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April
My dear Senator:
I & B sending you herewith copy of the letter I
received from Mr. Bennett, which I re&d to you over the
telephone and which you asked me to sena to you.
Concerning other matters which I ciiscussed with you
ov©r the telephone, regarding the banking organisation with
which I was formerly connected, I air* enclosing herewith a
combined statement of banks owned by the First Security
Corporation as of September 29, 1954,, This is the last
statement I have. In discussing the matter with Mr. Bennett
he advises me that there is & substantial improvement since
the date of the referred to statement. In the statement
you will note the total aaount of Preferred n A* Stock subscribed for rod owned by the Reconstruction Finance Corporation is islf750,000.00, and that the equity in the banks
junior to the xtec instruction Finance Corporation1! investment amounts to £3,532,000*00, or practically twice the
amount of the .investment of the Reconstruction Finance
Corporation. This :r,33£,00Q.Q0 is made up of the following itemss
Preferred »BW Stock
Common Stock
Surplus
Undivided Profits
Total
.000.00
^££0,000.00
300,000.00
2,000.00
;, 3,532,000.00
Sincerely yours,
K. S. Secies,
Governor..
Hon. Jawes F 0 Byrnes,
United states Senator,
Washington, D. C.
Enclosures*
i/JPX
Ogden, Utah,
January 4thf 1955.
Mr. M. ,.
5010 Cleveland AYS., l« l# 9
Washington, D. C.
Dear Marrinert
The audit of Scholefield, <»ells & i>axter, which
was ordered last suwaaer when I returned, has finally been couple ted. This audit ties up with a certified public audit record
of our operations froa the inception of the organisation of the
Corporation, To be more exact, the audit taringa everyting up to
jctobar 1, 1954 and includes an appraisal of the assets of the subi&ries, bringing all "bonds to aarkot, value as of that date and
not only excludes loss classifications according to examinations
by supervising banking authorities, but also ©Urinates all items
classified as doubtful, fce are ad Justin:: the books of the subsidiaries and of the holding corporation to the appraisal thus
obtained, as of October 1, 1934, In the holding corporation of
course this has meant writing out all good will, although certainly
good will is involved in building up an organisation such as ours
which has beau developed through the years through the various
units of the Corporation.
I &ade report to the stockholders at the meeting
of Decemberfettfefgiving the facts of this report. There was not
a single dissenting comment at the seeting, which was represented
by close to 75% of the stock.
In addition to appraisal of values, this audit was
made to fit in with our last audit and constituted a review of the
previous audits by the sane concern to determine whether at any
time the holding corporation had over-stated or misrepresented
earnings to stockholders, as to whether dividends had been p&id
which had not been earned, and all the other matters to which suspicion is attached as respects holding corporations. This audit
cost us a good deal of money. It consisted of checking the records
of all of our subsidiaries, checking with the various supervising
banking authorities. I felt that the aon^y would bs well spent,
and that it would disclose to us the result of a cold, analytical
review of what we and our subsidiaries have done.
Mr. M, l« I—!••
Upon the completion of the report I appointed Lafayette Handlett as Chairman, and Messrs* Duncan MacVichie &nd
Frederic S« Smith &a a committee to study this report in conjunction with the certified public accountants and our General Auditor,
for tins purpose of picking out any highlights or polfltf >f criticise
that should be brought to the special attention of the full Board
of Directors. Two of the members of this eoaw&ttee are the aost
critical ©embers of the Board, and the most competent, having been
helpful in the past in that they have large holdings in the Corporation and are always ready with criticisms when they detect any*
The Hanchett report has been completed today at the
end of a two day session, and the results are as followst
1, Complimentary reference as to the gooa faith
of i&e
2. Io reports to stockholdere over-stating the
condition of the Corporation,
3* No dividends declared not consonant with the
earnings for the period,
In other words the audit, and the inspection by 'the special committee
of th'e Board of Directors, wag that we may not b© accused of any
of the things that have been charged to other bank holding corporations. Of course you and I knew that, but I have be@n anxious to
get it on record from disinterested parties as a complinest to us
in the face of what hag occurred in other sisilar situations, I
thought you woulci be glad to know this* There is absolutely nothing
in connection with our community functions that can be attacked
without credit to us in the final analysis•
Sincerely yours,
(Signed) E. G» Bennett,
President*
Copy
of
tun mmiti otmrn
Dibits
Oh b*,Si>
. ptesber £9, 19 Si.
frftll i&d Discounts
Banking Houses, Furnitureft&tiFixtures
XnvestB^nt Bonas «ttd ^©curitie®
9«i« Bonds Securing Circulation
Cue from B*f* Treasurer--JRedenptioa Fund
de&l Estate Owned
Stock in Federal K®serve Bank
Other Assets
Uash ana in Banks
B*ft»i liunicipal and Listed
{.14, £7 9,312.24
738,401.47
1,477,515.25
1,150,000.00
57,500.00
118,112.61
114,600*00
139,650.55
.'12,487,345.91
2%M 406^407 #96
Total A»sofurcea
54,tt8tT$5#87
.-•53,027,24"•;.97
Liabilities
Capitals
Preferred »AK Stack
| 1,750,000.00
Preferred WB8 iiflrti ItiliMMllilt
value
50,000,00
(All awsed: by First Security
Corporation)
Common Stock
1,-380,QOO.QQ
S,840,000.00
Surplus
Undi/iQ@d Profits
iteservas for Taxes, Interest, etc*
B&nk Currency in Circulation
Other Liabilities
9 0,000#00
642,494.46
£55,293.72
1,150,000.00
7,062.48
46,534,336.31
Total L i a b i l i t i e s
^55,027,E45,97
@FedFRASER