PLANS OF ASSOCIATION. Pursuing in part the method adopted by the Board of Bank Commissioners, which formerly exercised supervision over this department, we divide Building and Loan Associations into three classes. We term them the Locals, Nationals, and Coöperative Banks. The last named class were treated as unclassified" by the Bank Commissioners. The Locals. The distinguishing characteristics of the Locals are as follows: 1. They generally confine their operations in loaning money to the city or town or the immediate neighborhood in which they are organized. 2. The capital stock of Locals is generally represented by certificates of a par value of $200 per share, with monthly payments of $1 per share, and the stock is calculated to mature at from nine to eleven years. 3. The Locals defray their expenses from the earnings, and carry the balance of the profits up to the credit of stockholders. 4. The Locals employ no agents to solicit business and pay no commissions. The Nationals.-The Nationals have the following characteristics: 1. They solicit subscriptions and make loans in a wider territory, sometimes comprehending several counties, sometimes several States. They have a central board of management, and local boards in various places where they operate, to pass upon the desirability of loans and transact other business. 2. The capital stock of Nationals is generally represented by certificates of the par value of $100 per share, with monthly payments of 60 cents per share, and the stock is calculated to mature in from seven to eight years. 3. The Nationals reserve from the monthly payments from 8 to 10 cents per share, which they cover into an expense fund to meet all ordinary expenses; and all, or nearly all, of the gross earnings are carried up to the credit of the stockholders. In some cases where the expense fund becomes greater than the requirements of the association, the surplus is carried to the credit of the stockholders, thus augmenting the profits. 4. The Nationals employ agents to solicit business, and either pay such agents directly or allow them to collect a fee from subscribing members. This fee is generally $1 per share. Cooperative Banks.-This class, of which two associations are represented in this report, varies from the Locals and Nationals, in that it incorporates many features of a savings bank into its system, allowing interest on deposits, withdrawable after a stated time, etc. It is a question whether such associations should not be under the supervision of the Board of Bank Commissioners, in so far as their bank features are concerned, while their mutual savings and loan business should be supervised by this Commission. Associations Unclassified and not Supervised.-There is still another kind of association which incorporates in its plan of operations the features of these Cooperative Banks and others as well, such as endowments, life insurance, etc. These associations have thus far escaped the supervision of any State Commission, inasmuch as their systems cannot be classified under the Building and Loan plan, or the Insurance plan, or the Savings Bank plan. Yet it is very certain that these unclassifiable associations require official supervision in the interest of the public as much as any. Their plans being intricate, and their management vested in a set of officers over whom the subscribers and members exercise little or no supervision or control, make it possible for the perpetration of extensive injustice. These associations are operated under the sanction of the State, being regularly incorporated, and there is no doubt that the State has a moral responsibility for their good conduct. As a general rule, those organizations which are formed on a plan especially designed to clear them from official inspection are the ones that most need supervision. We recommend, therefore, that the scope of one or all of the existing Commissions be so broadened as to allow them to take cognizance of these hitherto unclassified mutual associations. INCREASE OF BUILDING AND LOAN ASSOCIATIONS. The oldest Building and Loan Association now doing business in the State is the Germania Building and Loan Association of Sacramento (H. J. Goethe, Secretary), which was incorporated December 31, 1872. The development of this system of cooperative investment is shown by the following table, which gives the number of associations for each successive year from the earliest date: This statement takes account of only the associations now doing business in the State. There were doubtless a number started during this period which were subsequently closed up, and of which we have no official record. Of the 146 associations reported as doing business in 1893, we give herewith reports from 137. Two have retired from business, and seven associations did not complete their first fiscal year in time to be included in this report. They are as follows: Columbian Building and Loan Association, Alameda; incorporated July 1, 1893. Mutual Building and Loan Association, Fort Bragg; incorporated February 7, 1894. Escondido Building and Loan Association, Escondido; incorporated September 19, 1893. Safety Mutual Building and Loan Association, San Francisco; incorporated May 12, 1894. Equitable Mutual Building and Loan Association, Los Angeles; incorporated September 26, 1892.* Ukiah Building and Loan Association, Ukiah; incorporated May 1, 1894. Granite Building and Loan Association, San Francisco; incorporated August 18, 1893. The Truckee Building and Loan Association of Truckee (Local) is liquidating, and did no business in 1893. The Santa Ana Building and Loan Association of Santa Ana (Local) is liquidating, and has its affairs about closed up. The Republic Building and Loan Association of San Francisco (National) is also liquidating, but its business for the past fiscal year is reported herewith. The Imperial Building and Loan Association of Los Angeles (National) was reported to the Attorney-General in August, 1893, as insolv*Did no business till December, 1893. ent, but was given further time to repair its capital under a new management. It was again reported insolvent in July, 1894, and then made an assessment upon members to cover its losses. The San Bernardino Building and Loan Association of San Bernardino (Local) is closing up its business. CAPITALIZATION. From tables elsewhere presented, it appears that the total capitalization of the Building and Loan Associations of the State is $553,700,000. This amount represents the par, or fully paid-up, value of the stock, and it also represents a large number of shares that have not been placed in the hands of stockholders. The scheme of organization provides not only for future payments for a period of seven, eight, nine, or ten years, but it also provides for the growth of associations in the meantime by the accession of new members. The full limit of shares provided for incorporations is 4,727,500. This full capitalization may be classified as follows: As a general rule the Local Associations issue their stock of a face value of $200 per share. There are but sixteen exceptions in the State. Of the 127 Local Building and Loan Associations reported, 125 are on the serial plan and one on the terminating plan. Sixteen associations have outstanding 17,089 shares of par value of $100 each. One hundred and eleven associations have outstanding 250,64321 shares of par value of $200 each. One hundred and twenty associations, with 262,586 shares, collect installments of $1 per share per month. Four associations, with 2,571 shares, collect installments of 50 cents per share per month. One association, with 2,9934 shares, collects installments on two series. of $1 per share per month, and of 50 cents per share on twelve series, averaging 59.3 cents per share. Three associations, with 4,154 shares, collect installments of 60 cents. per share per month. The average monthly installment per share of all Local Associations is 98 cents. All associations conducted on the National plan collect 60 cents per share per month. CAPITALIZATION OF LOCALS. 111 associations at $200 per share, 909,500 shares 16 associations at $100 per share, 143,000 shares.. Total capitalization of Locals.. $181,900,000 00 14,300,000 00 $196,200,000 00 Total capitalization of Locals, Nationals, and Coöperative Banks... $553,700,000 00 The actual transactions in shares are shown in the following table: This shows an increase (by the new issue) of 20.5 per cent; and a decrease (by the cancellations) from total issue of 13.7 per cent. The net increase of shares outstanding was 3.85 per cent. This shows an increase (by the new issue) of 37.37 per cent; and a decrease (by the cancellations) of 24.95 per cent. The net increase of shares outstanding was 3.02 per cent. This shows an increase (by the new issue) of 35.78 per cent; and a decrease (by the cancellations-basis of total issue) of 28.9 per cent. The net decrease of shares outstanding was 3.45 per cent. The net increase in shares outstanding of all associations taken together was 2.74 per cent. |