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Immediate Release
r e Ie a 5 e
June 23, 1976
MEMBER BANK INC<Jm, 1975
Income before securities gains and losses (after taxes) increased
$74 million, or 1.4 percent at Federal Reserve member b&nks during 1975.
This increase was far below the $404 million (8;0 percent) gain Tecorded
in 1974. Securities transactions, however, posted a net gain after two
succesive years of decline. As a result, member bank net income rose
$181 million, or 3.4 percent during 1975 (only about one-half as much
as· in 1974). The ratio of net income to average equity capital and
reserves also declined from 10.8 percent in 1974 to 10.3 percent in 1975.
Total operating income at member banks in 1975 declined 4.6
percent after increasing 29.1 percent the previous year. Revenues from
loans in 1975 amounted to $35,454 million, down $5,323 million or·l3.1
percent from the 1974 level. Contributing significantly to this decline
was a ·sharp drop in the average return on loans from 9. 90 percent in 1974
to 8.44 percent in 1975. Investment income at· member banks increased
$1,322 million, or 1.8.3 percent in 1975 to $8,558 million, up sharply
from the 1974 level. Average investments at member banks rose 11.1
percent, substantially more than the 2,1 percent and 3.0 percent increases
recorded in 1974 and 1973, respectiveiy. Slightly ~igher average returns
on secur:l.ties also contributed to the increase in revenue from this
source. Income from U.S. Treasury securities rose 35.1 percent, or
.$822 million, due both to larger holdings of these securities and to
h:l:gher return rates in 1975. Holdings of "other securities" also increased
substantially as did the rate of return on these investments, thus, resulting
in a 10.2 percent increase in revenue from this source. "All other"
income, Which includes revenues from trust department~ service charges
on deposit accounts, and trading account activities, rose $1,530 million,·
or 26.3 percent.
·
Total operating expenses at member banks during 1975 decreased
$2,408 million, or 5.1 percent as compared to a 33.6 percent increase in
1974. Contributing significantly to this decline was a $5,100 million
decline ~7.8 percent) in interest paid on time deposits. Salaries, wages
and benefits, however, continued to rise in 1975, although the 8.9 percent
increase was significantly less than the 13.1 percent increase of a year
earlier. "All other" expenses, Which includes net occupancy expense,
equipment, provision for loan losses, and other operating expenses rose
$1,903 million, or 20.3 percent. Nearly 63 percent of this increase
was the result of a $1,193 million or 64.2 percent increase in loan loss
provisions.
Reflecting all of the above changes income before securities
gains and losses (after taxes)· rose $74 million, or 1.4 percent in
1975, significantly less than the 8 percent increase posted in 1974.
Security transactions at member banks in 1975 resulted in avery slight
gain after two successive years of losses. As a result, net income
at member banks increased 3.4 percent in 1975 to $?,545 million.
Income and expenses of member banks usually represent about
three-fourths of the total for all insured commercial ·banks in the
country.
(over)
'
MEMBER BANK INC<Im, BY CLASS
OF BANK 1975 and 1974
(In millions of dollars)
Item
All
member banks
1914
1975
New York Citv
1975
1974'
Laz:ge Banks
Citv of Chicago
1974
1975
Oth r
1975
1974
All
other anks
1974
1975
198
311
19,399
13,692
1,052
1,661
2,995
20,925
16,175
722
1,591
2,437
19,855
13,492
1,554
2,986
1,824
19,388
.13,961
1,253
2,601
1,572
2,298
360
1,464
474
2,818
326
2,114
378
16,964
3,630
I 9,097
; 4;238
18,562
3,370
11,707
3,484
17,272
3,972
8,918
4,381
16,609
3,662
9,118
3,829
1,482
390
1,093
427
130
298
397
2,363
555
1,808
2,584
357
2,228
2, 779
532
2,246
17
15
-4
-4
8
-36
21
-10
5,364
1,140
1,076
294
280
i 1,863
1,772
2,249
2,237
2,476
2271
503
454
133
132
i
978
852
862
832
10.20
10.27
10.88
10.75
10.53
10.67
~1.17
11.~
.11.00
11.09
11.60
11.43
10.06
10.11
10.60
10.39
10.03
10.12
10.89
10.85
l/
Revenue:
On loansOn U.S·. Treasury securities
On other securities
All other
51,356
35,454
3,165
5,393
7,343
53,828
40,777
2,343
4,893
5,813
9,375
6,304
415
550
2,107
10,299
8,024
278
504
1,494
2,725
1,966
145
196
-418
3,216
2,617
Expenses:
Salaries, wages, and benefits
Interest on time deposits
All other
44,398
9,621
23,508
ll,268
46,806
8,832
28,608
9,36~
7,864
1,660
4,029
2,175
8,817
1,474
5,669
1,675
Income bef. inc. taxes & sec. gains & losses
,Applicable income taxes
Income before sec. gains and losses
Net gains & credits (+) or losses & charges (-)
after taxes Jj
6,957
1,453
5,505
7,021
1,591
5,431
1,5ll
386
1,125
41
-63
Net income
5,545
Cash Dividends declared
Ratios (percent): 11
To equity capital (incl .. reserves):
.Income (after taxes) before sec. gains &.
losses
Net Income
.
90
114
284
I
• 2,.435
580
. 1,855
;
I
i
Average return on loans
'10.33
8.61.
9.90
7.97
8.10
8.44
10.96
8.55
10.23
9.17
Average return on U.S. Treasury securities
6.39
6.80
6.80
7.17
6.69
6.52
7.19
6.74
6.11
6.42
5.27
Average return on other securites
6.33
5.49
5.54
5.58
5.57
5.34
5.23
5.60
5.24
Interest on time deposits to average time
depollits
7.14
6.37
5. 95
8.95
6.46
8.76
6.01
7.43
5. 71
6.10
1/ Includes income on Federal funds sold and charges on loans other than interest.
Includes primarily net gains and losses on sales of securities. Also included are net miscellaneous losses and c~its and minority interest
in consolidated subsidiaries.
11 The asset, liability, and capital account items used in calculating these ratios are av•rages of the June ~December call dates for the
calendar year and the December call date for the preceding year.
4/ Less than $500,000.
NOTE: Details may not add to totals because of rounding. ·
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@FedFRASER