The small cash balance necessary to carry on the average Building and Loan Association emphasizes one of the strong features of the system. It is not necessary to keep on hand a considerable amount of idle capital as a safeguard against a panic in the money market. Their capital is practically all invested and earning money for the association. REAL ESTATE. The Local Associations report the number of foreclosures since organization, 66; the Nationals, 6; Coöperative Banks, none. The Locals report the gross amount due on foreclosures, $207,306 41; Nationals, $4,633. This, however, understates the case. In many cases there have been compromises on defaulted mortgages, and property has been taken in satisfaction thereof. Such a transaction is not technically classed as a foreclosure, but it is a forced purchase, which amounts to the same thing. Generally speaking, Building and Loan Associations do not willingly deal in real estate, and they only purchase to save themselves from loss. Taking the total amount of assets in real estate, we find the following results: Locals Nationals Cooperative Banks Total $298,337 44 30,054 20 $328,391 64 This exhibit makes an average real estate holding for each Local Association of $2,349 11, and an average to each share of stock outstanding of $1 12. The Nationals average a holding of $3,756 77 by each association, and by each share of stock outstanding, 36 cents. The Local Associations report a total of dues amounting to $12,026,580 35. This is an average to each association of $94,697 48, and an average per share of $44 92. The National Associations report dues paid in, $982,512 04. This is an average to each association of $122,814, and an average per share of. $11 68. *Owing to fundamental differences between associations operating under the Local and the National plans, the basis of comparison here instituted as regards Dues Paid In and Earnings is not absolutely correct. The National Associations and one of the Coöperative Banks collect installments of 60 cents per share a month. Out of this 60 cents they cover 8 or 10 cents (as the case may be) into an Expense Fund, and the balance, 50 or 52 cents, is credited to a Loan Fund. It is this Loan Fund only which they have reported to us as Dues Paid In. If, instead of following this plan, they had credited the entire 60 cents per share per month to Dues Account, and had paid expenses out of their earnings, as the Locals do, it is plainly to be seen that the Dues Account of the Nationals would be increased from The Coöperative Banks report dues paid in $834,894 22. This is an average to each association of $417,447 11, and an average per share of $17 12. AVERAGE AGE OF SHARES. The average age of shares in the associations is attested by a comparison of the average dues paid in per share. Locals Coöperative Banks Average Dues 11 68 17 12 15 to 20 per cent, and Earnings Account decreased by the same amount, the aggregate liability to stockholders remaining the same. For the purpose of making an absolutely fair comparison in this respect, we calculate what the statements would show under such a change of plan. Actual dues paid in Actual earnings... NATIONAL ASSOCIATIONS. Total liabilities to stockholders in book values as at present shown Average dues paid per share Average age of shares Ratio of earnings to dues paid in. Average earnings per share Average dues Average earnings $1,143,281 40 69,790 64 $1,213,072 04 $13 60 22 months. 6.1 per cent. 83 cents. $13 60 83 $14 43 $898,863 59 27,891 82 $926,755 41 A new comparison can then be made, as follows: PERCENTAGE OF EARNINGS TO DUES PAID IN. Locals Nationals Cooperative Banks AVERAGE EARNINGS PER SHARE. $18 43 30.7 months. 3.1 per cent. $18 43 57 $19.00 34.33 per cent. 6.1 per cent. 3.1 per cent. In other words, an average share of stock in Local Associations has run 45.6 months, has paid in dues $44 92, and is credited with earnings $15 42. An average share of stock in National Associations has paid in dues (including Expense Fund) $13 60, and is credited with earnings, 83 cents. An average share of stock in Cooperative Banks has run 30.7 months, has paid in dues $18 43, and is credited with earnings, 57 cents. At an average of 98 cents per share per month paid in on the Local shares, this would make their average age 45.6 months. At an average of 514 cents (credited to Loan Fund) per month on National shares, this would make their average age 22.7 months. The average age of stock in Coöperative Banks is found, by a similar process, to be 33.24 months. ACCRUED EARNINGS.† The Local Associations report accrued earnings amounting to $4,129,069 01. This is equivalent to 34.33 per cent on the capital paid in as dues. The National Associations report accrued earnings amounting to $230,560. This equals 23.46 per cent of the paid-in capital. The Cooperative Banks report accrued earnings, $91,861 19. This equals 11 per cent of paid-in capital. The average per share of dues and earnings and the sums of these, making the average book values, are shown in the table below: The Local Associations report an aggregate of net profits for the year amounting to $1,254,973 52. This makes the net earnings 7.56 per cent on the working capital (average amount loaned for the year). The National Associations report net profits for the year amounting to $137,086 64. This shows net earnings on the average working capital of 12.34 per cent. The Coöperative Banks report net profits for the year amounting to $56,860 81. This shows net earnings on the average working capital of the year of 6.17 per cent. All classes of associations together report net earnings for the year amounting to $1,448,920 97. This makes the aggregate net earnings equal to 7.77 per cent on the average investment for the year, or working capital. A comparison shows as follows: Locals. Cooperative Banks All classes. Percentage of Profits on Average Investment of the Year. 7.56 per cent. 12.34 per cent. 6.17 per cent. 7.77 per cent. + It should be borne in mind that from the standpoint of stockholders the profits reported by National Associations and those doing business on the National plan are, in every instance, gross profits. That is, a stockholder must deduct from the gross profits in his favor the amount which he has contributed to the Expense Fund, in order to ascertain his net profit on the transaction. In this case, deducting the average contribution to the Expense Fund, the net profit remaining to the average share of stock in Nationals is 83 cents, instead of $2 74; Coöperative Banks, 57 cents, instead of $1 88. UNAPPORTIONED PROFITS. The Local Associations report a total of $446,523 54 unearned and unapportioned profits. This averages $3,515 93 to the association, and $1 67 per share. The National Associations report unapportioned profits $30,037 23. This averages $3,754 65 to the association, and 34 cents per share. The Cooperative Banks report unearned and unapportioned profits $5,749 02. This averages $2,874 51 to the association, and 12 cents per share. Recurring to the average book values previously ascertained, we find that these reserve profits should be added to them to show the average net asset per share to stockholders. The Local Associations report total liabilities for overdrafts and bills payable amounting to $1,499,202 50, which is an average indebtedness to each association of $11,804 74, and averages to each share $5 60. The National Associations report a similar indebtedness of $62,520 21.. This averages $7,815 03 to each association, and 74 cents per share. The Cooperative Banks report a like liability of $48,016 01, which averages $24,008 01 to each association, and 98 cents per share. There has been a disposition on the part of some associations, we think, to go into debt more than was for their good. There is really a danger line in this matter for Building and Loan Associations, as there is for other corporations and for individuals. We would advise that an association should not borrow at bank or on bills payable more than it can repay with three months of its current revenues. Then there is little danger of being seriously inconvenienced if the obligation is pressed to a short settlement. During this fiscal year the Local Associations have increased their outside indebtedness by $1,593,990 09, and have decreased them by the payment of $1,566,065 22, leaving a net increase of $27,924 87. Our next annual report will probably show a considerable diminution in this class of liability. During the year the National Associations have increased their outside indebtedness by $52,394 34, and have decreased them by $59,283 72, showing a net decrease of $6,889 38. The Cooperative Banks have increased their outside indebtedness by $82,516 01, and decreased them by $103,533 47, showing a net decrease of $21,017 46. * Unapportioned. SALARIES. The Local Associations report a total expense for salaries amounting to $129,489 24. This averages $1,019 61 to each association, and 49 cents per share ($200 shares). It is also equal to 1.46 per cent of total receipts. The National Associations report salaries amounting to $36,385 46. This is an average of $4,548 18 to each association, and 43 cents per share ($100 shares). It is also 3.8 per cent of the total receipts. The Cooperative Banks report salaries $14,952 50, which is an average of $7,476 25 per association, and 30 cents per share ($100 shares). It is also 0.56 per cent of total receipts. A comparison shows: Local Associations report taxes paid to the amount of $171,300 47. This is an average of $1,348 82 for each association, and average expense to each share of 64 cents. It amounts to 1.45 per cent on the present worth or taxable value of loans. The National Associations report taxes paid $9,652 35, which is an average expense per share of 11 cents. It amounts to 0.91 per cent on the taxable value of loans. The Cooperative Banks report taxes $7,396 54, which is an average to each association of $3,698 27, and an average expense to each share of 15 cents. It amounts to 0.8 per cent on the average loaning capital of the year. MISCELLANEOUS EXPENSES. The Local Associations report $42,604 93, which is an average of $335 47 for each association, and 16 cents per share. It is 0.48 per cent of total receipts. The National Associations report $29,778 78, which is an average of $3,772 35 per association, and 35 cents per share. It is 3.12 per cent of the total receipts. The Coöperative Banks report $29,260 04, which is an average of $14,630 02 per association, and 60 cents per share. It is 1.11 per cent of the total receipts. TOTAL EXPENSES. Items of expense, including salaries, taxes, and miscellaneous expenditures, are reported by the Local Associations $343,394 64. This averages to each share $1 29 ($200 shares). The ratio to total receipts of the year is 3.89 per cent. All expenses, as above reported by the National Associations, are $75,816, which is an average of $9,477 07 per association, and 90 cents. |