In the Bank's published accounts for the year ended March 31st 1971, an existing Reserve (previously entitled Reserve for Repairs and Rebuilding of Branches) was renamed Development Reserve. Its balance was increased to £500,000 with the transfer of £400,000 from the Income & Expenditure Account.

 

This Reserve was created in anticipation of the expenditure that was to be incurred, following the Bank's decision to computerise its accounting system. The Bank had recently joined the West Midlands and South Wales Computer Consortium of Trustee Savings Banks. This group of TSBs were co-operating to provide an On-Line Real Time computer system. The take-on of BMB branches to this system was anticipated to commence in late 1973.

 

The financing of the Computerisation project was split into three parts:

 

 

The individual banks in the Consortium made loans that enabled a computer centre (at Kidderminster, Worcestershire) to be built and equipped, and each loan represented that Bank's contribution to the net assets of the Consortium. The loan agreement allowed for the Bank receiving interest (at 8½%) on this 8-year advance. The development of the computer centre was already well forward when the BMB joined the Consortium, and an initial sum was advanced in 1971/72 - the sum of £402,216 shown as the outstanding at March 31st 1972.

 

In 1972/73, a further £134,979 was advanced - but repayments of £84,411 were received; outstanding balance: £452,784
In 1973/74, a further £99,382 was advanced - but repayments of £104,854 were received; outstanding balance: £447,312
In 1974/75, a further £54,786 was advanced - but repayments of £114,198 were received; outstanding balance: £387,900
In 1975/76, a further £11,308 was advanced - but repayments of £102,889 were received; outstanding balance: £296,319

 

The published accounts for the first period of trading of the Birmingham Municipal TSB (April 1st to November 20th 1976) did not show details of the amounts advanced and repaid on the Loan Account. However, the accounts did show that the balance outstanding on March 31st 1976 was split as follows (£):
 Premises and Equipment 86,084
 Computer Systems 210,235

 

Transactions on the Loan in the period April 1st to November 20th 1976 resulted in the split at the end of the financial year being as follows:
 Premises and Equipment £80,001
 Computer Systems £109,325

 

In 1976/77, £3,000 was added to the Loan for Computer Premises, and £9,000 repaid; £5,000 was added re Computer Equipment, and £48,000 repaid, resulting in an outstanding balance on the Loan of £140,000:
 Premises and Equipment £74,001
 Computer Systems £66,325

 

In 1977/78, the Loan was reduced to £88,000 as follows:
 Premises and Equipment: net additions/ (sales) (£3,000); repayments (depreciation): £10,000 - balance £61,001
 Computer Systems: net additions/ (sales) (£6,000); repayments (obsolete items eliminated): £33,000 - balance £27,235

 

By November 20th 1979, the loan balance had further reduced to £60,000:
 Premises £39,000
 Equipment £21,000

 

[2] Development Reserve

 

As stated above, a Development Reserve of £500,000 was created in 1971/72, mainly to set aside a sum for anticipated future expenditure on the computerisation project. Transactions through this Reserve over the succeeding years were as follows:

 

1971/72: £80,000 transferred to the Computer Expenses Account. Balance Carried Forward: £420,000

 

1972/73: balance increased by £180,000 (Provisions no longer required: £30,000; Transfer from Income & Expenditure A/c: £150,000).

    Balance Carried Forward: £600,000

 

1973/74: balance increased to £850,000. Computer equipment purchased during the year, debited to this Reserve, amounted to £159,250. The Accounts stated that: During the year under review approximately one-third of the initial computer equipment required by the Bank has been delivered and the cost has been charged against Development Reserve. A transfer of £409,250 was made from the Income & Expenditure Account

 

1974/75: A charge of £217,600 was made against the Reserve for Computer and other equipment. This sum was replaced from the Income & Expenditure A/c to leave the Balance Carried Forward at £850,000. A note in the Accounts stated that: The purchase of computer equipment made during the year added to those charged in 1973/74 represent approximately 86% of the Bank's requirements under the present system

 

1975/76: the Accounts stated that: Amounts are set aside to reserve each year for the purpose of future development and modernisation of the Bank's various premises and other major asset requirements, particularly computer equipment. The sum of £150,000 was transferred from the Income & Expenditure A/c to increase the Balance Carried Forward to £1,000,000. The project to computerise the Bank's accounting system had just been completed with the take-on of Solihull branch on March 19th 1976. No further transactions relating to Computerisation were subsequently made through the Development Reserve

 

[3] Computer Revenue Expenses Account

 

Computer Expenses were identified as a separate item from other Management Expenses, in the Income and Expenditure Accounts for the first few years from the commencement of computerisation. In 1971/72, the sum of £121,071 was incurred, and £41,071 was debited to the Income and Expenditure Account after £80,000 was transferred from Development Reserve. The sum of £121,071 was incurred as follows:

 

(a) Certain expenditure incurred prior to the Bank's joining the Consortium
which it was agreed to pay as part of the terms of entry…….......................…………………. 39,933

 

(b) The proportion laid down in the Agreement with the Consortium of that
body's revenue expenditure for the year 21st November 1970 to 20th
November 1971……………………………………………………………………..…...……… 30,583

 

(c) The agreed proportion of the revised estimated expenditure for the year
21st November 1971 to the 20th November 1972 taken pro rata to 31st
March 1972…………………………………………………..………………….…........………. 50,555

 

Total.............................................................................................................................................£121,071

 

In these expenses there was charged depreciation of computer equipment based on the method prescribed
by the National Debt Office. If this had been calculated in equal annual amounts over a useful working
life of ten years, the Bank's share would have been increased by £8,295.

 

Charges for Computer Expenses shown in the succeeding years were as follows:

 

1972/73: £193,670
1973/74: £285,235
1974/75: £327,337
1975/76: £394,366

 

Following the BMB's transfer of status to become the Birmingham Municipal Trustee Savings Bank, the amount of Computer Expenses was no longer identified separately in the published accounts.