Money In the Bank

As they totted up their six months' earnings last week, bankers could appreciate the benefits of tight money. With companies everywhere competing for more loans than there are funds available, the interest rate on prime loans stood at 4%, while lower-grade risks brought up to 6%. By gradually shifting out of low-paying Government bonds to get more cash to lend, most bankers reported earnings at an alltime peak, in some cases as much as 19% better than last year.

Some record-breakers:

P:First National City Bank of New York increased its loans by 11% to $3.9 billion and, together with its trust affiliate, City Bank Farmers Trust, pushed net earnings up 12.5% to $28.7 million in the first half.

P:Chase Manhattan Bank boosted loans nearly 9% to $3.8 billion, and saw net earnings soar 17% to $26.7 million.

P:Guaranty Trust Co. increased its loans more than 7 1/2% to $1.5 billion and produced an 8% jump in earnings to $15 million.

P:Manufacturers Trust, Chemical Corn Exchange, Irving Trust, and The Bank of New York all lent between 6% and 11% more money and in return had increased earnings of from 13% to nearly 19% higher than 1956's level.

But while 1957's tight-money market produced some of the best profits ever for the bankers, it also brought cautionary signs of lesser profits ahead. Just as bankers could charge more for their loans, so they also have to pay more to their savings depositors. Reporting on his first six months last week, President S. Clark Beise of California's Bank of America, biggest U.S. bank, noted that assets had topped $10 billion for the first time, and that deposits showed a $400 million gain since last year to $8.9 billion. But the bank's six-month earnings were cut by $1,800,000 to $35.1 million because the bank had hiked its savings-deposit interest rate from 2% to 3% in January. In New York last week, some banks edged up savings-deposit interest to 3 1/4%.

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