Banks, Third Quarter

Numerous are the means by which a bank gets customers. Proximity, a nice building, friendly vice presidents are customary lures; another lure is an easy loan policy. Few prospective depositors spend as much time looking at a bank's balance sheets as they do investigating a company whose bonds they want to buy. One reason is that the average person can tell nothing from the average bank balance sheet. Another is that a person capable of telling at a glance what a bank's general position is usually realizes that only the people within a bank can tell whether or not it is liquid.

Knowing what percentage of a bank's deposits is in cash and U. S. Government bonds is helpful, can be estimated. So is knowledge of how much the bank has loaned. But no statement reveals the condition of the loans. How much the bank has invested in corporate bonds and stocks is important in gauging its condition, but few balance sheets state whether investments are at cost or market. In Canada the ten big banks publish lengthy, frank statements. A few small U. S. banks have adopted such a policy, but the majority hide their true condition in a conglomerate of massive figures. The Fifth Avenue Bank of New York, old, much patronized by dowagers, is unusually frank. Its statement of resources provides for 21 items and even separates coin from paper money. Yet a sum of ten millions includes all "public securities." How much of the amount is in Governments, how much in less liquid State and Municipals is not revealed.

Last week banks were starting to issue their third-quarter reports. In view of the great silent run upon all U. S. banking, these statements were inspected more closely than ever. Points which many a banker noted included:

Chase National Bank is still the largest although its combined resources of $2,215,122,471.81 are $214,187,744.70 lower than the June figure. The combined resources of National City Bank and Bank of America (Manhattan) were $2,103,068,276.44, putting Guaranty Trust Co. back into third place with its $1,717,584,871.27. Typical of the high degree of liquidity shown by the large Manhattan banks was Guaranty's statement. Cash on hand and due from banks was 350 millions while Government securities were 333 millions. These two items were a good half of the bank's $1,223.000,000 in deposits.

Corn Exchange Bank Trust Co., proud of statements which "anyone can understand," showed $30,900,000 in private securities, also $21,937,000 in bonds and mortgages owned.

Continental Bank & Trust Co., just merged with dubiously liquid Straus National, showed cash and Governments of 33 millions against deposits of 44 millions. Its call loans to brokers, long the specialty of this so-called "broker's bank," were ten millions. The statement bore a pledge that the bank would continue its old policy of liquidity.

New York Trust Co. showed cash and Governments equalling 69% of deposits, against 65% three months ago. Bankers Trust Co., an institution said to be highly regarded by Andrew William Mellon, showed little change, remaining around 45%. Its statement was one of the few to declare that securities are carried at the market. Bank of America deposits stood at 186 millions against 218 millions in June. Chemical Bank & Trust Co., still known to oldsters as "Old Bullion," showed a ratio of 50% between cash & Governments and total deposits.

First National Bank (New York), the "Baker Bank" earned $21.69 during the quarter against the $25 dividend. This year is the first since 1908 that the Baker Bank has undertaken to pay its dividends itself, without drawing part of them from First Security Co. First Security was the idea of the late George Fisher Baker, made popular the movement for investment affiliates. Eventful in First National's history was an untoward happening last week. Not the strong bank but the not-strong 50-year-old building which housed it (at No. 2 Wall Street) began to crack and topple. George Fisher Baker Jr. supervised a rapid move into National City Bank Building, said First National had no further plans. In 1837, the new bank building of Joseph & Co. collapsed mysteriously, an omen widely discussed when Wall Street was engulfed in a panic only three days later.

Bankers inspected Philadelphia statements with anxiety. The banking situation in that city had become so grave that recently newspapers carried advertisements signed by prominent citizens asking people not to take their money out of banks. The Philadelphia National, in business since 1803 and biggest in the city, showed 289 millions in deposits, a drop of 83 millions since June. Lumped in one item of 218 millions were "loans, discounts and other investments." First National of Philadelphia, proud holder of National Charter No. i (1863), whose directors include Cyrus Hermann Kotzschmar Curtis and new A. B. A. President Harry J. Haas (see p. 13) showed resources of 85 millions against 96 millions three months ago. Still second biggest bank in Philadelphia is the bank with the longest name: The Pennsylvania Company for Insurances on Lives and Granting Annuities, chartered in 1812.

In Pittsburgh, Mellon National Bank showed $106,560,000 in Government bonds, $39,000.000 in cash and $228,232,000 in deposits. A statement that .interested bankers was that of Atlantic National Bank of Jacksonville, which has the accounts of 60% of Florida's banks. In detail it explained its assets, showed that its 27 millions in deposits were about 90% covered by Government bonds, cash, acceptances, and readily marketable bonds.

An unusual item on First National Bank of Boston's showed "Agreements to Repurchase United States Government Securities . . . $5,300,000." This did not mean the bank was short of bonds, but that it had sold them to another bank agreeing to buy them back, probably within 30 days. The transaction was in the nature of borrowing except that the selling bank receives 100% on the bonds' value, probably paid a lower-than-market interest charge. Continental Illinois Bank & Trust Co. (Chicago) printed its imposing list of 49 directors beneath its statement in newspapers. With resources of $1,070,352,028 it is fourth biggest U. S. bank. Once ahead of it, Bank of America (California) last week showed resources of $1,017,447,596. Deposits came to $842,000,000 against $962,000,000 at the end of the last quarter. Of total deposits, only $227,294,000 were demand deposits. During the quarter undivided profits increased $802.847.

Although few major banks have changed dividend rates, bank shares have dropped greatly. Chase National at $45 last week yielded 9% on its present dividend. The $1,000 par stock of San Francisco Bank however was quoted at a fabulous $12,000 per share. Stock in closely-held Mellon

National was unquoted although its average price is $17,000 a share. San Francisco Bank carried bank buildings & lots, other real estate and pension funds at $1 each although their actual values are one million times $3. Mellon National Bank pays an annual dividend of $200 plus a "Christmas bonus" of $6 a share.

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