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FEDERAL statistical RESERVE release June 21, 1978 c.4 Immediate Release STATISTICAL RELEASE INSURED BANK INCOME, 1977 Net profits of all insured commercial banks increased $1 billion to $8.9 billion during 1977. As a per cent of assets or equity, profits were marginally higher than in 1976 but still below the pre-1975 levels. A sharp reduction in net loan losses due to improved loan portfolio credit quality was an important factor in sustaining profitability during 1977. An increase in gross interest income, resulting from a higher rate of return on loans and a shift away from lower yield securities, was offset by a proportional increase in interest expense that was incurred by a greater reliance on interest-bearing liabilities. The aggregate profit results mask important differences within the size classes of banks. Returns on equity at banks with assets below $100 million rose by 4 per cent. Banks with assets between $100 million and $1 billion experienced a 7 per cent increase in profit rates, while larger banks had a small decline. All groups were successful in reducing their loan loss provisions, but gains in interest income at the largest banks were hindered by the continued weakness in loan demand from their largest corporate customers. INSURED BANK INCOME BY SIZE OF BANK, 1977 and 1976 (in millions of dollars) Item All Insured Banks With Consolidated Assets: Under $100 million $1 billion $100 million to $1 billion and over 1977 1976 1977 1976 1977 1976 1977 1976 Interest revenue On loans On securities On Federal funds sold On balances with banks 81,173 58' 811 15,031 2,471 4,860 72,137 51,471 14,227 1,980 4,459 20,838 14,603 5,416 694 125 19,175 12,930 5,451 629 165 17,236 12,300 4,178 597 161 15,4ll 10,843 3,870 525 173 43,099 31,908 5,437 1,180 4,574 37,552 27,699 4,906 826 4,121 Interest expense On domestic CD's) $100,000 On other domestic savings and time deposits On deposits in foreign offices On Federal funds purchased ยท On other borrowed money 44,445 6,733 39,207 7,083 10,001 1,083 9,183 1,104 8,412 1,513 7,452 1,569 26,032 4,137 22,573 4,410 21,753 10,216 4,536 1,207 19,066 8,745 3,305 1,008 8,715 7,907 0 0 125 78 103 69 6,053 39 674 133 5,156 40 566 121 6,985 10,177 3,737 996 6,004 8,705 2,636 818 36,728 8,895 3,244 30,795 32,930 8,250 3,651 27,608 10,837 1,541 632 8,331 9,992 1,426 663 7,830 8,824 1,859 609 7,603 7,959 1, 775 702 7,022 17,067 5,495 2,003 14,861 14,979 5,048 2,286 12,755 11,585 2,829 142 8,898 3,299 14,397 9,922 2,287 214 7,849 3,032 14,397 3,416 2,926 649 487 82 123 2,849 2,561 749 708 13,157 13,300 2,470 399 54 2,125 783 1,096 2,010 251 59 1,818 762 971 5,698 1,780 3,924 1,767 144 4,986 1,548 32 3,469 1,561 126 11.8 7.4 11.6 12.4 11.9 7.1 9.1 8.6 12.0 7.6 11.2 6.5 11.3 6.2 11.6 6.4 Net interest revenue Noninterest income Loan loss provision Other noninterest expense Income before taxes and securities gains or losses Income taxes l/ Gains and lossesNet income Cash dividends declared Number of banks 2/ Ratio to average equity capitalNet income Retained earnings l/ ?::_/ 5 Includes net gains or losses from securities and extraordinary items. Equity capital includes common and preferred stock, surplus, contingency reserves, and undivided profits. The 1976 equity capital is adjusted for certain one-time changes that arose from a re-definition of the loan loss reserve.
@FedFRASER