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F e d e r a l r e s e r v e Ba n k o f D a lla s DALLAS, TEXAS 75222 Circular No. 75-87 June 20, 1975 CONDITION AND INCOME OF MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT TO ALL MEMBER BANKS IN THE ELEVENTH FEDERAL RESERVE* DISTRICT: Although growth in total credit at member banks in the Eleventh District moderated substantially in 1974, net income advanced sharply. Loan demand rose a t less than one-third the pace of the previous two years, but banks increased their holdings of state and municipal securities. Deposit inflows to banks slowed as rising interest rates in money markets made commercial bank time deposits somewhat less attractive much of the year. However, with the prime rate reaching record highs and with a 4.8-percent increase in loans outstanding, income from loans rose substantially. Total assets of member banks in the District increased 6.5 percent in 1974, compared with 12.3 percent in 1973. Total loans rose 4.8 percent, compared with 15.6 percent in the previous year. Although deposit inflows were somewhat weaker than in earlier years, moderation of loan demands permitted banks to acquire nearly $800 million in additional state and municipal securities. In the first half of 1974, banks liquidated over $230 million of U.S. Government and other securities. However, as loan demands eased somewhat further toward the end of the year, bank holdings of U.S. Government securities remained essentially unchanged while banks replaced some of their other securities. As in the nation, 1974 was characterized by both inflation and an emerging recession in the District. Although business loans increased 13 percent during the year, much of this increase was associated with greater activity in energy-related industries. With rapidly rising prices, some of the increase simply reflected the higher cost of doing business. Demands for other major types of loans, however, were relatively weak. Although real estate loans expanded 5.7 percent, or nearly $170 million, most of this expansion came before midyear since con struction in the District slowed markedly toward year-end. Drought conditions in major producing areas in the District caused a sharp drop in crop production last year, and a sub stantial drop in beef cattle prices curtailed growth in livestock income. Consequently, with depressed farm and ranch operations, agricultural loans showed a slight decline. District automobile sales were also sluggish, and automobile instalment loans fell 1.5 percent during the year. Loans to individuals rose 4.2 percent, even though credit extended through retail credit-card plans increased 21.6 percent. Loans to financial institutions, which include Federal funds sold, fell 10 percent, while security loans rose only marginally as there was no major improvement in stock prices in 1974. Total deposits at District member banks increased 8.8 percent in 1974. This was the slowest rate of deposit growth at these banks in the past five years. Time deposits of in dividuals accounted for 56.8 percent of the increase. Demand deposits of individuals rose only marginally, while deposits of the U.S. Government fell 32 percent, or $120 million. With rates on Federal funds rising to record levels, the banks reduced their borrowings in the Federal funds market and from other market sources by 17.7 percent. In addition, they reduced their borrowings from the Federal Reserve Bank of Dallas by 40 percent during the year. Total operating income increased 27.3 percent, or $613 million, over 1973. Over two-thirds of this increase was accounted for by greater interest and fees received on loans. However, rising prices, as well as rising interest rates paid on time deposits, caused total operating expenses to increase even faster than income. As a result, income before taxes or securities adjustments rose 17.6 percent. Income taxes for these banks increased 10.5 percent over the previous year, and — despite some losses on securities —banks showed a gain of 19.4 percent for net income. Sincerely yours, Ernest T. Baughman President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) COMPARATIVE STATEMENT OF CONDITION OF MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT (Amounts in thousands of dollars) June 30, 1974 Dec. 31, 1973 21,423,061 2,029,553 5,543,596 1,391,422 30,387,632 5,615,633 37,405,411 11,132,553 11,764,406 315,234 4,497,329 1,963,138 311,452 29,984,112 2,656,277 148,616 3,318,942 71.4% 20,861,033 2,121,498 4,966,756 1,531,715 29,481,002 6,572,869 37,382,113 11,959,734 10,986,659 375,849 3,925,284 2,493,944 384,524 30,125,994 2,484,022 38,480 3,521,589 69.2% 18.7% 21.8% 8.9% 650 8.7% 642 Dec. 31, 1974p Item Loan (gross), including overdrafts1 _________________ .21,897,396 U.S. Treasury securities ____________________ _____. 2,025,971 Obligations of States and political subdivisions________ . 5,744,723 Other securities (including trading account securities) —. 1,467,173 TOTAL LOANS (GROSS) AND INVESTMENTS_____ .31,135,263 Cash and balances due from b a n k s __________________ . 7,141,087 TOTAL ASSETS _________________________________ .39,794,513 Individual — Demand deposits _____________________ .12,159,327 Individual — Time deposits ________________________ .12,496,923 Deposits of U.S. Governm ent___ ____ _______________. 255,588 Deposits of States and political subdivisions___ ______ . 4,642,383 Deposits of banks __________________ _____________ . 2,849,035 Certified and officers’ checks, etc. ____________ ____ —. 379,269 TOTAL DEPOSITS ________________________ ____ .32,782,525 TOTAL CAPITAL ACCOUNTS ____________________ . 2,760,781 Borrowings from Federal Reserve B a n k _____________ . 23,100 All other borrowings _____________________________ . 2,897,518 Ratio of loans to total deposits______________________ . 66.8% Ratios of cash and balances due from banks to total deposits ...... ........ . 21.8% Ratio of total capital accounts to risk assets (total assets less Government securities and cash assets) ________ . 9.0% Number of member banks . 658 1 Includes Federal funds sold, p— Prelim inary. PRINCIPAL ASSET AND LIABILITY ITEMS OF MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT (In thousands of dollars) Date Dec. 31, 1965 1966 Dec. 30, 1967 Dec. 31, 1968 1969 1970 1971 1972 1973 1974p Total D eposits Total Loans (G ross)1 Total Investm ents Total Loans (G ross) and Investm ents Total U.S. Treasury Securities Total Capital Accounts 15,366,002 16,073,230 8,669,530 29,176,977 4,481,641 24,618,385 13,151,171 13,795,362 2,498,091 2,355,472 1,378,642 1,454,963 17,708,732 9,957,491 5,275,204 15,232,695 2,610,139 1,539,474 19,603,344 19,403,693 21,310,875 24,105,203 27,533,316 30,125,994 32,782,525 11,370,944 12,138,578 13,496,198 15,223,814 18,043,657 20,861,033 21,897,396 5,744,992 5,322,856 6,196,825 7,244,416 8,223,521 8,619,969 9,237,867 17,115,936 17,461,434 19,693,023 22,468,230 26,267,178 29,481,002 31,135,263 2,649,477 2,148,747 2,194,238 2,365,542 2,389,335 2,121,498 2,025,971 1,630,114 1,730,892 1,872,565 2,002,638 2,222,533 2,484,022 2,760,781 1 Includes Federal funds sold. 2 Commodity Credit Corporation certificates of interest and Export-Import Bank participations are henceforth included in “Total Investm ents,” rather than “Total Loans (G ross).” p— Prelim inary. COMPARATIVE STATEMENT OF INCOME, EXPENSES, AND DIVIDENDS OF MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT (Amounts in thousands of dollars) 1973 1974p Item Interest and dividends on securities _________________ . 471,899 Interest and fees on lo a n s__________________________ .1,867,806 Service charges on deposit accounts_________________ . 62,269 All other operating income1 ... __________ __________. 457,401 TOTAL OPERATING INCOME ____________________ 2,859,375 Salaries and wages ________________________________ . 357,463 Interest on time and savings deposits_____ _________ 1,105,126 All other operating expenses________________________ . 936,110 TOTAL OPERATING EXPENSES 2,398,699 INCOME BEFORE INCOME TAXES AND SECURITIES GAINS OR LOSSES_____________________________ . 460,676 Applicable income taxes ___________________ _______. 98,236 Net securities gains or losses_______________________ . -2,695 Extraordinary items and other charges or c re d its______ . 1,439 NET INCOME ____________________________________ . 361,184 Cash dividends declared2 __________________ _______. 96,394 Number of member b a n k s__________________________ . 658 405,537 1,458,252 56,049 326,969 2,246,807 315,337 790,160 749,572 1,855,069 391,738 88,909 -2,044 1,630 302,415 93,171 642 Net Change 66,362 409,554 6,220 130,432 612,568 42,126 314,966 186,538 543,630 68,938 9,327 -651 -191 58,769 3,223 16 1 Includes income from Federal funds sold and securities purchased under agreem ents to resell. 2 Includes interest on capital notes and debentures, p— Preliminary. PRINCIPAL ITEMS OF INCOME, EXPENSES, AND DIVIDENDS OF MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT (Amounts in thousands of dollars) Year 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974p Total Operating Income Total Operating Expenses Income before Taxes and Securities Gains or Losses 701,424 797,834 883,093 1,035,225 1,250,222 1,408,333 1,508,729 1,687,789 2,246,807 2,859,375 509,130 586,397 651,566 765,580 960,470 1,093,905 1,205,908 1,350,622 1,855,069 2,398,699 192,294 211,437 231,527 269,645 289,752 314,428 302,821 337,167 391,738 460,676 1 Includes interest on capital notes and debentures, p—Preliminary. Net Income Cash Dividends Declared1 Number of Member Banks 105,100 116,744 130,011 152,949 189,681 219,794 236,796 263,860 302,415 361,184 56,080 59,816 64,604 78,065 72,812 82,034 94,471 95,537 93,171 96,394 675 673 667 651 640 634 633 633 642 658 CHANGES IN LOANS AND DEPOSITS AT MEMBER BANKS ELEVENTH FEDERAL RESERVE DISTRICT, 1966 - 1 9 7 4 20 PERCENT CHANGE [Dec. Over Dec.] ---------------------------- 1966 1967 1968 1969 1970 1971 1972 CHANGES IN T O T A L O PERATING EXPENSES A N D INCOME OF MEMBER BANKS E LE V E N T H FED E R A L RESERVE D IS TR IC T, 1966 -1 9 7 4 40 PERCENT CHANGE [Dec. Over Dec.] ------------------------------------------------------------------ TO T A L OPERATING INCOME 1973 1974
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