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Western Bank Profits“ 1972 RUTH WILSON Federal Reserve Bank of San Francisco April 1973 Profit Margin Rules Since under the current economic stabilization program, all segments of our society — business firms and wage earners alike-—are called upon to forego for the sake of the general welfare some of the earnings that they might otherwise have realized, banks should accept similar restraints. While present criteria provide for flexibility in the "large-business prime rate,” increases in a bank’s entire structure of lending rates must in no instance lead to undue increases in the bank’s profit margin. If increases in interest rates on loans occur, they shall not raise the bank’s over-all profit margins on domestic operations (excluding revenues from service functions such as trust departments and data processing) above the average of the best two years in the four preceding calendar years. For purposes of this test, the profit margin is defined as the ratio of net operating income, on a fully taxable equivalent basis before income taxes and securities gains or losses, to gross operating income on a fully taxable equivalent basis. Committee on Interest and Dividends Western Bank Profits — 1972 et income of Twelfth District member banks increased 9 percent in 1972— the largest gain of the past three years — to reach a new high of $567 million. This increase in net profits came about mainly because of a 13-percent rise in income before taxes and securities gains, reversing the 1971 decline in this measure. The very substantial increase in pre-tax profits, in turn, reflected the heavy demand for mortgage, consumer and business credit generated by the rapid expansion of the 1972 economy. As Western banks accommodated the rising credit needs of their customers, their earning as sets expanded by nearly $8.5 billion. The average rate of return on these assets declined, despite a late-year rise in loan rates and security yields, and thus limited the otherwise sharp increase in pre tax income. Western banks expanded their role in inter national financial markets, recording a large in crease in income from foreign operations during 1972. In addition, their profits picture reflected the second successive year of capital gains on security transactions. Income performance in 1972 benefitted from a relatively slower rate of increase in expenses than in revenues — a reversal of the pattern of the past several years. A key factor in curbing expenses was the early-year reduction in the rate paid on passbook savings. This decrease, amount ing to one-half percentage point, applied to one of the largest sources of bank funds. Banks encountered some difficulties in main taining profit margins as they did in the recent turbulent past. The margin between the rate of return on assets and the cost of funds narrowed N in the first quarter, as loan rates declined to the lowest level since I960, reflecting the banks’ highly liquid situation at that point in the cycle. Then, in the fourth quarter, banks encountered difficulties when loan rate increases failed to keep pace with the rapidly rising cost of funds, just at a time when a firmer monetary policy was causing heavier reliance on borrowed funds to meet strengthening loan demand. Most District banks reported strong gains in income, although income statements varied widely among individual banks. Some banks suffered declines in net income, while certain other banks recovered from poor 1971 perform ances to register large gains in 1972. In a reversal of recent trends, the largest banks— those with deposits of $500 million or more — outpaced other banks in terms of 1972 profits, because of stronger gains in pre-tax income as well as sub stantial returns from security sales. Record net income based on higher operating net plus security gains WESTERN BANK PROFITS— 1 97 2 O P E R A T IN G IN C O M E Total pre-tax (operating) income increased percent— twice as fast as in the previous year— to reach $5.3 billion in 1972. The eco nomic expansion helped cause a shift in the com position of bank earning assets, however, as loan demand increased from all sectors of the eco nomy. Loan revenue, which rose 10 percent after a decline in 1971, accounted for two-thirds of the year’s increase in total income. Interest and dividends from securities meanwhile rose only 4 1/2 percent, following a very large increase in the preceding year, and accounted for only oneeighth of the total income increase. Smaller sources of operating income also rose in 1972, including a very substantial gain from foreign operations. Rates ©f on assets decline . .. lower rates paid on time deposits 9 1/2 Higher ban revenue 4 Interest and fees on loans (excluding income from Federal funds) increased $304 million to reach $3.5 billion in 1972. Loan portfolios ex panded 17 percent— although at lower average rates of return — as a consequence of burgeoning credit demands from all sectors of the economy. Loan demand was strong throughout the Dis trict, reflecting the geographic breadth as well as the strength of the economic expansion. A change in the loan mix partly compensated for the lower level of loan rates, as banks allo cated more of their funds to mortgages and con sumer loans, which carry significantly higher rates of return than prime business loans. Mort gage financing absorbed nearly one-third of the $7.6-billion total increase in loans, as the regional housing boom continued at full tilt. Consumer loans accounted for another one-fifth of the total loan increase, reflecting the strength of the de mand for autos and other credit-financed con sumer goods. Despite this emphasis on loan categories which normally carry higher interest rates, the average rate of return on loans (excluding Fed funds) fell to 7.37 percent in 1972 — 33 basis points below the 1971 average and 93 basis points below the high 1970 rate. However, rates ranged widely over the course of the year. In the first quarter, when banks appeared to be deluged with funds, the prime rate on business loans declined to 4% percent, and this was followed by a gen eral reduction in loan rates to the lowest levels since I960. In following quarters, as the move ment in money-market rates reversed, loan rates began to edge up gradually, until finally, rapidly rising money rates and strong loan demand brought a 6-percent prime rate around year-end. But because of a very competitive mortgage mar ket, mortgage rates did not follow business-loan rates upward in this late-year uptrend, and con sumer-loan rates similarly lagged. In addition to income from regular loans, Dis trict banks recorded a 39 percent ($40 million) increase in revenue from sales (loans) of Federal funds — that is, from interbank lending of re serves on deposit with the Federal Reserve Bank — and from loans under repurchase agreements with security dealers and others. The volume of interbank Fed-funds sales nearly doubled over the year (daily average basis), reflecting in creased borrowings by banks as reserve pressures increased. The rate of return on these transac tions ranged from a low of 3.29 percent in Feb- raary to a high of 5.33 percent in December. The average rate for the year, 4.44 percent, was 22 basis points below the 1971 average. L o o n in c o m e sours,, but security Income rises at slower rate Percent Change Small gain from securities As typically happens in a boom period, banks added to their loan portfolios at the expense of their security portfolios, so that income from securities increased only $46 million to reach $840 million last year. This mere 4y2-percent gain compared with the sharp 26-percent in crease of the previous year, when loan demand was weaker and banks were replenishing their security holdings. Only one-eighth of 1972’s total increase in operating income came from securities, whereas four-fifths of the previous year’s increase was attributable to this source. Actually, security portfolios increased modestly, but this was largely offset by a decline in the average rate of return. Banks incurred a 30-basis point decline in the rate of return on U.S. Treasury securities, reflect ing the lower level of yields on short and inter mediate-term issues during the first half of the year, as well as a shift in security holdings toward shorter maturities. On the other hand, banks benefitted from a 19-basis point increase in the rate of return on U.S. Agency securities, and took advantage of this more favorable yield spread to expand their holdings in this area. Their portfolios of tax-exempt state and local obliga tions fluctuated during the year, but with little year-over-year change, and the rate of return on these sucurities declined by a moderate 7 basis points. Gains from other sources Foreign branches and Edge Act subsidiaries represented the fastest growing source of bank income in 1972. These operations produced an increase in income of $111 million-— triple the amount realized in the previous year. (This amounted to almost one-fourth of the year’s total increase in revenues.) Western banks’ role ex panded significantly, as additional banks entered the field of foreign operations, while other banks not only entered new areas but also extended the scope of their activities in countries previously served. The outlook for future income growth from foreign activities is enhanced by the stra tegic situation of Western banks for financing the emerging trade with Pacific Basin countries. Other sources of income generally increased in 1972. Trust department income expanded 9 per cent— slightly below the previous year’s pace. Service charges on deposit accounts increased 1y 2 percent, about as rapidly as they did in 1971, but other charges and fees rose 12 percent, as a consequence of the rapidly expanding range of services offered to bank customers. Income from other miscellaneous activities also rose rapidly over the year. On the other hand, income from trading accounts declined for the second straight year, reflecting in part a reduction in the volume of securities held in these accounts. O P E R A T IN G EXP EN SES Total bank operating expenses increased 9 per cent— somewhat faster than in the previous year — to reach $4.5 billion in 1972. Unlike other recent years, however, total costs rose at a slower S WESTERN BANK PROFITS 1972 pace than revenues, and thereby helped account for 1972’s strong profit performance. Wages and salaries (including employee bene fits) increased more than 8l/> percent, outpacing the 1971 increase, despite the downward pres sure of Phase II controls on payroll costs. Part of the increase was due to a 4-percent rise in employ ment, with many of the 5,852 new employees being hired to staff the 111 new banking offices which opened during the year. Mergers account ed for the loss of five member banks, and thus did not materially reduce staffing requirements. N et incQme rises sharply: increasing revenues outpace rise in expenses Percent C h a n g e -1 0 -5 0 5 10 15 I-----------1--------- 1-----------1-----------1----------1 1 9 7 1 -7 2 N e t In c o m e ^ 1 9 7 0 -7 1 T o ta l R e v e n u e s T o ta l E x p e n s e s -m m m rn Slowdown in deposit costs Interest expense on time-and-savings deposits, which amounts to over two-fifths of all expenses and thus stands out as the largest cost category, advanced almost 8 percent last year. This rate of increase fell considerable below the 1971 figure, however, in part because the deposit base— al though growing by 11 percent— expanded at a slower pace than in the previous year. More importantly, Western banks profited from a 24-basis point decline, to 4.55 percent, in the average rate of interest paid on time-andsavings deposits. Many large banks, early in the year, reduced the rate paid on passbook savings from 4 1/2 to 4 percent, and maintained that lower rate throughout the remainder of the year. That one step alone sharply affected deposit-interest expense, since it applied immediately to the largest negotiable CD’s, which normally carry higher interest rates than consumer savings in struments. However, because of unusually low CD rates during the first half of the year, the upward impact on interest expense was some what limited — even though the largest issuance came during the last quarter, when offering rates were rising sharply. More money for borrowed funds 6 Expenses for borrowed funds rose sharply be cause of a strong rise in the volume of borrow ing, especially since much of this occurred when money-market rates were rising in the latter part of the year. The cost of Federal funds purchased (borrowed) and securities sold under repurchase agreements rose 27 percent, to $218 million. Interbank Federal funds purchases roughly matched the previous year’s level (daily average basis), but borrowings from U.S. Government securities dealers under repurchase agreements nearly doubled. However, the largest expense for borrowed funds came from purchases of securi ties under repurchase agreements with corpora tions and public agencies, particularly the latter. These transactions reached $2 billion (daily aver age)—well above the previous (1971) record— reflecting the growth of temporarily excess funds available to states and political subdivisions be cause of their generally improved financial situation. Interest on other borrowed money also rose nearly 30 percent, but amounted to less than $7 million; included in this was interest paid on $18 million (daily average) borrowings from the Federal Reserve Bank at a discount rate of 4.50 per cent. (That rate remained constant through out the year.) Meanwhile, interest paid on capital notes and debentures almost doubled, to $42 mil lion, as banks took advantage of the relatively low level of money rates early in the year to aug ment their sources of funds by offering such instruments. Banks added $16 million to their provision for possible loan losses — only half the provision made in the previous year, when serious financial difficulties were encountered by some major bank customers. However, actual loan losses declined 20 percent from the very high 1971 figure to $134 million, reflecting both the general im provement in the economic climate and the greater care utilized by banks in extending credits. . . . especially with slowdown in time-deposit interest costs BANK PROFITS Income before taxes and securities gains jumped 13 percent to $759 million, as rising revenues outpaced the increase in expenses for the year. This was the first time since 1969 that pre-tax profits increased. After adjusting for higher State and Federal income taxes (princi pally the latter), banks recorded $555 million in income after taxes, but before securities gains. Banks realized net capital gains on securities for the second straight year, as higher security prices during at least part of the year permitted capital appreciation on securities purchased at lower price levels. Capital gains amounted to $9 mil lion, and extraordinary credits added $3 million more. Thus, the combination of these operating and "below the line” items led to a 9-percent rise in net income, to $567 million. Member-bank capital increased $788 million — double the 1971 gain — partly because of sub stantial issuance of notes and debentures and ad ditions to common and preferred stock, but also because of increases in surplus, undivided profits and capital reserves. Yet, as a consequence of the sharp gain in income, several major income/ capital ratios increased last year. On the other hand, the ratio of dividends to equity capital (plus reserves) declined, reflecting the restric tion on dividend payments enforced by the Com mittee on Interest and Dividends. W ide range of results The largest District banks — those with de posits of $500 million or more — recorded a 9percent increase in net income, as against a 7y2percent gain for other member banks. The dif ference was attributable to a stronger perform ance in pre-tax profits, plus a larger increase in capital gains on securities; on the other hand, the largest banks incurred much higher income taxes, as they swung from a loss to a gain position in revenues between 1971 and 1972. Profit results varied widely among District states. California, the largest state, recorded a lOl/rpercent increase in net income, but Idaho, Nevada and (especially) Utah posted even larger gains. (Utah banks had a l6 y 2-percent increase for the year.) In each of these states except Idaho, relatively small increases in deposit-interest ex pense helped to limit total expenses, and thus to expand net income. Banks in both Arizona and Alaska reported below-average increases in net income, because of actual declines in profits before taxes and securi ties gains. In Arizona’s case, this was more than offset by a large reduction in tax payments; in Alaska’s case, by larger capital gains on securities. Oregon banks posted a relatively low 4-percent increase in net income, as a consequence of lower security gains as well as extraordinary losses. Washington reported a decline of over 5 per cent in net income— the only District state to do so. This decrease reflected a sharp decline in pre tax profits, a result of the continuing problems of 7 WESTERN BANK PROFITS— 1972 some individual banks stemming from Washing ton’s prolonged recession. Lower tax payments offset most of this reduction in pre-tax profits, but on the other hand, Washington banks also reported smaller security gains as well as an in crease in extraordinary charges. * * * After the relative calm of 1972, Western banks encountered turbulent waters as they entered the new year. In the first quarter of 1973, moneymarket rates climbed steeply until the cost to banks of Fed funds and CD money exceed the prime business-loan rate, even after the increase in the latter to 6 ^ percent in late February and 6]/2 percent in late March. At the same time, banks were almost overwhelmed by a record loan de mand from the business sector, reflecting not only the cyclically heavy demand for credit, but also the low level of the prime rate in relation to other sources of funds. Bank customers, faced with a series of inter national monetary crises, also borrowed substan tially to finance foreign-currency transactions. At the same time, households continued to maintain 8 last year’s fast-paced mortgage demand as well as their high rate of borrowing for consumer-goods purchases. Hard-pressed for funds to meet these contraseasonal loan demands, banks increased their of fering rates on negotiable CD’s and paid rates ranging over 7 percent for Fed-funds purchases. In addition, many banks moved back to the 4y 2 percent ceiling rate on passbook savings (early March) and thus incurred a major increase in the cost of this "non-marginal” source of funds. Consequently, bank profit margins narrowed in the first quarter, as the rise in the cost of funds outstripped the rise in rates of return. The out look for an immediate reversal of this trend is not promising. Even so, first-quarter loan reve nues were substantially higher than in the yearago period — and they should continue so in coming months because of the extremely large contra-seasonal rise in loan portfolios that banks have already experienced. Sharon Byrne provided statistical assistance for this article. CONSOLIDATED REPORT OF INCOME OF TWELFTH DISTRICT M EM BER BANKS ( m illio n s o f d o lla r s ) 19681 1969 1970 1971 1972p O p e ra tin g in c o m e — T otal In te re st a n d fe e s o n lo a n s In c o m e from F e d e ra l f u n d s s o ld In te re st a n d d iv id e n d s o n in v e stm e n ts (e x c lu d in g tra d in g a c c o u n ts ) T r u s t d e p a rtm e n t in c o m e S e r v ic e c h a r g e o n d e p o s it a c c o u n t s O th e r o p e ra tin g in c o m e 3 ,530 2 ,4 7 6 2 N.A. 4,168 2,989 99 4,601 3,201 120 4 ,808 3 ,1 9 3 1 02 5,271 3 ,497 14 3 5903 96 207 1 62 549 108 2 03 220 636 116 207 322 803 128 211 370 840 14 0 215 438 O p e ra tin g e x p e n s e s — T o tal S a la r ie s , w a g e s a n d b e n e fits In te re st o n d e p o s it s In te re st o n b o rro w e d fu n d s (in c lu d in g F e d e ra l f u n d s p u r c h a s e d ) N et o c c u p a n c y e x p e n s e , furniture, e q u ip m e n t, etc. P r o v is io n s for lo a n lo s s e s O th e r o p e ra tin g e x p e n s e s 2 ,9 1 7 * 861 1 ,3614 3 ,4 4 4 991 1,408 3 ,878 1,109 1,596 4 ,137 1,201 1,779 4,512 1,306 1,919 85 234 75* 301 2 20 259 74 492 24 5 290 87 551 177 328 120 532 224 362 1 36 5 65 In c o m e b e fo re in c o m e t a x e s a n d s e c u ritie s g a in s o r lo s s e s A p p lic a b le in c o m e t a x e s In c o m e b e fo re s e c u r it ie s g a in s o r lo s s e s N e t s e c u ritie s g a in s after ta x e s E x tr a o rd in a r y c re d its after ta x e s 613* 199* 414* - 24* N.A. 724 249 475 — 17 — 1 7 24 22 3 501 2 - 18 671 162 509 10 1 759 204 555 9 3 N e t in c o m e C a s h d iv id e n d s p aid 391* 1 82 457 220 480 228 520 248 567 255 1) 1968 data pa rtia lly estim ated fo r som e item s (* ) a nd restated on 1969 re p o rtin g basis; data a lso a djusted fo r w ithdraw al of a la rge m e m b e r bank. 2) Includes incom e from Federal funds so ld not broken out separately. 3) Includes incom e from securities in tra d in g accounts. 4) Includes interest on E urodolla rs; in subse q ue nt years interest on E u ro d o lla rs is re porte d under interest on b orrow e d funds o r under other o p e ra tin g expenses. P = Prelim inary N A = N o t A v a ila b le N ote: Details m ay not a d d to total due to ro u n d in g; data not strictly c o m p a ra b le due to ch ang e s in m e m be r ba nk universe. 1972p O p e ra tin g in c o m e — T o tal In te re st a n d fe e s o n lo a n s In c o m e from F e d e ra l f u n d s s o ld In te re st a n d d iv id e n d s o n in v e stm e n ts ( e x c lu d in g t ra d in g a c c o u n ts ) T r u s t d e p a rtm e n t in c o m e S e r v ic e c h a r g e o n d e p o s it a c c o u n t s O th e r o p e ra tin g in c o m e 5,271.3 3 ,496.7 142.5 O p e ra tin g e x p e n s e s — T o tal S a la r ie s , w a g e s a n d b e n e fits In te re st o n d e p o s it s In te re st o n b o rro w e d fu n d s (in c lu d in g F e d e ra l f u n d s p u r c h a s e s ) N et o c c u p a n c y e x p e n s e , furniture, e q u ip m e n t, etc. P r o v is io n s for lo a n lo s s e s O th e r o p e ra tin g e x p e n s e s 4,512.2 1,306.1 1,919.0 Change 1971-72 Dollar Percent Percent Change 1970-71 + 4 6 3 .6 + 3 0 3 .9 + 40.3 + + + 9.6 9.5 39.4 + 4.5 - 0.3 -1 4 .6 + + + + 36.6 11.7 3.4 67.7 + + + + 4.6 9.1 1.6 18.3 + 2 5 .9 + 1 0 .5 + 1.8 + 15.7 + 3 7 5 .5 + 1 0 5 .0 + 1 3 9 .6 + + + 9.1 8.7 7.8 + 6.6 + 8.3 + 1 1 .4 2 2 4 .4 3 6 2 .0 135.9 564 .8 + + + + 47.8 34.3 15.7 33.1 + + + + 27.1 10^5 13.1 6.2 -2 7 .7 + 1 2 .7 + 3 8 .8 - 3.5 In c o m e b e fo re in c o m e t a x e s a n d s e c u ritie s g a in s o r lo s s e s A p p lic a b le in c o m e t a x e s In c o m e b e fo re s e c u ritie s g a in s o r lo s s e s N e t s e c u ritie s g a in s after t a x e s E x tr a o rd in a r y c re d it s after t a x e s 759 1 2 04 .4 5 5 4 .7 9.0 2.8 + + + + 88.1 42.9 45.2 1.1 2.4 + 13.1 + 26.6 + 8.9 — 10.9 + 6 0 0 .0 - 7.3 -2 7 .7 + 1.8 N e t in c o m e C a s h d iv id e n d s p aid 566 .5 255 .0 + + 46.5 7.5 + + + + P = Prelim inary 839 .5 140.1 214 .5 4 3 8 .0 8.9 3.0 — — 8.4 8.6 SELECTED EARNINGS AND EXPENSE ITEMS OF TWELFTH DISTRICT MEMBER BANKS (p e rc e n t c h a n g e s ) Largest Banks All Other 1971-72^ 1970-712 O p e ra tin g in c o m e — T otal In te re st a n d fe e s o n lo a n s In c o m e from F e d e ra l f u n d s s o ld In te re st a n d d iv id e n d s o n in v e stm e n ts ( e x c lu d in g tra d in g a c c o u n t s ) + 9.8 + 9.6 + 4 3 .0 + 4.3 - 0.7 -1 3 .0 + + + 8.7 8.6 7.7 + 5.8 + 3.7 -2 5 .2 + 4.4 + 2 7 .7 + 5.8 + 1 1 .0 O p e ra tin g e x p e n s e s — T o tal S a la r ie s , w a g e s a n d b e n e fits In te re st o n d e p o s it s In te re st o n b o rro w e d fu n d s (in c lu d in g F e d e ra l f u n d s p u r c h a s e s ) P r o v is io n fo r lo a n lo s s e s + + + 9.2 8.8 7.7 + 6.5 + 8.5 + 1 1 .3 + + + 8.3 8.4 9.2 + 7.9 + 6.7 + 12.8 + 2 7 .1 + 1 5 .7 — 28.3 + 4 2 .6 + 2 7 .3 — 7.3 -1 6 .7 + 1 7 .6 In c o m e b e fo re in c o m e ta x e s a n d s e c u ritie s g a in s o r lo s s e s A p p lic a b le in c o m e t a x e s In c o m e b e fo re s e c u ritie s g a in s o r lo s s e s + 1 3 .5 + 3 0 .0 + 8.4 - 7.6 — 29.3 + 2.0 + 10.4 + 5.0 + 12.6 - 4.7 — 15.9 + 0.7 N e t in c o m e after s e c u r it ie s g a in s a n d e x t ra o r d in a ry c re d its + + + + 1 0 .1 9.1 1970-71 1971-72p 8.1 7.5 1) Includes 21 District m e m b e r banks with total de p o sits of $500 m illion a nd ove r as of D e c e m b e r 31, 1972. 2) In clu d e s 19 D istrict m e m b e r banks with total d e p osits of $500 m illion a n d over as of D e c e m b e r 31, 1971. P = Prelim inary SELECTED OPERATING RATIOS OF TWELFTH DISTRICT MEMBER BANKS (p e rce n t) E a r n in g s R a tio s: R e tu rn o n lo a n s (in c lu d in g F e d e ra l fu n d s) R e tu rn o n U .S. T r e a s u r y S e c u r it ie s (e x c lu d in g tra d in g a c c o u n ts ) R e tu rn o n o th e r s e c u ritie s ( e x c lu d in g t ra d in g a c c o u n ts ) In c o m e after t a x e s a n d b e fo re s e c u r it ie s g a in s ( lo s s e s ) to e q u ity ca p ital p lu s all r e s e rv e s N e t in c o m e to e q u ity ca p ital p lu s all r e s e rv e s C a s h d iv id e n d s to e q u ity c a p ita l p lu s all r e s e rv e s In te re st p a id o n d e p o s it s to total tim e d e p o s it s T im e d e p o s it s to total d e p o s it s 1968 1969 1970 1971 1972p 7.24 7.95 8.32 7.59 7.20 4.8 0 1 4.71 5.42 5.37 5.07 3 .8 8 1 4.00 4.40 4.46 4.32 10.25 9.67 10.96 10.55 10.56 10.13 10.24 10.45 10.35 10.57 4.52 4 .5 8 2 56.88 5.08 4.64 55.59 4.81 5.15 55.49 4.97 4.79 58.50 4.76 4.55 58.83 1) In clu d e s securities in tra d in g accounts. 2) In clu d e s interest on E u rod olla rs; sub se q u e n t years exclude interest on Eurodolla rs. P = P relim inary N ote: These ratios are c o m p u te d from_ a g g r e g a t e am ounts of incom e a n d expense items. E q uity ca p ital, reserves, deposits, loan a nd securities item s on which these ratios are b a se d are a v e ra ge s of data from three call re ports (D e c e m b e r of p rio r year, June a nd D e c e m b e r of current year). 10 SELECTED ASSET AND LIABILITY ITEMS OF TWELFTH DISTRICT M EM BER BANKS (Data as of December 31 — millions of dollars) 19681 1969 1970 1971 1972p G r o s s lo a n s a n d in v e stm e n ts F e d e ra l f u n d s s o l d 2 O th e r lo a n s C o m m e r c ia l a n d in d u stria l R e a l E sta te L o a n s to in d iv id u a ls A g ric u ltu ra l U .S . T r e a s u r y s e c u r it ie s 3 O th e r S e c u r it ie s 3 S e c u r it ie s in tra d in g a c c o u n t s 5 2 ,152 866 3 6 ,5 3 9 14,149 10,681 7,145 1,379 6 ,344 8 ,403 N.A. 5 2 ,220 816 3 8 ,6 8 2 15,002 11,162 7,563 1,446 4,731 7,442 549 5 7 ,2 3 9 1,946 39,291 15,485 11,207 7,427 1,455 5,881 9,187 934 6 5 ,595 2,435 4 3 ,9 3 6 16,393 12,648 8 ,359 1,615 7,183 11,168 873 7 4 ,0 3 7 3 ,2 2 4 5 1 ,5 7 7 17,960 15,024 9,711 1,942 7,184 11,398 654 T o tal a s s e t s 63,308 6 5 ,486 7 1 ,307 8 1 ,662 9 2 ,589 T o tal d e p o s it s Dem and D e m a n d IR C T o ta l tim e a n d s a v in g s S a v in g s O th e r tim e IP C State a n d po litic al s u b d iv is io n s 5 5 ,553 2 3 ,9 2 9 19,699 3 1 ,6 2 4 1 6 ,377 10,052 3 ,8 9 7 5 3 ,6 8 4 2 4 ,998 2 0 ,716 2 8 ,6 8 6 15,265 9,533 2 ,769 6 0 ,238 2 5 ,7 3 7 2 1 ,320 34,501 15,759 12,613 4,751 6 8 ,016 2 7 ,769 2 2 ,818 4 0 ,2 4 7 17,794 14,699 6,084 7 7 ,107 3 2 ,4 8 0 2 6 ,736 4 4 ,627 18,673 17,319 6,516 3 ,935 4 ,1 8 4 4 ,377 4,781 5 ,569 C a p ita l a c c o u n t s 1) 1968 data adjusted for w ithdraw al of a la rge m e m b e r bank; d a ta are not on a fully c o n so lid a te d basis. 2) In c lu d in g securities p urchase d unde r resale agreem ents. 3) In I968 data includ e securities in tra d in g accounts; in subseq uent years data exclude securities in tra d in g accounts. P = Prelim inary N A = N o t A v a ila b le N ote: Details m ay not a d d to total due to ro u n d in g; data not strictly c o m p a ra b le due to c h an g e s in m e m be r ba nk universe. December 3 1 ,1972p Change 1971-72 Dollar Percent Percent Change 1970-71 G r o s s lo a n s a n d in v e stm e n ts F e d e ra l f u n d s s o l d 1 O th e r lo a n s C o m m e r c ia l a n d in d u stria l R e a l E state L o a n s to in d iv id u a ls A g ric u ltu ra l U .S. T r e a s u r y s e c u r it ie s 2 O th e r S e c u r it ie s 2 S e c u r it ie s in tra d in g a c c o u n t s 7 4 ,0 3 7 3 ,2 2 4 5 1 ,5 7 7 17,960 15,024 9,711 1,942 7,184 11,398 654 + 8,442 + 789 + 7,641 + 1,567 + 2 ,376 + 1,352 + 327 + 1 + 230 — 219 + 2.1 -2 5 .1 + 1 4 .7 + 2 5 .1 + 1 1 .9 + 5.9 + 1 2 .9 + 1 2 .8 + 1 1 .0 + 2 2 .1 + 2 1 .8 — 6.5 T o tal a s s e t s 9 2 ,589 + 1 0 ,9 2 7 + 1 3 .4 + 1 4 .5 T o tal d e p o s it s Dem and D e m a n d IP C T o ta l tim e a n d s a v in g s S a v in g s O th e r tim e IP C State a n d p o litic al s u b d iv is io n s 7 7 ,1 0 7 3 2 ,4 8 0 2 6 ,7 3 6 4 4 ,6 2 7 18,673 17,319 6 ,516 + + + + + + + 9,091 4,711 3 ,918 4,380 879 2,620 432 + 1 3 .4 + 17.0 + 1 7 .2 + 1 0 .9 + 4.9 + 1 7 .8 + 7.1 + 1 2 .9 + 7.9 + 7.1 + 1 6 .7 + 1 3 .0 + 1 6 .5 + 2 8 .1 5 ,569 + 788 + 1 6 .5 + C a p ita l a c c o u n t s 1) In c lu d in g securities p urc hase d under resale agreem ents. 2) Excludes securities in tra d in g accounts. P = Prelim inary + 1 2 .9 + 3 2 .4 + 1 7 .4 + 9.6 + 1 8 .8 + 16.2 + 2 0 .3 + 0.0 9.2 Publications A vailab le Business and Financial Letter—A weekly newsletter covering current developments in the national economy, one topic per issue. Western Economic Indicators—A monthly 90-page statistical compendium, providing all major economic and financial statistics for the nine-state San Francisco Reserve District. Single copies only. The China Trade (40 pp. 1972)—An analysis of two centuries’ trade between China and the West. The study describes the development of trade under Western auspices during the 19th and early 20th centuries, and then describes the completely different trading environ ment existing today. After analyzing the structure of China’s current imports and exports, the study concludes with estimates of the future magnitude of the China trade. Silver: End of an Era (32 pp. 1972)— A revised version of an earlier study of the politics and economics of the silver industry. The study describes a century of silver legislation (leading up to the recent demonetization), the development of the Western mining indus try, world coinage and industrial demand, and the sharp price fluctuations of the past decade. Nation-Spanning Credit Cards (12 pp. 1972)—An analysis of the rapid growth of bank credit cards, with emphasis on the nationwide coverage recently obtained by two major card plans. The study describes the advantages to cardholders and merchants from wide spread credit-card usage, technological developments enhancing the spread of a general electronic-payments system, and the increasing profitability of card plans with the growing maturity of the industry. W all Street: Before the Fall (36 pp. 1970)—An analysis of basic stockmarket develop ments of the past 15 years. The booklet describes the supply and demand factors underlying price trends, and analyzes the industry’s operational problems and the expanded role of institutional buying in recent years. Calibrating the Building Trades (20 pp. 1971)— An analysis of the unique features of the construction industry and their effect on construction wage trends. The study describes the Administration’s development of an "incomes policy” tailored to that specific industry. On the Waterfront (28 pp. 1972) — An historical study of the Pacific Coast longshore industry. The study describes the background to the prolonged strike of 1971-72, analyzes the impact of the strike on the regional economy, and discusses the future of the industry in terms of the revolutionary concept of containerization. Individual copies of each publication are available on request, and bulk shipments are also available free to schools and nonprofit institutions. Write to the Administrative Service Department, Federal Reserve Bank of San Francisco, P.O. Box 7702, San Francisco, California 94120.
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