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Annual Report 1974 Comptroller of the Currency The Administrator of National Banks James E. Smith Comptroller of the Currency Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Letter of Transmittal TREASURY DEPARTMENT, OFFICE OF THE COMPTROLLER OF THE CURRENCY, WASHINGTON, D.C., OCTOBER 1, 1975 SlRS: Pursuant to the provisions of Section 333 of the United States Revised Statutes, I am pleased to submit the 1974 Annual Report of the Comptroller of the Currency. Respectfully, JAMES E. SMITH, Comptroller of the Currency. THE PRESIDENT OF THE SENATE THE SPEAKER OF THE HOUSE OF REPRESENTATIVES HI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Contents Title of Section Page I. Condition of the National Banking System 1 II. Income and Expenses of National Banks 3 III. Structural Changes in the National Banking System 5 IV. Bank Examinations and Related Activities 13 V. Law Department 15 VI. Fiduciary Activities of National Banks 19 VII. International Banking and Finance 21 VIII. Administrative and Management Developments 23 IX. Other Activities 27 X. Financial Operations of the Office of the Comptroller of the Currency 29 Appendices A. Merger Decisions, 1974 35 B. Statistical Tables 175 C. Addresses and Selected Congressional Testimony 251 D. Selected Rulings and Correspondence of the Comptroller of the Currency 299 Index 327 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Statistical Tables Table No. Title Page Table No. Title Page 1 Assets, liabilities, and capital accounts of National 7 Branches of National banks, by States, calendar banks, 1973 and 1974 2 1974 1( 2 Income and expenses of National banks, 1973 and 8 De novo branch applications of National banks, by 1974 4 States, calendar 1974 1] 3 National banks and banking offices, by States, Dec. 9 De novo branches of National banks opened for busi- 31, 1974 6 ness, by community size and by size of bank, 4 Applications for National bank charters, and charters calendar 1974 IS issued, by States, calendar 1974 7 10 Mergers, calendar 1974 IS 5 Applications for National bank charters issued pur- 11 Office of the Comptroller of the Currency: balance suant to corporate reorganizations, and charters sheets 3( issued, by States, calendar 1974 8 12 Office of the Comptroller of the Currency: statements 6 Applications for conversion to National bank charters, of revenue, expenses, and Comptroller's equity... 31 and charters issued, by States, calendar 1974 9 13 Office of the Comptroller of the Currency: statements of changes in financial position 31 VI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis I. Condition of the National Banking System Recessionary and inflationary factors in the econ- the relatively smaller accounts, acceptances out- omy during 1974 exerted an important influence on standing increased sharply, from $2.9 billion at the the operations of National banks. In contrast to a end of 1973 to $7.1 billion at year-end 1974. 17.8 percent rise in total loans in 1973, the increase For the second consecutive year, the rate of registered during 1974 was 9.7 percent. Total secu- growth in total assets was less than that of the prior rities held, which had grown only 0.9 percent during year. At year-end 1974, total assets of National 1973's strong loan demand, edged upward 2.2 per- banks reached $534.4 billion, a figure 9.2 percent cent in 1974. The major source of new funds for the above the December 1973 amount. The two previous system during 1974 was a 15.7 percent increase in years' rates were 15.5 percent in 1972 and 12.6 per- time and savings deposits, an increase nearly as cent in 1973. great as the 16.0 percent figure for 1973. Demand In the composition of National bank assets, the deposits continued to show relatively small in- proportion accounted for by loans increased very creases; 1973's growth rate of 3.8 percent eased to a slightly in 1974, from 55.5 percent to 55.7 percent, minuscule 0.8 percent in 1974. In consequence, by while the proportion represented by securities the end of 1974, total time and savings deposits dropped slightly, from 21.4 percent to 20.0 percent. accounted for 58.2 percent of total deposits, a pro- Total reserves on loans rose by 10.5 percent, from portion that has climbed from 52.0 percent at the $4.6 billion to $5.1 billion, a slightly higher rate of end of 1972 and 54.8 percent at the end of 1973. increase than the 9.7 percent shown by total loans. Within the securities category, the 1974 decline of Total capital of National banks reached $35.8 billion 6.1 percent in Treasuries held was more than offset at year-end 1974, reflecting an 8.1 percent increase by increases of 11.4 percent in securities of Govern- over the prior year figure of $33.1 billion. As in 1973, ment agencies and corporations and of 3.7 percent the capital markets were relatively unreceptive to in municipals. Federal funds purchased and secu- bank debenture issues during 1974, and the total rities sold under agreement to repurchase grew only outstanding only inched upward, from $2.2 billion to a nominal 1.0 percent as a source of funds. Among $2.3 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE 1 Assets, liabilities, and capital accounts of National banks, 1973 and 1974 [Dollar amounts in millions] Dec. 31, 1973 Dec. 31, 1974 Change, 1973-1974 4,661 banks 4,708 banks Amount Percent Amount Percent Amount Percent distribution distribution ASSETS Cash and due from banks $70,724 14.45 $76,557 14.33 $5,833 U.S. Treasury securities 30,966 6.32 29,081 5.44 -1,885 Obligations of other U.S. Government agencies and cor- porations 15,072 3.08 16,788 3.14 1,716 Obligations of States and political subdivisions 55,236 11.28 57,2% 10.72 2,060 Other securities 3,411 .70 3,835 .72 424 Total securities. 104,685 21.38 107,000 20.02 2,315 Federal funds sold and securities purchased under agree- ments to resell 22,091 4.51 23,751 4.44 1,660 Direct lease financing 1,573 .32 2,426 .45 853 Loans. 271,572 55.47 297,852 55.73 26,280 Fixed assets 8,144 1.66 9,052 1.69 908 Customers' liability on acceptances outstanding . 2,847 .58 7,037 1.32 4,190 Other assets 7,965 1.63 10,747 2.02 2,782 Total assets . 489,600 100.00 534,422 100.00 44,822 LIABILITIES Demand deposits of individuals, partnerships and corpora- tions 136,056 27.79 137,829 25.79 1,773 Time and savings deposits of individuals, partnerships and corporations 181,215 37.01 207,794 38.88 26,579 Deposits of U.S. Government 6,193 1.26 2,711 .51 -3,482 Deposits of States and political subdivisions 37,072 7.57 40,206 7.52 3,134 Deposits of foreign governments and official institutions, central banks, and international institutions 6,030 1.23 7,472 1.40 1,442 Deposits of commercial banks 23,379 4.78 29,552 5.53 6,173 Certified and officers' checks, etc 5,935 1.21 5,662 1.06 -273 Total deposits . 395,881 80.86 431,225 80.69 35,344 Demand deposits 179,046 36.57 180,391 33.75 1,345 Time and savings deposits 216,835 44.29 250,834 46.94 33,999 Federal funds purchased and securities sold under agree- ments to repurchase 35,975 7.35 36,323 6.80 348 Liabilities for borrowed money 3,722 .76 3,286 .61 -436 Acceptances executed by or for account of reporting banks and outstanding 2,921 .60 7,142 1.34 4,221 Other liabilities 13,251 2.71 15,424 2.89 2,173 Total liabilities 451,749 92.27 493,400 92.32 41,651 Minority interest in consolidated subsidiaries -1 RESERVES ON LOANS AND SECURITIES Reserves on loans 4,634 .95 5,119 .96 485 Reserves on securities 79 .02 70 .01 -9 CAPITAL ACCOUNTS Capital notes and debentures 2,200 .45 2,258 .42 58 Preferred stock 37 .01 13 -24 Common stock 7,904 1.61 8,336 1.56 432 Surplus 13,513 2.76 14,067 2.63 554 Undivided profits 8,998 1.84 10,652 1.99 1,654 Reserves 484 .10 503 .09 19 Total capital accounts 33,135 6.77 35,830 6.70 2,695 Total liabilities and capital accounts 489,600 100.00 534,422 100.00 44,822 NOTE: Data may not add to totals because of rounding. Dashes indicate amounts less than .01 percent. The 1973 and 1974 data reflect consolidation of all majority-owned bank premises subsidiaries, and all significant domestic major owned subsidiaries, with the exception of Edge Act subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis II. Income and Expenses of National Banks The combination of real growth in the National to resell surpassed revenues from Treasury holdings Banking System and strong inflationary pressures in 1974, $2.2 billion to $1.8 billion. Revenues from led to steep increases in both total operating income municipals held totalled $2.5 billion, a 13.5 percent and total operating expense in 1974; 29.6 percent for increase over 1973, and holdings of securities of the former and 34.3 percent for the latter.