Table 114. Income of insured commercial banks in the United States (States and other areas), 1971-1976 Table 115. Ratios of income of insured commercial banks in the United States (States and other areas), 1971-1976
Table 116. Income of insured commercial banks in the United States (States and other areas), 1976
Banks grouped by class of bank
Table 117. Income of insured commercial banks operating throughout 1976 in the United States (States and other areas)
Banks grouped by amount of assets
Table 118. Ratios of income of insured commercial banks operating throughout 1976 in the United States (States and other areas)
Banks grouped according to amount of assets
Income of insured mutual savings banks in the United States (States and other areas), 1971-1976
Table 120. Ratios of income of insured mutual savings banks in the United States (States and other areas),
The income data received and published by the Corporation relate to iaries and other nonbank subsidiaries that were significant according to cercommercial and mutual savings banks insured by the Corporation.
Banks having assets of $25 million or more are required to report consolidated income accounts on an accrual basis. Where the results would not be significantly different, certain accounts may be reported on a cash basis. Smaller banks continue to have the option of submitting their reports on a cash or an accrual basis, except that unearned discount on instalment loans, and income taxes, must be reported on an accrual basis.
Prior to 1976, insured banks were required to submit a consolidated Report of Income, including all majority-owned domestic premises subsid
tain tests. Beginning in 1976, the consolidated income report must include
also all majority-owned Edge Act and Agreement Corporations, and all
majority-owned significant foreign subsidiaries and associated companies to
the extent that the income of such subsidiaries is remittable.
Banks were required to report income and expenses more frequently
beginning in 1976. Banks having assets of $300 million or more submit
quarterly statements and other insured banks submit semiannual reports. In
this report, income data are included for all insured banks operating at the
end of the respective years, unless indicated otherwise. In addition, when
appropriate, adjustments have been made for banks in operation during part
of the year but not at the end of the year.
Several changes were made in 1976 in the format of the income reports
submitted by banks, mainly involving additional separate items on the face
of the report. Those changes are indicated in several historical data tables to
follow, with explanatory notes where necessary.
In 1976, the method used for determining "Provision for possible loan
losses" was changed significantly. Also, beginning in 1976, "memoranda"
data in table 114 and elsewhere on charge-offs and recoveries to loan loss
reserves include also the gross charge-offs and recoveries on loans by banks
not on a reserve basis of accounting (see pp. 257).
"Applicable income taxes" on income before securities gains or losses is
an estimate of the tax liability that a bank would incur if its taxes were
based solely on operating income and expenses; that is, if there were no
security gains or losses, no extraordinary items, etc. The amount reported by
each bank consists of Federal, State and local, and foreign income taxes,
estimated using the tax rates applicable to the reporting bank. Income taxes
currently payable, and deferred income taxes, are included.
The memoranda item "total provision for income taxes" includes applic-
able taxes on operating income, applicable taxes on securities gains and
losses and extraordinary items, and tax effects on differences between the
provision for loan losses charged to operating expense and transfers to the
reserve for bad debt losses on loans. For banks generally the transfers to
reserve for bad debts have exceeded the provision for loan losses and conse-
quently have tended to reduce tax liability. (Since enactment of the Tax
Reform Act of 1969, additions to loan loss reserves for Federal tax purposes
have been subject to a schedule of limitations that will eventually put these
reserves on a current experience basis.)
For a discussion of the report of income and expenses for mutual savings
banks prior to 1971, see the 1951 Annual Report, pp. 50-52.
Beginning December 31, 1971, income and expenses for mutual savings
banks are reported on a consolidated basis in the same manner as required of
commercial banks, including all domestic branches, domestic bank premises
subsidiaries, and other significant nonbanking domestic subsidiaries (see page
255).
Beginning in 1972, banks with total resources of $25 million or more are
required to prepare their reports on the basis of accrual accounting. All
banks are required to report income taxes on an accrual basis.
Under operating income, certain income from securities formerly in the
"other" category are shown separately beginning in 1971. Income from U.S.
Treasury securities is combined with income from U.S. Government agency
and corporation securities. Somewhat fewer items are detailed under oper-
ating expenses. Beginning in 1971, actual net loan losses (charge-offs less
recoveries) are included as an expense item in the operating section of the
report (see discussion below). In 1970 and prior years (table 119), the
amounts shown for this expense item were "Recoveries credited to valuation
adjustment provisions on real estate mortgage loans" less the "realized losses
charged to valuation adjustment provisions on [these] loans," which were
reported in those years in the memoranda section.
The nonoperating sections of the report were condensed in 1971, with
realized gains and losses on securities, mortgage loans, and real estate re-
ported "net" rather than in separate sections and captions as before. De-
tailed data formerly reported on reconcilement of valuation adjustment
provisions were almost entirely eliminated, except for a simple reconciliation
of surplus.
National banks and State banks in the District of Columbia not members
of the Federal Reserve System: Office of the Comptroller of the Currency.
State bank members of the Federal Reserve System: Board of Governors
of the Federal Reserve System.
Other insured banks: Federal Deposit Insurance Corporation.
Use of the reserve method of loan accounting was greatly encouraged
when, in 1947, the Internal Revenue Service set formal standards for loan
loss transfers to be permitted for Federal tax purposes. In their reports
submitted to the Federal bank supervisory agencies prior to 1948, insured
commercial banks included in non-operating income the amounts of recov-
eries on loans (applicable to prior charge-offs for losses) which included, for
banks using the reserve method, transfers from loan loss reserves. Direct
charge-offs and losses on loans, and transfers to reserves were included to-
gether in non-operating expenses. Banks using the reserve method were not
required to report separately their actual losses, that is, charges against loan
loss reserves. (In statements of condition prior to 1948, insured banks re-
ported loans on a net basis only, after allowance for loan loss reserves.
Beginning with the June 30, 1948 report, banks were required to report
gross loans, with total valuation reserves, those set up pursuant to Internal
Revenue Service regulations, and other reserves shown separately. However,
instalment loans ordinarily continued to be reported net if the instalment
payments were applied directly to the reduction of the loan.)
Beginning with the year 1948, the income reports were revised to show
separately, in a memoranda section, the losses charged to reserves. These
items continued to be combined in the non-operating expense section until
1961. Recoveries credited to reserves were also itemized in the memoranda
section beginning in 1948, as were the amounts transferred to and from
reserves during the year. Each of these debits and credits were segregated as
to reserves set up pursuant to IRS regulations, and other reserves. Losses and
recoveries, and transfers to and from reserves, but not the specific tax-related
transfers, were separately reported in the Corporation's published statistics.
Several important revisions were made in the format of the income re-
ports of commercial banks in 1969. A new entry entitled "Provision for loan
losses" was included under operating expenses. This item included actual
loan losses (charge-offs less recoveries) during the year or, at the option of
the bank, an amount derived by applying the average loan loss percentage for
the five most recent years to the average amount of loans during the current
year. Banks had the option also of providing a larger amount in any year
than the amount indicated by the formula. Beginning in 1976, required use
of the formulas was discontinued. Banks are instructed to expense an
amount which in the judgment of bank management will maintain an ade-
quate reserve, and to provide a fully reviewable record for bank examination
purposes of the basis for the determination of the loan-loss provision.
Also beginning in 1976, banks not on a reserve basis report gross charge-
offs and recoveries; the difference-net losses-is reported as the "provision
for loan losses" in operating expenses. Banks continue to report all transfers
to and from reserves in the memoranda section of the income statement, but
this detailed information is not included in the tables to follow.
Mutual savings banks
While mutual savings banks reported loan losses and transfers to loss
reserves prior to 1951, the Corporation's published statistics did not show
these data separately, as was the case also for recoveries and transfers from
reserves. When the reporting form was revised extensively in 1951, these
various nonoperating expenses were itemized, and a memoranda section was
added to show also the losses and recoveries in reserve accounts. "Realized"
losses (and recoveries) for which no provision had been made, and transfers
were included in the nonoperating expense (income) section, while direct
write-downs and other loan losses for which provision had been made, were
reported separately in a memoranda account.
Following 1951, the loan loss section of the reports of condition and
income and expense remained unchanged until 1971. Beginning in 1971, the
income report was revised in a manner similar to changes in 1969 applicable
to commercial banks, to show actual net loan losses as operating expenses.
(Mutual savings banks did not have the option available to commercial banks
of reporting losses based on recent years average experience.) At the same
time, all valuation reserves were merged into surplus accounts on statements
of condition submitted to the Federal supervisory agencies.
Table 114. INCOME OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976 (Amounts in thousands of dollars)
1Data are from fully consolidated reports of income, including domestic and foreign offices (see page 255).
2 Figures not available before 1976.
3Securities held in trading accounts are included in "All other assets"; income from these securities is included in "Other income." 4Included in "Interest on other deposits" before 1976.
5 Averages of amounts reported at beginning, middle and end of year. 1976 averages are based on consolidated reports, domestic and foreign. 6 For years before 1976, data are gross loans (see page 234 and table 109).
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