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ESTABLISHED 1890 MONTEREY COUNTY HOME OWNED COUNTY BANK! WIDE SALINAS, C A L I F O R N I A February $$ 19$1 OFFICE OF THE PRESIDENT Governor M a r r i n e r S . E c e l e s F e d e r a l Reserve Bank Washington, D« C # Dear M a r r i n e r : I enclose a copy o f my annual r e p o r t , i n whi c h I s t o l e some o f y o u r thunder® I imagine y o u g e t t i r e d o f l o o k i n g a t t h e s e r e p o r t s * Think you are p u t t i n g up a f i n e b a t t l e a g a i n s t some o f the A d m i n i s t r a t i o n s ideas and hope you w i l l keep i t up* Best personal regards* Sincerely yours President Am C. HughesiE Ends* of the President http://fraser.stlouisfed.org/ MONTEREY Federal Reserve Bank of St. Louis COUNTY S BANK Report of A . C. Hughes, President at the Sixtieth A n n u a l Meeting of Stockholders J A N U A R Y 17, 1951 This is the Sixtieth Annual Report of our Bank, and the Twenty-Sixth year that I have been privileged to act as President. I am most happy to be able to say that 1950—our Sixtieth Year—was by far our best. I n addition to my own deep personal satisfaction, I express the sincere appreciation of our Board of Directors for the consistently successful efforts of our Officers and Employees. Personnel We are benefiting from the excellent spirit and competence of a staff which finds itself working under war time conditions. Thirty-six members of our staff have been with us over 10 years, and of these, 16 over 20 years. W e have a good salary schedule and an adequate Profit Sharing Plan, which stimulate loyalty and good will within our organization. I n addition, the bank contributes to the cost of Group Life, Hospital, Surgical and Medical Insurance. We anticipate the loss of many of our employees to Military Service in the near future. The training of replacements is a continual process. Already, six employees have been called. We do not feel they have severed their connection with the Bank, but rather have been given a leave of absence. Good personnel relations are essential if our bank is to progress and prosper. Examinations Our usual Federal and State examinations were conducted during the year. The examinations reflect a continued sound and conservative operation. Federal Deposit Insurance Corporation Congress revised the Federal Deposit Insurance Corporation Act and increased the insurance coverage on deposits from $5,000 to $10,000. As a result, it is possible for a husband and wife to have $30,000 protection in three accounts, as follows: $ 10,000 Husband's name $10,000 Wife's name $10,000 Husband and wife, jointly $30,000 Total insurance protection This legislation also cut our annual assessment by 60 per cent. As our assessment last year was $43,355.22, this will save y $26,013.13. Our paid assessments since 193 . total $328,747.78. Bank Stock The changes in the Federal Desposit Insurance Corporation Act will require banks to provide a stronger capital structure. After a thorough investigation, your Board of Directors voted to improve our Capital Ratio by selling 10,000 shares of our bank stock, to our present stockholders, at the attractive price of $50.00 a share. Comparative Statement Total Deposits 1949 1950 :£54,534,728.03 $53,204,941.08 24,025,866.86 28,579,865.40 7,397,898.98 8,238,670.84 473,621.19 563,647.28 180,000.00 257,500.00 150,000.00 150,000.00 Total Loans Cash and Due from Banks Earnings after expenses, (other taxes, than in- come taxes) and reserves Income Taxes Cash Dividends Declared —. Bonds Maturity 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 Par Value $ 1,944,500 459,000 2,097,000 7,960,000 2,076,000 637,000 856,000 393,000 2,394,000 340,000 85,000 65,000 300,000 290,000 75,000 185,000 Per Cent of Total 9.65 2.28 10.40 39.49 10.30 3.16 4.24 1.95 11.88 1.69 .42 .32 1.49 1.44 .37 .92 Cumulative Per Cent 9.65 11.93 22.33 61.82 72.12 75.28 79.52 81.47 93.35 95.04 95.46 95.78 97.27 98.71 99.08 100.00 $20,156,500 90,000 Federal Reserve Bank Stock $20,246,500 Per Cent 70.36 29.64 Governments Others $14,183,000 5,973,500 Federal Reserve Bank Stock .... $20,156,500 90,000 Total Market Value Total Book Value Appreciation $20,246,500 $20,538,805.93 $20,517,098.89 $ 21,707.04 100.00 C a p i t a l Funds The Status of our capital accounts over a three year period is shown below: Dec. 31, 1948 Dec. 31, 1949 Dec. 31,1950 Capital $1,000,000.00 $1,000,000.00 $1,200,000.00 Surplus 1,700,000.00 1,700,000.00 2,300,160.00 Undivided Profits 827,692.76 971,313.95 827,461.23 Total $3,527,692.76 $3,671,313.95 $4,327,621.23 Book Value Per Share $70.55 $73.43 $72.13 Installment Loans Regulations and " X " O n September 18, 1950 the Federal Reserve Board reinstituted Regulation " W " to curb consumer installment credit. The regulation was tightened further on October 16. By establishing d o w n p a y m e n t requirements and maximum maturities on consumer goods, such as automobiles, furniture and appliances, the Regulation has curtailed the sale and financing of these items. The most drastic effect has been in automobile sales. Our outstanding loan volume has already dropped $200,000. These restrictions, coupled with probable material shortages, will mean a further reduction of loan volume in this lucrative installment loan field. W e must endeavor to make this up elsewhere. As a further check on the expansion of credit the Federal Reserve Board issued Regulation " X " on October 12, 1950. This restricted the amount permitted to be loaned on the construction of new residential property. Simultaneously the Federal Housing Administration and the Veterans' Administration reduced loan maximums on both existing and new construction and shortened all maturities to 20 years. The effect on our bank as well as all lending institutions has been to sharply reduce the volume of Veterans Loans, since this type of loan had the most liberal terms prior to Regulation " X . " Regular bank loans for jnew construction and F.H.A. loans have jeen affected only slightly. I t appears that high construction costs have deterred borrowers just as much as credit restrictions. Trust Department The Trust Department is presently administering trust assets valued in excess of $6,000,000.00. I t continues to demonstrate its ability to fit in with, and develop business for the commercial and savings departments. A t the same time it shows a profit on its own operations. The chief source of income is from the handling of Estates. H o w ever, a complete trust service is rendered in other matters, such as Trustee under Living Trust Agreements, Agent for the management of real and personal p r o p e r t y . Custodian of Securities, Transfer Agent for •rporations, Escrow Agent, and Trustee der Life Insurance Trust Agreements. The department is operated by officers and personnel devoting full time to this highly specialized work, and is under the direction of a Trust Committee comprised of Bank Officers and Directors. There is great opportunity for growth in the Trust Department, and such additional business can be obtained through concerted effort by the Officers, Directors, and Stockholders. Y o u r Bank i n Brief in 1950 Made 15,695 loans totaling $26,55?, 117.94. Earned share). $306,147.28 net. ($6.12 per Paid $150,000 in dividends ($3.00 per share) to 780 stockholders. Has Capital Funds of $4,327,621.23 and total resources of $58,144,300.55. Serves more than 37,000 savings and commercial customers. Bank staff of 167 people. Has eight branch offices in Monterey County. Looking Ahead N o one foresaw that the North Koreans would invade and that we would go to the aid of the South Koreans. Thus we became involved in a very tough international situation which calls for a large-scale national defense program. The old year, 1950, went out with the Administration taking steps toward stricter controls, which will have their effect on the business world in this New Year. Bankers should become better leaders in molding public opinion in this crisis, and help develop a sound and realistic policy from the financial viewpoint. American banking in 1951 has a rampant credit inflation to deal with. Marriner S. Eccles, of the Federal Reserve Board, recently stated, " I t would be u n f o r t u n a t e i f people should be led to believe that price and wage controls, or changes in bank reserve requirements, will save the dollar from serious depreciation. Neither program goes to the heart of the matter. There must be genuinely effective measures to restrict the supply of money competing for goods, higher taxes, and more saving and less spending for non-essential purposes, both by Government and by the people." The Federal Reserve Bank has ordered an. increase in reserves of member banks, and the increase for our bank totals $745,200.58. The object of this order is to help stop inflation by curtailing the loanable funds of banks. Nationally, this freezes over two billion dollars. The relation between inflation and socialism is closer than is generally appreciated. A t every step in the inflationary process new pressures are created for the government to step in with new controls. President James E. Shelton, of the American Bankers Association, recently stated, "Even the old-line socialists preached that the way for government to take over private business and private property was to take away the profits of private business and private property, and then both would automatically fall into the lap of the Government." The American Bankers Association is fortunate at this time, to have a President who always has defended the American economic system of individual freedom and opportunity. H e is equally outspoken in his opposition to Federal Government tendencies toward socialization of the economy. Bankers and business men must understand the mess that we are in, and follow the lead of President Shelton, in doing something about it. I t is important that we contact our Congressmen and help formulate a sound policy before it is too late. W e have anticipated these moves and are prepared for further controls and adjustments, because the National Defense Program will be the most important factor in business activity during 1951. The coming year could be forecast as a prosperous year, coupled with many problems in this dangerous period. Your Officers and Directors are aware of the National confusion and are doing everything within their power to cope with this "long era of strife." A . C. HUGHES, President MONTEREY C SALINE } CONDEN! at the close of b RESOURCES Cash and Sight Exchanges $ 8,238,670.84 U . S. Government Securities 14,609,892.01 Other Bonds and Securities . Loans and Discounts . Bank Premises (8 Offices) 5,907,206.88 . 28,579,865.40 531,634.65 Earned Interest Receivable and Prepaid Expenses . Other Resources 58,818.15 T O T A L RESOURCES . Member Federal Reserve 218,212.62 System $58,144,300.55 U N T y B A N K CALIFORNIA STATEMENT December | 31, 1950 LIABILITIES Capital Stock $ 1,200,000.00 Surplus 2,300,160.00 U n d i v i d e d Profits . 827,461.23 Reserve f o r Interest, Taxes, etc. . Deposits 253,435.19 . . 53,204,941.08 Deferred Interest Credits O t h e r Liabilities 23,311.40 T O T A L LIABILITIES . Member 334,991.65 Federal $58,144,300.55 Deposit Insurance Corporation M o n t e r e y C o u n t y Security Company DECEMBER 31, 1950 RESOURCES $ 19,947.40 Cash in Bank Stock 1.00 Less Reserve .... 1.00- .00 Notes Receivable, 92,389.56 Secured Notes Receivable, 60,231.85 Unsecured Real Estate Land Buildings 33,325.00 8,800.00 Less Reserve for Dep'n .... 440.00- 8,360.00 41,685.00 $214,253.81 Total Resources LIABILITIES Capital Stock Undivided Profits Reserve for Taxes on Income $120,000.00 87,896.74 4,357.07 Reserve for Mer. Purchase Collection Costs Total Liabilities 2,000.00 .$214,253.81 OFFICERS A . C. HUGHES President A . P. H O L M - J. E . A B E R N E T H Y - - - - LEO W . BARDIN - Executive Vice President Vice President, Trust Officer, and Manager, Carmel - Vice President and Manager, King City - - Vice President and Manager, Monterey THOMAS L . CRAIG - - G. H . BURNETTE - Vice President, Secretary and Treasurer - - - Vice President and Cashier D. A . GILCHRIST - - Vice President and Manager, Gonzales - Vice President Vice President J. A . G E N A S C I J. C . J U R I - - - - L. F. RIANDA LEO TAVERNETTI Vice President ROLAND TAVERNETTI - - - - Vice Trust PAUL W . LAWRENCE Assistant Secretary, Assistant President Officer, Treasurer Assistant Vice President and Manager, Greenfield F. A . HITCHCOCK - - - Assistant Vice President M . D . BECK Auditor W . B. C O T T R E L L - - ROBERT T . K A T T N E R - - Assistant Trust Officer, Assistant Secretary, Assistant Treasurer CLARK ALSOP Assistant Cashier and Manager, Castroville R . W. B A R R Y Assistant Cashier C. B. BRIGGS Assistant Cashier, Assistant Manager, Alisal ROBERT CAUSLEY, JR. Assistant Cashier S. E . C O L E M A N Assistant Cashier and Assistant Manager, Carmel ADOLPH DECOTO HELEN - EAKIN STAFFORD H U G H E S - J. J. JORGENSEN - BOB F. W O R K S Assistant Cashier and Assistant Manager, King City Assistant Cashier Assistant Cashier and Assistant Manager, Monterey - Assistant Cashier and Manager, Alisal Assistant Cashier BOARD OF A . C . HUGHES DIRECTORS - President (Chairman of the Board) W . T . BRAMERS - - - - H . F. COZZENS - - - - Civil E . B . GROSS - - E. J. LEACH - - - - - Farmer Engineer - Capitalist - Doctor of Dentistry - - - - Rancher - - Retired J. W . MCKINSEY C . B. O U T H I E R - - - - CHAS. B . ROSENDALE - - Attomey-at-Law C. C. SALMINA - - - - - E. H . TICKLE - - - - - - Farmer Capitalist • OFFICES SALINAS ALISAL CARMEL CASTROVILLE GONZALES MONTEREY GREENFIELD KING CITY Home Owned • County Wide February 13, 1951. Mr* A. C. Hughes, President, Monterey County Trust and Savings Bank, Salinas, C a l i f o r n i a . Dear Andys Thank you f o r your note of February 5 , 195^ and copy of your annual r e p o r t , which I have read with i n t e r e s t . I agree w i t h you t h a t the tendency a t the moment i s t o r e l y more and more heavily upon d i r e c t controls over wages, p r i c e s , and goods to counter i n f l a t i o n a r y pressures. Not only do such d i r e c t controls project Government into, the business a f f a i r s of the country, but they attack the symptoms rather than the basic causes of i n f l a t i o n . On the other hand, I do not agree t h a t higher taxes and monetary p o l i c i e s designed to curb f u r t h e r bank c r e d i t expansion are p r i m a r i l y s o c i a l i s t i c . We have to do something t o curb an i n f l a t i o n which threatens to undermine the purchasing power of the d o l l a r and the s t a b i l i t y of our economy. The best way to do t h i s i s to c u r t a i l funds a v a i l a b l e f o r spending a t a time when labor and materials are being diverted from c i v i l i a n t o defense production. I am hopeful t h a t the American Bankers Association w i l l lend more active support to the Federal Reserve position regarding appropriate monetary and c r e d i t p o l i c i e s f o r the present defense economy. Unless the Federal Reserve i s enabled to exercise i t s t r a d i t i o n a l q u a n t i t a t i v e controls over the volume of bank c r e d i t , we may f i n d ourselves saddled w i t h an even more onerous burden of d i r e c t controls. Kindest personal regards. Sincerely yours, M. S. Eccles. CBS: dm
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