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IENOCH PRATT * EICON UBP/^y AUG : c 1959 BOARD OF GOVERNORS OF THE feiIer E.5 (For Immediate Re’T'KTSy) -August 7, 1959 MEMBER BANK Ea RNINGS, FIRST HALF OF 1939 Preliminary figures on member bank earnings indicate that net current earnings before income taxes were $1,385 million, an increase of $110 million over the first six months of last year. However, net profits after taxes were $598 million or $230 million lower than in the first half of last year when greater profits were reported on the sales of securities; they are more comparable to the $568 million reported in the first half of 1957* The ratio of net profits on an annual basis to average total capital accounts declined from 1 1 .2 per cent in the first half of 1958 to 7.6 per cent in the first half of 1959 * Earnings on loans rose $208 million and earnings on U. S. Government securities rose $67 million. These increases resulted from larger average hold ings of Government securities and loans, and higher average interest rates. Per centagewise, expenses increased slightly more than earnings. The net effect of security transactions, other profit and loss adjust ments, and changes in valuation reserves was a loss of $378 million, compared to a gain of $2l+5 million in the first six months of 1958 . The 1959 position repre sents the usual relationship among these items; in other postwar years member banks had reported net gains from these transactions only in 19^6 and 195^* Provisions for income taxes amounted to $1*11 million, $281 million lower than in the corresponding period last year, reflecting the decline in pro fits before income taxes. Cash dividends declared amounted to $326 million in the first half of 1959 > representing a distribution pf 5^ per cent of net profits after taxes and an approximate yield of k .2 per cent on average total capita] accounts on an annual basis. ,(Over) F^i. MEMBER BANK EARNINGS, BY CLASS OP BANK, FIRST AND SECOND HALVES OF I958 AND FIRST HALF OF 1959 (In millions of dollars; first half of 1959 preliminary) All Member Banks Item Earnings: On U. S. Government securities On loans 1/ All other Expenses Net current earnings Before income taxes Recoveries, profits, and transfers from valuation reserves 2/ Losses, charge-offs, and transfers to valuation reserves 3/ Profits Before income taxes Taxes on net income Central Reserve City Banks l few York Chicago First Second First First Second First Half Half Half Half Half Half 1958 1958 1958 1958 1959 1959 First Second Half Half 1958 1958 First Half 1959 3,515 3,612 3,8*6 633 2,130 752 633 2,197 700 2,337 782 808 150 2,240 1,275 2,377 1,235 2,*6l 1,385 3-18 319 267 260 278 599 179 1*1 87 25 28 328 353 517 1,520 1,085 1,009 *56 692 * 11 26 39 2*7 128 578 621 138 13* 81 89 35* 3*5 1*5 96 372 153 28 81 31 76 27 3*3 72 70 66 585 329 156 120 177 73 Reserve City Banks Country Banks First Second Half Half 1958 1958 First Half 1959 First Second Half Half 1958 1958 First Half 1959 1 ** 1,393 1 ,**2 1,526 1,399 1,55* 1, *57 32 236 868 289 6* 75 70 892 500 931 985 5*1 957 512 *1 15 19 285 69 52 186 69 *3 27 130 198 118 139 39* 1*8 509 .209 328 10 * 151 *51 205 388 170 30 31 82 20 *0 80 *2 59 27 *9 21 183 602 285 2*2 258 288 271 891 309 956 827 312 283 885 301 928 312 1,058 1,058 399 *97 **1 315 Net profits 828 629 598 173 127 105 38 32 28 318 2*5 2*6 300 22* 219 Cash dividends declared 307 339 326 77 83 79 15 11 17 12 * 133 132 90 112 98 17 .2 1 1 .2 2.56 1 6 .1 8.2 17.7 7.6 16.8 10.9 2.*2 *.*0 16.0 18.9 17.9 19.0 2.71 *.57 2-35 5**0 10.9 2 .6* 5*8* 7-9 2.35 *•37 2.5* 5.38 18.5 8 .* 2.65 17.1 7.5 18.0 8.6 1*.0 8.9 18.3 11.6 1 6 .1 11.0 2.32 16.9 6 .* 2.72 Ratios - annual Basis (in per cent): Net current earnings Before income taxes to Average total capital accounts Net profits to average total capital accounts Average return on U. S. Govt, securities Average return on loans 5 ’31 2.35 5.39 l/ Includes charges on loans other than interest. 2/ Does not include recoveries credited to valuation reserves. 3/ Does not include losses charged to valuation reserves. 2.68 5-*5 7.8 2.38 *•51 2.33 *.*2 2.51 *.60 5**6 6.03 7.6 6.01
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