accounts as a percentage of—

Year

Total

assets

Assets other than 

cash and U. S. Government obligations

1944....................................................................................... 5.94%

6.64

27.58%

28.281943.......................................................................................

1942....................................................................................... 7.39 25.99

1941....................................................................................... 8.91 22.82

'1940....................................................................................... 9.44 24.38

1939....................................................................................... 10.33 25.38

1938....................................................................................... 11.33 25.62

1937....................................................................................... 11.81 25.00

1936....................................................................................... 11.26 24.60

1935....................................................................................... 12.19 26.09

1934....................................................................................... 13.24 26.69

Capital ratios by size of bank. Small banks generally have 

higher ratios of total capital accounts to total assets than the large 

banks. This is shown by the data summarized in Table 18 for the 

12,983 insured commercial banks examined during 1944. Of these 

banks, 2,267, or 17 percent, had adjusted capital accounts equal to 

more than 10 percent of the appraised value of their assets. Of the 

241 smallest banks examined during 1944, 76 percent had capital 

ratios of over 10 percent, and this proportion steadily declined as the

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44 FEDERAL DEPOSIT INSURANCE CORPORATION

size of the banks increased until only 4 percent of the 249 largest 

banks had capital ratios of over 10 percent and nearly half had ratios 

of less than 5 percent.

Table 18. DISTRIBUTION OF INSURED COMMERCIAL BANKS EXAMINED IN 1944 

A c c o r d in g t o A d ju s t e d C a p it a l R a t io a n d b y A m o u n t o f D e p o s it s

Size of bank All

banks

Banks with adjusted capital accounts per $100 of 

appraised value of assets of—

$0.01

to

$4.99

$5.00

to

$7.49

$7.50

to

$9.99

$10.00

to

$14.99

$15.00

or

more

All banks.............................................. 12,983 2,108 5,414 3,194 1,839 428

Banks with deposits of—

$250,000 or less................................. 241 4 18 37 114 68

$250,000 to $500,000......................... 1,297 31 260 512 394 100

$500,000 to $1,000,000..................... 2,888 195 1,279 902 434 78

$1,000,000 to $2,000,000.................. 3,423 563 1,598 765 416 81

$2,000,000 to $5,000,000.................. 2,950 650 1,299 613 321 67

$5,000,000 to $10,000,000................ 1,101 273 515 194 100 19

$10,000,000 to $50,000,000.............. 834 276 351 142 53 12

More than $50,000,000..................... 249 116 94 29 7 3

Earnings of I nsured C ommercial B anks

Insured commercial banks during 1944 had the highest level of net 

profits since deposit insurance began in 1934. Net profits before taxes 

in 1944 were $954 million, a gain of 25 percent over 1943 and 83 percent 

over 1942. Net profits after taxes were $751 million in 1944, which 

was 18 percent above 1943 and 70 percent above 1942. Operating 

earnings and expenses and net profits for the three years are shown 

in Table 19.

Table 19. E a r n in g s , EXPENSES, AND DIVIDENDS OF INSURED

C o m m e r c ia l B a n k s , 1942-1944

(Amounts in millions of dollars)

Item 1944 1943 1942

Total current operating earnings.............................................

Total current operating expenses.............................................

Net current operating earnings.........................................

Profits on assets sold, recoveries on assets, etc......................

Losses, charge-offs, etc..............................................................

$2,215

1,357

858

362

266

954

203

751

253

498

$1,959

1,256

703

353

290

766

128

638

233

405

$1,790

1,222

568

223

271

520

79

441

228

213

Net profits before income taxes................................................

Taxes on net income..................................................................

Net profits after taxes...............................................................

Cash dividends declared and interest paid on capital...........

Net profits retained...................................................................

Number of banks....................................................................... 13,268 13,274 13,347

Detailed figures for 19M—See Table 111, page 140.

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EARNINGS OF INSURED COMMERCIAL BANKS 45

Total current operating earnings have not increased as rapidly 

during the last three years as earning assets, both because of the 

larger proportion of assets invested in Governments which have a 

lower rate of return than loans and because of a continuation of the 

gradual decline in the average rate of return on loans. However, total 

current operating expenses have increased more slowly than have 

total current operating earnings. Total current operating expenses 

took 61 percent of total current operating earnings in 1944 compared 

with 68 percent in 1942. As a result, net current operating earnings 

have increased during the last two years at about the same rate as 

the earning assets of insured commercial banks.

Losses and charge-offs in 1944 amounted to only $266 million, the 

lowest in the history of Federal deposit insurance. Recoveries on 

assets and profits on securities sold or redeemed were $362 million in 

1944, and for the third time since 1934, recoveries and profits exceeded 

charge-offs.

Total income taxes of $203 million on earnings of insured commercial 

banks in 1944 were 59 percent higher than the $128 million total for 

the previous year and two and a half times the $79 million in 1942. 

Income taxes amounted to 21 percent of net profits before taxes in 

1944 compared with 15 percent in 1942.

The substantial rise in net profits during the war has not been 

accompanied by a significant increase in cash dividends. The 1944 

total of $253 million was the same as in 1941, the previous high, and 

moderately above the 1942 and 1943 totals. The result of the maintenance of dividend payments at prewar levels during the war has 

been a sharp increase in net profits retained by insured commercial 

banks. In 1944, nearly $500 million, or two-thirds of net profits after 

taxes, was added to total capital accounts. This compares with $405 

million, or 63 percent, of net profits retained in 1943 and $213 million, 

or 48 percent, retained in 1942.

Rate of net profits. Net profits after taxes of all insured commercial banks in 1944 represented a return of 9.7 percent on average 

total capital accounts, substantially above the 8.8 percent return in

1943 and more than 50 percent above the 6.3 percent return in 1942. 

The rate of return in the last two years has been higher than at any 

other time during the last decade.

The rise in the ratio of net profits to total capital accounts during 

the war years is due, in large part, to the fact that total capital accounts grew less rapidly than earning assets. The ratio of net earnings 

to total capital accounts rose from 7.0 percent in 1942 to 8.5 percent 

in 1944. An additional factor contributing to the rise in net profits 

was the excess of recoveries and profits on assets over losses and

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Federal Reserve Bank of St. Louis
46 FEDERAL DEPOSIT INSURANCE CORPORATION

charge-offs in both 1943 and 1944. The effect of net charge-offs or 

net recoveries is represented by the difference between the rate of 

net earnings and the rate of net profits.

In Chart D and Table 20 ratios of net profits, net earnings, and 

cash dividends to total capital accounts are shown for each year 

since the beginning of deposit insurance.

CHART D

Ratios of Net Earnings, Net Profits and Cash Div id e n d s T o

Average Total Capital Accounts-A ll Insured Commercial Banks

1934 - 1944

1934 j 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944

Table 20. R atios op N et P rofits, N et E arn in gs, and Cash D ividends to

A verage T otal Capital A ccounts, all I nsured C ommercial B an k s, 1934-1944

Ratios to average total capital accounts1

Year

Net profits 

after taxes

Net operating 

earnings after 

taxes2

Cash dividends 

declared and interest 

paid on capital

1944.................................................... 9.7% 8.5% 3.3%

1943.................................................... 8.8 7.9 3.2

1942.................................................... 6.3 7.0 3.3

1941.................................................... 6.7 6.9 3.7

1940.................................................... 6.1 6.6 3.6

1939.................................................... 6.0 6.9 3.6

1938.................................................... 4.7 6.6 3.5

1937.................................................... 6.0 7.3 3.5

1936..................................................... 8.3 7.0 3.6

1935.................................................... 3.4 6.5 3.4

1934.................................................... -5.5 6.5 3.0

1 Total capital accounts are averages of figures for beginning, mid-year, and year-end call dates. 

a After all taxes, including income taxes which were not available separately prior to 1942.

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EARNINGS OF INSURED COMMERCIAL BANKS 47

The rise in bank earnings has been general. With few exceptions, 

the prosperity has been shared by all banks. Whereas, 22 percent of 

the banks in 1942 and 37 percent in 1943 reported net profits after 

taxes in excess of 10 percent of average total capital accounts, one-half 

of the banks in 1944 had net profits in excess of 10 percent of average 

total capital accounts. Conversely, the proportion of banks reporting 

net losses fell from 6 percent in 1942 to 2 percent in 1943 and only 

1 percent in 1944. The distribution of banks according to the rates of 

net profits on total capital accounts for 1942, 1943, and 1944 is shown 

in Table 21.

T ab le 21. D is t r ib u t io n of I n s u r e d C o m m e r c ia l B a n k s A cc o r d in g t o R a t e

of N e t P r o f it s o n T o t a l C a p it a l A c c o u n ts, 1942-1944

Rate of net profits

1944 1943 1942

Number 

of banks

Percentage

distribution

Number 

of banks

Percentage

distribution

Number 

of banks

Percentage

distribution

AH banks1............................ 13,141 100.0% 13,145 100.0% 13,226 100.0%

Banks with net loss..........

Banks with net profits

after taxes per $100 of

total capital accounts

of— 2

117 0.9 257 2.0 749 5.7

$0.00 to $4.99................... 1,288 9.8 2,290 17.4 3,963 30.0

$5.00 to $9.99................... 5,062 38.5 5,678 43.2 5,647 42.7

$10.00 to $14.99............... 4,475 34.1 3,418 26.0 2,129 16.1

$15.00 to $19.99............... 1,618 12.3 1,067 8.1 520 3.9

$20.00 or more................. 581 4.4 435 3.3 218 1.6

1 Excludes banks submitting reports covering less than the full year’s operations or materially 

affected by mergers.

2 Total capital accounts are averages of figures at beginning, mid-year, and year-end call dates.

Sources of earnings. Total current operating earnings increased 

from $1,790 million in 1942 to $1,959 million in 1943 and to $2,215 

million in 1944. The substantial rise in earning assets which caused this 

increase in gross earnings has been accompanied by a marked shift 

in the relative importance of the various types of assets as sources 

of income. Prior to 1943, income on loans was the most important 

earnings item, accounting for approximately 45 percent of total 

current operating earnings in each year from 1934 to 1941. In the 

war years this proportion declined and by 1944 income on loans 

accounted for less than one-third of total current operating earnings. 

In the last two years income on securities has exceeded income on 

loans and in 1944 income on securities constituted almost one-half 

of total current operating earnings.

Since 1941, the expansion of the earning assets of banks has been 

confined to holdings of United States Government obligations, and 

as a result, income on securities has increased rapidly, reaching $1,090 

million in 1944. The average rate of return on securities, however,

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Federal Reserve Bank of St. Louis
48 FEDERAL DEPOSIT INSURANCE CORPORATION

continued to decline and was 1.49 percent in 1944. This decline in 

recent years has been a result of both the increased holdings of Government obligations and the concentration of these holdings in short term 

issues. Total income from loans, on the other hand, has steadily 

declined since 1941. While the volume of loans outstanding rose 

moderately during 1944, the average rate of return fell from 3.85 

percent in 1943 to 3.44 percent in 1944 resulting in a slight decline 

in total income from loans.

Earnings from other sources have increased in the last two years. 

The 1944 total of $427 million was 9 percent above 1943 and 14 percent 

above 1941. The increase, which was primarily due to higher income 

from service charges, was not, however, as rapid as the rise in total 

current operating earnings. In 1944, 19 percent of gross earnings was 

derived from sources other than loans and securities in contrast to 

22 percent in 1941. These trends are shown in Table 22.

Table 22. A m o u n ts AND RATES OF INCOME RECEIVED BY INSURED 

C o m m e r c ia l B a n k s , 1934-1944

Total current operating earnings 

(millions of dollars) from— Income on 

loans 

per $100 of 

loans1

Income on 

securities 

per $100 of Year Loans Securities Other securities1

sources

1944............................................ $698 $1,090

861

$427

393

$3.44

3.85

$1.49

1943............................................ 706 1.52

1942............................................ 817 610 364 4.08 1.782

1941............................................ 848 509 373 4.27 1.95

1940............................................ 769 500 363 4.41 2.16

1939............................................ 727 522 357 4.46 2.38

1938............................................ 705 532 347 4.36 2.56

1937............................................ 710 572 352 4.28 2.68

1936............................................ 663 574 330 4.34 2.66

1935............................................ 643 548 295 4.40 2.87

1934............................................ 691 550 278 4.63 3.17

1 Loans, securities, and deposits are averages of figures reported at beginning, middle, and end of 

year by banks submitting statements of assets and liabilities.

2 For 1942, average securities are based on amounts reported at end of month in the Treasury 

survey of ownership of Government securities as well as upon amounts reported at call dates.

Detailed figures for 19UU—See Tables 111-112, pages 140-143.

Expenses. Total current operating expenses amounted to $1,357 

million in 1944, 8 percent above the $1,256 million in 1943. Of the 

total increase of $101 million in 1944, $46 million represented an 

increase in salary and wage payments. The number of officers and 

employees increased 2 percent during 1944, while total salaries, wages 

and fees paid rose 8 percent in 1944 as compared with 1943. Because 

of the increase in the volume of time and savings deposits, interest 

paid on these deposits rose to $187 million in 1944, $23 million or

14 percent higher than in 1943. This increase in 1944 reversed the 

downward trend in evidence since 1934. However, the average rate 

of interest paid continued to decline and was .87 percent in 1944.

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EARNINGS OF INSURED COMMERCIAL BANKS 49

Earnings by size of bank. There was little relationship between 

size of bank and the ratio of net profits to total capital accounts in 

1944. Except for the fact that the 1,105 smallest banks, those with 

deposits of $500,000 or less, had an average ratio of net profits after 

income taxes to total capital accounts substantially below the ratios 

of the larger banks, there appeared to be no relationship between 

size of bank and the net profits ratio.

The fact that the small banks had the highest ratios of net operating 

earnings to total assets, as shown in Table 23, was primarily due to 

the larger proportion of earning assets held in the form of Government 

securities and to their greater concentration of these holdings in short 

term issues by the large banks. The higher ratio of net earnings to 

total assets shown by the small banks was, however, counteracted 

by their higher ratios of total capital accounts to total assets. As a 

result, when net earnings are related to total capital accounts, the 

smallest banks had the lowest ratios while the two groups of the 

largest banks had the highest ratios.

Table 23. N e t E a r n in g s AND NET PROFITS RATIOS OF INSURED 

C o m m e r c ia l B a n k s , 1944

BANKS GROUPED BY AMOUNT OF DEPOSITS

Number

of

banks1

Ratios to total capital accounts2 Ratio of net 

current 

operating 

earnings to 

total assets2

Size of bank

Net profits 

after taxes

Net current 

operating 

earnings

All banks.................................... . 13,177 9.46% 10.82% 0.65%

Banks with deposits o f:

$500,000 or less............................... 1,105

2,578

7.98 8.01 0.83

$500,000 to $1,000,000................... 9.82 9.73 0.77

$1,000,000 to $2,000,000................ 3,520 10.13 10.35 0.72

$2,000,000 to $5,000,000................ 3,378 9.59 10.16 0.67

$5,000,000 to $10,000,000.............. 1,328 9.26 9.99 0.63

$10,000,000 to $25,000,000. .......... 742 9.21 10.12 0.60

$25,000,000 to $50,000,000______ 238 9.08 10.00 0.60

$50,000,000 to $100,000,000.......... 129 9.65 11.55 0.58

More than $100,000,000................. 159 9.49 11.27 0.66

1 Excludes banks submitting reports covering less than the full year’s operations and trust companies 

not engaged in deposit banking.

2 Total assets and total capital accounts are averages of figures for December 31, 1943, June 30, 

1944, and December 30,1944, for banks submitting reports to the Federal Deposit Insurance Corporation 

and as of December 30, 1944, for other banks.

The same picture for rate of net profits is shown by Table 24 

which shows the banks grouped by rate of net profits and amount 

of deposits. About half of all insured commercial banks had net 

profits in excess of 10 percent of average total capital accounts. 

This proportion was closely approximated in each of the size groups 

except for the smallest banks with deposits of $500,000 or less, and

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Federal Reserve Bank of St. Louis
50 FEDERAL DEPOSIT INSURANCE CORPORATION

in this group only about one-third of the banks had net profits in 

excess of 10 percent of average total capital accounts.

Table 24. DISTRIBUTION OF INSURED COMMERCIAL BANKS ACCORDING TO RATIO 

o f N e t P r o f i t s t o T o t a l C a p it a l A c c o u n t s a n d b y A m o u n t o f D e p o s its , 1944

All

banks1

Banks 

with net 

loss

Banks with net profits after taxes per $100 of 

total capital accounts of—2

Size of bank

$0.01

to

$4.99

$5.00

to

$9.99

$10.00

to

$14.99

$15.00

to

$19.99

$20.00

or

more

All banks1....................................... 13,141 117 1,288 5,062 4,475 1,618 581

Banks with deposits of—

$500,000 or less........................... 1,464 24 327 586 371 111 45

$500,000 to $1,000,000............... 2,843

3,503

23 295 1,078 939 355 153

$1,000,000 to $2,000,000............ 26 272 1,255 1,237 529 184

$2,000,000 to $5,000,000............ 3,080 28 227 1,160 1,138 402 125

$5,000,000 to $10,000,000.......... 1,116 7 99 459 396 115 40

$10,000,000 to $25,000,000........ 661 6 46 304 218 68 19

$25,000,000 to $50,000,000 206 1 8 98 78 15 6

$50,000,000 to $100,000,000___ 127 2 9 52 47 13 4

More than $100,000,000............. 141 5 70 51 10 5

1 Excludes banks submitting reports covering less than the full year’s operations or materially 

affected by mergers.

2 Total capital accounts are averages of figures at beginning, mid-year, and year-end call dates.

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PART THREE

GROWTH IN BANK DEPOSITS AND IN TOTAL

MONEY SUPPLY, 1940-1944

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D ep o sit s in C o m m e r c ia l a n d M u t u a l Sa v in g s B a n k s

At the close of 1944, total deposits in commercial and mutual 

savings banks in the United States and possessions amounted to 

$142 billion, more than twice the amount five years earlier. Four-fifths 

of the growth in deposits during the five years occurred in the latter 

half of the period. From the end of 1939 to the middle of 1942 deposits 

increased by $15 billion; during the next two and a half years to the 

end of 1944 they increased by $59 billion. The large growth in deposits 

since the middle of 1942 is the result of participation by the banks in 

financing the Federal Government wartime deficit.

Growth in deposits by class of owner. About two-thirds of the 

increase during the period, 1940-1944, in total deposits in commercial 

and mutual savings banks was in deposits of individuals, partnerships, 

and corporations. The bulk of the remainder, or more than one-fourth 

of the total growth in deposits, occurred in deposits of the United 

States Government. Deposits of States and political subdivisions, and 

also interbank deposits, grew at a relatively moderate rate. The 

amount of deposits owned by each of these groups, at each year-end 

and mid-year during the 5-year period, is shown in Table 25. The 

change in such deposits, by years, is shown in Table 26.

T ab le 25. DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS IN THE

U n ited States a n d P ossessions, b y Class of Ow n e r ,

Ju n e 30 and D ecem ber 31, 1939-1944

(In millions of dollars)

Date Total Interbank

United

States

Government

States and 

political 

subdivisions

Individuals,

partnerships,

and

corporations1

Certified 

checks etc.2

1944—Dec. 30.............. $142,077 $12,229 $20,834 $5,061 $102,586 $1,367

June 30.............. 129,127 11,201 19,591 4,933 91,841

90,140

1,561

1943—Dec. 31.............. 118,100 11,000 10,433 4,848 1,679

June 30.............. 107,622 10,887 8,080 4,783 82,730 1,141

1942—Dec. 31..............

June 30..............

100,153

82,9873

11,309

10,279*

8,467 4,491 74,657 1,229

83,6014

82,073

10,8934

10,997

1,889 4,437 65,606 776

1941—Dec. 315............. 1,941 4,278 63,763 1,094

June 305............. 78,392 10,955 793 4,119 61,719 806

1940—Dec. 31»............. 76,248 10,952 799 3,921 59,597 979

June 295............. 70,994 10,192 877 3,696 55,697 532

1939—Dec. 305............. 68,413 9,884 906 3,495 53,506 622

1 For 1942-1944, includes unclassified deposits in noninsured banks and total deposits in mutual 

savings banks.

2 Certified and officers’ checks, cash letters of credit and travelers’ checks outstanding, and amounts 

due to Federal Reserve banks.

8 Excluding reciprocal deposits reported by insured commercial banks. These figures are comparable 

with those for subsequent dates.

4 Including reciprocal deposits reported by insured commercial banks. These figures are comparable

with those for prior dates.

6 From reports of Comptroller of the Currency. Possessions included are Alaska, Hawaii, Puerto 

Rico, and the Virgin Islands. Figures for total deposits differ slightly from those in the Annual Report 

of the Federal Deposit Insurance Corporation, 1941, p. 122, which are not available by class of owner.

Note: Figures are rounded and will not necessarily add precisely to totals.

53

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54 FEDERAL DEPOSIT INSURANCE CORPORATION

T ab le 26. INCREASE IN DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS

B a n k s , U n it e d St a t e s a n d P o ss e s sio n s, b y Y e a r a n d C la ss of O w n e r , 1940-1944

Year Total1 Interbank1

United

States

Government

States and 

political 

subdivisions

Individuals,

partnerships,

and

corporations

Certified 

checks etc.

Amount of increase

(thousands of dollars)

1940-1944.................. $74,189 $2,871 $19,928 $1,565 $49,081 $745

1944....................... 23,977 1,229 10,400 213 12,446 -312

1943....................... 17,947 -309 1,967 357 15,482 450

1942....................... 18,605 837 6,526

1,142

213 10,894 135

1941....................... 5,825 46 356 4,167 115

1940....................... 7,835 1,068 -106 426 6,091 357

Percentage increase

1940-1944................. 108% 29% 2,201% 45% 92% 120%

1944....................... 20 11 100 4 14 -19

1943....................... 18 -3 23 8 21 37

1942....................... 23 8 336 5 17 12

1941....................... 8 (2) 143 9 7 12

1940....................... 11 11 -12 12 11 57

1 Increase for 1944 and 1943 computed from figures excluding reciprocal deposits reported by insured 

commercial banks; increase for 1942, 1941 and 1940 computed from figures including reciprocal deposits.

2 Less than one-half of 1 percent.

Note: Figures are rounded and will not necessarily add precisely to totals.

The rate of growth in deposits of the United States Government 

was far higher than the rate of growth in the deposits of individuals, 

partnerships, and corporations. The latter nearly doubled during the 

5-year period, rising from $54 billion to $103 billion; the former 

increased by more than 20-fold, rising from less than $1 billion to 

nearly $21 billion. The growth in the deposits of the United States 

Government represents primarily the larger cash balance needed in 

connection with the greatly increased expenditure of the Government 

in wartime. However, the growth in bank deposits owned by the 

Government has been relatively greater than the growth in its expenditure. In 1939, the amount of Government deposits in commercial and mutual savings banks was less than 10 percent of its 

annual expenditure. For 1944 the deposit balance of the Government 

averaged about 15 percent of its annual expenditure.

Relation, of deposit growth to war finance. The growth in 

total deposits is an accompaniment of the acquisition of additional 

assets by the banks. During the war period the assets acquired by the 

banks have consisted almost exclusively of United States Government 

obligations, and in the defense period chiefly of such obligations.

From the end of 1939 to the middle of 1942 the net increase in 

assets of commercial and mutual savings banks (excluding balances 

with other banks) amounted to $14.4 billion, of which three-fourths 

consisted of United States Government obligations; from the middle 

of 1942 to the end of 1944 the net increase amounted to $59.0 billion, 

of which'95 percent consisted of United States Government obligations

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DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS 55

and 4 percent of currency and reserve balances at Federal Reserve 

banks. In the latter period the increase in assets of Federal Reserve 

banks, accompanying the increase in commercial bank reserves and 

the issue of currency, also consisted of United States Government 

obligations.

From the middle of 1942 to the end of 1944 the net increase in bank 

assets other than United States Government obligations, reserves at 

Federal Reserve banks, and currency was less than the increase in 

the banks' capital accounts and miscellaneous liabilities. The increase 

in deposits was therefore slightly smaller than the increase in the 

banks' holdings of Government obligations and of other assets based 

on such holdings. The amount of increase in deposits, other than 

interbank, was $57.1 billion; the increase in Government obligations 

and assets based on such obligations was $58.3 billion (see Table 27).

T ab le 27. A sse t s ACQUIRED BY COMMERCIAL AND MUTUAL SAVINGS BANKS

in t h e U n it e d St a t e s a n d P o ss e s sio n s, 1940-1944

(In millions of dollars)

Assets, capital and liabilities Dec. 30, 1939, 

to

June 30, 1942

June 30, 1942, 

to

Dec. 30, 1944

Dec. 30, 1939, 

to

Dec. 30, 1944

United States Government obligations.................. $10,878

1,739

967

816

$55,941

-649

2,317

1,370

$66,819

1,090

3,284

2,186

Other loans and investments and miscellaneous 

assets......................................................................

Currency and reserves with Federal Reserve banks1 

Float (cash items in process of collection).............

Total assets acquired, excluding balances 

with other banks....................................... 14,400

386

58,979

1,446

73,379

1,832

Deduct: Increase in capital accounts and miscellaneous liabilities...................................................

Balance.............................................................. 14,014

14,180

57,533

57,139

71,547

Increase in deposits other than interbank. ... 71,319

1 From the end of 1939 to the middle of 1942 the increase in assets of Federal Reserve banks consisted primarily of gold so that the increase in currency and reserves held by commercial banks was 

based primarily upon gold; during the period from the middle of 1942 to the end of 1944 the assets acquired by the Federal Reserve banks consisted almost exclusively of United States Government obligations so that for this period the increase in currency and reserves of commercial banks was based primarily 

on those obligations.

Sale of Government obligations affects bank deposits in different 

ways depending upon the identity of the buyers and sellers. When 

Government obligations are sold by the Treasury directly to individuals or business enterprises, the immediate effect is to reduce 

the deposit balances of individuals, partnerships, and corporations 

and to increase the deposits of the Federal Government, leaving total 

deposits unchanged. As expenditures are made by the Government 

the balance is transferred back to individuals. When Government 

obligations are sold by the Treasury directly to banks an expansion 

takes place in the deposits of the Federal Government with no reducDigitized for FRASER 

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Federal Reserve Bank of St. Louis
CHART E

P e r c e n t a g e In c r e a s e in D e p o s i t s o f In d i v i d u a l s , Pa r t n e r s h i p s a n d

C o r p o r a t i o n s in C o m m e r c i a l a n d M u t u a l S a v i n g s B a n k s

J u n e 3 0 ,1 9 4 2 t o D e c e m b e r 3 1 ,1 9 4 4

OX

O*

■MASS. 29

R.I. 36 

CONN. 36

I*. • 1 25% -4-9% 

50% -7 4 % 

V //A 7 5 % -9 9 %

t f f l 100% ,-124% 

125%,-149%, 150% and over

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
tion in the deposits of others, so that total deposits are increased. As 

the Government spends the money this increase is transferred to the 

accounts of individuals, partnerships, and corporations. When banks 

purchase Government obligations previously held by other investors 

an increase takes place in the deposits of individuals, partnerships, 

and corporations, with a corresponding rise in total deposits.

Some of these aspects of the acquisition of Government obligations 

by the banks and the accompanying creation of bank deposits are 

markedly influenced by the timing of the bond drives. Other aspects 

of the flow of deposits from the Government to individuals and 

business and from the latter to the Government (particularly Government expenditures and the payment of taxes) have little relation to 

the timing of the bond drives or of the purchase of Government 

obligations by banks. For these reasons substantial differences may 

appear, for short periods, between the amount of Government obligations purchased by the banks and the amount of growth in the deposits of individuals, partnerships, and corporations. However, for 

the war period as a whole the entire amount of United States Government obligations acquired by commercial and mutual savings banks, 

and also the amount of Government obligations acquired by Federal 

Reserve banks which is accompanied by increased reserve balances 

in those banks, will appear in the growth of deposits of individuals, 

partnerships, and corporations—except to the extent that the Government maintains a larger cash balance, in the form of deposits in 

commercial and mutual savings banks, in the postwar than in the 

prewar period.

Change in deposits of individuals, partnerships, and corporations by regions and States. For the entire nation, excluding 

territories and possessions, the growth in the deposits of individuals, 

partnerships, and corporations from the end of 1939 to the end of 

1944 amounted to $49 billion, or 91 percent. Three-fourths of this 

increase occurred during the latter half of the 5-year period.

The increase in deposits of individuals, partnerships, and corporations has not been uniform throughout the country. The growth 

has been relatively highest in the southern and western part of the 

nation, and relatively lowest in the northeast.

The accompanying map (Chart E) shows the percentage change in 

deposits of individuals, partnerships, and corporations in each State 

during the 2 3^ year period from the middle of 1942 to the end of 1944. 

In Table 28 the amount of these deposits in each State is shown for 

the three dates, December 30,1939, June 30,1942, and December 30, 

1944, with percentage changes for each of the 2 year periods between 

these dates, and for the 5-year period.

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS 57

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58 FEDERAL DEPOSIT INSURANCE CORPORATION

T ab le 28. DEPOSITS OF INDIVIDUALS, PARTNERSHIPS, AND CORPORATIONS IN

C o m m e r c ia l a n d M u t u a l Sa v in g s B a n k s , b y F D I C D is t r ic t a n d St a t e

Amount (millions of dollars) Percentage change

FDIC District and State

Dec. 30, 

1939

June 30, 

1942

Dec. 30, 

1944

Dec. 1939 

to

June 1942

June 1942 

to

Dec. 1944

Dec. 1939 

to

Dec. 1944

United States (excluding 

possessions)......................... $53,358 $65,326 $102,045 22% 56% 91%

District 1—tota l. .................... 6,190 7,004 9,261 13 32 50

Maine...................................... 311 346 516 11 49 66

New Hampshire..................... 267 291 381 9 31 42

Vermont................................. 162 172 235 6 36 45

Massachusetts........................ 3,695 4,124 5,308 12 29 44

Rhode Island.......................... 470 550 746 17 36 59

Connecticut............................ 1,284 1,520 2,075 18 36 62

District 2—total...................... 20,058 23,197 30,327 16 31 51

New York............................... 17,936

1,891

20,744 26,573 16 28 48

New Jersey............................. 2,187 3,374 16 54 78

Delaware................................. 230 266 379 15 43 65

District 3—tota l...................... 6,834 8,320 12,330 22 48 80

Ohio......................................... 2,192 2,974 4,872 36 64 122

Pennsylvania.......................... 4,642 5,346 7,457 15 40 61

District 4—total...................... 2,258 2,990 5,011 32 68 122

Maryland................................ 755 876 1,334 16 52 77

Virginia................................... 493 695 1,102 41 59 123

West Virginia......................... 250 328 529 31 62 112

North Carolina....................... 315 447 961 42 115 205

South Carolina....................... 124 179 392 44 119 216

Dist. of Col............................. 322 465 693 44 49 115

District 5—tota l...................... 1,374 1,973 4,098 44 108 198

Georgia................................... 344 507 1,007 48 98 193

Florida.................................... 282 417 979 48 135 248

Alabama................................. 243 394 756 62 92 211

Mississippi.............................. 163 206 459 27 123 182

Louisiana................................ 343 449 897 31 100 162

District 6—tota l...................... 1,937 2,530 4,587 31 81 137

Kentucky................................ 383 457 923 19 102 141

Tennessee............................... 387 529 1,035 37 96 167

Missouri.................................. 1,019 1,321 2,158 30 63 112

Arkansas................................. 148 224 471 51 111 219

District 7—tota l...................... 2,887 3,933 7,178 36 83 149

Indiana................................... 745 999 1,863 34 87 150

Michigan................................. 1,331 1,938 3,485 46 80 162

Wisconsin............................... 811 997 1,830 23 84 126

District 8—tota l...................... 3,950 5,084 8,214 29 62 108

Illinois..................................... 3,425 4,389 6,936 28 58 103

Iowa........................................ 525 695 1,278 32 84 143

District 9—total...................... 1,023 1,213 2,399 19 98 135

Minnesota............................... 766 886 1,584 16 79 107

North Dakota........................ 68 93 284 36 206 317

South Dakota......................... 73 100 226 38 125 210

Montana................................. 116 133 306 15 129 164

District 10—total.................... 1,140 1,511 3,154 33 109 177

Nebraska................................ 235 311 688 33 121 193

Kansas.................................... 280 403 911 44 126 226

Oklahoma............................... 302 396 774 31 95 156

Colorado................................. 270 339 651 26 92 141

Wyoming................................ 53 62 130 18 108 145

District 11—tota l.................... 1,198 1,698 3,563 42 110 197

Texas....................................... 1,077 1,533 3,172 42 107 194

New Mexico........................... 46 62 156 34 150 235

Arizona................................... 74 102 236 38 131 218

District 12—total.................... 4,509 5,873 11,922 30 103 164

Idaho....................................... 79 103 278 31 169 252

Utah........................................ 122 162 340 33 110 180

Nevada................................... 33 53 96 59 80 186

Washington............................ 475 718 1,541 51 115 224

Oregon..................................... 263 383 884 46 131 236

California................................ 3,537 4,454 8,783 26 97 148

Note: Figures are rounded and will not necessarily add precisely to totals.

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Federal Reserve Bank of St. Louis
DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS 59

Table 29 shows the percentage growth of deposits of individuals, 

partnerships, and corporations by Federal Deposit Insurance Corporation districts listed according to rate of growth.

Table 29. PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS, PARTNERSHIPS,

a n d C orporations, 1940-1944, b y F D IC D istrict

FDIC

District

No.

States

Dec. 30, 1939, 

to

June 30, 1942

June 30, 1942, 

to

Dec. 30, 1944

Dec. 30, 1939, 

to

Dec. 30, 1944

5. Georgia, Florida, Alabama, Mississippi, 

Louisiana................................................ 44% 108% 198%

11. Texas, New Mexico, Arizona.................. 42 110 197

10. Nebraska, Kansas, Oklahoma, Colorado, 

Wyoming................................................ 33 109 177

12. Idaho, Utah, Nevada, Washington, Oregon, California....................................... 30 103 164

7. Indiana, Michigan, Wisconsin................. 36 83 149

6. Kentucky, Tennessee, Missouri, Arkansas 31 81 137

9. Minnesota, North Dakota, South 

Dakota, Montana................................. 19 98 135

4. Maryland, Virginia, West Virginia, 

North Carolina, South Carolina, District of Columbia................................... 32 68 122

8. Illinois, Iowa............................................. 29 62 108

3. Ohio, Pennsylvania................................... 22 48 80

2. New York, New Jersey, Delaware.......... 16 31 51

1. Maine, New Hampshire, Vermont, 

Massachusetts, Rhode Island, Connecticut................................................... 13 32 50

The wide variation in the growth of these deposits in the various 

regions and States is due to numerous factors, among which the following may be mentioned: the location of factories producing materials for military purposes, the relatively rapid growth in prices 

of farm products, the geographic incidence of Federal taxation, and 

the geographic distribution of bond purchases.

Some of the wartime conditions which influence the relative growth 

of deposits have also had a similar influence on the income of the 

people of the various geographic regions. The percentage increases 

by States in income payments from 1939 to 1944 are compared in 

Chart F with the change in the deposits of individuals, partnerships, 

and corporations from the close of 1939 to the close of 1944.1 In the 

dominantly agricultural States the rate of growth in deposits was 

higher than in income payments, while in dominantly industrial 

regions the rate of increase in deposits was smaller than in income 

payments. The industrial population has continued during the war 

to purchase the chief products of the agricultural regions and has

1 Income payments are from the Survey of Current Business, June 1943 and August 1945,

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Federal Reserve Bank of St. Louis
60 FEDERAL DEPOSIT INSURANCE CORPORATION

Table 30. GOVERNMENTAL DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS

B a n k s , b y F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t io n D is t r ic t a n d St a t e

United States Government States and political subdivision

FDIC District and State Amount (millions) Percentage Amount (millions) Percentage

Dec. 30, 

1939

Dec. 30, 

1944

increase 

1939 to 

1944

Dec. 30, 

1939

Dec. 30, 

1944

increase 

1939 to 

1944

United States (excluding 

possessions).......................... $899 $20,763 2211% $3,467 $5,047 46%

District 1—tota l...................... 38 1,424 3684 172 245 43

Maine..................................... 2 47 1882 9 17 75

New Hampshire..................... 1 31 2303 7 11 50

Vermont................................. 1 15 2159 4 6 47

Massachusetts........................ 26 931 3539 96 149 55

Rhode Island......................... 1 114 9103 17 19 9

Connecticut............................ 6 286 4312 38 44 18

District 2—total...................... 192 8,739 4460 760 835 10

New York............................... 165 8,105 4810 581 599 3

New Jersey............................. 25 574 2181 173 220 27

Delaware................................. 1 60 4197 6 16 168

District 3—total...................... 145 2,055 1322 397 489 23

Ohio......................................... 30 836 2729 169 254 50

Pennsylvania.......................... 115 1,219 960 228 235 3

District 4—total...................... 58 1,110 1822 185 329 78

Maryland................................ 36 371 927 45 59 32

Virginia................................... 8 239 2977 39 66 70

West Virginia......................... 5 118 2475 22 42 93

North Carolina...................... 7 224 3218 52 116 122

South Carolina....................... 1 51 6571 27 45 64

Dist. of Col............................ 2 107 5943 i i 22

District 5—tota l...................... 59 588 892 217 411 89

Georgia................................... 17 156 832 35 79 125

Florida.................................... 10 150 1377 53 108 103

Alabama................................. 8 107 1180 33 85 156

4 58 1520 29 50 70

Louisiana................................ 20 117 473 67 90 35

District 6—to ta l...................... 54 792 1369 176 325 84

Kentucky................................ 8 144 1789 29 50 71

Tennessee............................... 19 196 924 39 76 95

Missouri.................................. 25 402 1486 88 154 75

Arkansas................................. 2 50 2738 20 44 123

District 7—total...................... 64 1,136 1663 273 444 63

Indiana................................... 21 283 1258 108 172 58

Michigan................................ 28 547 1835 121 195 62

15 306 1894 43 77 77

District 8—tota l...................... 98 1,977 1908 356 489 37

Illinois..................................... 94 1,758 1773 281 347 24

Iowa........................................ 5 219 4632 76 142 88

District 9—total...................... 7 486 6960 128 222 73

Minnesota............................... 6 399 7578 83 103 24

North Dakota........................ (*) 31 6701 4 52 1071

South Dakota......................... 1 25 3992 20 28 37

Montana................................. 1 30 4834 20 39 97

District 10—tota l.................... 23 435 1761 196 310 58

Nebraska................................. 3 109 3141 29 37 31

Kansas.................................... 8 119 1386 82 142 72

Oklahoma............................... 10 125 1145 57 95 66

Colorado................................. 2 69 4329 17 22 25

Wyoming................................ (*) 12 3051 10 14 33

District 11—total.................... 41 557 1251 165 253 54

Texas....................................... 40 516 1177 136 215 58

New Mexico........................... 1 15 2340 15 20 30

Arizona................................... 0) 26 11086 13 18 37

District 12—to ta l.................... 119 1,463 1126 442 696 57

Idaho....................................... 1 25 4146 17 25 46

Utah........................................ (l) 37 13934 19 27 46

Nevada................................... (x) 11 5151 6 11 103

Washington............................ 8 274 3450 38 91 140

Oregon..................................... 6 123 1805 25 72 190

California................................ 104 993 854 338 469 39

1 Less than $500,000. Note: Figures are rounded and will not necessarily add precisely to totals.

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Federal Reserve Bank of St. Louis
paid higher prices for those products, while purchases of industrial 

products by the agricultural population have been curtailed by the 

diversion of industrial production to war supplies.

CHART F

P e r c e n ta g e In c re a se s, 1939 t o 1 9 4 4, in

Income Payments, and in D e p o s its o f In d iv id u a ls ,

P a rtn e rsh ip s, and C o r p o r a tio n s , b y S ta te s

DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS 61

PERCENTAGE INCREASE IN

INCOME PAYMENTS. 1939-1944

220

200 WASH. A

180

160

• VA.

• M/SS.

ALA.

•

KAN.

• 9

ORE.

FLA.

•

140

•

CAL. TENN. , 

U1

•

, GA. 

iAH

S.C.

• IDAHO

• N.DAK.

120

MD.0

IND.•*

V * *

• i

&

0

| ar iz7

• N.C. « N.MEX.

100

R.I. «

M E

•

•CONN.

0*'°

> ' j

» KY. *C>KLA.

•

S. DAK.

80.

MASS

60

DE -• N.I 

>PA.

*>

• COLO. 

•JA.

o ^ ° -

C

• N.Y •

MINN.

AAONT.

40

• N.H.

4 0 60 80 100 120 140 160 180 200 220 240 260 280 300 320 

PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS ,

PARTNERSHIPS, AND CORPORATIONS, DEC.3M939-DEC.31,1944

Change in governmental deposits by regions and States.

Deposits in commercial and mutual savings banks owned by governments—Federal, State, and local—at the end of 1944 were nearly 

six times as large as at the end of 1939. For the 5-year period deposits 

of the United States Government increased by nearly $20 billion, 

and those of States and their political subdivisions by less than $2 

billion. About 95 percent of the increase in United States Government 

deposits occurred during the second half of the period.

The amounts of Federal and other governmental deposits, respectively, held by commercial and mutual savings banks in each region 

and State on December 30, 1939, and December 30, 1944, are shown 

in Table 30. Percentage changes for the 5-year period are also given.

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Federal Reserve Bank of St. Louis
62 FEDERAL DEPOSIT INSURANCE CORPORATION

T ab le 31. INTERBANK DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS, BY

F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t io n D is t r ic t a n d S t a t e

FDIC District 

and State

Amount (millions of dollars) Percentage change3

Dec. 30, 

19391

June 30, 1942, with 

reciprocal deposits Dec. 30, 

19442

Dec. 30, 

1939,to 

June 30, 

1942

June 30, 

1942,to 

Dec. 30, 

1944

Dec. 30, 

1939,to 

Dec. 30, 

Included Excluded 1944

United States........... $9,880 $10,891 $10,277 $12,228 10% 19% 31%

District 1—total. . . . 416 457 435 402 10 -8 2

8 10 10 9 22 -12 7

New Hampshire.... 6 6 6 7 -6 19 12

Vermont.................. 1 1 1 1 5 36 42

Massachusetts........ 353 382 362 333 8 -8 -1

Rhode Island.......... 11 13 12 12 22 5 28

Connecticut............ 37 45 44 40 20 -9 10

District 2—tota l. . . . 4,686 4,322 4,250 4,278 -8 1 -7

New York............... 4,640 4,278 4,212 4,235 -8 1 -7

New Jersey............. 42 41 35 40 -4 15 10

Delaware................. 3 4 3 3 31 31

District 3—to ta l. . . . 942 1,014 904 971 11 7 19

Ohio......................... 201 279 251 323 39 28 78

Pennsylvania.......... 741 736 653 648 -1 -1 -1

District 4—tota l. . . . 388 502 435 614 29 41 83

Maryland................ 119 117 105 116 -1 11 10

Virginia................... 87 123 109 157 42 43 103

West Virginia.......... 15 26 26 37 76 40 146

North Carolina....... 125 169 139 234 35 68 127

South Carolina....... 10 16 12 23 51 92 191

Dist. of Col............. 32 51 42 47 58 11 75

District 5—tota l. . . . 340 482 416 711 42 71 142

Georgia.................... 100 150 127 210 49 65 146

Florida..................... 63 100 89 160 59 81 186

Alabama.................. 45 68 56 78 53 40 113

Mississippi.............. 14 19 18 58 40 224 355

Louisiana................. 118 145 126 205 22 63 99

District 6—total. . . . 691 970 896 1,285 40 43 101

Kentucky................ 64 112 102 151 73 48 155

Tennessee................ 127 201 176 302 59 71 172

Missouri.................. 470 613 578 767 30 33 73

Arkansas................. 30 44 40 65 48 64 142

District 7—to ta l----- 284 369 357 440 30 23 60

Indiana.................... 76 104 101 129 36 28 74

Michigan................. 127 158 153 180 24 18 47

Wisconsin................ 80 107 103 131 33 27 69

District 8—tota l. . . . 1,004 1,273 1,226 1,412 27 15 46

Illinois..................... 944 1,172 1,127 1,297 24 15 43

Iowa......................... 60 101 99 114 68 16 95

District 9—to ta l. . . . 177 250 238 328 41 37 94

Minnesota............... 158 220 211 280 40 33 86

North Dakota......... 3 9 8 13 197 56 362

South Dakota......... 5 7 6 8 55 29 99

Montana.................. 12 13 13 26 14 102 131

District 10—t o ta l... 240 338 313 516 41 65 132

Nebraska................. 65 98 95 145 52 53 132

Kansas..................... 39 65 59 100 68 70 187

Oklahoma................ 79 99 88 163 25 84 131

Colorado.................. 51 69 65 97 35 48 100

Wyoming................. 6 6 6 11 6 85 97

District 11—to ta l... 321 391 358 685 22 92 134

Texas....................... 316 384 351 673 21 92 133

New Mexico............ 3 5 4 9 58 108 230

Arizona.................... 2 3 3 4 63 44 134

District 12—total. .. 391 522 449 586 34 30 74

Idaho....................... 3 4 3 6 26 59 101

Utah......................... 22 31 29 47 42 61 129

Nevada.................... 1 1 1 1 40 -38 -13

Washington............. 52 76 63 89 46 42 107

Oregon..................... 23 33 28 39 40 41 98

California................ 290 377 324 403 30 24 62

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Federal Reserve Bank of St. Louis
DEPOSITS IN COMMERCIAL AND MUTUAL SAVINGS BANKS 63

Change in interbank deposits by State. The rate of growth in 

interbank deposits during the period from the end of 1939 to the 

middle of 1942 was less than one-half, and during the period from 

the middle of 1942 to the end of 1944 approximately one-third, of 

the rate of growth in deposits owned by individuals, partnerships, and 

corporations. However, in both periods the variation among the States 

in rate of growth was greater in interbank deposits than in the deposits 

of individuals, partnerships, and corporations. This is not remarkable, 

since interbank deposits are directly affected by the flow of payments 

throughout the nation and for this reason are particularly volatile. 

From the end of 1939 to the middle of 1942 the percentage change 

in interbank deposits ranged from a loss of 8 percent in New York 

to an increase of 197 percent in North Dakota. From the middle of 

1942 to the end of 1944 the percentage change varied from a decline 

of 38 percent in Nevada to an increase of 224 percent in Mississippi. 

The figures for each State are given in Table 31.

A comparison, for the 5-year period from the end of 1939 to the 

end of 1944, between the change in interbank deposits and that in 

deposits of individuals, partnerships, and corporations in each State 

is given in Chart G. This chart indicates a fairly close relation between 

the growth in the two categories of deposits. The northeastern part 

of the United States, in which the rate of growth in deposits of individuals, partnerships, and corporations has been the lowest, is the 

area with the smallest growth in interbank deposits; while the growth 

in interbank deposits has been most rapid in the southern and western 

region in which the growth in deposits owned by individuals, partnerships, and corporations has been the highest.

T otal M oney Supply

Deposits in commercial and mutual savings banks are the major 

part of the nation’s means of payment, or money supply. Checks on 

demand deposit accounts are used directly in the business transactions 

of the people of the nation. Time and savings deposits are held largely 

as available reserves should need arise for an additional amount of 

cash, or means of payment. However, bank deposits do not constitute 

all the nation’s means of payment. Currency, including silver and 

minor coins, is used for many transactions; the United States Government maintains checking accounts with Federal Reserve banks; and

Footnotes to Table 31:

1 Includes reciprocal deposits.

2 Excludes reciprocal deposits in insured commercial banks.

3 Change for December 30, 1939, to June 30, 1942, derived from figures including reciprocal deposits; for June 30, 1942, to December 30, 1944, from figures excluding reciprocal deposits. Change 

from December 30, 1939, to December 30, 1944, derived from the percentage changes for the two shorter 

periods.

Note: Figures are rounded and will not necessarily add precisely to totals.

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Federal Reserve Bank of St. Louis
64 FEDERAL DEPOSIT INSURANCE CORPORATION

CHART S

Pe r c e n t a g e In c r e a s e s , 1 9 3 9 t o 1 9 4 4 , in

In t e r b a n k D e p o s it s a n d in D e p o s it s of In d iv id u a l s ,

Pa r t n e r s h ip s , a n d C o r p o r a t io n s , b y States

p e rc e n ta g e in c re a s e in 

INTERBANK DEPOSITS, 1939-1944 

370'

360.

340.

320_

300_

280.

260.

240.

220

200

180

160

140

120

100.

80

60

40

20

o

2.0 , , , ,_,__;__,__,--,_,--,--,

40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 

PERCENTAGE INCREASE IN DEPOSITS OF INDIVIDUALS, 

PARTNERSHIPS, AND CORPORATIONS, 1939 TO 1944-

N.DAK.

•

•MISS.

• fsJ.MEX.

KAN. FLA

•

TE NIJ.

W.1

•

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KV!

»

O

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VA. P*

IND

c*a J

•

LA.

ALA. WASH

•

lHO

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•

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OHIO.

WIS.

•

•

S. DAK. •

ORE.

Di * /via 1

#VT. ILL.

•

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•

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y —

N.J

Ay.

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NEV.

•

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
TOTAL MONEY SUPPLY 65

deposits in the postal savings system are essentially similar to savings 

deposits in banks. On the other hand, one class of bank deposits— 

interbank—is customarily excluded from the total money supply 

in order to avoid double counting.

Total money supply. At the close of 1944 the total money supply 

of the nation, understood as the total of deposits and currency other 

than those owned within the banking system, amounted to $156 

billion. This figure is made up of the following items:

Billions of dollars Percent of total

Total money supply................................................................. $156.4 100%

Deposits in commercial and mutual savings banks.............. 129.9 83

Deposits in the postal savings system................................... 2.3\ «

U. S. Treasury deposits in Federal Reserve banks.............. .4/

Currency outside banks........................................................... 23.8 15

At the end of 1939 the total money supply amounted to $67 billion. 

The increase during the five years, 1940-1944, was $90 billion, or 

$134 percent. The amounts on each June 30 and December 31 during 

this period are shown in Table 32.

Table 32. T otal D eposits and C u rrency, E xclu din g I nterban k Oblig atio n s,

Jun e 30 and D ecem ber 31, 1939-1944

(In millions of dollars)

Date Total

Deposits in 

commercial 

and mutual 

savings banks

Deposits 

in postal 

savings 

system

U. S. Treasury 

deposits in 

Federal 

Reserve banks

Currency

outside

banks1

1944—Dec. 30........ $156,388 $129,847 $2,342 $440 $23,759

June 30........ 141,677 117,926 2,034 650 21,067

1943—Dec. 31 128,490 107,100 1,788 579 19,023

June 30........ 114,742 96,734 1,577 455 15,976

1942—Dec. 31 ... 105,084 88,844 1,417 799 14,024

June 30........ 85,326 72,708 1,316 290 11,012

1941—Dec. 31........ 82,917 71,076 1,314 867 9,660

June 30........ 77,960 67,437 1,304 980 8,239

1940—Dec. 31........ 74,337 65,296 1,304 368 7,369

June 29........ 69,072 60,802 1,293 234 6,743

1939—Dec. 30........ 66,887 58,529 1,279 634 6,445

1 Includes Treasury cash other than gold.

Ownership of the money supply. Of the total money supply at 

the end of 1944, over $26 billion was owned by governments—Federal, 

State, and local. The remaining $130 billion may be treated as the 

money supply of individuals and business, including religious, civic, 

and other organizations. This figure is somewhat exaggerated, since 

it includes deposits of foreigners in commercial and mutual savings 

banks in the United States, currency owned by State and local 

governments, United States currency held in foreign countries, and 

probably some currency which has been destroyed. Table 33 shows 

how much of the money supply was owned by governments, and how 

much by business and individuals, on each June 30 and December 31,

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Federal Reserve Bank of St. Louis
66 FEDERAL DEPOSIT INSURANCE CORPORATION

from the end of 1939 to the end of 1944, and also the change in each 

category during each six months of the 5-year period.

T ab le 33. T o t a l DEPOSITS AND CURRENCY, EXCLUDING INTERBANK OBLIGATIONS,

Ju n e 30 a n d D e c e m b e r 31, 1939-1944, b y C l a ss of O w n e r

(In millions of dollars)

Date Total

Owned by—

Change during 6 months

Total

Owned by—

Government1

Individuals

and

business2

Government

Individuals

and

business

1944—Dec. 30..............

June 30..............

1943—Dec. 31..............

June 30..............

1942—Dec. 31..............

June 30..............

1941—Dec. 31..............

June 30..............

1940—Dec. 31..............

June 29..............

1939—Dec. 30..............

$156,388

141,677

128,490

114,742

105,084

85,326

82,917

77,960

74,337

69,072

66,887

$26,588

25,360

16,046

13,480

13,835

6,692

7.131 

5,927

5.132 

4,851 

5,079

$129,800

116,317

112,444

101,262

91,249

78,634

75,786

72,033

69,205

64,221

61,808

$14,711

13,187

13,748

9,658

19,758

2,409

4,957

3,623

5,265

2,185

$1,228

9,314

2,566

-3 55

7,143

-439

1,204

795

281

-2 2 8

$13,483

3,873

11,182

10,013

12,615

2,848

3,753

2,828

4,984

2,413

1 Includes deposits of the United States Government and of States and their political subdivisions 

in commercial and mutual savings banks; United States Treasurer’s general account in Federal Reserve 

banks, and Treasury cash other than gold.

2 Includes deposits of individuals, partnerships, and corporations, and certified checks, etc., in 

commercial banks; total deposits in mutual savings banks; deposits in the postal savings system; and 

currency outside the Treasury and banks.

Of the increase in the money supply during the five years, $22 

billion occurred in the amount owned by governments, chiefly the 

Federal Government, and $68 billion in the amount owned by individuals and business. By years the growth in deposits and currency 

of individuals and business is as follows:

Billions of dollars Percent

1940-1944.......................................................................................... $68.0 110%

1944............................................................................................... 17.3 15

1943................................................................................................ 21.2 23

1942............................................................................................... 15.5 20

1941............................................................................................... 6.6 10

1940............................................................................................... 7.4 12

Types of deposits and currency owned by individuals and

business. Of the $130 billion of deposits and currency owned by 

individuals and business at the end of 1944, $67 billion was in the 

form of demand deposits in commercial banks, $40 billion in savings 

deposits in commercial and mutual savings banks and the postal 

savings system, and $23 billion in the form of currency. The distribution for year-end and mid-year dates for the preceding five years 

is shown in Chart H.

During the 5-year period, 1940-1944, the portion of the deposits 

and currency owned by individuals and business which was in the 

form of currency increased from 10 to 18 percent. The portion held

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Federal Reserve Bank of St. Louis
TOTAL MONEY SUPPLY 67

in demand deposits rose from 47 to 51 percent, and that in the form 

of time deposits declined from 43 to 30 percent. For the three war 

years, and also for the entire 5-year period, about one-fourth of the 

increase in deposits and currency owned by individuals and business 

was in the form of currency. The figures are given in Tables 34 and 35.

CHART H

De p o s it s a n d C u r r e n c y O w n e d b y In d i v i d u a l s

a n d B u s i n e s s , b y T y p e

1939- 1 9 4 4

BILLIONS OF DO LLARS B ILLIO N * OF D O LL A R S

Table 34. CLASSIFICATION OF DEPOSITS AND CURRENCY 

O w n e d b y I n d iv id u a ls a n d B u s in e s s , 1939-1944

Date

Amount (millions of dollars) Percentage of total in—

Total

Time and 

savings 

deposits1

Demand

deposits* Currency3

Time and 

savings 

deposits

Demand

deposits Currency

1944—Dec. 30___ $129,800 $39,532 $66,762 $23,505 30% 51% 18%

June 30.... 116,317 35,440 59,996 * 20,881 30 52 18

1943—Dec. 31___ 112,444 32,462 61,145 18,837 29 54 17

June 30.... 101,262 29,950 55,499 15,814 30 55 16

1942—Dec. 31----- 91,249 28,097 49,205 13,946 31 54 15

June 30.... 78,634 26,863 40,834 10,936 34 52 14

1941— Dec. 31___ 75,786 27,319 38,852 9,615 36 51 13

June 30.... 72,033 27,497 36,333 8,204 38 50 11

1940—Dec. 31___ 69,205 27,304 34,575 7,325 39 50 11

June 29.... 64,221 27,048 30,474 6,699 42 47 10

1939—Dec. 30___ 61,808 26,613 28,793 6,401 43 47 10

1 Includes all deposits in mutual savings banks and the postal savings system. 

a Includes certified checks, etc., and unclassified deposits in noninsured commercial banks.

* Currency outside banks and the United States treasury. Currency held abroad and by State and 

local governments is included.

N o t e : Figures are rounded and will not necessarily add precisely to totals.

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68 FEDERAL DEPOSIT INSURANCE CORPORATION

T ab le 35. ANNUAL INCREASE IN DEPOSITS AND CURRENCY

O w n e d b y I n d iv id u a l s a n d B u s in e s s , 1940-1944

Year

Amount (billions of dollars) Percentage of increase in—

Total

Time and 

savings 

deposits

Demand

deposits Currency

Time and 

savings 

deposits

Demand

deposits Currency

T otal..................... $68.0 $12.9 $38.0 $17.1 19% 56% 25%

1944....................... 17.4 7.1 5.6 4.7 41 32 27

1943....................... 21.2 4.4 11.9 4.9 21 56 23

1942....................... 15.5 .8 10.4 4.3 5 67 28

1941....................... 6.6 4.3 2.3 65 35

1940....................... 7.4 .7 5.8 .9 9 78 13

N o t e : Figures are rounded and do not necessarily add precisely to totals.

The increase in the proportion of business and individual cash 

balances held in the form of currency is due to various factors, including the following: the relatively large rise in incomes of wageeamers, many of whom have not been accustomed to maintain 

checking accounts; the inconvenience of cashing checks under wartime 

conditions and the inconvenience of charge accounts under consumer 

credit restrictions; the movement of population and difficulties in 

establishing bank accounts and charge accounts in new places; illegal 

transactions such as “ black market” sales; and the stimulus to tax 

evasion resulting from high tax rates.

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Federal Reserve Bank of St. Louis
PART FOUR

LEGISLATION AND REGULATIONS

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F e d e r a l Le g is l a t io n R e l a t in g t o In s u r e d Ba n k s

o r t h e C o r p o r a t io n

INTERNAL REVENUE COLLECTORS—CHECKS AND MONEY ORDERS

[Pu blic L a w 541— 78th C ongress]

[C h apter 672— 2d Session]

[H. R. 5565]

AN ACT

To authorize collectors of internal revenue to receive certain checks and money 

orders in payment of taxes and for revenue stamps.

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That section 3656 of the Internal Revenue Code 

(relating to payment of taxes by check) is amended to read as follows:

“ SEC. 3656. PAYMENT BY CHECK AND MONEY ORDERS.

“ (a) C e r tifie d , C a sh iers’, and T r e a s u r e r s ’ C h ecks and M o n e y O rd e r.—

“ (1) A u th o r ity t o re c e iv e .— It shall be lawful for collectors to receive for 

internal revenue taxes or in payment of stamps to be used in payment of internal 

revenue taxes certified, cashiers’, and treasurers’ checks drawn on National and 

State banks and trust companies, and United States postal, bank, express, and 

telegraph money orders, during such time and under such regulations as the 

Commissioner, with the approval of the Secretary, may prescribe.

“ (2) D isc h a rg e o f lia b ility .—

‘‘ (A) Check Duly Paid.—No person who may be indebted to the United States 

on account of internal revenue taxes or stamps used or to be used in payment 

of internal revenue taxes who shall have tendered a certified, cashier’s, or 

treasurer’s check or money order as provisional payment therefor, in accordance with the terms of this subsection, shall be released from the obligation 

to make ultimate payment thereof until such certified, cashier’s, or treasurer’s 

check or money order so received has been duly paid.

“ (B) Check Unpaid.— If any such check or money order so received is not 

duly paid the United States shall, in addition to its right to exact payment 

from the party originally indebted therefor, have a lien for the amount of such 

check upon all the assets of the bank on which drawn or for the amount of 

such money order upon all the assets of the issuer thereof; and such amount 

shall be paid out of its assets in preference to any or all other claims whatsoever 

against said bank or issuer except the necessary costs and expenses of administration and the reimbursement of the United States for the amount 

expended in the redemption of the circulating notes of such bank.

“ (b) O th e r C h eck s.—

“ (1) A u th o r ity t o re c e iv e .— Collectors may receive checks in addition to 

those specified in subsection (a) in payment of taxes other than those payable 

by stamp during such time and under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe.

“ (2) U ltim a te lia b ility .—If a check so received is not paid by the bank 

on which it is drawn the person by whom such check has been tendered shall 

remain liable for the payment of the tax and for all legal penalties and additions 

to the same extent as if such check had not been tendered.”

Approved December 22, 1944.

71

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72 FEDERAL DEPOSIT INSURANCE CORPORATION

R e p o r t o f t h e C o r p o r a t i o n o n A b s o r p t i o n

o f E x c h a n g e C h a r g e s

LETTER TO THE CHAIRMAN, SENATE COMMITTEE ON 

BANKING AND CURRENCY

April 27, 1944

H o n o r a b l e R o b e r t F. W a g n e r , Chairman

Senate Committee on Banking and Currency 

Washington, D. C.

My dear Senator:

As requested, we are pleased to submit herein the report of this Corporation on 

S. 1642 entitled “ A Bill to amend the Federal Reserve Act, as amended, to provide 

that the absorption of exchange and collection charges shall not be deemed the 

payment of interest on deposits” . We recommend enactment of H. R. 3956, an 

identical measure, which already has been passed by the House of Representatives.

While this legislation is in the form of an amendment of the existing law, the 

primary issue before the House in its consideration of the Bill was what Congress 

meant to include in the term “ interest” in the 19331 and 19352 statutes prohibiting 

payment of interest on demand deposits. As is obvious from the debates on the 

Bill, the House concluded that in its opinion Congress never intended that absorption of exchange be included in the term “ interest” . We share this view and 

in our administration of the 1935 Act, in its application to non-member insured 

banks, which substantially restates the provisions of the 1933 Act applicable to 

member banks, we have so construed the law.

Historically the two practices are separate and distinct and the legislative history 

of both Acts clearly shows that Congress intended to regulate payment of interest 

only. The evils which these statutes were designed to correct, as the hearings and 

the debates in Congress show, were attributed to actual interest payments and not 

to absorption of exchange or other expenses for customers. At no place in the legislative record of the present statutory provisions is there any mention of absorption 

of exchange.

It is a fact, however, that as respects member banks, an administrative ruling 

has been made which prohibits them from absorbing exchange and this ruling is 

based solely upon the interest statute. If, therefore, the interest statute does not 

extend to absorption of exchange, as we believe is clear as a matter of law, the ruling 

is invalid for lack of legislative authorization. But while its invalidity seems clear, 

it is nevertheless being actively and continuously enforced so that it will continue to 

have the force of law unless Congress enacts the pending Bill which specifically 

states that absorption of exchange is not interest. As the adverse impact of the ruling 

is borne principally by non-member banks, judicial relief to test the correctness of 

the ruling is not available, since these institutions have no standing to question 

a ruling which does not by its terms apply to them, even though its full impact falls 

upon them indirectly. Although enactment of the Bill merely declares and reaffirms 

the intent of the present law, failure of passage means submitting to continued 

enforcement of a ruling which lacks Congressional sanction.

1 Section 19 of the Federal Reserve Act, Act of June 16, 1933, ch. 89, sec. 11(b), 48 Stat. 181, supplemented by Act of August 23, 1935, ch. 614, sec. 324(a), 49 Stat. 714.

* Act of August 23, 1935, ch. 614, sec. 101, 49 Stat. 702.

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ABSORPTION OF EXCHANGE CHARGES 73

Opposition to the Bill has been solicited upon the ground that its passage means 

a blow to par clearance of checks. But par clearance of checks was not deterred by 

the practice of paying interest on demand deposits and the interest statute was not 

designed to further par clearance, but was intended only to prevent attraction of 

funds to money centers for use in stock market speculation. Desire to achieve more 

wide-spread par clearance is not a sufficient reason for sustaining a ruling which 

misapplies the interest statute. Opposition to enactment of the Bill on this ground 

is a confession that the present law is not only being misconstrued but is being 

misapplied to a field in which Congress has pointedly refrained from legislating 

since in 1917 it expressly authorized member and non-member banks to charge 

exchange on clearings through private commercial banking channels. (Section 13 of 

the Federal Reserve Act, Act of June 21, 1917, ch. 32, sec. 4, 40 Stat. 234.)

Par clearance is pertinent to this legislation only because the prohibition against 

absorption operates to force banks which charge exchange to clear at par. This 

circumstance demonstrates that, in enacting the interest statutes, Congress did not 

intend to affect absorption of exchange because the historic bitterness engendered 

by the par clearance controversy is such that some mention of the problem would 

have been made in the 1933 or 1935 Congressional considerations of the interest 

laws. But no mention was made. Thus, while the effect of absorption on par clearance may be pertinent to a discussion favoring the enactment of the Bill, it is not 

a reason which may be advanced in opposition to its passage, unless the opposition 

is prepared to sacrifice the constitutional supremacy of Congress in legislative 

matters in order to strike a blow at non-par banking. Furthermore, while the defeat 

of the Bill would be a direct blow at banks which charge exchange, the passage of 

the Bill will not spread the practice of charging exchange to any greater degree 

than has been marked the past 10 years. During this period, exchange has been 

absorbed by banks desiring to do so, and the interest statute was not enforced 

against exchange absorption, unless covertly, until the recent ruling (September 

1943) defining absorption of exchange as interest. This was the first revival of the 

issue after it had been laid to rest in 1937 following its brief and uncertain career 

in that year. During this 10 year period, the number of banks charging exchange 

has diminished until today only slightly more than 2500 institutions impose these 

charges. How, then, can the mere return to a practice so briefly interrupted tend 

to increase the number of banks which charge exchange? If par clearance is jeopardized by exchange absorption, we believe the facts should be fairly assembled 

and the issue squarely and openly presented for Congressional consideration and 

not resolved indirectly in the disguise of an interest ruling. But it must be said 

that evidence thus far produced has consisted only of fearful apparitions of the 

consequences of general departure from par clearance instead of facts indicating 

that absorption of exchange threatens par clearance.

Opposition to the Bill is also being drummed up on the false premise that absorption of exchange has led to diversion of funds from “ normal” banking channels 

and to “ unsound banking” conditions. The facts submitted in the cases cited during 

the hearings on the Bill to the House Committee on Banking and Currency where 

these charges were made do not support these conclusions. In five of the seven 

cases we have received information from the banks involved showing affirmatively 

that banking funds have not been diverted from “ normal” banking channels and 

unsound banking conditions have not arisen as the result of exchange absorption. 

If such conditions do occur, ordinary supervisory methods can easily effect timely 

corrections. Here again the fact that unsound practices have not resulted from actual 

experience in absorption of exchange charges during the past ten years is submerged 

in the dreadful descriptions of possible consequences, which are wholly imaginary. 

Care must be exercised that the opprobrious connotations of the terms “ unsound”

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banking and “ unnatural” balances are not accepted as substitutes for facts to show 

that absorption of exchange has produced either consequence.

It should be observed that exchange charges have been singled out as the one 

expense which banks may not absorb for depositors without violating the interest 

law, while other expenses may be absorbed with approval. The distinction is rested 

on the theory that exchange charges are “ out-of-pocket” expenses. The term “ outof-pocket” expenses has no precise significance by legal definition or common usage. 

It suggests expenses of the type which one may pay for “ incidentals” as distinguished 

from more important expenses. Treating the term to mean expenses identifiable 

only with a particular transaction as distinguished from those which are not, we 

find that exchange charges are the only “ out-of-pocket” expenses which are administratively prohibited from being absorbed. Thus all banks are permitted to 

absorb their own service charges by service charge allowances in consideration of 

balances maintained.

Banks today generally have established service charge schedules which allow 

the theoretical earning value of their customers’ accounts to be offset against their 

charges for the services which they render to customers in collecting checks deposited, paying checks and otherwise furnishing them depositary service. These 

charges are frequently called “ activity” charges. If the allowances to the customers 

for the earning value of their accounts are less than the activity charges for the 

services they require, the excess is billed to the customers as service charges. However, where the earning allowances exceed the activity charges, the customers are 

neither paid nor credited with the difference. These service charge credit allowances 

to customers are granted in direct proportion to the size of the balances which they 

maintain. This is accomplished either through schedules under which activity 

allowances increase proportionately with the minimum balances maintained by 

depositors or through individual analysis of costs of handling depositors’ accounts, 

the latter system being generally employed by banks in handling the accounts of 

their bank customers and other large depositors. The effect of these allowances 

is that the banks absorb their own service charges in direct proportion to the size 

of the balances which their depositors maintain. This has been held not to be a 

violation of Section 19 of the Federal Reserve Act prohibiting payment of interest 

on demand deposits. (January 1944 Federal Reserve Bulletin, p. 13). As banks 

may absorb their own service charges without violating the regulations of either 

the Federal Deposit Insurance Corporation or the Board of Governors of the Federal 

Reserve System, why should member banks be prohibited from absorbing the 

exchange charges which they pay to other banks? We must bear in mind that 

exchange charges are service charges of the banks making the charges. When paid 

out by collecting banks in connection with their depositors’ business, they are 

merely one of the expenses of collecting checks and historically have been treated 

as part of the expenses of bank operation.

The Federal Reserve Board has expressly ruled that member banks may pay 

and absorb the intangible property taxes levied by states such as Michigan, Indiana 

and Kentucky computed on their depositors’ bank balances, without violating the 

interest statute. These taxes are laid on the depositors and not on the banks. They 

are in every sense “ out-of-pocket” expenses as the term is used in relation to absorption of exchange. Rulings on this question follow the exception contained in 

the Board’s Revision of Regulation Q, effective January 1, 1936, which provided 

that:

“ The term ‘interest’ includes the payment or absorption of exchange and

collection charges which involve out-of-pocket expenses, but does not include the

payment or absorption of taxes upon deposits whether levied against the bank or the

depositor nor the payment or absorption of premiums on bonds securing deposits

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ABSORPTION OF EXCHANGE CHARGES 75

where such bonds are required by or under authority of law.” (1935 Federal Reserve

Bulletin, p. 864). (Emphasis supplied).

We think, therefore, that apart from the question whether the interest statute was 

designed to prevent absorption of “ out-of-pocket” expenses, it would be entirely 

inconsistent to permit the prohibition against absorption of exchange to be continued since all other types of “ out-of-pocket” expenses may be absorbed. This 

circumstance, as well as the fact that the Corporation has from the beginning 

interpreted the interest statute governing non-member banks which it administers 

as not prohibiting absorption of exchange, prompted the Federal Deposit Insurance 

Corporation to caution the Federal Reserve Board on August 20, 1943 before its 

controverted ruling was issued that “ the theory of the Board of Governors would 

appear to require it to outlaw as well the absorption of service charges and other 

expenses for depositors which all banks now incur to some degree” , that its proposed 

ruling was “ simply another attempt to force par clearance upon non-member banks” 

and that “ it hopes that the Board of Governors will not give rise to a situation 

where two Federal agencies make conflicting decisions to the consternation of the 

public” ; and to suggest that “ in such a situation we consider it singularly appropriate to await precise directions from Congress” . (House Hearings, p. 599).

Even if our concept of the Congressional intent be wrong, the evidence adduced 

at the hearings before the House Committee on the present Bill is abundantly 

convincing that absorption of exchange by a correspondent bank pursuant to 

arrangement with its bank customers involves no interest because the bank which 

absorbs the exchange is usually, if not always, a complete stranger to the depositorowner of the check, who is the person ultimately benefited by the absorption. Since 

the forwarding bank derives no financial benefit from the absorption because it acts 

as agent for the owner of the check, and since the latter maintains no deposit in 

the intermediate correspondent bank which absorbs the exchange charges, wherein 

can there be a “ payment of interest on demand deposits” ? Under the most generous 

construction of the law in this state of facts there is no violation of the law because 

the “ payment” is not made to a “ depositor” of the bank, that is, unless the “ sins” 

of the correspondent bank be attributed to the customer-bank.

Since consideration of the Bill by the House, the Board of Governors has partially 

receded from its position that absorption of exchange is interest and now holds that 

a bank may, without violating the law, absorb exchange charges where it does not 

agree to do so as a means of soliciting new accounts or retaining existing accounts 

and where the expense involved in making collection from depositors would exceed 

the amount of the exchange charges. This leaves each bank subject to the uncertainties of arbitrary administrative action in individual cases. Examiners may, 

applying no uniform rule, permit one bank to absorb exchange in amounts which 

another bank is prohibited from absorbing.

Compensation, in the sense of interest, is the benefit received by the person 

compensated; thus it operates upon the recipient and is wholly independent of the 

intent of the person from whom the alleged payment flows. Indeed, under the 

Federal Reserve's basic theory, compensation occurs even though the party absorbing an expense for another would suffer a greater loss by collecting than by 

foregoing collection. Consequently, the new thesis of “ permissible compensation” 

has no basis in law and cannot be sustained upon any legal principles.

The law does not say that interest on demand deposits may be paid in small 

amounts, nor that it may be paid to effect operating efficiency, nor that it may be 

paid when not intended as an inducement to attract or retain deposit accounts. The 

statute provides that interest on demand deposits may not be paid at all. If, as is 

contended, absorption of exchange is interest, then all absorption of exchange is 

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missible absorption and prohibited absorption. Such an arbitrary distinction may 

not be made by “ administrative” definition of legal terms which have well established meanings in the law.

There are forceful affirmative reasons for urging Congress to pass this legislation. 

Approximately 2500 banks in the United States derive a substantial part of their 

operating revenues from exchange charges. In most instances these institutions are 

small, locally-owned, independent banks operating in rural communities. In 1942 

less than 100 of these banks had deposits exceeding $2 million. They are not only 

small businesses, but are the financial institutions which serve small business. These 

banks are required to maintain legal reserves and surplus funds on deposit with 

city banks. The banking system derives substantial profit and benefit from these 

interbank deposits and has been willing and is well able to absorb exchange charges 

imposed by the non-par banks without passing them back to the public. Many 

banks were absorbing these charges until prevented by the recent administrative 

ruling, and investigation does not disclose that any unsound banking practices 

resulted therefrom. Nor can it be said that these interbank balances represent a 

diversion of funds from “ normal” banking channels. Interbank deposits—both as 

to size and location—are determined by the necessities of banking conditions and 

are dictated by the banking requirements of the depositing banks and their patrons. 

There has been no evidence produced to substantiate the charge that these interbank balances have deviated from normal channels in order to obtain benefits 

outside the pale of normal banking service.

It is clear that if exchange absorption remains outlawed, the effect will be to 

force banks to discontinue charging exchange and the customer relationships of 

those which continue to do so will be, as they already have been, seriously disturbed. 

There is grave danger that many of these banks will be forced to discontinue business 

if they are deprived of the revenue which they have been deriving from exchange. 

While the smaller banking institutions which charge exchange will be affected 

severely by a continuance of the prohibition against absorption of exchange, neither 

the larger banks nor the banking system as a whole will be injured by the passage 

of the pending Bill which simply permits banks to absorb exchange if they desire 

to do so, but places them under no compulsion so to do. The banks which are adversely affected, therefore, are entitled to greater consideration by Congress than 

those which have only an academic interest in the problem as is the case with most 

of the banks which have opposed passage of this legislation.

We call the attention of the Committee to the fact that the Federal Deposit 

Insurance Corporation has adopted a formal ruling which holds that the law (49 

Stat. 702, ch. 614) prohibiting payment of interest on demand deposits by nonmember insured banks, does not prohibit absorption of exchange. This ruling 

restates in codified form the position which the Corporation has taken on this issue 

since 1935 when the law was first passed and reads as follows:

“ The absorption of normal or customary exchange charges by an insured 

nonmember bank, in connection with the routine collection for its depositors of 

checks drawn on other banks, does not constitute the payment of interest within 

the provisions of Section 304.2 (a) of Part 304 of the Corporation's Rules and 

Regulations.”

For the foregoing reasons, we recommend that the Bill H. R. 3956 be voted out 

by your Committee and passed by the Senate. A memorandum dealing with the 

principles of law involved, is enclosed for the information and use of the Committee.

By direction of the Board:

F ran cis C. B row n

General Counsel

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ABSORPTION OF EXCHANGE CHARGES 77

GENERAL COUNSEL’S MEMORANDUM

Re : H. R. 3956

Reason for Favoring Legislation:

The proposed Bill reverses an administrative ruling of the Board of Governors 

of the Federal Reserve System which, we believe, goes beyond the field of regulation 

authorized by Congress and which, under the pretense of regulating interest, is 

designed to discourage and eliminate the practice of charging exchange. Our support 

of the measure stems principally from our opposition to the practice of circumventing the legislative authority of Congress by administrative regulation, and 

secondarily, from our interest as insurer of a large group of banks, not members 

of the Reserve System, which feel the full impact of the ruling although without 

legal right to contest its validity, and finally, from our apprehension of the consequences of the campaign to compel these institutions to discontinue their practice 

of charging exchange—a practice expressly authorized both by Congress and by 

many state legislatures.

The Present Law:

We observe a common and single legislative purpose in the laws prohibiting the 

payment of interest on demand deposits administered, as to member banks of the 

Federal Reserve System, by the Board of Governors of the Federal Reserve System 

(Sec. 19 of the Federal Reserve Act, as amended by Sec. 11 (b) of the Banking Act 

of 1933, and Sec. 324 (a) of the Banking Act of 1935) and, as to nonmember insured 

banks, by the Federal Deposit Insurance Corporation (Sec. 12B of the Federal 

Reserve Act, as amended, subsec. (v), paragraph (8), added by Sec. 101 of the 

Banking Act of 1935). Although some differences in the two laws exist, it is evident 

that Congress used the word “ interest” in the same sense in each provision. Because 

of the absence of legislative standards circumscribing the power of the Reserve 

Board under Sec. 324 (a) of the 1935 Act, to determine what shall be deemed to be 

a payment of “ interest” , the asserted delegation to it of legislative power to broaden 

the common legal meaning of the term is of doubtful validity under decisions of the 

Supreme Court of which Panama Refining Co. v. Ryan (1935) 293 U. S. 388, 79 L. ed. 

446, is a typical example. There the Court said that executive regulations “ become, 

indeed, binding rules of conduct, but they are valid only as subordinate rules and 

when found to be within the framework of the policy which the legislature has 

sufficiently defined” (p. 428). Therefore the law under which the Reserve Board 

operates is necessarily on a parity with that governing the Federal Deposit Insurance 

Corporation, which does not expressly contain such delegation. Regardless of the 

validity of the delegation, however, the Reserve Board has not currently exercised 

its power to define interest to include the practice of absorbing exchange. It has 

issued a ruling in a specific case and has published general discussions of the subject 

which constitute administrative “ case law” on the question of absorption of exchange applicable to member banks. The Board explained before the House Banking 

and Currency Committee that its recent action was based not on its power of 

definition but on its application of the word “ interest” to the practice of absorbing 

exchange. Although applicable only to member banks, the adverse impact of this 

ruling operates directly and almost exclusively upon nonmember institutions, since 

principally member banks act as clearing or collecting agents or correspondents on 

items forwarded for collection from nonmember banks (2529 in number) which 

charge exchange on out-of-town remittances.

History of Par Clearance Controversy:

To understand the true significance, social and economic, of the question of 

absorption of exchange, it is necessary briefly to review the history of the fight for

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and against compulsory and universal par clearance through the Federal Reserve 

System. The banks which now charge exchange are located principally in sixteen 

states of the south and middle west. These institutions are primarily small, independent, locally-owned banks in important agricultural areas which have been 

providing local credit accommodations and banking facilities to their communities. 

The revenue which these banks derive from exchange has been a substantial, and 

in many cases a vital, part of their income. They have adhered steadfastly to their 

age-old practice of charging exchange on remittances out of town, notwithstanding 

recurrent efforts on the part of the Federal Reserve Board in past years to force 

them to remit at par on collections by member banks through the Federal Reserve 

banks.

After the Federal Reserve System was set up certain Federal Reserve banks 

instituted compulsory par remittance by member banks on checks sent through 

them. In 1915 the Federal Reserve Board instituted a voluntary par remittance 

plan. However, this failed in a number of areas because of the small percentage of 

banks (25%) which agreed to remit at par. In 1916 the Federal Reserve Board 

instituted compulsory par remittance which was put into effect in the face of intense 

opposition on the part of many national banks in country areas, and the efforts of 

a committee of the American Bankers Association to obtain postponement of the 

compulsory plan failed. Although many of the larger banks favored the compulsory 

plan because they were already remitting at par, the then (1916) president of the 

American Bankers Association declared his sympathies with the country banks 

in these words: “ The transfer of funds is a service which is as much entitled to 

compensation, when made by a bank, as it is when made by an express company 

or by the postal official” . A committee of the American Bankers Association reported 

at the 1917 convention that it had sounded the opinion of bankers and that over 

75% opposed the par collection plan. However, as the Federal Reserve Board had 

observed in the preceding year, the force of competition with par clearing member 

banks was driving many non-member banks onto the par list.

In 1917, section 13 of the Federal Reserve Act was amended expressly to permit 

banks to make reasonable exchange charges on collections otherwise than against 

the Federal Reserve banks. In accepting this amendment the non-par banks, supported by an opinion of the General Counsel of the American Bankers Association, 

had understood that the amendment would permit non-member banks to charge 

exchange on collections which the Federal Reserve banks were handling in the 

customary agency capacity. However, the Attorney General in 1918 (31 Op. Atty. 

Gen’l. 245, 251) issued an opinion to the contrary, so that non-member banks were 

prohibited from charging exchange not only on collection items owned by the Federal 

Reserve banks, but also on those which they were handling in an agency capacity. 

This deprived banks of the clearing facilities of the Federal Reserve banks for 

checks drawn on non-par banks and the situation in this respect has since remained 

unchanged.

The struggle, however, between the conflicting economic philosophies raged 

unabated. The Reserve Board continued its pressure upon the non-par banks by 

first persuading as many banks as possible in a district to remit at par, and then, 

when a majority had so agreed, announcing that all banks in the district would, 

on a specified date, be put on the par list, enforcing the pronouncement by presenting checks over the counter by messengers, or by postal officials, or by par banks 

located in the same towns, and demanding cash settlements at par. In Brookings, 

Oregon, for example, it maintained an agent for practically a year at an expense 

of $3542. for the purpose of presenting such checks on the Brookings State Bank. 

Brookings State Bank v. Fed. Res. Bank (D. C. Ore., 1922) 281 Fed. 222, 227. Some 

non-par banks claimed that checks were accumulated and presented in large amounts

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ABSORPTION OF EXCHANGE CHARGES 79

to harrass them and that this made it difficult, if not impossible, for them to meet 

the payments because of the large amount of vault cash required for such purpose. 

Charges of coercion and oppression were flung at certain Federal Reserve banks 

and recriminations abounded. From 1920 to 1927 six suits were instituted against 

Federal Reserve banks in an effort to stop this practice. Others were avoided only 

by the Federal Reserve abandoning the practice. Many non-par banks, however, 

yielded to this persuasion and the number of non-par banks was gradually reduced.

After unsuccessful efforts by certain banks to enjoin judicially a Federal Reserve 

bank from presenting checks over the counter, state legislatures enacted laws 

permitting their banks to settle by draft for such checks. These laws led to the 

decision in Farmers & Merchants Bank of Monroe v. Federal Reserve Bank of Richmond

(1923) 262 U. S. 649, 67 L. ed. 1157, in which the Supreme Court, speaking through 

Justice Brandeis, held that the Federal Reserve had no authority to enforce universal 

par clearance, and said (pp. 664-666):

“ ***Congress did not in terms confer upon the Federal Reserve Board or the 

federal reserve banks a duty to establish universal par clearance and collection 

of checks; and there is nothing in the original act or in any amendment from 

which such duty to compel its adoption may be inferred. The only sections which 

in any way deal either with clearance or collection are 13 and 16. In neither 

section is there any suggestion that the Reserve Board and the reserve banks 

shall become an agency for universal clearance. On the contrary § 16 strictly 

limits the scope of their clearance functions. It provides that the Federal Reserve 

Board: ‘may at its discretion exercise the functions of a clearing house for such 

Federal reserve banks . . . and may also require each such bank to exercise the 

functions of a clearing house for its member banks/

“ There is no reference whatever to ‘par’ in § 13, either as originally enacted 

or as amended from time to time. There is a reference to ‘par1 in § 16; and it is 

so clear and explicit as to preclude a contention that it has any application to 

non-member banks, or to the ordinary process of check collection here involved.

* * *

“ Moreover, the contention that Congress has imposed upon the Board the 

duty of establishing universal par clearance and collection of checks through the 

federal reserve banks is irreconcilable with the specific provision of the Hardwick 

Amendment which declares that even a member or an affiliated non-member 

may make a limited charge (except to federal reserve banks) for ‘payment of 

checks and . . . remission therefor by exchange or otherwise’. The right to make 

a charge for payment of checks, thus regained by member and preserved to 

affiliated non-member banks, shows that it was not intended, or expected, that 

the federal reserve banks would become the universal agency for clearance of 

checks.”

The importance of this issue is cogently summed up in the following quotation 

from “ Deterrents to Membership in the Reserve System” , an article by B. Magruder 

Wingfield, the then Assistant General Counsel for the Reserve Board, published 

by the Reserve Board in a volume on “ Banking Studies” (1941), at page 277:

“ To many smaller banks, exchange charges are a source of substantial revenue 

they are reluctant to do without and, in many instances, state they can not do 

without. In view of these facts and the differences in Federal and State laws with 

respect to par clearance, it is clear that the requirement that checks be paid in full

by member banks is an important obstacle to membership in the Reserve System, 

particularly since no such requirement is applicable to nonmember insured 

banks.” (Emphasis supplied).

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In 1920 and again in 1932 Committees of Congress held hearings at which the 

par clearance controversy was aired.1 At each of these hearings numerous references 

were made to the practice of charging exchange and absorption of exchange and its 

inextricable relationship to par clearance was apparent. However, prior to the 

hearings on the present Bills, the par clearance issue had not been directly reopened 

since the Supreme Court decided the Richmond case. Today whether a bank remits 

at par is essentially a matter of policy with the bank's management. In many 

communities, however, this policy is largely governed by the necessities of meeting 

the competition of banks which, to a large extent, do remit at par. The force of this 

competition, in many instances, has extended into communities adjoining the 

locations of the par institutions, and as the infiltration of national banks and state 

member banks into non-par areas increases, the non-par list probably will further 

contract. City banks are now generally par remitting banks, whereas in many 

states non-par banks are confined to rural communities.

The forces of competition are at work. These forces have, for many years past, 

led to arrangements between banks and their depositors whereby the former have 

absorbed the exchange charges imposed by non-par banks on items which are collected through their facilities. Correspondent banks have made similar arrangements 

with their bank customers whereby they absorb exchange charges imposed on 

remittances by non-par banks to the extent that the balances of their customers 

justify. The correspondent banks have been able and willing to absorb this expense, 

as well as the other costs of collection, and to render other services, because banks 

for whom they act as correspondents maintain with them deposits of part of their 

available reserves—and deposits being the banker’s principal stock in trade, these 

funds have been so invested as to warrant the correspondent banks making these 

arrangements. Moreover, these deposit accounts have been so maintained not only 

to obtain these services but also because inter-bank balances are a necessary part 

of the entire banking system ; they are required to enable a bank to furnish its 

customers the full measure of banking facilities. These absorbing arrangements, 

in many instances, have been confined to local areas. So far as the public is concerned and from a practical standpoint, the result of these arrangements is that 

the non-par banks operate on a par basis and thus have been able to meet the 

competition of nearby par banks. The issue of absorption of exchange for this 

reason is inextricably mingled with the whole issue of par clearance. Indeed, the 

Board of Governors of the Federal Reserve System, in a letter dated October 14, 

1942, addressed to the Honorable Preston Delano, Comptroller of the Currency, 

dealing with the bank at Lincoln, Nebraska, which appears in the record of the 

hearings on the present measure before the House Banking and Currency Committee, made the following significant statement (p. 592):

“ The Board does not believe that the problem of exchange absorption can be

considered alone. It is only a part of the whole question of par clearance with

its many involved and related questions.”

Moreover, that the question of exchange absorption cannot logically nor practically be divorced from the paramount issue of par clearance is made clear beyond 

doubt by the recent action of a state bankers association which issued a circular 

containing the following significant passage: “ If all banks will cease absorbing these 

charges, it is predicted that it will be only a matter of time until all banks throughout 

the United States will be on a par clearance basis” . In the face of this very plain 

understanding by bankers as to the consequences which will flow inevitably from 

the enforcement of the Federal Reserve Board’s recent ruling outlawing the absorption of exchange and the Board’s continuing pressure upon exchange charging

1 House Hearings, Committee on Banking and Currency, Par Collection of Checks, 66th Cong., 

2nd Sess.; House Hearings, Committee on Banking and Currency, To Provide a Guaranty Fund for

Depositors in Banks, 72nd Cong. 1st Session.

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ABSORPTION OF EXCHANGE CHARGES 81

banks, we have been unable to accept unreservedly the Board’s statement that its 

ruling was not motivated by the hope of achieving universal par clearance but only 

by the desire to enforce the law prohibiting the payment of interest on demand 

deposits.1 The literal acceptance of its disclaimer is rendered even more difficult in 

view of the letter sent out to banks by the Reserve Board on February 18, 1944, 

encouraging opposition to the pending Bill and containing the following quotation: 

“ This matter of exchange charges is nothing but a ‘gouge1, a kind of racketeering 

against the depositors of banks, and, against the commerce and industry of the 

nation.” Nor can the statement readily be reconciled with the pressure campaign 

against the pending Bill which has been carried on by the Reserve-Board-controlled 

Federal Reserve Banks, one of which, on March 10, 1944, wrote all of the operating 

banks in its district stating: “ If the Senate joins the House in enacting this legislation within the next week or two, the progress made in the past thirty years in 

building a par collection system will be reversed.*** The two Senators from your 

State as well as the members of the Senate Committee on Banking and Currency 

undoubtedly will wish to understand the significance of the Maybank Bill (S. 1642). 

No one is better able to interpret its possible effects than you. As for ourselves, it 

is our considered judgment that this legislation is not in the public interest.”

Moreover, the Board’s disclaimer must be viewed in light of the past history of 

its attitude toward absorption of exchange. In 1936, the Board of Governors requested the Federal Advisory Council for its opinion as to whether the promulgation 

and enforcement of Regulation Q, with the inclusion therein of the definition outlawing absorption of exchange as a payment of interest, would have an adverse 

effect upon membership in the Federal Reserve System; and the Federal Advisory 

Council replied that it would not. (1936 Annual Report of the Federal Reserve 

Board, p. 233). If the motive of the Federal Reserve Board was enforcement of the 

law and not the achievement of par clearance, why, it is fair to ask, was it concerned 

with the effect of its ruling forbidding absorption of exchange upon membership in 

the Federal Reserve System? If the law prohibiting interest upon demand deposits 

compelled such a ruling, then whether membership in the Federal Reserve System 

was affected or not it would seem that the Reserve Board was required to make 

that ruling. We may justly ask, would the Federal Reserve Board have persisted 

in its attitude had it been advised by the Federal Advisory Council that such a 

ruling would have a detrimental effect upon membership in the system? Moreover, 

the Federal Advisory Council’s reply is not consistent with the Board’s present 

statement that it was confronted with the unhappy possibility that such a ruling 

would result in member banks withdrawing from the System.

The ruling of the Board has singled out absorption of exchange charges alone, of 

all expenses identifiable with a depositor’s account, for classification as a prohibited 

interest payment; while other rulings hold that other expenses, equally identifiable, 

such as, intangible property taxes against depositors based upon their bank balances, 

bond premiums and expenses of clearing checks, may be absorbed without violation 

of the law. Thus, for example, the Federal Reserve Board has held that member 

banks may pay and absorb intangible property taxes upon depositors’ bank balances 

such as those levied in the states of Michigan, Indiana and Kentucky, without

i “ The Board is even more surprised at the statement in your letter that as you view the proposed 

ruling it is simply another attempt to force par clearance upon nonmember banks. The Board does favor 

Nation-wide par clearance, but it agrees with you that the final determination of the question is one for 

appropriate legislative bodies. Consequently it must most emphatically disagree that forcing par clearance was the motive of the Board’s ruling. To the contrary, the Board was confronted with the unhappy 

possibility that, by making such a ruling, member banks resorting to the practice in question would 

feel that they should withdraw from the Federal Reserve System. It must reiterate that its purpose in 

making the ruling was solely to carry out what it believes to be its responsibility under the law, in response 

to a request from the Office of the Comptroller of the Currency for a ruling in the particular case disclosed 

by reports of examination made by National bank examiners.” (From letter of L. P. Bethea, Asst. Sec., 

Board of Governors of the Federal Reserve System, to Hon. Leo T. Crowley, Chairman, Federal Deposit 

Insurance Corporation, dated Sept. 9,1943, Hearings on H. R. 3956 before House Committee on Banking 

and Currency, 78th Cong., 2nd Sess., p. 601).

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violating the interest statute. It is to be noted that these taxes are laid on the 

depositors and not on the banks and are in every sense “ out-of-pocket” expenses 

insofar as the bank is concerned. Nevertheless, the Federal Reserve Board has ruled 

that the term “ interest” includes the payment or absorption of exchange and 

collection charges “ but does not include the payment or absorption of taxes upon 

deposits whether levied against the bank or the depositor” . Federal Reserve Bulletin

(1935), p. 864; id. (1944), p. 13.

Interpretation of Interest-Prohibition Statute:

Mindful of this turbulent history of the par clearance issue, we pass to consideration of the question whether Congress intended that absorption of exchange be 

deemed the payment of interest.

What did Congress mean by the term “ interest” as used in the laws prohibiting 

payment of interest on demand deposits? The laws themselves contain no definition.

The Banking Act of 1933 became law on June 16,1933. The Senate bill contained 

a provision prohibiting interest payments on demand deposits; the House bill 

contained only a provision for regulating interest rates on savings and time deposits. 

The reports on these bills cast no light on the question under consideration here, but 

we do learn from the Congressional Record that the purpose of the Senate provision 

was to attract surplus bank money away from the large money markets, where it 

had been used for speculative purposes, and return it to the home communities of 

the banks where it could be loaned out. It was thus explained to the Senate:

“ * * *. The payment of interest on demand deposits has resulted for years and 

years in stripping the country banks of all their spare funds, which have been 

sent to the money centers for stock speculative purposes. * * *. If they have 

abundant funds and credits they can lower the rate of interest in order to stimulate 

business and industry and farming activities.

“ * * *. They have their standard rates and stick to them, and would rather 

send their surplus funds to New York to be used for stock-gambling purposes at 

a wonderful rate of 2 percent, reduced now, I think, to 13^ percent, than to 

loan to their merchants and business men at less than their standard rates. So 

that this payment of interest, particularly on bank demand deposits, has resulted 

in drawing the funds from the country banks to the money centers for speculative 

purposes, to be polite about the matter.” (77 Cong. Rec. p. 3729).

And thus to the House:

“ * * *. We departed from sound banking principles. Our great banking system 

was diverted from its original purposes into investment activities, and its service 

devoted to speculation and international high finance. * * *. Agriculture, commerce, and industry were forgotten. Bank deposits and credit resources were 

funneled into the speculative centers of the country for investment in stocks 

operation and in market speculation. Values were lifted to fictitious levels. 

Call-money rates went soaring, community bankers over the Nation were lured 

away from normal and legitimate channels into a maelstrom of untried and 

destructive activities.” (77 Cong. Rec. p. 3835).

It was suggested also that prohibiting the payment of interest on demand deposits 

would make it easier for banks to pay their deposit insurance assessments by relieving 

them of the heavy interest burden—a burden which averaged, for the 5 years prior 

to 1933, an annual expenditure of approximately $250 millions.

It is significant that nowhere in the Congressional Record of the proceedings on 

the 1933 Act nor in the reports of the Congressional Committees was there any

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ABSORPTION OF EXCHANGE CHARGES 83

reference to absorption of exchange, or any intimation that the provision outlawing 

interest on demand deposits would affect, directly or indirectly, either the charging 

or the absorption of exchange.

In the hearings before the House Banking and Currency Committee on H. R. 3956 

(78th Congress)—the companion bill to S. 1642 now under consideration in the 

Senate—it was disclosed (p. 497) that the Reserve Board had received numerous 

inquiries from banks during 1933 and 1934 for rulings on the question whether 

absorption of exchange was a violation of the interest prohibition. The Reserve 

Board's 1933 Annual Report, submitted to Congress on May 28, 1934, contained 

a copy of its interest Regulation Q as well as recommendations for amendments 

to the law prohibiting payment of interest on demand deposits, including a recommendation that the Board be given power to prescribe rules and regulations to 

prevent evasions of the law. But neither the interest regulation nor the recommendations for legislation contain any reference to absorption of exchange. The Annual 

Report of the Board for 1934 contained a recommendation from the Federal Advisory Council regarding Regulation Q but again there was no mention of absorption 

of exchange. And although extensive hearings were held in 1935 before the Banking 

and Currency Committees of both Houses of Congress on the bill later enacted as 

the Banking Act of 1935, again no mention was made of absorption.

The 1935 bill contained the provision that the Federal Reserve Board should 

have the power to determine what should be deemed “ interest” for the purposes 

of the interest statute. It was included in Title III of the bill under the heading 

“ Technical Amendments” . Chairman Eccles of the Federal Reserve Board did not 

touch upon these provisions in his testimony before the Senate Committee on 

Banking and Currency but in testifying before the House Committee he referred 

to the amendments in this Title as “ in the nature of technical improvements of a 

non-controversial nature” . (House Hearings, Committee on Banking and Currency, 

Banking Act of 1935, p. 185.) Again he said: “ They are largely of a technical nature” . 

(Id., p. 346.) Comptroller of the Currency O'Connor in testifying upon the bill before 

the Senate Committee filed a statement in explanation of the objects of the proposed 

amendments contained in Title III. (Senate Hearings, Committee on Banking and 

Currency, Banking Act of 1935, p. 113.) It will be observed that his explanation of 

Section 323(a) of the bill, which contained the provision authorizing the Federal 

Reserve Board to define what shall be deemed the payment of interest, reads as 

follows: “Authorizes Federal Reserve Board to define ‘deposit' and related terms for 

reserve and interest requirements respecting deposits” . (Id., p. 116.) He further 

explained that section as follows (Id., p. 168):

“ Mr. O'CONNOR...............

Section 323(a) is partly new, and authorizes the Federal Reserve Board to 

define ‘deposit' and related terms for reserve and interest requirements respecting deposits.

Senator TOWNSEND. Who defines those deposits?

Mr. O'CONNOR. The Federal Reserve Board.

Senator BULKLEY. I think we ought to have a more full explanation of that. 

I am frank to say that I do not see what that is driving at.

Senator COUZENS. Was that new over last year's act?

Senator BULKLEY. Yes.

Mr. O'CONNOR. Yes; part of it is new.

Senator BULKLEY. It is all new in the sense that it was not contained in our 

omnibus bill last year.

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Mr. O’CONNOR. I am reading from the report of the House, page 21:

Section 323(a) amends section 19 of the Federal Reserve Act so as to repeal 

the rigid statutory definitions of “ demand deposits” and “ time deposits” and 

authorizes the Federal Reserve Board to define for the purposes of the section 

the terms: “ Demand deposits” , “ gross demand deposits” , “ deposits payable 

on demand” , “ time deposits” , “ savings deposits” and “ trust funds” , to determine what is to be deemed a payment of interest and to prescribe regulations 

to effectuate the purposes of the section.

Oh, yes; it comes back to me now: We had a number of discussions in the Federal 

Reserve Board, gentlemen, after the passage of the 1933 act, when you eliminated 

the interest on demand deposits, as to what constituted a demand deposit, a 

time deposit, or a savings deposit. We found great difficulty in applying the 

definitions that were in the act, and we found some of the banks attempting to 

circumscribe the prohibitions; and we wanted, when we found those evasions, 

to keep correcting the definition until they could not evade it” .

It will be noted that not one word was said about absorption of exchange; indeed 

not a word about interest. The explanation was that the provision authorized the 

Federal Reserve Board to define the term “ deposit” , in view of the difficulty which 

had been experienced in determining what were demand deposits. Not only was 

absorption of exchange not mentioned but that portion of the authorization with 

respect to the definition of the term “ interest” was not even discussed.

Similarly, in the House hearings, the Comptroller of the Currency said (House 

Hearings, Committee on Banking and Currency, Banking Act of 1935, p. 661) that 

“ practically all of the things I am going to talk about are technical matters * * 

and he described the section which included the power of definition as follows:

“ Section 323(a), which is partly new, authorizes the Federal Reserve Board to 

define ‘deposit’ and related terms for reserve and interest requirements respecting

deposits” . (id., p. 665).

In light of this background, how can it fairly be said that Congress intended to 

eliminate or authorize the elimination of the absorption of exchange as a “ device” 

for the indirect payment of interest on demand deposits? Nothing was said about 

it at the hearings on the bill; on the contrary, the silence on that subject justifies 

us in saying that Congress did not intend to authorize this elimination through the 

regulation of interest payments. If the absorption of exchange was then an acute 

evil and an obvious device for the indirect payment of interest on demand deposits, 

as the Federal Reserve Board now asserts it then believed, how can it justify the 

complete silence of every one on the subject when the 1935 bill was before Congress? 

The true interpretation of the statute depends not upon what the Federal Reserve 

Board claims it intended in proposing the 1935 amendment to Congress, but upon 

what Congress intended in enacting it into the law. Although the problem may have 

been acute to the Federal Reserve Board in 1934 and 1935, as it did not communicate 

its anxiety to Congress, but on the contrary represented the amendment to be 

“ technical” and “ non controversial” , neither of which descriptions fits legislation 

which would permit it to disturb the practice of exchange absorption, we must 

conclude that Congress did not intend to authorize its recent ruling.

The provision governing interest payments by non-member insured banks 

(initially proposed to be enforced by the Federal Reserve Board but changed before 

passage to the Federal Deposit Insurance Corporation) was also discussed fully by 

representatives of the several banking agencies but no mention was made there of 

any intention to prohibit absorption of exchange.

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It cannot be said that Congress, in enacting the Banking Act of 1935 and continuing therein the prohibition against the payment of interest upon demand 

deposits, adopted the administrative interpretation laid down by the Federal Reserve 

Board in 1934. We do not contest that the courts have held that the existence of 

an administrative regulation during several re-enactments of a statute is persuasive 

evidence of the Congressional approval of such administrative action. McCaughn v. 

Hershey Chocolate Co. (1931) 283 U. S. 488, 492, 75 L. ed. 1183, 1187; Jones v. 

Magruder (D. C. Md., 1941) 42 F. Supp. 193, 199; Railroad Federal Savings and

Loan Association v. U. S., 135 F. (2d) 290, 293 (CCA 2, 1943). But in almost all 

cases it will be found that the administrative regulation was in existence a considerable length of time and usually through several statutory re-enactments. 

Where the regulation is only of short life, the rule is not applied. Commissioner of

Internal Revenue v. Sun Pipe Line Co., 126 F. (2d) 888 (CCA 3, 1942). The theory 

upon which the rule is based is that there is a presumption that the legislature is 

aware of the administrative ruling and impliedly adopts it by failing to legislate 

against it. This presumption, however, is thoroughly overcome as far as the 1935 

Act is concerned, since Congress actually was kept in complete ignorance of any 

ruling on this subject. As an eminent authority has said: “ While the acquiescence 

of the legislature seems to be of small matter where there is no evidence to the effect 

that the statute or contemporaneous interpretation was called to the legislature’s 

attention, it is believed that when action has been taken upon a statute by the 

legislature, and where a practical and contemporaneous interpretation was called 

to its attention, the failure of the legislature to change the interpretation should 

be regarded as presumptive evidence in its correctness” . 2 Sutherland, Statutory

Construction (3rd ed.), 525. Even had the legislative record been such as to warrant 

the conclusion that Congress did intend to adopt the Reserve Board’s views, its 

rulings on the subject were so confusing and contradictory that no clarification of 

the issues could have resulted. Thus, the Board had held that absorption of exchange 

charges by a bank for depositors who maintained balances of $1000. or more was not

a violation of the law; this, notwithstanding the interest statute prohibits the 

payment of any interest on demand deposits. Yet in another case it held that absorption of exchange charges by a bank “ up to an amount equivalent to a certain 

specified percentage of the amount of the collected balance” of its correspondent 

bank customers was a violation of the law (Federal Reserve Bulletin (1934), p. 395). 

Furthermore, these rulings appear to have been entirely precatory to the extent 

that they declared exchange absorption to be illegal, as the practice continued to 

be indulged in by member banks throughout the system without interference by 

the Board until 1944.

We think it cannot reasonably be said that Congress, in passing this legislation, 

could have had any intention of prohibiting the long established banking practice 

which was so completely wrapped up in the explosive par clearance issue without 

some mention having been made of the problem in the debates, the reports on the 

bills or the testimony upon which the Congressional Committees acted.

There are certain well established rules for determining legislative intent. One 

of these is that penal statutes must be strictly construed and the statutes in this 

case are plainly penal. The one governing insured nonmember banks carries with 

it the specific penalty of $100 for each violation as well as the general penalty of 

the forfeiture of deposit insurance. The one governing member banks carries the 

general penalty of forfeiture of charter, in the case of national banks, and forfeiture 

of membership in the Federal Reserve System, in the case of state member banks, 

as well as the loss of federal deposit insurance, or the removal from office of the bank 

officers responsible for the violations. Statutes which provide for forfeitures upon 

their violation are penal. State of Maryland v. The B. & O. R. Co. (1845) 3 How.

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(U. S.) 534,11 L. ed. 714; Chase v. Curtis, et al (1885) 113 U. S. 452, 28 L. ed. 1038; 

Hall v. Norfolk & W. R. Co. 44 W. Va. 36, 28 S. E. 754 (1897); Vestal Co. v. Robertson, 

277 111. 425, 115 N. E. 629 (1917); Manhattan Trust Co. v. Davis, 23 Mont. 273, 

58 P. 718 (1899).

Another of these rules is that words having a precise and well-settled meaning 

in common usage are to be understood in the same sense when used in statutes. This 

rule has been applied to the use of the word “ interest” in statutes in two decisions 

of the United States Supreme Court involving provisions of the Internal Revenue 

Code. Deputy v. DuPont (1940) 308 U. S. 488, 84 L. ed. 416; Old Colony R. Co. v. 

Commissioner of Internal Revenue (1932) 284 U. S. 552, 76 L. ed. 484.

In Deputy v. DuPont, the Court, speaking through Mr. Justice Douglas, said:

. . In the business world ‘interest on indebtedness’ means compensation for 

the use or forbearance of money. In absence of clear evidence to the contrary, 

we assume that Congress has used these words in that sense. In sum, we cannot 

sacrifice the ‘plain, obvious and rational meaning’ of the statute even for ‘the 

exigency of a hard case’.”

In the Old Colony case the Court, speaking through Mr. Justice Roberts, said:

. . as respects ‘interest’, the usual import of the term is the amount which one has

contracted to pay for the use of borrowed money * * *. We cannot believe that 

Congress used the word having in mind any concept other than the usual, ordinary 

and everyday meaning of the term, or that it was acquainted with the accountants’ 

phrase ‘effective rate’ of interest and intended that as the measure of the permitted deduction” .

Furthermore, judicial precedents concerning interest for the purpose of determining whether usury has been practiced, establish that the question whether a 

particular payment by a borrower to a lender is interest or reimbursement of an 

expense, involves intent. There is no presumption of an illegal or usurious intent, 

but on the contrary the burden rests upon the party seeking to impeach the transaction for usury to prove the illegal intent. Brown v. Robinson (1918) 224 N. Y. 

301, 314, 120 N. E. 694, 698. Here, however, for purposes of administrative disposition, it appears that the Reserve Board has reversed the presumption and burden 

of proof by ruling {Federal Reserve Bulletin (1934), p. 396)—

“ * * * that, in any case in which a member bank pays or absorbs exchange or 

collection charges or other expenses in connection with any deposit payable on 

demand, the burden will be upon it to show that such payment or absorption 

of charges is not a device to evade the provisions of Section 19 of the Federal 

Reserve Act forbidding the payment of interest on deposits payable on demand.”

The extensive hearings which were had before the House Banking and Currency 

Committee on the present measure have clearly demonstrated the importance of 

absorption to many bankers and the intensity of their opposition to any restriction 

of this practice, which was a well known banking custom and was separate and 

distinct from the payment of interest. That the two practices are different both in 

origin and economic effect is borne out also by numerous witnesses who testified 

at those hearings.

It is significant that just as bankers have long differentiated between the payment 

of interest which they consider compensation and the absorption of exchange which 

they consider expense, so have courts in usury cases similarly differentiated between 

the payment of interest and exchange. Cayuga County Bank v. Hunt, 2 Hill (N. Y.) 

635; Holford v. Blatchford, 2 Sandf. Ch. (N. Y.) 149.

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ABSORPTION OF EXCHANGE CHARGES 87

In Buckingham v. McLean (1851) 13 How. (U. S.) 151, 14 L. ed. 91, the Supreme 

Court said:

“ The reason why the addition of the current rate of exchange to the legal rate 

of interest does not constitute usury is, that the former is a just and lawful compensation for receiving payment at a place where the money is expected to be 

less valuable than at the place where it is advanced and lent.”

Absorption of Exchange—Administrative Interpretations:

Let us now consider the historical development of the administrative concept 

that absorption of exchange constitutes payment of interest in violation of section 19 

of the Federal Reserve Act.

In 1935 the Reserve Board revised its Regulation Q (effective January 1, 1936) 

to include the following definition of interest:

Section 1(f)— “ The term ‘interest’ means a payment, credit, service, or other 

thing of value which is made or furnished by a bank as consideration for the use 

of the funds constituting a deposit and which involves the payment or absorption 

by the bank of out-of-pocket expenses (i.e., expenses arising out of specific transactions for specific customers and definitely attributable to such transactions as 

distinguished from overhead and general operating expenses), regardless of 

whether such payment, credit, service, or other thing of value varies with or 

bears a substantially direct relation to the amount of the depositor’s balance.

The term ‘interest’ includes the payment or absorption of exchange and collection charges which involve out-of-pocket expenses, but does not include the 

payment or absorption of taxes upon deposits whether levied against the bank 

or the depositor nor the payment or absorption of premiums1 on bonds securing 

deposits where such bonds are required by or under authority of law.

Notwithstanding the foregoing, the payment or absorption of isolated items 

of out-of-pocket expense in trivial amounts and not of a regularly recurrent 

nature, where the charging of such items to customers would cause undue friction 

or misunderstanding, will not be deemed to be a payment of interest, provided 

that the banks acts in good faith and does not utilize the absorption of such 

items as a basis for soliciting accounts or obtaining an advantage over competitors and provided further that the bank maintains and makes available to 

the examiners authorized to examine the bank a record showing the amounts 

of such items paid or absorbed by it, the dates of such payment or absorption, 

and the names of the customers for whom such items were paid or absorbed.”

At about the same time the Federal Deposit Insurance Corporation issued a 

revision of its interest Regulation IV, also to become effective January 1, 1936, 

containing the following definition of interest:

Section 1(f)—“ The term ‘interest’ means a payment or credit which is made or 

furnished by a bank as consideration for the use of the funds constituting a deposit.

The term ‘interest’ includes any direct or indirect payment by the bank of 

the purchase price of premiums given to depositors or prospective depositors in 

connection with obtaining deposits.

The term ‘interest’ does not include the payment or absorption of taxes upon 

deposits, whether levied against the bank or the depositor, nor payment or

1 The provision permitting banks to pay and absorb the taxes for their depositors is supported by 

later specific rulings of the Board to the same effect. Why the Board permits taxes to be paid and absorbed but prohibits banks from absorbing exchange can be explained only by the fact that the former 

has no bearing upon the issue of par clearance. The provision relative to bond premiums constituted a 

reversal of an earlier ruling by the Board. (Federal Reserve Bulletin (1933), p. 500).

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88 FEDERAL DEPOSIT INSURANCE CORPORATION

absorption of premiums on surety bonds securing deposits where such bonds are 

required by or under authority of law.”

The Reserve Board requested the Federal Deposit Insurance Corporation to hold 

its definition of interest in abeyance and deferred until further notice the effective 

date of its own definition pending discussions between the two agencies with a view 

to having the Federal Deposit Insurance Corporation issue its interest regulation 

in language paralleling the Reserve Board’s Regulation Q. These discussions centered 

on the question whether the payment or absorption of exchange or collection charges 

constituted interest and this appears to have been the first time the issue was raised 

between the two agencies. Their viewpoints were irreconcilable in this respect. 

On January 20, 1936 the Federal Deposit Insurance Corporation advised the 

Reserve Board by letter that “ both the practice of paying interest on demand 

deposits and the practice of charging for exchange and collection and absorbing 

such charges where the advantage lay existed long prior to the Banking Act of 1933 

and thus far Congress has expressly prohibited only the former” , and that “ in the 

present state of the law and the practices we are not prepared to say that the practice 

which would be proscribed by Regulation Q is unsupported by principles of banking 

specially applicable to the business of exchange.”

The Reserve Board announced in its January 1937 Bulletin (p. 11) that during 

the preceding year it had given exhaustive consideration to the subject and “ as a 

result of this consideration, has taken action fixing February 1, 1937” as the date 

on which the definition of interest in its Regulation Q would become effective. In 

its March 1937 Bulletin (p. 186) it announced that the effective date had been 

postponed from February 1, 1937 to May 1, 1937 at the request of the Chairmen 

of the Banking and Currency Committees of both Houses of Congress. In the same 

Bulletin (p. 187) there was printed the February 12,1937 press release of the Reserve 

Board and the Federal Deposit Insurance Corporation jointly announcing the 

amendment of the Reserve Board’s Regulation Q and of the Federal Deposit Insurance Corporation’s Regulation IV, and the addition to each Regulation of the 

sentence:

“ Within this regulation, any payment to or for the account of any depositor 

as compensation for the use of funds constituting a deposit shall be considered 

interest.”

This joint press release included the following statement:

“ The Board of Governors, in its original definition of the term ‘interest’ (section 1(f) ), specified that such term should include the payment or absorption 

of exchange or collection charges which involve out-of-pocket expenses. The

present action of the Board of Governors removes this finding or specification from

its regulation.

Henceforth under both regulations the question of what in a particular case 

is a payment of interest upon a demand deposit or a device to evade the prohibition against the payment of such interest, becomes, for both agencies, a matter 

of administrative determination under the general law in the light of experience 

and as specific cases may develop.” (Emphasis supplied).

This release was widely interpreted to constitute an abandonment by the Board 

of its previous theory that absorption of exchange could be interest.

Absorption of exchange was a dead issue from 1937 until 1943. The Reserve 

Board’s Bulletins contain no rulings on the subject during this long period. Many 

member banks which had notified their customers in 1936 or 1937 that because of 

Regulation Q they could no longer absorb exchange, withdrew their notices. The 

practice of absorption continued to be a matter of individual bank policy until

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ABSORPTION OF EXCHANGE CHARGES 89

September 1943 when the ruling in the Lincoln case was published in the Reserve 

Board’s Bulletin. Between 1937 and September 1943 thousands of examinations 

of member banks were conducted by national and Federal reserve bank examiners. 

From this it seems clear that for over 6 years the practice was at least tolerated if 

not approved by the Comptroller of the Currency and the Federal Reserve Board.1 

Throughout this period the Federal Deposit Insurance Corporation consistently 

held to the position that absorption of exchange by insured nonmember banks in 

connection with routine collection of checks could not be considered payment of 

interest.

In October 1942 the Reserve Board notified the Federal Deposit Insurance 

Corporation of the fact that the Comptroller of the Currency had requested a 

ruling from it on the absorption of exchange by a national bank and suggested a 

conference on the subject. Conferences were held between staff members at which 

the Reserve Board outlined its proposed ruling substantially as later issued. The 

Federal Deposit Insurance Corporation’s representatives at these conferences 

restated the Corporation’s position on the question, asserting (1) that Congress 

had not intended to treat absorption of exchange charges as interest, (2) that 

exchange charges could not be differentiated from many other expenses which banks 

absorbed for their customers and which all agencies agreed were not interest, and

(3) that the evil which Congress sought to eradicate by the restriction against 

payment of interest was not present in absorption of exchange, as the amount of 

exchange absorbed varies only as the dollar amount of checks issued by depositors 

in non-par banks might vary and hence there could be no competitive bidding.

The Reserve Board’s ruling was published in September 1943. This ruling was 

allegedly confined to the facts of a particular case and the Federal Deposit Insurance 

Corporation did not learn that it was being used generally as a precedent against 

all absorption of exchange until shortly before the hearings started before the House 

Banking and Currency Committee last December. It then learned that based upon 

this ruling action had been taken to outlaw all absorption of exchange by member 

banks. In the meantime the legal staff of the Corporation had again reviewed the 

question and in November, 1943 the General Counsel advised the Board of Directors 

of the Corporation that routine absorption of exchange cannot be considered a 

payment of interest within the terms of the interest regulations of the Federal 

Deposit Insurance Corporation. Based upon this opinion the Federal Deposit 

Insurance Corporation adopted a ruling on the subject, of which a copy, together 

with the General Counsel’s opinion, is attached hereto. It will be noted that this 

ruling contained the qualification that it was applicable “ in the absence of facts 

or circumstances establishing that the practice is resorted to as a device for the 

payment of interest.”

This clause had no special significance. The purpose of including it was to follow 

the wording of the law, in case the ingenuity of man devised schemes for payment 

of interest under the guise or pretense of absorbing exchange. We had in mind no 

hypothetical state of facts which would bring a case of absorption of exchange 

within the statute prohibiting payment of interest where it is absorbed by a bank 

in connection with its routine collection of checks.

1 The September 1943 ruling appears to have the practical effect of reinstating the specification 

which the Reserve Board had removed from its Regulation in 1937, with the same unfortunate consequences which Mr. Justice Roberts referred to in the recent case of Maknich v. So. Steamship Co.

(1944) 321 U. S. 96, 88 L. ed. 561, when he said: “ The evil resulting from overruling earlier considered 

decisions must be evident. In the present case, the court below naturally felt bound to follow and apply 

the law as clearly announced by this court. If litigants and lower federal courts are not to do so, the law 

becomes not a chart to govern conduct but a game of chance; instead of settling rights and liabilities 

it unsettles them. Counsel and parties will bring and prosecute actions in the teeth of the decisions that 

such actions are not maintainable on the not improbable chance that the asserted rule will be thrown 

overboard. . . . But the more deplorable consequence will inevitably be that the administration of justice 

will fall into disrepute. Respect for tribunals must fall when the bar and the public come to understand 

that nothing that has been said in prior adjudication has force in a current controversy” .

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90 FEDERAL DEPOSIT INSURANCE CORPORATION

As a result of the detailed elaboration of the practice which is contained in the 

record of the hearings on this Bill before the House Committee, this Corporation 

concluded that the foregoing qualification is unnecessary and possibly leaves open 

to some doubt the true intention of the Corporation in making its ruling. Accordingly, it recently amended its ruling to read as follows:

“ The absorption of normal or customary exchange charges by an insured 

nonmember bank, in connection with the routine collection for its depositors of 

checks drawn on other banks, does not constitute the payment of interest within 

the provisions of Section 304.2 (a) of Part 304 of the Corporation’s Rules and 

Regulations” .

No actual case of absorption of exchange has come to our attention which would 

not be exempt under this latest ruling of the Corporation. However, we wish to 

emphasize that this represents merely a change in phraseology and does not represent 

a change in the position which this Corporation has consistently adhered to since 

the enactment of the Banking Act of 1935—the Act which directed the Board of 

Directors of the Corporation to prohibit, by regulation, the payment of interest 

on demand deposits in insured nonmember banks.

The Federal Reserve Board’s September 1943 ruling has been the subject of a 

recent “ interpretation” , promulgated by the Board, in which absorption of exchange 

is declared not prohibited if not offered “ as compensation for the use of funds on 

deposit.” This “ interpretation” serves only to confound the confusion precipitated 

by the original ruling. Under this “ interpretation” every bank examination will give 

rise to a dispute; and, in practice, will result—as is evident from what has transpired 

in the few months since the September ruling—in banks ceasing all absorption. 

No bank will expose itself to criticism under an “ interpretation” which furnishes 

it no standard whereby it may determine whether in any given case it has crossed 

the line of transgression. It serves no purpose and resolves no question to say that 

“ compensation for the use of funds” is interest. This is only to state the obvious. 

The question remains whether it is accurate to hold that absorption of exchange, 

as known to bankers and as ordinarily practiced by them in the course of normal 

service to a depositor or a correspondent bank, can ever be “ compensation for the 

use of funds” and consequently interest. If exchange absorption, under any of the 

circumstances in which it is customarily practiced, can be considered as interest, 

how can absorption of service charges or taxes upon a depositor’s bank balance 

be free of the prohibition by blanket absolution? If exchange absorption constitutes 

a violation only when employed as a competitive device for “ the solicitation of 

deposits” , how can absorption of service charges, when similarly employed, be given 

official sanction?

Even if our concept of the Congressional intent be wrong, the evidence adduced 

at the hearings before the House Banking and Currency Committee has fully 

convinced us that the absorption of exchange by a correspondent bank by arrangements with another bank involves no interest because the bank which absorbs the 

exchange is usually a complete stranger to the depositor-owner of the check, who 

is the person ultimately benefited by the absorption.

Where a correspondent bank absorbs exchange charges on items forwarded for 

collection from non-par banks by another customer-bank, the amount absorbed 

cannot constitute a prohibited “ payment of interest on demand deposits” because 

the forwarding customer-bank acts as agent for its depositors in collecting the checks 

drawn on the non-par banks and as it derives no financial benefit from the absorption 

cannot be said to receive a “ payment” ; while its depositors who derive the benefit 

of the absorption are not depositors of the absorbing bank as they maintain no 

deposits with it.

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ABSORPTION OF EXCHANGE CHARGES 91

We wish to comment briefly at this point on one aspect of our view of the law. 

The avowed purpose of the prohibition against payment of interest on demand 

deposits was to curb speculative use of bank funds attracted to large money centers 

by attractive interest rates. This condition resulted from the complete absence of 

regulation of the use of borrowed funds for speculative purposes. The Banking Act 

of 1933 took member banks out of the business of speculating in securities. It 

divorced them and their officials from their securities affiliates. The Securities Act 

of 1933 (Public, No. 22, 73rd Congress, 48 Stat. 74) and the Securities Exchange 

Act of 1934 (Public, No. 291, 73rd Congress, 48 Stat. 881), not only brought under 

government supervision the distributors of securities and stock exchanges, but also 

gave the Board of Governors of the Federal Reserve System broad power to regulate 

the use of credit for the purchase or carrying of securities. The Reserve Board has 

exercised this power through its Regulations T and U.

But again we suggest that even in the absence of these specific safeguards, the 

free absorption of exchange cannot bring about even a slight recurrence of the 

attraction of bank funds to money centers. The amount of exchange absorbed 

depends upon two factors over which the banks which absorb exchange have no 

direct control. The first is the rate of exchange which by long usage has customarily 

been charged at not over 3^ of 1 % of the aggregate amount of checks presented and 

paid and is limited by law in seven states1 where 1020 non-par banks out of the 

total of 2529 are situated. The second is the dollar amount of the checks which 

individual customers of non-par banks will send to out of town points, a matter 

which is governed entirely by the purchasing power and practices of the customers 

of these banks. While the dollar volume of these checks may vary from year to 

year, it will not be increased by the amount of exchange which banks may absorb 

or the number of banks which absorb it. The forces of competition always have 

controlled and will continue to control the exchange rate, and the economic circumstances of non-par bank customers will control the number and amounts of 

their checks.

If this legislation is passed these natural laws and forces will work without interference. If any bank should make unwise engagements with its customers, the 

situations can be handled with complete effectiveness, where necessary, by ordinary 

bank supervisory methods as easily as other operating problems involving matters of 

judgment are now handled.

For the purpose of encouraging opposition to the measure, many appeals have 

been made to banks expressing fear that the program to achieve universal par 

clearance would be jeopardized if the proposed law should be enacted. Any administrative effort to compel banks to remit at par on clearings which do not pass 

through the Government-controlled Federal Reserve banks is wholly illegal and 

contrary to the Act of Congress expressly authorizing member banks to charge 

exchange to which we have already referred. {Farmers & Merchants Bank of Monroe

v Federal Reserve Bank of Richmond, 262 U. S. 649.) In this field par clearance is 

strictly a matter of voluntary choice on the part of the banking system. Compulsion

may not be used directly or indirectly, however desirable universal par remittance 

may seem.

For these reasons I advise the Board of Directors of this Corporation to recommend favorable action upon the Bill in question.

F rancis C. B r o w n

General Counsel

i Florida, Georgia, Louisiana, Mississippi, North Carolina, South Dakota and Tennessee.

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92 FEDERAL DEPOSIT INSURANCE CORPORATION

RULING OF THE BOARD OF DIRECTORS OF THE 

FEDERAL DEPOSIT INSURANCE CORPORATION 

ADOPTED DECEMBER 6, 1943

R e : A bsorption of E xc h a n g e C har g es a s

Pa y m e n t of I nterest

The Federal Deposit Insurance Corporation recently has received a number of 

inquiries from insured banks concerning whether the absorption by insured nonmember banks of exchange charges imposed by other banks on checks deposited 

by customers for collection or clearance constitutes a payment of interest in violation 

of the Corporation’s interest regulations, Code of Federal Regulations, Title 12, 

Part 304 (Section 304.2).

The Board is of the view that the absorption of exchange charges by an insured 

nonmember bank in connection with its routine collection for its depositors of checks 

drawn on other banks cannot be considered a payment of interest, within the terms 

of the interest regulations of the Federal Deposit Insurance Corporation, in the 

absence of facts or circumstances establishing that the practice is resorted to as a 

device for the payment of interest.

Attached hereto is a copy of the memorandum opinion of the General Counsel 

for the Corporation on this question.

November 24, 1943

M e m orandum—

Qu e st io n : Does the Absorption by an Insured Bank of Exchange Charges Constitute a Payment of Interest Prohibited by the Regulations of the Federal

Deposit Insurance Corporation?

The Federal Deposit Insurance Corporation recently has received a number of 

inquiries from insured banks concerning whether the absorption by insured nonmember banks of exchange charges imposed by other banks on checks deposited 

by customers for collection or clearance constitutes a payment of interest in violation 

of the Corporation’s interest regulations, Code of Federal Regulations, Title 12, 

P^rt 304 (Section 304.2).

The renewed inquiries concerning"this"question appear to be prompted by recent 

publicity given to a ruling of the Board of Governors of the Federal Reserve System 

interpreting the provisions of its Regulation Q. The interest regulations of the 

Federal Deposit Insurance Corporation are applicable only to insured banks which 

are not members of the Federal Reserve System, whereas Regulation Q is applicable 

only to member banks of that system.

The Corporation’s interest regulations provide that with certain exceptions not 

here applicable, “ no insured nonmember bank shall directly or indirectly, by any 

device whatsoever, pay any interest on any demand deposit” , and that “ any payment to or for the account of any depositor as compensation for the use of funds 

constituting a deposit Jshall be considered interest.” The question presented is 

whether the absorption of exchange charges constitutes a “ payment to or for the 

account” of the insured bank’s customers and if so, whether such payment is “ as 

compensation for the use of funds constituting a deposit.” If both of these questions 

are answered in the affirmative, the act of absorbing the exchange charge would be 

a prohibited payment of interest; otherwise, it would not be a violation of the 

regulation.

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ABSORPTION OF EXCHANGE CHARGES 93

The absorption of exchange charges arises out of the collection of checks drawn 

on out-of-town banks which are not cleared through the Federal Reserve banks 

and for which the drawee bank makes a charge against the collecting bank. These 

checks are deposited by the payees or endorsees in other insured banks which 

forward them for collection to the drawee banks. The latter remit the face amount 

of these checks less their charges for clearing or honoring the checks. The collecting 

banks absorb the difference between the face of the checks and the amount remitted, 

which is the amount of the exchange so deducted. More than 2100 insured commercial banks not members of the Federal Reserve System do not clear such checks 

at par and thus are listed by the Federal Reserve banks as “ non-par” banks. In 

addition, many other banks, both members and nonmembers of the Federal Reserve 

System which clear at par through the Federal Reserve banks, make a practice of 

charging exchange on so-called “ direct sendings” , i.e., items forwarded by correspondent banks directly rather than through the Federal Reserve banks.

It is our opinion that the absorption of exchange charges by an insured nonmember bank in connection with its routine collection for its depositors of checks 

drawn on other banks cannot be considered a payment of interest, within the terms 

of the interest regulations of the Federal Deposit Insurance Corporation, in the 

absence of facts or circumstances establishing that the practice is resorted to as a 

device for the payment of interest.

The reasons for this opinion are as follows:

(1) The absorption of expenses in connection with handling a depositor’s account 

under the law is not ordinarily a payment to or for the account of the depositor. 

Banks customarily absorb many expenses in connection with the handling of customers’ accounts which the law recognizes to be investments in customer good 

will. Therefore, these are expended for the account of the bank rather than for the 

account of its depositors, even though the depositors may derive benefit therefrom. 

Thus, for valued customers, banks frequently absorb expenses such as telephone 

and telegraph charges, postage, clerk and teller hire, and the cost of printing check 

forms.

Most banks have installed schedules of service charges to be levied upon deposit 

accounts. While numerous differences of detail obtain, the common rule underlying 

such schedules is that the deposit is worth something to the bank and the bank 

will absorb costs of handling the account up to the average worth of the account 

on the basis of an assumed rate of return on an investment of the account. In most 

cases, a basic charge is made for any account which is not kept above a certain 

minimum balance. For such charge, or the maintenance of such minimum balance, 

a certain number of items, i.e., checks or deposits, are handled. Items in excess of 

the minimum allowed, if not compensated for by larger balances, are charged for 

at published or established rates. In a large proportion of the banks which use this 

“ measured” system of service charges, the larger accounts, or the more active 

accounts, are also subjected to analysis to determine the cost or profit to the bank 

of handling such accounts, and the customer is charged accordingly. In many other 

banks all service charges are based upon account analysis regardless of size of the 

account. Approximately 70 percent of the clearing houses participating in a survey 

conducted by the American Bankers Association in 1938 reported use of account 

analysis in levying service charges upon depositors. (“ Service Charge Survey, 1938” 

Bulletin 77, January 1939, American Bankers Association.) Under this latter 

system, charges are made against the account for all costs incurred by the bank in 

handling the account and credit is given for the amount which the account earns 

for the bank. These costs include exchange and collection costs absorbed, bookkeeping and transit costs of handling items deposited or checks or drafts drawn,

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94 FEDERAL DEPOSIT INSURANCE CORPORATION

and charges for miscellaneous services such as collecting notes, handling out-oftown collections, transferring money by wire or otherwise, or providing credit 

information. So long as the worth of the account to the bank exceeds the cost of 

performing services, no charge is levied against the customer.

Where exchange charges are absorbed within the frame-work of schedules of 

service charges, and the motive is only to establish, maintain, or strengthen customer 

good will rather than to attract funds for money consideration, such absorption 

cannot be differentiated from the absorption of other ordinary items of expense, 

including internal expenses (such as rents, clerk hire, etc.) connected with handling 

a customer’s account.

(2) Exchange charges are expenses of collecting items drawn against banks which 

regularly make a practice of imposing such charges and thus are comparable to the 

costs of maintaining clearing houses, hiring messengers, and other expenses of like 

character connected with normal check-clearing activities which are customarily 

absorbed as part of the operating expenses of banks, even though these charges 

may enter into computations forming the basis for service charges which when 

collected constitute operating income of the bank.

(3) The feature of progressive competitive bidding characteristic of interest is 

lacking in the case of absorption of exchange charges, as the amount of the exchange 

charge is fixed not by the depository bank but by the non-par drawee bank and 

would not vary as between depositories regardless of the bank selected as the 

collecting medium.

(4) Although the practice of absorbing exchange charges antedated the legislation 

on which the Corporation’s interest regulations are predicated, no suggestion may 

be found in the legislative record or history of this provision to indicate any purpose 

on the part of Congress to permit any regulations of the practice of charging exchange in connection with the regulation of interest. Any restriction against absorption of exchange charges would naturally act as a direct deterrent to the imposition of such charges by the many banks which now impose them. In view of 

the well-known and turbulent history of the par-clearance issue and the absence of 

a specific congressional mandate, it seems evident that Congress did not authorize 

the Corporation to hold that the absorption of exchange charges in the ordinary 

course of business constitutes payment of interest.

This opinion will not apply to cases where the particular circumstances are such 

as to establish that the practice has been resorted to deliberately as a device for 

the payment of compensation to a depositor for the use of his funds.

F rancis C. B r o w n

General Counsel

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ABSORPTION OF EXCHANGE CHARGES 95

LETTER TO THE CHAIRMAN, SENATE COMMITTEE ON 

BANKING AND CURRENCY

January 3, 1945

T h e H o norable R obert F. W ag n er

United States Senate 

Washington, D. C.

My dear Senator Wagner:

I am informed that the Senate Banking and Currency Committee closed the 

hearings on the Maybank Bill, S. 1642 on Friday, December 15, 1944 and gave 

permission to all interested parties, including this Corporation, to file statements 

of their views, if they so desired, on or before December 21, 1944. It was impossible 

for me to file a statement by December 21 owing to a number of pressing matters 

which were occupying my time, and permission was granted me to file the statement 

at a later date in order to give me a reasonable opportunity to consider the matter.

I understand that it was necessary to limit the hearings due to the fact that they 

were started a few days before the Seventy-eighth Congress adjourned, and that 

many witnesses desiring to testify could not be heard. I also understand that the 

hearings were discontinued following the action of the Senate on the Maybank 

amendment to the Crop Insurance Bill and that the Committee had no opportunity 

to consider many aspects of the bill before adjournment and that it did not act 

upon the measure. In view of these facts, I have concluded that there will be no 

purpose in my filing a detailed statement of my views on the Maybank bill, as it 

would simply be incorporated in the record without having been actually considered 

by the Committee.

However, I believe a bill such as the Maybank Bill should be enacted to prevent 

disruption of the time-honored business practice of nonpar banks and to permit 

banks to absorb on a voluntary basis exchange charges, as well as other expenses 

connected with the handling of their depositors’ accounts, in the same manner as 

they have been doing for the past ten years and longer, and as many of them are 

doing today. I think the present situation is particularly unfortunate because it is 

common knowledge that member banks in some areas are freely absorbing exchange 

charges whereas member banks in other areas are being prevented from doing so, 

so that aside from having no legal foundation, the administrative rule against 

absorption of exchange is not being uniformly applied to all member banks.

As even the American Bankers’ Association which opposed the Maybank-Brown 

bills has recommended that the existing practice not be changed abruptly, and that 

the entire problem be studied, it seems probable that the new Congress will wish 

to act on this matter in some way. Therefore, I have concluded not to exercise the 

privilege which you have kindly afforded me of filing a statement at this time. 

However, I will be very happy to submit testimony on any measure which may be 

offered in the new Congress dealing with this subject. Anyone desiring to know my 

views on this subject in greater detail is referred to my testimony before the House 

Banking and Currency Committee appearing in the printed hearings on the Brown 

Bill (H. R. 3956) at pages 112 to 132, 150 to 155, and 669 to 694.

I would appreciate it very much if you would have this letter made a part of the 

record in the event the hearings before the Senate Banking and Currency Committee of the Seventy-eighth Congress on the Maybank Bill are to be printed.

Yours very truly,

(Signed) L eo T . C r o w l e y

Chairman

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R e g u l a t i o n s o f t h e C o r p o r a t i o n *

PART 302—ASSESSMENTS

As Amended June 15, 19kk

Section 302.1* * *.

302.2* * *.

302.3 Payment of assessments by banks whose insured status has terminated— (a) Assumed deposits of terminating bank become deposits of

assuming bank. The deposit liabilities of one bank, if assumed by a second insured 

bank, will, except to the extent that depositors of the first bank by affrmative action 

signify their express intention to hold the first bank liable as a debtor, be presumed 

for assessment purposes to cease being deposit liabilities of the first bank on the date 

the assumption becomes effective, Provided, the requisite notice of assumption be 

given to the depositors. The assumed deposits, for assessment purposes, are deposit 

liabilities of the assuming bank from the date of assumption, whether or not the 

requisite notice of assumption has been given to the depositors.

(b) Payment of assessments by assuming bank on assumed deposits of

terminating bank. Where the deposit liabilities of an insured bank are assumed 

by another insured bank and the assuming bank agrees to file the certified statement 

which the terminating bank is required to file, the filing of such certified statement 

and the payment of the assessment thereon by the assuming bank shall be deemed 

the acts of the terminating bank: Provided, the requisite notice of assumption be 

given to the depositors of the terminating bank and, Provided further, That such 

certified statement shall be filed separately from that required to be filed by the 

assuming bank.

(c) Resumption of insured status before insurance of deposits ceases.

If a bank whose insured status has been terminated under paragraphs (1) or (2) of 

subsection (i), of section 12B of the Federal Reserve Act, as amended (12 U. S. C. 

264 (i) (1) and (2) ), makes application to the Corporation, before the insurance of 

its deposits shall have ceased, to be permitted to continue or to resume its status 

as an insured bank and if the directors grant the application, the bank will be 

deemed, for assessment purposes, to continue as an insured bank and must thereafter 

furnish certified statements and pay assessments as though its insured status had 

not been terminated.

96 FEDERAL DEPOSIT INSURANCE CORPORATION

PART 303—ADVERTISEMENT OF MEMBERSHIP

As Amended January 27, 19kk

Section 303.0* * *.

303.1 Mandatory requirements with regard to the official signs and their

display— (a) * * *.

(b) Official sign. The official sign referred to in paragraph (a) of this section 

shall be seven inches by three inches in size, and shall be of the following design:

1 A new print, revised as of July 15, 1944, is available upon request. The Rules and Regulations of 

the Corporation are to be found in Chapter III, Title 12 of the Code of Federal Regulations.

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REGULATIONS OF THE CORPORATION 97

D E P O S ITS INSURED

BY

The Federal Deposit Insurance Corporation

WASHINGTON, D. C.

cennn m a x im u m in s u r a n c e ccnnfl fdU U U FOR EACH DEPOSITOR $*>UUU

Any insured bank may procure the standard signs from the Corporation or may 

use any other sign of the same size, wording and appearance which shall have been 

approved in writing by the Corporation as conforming to the requirements of this 

section. Such approval will be given only in individual cases where the standard 

sign does not harmonize with the bank’s counters and fixtures or where it cannot 

be adequately displayed because of the type of construction of the bank’s counters 

or fixtures.

The Corporation shall furnish to banks an order blank for use in procuring the 

official signs. Any bank which promptly, after receipt of the order blank, fills it in, 

executes it, and properly directs and forwards it to the Federal Deposit Insurance 

Corporation, Washington, D. C., shall not be deemed to have violated this regulation 

on account of not displaying an official sign or signs, unless the bank shall omit to 

display such official sign or signs after same have been tendered to the bank through 

the instrumentality of the United States mail or otherwise.

(c) * * *.

(d) * * *.

303.2 Mandatory requirements with regard to the official advertising

statement and manner of use— (a) Insured banks to include official advertising statement in advertisements of types enumerated. Each insured 

bank shall include the official advertising statement, prescribed in paragraph (b) 

of this section, in advertisements issued or caused to be issued by it after November 

20, 1936, of the types enumerated in paragraph (c) of this section as being of the 

class in which the official statement is required to be included.

No bank which becomes an insured bank after October 26, 1936, is required to 

include the official advertising statement in such advertisements until 60 days after 

its first day of operation as an insured bank.

In cases where the Board of Directors of the Federal Deposit Insurance Corporation shall find the application to be meritorious; that there has been no neglect 

or wilful violation in the observance of this paragraph, and that undue hardship 

will result by reason of its requirements, the Board of Directors may grant a temporary exemption from its provisions to a particular bank upon its written application setting forth the facts.

In cases where advertising copy not including the official advertising statement 

is on hand on the date the requirements of this paragraph become operative, the 

insured bank may cause the official advertising statement to be included by use 

of a rubber stamp or otherwise.

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98 FEDERAL DEPOSIT INSURANCE CORPORATION

PART 306—AGENTS FOR SERVICE OF PROCESS

As Amended January 2 7 ,19M

Section 306.1 Agents for service of process. The board of directors has designated an agent upon whom service of process may be made in each state, territory 

and other jurisdiction in which an insured bank is located. A current list containing 

the names and addresses of such agents is kept on file in the Office of the Corporation, Washington, D. C.; a current list of such agents in each Federal Deposit 

Insurance district is kept on file in the office of the supervising examiner for the 

district; and, the name and address of such agent for each state, territory and 

jurisdiction are on file with the secretary of state or corresponding official in such 

state, territory or jurisdiction. Persons desiring to serve process upon the Federal 

Deposit Insurance Corporation may obtain the name and address of the proper 

agent by communicating with such local official, the supervising examiner for the 

district, or the Federal Deposit Insurance Corporation, Washington, D. C.

PART 309—VOLUNTARY TERMINATION OF INSURED STATUS

Adopted March 17,19M

Sec. Sec.

309.1 Steps to be taken and records to 309.3 Steps to be taken and records to

be furnished the Corporation be furnished the Corporation

by an insured nonmember where deposits are assumed by

bank in liquidation. another insured bank.

309.2 Steps to be taken and records to

be furnished the Corporation 

by a member bank in liquidation (both state and national).

Section 309.1 Steps to be taken and records to be furnished the Corporation by an insured nonmember bank in liquidation (a) Whenever a nonmember bank goes into liquidation and its insured status has not been terminated 

by the board1 and its deposit liabilities are not assumed by another insured bank, 

it shall terminate its status as an insured bank in accordance with the provisions 

of paragraph (1), subsection (i) of section 12B of the Federal Reserve Act, 

as amended.2 To effect such termination the bank shall adopt a resolution in form 

substantially as follows:

“ R e s o l v e d : (1) that the status of the..................................................................

(Name of bank)

..............................................as an insured bank under the provisions of section

(City or town) (State)

12B of the Federal Reserve Act, as amended, shall terminate ninety (90) days 

from the date of the receipt by the Federal Deposit Insurance Corporation of 

a copy of this resolution;3

1 Board means board of directors of the Federal Deposit Insurance Corporation.

2 The Federal Deposit Insurance Act (12 U. S. C., 264) provides in subsection (i) (1), in part, as 

follows: “ Any insured bank (except a national member bank or State member bank) may, upon not 

less than ninety days’ written notice to the Corporation, and to the Reconstruction Finance Corporation if it owns or holds as pledgee any preferred stock, capital notes, or debentures of such bank, 

terminate its status as an insured bank. * * * After the termination of the insured status of any bank 

* * * the insured deposits of each depositor in the bank on the date of such termination, less all subsequent withdrawals from any deposits of such depositor, shall continue for a period of two years to be 

insured, and the bank shall continue to pay to the Corporation assessments as in the case of an insured 

bank during such period. * * *” (Bold face supplied.)

* If the bank desires to fix a later date of termination, it may do so as the law prescribes only the 

minimum notice period which is 90 days.

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REGULATIONS OF THE CORPORATION 99

(2) that............................................................................. is hereby directed to

(Cashier or other officer)

immediately forward a certified copy of this resolution to the Federal Deposit 

Insurance Corporation, Washington, D. C., which shall constitute the notice 

of termination prescribed in paragraph (1), subsection (i) of said section 12B.”

Upon receipt of a certified copy of the aforesaid resolution the Corporation will 

promptly advise the bank of the date of the receipt thereof, and confirm the date 

of the termination of its insured status.

Thereupon, and prior to the termination date, the bank shall give notice to its 

depositors of the termination of its insured status. Such notice shall be (1) mailed 

to each depositor at his last address of record as shown upon the books of the bank; 

(2) published in not less than two issues of a local newspaper of general circulation, 

and (3) in form substantially as follows:

«<

(Date)

N o tic e t o D e p o s it o r s :

P l e a s e b e a d v is e d that the status of the..............................................................

(Name of bank)

..........................................................as an insured bank under the provisions of

(City or town) (State)

section 12B of the Federal Reserve Act, as amended, will terminate on the..........

day o f......................................,1 9 .........

You a r e F u r t h e r A d v is e d that your insured deposits in this bank on the 

date of termination will continue to be insured within the limitations provided 

by law.

(Name of Bank)

(Address)"

(There may be included in such notice any additional information or advice the 

bank may deem desirable.)

(b) The bank shall furnish to the Corporation the following records and information:

(1) An affidavit of the mailing and an affidavit of the publication of the notice 

to depositors. The affidavit of mailing should be executed by the person mailing 

the notice and should state (a) the date of mailing, (b) that it was mailed to each 

depositor at his last address of record as shown on the books of the bank and (c) that 

a copy of the notice as mailed is attached.

(2) A certified copy of the resolutions pursuant to which the bank was placed 

in liquidation and/or any other document or instrument required by law to place 

the bank in liquidation.

(3) The bank shall continue to file certified statements and pay assessments 

thereon for the period its deposits are insured, as provided by the Federal Deposit 

Insurance Law:4 Provided, That after the bank shall have paid in full its deposit 

liabilities and the assessment to the Corporation required to be paid for the semiannual period in which its deposit liabilities are paid in full, and after it shall under 

applicable law have ceased to have authority to transact a banking business and 

to have existence except for the purpose of, and to the extent permitted by law for 

winding up its affairs, it shall not be required to file further certified statements 

nor to pay further assessments.

(4) When the deposit liabilities of the bank shall have been paid in full, the bank 

shall furnish to the Corporation an affidavit executed by two of its officers, which

* See footnote number 2.

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100 FEDERAL DEPOSIT INSURANCE CORPORATION

affidavit shall state the fact that the deposit liabilities have been paid in full and 

give the date of the final payment thereof.5

(5) Where the bank has unclaimed deposits the affidavit to be furnished pursuant 

to the preceding paragraph, shall further state the amount of such unclaimed 

deposits and the disposition made of the funds to be held to meet such claims. For 

assessment purposes, the following will be considered as payment of such unclaimed 

deposits, viz:

(i) the transfer of cash funds in an amount sufficient to pay such unclaimed 

and unpaid deposits to the public official authorized under the law to receive 

the same; or

(ii) if no provision is made by law for the transfer of funds to a public official, 

the transfer of cash funds or compensatory assets to an insured bank in an amount 

sufficient to pay the unclaimed and unpaid deposits in consideration of such 

insured bank assuming the payment thereof: Provided, That, prior to such 

transfer, the liquidating bank shall have given notice, as hereinafter provided, 

to the owners of the unclaimed deposits of the intended transfer and a reasonable 

time shall have elapsed after the giving of such notice to enable the depositors 

to obtain their deposits. Such notice shall be mailed to each depositor and shall 

be published in a local newspaper of general circulation. The notice shall advise 

such depositors of the liquidation of the bank; shall request them to call for and 

accept payment of their deposits; and shall state the disposition to be made of 

their deposits upon their failure to promptly claim the same.

If such unclaimed and unpaid deposits are disposed of as provided in (i) above, 

a certified copy of the public official’s receipt issued for such funds shall be furnished 

to the Corporation. If such unclaimed and unpaid deposits are disposed of as provided in (ii) above, an affidavit of the publication and of the mailing of the notice 

to depositors, together with a copy of such notice, and a certified copy of the contract 

of assumption shall be furnished to the Corporation.

(6) The liquidating bank shall advise the Corporation of the date on which the 

authority or right of the bank to do a banking business shall have terminated and 

the method or means whereby such termination shall have been affected, that is, 

whether such termination has been effected by the surrender of its charter, by the 

cancellation of its authority or license to do a banking business by the supervisory 

authority, or otherwise.6

309.2 Steps to be taken and records to be furnished the Corporation

by a member bank in liquidation (both state and national), (a) Whenever 

a bank which is a member of the Federal Reserve System goes into liquidation and 

its insured status has not been terminated by the board7 and its deposit liabilities 

are not assumed by another insured bank, it shall notify its depositors of the date 

of the termination of its insured status.8 Such notice shall be in the form prescribed 

in the preceding section and shall be given at the time and in the manner therein 

provided.

5 The issuance of a draft or officer's check does not constitute the discharge of a deposit liability 

or relieve the bank of assessment until such draft or other evidence of payment has been duly presented 

for payment and has been paid.

8 As the governing law of the various jurisdictions is not uniform in this respect, it is suggested 

that the applicable statute be consulted and that this Corporation be advised of the manner in which 

the termination or cancellation of such authority has been effected.

7 See footnote number 1.

8 Said subsection (i) (2) provides, in part, as follows: “ Whenever a member bank shall cease to be 

a member of the Federal Reserve System, its status as an insured bank shall, without notice or other 

action by the board of directors, terminate on the date the bank shall cease to be a member of the Federal 

Reserve System, with like effect as if its insured status had been terminated on said date by the board 

of directors after proceedings under paragraph (1) of this subsection.” Section 10, subsection (c) of 

regulation H of the Board of Governors of the Federal Reserve System provides, in part, as follows: 

“ A bank's withdrawal from membership in the Federal Reserve System is effective on the date on which 

the Federal Reserve bank stock held by it is duly canceled.”

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REGULATIONS OF THE CORPORATION 101

(b) The bank shall furnish to the Corporation the records and information 

mentioned in, and comply with the requirements of, subsection (b) of the preceding 

section.

309.3 Steps to be taken and records to be furnished the Corporation

where deposits are assumed by another insured bank.9 (a) Whenever the 

deposit liabilities of an insured bank are assumed by another insured bank, the bank 

whose deposits are assumed or the assuming bank as its agent shall give notice to 

its depositors of such assumption. Such notice shall be (1) mailed to each depositor 

at his last address of record as shown upon the books of the bank; (2) published in 

not less than two issues of a local newspaper of general circulation, and (3) in form 

substantially as follows:

(Date)

N o tic e t o D e p o s it o r s :

P l e a s e b e a d v is e d that the deposit liabilities shown on the books of the

undersigned bank as of the close of business on....................................... 19___

have been assumed by the

(Name of assuming bank) (city or town) (State)

and that the status of the undersigned bank as an insured bank will therefore 

terminate as provided in section 12B (i) (4) of the Federal Reserve Act, 

as amended.

You a r e f u r t h e r a d v is e d that.............................................................................

(Name of assuming bank)

is an insured bank and that your deposits will continue to be insured by the 

Federal Deposit Insurance Corporation in the manner and to the extent provided 

in said Act.

.................................................. 10

(Name of bank)

(Address)’*

(There may be included in such notice any additional information or advice 

the bank may deem desirable.)

The bank shall furnish to the Corporation an affidavit of mailing and an affidavit 

of publication of the notice to depositors. The affidavit of mailing should be in the 

form prescribed in paragraph (1), subsection (b) of section 309.1.

(b) The liquidating bank shall continue to file certified statements and pay 

assessments thereon for the period its deposits are insured, as provided by the 

Federal Deposit Insurance Law: Provided, That if the liquidating bank, or the 

assuming bank as its agent, has given the requisite notice to the depositors of the 

assumption of the deposit liabilities within thirty days after such assumption takes 

effect, then the liquidating bank shall file a final certified statement, which statement 

shall be executed to reflect its average daily deposit liabilities for the semiannual 

period in which its deposit liabilities are assumed and shall pay to the Corporation 

the normal assessment thereon.11

9 Said subsection (i) (4) provides, in part, as follows: “ Whenever the liabilities of an insured bank 

for deposits shall have been assumed by another insured bank or banks, the insured status of the bank 

whose liabilities are so assumed shall terminate on the date of receipt by the Corporation of satisfactory 

evidence of such assumption with like effect as if its insured status had been terminated on said date by 

the board of directors after proceedings under paragraph (1) of this subsection: Provided, That if the 

bank whose liabilities are so assumed gives to its depositors notice of such assumption within 30 days 

after such assumption takes effect by publication or by any reasonable means, in accordance with regulations to be prescribed by the board of directors, the insurance of its deposits shall terminate at the end 

of 6 months from the date such assumption takes effect, and such bank shall thereupon be relieved of all 

future obligations to the Corporation, including the obligation to pay future assessments.”

10 If this notice is given by the assuming bank as agent for the liquidating bank, it may add its own 

name designating itself as agent.

11 See section 302.3 of part 302 of these Rules and Regulations.

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102 FEDERAL DEPOSIT INSURANCE CORPORATION

(c) The Corporation will consider receipt of the following as satisfactory evidence 

of such assumption:

(1) A certified copy of the resolution (a) duly authorizing the bank’s officers 

to enter into a contract for the sale of the bank’s assets to another insured bank 

upon the consideration of the assumption by it of the deposit liabilities, and (b) 

duly placing the bank in liquidation.

(2) A certified copy of the assumption agreement, provided it contains an express 

undertaking by an insured bank to pay the deposit liabilities of the bank going into 

liquidation.

(d) The bank shall furnish to the Corporation the information called for in 

paragraph (6), subsection (b) of section 309.1.

St a t e Le g is l a t io n R e l a t in g t o b a n k Su p e r v is io n

a n d b a n k Op e r a t io n s

Regular sessions of State legislatures were held during 1944 in nine states. All 

but ten State legislatures held extra or special sessions which were devoted principally to the enactment of war legislation. Many of the legislatures enacted statutes 

beneficial to persons in military service and protecting others in their dealings with 

them, such as acts relating to proof of wills of persons in military service, appointment of conservators or interim trustees, and acts validating actions taken under 

powers of attorney of such persons. The Legislatures of Kentucky and Mississippi 

enacted statutes (Kentucky Ch. 15, Mississippi Ch. 253) for the purpose of conforming their laws to Executive Order No. 9112 of March 26, 1942, and Federal 

Reserve Regulation V so as to exclude from statutes prescribing bank loan limitations loans which are guaranteed by commitments to purchase same given by 

Federal Reserve banks, the United States or agencies thereof (including wholly 

owned corporations).

Some of the more important subjects dealt with by State legislation during 1944 

are listed below.

AFFECTING BANKING AND SUPERVISORY AUTHORITY 

Internal functions:

Abolishing the office of general attorney for the banking department, directing 

the Attorney General to advise the department on legal matters, and authorizing the State Comptroller, with Attorney General’s approval, to employ 

special counsel in litigation....................................................Mississippi (Ch. 260)

Increasing from two-thirds to three-fifths the percentage of votes required for 

action by the banking board in discharging various duties. .New York (Ch. 52)

Banks in financial difficulties:

Amending provisions relating to circumstances under which superintendent may 

take possession of banking institutions..................................New York (Ch. 40)

Providing that on petition of superintendent showing that a bank has ceased to 

transact business, or not completed voluntary dissolution, or abandoned and 

forfeited its charter and has distributed its assets a court may order such bank 

dissolved and terminated. Providing for the disposition of securities of such 

banks deposited with the superintendent after the expiration of prescribed 

period....................................................................................... New York (Ch. 40)

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STATE LEGISLATION 103

Banks in financial difficulties:— Continued

Providing that statements executed and acknowledged by superintendent and 

setting forth extracts from records of or relating to banking organizations in his 

possession shall be received in evidence with the same effect as the original 

.....................................................................................................New York (Ch. 40)

Other:

Making the commissioner of banking and insurance the lawful attorney for 

service of process against foreign banking institutions and national banks 

pertaining to any trust or estate in respect to which such bank is acting in a 

fiduciary capacity................................................................. New Jersey (Ch. 209)

Amending law relating to the destruction of reports and documents received by 

the banking department and declaring that reproductions thereof shall be 

deemed for any purpose to be equivalent of the original___ New York (Ch. 23)

Authorizing the superintendent to deduct from allowed claims for unclaimed 

deposits a service charge of one percent, plus any court allowed costs and 

fees.............................................................................................New York (Ch. 40)

Permitting the superintendent of banks to levy assessments against banking 

organizations at rates lower than those previously specified.. New York (Ch. 25)

OPERATIONS OF BANKS OF DEPOSIT

Limitations on loans, investments and deposits:

Excepting from the loan limitations loans and discounts secured by Federal or 

State securities when maximum par value of such securities that may be loaned 

is fixed by the Comptroller....................................................Mississippi (Ch. 253)

Providing that industrial banks may not deal in bonds or notes which are in 

default as to either principal or interest when acquired, but permits the holding 

of such bonds or notes not in default when acquired..........New York (Ch. 247)

Amending the law relating to limitation on amount of deposits..........................

................................................................................................. Mississippi (Ch. 255)

Amending method of computing the maximum deposits which a bank or trust 

company may hold......................................................... Rhode Island (Ch. 1523)

Checks:

Providing that stop-payment order must be in writing to be effective against

local banks, and providing for renewal thereof every six months......................

................................................................................................. Mississippi (Ch. 256)

Providing that no bank or trust company shall be liable for non-payment through 

mistake or error of a check unless the depositor proves actual damage thereby 

................................................................................................. Mississippi (Ch. 257)

Reducing the time in which a depositor must notify his bank of a raised or forged 

check against his account in order to hold the bank liable. .Virginia (Ch. 18)

Security and pledge of assets:

Permitting the State Treasurer to require deposit of United States or state bonds

as security for deposits of public moneys in banking institutions..................

................................................................................................. New Jersey (Ch. 79)

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104 FEDERAL DEPOSIT INSURANCE CORPORATION

Security and pledge of assets:— Continued

Removing the qualification of “ market” in respect to the value of securities 

deposited by foreign banking corporations as applied to the amount of such 

securities in excess of that required to be deposited which may be withdrawn 

................................................................................................. New York (Ch. 21)

Permitting banks, industrial banks, and trust companies to act as financial agents 

of the United States Government and as depositories of public money of the 

United States. Permitting such institutions to pledge assets to secure such deposits and to secure the faithful performance of duties as such agent..............

................................................................................................... New York (Ch. 13)

Other:

Amending the law relating to annual transfer of earnings to surplus..................

................................................................................................. Mississippi (Ch. 254)

Prescribing period during which records and files of a bank must be preserved 

................................................................................................. Mississippi (Ch. 258)

Authorizing the establishment and maintenance of branch banking offices or

agencies upon approval of application by bank commissioner..............................

...................................................................................................New Jersey (Ch. 30)

Repealing the authority of safe deposit companies to maintain branches in place 

outside the state but permitting certain such companies owned by other banking 

institutions to open branches where such other institutions have a branch 

...................................................................................................New York (Ch. 15)

Amending requirements relating to applications to change location of an office

(other than the principal place of business) of a safe deposit company..............

................................................................................................... New York (Ch. 26)

Amending law relating to change of location of place of business of licensed 

lenders..................................................................................... New York (Ch. 26)

Providing for guaranteed bank loans to certain war veterans for the purpose of

re-establishing themselves in small businesses or professions..............................

................................................................................................. New Jersey (Ch. 126)

Permitting state officials having public funds deposited in banks to participate 

in and consent to certain amendments to the certificate of incorporation of 

such banks.................................................................................New Jersey (Ch. 13)

Allowing banks and trust companies having shares of capital stock to fix the par 

value thereof at not less than $1.00 per share......................New Jersey (Ch. 25)

Repealing Act relating to the creation of corporations to receive assets of banks 

................................................................................................... New York (Ch. 12)

Amending law relating to qualifications of directors of safe deposit companies 

................................................................................................. New York (Ch. 151)

Regulating and licensing check cashing agencies..................New York (Ch. 593)

Providing that wages owing to bank employees for services shall, under certain 

circumstances, be preferred claims against banks..............New York (Ch. 40)

Requiring bank directors to cause an examination to be made of their bank only 

once a year............................................................................... Virginia (Ch. 17)

Legalizing business transacted by banks or cash depositories on any day other 

than Sunday..................................................................... South Carolina (Ch. 499)

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STATE LEGISLATION 105

Other:— Continued

Providing for the assignment of accounts receivable without notice......................

................................................................................................... Virginia (Ch. 223)..

SAVINGS BANKS, TRUST FUNDS, AND FIDUCIARY INSTITUTIONS

Common trust funds and legal investments:

Authorizing banks to establish common trust funds and prescribing conditions 

precedent to investment of fiduciary funds..............................Virginia (Ch. 369)

Changing time for valuing common trust funds held by trust companies..........

................................................................................................. New York (Ch. 158)

Prohibiting fiduciary bank or trust company from purchasing own stock for 

estate under its management unless expressly authorized by the trust instrument 

but permitting such fiduciary to hold such shares originally received directly 

from the testator or donor if considered a proper investment under the prudent 

man rule................................................................................... Kentucky (Ch. 13)

Revising the requirements relating to the legality of railroad mortgage bonds as 

legal investments for savings banks......................................New Jersey (Ch. 104)

Permitting board of managers of savings banks in determining whether investments meet legal requirements, to rely on statistical, financial or other information in publications accepted as reliable by the commissioner. Providing 

that investments, legal when made, shall continue to be legal, but requiring 

that securities illegal when exchanged under reorganization or recapitalization 

must be disposed of within the prescribed period..............New Jersey (Ch. 104)

Permitting savings banks to invest in mortgages on real property in adjoining 

states......................................................................................... New York (Ch. 24)

Reducing the amount of stock of certain national banks which a savings bank or

trust company may hold as investment or as security for loans......................

........................................................................................... Rhode Island (Ch. 1379)

Authorizing savings banks and trust companies to invest in notes or bonds secured 

by mortgages issued under Title III of the Servicemen’s Readjustment Act of 

1944.................................................................................................Maine (Ch. 925)

Deposits:

Providing that until six months after the war deposits of a savings bank in any 

other bank shall not exceed 10 percent of its deposits, nor the capital stock 

and surplus of such depository......................................Rhode Island (Ch. 1389)

Other:

Permitting banks and trust companies acting as fiduciaries to cause securities held

in such capacity to be registered and held in the name of a nominee..................

......................Kentucky (Ch. 11), New Jersey (Ch. 114), New York (Ch. 215)

Providing for cancellation of bonds without surety given by banks or trust companies where the assets of estate have been distributed to persons entitled

thereto and discharging the fiduciary from all liability on such bonds..............

................................................................................................. New Jersey (Ch. 181)

Providing that the deposit required of trust companies may consist of United 

States guaranteed securities, as well as United States securities, and requiring 

that such deposit be equal to the par value but not less than market value of 

10 percent of the capital stock of the trust company___ New York (Ch. 21)

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Other:— Continued

Providing for discretionary orders of the Supreme Courts in litigation involving 

mortgage and bond holders who object to modification of the terms of such 

bonds by trust companies................................................... New York (Ch. 128)

Including trust companies, except members of the Federal Reserve System, among 

the banks which are required to maintain a reserve fund. Member banks must 

maintain the reserves required by Federal law..........Rhode Island (Ch. 1522)

Permitting two or more savings banks in the same county to merge or consolidate 

into a single savings bank....................................................New Jersey (Ch. 22)

Regulating the pensioning of officers and employees of savings banks, exempting 

such pensions from execution or attachment, and including the time spent in

military service in computing the length of service under such pensions..........

.................................................................................................New Jersey (Ch. 147)

Authorizing savings banks, credit unions, and savings and loan associations to

establish death, disability, and retirement plans for employees...........................

........................................................................................... Rhode Island (Ch. 1495)

Adopting Uniform Trust Receipts Act....................................Virginia (Ch. 368)

Requiring banks and other fiduciary institutions to furnish information to Family 

Court upon request relative to funds of persons chargeable with support of 

others and persons asking for such support... .South Carolina (Act No. 509)

BANKS IN FINANCIAL DIFFICULTIES OR RECEIVERSHIP

Authorizing surviving directors as trustees on dissolution of dissolved banks and 

trust companies to sell or distribute assets of inter vivos trusts held by the 

institution as trustee prior to dissolution and validating instruments previously 

executed by such directors in such actions.........................New Jersey (Ch. 176)

Authorizing the State Treasury to dispose of bonds, mortgages, and stocks of 

corporations standing in his or the state's name received in liquidation of claims 

against insolvent banks..........................................................New Jersey (Ch. 15)

Amending the law relating to the disposition of contents of safe deposit boxes of 

banks in the possession of superintendent..........................New York (Ch. 40)

Amending law relating to payment of dividends by superintendent of banks to 

creditors of banks in his possession. Providing that no creditor shall be entitled

to receive interest on dividends because of delay in their payment..................

...................................................................................................New York (Ch. 40)

CREDIT UNIONS AND SMALL LOANS

Authorizing credit unions to sell to members negotiable checks drawn by or on

it and payable by or through a trust company or national bank......................

......................................................................................... Rhode Island (Ch. 1493)

Restricting the pledge of shares or deposits in a credit union..................................

...........................................................................................Rhode Island (Ch. 1494)

Revising the small loan law............................................................. Virginia (Ch. 370)

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PART FIVE

STATISTICS OF BANKS AND DEPOSIT INSURANCE

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o

00

N u m ber, Offices, and D eposits of A ll Operatin g B anks

Table 101. Changes in number and classification of operating banks and branches in the 

United States and possessions during 1944

Table 102. Number of operating banks and branches, December 31, 1944

Grouped according to insurance status and class of bank, and by State and type

of office

Table 103. Number and deposits of operating commercial and mutual savings banks, 

December 31, 1944 

Banks grouped according to insurance status and by State

The line of demarcation between banks and other types 

of financial institutions is not always clear. In these tables 

provision of deposit facilities for the general public is the 

chief criterion. However, trust companies not engaged in 

deposit banking are included because uninvested trust 

funds may be insured by the Federal Deposit Insurance

savings banks, with a few exceptions, accept only savings 

deposits, while most banks classified as commercial banks 

also accept checking accounts and other deposits subject 

to withdrawal on demand. However, a few banks included 

in the commercial group hold only savings and time 

deposits. Trust companies are included with commercial

FEDERAL DEPOSIT INSURANCE CORPORATION

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Corporation, and credit unions which accept deposits are 

excluded. A more detailed statement of institutions 

included and excluded is given in the Annual Report of 

the Corporation for 1943, pages 59-60.

The data in the tables which follow relate to banks 

operating in the continental United States and in Alaska, 

Hawaii, Puerto Rico, and the Virgin Islands, including 

branches of foreign banks which engage in a general 

deposit business in this area.

Banks are classified on the following bases:

Insurance status

Commercial and mutual savings

Membership in the Federal Reserve System

A bank is classified as an insured bank when its deposits 

are insured by the Federal Deposit Insurance Corporation. 

All banks members of the Federal Reserve System are 

required by law to be insured banks. Other banks may be 

admitted to deposit insurance upon meeting conditions 

prescribed by law.

The traditional distinction between commercial banks 

and mutual savings banks has been followed. Mutual

banks since most institutions known as trust companies 

accept checking accounts.

Banks members of the Federal Reserve System are 

separated into two groups: national and State. All national banks in the continental United States are required 

to be members of the Federal Reserve System; State 

chartered banks may become members of the Federal 

Reserve System upon meeting certain conditions. None of 

the six national banks in the possessions is a member of 

the Federal Reserve System; four have been admitted to 

deposit insurance.

Sources of data:

Insured banks: records of the Federal Deposit Insurance 

Corporation; Office of the Comptroller of the Currency; 

and Board of Governors of the Federal Reserve System.

Noninsured banks: Board of Governors of the Federal 

Reserve System; State banking authorities; Rand McNally

Bankers Directory; and Polk’s Bankers Encyclopedia.

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 109

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Federal Reserve Bank of St. Louis
Table 101. CHANGES IN NUMBER AND CLASSIFICATION OF OPERATING BANKS AND BRANCHES 

in t h e U n it e d S t a t e s a n d P o s s e s s io n s D u r in g 1944

All banks Commercial banks and trust companies Mutual savings banks

Insured1 Noninsured

Type of change

Total In­ Non­ Total

Members F. R. 

System Not

mem­ Banks 

of deposit

Trust

com­ Total Insured2

Nonsured insured insured Total

National State

bers 

F. R.

System

panies 

not accepting 

deposits

BANKS

Number of banks, December 31, 1944....................................... 14,710

14,751

13,460

13,458

1,250

1,293

14,167

14,206

13,268 5,025 1,786 6,457 816 83 543 192 351

Number of banks, December 31, 1943....................................... 13,274 5,040 1,695 6,539 847 85 545 184 361

Net change during year............................................................ -41 + 2 -43 -39 -6 -15 +91 -82 -31 -2 -2 + 8 -10

Changes resulting from —

Banks beginning deposit operations 70 61 9 70 61 8 5 48 9

New banks . . . . . . .. ..................... 65 56 9 65 56 8 5 43 9

Financial institutions becoming banks of deposit 5 5 5 5 5

Banks ceasing deposit operations...................................... 111 96 15 109 95 32 9 54 12 2 2 1 1

Suspended banks not reopened or succeeded 1 1 1 1 1

Merged with financial aid of FDIC—net decrease 1 1 1 1 1

Other mergers and absorptions—net decrease.................... 74 67 7 72 66 26 8 32 4 2 2 1 1

Other liquidations . . . . 35 27 8 35 27 5 1 21 8

Noninsured banks becom ing insured . . . . . . +39

+ 4

+35

-2

-39 +30

+ 4

+26

-2

+30 -30 + 9 -9

Successions to noninsured banks -4 + 4

+26

-2

-4

Admissions to insurance, operating banks^ . . . -35 -26 + 9 -9

Insured banks becom ing noninsured +2

+2

+ 2

Succession to insured bank -2 -2 -2 + 2

Other changes in classification am ong banks + 9

+ 13 

-4

+95

-6

-104

National banks succeeding State banks -7

State banks succeeding national banks + 4

Admissions to F R System . + 108 -108

Withdrawals from F R System . . -7 + 7 

3

Changes not involving number in any class:

Successions . ...................... 5 5 5 5 2

Changes in title location, or name of location ............ 58 56 2 57 55 17 13 25 2 1 1

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
BRANCHES

Num ber of branches, December 31, 1944. 

Num ber of branches, December 31, 1943.

Net change during year...........................................

Changes resulting from —

Branches opened for business.............................

Facilities provided as agents of the government.

Absorbed banks converted into branches............

Branches replacing offices closed or relocated. . . 

Other branches opened..........................................

Branches discontinued..........................................

Facilities provided as agents of the government. 

Other branches discontinued.................................

Branches of banks adm itted to insurance............

Other changes in classification am ong branches.

Branches transferred as result of absorption............

From State banks to national banks.........................

Admissions to F. R. System.......................................

Changes not involving number in any class:

Branches transferred as result of absorptions... 

Changes in title, location, or name of location. .

ALL BANKING OFFICES

Number of offices, December 31, 1944. 

Number of offices, December 31, 1943.

Net change during year.........

Changes resulting from -

Offices opened.

Banks............

Branches........

Offices closed.

Banks..........

Branches------

Changes in classification.............................

Noninsured banks to insured banks...........

Insured banks to noninsured banks............

Noninsured branches to insured branches.

Among insured banks...................................

Among branches of insured banks..............

4,141

4,000

+ 141

174

96

36

1

41

33

16

17

18,851

18,751

+ 100

244

70

174

144

111

33

3,974

3,839

+ 135

166

95

33

1

37

33

16

17

+2

17,434

17,297

+137

227

61

166

129

96

+39

+39

-2

+2

167

161

4,001

3,864

3,875

3,744

1,815

1,742

1,080

1,049

980

953

125

119

1

1

140

136

99

95

41

41

+ 6

8

+ 137 

170

+ 131 

164

+73

95

+31

22

+27

47

+ 6

6

+ 4

4

+ 4

2 2

1 96 95 73 13 9 1

3 34 32 12 7 13 2 2 1 1

1 1 1

4 39 36 10 2 24 3 2 1 1

33 33 22 2 9

16 16 16

17 17 6 2 9

-2 + 2 -2

+ 11

+ 3 

-1

-11

-2 -1

+ 2 -1

+ 9 -9

1 1 1 1 1

11 11 5 2 4 1 1

1,417

1,454

18,168

18,070

17,143

17,018

6,840

6,782

2,866

2,744

7,437

7,492

941

966

84

86

683

681

291

279

392

402

-37 +98 + 125 +58 + 122 -55 -25 -2 + 2 + 12 -10

17 240 225 103 27 95 15 4 2 2

9 70 61 8 5 48 9

8 170 164 95 22 47 6 4 2 2

15

15

142

109

33

128

95

33

54

32

22

11

9

2

63

54

9

12

12

2

2

2

2

1

1

1

1

-39 +28

+30

-2

+ 9 + 106 -87 -28 + 11

+ 9

-11

-39 +30

-2

-30 -9

+ 2

-2

+ 2

+ 2 -2

+ 9 + 95 

+ 11

-104

-11

1 Includes 10 trust companies not engaged in deposit banking on December 31, 1944 and 11 on December 31, 1943.

2 Includes three mutual savings banks, members of the Federal Reserve System, for December 31, 1944 and December 31, 1943. 

* Operating at beginning of year.

Back figures—See the Annual Report for 1943, pp. 68-69, and earlier reports.

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 111

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Federal Reserve Bank of St. Louis
Table 102. NUMBER OP OPERATING BANKS AND BRANCHES, DECEMBER 31, 1944

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OP BANK, AND BY STATE AND TYPE OF OFFICE

All banks Commercial banks and trust companies Mutual savings banks Insured banks 

as percentages of—

Insured1 Noninsured

State and type of bank or office

Total Insured Non­ Total

Members F. R. 

System Not 

members 

F. R.

System

Banks 

of deposit

Trust

com­ Total Insured2

Noninsured

All

banks

Commercial

banks

Mutual

savings

banks insured Total

National State

panies 

not accepting 

deposits

United States and possessions....... 18,851

14,710

13,469

1,241

4,141

18,741

14,670

17,434

13,460 

12,296

1,16 A

3,974

17,427

13,455

12,293

1,162

1,417

1,250

1,173

18,168

14,167

13,009

1,158

17,143

13,268

12,155

1,113

6,840

5,025 

A,691

2,866

1,786

7,437

6,457

941

816T

84

83

683

543

291

192

392

351

92.5

91.5

94.4

93.7

42.6

35.4

Unit banks...................................... 1,583 5,881 772 82 460 141 319 91.3 93.4 30.7

Banks operating branches.............. 77 33k 203 576 44 1 83 51 32 93.8 96.1 61.4

Branches............................................. 167 4,001 3,875 1,815 1,080 980 125 1 140 99 41 96.0 96.9 70.7

United States...................................... 1,314

1,215

18,058

14,127

12,980

1,147

3,931

110

40

29

11

70

17,136

13,263

6,840 2,866 7,430 843 79 683 291 392 93.0 94.9 42.6

All banks............................................ 5,025 1,786 6,452 786 78 543 192 351 91.7 93.9 35.4

Unit banks...................................... 13,UO

1,230

1,147

68

12,152 4,691 1,583 5,878 751 77 460 141 319 91.5 93.6 30.7

Banks operating branches.............. 1,111

3,873

7

334 203 574 35 1 83 51 32 94.5 96.9 61.4

Branches............................................. 4,071

110

40

29

3,972

7

99 1,815 1,080 978 57 1 140 99 41 97.6 98.5 70.7

Possessions 103 7 98 5 6.4 6.4

All banks 5 35

26

5 5 30 5 12.5 12.5

Unit banks 3 3 3 21 5 10.3 10.3

Banks operating branches 11

70

2 9 2 2 9 18.2 18.2

Branches.............. 2 68 2 2 68 2.9 2.9

State

Alabama . .. 245

217

208

241 4 245 241 92 18 131 4 98.4 98.4

All banks . 213

204

4 217

208

9

213 66 17 130 4 98.2 98.2

Unit banks 4 2049

59 16 129 4 98.1 98.1

Banks operating branches 9 9 7 1 1 100.0 100.0

Branches 28

49

14

9

28

47

28

49

28 26 1 1 100.0 100.0

Arizona........ 2 47 34 2 11 2 95.9 95.9

All banks 12

7

2 14

9

12 5 2 5 2 85.7 85.7

Unit banks 2 7 3 2 2 2 77.8 77.8

Banks operating branches 5 5 5 5 2 3 100.0 100.0

Branches 35

247

226

207

19

35

227

35 35 29 6 100.0 100.0

Arkansas........ 20 247 227 55 15 157 17 3 91.9 91.9

All banks. . . 206 20 226 206 51 15 140 17 3 91.2 91.2

Unit banks 187 20 207 187 47

4

15 125 17 3 90.3 90.3

Banks operating branches 19 19 19 15 100.0 100.0

Branches........................... 21 21 21 21 4 17 100.0 100.0

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
California..............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

C olorado................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

C onnecticut.........................

All banks.............................

Unit banks......................

Banks operating branches

Branches.............................

Delaware...............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

District of C olum bia.........

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Florida...................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

G eorgia..................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Id a h o .....................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Illinois...................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

1,066 15 1,081 1,066 807

186 14 200 186 91

155 13 168 155 82

SI

1 32 SI 9

880

1 881 880 716

138 16 154 138 81

134 16 150 134 77

ISO 16

1U6 ISO 73

h U U U 4 4 4 4

112 96 136 110 59

101 88 117 99 51 U 87 109 92 U6 7 1 8 7 5

11 8 19 11

8

52 4 53 52 13

39 3 40 39 13

322 S3 32 13

7

1

7

7

131 13 13

55 55 55 27

21 21 21

9

9 9

9

U

12 12 12

5

34 34 34 18

183 7 190 183 68

165 6 171 165 56

151 5 156 151 U6 U 1 15 1U 10

18 1 19 18 12

317 76 393 317 78

276 74 350 276 47

258 72 330 258 35

182 20 18 12

41 2 43 41 31

88 1 89 88 57

45 1 46 45 16

381 39 38 10

7 7 7

6

43 43 43 41

828 16 844 828 356

822 16 838 822 350

816 16 832 816 SU 6 6 6 6 6 6 6 6

1,081

200

168

32

881

154

150

1U6U4

208

189

1818

19

56

42

SU8

14

55

219

12

34

190

171

156

15

19

393

350

SSO

20

43

89

46

897

43

844

838

83266

143

19

127

124

15

15

15

16

13

11

24956

15555

19

12937

10

10

10

124

124 

12 U

116

76

61

15

40

42

42

U2

32

22

18U

1043211

110

104

100U

220

217

21US3

21

19

1812

348

348

3U8

6 9 98.6 98.6

5 9 93.0 93.0 u 9 92.S 92.S 1 96.9 96.9 1 99.9 99.9

16 89.6 89.6

16 89.3 89.3

16 89.0 89.0

100.0 100.0

100.0 100.0

25

1 72 2 70 53.8 80.9 2.8

17 1 72 2 70 53.4 84.6 2.8

16

1 72

2 70 51.98U.U 2.8

1 87.5 87.5

8 57.9 57.9 1 3 3 92.9 98.1 1 2 2 92.9 97.5

1 1 1 9U.1 97.0

1 1 87.5 100.0

1 1 92.9 100.0

100.0 100.0

100.0 100.0

100.0 100.0

100.0 100.0

100.0 100.0

4 3 96.3 96.3

3 3 96.5 96.5 2 S 96.8 96.8 1 93.3 93.3 1 94.7 94.7

76 80.7 80.7

74 78.9 78.9

72 78.2 78.2 2 90.0 90.0 2 95.3 95.3 1 98.9 98.9 1 97.8 97.8 1 97.k 97.U

100.0 100.0

100.0 100.0

11 5 98.1 98.1

11

5 98.1 98.1

11

5 98.1 98.1

100.0 100.0

100.0 100.0

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 113

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Federal Reserve Bank of St. Louis
Table 102. NUMBER OF OPERATING BANKS AND BRANCHES, DECEMBER 31, 1944— Continued

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE

State and type of bank or office

All banks

Total Insured Noninsured

Commercial banks and trust companies

Total

Insured1

Total

National

Members F. R. 

System

State

Not 

members 

F. R. 

System

Noninsured

Banks 

of deposit

Trust 

companies 

not accepting 

deposits

Mutual savings banks

Total Insured2

Noninsured

Insured banks

as percentages ofAll

banks

Commercial

banks

Mutual

savings

banks

Indiana..................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Iowa........................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Kansas...................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Kentucky..............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Louisiana..............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Maine.....................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

575

499

453

46

76

807

650

534

116

157

625

619 

613

6

6

428

392 

87 U

18

36

212

149

118

SI

63

163

98

73

25

65

550

475

430

45

75

738

586

474

112

152

455

449

US

6

6

398

363

sue

17

35

211

148

117

SI

63

119

63

45

18

56

170

170

170

571

495

449

46

76

807

650

534

116

157

625

619

61S

428

392

37 k\

18

36

212

149

118

31

63

129

66

1*8

28

63

547

472

427

45

75

738

586

474 112

152

455

449

443

6

6

398

363

346

17

35

211

148

117

31

63

113

57

89

18

56

137

124

116

8

13

99

98

97

1

1

182

176

170

111

93

90

3

18

63

32

25

7

31

40

35

81

118

103

100

3

15

63

63

63

292

245

211

S4

47

576

425

314

111

151

235

235

235

260

250

240

10

10

135

108

27

40

17

7

10

23

20

19

18

1

1

69

64

60

4

5

168

168

168

95.7

95.2 

94.9

97.8

98.7

91.4

90.2

88.8

96.6

96.8

72.8

72.5

72.3

100.0

100.0

93.0

92.6 

92.5

94.4

97.2

99.5

99.3

99.2

100.0

100.0

73.0

64.3

61.6

72.0

86.2

95.8

95.4

95.1

97.8

98.7

91.4

90.2

88.8

96.6

96.8

72.8

72.5

72.8

100.0

100.0

93.0

92.6 

92.5

94.4

97.2

99.5

99.3 

99.2

100.0

100.0

87.6

86.4

90.7

78.8

88.9

75.0

75.0

75.0

17.6

18.8

20.0

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
All banka..............................

Unit banks........................

Banks operating branches. 

Branches...............................

Maryland...............................

Massachusetts.......................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

Michigan.................................

All banks...............................

Unit banks........................

Banks operating branches. 

Branches...............................

Minnesota..............................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

M ississippi..............................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

Missouri..................................

All banks.............................

Unit banks........................

Banks operating branches.

Branches...............................

Montana.................................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

284 270 14] 259 255 75

184 174 10 174 171 63

153 146

7 146 144 59

31 28

3 28 27

4

100 96 4 85 84 12

546 312 234 323 312 193

388 188 200 197 188 124

321 147 174 155 147 105

67 41 26 42 41 19

158 124 34 126 124 69

624 582 42 624 582 139

445 411 34 445 411 75

s u 363 31 394 363 63

51 48 3 51 48 12

179 171 8 179 171 64

679 651 28 678 650 190

673 645 28 672 644 184

671 643 28 670 642 182 2 2 2 2 2 6 6 6 6 6

257 252

5 257 252 25

202 1975 202 197 23

172 1675 172 167 21

SO 30 30 SO

2

55 55 55 55

2

599 568 31 599 568 85

594 563 31 594 563 80

590 559 31 590 559 76 4 4 4 4 4 5 5 5 5 5

111 111 111 111 41

111 111 111 111 41

111 111 111 111 41

420 359 61 420 359 134

415 354 61 415 354 130

410 349 61 410 349 126

5 5

5

5

4

5 5

5

54

26 26 26 26 19

9 9 9 9

6

44 4 4

3

5

5 5 5

3

17 17 17 17 13

Nebraska............... .................

All banks..............................

Unit banks........................

Banks operating branches. 

Branches...............................

Nevada.....................................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

60

17

107

43

76

30n

16

46

237

153

139

14

84

25

25

25

96

96

33

33

S3

17

17

17

120

91

75

16

29

43

34

2869

206

183

161

22

23

435

435

485

224

171

143

28

53

387

387

387

37

37

37

208

207

2061132111

32111

119812

34

26

2338

27

27

27

29

29

29

53

53

53

25 1 

1073

15

223

191

166

25

32

15321

12

107523

223

191

166

25

32

95.1

94.6

95.4

90.3

96.0

98.5

98.3

98.6

96.4

98.8

57.1

48.5 

45.8

61.2

78.5

96.6

95.4 

94.8

97.6

98.4

93.3

92.4

92.1

94.1

95.5

93.3

92.4

92.1

94.1

95.5

95.9

95.8

95.8

100.0

100.0

95.9

95.8

95.8

100.0

100.0

98.1

97.5

97.1

100.0

100.0

98.1

97.5

97.1

100.0

100.0

94.8

94.8 

94.7

100.0

100.0

94.8

94.8 

94.7

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

85.5

85.3

85.1

100.0

100.0

85.5

85.3

85.1

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

60.0

30.0 

28.6

33.3

80.0

100.0

100.0

100.0

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 115

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Federal Reserve Bank of St. Louis
Table 102. N u m b e r o f Op e r a t in g B a n k s a n d B r a n c h e s , D e c e m b e r 31, 1944— Continued

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE

State and type of bank or office

New H am pshire..................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

New Jersey............................

All banka............................

Unit banks......................

Banks operating branches

Branches.............................

New M exico..........................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

New Y ork ..............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

North Carolina....................

All banks.............................

Unit banks......................

Banks operating branches

Branches.............................

North D akota......................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

All banks

Total

110

107 

10 h

3

3

508

375

315

60

133

49

41

3U

7

1,545

827

678

1U9

718

376

227

178

U9

149

178

153

137

16

25

Insured

58

57

56

1

1

500

367

307

60

133

49

41

3h

7

8

1,532

815

668

1U7

717

369

222

17 UU8

147

170

147

133

lh

23

Noninsured

Commercial banks and trust companies

Total

67

65

63

2

2

480

351

29h

57

129

49

41

Sh

7

8

1,355

696

588

108

659

376

227

178

U9

149

178

153

137

16

25

Insured1

National State

58

57

56

1

1

474

345

288

57

129

49

41

n

7

8

1,342

684

578

106

658

369

222

17 AU8

147

170

147

133

n

Members F. R. 

System

53

52

51

1

1

262

220

196

2h

42

23

22

21

1

1

588

403

36h

39

185

55

45

10

42

42

138

73

U7

26

65

5

5

5

607

190

1U0

50

417

19

9

7

2

10

Not 

members 

F. R.

System

74

52

U5

7

22

21

14

8

6

7

147

91

7h

17

56

295

168

128

U0

127

128

105

91

U

23

Noninsured

Banks 

of deposit

Trust 

companies 

not accepting 

deposits

Mutual savings banks

Total

190

131

90

hi

59

Insured2

190

131

90

hi

59

Noninsured

43

42

hi1

1

2

2

2

Insured banks

as percentages ofAll

banks

52.7

53.3

53.8

33.3

33.3

98.4

97.9

97.5

100.0

100.0

100.0

100.0

100.0

100.0

100.0

99.2

98.5

98.5

98.7

99.9

98.1

97.8

97.8

98.0

98.7

95.5

96.1

97.1

87.5

92.0

Commercial

banks

86.6

87.7 

88.9

50.0

50.0

98.8

98.3

98.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

99.0

98.3

98.1

97.8

97.8

98.0

98.7

95.5

96.1

97.1

87.5

92.0

Mutual

savings

banks

92.9

91.7

90.5

100.0

100.0

100.0

100.0

100.0

100.0

100.0

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
O h io .......................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Oklahom a.............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Oregon...................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Pennsylvania........................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Rhode Island.......................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

South Carolina....................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

South D akota......................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Tennessee..............................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Texas......................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

853 837 16

682 666 16

6k3 627 16

39 39

171 171

390 379 11

384 373 11

378 367 11 6 6 6 6

143 139

4

71 67

4

6k 60

k

7 7

72 72

1,167 1,143 24

1,042 1,022 20

985 968 17

57 5k

3

125 121

4

82 51 31

35 16 19

22

9 13

13

7

6

47 35 12

179 153 26

146 120 26

137 111 26 9 9

33 33

209 208

1

164 163

1

lkl IkO

1

23 23

45 45

355 344 11

296 285 11

27k 263 11

22 22

59 59

884 815 69

857 788 69

831 762 69

26 26

27 27

850

679

6U0

39

171

390

384

3786

142

70 

637

72

1,146

1,035

982

53

111

71

26n

12

45

179

146

1379

33

209

164

1U1

23

45

355

296

27k

22

59

884

857

831

26

27

834

663

62k

39

171

379

373

3676

138

66

597

72

1,122

1,015

965

50

107

51

1697

35

153

120

1119

33

208

163

IkO

23

45

344

285

263

22

59

815

788

762

26

27

279

240

232

206

200

19 k66

92

24

213

719

666 6kl

25

53

21

1183

10

50

22

18k

28

58

36

32k

22

95

70

637

25

463

436

U10

26

27

288 267 16 3 3

177 246 16 3 3

159 233 16 3 3

18 13

111 21

15 158

92

15 158

9

2

15 158

92

8 38 2 2 1 1

8 34 2 2 1 1 8 30 2 2 1 1 k4

139 264 222 21 21

101 248 18

2 7 7

86 238 15

2

3

3

15 10

3

k

k

38 16 4 14 14

20210 17 3 11 11

3 7 3 9 9 1 2 3 8 8

2 2

5 1 1

18

7 10 2

2

8 95 26 6 92 26 k 89 26 2 3

2 3

24

24

126

1

103

1

2k

8k

19

1

23

198

230

207

74

74

7 193

lk

23

250

7

k

I

11

102 68

1

102

102

250 68

1

250 68

1

98.1

97.7 

97.5

100.0

100.0

97.2

97.1

97.1

100.0

100.0

97.2

94.4

93.8

100.0

100.0

97.9

98.1

62.2

45.7 

k0.9

53.8

74.5

85.5 

82.2

81.0

100.0

100.0

99.5

99.4

99.3

100.0

100.0

96.9

96.3 

96.0

100.0

100.0

92.2

91.9 

91.7

100.0

100.0

98.1

97.6 

97.5

100.0

100.0

97.2

97.1

97.1

100.0

100.0

97.2

94.3

93.7

100.0

100.0

97.9

98.1

98.3

9 k.3

96.4

71.8

61.5 6k.S

58.3

77.8

85.5

82.2 

81.0

100.0

100.0

99.5

99.4

99.3

100.0

100.0

96.9

96.3 

96.0

100.0

100.0

92.2

91.9 

91.7

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 117

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 102. N u m ber o f O p eratin g B anks AND B ran ch es, December 31, 1944— Continued

GROUPED ACCORDING TO INSURANCE STATUS AND CLASS OF BANK, AND BY STATE AND TYPE OF OFFICE

State and type of bank or office

Utah.........................................

All banks..............................

Unit banks........................

Banks operating branches. 

Branches...............................

Vermont..................................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

Virginia...................................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

Washington............................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

West Virginia........................

All banks..............................

Unit banks........................

Banks operating branches. 

Branches...............................

Wisconsin...............................

All banks..............................

Unit banks........................

Banks operating branches.

Branches...............................

All banks

Total Insured

77

57

50

7

20

98

80

72

8

18

401

312

267

1>5

89

232

128

115

13

104

178

178

178

702

559

m

88

143

Noninsured

77

57

50

7

20

97

79

71

8

18

401

312

267

h 5

89

229

125

112

13

104

173

173

173

690

548

U61

87

142

Commercial banks and trust companies

Total

77

57

50

7

20

81

72

65

7

9

401

312

267

U5

229

126

llh12

103

178

178

178

698

555

U67

88

143

Insured1

Total

77

57

50

7

20

80

716k

7

9

401

312

267

k5

89

226

123

111

12

103

173

173

172

687

545

k58

87

142

National

Members F. R. 

System

15

41

39

37

156

130

120

10

26

136

41

33

8

95

76

76

76

in

96

92

k

15

State

Not 

members 

F. R. 

System

78

64

57

7

14

16

15 

lk1

1

30

30

30

27

23

20

3

4

38

31

26

5

7

167

118

90

28

49

74

67

6k

3

7

67

67

67

503

384

306

78

119

Noninsured

Banks 

of deposit

Trust 

companies 

not accepting 

deposits

Mutual savings banks

Total Insured2

Noninsured

Insured banks

as percentages ofAll

banks

100.0

100.0

100.0

100.0

100.0

99.0

98.8

98.6

100.0

100.0

100.0

100.0

100.0

100.0

100.0

98.7

97.7 

97.k

100.0

100.0

97.2

97.2

97.2

98.3

98.0

97.9

98.9

Commercial

banks

Mutual

savings

banks

100.0

100.0

100.0

100.0

100.0

98.8

98.6

98.5

100.0

100.0

100.0

100.0

100.0

100.0

100.0

98.7

97.6 

97.k

100.0

100.0

97.2

97.2

97.2

98.4

98.2 

98.1

98.9

99.3

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

75.0

75.0

75.0

00FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
W yom ing..............................

All banka............................

Unit banks......................

Banks operating branches

Branches.............................

Possessions

Alaska3...................................

All banka............................

Unit banks......................

Banks operating branches

Branches.............................

Hawaii4..................................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Puerto R ic o ..........................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

Virgin Islands5....................

All banks............................

Unit banks......................

Banks operating branches

Branches.............................

98.3

98.2

98.2

100.0

100.0

21.1

17.6

15.3

50.0

50.0

1.9

11.1

14.3

66.7

50.0

100.0

100.0

98.3

98.2

98.2

100.0

100.0

21.1

17.6

13.3

50.0

50.0

1.9

11.1

14.3

66.7

50.0

100.0

100.0

1 Includes 10 trust companies not engaged in deposit banking: 2 national banks, 1 each in Illinois and Kansas; 3 State banks members of the Federal Reserve System, 1 each 

in California, Illinois and Massachusetts; and 5 State banks not members of the Federal Reserve System, 1 each in Florida, Missouri and Wisconsin, and 2 in Pennsylvania

2 Includes 3 mutual savings banks, members of the Federal Reserve System.

3 Includes 4 national banks, 3 among insured banks not members of the Federal Reserve System, and 1 among noninsured banks.

4 Includes, among noninsured banks, 1 national bank operating 21 branches.

5 Includes, among insured banks not members of the Federal Reserve System, 1 national bank operating 1 branch.

Back figures—See the Annual Report for 1943, pp. 70-75, and earlier reports.

NUMBER, OFFICES, AND DEPOSITS OF OPERATING BANKS 119

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
T a b le 1 0 3 . NUMBER AND DEPOSITS OF OPERATING COMMERCIAL AND MUTUAL SAVINGS BANKS, DECEMBER 31, 1944

BANKS GROUPED ACCORDING TO INSURANCE STATUS AND BY DISTRICT AND STATE

Number of banks Deposits (in thousands of dollars)

Commercial banks and 

trust companies Mutual savings banks Commercial banks and 

trust companies Mutual savings banks

FDIC District Noninsured

and State All

banks

Total Insured1 Banks 

of deposit

Trust 

companies 

not accepting 

deposits

Total Insured

Noninsured

All

banks

Total Insured Noninsured Total Insured Noninsured

United States and 

possessions........ 14,710 14,167 13,268 816 83 543 192 351 142,076,855 128,701,304 125,751,795 2,949,509 13,375,551 8,910,338 4,465,213

United States. . . 14,670 14,127 13,263 786 78 543 192 351 141,444,810 128,069,259 125,713,909 2,355,350 13,375,551 8,910,338 4,465,213

Possessions 40 40 5 30 5 632,045 632,045 37,886 594,159

FDIC District

District 1 ............ 897 543 488 50 5 354 16 338 11,407,131

44,754,338

15,955,147

7,130,226

5,851,735

7,038,995

9,282,299

12,170,679

3,470,471

4.460.656 

5,157,611

15,397,567

1,031,336

288,077

633,393

10,827,241

845,468

2.463.657 

464,640 

855,710

1,409,795

1,464,446

7,171,873

37,191,009

14,962,237

6,830,217

6,729,684 442,189 4,235,258

7,563,329

105,288 4,129,970

District 2 ............ 1,258

1,724

1,068

1,101 1,069

1,678

1,019

29 3 157 153 4 36,058,267 1,132,742 7,480,449 82,880

District 3 ............ 1,714

1,058

34 2 10 10 14,916,074 46,163 992,910 992,910

District 4 ............ 36 3 10 3 7 6,708,301 121,916 300,009 57,622 242,387

District 5 ............ 1,089

1,508

1,503

1,488

1,101

1,625

912

537

217

14

226

200

150

189

42

1,089

1,508

1,495

1,488

1,100

1,625

912

534

217

14

226

200

150

117

40

999 87 3 5,851,735

7,038,995

9,240,776

12,170,679

3,365,742

4,460,656

5,157,611

15,259,774

1,031,336

288,077

633,393

10,827,241

845,468

1,481,117

401,066

855,710

1,409,795

1,464,446

5,809,075 42,660

District 6 1,417

1,428

1,408

1,065

1,366

841

490

213

12

206

186

134

99

39

77

53

14 6,991,923

9,117,470

47,072

District 7 ............ 14 8 6 2 123,306 41,523 31,547 9,976

District 8 75

33

246

68

5 12,069,613

3,289,587

4,292,693

5,073,867

14,695,241

1,025,768

288,077

629,069

10,769,982

840,237

1,304,667

399,981

855,710

101,066

76,155

167,963

83,744

564,533

5,568

District 9 2 1 i 104,729 104,729

District 10 13

District 11 3

District 12 28

4

16 3 3 137,793 137,793

State

Alabama

Arizona 2

Arkansas 17

5

3

9

4,324

57,259

5,231

176,450

1,085

California

Colorado 16

Connecticut........

Delaware.............

17

1

1 72

2

2 70

2

982,540

63,574

18,865 963,675

63,574

Dist. of Columbia 

Florida

21 21

171

21

165171 3 3 1,404,146 5,649

Georgia 350 350 276 74 1,440,931 23,515

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Idaho.................

Illinois...............

Indiana..............

Iowa..................

Kansas...............

Kentucky..........

Louisiana..........

Maine................

Maryland..........

Massachusetts..

Michigan...........

Minnesota.........

Mississippi........

Missouri............

Montana............

Nebraska...........

Nevada..............

New Hampshire

New Jersey.......

New Mexico___

New York.........

North Carolina. 

North Dakota. .

Ohio...................

Oklahoma..........

Oregon...............

Pennsylvania. . . 

Rhode Island. .. 

South Carolina. 

South Dakota. .

Tennessee..........

Texas.................

Utah..................

Vermont............

Virginia..............

Washington. . . . 

West Virginia...

Wisconsin..........

Wyoming..........

Possessions

Alaska................

Hawaii...............

Puerto R ico. . . . 

Virgin Islands..

46

838

499

650

619

392

149

98

184

388

445

673

202

594

111

415

9

107

375

41

827

227

153

682

384

71

1,042

35

146

164

296

857

57

80

312

128

178

559

57

46

838

495

650

619

392

149

66

174

197

445

672

202

594

111

415

9

65

351

41

227

153

679

384

70

1,035

26

146

164

296

857

57

72

312

126

178

555

57

45

822

472

586

449

363

148

57

171

188

411

644

197

563

111

354

9

57

345

41

684

222

147

663

373

66

1,015

16

120

163

285

788

57

71

312

123

173

545

56

1

11 5

19

64

4 4 3 1

168 2

24 5

1

9 32 6 26

2

9

1 10

191

3 7

191

26 8

27 1 1 1

5

29 2

53 8

8 42 42

3 3 24 22 2

12 131 131

4 1

5 1

16 3 3

9 2

2 2 1 1

18 2 7 7

7 3 9 9

26

1

7 4

68 1

1 8 8

3 2 2

4 1

8 2

1

4 3 1

14

3 5

12

1

335,897

10,402,500

2,471,041

1,768,179

1,279,823

1,277,380

1,319,177

591,822

1,887,870

6,762,882

4,442,975

2,395,021

626,981

3,508,102

405,248

985,418

120,971

432,220

4,246,024

202,029

39,924,181

1,549,320

381,887

6,347,905

1,181,405

1,132,061

9,607,242

898,076

514,773

288,315

1,620,120

4,667,505

454,501

258,474

1,586,415

2,014,344

736,138

2,368,283

168,542

51,473

461,079

115,156

4,337

335,897

10,402,500

2,438,336

1,768,179

1,279,823

1,277,380

1,319,177

415,752

1,587,861

4,202,610

4,442,975

2,290,292

626,981

3,508,102

405,248

985,418

120,971

198,309

3,870,446

202,029

32,800,004

1,549,320

381,887

6,173,545

1,181,405

1,125,354

8,788,692

682,603

514,773

288,315

1,620,120

4,667,505

454,501

191,482

1,586,415

1,883,258

736,138

2,359,465

168,542

51,473

461,079

115,156

4,337

329,146

10,376,731

2,411,112

1,692,882

1,148,613

1,257,635

1,318,430

384,918

1,510,403

4,077,598

4,354,045

2,278,316

619,800

3,493,238

405,248

958.482 

120,971 

185,720

3,864,125

202,029

31,789,904

1,527,964

319,168

6,162,943

1,176,819

1,119,122

8,753,131

585,299

499,986

286,855

1,611,981

4,583,761

454,501

191.482 

1,586,415

1,867,890

727,823

2,352,313

168,542

20,381

13,248

4,257

6,751

25,769

27,224

75,297

131,210

19,745

747

30,834

77,458

125,012

88,930

11,976

7,181

14,864

32,705 23,167 9,538

176,070

300,009

2,560,272

19,431

57,622

156,639

242,387

2,560,272

104,729 104,729

26,936

12,589

6,321

233,911

375,578

233,911

356,272 19,306

1,010,100

21,356

62,719

10,602

4,586

6,232

35,561

97,304

14,787

1,460

8,139

83,744

7,124,177 7,124,177

174,360 174,360

6,707

818,550

215,473

6,707

818,550

215,473

66,992 66,992

15,368

8,315

7,152

131,086 131,086

8,818 8,380 438

31,092

447,831

115,156

80

1 Includes 10 trust companies not engaged in deposit banking: 2 each in Illinois and Pennsylvania and 1 each in California, Florida, 

Wisconsin.

Back figures—See the following Annual Reports: 1943, pp. 76-77; 1942, pp. 76-77; 1941, pp. 108-109.

Kansas, Massachusetts, Missouri and

!ER, OFFICES, AND DEPOSITS OF OPERATING BANKS 121

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Federal Reserve Bank of St. Louis
Table 104. Summary of assets and liabilities of operating banks in the United States and 

possessions, June 30, 1944

Banks grouped according to insurance status and type of bank

Table 105. Summary of assets and liabilities of operating banks in the United States and 

possessions, December 30, 1944

Banks grouped according to insurance status and type of bank

Table 106. Assets and liabilities of operating insured commercial banks, December 30,1944, 

June 30, 1944 and December 31, 1943

Table 107. Summary of assets and liabilities of operating banks in the United States and 

possessions, 1942-1944

Banks grouped according to insurance status and by type of bank

Table 108. Percentage distribution of assets and liabilities of operating insured commercial 

banks, call dates, 1934-1944

A sse t s a n d L ia b il it ie s o f O p e r a t in g B a n k s

Statements of assets and liabilities are submitted by of the loan. Such loans are reported gross if, under contract,

insured commercial banks upon either a cash or an the payments do not immediately reduce the unpaid

accrual basis, depending upon the bank's method of balances of the loan but are assigned or pledged to assure

bookkeeping. Assets reported represent aggregate book repayment at maturity.

122 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
value, on the date of call, less valuation allowances and 

premiums.

Assets and liabilities held in or administered by a 

savings, bond, insurance, real estate, foreign, or any 

other department of a bank, except a trust department, 

are consolidated with the respective assets and liabilities 

of the commercial department. “ Deposits of individuals, 

partnerships, and corporations” include trust funds deposited by a trust department in a commercial or savings 

department. Other assets held in trust are not included 

in statements of assets and liabilities.

In the case of banks with one or more domestic branches, 

the assets and liabilities reported are consolidations of 

figures for the head office and all domestic branches. In 

the case of a bank with foreign branches, net amounts due 

from its own foreign branches are included in “ Other 

assets” , and net amounts due to its own foreign branches 

are included in “ Other liabilities” .

Since June 30, 1942, demand balances with and demand 

deposits due to banks in the United States exclude 

reciprocal interbank deposits. Reciprocal interbank deposits arise when two banks maintain deposit accounts 

with each other.

Instalment loans are ordinarily reported net if the 

instalment payments are applied directly to the reduction

Total deposits shown in these tables are not the same 

as the deposits upon which assessments paid to the Federal 

Deposit Insurance Corporation are based. The assessment 

base is slightly lower due to certain deductions which 

may be claimed.

Data for noninsured trust companies not accepting 

deposits are excluded. Data for some noninsured commercial banks are omitted because of unavailability of 

reports. On December 30, 1944, 83 noninsured trust 

companies and 30 noninsured commercial banks were 

excluded. Because of these exclusions, the number of 

noninsured banks in the following tables does not agree 

with the number shown in the previous section.

Sources of Data:

National banks and State banks in the District of 

Columbia not members of the Federal Reserve System: 

Office of the Comptroller of the Currency.

State banks members of the Federal Reserve System: 

Board of Governors of the Federal Reserve System.

Other insured banks: Federal Deposit Insurance 

Corporation.

Noninsured banks: State banking authorities; Rand

McNally Bankers Directory; and Polk's Bankers Encyclopedia.

ASSETS AND LIABILITIES OF OPERATING BANKS

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Federal Reserve Bank of St. Louis
Table 104. SUMMARY OF ASSETS AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS, JUNE 30, 1944

BANKS GROUPED ACCORDING TO INSURANCE STATUS AND TYPE OF BANK 

(Amounts in thousands of dollars)

Asset, liability or capital account item All

banks

Commercial banks Mutual savings banks

Total Insured1 Noninsured Total Insured N oninsured

ASSETS

Gash, balances with other banks, and cash items in process of col28,279,426

83,566,663

76,015,703

3,628,715

3,393,836

499,963

28,446

25,487,832

1,892,165

1,092,660

331,019

468,486

139,226,086

27,736,549

75,008,839

68,715,113

3,463,921

2,432,676

368,683

28,446

21,071,435

1,569,155

987,839

179,871

401,445

125,385,978

27,190,581

73,227,763

67,103,707

3,393,594

2,388,042

342,420

545,968

1,781,076

1,611,406

70,327

44,634

26,263

28,446

339,344

72,156

16,191

7,989

47,976

2,738,544

542,877

8,557,824

7,300,590

164,794

961,160

131,280

380,628

5,377,663

4,751,980

119,590

491,932

14,161

162,249

3,180,161

2,548,610

45,204

469,228

117,119

Securities—total.................................................................................................

United States Government obligations, direct and guaranteed...................

Obligations of States and political subdivisions............................................

Other bonds, notes, and debentures...............................................................

Corporate stocks................................................................................................

Loans, discounts, and overdrafts (including rediscounts)....................

Miscellaneous assets—total............................................................................

Bank premises owned, furniture and fixtures................................................

Other real estate—direct and indirect............................................................

All other miscellaneous assets..........................................................................

,/20,732,091

1,496,999

971,648 

171,882 

, 353,469 

£22,647,434

4,416,397

323,010

104,821

151,148

67,041

13,840,108

J 3,111,443

248,827 

77,949 

120,277 

/ 50,601 

J 9,118,561

1,304,954

74,183

26,872

30,871

16,440

4,721,547

LIABILITIES

Deposits—total....................................................................................................

Demand deposits of individuals, partnerships, and corporations...............

Time deposits of individuals, partnerships, and corporations.....................

States and political subdivisions......................................................................

United States Government..............................................................................

Interbank............................................................................................................

129.127.408

129.127.408

824,268

86,692

737,576

129,951,676

9,274,410

2,995,981

4,203,295

2,075,134

139,226,086

116,654,134

58,214,499

20,932,986

4.933.334 

19,584,847 

11,201,021

1,560,945

226,502

778,509

86,440

692,069

117,432,643

7.953.335 

2,991,265 

3,271,672 

1,690,398

125,385,978

•'114,179,597

57,364,373

20,543,888

4,811,792

18,864,831

11,038,203

1,550,679

5,831

757,250

84,240

673,010

114,936,847

7,710,587

2,894,735

3,190,416

1,625,436

122,647,434

2,474,537

850,126

389,098

121,542

720,016

162,818

10,266

220,671

21,259

2,200

19,059

2,495,796

242,748

96,530

81,256

64,962

2,738,544

12.473.274

12.473.274

J

45,759

252

45,507

12,519,033

1,321,075

4,716

931,623

384,736

13,840,108

8.234.962

8.234.962

25,265

252

25,013

8,260,227

858,334

4,716

665,281

188,337

9,118,561

4.238.312

4.238.312

20,494

..........20,494

4,258,806

462,741

........266,342

196,399

4,721,547

Certified and officers’ checks, cash letters of credit, etc..............................

Not classified, including postal savings..........................................................

Miscellaneous liabilities—total......................................................................

Rediscounts and other borrowed money........................................................

All other miscellaneous liabilities....................................................................

Total liabilities (excluding capital accounts)....................................

CAPITAL ACCOUNTS 

Capital accounts—total...................................................................................

Capital stock, notes, and debentures.............................................................

Surplus .. ............................................................................................

Undivided profits, including all other capital accounts...............................

Total liabilities and capital accounts..................................................

Number of banks included................................................................................... 14,608 14,064 13,269 795 544 192 352

1 Includes 10 trust companies not engaged in deposit banking.

Back figures—See the following Annual Reports: 1943, pp. 78-79; 1942, pp. 78-79; 1941, pp. 122-125.

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
T a b le 105. SUMMARY OF A s se t s AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS, DECEMBER 30, 1944

BANKS GROUPED ACCORDING TO INSURANCE STATUS AND TYPE OF BANK

(Amounts in thousands of dollars)

Asset, liability or capital account item All

banks

Commercial banks Mutual savings banks

Total Insured1 Noninsured Total Insured Noninsured

ASSETS

Cash, balances with other banks, and cash items in process of col30,911,332

93,843,404

86,280,551

3,627,047

3,401,833

508,892

25,081

26,079,480

1,783,700

1,057,751

242,137

483,812

152,617,916

30,327,497

84,283,943

77,952,788

3,500,061

2,431,732

374,281

25,081

21,707,210

1,511,125

955,941

145,109

410,075

137,829,775

29,746,309

82,053,067

75,896,226

3,423,732

2,385,706

347,403

581,188

2,230,876

2,056,562

76,329

46,026

26,878

25,081

352,452

52,094

15,899

6,060

30,135

3,216,610

583,835

9,559,461

8,327,763

126,986

970,101

134,611

399,579

6,112,598

5,508,720

95,789

493,394

14,695

184,256

3,446,863

2,819,043

31,197

476,707

119,916

United States Government obligations, direct and guaranteed..................

Obligations of States and political subdivisions............................................

Other bonds, notes, and debentures..............................................................

Loans, discounts, and overdrafts (including rediscounts)....................

Miscellaneous assets—to ta l............................................................................

Bank premises owned, furniture and fixtures...............................................

Other real estate—direct and indirect............................................................

All other miscellaneous assets.........................................................................

Total assets.................................................................................................

LIABILITIES

Deposits—total...................................................................................................

Demand deposits of individuals, partnerships, and corporations...............

Time deposits of individuals, partnerships, and corporations.....................

States and political subdivisions.....................................................................

United States Government..............................................................................

Interbank...........................................................................................................

i 21,354,758

1,459,031

940,042 

139,049 

. 379,940 

<134,613,165

4,372,270

272,575

101,810

97,028

73,737

14,788,141

J 3,110,134

204,954

75,677 

, 75,454 

/ 53,823 J9,827,265

1,262,136

67,621

26,133

21,574

19,914

4,960,876

142,076,855

[142,076,855

J

926,049

124,486

801,563

143,002,904

9,615,012

3,014,030

4,470,157

2,130,825

152,617,916

128,701,304

65,131,825

23,814,595

5,060,616

20,828,457

12,229,376

1,366,668

269,767

891,356

123,893

767,463

129,592,660

8,237,115

3,009,177

3,485,846

1,742,092

137,829,775

Jl25,751,795

64,148,968

23,362,909

4,943,810

19,861,966

12,074,356

1,354,421

5,365

871,103

121,549

749,554

126,622,898

* 7,990,267

2,912,455

3,401,995

1,675,817

134,613,165

2,949,509

982,857

451,686

116,806

966,491

155,020

12,247

264,402

20,253

2,344

17,909

2,969,762

246,848

96,722

83,851

66,275

3,216,610

13,375,551

[ 13,375,551

34,693

593

34,100

13,410,244

1,377,897

4,853

984,311

388,733

14,788,141

J8,910,338

8,910,338

24,715

90

24,625

8,935,053

892,212

4,853

699,772

187,587

9,827,265

4.465.213

4.465.213

9,978

503

9,475

4,475,191

485,685

.....284,539*

201,146

4,960,876

Certified and officers’ checks, cash letters of credit, etc..............................

Not classified, including postal savings.........................................................

Miscellaneous liabilities—total.....................................................................

Rediscounts and other borrowed money........................................................

All other miscellaneous liabilities....................................................................

Total liabilities (excluding capital accounts)....................................

CAPITAL ACCOUNTS 

Capital accounts—total...................................................................................

Capital stock, notes, and debentures.............................................................

Surplus ..................................................................................................

Undivided profits, including all other capital accounts...............................

Total liabilities and capital accounts..................................................

Number of banks included.................................................................................. 14,597 14,054 13,268 786 543 192 351

1 Includes 10 trust companies not engaged in deposit banking.

Back figures—See Table 104 and the following Annual Reports: 1943, pp. 78-79; 1942, pp. 78-79; 1941, pp. 122-125.

ASSETS AND LIABILITIES OF OPERATING BANKS

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Federal Reserve Bank of St. Louis
T a b le 106. A ss e t s AND LIABILITIES OF OPERATING INSURED COMMERCIAL BANKS, DECEMBER 30, 1944,

Ju n e 30, 1944 and D ecem ber 31, 1943

(Amounts in thousands of dollars)

ASSETS

Cash, balances with other banks, and cash

items in process of collection—total. .

Currency and coin.............................................

Reserve with Federal Reserve banks..............

Demand balances with banks in the United 

States (except private banks and American branches of foreign banks)................

Other balances with banks in the United States 

Balances with banks in foreign countries 

Cash items in process of collection..........

Obligations of the United States Government—total........................................

Direct:

Treasury bills............................................

Treasury certificates of indebtedness. . .

Treasury notes..........................................

United States savings bonds...................

Other bonds maturing in 5 years or less 

Other bonds maturing in 5 to 10 years.

Bonds maturing in 10 to 20 years..........

Bonds maturing after 20 years...............

Guaranteed obligations...............................

Other securities—total................................

Obligations of States and political subdivisions 

Other bonds, notes, and debentures1. . . 

Corporate stocks:

Federal Reserve banks........................

Other corporate stocks........................

Total securities..............................

Loans, discounts, and overdrafts (including

rediscounts)—total.................................

Commercial and industrial loans (including

open market paper)....................................

Loans secured by agricultural commodities, 

covered by purchase agreements of the

Commodity Credit Corporation...............

Other agricultural loans (excluding loans on 

farm land).........................................

Dec. 30, 

1944

June 30, 

1944

Dec. 31, 

1943

29,746,309

1,625,675

14,259,603

27,190,581

1,467,749

12,811,799

27,191,292

1,447,018

12,834,452

9,732,661

64,239

17,088

4,047,043

8,721,213

64,241

17,936

4,107,643

8,382,577

68,615

20,398

4,438,232

75,896,226 67,103,707 58,693,549

3,972,299

15,302,996

15,780,732

763,842

5,917,794

25,467,314

5,796,636

1,917,000

977,613

4,708,982

15,468,690

11,835,200

620,564

5,650,408

20,019,989

6,046,361

1,790,461

963,052

4,636,858

13,220,074

7,673,192

316,032

5,790,533

16,775,686

6,159,925

1,619,819

2,501,430

6,156,841

3,423,732

2,385,706

6,124,056

3,393,594

2,388,042

5,984,550

3,287,646

2,342,211

162,541

184,862

158,123

184,297

153,983

200,710

82,053,067 73,227,763 64,678,099

21,354,758 20,732,091 18,843,488

7,921,036 7,407,284 7,777,748

805,503 504,101 598,466

917,363 970,155 906,787

LIABILITIES AND CAPITAL

Deposits of individuals, partnerships, and 

corporations—tota l......................

Demand.....................................................

Time..........................................................

Certified and officers’ checks, cash letters 

of credit and travelers’ checks ou tstanding, and am ounts due to Federal Reserve banks.................................

Government deposits—total...........................

United States Government—demand:

War loan and Series E bond accounts........

Other accounts...............................................

United States Government—time...................

Postal savings....................................................

States and political subdivisions—demand. . . 

States and political subdivisions—time..........

Interbank deposits—tota l...............................

Banks in the United States—demand.............

Banks in the United States—time...................

Banks in foreign countries—demand..............

Banks in foreign countries—time....................

Total deposits..............................................

Demand.......................................................

Time............................................................

Miscellaneous liabilities—tota l........

Bills payable, rediscounts, and other liabilities

for borrowed money.......................

Acceptances outstanding.........................

Dividends declared but not yet payable

Income collected but not earned............

Expenses accrued and unpaid................

Other liabilities.........................................

Total liabilities (excluding capital 

accounts).....................................

Dec. 30, 

1944

June 30, 

1944

Dec. 31, 

1943

87,511,877

64,148,968

23,362,909

77,908,261

57,364,373

20,543,888

76,918,566

58,346,160

18,572,406

1,354,421 1,550,679 1,668,876

24,811,141 23,682,454 14,823,570

19,455,586

303,205

103,175

5,365

4,520,308

423,502

18,431,347

331,631

101,853

5,831

4,404,201

407,591

9,665,368

285,343

117,206

7,097

4,353,497

395,059

12,074,356

11,063,174

52,672

947,651

10,859

11,038,203

U0,030,896

57,136

2938,813

11,358

10,704,765

9,743,462

63,861

893,382

4,060

125,751,795

101,793,313

23,958,1*82

114,179,597

93,051,9UO

21,127,657

104,115,777

81+,956,088

19,159,689

871,103 757,250 676,488

121,549

72,693

48,357

46,728

278,974

302,802

84,240

58,232

44,040

45,499

245,245

279,994

45,679

55,006

41,695

45,449

197,759

290,900

126,622,898 114,936,847 104,792,265

126 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Consumer loans to individuals:

Retail automobile instalment paper............

Other retail, repair and modernization instalment loans.............................................

Personal instalment cash loans....................

174,164

191,742

317,571

1,204,933

2,269,381

2,264,758

449,614

3,156,607

737,930

59,374

884,782

169,333

172,911

312,608

1,207,383

2,220,652

2,296,144

468,271

3,153,238

743,728

61,303

1,044,980

160,456

191,913

310,389

1,205,670

1,414,365

921,583

448,577

3,203,587

785,826

57,939

860,182

Capital accounts—to ta l...................................

Capital stock, notes, and debentures..............

Surplus................................................................

Undivided profits...............................................

Total liabilities and capital accounts

7,990,267

2,912,455

3,401,995

1,169,389

506,428

7,710,587

2,894,735

3,190,416

1,129,712

495,724

7,453,726

2,874,548

3,089,817

1,006,406

482,955

Loans to brokers and dealers in securities. . . . 

Other loans for the purpose of purchasing or 134,613,165 122,647,434 112,245,991

Real estate loans:

On farm land..................................................

On residential properties...............................

On other properties........................................

Loans to banks...................................................

All other loans (including overdrafts).............

Loans and securities—total.................

Bank premises, furniture and fixtures, and 

other real estate—total.........................

Bank premises....................................................

Furniture and fixtures.......................................

Real estate owned other than bank premises. . 

Investments and other assets indirectly representing bank premises or other real estate.

Miscellaneous assets—total.............................

Customers’ liability on acceptances outstanding.......................................................

Income accrued but not collected....................

Prepaid expenses

MEMORANDA

Pledged assets and securities loaned—total

United States Government obligations, direct 

and guaranteed, pledged to secure liabilities

27,727,300

26,831,454

561,779

300,421

33,646

26,632,106

25,622,389

680,101

299,489

30,127

18,541,870

17,570,199

655,191

275,981

40,499

103,407,825 93,959,854 83,521,587

1,079,091

868,882

71,160

63,522

75,527

1,143,530

895,051

76,597

91,671

80,211

1,201,282

914,292

79,977

122,728

84,285

Other assets pledged to secure liabilities........

Assets pledged to qualify for exercise of fiduciary or corporate powers, and for purposes other than to secure liabilities........

Securities loaned................................................

Secured and preferred liabilities—tota l. . . .

Deposits secured by pledged assets pursuant

to requirements of law..............................

Deposits preferred under provisions of law

but not secured by pledge of assets.........

Borrowings secured by pledged assets............

Other liabilities secured by pledged assets. ...

24,843,282

23,846,867

901,915

93,743

757

23,442,333

22,569,642

845,005

25,712

1,974

14,852,101

13,936,664

897,046

16,901

1,490

379,940

62,801

216,599

11,930

88,610

353,469

51,660

205,919

11,792

84,098

331,830

44,625

179,435

11,920

Other assets........................................................ 95,850

Total assets...............................................

Number of banks........................ 13,268 13,269 13,274

134,613,165 122,647,434 112,245,991

Number of banks................................................... 13,268 13,269 13,274

1 Includes obligations of United States government corporations and agencies not guaranteed by the United States government.

2 Revised.

Back figures—See the following Annual Reports: 1943, pp. 80-81; 1942, pp. 80-81; 1941, pp. 126-129; 1940, pp. 144-147; 1938, pp. 164-167.

ASSETS AND LIABILITIES OF OPERATING BANKS 127

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 107. SUMMARY OF ASSETS AND LIABILITIES OF OPERATING BANKS IN THE UNITED STATES AND POSSESSIONS, 1942-1944 

BANKS GROUPED ACCORDING TO INSURANCE STATUS AND BY TYPE OF BANK

(Amounts in thousands of dollars)

to Asset, liability or capital account item June 30, 1942 December 31, 1942 June 30, 1943 oo

Total assets.................................................

Cash and amounts due from other banks 

United States Government obligations1. .

Other securities.........................................

Loans, discounts, and overdrafts............

Miscellaneous assets.................................

Total liabilities and capital accou n ts..

Total deposits............................................

Miscellaneous liabilities............................

Total capital accounts..............................

Number of banks included.......................... .

A LL BANKS

92.081.685

25,667,360

30,339,709

8,637,868

25,132,675

2,304,073

92.081.685

82,986,623

665,434

8,429,628

14,827

INSURED

80.765.023

24,525,180

26,622,491

7,211,967

20,615,128

1,790,257

80.765.023

73,026,710

603,606

7,134,707

13,456

NONINSURED

11.316.662 

1,142,180 

3,717,218 

1,425,901 

4,517,547

513,816

11.316.662

9,959,913

61,828

1,294,921

ALL BANKS

109.305.505

28,809,564

46,036,206

8,286,363

23,961,174

2,212,198

109.305.505 

100,152,825

638,689

8,513,991

1,371 14,731

97.713.102

27,723,412

41,572,955

7,037,939

19,647,248

1,731,548

97.713.102

89,868,741

587,315

7,257,046

13,403

N ON IN SU RED

11.592.403

1,086,152

4,463,251

1,248,424

4,313,926

480,650

11.592.403

10,284,084

51,374

1,256,945

ALL BANKS

116.983.581

26,771,369

57,912,891

7,914,650

22,294,293

2,090,378

116.983.581

107,621,968

657,726

8,703,887

1,328 14,666

105.414.414

25,707,425

52,805,608

6,775,165

18,405,526

1,720,690

105.414.414

97,321,366

606,085

7,486,963

13,363

NONINSURED

11.569.167

1,063,944

5,107,283

1,139,485

3,888,767

369,688

11.569.167

10,300,602

51,641

1,216,924

1,303

Total assets..................................................

Cash and amounts due from other banks 

United States Government obligations1. .

Other securities.........................................

Loans, discounts, and overdrafts............

Miscellaneous assets.................................

Total liabilities and capital accou n ts..

Total deposits............................................

Miscellaneous liabilities............................

Total capital accounts..............................

Number of banks included..........................

ALL

COMMERCIAL

80.394.510 

24,914,120 

26,457,825

6,982,370

20,303,587

1,736,608

80.394.510

72,588,851

622,388

7,183,271

14,280

INSURED

COMMERCIAL

78.709.455

24,381,860

25,936,082

6,790,346

19,922,804

1,678,363

78.709.455 

71,162,431

594,204

6,952,820

NONINSURED

COMMERCIAL

1.685.055 

532,260 

521,743 

192,024 

380,783

58,245

1.685.055

1,426,420

28,184

230,451

ALL

COMMERCIAL

97.368.511

28,139,627

41,483,606

6,815,643

19,248,743

1,680,892

97.368.511

89,478,713

604,225

7,285,573

INSURED

COMMERCIAL

95.459.111

27,593,375

40,711,697

6,632,557

18,906,869

1,614,613

95.459.111

87,820,427

582,450

7,056,234

NONINSURED

COMMERCIAL

1.909.400

546,252

771,909

183,086

341,874

66,279

1.909.400

1,658,286

21,775

229,339

ALL

COMMERCIAL

104.555.146

26,049,517

52,627,666

6,532,988

17,704,857

1,640,118

104.555.146

96,475,864

617,011

7,462,271

INSURED

COMMERCIAL

102.405.464

25,537,614

51,541,848

6,348,275

17,392,157

1,585,570

102.405.464

94,582,458

593,666

7,229,340

NONINSURED

COMMERCIAL

2.149.682

511,903

1,085,818

184,713

312,700

54,548

2.149.682

1,893,406

23,345

232,931

13,403 877 14,185 13,347 838 14,121 13,302 819

Total assets.........................................................

Cash and amounts due from other banks....

United States Government obligations1.........

Other securities.................................................

Loans, discounts, and overdrafts....................

Miscellaneous assets.........................................

Total liabilities and capital accounts..........

Total deposits....................................................

Miscellaneous liabilities....................................

Total capital accounts......................................

Number of banks included..................................

ALL

M UTU AL

SAVIN GS

11.687.175

753,240

3,881,884

1,655,498

4,829,088

567,465

11.687.175

10,397,772

43,046

1,246,357

INSURED

MUTUAL

SAVINGS

2.055.568 

143,320 

686,409 

421,621 

692,324 

111,894

2.055.568 

1,864,279

9,402

181,887

NONINSURED

MUTUAL

SAVINGS

9.631.607

609,920

3,195,475

1,233,877

4,136,764

455,571

9.631.607

8,533,493

33,644

1,064,470

ALL

M UTU AL

SAVINGS

11.936.994

669,937

4,552,600

1,470,720

4,712,431

531,306

11.936.994 

10,674,112

34,464

1,228,418

INSURED

M UTU AL

SAVINGS

2.253.991

130,037

861,258

405,382

740,379

116,935

2.253.991 

2,048,314

4,865

200,812

NONINSURED

M UTU AL

SAVINGS

9.683.003 

539,900

3,691,342

1,065,338

3,972,052

414,371

9.683.003 

8,625,798

29,599

1,027,606

ALL

M UTU AL

SAVINGS

12.428.435 

721,852

5,285,225

1,381,662

4,589,436

450,260

12.428.435 

11,146,104

40,715

1,241,616

INSURED

MUTUAL

SAVINGS

3.008.950 

169,811

1,263,760

426,890

1,013,369

135,120

3.008.950 

2,738,908

12,419

257,623

NONINSURED

MUTUAL

SAVINGS

9.419.485 

552,041

4,021,465

954,772

3,576,067

315,140

9.419.485 

8,407,196

28,296

983,993

547 53 494 546 56 490 545 61 484

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Total assets..................................................

Cash and amounts due from other banks 

United States Government obligations1. .

Other securities..........................................

Loans, discounts, and overdrafts............

Miscellaneous assets..................................

Total liabilities and capital accounts..

T otal deposits............................................

Miscellaneous liabilities............................

Total capital accounts...............................

Number of banks included............................

Total assets........................................................

Cash and amounts due from other banks.. .

United States Government obligations1.......

Other securities...............................................

Loans, discounts, and overdrafts..................

Miscellaneous assets.......................................

Total liabilities and capital accounts.......

Total deposits..................................................

Miscellaneous liabilities.................................

Total capital accounts....................................

Number of banks included................................

Total assets.........................................................

Cash and amounts due from other banks....

United States Government obligations1.........

Other securities.................................................

Loans, discounts, and overdrafts....................

Miscellaneous assets.........................................

Total liabilities and capital accounts.........

Total deposits....................................................

Miscellaneous liabilities...................................

Total capital accounts......................................

Number of banks included..................................

December 31, 1943

ALL BANKS

127.794.459

28,570,225

66,156,026

7,444,630

23,652,670

1,970,908

127.794.459

118,099,719

733,447

8,961,293

214,632

ALL

COMMERCIAL

114.734.158

27,766,100

60,059,086

6,145,420

19,170,886

1,592,666

114.734.158

106,349,452

697,676

7,687,030

214,087

ALL

MUTUAL

SAVINGS

13.060.301

804,125

6,096,940

1,299,210

4,481,784

378,242

13.060.301

11,750,267

35,771

1,274,263

545

INSURED

120.609.856 

27,750,323 

62,537,544

6,592,571

21,916,838

1,812,580

120.609.856

111,649,837

698,381

8,261,638

13,458

INSURED

COMMERCIAL

112.245.991

27,191,292

58,693,549

5,984,550

18,843,488

1,533,112

112.245.991

104,115,777

676,488

7,453,726

13,274

INSURED

MUTUAL

SAVINGS

8.363.865

559,031

3,843,995

608,021

3,073,350

279,468

8.363.865 

7,534,060

21,893

807,912

184

NONINSURED

7.184.603 

819,902

3,618,482

852,059

1,735,832

158,328

7.184.603

6,449,882

35,066

699,655

21,174

NONINSURED

COMMERCIAL

2.488.167

574,808

1,365,537

160,870

327,398

59,554

2.488.167

2,233,675

21,188

233,304

2813

NONINSURED

M UTU AL

SAVINGS

4.696.436

245,094

2,252,945

691,189

1,408,434

98,774

4.696.436

4,216,207

13,878

466,351

361

June 30, 1944

ALL BANKS

139.226.086 

28,279,426 

76,015,703

7,550,960

25,487,832

1,892,165

139.226.086

129,127,408

824,268

9,274,410

14,608

ALL

COMMERCIAL

125.385.978 

27,736,549 

68,715,113

6,293,726 

21,071,435 

1,569,155

125.385.978

116,654,134

778,509

7,953,335

14,064

ALL

M UTU AL

SAVINGS

13.840.108

542,877

7,300,590

1,257,234

4,416,397

323,010

13.840.108 

12,473,274

45,759

1,321,075

544

131.765.995 

27,571,209 

71,855,687

6,749,739

23,843,534

1,745,826

131.765.995

122,414,559

782,515

8,568,921

13,461

INSURED

COMMERCIAL

122.647.434 

27,190,581 

67,103,707

6,124,056

20,732,091

1,496,999

122.647.434

114,179,597

757,250

7,710,587

13,269

INSURED

M UTU AL

SAVINGS

9.118.561

380,628

4,751,980

625,683

3,111,443

248,827

9.118.561

8,234,962

25,265

858,334

192

NONINSURED

7.460.091

708,217

4,160,016

801,221

1,644,298

146,339

7.460.091

6,712,849

41,753

705,489

1,147

NONINSURED

COMMERCIAL

2.738.544

545,968

1,611,406

169,670

339,344

72,156

2.738.544

2,474,537

21,259

242,748

795

NONINSURED

MUTUAL

SAVINGS

4.721.547

162,249

2,548,610

631,551

1,304,954

74,183

4.721.547

4,238,312

20,494

462,741

352

December 30, 1944

ALL BANKS

152.617.916 

30,911,332 

86,280,551

7,562,853

26,079,480

1,783,700

152.617.916

142,076,855

926,049

9,615,012

14,597

ALL

COMMERCIAL

137.829.775 

30,327,497 

77,952,788

6,331,155

21,707,210

1,511,125

137.829.775

128,701,304

891,356

8,237,115

14,054

A LL

M UTU AL

SAVINGS

14.788.141

583,835

8,327,763

1,231,698

4,372,270

272,575

14.788.141

13,375,551

34,693

1,377,897

543

144.440.430

30,145,888

81,404,946

6,760,719

24,464,892

1,663,985

144.440.430

134,662,133

895,818

8,882,479

13,460

INSURED

COMMERCIAL

134.613.165

29,746,309

75,896,226

6,156,841

21,354,758

1,459,031

134.613.165

125,751,795

871,103

7,990,267

13,268

INSURED

M UTUAL

SAVINGS

9.827.265

399,579

5,508,720

603,878

3,110,134

204,954

9.827.265 

8,910,338

24,715

892,212

192

NONINSURED

8.177.486 

765,444

4,875,605

802,134

1,614,588

119,715

8.177.486

7,414,722

30,231

732,533

1,137

NON IN SU RED

COMMERCIAL

3.216.610 

581,188

2,056,562

174,314

352,452

52,094

3.216.610

2,949,509

20,253

246,848

786

NONINSURED

MUTUAL

SAVINGS

4.960.876

184,256

2,819,043

627,820

1,262,136

67,621

4.960.876 

4,465,213

9,978

485,685

351

to

1 Includes both direct and guaranteed obligations.

2 Revised.

Back figures—See the Annual Report for 1941 pp. 122-125.

ASSETS AND LIABILITIES OF OPERATING BANKS

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
C a ll D a te s, 1934-1944 ^

________________________________________________________________________________________________________________________________________________________ CO

T a b le 108. PERCENTAGE DISTRIBUTION OF ASSETS AND LIABILITIES OF OPERATING INSURED COMMERCIAL BANKS

Asset or liability item

1934 1935 1936 1937 1938 1939

June 30 Dec. 31 June 29 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 30

Total assets ........................................................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cash, balances with other banks, and cash items

21.5 24.1 24.2 27.2 26.2 28.0 26.5 27.5 30.1 30.2 32.6 34.7

38.0 39.1 40.3 39.5 41.4 39.7 38.6 37.8 37.3 37.8 37.0 35.5

United States Government obligations, direct and

23.7 25.4 26.1 26.1 27.6 26.3 25.5 25.3 24.9 25.6 25.3 24.6

5.2 5.2 5.5 5.2 5.2 4.9 4.9 4.8 4.9 5.3 5.3 5.2

7.5 7.1 7.3 7.0 7.4 7.4 7.1 6.6 6.4 6.0 5.5 4.9

1.6 1.4 1.4 1.2 1.2 1.1 1.1 1.1 1.1 .9 .9 .8

Loans, discounts, and overdrafts (including rediscounts) ................................................................ 35.0 31.5 30.7 28.9 28.2 28.4 31.0 30.9 28.9 28.2 27.0 26.7

Miscellaneous assets—total........................................... 5.5 5.3 4.8 4.4 4.2 3.9 3.9 3.8 3.7 3.8 3.4 3.1

Bank premises owned, furniture and fixtures............... 2.7 2.6 2.6 2.3 2.2 2.1 2.1 2.1 2.2 2.0 1.9 1.7

Other real estate—direct and indirect1......................... 1.0 1.0 1.1 1.1 1.1 1.0 1.0 1.0 .9 1.1 1.0 .9

All other miscellaneous assets......................................... 1.8 1.7 1.1 1.0 .9 .8 .8 .7 .6 .7 .5 .5

Total liabilities and capital accounts............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Deposits—total ............................................................. 82.5 84.0 85.3 86.7 87.0 87.6 87.2 87.1 87.3 87.7 88.0 88.8

Demand deposits of individuals, partnerships, and 

corporations............................................................... 34.4 36.0 38.1 39.5 40.0 41.6 41.3 40.8 40.5 41.3 41.6 43.0

Time deposits of individuals, partnerships, and 

corporations............................................................... 26.1 25.1 26.0 24.6 24.2 24.0 25.4 25.8 25.8 24.7 24.1 22.9

States and political subdivisions..................................... 5.5 5.6 6.2 6.0 6.2 5.8 6.4 6.0 6.3 6.2 6.2 5.4

United States Government.............................................. 3.9 3.6 1.7 1.7 2.1 1.7 1.2 1.5 1.0 1.5 1.2 1.3

Postal savings ................................................................. 1.5 1.1 .8 .5 .4 .2 .2 .2 .2 .2 .1 .1

Interbank........................................................................... 10.2 10.7 11.6 12.6 12.5 12.6 11.2 11.3 12.2 12.8 13.4 15.1

Certified and officers’ checks, cash letters of credit, etc. .9 1.9 .9 1.8 1.6 1.7 1.5 1.5 1.3 1.0 1.4 1.0

Miscellaneous liabilities—total..................................... 23.1 22.8 21.6 1.1 1.2 1.1 1.2 1.1 .9 1.0 1.0 .9

nf’ViOT Vinrrnw Pn TYinnPV .2

22.9

.1 .1 .1 .1 .1 .1 .1

All other miscellaneous liabilities................................... 22.7 21.5 1.0 1.1 1.0 1.2 1.0 .9 1.0 1.0 .8

Capital accounts—total................................................... 14.4 13.2 13.1 12.2 11.8 11.3 11.6 11.8 11.8 11.3 11.0 10.3

Capital stock, notes, and debentures............................. 7.7 7.2 7.1 6.5 6.0 5.5 5.6 5.6 5.6 5.3 5.0 4.6

Surplus............................................................................... 4.5 4.1 4.0 3.8 3.9 3.9 4.0 4.2 4.2 4.1 4.0 3.9

Undivided profits, including all other capital accounts 2.2 1.9 2.0 1.9 1.9 1.9 2.0 2.0 2.0 1.9 2.0 1.8

Number of banks included...................................................... 13,896 14,137 14,175 14,123 14,059 13,970 13,885 13,795 13,723 13,659 13,569 13,535

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
1940 1941 1942 1943 1944

June 29 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 30

Total assets............................................................................................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cash, balances with other banks, and cash items in process of collection ....................................................................................................... 36.4 37.2 34.3 33.6 31.0 28.9 24.9 24.2 22.2 22.0

Securities—tota l................................................................................................ 34.8 34.2 36.0 36.5 41.6 49.6 56.6 57.6 59.7 61.0

United States Government obligations, direct and guaranteed.................. 24.3 24.1 26.5 27.3 33.1 42.7 50.3 52.3 54.7 56.4

5.3 5.1 4.9 4.8 4.4 3.7 3.4 2.9 2.8 2.5

4.5 4.3 4.0 3.8 3.6 2.8 2.5 2.1 1.9 1.8

Corporate stocks............................................................................................... .7 .7 .6 .6 .5 .4 .4 •3 .3 .3

Loans, discounts, and overdrafts (including rediscounts).................... 25.9 26.0 27.2 27.6 25.3 19.8 17.0 16.8 16.9 15.9

Miscellaneous assets—to ta l............................................................................ 2.9 2.6 2.5 2.3 2.1 1.7 1.5 1.4 1.2 1.1

Bank premises owned, furniture and fixtures.............................................. 1.6 1.4 1.5 1.4 1.3 1.1 1.0 .9 .8 .7

Other real estate—direct and indirect............................................................ .8 .7 .6 .5 .4 .3 .2 .2 .1 .1

All other miscellaneous assets......................................................................... .5 .5 .4 .4 .4 .3 .3 .3 .3 .3

Total liabilities and capital accoun ts............................................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Deposits—total................................................................................................... 89.1 89.7 89.9 90.4 90.4 92.0 92.3 92.8 93.1 93.5

Demand deposits of individuals, partnerships, and corporations...............

Time deposits of individuals, partnerships, and corporations.....................

States and political subdivisions.....................................................................

44.1

22.5

5.5

45.8

21.2

5.4

47.1

20.8

5.5

47.6

19.7 

5.4

49.8

18.9 

5.5

49.3

16.5

4.6

52.1

16.5

4.6

52.1

16.5

4.2

46.7

16.8 

3.9

47.6

17.4

3.7

United States Government............................................................................. 1.2 .9 .9 2.3 2.3 8.6 7.6 9.0 15.4 14.8

Postal savings.................................................................................................... .1 .1 .1 .1 .1

Interbank........................................................................................................... 14.9 14.9 14.4 13.9 12.8 11.7 10.4 9.5 9.0 9.0

Certified and officers’ checks, cash letters of credit, etc.............................. .8 1.4 1.1 1.4 1.0 1.3 1.1 1.5 1.3 1.0

Miscellaneous liabilities—total.....................................................................

Rediscounts and other borrowed money........................................................

.8 .8 .8 .7 .8 .6 .6 .6 .6

.1

.6

.1

All other miscellaneous liabilities.................................................................... .8 .8 .8 .7 .8 .6 .6 .6 .5 .5

Capital accounts—total................................................................................... 10.1 9.5 9.3 8.9 8.8 7.4 7.1 6.6 6.3 5.9

Capital stock, notes, and debentures............................................................. 4.4 4.1 3.9 3.7 3.6 3.0 2.8 2.6 2.4 2.2

Surplus............................................................................................................... 3.8 3.6 3.6 3.5 3.5 2.9 2.8 2.7 2.6 2.5

Undivided profits, including all other capital accounts............................... 1.9 1.8 1.8 1.7 1.7 1.5 1.5 1.3 1.3 1.2

Number of banks included...................................................................................... 13,480 13,438 13,423 13,427 13,403 13,347 13,302 13,274 13,269 13,268

1 Includes direct only prior to December 31, 1938.

2 Includes circulating notes outstanding.

COASSETS AND LIABILITIES OF OPERATING BANKS

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
CO

to

E x a m in e r s ' E v a l u a t io n of In su r e d C o m m e rc ial B a n k s

Table 109. Examiners’ appraisal of assets, liabilities, and capital of insured commercial 

banks examined in 1939-1944

Table 110. Examiners’ appraisal of assets, liabilities, and capital of insured commercial 

banks examined in 1944

Banks grouped according to amount of deposits

The tables in this section present a summary of the 

evaluation of bank assets and liabilities made by examiners of the Federal supervisory agencies. Since bank 

examinations are made at various dates during the year, 

these tables differ from those in the previous sections, 

which are based on reports submitted by the banks for 

specified dates. These tables have been prepared from 

reports of examination available during the year and do 

not cover precisely the banks examined in that year. 

The figures for 1944 include 12,945 insured commercial 

banks operating at the close of the year and 38 banks

appraised value of assets regarded as suitable for bank 

investment; and (2) substandard, which represents the 

appraised value of assets believed by the examiners to 

involve a substantial degree of risk, or to be otherwise 

undesirable for bank investment. For a description of the 

procedure followed in examiners’ evaluation of assets, see 

the Annual Report of the Corporation for 1938, pages 

61-78.

Appraised value of United States Government obligations exceeds book value because the excess of redemption 

value of United States Savings Bonds over book value is

FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
which ceased operations or were taken over by other banks 

during the year. Figures for 307 insured banks operating 

at the close of the year were not included in the tabulations: 10 because they were not engaged in deposit 

banking, and 297 because reports of examination were, 

for various reasons, not available for tabulation. For 

252 banks the figures are derived from reports of examination made in the last three months of 1943.

Evaluation of Assets

Book value of assets is the net value, after deduction 

of valuation and premium allowances, at which the assets 

are carried on the books of the banks at the time of 

examination.

Assets not on the books represent the determinable 

sound value of assets which are not included in the bank's 

statement of assets or are carried at nominal values.

Examiners’ deductions from total assets represent 

the difference between the appraised value and book 

value of assets shown on the books.

Appraised value of total assets represents the value 

of all assets as determined by examiners and is segregated 

into two groups: (1) not criticized, which represents the

greater than the examiners' deductions of unamortized 

premiums on other United States Government bonds 

purchased above par. Appraised value of other securities 

and of loans and discounts do not include assets not 

shown on the books. Assets not on the books, other than 

United States Government obligations, are included in 

the appraised value of fixed and miscellaneous assets.

Evaluation of Liabilities and Capital

Adjusted liabilities include all liabilities shown on 

the books and such others as have been determined by 

the examiners.

Book value of capital accounts refers to the net 

worth or equity of the stockholders (including holders 

of capital notes and debentures) shown on the books at 

the time of examination.

Adjusted capital accounts equal book value of total 

capital accounts plus the value of assets not shown on 

the books, less examiners' deductions from total assets, 

and less liabilities not shown on the books. The term 

“adjusted capital accounts" corresponds to the term 

“net sound capital” used in the Annual Reports of the 

Corporation for the years 1939-1943.

EXAMINERS’ EVALUATION OF INSURED COMMERCIAL BANKS 133

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CO

4^

Table 109. E x a m in e r s ’ A p p r a is a l o f A s s e t s , L i a b ilit ie s , a n d C a p it a l o f I n s u r e d C o m m e r c ia l B a n k s E x a m in e d in 1939-1944

(Amounts in thousands of dollars)

Asset, liability or capital item 1939 1940 1941 1942 1943 1944

Total assets—book value.................................................................................... 58,254,425 65,184,983 71,697,320 80,449,956 102,021,738 118,843,675

Assets not on the books...................................................................................... 38,996 36,777 19,851 20,089 26,346 20,897

Examiners’ deductions........................................................................................ 340,697 255,876 174,037 145,741 97,144 54,193

Appraised value................................................................................................... 57,952,724 64,965,884 71,543,134 80,324,304 101,950,940

100,690,81+3

118,810,379

51+,982,653 62,1+13,890 69,512,512 78,610,078

1,711+, 226

117,981+,985

Substandard...................................................................................................... 2,970,071 2,552,1+91+ 2,030,622 1,260,097 825,391+

Cash and due from banks................................................................................. 18,643,164 23,308,292 24,107,119 24,618,882 25,342,868 26,036,187

U. S. Government obligations—book value.................................................

Appraised value1.................................................................................................. 8 8 8

26,799,729

26,807,855

50,067,210

50,073,639

65,089,147

65,096,303

Other securities—book value............................................................................ 221,315,369 222,758,101 225,759,640 6,682,798 6,055,350 5,805,695

Appraised value................................................................................................... 221,234,173 222,698,345 225,722,984 6,651,951 6,040,897 5,800,937

Not criticized..................................................................................................... 220,027,268 221,659,1+91 *21+,970,1+12 6,031+,558 5,578,71+3 5,1+99,037

Substandard...................................................................................................... 1,206,905 1,038,851+ 752,572 617,393 1+62,151+ 301,900

Loans and discounts—book value................................................................... 16,055,860 17,037,342 19,544,145 20,136,352 18,290,697 19,562,561

Appraised value................................................................................................... 15,898,191 16,924,352 19,467,422 20,071,927 18,251,118 19,539,481

Not criticized..................................................................................................... 11+,669,527 15,870,628 18,618,309 19,303,969 17,710,001 19,180,11+1+

Substandard...................................................................................................... 1,228,661, 1,053,721+ 81+9,113 767,958 51+1,117 359,337

Fixed and miscellaneous assets—book value............................................... 2,240,032 2,081,248 2,286,416 2,212,195 2,265,613 2,350,085

Appraised value................................................................................................... 2,177,196 2,034,895 2,245,609 2,173,689 2,242,418 2,337,471

Not criticized..................................................................................................... 1,61+2,691+ 1,571+,979

1+59,916

1,816,672 1,81+1+,811+

328,875

1,985,592 2,173,311+

Substandard...................................................................................................... 531>,5 02 1+28,937 256,826 161+,157

Total liabilities—book value............................................................................. 51,781,865 58,627,148 65,012,512 73,529,826 94,882,516 111,242,503

50,976,656 57,919,547 64,218,740 72,755,007 94,087,113 110,177,295

Other liabilities—book value.............................................................................. 805,209 707,601 793,772 774,819 795,403 1,065,208

Liabilities not on the books................................................................................ 10,436 12,927 6,084 7,362 4,491 7,563

Adjusted total liabilities..................................................................................... 51,792,301 58,640,075 65,018,596 73,537,188 94,887,007 111,250,066

Total capital accounts—book value............................................................... 6,472,560 6,557,835 6,684,808 6,920,130 7,139,222 7,601,172

Assets not on the books...................................................................................... 38,996 36,777

255,876

19,851 20,089 26,346 20,897

Examiners’ deductions from total assets.......................................................... 340,697 174,037 145,741 97,144 54,193

Liabilities not on the books................................................................................ 10,436 12,927 6,084 7,362 4,491 7,563

Adjusted capital accounts.................................................................................. 6,160,423 6,325,809 6,524,538 6,787,116 7,063,933 7,560,313

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Adjusted capital accounts per $100 of—

Appraised value of total assets....................

Book capital...................................................

Substandard assets per $100 of—

Appraised value of total assets. . . . 

Adjusted capital accounts..............

Substandard loans and discounts per $100 of—

Appraised value of loans and discounts...................

$10.63

95.18

5.12

48.21

7.73

$9.74

96.46

3.93

40.35

6.23

$9.12

97.60

2.84

31.12

4.36

$8.45

98.08

2.13

25.26

3.83

$6.93

98.95

1.24

17.84

2.9

$6.36

99.46

.69

10.92

1.84

Number of banks. 13,505 13,437 13,308 13,303 13,207 12,983

1 Appraised value is in excess of book value due to the excess of redemption value of U. S. Savings Bonds not shown on the books over examiners’ deductions of unamortized 

premiums on U. S. Government obligations purchased above par.

2 Prior to 1942 U. S. Government obligations not available separately, included under other securities.

EXAMINERS’ EVALUATION OP INSURED COMMERCIAL BANKS 135

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COOi

BANKS GROUPED ACCORDING TO AMOUNT OF DEPOSITS 

(Amounts in thousands of dollars)

T a b le 110. EXAMINERS’ APPRAISAL OF ASSETS, LIABILITIES, AND CAPITAL OF INSURED COMMERCIAL BANKS EXAMINED IN 1944

Asset, liability or capital item

Banks with deposits of—

All

banks $250,000 $250,000 $500,000 $1,000,000 $2,000,000 $5,000,000 $10,000,000 More than

Af 1 DQO U1 1COD to to to to to to $50,000,000

$500,000 $1,000,000 $2,000,000 $5,000,000 $10,000,000 $50,000,000

118,843,675 53,777 555,719 2,324,557 5,298,445 9,885,833 8,121,511 17,851,335 74,752,498

20,897 40 469 1,701 2,744 2,807 1,557 3,112 8,467

54,193 57 502 1,406 3,556 7,617 5,404 13,417 22,234

118,810,379 53,760 555,686 2,324,852 5,297,633 9,881,023 8,117,664 17,841,030 74,738,731

117,98^,985 52,820 548,363 2,301,135 5,245,057 9,776,597 8,038,280 17,680,274 74,342,459

825,394 940 7,323 23,717 52,576 104,426 79,384 160,756 396,272

26,036,187 22,440 200,549 747,529 1,543,449 2,597,352 1,935,285 4,072,948 14,916,635

65,089,147 16,124 209,365 1,009,900 2,468,966 4,900,364 4,351,255 9,925,487 42,207,686

65,096,303 16,151 209,694 1,011,353 2,471,132 4,902,412 4,351,956 9,925,857 42,207,748

5,805,695 1,898 23,390 121,706 318,016 710,094 559,668 1,011,901 3,059,022

5,800,937 1,893 23,370 121,590 317,701 709,460 558,950 1,011,245 3,056,728

5,499,037 1,690 21,497 115,455 304,300 680,303 536,181 965,209 2,874,402

301,900 203 1,873 6,135 13,401 29,157 22,769 46,036 182,326

19,562,561 12,513 116,383 421,853 904,539 1,542,601 1,152,740 2,515,380 12,896,552

19,539,481 12,482 116,047 420,951 902,478 1,538,908 1,150,099 2,509,166 12,889,350

19,180,144 11,889 111,141 405,252 869,790 1,480,541 1,108,232 2,437,274 12,756,025

359,337 593 4,906 15,699 32,688 58,367 41,867 71,892 133,325

2,350,085 802 6,032 23,569 63,475 135,422 122,563 325,619 1,672,603

2,337,471 794 6,026 23,429 62,873 132,891 121,374 321,814 1,668,270

2,173,314 650 5,482 21,546 56,386 115,989 106,626 278,986 1,587,649

164,157 144 544 1,883 6,487 16,902 14,748 42,828 80,621

111,242,503 46,208 499,767 2,136,012 4,903,583 9,169,727 7,559,347 16,704,103 70,223,756

110,177,295 46,037 498,687 2,132,185 4,895,176 9,145,860 7,535,770 16,612,289 69,311,291

1,065,208 171 1,080 3,827 8,407 23,867 23,577 91,814 912,465

7,563 12 60 138 256 462 200 2,427 4,008

111,250,066 46,220 499,827 2,136,150 4,903,839 9,170,189 7,559,547 16,706,530 70,227,764

Total assets—book value...............................

Assets not on the books.................................

Examiners’ deductions....................................

Appraised value...............................................

Not criticized.................................................

Substandard..................................................

Gash and due from banks.............................

U. S. Government obligations—book value

Appraised value1.............................................

Other securities— book value.......................

Appraised value...............................................

Not criticized.................................................

Substandard..................................................

Loans and discounts—book value..............

Appraised value...............................................

Not criticized.................................................

Substandard..................................................

Fixed and miscellaneous assets—book value

Appraised value.............................................

Not criticized...............................................

Substandard................................................

Total liabilities—book value......................

Total deposits................................................

Other liabilities—book value.......................

Liabilities not on the books.........................

Adjusted total liabilities...............................

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Total capital accounts—book value............

Assets not on the books.................................

Examiners' deductions from total assets.......

Liabilities not on the books...........................

Adjusted capital accounts...............................

7,601,172

20,897

54,198

7,563

7,560,313

7,569

40

57

12

7,540

55,952

469

502

60

55,859

188,545

1,701

1,406

138

188,702

394,862

2,744

3,556

256

393,794

716,106

2,807

7,617

462

710,834

562,164

1,557

5,404

200

558,117

1,147,232

3,112

13,417

2,427

1,134,500

4,528,742

8,467

22,234

4,008

4,510,967

Adjusted capital accounts per $100 of—

Appraised value of total assets.......................

Book capital.................................................

$6.36

99.46

$14.03

99.62

$10.05

99.83

$8.12

100.08

$7.43

99.73

$7.19

99.26

$6.88

99.28

$6.36

98.89

$6.04

99.61

Substandard assets per $100 of—

Appraised value of total assets.......................

Adjusted capital accounts...............................

.69

10.92

1.75

12.47

1.32

13.11

1.02

12.57

.99

13.35

1.06

14.69

.98

14.22

.90

14.17

.53

8.78

Substandard loans and discounts per 

$100 of—

Appraised value of loans and discounts......... 1.84 4.75 4.23 3.73 3.62 3.79 3.64 2.87 1.03

Number of banks.............................................. 12,983 241 1,297 2,888 3,423 2,950 1,101 834 249

1 Appraised value is in excess of book value due to the excess of redemption value of U. S. Savings Bonds not shown on the books over the examiners’ deductions of unamortized premiums 011 U. S. Government bonds purchased above par.

EXAMINERS’ EVALUATION OF INSURED COMMERCIAL BANKS 137

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Federal Reserve Bank of St. Louis
Table 111. 

Table 112. 

Table 113.

E arn in g s, Expenses, and D ividends op Insured Banks

Earnings, expenses, and dividends of insured banks, 1944 

By class of bank

Ratios of earnings, expenses, and dividends of insured banks, 1944 

By class of bank

Earnings, expenses, and dividends of insured commercial banks operating 

throughout 1944

Banks grouped according to amount of deposits

Reports of earnings, expenses, and dividends are 

submitted to the Federal supervisory agencies on either 

a cash or an accrual basis. This year income taxes are 

shown separately, for the first time, for all classes of 

insured banks.

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Earnings data are included for all insured banks operating at the end of the year. Earnings for national banks 

reporting for the first half of the year only are also included.

Averages of assets and liabilities are based upon the 

beginning, middle, and year-end call report data and 

include figures for banks which reported on one or two 

call dates only. Consequently, the assets and liability 

averages are not strictly comparable with the earnings 

data, but the differences are not large enough to affect 

the totals significantly. Some further incomparability is 

also introduced by shifts between classes of banks during 

the year.

Sources o f data:

National banks and State banks not members of the 

Federal Reserve System in the District of Columbia: 

Office of the Comptroller of the Currency.

State banks members of the Federal Reserve System: 

Board of Governors of the Federal Reserve System.

Other insured banks: Federal Deposit Insurance 

Corporation.

EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED BANKS 139

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Federal Reserve Bank of St. Louis
BY CLASS OF BANK 

(Amounts in thousands of dollars)

T a b le 111. EARNINGS, EXPENSES, AND DIVIDENDS OP INSURED BANKS, 1944

Insured commercial banks

Insured

mutual

savings

banks1

Insured commercial banks

Total

Members F. R. System Not 

members 

F. R.

System

Operating 

throughout 

the year

Operating 

legs than 

full year2

National State

2,214,905 1,201,935 671,527 341,443 295,709 2,206,692 8,213

Interest and dividends on securities..................................... 1,090,253 629,920 329,700 130,633 127,550 1,087,473 2,780

Interest and discount on loansf............................................. 680,708 359,067 189,084 132,557 141,262 679,260 1,448

Service ch&rges find other fees on bctnks’ lo&ns « . .. 17,320

107,375

8,588

59,931

6,309

25,569

2,423

21,875

17,301 19

Service charges on deposit accounts................................

Other service charges, commissions, fees, and collection

538

107,125 250

and exchange charges..................................................... 78,485 35,064 18,138 25,283 78,234 251

Trust department .. ...................................... 112,486

128,278

37,387 66,944 8,155 109,659 2,827

Other current operating earnings......................................... 71,978 35,783 20,517 26,359 127,640 638

Current operating expenses—tota l.................................... 1,356,680 722,285 404,206 230,189 86,575 1,350,760 5,920

240,354

386,346

121,873 65,595 52,886 10,093 239,102 1,252

Salaries and wages—employees.......................................

Fees paid to directors and members of executive, dis207,821 129,592 48,933 20,658 384,706 1,640

count, and other committees......................................... 12,907 6,377 3,135 3,395 1,903 12,842 65

Interest on time and savings deposits.................................. 186,773 96,807 47,168 42,798 (*) 186,422 351

Interest and discount on borrowed money.......................... 1,112

97,307

452 515 145 1,101 11

Taxes other than on net income...........................................

Recurring depreciation on banking house, furniture and

53,800 29,035 14,472 14,838 96,926 381

fixtures............................................................................. 41,845 24,404 10,531 6,910 3,359 41,778 67

Other current operating expenses......................................... 390,036 210,751 118,635 60,650 35,724 387,883 2,153

Net current operating earnings.......................................... 858,225 479,650 267,321 111,254 209,134 855,932 2,293

Recoveries and profits—total............................................... 361,726 193,870 124,220 43,636 101,473 360,666 1,060

92,778 50,290 32,521 9,967 31,423 92,683 95

Profits on securities sold or redeemed.................................. 129,834 68,846 47,406 13,582 30,677 129,598 236

84,224 50,240 22,300 11,684 14,763 84,069 155

54,890 24,494 21,993 8,403 24,610 54,316 574

265,881 142,418 89,759 33,704 113,691 265,438 443

On securities............................................................................ 110,439 67,556 29,587 13,296 17,625 110,386 53

70,090 41,023 19,260 9,807 68,179 70,001 89

85,352 33,839 40,912 10,601 27,887 85,051 301

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Non-operating profit.............................................................. 95,845 1 51,452 34,461 9,932 -12,218 95,228 617

Net profits before income taxes.......................................... 954,070 531,102 301,782 121,186 196,916 951,160 2,910

Taxes on net income—total.................................................

Federal.....................................................................................

202,821

187,032

15,789

120,431

111,675

8,756

63,284

57,461

5,823

19,106

17,896

1,210

122 202,071

186,342

15,729

750

690

State........................................................................................ 122 60

Net profits after taxes............................................................ 751,249 410,671 238,498 102,080 196,794 749,089 2,160

Dividends and interest on capital—total........................

Dividends declared on preferred stock and interest paid

on capital notes and debentures...................................

Cash dividends declared on common stock........................

253,193

13,645

239,548

144,001

5,294

138,707

82,000

4,392

77,608

27,192

3,959

23,233

132,912

482

*132,430

252,079

13,635

238,444

1,114

10

1,104

Net additions to capital from profits............................... 498,056 266,670 156,498 74,888 63,882 497,010 1,046

Average assets and liabilities5

Assets—total............................................................................ 123,168,863

28,042,727

67,231,161

6,088,482

20,310,112

1,496,381

70,378,946

16,528,328

38,665,434

3,447,852

10,936,478

800,854

38,529,099

7,951,948

21,652,390

1,682,079

6,743,473

499,209

14,260,818

3,562,451

6,913,337

958,551

2,630,161

196,318

9,164,873

449,751

4,723,004

628,821

3,115,939

247,358

Cash and due from banks.....................................................

U. S. Government obligations..............................................

Other securities.......................................................................

Loans and discounts..............................................................

All other assets.......................................................................

Liabilities and capital—total..............................................

Total deposits.........................................................................

123,168,863

114,682,390 

9S ,267,11k

21,1*15,276

768,280 

7,718,193

70,378,946

65,801,156 

5 k,293,819

11,507,337

472,607 

4,105,183

38,529,099

35,672,528

29,992,910

5,679,618

249,974

2,606,597

14,260,818

13,208,706 

8,980,385

k,228,321

45,699 

1,006,413

9,164.873

8,280,998 Demand deposits..................................................................

Time and savings deposits.................................................. 8,280,998

23,974

859,901

Borrowings and other liabilities...........................................

Total capital accounts...........................................................

Number of active officers, December 30.................................

Number of other employees, December 30.............................

56,494

229,377

26,436 

1 121,926

11,247

71,336

18,811

36,115

1,276

9,719

56,146

228,067

348

1,310

Number of banks, December 30.............................................. 13,268 5,025 1,786 6,457 192 13,177 91

1 Includes 3 mutual savings banks, members of the Federal Reserve System.

* Includes banks operating less than full year and trust companies not engaged in deposit banking.

* Interest and dividends paid depositors of mutual savings banks are shown as a deduction from net profits.

4 Interest and dividends paid depositors. See footnote 3.

6 Averages of figures reported at beginning, middle, and end of year.

N o t e : Minus (-) indicates non-operating loss.

Back figures—See the Annual Report for 1943, pp. 96-97, and earlier reports.

EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED BANKS 141

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Federal Reserve Bank of St. Louis
Table 112. R atios of E arnings, E xpen ses, and D ividends of I nsured B a n k s, 1944

BY CLASS OF BANK

Insured commercial banks

Insured

mutual

savings

Total banks1

Members F. R. System Not 

members 

F. R. 

National State System

Am ounts per $100 of current operating earnings 

Current operating earnings—to ta l........................................................................................... $100.00 $100.00 $100.00 $100.00 $100.00

Interest and. dividends on securities............................................................................................ 49.22 52.41 49.10 38.26 43.13

Income on loans ....................................................................................................................... 31.52 30.59 29.09 39.53 47.77

Service charges on deposit accounts............................................................................................ 4.85 4.99 3.81 6.41

Other current operating earnings................................................................................................. 14.41 12.01 18.00 15.80 9.10

Current operating expenses—tota l............................................................................................ 61.25 60.09 60.19 67.42 29.28

Salaries, wages, and fees............................................................... .............................................. 28.88 27.96 29.53 30.82 11.04

Interest on time and savings deposits......................................................................................... 8.43 8.05 7.02 12.53 (a)

Other current operating expenses................................................................................................. 23.94 24.08 23.64 24.07 18.24

Net current operating earnings................................................................................................ 38.75 39.91 39.81 32.58 70.72

Am ounts per $100 of total assets*

Current operating earnings—total................................................................................................... 1.80 1.71 1.74 2.39 3.23

Current operating expenses—total................................................................................... 1.10 1.03 1.05 1.61 .95

Net current operating earnings........................................................................................................ .70 .68 .69 .78 2.28

Recoveries and profits—total ........................................................................................................ .29 .27 .32 .31 1.11

Losses and charge-offs—total ......................................................................................................... .22 .20 .23 .24 1.24

Net profits before income taxes....................................................................................................... .77 .75 .78 .85 2.15

Net profits after income taxes .......................................................... ........................................... .61 .58 .62 .72 2.15

Am ounts per $100 of total capital accounts*

Net current operating earnings......................................................................................... . 11.12 11.68 10.26 11.05 24.32

Recoveries and profits—total .............................................................................. .......................... 4.69 4.72 4.76 4.34 11.80

Losses and charge-offs—total........................................................................................................... 3.45 3.47 3.44 3.35 13.22

Net profits before income taxes .................................................................................................... 12.36 12.93 11.58 12.04 22.90

Income taxes on net income............................................................................................................ 2.63 2.93 2.43 1.90 .01

Net profits after income taxes.................................................................................................... 9.73 10.00 9.15 10.14 22.89

Cash dividends declared.................................................................... . ........................................... 3.28 3.51 3.15 2.70 <15.46

Net additions to capital from profits............................................................................................... 6.45 6.49 6.00 7.44 7.43

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Special ratios3

Income on loans per $100 of loans.......................... 3.44

1.49

.12

3.36

1.50

.11

.84

2.90 5.13 A KQ.

Income on securities per $100 of securities................................. 1.41

.09

.83

r.66

.24

1.01

4*0o

2,38 Service charges per $100 of demand deposits.......................

Interest paid per $100 of time and savings deposits..................... .87 \ J

Assets and liabilities per $100 of total assets*

Assets—total.............................. 100.00

22.77

54.59

4.94

100.00 100.00 1AA AA

Cash and due from banks................................................. 23.48

54.94

4.90

20.64

JLuU.lfU

9A Q ft lUU.UUA Q1

U. S. Government securities............................................. 56.20

*S70

AR Aft 4.*71p;i Other securities.............................. 4.37 A 79 D-L .OO ftA Loans and discounts......................................... 16.49 15.54 17.50

O. i L* 1 ft A A 0 .ODfin All other assets.................................. 1.21 1.14 1.29

±o .44 1 3ft 04 .UU 

X too 9 7 A u • (U

Liabilities and capital—total............................... 100.00

93.11 

75.72

17.39

100.00 100.00 inn ah 1AA AA Total deposits............................................ 93.50 92.58

lvU»uu Q9 A9 lUv«UU Qfi Qft Demand deposits..................................... 77.15 1 ft 77.8 A 62.97

yu .uo

Time and savings deposits...................................

............... * * *

Borrowings and other liabilities.................................... '.62

6.27

10.00

.67

1U.7U

.65

29 >65Q9 yo.s 69ft Total capital accounts................................................... 5.83 6.77

• o£

7.06 9.38

Number of banks, December 30....................................... 13,268 5 025 1 786 a 0,40 i A^n 1 Q9 XV A

1 Includes 3 mutual savings banks, members of the Federal Reserve System.

* Interest and dividends paid depositors of mutual savings banks are shown as a deduction from net profits.

Asset and liability items are averages of figures reported at beginning, middle, and end of year.

4 Interest and dividends paid depositors. See footnote 2.

Back figures—See the Annual Report for 1943, pp. 98-99.

EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED BANKS 143

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Federal Reserve Bank of St. Louis
Table 113. EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT 1944

BANKS GROUPED ACCORDING TO AMOUNT OP DEPOSITS 

(Amounts in thousands of dollars)

Banks with deposits of—.2

Total1 $500,000

or

less

$500,000

to

$1,000,000

$1,000,000

to

$2,000,000

$2,000,000

to

$5,000,000

$5,000,000

to

$10,000,000

$10,000,000

to

$50,000,000

$50,000,000

to

$100,000,000

More than 

$100,000,000

Current operating earnings—to ta l............................ 2,206,692 11,524 45,555 111,570 218,126 183,276 381,787 154,321 1,100,533

1,087,473 3,054 15,583 42,665 93,825 86,179 181,877 77,502 586,788

Interest and discount on loans...................................... 679,260 5,758 20,275 46,726 83,099 61,348 114,718 43,321 304,015

Service charges and other fees on banks’ loans.......... 17,301 172 277 510 1,147 844 1,891 672 11,788

Service charges on deposit accounts............................. 107,125 632 2,994 7,804 16,306 13,880 26,538 8,020 30,951

Other service charges, commissions, fees, and col* 

lection and exchange charges................................ 78,234 1,508 4,923 9,607 13,031 7,882 12,487 4,256 24,540

109,659 39 29 268 1,574 3,518 16,103 8,515 79,613

Other current operating earnings.................................. 127,640 361 1,474 3,990 9,144 9,625 28,173 12,035 62,838

Current operating expenses—tota l............................ 1,350,760 8,062 30,807 74,352 145,821 123,805 257,695 99,084 611,134

239,102 3,201 11,042 23,015 35,962 24,561 42,282 15,232 83,807

Salaries and wages—employees..................................... 384,706 856 3,697 11,176 28,291 28,943 71,656 29,944 210,143

Fees paid to directors and members of executive, 

discount, and other committees............................ 12,842 156 665 1,586 2,769 1,808 2,603 693 2,562

Interest on time and savings deposits.......................... 186,422 957 4,818 13,111 27,085 23,750 41,893 13,369 61,439

Interest and discount on borrowed money.................. 1,101

96,926

4 11 26 46 45 224 99 646

Taxes other than on net income................................... 522 1,876 4,869 10,254 8,532 18,818 7,439 44,616

Recurring depreciation on banking house, furniture 

and fixtures.............................................................. 41,778 270 980 2,426 5,239 4,479 8,663 3,198

29,110

16,523

Other current operating expenses................................. 387,883 2,096 7,718 18,143 36,175 31,687 71,556 191,398

Net current operating earnings.................................. 855,932 3,462 14,748 37,218 72,305 59,471 124,092 55,237 489,399

Recoveries and profits—total....................................... 360,666 1,300 5,033 12,866 26,079 23,650 60,118 19,109 212,511

92,683 236 1,113 3,177 6,044 5,425 14,171 3,723 58,794

Profits on securities sold or redeemed.......................... 129,598 196 1,047 3,065 8,254 8,112 22,482 9,234 77,208

84,069 575 1,961 4,142 7,206 47,405

4,575

6,019 13,319 3,442

54,316 293 912 2,482 4,094 10,146 2,710 29,104

Losses and charge-offs—total...................................... 265,438 714 2,659 8,106 19,501 17,960 45,616 14,385 156,497

110,386 199 973 3,356

2,491

8,295 8,339 19,827 6,741 62,656

On loans........................................................................... 70,001 337 994 5,647

5,559

4,595 9,842 2,814 43,281

All other........................................................................... 85,051 178 692 2,259 5,026 15,947 4,830 50,560

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Non-operating profit.....................

Net profits before income taxes.

Taxes on net income— total.

Federal....................................

State........................................

Net profits after taxes................................................

Dividends and interest on capital—total................

Dividends declared on preferred stock and interest

paid on capital notes and debentures..............

Cash dividends declared on common stock.............

Net additions to capital from profits....................

Number of active officers, December 3 0 .... 

Number of other employees, December 30.

Number of banks, December i

95,228

951,160

202,071

186,342

15,729

749,089

252,079

13,635

238,444

497,010

56,146

228,067

13,177

586

4,048

600

558

42

3,448

1,003

102

901

2,445

2,019

1,120

1,105

2,374

17,122

2,246

2,094

152

14,876

4,187

325

3,862

10,689

5,780

4,320

2,578

4,760

41,978

5,551

5,185

366

36,427

10,337

807

9,530

26,090

9,636

10,791

1,520

6,578

78,883

10,634

10,042

592

68,249

19,658

1,390

18,268

48,591

11,984

22,262

3,378

5,690

65,161

10,010

9,450

560

55,151

15,495

1,398

14,097

39,656

6,357

20,023

1,328

14,502

138,594

25,810

24,465

1,345

112,784

32,596

2,904

29,692

80,188

7,885

45,145

980

4,724

59,961

13,768

12,949

819

46,193

13,956

2,373

11,583

32,237

2,363

18,150

129

56,014

545,413

133,452

121,599

11,853

411,961

154,847

4,336

150,511

257,114

10,122

106,256

159

1 This group of banks is the same as the group shown in Table 111 under the heading “ Operating throughout the year/* 

* Deposits are as of December 30, 1944.

EARNINGS, EXPENSES, AND DIVIDENDS OF INSURED BANKS 145

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Federal Reserve Bank of St. Louis
Table 114. Disbursements by the Federal Deposit Insurance Corporation to protect 

depositors; number and deposits of insured banks placed in receivership or 

merged with the financial aid of the Corporation, 1934-1944

Banks grouped by class of bank, year of disbursement, amount of deposits, and

State

Table 115. Assets and liabilities of insured banks placed in receivership and of insured 

banks merged with the financial aid of the Federal Deposit Insurance Corporation, 1934-1944

As shown by books of bank at date of closing

Table 116. Depositors and deposits of insured banks placed in receivership, 1934-1944 

As shown by books of FDIC, December SI, 194b

D epo sit I n su r a n c e D is b u r s e m e n t s

Table 117. Disbursements to protect depositors, recoveries, and losses by the Federal 

Deposit Insurance Corporation from insured banks placed in receivership or 

merged with the financial aid of the Corporation, 1934-1944 

As shown by books of FDIC, December SI, 191*1+

Disbursements by the Federal Deposit Insurance payment from the receiver because of their preferred

Corporation to protect depositors are made whenever status. Unpaid depositors are primarily those whose

insured banks because of financial difficulties are placed claims are disputed, and those whose claims although not

in receivership or are merged with the aid of the Corpora- filed are not yet legally barred from payment by FDIC.

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
tion. In receiverships the disbursement is the amount paid 

by the Corporation on insured deposits. In mergers the 

Corporation’s disbursement is the amount loaned to 

merging banks, or the price paid for assets purchased 

from them.

Depositors and deposits in insured banks placed in 

receivership have been grouped in Table 116 to show the 

ways in which depositors’ claims against these banks 

were met. Because the claim of a single depositor may 

be paid in several ways, the number of depositors cannot 

be correlated with the amount of deposits in the various 

categories as given in the table.

Depositors eligible for insurance protection are all 

depositors except those holding only accounts which were 

restricted or deferred prior to 1934, and those whose 

deposits were made after the termination of a bank’s 

insured status. Depositors not eligible for insurance

protection are those whose total accounts are thus excluded from insurance, and those whose accounts are 

barred from payment by FDIC because the accounts were 

not claimed before the expiration of the period set by law.

Depositors paid by FDIC are all those who receive 

any payment from the Corporation. Depositors fully

paid by other methods are those who receive no payment from FDIC, but do receive full compensation for 

their accounts by offset, by sale of security, or by direct

Insured deposits are the deposits for which FDIC is 

legally liable. This includes the net amount due each 

depositor after deductions of offset, of amounts in excess 

of $5,000, and of amounts not eligible for insurance 

protection as described in preceding paragraphs. Secured

deposits are those covered by pledge of specific assets. 

Preferred deposits are those which, under Federal or 

State law, are paid from proceeds of the liquidation before 

common claims against the bank are met. Deposits subject to offset are those met by claims which the bank 

holds against the depositor. Deposits uninsured, unsecured, not preferred, and not subject to offset

are those not covered by insurance or other specific 

arrangement. They may be paid in full, however, by the 

receiver as common claims.

Deposits of insured banks placed in receivership as 

given in tables with data taken from the books of FDIC 

at the end of the year, will differ from the deposits in 

tables with data taken from books of bank at date of 

closing. This is because the former include deposits 

discovered or reclassified after the date of a bank’s 

closing.

Sources of data:

Books of bank at date of closing; and books of FDIC, 

December 31,1944.

DEPOSIT INSURANCE DISBURSEMENTS 147

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Federal Reserve Bank of St. Louis
Table 114. DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION TO PROTECT DEPOSITORS; NUMBER AND DEPOSITS

op In su red B an ks P la c e d in R eceiversh ip o r M erg e d w ith th e F in a n c ia l A id o f th e C o rp oratio n , 1934-1944

BANKS GROUPED BY CLASS OF BANK, YEAR OF DISBURSEMENT, AMOUNT OF DEPOSITS, AND STATE

Disbursement by FDIC 

(in thousands of dollars)

Total Receiverships1 Mergers1

Number of banks involving 

disbursement

Total Receiverships Mergers

Deposits (in thousands of dollars)

Total Receiverships1 Mergers2

All banks.

Class of bank

National banks....................................

State banks members F. R. System. 

Banks not members F. R. System...

Calendar year

193 4 

193 5 

193 6 

193 7 

1938.

1939.

1940.

1941.

1942.

1943.

1944.

Banks with deposits of-

$100,000 or less......................

$100,000 to $250,000............

$250,000 to $500,000............

$500,000 to $1,000,000... 

$1,000,000 to $2,000,000. 

$2,000,000 to $5,000,000.

$5,000,000 to $10,000,000. . 

$10,000,000 to $50,000,000. 

More than $50,000,000. . . .

259,696

77,993

99,405

82,298

941

8,890

14,828

19,202

30,474 | 

67,792 

74,232 

23,878

10,824

7,137

1,498

4,956

12,852

14,323

24,011

26,545

42,317

20,135

114,557

86,979

14,787

20,928

51,264

941

6,025

8,055

12,045

9,082

26,184

4,895

12,276

1,612

5,465

399

4,309

11,542

10,210

13,878

8,961

12,409

172,717

63,206

78,477

31,034

25,670

2,865

6,773

7,157

21,392

41,608

69,337

11,602

9,212

1,672

1,099

647

1,310

4,113

10,133

17,584

29,908

20,135

88,887

397

65

20

312

9

25

69

75

74

60

43

15

20 I 

5

2 I

106

108

58

49

35

25

245

21

6

218

24

42

50

50

32

19

8

6

4

1

24

9

5

152 499,233

94,716

179,081

225,436

1,966

13,320

27,528

33,346

59,724

157,779

142,389

29,721

19,011

12,534

1,915

6,358

17,609

20,657

36,807

49,319

77,568

51,791

239,124

109,590

19,474

26,538

63,578

1,966

9,091

11,241

14,961

10,296

32,740

5,657

14,730

1,816

6,636

456

4,947

13,918

12,463

17,591

11,747

16,279

389,643

75,242

152,543

161,858

32,645

4,229

16,287

18,385

49,428

125,039

136,732

14,991

17,195

5,898

1,459

1,411

3,691

8,194

19,216

37,572

61,289

51,791

206,479

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
State

Alabama............

Arkansas............

California..........

Colorado............

Connecticut

Florida...............

Georgia..............

Illinois...............

Indiana..............

Iowa...................

Kansas...............

Kentucky..........

Louisiana..........

Maryland..........

Massachusetts..

Michigan...........

Minnesota.........

Mississippi........

Missouri............

Montana............

Nebraska...........

New Hampshire

New Jersey.......

New York.........

North Carolina.

North Dakota. .

Ohio...................

Oklahoma..........

Oregon...............

Pennsylvania. ..

South Carolina.. 

South Dakota. .

Tennessee..........

Texas.................

Vermont............

Virginia..............

Washington 

West Virginia... 

Wisconsin..........

237

841

861

8

1,236

300

862

3,273

4,334

1,462

974 I 

4,614 1 

668 I 

3,109 fl 

1,571 |

5,340 I 

640 8 

257 I 

4,920 I 

213 

469 1 

118 I 

79,240 I 

67,432 I 

1,448 |

2,649 I

1,610 I 

1,218 I

962 

47,386 |

135

2,411

1,278

2,512

3,444

2,887

935

1,458

6,384

94

841

1,236

203

845

1,220

3,091

385

482

3,329

668

735

139

640

257

4,335

186

469

25,097

10,834

1,156

1,387

1,610

1,133

10,121

135

2,388

1,164

2,468

3,258

511

1,458

5,096

143 

* 861

97

17

2,053

1,243

1,077

492

1,285

2,374

1,571

5,201

585

27

118

54,143

56,598

292

1,262

85

962

37,265

23

114

44

186

2,376

935

1,288

1 Data from books of FDIC, December 31, 1944.

2 Data from books of bank at date of closing.

2 1 1 529 101 428

5 5 1,168 1,168

1 1 1,078 1,078

1 1 8 8

2 2 1,526 1,526

2 1 1 491 217 274

8 7 1 1,027 998 29

14 6 8 6,409 1,637 4,772

18 15 3 9,710 3,932 5,778

6

3 3 5,516 498 5,018

9 5 4 1,233 539 694

22 18 4 7,950 3,953 3,997

3 3 1,652 1,652

5 2

3 4,569 828 3,741

2 2 3,019 3,019

7 3 4 12,404 160 12,244

5 5 818 818

3 3 334 334

45 34 11 7,001 5,116 1,885

4

3 1 298 215 83

4 4 538 538

1 1 296 296

37 11 26 184,511 30,916 153,595

25 3 22 138,826 13,286 125,540

6 2 4 2,290 1,420 870

29 18 11 3,830 1,552 2,278

2 2 2,345 2,345

7

5

2 2,226 1,659 567

1 1 1,114 1.114

25 8 17 67,430 14,340 53,090

1 1 136 136

23 22 1 2,988 2,862 126

12 8 4 1,943 1,621 322

17 16 1 3,318 3,241 77

3

2

1 3,725 3,375 350

6 3 3 4,735 629 4,106

1 1 1,538 1,538

3 3 2,006 2,006

30 20 10 8,698 5,964 2,734

DEPOSIT INSURANCE DISBURSEMENTS

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Federal Reserve Bank of St. Louis
Table 115. ASSETS AND LIABILITIES OF INSURED BANKS PLACED IN RECEIVERSHIP AND OF INSURED BANKS MERGED WITH

th e F in a n c ia l A id o f th e F e d e r a l D ep osit In su ra n ce C o rp oratio n , 1934-1944

AS SHOWN BY BOOKS OF BANK AT DATE OF CLOSING

Assets Liabilities and capital accounts

Cash and 

due from 

banks

U. S. Government 

obligations

Other

securities

Loans,

discounts,

and

overdrafts

Banking 

house, 

furniture & 

fixtures

Other

real

estate

Other

assets

Total

Total

deposits

Other

liabilities

R .F . C.

capital

Private

capital

stock

Other

capital

accounts1

Total $105,577,803 $74,923,118 $73,477,580 $229,247,826 $22,225,616 $59,539,990 $13,360,756 $578,352,689 $497,017,139 $11,468,774 $25,130,464 $37,145,961 $7,590,351

RECEI

Total

VERSHIPS

$22,620,382 $10,154,078 $15,946,562 $65,569,217 $5,375,616 $12,293,686 $8,330,507 $140,290,048 $107,374,564 $10,122,023 $5,896,246 $12,254,299 $4,642,916

1934

1935

1936

1937

185,056

1,974,181

2,194,712

2,238,648

603,519

698,440

902,215

1,293,683

273,638

510,479

1,955,104

2,307,696

1,329,865

6,842,116

6,454,624

11,107,699

79,365

459,055

459,700

486,995

120,319

242,274

734,874

837,966

69,565

1,597,403

273,559

1,010,689

2,661,327

12,323,948

12,974,788

19,283,376

1,951,992

8,700,485

11,039,098

14,715,286

104,963

2,111,886

93,695

1,132,758

90,000

223.000

788.000 

755,250

432,100

950,000

1,069,350

2,498,815

82,272

338,577

-15,355

181,267

1938

1939

1940

1941

1,610,297

3,329,557

1,018,215

6,462,157

451,570

1,052,424

452,574

3,493,431

2,215,638

4,855,519

1,519,677

1,810,346

6,574,061

21,839,422

3,314,762

5,398,218

412,911

1,845,901

694,900

91,311

2,125,022

7,221,558

435,526

106,615

530,408

3,781,385

523,899

449,458

13,919,907

43,925,766

7,959,553

17,811,536

10,124,255

32,557,805

5,599,438

14,627,158

1,213,354

4,695,820

455,788

298,526

1,052,900

2,249,996

422,750

195,500

1,059,200

2,775,001

1,045,533

1,582,000

470,198

1,647,144

436,044

1,108,352

1942

1943

1944

MERGJ

Total

1934

500,513

2,910,826

196,220

3RS

$82,957,421

119,650

968,872

117,700

$64,769,040

52,364

405,011

41,090

$57,531,018

777,953

1,846,467

84,030

$163,678,609

70,685

772,493

2,300

$16,850,000

55,222

414,310

25,030

63,677

5,434

$5,030,249

1,601,417

7,381,656

446,774

$438,062,641

1,379,526

6,274,311

405,210

1,520

13,582

131

81,750

32,500

4,600

140.000

675.000 

27,300

-1,379

386,263

9,533

$47,246,304 $389,642,575 $1,346,751 $19,234,218 $24,891,662 $2,947,435

1935

1936

1937

404,834

3,109,830

4,717,074

233,395

2,071,296

2,495,254

1,403,807

2,080,059

3,520,186

2,256,417

8,917,554

8,678,629

608,467

1,277,605

562,181

10,808

325,362

186,497

4,917,728

18,966,364

21,086,180

4,228,816

16,287,262

18,384,923

140 315,000 373,772

1,184,658

926,359

19,769

262,651

310,000

609,200

1,664,000

1,808,400

685,333

21,006

1938

1939

1940

1941

8,133,887

27,451,442

30,227,874

3,167,243

7,018,796

27,929,162

17,183,076

801,273

10,377,037

16,266,036

17,987,527

2,835,309

20,896,236

44,289,765

60,687,428

8,178,623

2,873,257

5,142,882

4,553,388

798,028

3,913,009

15,459,743

22,840,095

1,014,582

2,380,489

1,049,600

458,831

197,669

55,592,711

137,588,630

153,938,219

16,992,727

49,428,383

125,038,946

136,731,549

14,990,768

168,674

679,659

157,766

57,508

3,726,463

6,103,500

7,186,655

289,000

2,697,650

6,381,000

8,666,162

1,111,250

-428,459

-614,475

1,196,087

544,201

1942

1943

1944

4,159,617

1,216,987

368,633

3,547,766

2,903,771

585,251

2,275,392

555,383

230,282

7,731,137

1,675,734

367,086

759,861

274,331

1,824,586

15,844

67,428

354,362

34,523

32,108

20,652,721

6,676,573

1,650,788

17,195,146

5,897,691

1,459,091

584 913,400

96,000

1,748,200

300.000

200.000

795,391

382,882

-8,303

i Includes surplus, undivided profits, and reserve funds minus operating deficit, if any, as shown by books. Minus (-) indicates net operating deficit.

N o t e : One insured bank was placed in receivership and one was merged with the financial aid of FDIC during 1944. The Brownsville State Bank, Brownsville, Indiana, (Case 245) 

suspended operations on May 12, 1944, and was placed in receivership. The Indiana State banking authority was named receiver for this State bank which was not a member of the 

Federal Reserve System. The First National Bank of Susquehanna, Susquehanna, Pennsylvania, (Case 152) with 4,589 accounts, was merged with The First and Farmers National 

Bank and Trust Company, Montrose, Pennsylvania, on May 27, 1944. A disbursement of $1,098,842 was made by the Corporation in connection with this merger. Data for individual 

insured banks placed in receivership and for those merged with the financial aid of FDIC before 1944 are given in earlier annual reports.

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
T a b le 116. DEPOSITORS AND DEPOSITS OF INSURED BANKS PLACED IN RECEIVERSHIP, 1934-1944

AS SHOWN BY BOOKS OF FDIC, DECEMBER 31, 1944

Number of depositors Amount of deposits

Eligible for insurance protection Insured Uninsured, unsecured, 

not preferred, and not enhio/>f nffaot

Not eligible 

for 

insurance 

protection

Total

Paid by 

FDIC

Fully paid 

by other 

methods

Unpaid

Total

Total Paid Unpaid

Secured

and

preferred

Subject

to

offset In excess 

of

insurance

maximum

Other

Total 380,510 289,106 36,233 12,810 42,361 $109,590,072 $87,137,904 $86,979,228 $158,676 $4,983,028 $6,320,584 $9,784,177 $1,364,379

1934 15,545 11,262 937 2,761 585 1,966,373 944,764

6,028,994

941,008 3,756 831,832 91,005 30,607 68,165

1935 32,275 23,422 2,986 1,509 4,358 9,090,632 6,024,650 4,344 538,951 561,288 1,935,853 25,546

1936 41,831 30,924 4,677 22 6,208 11,240,970 8,055,590 8,055,563 27 659,381

1,140,812

660,363 1,048,034 817,602

1937 74,151 56,813 7,761 78 9,499 14,961,275 12,047,836 12,044,562 3,274 1,084,311 642,707 45,609

1938 43,700 31,765 7,390 20 4,525 10,296,261 9,087,499 9,082,444 5,055 340,557 526,183 252,043 89,979

1939 90,212 72,212 6,245 3,917 7,838 32,739,801 26,259,973 26,184,011 75,962 576,440 1,921,758 3,949,352

221,323

32,278

1940 20,671 15,681 2,937 8 2,045 5,656,748 4,895,745 4,894,723 1,022 182,441 341,818 15,421

1941 38,594 29,885 1,709 11 6,989 14,730,243 12,278,587 12,276,408 2,179 391,711 793,302 997,814 268,829

1942

1943

1944

5,717

16,914

900

4,210

12,173

759

562

933

96

631

3,808

45

314 1,816,180

6,635,864

455,725

1,613,939

5,519,353

405,624

1,612,049

5,464,979

398,831

1,890

54,374

6,793

59,824

261,079

80,906

244,334

15,316

60,561

611,098

34,785

950

N o t e : Only one insured bank was placed in receivership in 1944. For name of bank and other information see Note to Table 115. 

Back figures—See the Annual Report for 1943, p. 105, and earlier reports.

DEPOSIT INSURANCE DISBURSEMENTS

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or

to

Table 117. DISBURSEMENTS TO PROTECT DEPOSITORS, RECOVERIES, AND LOSSES BY THE FEDERAL DEPOSIT INSURANCE CORPORATION FROM

In su re d B an k s P la c e d in R eceiversh ip o r M erg e d w ith th e F in a n c ia l A id o f th e C o rp oratio n , 1934-1944

AS SHOWN BY BOOKS OF FDIC, DECEMBER 31, 1944 

(Amounts in thousands of dollars)

All banks placed in receivership or merged

Disbursement by FD IC .................................................

Receiverships...............................................................

Mergers........................................................................

Recoveries by FDIC......................................................

Receiverships...............................................................

Mergers........................................................................

Estimate of losses by FD IC ..........................................

Receiverships1..............................................................

Mergers........................................................................

Banks placed in receivership or merged—liquidation

terminated

Disbursement by FDIC.................................................

Receiverships...............................................................

Mergers........................................................................

Recoveries by FDIC......................................................

Receiverships...............................................................

Mergers........................................................................

Losses by F D IC .............................................................

Receiverships...............................................................

Mergers........................................................................

Banks placed in receivership or merged inTotal

7,771

7,411

360

1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944

$259,696 1 

86,979 f 

172,717 1

195,034

62,120

132,914

38,810

18,611

20,199

48,217

35,815

12,402

40,446

28,404

12,042

$941

941

208

208

521

521

429

429

$8,890

6,025

2,865

6,020

4,194

1,826

2,786

1,770

1,016

5.149

5.149

3.641

3.641

1.508

1.508

$14,828

8,055

6,773

12,123

6,548

5,575

2,635

1,471

1,164

7,393

6,921

472

5,881

5,475

406

1,512

1,446

66

$19,202

12,045

7,157

15,050

9,225

5,825

3,770

2,579

1,191

8,085

7,694

391

6,052

5,704

348

2,033

1,990

43

$30,474

9,082

21,392

25,466

7,710

17,756

2,892

1,214

1,678

8,489

5,977

2,512

7,650

5,324

2,326

839

653

186

$67,792

26,184

41,608

44,708

13,730

30,978

12,409

9,568

2,841

12,780

7,195

5,585

11,366

5,846

5,520

1,414

1,349

65

$74,232

4,895

69,337

54,636

3,407

51,229

11,167

653

10,514

2,743

1,264

1.479

2,621

1,142

1.479

122

122

$23,878

12,276

11,602

21,353

11,954

1,339

219

1,120

675

675

488

488

187

187

$10,824

1,612

9,212

9,076

1,243

7,833

917

292

625

2,382

419

1.963

2,318

355

1.963

64

64

$7,137

5,465

1,672

4,779

3,215

1,564

616

616

$1,498

399

1,099

1,130

201

929

71

21

50

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Banks placed in receivership or merged—liquidation 

active

Disbursement by FDIC.................................................

Receiverships...............................................................

Mergers........................................................................

Recoveries by FDIC......................................................

Receiverships...............................................................

Mergers........................................................................

Estimate of losses by F D IC.........................................

Receiverships1.............................................................

Mergers........................................................................

Number of banks.........................................................

Receiverships...................................................................

Mergers............................................................................

Liquidation terminated.................................................

Receiverships...............................................................

Mergers........................................................................

Liquidation active..........................................................

Receiverships...............................................................

211,479 420 3,741 7,435 11,117 21,985 55,012 71,489 23,203 8,442 7,137 1,498

51,164 420 876 1,134 4,351 3,105 18,989 3,631 11,601 1,193 5,465 399

160,315 2,865 6,301 6,766 18,880 36,023 67,858 11,602 7,249 1,672 1,099

154,588 264 2,379 6,242 8,998 17,816 33,342 52,015 20,865 6,758 4,779 1,130

33,716 264 553 1,073 3,521 2,386 7,884 2,265 11,466 888 3,215 201

120,872 1,826 5,169 5,477 15,430 25,458 49,750 9,399 5,870 1,564 929

31,039 116 1,278 1,123 1,737 2,053 10,995 11,045 1,152 853 616 71

11,200 116 262 25 589 561 8,219 531 32 228 616 21

19,839 1,016 1,098 1,148 1,492 2,776 10,514 1,120 625 50

397 9 25 69 75 74 60 43 15 20 5 2

245 9 24 42 50 50 32 19 8 6 4 1

152 1 27 25 24 28 24 7 14 1 1

230 7 18 52 47 54 32 13 2 5

176 7 18 39 38 42 20 8 2 2

54 13 9 12 12 5 3

167 2 7 17 28 20 28 30 13 15 5 2

69 2 6 3 12 8 12 11 6 4 4 1

98 1 14 16 12 16 19 7 11 1 1

1 Estimates of losses for banks placed in receivership are based on total insured deposits, unpaid as well i

are the amounts paid on insured deposits by December 31, 1944. For amounts unpaid on insured deposits sc

i paid. The disbursements in the receiverships as given in the table 

s Table 116, page 151.

CR

CODEPOSIT INSURANCE DISBURSEMENTS

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INDEX

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INDEX

Absorption of exchange charges. See Exchange charges, absorption of.

Absorptions, consolidations, and mergers:

Of insured banks, 1934-44. See Mergers of insured banks with financial 

aid of the Corporation, Terminations of insurance.

Of operating banks, 1944...............................................................................110-111

Adjusted capital account. See Capital of banks.

Adjusted liabilities. See Assets and liabilities of insured commercial banks, 

examiners’ appraisal.

Admissions to insurance:

Applications approved and disapproved....................................................... 23-24

By class of bank, 1944................................................................................... 110-111

Applications from banks:

For admission to insurance............ ................................................................. 23-24

For approval of assumption of deposit liabilities of other banks............... 24

For approval of capital retirement or reduction........................................... 24

For approval of establishment of branches................................................... 24

For approval of repayment of waived deposits............................................ 24

Appraised value of assets. See Assets and liabilities of insured commercial 

banks, examiners’ appraisal.

Assessments on insured banks for deposit insurance:

Amount.............................................................................................................. 28

Basis o f............................................................................................................... 7

By banks whose insured status has terminated............................................ 96

Asset insurance....................................................................................................... 12-14

Assets and liabilities of closed banks. See Receivership, insured banks 

placed in.

Assets and liabilities of insured commercial banks, examiners’ appraisal:

Banks examined in 1939-1944....................................................................... 134-135

Banks examined in 1944, grouped by amount of deposits......................... 136-137

Definitions of terms used:

Adjusted liabilities...................................................................................... 133

Appraised value........................................................................................... 133

Book value................................................................................................... 133

Examiners’ deductions............................................................................... 133

Substandard................................................................................................. 132

Uncriticized............................................................................................... 132-133

’ Sources of data.................................................................................................. 133

Assets and liabilities of operating banks (see also Assets and liabilities of 

insured commercial banks, examiners’ appraisal; Capital of banks; 

Deposits):

Acquired, 1940-1944......................................................................................... 55

All banks, June 30 and December 30, 1944................................................124, 125

Commercial banks, June 30 and December 30, 1944................................ 124, 125

Insured commercial banks:

Call dates, December 30, 1944, to December 31, 1943.......................... 126

Reports o f.................................................................................................... 24-25

Mutual savings banks, June 30 and December 30, 1944..........................124, 125

Noninsured banks, June 30 and December 30, 1944.................................124, 125

Sources of data........................................ ......................................................... 123

Types of assets, 1934-1944............................................................................... 35-37

Assets and liabilities of the Federal Deposit Insurance Corporation.............. 26-31

Page

157

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Assets purchased by the Federal Deposit Insurance Corporation:

From banks in receivership to facilitate liquidation.................................... 29

From banks merged with financial aid of the Corporation. See Mergers of 

insured banks with financial aid of the Corporation.

Liquidation o f.................................................................................................... 18

Assets of insured banks, quality of. See Assets and liabilities of insured 

commercial banks, examiners’ appraisal.

Assets pledged to secure bank obligations........................................................... 127

Bank supervision (see also Examinations of banks):

Activities of the Federal Deposit Insurance Corporation in 1944............. 22-24

State legislation regarding, during 1944...................................................... 102-106

Banking monopoly............................................................................................... 9, 10-11

Banking offices, establishment of:

Banks beginning operations, 1944.................................................................. 110

Branches, establishment approved by Corporation..................................... 24

Branches opened, 1944.....................................................................................24, 110

Banking offices, number of. See Class of bank, banking data presented by.

Banking practices. See Unsafe and unsound banking practices.

Banks beginning operations. See Banking offices, establishment of.

Banks ceasing operations, 1944............................................................................. 110

Banks closed because of financial difficulties (see also Mergers of insured banks 

with financial aid of the Corporation; Receiverships, insured 

banks placed in):

Depositors protected by the Federal Deposit Insurance Corporation:

Fully protected, in insured banks placed in receivership, or merged

with the financial aid of the Corporation.......................................... 14-16

Number o f ................................................................................................... 15

Number of, in insured banks merged with financial aid of the

Corporation........................................................................................... 15

Number of, in insured banks placed in receivership..............................15, 151

Insured banks placed in receivership or merged with financial aid of 

the Corporation:

Deposits protected................................................................................15-17, 151

Disbursements by the Corporation in connection with...................15-16, 151

Loss to depositors........................................................................................ 15, 17

Loss to Federal Deposit Insurance Corporation................................15,18, 19

Number and deposits of, 1934-1944..................................................15, 148-149

Suspensions:

Number, 1944................................................* ........................................... 110

Of banks charged with unsafe and unsound banking practices............ 23

Banks in financial difficulties (see also Banks closed because of financial 

difficulties):

Methods of handling under existing law........................................................ 15-16

Recommendations of the Corporation............................................................ 9-10

Banks, number of. See Number of operating banks and branches.

Banks operating branches. See Banking offices, establishment of; Number 

of operating banks and branches.

Board of Directors of the Federal Deposit Insurance Corporation...............iv, v, 25

Board of Governors of the Federal Reserve System:

Actions on absorption of exchange charges and enforcement of par clearance. See Exchange charges, absorption of.

Data obtained from................................................................... 22, 109, 123, 139

Review of examination reports submitted by......................................... 22

158 FEDERAL DEPOSIT INSURANCE CORPORATION

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INDEX 159

Page

Book value of bank assets and liabilities. See Assets and liabilities of insured 

commercial banks, examiners’ appraisal; Assets and liabilities of 

operating banks; Capital of banks.

Branches. See Banking offices, establishment of; Classification of banks and 

banking offices; Number of operating banks and branches.

Capital of banks (see also Assets and liabilities of operating banks; Earnings,

expenses, and dividends of insured banks):

Adequacy o f.................................................................................................. 11, 42-44

Definition of terms used in examiners’ appraisal of:

Adjusted capital accounts.......................................................................... 133

Book value of capital accounts................................................................. 133

Net sound capital....................................................................................... 133

Examiners’ appraisal, insured commercial banks, 1944:

Grouped by adjusted capital ratio........................................................... 44

Grouped by amount of deposits............................................................. 136-137

Examiners’ appraisal, insured commercial banks, 1939-1944 ....... ............ 134

Of insured banks placed in receivership........................................................ 150

Ratios to assets:

Insured banks, 1944.........................................................................137, 143, 145

Insured commercial banks, by years....................................................... 43, 135

Retirements approved by the Corporation.................................................. 24

Total capital accounts:

Commercial and mutual savings banks, insured and noninsured,

June 30 and December 30, 1944.......................................................124, 125

Insured commercial banks.................................................. 42-43, 127, 134-137

Unsafe and unsound practices......................................................................... 22-23

Charge-offs on bank assets. See Earnings, expenses, and dividends of insured 

banks.

Class of bank, banking data presented by:

Admissions to and terminations of insurance............................................. 110-111

Assets and liabilities.......................................................................................124-125

Banks which suspended operations................................................................ 148

Deposits.......................................................................................... 120-121, 124, 125

Earnings of insured banks.......................................................................44, 140-141

Insured banks placed in receivership or merged with financial aid of the

Corporation............................................................................................ 148

Number of banking offices.............................................................110-111, 112-119

Number of banks............................................................ 110-111, 112-119, 120-121

Classification of banks and banking offices.......................................................108, 109

Closed banks. See Banks ceasing operations; Banks closed because of financial 

difficulties; Receivership, insured banks placed in.

Commercial banks. See Assets and liabilities of insured commercial banks, 

examiners’ appraisal; Assets and liabilities of operating banks; 

Capital of banks; Deposits; Earnings, expenses, and dividends of 

insured banks; Number of operating banks and branches.

Comptroller of the Currency:

Data obtained from.........................................................................22, 109, 123, 139

Director of Corporation.................................................................................iv, v, 25

Examination of insured banks by................................................................... 22

Review of reports of examinations made by................................................. 22

Consolidations. See Absorptions, consolidations, and mergers.

Consumer loans. See Instalment loans.

Criticized assets. See Assets and liabilities of insured commercial banks, 

examiners’ appraisal.

Currency, amount of. See Money supply, 1939-1944.

Demand deposits. See Assets and liabilities of operating banks; Deposits, 

classified by type of deposit.

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160 FEDERAL DEPOSIT INSURANCE CORPORATION

Page

Deposit Insurance National Banks...................................................................... 9-10

Depositors (see also Insurance coverage):

Claims against closed insured banks. See Receivership, insured banks 

placed in.

Losses. See Banks closed because of financial difficulties; Receivership, 

insured banks placed in.

Protected in insolvent or hazardous banks suspended or merged. See

Banks closed because of financial difficulties.

Deposits:

Amount of, banks grouped by:

Banks which received financial aid from the Corporation.................... 148

Banks which suspended operations.......................................................... 148

Insured commercial banks examined in 1944........................................136-137

Insured commercial banks operating throughout 1944.......................... 144

Classified by type of deposit:

Commercial and mutual savings banks, June 30 and December 31,

1939-1944............................................................................................... 53

Commercial banks, June 30 and December 30, 1944.......................... 124, 125

Insured banks placed in receivership, 1934-1944.................................... 151

Insured commercial banks, call dates, December 1944 to December

1942......................................................................................................... 126

Demand. See Deposits, classified by type of deposit.

Growth...........................................................................................................41, 53-63

Governmental, December 30, 1939 and 1944................................................ 60, 61

Insured and otherwise protected:

In banks merged with financial aid of the Corporation........................ 14-15

In banks placed in receivership....................................................14-15, 16, 151

Interbank (see also Deposits, classified by type of deposit):

By FDIC district and State, December 31, 1939, June 30, 1942, and

December 30, 1944............................................................................... 62, 63

Percentage increase..................................................................................... 62, 64

Of individuals and business, by type, 1939-1944.......................................... 66-67

Of individuals, partnerships, and corporations (see also Deposits, classified 

by type of deposit):

By FDIC district and State, December 30, 1939, June 30, 1942, and

December 30, 1944................................................................................ 58

Percentage increase................................................................... 56, 58, 59, 61, 64

Paid and unpaid in closed insured banks......................................................15, 151

Payments of, to insured depositors. See Receivership, insured banks 

placed in.

Postal savings deposits. See Deposits, classified by type of deposit. 

Preferred. See Deposits, secured and preferred.

Protected by the Corporation. See Deposits, insured and otherwise

protected.

Public funds. See Deposits, classified by type of deposit.

Savings and time. See Deposits, classified by type of deposit.

Secured and preferred:

Insured banks placed in receivership, 1934-1944................................... 15, 151

Insured commercial banks, call dates, December 30, 1944, to December 31, 1943............................................................................................ 127

Sources of data.................................................................................................. 147

Subject to offset. See Receivership, insured banks placed in.

Uninsured deposits of insured banks placed in receivership...................... 16, 151

Unsecured. See Receivership, insured banks placed in.

Deposits in:

All commercial and mutual savings banks:

December 31, 1944.........................." ......................................................120, 125

June 30, 1944............................................................................................... 124

June 30 and December 31, 1942-1944....................................................128-129

June 30 and December 31, 1939-1934, by class of owner...................... 53

Percentage change, 1940-1944, by class of owner................................... 54

All commercial banks:

Call dates, December 30, 1944 to December 31, 1943........................... 126

December 30, 1944................................................................................... 120, 125

June 30, 1944............................................................................................... 124

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INDEX 161

Page

Deposits in:— Continued 

All insured banks:

June 30, 1944............................................................................................... 124

December 30, 1944...................................................................................120, 125

All mutual savings banks:

December 30, 1944...................................................................................120, 125

June 30, 1944............................................................................................... 124

Banks located in each State and possession, December 30, 1944............ 120-121

Banks for which the Corporation is receiver................................................. 20

Banks which received financial aid from the Corporation............14-15, 148, 150

Insured banks merged with financial aid of the Corporation. .*.14-15, 148, 150

Insured banks placed in receivership...............................................14-15, 148, 151

Insured commercial banks:

At time of examination. See Assets and liabilities of insured commercial banks, examiners' analysis.

Call dates, December 30, 1944 to December 31, 1943........................... 126

December 30, 1944................................................................................... 120, 125

June 30, 1944............................................................................................... 124

Insured mutual savings banks:

December 30, 1944................................................................................... 120, 125

June 30, 1944............................................................................................... 124

Noninsured banks:

December 30, 1944...................................................................................120, 125

June 30, 1944............................................................................................... 124

Suspended banks............................................................................................... 148

Depreciation. See Earnings, expenses, and dividends of insured banks.

Depressions and deposit insurance....................................................................... 14

Dividends:

To depositors in mutual savings banks......................................................... 141

To stockholders of operating insured banks. See Earnings, expenses, and 

dividends of insured banks.

Earnings, expenses, and dividends of insured banks:

Insured commercial banks:

Amounts, 1942-1944................................................................................... 44

Amounts by class of bank, 1944............................................................... 140

Amounts by size of bank, 1944................................................................. 49

Discussion o f............................................................................................... 44-50

Rates of income received, 1934-1944........................................................ 48

Rates of net earnings and net profits....................................................... 45-47

Ratios to average total capital accounts.................................................. 46

Ratios to total current earnings................................................................ 142

Insured mutual savings banks, 1944.............................................................. 140

Sources of data.................................................................................................. 139

Sources of earnings........................................................................................... 47-48

Employees:

Federal Deposit Insurance Corporation........................................................ 26

Insured commercial banks, December 30, 1944............................................ 141

Insured mutual savings banks, December 30, 1944..................................... 141

Examinations of banks (see also Assets and liabilities of insured commercial 

banks, examiners’ appraisal; Capital of banks):

Banks cited for unsafe and unsound practices.............................................. 23

Banks examined by the Federal Deposit Insurance Corporation..............22, 109

Data from reports of examination................................................................132-137

Definition of terms........................................................................................... 133

Effect of war on................................................................................................ 22

Procedure.........................................................................................................132-133

Review of examinations made by Comptroller of Currency and Federal

Reserve banks....................................................................................... 22

Exchange charges, absorption of:

Congressional action......................................................................................... 20-21

Letters to Chairman, Senate Committee on Banking and currency___72-76, 95

Memorandum of General Counsel of the Corporation................................ 77-91

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162 FEDERAL DEPOSIT INSURANCE CORPORATION

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Exchange charges, absorption of:— Continued

Relation to par clearance of checks.....................................................73, 77-82, 91

Rulings by Board of Directors of the Corporation......................76, 87-90, 92-94

Ruling of Board of Governors of the Federal Reserve System........74-75, 87-90

Expenses of banks. See Earnings, expenses, and dividends of insured banks.

Expenses of the Federal Deposit Insurance Corporation. See Federal Deposit 

Insurance Corporation.

Failures of banks. See Banks closed because of financial difficulties.

Federal bank supervisory authorities. See Bank supervision; Board of 

Governors of the Federal Reserve System; Comptroller of the 

Currency; Federal Deposit Insurance Corporation.

Federal credit unions.............................................................................................. 25

Federal Deposit Insurance Corporation:

Actions by:

On absorption of exchange charges. See Exchange charges, 

absorption of.

On applications from banks. See Applications from banks.

To terminate insured status of banks...................................................... 23

Assessments on insured banks......................................................... 7, 23, 25, 27, 28

Assets and liabilities...............................................................................26-29, 30-31

Audit................................................................................................................... 29-32

Banks examined by, and submitting reports to ............................................ 22

Bank supervision by. See Bank supervision.

Board of Directors..........................................................................................iv, v, 25

Borrowing power............................................................................................... 30-31

Capital................................................................................................................27, 31

Claims held against suspended and merged banks....................................... 29, 30

Depositors protected by. See Banks closed because of financial difficulties.

Disbursements for protection of depositors......................................7, 19, 152-153

Districts............................................................................................................. vi, vii

Divisions............................................................................................................ iv, 26

Employees.......................................................................................................... 26

Examination of banks. See Examinations of banks.

Expenses............................................................................................................ 26-28

Income............................................................................................................... 25-28

Insured banks receiving financial aid from. See Banks closed because of 

financial difficulties.

Insured deposits. See Deposits, insured and otherwise protected.

Investments....................................................................................................... 30

Liquidation of assets of insured banks in financial difficulties. .15, 17-18, 19-20 

Loans to and purchase of assets from insured banks. See Mergers of 

insured banks with financial aid of the Corporation.

Losses incurred:

During 1944................................................................................................. 27

During 1934-1944................................................................... 15, 19, 28, 152-153

Reserve for............................................................................................. 20, 29, 30

Officers............................................................................................................. v, vi, 26

Organization and staff..................................................................................iv, 25, 26

Payments to insured depositors................................................................15-17, 151

Policies............................................................................................................... 8-20

Powers..............................................................................................................8-10, 17

Protection of depositors. See Banks closed because of financial difficulties. 

Purchase of assets to facilitate completion of liquidation of banks in

receivership............................................................................................. 17-18

Receiver for insured banks..............................................................................20, 150

Recoveries from banks in financial difficulties................................19-20, 152-153

Regulations:

Amended or adopted in 1944..................................................................... 21

Advertisement of FDIC membership....................................................... 96-97

Agents for service of process..................................................................... 98

Assessments.................................................................................................. 96

Voluntary termination of insured status..................................................98-102

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Federal Deposit Insurance Corporation:— Continued

Reports from banks.......................................................................................... 24-25

Reserves for losses................................................................................. 12, 20, 29, 30

Supervisory activities. See Bank supervision.

Surplus................................................................................................................27, 31

Federal Deposit Insurance Corporation Districts:

Banks classified b y ............................................................................................ 120

States and possessions served..........................................................................vi, vii

Federal Reserve Act. See Exchange charges, absorption of.

Federal Reserve Bulletin. See Exchange charges, absorption of.

Federal Reserve System. See Board of Governors of the Federal Reserve 

System.

Fixed and miscellaneous assets. See Assets and liabilities of insured commercial banks, examiners’ appraisal; Assets and liabilities of 

operating banks; Receivership, insured banks placed in.

Holding companies................................................................................................. 10-11

Insolvent or hazardous banks. See Bank supervision; Banks closed because of 

financial difficulties; Banks in financial difficulties.

Instalment loans, how reported............................................................................ 123

Insurance coverage:

In closed banks. See Deposits, insured and otherwise protected. 

Recommendation of the Corporation............................................................. 8

Insurance of bank assets........................................................................................ 12-13

Insurance status, banks classified by:

Assets and liabilities o f.................................................................................. 124, 125

Deposits o f.......................................................................................................120-121

Number o f....................................................................................................... 110-121

Suspensions o f................................................................................................. 148-149

Insured banks. See:

Absorptions, consolidations, and mergers;

Admissions to insurance;

Assets and liabilities of operating banks;

Assets and liabilities of insured commercial banks, examiners’ appraisal; 

Banking offices, establishment of;

Banks ceasing operations;

Banks closed because of financial difficulties;

Capital of banks;

Class of bank, banking data presented by;

Deposits;

Deposits in;

Earnings, expenses and dividends of insured banks;

Employees;

Examinations of banks;

Mergers of insured banks with financial aid of the Corporation;

Mutual savings banks;

Number of operating banks and branches;

Receivership, insured banks placed in;

Securities;

States, banking data classified by;

Terminations of insurance;

Unsafe and unsound banking practices.

Insured commercial banks not members of the Federal Reserve System.

See Class of bank, banking data presented by.

Insured commercial banks submitting reports to the Federal Deposit Insurance Corporation............................................................................. 24-25

Insured deposits. See Deposits, insured and otherwise protected.

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Insured mutual savings banks. See Mutual savings banks.

Insured State banks members of the Federal Reserve System. See Class of 

bank, banking data presented by.

Interbank deposits. See Deposits, interbank.

Interest: See Earnings, expenses, and dividends of insured banks.

Investments of banks. See Assets and liabilities of insured commercial banks, 

examiners’ analysis; Assets and liabilities of operating banks;

United States Government obligations; Unsafe and unsound 

banking practices.

Investments of the Federal Deposit Insurance Corporation............................ 29-30

Law, violations of by insured banks.................................................................... 22, 23

Legislation related to deposit insurance and banking (see also Exchange 

charges, absorption of):

Federal, enacted in 1944.................................................................................. 21, 71

Recommended by the Corporation................................................................. 8-11

State, enacted in 1944.................................................................................... 102-106

Liquidation, banks placed in............................................14-15, 19, 110, 148-149, 150

Loans by banks:

Amounts and types. See Assets and liabilities of operating banks.

Examiners’ evaluation. See Assets and liabilities of insured commercial 

banks, examiners’ appraisal.

Interest on. See Earnings, expenses, and dividends of insured banks.

Loans to insolvent or hazardous insured banks by Federal Deposit Insurance 

Corporation. See Mergers of insured banks with financial aid of 

the Corporation.

Losses:

Of banks:

Charged off. See Earnings, expenses, and dividends of insured banks.

Reserves for................................................................................................. 12

Of depositors. See Banks closed because of financial difficulties; Receivership, insured banks placed in.

Of the Federal Deposit Insurance Corporation. See Federal Deposit 

Insurance Corporation.

Mergers. See Absorptions, consolidations, and mergers; Mergers of insured 

banks with financial aid of the Corporation.

Mergers of insured banks with financial aid of the Corporation (see also

Banks closed because of financial difficulties; Banks in financial 

difficulties):

Banks cited for unsafe and unsound practices............................................. 23

Classification of banks merged........................................................................ 148

Collections by Corporation on assets purchased or held as collateral....................................................................................... 17-20, 152-153

Deposits protected............................................................................................ 15

Disbursements by Corporation...............................................19, 148-149, 152-153

Loans and assets purchased by the Corporation.......................................... 19

Losses incurred by Corporation........................................................19, 28, 152-153

Name and location of bank merged, 1944...................................................... 150

Number of banks merged......................................................... 15, 19,148,149,153

Procedure...................................................................................................9-10, 17-18

Repayments to Corporation..............................................................19-20,152-153

Money supply, 1939-1944:

Amount, June 30 and December 31, by type............................................... 65

Increase by 6-month periods........................................................................... 66

Owned by government and by individuals and business............................ 66

Owned by individuals and business, by type................................................ 66-68

164 FEDERAL DEPOSIT INSURANCE CORPORATION

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Monopoly in banking.......................................................................................... 9, 10, 11

Mutual savings banks:

Insured:

Assets and liabilities, June 30 and December 30, 1944....................... 124, 125

Deposits..................................................................................... 120-121, 124, 125

Earnings, expenses, and dividends......................................... 140-141, 142-143

Number...................................................................................................... 110-121

Insured and noninsured:

Assets and liabilities, June 30 and December 30, 1944....................... 124, 125

Classification................................................................................................ 109

Deposits, by State, December 30, 1944................................................. 120-121

Number...................................................................................................... 110-121

National banks. See Class of bank, banking data presented by; Comptroller 

of the Currency.

Net earnings of insured commercial banks. See Earnings, expenses, and 

dividends of insured banks.

Net profits of insured commercial banks. See Earnings, expenses, and dividends of insured banks.

Net sound capital of insured commercial banks. See Capital of banks.

New banks. See Banking offices, establishment of.

Noninsured banks. See:

Absorptions, consolidations, and mergers;

Admissions to insurance;

Assets and liabilities of operating banks;

Banks closed because of financial difficulties;

Capital of banks;

Class of bank, banking data presented by;

Deposits;

Number of operating banks and branches.

Number of operating banks and branches:

All banks:

Admissions to insurance...................................................................... 23-24, 110

Approved for admission to insurance....................................................... 23-24

Changes during 1944................................................................................ 110-111

December 30, 1944, by class of bank, FDIC district, and States and

possessions........................................................................................... 120-121

June 30 and December 30, 1944............................................................. 124-125

Terminations of insurance....................................................................... 110-111

All banks and branches:

Changes during 1944................................................................................ 110-111

December 31, 1944, by class of bank and States and possessions... .112-119

Banks operating branches............................................................................. 112-119

Branches:

Changes during 1944.................................................................................. I l l

December 31, 1944, by class of bank and States and possessions... .112-119 

Commercial banks:

Admissions to insurance...........................................................................110-111

Changes during 1944................................................................................ 110-111

December 30, 1944, by class of bank, FDIC district, and States and

possessions........................................................................................... 120-121

June 30 and December 30, 1944............................................................. 124-125

Insured commercial banks:

Applications approved and disapproved.................................................. 23-24

Call dates, December 30, 1944, to December 31, 1943.......................... 126

Changes during 1944................................................................................ 110-111

December 30, 1944, by FDIC district, and States and possessions. .120-121

Examined in 1944, by amount of deposits.............................................. 137

Operating throughout 1944, by amount of deposits.............................. 145

Mutual savings banks. See Mutual savings banks.

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166 FEDERAL DEPOSIT INSURANCE CORPORATION

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Number of operating banks and branches (continued):

Noninsured banks:

Changes during 1944................................................................................ 110-111

December 30, 1944, by class of bank, FDIC district, and States and

possessions............................................................................................120-121

June 30 and December 30, 1944............................................................. 124-125

Unit banks, December 30, 1944, by class of bank and States and possessions................................................................................................. 112-119

Officers, active, of insured banks. See Employees.

Officers and employees of the Federal Deposit Insurance Corporation.......... v, 26

Operating banks. See Number of operating banks and branches.

Par clearance of checks. See Exchange charges, absorption of.

Payments to depositors in closed insured banks. See Receivership, insured 

banks placed in.

Polk's Bankers Encyclopedia, data obtained from.......................................... 109,123

Possessions, banks and branches located in:

Deposits o f.......................................................................................................120-121

Number o f.......................................................................................112, 119, 120, 121

Postal savings deposits. See Deposits, classified by type of deposit.

Preferred deposits. See Deposits, secured and preferred.

Profits. See Earnings, expenses, and dividends of insured banks.

Protection of depositors. See Banks closed because of financial difficulties; 

Deposits, insured and otherwise protected.

Public funds. See Deposits, classified by type of deposit.

Purchase of bank assets by Corporation. See Assets of banks purchased by 

the Federal Deposit Insurance Corporation.

Rand McNally Bankers Directory, data obtained from................................. 109,123

Real estate, loans on. See Assets and liabilities of operating banks.

Receivership, insured banks placed in (see also Banks closed because of 

financial difficulties):

Activities of Corporation as receiver of.........................................................20, 150

Assets and liabilities of, at dates of suspension, 1934-1944........................ 150

Depositors:

Extent of protection by insurance......................................................14-16, 151

Methods of protection................................................................................ 15-19

Number eligible for protection, paid and unpaid................................... 151

Payments to .......................................................................................... 15-16, 151

Deposits:

Insured, paid and unpaid by December 31, 1944.................................. 16, 151

Not eligible for insurance protection....................................................... 16, 151

Paid and unpaid, December 31, 1944......................................................16, 151

Secured, preferred, and subject to offset................................................. 16, 151

Unclaimed accounts................................................................................... 16, 151

Uninsured.................................................................................................... 16, 151

Liquidation of.................................................................... 15, 19, 110, 148-149, 150

Losses by Corporation on depositors' claims paid........................................ 19

Name and location of, during 1944................................................................ 150

Number of banks..............................................................................................18, 148

Payments to depositors............................................................................. 15-16, 151

Purchase of assets from.................................................................................... 17-18

Receivers..................................................................................................146-147, 150

Sources of data................................................................................................ 146-147

Reconstruction Finance Corporation, capital of insured banks held by:

Amount. See Capital of banks.

Retirements approved by Federal Deposit Insurance Corporation........... 24

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Recoveries:

By banks on assets charged off. See Earnings, expenses, and dividends of 

insured banks.

By Federal Deposit Insurance Corporation on disbursements in closed

INDEX 167

banks........................................................................................ 19-20, 152-153

Regulations. See Federal Deposit Insurance Corporation.

Reports from banks................................................................................................ 24-25

Reserves:

In bank assets and liabilities. See Assets and liabilities of operating banks.

Of Federal Deposit Insurance Corporation........................................12, 20, 29, 30

Risk bearing and the operations of banks........................................................... 11-14

Savings and time deposits. See Deposits, classified by type of deposit.

Secured and preferred deposits. See Deposits, secured and preferred; Receivership, insured banks placed in.

Securities (see also United States Government obligations):

Examiners’ appraisal of, method used........................................................... 132

Held by Federal Deposit Insurance Corporation....................................28, 29, 30

Held by insured banks placed in receivership, 1934-1944........................... 150

Held by insured commercial banks: See Assets and liabilities of insured 

commercial banks, examiners’ analysis, 

geld by operating banks, See Assets and liabilities of operating banks, 

interest on securities held by banks. See Earnings, expenses, and dividends of insured banks.

Rate of income on............................................................................................. 48

Size of banks, banks classified by. See Deposits, amount of, banks grouped by.

State banks members of the Federal Reserve System. See Class of bank, 

banking data presented by.

State banks not members of the Federal Reserve System. See Class of bank, 

banking data presented by.

State bank supervisory authorities:

Data obtained from........................................................................................109, 123

State legislation regarding............................................................................. 102-103

State legislation regarding bank supervision and bank operations..............102-106

States, banking data classified by:

Deposits, December 30, 1944:

Commercial banks, insured and noninsured..........................................120-121

Mutual savings banks, insured and noninsured................................... 120, 121

Number of operating banks or offices, December 31, 1944:

All banking offices, by class of bank and type of office....................... 112-119

All banks....................................................................................................120-121

Commercial banks, insured and noninsured..........................................120-121

Mutual savings banks, insured and noninsured....................................120-121

Suspensions, receiverships, and mergers........................................................ 149

Stockholders of banks:

Losses of. See Banks closed because of financial difficulties.

Net profits of insured commercial banks, available for. See Earnings, 

expenses, and dividends of insured banks.

Substandard assets. See Assets and liabilities of insured commercial banks, 

examiners’ analysis.

Supervision. See Bank supervision.

Suspensions. See Banks closed because of financial difficulties; Receivership, 

insured banks placed in.

Taxes paid by insured banks. See Earnings, expenses, and dividends of insured banks.

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168 FEDERAL DEPOSIT INSURANCE CORPORATION

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Terminations of insurance:

For unsafe and unsound banking practices and violations of law or

regulations............................................................................................. 23

Number, 1944........................................................................................... 23, 110-111

Voluntary termination of insured status, regulation of the Corporation. .98-102

Time and savings deposits. See Deposits, classified by type of deposit.

Total money supply. See Money supply, 1939-1944.

Trust companies:

Classification o f............................................................................................... 108-109

Number not engaged in deposit banking....................................120-121, 124, 125

Unit banks. See Number of operating banks and branches.

United States Government obligations (see also Assets and liabilities of 

insured commercial banks, examiners’ analysis; Assets and liabilities of operating banks):

Acquired by commercial and mutual savings banks, 1939-1944................ 54-56

Held by Federal Deposit Insurance Corporation.................................... 28, 29, 30

Held by the banking system, 1941 and 1944................................................ 38-39

Types held by insured commercial banks, 1939-1944.................................. 39-41

Unsafe and unsound banking practices:

Actions of the Corporation.............................................................................. 23

Number of banks cited..................................................................................... 23

Types of, for which banks were cited............................................................ §2-23

Unsecured deposits. See Receivership, insured banks placed in.

Violations of law or regulations............................................................................ 22-23

War:

Bank supervision and the war........................................................................ 22

Effects of wartime changes on the banks...................................................... 53-68

Growth in bank assets and deposits, 1940-1944........................................... 55

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