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THE OMAHA SUNDAY BEE: SEPTEMBER SO, 1917.-
SAYINGS SOCIETIES
SHOW BIG GROWTH
Eecord of Quarter of Century;
of Building- and Loan Asso
ciations is Most Remarkable.
By T. J. FITZMORRIS.
A quarter of a century of state su
pervision plants a guide post of pro
gress in the twenty-fifth annual re
pprt of the state banking board cov
ering the business of Nebraska build
ing, savings and loan associations for
the twelve months ending June 30
last The years spanned since the
first report in 1892 constitute a rec
ord of co-operative development
creditable alike to the fostering care
of the state and the men who di
rected the affairs of associations.
In lS92the combined assets of seventy-one
associations totaled $2,902,
55? with 45,000 shares jn force. To
dajMhc assets o: seventy-three asso
ciations total $54,545,629, represent
ing llic saviiiRS ot 101,869 share-hold-
ers and-l.l.t.iw shares. Hits is a
normal year's sain of $6,627,782 in
assets, more than double thcr total
"of W)l and an increase of $370,000
over the - recdrd of the preceding
twelve, months.
Woven into the warp and woof of
the rjtiartcr-century growth is a story
of struggle, perseverance and sacri
fice, of unselfish work and devotion
to the ideal of mutual hclf-help. Hard
work gratuitously given, coupled
villi confidence and a fightini? spirit,
wert the forces which pulled Ne
braska associations through the pain
fully lean vcars of the '90's and
fought off the blight and threatened
disaster of nationwide speculative
concerns using the name of building j
arH loan association. The success I
which local associations subsequently
won is due in large part to state sti-i
pervision and the protection and en-,
couragcment afforded by sympathy
and sense in law enforcement.
Margin of Safety in Loans.
Several features of the report de
serve special study. The foundation
of association strength and per
manence rests on the homes of bor
rowing members. Homes are the
chief security for loans, restricted by
law, to lirst mortgages. Experience
in "Nebraska and the country over
ranks the home loan at the top of
real estate securities, provided the
lender's margin is on the safe side.
In practice three or more officers in
spect and appraise property for loans
and determine the amount of the loan
both from the appraised and the com
munity standing and earning ability
of the applicant. These methods es
tablish the relation of loans to the
margin of safety. The report shows
that the mortgage loans totaling $48,
617,709 are secured by property ap
praised at $9:,88a,92&52, more than
double the amount of 'the loans. Fire
insurance to the amount of $57,375,
636 and tornado insurance totaling
$35,723,000 are held by the associa
tions ai collateral security. Tornado
insurance is a comparatively new ad
ditional safeguard, its rise dating from
Omaha's famous Easter buflday
blow.
Analysis of Real Estate Holdings.
The report notes a slight increase
in real estate in process of foreclos
ure: and subject to foreclosure, but
these are offset by an increase of
$65,000 in real estate sold on contract,
the total of the latter standing at
Summary of Nebraska Building and Loan
Associations far Year Ending June SO, 1917
ASSETS.
First mortgage loans .$48,617,709.19
Loans in process of foreclosure , 252,105.90
Loans on stock or pass book security.... 476,526.79
Real estate (otrrtT than office) 897,372.46
Real estate sold on contract 322,173.22
State and municipal securities 424,537.68
Cash 2,840,953.49
Delinquent interest, fines, etc 135,239.20
Furniture and fixtures 37,994.50
Taxes paid f8,092.44
Other assets 255,089.31.
Tax certificates 3,336.30
Certificates of deposit 264,500.00
LIABILITIES.
Running stock and dividends.... 36,946,026.11
Paid-up stock and dividends 14,116,148.21
Due shareholders on incomplete loans.... 1,556,055.49
Reserve fund 1,309,284.11
Undivided profits 534,309 48
Unearned premium.. 50.58
Other liabilities 55,765.80
Matured stock 27,350.00
Bills payable 550.00
Total $54,545,629.78
RECEIPTS.
Cash on hand last report $ 2,819,014.88
Dues running stock) 13,174,833.63
Paid-up stock f 5,346,820.18
Mortgage payments 8,967,570.87
Stock loan payments.
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706,604.37
Real estate sales , 307,908.17
Interest , 3,171,868.57
Premium 137,573.13
Fines ... 14,381.20
Rents 10,097.85
Membership and transfer fees 34,854.24
Rents and office building receipts 38,567.71
Other receipts in detail . 691,661.76
Tax certificates 4,825.08
Certificates of deposit. . 278,100.11
Incompleted loans 484,971.80
Bills payable 20,745.00
Total $54,545,629.78
, DISBURSEMENTS.
Mortgage loans $15,055,470.21
Stock loans 737,510.44
Withdrawals running stock and dividends. 10,400,524.70
Withdrawals dividend on paid-up stock.. 590,082.00
Withdrawals, paid-up stock . 3,545,793.43
Salaries 265,254.02
Commissions 49,006.03
Other expense 96,171.68
Real estate account 339,330.55
Cash on hand 2,886,181.75
Other disbursements in detail 1,325,827.67
Tax certificates 8,760.28
Matured stock 114,956.05
Certificates of deposit ; 359,878.63
Bills payable ' ' 12,808.81
Incomplete loans , 422,842.39
In some quarters the rate of interest
high, the average rate beinfr 8.1 per
cent together with a premium rate
averaging 2.9 per cent. Permanent
associations as a rule long ago
abandoned the premium system for a
straight charge. The report does not
show how many retain it Omaha
associations combined represent a lit
tle more than qne-half the total as
sets. With one or two exceptions no
premium charge is made and the rul
ing interest charge was 6.6 per cent.
t up to April 1, when three local lead
i ers reduced rates to 6 per cent
; straight. To strike an average inter
I est rate of 81 per cent, with a much
! lower rate on half the business, it is
! evident that interior associations
cater more to the investors than the
home maker.
A fact of much significance in this
connection is the marked increase in
the number of investing members
holding full-paid shar.es. Ten years
ago full-paid shares represented one
eighth of the whole. Today they rep
resent 40 per cent of outstanding
shares. In like manner the propor
tion of non-borrower to borrowers
has decreased rom 3 to 1 to 2 to 1.
The money of both classes of share
holders serves thesameusefulend.lt
financed 2,646 new .building loans dur
ing the year and 4,300 loans on im
proved property.
One of the many strikine features
of the business aggregating in round I
figures $54,500,000 in assets is the low
"cost of handling the fiscal year's re
ceipts' The outlay for twelve months
itemized as salaries, commissions and
other exoensec. totals $435,140.34, or
ahree-fonrths of ! per cent of the as-
sts. the average cost oi operandi
throughout the United States is
slightly under nine-tenths of 1 per
cent.
The saving makes more secure Ne
braska's rank as the eighth state in
this class of co operative development.
It outranks everv state west of the
Mississippi and south of the Ohio.
With a record untarnished by dis
honesty or serious failure, Nebraska
associations move forward to greater
prosperity and usefulness.
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Total...: $36,210,398.55
. PROFIT. '
Undivided profit ; (last report) $ 449,497.41
Interest f... 3,159,566.61
Premium 141,746.20
Fines 17,400.60
Membership and transfer fees.. 50,116.01
From other sources in detail .... 138,878.64
Total $3,957,205.47
Total $36,210,398.55
LOSS.
Dividends credited to running stock.' 1,926,220.38
Dividends credited to paid-up stock 753,092.75
Salaries 265,264.39
Commissions 52,313.86
Other expenses 117,563.73
Reserve fund credit 237,656.78
Undivided profits 526,117.51
Other expenses in detail 78,977.07
Total.... $3,957,205.47
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$322,173.82. The item of "real es
tate, office and other real estate," to
taling $897,372.46, gives an impres
sion of lax management unwarranted
by the facts. In the report for 1916
the late Secretary Royse pointed to
this item as evidence of inflated loans,
Examination gives a different aspect
to the figures. Four office buildings,
projected or occupied by three Oma
ha associations, account for one-half
the real estate total. All of them are
income producers and rising in value.
Grand Island and North Platte asso
ciations' own permanent office homes.
These six association homes represent
a total investment of $501,885, leaving
the actual real estate holdings taken
over through defaulted loans $395,487.
In other words three-fourths of 1 per
cent of all real estate mortgages have
come into possession of associations
at the close of a quarter of century
of state supervision.
Real estate in oroceis of foreclosure
and subject to foreclosure has lit
tle actual bearing on association busi
ness methods. They arise from busi
ness difficulties of borrowers, sickness
or other misfortune. Most of the
cases are settled in or out of court,
or the equity of the borrower sold to
others. "Subject to foreclosure," is
particularly misleading. Under the
law a borrower delinquent for three
months is subject to foreclosure, but
the rule, enforced in chronic cases,
servea as an efficient prod for lag
gards Reserve Fund Safeguards.
Shortly after the state banking de
partment assumed supervision of
associations the change from serial
to permanent association began. Se
rial associations are those issuing i 299 4g jMna
shares in series, each series independ-1 84333 59 t0
em in USCIl auu icquiiuiB itguiai
weekly or -monthly payment until
maturity or par value, following the
original system started in Philadel
phia eighty-six years ago and still in
vogue in that city. The so-called per
manent plan had its rise in Ohio forty
years ago and is distinguished from
the serial in each account being inde
pendent, sharing pro-rata in profits
divided quarterly or semi-annually
and withdrawable on thirty days' no
tice. In the serial system the larger
share of profits are withheld for di
vision at maturity of shares, and are
subject to any losses sustained in the
given series. The permanent system
necessitated the creation of reserve
funds to meet possible losses and the
law fixed the amount at 5 per cent ot
the annual net profits. Fifty-four
associations are on the permanent
plan, thirteen retain the serial system
and six associations combine both
systems. The reserve fund now
amounts to $1,309,284.11 and is avail
able solely for losses in mortgage
loans. This in itself is a bulwark ot
strength. But in addition the associa
tions report undivided profits of $534,-
a total reserve of $1,-
meet contingent losses
from real estate on hand and in pro
cess of foreclosure Even if these two
classes of defaulted accounts proved
a total loss, an impossible result, the
drain on the reserves would barely
amount to one-third.
Profits and Interest Charges.
During the twelve months covered
by the last report dividends amount
ing to $1,894,694.04 were declared on
installment shares and $769,461.04 on
full-paid shares. The average rate on
installment shares was 7.4 per cent
charged borrowers remain abnormally
and on full paid shares 6.2 per cent.
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FIVE POINTS:
Covering a Safe Investment
1 .-AMPLE FIRST MORTGAGE SECURITY on improved
City real estate and Eastern Nebraska farms mortgages
non-negotiable and payable monthly and a further se
curity of a strong Reserve Fund.
2.EASILY CONVERTIBLE INTO CASH on legal notice
at office of issuance.
3 CONVENIENT, because no renewals of investment re
quired, with dividends payable semi-annually.
4. PROFITABLE, because paying at least 5 per cent.
5. -STATE SUPERVISION, .
For over twenty-five years the shares of this Association
have fully rhet all these conditions. If you have $1.00 or
$5,000.00 to invest, call and see us any day.
The Conservative Savings $ Loan Ass'n
1614 Harney St., Omaha.
Resources, $14,000,000.00. Reserve, $375,000.00.
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GUARANTEE FUND
IFE ASSOCIATION
Orgsuiized 1901
COMPARATIVE STATEMENT
ASSETS ' ' Jan. 1,1917 Sept. 1,1917 M
Farm Loans. . . . . . .... $1,670,929.35 $1,895,163.35
Municipal Bonds...... 153,300.00 233,100.00
Real Estate. 60,000.00
Cash in Banks & Treas. 102,202,23 120,365.58
Accrued Interest...... 30,991.03 43,000.00--Estimated
. Total J..w $1,957,422.61 $2,851,628.9$' .
THE BEST POLICY for the average beneficiaries (widowa and dependent
children) is the one which GUARANTEES TO" THEM A MONTHLY INCOME
through the period of their dependence. ,
Contracts secured by First Mortgage Farm Loans arid Municipal Bonds,
which must always exceed in value the entire liability of the Association.
Our rates are less than some companies charge, for the reason that our
policies provide PURE INSURANCE PROTECTION, the premiums covering,
only that feature which is the ONE THING OF REAL VALUE in all insurance v
contracts.
HOME OFFICE
B R AN D E I S T H E AT E R B iTl L D I N G
V OMAHA. "' . ,
' PhoneDoutlat 7100. -
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pi N Olde.t B.ak hi NrirMl
EUUUIJ 1881
The United States National Bank of Omaha
SIXTEENTH AND FARNAM STREETS
UNITED STATES DEPOSITORY
Capital Stock,
$1,000,000.00
Surplus and
Profit,
$910,000.00
Total Resources,
$20,500,000.00
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Accounts of
Banks, .
Corporations,
Firms and
Individuals
Solicited.
MILTON T. BARLOW,
President
WILLIAM E. RHOADES,
Vice President
JOSEPH C. McCLURi:
. Assistant Cashier.
charEes p. brinkman,
, ' Assistant Cashier.
HILTON T. BARLOW,
President .
GEORGE BRANDEIS,
President J. L. Brandeii & Sons.
EDWARD L'BURKE,
President Kent & Burke Co.
SAMUEL a CALDWELL,
of Coal Hill Coal Co.
EDWIN A. DUFF, k
President Duff Grain Co.
OFFICERS
GURDON W. WATTLES, .
Chairman of the BoarcL
THOMAS F. MURPHY,
Assistant Caahitr.
DIRECTORS
THOMAS A. FRY,
President Drexel Shot Co.
GEORGE E. HAVERSTICS,
Vice President
GEORGE H. KELLY,N
President Adams ft Kelly Co.
CHARLES W. LYMAN.
EDGAR M. MORSMAN,
ABRAHAM L. REED,
President United Statea Trust Co.
GEORGE E. HAVERSTICX,
Vice President
ROBERT P. MORSMAN,
Vice President and Cashier.
GWYER H. YATES, .
Assistant Cashier.
ORIGEN WILLIAMS,
Auditor.
WILMAM E. RHOADES,
Vice President
BENJAMIN F. SMITH,
of Smith Bros., New York A Omaha.
WILLIAM A. SMITH,
Vice President Omaha & C. B. St Ry.
OURDON W. WATTLES,
Chairman of the Board.
President Omaha & C. B. St Ry,
OASPER E. YOST,
President Nebraska Telephone Co.
II
.Deposita fn the Savings "Department draw Interest at the rate of 3 compounded semi-annually.
ONE DOLLAR WILL OPEN AN ACCOUNT ' '
Safety Deposit Boxes ia the Safe Deposit Department for the ttorag of leenrrde and rahabla paper Three Dollan par year upward.
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