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i •(For immediate release) C .4 . K | March 6, 1968 MEMBER BANK INCOME, 1967 A substantial expansion in the volume of loans and in invest ments in state and municipal securities, along with a somewhat higher rate of return, raised the net income after taxes of Federal Reserve member banks in calendar 1967 despite increased expenses. Summaries of preliminary figures show that net income after taxes for the approximately 6,000 member banks rose $400 million or 18 per cent over 1966. The marked increase in gross revenue was offset in large part by increases in bank expenses. The net effect of security transactions, other profit and loss adjustments on loans and other assets, and changes in valuation reserves was to reduce net income by $736 mil lion. The ratio of net income to average total capital accounts for all member banks was 9.6 per cent compared to 8.6 per cent for the previous year. Gross current operating revenue increased by $1,787 million or approximately 11 per cent. Revenue on loans accounted for about threefifths of the rise. Substantial increases in average holdings and a slight increase in the average rate of return on loans were responsible. Revenue on U. S. Government securities rose $232 million over the pre ceding year as a result of a higher average rate of return on these in vestments. The $296 million increase in revenue from other securities resulted from a substantial increase in the average holdings of these types of securities--mostly state and municipal securities--and a modest increase in the average rate of return. Total current operating expenses was nearly 13 per cent, or $1,566 million higher than 1966. About three-fifths, or $878 million, of this increase was from an increase in interest payments on time and savings deposits. The increase resulted from a very large increase in average holdings of these liabilities and a slight increase in the average rate paid. The cost of salaries, wages, and other employee benefits rose $414 million and all other expenses $274 million. Net current earnings before income taxes was $4,353 million, about 5 per cent higher than 1966. The reduction of $736 million from the net effect of security transactions and other profit and loss ad justments on loans and other assets compared to a record net reduction of $1,046 million for 1966. The smaller net reduction was primarily due to smaller losses on securities sold in 1967. Net income before taxes was $3,616 million, $532 million more than last year. Taxes on net income were $1,007 million, $131 million higher than 1966. Net income after taxes rose to $2,609.million. Income and expense reports from these member banks usually represent a little more than 80 per cent of the accounts of all com mercial banks in the country. (over) MEMBER BANK INCOME, BY CLASS OF BANK, 1967 and 1966. (In millions of dollars. 1967 figures preliminary) .' . . . Revenue: On U.S. Government securities On other securities On loans 1/ All other ' ' :r . . All member banks 1967 | 1966 16,072 17,859 1,934 1,702 1,561 1,265 11,086' 12,128 2,236 2,018 13,507 4,211 6,091 3,205 11,941 3,797 5,213 2,931 2,189 666 . 1,037 485 1,985 582 949 455 4,353 4,130 891 790 352 284 20 Losses, charge-offs, and transfers to valuation reserves 3/ 1,088 1,330 Net income before related taxes 3,616 3,084 Taxes on net income 1,007 876 Net income 2,609 2,209 Expenses: Salaries, wages, and benefits Interest on time deposits All other Net current earnings before income taxes Recoveries, transfers from valuation reserves, and profits 2/ VjUUULi. y UdLUVO 1967 7,344 1,009 691 4,843 800 6,571 950 556 4,337 728 1966 558 150 274 134 479 133 231 115 5,092 1,572 2,331 1,190 4,500 1,421 1,992 1,086 5,667 1,823 2,449 1,396 4,977 1,661 2,042 1,274 205 209 1,580 1,537 1,676 1,594 19 20 28 173 143 138 94 191 282 36 77 421 514 440 457 ■721 528 189 161 1,332 1,165 1,375 1,231 237 145 58 51 362 352 351 328 484 383 131 ; 110 970 813 1,024 902 259 52 49 493 453 420 383 16.3 18.0 • V: * ' 284 Cash dividends declared 1,145 1,248 Ratios (per cent): Net current earnings before income taxes 16.1 16.1 16.0 to average total capital accounts Net income to average total capital 8.7 :; 8.6 9.6 accounts .. 4.59 4.02 Average return on U. S. Govt-, securities. 4.48 3.67 3.29 Average return on other securities 3.49 5.81 6.24 A.verage return on loans 6.39 5.32 4.11 4.32 Interest on time to average time deposits 1/ Includes charges on loans other than interest. 2/ Does not include recoveries credited directly to valuation reserves. 3/ Does not include losses charged directly to valuation reserves. Reserve City Banks City of Chicago Other 1966 1967 1967 1966 763 689 6,673 6,036 58 611 69 519 60 52 578 446 527 479 4,598. 4,285 106 : 100 885 786 New York City 1966 1967 3,080 2,775 . 245 175 210 232 1,986 2,159 . 444 405 15.2 7.4 3.59 3.45 5.68 5.08 (over) . 10.4 4.41 3.54 5.88 4.93 9.5 3.60 3.39 5.62 4.56 16.2 9.9 4.56 3.61 6.45 4.34 16.6 8.8 3.94 3.37 6.33 4.14 15.7 9.6 4.41 3.34 6.69 3.93 15.9 9.0 4.2C 3.17 6.53 3.72
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