SERIES CORRELATED WITH NET EARNINGS 250 
TABLE 153 
NATURE OF CORRELATION IN PERCENTAGE DEVIATIONS AND YEAR-TO- 
YEAR CHANGES IN DIFFERENT SERIES PAIRED 
SERIES CORRELATED 
Independent Variables 
Dependent Variables 
Loans and Discounts to Earn- 
ing Assets. .............. 
Net Earnings to Earning As- 
ast 
Net Earnings to Earning 
Assets. .............u... 
Loans and Discounts to Earn- 
ing Assets 
Total Deposits to Earning 
Assets. . oouvwiiomiionisg 
Net Earnings to Earning As- 
tets 
Net Earnings to Earning As- 
SES. itera 
Total Deposits to Earning 
NATURE oF CORRELATION 
Differ- 
ences 
from 
Jistrict 
Averages 
Changes , 
{rom 
Year 
to 
Vaap 
Differ- 
ences 
from 
Tountry’s 
Yearly 
Average 
Positive 
Positive 
Positive 
Positive 
Negative 
None 
—— 
Negative 
Negative 
Negative 
Positive® 
Negative 
Negative 
iw. 
ratios of loans and discounts to earning assets larger than the 
average will tend to raise the ratio of gross earnings to some- 
thing more than 6%. But, as already found, loans and discounts 
are also positively correlated with total expense. Accordingly, 
if average ratios of loans and discounts are associated with aver- 
age ratios of total expense, ratios of loans and discounts higher 
than the average will tend to be associated with ratios of total 
expense in excess of the average. That is, if the total expense 
ratio is 4% under average conditions, it will tend to be in excess 
of 4% for series with ratios of loans and discounts in excess 
of the average. If both ratios, 6 and 4—gross earnings and total 
expense—tend to be high under these conditions, then their 
effect on net earnings remains in doubt. It is only when it is 
learned that ratios of loans and discounts to earning assets are 
also positively correlated with ratios of net earnings to earning 
assets, that it becomes apparent that their effect upon gross 
earnings is greater than upon total expense, thus making the 
ratios of net earnings something above 29% —the amount found, 
for purpose of illustration, to characterize average conditions in 
respect to loans and discounts. 
But forces other than those associated with variable loans and 
discounts are tending to influence gross earnings, total expense, 
and net earnings. These, among other things, have been found 
to be the relative size and type of change in the amounts of total 
deposits. Their influences, too, acting simultaneously with those