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FEDERAL statistical C.4 Immediate Release RESERVE rel~ase June 5, 1975 Income before securities gains and losses (after taxes) increased $404 million, or 8.0 per cent at Federal Reserve member banks during 1974. This increase was substantially less than the $687 million (15.8 per cent) rise posted by member banks in 1973. Member banks also recorded net security losses in 1974 for the second consecutive year. Consequently, net income of member banks rose $352 million or 7.0 per cent in 1974, substantially less than the 13.9 per cent increase recorded in 1973. The ratio of net income to average equity capital and reserves also declined from 11.0 per cent in 1973 to 10.8 per cent in 1974. Total operating revenue at member banks in 1974 rose sharply -$12,120 million or 29.1 per cent -- although this rate was slightly below the 33.1 per cent increase of 1973. Revenues from loans rose $10,670 million or 35.4 per cent and accounted for 88 per cent of the overall increase in total operating revenue. For nearly all categories of loans, however, the rates of increase of average loans outstanding in 1974 were below those of 1973, although the average rate of return on loans increased. Investment income at member banks increased $705 million or 10.8 per cent in 1974, up sharply from the 1973 increase of $446 million. Average investments at member banks rose 2.1 per cent, slightly less than the 3.0 per cent increase recorded in 1973; however, the rate of return on these securities was higher in 1974. Income on U. S. Treasury securities declined $49 million due to smaller holdings of these securities. Holdings of "other securities," however, increased as did the average rate of return on these securities so that member banks were able to post an 18.2 per cent or $754 million increase in revenue from this source. "All other" income increased $743 million or 14.7 per cent in 1974. Included in this category is trust department income, service charges on deposit accounts, and other fees. Total operating expenses at member banks increased $11,779 million ·in 1974 --an increase of 33.6 per cent over the 1973 level of $35,027. About three-fourths of this overall increase was due to an $8,789 million (44.3 per cent) increase in interest paid on time deposits. Salaries and wages, also a major expense item, rose substantially in 1974, with member banks recording a 13.1 per cent increase in this expense item. "All other" expenses, which include such items as net occupancy expense, furniture and equipment, and provision for loan losses rose sharply -- $1,964 million or 26.5 per cent. This is substantially more than the $1,042 million increase recorded in 1973 and largely reflects increased loan loss provision expenses. As a result of these changes income before income taxes and net securities gains and losses rose $340 million, or 5.1 per cent over the 1973 level. This compares to a 1973 increase of $985 million (17.3 per cent). AppTicable income taxes declined $63 million or 3.8 per cent during 1974. Member banks also recorded losses in security transactions in 1974. Net income at member banks nonet~less increased in 1974, although the 7.0 per cent increase of $352 million was substantially below the 1973 increase $612 million. Income and expenses of member banks usually represent about threefourths of the total for all insured commercial banks in the country. ~over) MEMBER BANK INCOME, BY CLASS OF BANK 1974 and 1973 (In millions of dollars) Item All member banks 1973 1974 ty New arK 1974 1973 Large Banks C1ty o C!l~cago 1974 1973 All other banks 1973 1974 Other 1974 1973 Revenue: l/ On loansOn U. S. Treasury securities On other securities All other 53,828 40,777 2,343 4,893 5,813 41,708 30,107 2,392 4,139 5,070 10,299 8,024 278 504 1,494 7,483 5,448 249 433 1,352 3,216 2,617 90 198 311 2,147 1,638 79 159 271 20,925 16,175 722 1,591 2,437 15,829 ll,769 730 1,294 2,035 19,388 13,961 1,253 2,601 1,572 16 ,249 ll '251 1,334 2,252 1,4ll Expenses: Salaries, wages, and benefits Interest -on time deposits All other 46,806 8,832 28,608 9,366 35,027 7,806 19,819 7,402 8,817 1,474 5,669 1,675 6,159 1,293 3,611 1,255 2,818 326 2,114 378 1,826 281 1,284 261 18,562 3,370 11,707 3,484 13,548 2,963 7,884 2,701 16,609 3,662 9,118 3,829 13,494 3,268 7,041 3,185 Income bef. inc. taxes & sec. gains & losses Applicable income taxes Income before sec. gains and losses Net gains & cre~~ts (+) or losses & charges (-) after taxes - 7,021 1,591 5,431 6,681 1,654 5,027 1,482 390 1,093 1,324 393 931 397 ll4 284 321 84 237 2,363 555 1,808 2,281 593 1,689 2, 779 532 2,246 2,754 584 2,170 -66 -14 -17 -12 -4 -3 -36 2 -10 Net income 5,364 5,012 1,076 919 280 233 1, 772 1,690 2,237 2,169 Cash dividends declared Ratios (percent):~/ To equity capital (incl. reserves): Income (after taxes) before sec. gains & losses Net Income 2271 2 018 454 353 132 101 852 828 832 737 10.88 10.75 11.00 10.97 11.17 11.00 10.53 10.39 11.60 11.43 10.50 10.34 10.60 10.39 10.68 10.69 10.89 10.85 11.56 ll.55 9.90 6.39 5.27 8.34 5.89 4.76 10.33 6.80 5.49 8.39 5.93 4.83 10.96 7.19 5.57 8.53 5.57 4.91 10.23 6.ll 5.23 8.46 5.51 4.56 9.17 6.42 5.24 8.16 5.96 4.85 Average return on loans Average return on U. S. Treasury securities Average return on other securities Interest on time deposits .to average time ' __!!I 5.26 8.95 7.03 8.76 6.89 6.10 5.82 5.95 7.43 7.14 Includes J.ncome on Federal funds sold and charges on loans other than J.nterest. Includes primarily net gains and losses on sales of securities. Also included are net miscellaneous losses and credits and minority interest in consolidated subsidiaries. 11 The asset, liability, and capital account items used in calculating these ratios are averages of the June and December call dates for the calendar year and the December call date for the preceding year. ~/ Less than $500,000 NOTE: Details may not add to totals because of rounding. d~osits 1/ It i
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