CHAPTER V. WITHDRAWAL PLANS. As in the case of premium plans and plans for the distribution of profits there are various rules for withdrawals. They are not so numerous, however, as in the other cases, although there are twelve such. Shares are issued by building and loan associations upon the theory that when the periodical dues paid thereon, together with the profits earned thereby, amount to the ultimate, or, technically, the maturing value of the shares, the holders shall be entitled to receive, in cash, such value, if the shares have not been pledged for loans; if pledged for loans, equal in amount to their maturing value, the loans shall be cancelled; if the loans do not equal in amount the maturing value of the pledged shares the holder shall receive, in cash, the difference between the amount of the loans and the maturing value of the shares. Shareholders are not, however, as a rule, required to continue the periodical payment of dues until the maturity of their shares, but may, if they so desire, cease paying such dues, and, if their shares are unpledged for loans, withdraw the amounts already paid in, subject to widely varying regulations; if the shares have been pledged for loans, and the holders desire to settle their indebtedness before the shares mature, they are usually permitted to do so by paying the difference between the withdrawal value of the pledged shares and the amount of their indebtedness. Provision is usually made in the constitutions or bylaws of building and loan associations for the giving of notice by shareholders desiring to withdraw, ranging from one week to ninety days. Such notice is not, however, universally provided for, and when provided for is frequently not enforced if sufficient funds are on hand to permit with. drawal without notice. It is also usually provided that only a certain portion, as one-third or one-half, of the receipts of the association shall be applicable to the demands of withdrawing shareholders, and in such case, should the notices of intended withdrawals call for more money than the designated portion of receipts could satisfy, the withdrawing shareholder would be compelled to wait until future receipts should supply the deficiency. In nearly all national associations a certain portion of the periodical dues are set aside for expenses, as explained in Chapter IV relat ing to the distribution of profits, the remainder of the dues being H. Ex. 209-30 465 carried into what is ordinarily termed the loan fund. The money in the loan fund is used for the purposes of making loans to members, of paying off shares which have reached maturity, and of meeting the demands of withdrawing shareholders; and, usually, only the por tion of the dues included in the loan fund is returned to such shareholders, with whatever allowance of interest or profit thereon the particular withdrawal plan of each association may provide for, the portion of the dues carried into the expense fund, generally amounting to about one-sixth of each payment, being retained by the associa tion. In some national associations the loan fund is credited with whatever balance of the expense fund remains unexpended at the end of certain fixed periods, and withdrawing shareholders may derive some benefit from such unexpended balance, but this course is exceptional. The plan of separating the periodical dues into a loan fund and an expense fund is pursued by a few local associations, but the general rule in such associations is to return to withdrawing members all the dues paid in by them, with or without interest or profits. In associations which pay to withdrawing shareholders annual interest on dues paid in prior to withdrawal there are two methods of calculating such interest. First. The interest is calculated on the total amount of dues paid in for one-half the time during which they have been paid, commonly called the average time of investment; for example, in an associa tion requiring monthly payments of dues at the rate of $1 per share, if 6 per cent per anuum is allowed upon withdrawal, a member withdrawing at the end of one year would receive his dues, $12, and 6 per cent interest thereon for six months, or 36 cents, making a total of $12.36 per share. This method, on account of its simplicity, is the one ordinarily used; a few associations, however, use the following method: Second. The interest is calculated on the total amount of dues paid in for the true average, or equated time of investment, which is ascertained by taking one-half of the sum of the extremes of the arithmet ical series representing the periods of time during which the periodical payments of dues have been invested; thus, using the illustration given above, monthly dues having been paid for twelve months, the extremes of the series representing the periods of investment of the monthly payments are 1 and 12; one-half of the sum of the extremes is 6, which is the true average time of investment, in months, and 6 per cent on $12 for 63 months amounts to 39 cents, which added to the dues paid in gives a withdrawal value of $12.39 per share at the end of one year. No reference is made to these two methods of calculating interest in the descriptions of withdrawal plans which follow, the difference between the amounts obtained by them being small and growing proportionately smaller as shares increase in age. For the sake of uniformity, therefore, and because it was the simpler, the first method has The withdrawal value of shares, by whatever plan it may be determined, is always subject to the deduction of any fines charged against their holder for non-fulfilment of his obligation to promptly make payment of his periodical dues. In some cases shareholders desiring to withdraw are required to pay fees for the privilege of so doing; for instance, 25 cents or 50 cents may be exacted for each share upon which withdrawal is made. The range of such fees is stated under the descriptions of the different withdrawal plans in connection with which they are charged. A few associations do not permit their members to withdraw prior to the maturing of their shares; in such cases the only method by which a shareholder can realize upon his shares is by selling them to some other person at whatever price he can obtain. The number of associations reported as not permitting withdrawal prior to maturity, all of which are local, is as follows: Alabama, 2; Arkansas, 2; Georgia, S; Kansas, 3; Kentucky, 5; Nebraska, 1; New Jersey, 1; Ohio, 4; Pennsylvania, 2; South Carolina, S; Texas, 2; Virginia, 1; Washington, 1; West Virginia, 2; Wyoming, 2; total, 44. There are twelve principal plans under which building and loan associations permit their members to withdraw before their shares have reached maturity. A description is given of each of these plans, with their various modifications and regulations, and a statement of the number of associations in the various states and territories operating under each specified plan. A summary of these statements in tabular form immediately follows, preceding the descriptions: |