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I. I'A ' - n o BUS, .VA K 7/ FEDERAL statistical For immediate release C.4 RESERVE release May 21, 1971 MEMBER BANK INCOME. 1970 Net income after taxes rose substantially in calendar 1970 at Federal reserve member banks but less than the record growth in 1969. According to preliminary information net income after taxes increased by $373 million, or 10.8 per cent of the 1969 level. Contributing factors in this growth were a modest advance in net earnings from current operations before income taxes coupled with lower taxes on operating income and smaller after tax net security losses and other extraordinary charges. Gross operating revenue increased $2,922 million (11.7 per cent) during 1970, of which nearly three-fifths represented larger earnings from loans. An expansion in average loan volume and an increase in the rate of return combined to produce loan revenue that was $1,734 million (9.8 per cent) higher than in' 1969. Income from all major types of investments (excluding those in trading account) also rose. Interest on U. S. Treasury securities increased by $167 million (8.2 per cent) as a higher yield more than offset a reduction in average holdings of these securities. The advance in income from all other securities— a major portion of which represented State and local obligations— amounted to $401 million or 18 per cent. This was the result of a rise in yield as well as in average amount outstanding. Growth of $619 million (20.8 per cent) in earnings from all other sources was in part attributable to a sizable rise in income from trading account. At the same time operating expenses advanced by $2,668 million (14 per cent) in 1970, or at a somewhat faster rate than operating revenue. Two-fifths of the increase in expenses represented higher interest rates paid on a much larger volume of time deposits. This expense increased by $1,080 million, or 15 per cent. Salaries and wages, the second largest expense item, rose by $720 million (13 per cent) and all other expenses by $869 million (12 per cent). Net income from current operations (before income taxes) in 1970 was $253 million (4.6 per cent) above 1969. Due in part to the mid-year expiration of the surtax, taxes applicable to operating income were $38 million lower than in 1969 and net security losses and other extraordinary charges (after taxes) were $82 million less than in the preceding year. Reflecting these developments, net income of all member banks rose to a record high of $3,823 million— $373 million, or nearly 11 per cent, more than in 1969. Income and expense reports from these member banks usually represent about four-fifths of the accounts of all insured commercial banks in the country. (Over) MEMBER BANK INCOME, BY CUSS OF BANK, 1970 and 1969 (I n m i l l i o n s o f d o l l a r s , 1970 f ig u r e s p r e lim in a ry ) Item A ll member banks 1970 r 1969 _________ Reserve city banks__ New York City City of Chicago 1970 1 r 1969 1970 1l r 1969 --------Other 1970 | r 1969 Revenue: On loans 1/ On U. S. Treasury securities On other securities A ll other 27,913 19,487 2,208 2,623 3,594 24,991 17,753 2,041 2,222 2,975 5,116 3,616 279 359 862 4,668 3,441 247 294 687 M 30 848 81 93 207 1,085 794 70 79 141 10,450 7,518 671 842 1,419 Expenses: Salaries, wages, and benefits Interest on time deposits A ll other 22,193 6,158 8,139 7,896 19,525 5,438 7,059 2 / 7,027 ~ 4,051 1,081 995 1,975 3,650 939 826 1,884 961 219 288 454 849 186 249 414 8,385 2,321 3,084 2,979 236 81 155 2,065 670 1,395 Income b ef. Inc. taxes & sec. gains & losses Applicable income taxes Income before sec. gains and losses Net gains & credits (+) or losses & charges ( - ) after taxes 3/ Net income 1/ 11,117 7,503 1,177 1,330 1,107 9,906 6,656 1,125 1,120 1,004 7,326 2,045 2,738 2/ 2,543 ~ 8,796 2,537 3,770 2,489 7,699 2,268 3,245 2,186 2,005 679 1,326 2,321 644 1,677 2,207 663 1,544 5,720 1,775 3,945 5,467 1,813 3,653 1,065 370 695 1,018 390 628 269 92 178 -122 -204 -52 -78 -16 -5 -52 -73 -2 -47 150 1,343 1,252 1,675 1,496 70 651 593 592 515 3,823 Cash dividends declared 1.754 Ratios (per cen t): 4 / To equity capital (in c l. reserves): Income (after taxes) before sec. gains & losses 10.75 Net income 10.44 Average return on loans Average return on U. S. Treasury securities Average return on other securities Interest on time to average time deposits 9,332 6,862 598 729 1,142 Country banks 1970 i r 1969 7.91 5.62 4.56 4.97 3,450 642 550 162 1.523 423 345 88 10.70 10.10 9.76 9.03 9.23 8.08 9.77 8.91 8.99 8.70 10.80 10.40 11.06 10.44 11.31 11.35 11.32 10.97 7.57 4.90 4.07 4.47 7.73 6.00 5.11 5.71 7.45 4.99 4.22 4.79 7.71 5.97 4.60 5.42 7.47 4.77 3.95 4.66 8.11 5.59 4.36 5.11 7.75 4.76 3.89 4.60 7.83 5.53 4.56 4.67 7.47 4.97 4.15 4.28 1 Includes income on Federal funds sold and charges on loans other than in terest. * • Revised. An estimated $1C1 m illion of interest on Eurodollars was excluded from interest on time deposits and Included in a ll other operating expenses to conform with 1970 reporting procedures. 3/ Includes e ffe c t of minority interest in consolidated subsidiaries. y The asset, lia b ilit y , and capital account items used in calculating these ratios are averages of the June and December c a ll dates for the calendar year and the December c a ll date for the preceding year. NOTE: Details may not add to totals because of rounding. 2J
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