Union Bank in its methods of transacting business, and its officers, as if in a separate building. The financial strength of the bank and the ability of the management entitle it to, and no doubt it will receive, the confidence and co-operation of its depositors and the community. INCREASE OF BUSINESS. Within the past year one savings bank and twenty-seven co-operative banks have commenced business, making a total under the supervision of this Board of — 177 savings banks and institutions for savings, 93 co-operative banks, with assets of, 2 mortgage loan companies, with assets of, 2 collateral loan companies, with assets of, 289 institutions, with assets of, $350,072,392 12 7,106,751 77 67,603,464 02 1,834,737 64 375,378 59 563,579 67 $427,556,303 81 an increase of 28 institutions in number and of $25,864,881.76 in assets over last year. This year shows the largest yearly increase in deposits and also in assets since 1875. The increase in deposits for the year ending Oct. The increase in assets for the year ending Oct. $17,538,618 02 18,865,525 53 The difference between these two amounts shows the increase in guaranty fund, undivided earnings, etc. The total assets of the one hundred and seventy-seven savings banks of this Commonwealth, $350,072,392.12, are exceeded. by no other State except New York, in which they are $615,889,796; but, when considered from the stand-point of size and population, we surpass even that great State, inasmuch as the number of deposit accounts are 1,029,694, against 1,362,852 in New York, and the increase of open accounts for the year exceed by 634 those of New York. It is also gratifying to note that on the same grounds we exceed the deposits of the savings banks in Great Britain. The average deposit per capita of population in our Commonwealth, per census of 1885, is $171.38; but this cannot be called strictly correct, for without doubt there are some deposits belonging to citizens of other States. Aggregate Statement of Liabilities and Investments, Showing Increase or Decrease as compared with the Year ending Oct. 31, 1888. The range of investments as now allowed by statute to our savings banks is sufficiently broad to be in keeping with good conservative management, where safety and not the largest possible revenue is the principal guide and aim in placing these trust funds. One or two changes might be made, however, to advantage; viz., under the statutes, savings banks can invest in the bonds. of certain cities in certain States, provided they are issued for municipal purposes. Many of these cities did issue bonds for other than municipal purposes, and the purpose was stated in the body of the bond; some of these bonds have matured and been paid by a renewal of the bond, but the purpose formerly stated has been omitted in the renewal, and therefore they apparently appear as issued for municipal purposes, when in fact they were not. Thus this Board and the officers of the banks are often greatly embarrassed in ascertaining what was issued for municipal purposes and what was not. Various other complications enter into this subject, conflicting with the implied purpose of the law. The restrictions placed upon this class of investments limit of population and especially the limit of indebtedness - seem sufficient. The pledge of the credit of the city under these restrictions would appear to be ample security, without naming the particular purpose for which the bond was issued. We recommend that the words for municipal purposes" be stricken from the law, and suggest that the words "issued according to law" be added, and the unquestioned pledge of the credit of the city or town be required. INVESTMENTS. The largest increase in particular lines of investments is in railroad bonds, loans on personal security, and loans on real estate. The nearest approach to the legal limit of any investment is in that of loans on personal security, which now averages nearly twenty-four per cent. of deposits and income, the limit being thirty-three and one-third per cent. By reference to the law (section 20 of chapter 116, Public Statutes), it will be observed that this line of investment was intended to be the exceptional one; but it has proved in many cases to be the favorite, presumably because it has supplied the opportunity for loaning money by our banks which could not be obtained of them in any other way. During the past three years the losses in the savings banks have been greater through this class of investments than in any other. Safety should be the governing principle in the investments of our savings banks; they are trust funds, and should not be placed at any business risk. The amount loaned on personal security with collateral is $38,137,349 25 The amount loaned on personal security without collateral is 45,253,355 96 Total,. $83,390,705 21 Cash on hand, the reserve fund of the savings banks, amounting to $12,455,506.84, is nearly $3,000,000 more than last year, yet is but three and one-half per cent. of the entire assets, which is no more than should be on hand, in order to meet any immediate demand for payment of deposits. Of this amount, but $1,190,428.43, one-third of one per cent. of the total assets, is actual cash on hand or money in banks not drawing any interest; the balance, $11,265,078.41, slightly rising three per cent., is on deposit in banks drawing interest at from two to four per cent. National banks are required to carry a reserve of not less than fifteen per cent., which consists almost entirely of cash on hand or bank balances, to meet the demands of their depositors. It will be observed that the savings banks carry but onefourth as much reserve as national banks are required to; it is not necessary that they should carry as much, as they are not called upon to be prepared for the sudden changes and demands for money as in business circles. The present amount of cash reserve in our savings banks does not appear any too large, or indicate an unwarranted amount of funds. awaiting permanent investment. * The Framingham Savings Bank and Union Savings Bank of Fall River, which are under injunction; and the Everett Savings Bank, which has but recently commenced business. Total amount of ordinary dividends for the year, otal amount of extra dividends for the year, $12,359,518 48 162,477 95 |