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Ninth Annual Report
FEDERAL HOME LOAN
BANK BOARD
for the period
JULY 1, 1940, through JUNE 30, 1941
covering operationsof the
FEDERAL HOME
FEDERAL SAVINGS

LOAN

BANK SYSTEM

AND LOAN ASSOCIATIONS

FEDERAL SAVINGS
LOAN

INSURANCE

HOME OWNERS




AND

CORPORATION

LOAN CORPORATION

Ninth
Annual Report
FEDERAL HOME LOAN
BANK BOARD

covering operations of the
FEDERAL HOME
FEDERAL

SAVINGS

LOAN BANK SYSTEM
AND

FEDERAL
LOAN
HOME

SAVINGS

INSURANCE

OWNERS

LOAN

ASSOCIATIONS
AND

CORPORATION

LOAN

CORPORATION

for the period
JULY

1,

1940,

through JUNE

For sale by the Superintendent of Documents, Washington, D. C.




30,

1941

. . . . . .

Price 30 cents




Letter of Transmittal

FEDERAL HOME LOAN BANK BOARD,

Washington, D. C., October 1, 1941.
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

SIR: Pursuant to section 20 of the Federal Home Loan Bank Act,
we have the honor to submit herewith the Ninth Annual Report of the
Federal Home Loan Bank Board for the period July 1, 1940, through
June 30, 1941, covering the operations of the Federal Home Loan
Banks, the Federal Savings and Loan Associations, the Federal Savings
and Loan Insurance Corporation, and the Home Owners' Loan
Corporation.
The first section of the report presents a brief discussion of the vital
question of defense housing, with particular emphasis on the partici
pation of the Board and its agencies in the national program to provide
adequate housing accommodations for workers in defense industries.
Section II treats recent significant developments in the fields of resi
dential construction and home finance. The sections which follow
contain reports on the operating progress of each of the agencies under
the Board during the 1941 fiscal year.
In these days when world events occur with increasing rapidity,
an operating report restricted to a specific period, even though that
period be only a few months past, may well seem out of date in some
respects when it comes from the press. Although every effort has
been made in the report which follows to analyze trends in the thrift
and home financing field as they are affected by the present emer
gency and the Nation's all-out defense program, it is recognized that
forces now at work may have far-reaching effects which cannot yet
be predicted.
It is encouraging, nonetheless, to realize that whatever the future
may bring, the thrift and home financing resources of the country are
in a better position than ever before to withstand shocks and to make
readjustments. The Federal Home Loan Bank Board and its agen
cies, in carrying out the various activities assigned to them by the
Congress, have had a responsible part in correcting weaknesses which




III

IV

LETTER OF TRANSMITTAL

formerly handicapped this important sector of our economy. Al
though time and experience may well raise new problems for which
reforms and improvements so far achieved will offer only incomplete
solutions, there can be no question that definite progress has already
been made.
Respectfully,
JOHN H. FAHEY, Chairman,
T. D. WEBB, Vice Chairman,




FRED W. CATLETT,
WILLIAM H. HUSBAND,
FRANK W. HANCOCK, Jr.,

Members.

Contents

Page

LETTER OF TRANSMITTAL
I.

--

------------------------------

Defense lending by member institutions_--------Participation of the Federal Home Loan Bank Board in
the defense housing program _--------- ---------II. SURVEY OF HOUSING AND MORTGAGE FINANCE-___-

---

1. Residential construction and the real estate marketIncreased residential building_
----------------The defense program and residential building ----Growing importance of public housing Where new housing is built ------------------Continued preference for single-family houses - Improvement in the real-estate market---------Further decline in foreclosures __--------------Liquidation of real-estate overhang _--------Building costs-danger signals -------------Labor supply _---------------------------Rents and vacancies ----------------------Long-range market factors ------------------2. Mortgage finance and savings---------------Continued gains of home mortgage lending ----Expansion of construction lending_ ------------Increase in home mortgage debt- ------------Lending operations in the present emergency ---Growing volume of savings -------- _--------Savings for defense ----------------------Problems ahead---------------------------III.

FEDERAL HOME LOAN BANK SYSTEM ----------------

1. Operations of the Federal Home Loan Banks _. -.
Lending activity -_--------------- -------- _
Types of advances_ ----___-----------------Financial condition of the Federal Home Loan
Banks-------------------------------Income and expenses of the Federal Home Loan
Banks-----------------------------72




III
1

DEFENSE HOUSING--------- ------------------------

4
7
13

14
14
16
18
20
21
23
25
27
29
32
33
34
39
39
46
48
51
54
57
58
61
61
61
65
68

CONTENTS

VI

III. FEDERAL HOME LOAN BANK SYSTEM-Continued.
1. Operations of the Federal Home Loan Banks-Con.
Income and expenses of the Federal Home Loan
Bank Board ----------------------------Administration of the Federal Home Loan Bank
System-----------------------------_
Examination and supervision -------.
Federal Home Building Service Plan -----------2. Operations of member institutions ------------Changes in membership
-------------------Lending activity- ___-----------------------Reduction of Government share investments ---Analysis of condition of member associations ---Statement of operations --------------------Improvement in operating standards and man
agement---- --------------------------IV. FEDERAL SAVINGS AND LOAN ASSOCIATIONS.----Growth and development of Federal savings and loan
associations _-------------------------------Gain in private capital_-------------------------Expanded lending activity -----------------------Financial operations-----_
----------------------V. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION_
Operations of insured institutions ---------------Community programs -------------------------Supervision- _----------------------------------------------------Insurance settlements
Operation of insured institutions in default --------Operations of the Insurance Corporation -----------

VI.

HOME OWNERS' LOAN CORPORATION------------------

_----------1. Repayment record of borrowers ---Status of accounts _-------------------------------------------------Collections _
Reduction of mortgage indebtedness by borrowers_
2. General operations---------------------------Loan service_----------------------------Extension of loan terms-----------------Tax and insurance accounts ------------------Taxation ----------,------------_----------------------------Insurance program--------------------Foreclosures ------_
Property management -------------------




Page

75
75
77
80
81
81
84
87
91
97
98
103

104
107
110
111
115
116
120
124
125
130
132

135
135
135
138
140
141
141
144
145
146
147
148
151

CONTENTS

VII

VI. HOME OWNERS' LOAN CORPORATION-Continued.

2. General operations-Continued.
Property income and expense ----------------Vendee accounts ..-------------------------Reconditioning---------------------------Appraisals-- -------------- -----------_
3. Administration and personnel -----------------_-- -------------4. Financial operations ---Statement of condition
--_______
---_
_
Income and expense _-----------------------_---------5. Progress in liquidation ---------LIST OF CHARTS -----------------------------------

LIST OF EXHIBITS _-------------------------------

Exhibits ------------ ------------------------INDEX_------------




------

---------------------

Page
155
156
156
159
160
163
163
165
167
173
177

183
269

ORGANIZATION

FEDERAL

CHART

HOME

OF

THE

AGENCIES

LOAN

OF

THE

BAN K

BOARD

J I

(Created by Federal Home Loan Bank Act -Approved July 22 1932)

FEDERAL HOME LOAN BANK SYSTEM

FEDERAL

(Ceated by Federal Haom Loan Bank Ad
(A Amendled)

INSURANCE
CORPORATION
(Created by National Housing Act 1934 - Approved June 27, 1934)
(As Amended)

Ap red July 22. 1932)

A credit reserve organization for thrift and
home financing institutions. Regional Federal Home
Loan Banks, subject to the regulations of the Federal
Home Loan Bank Board. Make short-term and long-term
advances to and accept deposits from their member
institutions..

FEDERAL

HOME

FEDERAL SAVINGS

BANKS

LOAN

SAVINGS

& LOAN

HOME OWNERS' LOAN CORPORATION
(Authoet.d by Home Owners' Loan Act Aprosed Jane ,
(As Amended)

An emergency organization created to extend
relief to distressed home owners who were in danger
of losing their homes through foreclosure. Since
June 12, 1936 it has been engaged chiefly in servic.
ing its loans, liquidating its assets and discharging its
responsibilities to bond holders and the Government.
Members of the Federal Home Loan Bank Board con
stitute the Board of Directors of the Home Owners'
Loan Corporation.

An instrumentality of the United States est.
ablished to*insure the safety of investment to a
maximum of $5000.00 for each investor in each
Federal savings and loan association and in each
state-chartered institution of the savings and loan
association type which applies and is approved.
The members of the Federal Home Loan Bank
Boardconstitute the Board of Trustees of the Fed
eral Savings and Loan Insurance Corporation.

&

1933)

LOAN SYSTEM

(Authortsed by Home Owners' Loan Act - Apprwed June 13, 1933)
(As Amended)

Local mutual savings institutions, chartered
and supervised by the Federal Home
j

CHARL
ASSS
AV. LOAN H91
&

CIOr
,STATE
. no LOANaa.

j

SA IN6
ANKS

:

.l:

|

I N6UY A N c
N
PAN I ES

Loan

Bank

Board, and operated under boards of directors elected
by their members. They encourage long-term thrift
accounto

AND LOAN
ASSOCIATIONS

8

LOAN ASSOCIATIONS

I

INDIVIUAL

BROI ERSNS

and the financing of homes on long-term

amortizedfirst mortgage loans.

ANDBORROWERSINURED
AWD~

D 11-15-39

INVETORAPPOV
BQWabES

,
4

.V %

ft -'

^-e

A

5

Chairman,

FEDERAL HOME LOAN BANK BOARD

425085-41




(Face p. 1)

__

I
Defense Housing

D URING

the fiscal year ending June 30, 1941, the task of housing
for defense became a vital influence at work in the fields of
operation assigned to the Federal Home Loan Bank Board and its
agencies. Thrift and home financing, like most normal business
pursuits, have been passing through a period of readjustment and
adaptation required by a war economy.
When this country embarked upon its emergency program of
defense in the summer of 1940, it was immediately recognized that
one of the major problems to be met was the provision of adequate
housing for defense workers. The experience of 1917 and 1918, when
frantic and none-too-successful efforts were made to house those
employed in war industries, was ample proof of the necessity for
developing a comprehensive housing program as an integral part of
the broader plan of rearmament.
The responsibility of directing this part of the defense program was
entrusted to a Defense Housing Coordinator appointed by the Presi
dent on July 21, 1940. Until January 11, 1941, the Coordinator was
attached to the National Defense Commission; since that date he
has headed the Division of Defense Housing Coordination in the
Office for Emergency Management. As his title implies, the Co
ordinator has been assigned the task of analyzing local defense housing
needs and then bringing together the resources of private and public
organizations to meet those needs.
It is true, of course, that housing as such contributes nothing directly
to the actual manufacture of arms, munitions, tanks, airplanes, and all
the other supplies which are essential to a preparedness program.
On the other hand, it is axiomatic that without adequate shelter in
areas of high industrial activity or of strategic military importance,
all productive effort is seriously crippled. The responsibility of the
Coordinator and the several housing agencies of the Government is,
then, the task of seeing that no primary defense effort is slowed down
or interfered with because of insufficient housing.




2

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

To private industry belongs the job of providing most of the addi
tional housing needed in defense areas. Thus, housing designed for
permanent use should be constructed and financed with private
resources. On the other hand, there are certain localities where the
risks involved in financing new residential construction are so great
that private industry cannot be expected to assume them. In these
areas, new housing must be provided with public funds. For ex
ample, where the need is temporary and uncertain, or where the only
effective demand is for housing to be rented at uneconomic levels,
public construction is the obvious solution.
Generally speaking public funds are employed for the construction
of rental units and when private capital is unable or unwilling to
provide needed housing. In terms of dollar outlay, the program for
public defense housing, including funds authorized or in prospect for
both dwelling units and community facilities aggregated almost
$650,000,000 by the close of the 1941 fiscal year. On July 1, 1941,
public funds had been allocated for 107,383 regular family dwelling
units in defense areas, of which 66,656 were for industrial workers
and 40,727 for enlisted and civilian personnel of the Army and Navy.
Completed units at the close of the reporting period numbered 17,522,
or 16.3 percent of total allocations. An additional 70,146 had been
placed under construction contract.
Two types of defense housing constructed with public funds deserve
special mention. One is demountable and portable housing which is
programmed in localities where defense activity is of uncertain dura
tion and where the likelihood of integrating permanent new housing
with normal housing needs is questionable. The "ghost towns" of
the last post-war period emphasize the high cost of failure to recognize
the temporary nature of the demand for defense housing in a number
of localities.
Of the 107,383 family dwelling units in defense areas for which
public funds have been allocated through the close of the reporting
period, 11,759 were scheduled as demountable and portable housing.
It is hoped that this type of construction, which is relatively new in
this country, will prove the answer to the very difficult problem of
meeting an emergency need for housing in highly concentrated defense
localities without, at the same time, creating a permanent drag on the
real estate market by leaving an oversupply of housing after the
emergency.
Trailers and dormitories for single persons constitute the second
type of public housing designed for temporary use only. Trailers are
used primarily to provide interim housing until regular projects can




DEFENSE HIOUSING

3

be completed. Dormitories are designed for use for several years and
are often demountable in character. At the close of the 1941 fiscal
year, a total of 1,170 trailers and 3,076 dormitory units had been
completed.
However, despite this large volume of public defense housing,
private capital has been responsible for the bulk of residential con
struction in defense areas. During the 1941 fiscal year, 616,000
dwelling units were constructed throughout the United States. Of
this total, 510,000 units were built with private capital. Since an
overwhelming proportion of this new housing is located in areas of
concentrated defense activity, it is obvious that private capital is con
tributing most of the housing constructed in these localities to meet
emergency needs.
Local savings and loan associations, which make up the majority of
the membership of the Federal Home Loan Bank System, have long
been the most important institutions financing small homes. It is not
surprising, therefore, to find that these associations are proving them
selves able participants in the defense effort, providing from their
resources a substantial volume of housing in areas where the need is
most urgent. It is estimated that during the reporting period, new
dwelling units permanently financed by member savings and loan
associations totaled 175,000, of which 63 percent were located in
defense areas.
The Home Owners' Loan Corporation, which also operates under
the direction of the Federal Home Loan Bank Board, has played its
part in the defense program by speeding up its reconditioning program
in defense centers in order to place existing structures on the rental
or sales market as rapidly as possible.
Moreover, on August 20, 1941, the Coordinator announced a special
program to encourage repair and modernization of private homes which
will be carried out through offices of the Home Owners' Loan Corpo
ration and local Homes Registration Offices. The program has been
designed to make available to home owners without cost the services
of fee technicians who will assist them in estimating the possibilities
of repairing and converting their homes in order to make extra accom
modations available for defense workers. As much of this work as
possible will be done by salaried employees of the Home Owners'
Loan Corporation and a special fund of $100,000 has been authorized
by the President for use in employing fee technicians wherever
necessary. It is expected that a substantial volume of needed housing
can be supplied by conversion of existing dwellings in areas where
acute shortages exist.




4

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Defense Lending by Member Institutions

The member home financing institutions of the Federal Home Loan
Bank System are in an excellent position to do their share in satisfying
the emergent need for additional housing accommodations in defense
areas. These institutions have a long and creditable experience in
the home mortgage lending field, are operating in practically every
urban area in the country, and have ample investable funds, which
can be augmented from the resources of their Federal Home Loan
CHART I

LOANS MADE BY MEMBER SAVINGS AND LOAN ASSOCIATIONS
IN DEFENSE HOUSING AND OTHER AREAS
MILLIONS

OFDOLLARS

JANUARY 1940-JUNE 1941 BY MONTHS

120

100-M

DEFENSE
HOUSING M _A

JAN.

FEB.

MAR.

APR.

MAY

JUN,

1940

JUL.

AUG.

SEP

OCT.

NOV.

DEC.

JAN.

FEB.

MAR.

APR.

MAY

JUN.

1941
AND STATISTICS
DIVISIONOF RESEARCH
HOMELOANBANKBOARD
FEDERAL

Banks.

They have been accounting for about one-third of all record

ings of urban mortgages of $20,000 or less, a fact which demonstrates
that savings and loan associations represent a major source of the
private credit which is being used to provide needed homes for defense
workers.
As a gauge of the extent to which member savings and loan associa
tions are participating in the production of homes for defense, the
Federal Home Loan Bank Board has initiated a monthly study of the
lending activity of member institutions in "defense housing areas."
These areas include only communities so designated by the Defense




DEFENSE HOUSING

Housing Coordinator and those defined as eligible for home mortgage
insurance under Title VI of the National Housing Act. In both
cases, a'severe housing shortage must exist before the locality can be
approved as a defense housing area.
During the fiscal year 1941, member savings and loan associations
loaned $740,000,000 in defense housing areas. Although this over-all
figure includes loans for all purposes, it is estimated that over 110,000
newly constructed housing units were permanently financed by mem
ber savings and loan associations in defense housing areas.
In addition to the defense housing areas above described, there are
numerous localities in which the defense program has brought about
an increased demand for housing, although acute shortages have not
as yet developed. Thus, contracts let by the Army and Navy have
resulted in a rapid expansion of industrial activity in a large number of
communities where the problem of housing defense workers, although
not yet pressing, is nevertheless serious. If these areas are included
with localities of primary importance, the record of member savings
and loan associations is even more significant. During the fiscal year
1941, member institutions loaned approximately $420,000,000 in
financing 160,000 newly constructed family units in all areas where
defense contracts have been awarded.
Lending by member savings and loan associations in defense housing areas, by
purpose of loan
January to
June 1940

Construction
-----------------Home purchase------------Refinancing --------------------------------------------Reconditioning ---------,- ------------------Other -------------.----------------------Total

--------

--

--------

January to
June 1941

$105,
107,
57,
12,
26,

837, 400
440, 900
866, 000
031, 300
518, 400

$137, 922,900
145, 682, 900
55, 496, 400
12, 768, 700
26, 901, 500

+30. 3
+35. 6
-4.1
+6.1
+1.4

309, 694, 000

Purpose of loan

Percent
change

378, 772, 400

+22. 3

Lending by member savings and loan associations in other areas, by purpose of loan
January to
June 1940

loan
Purpose ofPurpose o
loan
Construction
---------------------------Home purchase
__
----------- --Refinancing
-----------------Reconditioning_--------Other--------Total ---

-

---------

---

--.

----

January to
June 1941

Percent
change

$47, 477, 600
47, 444,100
28, 903, 000
10, 752, 700
17,256,600

$53,490,100
62, 659,100
29, 772, 600
10,847, 300
17, 640, 500

+12. 7
+32.1
+3.0
+0. 9
+2. 2

151,834, 000

174, 409, 600

+14.9

The importance of member savings and loan associations of the
Federal Home Loan Bank System as a major source of mortgage credit




6

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

in defense housing areas is further illustrated by a comparison of their
lending record during the first 6 months of 1940, just prior to the
beginning of the national emergency, with the first 6 months of 1941,
when the preparedness program was well under way. As the preceding
table indicates, loans for the construction of new housing in defense
CHART II
CHANGE IN LENDING VOLUME OF INSURED ASSOCIATIONS IN DEFENSE HOUSING AREAS
UNITED STATES AND F.H.L.B. DISTRICTS; FIRST 6MO. 1940-FIRST 6MO. 1941
IN

PERCENT
0

10

20

C R E A SE
30

40

50

UNITED STATES

I - BOSTON
2-NEW YORK
::

3- PITTSBURGH

...

-..-....
-.:

:.:.; .:-.-.:...I...-. .:

TOTAL LOANS

'

".'.:i'

CiNiS UjTOTA O S
CONSTRUCTION
LOANS

4- WINSTON SALEM.

5- CINCINNATI
6- INDIANAPOLIS
7- CHICAGO

8- DES MOINES
9-LITTLE ROCK

II - PORTLAND

:

::

12-LOS ANGELES

DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANKBOARD

areas during the first 6 months of 1941 show an increase of 30 percent
as compared with only 13 percent in nondefense localities. Recon
ditioning loans in emergency defense areas also show a gain of 6 percent
during the first 6 months of 1941, while loans for the same purpose in
other areas increased only 1 percent. While it is impossible to say
with any degree of exactitude to what extent the demand for homes in
defense centers is being met by the reconditioning and conversion of




DEFENSE HOUSING

existing dwellings, there are numerous indications that this activity is
taking care of a substantial percentage of the demand for new housing
accommodations.
The first six months of 1941 also saw decided shifts in lending vol
ume among the twelve Federal Home Loan Bank Districts. Thus,
as the chart on page 6 shows, the most substantial increases in
lending activity and more particularly in the volume of construction
loans made are found in the Federal Home Loan Bank Districts of
Indianapolis, Cincinnati, Portland, and Boston. Undoubtedly, the
unusual gains made in these areas are related directly to the fact that
these same regions have received a large number of defense contracts
and include a majority of the most concentrated defense centers.
Participation of the Federal Home Loan Bank Board in the Defense
Housing Program

The Federal Home Loan Bank Board is governed by two principal

objectives in its defense housing activities.

First, it seeks to collabo

rate to the fullest extent with other governmental departments and
agencies in the development of an effective plan to provide needed
additional housing in defense areas. Secondly, the Board has taken
various measures to assure maximum cooperation on the part of the
3,839 member institutions of the Federal Home Loan Bank System
in financing permanent-use defense housing.
With the energetic assistance of the Presidents of the twelve regional
Federal Home Loan Banks, the Board has been engaged during the
fiscal year in carrying on a program designed to bring about the great
est possible cooperation from member institutions of the Bank System
in using their resources to provide permanent-use defense housing.
Each of the Bank Presidents, assisted by a field force organized by
the Board for this purpose,' has initiated and carried forward a com
prehensive program designed to stimulate activity on the part of
member institutions in his District. The basic objectives of these
programs are to bring about complete understanding, active interest,
and energetic participation in the national program for defense housing.
The Bank Presidents, because of their familiarity with local housing
conditions in their respective Districts, have also been able to assist
the Defense Housing Coordinator in studying the defense housing
needs of individual communities.
Member institutions have been encouraged to analyze local housing
and defense conditions with a view to determining the need for addi
tional housing facilities and the extent to which their individual
resources can be employed in financing them. Associations have




8

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

been urged to join forces with others interested in local housing condi
tions to establish and conduct cooperative local defense housing pro
grams. In a number of cases, member institutions, in cooperation
with other local lenders, have conducted reconditioning and moderni
zation programs in their communities. Such programs have proved
advantageous since they provide within a short time additional hous
ing facilities, reduce the danger of overbuilding, and require much less
capital than new construction.
In encouraging these activities by savings and loan associations, the
Board has been motivated by the desire to meet urgent needs for
additional housing accommodations. However, the Board has cau
tioned lending institutions that it is of the utmost importance during
the present emergency to r'equire observance of minimum construction
standards, adequate inspection procedures, conservative appraisal
practices, and firm collection policies. Enlistment in the defense
housing program to the limit of each association's ability consistent
with sound business practices is, in short, the obligation which the
Board has urged each member institution to assume as its primary
contribution to the national defense effort.
Participation of member institutions in the defense housing program
has been facilitated further by amendments to the Rules and Regula
tions governing the operation of Federal and insured savings and loan
associations. Recognizing that the acute need for defense housing
in many localities is placing emphasis primarily on the origination of
loans, the Board has liberalized its regulations to permit insured
institutions to sell mortgages and use the proceeds for financing defense
housing when necessary.
In the case of Federal savings and loan associations located in
recognized defense housing areas, the Board has indicated its willing
ness to consider individual applications for permission to sell mortgages
for the duration of the emergency without regard to the limitations
established by the Regulations. Insured State-chartered institutions
have also been advised that the Regulations have been amended to
permit the sale of mortgages made to finance permanent-use defense
housing. In taking this action, the Board had no intention of en
couraging its member institutions to engage in a program of unre
strained mortgage brokerage. Its purpose is rather to afford insured
institutions a means whereby they can assist to a material degree in
financing the construction of defense housing by setting up a revolving
fund for the origination and sale of a substantial volume of their
mortgage loans.




DEFENSE HOUSING

9

As a matter of policy, applications from Federal savings and loan
associations for permission to sell mortgage loans in excess of regula
tory limitations are carefully examined and permission is granted
only where there is ample evidence that the supply of loanable funds
available to the institution is less than the demand for home mortgage
credit. The Board has also required Federal associations to submit
evidence of carefully developed lending programs designed to avoid
overextension of loan commitments as a result of too extensive use
of the sale privilege.
The Board has also amended its Regulations to make available to
Federal savings and loan associations the procedure for making loans
under Title VI of the National Housing Act. This new title, de
signed to encourage private building in defense areas, became oper
ative on March 28, 1941. It authorizes the insurance by the Federal
Housing Administration of mortgages written up to 90 percent of
appraised value on builder-owned properties located in areas where
the President finds "that an acute shortage of housing exists or im
pends which wpuld impede national defense activities." The original
legislation authorized insurance of mortgages under Title VI up to
$100,000,000; by an amendment adopted on September 2, 1941, this
figure was increased to $300,000,000. The Presidents of the Federal
Home Loan Banks and the Board's special field staff have urged all
member associations located in defense areas to take advantage of the
insurance facilities of Title VI.
Since 1938, the Board has restricted investments by the Home
Owners' Loan Corporation in the shares of savings and loan associa
tions to special rehabilitation, cases. However, the Board has now
decided that where justified, moderate HOLC investments may be
made to provide additional working capital to meet defense housing
demands. Such investments are intended to enable the associations
to build up and maintain a revolving fund for the origination and sale
of mortgages made to finance defense housing projects. In addition,
the Board has announced that requests for the retirement of HOLC
share investments may be waived upon application by associations
located in defen'se areas. Associations applying for such waivers are
required to demonstrate a definite need for the retention of these
funds to meet defense housing needs.
As already indicated, the Board has strongly urged the member
institutions of the Federal Home Loan Bank System to participate
in the organization of local committee groups to survey existing hous
ing resources and to determine additional housing needs in individual
425085-41-2




10

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

cities. The most effective local committees have proved to be those
which bring together all community interests most directly concerned
with housing-lending institutions, local housing authorities, operative
builders, supply dealers, and representatives of labor and industry.
Where local defense councils are in existence, the defense housing
committees are usually set up as subcommittees of the councils.
These committees are voluntary in nature and operate under no
common plan of operation. Nevertheless, these groups are assuming
a more and more important place in carrying out the defense program.
It is true, of course, that national planning and coordination are es
sential to any program of housing for defense. Local community
organizations have neither the necessary information nor adequate
resources for assuming responsibilities outside their immediate
locality. However, it is in the local community that the actual con
struction of needed housing must be carried on, where defense workers
will be living and working, and where the post-emergency effects of
defense housing will be felt. Any national organization removed, as
it is, from the local scene finds itself handicapped in maling an analysis
of either needs or resources without the assistance of those most fa
miliar with local conditions. The task of the Defense Housing Co
ordinator is made considerably easier in localities where he can rely
for accurate information and analysis upon the recommendations
of a well-organized cooperative committee.
In addition to studying local housing problems as they are affected
by defense activity, defense housing committees are undertaking
numerous other responsibilities designed to meet the needs of their
localities. The committees keep a check on the construction of defense
housing to make sure that homes are made available as rapidly as is
necessary. In many cities they have cooperated in the establishment
and operation of Homes Registration Offices. By assembling in a
central place all information on available vacant rooms, apartments,
and homes, both for sale and rent, these Offices have proved an effec
tive means of putting existing housing resources to the most econom
ical use and are successful in relieving, in part at least, severe short
ages. Another activity of local committees is the stimulation of
programs to repair, modernize, and convert existing dwellings, thereby
adding to the housing supply and avoiding unnecessary new con
struction.
In summary, the formation of local defense housing committees has
been encouraged for the primary purpose of maintaining current
information on the progress of builders in supplying the defense
housing tentatively assigned to private enterprise and to deal with




DEFENSE HOUSING

11

the post-war housing problem and the orderly liquidation of any
excess housing which cannot be absorbed when the community
returns to normal.
At the close of the reporting period, the Defense Housing Coordi
nator announced that private industry would be expected to provide
a minimum of 400,000 new dwelling units in defense areas during the
1942 fiscal year. The record so far made by private building interests
gives every reason to believe that this goal will be met. Certainly the
member home financing institutions of the Federal Home Loan Bank
System, whose "assets now total more than $5,000,000,000, can be
expected to finance a substantial proportion of the housing needed for
defense.







__

II

Survey of Housing and Mortgage Finance

HE fiscal year 1941 was a period of continued progress in the
fields of activity in which the Federal Home Loan Bank Board is
primarily concerned. Construction of new homes, investment of
savings in home mortgages, and general operations of the real-estate
market all showed substantial improvement during the reporting
period.
A gain of 27 percent over the previous fiscal year brought residential
construction in nonfarm areas back to the annual level of the late
Twenties. Home mortgage lending by private financial institutions
reached a new ten-year high. Except for a brief period during the
fall of 1940, the flow of savings into financial institutions continued
at an excellent rate. The real-estate market as a whole showed
significant signs of improvement. Real estate owned by financial
institutions declined to such an extent that the overhang of institu
tionally-acquired properties, which for the past several years has been
a serious drag on the market, no longer represents a major problem
except in a few scattered areas.
The accelerating tempo of the national defense program has at the
same time raised new problems and uncertainties which are already
affecting thrift and home financing operations. No business operates
in a vacuum and the mobilization of economic resources in the interests
of an all-out preparedness effort means readjustments in all business
activity. Fortunately, the home financing structure is today better
able to meet the challenge than at any time in the past.
Member home financing institutions of the Federal Home Loan
Bank System are supported by a substantial reservoir of credit on
which they can rely, when necessary, for the payment of withdrawals
or the financing of mortgage loans. Insurance of accounts in savings
and loan associations has created a high degree of confidence on the
part of savers and investors. Activities of the Federal Government
in providing a ready market for insured mortgages is a further im
portant bulwark to the home financing industry. Finally, the home
mortgage debt of the country is basically sounder than in former
periods of emergency.

T




13

14

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

1. RESIDENTIAL CONSTRUCTION AND THE REAL-ESTATE MARKET
Increased Residential Building
The fiscal year 1941 witnessed profound changes in the national
economy. By the beginning of the reporting period, the program for
defense and all-out aid to the Democracies had reached the point
where actual production was having measurable results in improved
business conditions. Throughout the reporting period, the upward
trends were maintained until by June 30, 1941, the various gauges of
general business activity had reached the highest levels in many years.
Thus, the index of industrial production was 157 for June 1941, a
figure 30 percent higher than a year previous. Nonagricultural
income rose from $66,616,000,000 during the 1940 fiscal year to
$74,018,000,000 during the reporting period. Manufacturing payrolls
increased $572,000,000, or 25.6 percent. Nonagricultural employment
reached the record level of 32,647,000 in June 1941. Farm prices and
cash income both enjoyed steady gains.
New residential construction was no exception to this general trend.
During the fiscal year 1941, the total volume of residential construction
reached the highest point since 1928. On the basis of building permit
figures compiled by the Department of Labor, construction was
started on approximately 616,000 nonfarm dwelling units, with an
estimated permit valuation of $2,136,842,000. Compared with the
previous fiscal year, these figures show a gain of 27 percent in number
and 29 percent in dollar volume.
Number of new dwelling units provided in nonfarm areas, by quarters, fiscal years
1940 and 1941
uarter
uarter

Fiscal year
1940
124, 265

July-September ---------------------..------------

October-December -------------------------January-March ..
---April-June .----------....-----------------

-

117,224
99,322
143, 427

Fiscal year
1941
150, 634

146, 617
128, 872
189,936

Percent
increase
21.2

25.1
29.8
32.4

*Source: U. S. Department of Labor.

Even more indicative of the acceleration in the rate of residential
construction is a tabulation by quarters during the last two fiscal-year
periods. On this basis, the first quarter of the current fiscal year
shows an increase of 21 percent over the corresponding period a year




15

SURVEY OF HOUSING AND MORTGAGE FINANCE
CHART III
INDICES

OF RESIDENTIAL

CONSTRUCTION

INDEX

1935 -1939

AND INDUSTRIAL PRODUCTION

= 100

DIVISION RESEARCH STATISTICS
OF
AND
FEDERAL
HOME
LOANBANKBOARD

CHART IV
CONSTRUCTION OTHER THAN RESIDENTIAL
CONSTRUCTION CONTRACTS AWARDED
1935- 1939 = 100

INDEX

or"x

BY YEARS

BY MONTHS

160 -

160
140
120

100
80
60

20t
.. .

. . , .

.,

, .

6

, , ,

17

,

.

18

=: ,

p ,

19

Source: Board of Governors of the Federal Reserve System,
based on reports of the E W Dodge Corporation




o , ,

1931940

,A

. .

..

1940

. .

-.

.

. .

..

MAR. JUN.
1941

DIVISIONOF RESEARCH STATISTICS
AND
FEDERALHOMELOANBANK
BOARD

16

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

previous, while gains of 25, 30, and 32 percent were scored in the second,
third, and fourth quarters.
Despite the increased volume during the fiscal year 1941, residential
building failed to keep pace with nonresidential building because of the
rapid expansion in plant facilities which has accompanied the defense
program. Only a short time ago idle factories and equipment were
commonplace. Today, the sithation is completely changed. The
staggering job of meeting within the shortest possible period of time
the production demands of an all-out defense program has necessitated
plant expansion on a huge scale.
The Defense Program and Residential Building
Like so many other fields of economic activity, residential construction
during the fiscal year 1941 was greatly affected by the defense effort
and, more particularly, by the
CHART V
program of defense housing. The
DISTRIBUTION OF RESIDENTIAL CONSTRUCTION
necessity of providing adequate
PRIVATE AND PUBLIC
NUMBEROF NONFARM
UNITS
DWELLING
shelter in defense areas, so that
THOUSANDS
no essential productive activity
is hindered by the lack of housing
300
accommodations
for defense
j -C
-PRIVATE
:
workers, is basic to the Nation's
250
,
preparedness program.
The stimulus given to the
whole economic system by the
program of national defense, as
evidenced by rising industrial
production, increased national
100
income, decreased unemploy
ment, rising wages, and so forth,
has in itself undoubtedly ac
counted for a substantial amount
of new residential building. In
Jan:Jul.JanJul.Jan.Jul.Jan
Jun
Dec. Jun
Dec
Jun. Dec
Jun.
u938
1939
19 4 0 =i 1941
a sense then, it might be said
OIVISIONOFRESEARCH
AND STATISTICS that the general defense effort of
FEDERALHOME LOAN BANK
BOARD
the country has been the primary
cause of the increase in residential construction activity during the
current fiscal year.
The effects of the defense program are most clearly visible in the
public housing field. During the fiscal year 1941, the total number of
dwelling units provided in nonfarm areas through public funds
200




,.

17

SURVEY OF HOUSING AND MORTGAGE FINANCE

amounted to 105,788, or nearly twice the previous record set during
the 1940 reporting period. According to the United States Depart
ment of Labor, 63,767 units, or 60.3 percent of this total, represent
defense housing placed under construction contract in localities where
the preparedness program necessitated additional housing facilities.
While these figures show the direct result of the defense emergency
on public housing, they indicate only one part of the story. The
substantial increase in the volume of housing provided by private
resources, amounting to 84,454 units, was also broight about in
substantial measure by the urgent need of additional housing facilities
in defense localities.
CHART VI

IN PRIVATE RESIDENTIAL CONSTRUCTION
DEFENSE AND NONDEFENSE AREAS

INCREASE

IN

COMPARISON OF FIRST 6 MONTHS OF 1940 AND 1941
P E R C E N T

TOTAL
CONSTRUCTION

20

10

0

&
II

22.3
S2.

30

IN C R E A S E

40

50
I

60

DEFENSEAREAS
257

NONDEFENSE AREAS

I - FAMILY
DWELLINGS
2-FAMILY
DWELLINGS
MULTI-FAMILY
DWELLINGS

52.1

2.8
6.3
357.5

~::i:..

;

::

' .::.:.

::::::

DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANKBOARD

The concentration of private housing in defense areas is illustrated
in the chart above. During the first six months of 1941, private
residential construction in "defense localities," 1 which represented
over 75 percent of all private residential building in incorporated places,
expanded by 22 percent as compared with a growth of only 13 percent
during the first six months of 1940. These percentage gains un
doubtedly minimize the stimulating effect of the defense program on
private building, for they have been restricted to residential construc
tion activity within city and town limits and, therefore, fail to take
into account the large volume of housing located immediately outside
boom towns.
1 "Defense localities" are defined as those areas for which public housing funds have either been allocated
or where allocation is definitely under consideration as well as those which have been designated for FHA
insurance under the new Title VI of the National Housing Act.




18

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

It must be recognized that a certain proportion of new private hous
ing has undoubtedly been built to meet normal replacement require
ments or to fill a demand divorced from any but the most indirect
influence of the defense emergency. However, the substantial gains
in private residential construction do signify that private housing is
meeting a major portion of the demand for housing in defense areas.
It should be noted in this connection that even where new home
construction in defense areas is not specifically designed for occupancy
by incoming defense workers, it does make available additional va
cated units which may be used for this purpose. For this reason, any
additional housing in defense areas helps in the execution of the
armament program.
Growing Importance of Public Housing
As already stated, the number of publicly-financed nonfarm dwelling
units on which construction was started in the 1941 fiscal year aggrer
gated 105,788, an increase of 81 percent over the preceding fiscal yea.
This rise is directly reflected in the share of total residential construc
tion attributed to public housing during the reporting period. Housing
CHART VII
ESTIMATED

VALUE

OF RESIDENTIAL CONSTRUCTION

INCLUDING

MAINTENANCE

BILLIONS

OF DOLLARS

6

UNITED

STATES; 1915-1940

MAINTENANCE:.
S

4t

Source: U.S. Deportment of Commerce




4

^

TOTAL RESIDENTIAL

<3CONSTRUCTION

... ....
.. ..
..

DIVISION RESEARCH
OF
AND STATISTICS
FEDERALHOME LOANBANK BOARD

SURVEY OF HOUSING AND MORTGAGE FINANCE

19

financed with Government funds represented 17 percent of total new
nonfarm units in the fiscal year 1941 as compared with 12 percent
during the previous year.
The relationship between public and private housing in total
residential construction activity is illustrated in Chart VII which
indicates the volume of expenditures for new construction and
maintenance, with a breakdown to show the relative amounts provided
from private and public funds.
The factor almost solely responsible for the increase in public hous
ing was, of course, the necessity of meeting the demand for additional
housing accommodations in defense centers which could not for good
reason be met with private resources. The volume of public housing
provided under the United States Housing Act of 1937 and the New
York Public Housing Law of 1939 amounted to 60,200 units during the
fiscal year 1941 as compared with 58,421 during the previous year.
Included in this total for 1941 are 18,179 units placed under construc
tion contract which will be used to house defense workers, for the
duration of the emergency, but which will revert to their original
function of slum clearance projects when they are no longer needed for
this purpose. There was, therefore, relatively little increase in the
volume of housing constructed for immediate or ultimate use as slum
clearance projects.
The following table compares the expansion of publicly-financed
construction with the increase in private building activity in nonfarm
areas:
Comparison of private and public residential construction in nonfarm areas
Total construction

Fiscal-year period

Private

1939__

-

_____-

--__

1940 ____. _
1941.-__-.
--- _

Dwelling
units
started

Number
1938-__-

Dwelling
Increase
units
over precedstarted
ing year

Number

____

273,742

_____

484,238
616, 059

_____

419, 539

Percent
______

53.3
15.4
27.2

_

273,022

394,034

425,817
510,271

Public

Increase
Dwelling
Increase
over precedunits
over preced
ing year
started
ing year
Percent
____________

Number
720

44. 3

25, 505

8.1
19.8

58 421
1105,788

Percent
---

3, 442. 4
129.1
81.1

1 Of this total, 63,767 units were built in defense housing projects.

Direct construction of housing by Governmental agencies has
resulted from two specific needs. The first is exemplified in the
program of the United States Housing Authority-to replace sub
marginal housing by providing decent living quarters which are
rented on a subsidized basis to slum dwellers. The second is the
urgent problem of meeting housing needs in defense areas where private




20

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

industry cannot handle the job because of the temporary character of
the demand or because the demand is for housing at uneconomic rent
levels. Present trends would seem to indicate that public housing for
defense will play an increasingly important role in total residential
construction activity.
Where New Housing is Built
During the 1941 fiscal year, the rate of private residential construction
in nonfarm areas showed gains ranging from 4.1 to 32.4 percent in the
nine major geographical divisions of the country. The East North
Central, South Atlantic, New England, and East South Central States
led the other Districts with increases of 25 percent or more, while the
Middle Atlantic and Mountain States at the other end of the list
showed increases of slightly more than 4 percent.
The highest rates of private residential construction, continuing
the trends of the last several years, were found in the Pacific, Moun
tain, and Southern States. The lowest rates of residential construc
tion, in terms of population, were found in the New England and the
Middle Atlantic States. It is interesting to note that the New
England States, where the rate of construction is lower than for any
of the other eight geographical divisions, experienced one of the
highest percentage increases during the reporting period. On the
other hand, the Mountain States, which ranked second in terms of
rate alone, experienced a gain of only 4.4 percent as compared with
the previous year.
Private residential construction in nonfarm areas, fiscal years 1940 and 1941
[Rate per 100,000 population] I
Percent
increase

Geographic division

1940

1941

New England---.-- Middle Atlantic_------.
East North Central-....

206. 7
282. 2
331.4

270. 3
293. 7
438. 9

30.8
4.1
32.4

South Atlantic----------

597.8

791.0

32.3

West North Central--...
East South Central-...

351. 1
365.7

382. 9
460. 6

9. 1

26.0

G
d9ces
Geographic division
West South Central-....
Mountain .-----------Pacific---------------.

1940

1941

504. 6
543. 2
581. 5
606. 9
981. 0 1, 192.4

United States total419. 4

502. 6

re

7. 6
4.4
21.5
19.8

1 In the compilation of this material, building permit data collected by the U. S. Department of Labor
have been used; publicly financed units are excluded. In order to provide a basis for comparison of resi
dential building activity between various sections of the country, a ratio of the total number of new family
dwelling units to existing nonfarm population has been computed instead of the absolute number of dwelling
units provided. Population estimates used in computing the rate of building are based on the U. S. Census
of 1940.

To complete the picture of where residential construction was
carried on during the last fiscal year, the statistics have been expressed
in the table below in terms of rate per 100,000 population in cities of
varying size. Generally speaking, the highest rates were found in
smaller communities and in rural nonfarm areas.




21

SURVEY OF HOUSING AND MORTGAGE FINANCE

Rate of private residential construction, by size of community, fiscal year 1941
[Rate per 100,000 population]

502
488
413
432
485

Total nonfarm.---. --------------Total urban ----------------..--- .
500,000 and over- ....-------100,000-500,000_._...-- -----------.
50,000-100,000-------------------

Fiscal year

Population group

Fiscal year
194]

Population group

1941

25,000-50,000-----------------570
10,000-25,000-.---..-----------------579
.
585
5,000-10,000--- ----- --------------2,500-5,000---------------------------572
542
Rural nonfarm_---------------- -----

The increasing rates of construction in smaller communities are
particularly interesting in view of population trends disclosed by the
1940 Census. Briefly, the Census showed that during the Thirties,
CHART VIII
INCREASE IN RESIDENTIAL CONSTRUCTION BY SIZE OF COMMUNITY
FISCAL YEAR 1941
0

5

10

15

PERCENT

20

INCREASE

25

30

35

4

45 _

50

TOTAL NONFARM

500,000 and over

50,000-500,000

2,500- 50,000
RURAL NONFARM

N.

4,

:

DIVISION OF RESEARCH
AND STATISTICS
FEDERALHOME LOANBANK BOARD

the highest rates of population increase occurred in small communities.
Thus, the percentage increase in the number of persons living in
communities of 500,000 or over was 7.4 percent during the decade of
the Thirties, 4.4 percent in cities of 50,000 to 500,000, and 13.7
percent in urban areas of 2,500 to 10,000. Rural nonfarm areas
show an even higher gain of 14.5 percent. This trend was a direct
reversal of the population curve of the Twenties. 2
The above chart illustrates the higher percentage gains in total
residential units provided during the fiscal year 1941 in smaller
communities.
Continued Preferencefor Single-Family Houses
The Eighth Annual Report of the Federal Home Loan Bank Board
emphasized the long-range trend toward an ever growing proportion
2 For detailed information on population trends as disclosed by the 1940 Census, see pp. 35-38.




22

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

of single-family dwellings in the annual additions to the residential
housing supply of the country. This development, which started
with the recovery of residential construction in 1935, is contrary to
our experience in the upswing of previous building cycles. During
the Twenties, for example, the proportion of new dwelling units con
tained in apartment houses rose substantially during the period 1922
to 1928. During this same period, construction of one- and two-family
houses remained relatively stable.
CHART IX

NUMBER
'THOUSANDS

OF NEW NONFARM DWELLING UNITS
BY TYPE OF DWELLING: 1921-1940

Source.
National
Bureau Economic
of
Research
1921-1936
U.S. Department of Labor 1937-1941

BUILT

DIVISIONOFRESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANK
BOARD

During the year under review, single-family houses assumed a posi
tion of even greater importance. Approximately 81 percent of total
nonfarm units built are found in dwellings of this type as compared
with 78 percent during the previous fiscal year. The gain in single
family home construction was made at the expense of multifamily
housing developments as Exhibit 1 and the chart above indicate.
The number of new single-family dwelling units provided during the
fiscal year 1941 totaled 497,230, an increase of 32.4 percent over the
previous fiscal year. The total volume of units provided in multi
family structures, on the other hand, amounted to 80,018 during the




SURVEY OF HOUSING AND MORTGAGE

FINANCE

23

reporting period, or a gain of only 1.8 percent. The number of units
provided in two-family structures showed a good increase during the
fiscal year 1941 from 30,162 to 38,811. However, the relative impor
tance of this type of housing remained practically unchanged, the
figures for each of the last two fiscal years representing but 6 percent
of the total new housing constructed.
Undoubtedly one of the main explanations for the predominant posi
tion of single-family houses in the volume of new construction during
recent years is the fact that our population is increasing at a much
faster rate in smaller communities and suburban areas than in central
cities where most apartment building is concentrated. The tradi
tional preference of the average American for a single-family home of
his own is much more easily satisfied if he lives in a community where
there is no problem of crowded living. It is no mere coincidence that
the 1940 Census shows population during the Thirties to have grown
three times as rapidly in suburban areas as in the central sections of
our metropolitan communities.
Improvement in the Real-Estate Market
Recent Annual Reports of the Federal Home Loan Bank Board have
emphasized that the real-estate market in this country has made only
an incomplete recovery from the depression of the early Thirties.
Reasons why recovery has lagged in this field are not difficult to find.
Real estate is by its nature a commodity which moves slowly. Prices
at which properties have been offered for sale have only recently been
adjusted to realistic levels since many property holders refused to
incur the very heavy sacrifices which would have been inevitable had
they disposed of their investments at the depth of the depression.
The avalanche of foreclosures during the first depression years resulted
in an institutionally-owned overhang of properties which further
deflated prices. Depreciation and obsolescence have exacted a heavy
toll on older properties remaining unsold.
The task of liquidation under these conditions has naturally been a
difficult one. Until recently, the market has functioned under the in
fluence of mixed and somewhat paradoxical trends. Thus, the sale
prices of older and larger properties have steadily declined, reflecting
competition with new low-priced homes and the common preference
of prospective home purchasers for small new houses located in
attractive neighborhoods. On the other hand, the institutionally
owned overhang of properties has been steadily if slowly reduced,
foreclosures have dropped to near normal levels, and sales activity,




24

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

particularly in the lower price brackets, has been on the upgrade.
Compared with the slow recovery during the past few years, the
real-estate market showed an accelerated improvement during the
reporting period. The immediate return to boom conditions expected
by a few optimists after the outbreak of the European war failed to
occur, but all market factors, at least up to the present time, have
been advancing in a positive direction.
Sales activity, which was already showing a good increase during
the 1940 fiscal year, moved upward during the reporting period to a
new post-depression peak. Reports on the volume of real-estate
transfers and general market activity show a continuing improvement
which is encouraging to those engaged in the field of housing and
mortgage finance. In many localities, definite tendencies toward a
stiffening of the prices at which older properties are sold have been
noted, although the demand for this type of structure is still much
slower than for small, new, single-family dwellings.
Member institutions of the Federal Home Loan Bank System, as
well as other institutional holders of repossessed properties, also made
excellent progress in liquidating their holdings during the current
fiscal year. Prices have not only held up m most areas, but in some
localities show a tendency to increase. As the defense program
gathers greater momentum, it is having more and more noticeable
effects on all sectors of the real-estate market. Thus, in a few locali
ties where industrial activity has reached a new high pitch, there has
been a concomitant upswing in real-estate activity. It is too early
to draw any basic conclusions as to the long-run effects of the defense
program on the real-estate market, but the few signs now available
point toward increasing improvement.
The excessive tax burden borne by real estate in many communities
remains one of the major bars to further recovery of the real-estate
market. Property tax levies show little change since the Board
stated in its Annual Report a year ago: "Overvaluation of properties
in terms of present prices and revenues, outmoded tax-appraisal
methods, high tax rates, and excessive costs of tax collection through
out the 175,000 overlapping tax jurisdictions discourage owner-occu
pancy and investment in real estate alike." Statistics for 252 cities
collected by the Detroit Bureau of Governmental Research, Inc.,
show, for example, that there was an increase of 1.0 percent in the
average adjusted tax rate per $1,000 during 1940, accompanied by a
decline of 1.5 percent in average assessed values.




25

SURVEY OF HOUSING AND MORTGAGE FINANCE

1
Comparisons of 1940 and 1939 average adjusted tax rates of 252 American cities

Average adjusted rates
per $1,000 of assessed
value

Average adjusted rates
per $1,000 of assessed
value
Population group

group

__Population

1940
500,000 and over _---300,000-500,000_-------100,000-300,000 -- --50,000-100,000--- -----

1939

$28.87
29.39
29.08
27. 14

$28.41
27.92
29.21
26.64

1940

Percent
change
+1.6
+5.3
- 0. 4
+1.9

30,000-50,000---------.All 252 cities --

-

1939

$27.65 $27.51
---28.01
27.72

Percent
change
+0.5
+1.0

1 Source: National Municipal Review, December 1940, p. 795.

Although tax rates are still on the increase, there has been a notice
able deceleration in the rate during the last four years, indicating the
possibility that rates are becoming more or less stationary. Accord
ing to the Detroit Bureau, one explanation for this tendency may be
that revenue from the taxation of real property may be approaching
a point of diminishing returns-"further increase in tax rates may
produce political reverberations and a migration of assessed values." 3
Further Decline in Foreclosures

One of the most positive gauges of improving real-estate market condi
tions is the steady decline in foreclosure activity. During the fiscal
year 1941, the total number of nonfarm real-estate foreclosures de
clined 20 percent from the previous year and represents the lowest
annual volume since 1926. This latter year is generally considered
to have been the low year of the previous foreclosure cycle.
Foreclosures brought by the Home Owners' Loan Corporation have
a strong influence on the trend for the country as a whole. In order
to show the most accurate relationship between foreclosures and the
normal real-estate market, Chart X has been prepared to illustrate
the volume of foreclosures for each year since the previous low point
of 1926, with separate trend lines for the Home Owners' Loan Cor
poration and others. The chart shows clearly that the volume of
"all other foreclosures" has been declining steadily for several years
and is now at an encouraging low and stable level.
Improvement of the general foreclosure picture during the last
fiscal year was widespread among the Federal Home Loan Bank
Districts. Each District and all but one State show a reduction in
the number of foreclosures initiated during the reporting period as
compared with the previous fiscal year. However, there are still a
3NationalMunicipal Review, December 1940, p. 793.
3
425085-41-




26

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

CHART X
NONFARM

REAL ESTATE FORECLOSURES IN THE UNITED STATES

BY YEARS

THOUSANDS

28

'29

'30 '31

'32

BY QUARTERS

THOUSANDS

'33 '34 '35

'36

D

M J

M

1937

J

S

J

S

D J

S

1939

1938

S

D

J

J

S

1940

D

M J

1941

DIVISIONOFRESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANK BOARD

CHART XI
RATE OF NONFARM REAL ESTATE FORECLOSURES, FISCAL YEAR 1941




NUMBER OF FORECLOSURES

1.0

1.5

PER 1,000 HOMES

24

:7

"

45

SURVEY OF HOUSING AND MORTGAGE

FINANCE

27

few States in which foreclosures are somewhat high. The map
on the opposite page, which illustrates the foreclosure rate for each
State during the fiscal year 1941, shows clearly that the States with
the highest rates are concentrated along the Atlantic Coast and in New
England. Four States in this region, New York, Massachusetts,
Pennsylvania, and New Jersey, show a rate well above the national
average of 3.6 per thousand nonfarm dwellings.
States west of the Mississippi, with the exception of Missouri and
Kansas, all show a rate lower than the national average. It is no
coincidence that the remaining problem areas as far as foreclosures
are concerned are the same areas where the real-estate market suffered
most severely and where recovery has been slowest. A further
reason for the higher volume of foreclosures along the Eastern Sea
board is the fact that there are a large number of highly urbanized
areas in this region. For many years, larger communities have
shown the highest foreclosure rate. Although foreclosures can be
expected to continue in some volume in these regions, the improve
ment so far shown, plus the fact that in most areas of the country
foreclosures have once more reached a low level, would appear to
indicate that foreclosures no longer constitute a major economic
problem. Exhibits 2 and 3 present data on nonfarm real-estate fore
closures for the United States and for each Federal Home Loan
Bank District.
Liquidation of Real-Estate Overhang

The declining rate at which financial institutions are acquiring resi
dential properties, coupled with steadily increasing sales activity, is
bringing about a substantial reduction in the real-estate overhang.
During the calendar year 1940, the estimated book value of residential
property owned by selected financial institutions, including savings
and loan associations, mutual savings banks, commercial banks, life
insurance companies, and the Home Owners' Loan Corporation, de
clined from $2,401,594,000 1 to $1,863,879,000, or by 22.4 percent.
The chart on page 28 illustrates the progress made during the last
two years by each of the aforementioned institutions in disposing of
owned properties.
Savings and loan associations and the Home Owners' Loan Cor
poration led other institutions in liquidating their acquired real estate
during 1940. Savings and loan associations are estimated to have
decreased their holdings by $188,686,000, or 27.7 percent. Real estate
owned by the Home Owners' Loan Corporation declined $123,953,202,
1Revision.




28

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

or 26.8 percent. Life insurance companies show a drop totaling
$120,076,000, or 21.3 percent. The balance sheet of commercial banks
shows a reduction in residential real estate of $55,000,000, or 22.4
percent, and the comparable figures for mutual savings banks were
$50,000,000 and 11.1 percent.
Estimates of the real-estate overhang do not include such items
as real estate owned by individuals, closed banks, and some other
financing institutions, but they do show a fair picture of current
trends in the liquidation of owned real estate. The volume of repos
sessed properties held by financial institutions-$1,863,879,000-is
still substantial and in itself emphasizes that there remains a liquida
tion problem of some significance. However, the present real-estate
CHART XII
REDUCTION IN RESIDENTIAL REAL ESTATE OVERHANG
AS OF DEC. 31
MILLIONS

S500

1,000

EACH. YEAR, 1938-1940
OF

DOLLARS

1,500

2,000-

2,500

3,000

..............

1939
1939

R..........
...

1940

.

i~i-J
SAVINGS LOAN
a
ASSOCIATIONS

MUTUAL
SAVINGS
BANKS

COMMERCIAL
BANKS

LIFE INS.
COMPANIES

HO. L. .

DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOME
LOANBANK
BOARD

overhang is largely concentrated in a few States along the North
Atlantic Seaboard and except for these areas no longer represents
the basic threat to stability of the real-estate market which it did
a few years ago. Provided another wave of foreclosures does not
occur in the near future, it would appear that financial institutions
throughout most of the country have made excellent progress in
disposing of a particularly slow asset.
For the past few years the concentration of owned real estate has
been most serious in the four States of New York, New Jersey,
Pennsylvania, and Massachusetts. Despite a reduction in the dollar
volume of holdings during 1940, these four States still account for
75 percent of HOLC holdings, for 70 percent of residential properties
owned by insured commercial banks, for 44 percent of small homes




SURVEY OF HOUSING AND MORTGAGE FINANCE

29

owned by life insurance companies, and for 55 percent of the real
estate holdings of savings and loan associations. In addition, about
87 percent of all real estate owned by mutual savings banks is located
in these four States. Although the overhang problem is no longer
as acute in this area as in the past, there still remains much to be
done before institutions in this region can operate on a normal market.
There are two important reasons for the substantial improvement
shown by lending institutions during 1940 in liquidating their property
holdings. The first of these is the belated recognition that it is
highly dangerous for financial institutions to hold real estate in
definitely in hope of recovery on a rising market. There has, there
fore, been an increasing tendency for institutions to price their proper
ties realistically and to make concerted drives to sell their properties
at the best possible figure, taking whatever losses may be necessary.
The second determining factor has undoubtedly been the revival in
general business conditions attendant upon the defense program.
In many localities where industrial activity has made rapid headway
during the last year, financial institutions have found a vastly im
proved market for their properties.
A need for additional housing accommodations brought about by
influxes of workers into industrial cities has also stimulated sales
activity. Many financial institutions have engaged in extensive
repair and rehabilitation programs in order to meet a demand for
decent, adequate shelter in areas where shortages have arisen as a
result of defense activity. The steadily mounting volume of employ
ment and increasing income in the hands of industrial workers has in
itself operated to broaden the market for existing residential properties.
More and more individuals in this class are finding themselves with
sufficient resources to acquire a home and in a large number of cases,
particularly where there are large families involved, housing needs
are best met by reconditioned older properties. Higher priced and
smaller new homes are more often than not outside the reach and need
of such individuals.
Exhibit 4 shows data on residential real estate owned by selected
financial institutions, tabulated by Federal Home Loan Bank Districts
and by States.
Building Costs-DangerSignals
In its Eighth Annual Report, the Federal Home Loan Bank Board
pointed out that building costs, unlike financing costs, had failed to
show any appreciable decline during the past several years. During
the first depression years, from 1929 to 1933, the price of building
materials declined less than did the prices of most other commodities.




30

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,

Despite this fact, after 1933, the price of building materials rose at a
rate substantially higher than that for other commodities. Following
the outbreak of the European war in the fall of 1939, further increases
resulted, and at the beginning of the 1941 fiscal year, the index of
wholesale building material prices compiled by the Department of
Labor stood at 103.2 as compared with a figure of 96.2 for all commod
ities (1935-1939=100).
CHART XIII
WHOLESALE PRICE INDICES OF LUMBER, ALL BUILDING MATERIALS
AND ALL INDUSTRIAL COMMODITIES
1935 - 1939 = 100

INDEX
140 .----

130

---

140

-----

--------

--------

3

120
-

0

90
80

--

_/_,..<

----

---------------- --

--

----

I

I

JUN.

*,*
1I

II

DEC.

1935

LUMBER

BUILDING MATERIALS
I
II II
I
i II

JUN.

I

I

BEC

1936

JUN.

1937

II I I

DEC.

II

JUN.

1938

II

I1
I

DEC.

I

JUN.

1939

DEC.

JUN.

1940

DEC.

JUN.

1941

DIVISIONOF RESEARCH
AND STATISTICS
Source: U.S. Department of Labor

FEDERALHOMELOANBANKBOARD

During the first six months of the reporting period, when the
defense program was going ahead at an ever accelerating rate, the
index of wholesale building material prices advanced to a figure of
110.9 at the end of December 1940. During this same period, the
index of all commodities rose to 99.3 During the second half of the
fiscal year, building costs continued to increase, although at a some
what declining pace. At the close of the fiscal year, in June 1941,
the index stood at 112.8, or 9.3 percent above the figure for a year
previous.
Although wholesale prices of all groups of building materials which
are included in arriving at the composite building material index




31

SURVEY OF HOUSING AND MORTGAGE FINANCE

showed increases during the year under review, the tremendous jump
in lumber prices during the first half of the year was largely responsible
for the rapid rise in the index as a whole. The behavior of lumber
prices which increased 25 percent during the last six months of 1940
gave considerable concern to those engaged in the building and home
financing fields. In September 1940, the National Defense Advisory
Commission stated that "the defense program did not justify any
increase in lumber prices . . "
CHART XIV
COST INDICES FOR CONSTRUCTION

1936

1937

OF A STANDARD
1935 -1939 = 100

1938

1939

SIX ROOM FRAME HOUSE

1940

1941

AND STATISTICS
DIVISION OF RESEARCH
BANKBOARD
FEDERALHOME LOAN

During the second half of the fiscal year, when the cantonment
building program of the Army had largely been completed, lumber
prices remained relatively stable, and even showed slight declines in
some months. Nevertheless, the index of lumber prices stood at 131
in June 1941, an increase of 24 percent over the figure for a year
previous.
Rising building costs during the fiscal year 1941 are also indicated
by the Federal Home Loan Bank Board's index of material and labor
costs for constructing a standard six-room frame house in selected
cities. Because it is based on dealers' prices, which usually lag behind




32

REPORT OF FEDERAt HOME. LOAN BANK BOARD,

1941

wholesale price quotations, this index does not reflect the substantial
increases shown by the Department of Labor's statistics on wholesale
prices. Nonetheless, the cost index of materials used in building the
standard house increased from 101.3 to 109.2, and the labor index from
103.5 to 118.6 during the reporting period (1935-1939=100). As the
chart on page 31 indicates, the rate of increase slackened somewhat
after the beginning of 1941, but each month after January 1941
represented a new high for the index since it was started in 1936.
Exhibit 5 shows the cost indices from January 1936 through
June 1941.
Labor Supply
The stimulus of the defense program has had very noticeable effects
on the demand for construction workers. Rapid plant expansion,
construction of Army cantonments, shipbuilding, defense housing,
residential building

CHARTincreased

CHART XV

.

CONSTRUCTION EMPLOYMENT
AS OF JUNE 30 EACH
MILLIONS
OF
EMLOYEES

2.0

-

1.8
1.6

1.4

7-

0.8
0.6

o
I

-

~

-

YEAR

all have had a hand in creating
more job opportunities than have
existed

since

long

before

the

depression years. As indicated
in Chart XV, the number of
S construction workers employed
on June 30, 1941, was higher by
far than at the close of the six
j i Sprevious fiscal years.
v iThere
is no indication as yet
that widespread shortages of con
struction labor have developed.
S
However, surveys of the labor
market, conducted by the Bureau

of Employment Security of the
Social Security Board, show that
.. i,1
..
DIVISION RESEARCHAND
OF
STATISTI
in
numerous localities serious
FEDERALHOMELOANBANK BOARD
.935 93 1937m" ' .
local shortages have already oc
1935
1936
1937
1938 1939
1940 1941
curred.
There are also some
Source: U.S. Department of Labor
indications of secondary short
ages in smaller communities because the normal labor supply has been
drawn into nearby cities where large defense contracts have been let.
The defense program and rising industrial production may well
raise serious problems in the construction field as far as the supply of
labor is concerned. During the 1930's, when the volume of both
residential and nonresidential construction remained at consistently
0.4

-




SURVEY OF HOUSING AND MORTGAGE FINANCE

33

low levels as compared with the previous decade, there was a very
natural decline in the number of skilled craftsmen in this field.
Many workers were forced to enter employment in related or new
fields, fewer younger men became apprentices in the various building
trades, and the nucleus of trained specialists declined in size due to
death, advancing age, and lack of replacements.
This development is clearly shown by reports from many areas of
high industrial activity at the present time where serious local short
ages, particularly of skilled workers, have been reported. Various
industries have been forced to engage in extensive training programs
to build up the available labor supply and to reorganize work activity
in order that more and more of the load can be handled by relatively
untrained and unskilled labor. It should also be noted that the
Selective Service Program, while it has drawn few skilled professional
laborers out of the market, has cut down in some degree the number
of younger unskilled workers available for training.
Rents and Vacancies
In view of generally rising prices during the fiscal year 1941, over-all
rent indices remained surprisingly stable. For the two fiscal years
prior to the reporting period, the index of residential rentals compiled
by the National Industrial Conference Board had shown only minor
fluctuations. For most of the fiscal year 1941, as shown by the
chart on page 34, the index remained fairly even, although there was
some indication of a slight rise toward the close of the year.
However, local studies, which have been conducted by the Depart
ment of Labor in defense communities from time to time during the
fiscal year 1941, showed a more pronounced trend toward rising rents,
particularly in units which rent for $30 or less per month. Up to the
present time, these substantial increases in rentals have been confined
to relatively few localities where concentrated armament orders and
greatly expanded Army and Navy activity have created real boom
conditions with nonexistent vacancies, rapidly rising rents, doubling
up of occupants, and increased real-estate prices. Whether such
conditions will become more widespread depends primarily upon the
extent to which new construction is successful in meeting housing
shortages.
Generally, the situation is made more acute by the lack of large
reserves of unoccupied family dwelling units in most communities.
As of April 1, 1940, the date on which the last decennial Census was
taken, vacancies throughout the country were low. For the country




34

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

as a whole, the Bureau of the Census reported a vacancy ratio of 5.0
percent. In urban areas, the rate was only 4.3 percent and in rural,
6.1 percent. Since completion of the Census, numerous WPA surveys
have been made in a large number of defense localities. Almost
without exception, these surveys showed declines in vacancy ratios
from the low figures disclosed at the time the Census was taken.
As in the case of rising rents, the lowest vacancy ratios and those
showing the greatest declines are reported by communities in which
CHART XVI
INDEX

INDEX OF RESIDENTIAL RENTALS
1935-1939 = 100

1932

1933

1934

1935

1936

Source: National Industrial Conference Board

1937

1938

1939

1940

DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOAN BANKBOARD

the defense program has brought about immediate demands for new
housing accommodations. Again, the extent to which this condition
may become common throughout the country cannot be determined
on the basis of information presently available. Where vacancies are
low or nonexistent, it follows, of course, that there will be a tendency
for rents and real-estate prices to increase substantially.
Long-range Market Factors
The real-estate market today is most vitally subject to the influences
not of normal long-range trends, but to the swift day-to-day changes
brought about by the defense program. If, as seems most likely,




SURVEY OF HOUSING AND MORTGAGE

FINANCE

35

the country finds it necessary to expand its defense preparations at
an ever-increasing tempo, the real-estate market may necessarily be
subjected to emergency action which will determine its entire course,
at least for the duration. On June 29, 1941, a program for giving
priority aid to defense housing was announced. It is possible that
similar action may have to be taken to assure an adequate supply of
construction labor on defense projects.
Heightened taxes, enforced savings, outright restriction of consumer
purchases-any such development if it occurs, would mean a very
sharp reduction in the output of housing just as it would mean belt
tightening in many lines of economic lactivity not directly related to
the preparedness program. In short, the Board recognizes that any
discussion of real-estate market factors, whether it be from the stand
point of immediate conditions or long-range trends, must recognize
first of all that the paramount defense effort of the country may
require a reduction of residential building except in those areas where
new accommodations are essential to house defense workers.
However, it is important to remember that such long-range factors
as population trends, number and size of families, changing age
structure of our population, degree of urbanization, and decentraliza
tion will always, ovdr a period of time, play a heavy role in shaping
housing demand.
The over-all picture of current population trends is summarized
in the comparative rates of increase during the last two decades.
Thus, from 1920 to 1930, the total population of the United States
increased from 105,710,620 to 122,775,046, or by 16.1 percent. Dur
ing the decade of the Thirties, the number of individuals residing in
this country reached the figure of 131,669,275, or an increase of only
7.2 percent. Even such unpicturesque over-all figures as these are a
strong indication that we are approaching a stage of relative maturity
in population growth.
The story of population trends during the 1930's is no less important
however, merely because the rate of increase was substantially under
that of preceding decades. The most revealing fact about current
population trends yet shown by the 1940 Census is that present day
developments must be measured in terms of local shifts and variations
rather than in terms of over-all expansion. Internal movements and
migrations of population are quite as important a determinant of
housing need as were the over-all gains of previous years.
Census statistics on the growth of population during the Thirties
in communities of varying size present a significant picture when
compared with trends in the same localities during the preceding




36

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

decade. The chart below, for example, shows that from 1920 to
1930 the rate of population growth in larger cities was higher by a
considerable margin than in smaller communities. During the
Thirties, exactly the reverse was true with smaller communities and
rural nonfarm areas showing far and away the largest percentage
increase. During both decades, cities in the largest population group,
however, show a contrary trend.
The analysis of urban popula
CHART XVII*
tion trends is incomplete without
POPULATION GROWTH, BY SIZE OF CITY
particular attention to move
1920-1930, 1930-1940
PERCENT
ments within metropolitan dis
40
tricts. The 1940 Census lists
35
63,000,000 people who are resi
-- 1920-1930
dents of metropolitan districts, a
30
30
940
---1iio - 1
gain of 15 percent during the
Thirties. Total population in
creased only 7 percent during the
same ten-year period.
The
20
1940
growth in metropolitan districts
is attributable in part at least to
the addition of new districts on
the Census list which in 1940
included 140 as compared with
96 in 1930 and 85 in 1920. A
difference in definition of the
TOTAL
500000 50 0002O500RURAL
NONFARM
ANDOVER 500,000 50000
NONFARM term "metropolitan district" by
Source:- Bureau of the Census
the Census Bureau accounts for
DIVISION RESEARCH STATISTICS
OF
AND
FEDERAL
HOME
LOANBANK
BOARD
a number of the areas added in
the 1940 Census.
More significant, perhaps, is the measurement of population growth
in the 133 metropolitan districts for which information is available for
both 1930 and 1940. Suburban areas in these districts show a gain
of over 2,700,000 people during the Thirties, while central cities added
only 2,000,000 to their population. On a percentage change basis,
outlying districts were growing three times as rapidly as central cities.
Individual cities show variations of this over-all pattern, of course.
In some instances, actual losses were registered in central cities, while
suburbs grew rapidly. In other cases, the entire metropolitan dis
trict remained virtually static. In the majority of cities, however,
there was a small gain in the central district and a rapid increase in
the suburban area. Exhibit 7 gives a detailed breakdown showing
population growth in individual metropolitan districts.
*Figures underlying Chart XVII will be found in Exhibit 6.




SURVEY OF HOUSING AND MORTGAGE FINANCE

37

Populationof 133 comparable metropolitan districts, inside and outside central cities,
1930-1940
Total population

Increase, 1930-1940

1940

Number

Location

In central cities --------------Outside central cities
.-------.------.------- Total

-----------

1930

Percent

42, 350, 996
19, 985, 686

40, 343,442
17, 259,423

2, 007, 554
2,726, 263

5.0
15. 8

62,336,682

57, 602,865

4, 733,817

8.2

Causes for the steady shift out of central cities into surrounding
suburban areas are not difficult to find. Decentralization results,
among other causes, from congestion of central business districts, high
tax rates in older sections of the cities, poor zoning and planning, re
strictive building codes, ease of transportation resulting from wide
spread ownership of automobiles, and blighted areas which have been
permitted to develop in many older communities. There is strong
evidence that decentralization has already reached a point in a number
of cities where the advantages to be obtained from a movement to
newer and better planned developments are exacting an uneconomic
toll from the community. Thus, as the radius of a city is expanded
through the settlement and growth of suburban districts, the area
which must be served by the municipality increases in geometric propor
tion and causes corresponding heavy increases in the cost of municipal
services. Extension of public utility lines, police and fire protection,
city paving, and transportation systems all mean increased cost to
local taxpayers. Where these services include too wide an area be
cause of excessive decentralization, the result is a heavily increased
tax burden which bears particularly hard on older properties in static
or declining central city areas.
Other significant population trends shown by the 1940 Census which
have a direct bearing on the real-estate market include the "aging"
of our population and a steady tendency toward smaller average size
families. In April 1940, the number of persons aged 65 or over was
8,960,000, or 6.8 percent of total population, as compared with
6,630,000, or 5.4 percent in 1930. Statistics on younger age groups
show that the number of persons approaching retirement will continue
to increase in the future. Thus, in 1940 there were 25,947,000
persons, or 19.7 percent of total, in the age group from 45 to 64 years
as compared with 21,415,000, or 17.4 percent, in 1930. Such changes
as these in the age structure of our population have a direct influence
on the need for housing. We may, for example, expect a greater
demand for small,- compact dwelling units to house older people.




38

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,

Of all population trends, probably none has greater significance in
relation to the housing market than those reflecting the number and
size of families, for housing demand is determined to a considerable
degree by these two factors. On April 1, 1940, the number of private
households (which corresponds closely to the number of families) was
34,860,000. It is, therefore, estimated that during the Thirties, there
was a net gain of some 5,000,000 families, or 16.6 percent, as compared
with an increase in total population of only 7.2 percent.
Over half of the increase in the number of families during the
Thirties resulted from a decrease in the average size of family from
CHART XVIII
PERCENT

CHANGE IN POPULATION, BY AGE GROUPS
UNITED STATES - 1940 OVER 1930

% DECREASE

AGEGROUPS 10

5

PERCENT INCREASE

0

5

10

20

15

Source:- Bureu of the Census

UNDERFEDERAL

14 -

25

30

35

40

DIVISION RESEARCH
OF
AND STATISTICS

HOME
LOAN
BANK
BOARD

19

20- 24

25-44

45-64

65 AND OVER

9

Source:- Bureauof the Census

DIVISION OF RESEARCH
AND STATISTICS
FEDERALHOMELOAN BANK ROARD

4.1 to 3.8. A drop in family size has been revealed by each Census
since 1890 and further declines are likely because of a steadily decreas
ing birth rate. Just as the number of families is a major determinant
of the number of dwelling units needed, the number of persons in the
average family decides, in the main, the size of units to be built.
The increasing importance of smaller single-family houses in recent
years in the total volume of residential construction is a direct reflec
tion of this relationship. For example, the median number of rooms
in new homes accepted for mortgage insurance by the Federal Housing
Administration has dropped from 6.2 in 1936 to 5.6 in 1940. 4
4

Seventh Annual Report of the Federal Housing Administration, p. 66.




SURVEY OF HOUSING AND MORTGAGE FINANCE

39

2. MORTGAGE FINANCE AND SAVINGS
For the thrift and home financing industry, the fiscal year 1941 was
a period of marked success. Home mortgage loans written by private
lending institutions reached a new peak. Savings of individuals
showed the largest net increase for any year since 1926, and brought
the aggregate volume of long-term savings to a record level more than
three times the 1920 total. The home financing industry at the close
of the reporting period faced an uncertain and difficult future, but the
success with which problems are being met justifies confidence in the
ability of the industry to meet whatever readjustments the present
emergency may necessitate.
Continued Gains of Home Mortgage Lending
Home mortgage lending once again showed substantial gains during
the calendar year 1940, when the estimated volume of new mortgage
loans written on one- to four-family homes totaled $3,322,000,000, an
increase of 16 percent over the previous year. The chart on page 40
which shows the trend in the volume of home mortgage lending, by
years since 1929, reveals that substantial recovery from the low point
of 1933 has already been achieved with activity in 1940 closely ap
proaching the 1930 level. When current trends in home mortgage
lending are compared with prior years, account must also be taken of
the fact that in recent years real-estate prices have been considerably
lower than in predepression periods. The 1940 dollar volume of
lending activity, in other words, undoubtedly means more in terms of
the number of houses financed than did the volume of new loans
made in 1929.
All types of institutional lenders showed increased activity during
1940. Savings and loan associations again led the field by originating
$1,200,000,000 in new loans, an increase of 22 percent over the previous
calendar year. Commercial banks and their trust departments loaned
$689,000,000, a figure 13 percent above the corresponding total dur
ing 1939. Home mortgage loans written by life insurance companies
increased 18 percent to a total of $324,000,000. Mutual savings banks
placed $133,000,000 in home mortgages as compared with $112,000,000
the previous year. Individuals and others accounted for $865,000,000,
a gain of 17 percent. Lending activity of the Home Owners' Loan
Corporation deserves special comment. The Corporation has, of
course, made no new mortgage loans since June 12, 1936, when its
statutory authority to refinance mortgages expired. Since that time,




40

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

however, the Corporation has sold a number of acquired properties
against purchase-money mortgages and has made supplemental
advances to both borrowers and vendees for such purposes as the
payment of delinquent taxes or the financing of needed repair and
modernization work (see pages 143-4). These two factors account for
"lending activity" of the Home Owners' Loan Corporation in the
chart below during the period subsequent to June 1936. Exhibit 8
gives the estimated figures on mortgage lending activity for the years
1929 through 1940, by type of lender.
CHART XIX
HOME MORTGAGE LENDING ACTIVITY
ESTIMATED
VOLUME MORTGAGE
OF
LOANSMADE NONFARM
ON
ONE TO FOURFAMILYDWELLINGS
1929 THROUGH
1940

DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOMELOANBANK BOARD

Chart XX on the facing page, illustrating the relative share of 1940
home mortgage lending accounted for by various lenders, shows that
savings and loan associations continue to be the most important lend
ing institutions in the small home field. The long experience of these
institutions as specialists in the financing of homes has equipped them
to maintain their predomindnt position, despite increasing compe
tition from other lenders.
The steadily increasing volume of savings and loan lending is even
more clearly shown by the chart on page 42. Based on monthly lend
ing reports received over the past five years, the Division of Research




SURVEY OF HOUSING AND MORTGAGE FINANCE

41

and Statistics of the Federal Home Loan Bank Board has developed an
index of new lending activity, adjusted for seasonal variations. By
removing certain obscurities resulting from normal seasonal fluctua
tions, the index shows with greater clarity than do monthly dollar
statistics the upward trend of lending operations.
A closer analysis of trends in mortgage lending activity is made
possible by monthly statistics on mortgage recordings which have been
collected by the Division of Research and Statistics of the Federal
CHART XX

ESTIMATED VOLUME OF MORTGAGE LOANS MADE ON NONFARM
ONE-TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER
CALENDAR

YEAR 1940

H.O.L.C.-

\S

MUTUAL SAVINGS BANKS

DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD

Home Loan Bank Board since the end of 1938. This study is designed
to measure activity in the field of small and medium-sized loans and
information is, therefore, restricted to mortgages of $20,000 or less on
nonfarm property. The data comprise not only home mortgages, but
mortgages on other types of properties which fall within the $20,000
limitation. The geographical coverage included in the sample on
which the statistics are based has.steadily been expanded until by
June of 1941, reports were being received from more than 700 counties
425085-41-4




42

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

containing 68 percent of the total nonfarm population and located in
every State and the District of Columbia. 5 Mortgage recording statis
tics, because they report not only new lending but registrations
resulting from changes in existing contracts, cannot be taken as an
absolute measure of the volume of new lending. Furthermore,
recording statistics are not a completely accurate measure of the
source of mortgage credit. Many lending institutions, particularly
CHART XXI
INDEX OF NEW MORTGAGE LENDING
ALL SAVINGS AND LOAN ASSOCIATIONS
INDEX

1935 -1939 = 100

ADJUSTED FOR SEASONAL VARIATION

o

1936

1937

1938

1939

I

1940

1941

DIVISIONOF RESEARCH
AND STATISTICS
BOARD
FEDERAL
HOME LOANBANK

life insurance companies, operate through loan correspondents who
record new mortgages in their own names.

A fairly substantial

A
Reports are received each month from field cooperators. Summaries of these reports are prepared for
each State, by type of mortgagee, and from the totals of reported statistics, estimates representing total
mortgages recorded in each State are developed on the basis of the relation of the nonfarm population in the
sample to the total nonfarm population in the State. Adjustment factors are employed in the calculation
to correct for the concentration of type of lenders and for the influence of metropolitan areas. Mortgage,
recording data are not directly comparable with the estimates on home mortgage lending presented in
Chart XIX and Exhibit 8. As pointed out in the text, recordings include mortgages on one- to four-family
homes as well as mortgages on other types of properties within the $20,000 limitation. Moreover, the period
covered by mortgages recoided and loans made is not necessarily the same. Lending statistics are reported
as of the date of loan commitment, while recording figures reflect the actual date of loan registration. Finally,
alterations in the terms of an existing contract may necessitate a new registration. In the case of the re
financing of an institution'S own mortgage, for example, the face amount of the instrument would appear in
the recording totals, whereas only that portion which represented an increase in funds loaned would be
included in lending figures.




SURVEY OF HOUSING AND MORTGAGE FINANCE

43

volume of mortgages are, therefore, made with the intention of
subsequent sale to other mortgagees. Such transfers, when con
summated, are usually not apparent from mortgage records. How
ever, the movement of recordings over a period of time does give an
excellent picture of trends in lending activity and shifts among the
various classes of lenders.
During the fiscal year 1941, total recordings of $20,000 or less
numbered 1,545,000 in the amount of $4,362,000,000. Compared
CHART XXII
ESTIMATED VOLUME OF MORTGAGE RECORDINGS ON NONFARM PROPERTY
OF $20,000 OR LESS
MILLIONMORTGAGES
l
R
FISAl Y
YFARS 1 0 AD
"Q_4 A~n IQ41

MI
DOLLAIONSF
OF
DOLLARS

OF
AND
DIVISION RESEARCH STATISTICS
FEDERAL
HOMELOANBANKBOARD

with the 1940 reporting period, these figures represent an increase of
12.8 percent in number and 16.2 percent in dollar volume.
Since the initiation of the mortgage recording studies, the data
have consistently shown savings and loan associations leading all other
institutional lenders, accounting roughly for one-third of the annual
total. The fiscal year 1941 was no exception to this rule. Savings
and loan recordings measured by number of mortgages represented
34 percent of total and on the basis of dollar volume, 32 percent. The
relative position of other institutional lenders shows little change from
the previous year. Banks and trust companies again ranked second,
accounting for 22 percent by number and 25 percent by dollar volume




44

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

of all recordings. Individuals and miscellaneous lenders ranked next,
with insurance companies and mutual savings banks occupying a rela
tively minor position in the home loan field. It is true, of course, that
insurance companies have but recently reentered this particular ac
tivity and mutual savings banks operate almost entirely in a few States
along the Eastern Seaboard. Mortgage recordings by Federal Home
Loan Bank Districts and by States are given in Exhibit 9.
Total recordings of mortgages of $20,000 or less on nonfarm property, fiscal years

1940 and 1941
Total

Percent of total

Type of lender

Increase
Fiscal year
1940

Fiscal year
1941

Fiscal
year 1940

Fiscal
year 1941

Number of mortgages recorded
Savings and loan associations ------Insurance companies ---------Banks and trust companies_ -------Mutual savings banks
-Individuals ------------Others ._
----------------Total_------ ----------

469, 578
61, 203
292,496
42, 357
327, 875
176, 634

-

527, 602
74, 728
338, 316
50,457
365, 225
188,930

58,024
13,525
45,820
8,100
37, 350
12, 296

34. 3
4. 5
21.3
3.1
23.9
12.9

34.2
4.8
21.9
3.3
23.6
12.2

1, 370,143

1, 545,258

175,115

100. 0

100. 0

Dollar amount of mortgages recorded (in thousands of dollars)
Savings and loan associations ----Insurance companies---Banks and trust companies ----Mutual savings banks ----Individuals
---Others
------Total__--

$1, 175,056
308,179
931,031
157,816
612, 284
568, 344

-

---------------

$1, 392, 379
366, 795
1,093,234
190,107
696, 392
623, 328

$217, 323
58, 616
162, 203
32. 291
84,108
54, 984

31.3
8.2
24.8
4.2
16.3
15.2

3,752, 710

---

4, 362,235

609, 525

100.0

31.9
8.4
25.1
4.3
16.0
14. 3
100.0

The explanation for the larger proportionate share attributed to

savings and loan associations in the number of mortgages recorded
than in the dollar volume of registrations is found in the fact that the
average size of the loans made by these institutions is considerably
smaller than the average for other institutions. Thus, as indicated
by the table below, the average loan recorded by savings and loan
associations was $2,639 as compared with an over-all average of $2,823.
Average size of nonfarm mortgage loans recorded, fiscal year 1941
Type of lender
Type of
lender
Individuals ---- _---------Savings and loan associations -----Banks and trust companies ----------Other mortgagees




Average size
of loan
-

$1,907
2,639
3,231
3,299

ize
Av
of loan

Type oflender

Mutual savings banks __-Insurance companies----------_
All mortgagees-

-

$3,768
4,908
2,823

45

SURVEY OF HOUSING AND MORTGAGE FINANCE

The relative importance of the various types of mortgage lending
institutions in different geographical areas is shown by the following
chart. Explanations for the varying degrees of importance are not
difficult to discover. Thus, in many localities savings and loan asso
ciations have traditionally been the major source of home financing
funds. In other localities where the savings and loan movement has.
CHART XXIII
MORTGAGE

RECORDINGS

DURING

FISCAL YEAR

1941

BY FEDERAL HOME LOAN BANK DISTRICTS
PERCENT

OF TOTAL DOLLAR VOLUME, BY TYPE OF LENDER
N T

P E RE

0

10

20

30

40

50

60

70

80

90

100

I-BOSTON
i~i~: ::::S~:85i'
Zo
.............. i"':-'' : iii :'' i~
s; i::i
.

.:

2-NEW YORK
3-PITTSBURGH

ii

rr;e........

4-WINSTON SAL EM

:::::::::

X...::;~~'.::.~
... ..::::::;:8;i::~t:I~:(~i~~iIX:
........ ::; '::r:
:~.,:.

5-CINCINNATI
6-INDIANAPOLIS
7-CHICAGO
8-DES MOINES

' ;;;
.......
s...
;.:~;;;ME'
1~Z... :
'

9- LITTLE ROCK

~tji~
~:r::N:~

I -PORTLAND

Iv:: :. .::
:. : :

%~

E

""""
'''':'"

10- TOPEKA

E"'~

: . ...........
:

12-LOS ANGELES

SAVINGS LOAN INSURANCE
a
ASSOCIATIONS COMPANIES

BANKS TRUST
8
COMPANIES

MUTUAL
SAVINGS
BANKS

INDIVIDUALS

OTHER
MORTGAGEES

DIVISIONOFRESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANKBOARD

not developed to a similar degree, other financial institutions are of
greater significance. The impact of the depression on lending institu
tions and the degree of recovery so far attained are no respecters of
geographical boundaries, and these factors have a direct influence on
present business volume.
In nine of the twelve Federal Home Loan Bank Districts, savings

and loan associations ranked first in the list of lenders on residential
mortgages of $20,000 or less. In the remaining three Districts, Pitts
burgh, Indianapolis, and Los Angeles, commercial banks were the most
important lenders in this field.




46

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,

Expansion of Construction Lending
For the past several years the volume of new loans made to finance the
construction or purchase of homes has been assuming ever greater
importance in the total lending picture. This trend has accompanied
the steadily increasing amount of new residential construction and
reflects, at the same time, a steady falling off in the demand for re
financing loans. A good illustration of this fact is found in the shifts
among the various classifications of loans made by savings and loan
associations in recent years. Unfortunately a similar breakdown on
the lending activity of other financial institutions is not available,
but since the same influendes are at work throughout the financial
community, it is highly probable that other lenders on residential
real estate would show much the same experience.
During the fiscal year 1941, the total volume of loans written by
savings and loan associations reached a new post-depression peak of
$1,294,400,000. As indicated by the table below, practically all of
the 1941 increase in total lending activity by savings and loan asso
ciations was accounted for by gains made in loans for the construction
or purchase of homes. Thus, loans for new construction alone
increased $96,300,000, or 28 percent. Home purchase loans which
reflect an actual transfer of ownership increased $104,500,000, or 27
percent. Loans advanced for refinancing actually declined, while
the figures for reconditioning and miscellaneous loans show only
slight gains over the previous year.
Distributionof loans made by all savings and loan associations, by purpose of loans,
fiscal years 1937-1941
Amounts in millions of dollars

Percent distribution

Purpose of loan
1937
Construction ..- __
Home purchase...Refinancing-- ....
Reconditioning.--.
Other-------

Total..----

1938

1939

1940

1941

1937

$226.3
298.6
184.0
65. 5
94.0

$213.2
286.6
167.4
59.4
94.1

$256.3
292.9
165.6
58. 3
95.8

$340.0
382.7
196.0
61.7
110.4

$436.3
487. 3
194. 8
63.4
112.6

26
34
21
8
11

26
35
20
7
12

29
34
19
7
11

31
35
18
6
10

34
37
15
5
9

868.4

820. 7

868.9 1,090.8 1,294.4

100

100

100

100

100

1938

1939

1940

1941

During the fiscal year 1937, at a time when a substantial volume of
mortgage debt was being refinanced, loans made on newly-built homes
represented only 26 percent of total savings and loan advances. In
the fiscal year 1941, over one-third of the aggregate loan volume went
to finance new construction. Much the same trend though in lesser




47

SURVEY OF HOUSING AND MORTGAGE FINANCE

degree is shown by home purchase loans. Where loans for the buying
of existing houses constituted 37 percent of total during the reporting
period, the corresponding figure five years previous was 34 percent.
In short, approximately 71 percent of the current lending volume of
savings and loan associations is going to finance the construction or
purchase of dwellings, whereas the similar percentage in the 1937
fiscal year was 60 percent.
CHART XXIV
SAVINGS AND LOAN CONSTRUCTION LENDING COMPARED WITH
1 AND 2 FAMILY HOME CONSTRUCTION
PERCENT

U.S.

PERCENT

1

2
I

CHANGE

3

FISCAL YEAR 1941 OVER FISCAL YEAR 1940

4

+0.5%
& LESS THAN
5
6
7
8
g
10
II
FEDERAL HOMELOANBANK DISTRICTS

12

DIVISIONOF RESEARCH
AND STATISTICS'
FEDERAL
HOMELOANBANKBOARD

Further evidence of the fact that savings and loan associations are
accounting for an increasing proportion of new construction financing
is found in the above chart which compares gains made in con
struction loans of savings and loan associations with permits issued
for one- and two-family homes-the type of dwelling on which most
savings and loan funds are advanced. During the reporting period,
the increase in association construction loans actually exceeded the
gains in one- and two-family building in seven of the Federal Home
Loan Bank Districts.




48

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Increase in Home Mortgage Debt
The mortgage debt outstanding on nonfarm one- to four-family
dwellings increased during 1940 for the fourth consecutive year. In
dollar volume, the gain is estimated at $907,000,000, bringing the total
debt to $19,123,000,000. This increase of 5 percent during 1940
compares with an increase of $570,000,000, or 3.2 percent during the
previous year.
The recent growth in home mortgage debt is the result of a number
of factors. The steady increase in residential construction and the
sale of properties on a low equity and longer amortization basis
explains the major share of the increase. Progress made by financial
institutions in liquidating property previously acquired through fore
closure has also raised the volume of debt outstanding. The low level
of foreclosures in recent years has removed one of the primary causes
for cancellation of debt by transfer to ownership during the early
depression period. Rising incomes and expanding industrial activity
are undoubtedly contributing to a more active market.
Because the Home Owners' Loan Corporation has since June of
1936 been primarily engaged in liquidating the $3,000,000,000 mort
gage debt which it refinanced during the three previous years, changes
in the over-all home mortgage debt fail to show the increase attribut
able to expanded holdings of private mortgage lenders. As the table
below indicates, operating mortgage lenders registered a net increase
in mortgage holdings of $989,000,000 during 1940.
Estimated balance of outstanding mortgage loans on nonfarm one- to four-family
dwellings
[Millions of dollars]
Increase or decrease
Classes of lenders

1936

1937

1938

1939

1936

1940

through
1940

1937

Home

1938

1939

1940

-$365

-$229

-$131

-$82

-$807

Owners'
$2, 763

$2,398

$2,169

$2, 038

$1, 956

uals).---------

14, 462

14, 946

15, 477

16, 178

17, 167

+484

+531

+701

+989

+2,705

Total.------

17,225

17,344

17,646

18,216

19,123

+119

+302

+570

+907

+1,898

Loan Corporation_

All others (institu
tions and individ

The steady recovery of home mortgage debt, particularly during
the past three years, is especially significant when compared with
trends in other types of long-term private debt. Although home
mortgage debt is still well below the 1929 total, the steady gain since
1937 has brought the debt back to the 1932 level. The volume of




SURVEY OF HOUSING AND MORTGAGE

49

FINANCE

mortgage indebtedness on farms is virtually stationary and private
long-term debt as a whole has increased only slightly during the past
several years.
Commercial banks and savings and loan associations have been
responsible for the largest dollar increases in home mortgage debt
since the turning point at the end of 1937. Loans held by commercial
banks show a net gain of $695,000,000 during this period reaching a
CHART XXV

ANNUAL CHANGES IN ESTIMATED PRIVATE MORTGAGE DEBT ON NONFARM
ONE TO FOUR FAMILY DWELLINGS
MILLIONS

1930 THROUGH 1940

OF DOLLARS
1,000

800

t

600
400

200
ri)
uj

400
600

11000

1,400

1,600
1.600-

1930

1931

1932

1933

1934

1935

1936

1937

1938

1939

1940

AND STATISTICS
DIVISION
OF RESEARCH
FEDERAL
HOME
LOANBANKBOARD

total of $2,095,000,000 at the end of 1940. Savings and loan associa
tions show a similar growth of $684,000,000 resulting in a total port
folio of $4,104,000,000. Holdings of life insurance companies increased
$512,000,000, mortgages held by individuals and "others" increased
$330,000,000 while the liquidation of the HOLC brought about a
decline of $442,000,000 in the volume of home mortgages held by
that Corporation.
During the calendar year 1940 alone, savings and loan associations,
commercial banks, and life insurance companies were responsible for
practically all of the $907,000,000 increase in home mortgage debt.
Mutual savings banks and individuals and others show only nominal




50

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

increases while the holdings of the Home Owners' Loan Corporation
declined by some $82,000,000.
As indicated by the pie chart below, savings and loan associations
continue to be the most important institutional holders of home
mortgage debt. These institutions account for 21 percent of the
total loans outstanding at the end of 1940 and are exceeded in im
portance only by the miscellaneous group, individuals and others.
Exhibit 10 shows a detailed breakdown of the home mortgage debt
CHART XXVI

ESTIMATED BALANCE OF OUTSTANDING MORTGAGE LOANS ON NONFARM
ONE-TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER
DECEMBER 31,1940

any time is the relative34.0%
soundness of the debt structure.
.\X

\
H.O.L.C.
OTHERS %
10.2%

A volume

INSURANCE COS.%.

DIVISIONOF RESEARCH
AND STATISTICS
ASSOCIATIONS
FEDERALHOME LOANBANK BOARD
BANKS
14.1%

COMMERCIAL

&

OF
DIVISION RESEARCH AND STATISTICS
FEDERAL HOME LOANBANK BOARD

structure by type of financial institution over a period of the last
type*
eleven years.
From a national viewpoint, the steady increase in the volume of
increase
debt on nonfarm one- to four-family houses gives no particular cause
for concern. The purchase of a home represents the largest invest
ment ever made by the majority of the consuming public and results
from cash transactions only in rare instances. Without financial
Without
assistance from mortgage lending institutions, widespread home owner
institutions,
ship would be a practical impossibility.
ship would be a practical impossibility.
of debt outstanding at
More important than the absolute volume of debt outstanding at
the debt structure. A volume
any time is the relative soundness of




SURVEY OF HOUSING AND MORTGAGE FINANCE

51

of debt only half the size of that now outstanding, incurred without
proper attention to property and credit risks, might well prove many
times more hazardous than a debt half again the size of that now
existing but incurred only after careful examination and selection of
risk.
The debt structure of the Twenties was basically unsound in many
respects as depression experience only too clearly emphasized. During
the period of boom conditions after the last war, real estate was often
overpriced, there was widespread and unsound speculation, inadequate
attention was given to property appraisal and ceedit examination, and
financing costs and loan terms were in many cases exorbitant and ill
suited to the needs of borrowers. Many institutions overextended
themselves or found themselves in an overextended position because
of the lack of any reserve credit facilities.
Many of these defects have largely been eliminated and progress is
steadily being made toward further improvement in the debt struc
ture. Appraisals are made on a more careful scientific basis and the
importance of credit analysis is more generally recognized. Long-term
amortized loans with low down payments make expensive junior
financing less necessary. Thrift and home financing institutions are
bulwarked by a reserve credit system on which they can rely to avoid
the credit shortages which formerly threw operations completely out
of gear.
Lending Operations in the Present Emergency
Despite the improvement already noted in the character of the debt on
urban homes today as compared with the Twenties there is still sub
stantial room for improvement and, as a matter of general policy, the
Federal Home Loan Bank Board is constantly encouraging the mem
ber institutions of the Federal Home Loan Bank System to maintain
the high standards of operation which are the best defense against
possible future trouble. The last depression proved the high cost of
unsound and careless lending. A major aim in supervisory activities
of the Board is to avoid similar difficulties in the future by encourag
ing the widespread adoption of lending terms which will enable mem
ber associations to attract and hold the best type of mortgage security
in an increasingly competitive market.
Variable interest rates are recommended by the Board to enable
institutions to gear their lending operations to market demands and
obtain a diversified portfolio on which earnings are more closely
related to the degree of risk involved. The Board has urged institu
tions to treat all borrowers equitably by refinancing old loans on more




52

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

realistic terms in order to maintain the good will of borrowers and
protect portfolios against useless raiding. The direct relationship
between the cost of money and mortgage interest rates has been
emphasized and wherever dividend rates are uneconomically high, the
Board seeks to influence associations to reduce rates to competitive
levels. Experience has proved that the rate of return, provided it is
not so low that thrift goes completely unrewarded, is of less im
portance to prospective savers than safety of principal.
In general, the policy advocated by the Board is the establishment
of both dividend and' interest rates at levels which will (1) enable
institutions to secure an adequate flow of savings funds, (2) to invest
those funds in sound mortgage security, and (3) leave a sufficient
spread to meet normal business expenses and provide adequate re
serves against future losses. 6
The operations of mortgage lending institutions in the present
market require the closest possible attention to risk analysis. In
creasing competition, for example, although a healthy development,
does give rise to the danger that some institutions, in their efforts to
attract mortgage loans, may accept too many marginal risks for
future safety. The steady trend during the past few years toward
lower down payments and longer amortization periods has eased the
burden of home ownership, but there is no denying the fact that this
development has placed a greater responsibility on home financing
institutions to make careful appraisals of the mortgage investments
in which they are placing the savings funds entrusted to them.
Even more important than these general market factors, however, is
the fact that "business as usual" is disappearing in the present
emergency. All economic activity is rapidly being diverted, in greater
or lesser degree, to the primary defense needs of the country. Mort
gage lending, like other business activity, is directly subject to the
influence of our all-out armament program. The present-day
housing demand is defined first as the need for shelter in defense
areas. If necessary to the preparedness program, residential construc
tion activity may be directed into meeting only that need.
It is no easy task, then, which faces home financing institutions
today. On the one hand, they are confronted with an emergent need
for their facilities, a need which is not the result of normal market
operations. On the other hand, there loom all the uncertainties as to
the long-range character of the risks they are expected to assume,
indeed uncertainty as to the whole future turn of events. Their
6 More detailed comment on the supervisory activities of the Federal Home Loan Bank Board will be
found in the Eighth Annual Report, pp. 38-40, 48-49.




SURVEY OF HOUSING AND MORTGAGE FINANCE

53

task, then, is to cooperate to the greatest possible extent in fulfilling
their share of the defense effort. The difficulty arises in trying to
avoid that indefinable lending area where extension of credit will
result in the creation of unsound debt and future collapse.
The Board is firmly of the opinion that although no hard and fast
rules can be set up for the guidance of private lending institutions in
this critical period, it is possible to avoid serious future consequences
if proper attention is given to certain safeguards which should at this
time more than ever be carefully followed by lending institutions.
Thus, it is particularly important that every savings and loan associa
tion carefully inspect the type of construction which it intends to
finance. The jerry-building of past decades has been the cause of
substantial losses suffered by financial institutions in periods of
deflated value. The urgent need of the present day is no excuse for
shoddy and unsound construction which has always in the long run
proved the most expensive type of building.
Careful, scientific appraisal will similarly ward off much future
trouble. It is essential that the relationship between loan amount
and appraised value of mortgage security be accurately determined.
The credit rating of prospective borrowers should be carefully analyzed
to avoid a repetition of the unsound lending which had such tragic
effects both on overhoused borrowers and on financial institutions
after the lastreal-estate collapse.
Attention should be given to neighborhood trends, for there is a
growing realization that security values represented by investments in
real estate are determined to a high degree by the character of the
locality in which the property is situated. Real estate is by its nature
an immovable commodity and many sound structures are today
suffering from encroachments of blighted areas.
One of the best safeguards which any lending institution can em
ploy is an adequate and systematic reserve policy. Too little attention
has been paid in times past to the importance of reserves in the sav
ings and loan industry. The Federal Home Loan Bank Board in
cooperation with the Presidents of the Federal Home Loan Banks,
State supervisory officials, and leaders of the industry have for some
time urged in the strongest possible terms the necessity of providing
now for losses which may have to be taken in the future. Statutory
requirements for minimum reserve allocations should be considered
the irreducible figure and wherever possible more substantial transfers
should be made. The institutions which err on the side of generosity
in their reserve policy have everything to gain and nothing to lose
in the process; and the same is true for the individual investors in these




54

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

institutions. There is no problem of dividend payments on reserve
accounts. If an amount equivalent to reserves is invested in con
vertible low-rate investments, the liquidity position of the association
is considerably enhanced. There is no set rule for determining the
amount which should be built up in reserves, but it is highly important
that every financial institution weigh carefully the risks it is presently
assuming and attempt in the most accurate manner possible to set
aside in reserve accounts an amount sufficient to balance the degree of
risk involved.
The job of lending, but lending on the soundest possible basis is
particularly important to savings and loan associations. Because of
the mutual character of these institutions, practically all of the in
vestable funds in their possession have been entrusted to them in the
form of small savings of average people. The trustee responsibility
of safeguarding and protecting these savings is no less important in
the managerial operations of savings and loan associations than is the
extension of mortgage credit to prospective home owners. No

institution is fulfilling its just obligations if it caters to the interests
of either group to the exclusion of the other.
Growing Volume of Savings

The volume of individual long-term savings again showed an overall
gain during the calendar year 1940. Most financial institutions
experienced a temporary slowing down in receipt of new money during
the late summer and early fall, but shortly thereafter the rate was again
stepped up. It is probable that developments on the European war
front during the summer of 1940-the collapse of France, repeated
British losses and a sudden realization of possible dangers to this
hemisphere-were largely responsible for this short reversal of previous
trends.
As indicated by Chart XXVII, savings funds dropped off during
the first years of the depression, but since 1934 have shown a steady
increase. The types of savings on which the chart is based include
only such savings as are potentially available for investment in home
mortgages or which are directly competitive with share investments in
savings and loan associations. The figures include statistics on the
volume of savings deposits in banks, savings in life insurance com
panies and savings and loan associations, postal savings, postal
savings bonds, and United States savings bonds. The volume of
these savings increased approximately $3,500,000,000 during 1940 to
a new all-time high of $57,962,000,000. Detailed information on the




55

SURVEY OF HOUSING AND MORTGAGE FINANCE

distribution of long-term savings from 1935 through 1940 will be found
in Exhibit 11.
The importance of maintaining a steady flow of savings during an
emergency period cannot be overestimated. One of the most im
minent dangers faced by any country embarking on a period of rapid
industrial expansion occasioned by a program of wholesale rearma
ment is that through the development of inevitable bottlenecks and
shortages, accompanied by rapidly rising income, demand for con
CHART XXVII

AMOUNTS
BILLIONS
OF
DOLLARS

OF SELECTED TYPES OF LONG-TERM
SAVINGS HELD BY INDIVIDUALS
1920

60

THROUGH

1940

50

40

30

20

0

___

-______

1920

'21

'22

'23

'24

'25

'26

'27

'28

'29

'30

'31

'32

'33

'34

'35

'36

'37

'38

'39

'40

DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL HOMELOAN
BANKBOARr

sumer purchases will outstrip productive effort and bring about a
period of vicious inflation. The increasing volume of individual
savings entrusted to long-term investment institutions is, therefore,
encouraging, for it shows that at least some portion of enlarged income
payments is not used for consumer purchases.
The comparative rates of increase among various classes of institu
tions and savings media remained relatively unchanged during 1940.
Savings bonds again showed by far the largest percentage increase.
The current redemption value of these bonds grew by almost
$1,000,000,000 during the year, an increase of 44.6 percent. Life




56

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

insurance companies showed an even larger dollar gain in savings
funds, $1,644,000,000-or a gain of 7.0 percent. Savings deposits
in insured commercial banks, which represent virtually all savings
deposits in commercial banks, show an increase of $440,000,000, while
savings and loan associations and mutual savings banks reported
gains of $221,000,000 and $137,000,000, respectively. Postal savings
grew by only $27,000,000.
Although private capital, which is the measure of savings invested
in savings and loan associations, increased by $221,000,000, or 5
percent, in all associations throughout the country, the picture is
even more favorable if member institutions of the Federal Home Loan
CHART XXVIII

PERCENT CHANGE OF PRIVATE INVESTMENT IN SAVINGS AND LOAN ASSOCIATIONS
BY CLASS OF ASSOCIATION10

PERCENT DECREASE
5

0

CALENDAR YEAR 1940
5

PERCENT
10

INCREASE
15

20

25

ALL MEMBERS

FEDERALS

INSURED

STATE

NONINSURED STATE

NONMEMBERS

'q.

AND STATISTICS
DIVISIONOFRESEARCH
FEDERALHOMELOANBANKBOARD

Bank System are considered alone. These institutions which include
the large majority of active operating associations, increased their
private resources by $341,000,000, or 10 percent during the year.
The fact that savings invested in operating nonmember institutions
declined by $120,000,000, or 10 percent, explains the relatively small
increase for savings and loan associations as a whole. There are
still many nonmember institutions which are inactive and gradually
withdrawing from the savings field; trends in these institutions color
statistics for the industry as a whole.
Among the member institutions of the Federal Home Loan Bank
System, Federal savings and loan associations were far and away the
most active group with regard to trends in private share capital.
These institutions alone show a growth of $270,000,000, or 24 percent
during the calendar year 1940. State-chartered insured associations




SURVEY OF HOUSING AND MORTGAGE FINANCE

57

also show a good increase of 15 percent, while uninsured State member
associations show a decline of 3 percent in private capital.
Despite the fact that the defense effort has brought about a new
demand for additional funds to finance the armament program, there
is no indication as yet that the consistent trend toward lower rates
of return on invested funds has come to a halt. Bond yields, for
example, which have remained at consistently low levels for the last
several years declined even further during the fiscal year. The yield
on long-term U. S. Treasury bonds was 1.91 on June 30, 1941, as
compared with 2.39 a year previous. The return on both high-grade
and low-grade corporate bonds also declined to a record low. The
weighted average dividend rate paid by mutual savings banks declined
to 1.90 percent at the end of June 1941 as compared with 2.04 percent
a year previous. Rates paid by commercial banks on savings de
posits have been reduced in many localities below legal maxima. The
dividend rate paid by Federal savings and loan associations dropped
for the third consecutive year to a figure of 3.25 percent.
Savingsfor Defense
The cost of financing the tremendous expenditures necessitated by the
defense program has raised new problems in the field of government
finance. In order to avoid an inflationary spiral, every effort is
being made to pay for a substantial percentage of current outlays
from taxation and savings funds. The Public Debt Act of 1941
authorized the issuance of modified savings bonds for the purpose of
attracting surplus public savings to the Treasury. These bonds,
which went on sale May 1, 1941, are of three types-Series E, which
are quite similar to the so-called Baby Bonds and which are sold only
to individuals, and Series F and G, which are designed to attract
corporate and large individual savings. Defense bonds are being
sold through the voluntary efforts of a number of private financial
institutions, including members of the Federal Home Loan Bank
System, commercial and mutual savings banks, as well as through
post offices.
Member institutions of the Federal Home Loan Bank System
were designated as issuing agents for the sale of defense bonds on
April 15, 1941. Immediately thereafter, the Federal Home Loan
Bank Board and the Presidents of the Federal Home Loan Banks
actively endorsed and assisted in carrying out a program of participa
tion by savings and loan associations. Federal associations, by
virtue of the fact that they are agents of the Federal Government
425085-41-5




58

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

were authorized to make application directly to the Federal Reserve
Bank of the District in which the institution is located. In a few
cases it has been necessary for State legislatures and supervisory
departments to revise either the statutes or the regulations under
which State associations are operating, in order to permit them to act

as issuing agents.

No time was lost in any State in securing the

necessary changes and by the close of the fiscal year, State-chartered
member institutions of the Federal Home Loan Bank System in
practically all States were permitted to apply.
Savings and loan associations are peculiarly suited to serve as sales
agents for the Treasury in the defense bond campaign. Member
institutions of the Federal Home Loan Bank System are widely
scattered throughout the United States and practically no community
is outside the area served by one or more savings and loan associa
tions. The customers of savings and loan associations constitute
that group which will provide the best market for the sale of Series
E bonds. The average citizen who is able to save small amounts
and who is interested in purchasing a modest home is the same citi
zen on whom the Government must rely as its most important pur
chaser of defense savings bonds.
Problems Ahead

The present national emergency has raised a host of new problems

in the general field of thrift and home finance-some of which have
been discussed briefly in this chapter. The not unlikely prospect
that additional measures may be necessary to divert a greater volume
of private savings into defense financing and the certainty of higher
taxes may well slow down the flow of private investments into home
financing institutions. The urgent need for defense housing, the
prospect of further increases in building costs, the possibility of labor
shortages or the exercise of priorities on labor and materials-these
are but a few of the recent developments which complicate the out
look for the immediate future.
The home financing industry, like all private business, faces a
major challenge in solving its problems, but fortunately the industry
is better able today than ever before to meet the test. Activities of
the Federal Government during the last few years have done much
to strengthen our home financing structure. The Federal Home
Loan Bank System alone is a stalwart bulwark sorely needed and
lacked by home financing institutions in previous emergency periods.
The elasticity of credit made possible by membership in this national




SURVEY OF HOUSING AND MORTGAGE FINANCE

59

credit system makes the job of conducting business today on a sound
financial basis a much easier one.
The Federal Savings and Loan Insurance Corporation, by insuring
the safety of investments in savings and loan associations, has had
considerable success in restoring public confidence in local home
financing institutions and in maintaining a steady flow of private
savings into the home mortgage lending field. The psychological
advantages resulting from an insurance of the risk involved in invest
ing the small savings of average people are hard to overestimate.
Perhaps even more important than insurance itself, however, is the
general improvement in operating standards and policies of insured
savings and loan associations which must meet definite standards of
eligibility before approval by the Corporation. The fact that insur
ance of accounts has been extended to 2,310 institutions holding 53
percent of the assets of all operating associations in the country has
brought about a recognized improvement in the whole home financing
structure.
Despite the importance of the various actions taken by the Govern
ment to strengthen and support home mortgage lending, its efforts
would amount to little were they not accompanied by better lending
techniques and generally higher standards of operation in private
financial institutions. Success or failure of home mortgage lending
depends, in the final analysis, upon the capabilities of local manage
ment and sound business methods. Ground for considerable en
couragement is found in such developments as the improvement in
appraisal standards, more critical and careful loan analysis, more
realistic lending terms, and the increasing realization on the part of
individual institutions that the job of lending on home mortgage
credit is a business which requires training, skill, and specialized
knowledge. Only time will tell whether recovery so far made in the
home mortgage lending field and the structural improvements brought
about both by the industry and the Federal Government will prove
adequate to meet the inevitable strain to which it will be subjected.
Undoubtedly, however, there is a general awareness, which stems
perhaps from recent experience, of the possible dangers ahead and
the need for careful, farsighted planning. This attitude in itself is
a healthy one and gives promise that a determined effort will be made
to avoid the unsound type of lending which has always, in the past,
caused ultimate trouble.







III
Federal Home Loan Bank System

FOR

the Federal Home Loan Banks and their member home
financing institutions, the 1941 fiscal year was a period of record
breaking activity. Advances by the Banks and repayments by bor
rowing member institutions both reached the highest figures for any
fiscal year since the Bank System was established in 1932. A sub
stantial inflow of private capital into member savings and loan asso
ciations enabled them to write mortgage loans in the total amount of
$1,084,866,000, an increase of 21.3 percent over the preceding fiscal
year, and to reduce Government share investments by almost 13
percent. The combined balance sheet and operating statements of
member savings and loan associations reflect steady improvement.
The national emergency has confronted thrift and home financing
institutions with a host of new problems. Fortunately the industry
is better prepared than ever before to meet this challenge. Manage
ment and operating standards have been substantially improved in
recent years, the problems brought on by the depression of the early
Thirties have largely been surmounted, and perhaps most important
of all, the industry is now able to face a difficult future with the knowl
edge that it is supported by the Federal Home Loan Bank System
which stands ready to meet both emergency and normal credit
demands.
1. OPERATIONS OF THE FEDERAL HOME LOAN BANKS
Lending Activity

The lending record of the Federal Home Loan Banks during the fiscal
year 1941 demonstrates most clearly the ability of the System to
meet the credit needs of its member institutions. The fact that ad
vances outstanding on June 30, 1941, totaled $169,897,390, an in
crease of 8 percent as compared with the close of the previous report
ing period, tells only one part of the story. Of equal significance is
the fact that advances made during the 1941 fiscal year reached a
new high of $142,875,563, a figure 32 percent greater than that for the
fiscal year 1940. An increase of 9 percent in the total volume of




61

62

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

repayments made by member institutions during the fiscal year 1941
accounts for the relatively small margin between the balance of out
standing advances at the close of the last two fiscal years.
The chart below shows a regularly recurring relationship between
the volume of advances and the volume of repayments during each
semiannual period. Normally, advances during the six-month period
CHART XXIX

FEDERAL HOME LOAN BANK SYSTEM ADVANCES AND REPAYMENTS
DECEMBER 1936

MILLIONS

.

. . .

.

.

.

THROUGH JUNE 1941
. . .

. .

. .

.

.

OFDCLLARS

S ADVANCES OUTSTANDING

200

75

50
25
0

II IL

i

i

i

i

L

.

.

L

i

I I

DIVISION RESEARCH.AND
OF
STATISTICS
FEDERAL
HOME
LOAN
BANKBOARD

from July to December are well above repayments, while from Jan
uary to June, exactly the reverse is true, with repayments substan
tially in excess of advances. The last fiscal year was no exception to
this general rule, but the movement of both advances and repayments
was exaggerated in each six-month period due to certain special fac
tors which influenced the lending activity of the twelve Banks.
The chart indicates, for example, that during the first half of the
reporting period, from July through December 1940, current advances




FEDERAL HOME LOAN BANK SYSTEM

63

were substantially higher and current repayments considerably lower
as compared with the first half of the preceding fiscal year. The need
for an unusual amount of additional credit during this period is ex
plained, in part at least, by a temporary slackening in the flow of
private savings during the fall of 1940, probably brought on by psy
chological reactions to the turn of events abroad. The collapse of
France, mounting British reverses, and the very real danger of an in
vasion of Great Britain apparently had some effect on the American
investing public. For a few months at this time there were indica
tions that hoarding, for example, was increasing.
Home financing institutions generally were impressed with the
necessity of maintaining a sufficiently liquid position to meet possible
withdrawal demands. Therefore, they drew on the resources of the
Federal Home Loan Banks to forestall any difficulty in this regard.
Accompanying the temporary dropping off in the rate of private
savings there was a steady demand for new mortgage funds which in
turn led to increased use of the credit facilities of the Federal Home
Loan Banks.
During the second half of the reporting period, this trend was
reversed. Again, the shift was undoubtedly the result of more than
the normal seasonal factors which regularly cause a rate of repayment
well in excess of new advances during this six-month period. Advances
made during the first six months of 1941 amounted to $57,774,230,
while repayments reached a new peak of $89,368,804. It is probable
that this greater than seasonal variation resulted from the fact that
in the early months of 1941, private capital began to flow into home
financing institutions at a good rate. Member institutions borrowing
from the Federal Home Loan Banks, no longer confronted with the
imminent possibility of a growing withdrawal demand, were able to
retire at least a portion of the funds previously obtained from their
Regional Bank. In other words, emphasis during the second half
of the fiscal year just closed was shifted from primary liquidity to
unused lines of credit with the Federal Home Loan Banks.
Although increasing private investments were undoubtedly the
primary cause of the decline of advances outstanding after the all
time peak in December 1940, there were other developments which

strengthened the cash resources of member institutions and made it
possible to retire indebtedness. Principal repayments on direct
reduction loans increase steadily as the loans age, and many associa
tions have now built their portfolios to a point where this factor alone
is responsible for a substantial incoming volume of funds available for
mortgage lending. The sale of a large number of owned properties




64

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

through the medium of purchase-money mortgages has brought in
cash down payments and added to earning mortgage portfolios. An
ever increasing number of associations are supplementing their avail
able lending funds by selling enough insured mortgages to build up a
revolving fund. This activity has not yet assumed importance for
the country as a whole, but in certain defense areas has already
become significant.
Gross advances made by the Federal Home Loan Banks since the
beginning of operations through June 30, 1941, totaled $773,908,855
and repayments made on such advances amounted to $604,011,465.
C T
XX
Exhibit 12 summarizes in some
CHART XXX
detail advances, repayments, and
PERCENTAGE OF BORROWING MEMBERS
alane
ttand
since the
balances outstanding since t
TO TOTAL MEMBERSHIP
PERCENT AS OF JUNE 30 EACH YEAR
beginning of operations.
Acomparison of advancesout
:
... standing in each of the Federal
VGB
"LNONBORROWINGI
so
Home Loan Banks at the close of
the last two fiscal years shows
. .....
little uniformity in percentage
60
-increases or decreases. Nine of
S'
the Banks show gains of from
40
1
1.1 to 31.2 percent in advances
S.4

held on June 30, 1941, over the
BORROWING

.i-

S. -.
o2 0

o
i

~
i

/

3o
1936

.......
1937

1938

1939

1940

1941

DIVISIONOF RESEARCH
AND STATISTICS

FEDERAL
HOME
LON B

BOo

close of the previous fiscal year.
The other three Banks show a
contrary trend, with declines
ranging from-0.9 to 13.5 percent.
Exhibit 13 gives detailed in

formation on outstanding ad

in each of the Bank
Districts for the past eight years.
vances

There was no substantial change at the close of the fiscal year in the
number of member institutions borrowing from their Regional Banks.
A year ago, on June 30, 1940, some 2,090 member institutions, or
53.4 percent of the total membership, were indebted to the Banks.
On June 30, 1941, the corresponding figure was 2,010, or 52.4 percent
of membership. This slight decline in the number of borrowing
members and the somewhat higher volume of advances at the close
of the reporting period is reflected in an increase in the average prin
cipal indebtedness of borrowers from $75,310 on June 30, 1940, to
$84,526 on June 30, 1941. The percentage of borrowing members at
the close of each of the last six fiscal-year periods, by Federal Home
Loan Bank Districts, is shown in Exhibit 14.




FEDERAL HOME LOAN BANK SYSTEM

65

The maximum rate which can be charged by the Federal Home
Loan Banks on advances to their member institutions has been set
at 3 percent by the Federal Home Loan Bank Board. On July 1,
1940, the Banks were charging from 2}/ to 3 percent on long-term
advances and from 1Y2 to 3 percent on short-term advances.
During the reporting period, the Indianapolis Bank reduced its
rate from 3 to 2% percent on short-term advances which do not
exceed 15 percent of the institution's share capital. The Federal
Home Loan Bank of Chicago lowered the cost of short-term ad
vances from 3 to 2 percent if in each case the advance is amortized
at the rate of at least 2} percent quarterly. If amortized within
one year in equal monthly installments, associations in the Chicago
District are permitted to borrow at 1% percent. The Los Angeles
Bank reduced from 3 to 2% percent the interest rate charged on
long-term advances provided in each case the association agrees to
use the proceeds of the advance to make new mortgage loans insured
by the Federal Housing Administration. Detailed information on
the rates charged by each of the twelve Banks will be found in
Exhibit 15.
Types of Advances
The trend toward an increasing proportion of short-term advances
has continued steadily during the last two fiscal years. On June 30,
1941, advances which had been written for a period of one year or
less amounted to $65,807,625, or 38.7 percent of all advances out
standing. This compares with a figure of $42,664,098, or 27.1 per
cent of the total at the close of the preceding fiscal year. As the
chart below indicates, this development toward greater emphasis on
short-term advances is a direct reversal of the trend which had
previously continued for several years.
The emphasis on short-term advances was general throughout the
country, with ten of the twelve Banks showing an increase both in
dollar volume and in relation to total advances outstanding during
the 1941 fiscal year. In the Topeka District, the amount of short
term advances declined, but rose from 11.8 to 12.2 percent of all
advances. Only in the Portland Region did short-term advances
decline both in dollar volume and ratio to total portfolio. The dis
tribution of long- and short-term advances outstanding in each of
the Federal Home Loan Bank Districts is shown in Exhibit 16.
There are undoubtedly a number of reasons why member institu
tions are borrowing to an increasing extent on a short-term basis.
Some of the Banks have adopted variable interest rate schedules




66

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,

which make the cost of short-term
ing the period when small or new
very rapid rate, credit was needed
CHART XXXI
DISTRIBUTION

SHORT-TERM

OF LONG-TERM

--

have

AND

advances

retired

ADVANCES OUTSTANDING

AS OF JUNE 30 EACH

PERCENT
10
0

advances attractively low. Dur
associations were expanding at a
to meet the demand for mortgage
loans, and it was valuable to

YEAR

as

which

mortgage

could

be

payments

-

were received.

.

ever, normal credit demands can
often be met with short-term
advances, supplemented by an
adequate flow of private savings

80o
-:

60

. . . i.-.
-

-

I1

.

..

1

and mortgage repayments.

The majority of collateralized
made by the Federal
Home Loan Banks are long
S term in character, and it is,

Badvances
cz

NG TER
- M
M

S
-

:

therefore, not surprising to find
Sthe relationship between secured

II20

Sand
0

1936

1937

1938

unsecured advances follow
ing closely the pattern set by the

4
1939

As associations

terms on which

1941
1940

advances

are

extended. The increasing num
ber of short-term advances dur
ing the last fiscal year, for example, was accompanied by a growth in
the volume of advances made without collateral.
DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOME LOANBANK BOARD

Trend of secured and unsecured advances outstanding, by fiscal-year periods
Collateralized advances
Date

June
June
June
June
June
June
June
June
June

30,
30,
30,
30,
30,
30,
30,
30,
30,

1933 -_
1934 __-----.--- --1935 ..-1936 ---..
-------1937------1938 -----1939..--------1940 --------1941_-- ---------

Total advances
outstanding

$47, 663, 830
85,148, 354
79,232, 514
118, 586, 838
167,056, 887
196.224,937
168, 961, 563
157, 397,047
169,897, 390

Uncollateralized advances

Amount outstanding

Percent of
total

Amount outstanding

$46, 521,239
82, 740, 248
68,045,199
89,964,281
130,944,112
163, 386,013
145,442,668
126, 342,499
121, 995,964

97.6
97.2
85.9
75.9
78.4
83.3
86.1
80.3
71.8

$1,142, 591
2,408,106
11,187,315
28, 622, 557
36, 112,775
32,838,924
23, 518, 895
31,
054, 548
47,901, 426

Percent of
total
2.4
2.8
14. 1
24. 1
21.6
16. 7
13. 9
19.7
28.2

As shown by the table above, "unsecured advances" which are col
lateralized only to the extent of the borrowing association's invest
ment in the capital stock of its Federal Home Loan Bank amounted




FEDERAL HOME LOAN BANK SYSTEM

67

to $47,901,426 on June 30, 1941, or 28.2 percent of all advances out
standing. At the beginning of the reporting period, advances of this
character totaled $31,054,548, or 19.7 percent of total. Despite the
fact that unsecured advances do not require a pledge of collateral, a
number of other conservative, safeguards have been set up for this
type of lending. Thus, when such advances are made for a period
up to one year, under Section 11(g) of the Federal Home Loan
Bank Act, member institutions are not permitted to have outstand
ing liabilities to other creditors in an amount exceeding 5 percent of
their net assets. This restriction insures the Federal Home Loan
Bank recourse to a substantial share of the borrowing institution's
assets. Furthermore, provision has been made whereby the Federal
Home Loan Bank may utilize, if necessary, any excess collateral
which may have been pledged by the institution as security for
other advances.
At the close of the fiscal year 1941, secured advances amounted to
$121,995,964, or 71.8 percent of total. Collateral supporting these
advances consisted of 130,546 home mortgages with unpaid balances
of $302,821,736, obligations of the United States Government, direct
or fully guaranteed, in the amount of $800,450, and other eligible
collateral in the amount of $85,016. In addition, a statutory lien
was held on stock owned by borrowing members in the amount of
$23,752,000 which can, if necessary, be used to protect advances,
both secured and unsecured. A detailed description of the types of
advances made by the Federal Home Loan Banks will be found in
Exhibit 17.
Probably the most adequate proof of the conservative lending opera
tions of the Federal Home Loan Banks is the fact that during nine
years' operating experience not a single loss has been incurred on over
$700,000,000 in advances.
On June 30, 1941, except for 13 borrowers in voluntary or involun
tary liquidation, no institutions were delinquent over 30 days. Ad
vances held by the 13 institutions in liquidation totaled $649,714.
Advances to 12 of these borrowers, aggregating $499,714, were secured.
by home mortgages valued at $1,799,471 and stock in the Regional
Banks in the amount of $123,100. An advance of $150,000 to the
other liquidating institution was unsecured except for the association's
$15,000 investment in the stock of its Bank. However, this advance
is deemed amply protected by the large volume of the institution's
assets. The advances to the 13 institutions are being liquidated reg
ularly-in many cases ahead of schedule-and the generous margin of




68

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

security behind them promises complete recovery within a normal
period of time.
The borrowing capacity of each member institution has been defined
by regulation of the Board as the amount for which an association can
legally obligate itself or, in the absence of a legal limit, as the equivalent
of 50 percent of the institution's net assets. On June 30, 1941, the
total borrowing capacity of member associations, arrived at in the
manner indicated, was $2,066,737,953. This figure should not be
interpreted as a measure of the credit reservoir upon which member
institutions can draw at will. On the contrary, every application for
an advance is individually considered on its own merits and the appli
cant's "borrowing capacity" is probably the least important factor
determining approval or disapproval. Much more important, for
example, are the prospective borrowing association's financial condi
tion and the acceptability of its collateral. Nevertheless, the very
wide margin between legal borrowing capacity and advances outstand
ing indicates the potentialities of the Bank System.
FinancialCondition of the FederalHome Loan Banks
The consolidated balance sheet for the twelve Federal Home Loan
Banks as of June 30, 1941, shows a highly liquid and sound financial
picture. The volume of cash funds, $57,203,868, on June 30, 1941, was
larger than at the close of any previous fiscal year and cash balances
have been maintained during recent months at a higher point than
during any prior period in the history of the Bank System. The
primary measure of the value of the Federal Home Loan Bank System
is its ability to meet any legitimate demand for credit, normal or
extraordinary, which may be made by the home financing industry.
Only in a secondary sense is the volume of advances which may be
outstanding at any particular time a gauge of the System's usefulness
or accomplishments. For this reason, it is important for the Banks to
maintain a high degree of liquidity, particularly during critical times
when any accurate estimation of future demand for advances is diffi
cult to make.
Cash holdings of $57,203,868 on June 30, 1941, represent an increase
of 21 percent over the close of the preceding fiscal year. In addition,
secondary liquid reserves in the form of investments in United States
Government obligations, direct or fully guaranteed, amounted to
$63,407,070 at the close of the reporting period. Combined cash and
investments constituted 41 percent of consolidated assets on June 30,
1941, as compared with 39 percent a year previous. Cash available




69

FEDERAL HOME LOAN BANK SYSTEM

for advances 7 and securities in excess of legal requirements 8 totaled
$96,012,261 at the end of the 1941 fiscal period. A statement of
condition for the Federal Home Loan Banks as a whole and for each
of the Banks separately, as of June 30, 1941, is given in Exhibit 18.
CHART XXXII
COMPOSITION OF CONSOLIDATED ASSETS OF THE TWELVE FEDERAL HOME LOAN BANKS
AS OF JUNE 30, 1940 AND JUNE 30,1941
10

0

JUNE 30

P ER C ENT
60
50
40

30

20

9421.8

JUN E 130

90

80

70

58 ..............
.
OTHER 0.3
ASSETS

1ig ! ! 1: 1
CASH

100

INVESTMENTS

ADVANCES
OUTSTANDING ASSETs 03
OTHER
OF
AND STATISTICS
DIVISION RESEARCH
FEDERALHOME
LOANBANKBOARD

The book value of security holdings on June 30, 1941, amounted
to $63,407,070, which is somewhat higher than the par value of
$62,351,950, but is well under the current market price of $66,080,463.
The following table shows the distribution of securities by maturity
or dall dates and yields at the close of the last two fiscal years. A
detailed list of securities held by the twelve Banks will be found in
Exhibit 19.
Distribution of securities held by the twelve Federal Home Loan Banks, as of
June 30, 1940, and June 30, 1941
June 30, 1940
Maturity/Callable
Amount

Under 1 year--.------.
1 to 5 years ------.
5 to 10 years -------10 to 15 years -------15 to 20 years --------

20 years and over --

Total -----------

-

en
of total

June 30, 1941
Average
weighted
yield

Amount

$270,000
21,803,000
13,160,000
12, 343,000
2, 638,000

0.5
40. 6
24. 5
23.0
4.9

Percent
1.10
1.17
1.97
2. 55
2.45

$2, 780, 000
22, 458, 800
15, 592,000
16, 808,150
4, 713, 000

53,689,000

100.0

1.84

62, 351, 950

3,475, 000

6. 5

2. 58 ----------------

Pee
of total

--

Average
weighted
yield

4. 5
36. 0
25.0
26. 9
7. 6

Percent
0.85
1.17
2. 20
2. 33
2. 51

100.0

1. 83

1 Based on cost to maturity/callable dates.

At the beginning of the fiscal year 1941, two series of consolidated
debentures were outstanding in the total amount of $48,500,000.
Series "C" amounting to $25,000,000 was retired at maturity on
7 Represents total cash less reserve requirements of 75 percent of members' demand deposits, 25 percent
of members' time deposits, total applicants' deposits, interbank deposits, and imprest funds.
a
R epresents the face value or principal amount of investments owned above the necessary legal reserves.




70

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

December 1, 1940, leaving only Series "D" outstanding. On Novem
ber 29, 1940, two additional series, "F" and "G," were issued to
provide funds for anticipated requirements. Series "F" in the amount
of $15,000,000 was sold on a short-term basis to mature on April 15,
1941, and carried an interest rate of X of 1 percent. This series was
retired in full at maturity. Series "G," the second series issued on
November 29, amounted to $52,000,000 and will mature April 15,
1942. This issue bears an interest rate of % of 1 percent. As in
past offerings, both series issued during the reporting period were
many times oversubscribed.
* As a result of debenture transactions during the reporting period,
outstanding obligations of the Federal Home Loan Banks totaled
$75,500,000 at the close of the fiscal year. Consolidated debentures
are the joint and several obligations of all of the Federal Home Loan
Banks. The extent of the participation of each Bank in the issuance
of each series now outstanding may be found in Exhibit 20.
Deposits of member institutions in their Federal Home Loan
Banks have varied from $25,000,000 to $35,000,000 for the last two
fiscal-year periods. On June 30, 1941, the total volume of such
deposits outstanding amounted to $31,306,869, of which 19 percent
was on a noninterest-bearing demand basis and 81 percent in interest
bearing time deposits. Although deposits of member institutions with
the Federal Home Loan Banks have not yet reached a figure where
they constitute a major source of funds, sufficient use has been made
of this service of the Banks to indicate that many institutions are
finding it a convenient means of preserving their liquidity positions.
Interest rates paid by the Banks on time deposits were again
reduced in several instances and prior to the close of the current
fiscal year, it was announced that on and after July 1, 1941, the nine
Banks paying interest on time deposits would pay a uniform rate of
% of 1 percent.
Except in one case, each of the nine Banks requires
a ninety-day waiting period before interest is paid on deposits. The
Boston Bank pays interest on deposits remaining from thirty to
ninety days. Exhibit 21 gives a detailed account of the interest rates
paid on time deposits as of July 1, 1941.
Interbank deposits have proved particularly useful as a means of
providing sufficient funds to meet the demand for advances within
the Bank System. Through this means, the Banks are able by a
comparatively simple device to maintain an interregional flow ot
funds from areas of plenty to localities of temporary scarcity. Inter
bank deposits are made on a demand basis and, by resolution of the




71

FEDERAL HOME LOAN BANK SYSTEM

Federal Home Loan Bank Board, carry an interest rate of % of 1 per
cent per annum. During the fiscal year 1941, interbank deposits
totaled $17,500,000, and the amount outstanding on June 30, 1941,
was $2,500,000. From the beginning of operations through the close
of the current reporting period, more than $97,000,000 had been
transferred within the Bank System by means of interbank deposits.
Outstanding capital stock of the Federal Home Loan Banks totaled
$171,283,200 on June 30, 1941, as compared with $167,373,475 a year
previous. The increase of $3,909,725 was accounted for by addi
tional share subscriptions of member institutions since capital stock
owned by the Federal Government has remained unchanged at
$124,741,000 since November 1937. On a percentage basis, the ratio
CHART XXXIII
COMPOSITION OF CONSOLIDATED LIABILITIES AND CAPITAL
OF THE TWELVE FEDERAL HOME LOAN BANKS
AS OF JUNE 30, 1940 AND JUNE 30,1941
10

0

20

30

P E
40

R CE
50

NT
60

70

80

90

100

JUNE 30
1940
0.3
$T g

JUNE 30

'I

MEMBERS
U.S. GOVERNMENT
CAPITAL STOCK SUBSCRIPTIONS

SURPLUS MEMBER DEBENTURESOUTSTG.
& UNDIV. DEPOSITS
OTHERLIABILITIES0.4
PROFITS
OFRESEARCH
AND STATISTICS
GIVISION
FEDERAL
HOMELOANBANKBOARD

of capital stock owned by member institutions to the total outstand
ing has been increasing steadily since the organization of the Bank
System. At the close of the fiscal year 1941, 27.2 percent of total
stock was owned by member institutions as compared with 25.5
percent a year previous.
On February 20, 1941, the capital stock of the Federal Home Loan
Banks owned by the Federal Government was taken over from the
U. S. Treasury by the Reconstruction Finance Corporation. This
transfer of ownership was first suggested in the President's Budget
Message for the Fiscal Year 1941, in which he outlined a program for
recapturing approximately $700,000,000 of the capital funds of various
Government corporations. Authority for the actual transfer was
given by the Congress in an Act approved June 25, 1940. Except
for this legislation, there has been no change in the statutes and
regulations governing the capital structure of the Banks.




72

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Each member institution in the System is required to hold stock
in its Regional Bank in an amount equal to at least 1 percent of the
unpaid principal of its home mortgage portfolio, but not less than
$500. Borrowing members are subject to the further requirement
that paid-in stock must equal at least one-twelfth of their outstanding
indebtedness to the Bank.
Changes in capital structure of the twelve Federal Home Loan Banks
June 30, 1940
Total stock subscriptions:
Members ----------------------------------_
_ --- -------....
United States Government 1--------------------Payments received on stock subscriptions:
Members
--------------------------United States Government 1
----------------------------Balance due on above stock subscriptions:
Members----------------------------------------------------------

United States Government 1-

-

June 30, 1941

$42,647,900
124, 741, 000

$46, 571,900
124, 741,000

42, 632,475
124,741,000

46, 542, 200
124, 741, 000

15,425

29, 700

1 Government stock has been held by the Reconstruction Finance Corporation since February 20, 1941.

That part of the capital structure of the twelve Banks represented
by reserves and undivided profits was also strengthened during the
reporting period. Net earnings allocated to reserves and undivided
profits amounted to $3,696,183 during the 1941 fiscal year, of which
$1,338,992 was transferred to reserves and $2,357,191 to undivided
profits. Reserve allocations by the Banks have consistently been
greater than required by statute. Thus, during the current reporting
period, the total amount of earnings retained by the Banks over and
above dividends was $1,030,719 in excess of statutory requirements.
Since the beginning of operations, from the fall of 1932 to June 30,
1941, the Banks have built up surplus and undivided profits in the
amount of $12,033,992, or 113 percent more than the reserve required
by law. The ratio of reserves and undivided profits to paid-in capital
stock was 7 percent at the close of the current reporting period as
compared with 6 percent a year previous.
Due principally to the increase in debenture obligations, total
resources of the Banks increased during the last fiscal year from
$260,067,459 to $291,511,973. At the close of the reporting period,
current assets were 233 percent of current liabilities.
Income and Expenses of the FederalHome Loan Banks
During the current reporting period, earnings of the Federal Home
Loan Banks were somewhat above the amount realized during the
previous fiscal year. Gross income for the fiscal year 1941 was




73

FEDERAL HOME LOAN BANK SYSTEM

$6,031,305 as compared with $5,715,959 during the preceding fiscal
year period. Increased interest income on a larger average outstand
ing volume of advances and profits from the sale of investments were
mainly responsible for this trend. During the preceding fiscal year,
when interest rates in a number of the Banks were reduced and loan
volume declined as well, there was a substantial falling off in income.
Although operating expenses of the Banks are not as flexible as
income, the Banks were able to effect a reduction in total expenses
during the reporting period. Deductions from gross income, there
fore, declined from $2,479,232 to $2,335,122. The net effect of a
higher gross income and lower operating costs was, of course, an in
crease in net income from $3,236,727 during the 1940 fiscal year to
$3,696,183 during the current reporting period.
A detailed statement of profit and loss during the fiscal year 1941
for each of the Federal Home Loan Banks will be found in Exhibit 22.
The following table presents a summary picture of income and expenses
for the Bank System as a whole.
Condensed consolidated statement of profit and loss of the twelve Federal Home Loan
Banks
Fiscal year
1940

Fiscal year
1941

Income:
Interest-earned on advances-----_

----

-

Interest earned on investments -------------------Interest earned on deposits in commercial banks.----_-----__Nonoperating income ----------Gross income ----.

-----------. .

-

---- _------------------

Total deductions -----------..---------_

956, 533
570

$4, 610, 363

987, 472
1,042

--------------------

-----.

196, 967

432, 428

5, 715, 959

6, 031, 305

927, 106
247, 393
938, 750
300,000
49, 358
16,625

934, 803
119, 524
814, 216
300,000
79, 589
86,990

2, 479, 232

--------------. ------------------------....-.

Less-Charges:
Compensation, travel, and other administrative expenses ...
Interest on deposits
.-------------------------------------Interest on debentures -- ---------------,...
-------.
---Assessments for expenses of Federal Home Loan Bank Board -------Other expenses _-------------------------------.--------- -.
Nonoperating charges --------------------------_------_
---------

Net income --------

$4, 561,889

2, 335, 122

3.. 236, 727
,

3, 696, 183

The Federal Home Loan Banks were created primarily for the pur
pose of serving member home financing institutions as a credit reser
voir upon which they can rely for advances during both normal and
emergency periods. Earnings which can with safety be distributed
in the form of dividends to stockholders are of secondary importance.
Nevertheless, over $16,000,000 in earnings of the Federal Home Loan
Banks has been paid to stockholders, both Government and institu
tional, since the organization of the System.
425085-41-6




74

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

During the fiscal year 1941, dividends declared by the Banks ranged
from one to two percent, with a weighted average rate of 1.14 percent,
as compared with 1.07 percent during the previous reporting period.
The increase in the average results from the fact that two Banks raised
their dividend rates during the 1941 fiscal year. Dividends distributed
CHART XXXIV*

DISTRIBUTION OF NET INCOME
FEDERAL HOME LOAN BANKS-FISCAL YEAR 1941
N
\DNDS
.....
.,

PAID

DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD

during the current reporting period amounted to $1,926,227, of which
$838,003 was paid to the United States Treasury, $583,054 to the
Reconstruction Finance Corporation, and $505,169 to member insti
tutions. From the time of the Banks' organization to December 31,
1940, the United States Treasury received $12,021,340 in dividends.
*Figures underlying Chart XXXIV will be found in Exhibit 25.




FEDERAL HOME LOAN BANK SYSTEM

75

When the Government's stock was transferred to the Reconstruction
Finance Corporation in February 1941, the Treasury waived claim
to any dividends declared after January 1, 1941. Future dividend
payments on such stock will, of course, be made to the Reconstruction
Finance Corporation. Exhibit 23 shows the dividend rates declared
by each Bank for the fiscal years 1940 and 1941 and the cumulative
amounts paid from the beginning of operations through June 30, 1941.
As already indicated, allocations to reserves and undivided profits
during the fiscal year 1941 were $1,030,719 in excess of the reserve
requirements of the Federal Home Loan Bank Act. An analysis of
the surplus and undivided profits of the Federal Home Loan Banks,
individually and collectively, is given in Exhibit 24.
Income and Expenses of the FederalHome Loan Bank Board
Since the members of the Federal Home Loan Bank Board also com
pose the Board of Directors of the Home Owners' Loan Corporation
and the Board of Trustees of the Federal Savings and Loan Insurance
Corporation, the Federal Home Loan Bank Board derives its operating
funds not only from the Federal Home Loan Banks, but also from
these two agencies for services rendered and from fees received for the
examination of home financing institutions. Expenses of the Exam
ining Division of the Board, which constitute the major portion of the
Board's operating budget, are reimbursed by the institutions examined.
During the 1941 fiscal year, total receipts of the Federal Home Loan
Bank Board amounted to $1,215,689 as compared with $1,396,775
for the fiscal year 1940. In addition, a cash balance of $352,671 was
carried over at the beginning of the fiscal year 1941. Disbursements
during the same two periods aggregated $1,328,401 and $1,282,529,
respectively. The cash balance as of June 30, 1941, amounted to
$239,959. Exhibit 26 shows detailed information on administrative
receipts and disbursements for the last two fiscal years.
The personnel of the Bank Board totaled 460 at the close of the
reporting period. Of this total, 304 employees constituted the staff
of the Examining Division. Exhibit 27 gives a summary of personnel
by departments as of June 30, 1940, and June 30, 1941.
Administration of the FederalHome Loan Bank System
The major administrative responsibility of the Federal Home Loan
Bank Board is the establishment of basic policies and the maintenance
of adequate safeguards to insure successful operation of the Federal
Home Loan Bank System. The Board is assisted in this responsibility




76

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

by the Governor of the Federal Home Loan Bank System who acts
as its chief administrative officer.
The structural organization of the Bank System has been designed
to -permit the maximum possible decentralization without loss of the
over-all supervision which is necessary in the administration of a
nation-wide organization and which is required by the Federal Home
Loan Bank Act. Each of the twelve Regional Banks is governed by
a Board of Directors which has been given considerable discretion
and initiative within the terms of the Federal Home Loan Bank Act
and the Rules and Regulations of the Bank Board. Under the general
supervision of the regional directors, the officers of the Banks assume
the actual job of management. The importance of maintaining the
maximum of local autonomy possible in the administration of the
Federal Home Loan Bank System has long been stressed by the
Federal Home Loan Bank Board. If the Banks are to fulfill their
responsibilities to member institutions, considerable freedom of action
in meeting local problems and situations is essential.
It should not be implied that this philosophy of administration
means a lack of coordination and supervision on the part of the Board.
To the contrary, regular semiannual examination of the Banks, daily
and monthly reports on operations and condition from each of the
Banks, and the requirement that full and complete minutes of direc
tors' and executive committee meetings must be kept and certified
copies forwarded to the Governor, all serve as means by which the
Board is able to scrutinize closely the current operations and activities
of each of the Banks with the view to maintaining basic rules and
regulations governing Bank operations on a well-defined basis.
The value of maintaining the Federal Home Loan Bank System on a
decentralized but safeguarded administrative plan is illustrated by the
successful operation of the Banks during the present emergency period.
For example, there is little loss of time in meeting unusual situations
either of a supervisory or credit nature which constantly confront the
Banks in dealing with member institutions. All demands for credit
are acted upon promptly by the Banks without reference to Wash
ington. Officers of the Regional Banks are better able, because of
their familiarity with local trends and conditions, to offer counsel and
to take corrective action, if necessary, to prevent future trouble which
may result from unsound lending or careless management during the
present critical times.
The Federal Home Loan Bank Board is materially assisted in carry
ing out its supervisory responsibility for the safe conduct of the Bank
System through periodic conferences with the Federal Savings and




FEDERAL HOME LOAN BANK SYSTEM

77

Loan Advisory Council, a body created by statute to confer with the
Board "on general business conditions, and on special conditions
affecting the Federal Home Loan Banks and their members." The
Council consists of one member elected by each of the twelve boards
of directors of the Federal Home Loan Banks and six members
appointed by the Federal Home Loan Bank Board. The Council held
two meetings during the current fiscal year, at which time thorough
discussions were held on such questions as defense housing, current
appraisal practices, debenture financing, mortgage-interest and
dividend rates, State and Federal legislation, retirement of Govern
ment investments in Federal savings and loan associations, and the
insurance of small associations. The Board derived, as.always, con
siderable help in the formulation of policies not only from its dis
cussions with the Council in these two meetings, but also by direct
informal advices received from Council members throughout the
reporting period. A list of members of the Council as of June 30, 1941,
is attached as Exhibit 28.
To effect an even closer working relationship between the twelve
Bank Presidents and the Governor of the Federal Home Loan Bank
System, the Board some time ago created the Bank Presidents'
Conference, composed of the executive heads of the twelve Banks.
The Conference met twice during the fiscal year 1941 to confer with
the Governor. Meetings of the Presidents serve the very valuable
purpose of bringing together periodically those most directly con
cerned with day-to-day operations for a thorough discussion of both
specific and general problems facing the Banks. At both Conference
meetings during the last year, considerable time was devoted to the
problem of defense housing and the cooperation of the Banks and
their member institutions in furthering the aims of the national
program. The Presidents were unanimous in supporting the program
through the formation of local housing committees, conferences with
representatives of public housing agencies, and surveys of defense
housing needs in specific localities. Other subjects discussed at the
meetings included debenture financing, investment and liquidity
policies of the Banks, extensions of credit, supervisory duties of Bank
officers, interest and dividend rates, and the cooperation of member
institutions of the Bank System as issuing agents in marketing defense
savings bonds and stamps.
Examination and Supervision
The Federal Home Loan Bank Board is charged by statute with the
responsibility of examining and supervising the twelve Federal Home




78

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Loan Banks. Semiannual examinations of the Banks and their
regular operating reports provide the factual basis on which the Board
determines the policies and procedures which guide Bank operations.
The Board also examines and supervises all Federal savings and
loan associations. Supervision and, in most States, examination of
State-chartered associations insured by the Federal Savings and Loan
Insurance Corporation are shared with the respective State Depart
ments. In a few cases where uninsured member institutions are not

subject to State examination, it is customary for such institutions to
submit to annual Federal examination. Each member institution is
also required to file a detailed annual report which is analyzed by the
Board's Examining Division. These reports are useful supervisory
tools both for the Federal Home Loan Banks and the Board.
From an organizational standpoint, examination and supervision of
insured institutions are two separate and distinct functions of the
Federal Home Loan Bank Board. Examinations are conducted by a
single Examining Division serving the Board and each of its agencies.
The Governor of the Federal Home Loan Bank System and the
officers of the Federal Home Loan Banks, as agents for the Board, have
been made responsible for carrying out the Board's supervisory
responsibilities.
The establishment of an Examining Division with the Chief Exam
iner in Washington and a District Examiner in each Federal Home
Loan Bank District has proved advantageous not only to the Board
and its agencies but also to the associations themselves. A single
examination of Federal savings and loan associations serves both the
Federal Home Loan Bank Board, which charters these institutions,
and the Federal Savings and Loan Insurance Corporation, which
insures their investors' accounts. The examination of State-chartered
insured associations is conducted jointly with the State authorities in
a majority of the States. Data revealed by examinations are useful
to the Board in considering various types of applications received
from member institutions, including those for insurance of accounts
by the Federal Savings and Loan Insurance Corporation, for conver
sion to Federal charter, and for share investments by the Home
Owners' Loan Corporation. A standard examination report form,
developed by the National Association of Building and Loan Super
visors, the United States Savings and Loan League, and the Federal
Home Loan Bank Board is now used in examinations conducted by
the Board and by over half of the State Supervisory Departments.
Adoption of this form has eliminated considerable costly duplication




FEDERAL HOME LOAN BANK SYSTEM

79

in examination of State associations and provides a convenient norm
for individual case analysis.
The separation of supervisory analysis and recommendations from
actual examination of financial condition has proved a successful
device for insuring, first, a high degree of independence to fact-finding
examiners and, second, a detached consideration by supervisory offi
cials of information revealed by examination. Examination and
supervision, in other words, are two distinct but related activities of
the Board. During an examination, the basic aim is to find and relate
all essential facts concerning financial condition and current operations
of a particular institution. The examination report is then carefully
analyzed by trained supervisory officials who seek to determine
whether the association is being operated in accordance with the Rules
and Regulations of the Board and the best standards and practices
of the industry. Recommendations for necessary supervisory action
are usually based on these supervisory studies.
The principles guiding the Board in its supervisory activities are, in
reality, the same principles which guide local management and
directorates of supervised institutions-the maintenance of the

industry in the soundest possible condition, offering a safe place for
the investment of savings, and a source of funds for economical home
financing. To the extent that these objectives are attained in each
individual association, the industry is contributing to a stronger and
better planned financial structure.
Supervision of financial institutions is a major responsibility involv
ing protection of the interests of millions of private individuals whose
savings funds are handled by these institutions. During critical times
such as these, it is more important than ever that both institutional
management and supervisory authorities recognize their joint obliga
tion to avoid the type of operation which appears so profitable in
"boom times," but which past experience has always shown ulti
mately to be so costly. For example, one of the responsibilities of the
Board can be defined in these terms: To encourage member institu
tions of the Bank System to participate on a basis consistent with
sound business practices in the program for housing defense workers.
To carry out that responsibility implies a policy of watchful guidance
with the constant aim of preventing at the earliest possible moment
the development of unsound activities.
The delegation of immediate supervisory functions to the officers
of the Federal Home Loan Banks has been of immeasurable value to
the Board. By this means, supervisory actions and decisions are




80

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

more responsive to varying conditions throughout the country and to
special circumstances which are constantly developing in areas of
concentrated defense activity.
Rules and Regulations governing ordinary operations, supervisory
examinations and analyses, the exercise of informal influence, in fact
the whole sphere of supervision, cannot of itself insure successful
operation or rule out the possibility of serious trouble. To effective
supervision must be coupled intelligent management on the part of
each and every home-financing institution. For this reason, the
Board devotes considerable energy to encouraging the industry to
adopt progressive operating plans and methods, to employ capable,
efficient management-in short, to place institutional operations on
a basis which experience has shown will do most to assure successful
administration of home-financing institutions.
FederalHome Building Service Plan
The Federal Home Building Service Plan, initiated by the Federal
Home Loan Bank Board in 1936 to stimulate the adoption of local
"quality housing" programs was decentralized during the reporting
period. Prior to this time, this activity of the Board was adminis
tered directly by the Board in Washington through the Regional
Federal Home Loan Banks. Operating experience and the necessity
for conducting the plan on a basis sufficiently flexible to permit adap
tation to varying conditions throughout the country account for the
decision to transfer administration of the program to the Regional
Banks in each of the twelve Federal Home Loan Bank Districts.
The essential purpose of the Federal Home Building Service Plan re
mains unchanged-to provide architectural counsel in the selection
of a design suitable to site and neighborhood; to plan for future as
well as present living requirements; to verify the specification of
proper building materials; to supervise actual construction-all at a
fee in line with the limited income of the average small-home buyer.
Homes built under the Plan are registered with the Board in Wash
ington and a certificate identifying the dwelling as a quality product
is issued to the owner by the lending institution.
The Federal Home Building Service Plan enables member institu
tions of the Bank System to offer prospective borrowers assurance of
sound planning, design, and construction. Emphasis on quality con
struction in the small-home field, where architectural planning and
guidance have long been sorely needed, benefits both the borrower
and the lending institution-the borrower because he receives a better
house for his money and the lending institution because the security




FEDERAL HOME LOAN BANK SYSTEM

81

underlying its mortgage loans becomes a better risk. Under the
present decentralized operation of the Plan, the Board is primarily
concerned with over-all coordination of regional programs and the
stimulation of public interest.
General administration of the Plan rests with the Governor's office.
The Board's Architectural Adviser approves architects and home de
signs. Assistance is given by the Board's Public Relations Depart
ment through the preparation of local and national publicity, adver
tising material, and suggestions for individual promotion campaigns
by cooperating institutions.
To the Federal Home Loan Banks has been assigned the task of
handling all direct contacts with member institutions. The Banks
maintain complete information on the operation and extent of the
program and have available all material needed by institutions de
siring to adopt the Plan. Each of the Banks stands ready to assist
through counsel and guidance any interested member institution.
It has long been recognized that any program of this sort to be
successful must be adaptable to varying local needs. Subjecting as
sociations to detailed restrictions would hinder-not help-wide
spread adoption of the Plan. The Federal Home Building Service
Plan, in short, is a tool which member institutions can adopt to meet
the special conditions of local markets while, at the same time, con
ducting a quality construction program which is nationally recognized
and which meets the high standards established for the program as a
whole.
As of June 30, 1941, there were 348 member institutions which had
received approval by the Board to offer the Federal Home Building
Service Plan to their patrons and 535 architects had qualified. On
the same date, the number of individual home designs approved under
the Service totaled 520.
2. OPERATIONS OF MEMBER INSTITUTIONS
Changes in Membership

The number of home financing institutions which are members of the
Federal Home Loan Bank System has shown little change during the
last four fiscal years. At the close of the reporting period there were
3,839 member institutions as compared with 3,914 a year previous.
The combined assets of all members, however, continue to show
significant increases. On June 30, 1941, aggregate resources totaled
$5,287,175,000, a gain of $360,021,000, or 7.3 percent during the 1941
fiscal year.




82

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

The decline in the number of member institutions is accounted for
principally by a continuing process of consolidation within the sav
9
ings and loan industry. The trend is essentially a healthy one,

resulting as it does in the gradual elimination of submarginal institu
tions and the development of larger and stronger associations. The
Board and the Federal Home Loan Banks have supported and en
couraged the process by assisting in mergers and reorganizations,
with subsequent insurance of accounts by the Federal Savings and
CHART XXXV
NUMBER AND COMBINED ASSETS OF MEMBER INSTITUTIONS OF THE

FEDERAL HOME LOAN BANK SYSTEM
NUMBER

AS OF JUNE 30 EACH YEAR
NUMBER
OFBIL
MEMBERINSTITUTIONS
OF DOLLARS

ESTIMATED
ASSETS

6

5,000---

5
4,000

3,000

2,000

O

0

1934 1935

1936 1937 1938 1939 1

9411

1934 1935 1936 1937

1938 1939 1940 1941

DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL
HOMELOAN BANKBOARD

Loan Insurance Corporation. The principle guiding the Board in
this general policy has been the development of a membership of
sound, well-managed institutions capable of meeting the greatly
increased current needs for economical and efficient home financing.
It is probable that the number of savings and loan associations will
continue to decline for some time. The number of operating associa
tions has already dropped from 11,442 in 1931 to approximately 7,200
at the end of 1940. It is estimated that among the latter, 1,500
associations are in a state of gradual liquidation. Since these insti
0For a detailed discussion of the process of consolidation in the savings and loan industry, see Eighth
Annual Report of the Federal Home Loan Bank Board, pp. 56-9.




83

FEDERAL HOME LOAN BANK SYSTEM

tutions are making no new loans and receive no new investments, it
is expected that many of them will be reorganized, merged with more
active associations, or formally dissolved.
The record of admissions to and withdrawals from the Bank
System during the last fiscal year is an additional indication of the
trend toward fewer institutions. Thus, during the reporting period,
69 institutions were admitted to membership as compared with 90
during the fiscal year 1940. Applications for membership which
were still pending on June 30, 1941, totaled 66 as against 96 a year
previous.
Membership terminations during the reporting period totaled 144 as
compared with 122 during the 1940 fiscal period. Termination of
membership in many cases does not mean quite what the phrase im
plies. During the current fiscal year, for example, 30 terminations
resulted from the merger or consolidation of associations within the
membership of the Bark System. In such cases, the System as a
whole does not lose all of the assets of the merged institution. As a
matter of fact, where mergers are conducted as part of a community
wide rehabilitation program, the resulting institutions, because they
are financially sound, well-managed, and able to take an active part
in the mortgage lending business of their community, may within a
short period of time bring a substantial net addition to the resources
of the System.
In addition to the 30 membership terminations resulting from
merger or consolidation, 81 member institutions went into liquida
tion, and 33 institutions withdrew voluntarily. The following table
presents a summary of the changes in membership during the fiscal
year 1941:
Number and assets of member institutions of the Federal Home Loan Bank System,
June 30, 1941, compared with June 30, 1940
[Dollar amounts in millions]
June 30, 1940
Number
Savings and loan associations 1..--...--.
Insured associations:
Federally chartered-----------State-chartered-..-.-------._-Uninsured associations
--Other members
_____----Savings banks.---..
--------------Insurance companies----------------Total---.......------------..

Assets

June 30, 1941
Number

Assets

Net change in fiscal
year
Number

Assets

3,865

$4, 233

3,798

$4, 627

-67

+$394

1,421
812
1, 632
49
11
38

1,726
979
1, 528
694
213
481

1,452
857
1,489
41
12
29

2,028
1, 126
1,473
660
252
408

+31
+45
-143
-8
+1
-9

+302
+147
-55
-34
+39
-73

3,914

4,927

3,839

5,287

-75

+360

1Includes savings and loan associations, building and loan associations, homestead associations, and
cooperative banks.




84

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Member savings and loan associations have for some time been the
most active and substantial group within the entire thrift and home
financing industry. Although representing but 53 percent of all
operating institutions at the close of 1940, assets of members totaled
77 percent of aggregate resources for the industry as a whole, and
their mortgage portfolio represented 80 percent of the combined
CHART XXXVI*

MEMBER SAVINGS AND LOAN ASSOCIATIONS COMPARED WITH
ALL OPERATING SAVINGS AND LOAN ASSOCIATIONS
BY CALENDAR YEARS

:

NONMEMBER
ASSOCIATIONS

ASSETS

NUMBE
R

M

MEMBER
ASSOCIATIONS

MORTGAGES HELD

BILLIONS
OFDOLLARS

BILLIONS
OFDOLLARS

- ,

LOA
,NS MADE
BILLIONS
OF DOLLARS

5-

1.4

1.0

4.
...
-

!
.8

68%

78%

1938

1939

1940

1938

2

73%c

1939

1940

.,

940

1938

1939

1940

DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANKBOARD

holdings of all associations. Exhibit 29 presents the number and
assets of member institutions by Federal Home Loan Bank Districts
and by States, at the close of the last two fiscal years.
Lending Activity

Lending activity of member savings and loan associations reached new
record levels during the reporting period. Estimates prepared by the
Board's Division of Research and Statistics show that the volume of
new mortgage loans made by member associations during the fiscal
* For actual figures, see Exhibit 30.




85

FEDERAL HOME LOAN BANK SYSTEM

year 1941 totaled $1,084,866,000 as compared with $894,212,000
during the preceding fiscal year, an increase of 21.3 percent. Loans
written by nonmember institutions also showed a good gain, advancing
from $196,576,000 during the 1940 fiscal year to $209,508,000. Lend
ing activity of all savings and loan associations, therefore, reached a
grand total of $1,294,374,000 during the reporting period.
CHART XXXVII
VOLUME OF NEW MORTGAGE LOANS MADE BY SAVINGS AND LOAN ASSOCIATIONS
MILLIONS

BY TYPE OF ASSOCIATION

OFDOLLARS

1940

1941

DIVISION RESEARCH STATISTICS
OF
AND
FEDERAL
HOME
LOAN
BANK
BOARD

Once again, member institutions were responsible for an increasing
share in total savings and loan lending activity during the fiscal year
1941. On a percentage basis, savings and loan members accounted
for 84 percent of the mortgage loans made by the entire industry, as
compared with 82 percent during the previous fiscal year. The ratio
of nonmember lending to total declined from 18 to 16 percent.
Percentagedistribution of new mortgage loans made by savings and loan associations
over the various classes of associations, fiscal-year figures
Class of association
-i--

1938
----------

.

Nonmember associations------------




-----------

1941

1940
..

I

100. 00
76. 71

------------------------All savings and loan associations
Member savings and loan associations------------------------Federal associations-----------State-chartered associations ----------- ---.

1939

..

--

100. 00
79. 03

100.00
81.98

100. 00
83. 82

34. 34
42.37

38.44
40. 59

41. 97
40. 01

42. 50
41.32

23. 29

20. 97

18. 02

16. 18

86

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

In the past, the relative position of member institutions and of
Federal savings and loan associations as sources of mortgage credit
was influenced directly by the increasing number of member and
Federal associations. However, there have been only inconsequential
changes in the number of member associations during recent years
and it is, therefore, safe to conclude that the most active savings and
loan associations are being concentrated to an ever greater degree
within the Federal Home Loan Bank System. Another measure of
this fact is found by comparing current lending activity with assets,
by class of association. Such an analysis shows that member asso
ciations loaned $244 for each thousand dollars of assets as compared
with only $148 for nonmember institutions. The table on page 85
illustrates the shifts in the relative importance of various types of
savings and loan associations, by indicating the percentage of mort
gage loans accounted for by each of the groups during the last four
fiscal years.
CHART XXXVIII
PERCENTAGE

INCREASE IN NEW MORTGAGE LENDING ACTIVITY OF
SAVINGS AND LOAN ASSOCIATIONS
UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS-JUNE 30, 1940 TO JUNE30, 1941
0

5

10

15

20

25

30

UNITED STATES
I - BOSTON
2-NEW YORK
n~riz

3- PITTSBURGH
4-WINSTON SALEM

1yek

fil{2
_

5 - CINCINNATI
6-INDIANAPOLIS
7 -CHICAGO
8-DES MOINES

-Kit _

_

_

_

__

9 -LITTLE ROCK
10- TOPEKA
I - PORTLAND
12 -LOS ANGELES




DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANK BOARD

87

FEDERAL HOME LOAN BANK SYSTEM

Exhibit 31 shows the monthly volume of new mortgage loans made
by savings and loan associations, separated by class of associations,
from January 1936 to June 1941, and Exhibit 32 presents the dollar
amount and percentage increase in such loans by Federal Home Loan
Bank Districts over the last two fiscal years.
Stimulated lending activity was not restricted to any particular
geographical area and each of the twelve Federal Home Loan Bank
Districts reported substantial improvement during the current fiscal
year as compared with the previous reporting period. Increases
ranged from 4 percent in the Des Moines Federal Home Loan Bank
District to 30 percent in the Boston District.
The distribution of mortgage loans made by member institutions,
according to the purpose for which the loans were granted, followed the
same general pattern shown by the entire savings and loan industry. 0
The trends were, if anything, more accentuated in the case of member
institutions. Thus, the volume of construction loans increased from
33.4 to 35.9 percent of total and home purchase advances also showed
a good increase from 33.2 to 35.8 percent of gross lending volume.
So substantial were the gains in these two types of loans that the
ratio of refinancing, reconditioning, and miscellaneous loans declined
materially during the year.
Distribution of new mortgage loans made by all savings and loan members of the
Federal Home Loan Bank System, according to purpose

-

Purpose of loan

Construction----------- Home purchase ---Refinancing
.---- ._---Reconditioning

Other ------------

-------

Total ..------------

Fiscal year 1939
Dollars
Percent
$219, 726,000
216, 789,000
136, 494,000
41,842,000

Fiscal year 1940
Dollars

32. 0 $298,628,000
31. 6
297, 243,000
19.9
166,191,000

71, 846,000
-

10. 4

6.1

46, 600,000

686, 697,000

100.0

894, 212,000

85, 550,000

Fiscal year 1941

Percent
33. 4
33.2
18.6
5. 2

9. 6
.100.0

Dollars

Percent

$389, 559,000
388, 376,000
168,201,000

35. 9
35. 8
15. 5

49, 396,000

4. 6

89, 334,000
1,084, 866, 000

8. 2
100.0

Reduction of Government Share Investments

Outstanding investments of the United States Treasury and the
Home Owners' Loan Corporation in the shares of savings and loan
associations declined appreciably-by 12.9 percent, in fact-during
the fiscal year 1941. Repurchases which resulted in a decline of
outstanding Government investments from $237,161,310 on June 30,
1940, to $206,524,260 at the close of the reporting period are an
effective refutation of the fears which have been expressed by some
1oSee Survey of Housing and Mortgage Finance, pp. 46-48.




88

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

that temporary Government assistance to private financial institutions
leads to permanent Federal subsidy.
The program for the investment of Government funds in the share
capital of savings and loan associations originated in 1933 when the
Home Owners' Loan Corporation was established to rescue hundreds
of thousands of distressed home owners in imminent danger of losing
their homes. Concurrently, with the establishment of this direct
relief activity, the Congress wisely undertook the important task of
bringing about a wholesale rehabilitation of the permanent home
financing structure. As one part of this broader program, the Home
Owners' Loan Act of 1933 and subsequent appropriations allocated
Treasury funds of $49,300,000 for investment in the shares of Federal
savings and loan associations. A short time later the Home Owners'
Loan Corporation was permitted by amendment to its organic statute
to make investments up to $300,000,000 in the shares of both Federal
savings and loan associations and State-chartered associations which
either belong to the Federal Home Loan Bank System or which are
insured by the Federal Savings and Loan Insurance Corporation.
Investment by the Government in the share structure of savings and
loan associations was intended to provide sufficient capital for a tem
porary period to enable these thrift and home financing institutions to
meet demands for mortgage credit, thereby stimulating residential
construction and employment. The program was highly successful in
bringing about the desired result, for the lending activity of savings
and loan associations was immediately stepped up as the program got
under way.
The following table shows the volume of investments made by the
Treasury and the Home Owners' Loan Corporation for each of the
fiscal years from 1934 through 1941:
Gross investments made by the U. S. Treasury and the Home Owners' Loan
Corporationin member savings and loan associations
Investments by the
U. S. Treasury

Investments by the
HOLC

Total investments

Fiscal year
Amount
invested
- ---- --- ..
---.--_-- -------

Cumulative

Amount
invested

Cumulative

Amount
invested

$1,086, 300
29, 520, 400

$1,086, 300 -- ---_
30, 606, 700 -- _-------

__..
_- __ -----

$1,086, 300
29, 520, 400

$1, 086, 300
30, 606, 700

18,693,300

49,300,000 $63, 142, 700

$63,142,700

81,836,000

112,442,700

1934
1935

_

1936

---

1937
1938
1939

-----------.. -----------------...
--- ---------------_---

1940
1941

-

--

-------

--------------__---- ------ --------




49, 300,000 119,890, 300
49, 300,000 28,964, 610
7, 152, 200
49, 300,000
49, 300,000
49,300,000

1, 538,400
1, 420,000

Cumula
tive

183,033,000 119, 890, 300
211,997, 610 28,964,610
7,152, 200
219,149, 810

232, 333, 000
261, 297, 610
268. 449, 810

1, 538, 400
1, 420,000

269, 988, 210
271, 408, 210

220, 688, 210
222,108, 210

89

FEDERAL HOME LOAN BANK SYSTEM

In the belief that it would be unsound to provide permanent capital
for private financial institutions from Government funds, Congress
provided for the gradual liquidation of share investments and charged
the Federal Home Loan Bank Board both with supervising the original
investments and their retirement. Under the terms of the Acts
authorizing Government share investments, no requests for repur
chase may be made for a period of five years from the date of invest
ment; thereafter, requests may be made at the discretion of the Federal
Home Loan Bank Board, but in no event in an amount exceeding, in
any one year, ten percent of the total amount invested in the shares
of any association.
Through June 30, 1941, the volume of repurchases requested by the
Federal Home Loan Bank Board after study of the financial condi
tion of associations which had received investments was $3,972,850.
Since retirements during the same period totaled $64,883,950, it
is evident that savings and loan associations have retired volun
tarily $16 for each dollar requested by the Board. This excellent
record has been made possible because private investments have been
received by member institutions at a rate sufficient not only to take
care of current mortgage loan demands, but also to permit retirement
of Government capital. While many associations have made partial
repurchases of their Government share investments, a large number
of institutions have been able to retire them in full, with the result
that by June 30, 1941, the number of Federal associations holding
Treasury money was reduced to 345 as compared with 661 associations
which had originally received investments, and the number of Federal
and State associations employing Home Owners' Loan Corporation
funds had declined from 1,348 to 1,106.
Repurchases of Treasury and HOLC investments by member savings and loan
associations
Treasury investments
Fiscal year

lative,e- Cumtiv

HOLC investments
Amount re-

Cumulativ

Total investments
mount re-

purchased
1936 ------------1937 ------1938----------------1939 ----1940
1941_-- ----

-

purchased

purchased

$77,000
1,039,300
381,000
3,811,000
1 9, 854, 600
110,466, 200

$77,000 -----1,116,300
$12,000
$12,000
1,497,300
259,000
271,000
5,308,300
2,420,000
2,691,000
1 15,162,900
14,973,000
17, 664, 000
125, 629,100
2 21, 590, 850
2 39, 254, 850

$77,000
1,051,300
640,000
6,231,000
24, 827, 600
32, 057, 050

Cumula
tive
$77,000
1,128,300
1,768,300
7,999,300
32,826,900
64, 883,950

1 The following amounts were retired in accordance with section 5 (j) of the Home Owners' Loan Act:
$671,800 in 1940; and $2,088,000 in 1941.
2 Of this amount, $1,213,050 was called for retirement by the Federal Home Loan Bank Board in accord
ance with the Home Owners' Loan Act.
7
425085-41-




90

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Investment by the Treasury in the shares of Federal savings and
loan associations was completed in 1936 when the $49,300,000 avail
able was exhausted. Since that time, the large volume of voluntary
repurchases has reduced the amount outstanding by more than
one-half to a figure of $23,670,900 at the end of the fiscal year 1941.11
Investments by the Home Owners' Loan Corporation were made
for the most part in 1936 and 1937. Since that time, investments
have been approved on a restricted basis usually in connection with
reorganization of individual associations and community rehabili
tation programs. However, the Board has recently adopted the
policy of considering HOLC investment requests which are received
from institutions located in defense areas whose supply of local
capital is insufficient to meet the immediate need for home financing.1'
The balance of HOLC investments outstanding at the end of the
fiscal year 1941 amounted to $182,853,360, a reduction of 18 percent
in the gross total of $222,108,210.
Net amounts of Treasury and HOLC investments outstanding
Treasury investments
_Fiscal y ear

1934

--------

..
Number of
associations 1
-

1935
---------1936 -----------------1937 ------------------1938--------1939.
--_
------1940-------1941
---------------

60
576
661
661
623
585
501
345

eTotalinest

HOLC investments
.

Amount

Number of
associations 1

$1,086,300

_

30,606,700 ,---49,223,000
48,183,700
47,802,700
43,991,700
34,137,100
23,670,900

776
1,141
1,264
1,304
1, 231
1,106

Amount

Amount

___-----

$1,086,300

_ ---------.
$63,142,700
183,021,000
211,726,610
216,458,810
203,024, 210
182,853,360

30,606,700
112,365, 700
231, 204,700
259,529,310
260,450, 510
237,161,310
206, 524,260

1 A number of Federal associations have received both Treasury and HOLO investments.

Investments by the Federal Government in the share capital of
savings and loan associations have not only served the very useful
purpose of encouraging home mortgage lending activity, but have
also been a profitable earning asset on the national balance sheet.
Through the close of the current reporting period, the United States
Treasury had received $9,257,236 and the Home Owners' Loan
Corporation, $32,553,691 as dividends on their share purchases.
This is equivalent to a net earning yield of 3.41 percent on the average
investments outstanding from 1934 through the fiscal year 1941-a
rate well in excess of the cost of money to either the Home Owners'
11For more detailed information on investments by the Treasury in the shares of Federal associations,
see pages 107-110.
12
See page 9.




91

FEDERAL HOME LOAN BANK SYSTEM

Loan Corporation or the Treasury. Losses have been inconsequential,
amounting to only $1,428 in the case of one liquidating association.
A complete tabulation of Treasury and HOLC investments made
and repurchased and net investments outstanding by class of member
institution will be found in Exhibit 33.
Analysis of Condition of Member Associations
The combined balance sheet of all member savings and loan asso
ciations shows a decided improvement during the calendar year 1940.
The most important asset trends are found in a substantial increase
in mortgage loans outstanding, a noteworthy decline in owned real
estate, and a much stronger liquid position as measured in terms of
cash on hand and in banks. The liability side of this master balance
sheet shows a gain in private repurchasable capital and a substantial
reduction in Government investments in the share capital of member
associations. General reserves and undivided profits show a dollar
increase of almost $19,000,000, but declined somewhat in relation
to assets-a not unexpected trend in view of net losses incurred in
the sale of a large volume of owned properties and the rapid growth
of total resources. Exhibits 34 and 35 give a detailed balance sheet
for all savings and loan members and a percentage distribution of
the various balance-sheet items.
CHART XXXIX
PERCENT

CHANGE IN ASSETS OF MEMBER
CALENDAR

SAVINGS AND LOAN ASSOCIATIONS

YEAR 1940 OVER 1939

% DECREASE

PERCENT
0

5

5

INCREASE
10

IS

90

ALL MEMBERS
FEDERALS
FR___.v

QM~nA-v#lA-f2

STATE-INSURED
________

______R!

STATE-UNINSURED

DIVISION RESEARCH
OF
AND STATISTICS
FEDERALHOME LOANBANKBOARD

Assets.-Total assets of member savings and loan associations show
a gain of almost $363,000,000 during 1940, reaching a new high of
$4,411,000,000 on December 31, 1940. This gain of 9 percent com
pares with an increase of $295,000,000, or 7.9 percent during the
preceding year. Once again, the net increase in total assets was
restricted to Federal savings and loan associations which show a gain
of 18.5 percent and to State-chartered insured institutions whose total




92

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

resources grew by 13.5 percent. State-chartered uninsured members
suffered a decline of $53,500,000 in gross assets. It should be recog
nized, of course, that this decline resulted largely from the transfer
of State associations to the insured or Federal categories.
The gain in assets of member institutions was general throughout the
entire country with associations in the Winston-Salem District show
ing the most substantial increase-18.3 percent. Members in the Los
Angeles and Portland Districts ranked second and third, showing per
centage gains of 14.7 and 14.1, respectively..
The growth in assets of member institutions and mergers completed
during the year are reflected in an increase of over $100,000 in the
average size of member savings and loan associations. At the close
of 1940, the average member institution had total resources of
$1,155,000 as compared with $1,046,000 a year previous.
First-mortgage loans.-The substantial gains in home mortgage
lending activity during 1940 are reflected in a new high for first
mortgage loans outstanding at the close of the year. The increase of
$388,000,000 in net first-mortgage investments exceeded gains made
in' previous years andl resulted in a total 'portfolio of $3,496,000,000.
It is now estimated that member institutions hold 80 percent of the
mortgage investments of the entire savings and loan industry.
One of the most encouraging results of the increased lending activity
of member savings and loan associations is the rising ratio of mortgage
loans to total resources. At the close of 1940, first-mortgage holdings
represented 79.3 percent of aggregate assets as compared with 76.8
percent at the beginning of the year. During the four-year period
from 1936 to 1940, the mortgage account of member savings and loan
associations has risen nearly ten percentage points in relation to total
resources. Because home loans are the principal earning asset of
savings and loan associations, the upward trend in this item is having
a favorable effect on operating income.
Throughout the country, ea6h of the Federal Home Loan Bank Dis
tricts shows a gain in mortgage portfolios, with the Winston-Salem
Region, as illustrated by the chart on the opposite page, maintaining
the highest rate of increase. Associations in this area also show the
highest ratio of mortgage loans to total assets.
Federal savings and loan associations accounted for approximately
two-thirds of the 1940 increase in total first-mortgage investments of
member institutions. Federal associations alone built up their port
folio by $1,553,677,000, or by 21 percent. State-chartered insured
associations show the second best record, with a gain of 17 percent.




93

FEDERAL HOME LOAN BANK SYSTEM

The portfolio of State-chartered uninsured associations remained vir
tually static at $1,130,000,000.
Junior mortgages, which have never represented a very important
asset item on the balance sheet of savings and loan associations, de
clined further during 1940 to a figure of some $3,800,000, or less than
one-tenth of one percent of the total.
Real estate.-The real-estate owned account of member savings and
loan associations shows a reduction of over one-fifth during 1940. Im
CHART XL

TREND INSELECTED ASSET ACCOUNTS OF ALL MEMBER
SAVINGS AND LOAN ASSOCIATIONS
UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS-

DEC 31,1939 TO DEC 31,1940
MORTGAGE
LOANS
REAL ESTATEOWNED
OUTSTANDING

ASSETS
PERCENT INCREASE

0

5

10

15

PERCENT DECREASE

20

35

25

30

20

15

10

PERCENT INCREASE

5

0

0

5

10

15

20

UNITED STATES
BOSTON
I2-NEW YORK
3-PITTSBURGH

f

4-WINSTON SALEM
5-CINCINNATI
6-INDIANAPOLIS

.

7-CHICAGO
8-DES MOINES
9-LITTLE ROCK

.

.

IO-TOPEKA
II-PORTLAND
12-LOS ANGELES

.

.

DIVISIONOFRESEARCHAND STATISTICS
FEDERAL HOME
LOAN BANKBOARD

proving economic conditions, a rising real-estate market, and con
certed efforts by association management to dispose of a particularly
slow asset are the principal factors accounting for this trend. The
excellent progress shown by member institutions in liquidating fore
closed properties is clearly reflected in the following figures: At the
end of 1936, member savings and loan associations held real estate
valued on the books at $525,000,000, or 15.7 percent of total assets.
At the end of 1940, four years later, the gross real-estate account had
declined to $300,000,000 and represented less than 7 percent of aggre
gate resources. Member institutions throughout the entire Federal




94

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Home Loan Bank System were successful in reducing their real-estate
accounts. The most substantial decline occurred in the Chicago
Region where associations were able to dispose of 33.2 percent of
owned properties. The Indianapolis District was second, showing a
decline of 30.1 percent, and the Pittsburgh Area ranked third with a
decrease of 24.1 percent.
By the end of 1940, real estate held by member institutions in 30
States, the District of Columbia, Alaska, and Hawaii represented less
than 5 percent of total resources and in an additional 14 States repre
sented between 5 and 10 percent of aggregate assets. Although real

estate owned by member savings and loan associations is still some
what high in a few regions where the overhang has been a particularly
serious problem, it now appears safe to observe that institutionally
owned properties no longer represent a nation-wide problem and that
with the continuation of present trends, the vast majority of associa
tions should be safely past the danger point within a short period of
time.
Real estate owned by member savings and loan associations, by Federal Home Loan
Bank Districts
Dollar amounts
thousands)
oin

Proportion to total assets

Federal Home Loan Bank District
Dec. 31,1939

Dec. 31, 1940

No.
No.
No.
No.
No.
No.
No.

-----------

$376,673

$299,838

9.30

1-Boston -_----------------2-New York.---_-----------------3-Pittsburgh.------------------4-Winston-Salem.---------------5-Cincinnati-------------------------6-Indianapolis.----.-------------------------------------------7-Chicago----

6.80

45,264
72,128
31, 610
8,960
76,983
21,792
62,697

39, 696
62,625
23,985
6,904
62,935
15, 222
41,883

9. 53
16.04
13.30
2.17
9.38
8. 40
15.37

7.77
13.50
9.37
1.41
7.20
5.35
9.64

17, 454

14,773

10.60

8.48

11,006

8, 868

4.09

2.87

No. 8-Des Moines _---.--------------------.
13,889
No. 9--Little Rock .
.--------.--..-----------10, 639
No. 10-Topeka_--..-----------..

No. 11-Portland

-----------

--.----.-----------------

No. 12-Los Angeles ---------------------

4,251

10,888
8, 253

3,806

Dec. 31, 1940

Percent
United States -------

Dec. 31,1939

Percent

6.82
5.02

3.15

4.72
3. 59
2.47

The increasing popularity of land contracts as a method of selling
institutional properties is indicated by the $12,000,000 increase during
1940 in the volume of real-estate contracts held by member savings
and loan associations. The dollar value of this account at the close
of December 1940 was $167,000,000, or 3.8 percent of total assets.
Cash.-The very natural desire for greater liquidity during the
current critical period is reflected in an increase of $36,000,000 during
1940 in the cash accounts of member savings and loan associations.
Cash on hand and in banks on December 31, 1940, represented 5.5
percent of the total assets of all member savings and loan associations.




95

FEDERAL HOME LOAN BANK SYSTEM

There has been a steady increase in the volume of cash reserves since
1937 and the aggregate liquid funds held by associations at the close

of 1940 amounted to almost a quarter of a billion dollars.
Private repurchasable capital.-Private investments in member
savings and loan associations showed an increase of almost 12 percent,
or over $355,000,000 during 1940. Funds of this character, including
shares, deposits, and investment certificates, totaled $3,376,000,000
on December 31, 1940, representing 76.5 percent of aggregate re
CHART XLI
TREND IN SELECTED LIABILITY ACCOUNTS OF ALL MEMBER
SAVINGS AND LOAN ASSOCIATIONS
UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS - DEC.31,1939 TO DEC.31,1940
INVESTMENTS
PRIVATE

PROFITS
&
RESERVES UNDIVIDED

INVESTMENTS
GOVERNMENT

INCREASE
PERCENT

PERCENTDECREASE

0

5

10

15 20

25

20

15

10

5

PERCENTCHANGE

0

-5

+5

0

+10 +15 +20

+25

UNITEDSTATES
I-BOSTON
2-NEW YORK
3-PITTSBURGH
.

4-WINSTON SALEM
5-CINCINNATI

,

.

.

:
'~

.

6-INDIANAPOLIS
7-CHICAGO
8-DES MOINES
9-LITTLE ROCK
10-TOPEKA
II-PORTLAND

12-LOSANGELES

9_

__

__

__

DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOME
LOAN
BANKBOARD

sources as compared with 74.6 percent a year previous. A clearer
picture of the growing interest of private individuals in savings and
loan associations as an investment outlet is shown by the fact that the
average member savings and loan association held private repurchas
able capital of more than $884,233 at the close of 1940 as compared
with a figure of $780,887 at the end of 1939.
As already mentioned, the trend of Government investments in the
share capital of member savings and loan associations shows a sub
stantial reduction in contrast to the rise in private investments.
Government investments in member associations declined from
$250,000,000 on December 31, 1939, to $220,000,000 at the close of




96

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

1940. This decline was over three times as great as that experienced
during 1939 and resulted primarily from the heavy voluntary repur
chases during the year, made possible by an increased inflow of private
savings. By the close of 1940, there was more than fifteen dollars of
private money for every one dollar of Government funds in member
institutions; a year previous, the ratio was twelve dollars to one
dollar.
Federal savings and loan associations show the best record in
attracting private investments. These associations alone accounted
for over two-thirds of the total increase in private repurchasable
capital received by all member institutions, showing a net gain of
$274,000,000, or a rise of 24.5 percent as compared with the previous
year end. State-chartered insured associations accounted for an
increase of $111,000,000, or 15.8 percent, while State-chartered unin
sured institutions suffered a decline of 2}{ percent in the volume of
private funds en trusted to them. Again the record of State-chartered
uninsured institutions reflects in part the transfer of associations from
this category to the Federal and insured groups.
Associations in each of the Federal Home Loan Bank Districts
show a good percentage gain in the volume of private investments held
during 1940. Members in the Winston-Salem District led the System
with an increase of 20.3 percent, with associations in the Los Angeles
District a close second at 18.9 percent.
Mortgage pledged shares declined from $166,000,000 to $146,000,000
or by 12.0 percent during 1940. This item now represents but 3.3
percent of total resources and will continue to be increasingly less
important because of the widespread adoption of direct-reduction loans
and the elimination of share-account sinking-fund loans.
Borrowed money.-Borrowed money outstanding on December 31,
1940, over 92 percent of which was represented by Federal Home Loan
Bank advances, showed a net increase of approximately 10 percent as
compared with the volume outstanding on December 31, 1939.
Because of the concomitant gain in total assets, however, this increase
was insufficient to change the ratio of borrowings to total liabilities,
the figure remaining at 4.9 percent.
Reserves.-General reserves and undivided profits were increased by
over $18,800,000, or 6.6 percent, during the calendar year 1940.
However, this increase failed to keep pace with the growth in total
resources and the ratio of reserves to gross assets declined fractionally
from 7.0 to 6.9 percent. When the reserve position of member sav
ings and loan associations is analyzed in light of the substantial reduc
tion of real estate owned and the rapid growth of many new associa-




FEDERAL HOME LOAN BANK SYSTEM

97

tions, the difficulty of bringing about an increase in the reserve ratio is
understandable. The fact that associations have been able to dispose
of over 20 percent of their owned real estate within a single year and to
increase their assets during the same period by 9 percent while main
taining reserve ratios is a feat which deserves commendation. Never
theless, in the interests of conservative operation, the Board is urging
associations to build up reserves as rapidly as possible while conditions
are favorable.
Statement of Operations
Because consolidated income and expense data are available only for
those member institutions which report on a calendar-year basis, and
because there are changes in the number of member institutions from
year to year, a comparison of operating ratios is more significant than
changes in dollar volume. However, it is worth noting that the 3,508
institutions which reported their operations for the calendar year
1940 show a total gross operating income of $212,591,000 as com
pared with $182,954,000 for the 3,110 reporting members in 1939.
Net income after deduction of all charges aggregated $142,324,000 in
1940 as compared with $121,575,000 during 1939. Exhibit 36 con
tains detailed operating ratios for member institutions during 1939
and 1940 by type of institution.
The increase in mortgage investments of member savings and loan
associations during 1940 is reflected in the fact that 86.2 percent of
gross operating income was derived from interest on these loans.
During 1939 the corresponding ratio was 85.2 percent. As might be
expected from the large dollar volume of real estate sold on a contract
basis, interest income from this account was also somewhat higher in
1940, representing slightly more than 4 percent of total income. Con
versely, the decline of over $77,000,000 in real-estate holdings during
1940 brought about a reduction in income received from the manage
ment of properties from 3 to 2.4 percent of gross income.
The ratio of operating expenses to total income during 1940 shows a
slight increase as compared with 1939 with most of the rise accounted
for by gains in "other operating expenses." The expense ratios for
compensation, maintenance of office quarters, and advertising re
mained virtually unchanged. Of total income received during 1940,
some 26.2 percent was used for the ordinary expenses involved in
running an association, i.e., 12.6 percent went for compensation of
personnel, 2.5 percent for maintenance of office quarters, 2.1 percent
for advertising, and the remaining 9.0 percent for "other operating
expenses." These latter items include depreciation of buildings and




98

REPORT

OF FEDERAL HOME LOAN BANK BOARD,

1941

equipment, payment of insurance and bond premiums, examination
fees, stationery, printing, postage, and various communication
charges.
The distribution of net income by reporting associations during
1940 illustrates the increasing emphasis placed on the accumulation
of adequate reserves and undivided profits. In 1940 dividend pay
ments absorbed 73.6 percent of net income as compared with 75.7
percent in 1939 and 78.8 percent in 1938. Transfers to reserves and
undivided profits, on the other hand, showed a contrary trend.
Over 26 percent of net income was allocated to these accounts during
1940. In the previous year the corresponding ratio was 24.4 percent.
For the first time the combined operating statements of member
institutions have been segregated by asset size groups (Exhibit 37).
Analysis of operating ratios by size of institution apparently bears
out the conclusion that larger associations are able to operate more
efficiently. The ratio of total expense to total operating income,
although the trend is not entirely even, is generally lower in large
institutions. Associations with less than $50,000 in assets, for
example, had an operating expense ratio of 34 percent during 1940,
while institutions in the over $10,000,000 asset bracket showed a
ratio of 25 percent.
Compensation costs for management and personnel which represent
approximately one-half of total operating expenses show a steady
reduction in relation to gross income as associations increase in size.
Whereas institutions with assets of less than $50,000 had a compen
sation expense ratio of 20.2 percent, the corresponding ratio for
institutions in the over $10,000,000 group was but 11 percent. In
general, the ratio of advertising expenses to gross operating income
contrasted directly with the trend in compensation costs, and the
larger institutions show progressively higher ratios. Examination of
the operating ratios by size of institution which will be found in
Exhibit 37 may prove of value to association managers in comparing
their income and expense ratios with those for institutions of similar
size.
Improvement in OperatingStandards and Management
The foregoing statistical analysis of the operations of member savings
and loan associations has illustrated by fact and figure the progress
of these home financing institutions during the present recovery
period. There have been a number of factors responsible for this
trend. In addition to such developments as assistance by the Federal
Government through the Federal Home Loan Bank System and the




FEDERAL HOME LOAN BANK SYSTEM

99

Federal Savings and Loan Insurance Corporation, and generally
improved economic conditions, the evolution of new methods of
operation designed to correct the weaknesses brought to light during
the early depression period has been particularly important.
Prior to the early Thirties, many savings and loan associations
were run as small neighborhood clubs, operating on a part-time
basis and under complicated and out of date lending and investment
regulations. Operating plans had been developed over a long ex
perience and not infrequently had failed to keep pace with changing
needs. Many associations were accustomed to meet only periodi
cally and in private quarters. No attempt was made to keep offices
open for the conduct of business except on these particular occasions.
Quite often savings and loan associations were conducted as a side
line activity by other financial institutions.
In a period of growing competition and a more well-defined home
mortgage market, associations of this type soon found themselves
at considerable disadvantage. The result has been a growing trend
toward full-time, well-trained management, independent office quar
ters, and the development of modern operating practices and
standards.
For example, the "permanent" plan of operation has largely
replaced the old "serial" type of association in which series of shares
are issued only at stated intervals. "Permanent" associations issue
shares at any time desired by the prospective saver, thereby offering
a competitive, modern investment outlet. All Federal savings and
loan associations are required to operate on the permanent plan.
The Federal Home Loan Bank Board and the officers of the Federal
Home Loan Banks have encouraged other member institutions of
the Bank System to make the change to this plan.
Lending plans have also been streamlined to meet growing compe
tition and to provide today's borrowers with a simple, easily under
stood mortgage contract. The majority of loans now being written
by savings and loan associations are direct-reduction loans. Until
comparatively recent times, most associations offered mortgage money
on the "share-account sinking-fund" or "cancel and endorse" bases.
In the case of the share-account sinking-fund loan, the borrower
subscribed to the shares of the association in an amount equal to
his loan, and his monthly payments went to purchase share capital
rather than to retire the loan. When payments on shares, plus
accumulated earnings, reached a figure equal to the loan, the share
investment was used to repay the borrower's indebtedness. The
cancel and endorse plan worked much the same way, except that




100

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941

as share payments were built up to the value of an entire share,
that share was canceled and the loan reduced by a corresponding
amount. Although these loan plans were distinct improvements
over the older straight loan, both became unnecessarily complicated
with the development of the direct-reduction loan.
In the case of direct-reduction loans, no subscriptions to share
capital are involved, and monthly payments are applied directly to
the loan balance, with interest figured on the constantly reducing
balance outstanding. The loan contract is easily understood and
less expensive to the borrower. The Federal Home Loan Bank Board
has required Federal savings and loan associations to use the direct
reduction loan and has urged all member associations to adopt it.
For the most part, the direct-reduction loan has become the standard
type mortgage for the entire home-financing industry.
Further improvements in lending plans offered by savings and loan
associations include the adoption of variable interest rates by which
institutions are better enabled to evaluate their loans and to fit mort
gage terms to the degree of risk involved. Various charges, penalties,
fines, and forfeitures which a few years ago were commonly made by
savings and loan associations have been greatly reduced and in many
cases completely eliminated. Today, the average borrower from a
savings and loan association knows exactly what his loan is costing
him and how long he must keep up his monthly payments to clear the
indebtedness on his home.
One of the most vital improvements in the conduct of savings and
loan associations has been the increasing emphasis on stronger reserves.
Early savings and loan associations, because they were mutual insti
tutions, were often run on the theory that the accumulation of reserves
was unfair to savings members because it meant a lower dividend
return on investments. It is now generally recognized, however,
that the accumulation of certain minimum reserves is essential to the
sound conduct of the lending institution. In fact, most State laws,
as well as the regulations governing Federal savings and loan asso
ciations, now establish certain minimum reserve allocations for sav
ings and loan associations. The savings of investors, it is now con
ceded, are inherently safer in an institution which has built up a
sufficient cushion to absorb inevitable losses.
Hand in hand with the greater emphasis on reserves has come a
development toward increased liquidity. Although savings and loan
associations, because their funds are invested for the most part in
long-term home mortgage security, are not completely liquid insti
tutions, it is now recognized that there-are certain normal withdrawal




FEDERAL HOME LOAN BANK SYSTEM

101

demands which all institutions must expect and for which they should
be prepared.
Another aspect of improved operating standards is the widespread
adoption of carefully drawn operating budgets which are used as a
guide in analyzing expenditures and keeping them in line with expected
revenues.
The Federal Government, through the Federal Home Loan Bank
System, the Federal Savings and Loan Insurance Corporation, and
the standards of operation which it has set for Federally chartered
institutions, has been responsible in no small measure for the develop
ment of the savings and loan industry into a more well-defined finan
cial system. However, no activity which encourages sound operating
techniques is in itself sufficient to insure permanent, sound savings
and loan operations. Such supervisory efforts must be accompanied
in each instance by trained, wide-awake, and efficient local manage
ment.
There is no question but that the level of management standards
has been much improved during the last few years. The Board and
its agencies have steadily encouraged this trend. Leaders of the
industry, well aware of management problems, have also spared no
effort to bring about higher professional standards.
Within the last two years there has appeared a new development
which is typical of the increasing importance attached to well-quali
fied management-the first savings and loan graduate schools. Sev
eral schools have been held in various parts of the country for the
purpose of affording association executives an opportunity to compare
their policies and activities and to study, analyze, and work out solu
tions to the various managerial problems which confront them. The
schools have been sponsored by local industry leaders with the coop
eration of the Federal Home Loan Banks. The schools so far held
have run from four or five days to two weeks, and are usually held in
the summer on the campus of a well-known university. Trained
specialists are engaged to lead concentrated study periods on various
realistic questions. Lectures are given on savings and loan law, con
struction loan procedure, business forecasting, financial problems,
personnel administration, and market analysis. Open forums are
usually held at which the attending executives have an opportunity
to thrash out in common discussion stubborn operating problems.
The graduate schools are still largely experimental, but each has
aroused considerable interest and seems destined to become an
increasingly important factor in management training. Encouraging
response and the real interest shown by local managers is evidence




102

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

at least that there is a growing awareness of a need for more train
ing and study in the field of savings and loan management.
Another very recent development indicative of a growing profes
sional attitude toward savings and loan operation is found in a number
of local research projects initiated as a cooperative activity by a
group of institutions for the purpose of acquainting themselves with
local market trends. The increasingly complex society in which we
live makes it ever more important to local management to know how
general business conditions, employment and unemployment, con
templated building activity, current volume of mortgage lending,
trends in rents and vacancies, and long-time neighborhood trends
react on savings and loan business, present and prospective.
When associations were small and existed primarily to serve the
interests of a local group, all of this was not so important. Now,
however, that savings and loan associations are extending their
operations over a wider field in an increasingly competitive market,
research becomes a factor of considerable significance. Present efforts
to broaden local technical knowledge in the field of housing and mort
gage finance represent only the merest, but still a very encouraging,
beginning. As in the case of graduate schools, these projects indicate
a realization of a serious lack of essential information and a growing

determination to do something about it.




- -- I -

- -C- -

IV

--

_-

- --

Federal Savings and Loan Associations

PUBLIC

confidence in Federal savings and loan associations was
once more evidenced by the rapid progress of these local thrift and
home financing institutions during the 1941 fiscal year. Private share
investments in the 1,4551 associations operating under Federal
charter on June 30, 1941, increased by $286,761,600, or 23 percent,
during the reporting period. The substantial inflow of private capital
was sufficient to permit Federal associations to repurchase $28,566,050
of share investments held by the United States Government, although
requests for retirements totaled only $3,160,050. At the same time,
cash resources and reserves were substantially increased and new
mortgage loans totaled $550,058,000, an increase of 20 percent over
the preceding year.
In providing for the establishment of Federal savings and loan asso
ciations in 1933, Congress contemplated that these institutions would
serve two purposes: (1) To provide sound thrift and home financing
facilities in communities previously lacking adequate savings and
home mortgage lending resources, and (2) to develop under Federal
charter a group of home financing institutions operating under the
best standards and practices evolved in the long history of savings and
loan associations. The first aim has largely been carried out, resulting
in the establishment as of June 30, 1941, of 639 newly-organized Fed
eral associations, with assets of $629,301,000. It is not contemplated
that there will be any further substantial increase in the number of new
associations.
The importance of Federal savings and loan associations as an active
standardized thrift and home financing system is well illustrated by a
few facts showing the place of Federals in the savings and loan industry
as a whole.
1 Three associations are omitted from all statistical figures throughout this section because they had not
fully completed organization prior to June 30, 1941; also, one association in process of liquidation whose
charter had not been cancelled on that date is excluded. The difference between the 1,455 associations
reported as operating under Federal charter and the 1,452 Federal savings and loan associations listed as
members of the Federal Home Loan Bank System is due to the lapse of time between the issuance of Federal
charters and the issuance of membership certificates.




103

104

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Federal savings and loan associations compared with all operating associations
[Amounts in thousands of dollars]
Number
Date

Dec.
Dec.
Dec.
Dec.

31,
31,
31,
31,

1937-------------------1938 ------------------1939 -----------------1940 -7,

Federal
All
operating savings and
assoclaloan assotions
lcations
8,870
8,289
7, 719
209

1, 323
1, 366
1,409
1, 441

Assets

Percent
of total

14. 92
16.48
18 25
19. 99

Federal
All
operating savings and
associaloan asso
tions
clations
$5, 600, 408
5, 543, 099
5, 524, 337
5, 716, 514

$1, 108, 931
1, 312, 585
1, 577, 981
1, 873, 350

Percent
of total

19 80
23.68
28 56
32. 77

At the close of 1940, Federal savings and loan associations repre
sented, by number, 20 percent of all operating associations. Assets of
these institutions, however, constituted approximately 33 percent of
all savings and loan assets, and mortgage loans written by Federals
during the fiscal year 1941 constituted 42 percent of loans written
by the entire industry. It is estimated that at the close of the report
ing period, the mortgage portfolio of Federal savings and loan associa
tions comprised 35 percent of the outstanding mortgage loans held
by all institutions of this type.
Federal savings and loan associations are required to operate on a
uniform basis and under regulations designed to insure efficient,
modern business operations. Both lending and savings plans are
simple and easily understood, enabling Federal associations to meet
with ease the current strong competition both for savings funds and
mortgage loans. Although Federal associations, from the standpoint
of years, represent the youngest group within the savings and loan
industry, they have already set a standard for the industry as a whole
and their influence has been responsible in no small degree for recent
widespread improvement in the operating practices of all thrift and
home financing institutions.
Growth and Development of Federal Savings and Loan Associations

The number of operating Federal associations changed only slightly
during the reporting period. There was a net increase of 26 associa
tions, bringing the total number on June 30, 1941, to 1,455. On the
same date, however, the combined assets of Federal associations
reached the record-breaking figure of $2,029,639,000, as compared
with $1,728,865,000 a year previous-a growth of 17 percent.
As the following chart shows, there have been practically no new
Federal savings and loan associations chartered since 1936. Growth




FEDERAL

SAVINGS AND

LOAN

105

ASSOCIATIONS,

since that time has been almost entirely in the number of older institu
tions which previously had been operating under State charters and
converted to the Federal plan of operation. Assets of Federal savings
and loan associations, on the other hand, show an excellent rate of
increase whether taken from the standpoint of the progress of new
institutions or gains made by older converted associations. It is
natural, of course, because of the comparatively short time in which
new associations have been operating, that their combined assets
CHART XLII
NUMBER AND ASSETS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
NUMBER

MILLIONS

NUMBER

ASSETS

OFDOLLARS

1,400
1,750
1,200
1,500
1,000
1,250
800

,000.

400

'

1934

1935

1936

1937

1938

1939

1940

41

1934 1935

1936

1937 1938

1939

1940

1941

Converted Federal Savings and Loan Associations
Newly Chartered Federal Savings and Loan Associations
DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOME LOAN BANK BOARD

should be substantially smaller than in the case of converted associa
tions which commenced operations as Federal institutions after
growing to fairly good size prior to conversion.
The net addition of 26 Federal associations during the fiscal year
1941 was the result of 43 new charters issued and 17 cancellations of
existing charters. Of the new charters, 36 were for the conversion
of State-chartered associations and only 7 for newly-organized insti
tutions. The cancellations of Federal charters during the reporting
period resulted from 16 mergers with other Federal savings and loan
associations, and one voluntary dissolution. Where a reduction in
425085-41-8




106

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941

the number of institutions results from mergers, the system as a
whole suffers, of course, no loss of assets.
Changes in number of Federal savings and loan associations, fiscal year 1941
Number of New charassociations ters issued
June 30, 1940

Type of association

Charters
canelle

Number of
associations
June 30, 1941

633
796

7
36

1
16

639
816

1, 429

43

17

1,455

New associations---------------------------------Converted associations--------------------------Total--------------------------

CHART XLIII
PERCENTAGE

GROWTH IN ASSETS AND PRIVATE REPURCHASABLE CAPITAL
OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
US AND FHLB DISTRICTS-FISCAL YEAR 194/ OVER 1940
ASSETS
PRIVATE REPURCHASABLE CAPITAL
P E R C
10

0

UNITED

E N T
20

PE
30

R

10

0

C E N
20

T
30

40

STATES

I - BOSTON

"

2-NEW YORK
3-PITTSBURGH

"

4-WINSTON SALEM

5 -CINCINNATI

I

6 -INDIANAPOLIS

g

7 - CHICAGO

k

8-DES MOINES
9-LITTLE ROCK

:

S

|

10-TOPEKA
I I -PORTLAND
12-LOS ANGELES
DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOMELOAN
BANKBOARD

At the close of the reporting period, 86 applications for conversion
to Federal charter were on file with the Federal Home Loan Bank
Board, as well as two requests for the issuance of new charters.
Fifty percent of the Federal charters issued to converting associations
during the fiscal year 1941 were granted to institutions located in the
States of Pennsylvania, Wisconsin, and New Jersey. In each of these
States, the savings and loan industry is undergoing a major program




107

FEDERAL SAVINGS AND LOAN ASSOCIATIONS

of rehabilitation, not infrequently involving segregation, merger, and
conversion to Federal charter. As shown by Chart XLIII, Federal
savings and loan associations in the Pittsburgh, Winston-Salem, and
Los Angeles Federal Home Loan Bank Districts showed the greatest
percentage gains in assets during the reporting period. Progress was
not restricted to these particular areas, however, and each District
shows an excellent rate of growth. Exhibit 38 shows the number and
assets of Federal savings and loan associations classified by new and
converted associations for each of the fiscal years from 1934 through
1941; and Exhibit 39 summarizes the number, assets, and mortgage
loans outstanding of Federal associations, by Federal Home Loan
Bank Districts and by States.
The relatively little change in the number of Federal associations

during the last few years, accompanied by the rapid rise in gross
resources of these associations, has naturally meant a corresponding
increase in the average size of Federal associations. At the close of
the fiscal year 1941, the average Federal savings and loan association
had assets of $1,395,000, as compared with $1,210,000 a year previous.
The following table illustrates this trend by showing the distribution
of Federal savings and loan associations by asset size groups at the
close of the last three fiscal years. Thus, since June 30, 1939, the per
centage of Federal associations in the asset group of $1,000,000 and
more has increased from 28 to 38. At the other end of the scale, thepro
portion of Federal associations with assets of less than $250,000 has
decreased during the last two years from 32 to 21.
Distributionof Federal savings and loan associations,by size groups
June 30, 1939
...

Asset size group

June 30, 1940

June 30, 1941

Number
All associations..--------------- ------Less than $100,000
_------------$100,000 to $250,000--..--.----------- .$250,000 to $500,000 ------------$500,000 to $1,000,000 ------------$1.000.000 to $2,500,000
.--------------$2,500,000 and over- --...
..
_------------

Percent

Number

Percent

Number

1,386
146
308
284
264
260
124

100
10
22
21
19
19
9

1,429
89
275
309
296
300
160

100
6
19
22
21
21
11

1,455
57
252
292
305
347
202

-

Percent
100
4
17
20
21
24
14

Gain in Private Capital
During the fiscal year 1941, the number of individuals who have
entrusted their savings funds to Federal savings and loan associations
increased from 1,562,079 to 1,806,852. Their investments reached a
new high on June 30, 1941, of $1,554,809,600, an increase of 23 percent
as compared with the total volume of investments outstanding a year




108

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

previous. To eliminate the inflation of private capital trends which
has resulted from the addition of new associations to the Federal sav
ings and loan system, an index has been prepared on the experience.
of a comparable group of Federal savings and loan associations which
have been operating over the past six years. As the following chart
indicates, private capital during this period has more than doubled
and during thepast fiscal year alone showed an increase of 21 percent.
Exhibit 41 summarizes, by
CHART XLIV*
Federal Home Loan Bank Dis
INDEX OF PRIVATE REPURCHASABLE CAPITAL
OUTSTANDING IN COMPARABLE FEDERAL
tricts and by States, the number
SAVINGS AND LOAN ASSOCIATIONS
of private investors and the
1935-1939 =100
INDEX

250-

AVERAGE MONTH

20

5so

l0oo

50

1935

1936

volume of private investments

held by Federal savings and loan
associations.
In contrast to the steady
____
increase in the volume of private
capital invested in Federal sav
Sings
and loan associations, the
past few years have witnessed a
Ssteady
decline in the volume of
Government funds invested in
these associations. During the
-fiscal year 1941, investments
o
held by the United States Treas
ury and the Home Owners'
Loan Corporation declined from
_____
1937
193
1939
1940
1941
$197267,900 to $169,246,850.
AS OF JUNE
30
$197,267,900
Approximately 93 percent of the
DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOMELOAN
BANK BOARD
amount of Government invest

*For figures, see Exhibit 40.

ments so far retired by Federal

savings and loan associations is accounted for by voluntary repur
chases. Investments called by the Federal Home Loan Bank Board
under the terms of the Home Owners' Loan Act of 1933 have amounted
to only $3,831,850 as compared with gross retirements of $56,887,950.
As in the case of member institutions as a whole, the rate at which
private capital has been received by Federals has made it possible
for them to repay the Government at a faster rate than was contem
plated by Congress. As a result of increasing private share subscrip
tions and decreasing Government capital investments, the ratio of
Government money to total capital outstanding declined from 13 to 10
percent during the reporting period.




109

FEDERAL SAVINGS AND LOAN ASSOCIATIONS

Repurchases of Government investments by Federal savings and loans associations,
cumulative, June 30
United States Treasury

Loan

Home Owne

June 30
Total repurchased
1936

.------------.-----------

Amount
called

$77,000 -------

Total repurchased
.------

1937 ------------------------------

1,116,300 -------

1938

1 497, 3
1,
300 ------.-------

1939 ---1940
1941

--------------------

--------------

---------------------------

Amount
called

$12,000 ----_____
231, 000 -----

5,308, 300 ----- _--,
,------------------------ 1, 490, 000 -------$671,800
13,159,000 -----15,162,900
25,629,100

2, 759, 800

31,258, 850

-

$1, 072, 050

CHART XLV
By the close of the fiscal year
the cumulative investment PRIVATE AND GOVERNMENT CAPITAL HELD BY
1941,
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
MILLIONS
of the Government in Federal
savings and loan associations
Of this 1,400
totaled $226,134,800.
amount, $49,300,000 represented
0
share purchases by the Secre- I,20 o
PRIVATE
tary of the Treasury, and the
investments by the ,,000
remainder
Home Owners' Loan Corpora800
tion. No new investments have
been made by the Treasury since 60oo0
November 1935 when the total
o00
amount appropriated by ConfGOVER NMENT
purpose was exgress for this
...........
.... ** ..
by 200
hausted. New investments
I
.
.""
the Home Owners' Loan Coro
OFDOLLARS

poration during the fiscal year

1935

1936

1937

1938

1939

1940

1941

A FJUE 30
amounted to only $275,000.
DIVISION RESEARCH STATISTICS
The President's Budget MessThe President's Budget Messi OF^"^Ns s'o
'
age for the Fiscal Year 1941 out
lined a plan of recapturing approximately $700,000,000 from the capital
funds of various Government agencies. The investments of the United
States Treasury in the shares of Federal savings and loan associations
were one of the items included in this program. Since voluntary re
purchases have brought about a substantial reduction in the $49,300,000
capital investment of the Treasury to $23,670,900 at the close of the
current fiscal year, and because of the increased need for private funds
AND

FEDERAL
HOMELOAN
BANK BOARD

in home financing institutions to assist in the Nation's program of




110

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941

defense housing, the President withdrew his request for the complete
retirement of capital stock owned by the Government in Federal savings
and loan associations.
Treasury and HOLC investments in Federal savings and loan associations
Investments Additional
outstanding i
ment
June30,1940
scal year
1941

Investing agency

U. S. Treasury.---------------- Home Owners' Loan Corporation..---------Total------.....

.-----..
--...

-----.---..

$34,137,100 ---------_
163,130,800
2 $545,000
197, 267, 900

545, 000

Repurchases Investments
fiscal year
outstanding
1941
June 30, 1941
1$10, 466, 200
318,099,850

$23, 670, 900
145, 575, 950

28, 566, 050

169, 246, 850

1 Of this amount $2,088,000 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act.
2 Only $275,000 was actually invested in Federal savings and loan associations by the Home Owners' Loan
Corporation. The remaining $270,000 represents an increase in investments outstanding at the end of the
year as a result of the conversion to Federal charter of State associations which had already received HOLC
investments.
8
Of this amount, $1,072,050 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act.

A summary of investments by the United States Treasury and the
Home Owners' Loan Corporation in Federal savings and loan associa
tions, detailed by Federal Home Loan Bank Districts and by States,
will be found in Exhibit 42.
During the calendar year 1940, dividends paid to the United States
Treasury and the Home Owners' Loan Corporation by Federal savings
and loan associations amounted to $6,226,287, of which $1,003,948
went to the United States Treasury and $5,222,339 to the Home
Owners' Loan Corporation. Since the first investments were made in
these institutions in 1934, total dividends to the United States Govern
ment, both Treasury and HOLC, have amounted to $33,166,182.
This represents a weighted average return over the seven-year period
ending with December 31, 1940, of 3.5 percent.
Expanded Lending Activity

Mortgage lending activity of Federal savings and loan associations
broke all previous records during the fiscal year 1941. The total
volume of mortage loans written during the reporting period is esti
mated at $550,058,000 as compared with $457,816,000 during the
fiscal year 1940, an increase of 20 percent.
As previously pointed out, the past few years have shown a decided
movement toward an increasing proportion of construction and home
purchase loans in the lending activity of savings and loan associations
(see pp. 46-8). Federal savings and loan associations show a particu
larly strong trend in this direction. Thus, over the last five years, the
proportion of construction loans has risen from 29 to 41 percent




111

FEDERAL SAVINGS AND LOAN ASSOCIATIONS

of total, and home purchase lending, from 22 to 33 percent. Refi
nancing, on the other hand, has declined in relation to total from 34
to 15 percent.
Volume of new mortgage loans made by Federal savings and loan associations, by
purpose of loan
[Amounts in thousands of dollars]
Fiscal year

Volume of
loans made

Purchase
of homes

Refinancing

Reconditioning

Other

Percent
1936 -----------------1937
__--------------1938 .
------------------.
1939
--------------1940 ..--------------------------- --1941 ....

Construetion

Percent

Percent

Percent

Percent

29.1
34.5
33.7
37.0
39.1
41.4

221
28.9
30 0
28.5
30.3
32.9

$165,362
291,986
281,851
333, 959
457, 816
550,058

Exhibit 43 summarizes, by
Bank Districts and by States,
loans made by reporting Federal
savings

and

loan

,

,OF

associations

34.4
23. 5
21.7
20.2
18.6
15.3

4.4
5.8
6.2
5.6
4.5
4.1

10.0
7.3
8.4
8.7
7.5
6.3

CHART XLVI
-UME OF MORTGAGE LOANS HELD
EY FEDERAL SSAVINGS & LOAN ASSOCIATIONS
MLLIONS FISCAL YEARS 1936-1941
DOLLARS

during the 1941 fiscal year, clas- I,6oo
sified by purpose of loan.
1,400
Total loans held by Federal
savings and loan associations ,2oo
increased from $1,404,952,500 on
June 30, 1940, to $1,688,241,200 1,000
at the close of the reporting
o00
period. Because of the increas
600
ing principal repayments received
on direct-reduction loans, and
400
also because an increasing num
ber of associations are selling
200
enough loans to build up a
1o
936
revolving fund to make FHA insured mortgages in defense areas,
the total current lending activity
of these associations is not reflected entirely in trends from year to
year in the volume of loans held.
DIVISION
OFRESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANKBOARD

FinancialOperations
The principal developments outlined on the preceding pages are re
flected in the combined comparative statement of condition of all
Federal savings and loan associations at the close of the calendar years
1939 and 1940. (See Exhibits 34 and 35.) Total assets increased 18.5




112

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941

percent during this period. The major gains are reflected in mortgage
loans outstanding (up 20.9 percent), and cash on hand and in banks
(up 27.2 percent).
Mortgage holdings represented 83.2 percent of total resources on
December 31, 1940, as compared with 81.5 percent a year previous;
real estate owned dropped from 5.7 percent to 4.1 percent of total
assets and cash on hand increased as a ratio to total resources from 5.6
to 6.0 percent.
The liability side of the balance sheet shows a gain of 24.6 percent
in private capital, while Government capital declined and reserves and
undivided profits rose from $76,089,000 to $90,476,000. Because com
bined figures are somewhat distorted as a result of newly-chartered
associations and mergers, selected balance-sheet items for a group of
1,394 identical Federal savings and loan associations, separated by
new and converted institutions have been prepared'to obtain a more
accurate basis for comparison. This material will be found in Ex
hibit 44. Operating trends of the newly-organized Federal savings
and loan associations vary significantly from those of older converted
institutions. Thus, new associations show a more rapid growth in
assets, private investments, and mortgage holdings. Property owned
by both types of institutions showed a good decline with older associa
tions showing the better percentage record. On the other hand, the
ratio of owned property to total resources, as might be expected, is
much lower in the case of new Federals.
Reserves and undivided profits have been accumulated at a more
rapid rate by new institutions, but the ratio of reserves and undivided
profits to total assets is considerably lower in new associations due to
the shorter period of time in which they have been operating.
The consolidated statement of operations for Federal savings and
loan associations during the calendar year 1940 (Exhibit 45) shows
clearly the effect of increased lending activity on association income.
Gross operating income of the 1,428 reporting Federal savings and loan
associations during the calendar year 1940 amounted to $92,292,000
as compared with $78,255,000 for 1,384 reporting associations during
1939. Operating expenses aggregated $25,932,000 in 1940 as against
$22,242,000 during the previous year. The ratio of operating expense
to gross operating income shows a slight reduction from 28.4 percent
during 1939 to 28.1 percent during 1940. Net income for the year
1940 (after interest and nonoperating items) aggregated $63,493,000
for reporting Federal associations as compared with $53,319,000 the
year previous.




FEDERAL SAVINGS AND LOAN ASSOCIATIONS

113

The increasing proportion of net income which is employed to
strengthen the reserve position of Federal savings and loan associa
tions is evidenced by the fact that 27.3 percent of 1940 net income
was allocated to reserves and undivided profits as compared with 23.8
percent in 1939 and 22.1 percent in 1938. Dividend payments during
1940 took 72.7 percent of net income as compared with 76.2 percent
in 1939.
The largest single operating expense of Federal savings and loan
associations during 1940 was the cost of compensation to officers,
directors, and employees. Expenditures for this item aggregated
$12,088,000, or 13.1 percent of gross operating income. The next
largest item in the list of operating expenses is advertising which
aggregated $2,691,000 during 1940, or 2.9 percent of gross operating
income. Increasing emphasis on business promotion activities re
sulted in an average advertising cost of $1,884 per association in 1940
as compared with $1,704 the year previous. 2
Because operating ratios of Federal savings and loan associations
vary considerably with the size of individual associations, a tabulation
of ratios on the basis of nine size groups is presented in Exhibit 46.
This material may prove useful to individual association executives
in comparing the operations of their own association with those of a
number of institutions of comparable size.
The dividend rates paid by Federal savings and loan associations on
invested share capital have been declining steadily for the last several
years. During the calendar year 1940, the average rate for all associa
tions, weighted by the amount of invested capital, was 3.25 percent
as compared with 3.39 percent during 1939, and 3.49 percent in 1938.
During the year 1940, each of the Federal Home Loan Bank Districts
showed a reduction in the average dividend rate paid by Federal
associations. A downward trend in a large majority of the States
likewise supports the observation that a reduction in rates is general
throughout the country. There is a wide variation in the rates paid
by Federal associations in different localities, as indicated by the
fact that during 1940, rates ranged from a low of 2.42 percent in New
York to a high of 4.03 percent in New Mexico. Exhibit 47 shows the
average annual dividend rates paid by Federal savings and loan
associations in each of the Federal Home Loan Bank Districts and
States during the calendar years 1939 and 1940
2

For a detailed analysis of business promotion expenditures of savings and loan associations, see Federal
Home Loan Bank Review, May, June, August, and October 1941.







__

V

___

I __

__

Federal Savings and Loan Insurance
Corporation

by the
progress was made during
STEADY Savings and Loan Insurance the fiscal year 1941 savings
Federal
Corporation and the
and loan associations whose investors' accounts it insures. At the
close of the reporting period, there were 2,310 insured associations
with assets of $3,158,251,000, giving 2,974,500 private investors the
benefits of insurance. A year previous, the number of insured insti
tutions totaled 2,235, gross assets amounted to $2,708,529,000, and
insured investors numbered 2,591,600.
In addition to the gains measured by these figures, the consolidated
balance sheet for insured associations shows considerable improve
ment in each of the more important items. Thus, mortgage holdings
increased by 20 percent to $2,554,274,200. Real estate owned
declined from $162,934,700 to $130,334,600, and now represents but
4 percent of gross assets. On the liability side, private repurchasable
capital increased by 20 percent to $2,433,512,500, Government
share capital declined from 9 to 7 percent of total resources, and the
position of reserves and undivided profits was strengthened.
Despite an increased work load, the Corporation itself was again
able to operate throughout the fiscal-year period on interest earnings
from invested reserves. This meant that the Corporation was able
to increase its aggregate resources from $124,917,101 to $130,920,146.
Surplus and reserves were built up from $23,620,811 to $29,388,884,
or by 24 percent.
The degree of recovery in the savings and loan business from the
depression of the early Thirties can be measured in part at least by
the fact that since the establishment of the Federal Savings and Loan
Insurance Corporation in 1934, only 28 insured institutions have
experienced difficulties so serious that corrective action by the Cor
poration was necessary. In handling 16 of these cases, the Federal
Savings and Loan Insurance Corporation made net cash disburse
ments of $1,463,667 in order to prevent default. Recoveries received
through June 30, 1941, in the amount of $20,202, have been deducted
from gross disbursements to arrive at the foregoing figure. At the




115

116

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

close of the reporting period, contingent commitments to insured
institutions in difficulty totaled $291,374.
Three of the savings and loan associations so far assisted by the
Corporation have been merged with other insured institutions, ten
have continued operations as independent units, and three have
liquidated voluntarily, paying all investors in cash. After an exhaus
tive study of the condition of two other associations, it was found that.
no financial assistance was needed from the Corporation. These
institutions thereupon continued operation under approved plans.
Operation of each of the associations is, of course, followed closely
to prevent a recurrence of former trouble.
In addition, four institutions have been declared in default and
placed in liquidation. Two of these associations are being liquidated
by the Insurance Corporation, one jointly by the Corporation and
the Kansas Building and Loan Department, and one by the Ohio
Building and Loan Department. By June 30, 1941, insured share
holders in three of these associations had been issued new accounts
in other insured institutions amounting to $508,988. This represents
87.3 percent of the number of insured claims to be settled, and 96.5
percent of the dollar amount involved. Payment of insurance to
insured shareholders in the fourth association, which was placed in
liquidation in June 1941, was pending final arrangements by the
Insurance Corporation at the end of the reporting period. As the
liquidation of these associations proceeds, it is probable that a sub
stantial percentage of the funds issued to purchase new accounts will
be recovered by the Corporation. At the close of the 1941 fiscal
year, the Insurance Corporation was studying six cases in which some
form of corrective action will probably have to be taken.
Operations of Insured Institutions
The number of savings and loan associations benefiting from insurance
protection increased from 2,235 to 2,310 during the 1941 reporting
period. Of this number, 1,450 were Federal savings and loan associa
tions, and the remaining 860 were institutions operating under State
charter.
During the fiscal year 1941, insurance certificates were granted to
22 Federal savings and loan associations and to 62 State institutions.
During the same period, certificates of 5 associations were canceled
because of mergers with or sale of assets to other insured associations
and 4 associations which went into liquidation were removed from the
list of insured associations. On June 30, 1941, 236 applications for




FEDERAL SAVINGS AND LOAN INSURANCE

CORPORATION

117

insurance of accounts were pending. Applications from 394 associa
tions had been withdrawn and 158 had been rejected by the close of
the fiscal year.
Changes sn number of insured associations,fiscal year 1941
Associations msured June
30, 1940

Type of association

Conversions to
Federal
charter

Associa
tions in
sured June
30, 1941
1,450

--------

1, 421

22

5

+12

814

62

4

-12

2,235

Federal savings and loan associations --State-chartered savings and loan associa
tions ...-----------------------..Total--

New inInsurance
surance
certificates certificates
canceled
issued

84

9

860
0

2,310

The growth in number of insured associations has slowed down
substantially during recent years because a majority of the eligible
associations within the business were insured in the years immediately
following the establishment of the Corporation. In a number of
CHART XLVII
PROGRESS OF INSURED INSTITUTIONS
JUNE 30, 1936 TO JUNE 30, 1941
ASSETS

NUMBEROF INVESTORS

NUMBEROF ASSOCIATIONS

(MILLIONS OF DOLLARS)

(THOUSANDS)

2,974 -

2,31 O2,235
2,170----2,015 .

,

3,158----

-------

2,236_-______

~

'

2,709

2,339

S,833 --

1,756---

2,592 _

1978

1,489 --.

1,579

,y

o.

I915

..

1936 '37

o-

'38 '39




'40

'41

o

1936 '37 '38

'39 '40

'41

1936'37

'38

'39 '40 '41

DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL
HOMELOAN BANK BOARD

118

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

localities throughout the country, associations are receiving insurance
certificates only after reorganization and rehabilitation have placed
the institutions in a position to meet the entrance standards of the
Corporation. The task of broadening the insurance coverage of the
Federal Savings and Loan Insurance Corporation, as a matter of fact,
is now largely a responsibility which must be carried out in connection
with such rehabilitation programs.
The extent of insurance coverage already obtained is well illustrated
by a comparison of insured associations with all member savings and
loan associations of the Federal Home Loan Bank System. At the
close of the reporting period, 60.8 percent of all member savings and
loan associations were insured, and they held over 68 percent of the
aggregate resources of all member associations. Insured institutions
are operating in every State as well as in the District of Columbia,
Alaska, and Hawaii. On June 30, 1941, insured institutions in 18
States and Alaska represented from 90 to 100 percent of the assets of
all members and in 27 States and Hawaii, the resources of insured
institutions represented over 70 percent of total member savings and
loan association assets.
Exhibit 48 shows the number and assets of insured associations and
the number of investors in these institutions as of June 30, 1941, by
Federal Home Loan Bank Districts and by States. Exhibit 49 com
pares insured savings and loan associations with all savings and loan
member institutions of the Federal Home Loan Bank System, by
Federal Home Loan Bank Districts and by States, at the close of
the fiscal year 1941.
The operating progress of insured associations is well illustrated by
the chart on the facing page which shows the trend of entering and
present assets of savings and loan associations from the time insurance
was granted through June 30,1941. The dotted line on the chart repre
sents the assets of all associations insured since 1934 as of the respec
tive dates insurance was granted; the solid line, the total assets of all
insured institutions at the end of each month. The spread between
the two lines indicates the gain in assets after insurance of accounts
was granted.
Another evidence of the growing importance of insured savings and
loan associations within the industry is the fact that during the fiscal
year 1941, new mortgage loans made by these institutions totaled
$817,894,000, an increase of 23 percent over the previous reporting
period and an amount equal to 75 percent of the total lending volume
for all member institutions of the Federal Home Loan Bank System.




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

119

CHART XLVIII
BILLIONS
OF DOLLARS

ASSETS OF INSURED
OCTOBER

1934

ASSOCIATIONS

THROUGH

JUNE

1941

35 r-r-

4

'34
1935
1936
1937
1938
1939
Estimates based upon current reports from approximately 95 % of all insured associations

1940

1941

DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOMELOAN
BANK
BOARD

In order that the dollar volume and percentage changes in the vari
ous major balance-sheet items of insured associations for the last two
fiscal years may be compared more accurately, the chart on page 120
has been based on the percentage increase in pertinent ledger accounts
of an identical group of 2,159 insured institutions, whose combined
assets represented approximately 94 percent of the total resources of
all insured associations at the close of the 1941 fiscal year.
During the reporting period, gross assets of the 2,159 identical asso
ciations operating during the last fiscal year increased $357,608,000,
or by 14 percent. With the return of foreclosure activity to a normal
level, and because of a more active and stable real-estate market,
these institutions were able to reduce their real-estate holdings by
$37,347,000, or 24 percent, and increase their mortgage portfolio from
$2,050,272,000 to $2,402,522,000. The liquidity position of insured
institutions as measured by cash and Government obligations increased
from $173,408,000 to $211,839,000.
Private capital was invested in the 2,159 identical associations at
an excellent rate, and the net volume outstanding increased by 17 per

cent during the reporting period. The particularly rapid decline in




120

REPORT OF FEDERAL HOME

LOAN BANK

BOARD,

1941

the volume of owned real estate necessitated the write-off of losses
involved in sales. Nevertheless, reserves and undivided profits show
an increase of $19,647,000, or 13 percent. At the close of the report
ing period, reserves and undivided profits were equal to 144 percent
of total real estate owned. This was the first fiscal year end since the
introduction of share insurance that reserves and unallocated income
exceeded the book value of real estate held by identical associations.
CHART XLIX
PERCENTAGE CHANGE IN SELECTED BALANCE SHEET ITEMS
OF 2,159 IDENTICAL INSURED ASSOCIATIONS
JUNE 30, 1941 COMPARED
PE R C E N T

DECREASE

WITH

JUNE 30,1940
PE R C E N T

INCREASE

DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANK BOARD

Progressof an identical group of 2,159 insured associations,fiscal year 1941
[Amounts in thousands of dollars]
June 30, 1940 June 30, 1941 dolar olume

Item
Total assets ---------------------------------First mortgages held-------------------------Real estate owned-----------------------------Cash and Government obhgations-------Private repurchasable capital-------------------Government investment---------------Reserves and undivided profits

$2, 601, 541
2, 050, 272
153, 318
173,408
1,940, 270
229,050
147,187

$2, 959,149
2,402, 522
115, 971
211,839
2, 279,154
197, 911
166,834

$357, 608
352, 250
37, 347
38,431
338, 884
31,139
19, 647

cget
+13.7
+17. 2
-24.4
+22.2
+17. 5
-13.6
+13.3

Community Programs

As this and previous Annual Reports have already explained, it is the
policy of the Federal Savings and Loan Insurance Corporation to
process insurance applications in certain areas not on an individual
association basis, but rather as part of a community-wide program.
Generally speaking, this approach is desirable and many times is nec
essary in localities where there is either an excessive number of savings
and loan associations or where many of the established institutions




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

121

have ceased to operate normally. Experience has shown that exten
sion of insurance protection to problem areas on this basis is definitely
more advantageous than the insurance of individual associations with
out a general rehabilitation of other local thrift and home financing
institutions. The community benefits by the development of a well
balanced group of associations with adequate resources to meet local
needs. Individual institutions have a much greater chance of oper
ating successfully if the community is no longer troubled with
subnormally operating institutions. Risks insured by the Federal Sav
ings and Loan Insurance Corporation are much sounder in communities
where all local home financing institutions are operating normally.
Community programs are the primary responsibility of State super
visory authorities. The Corporation works closely with and extends
every assistance to the State Departments, but actual direction and
control of local rehabilitation efforts are centered in State supervisors.
The advantages of the community approach through the cooperation
of State regulatory agencies and the Federal Savings and Loan Insur
ance Corporation have been discussed at some length in previous
Annual Reports of the Board.' Probably the major benefit lies in the
fact that the progress of associations which eventually obtain insur
ance under a community program is not hindered by the unfavorable
influence of other associations in the same locality which are frozen
or otherwise are in unsound financial condition.
Several community programs in which the Corporation has par
ticipated already have been completed. Notable among these are
the programs for Altoona, Pennsylvania, and Milwaukee, Wisconsin.
A comprehensive rehabilitation effort for the Chicago area is now ap
proaching completion and similar programs are well under way in
a number of other problem localities.
Because of the high concentration of savings and loan associations
in the State of New Jersey, and because of the particularly serious
repercussions of the real-estate collapse in that area, the community
approach has been especially useful. By June 30, 1941, a total of
20 separate programs, involving 220 associations with aggregate
resources of $104,000,000, had been developed by the New Jersey
State authorities with the collaboration and assistance of lo6al in
dustry leaders, the Federal Home Loan Bank of New York, and the
Federal Savings and Loan Insurance Corporation. Of this total,
four individual programs had been fully completed by the close of
the reporting period.
1

See Eighth Annual Report of the Federal Home Loan Bank Board, pp. 107-110.
425085--41-9




122

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

The program for Paterson, New Jersey, is an excellent illustration
of the results that are being obtained. When the rehabilitation
plan for this area was first originated in the fall of 1939, there were
in existence a total of 34 associations, with combined assets of ap
proximately $16,000,000. The majority of these institutions were
small, part-time associations poorly located and unable to offer satis
factory or economical thrift and home financing facilities. The
Paterson community program has now virtually been completed
and the city proper is served by six full-time associations, each of
which is in sound financial condition, is centrally located in modern
office quarters, and is operating with the protection of insurance of
accounts.
An outstanding example of the results which can be obtained by
means of community programs is found in the recently completed
rehabilitation of the savings and loan industry in Milwaukee:
During the 1920's, local building and loan associations in Milwaukee expe
rienced an abnormally rapid mushroom growth, reaching a peak in 1930, when
there were well over 100 associations, with combined resources of approximately
$221,000,000. It is estimated that at that time there were 200,000 shareholders
in Milwaukee institutions, which is to say that one out of every three or four
persons in Milwaukee County had invested in savings and loan shares. As a
further measure of the prominent place of savings and loan associations in Mil
waukee County, it has been conservatively estimated that during the ten-year
period from 1921 through 1930, mortgage loans written by Milwaukee associa
ions amounted to more than $300,000,000 in loans made to approximately 60,000
individual home borrowers.
Due both to the extent of the economic depression and to unsound lending
practices which had been pursued during the boom Twenties, the savings and loan
associations of Milwaukee County encountered very serious difficulties in the
early 1930's. Within a very short time after the crash, almost all of the institu
tions in the County were forced to suspend or drastically curtail the payment of
withdrawal requests. New mortgage lending virtually ceased. From 1930 to
1937, the combined assets of Milwaukee associations fell from $221,248,000 to
$126,997,000.
Mortgage loans held by these institutions shrank from $205,802,000
to only $55,668,000-a drop of 73 percent-while foreclosures brought about an
increase in the real-estate owned account from $2,065,000 to $52,157,000.
With the establishment of the Federal Savings and Loan Insurance Corporation
in 1934, twelve of the Milwaukee associations were able to qualify for insurance,
but due to the widespread loss of public confidence in building and loan associa
tions, these few institutions made very slow progress during the next several
years. In an effort to meet in some measure at least the requirements of Mil
waukee for thrift and home mortgage facilities, five new Federal savings and loan
associations were organized during the middle 1930's. Although these institutions
were able to make some progress, it was evident that as long as the local industry
was held in ill repute, all operating savings and loan associations would be defi
nitely handicapped. The need for a general rehabilitation of savings and loan




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

123

associations throughout the community was clearly evident and in early 1939,
the State supervisory authorities, in cooperation with the Federal Savings and
Loan Insurance Corporation, launched a determined effort to clean up the
situation.
-In the course of the ensuing eighteen months, the State Banking Department
of Wisconsin succeeded in effecting a thoroughgoing reconstruction of savings
and loan facilities in Milwaukee. At the start of the program there were 107
savings and loan associations with combined assets of approximately $127,000,000.
Of these, 11 associations with assets of $3,000,000 were in liquidation, 5 associa
tions with assets of $6,000,000 were newly-organized Federal savings and loan
associations, 12 institutions with assets of $11,000,000 were insured State-chartered
associations, and the remaining 79-institutions with gross resources of $107,000,000
were uninsured State-chartered institutions. With the exception of the 5 Federal
savings and loan associations and the 12 insured State-chartered institutions,
almost all of the savings and loan associations in Milwaukee were completely
frozen.
During the course of the program, it was found possible to insure 27 additional
associations independently on a 100 percent basis. A total of 6 associations
received insurance certificates after a segregation of unsound assets. Another
12 institutions were merged in combinations which developed 4 insured units.
An additional 8 associations were merged with institutions already insured. The
State Department found it necessary to place a substantial number of associations
in liquidation or under restrictions equivalent thereto. On the other hand, a few
institutions were able to maintain normal operations without benefit of insurance.
At the conclusion of the program, Milwaukee was being served by 63 associations
with aggregate assets of approximately $83,000,000. The majority of these
institutions are offering their investors the protection of share insurance. The
progress of the insured group in Milwaukee is particularly encouraging. During
the six-month period ending June 30, 1941, combined private capital in the
52 institutions insured as of January 1, 1941, increased from $47,163,000 to
$48,580,000, or at an annual rate of approximately 6 percent. During this same
period, new mortgage loans written by all insured Milwaukee County associations
aggregated approximately $6,000,000.
One of the most interesting developments of the Milwaukee rehabilitation
program has been the Milwaukee Properties Bureau, a cooperative real-estate
marketing organization established as an integral part of the program to facilitate
the disposition of institutionally-owned properties.2 The success met by the
Bureau is illustrated by the sales record through June 30, 1941. As of that date,
the Bureau had been able to effect the sale of 2,412 parcels of real estate, at an
aggregate sales price of $13,145,648, representing the disposition of 38.7 percent
by number and 36.0 percent by dollar volume of all real estate owned by the
associations and listed for sale.
Sinceits establishment in the early summer of 1939, the Bureau has stimulated
widespread interest and attention on the part of many State supervisory authori
ties, savings and loan officials, and others. It appears not unlikely that as a
result of the Bureau's highly satisfactory experience in disposing of real estate,
similar organizations will be established in other communities as the need arises.
2A description of the Bureau and its operations will be found in the Eighth Annual Report of the Federal
Home Loan Bank Board, Exhibit 49




124

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Practically all community programs have depended for their success
on the reorganization of a number of local institutions unable by any
other means to resume normal operations. However, cases in which
reorganization is necessary before associations can qualify for insur
ance are not restricted to those communities where the insurance pro
gram has'been processed on a community basis, but have occurred in
many other areas as well. The Corporation and the Federal Home
Loan Banks have assisted several hundred institutions to reenter the
ranks of operating savings and loan associations through various types
of reorganization and subsequent insurance of accounts. In most
cases, reorganization has taken the form of a segregation by which
all good assets are transferred to a newly-organized association. In
other cases, the reorganization has been attained by means of a
write-down of shares in order to remove an impairment of capital or
by a pledge and escrow of shares in order to provide a secondary
reserve until the association's financial condition has been sufficiently
strengthened. In almost every case, these reorganized and insured
institutions have become a valuable asset to their community, pro
viding a safe, profitable investment outlet ana a supply of credit for
home-mortgage borrowers.
Supervision
Because the soundness of the Federal Savings and Loan Insurance
Corporation as an insuring instrumentality depends to a very con
siderable degree on the continued normal operation of insured insti
tutions, close supervision is exercised over all savings and loan as
sociations to which it is extending the benefits of insurance protec
tion. Safeguards for the operation of insured savings and loan as
sociations begin first with an examination of applicant institutions
and a careful analysis and study to determine whether such associa
tions meet the entrance standards of the Corporation. No detailed
criteria have been established which must be met by each associa
tion, for every applicant is considered individually and decisions are
made on the basis of the pertinent facts and financial condition shown
by each association. The Corporation requires that the applicant
association show satisfactory evidence of sound financial condition,
have competent management, adhere to safe lending and investment
policies, possess satisfactory earning capacity, be able to meet normal
withdrawal demands, and show corvincing prospects for successful
future operations.
Before approving an application for insurance, the Corporation also,
requires an institution to show evidence of intention to maintain ia




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

125

dividend policy which will permit adequate reserve allocations and to
charge mortgage interest rates that will enable the association to at
tract and hold the best mortgage loans available in the territory it
serves. Although exceptions may be made in unusual cases, the Cor
poration looks more favorably upon the application of an institution
with independent office quarters and full-time executive management.
Once insured, all associations are subject to the Rules and Regula
tions of the Corporation which include requirements that each insured
institution pursue only those financial policies which are consistent
with economical home financing.
As previously indicated,3 supervision by the Insurance Corporation
of operating insured institutions is conducted through the Governor
of the Federal Home Loan Bank System and the officers of the Fed
eral Home Loan Banks. Examinations of insured institutions are
made by the Examining Division of the Federal Home Loan Bank
Board.
Thus, neither supervisory nor examining activities of the Insurance
Corporation are subject to useless and expensive duplication which
might be unavoidable were it not for the cooperative arrangement just
described.
In addition to complete annual examination of insured associations,
supervision encompasses a close and continuing study of the progress
of associations by an analysis of monthly reports and through direct
contacts maintained by the officers of the twelve Federal Home Loan
Banks. Supervisory responsibilities of the Corporation also include
carrying out agreements with associations to which the Corporation
has given cash assistance to remove an impairment of capital or to
prevent default.
Insurance Settlements

Although every effort may be made to prevent the development of
problem cases, it is recognized that influences not readily subject to
control make certain losses inevitable in any insuring operation. In
fact, the basic purpose of an insurance system is to absorb the risk
of just such losses as these. During the fiscal year 1941, insurance
payments were made by the Federal Savings and Loan Insurance
Corporation to four associations which were threatened with default.
In one other case referred to the Corporation during the year, it was
determined, after careful study and the development of an approved
plan of operation, that immediate financial assistance was not neces
sary. This brings to a total of eighteen the number of insurance
cases which have been handled by the Corporation.
8Sea p. 78.




126

REPORT

OF FEDERAL HOME

LOAN

BANK BOARD,

1941

During June 1941, the Federal Home Loan Bank Board appointed
temporary conservators for three Federal savings and loan associations
pending hearings to determine whether a conservator or receiver
should be appointed. These associations were the First Federal
Savings and Loan Association of Renton, Renton, Washington, for
which a temporary conservator was appointed on June 19, 1941; the
Aetna Federal Savings and Loan Association, Topeka, Kansas; and
the First Federal Savings and Loan Association of Oklahoma, Okla
homa City, Oklahoma, for which temporary conservators were ap
pointed on June 26 and June 30, respectively. Hearings in these
three cases had not been held by the close of the reporting period.
Inefficient or dishonest management has been responsible for many
of the loss cases which the Corporation has so far been called upon to
manage. "Acts of God," such as flood and drought, as well as adverse
economic conditions, have also been contributing factors in a number
of the problem cases which had developed through the close of the
reporting period.
When there is a likelihood that an insured association is in need of
assistance from the Insurance Corporation under Section 406 of the
National Housing Act, as amended, the Corporation is notified by the
Governor of the Federal Home Loan Bank System, or by a State
supervisory authority. When an institution is referred to it for
assistance, the first obligation of the Corporation is to determine by a
careful examination of all facts the proper course of action to be fol
lowed. Section 406 of the National Housing Act provides for cor
rective action through a direct contribution, loan, or purchase of
assets. Each method for prevention of default is thoroughly explored
as it relates to the association in question and decision is based on a
determination as to which of the alternative methods will be most
beneficial to the shareholder, to the institution, and to the community,
as well as most satisfactory to the Corporation.
Once the decision, supported by factual study and analysis, has been
reached, recommendations are made to the Board of Trustees of the
Corporation (the Federal Home Loan Bank Board). Final decision
as to the type of corrective action to be taken, if any, to prevent a
default is the responsibility of the Board of Trustees. If it is decided
that the deficit in capital funds is to be made up, the Corporation
proceeds to do so under a plan which usually includes the utilization of
reserves of the association and execution of an agreement stipulating
the terms of settlement and the conditions on which recoveries may be
made by the Corporation.




FEDERAL SAVINGS AND LOAN INSURANCE

CORPORATION

127

In all cases where the difficulties of an association are traceable to
poor management, the Corporation insists that management satis
factory to the Board of Trustees be installed before any funds are
granted. The selection of new management is left to the board of
directors of the association, provided the individuals appointed meet
the approval of the Corporation.
Up to the present time, in no case referred to it has the Corporation
made a loan or a purchase of assets as a means of solving the associ
ation's problem. It is contemplated, however, that both of these
means of settlement may be employed at some time in the future.
In each case in which an insured association has been declared in
default and placed in liquidation, the Corporation as required by
statute, has offered all insured shareholders the two optional methods
of settlement, i.e., a new account in an open insured association, or
10 percent of his account in cash immediately and the remaining 90
percent in negotiable noninterest-bearing Corporation debentures.
Through the close of the reporting period, all insured shareholders had
elected the first option.
Summary of share settlement claims in insured institutions in liquidation as of
June 30, 1941 1
Community
Security Federal Savings and i edera Sa-n Trenton Build
Loan Associa- ings and Loan ing and Loan
Association of
and Loan
tionofGuymon, Indeedce
Guymon,

Oklahoma
Total number of insured accounts_

-

Total amount of insured accounts----------

Number of accounts settled---------------

Amount of accounts settled-------------Percent of accounts settled _
-------Percent of amount settled __
-------

---------

233

Independence,

Independence,
Missouri

Association,
Trenton, Ohio

renton, Ohi

$164, 335 83

374

51

$334, 584 77

$28, 455.44

$164, 061 65
91 0
99 9

$316, 470 84
83. 4
94 6

$28, 455.44
100.0
100 0

212

312

51

1 The Dickinson County Building and Loan Association of Abilene, Kansas, is not included in this
schedule since it was placed in liquidation just prior to the close of the fiscal year. There are 74 insured
accounts aggregating $44,268.94 m this institution.

To avoid delay and confusion, the Corporation has evolved a
special procedure for "paying off" shareholders in liquidating insured
institutions. Before offering shareholders an account in another
institution, the Corporation makes arrangements with nearby insured
associations for the issuance of the shares which it is estimated will be
required, paying for them in cash as they are issued. Shares are then
immediately made available to those electing this method of settle
ment. Because the cooperating associations have available in cash
from the Corporation an amount equal to the new accounts being




128

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

issued, each has so far seen fit to permit immediate withdrawal by the
shareholders in accordance with the current policy of the association.
By the close of the reporting period, experience had proved that a
substantial percentage of individuals receiving new share accounts in
connection with liquidation cases made no attempt to withdraw their
savings from the operating institution. Withdrawals, in fact, have
not exceeded 20 percent of the amount transferred.
At the time new accounts are issued to shareholders in other insti
tutions, their share accounts in the liquidating institution are assigned
to the Corporation, leaving it in almost complete ownership of the
association. When the exchange of share accounts has been com
pleted, the Corporation has fulfilled its primary obligation as insurer
and awaits its liquidating dividends along with others who have a
claim against the institution.
In those cases where the Corporation is acting as receiver for a
Federal association, a special representative of the receiver is placed in
charge of the association who proceeds to liquidate the assets under a
plan adopted by the Board. In each liquidation case of this type the
policy of the Corporation is to wind up the affairs of the association as
inexpensively as possible and with a minimum of disturbance to
shareholders and surrounding financial institutions. (For a report on
the three liquidating insured associations, see page 130.)
During the fiscal year 1941, financial assistance to insured asso
ciations totaled $546,468.49 and undisbursed contingent commit
ments, as of June 30, 1941, amounted to $291,374.11. Recoveries
during the reporting period amounted to $2,094.25. In all cases
referred to the Corporation since the beginning of operations, financial
assistance has aggregated $1,483,869.29 and recoveries through
June 30, 1941, have totaled $20,201.86. There follows a brief descrip
tion of the 6 cases requiring financial help during the fiscal year 1941:
Adverse climatic and economic conditions so substantially affected real estate
values in an isolated section of a southwestern State that a small State-chartered
association, already burdened with a large amount of real estate acquired through
a former manager, was seriously threatened with default. Thorough study of the
situation revealed that the community lacked home financing facilities and that a
contribution, which was less than the expense of liquidation, would be sufficient
to rehabilitate the institution. After determining that the association's execu
tive officer, who had been previously employed to help the institution work out its
problems, was capable, the Corporation made a contribution of $54,939.68 and
allowed the association to continue under the same management. The Corpora
tion also entered into an agreement with the association whereby that portion of
the contribution ultimately not required to absorb losses on specific assets shall be
returned to the Corporation.




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

129

A similar type of settlement was made in the case of another State-chartered
institution located in a large midwestern industrial city. Here again the diffi
culties were due to extended adverse economic conditions, resulting in heavy
appraised losses on real estate which exceeded the association's reserves. After
surveying each possible method of settlement, the Corporation made an outright
contribution of $45,773.27 without a recovery agreement in order that the asso
ciation might continue operations on a normal basis. Since the executive officers
and directors of the association had managed the institution's affairs as well as
could have been expected under the unfavorable local conditions, the Corporation
allowed them to continue under an agreement that they resign in such manner
and at such time as requested if this arrangement proved unsatisfactory. The
Corporation further strengthened the position of the association by authorizing it
to purchase the acceptable assets of a nearby association which was in the process
of liquidation.
Losses suffered by a small Federal savings and loan association in a south
eastern State exceeded the institution's reserves and fidelity bond coverage.
After the election of three new directors, the employment of a new managing
officer, and upon the execution of an agreement with the association providing
for return to the Corporation of any amount in excess of that needed to absorb
losses on specific assets, the Corporation made a contribution of $32,361.47 in
order that the association might continue in a sound and solvent condition;
$2,094.25 of this amount was immediately recovered under the terms of the
agreement.
Appraisals of real estate owned by a Federal savings and loan association in
one of the Pacific States reflected a substantial impairment of capital. Examina
tion of the association's condition revealed that its difficulty was caused largely by
failure of the association to take a realistic approach to the solution of the institu
tion's real estate problem. A survey of community conditions showed a definite
need for an insured association in that area. Accordingly, upon the employment
of new, full-time, executive management acceptable to the Board of Trustees and
the adoption of a satisfactory operating budget, the Insurance Corporation made a
contribution of $133,226.89 in order to allow the association to continue opera
tion. It was agreed that that portion of the contribution ultimately not required
to absorb losses is subject to return to the Corporation and if losses are greater
than anticipated, the Corporation will make further contributions to a maximum
of $21,117.65 upon approval of its Board of Trustees.
During the fiscal year 1941, the Corporation made additional disbursements
totaling $228,761.43 in order to prevent default in two associations which had pre
viously been given financial assistance. However, at the time of the original
settlement in each case, it was recognized that additional assistance might be
necessary to cover certain losses which could not be determined at that time.
Consequently, when subsequent examinations of those institutions showed
additional aid necessary, the Board, after determining that the total amount of
cash assistance was not in excess of that necessary to save the expense of liquida
tion and that such settlement was in the best interests of the Corporation, made
additional disbursements to prevent default and allowed the associations to con
tinue operation.
In addition, the Corporation paid out $53,500 to two insured institutions as pay
ments on contingent contributions previously authorized by the Board.




130

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Operation of Insured Institutions in Default
"Default" is defined as an official determination by a properly con
stituted legal authority pursuant to which a conservator, receiver, or
other legal custodian is appointed for an insured institution for the
purpose of liquidation. A declaration of default in the case of
Federal savings and loan associations is made by the Federal Home
Loan Bank Board after a thorough examination has shown such action
to be necessary; in the case of State-chartered institutions, the super
visory authorities or a court of competent jurisdiction of the State in
which the institution is located are responsible for a determination of
default.
In the event of default and liquidation of a Federal savings and
loan association, the statutes provide that the Federal Savings and
Loan Insurance Corporation must be appointed receiver. In the
event of default and liquidation of an insured State association, the
laws in a number of States permit the appointment of the Insurance
Corporation as coreceiver with the State authorities.
Since the establishment of the Insurance Corporation in 1934, four
insured institutions, two Federal savings and loan associations and
two State-chartered institutions, have been placed in liquidation.
The Insurance Corporation is acting as receiver for the two Federal
associations. One of the State-chartered institutions is being liqui
dated under the joint responsibility of the Insurance Corporation
and the Kansas Building and Loan Department. The supervisory
officials of Ohio are in charge of the other State association.
Under the terms of Section 406 (e) of the National Housing Act,
as amended, the Corporation is required to make an annual report to
the Congress on its operation of defaulted insured associations. The
following detailed report and the financial statements in Exhibit 50
are therefore submitted:
Both of the Federal savings and loan associations for which the Insurance
Corporation is now acting as receiver were placed in liquidation during the fiscal
year 1940.
Following the appointment of the Insurance Corporation as receiver for the
Community Federal Savings and Loan Association of Independence, Independ
ence, Missouri, a hearing was held in compliance with the Rules and Regulations
of the Federal Savings and Loan System at the Home Office of the association.
At this hearing, interested parties were given an opportunity to submit evidence
as to the condition of the association and its management and to propose any
plan for its operation or for the disposition of its assets. Following the hearing,
the Federal Home Loan Bank Board directed the Insurance Corporation to pro
ceed with liquidation under the terms of a plan approved by the Board. The
Board also appointed an agent for the Association to represent the Corporation,




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

131

with authority to take full possession of the institution, its books, records, and
assets, and to carry out the duties of the Insurance Corporation as receiver.
Subject to the supervision of the General Manager of the Insurance Corporation,
the agent was given authority to proceed with liquidation of the assets of the
association under the terms of a plan approved by the Board. The Community
Federal Savings and Loan Association of Independence, Independence, Missouri,
was placed in receivership on June 26, 1940, and liquidation proceedings were
authorized on July 23, 1940.
The Security Federal Savings and Loan Association of Guymon, Guymon,
Oklahoma, was placed in receivership by the Board on February 12, 1940, and
the Corporation was directed to proceed with liquidation on March 29, 1940.
The Trenton Building and Loan Association, Trenton, Ohio, is being liquidated
by the Superintendent of Building and Loan Associations of the State of Ohio.
This institution was declared in default and placed in receivership for purposes
of liquidation on April 15, 1940.
Liquidation in each of these three cases is progressing as favorably as can be
expected in view of the local circumstances affecting each institution. Every
effort is being made to conserve the assets of the associations and to conduct the
receiverships in a manner which will result in the greatest possible degree of
recovery to the Corporation and to uninsured shareholders. Comparative state
ments of condition and operations as of the date of each receivership through
June 30, 1941, are shown in Exhibit 50. None of the receivership cases has as
yet proceeded to a point where the Corporation can with any degree of accuracy
estimate the ultimate recovery; however, present indications do show that the
percentage return will probably be high. No liquidating dividends had been
declared or paid through June 30, 1941, except to creditors.

In addition to the three insured associations which had been
declared in default and placed in liquidation prior to the close of the
fiscal year 1941, the Insurance Corporation had an interest in one
other insured institution which was placed in liquidation during the
current reporting period. A report of this case follows:
In accordance with Section 17-1032 of the General Statutes of the State of
Kansas, the Kansas .Supervisor of Building and Loan Associations notified the
General Manager of the Insurance Corporation on May 26, 1941, that it ap
peared, upon examination of the affairs of The Dickinson County Building and
Loan Association, Abilene, Kansas, that the association was in an unsound con
dition and that the interests of its creditors were being jeopardized. Assets of
the association totaled $65,989.
The condition of the association was due primarily to unfavorable economic
conditions and a general decline of real-estate values in the Abilene area. Opera
tion of the association was unprofitable and it was impossible, even under compe
tent management, to accumulate sufficient reserves to meet resulting losses.
The Building and Loan Supervisory Board of the State of Kansas on June 9
concluded that a receiver for the association should be appointed and the Board
of Trustees of the Insurance Corporation determined that the Corporation would
act as coliquidator of the association with the Kansas Supervisor in accordance
with' the provisions of the Kansas Statutes. Formal liquidation proceedings
were pending at the close of the fiscal year.




132

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

A statement of condition of The Dickinson County Building and Loan Associa
tion as of June 30, 1941, is included in Exhibit 50.
Operations of the Insurance Corporation

During the fiscal year 1941, total resources of the Insurance Corpora
tion increased from $124,917,101 to $130,920,146, or by 5 percent.
Reserves and surplus, as of June 30, 1941, totaled $29,388,884, as
compared with $23,620,811 on the same date a year previous. Re
serves have been built up as rapidly as possible during the Corpora
tion's brief experience. During
CHART L
the same period, however, the
RESOURCES OF THE FEDERAL SAVINGS AND Corporation's potential insured
LOAN INSURANCE CORPORATION
INSURANCE
liability has grown at a faster
liability has grown at a faster
AS OF JUNE 30, 1935 AND JUNE 30, 1941
rate, making the continued accu
$ 130,920,146 __

_mulation

of reserves advisable.

The Corporation's

potential

insured liability, representing the

$ 101,874,480---

.

.A

total amount of all insured ac
counts up to $5,000 for each
investor and the total creditor
obligations of all insured associa
tions, was $2,464,167,000 at the

~

S

close of the reporting period as

compared with $2,056,099,000
at the close of the 1940 reporting
g
period. Expressed more simply,
o
the Corporation on June 30,
1
935
941
1941, had for each dollar of cap
AND STATISTICS ital
reserves, and surplus
surplus a po
a po
and
reserves,
HOMELOAN BANKBOARD
FEDERAL
tential liability of $18.82. Since
a large proportion of the assets of insured institutions, aggregating
$3,158,251,000, must be set up against the Corporation's potential
liability, it is inconceivable under realistic conditions that the entire
amount of this liability will ever become real. Even under the most
DIVISION RESEARCH
OF

adverse conditions, considerable amounts would be realized from
accounts subrogated to the Corporation.

The capital stock of the Corporation, aggregating $100,000,000 was
exchanged in 1934 for 3 percent guaranteed bonds of the Home
Owners' Loan Corporation in a similar amount. Reserves and surplus




FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

133

amounting to $29,388,884 are invested entirely in Government obliga
tions and securities wholly guaranteed by the Government. Exhibit
51 shows the Corporation's statement of condition as of June 30, 1941.
The Corporation receives its income from annual premiums paid by
insured institutions, admission fees from associations when first in
sured, and interest on its investments. All income above expenses is
placed in reserves. Disbursements in connection with ,insurance
settlements are charged to reserves.
The Corporation's premium income is derived from the payment by
each insured association of an annual insurance premium equal to
s of 1 percent of its total share and creditor obligations, or an amount
equal to approximately 11 cents for each $100 of assets. Premium
income earned during the fiscal year 1941 totaled $3,063,115 as com
pared with $2,631,241 for the preceding reporting year. Associations
which applied and were insured during the 1941 fiscal year paid an
admission fee of 4 cents for each $100 of insurable accounts and creditor
liabilities. Admission fees received during the reporting period
totaled $24,371 as against $19,022 during the preceding fiscal year.
Income of the Insurance Corporation from investments during the
fiscal year 1941, including $13,365 in profits from the sale of securities,
amounted to $3,494,673. Including miscellaneous items,; the aggre
gate income of the Corporation for the year ending June 30, 1941, was
$6,582,193, an increase of $457,533 over the preceding year.
Administrative expenses of the Corporation totaled $256,524 during
the 1941 reporting period; and nonadministrative expenses resulting
principally from costs incurred in connection with settlement cases
totaled $8,492. This compares with $240,383 for administrative and
$15,426 for nonadministrative expenses during the preceding fiscal
year. After deduction of expenses, both administrative and non
administrative, from gross income, the Corporation shows a net
income for the reporting period of $6,317,177 as compared with
$5,868,851 during the preceding fiscal year.
Financial assistance to insured institutions during the fiscal year
1941 aggregated $546,468 as compared with $537,472 the year before.
Contingent commitments to prevent default in insured associations
aggregated $291,374 on June 30, 1941, as against $323,756 a year
previous. Exhibits 52 and 53 present detailed statements of income
and expenses for the fiscal year 1941. The following table shows in
abbreviated form various income and expense items for the 1941
fiscal period:




134

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Condensed income and expense statement for the period July 1, 1940, to June 30, 1941
Income:
Insurance premiums earned------------_
Admission fees earned----------_
Interest earned on investments
------Miscellaneous ------------------

$3, 063, 114. 94
24, 370. 83
3, 481, 308. 13
34. 00

$6, 568, 827. 90
Administrative expenses-----_------------ Nonadministrative expenses --------------- _

256, 524. 40
8, 491. 79
265, 016. 19

Net income from operations---- _-----------------_
Other income: Profit on sale of securities_ -------------------

6, 303, 811. 71
13, 365. 05

Net income for period_--______
Less: Adjustment of net income for prior years

6, 317, 176. 76
3-------,
104. 16

Net income ---------

---------

___

_

-------

6, 320, 280. 92

Distribution of net income

To special reserve for contingencies------------To surplus_-----------------_

-------------

---------

Total---------------------Contributions to insured associations deducted from legal reserve
fund--------------------_______

$3,000,000. 00
3,320,280.92
6, 320, 280. 92
546, 468. 49

At the close of the reporting period, personnel employed by the
Corporation totaled 42. The Corporation is enabled to operate
efficiently with this small staff because it utilizes the general service
divisions of the Federal Home Loan Bank Board, thus making it
unnecessary for the Corporation to build up auxiliary departments.
Throughout its seven years' experience, the Corporation has been
able to meet its running expenses without using premium receipts or
income received from original capital. Income on earned reserves
has been more than sufficient to cover operating expenses.




VI
Home Owners' Loan Corporation

June 12, 1936, when its refinancing activities
SINCEclose, the Home Owners' Loan Corporation has were brought
been engaged
to a
primarily in liquidating its loans and the properties it has been forced
to acquire. Substantial progress was made toward this goal during
the reporting period. The total balance of loan and property accounts
was reduced from $2,436,945,646 to $2,189,038,942, or by 10.2 percent.
Sales of Corporation properties deserve special mention. An excess
of property sales over new acquisitions brought about a drop of 30.2
percent in the number of properties owned and in process of acquiring
title. The liability side of the Corporation's balance sheet shows a
decline in bonded indebtedness from $2,634,808,900 to $2,419,608,800.
Liquidation of the Home Owners' Loan Corporation is measured
primarily by the ability of the Corporation's borrowers to repay their
indebtedness. By June 30, 1941, a large majority of these borrowers
had made real headway in their efforts to acquire debt-free home
ownership. On that date, the average loan balance outstanding per
active borrower was $2,108 as compared with an average loan of $2,884
to these same individuals. In short, the average present borrower
from the Corporation has been able to reduce his indebtedness by almost
27 percent. Over 96 percent of the active original accounts still on
the books of the Corporation at the end of the fiscal year were per
forming satisfactorily, and only 3.8 percent of active accounts were in
default and not liquidating.
During the 1941 fiscal year, the Corporation was able to effect a
reduction of 22.4 percent in the number of personnel. Administrative
expenses of the Corporation also show a decrease of 15.3 percent,
resulting both from the termination of personnel and the closing of a
number of field offices.
1. REPAYMENT RECORD OF BORROWERS
Status of Accounts
Progressing liquidation of the Home Owners' Loan Corporation re
sulted in certain changes during the reporting period in the types of
accounts carried on the Corporation's books. Thus, the number of
135




136

REPORT

OF FEDERAL HOME

LOAN BANK BOARD,

1941

active original loan accounts declined somewhat due to foreclosures
and payments in full. Property accounts declined because of an
excess of sales over acquisitions. Since the large majority of property
sales are made on a deferred payment basis, vendee accounts show a
corresponding increase. A classification of accounts at the end of the
last two fiscal years is shown in the following table:
Classification of accounts, June 30, 1940, and June 30, 1941
June 30,1940
Total number of original accounts------------------Active original loan accounts on the books ----------------Active vendee accounts on the books ----------------Foreclosures pending (original loans and vendee accounts) -----------------Properties owned and in process of acquisition ---Accounts wholly terminated and exchanged -----

June 30,1941

1, 019,138
759,137
97, 025
6,177
70, 780
86, 019

1, 019, 510
716, 676
125, 573
5, 508
49, 419
122, 334

It will be noted that on June 30, 1941, the number of accounts set
up by the Corporation totaled 1,019,510. This figure exceeds the
1,017,823 loans refinanced by the Corporation principally as the result
of division of certain properties upon which original loans had been
granted.
CHART LI

CLASSIFICATION OF ACCOUNTS
AS OF JUNE 30, 1941
ACCOUNTS WHOLLY \
TERMINATED
I 2.0 %

DIVISION OF RESEARCHAND STATISTICS
FEDERAL HOME LOAN BANK BOARD

By the close of the reporting period, 12 percent of the Corporation's
accounts had been completely terminated, leaving 88 percent to be
liquidated. Over 70 percent of all accounts established by the




137

HOME OWNERS' LOAN CORPORATION

Corporation were still in active status on June 30, 1941, while 0.5
percent were in foreclosure pending judgment or sale. An additional
4.9 percent had shifted from mortgage loan status to property acquired
or in process of acquisition, and the remaining 12.3 percent of total
represented accounts set up for the purchasers of properties sold on
a deferred payment plan.
Of the active original borrowers' accounts still on the books at the
end of the 1941 fiscal year, 689,398, or 96.2 percent, were performing
satisfactorily. Borrowers in this category were either repaying their
loans on schedule; were less than three months in arrears; or if more
than three months in arrears, were reducing their delinquency by
regular payments. Only 27,278, or 3.8 percent of active accounts,
were in default and not liquidating. Of this number, but 2,765 were
classified as insoluble. Two factors are primarily responsible for the
low delinquency ratio on June 30, 1941. In the first place, generally
improved economic conditions have had a salutary effect on current
repayments by borrowers. Equally important is the influence of the
Corporation's extension program. In a number of cases the Corpora
tion makes supplementary advances in order to bring borrowers'
accounts into current status at the time repayment periods are
extended (see page 143).
Of the 132,731 vendee accounts which had been set up by the
Corporation through June 30, 1941, a total of 4,282 had been wholly
retired through repayment in full, 2,303 accounts had been returned
to the Corporation's property account as a result of foreclosure, and
3 accounts had been charged off or exchanged. An additional 570
vendee accounts were pending foreclosure judgment or sale at the
close of the reporting period, thus leaving -125,573 vendee accounts
in active status on June 30, 1941. Except for 2,190 cases, or 1.7
percent of total active vendees, all of these accounts were performing
acceptably.
Status of active borrower and vendee accounts, June 30, 1941
Total

Original loan
accounts

Classification
Percent

Number
Number total
of e

Total borrowers in "active status"_-----Paying on schedule or less than three
months i arrears -----------More than three months in arrears but
liquidating - ------Total in satisfactory status------------In default and not liquidating .----------

425085-41-




10

Number

Number

Vendee accounts

PercentNumber
ofe total Number
N

Percent
t
of total

842,249

100 0

716, 676

100. 0

125, 573

100 0

787, 520

93 5

665, 465

92.9

122,055

97. 2

25, 261
812,781
29,468

30
96 5
3. 5

23,933
689, 398
27, 278

3. 3
96.2
38

1, 328
123, 383
2,190

1.1
98 3
1.7

138

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

The foregoing statistical summary is significant primarily because
it shows that the large majority of HOLC borrowers are experiencing
no insurmountable difficulty in retiring their obligations to the Cor
poration. The low-cost, amortized loans made available to HOLC
borrowers are proving an effective means of assisting most of these
people not only to keep the homes they were in imminent danger of
losing, but to increase their equities as well.
Collections

During the fiscal year 1941, the Home Owners' Loan Corporation
received $73,122,180 in interest and $179,838,597 in principal from
original borrowers. Total collections thus amounted to $252,960,777
as compared with $256,505,868 during the 1940 fiscal year.
Increasing sales of acquired properties on a deferred payment basis
are reflected in a larger volume of collections from vendees. Total
receipts from this source during the reporting period amounted to
$62,592,891 as compared with $50,048,308 the year before. Interest
payments made by vendees alone totaled $14,142,293 as against
$9,531,005 in the 1940 reporting period.
From the beginning of operations through June 30, 1941, the Cor
poration collected a grand total of $1,843,734,607 from both borrowers
and vendees. Of this total, $1,092,184,460, or 59.2 percent, repre
sents repayments on mortgage principal including loans paid in full,
and the remaining $751,550,147 constitutes interest payments to the
Corporation. Cash sales and initial payments on property sales have
been included in these figures.
The collection record of the Corporation has followed closely the
fluctuations of general b'usiness conditions. Whenever employment
slackens and family income declines, collections from borrowers tend
to fall off. Conversely, as the following chart indicates, when
economic activity improves, payment is made promptly on billings
by the Corporation. The fiscal year 1941 shows an especially close
correlation between national income and collections. The reporting
period was one of rising industrial activity, increased employment,
and higher incomes.' It is no mere coincidence that the ratio of
payments received on active accounts to current billings actually
exceeded 100 percent because of payments received on delinquent
installments and prepayments during five of the first six months of
1941.
1

See pp. 14-15




HOME OWNERS'

139

LOAN CORPORATION

Another evidence of the improved ability of HOLC borrowers to
repay their obligations to the Corporation is the steadily increasing
number who are finding it possible, either through resources of their
own. or by private refinancing, to repay their loans in full. During
the reporting period, 30,954 original borrowers retired the balance of
their indebtedness to the Corporation. From the beginning of opera
tions through the close of the fiscal year 1941, the total number of
borrowers' accounts wholly terminated through payment in full
numbered 108,095 in the amount of $249,846,629.
CHART LII
PERCENT
110

H.O.LC.

AND NATIONAL INCOME
COLLECTIONS
T... -------- ----- ,

oBILLIONS
9

.....- o...
--.- ...............
--- -- - --8
.......
---

110 -,

THREE MONTHS MOVING AVERAGE

100-

8

RATIO OF COLLECTIONS

I TO CURRENT
BILLINGS
AT
(SCALE LEFT) |

70
no

ncluded

urrent ccruals and becaue of loon reaymGHT)
s

full

OF

7
6

E

705

1936 months the ratio 1937
1939
€'-In
some
exceeds 100% because1938 collection of arrearages
of the
not included in current accruals and because of loan repayments in full

FEDERAL OE

1940

LOAN ANK

ORD

1941

AND STATISTICS
OF RESEARCH
DIVISION
FEDERALhOME LOAN BANK BOARD

On June 30, 1941, arrearages amourted to $15,278,304, of which
$14,051,486 was due on original loan accounts and the remaining

$1,226,818 on vendee accounts. Of the total amount due and still
unpaid, $12,869,165 represented amounts uncollected on principal
and $2,409,139, amounts still unpaid on interest. As might be
expected from the improved repayment record of borrowers during
the reporting period, arrearages at the close of the reporting period
were substantially lower than a year previous, when the total amount
due and unpaid amounted to $35,118,808.




140

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Reduction of Mortgage Indebtedness by Borrowers

The liquidation of the Corporation's assets, and more particularly,
the rapidity with which this goal can be accomplished is measured
primarily by the ability of the Corporation's borrowers to repay their
indebtedness. The following table demonstrates the progress already
made by the present HOLC borrowers in reducing their mortgage
obligations through the close of the reporting period:
Debt liquidation of the average outstanding original loan
Number of original accounts outstanding, June 30, 1941_-----721, 614
Original amount of these loans ------_
--_
-- _
$2, 081, 236, 692
Average original amount_
$2, 884
Loan balance, June 30, 1941________________
$1, 521, 046, 216
Average loan balance, June 30, 1941___-___
____
_
$2, 108
Percent reduction____ ___
26. 9

The present average borrower has been able, over a period of from
five to eight years, to reduce by 26.9 percent the principal balance of
his mortgage loan. This record is particularly noteworthy when it is
recalled that a large majority of the original HOLC mortgagors were
delinquent some two years on principal and interest payments and
from two to three years on taxes and assessments at the time their
obligations were refinanced by the Corporation.
Not all of the original borrowers have, of course, been able to carry
out their loan contracts. It was not expected, in fact, that the
refinancing of distressed mortgages by the Home Owners' Loan Cor
poration would result in the successful rehabilitation of all of the mort
gagors to whom the Corporation's loans were granted. By June 30,
1941, foreclosure had been authorized in 193,612 cases when the
borrowers, although given every opportunity and encouragement,
still failed to meet their loan obligations. On the other hand, the
108,095 borrowers who have retired their loans in full have done more
than meet their mortgage payments on schedule. Exhibit 54 shows
the average original loan per active borrower and the average loan
balance outstanding on June 30, 1941, by HOLC Regions and by
States.
The original refinancing loans made by the Home Owners' Loan
Corporation aggregated $3,093,451,321. By the close of the 1941 fiscal
year, subsequent advances to original borrowers for miscellaneous
purposes, as well as the conversion of delinquent interest to principal,
increased this investment to $3,263,957,817. By June 30, 1941, the
Corporation's borrowers had retired, through repayment of principal,




141

HOME OWNERS' LOAN CORPORATION

$956,637,553, or 29.3 percent of total original loans and advances.
In addition, $786,274,048, or 24.1 percent of gross loans and advances
had been transferred to other accounts, particularly the Corporation's
property account. The net result of principal repayments and
transfers was to leave a balance of original loans and advances out
standing of $1,521,046,216 on June 30, 1941.
Reduction of indebtedness of original borrowers
Through
Through
June 30, 1940 June 30, 1941
Original amount of loans closed --------------------Advances to borrowers and interest merged with principal in extension agree
ments-----------------------------------------------------

$3,093,451, 321 $3, 093, 451, 321
153, 182, 289

170, 506, 496

---------Cumulative gross indebtedness of borrowers Less principal repayments---------------Less balances transferred to property and similar accounts-------

3, 246, 633, 610
776, 798, 956
734, 951, 572

3,263, 957, 817
956, 637, 553
786, 274, 048

Balance of original loans and advances outstanding-----

1, 734, 883, 082

1, 521, 046, 216

In addition to the repayment in full of 108,095 original loans, a
number of accounts have been terminated by charge-offs, cash sales,
and other methods. The following table summarizes all accounts
terminated as of the close of the last two fiscal years:
Cumulative number of accounts terminated
Through
Through
June 30, 1940 June 30, 1941
Original loans paid in full --------------------Cash sales at foreclosure---------------

77,141
908

Cash sales of acquired properties- .------------Vendee instruments paid in full
-------------Properties and accounts charged off or consolidated------------Total accounts terminated

-----_---

--

108, 095
1,224

86, 064

122, 314

6,038
1, 797
180

---

8, 471
4, 275
249

2. GENERAL OPERATIONS
Loan Service

Since its inception, the Home Owners' Loan Corporation has been
confronted with a peculiarly difficult problem in servicing its loans.
Unlike normal private lending institutions, the Corporation made its
loans to home owners already seriously delinquent and unable to
obtain from other sources the refinancing funds needed to avoid fore
closure. The added responsibility of keeping such borrowers in their
homes if reasonably possible impelled the Corporation to develop a
highly specialized servicing operation.




142

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

By treating delinquent accounts on an individual case basis, the
Corporation has been able to discover the source of borrowers' diffi
culties and to take corrective measures in many cases which otherwise
would have drifted into foreclosure. A representative of the Home
Owners' Loan Corporation calling at the borrower's home can usually,
by frank discussion with members of the family, diagnose the financial
ills which led to delinquency in loan payments.
In cases of small arrearage, the same results can often be obtained
by direct correspondence. In any event, the Corporation bends
every effort to assist the home owner to rehabilitate himself whether
the difficulty be lack of employment, illness, financial reverses, crop
failures, overhousing, excessive taxes, or any of the adversities which
may beset home owners during the course of long-term financing.
Through its representatives located in all sections of the country, the
Corporation is in a position to help borrowers obtain employment or
public assistance, to assist them in the sale or rental of their homes,
or to grant temporary forbearance, adjustments of loan payments,
or advances for taxes and reconditioning, if such action is justified
by the circumstances of the individual case.
The reduction in the number of active accounts in the Corporation's
portfolio during the fiscal year due to foreclosures and payments in
full was largely offset by sales of acquired properties on a deferred
payment basis. As a result, the number of mortgage loans and ven
dee accounts being serviced declined by only 13,393, or from 855,681
at the beginning of the fiscal year to 842,249 on June 30, 1941.
Although the volume of accounts was reduced only slightly, the
nature of the Corporation's servicing problem was altered by the
large-scale extension activities during the 1940 fiscal year and the
general improvement in business conditions which has been brought
about by the national defense program. As a consequence of these
developments, only 6.5 percent of the Corporation's loans were 3
months or more in arrears at the close of the fiscal year as compared
with 25.9 percent in December 1939, just prior to the inauguration
of the extension program under the Mead-Barry Act. Loans over
6 months in arrears represented but 1.2 percent of total as compared
with 17.3 percent in December 1939.
This shift in the delinquent status of accounts was accompanied
by a transition from "curative" to "preventive" servicing. In other
words, the Corporation's primary emphasis in servicing its loans
is at this time not so much the elimination of serious delinquencies,




HOME OWNERS' LOAN CORPORATION

143

although accounts in this category continue to receive close attention,
but rather the task of helping home owners to avoid arrearages.
Assistance of this latter type is especially necessary in those cases
where the borrower's repayment period has been extended to bring
his account current. Failure to maintain payments on the revised
basis may well mean unavoidable foreclosure since extensions usually
represent the ultimate possible liberalization of loan terms, if the
integrity of the Corporation's loans as debtor obligations is to be
maintained.
A new servicing policy was adopted by the Corporation in December
1940 to permit special leniency to the borrower whose income is
adversely affected by his induction or the induction of a member of
his family into military service. By June 1941, the privilege of
making reduced payments (generally equivalent to interest and
taxes) during the period of military service had been granted to
235 Corporation borrowers. In a number of cases, the Corporation
has agreed to carry the loans temporarily without any payment
whatsoever, on the borrower's promise to make up the delinquent
installments as soon as possible after the termination of military
service.
A servicing activity which protects both the Home Owners' Loan
Corporation and its borrowers is the advance of supplemental amounts
for the payment of taxes, insurance, repairs, and like costs. Many
borrowers have been hard pressed, at times, to meet these costs in
addition to their regular payments on interest and principal. In
justifiable cases, therefore, the Corporation has followed the practice
of advancing the needed funds, when the borrower is unable to take
care of these items himself, increasing the loan by the amount thus
paid out on his account. In this manner, the Corporation not only
protects its own security by the amounts expended, but also assists
its borrowers through temporary periods of difficulty.
The table below indicates that almost 92 percent of total supple
mental advances through June 30, 1941, were made for the payment
of delinquent taxes. While funds for this purpose still accounted
for the major share of funds advanced during the fiscal year 1941,
it is noteworthy that the dollar volume decreased from $66,283,241
during the previous reporting period to $13,165,882, or by 80 percent,
principally as a result of the growth in tax and insurance accounts
(see pages 145-6). Advances for other purposes show relatively
little change during the reporting period.




144

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Advances to original borrowers, by purpose
Fiscal year

Taxes

1934__
--------1935-------- -_ -----1936
-----------1937------ ---------1938
-----------1939--------------1940--------------1941----__-------------------

$1,619
85,035
1,563,728
11,349,050
18, 607, 296
36,991,707
66, 283, 241
13, 165, 882

Cumulative, June 30, 1941-------

148,047,558

Insurance

Maintenance

$17,017 ------_
.-391, 349
$3, 696
2,144,683
311,362
1,
215, 925
528,159
1, 269,992
386,026
415,172
1,068,715
778, 422
886, 627
1, 103, 216
895,414
7, 989, 319

3,426,456

Mscellaneous

Total

$676
21,904
66,
477
133, 013
145,979
881, 794
589, 950

$18,636
480, 756
4,041,677
13,159,611
20, 396, 327
38,621,573
68, 830,084
15, 754,462

1,839, 793

161, 303,126

Extension of Loan Terms

Under the terms of the Mead-Barry Act approved on August 11,
1939, the Home Owners' Loan Corporation was authorized to extend
the amortization period of borrowers' loan accounts to a maximum
of 25 years from the date of the execution of the security instru
ment, if, in the judgment of .the Corporation, the circumstances
of the home owner and the condition of the security justify such
extension. A substantial number of extension applications had been
processed before the close of the 1940 fiscal year, and on June 30,
1940, the books of the Corporation showed 172,491 extended accounts.
During the reporting period, an additional 61,134 accounts were
extended on the books of the Corporation, bringing the total to
233,625 as of June 30, 1941.
Authority to extend loan terms has considerably broadened the
Corporation's servicing activities and has given thousands of borrowers
a fresh opportunity to work out their delinquency problems and avoid
foreclosure. Loan extensions have naturally been granted borrowers
whose delinquency was most serious. Of the total loans extended
on the books of the Corporation from the beginning of the program
in the fall of 1939 through the close of the current reporting period,
48.3 percent were in arrears more than 12 monthly installments
and 31.2 percent were delinquent 18 or more monthly payments at
the time extensions were granted.
Accounts extended from October 1, 1939, through June 30, 1941,
classified by arrearageage groups at time of extension
Percent of total
Installments in arrears:
-8. 5
8-------_
------------Less than 3 months--43.2
3 to 11 months ---------------------17.1
----------------------------12 to 17 months --31. 2
-------18 months and over--------




Total_
----------

--------------

100. 0

HOME OWNERS'

LOAN CORPORATION

145

Extended accounts require close servicing attention by the Cor
poration, for failure to carry out the terms of revised contracts in
most cases leaves no alternative but resort to foreclosure. There is
a necessary limit to the leniency and assistance which can be extended
to the Corporation's borrowers without sacrificing the interests of the
Corporation and the taxpaying public, and there are few cases in
which any further aid can be justified if extended terms of payment
cannot be met.
At the close of the reporting period, the books of the Corporation
show that 225,784 of the 233,625 accounts which had received an
extension of amortization period were in active status. The remain
ing 7,841 had been terminated by foreclosure or payment in full. A
large proportion of the extended accounts now on the books of the
Corporation have been in effect for at least a year. Although this
is not a sufficient period of time to warrant accurate conclusions as to
the number of borrowers who will be able to rehabilitate themselves
by means of an extension, the performance record of this group of
Corporation debtors has to date been a satisfactory one. At the
close of the reporting period, 95.2 percent of active extended accounts
were in satisfactory status, while only 4.8 percent were in default
and not liquidating.
Tax and Insurance Accounts
In dealing with over one million borrowers, the Home Owners' Loan
Corporation found that one of the most serious cost problems involved
in home ownership was the burden of taxes, insurance, and similar
carrying charges which must be borne by the borrower in addition
to his regular monthly loan installments. In the normal course of
events, charges for taxes and insurance are levied on an annual basis
and in many cases their payment in a lump sum represents a major
hardship. In an effort to assist its borrowers, therefore, the Cor
poration has established a special procedure by which home owners
may accumulate funds for the payment of taxes and insurance on a
systematic monthly installment basis. When taxes and insurance
come due, they are paid automatically by the Corporation from the
funds paid in by the borrower in this manner.
This program has not only provided a safeguard for home owners
against the accrual of insurance charges and penalties due to tax
delinquency, but, in addition, it has brought about substantial econo
mies in the Corporation's administrative expenses by obviating the
need for searching public tax records on a large number of properties.
During the reporting period, the number of Corporation borrowers




146

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

and vendees for whom tax and insurance accounts had been estab
lished increased by 90,443 to a total of 418,517 on June 30, 1941. At
the time the Mead-Barry extension program was inaugurated in the
fall of 1939, the Board adopted, as a matter of policy, a requirement
that tax and insurance accounts be established in each case where an
extension was granted. Likewise, since October 1939, each vendee
has been required to accumulate funds for the payment of taxes and
insurance through such accounts.
The value of the tax and insurance program is directly reflected
in the fact that borrowers' tax delinquency has declined to the
point where the Corporation now encounters little difficulty on
this score.
Taxation

Tax and insurance accounts established by the Corporation have
proved a successful means of assisting borrowers to meet their annual
tax charges. However, the real root of the problem lies not in devices
which facilitate the collection of tax bills, but in a more equitable real
estate tax system. Taxes are, of course, cost factors over which the
Corporation has no control. Its experience as one of the largest tax
payers in the country, however, does offer some interesting facts on
the relative importance of taxation in the average home buyer's
budget.
Analysis of the tax and insurance accounts during the calendar year
1940 shows that for the country as a whole, the average monthly tax
and insurance installment represents approximately 33 percent of the
average monthly loan installment. In four-States, real-estate taxes
are equivalent to 50 percent or more of loan payments and in an
additional 12 States, they represent between two-fifths and one-half
of the monthly loan installment. Relating monthly tax accruals to
mortgage interest shows that the average tax is equal to about 80
percent of the interest charged each month on the Corporation's loans
and there are ten States in which taxes actually exceed the borrower's
interest payments.
A rigid cost such as taxation has a direct and evident bearing on
the cost of home ownership. An oppressive tax load not only handi
caps the borrower in meeting his mortgage indebtedness, but may well
even discourage home ownership if the borrower knows that after the
debt has been cleared he will still be left with an excessive tax burden.
Taxation costs have a direct effect on property acquisitions and sales.
It is impossible, of course, to single out taxation as the sole determi
nant in HOLC property operations. However, it is undoubtedly more
than a coincidence that the Home Owners' Loan Corporation has been




147

HOME OWNERS' LOAN CORPORATION

forced to acquire fewer properties and has been able to dispose of its
property acquisitions at a better rate in communities and areas where
taxes are on a reasonable level.
In the following table, annual taxes as a percentage of sales prices
are shown to correlate closely with the percentage of sales to acquisi
tions in the same localities. In Jersey City, for example, where annual
taxes represented 7.41 percent of property values as represented by
sales prices during the first six months of 1940, the Corporation had
been able to liquidate only 26.6 percent of its total acquisitions. In
San Francisco, on the other hand, where taxes represented but 1.89
percent of current market prices, the Corporation has been able suc
cessfully to dispose of 97.4 percent of acquisitions.
Annual tax rates and HOLC property sales in selected cities

City

Percentage
Taxes as a of HOLC
percent of
sales to
sales prices 1 properties
acquired

Jersey City_---Newark_----_
Rochester
---Buffalo -------Boston ------Brooklyn (N. Y.) _---Bronx (N. Y.) -- _---Queens (N. Y.) -----.
New Orleans_---------- Milwaukee---------Pittsburgh -------------

Percent
7.41
5. 80
5. 70
5. 32
5.17
4. 72
4 32
3.81
3. 78
3 70
3.69

Percent
26. 6
27. 9
39.1
32 1
45. 6
36 7
55 1
33 3
86 0
74 1
74. 8

City

St. Paul
..-------Minneapolis---------Fort Worth-----Indianapolis--------Dallas ---_
Atlanta ---------Tulsa--- -----Salt Lake City -------Oklahoma City-------Cleveland -------San Francisco.-----------

Percentage
Taxes as a of HOLC
percent of
sales to
sales prices 1 properties
acquired
Percent
3 63
3. 59
2. 97
2. 53
2. 23
2. 21
2 19
2.04
2 03
2 00
1 89

Percent
91.0
88. 0
89. 4
82. 5
92 6
96. 3
86 0
98.3
94. 5
87. 0
97.4

Based on sales during the first six months of 1940.

A further example of the cost of taxation in HOLC operations is
found by relating the annual tax burden to gross income received by
the Corporation from the properties it owns. During the fiscal year
1941, over 40 percent of total gross rentals received by the Corporation
was disbursed in the form of taxes.
Insurance Program

As outlined in the Eighth Annual Report of the Board, certain changes
were made in May 1940 in the Corporation's program with respect to
insurance of borrowers' properties, as well as properties acquired by
the Corporation, against fire, windstorm, and other bozards. An
agreement was entered into with the Stock Company Association
whereby borrowers who maintain tax and insurance accounts with the
Corporation (see p. 145), as well as certain borrowers who neglect to
obtain insurance, may have their properties insured by the Stock




148

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Company Association pursuant to its contract with the Corporation.
This contractual agreement was concluded only after open competitive
bids had been received from a number of qualified insurance carriers.
The majority of the Corporation's borrowers are continuing to fur
nish their own insurance policies from companies of their own selection
and through their own agents. The Home Owners' Loan Corporation
requires only that the insurance carriers be licensed by the 'State in
which the borrower's property is located and that the policy be such
in amount and other respects as to afford the Corporation adequate
protection. However, 90 percent of the 418,517 borrowers and vend
ees for whom tax and insurance accounts have been set up on June 30,
1941, had elected the convenience of having the insurance on their
properties renewed with the Stock Company Association under the
terms of its contract with the Corporation.
On June 1, 1940, the Board discontinued the purchase of insurance
against fire and other hazards on its owned properties. In lieu of
insurance, a reserve was set up to which such losses might be charged.
On the basis of previous loss experiences, reserve allocations were es
tablished at the rate of fifty cents per month per owned property.
From the time the reserve was first set up in June 1940 through the
close of the fiscal year 1941, provisions for losses on this basis aggre
gated $352,746.50, while losses charged to the reserve during the same
thirteen months totaled only $115,389.53.
Foreclosures
After deduction of withdrawn cases, net foreclosures authorized on
original loans during the fiscal year 1941 totaled 11,498. During the
previous reporting period, net authorizations totaled 11,078. Fore
closure authorizations on vendee accounts numbered 1,593 as against
795 during the 1940 fiscal year. Included in the above figures are
2,812 properties acquired during the reporting period by deed in lieu
of foreclosure as compared with 4,334 during the previous fiscal
year.
The slight increase in the number of net foreclosure authorizations
on mortgage loans during the fiscal year 1941 was accounted for
principally by foreclosure actions brought during the first few months
of the reporting period. The majority of accounts on which the
Corporation was forced to institute proceedings at that time were
cases in which foreclosure had previously been authorized, but which
had been postponed during consideration of extension applications.
In those cases where it was found after careful consideration that
even the most liberal extension of loan terms would be insufficient to
permit the borrower to carry his loan, it was necessary to resume




149

HOME OWNERS' LOAN CORPORATION

foreclosure action. These cases account for the noticeable increase in
foreclosure activity during the fall of 1940. After this period had
passed, the trend of foreclosures was steadily downward, with net
authorizations during the last six months of the reporting period
totaling only 3,615 as compared with 7,883 during the previous six
months.
The downward trend in foreclosure activity during the closing
months of the reporting period is attributed to two causes. First, the
Corporation's extension program has placed a large number of
marginal accounts on a satisfactory paying basis. At the end of
June 1941, only about 7 percent of outstanding mortgage loan accounts
were in default. Second and perhaps even more important, is the
fact that improved economic conditions and rising incomes have
enabled a great number of borrowers to maintain their loan contracts
on a current basis.
Foreclosureoperations during the fiscal year 1941, by months
Original borrowers
Month

Authoriza-WithWithAuthorizations
drawals

Vendees

Net authoriz
tons

AuthorizaAuthonza
tions

WithWithdrawals

Net au
thoriza
tions

1940
July
---------August -------------

September--_

1,554
1,829

--

October -------------November----------December--------1941
January------_February -March__---April-----.___,---__
May-------------June ----

-

-

Total------

-

351
385

1,203
1,
444

151
179

2, 223

-

358

1,865

29
27

122
152

235

38

197

2, 117
1, 706
1,313

596
585
584

1, 521
1,121
729

255
192
182

47
42
65

208
150
117

1,525
1,510
1,
497
1,
140
946
879

611
691
712
781
563
524

183
212
242
171
154
125

66
69
74
96
71
64

117
143
168
75
83
61

18, 239

6, 741

914
819
785
359
383
355
111, 498

2,281

688

21, 593

1Includes 586 redemptions.
2 Includes 1 redemption.

Since the beginning of operations, the Corporation has authorized
226,244 foreclosures on original loans, of which 32,632 have been
withdrawn, leaving a net total of 193,612, or 19.0 percent of loans
closed. Foreclosures which have been authorized on vendee accounts
reached the cumulative figure of 3,825 on June 30, 1941. After
deduction of withdrawals numbering 943, a net total of 2,882 remains.
Compared with the total volume of vendee accounts set up on the
books of the Corporation, this represents a foreclosure rate of only
2.2 percent and speaks well for the performance record of individuals
who have purchased Corporation properties on a deferred payment
basis.




150

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941

Exhibit 55 presents on a cumulative basis to June 30, 1941, net
foreclosure authorizations on original loans and vendee accounts, by
HOLC Regions and by States, and the ratio of net foreclosures on
original loans to the total number of loans granted.
As previous Reports of the Board have stated, the foreclosure
policy of the Home Owners' Loan Corporation is predicated on the
CHART LIII

FORECLOSURE
THOUSANDS

1936

ORIGINAL

1937

ACCOUNTS

1938

OPERATIONS

AND VENDEE

ACCOUNTS

1939

11

1940

1941

V -722
DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANKBOARD

belief that foreclosure should be taken only after every other reason
able means of enabling the borrower to keep his loan in satisfactory
status has been exhausted. One measure of this policy is found in
the following table:
Percent distribution of foreclosures through June 30, 1941, by arrear
ages at time of foreclosure
Percent

Arrearages before foreclosure:
of total
Less than 12 months --------------35. 5
12 months to 17 months---------------------------21. 4
18 months to 23 months -------------------------19. 4
24 months and over --------_
------------------23. 7




Total -------

,------------------------------ 100.0

HOME OWNERS'

LOAN CORPORATION

151

In its efforts to work out fair means of settlement with its borrowers,
the Corporation withheld foreclosure actions until the delinquencies
amounted to more than 12 months in 64.5 percent of total cases. As
a matter of fact, even this figure is something of an understatement.
Extended accounts are brought into current status at time of exten
sion by including in the loan amount delinquent principal and interest
as well as advances made for delinquent taxes, assessments, and
insurance. Iri the above table, therefore, arrearages at time of fore
closure on these accounts include only the period of delinquency after
approval of the extension agreement. If forbearance prior to this
time were also computed, the percentage of foreclosed accounts upon
which delinquencies totaled 12 monthly installments or more would
be substantially higher than 64.5 percent.
Property Management
The 1941 reporting period saw a further substantial reduction in the
real-estate holdings of the Home Owners' Loan Corporation. During
the 1941 fiscal year, the number of properties owned and in process
of acquiring title 2 decreased from 70,780 to 49,419, a reduction of
30.2 percent. The combined capital value 3 of properties owned and
in process of acquiring title was $318,734,001 on June 30, 1941, as
compared with $424,185,212 a year previous, a decline of 24.9 percent.
The Corporation's declining real-estate account resulted, of course,
from an excess of sales over new acquisitions during the reporting
period. Only 17,382 properties were acquired during the fiscal year
1941, while property sales during the same twelve months totaled
34,745. Exhibit 56 shows property acquisitions and sales, by fiscal
year periods, from 1936 through 1941.
The policy guiding all property management activities of the Home
Owners' Loan Corporation has been one of orderly liquidation,
designed to dispose of acquired real estate as rapidly as is consistent
with the Government's interest and with the Corporation's policy as
a public agency to safeguard the stability of the real-estate market.
The practice of "dumping" properties has never been followed on the
premise that such a policy might well weaken the market and would
represent an irresponsible sacrifice of the realizable value which the
Corporation has in its properties. Instead, properties owned by the
2 Properties in process of acquiring title are those where the foreclosure action has been advanced to the
point of judgment or sale but where because of the existence of a redemption period or for other reasons,
some additional time must yet elapse before the Corporation can acquire full title.
3
The capital value of property is represented by unpaid balances of loans and advances; unpaid interest
to date of foreclosure, sale, or judgment; foreclosure costs; other charges applicable to the period preceding
acquisition; initial repairs; and reconditioning and permanent additions which enhance the value of the
property.




152

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Home Owners' Loan Corporation are offered for sale at prices based
on fair market values.
Each property acquired by the Corporation is treated as an indi
vidual case and disposition is based on an analysis of all factors
involved. Decisions as to sale and rental prices and necessary recon
ditioning to be performed are based on such analysis, the object of
which is to determine the best means of liquidating the Corporation's
CHART LIV
PROPERTIES ACQUIRED AND SOLD
NUMBER
OF

JUNE 30, 1936 TO JUNE 30, 1941 BY MONTHS

EC.

JUN

1940

DEC.

\

JUN

1941

AND
DIVISION RESEARCH STATISTICS
OF
BOARD
FEDERALHOME
LOANBANK

properties. All properties are listed for sale with brokers, and listings
are distributed on an equitable basis to all reputable sales brokers in
the community.
The property holdings of the Corporation continue to show a ten
dency toward concentration in certain areas where, in spite of generally
improved economic conditions throughout the country, recovery of
the local real-estate market continues to lag and sales are difficult.
The real-estate problem of the Home Owners' Loan Corporation, like
that of other financial institutions, has become primarily one of
liquidating the properties which it now holds in these localities. 4
A conspicuous example of this concentration is found in the eastern
and northeastern sections of the country, especially in such States as
4 See Survey of Housing and Mortgage Finance, pp. 27-29.




HOME OWNERS'

153

LOAN CORPORATION

New York, New Jersey, and Massachusetts. The proportion of prop
erties in the New York Region, comprising New York, New Jersey,
and the New England States, has increased progressively from 32.2
percent of total at the end of the fiscal year 1938 to 69.5 percent on
June 30, 1941. Only 16.1 percent of the Corporation's loans were
originally made in these same States.
An inventory of properties owned on June 30, 1941, shows the heav
iest concentrations to be in the very large and the very small com
munities. Over 22.2 percent of the Corporation's properties were
located in cities with one million or more inhabitants and 13.4 percent
in towns of less than twenty-five hundred population. In particular,
the scattering of properties throughout thousands of small communities
has presented a unique problem in the marketing- activities of the
Corporation. Previous analyses have shown that sales had a tend
ency to lag in the population groups at each end of the scale, but
recent reports indicate that sales, in each of the various community
size groups, are approaching a closer balance.
Property sales, by size of community, through June 30, 1941
Total
Number of properties acquired i-------Number of properties sold---------Percentage sold
--------------

184, 686
139, 764
75 7

1,000,000 500,000 to 250,000 to 100,000 to 50,000 to
and over 1,000,000 500,000
250,000
100,000
27,017
17, 035
63 1

12,410
9, 302
75.0

19, 667
15, 826
80.5

21,024
17, 363
82 6

16, 016
12,076
75.4

25,000 to
50,000

10,000 to
25,000

5,000 to
10,000

2,500 to
5,000

Less than
2,500

Number of properties acquired ----------16, 085
Number of properties sold
---------------------------12,930
Percentage sold
----------------------------------80 4

23, 182
17,392
75.0

13, 682
10, 661
77.9

10, 662
8,273
77.6

24,941
18,906
75.8

1 Includes properties sold prior to acquisition, as permitted by statute in certain States.

Analysis of properties sold through June 30, 1941, shows a prepon
derance of sales at prices of $4,000 or less. As the following table
indicates, 85 percent or more of properties acquired and priced at
$3,000 or less had been sold through June 30, 1941, and over 79 per
cent of properties priced at $3,000 to $4,000 had also been liquidated.
Properties acquired and sold, by price ranges, as of June 30, 1941
Less than $1,000 to
$1,000
$2,000
Number of properties ac
quired 1 ------------------Number of properties sold -_
Percentage sold---1

12,967
11,063
85 3

31,043
27, 076
87 2

$2,000 to
$3,000

$3,000 to
$4,000

$4,000 to
$6,000

$6,000 to
$10,000

35,144
29,987
85 3

32,502
25,801
79.4

44,149
28,870
65.4

25,851
15,088
58.4

Includes properties sold prior to acquisition as permitted by statute in certain States.

425085-41-




11

$10,000
and over

3,030
1,879
62.0

154

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Only a limited number of HOLC properties have been sold on a
cash basis. The large majority have been sold with a down payment
and the balance payable in equal monthly installments over a period
ranging up to fifteen years. On June 30, 1941, the average down
payment on such sales was 11.9 percent of the purchase price.
Property sales through June 30, 1941, by terms
Number of
properties
Cash sales-------------------_

-'

Sales on security instruments -------------Sales contracts or other instruments m lieu thereof -----------Total ___--..

--------------...
.----------------

Percent of
total

8,478

6 1

76,430
54,856

54.7
39. 2

139, 764

100.0

Property sales through the end of the fiscal year 1941 resulted in a
cumulative capital loss of $168,402,668, or an average of $1,204.91 per
property, representing the spread between the sales price and the cap
ital value carried on the books of the Corporation. The cumulative
capital loss through the close of the reporting period was 25.8 percent
of the capital value of all properties sold. A detailed statement of
profit and loss on sales, by calendar years, is given in Exhibit 57.
Without some explanation of the factors accounting for losses, these
figures give a false picture of the Corporation's sales experience.
Losses resulting from the sale of owned properties have been computed
on the basis of a capital value which includes all costs resulting from
the forbearance shown by the Corporation to its distressed borrowers.
These book losses can, in fact, be taken in part to represent the cost
of leniency toward borrowers who failed to rehabilitate themselves.
Efforts to avoid foreclosure and to exhaust every possibility of work
ing out a satisfactory solution to delinquency problems mean the
accumulation of substantial arrearages in many cases before the Cor
poration resorts to foreclosure. After foreclosure has been authorized,
all costs incident to acquiring title are included in the capital value
which in almost every instance has been increased as a result of the
borrower's loan and tax delinquency. After acquisition, extensive
reconditioning is many times necessary before the property can be
placed in condition for rental or sale and amounts spent for these
purposes are also added to capital value. As a result, the book
value assigned to a large majority of the Corporation's acquired prop
erties is well above current market prices, and the losses reported
above should not be looked upon as losses resulting entirely from the
sale of real estate.




155

HOME OWNERS' LOAN CORPORATION

The various elements entering into the capital value of properties
cumulatively sold through June 30, 1941, are shown in Exhibit 58.
The chart which follows illustrates how capital value is built up on
the average property so far sold by the Corporation.
CHART LV
CAPITAL VALUE OF AVERAGE H. . L. C. PROPERTY
BASED ON CUMULATIVE PROPERTY SALES THROUGH JUNE 30, 1941

PLUS

LESS

PLUS

PLUS

$3,681

$413

$ 143

$392

$348

Amount of
ORIGINAL LOAN

Taxes and Assessments,lnsurance,
Maintenance, Misc

Repayments of
Principal 8 Other
Capital Credits

Delinquent Interest
Capitalized and
Foreclosure Costs

Initial Recondition
ing andCapitalized
Repairs

AND STATISTICS
DIVISION RESEARCH
OF
FEDERALHOME
LOAN
BANK
BOARD

Property Income and Expense

Of the 62,868 units in properties owned by the Corporation on June 30,
1941, there were 51,606, or 82.1 percent, rented or available for rental.
Of these units available for rental, 46,655, or 90.4 percent, were
rented.5 The 11,262 units vacant and not available for rental on
June 30, 1941, comprised those units held for repairs, properties held
vacant for sale, those adversely occupied, and a few cases in transition
from one of these categories to another.
During the fiscal year 1941, the gross operating income derived
from properties amounted to $20,774,183; and gross expenses, exclu
sive of interest and administrative overhead costs, totaled $16,680,132,
aIn 288 cases, dwelling units could not be rented because the tenants were in the process of eviction.




156

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

leaving a net operating income for the reporting period of $4,094,051.
From the beginning of operations through June 30, 1941, property
income aggregated $93,714,151, while total property expense amounted
to $79,299,181, resulting in a cumulative net operating income of
$14,414,970.
Detailed information on vacancies, rent collections, and average
rent per dwelling unit will be found in Exhibit 59. Exhibit 60 contains
a summary of the various income and expense items entering into the
operation of properties sold through June 30, 1941.
Vendee Accounts
The increasing volume of property sales is reflected in a corresponding
growth in the number of accounts established for the purchasers of
properties on a deferred payment basis. On June 30, 1941, vendee
accounts totaled 126,143, or 14.9 percent of all debtor accounts as
compared with 97,404, or 11.3 percent of total a year previous.
The Corporation's collection experience on its vendee portfolio has
been a satisfactory one. Of the total vendee accounts in active status
on June 30, 1941, over 97 percent were paying on schedule or were
less than three months in arrears; an additional 1.0 percent, although
delinquent, were making satisfactory liquidation payments; and only
1.7 percent were in default and threatened with foreclosure. As
already mentioned, foreclosures authorized on vendee accounts
through June 30, 1941, totaled only 2,882, or but 2.2 percent of all
properties sold on a deferred payment plan. By the close of the
reporting period, 2,229 properties had been reacquired from vendees. 6
Through June 30, 1941, property sales on a deferred payment basis
had brought a total sales price of $459,775,247, resulting in the estab
lishment of vendee accounts in the amount of $401,573,895. The
difference represents principally dowfi payments received from prop
erty sales. Principal repayments and transfers to the Corporation's
property account had reduced the dollar volume outstanding on vendee
accounts at the close of the reporting period to $349,246,315, including
$3,592,221 in advances made to vendees and unpaid balances of instru
ments received from partial sales in the amount of $3,091,554.
Reconditioning
Reconditioning operations of the Home Owners' Loan Corporation
are undertaken for two broad purposes. In the first place, funds
have been advanced by the Corporation to a number of its borrowers
6 These properties are included in the acquisition figures given on page 151.




157

HOME OWNERS' LOAN CORPORATION

to be expended for needed repairs and maintenance. As previously
explained (see page 143), this servicing activity of the Corporation
serves the dual purpose of protecting the interests of both the borrower
and the Corporation. In the second place, it is necessary to recon
dition a substantial number of properties which the Corporation has
been forced to acquire. In order either to rent or sell many properties,
it is essential that they be restored to a condition of normal habitability
which will enable them to compete favorably with similar properties
CHART LVI
RECONDITIONING

CASES COMPLETED

1936 THROUGH JUNE 1941

THOUSANDSJULY

4
TOTA CASES
12

10

8

6
PROET
4

AAEWN

AE

ALL OTHER
CASES

2

0

JUN

DEC

1936

JUN

1937

DEC

JUN

1938

DEC

JUN

1939

DEC

JUN

1940

DEC

JUN

1941

DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOME
LOANBANK BOARD

in the neighborhood. Determination of the character and extent
of reconditioning and repairs is based, of course, on a careful analysis
of each individual case.
Reconditioning operations during the fiscal year 1941 show a
decline from the previous year. This reduction is principally ac
counted for by a drop in the number of properties acquired, thereby
reducing the volume of necessary repair work on properties offered
for sale. During the reporting period, a total of 35,982 reconditioning
contracts were completed, in the amount of $11,653,483, as compared
with 66,085, in the amount of $17,722,229 the preceding year.




158

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Of the contracts completed during the 1941 fiscal year, 30,289, or
84.2 percent, were for the reconditioning of properties acquired by the
Corporation or in the process of acquisition. From the beginning of
operations in 1933 through the close of June 1941, the Corporation
had completed 831,850 reconditioning contracts involving a total
expenditure of $168,674,387. In addition to cases handled directly
by the Reconditioning Division of the Corporation, certain other
expenditures are made by contract management brokers who have
authority to provide for small maintenance repairs on properties
under their supervision. It is estimated that the Corporation's
reconditioning activity has, from the beginning of operations through
June 30, 1941, provided approximately 17 million days of work for
masons, carpenters, plumbers, painters, and others in the building
industry. Detailed information on the various types of recondition
ing cases completed since the beginning of operations will be found
in Exhibit 61.
The reconditioning program of the Home Owners' Loan Corpora
tion has had two important results. Expenditures of the Corporation
for moderate repair and rehabilitation work have improved the
marketability of properties. Since these properties must compete
on a market which offers the public attractive new homes at moderate
prices, it is important to place older structures in an attractive and
sound condition.
A second result of reconditioning activity has been the effect of
this type of operation in stopping neighborhood blight in older resi
dential districts. In several cities, reconditioning by the Home
Owners' Loan Corporation has stimulated private lenders and home
owners to take similar action to protect their real-estate investments.
The technical staff of the Corporation has cooperated in surveys of
blighted areas in Baltimore and Chicago, and the findings of these
studies have laid the groundwork for neighborhood rehabilitation
programs in a number of other communities.
As mentioned in the first section of this Report, the Corporation's
Reconditioning Division is now engaged in making similar studies for
the Defense Housing Coordinator with the view to developing modern
ization and conversion programs in areas of concentrated defense in
dustry as one means of adding to the existing supply of housing with
a minimum of cost and delay.7
7 See page 3.




HOME

OWNERS'

LOAN

CORPORATION

159

Appraisals

During the fiscal year 1941, the total number of appraisals completed
by the Corporation numbered 60,264 as compared with 90,872 during
the preceding reporting period. Of the appraisals completed during
the current fiscal year, 20,264 were initial appraisals and 40,000 repre
sented reappraisals or supplemental reviews. Changing economic
conditions, the aging of the Corporation's properties, and the various
contingencies that constantly affect their value make it necessary to
conduct fairly frequent reappraisals of properties in order to keep this
vital information on a current basis. The Corporation has, in fact,
adopted the policy of ordering review appraisals whenever it is found
that values are being affected by economic or neighborhood changes
and that the latest appraisal information available has become out
of date.
In the early period of operations, appraisals were used primarily as
a means of evaluating the security behind each of the million loans
refinanced by the Corporation. In subsequent years, appraisals have
been used by the Corporation principally as a property management
tool for the determination of sales prices, rents, and the need for recon
ditioning. In a few cases, appraisals are used in legal proceedings.
Since the Appraisal Section of the Corporation has had considerable
experience in estimating the value of real estate on a wide geographical
basis and has available within its regional and field set-up trained
specialists for this type of work, the other agencies under the Federal
Home Loan Bank Board, as well as a number of unrelated Govern
ment agencies, have made use of the appraisal facilities of the Corpo
ration. Under a cooperative arrangement with the Federal Works
Agency and the Procurement Division of the United States Treasury,
the Appraisal Section of the Home Owners' Loan Corporation has
assisted in the appraisal of various types of property, particularly old
post office and customhouse structures no longer needed for Govern
ment use. During the reporting period, the Corporation also made a
large number of defense appraisals for the War and Navy Depart
ments, involving all types of properties valued at several millions of
dollars. Twenty-six appraisals were completed or were under way on
June 30, 1941, for the War Department, and 62 for the Navy Depart
ment, thus making it unnecessary for these agencies to develop exten
sive appraisal facilities of their own. Cooperative appraisal work of
the Corporation's Appraisal Section for other Government depart
ments is done on a reimbursable basis.




160

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

3. ADMINISTRATION AND PERSONNEL
The problems encountered in the administration of the Home Own
ers' Loan Corporation are difficult and in many respects unique. Be
cause the Corporation's loans were made to distressed home owners,
it has been necessary to develop special service activities not usually
required of private lenders. The cost of handling the Corporation's
typically small accounts has also been relatively high since there is
little difference in overhead expenses on a mortgage of $3,000 and one
CHART LVII

TOTAL

1935

NUMBER

OF

EMPLOYEES*

BY MONTHS, JULY 1935-JUNE

TuOUSANnS

1936

1937

1938

*Includes WA E Employees

1941

1939

1940

1941

DIVISION RESEARCH
OF
AND STATISTICS
FEDERAL
HOMELOANBANK
BOARD

ten times that figure. The very fact that the Corporation's loans and
properties are located in virtually every county in the United States
has made the problem of administering and controlling operations more
complex than would otherwise be the case. Nevertheless, as the fol
lowing figures will show, the Corporation has been able to effect steady
reductions in administrative costs during the last several years.
On July 1, 1941, personnel s employed by the Corporation numbered
7,764, of whom 1,256 were listed on the home office and 6,508 on the
8All personnel figures




include employees on a per diem basis.

HOME OWNERS'

LOAN CORPORATION

161

field payrolls. Included in the figure for home office personnel are 203
individuals who were officially stationed in various field offices. These
figures compare with a total of 1,274 home office employees and 8,569
field employees at the beginning of the fiscal year. In other words,
during the reporting period, the Corporation was able to effect a reduc
tion of 21.1 percent in number of personnel, with a resulting saving in
annual salary cost of $3,831,400.
At the height of refinancing activity in November 1934, the total
personnel employed by the Corporation numbered more than 20,000.
From that period, the staff of the Home Owners' Loan Corporation
has been reduced by over 62 percent. This continuing retrenchment
reflects the progressive adaptation of the organization to the reduced
volume of its work and also the steady introduction of operating
efficiencies and improvements as rapidly as developments would per
mit. Detailed information on the number of employees on the pay
roll as of July 1, 1941, broken down by departments, divisions, and
sections will be found in Exhibit 62.
The Corporation has been faced with the difficult problem of
maintaining a high morale during a period when it has been necessary
to cut down on administrative overhead in view of the over-all
responsibility of the Corporation to liquidate its affairs as rapidly
and as economically as possible. In order to take advantage of
every opportunity to develop and maintain the complete support of
its employees, the Board in 1940 authorized the development and
publication of a statement of policy governing employee relations.
Department heads, supervisors, and employees cooperated in the
formation of clearly stated policies to which all agreed, and worked
out procedures for an easy, free exchange of ideas and the prompt
settlement of problems affecting both employees and management.
Probably the most serious personnel problem confronting the
Corporation has been the selection of personnel for separation when
reductions in force are necessary. Great care has been exercised to
develop and administer a uniform procedure for the fair and equitable
determination of employees who must be separated. Consideration
is given to such factors as efficiency, length of service, versatility,
economic need for employment, and veteran's preference.
As a public responsibility, the Corporation has assumed the task
of assisting employees who must be separated to obtain other employ
ment as rapidly as possible. Few of the employees separated during
the reporting period were without employment for any extended
length of time, and in the majority of cases, assistance by the Corpora
tion was instrumental in enabling these individuals to find other jobs.




162

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

In the fall of 1940, it became apparent that the national defense
program would require trained personnel in the rapidly expanding
agencies of the Government responsible for the problem of housing
for defense. In the interests of the broader public welfare, the
Corporation immediately adopted a policy of making available its
best qualified and most thoroughly seasoned employees for key posi
tions in defense agencies although in many cases this meant a con
siderable sacrifice on the part of its own organization.
Positions with the Home Owners' Loan Corporation have been
classified in accordance with the requirements of Executive Order
No. 6746 of June 21, 1934, which
CHART LVIII
set compensation scales for
ADMINISTRATIVE EXPENSES

employees in emergency agen

OF THE HOME OWNERS' LOAN CORPORATION

cies. Under the terms of the
Ramspeck Act, approved No
vember 26, 1940, the Home

1941
FISCAL YEARS1936 THROUGH
ooLLIs______

40

Owners' Loan Corporation with

35-_

a number of other agencies of the
Federal Government will begin
to operate fully under Civil
Service regulations and laws on
January 1, 1942. In anficipa
*
*
tion of this change in personnel

'
30

25

20

S
-

20

j
2
15_?

5!

_
i

procedures, the Board on May

se

^

o-;
Si
5-

'

?

14, 1941, provided for the adop
tion of salary rates and grades
prescribed for agencies subject
to the Classification

iftI

Act.

By

this action, the Board is assisting
1936
1937
1938
1939
1940
1941
its employees to secure at an
DIVISIOFRESEARCH ANDSTATISTICS early date all of the benefits of
FEDERAL HOMELOANBANKBOARD
'the Government service under
the merit system. Personnel policies and procedures of the Corpo
ration have been closely correlated with those of the Civil Service
Commission since the establishment of the Corporation in 1933. It
is, therefore, expected that the transition can be completed with a
minimum of work and expense.
During the 1941 fiscal year, 21 State, divisional, district, and other
branch offices of the Corporation were closed, reducing the total
number of such offices to 21 at the end of the reporting period. The
number of field stations maintained by the Corporation for servicing
purposes was also reduced from 56 to 47. The contraction in field




C

HOME OWNERS' LOAN CORPORATION

163

organization brought about during the reporting period was reflected
not only in substantial salary savings, but also in reduction of rental
and other overhead costs.
4. FINANCIAL OPERATIONS
Statement of Condition

The financial statement of the Home Owners' Loan Corporation
shows further progress in the liquidation of assets during the fiscal
year 1941. Aggregate resources declined from $2,790,002,453 on
June 30, 1940, to $2,565,932,327 at the close of the reporting period,
a decrease of 8 percent. A comparison of the balance sheet on
June 30, 1941 (Exhibit 63), with the balance sheet a year previous,
shows several significant shifts in major items during the reporting
period.
Changes in important balance-sheet items from June 30, 1940, to June 30, 1941
Assets:
- $213, 836, 866
Original mortgage loans and advances thereon---------+ 72, 007, 186
Vendee accounts and advances thereon---------Property owned and in process of acquiring title---------- -105, 451, 211
+11, 044, 501
Bond Retirement Fund-----------------------------Investments ----------------------------------------20, 170, 850
Liabilities and Capital:
Bonded indebtedness------------------------------215, 200, 100
+7, 000, 527
Accounts payable-----------------------------------21, 439, 806
Reserve for losses----------------------------------15, 909, 686
Net worth (capital stock minus deficit)------------------

Original mortgage loans.-The balance of original mortgage loans
outstanding and advances thereon shows a decline during the reporting
period from $1,734,883,082 to $1,521,046,216. This decrease is
primarily accounted for by principal repayments on the part of
original borrowers and to a lesser degree by the transfer of loan ac
counts to property accounts through foreclosure or deed in lieu of
foreclosure.
Vendee instruments.-The progress of the Corporation in selling
its owned properties on a deferred payment basis is reflected in an
increase of vendee instruments outstanding and advances thereon
from $277,239,129 to $349,246,315.
Property owned.-The capital value of property owned and in
process of acquiring title fell from $424,185,211 to $318,734,001
during the reporting period as a result of increasing property sales
and declining acquisitions, analyzed in detail on pages 151-155.




164

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Bond Retirement Fund.-On June 30, 1940, the cash and security
holdings of the Bond Retirement Fund totaled $35,066,998, of which
$31,449,200 was represented by cash held in the United States
Treasury for retirement of matured bonds. At the close of the
current reporting period, the total of such funds, all in cash, amounted
to $46,111,498, of which only $10,687,950 represented the portion
held against matured obligations. The balance applicable to un
matured bonds consequently increased during the year by $31,805,750.
Investments.-Investments of the Home Owners' Loan Corporation
include the entire capital stock of the Federal Savings and Loan
Insurance Corporation in the amount of $100,000,000 and invest
ments in the shares of Federal and State-chartered savings and loan
associations. Due entirely to the repurchase of share investments
by savings and loan associations, investments of the Corporation
declined from $303,024,210 to $282,853,360. Exhibit 64 gives a
detailed statement of HOLC investments in savings and loan
associations.
Bonded indebtedness.-The bonded indebtedness of the Corporation
declined from $2,634,808,900 to $2,419,608,800 during the reporting
period. Bonds outstanding on June 30, 1941, include $10,687,950
in matured bonds not yet presented for payment for which an equal
amount of cash is on deposit with the Treasurer of the United States.
Eliminating these bonds, the total liability of the Corporation on
unmatured bonded indebtedness totaled $2,408,920,850 on June 30,
1941, and if allowance is made for funds held by or due the Bond
Retirement Fund, a net liability of $2,373,497,300 results. All out
standing unmatured bonds of the Corporation are guaranteed by
the Government both as to principal and interest.
No bonds were issued by the Home Owners' Loan Corporation to the public
during the fiscal year ending June 30, 1941. The only securities issued during
this period were $5,000,000 of 4 percent, Series N bonds, due October 1940 and
$15,000,000, % percent, Series O bonds, due October 1941. Both of these series
were sold at intervals to the United States Treasury for general corporate purposes
and were repaid prior to June 30, 1941.
Prior to May 15, 1941, cash totaling $190,837,900, which had been accumu
lated in the Bond Retirement Fund, was deposited with the United States Treasury
for the payment of a lile amount of % percent, Series L bonds, due on that date.
This reduction in bonded indebtedness represented one of the largest single
reductions of debt in the record of Government agencies. A detailed statement
of bonds issued, refunded, and retired to June 30, 1941, and bonds outstanding
on that date is presented in Exhibit 65

Reserves and losses.-At the beginning of the reporting period, the
Corporation's reserve for losses on mortgage loans, interest, and




165

HOME OWNERS' LOAN CORPORATION

property amounted to $47,098,068. Regular monthly allocations of
$3,333,333 were added to the account during the fiscal year, resulting
in total additions of $40,000,000. Losses sustained during the year
on mortgage loans and property exceeded this amount, aggregating
$61,439,806, and resulted in a reduction in the balance outstanding
in the reserve at the close of the reporting period to $25,658,262.
Net worth.-On June 30, 1941, the accumulated deficit, after pro
vision for losses, aggregated $92,362,692. Hence, the net worth of
the Corporation at the close of the reporting period stood at
$107,637,308, a decline of $15,909,686 during the year.
Exhibit 66 gives the cash receipts and disbursements of the Cor
poration during the last two fiscal years. Their effect on cash working
funds, Bond Retirement Fund, and bond liability, taking into con
sideration assets of the Bond Retirement Fund, follows:
Fiscal year

Source of funds'
Cash working funds, beginning of year -----------------------------_---------Balance m Bond Retirement Fund, beginning of year -Net receipts from operations.--------------------------------------------------------------Proceeds from bond sales--------------------------------Discount on bonds purchased-------------Net funds available _ ----

.

1941

..--------- --- --

--- ----

--------------------

----

$39, 702, 549
35,066, 998
240,118, 617
20, 009,048

505, 715, 671

-----

$79, 329, 628
149, 217, 560
159, 884,275
117,171,577
112,631

334,897,212

39, 702, 549
35,066, 998
430, 946,124

53, 585, 613
46,111,499
235, 200,100

505, 715, 671

.

Use of funds'
Cash working funds, end of year_
----------Balance m Bond Retirement Fund, end of year -----------------Bonds retired
-------------Total

Fiscal year

1940

334, 897, 212

Income and Expense

During the fiscal year 1941, both the income and the expenses of the
Corporation show a substantial reduction. Operating and other
income totaled $116,484,728 as compared with $128,527,812 during
the preceding fiscal year. Operating and other expenses amounted
to $92,867,479 as compared with $105,496,796 during the 1940 report
ing period. There was, thus, a reduction of $12,043,084, or 9.4 percent
in income and $12,629,317, or 12 percent in expenses.
The greatest decline in income during the reporting period was the
result of a reduction in interest income on mortgage loans and ad
vances from $84,735,261 to $73,935,176. Two factors account for
this drop, a decline in the number of loan accounts on the Corporation's
books and a reduction in the principal amount on which interest is
charged as a result of amortization. Most of the decline is accounted
for by the latter of these factors.




166

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Interest income on vendee accounts increased $4,461,926 as a result
of the addition of a large number of new accounts during the fiscal
year. Property income for the fiscal year showed a substantial
decline in the amount of $5,493,675, reflecting reduced property
holdings and substantial progress in the sale of real estate. Dividends
received from share investments in savings and loan associations
declined due to retirements of these investments during the reporting
period. Furthermore, a number of institutions have reduced the
rate at which dividends are paid on their share capital.
Condensed income and expense statement for the fiscal years 1940 and 1941
Items

Operating and other income:
Interest on original mortgage loans and advances .--..---------Interest on vendee accounts and advances----- ----------Interest on special investments----------------------------Property income---Dividends on investments in savings and loan associations_
Miscellaneous .--- -..----------.---------..---------------Total income

....---------- .------------------

Operating and other expenses'
Net interest on bonded indebtedness---------------------------Amortization of discount on refunded bonds---------Administrative expense--------------------.
...-------------------------------General expense
Property expense----------------------- --------------------Total expense_-------------------

July 1, 1939
to June 30,
1940

July 1, 1940
to June 30,
1941

$84,735,261
9,969,264
41,407
26, 267,858
7, 253,960
260,062

$73, 935,176
14,431,190
19,639
20, 774,183
6, 473,661
851,479

128,527.812

116.484,728

56,393,368
1,466,777
23,331,735
2,296,198
22,008, 718

55, 242,303
19,766,078
1.178,966
16, 680,132

105,496,796

92,867,479

Net income before provision for losses------------------------Provision for losses-----------------------------------------------

23,031,016
40,067,690

23,617,249
40,353,331

Deficit for period-------------------------

17,036, 674

16, 736, 082

The drop in property expense during the reporting period accounted
for approximately 42 percent of the total decline in Corporation
expenses. Again, the decline can be attributed to the reduction in
real-estate holdings of the Corporation. Administrative expenses also
showed a substantial reduction of $3,537,321, or 15 percent during the
reporting period. Interest on bonded indebtedness declined by
$1,147,475 as a result of the reduction in the total volume of bonds
outstanding. After provision for losses in the amount of $40,353,331
during the reporting period, a deficit for 1941 fiscal-year operations
was sustained in the amount of $16,736,082 as against a loss of
$17,036,674 in the preceding fiscal year. A detailed income and
expense statement will be found in Exhibit 67.
From the beginning of operations through June 30, 1941, total
operating and other income of the Home Owners' Loan Corporation
aggregated $944,786,228 and operating and other expenses during




HOME OWNERS'

LOAN CORPORATION

167

this same period amounted to $809,541,194. The difference between
these two figures gives a net income of $135,245,034 before provision
for losses which may be sustained in the liquidation of assets. After
deduction of $227,600,293 for losses sustained and provision for future
losses, together with a surplus adjustment of $7,433, the deficit on
June 30, 1941, aggregated $92,362,692. A statement of income and
expense from the beginning of operations to. June 30, 1941, and an
analysis of changes in deficit for the reporting period are given in
Exhibits 68 and 69.
Since ordinary business practice requires the establishment of
reserves to which losses may be charged, the Board of Directors of the
Corporation has set aside from income each year specified amounts to
maintain reserves to which losses arising from delinquent interest and
the liquidation of mortgage loans and property may be charged.
During the fiscal year 1941, allocations thus set aside totaled
$40,000,000, but since losses charged off exceeded reserve provisions,
the balance in the reserve account was reduced by $21,439,806.
Analysis of reserves and charges to reserves
Cumulative
to June 30,

Item

Fiscal year
1941

1940

1941
$40,000, 000

Allocated to reserves--------------------------$186,137,153

Cumulative
to June 30,

$226,137,153

Losses"
On mortgage loans and vendee instruments 1 .----------168, 710
------2 115, 226,094
On capital value of property sold_.
Sales brokers' commissions and selling expenses --------23, 432,941
On properties charged off--__
--------_
211,340
Total losses------------Balance in reserves

-------

28,161
53,176, 575
8, 221, 827
13, 243

196,
3168,402,
31,654,
224,

871
669
768
583

139, 039, 085
----------

61,439, 806

200, 478, 891

47, 098, 068

-21,439, 806

25, 658, 262

1 Includes reserve provisions for accumulated interest .
2 Includes accrued interest capitalized of $27,415,423.50
3
Includes accrued interest capitalized of $36,144,860 60.

5. PROGRESS IN LIQUIDATION
During the reporting period, the Home Owners' Loan Corporation
made further substantial progress in the liquidation of its resources.
The task of liquidation consists primarily in the collection of the
amount invested in outstanding mortgage loans plus the unpaid bal
ance on properties acquired, subsequent additions in the form of ad
vances to borrowers and vendees, interest capitalized, and necessary
expenditures on properties acquired.




168

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

The net balance of loans outstanding and the capital value of prop
erties on hand was reduced during the fiscal year ending June 30, 1941,
from $2,436,945,646 to $2,189,038,942, or by 10.2 percent. This com
pares with a net liquidation ratio of 7.3 percent during the previous
fiscal year. The various processes by which this reduction in invest
ment was brought about are illustrated in the following table:
Reduction of total debtor and property accounts 1 in the fiscal year 1941
Balance of loans outstanding and property on hand, June 30,
1940----------------------------$2,436, 945,646
Plus: Additions during the year:
Advances to original borrowers_ ----$16, 244, 641
Advances to vendees ------------2, 428, 898
Interest converted to principal (extensions)1, 126, 599
Interest capitalized in property--1, 720, 892
Capital charges to property____
_
12, 539, 397
Sales brokers' commissions and selling ex
pense----------------8,221,827
Miscellaneous-------------2, 036, 957
Total additions -----------------------

44, 319, 211
2, 481, 264, 857

Minus: Receipts during the year:
Principal repayments by original borrowers
Principal repayments by vendees __
Miscellaneous capital cash credits-------Unposted advances, decrease -------

$179, 838, 597
48, 536, 004
1, 793, 954
625, 814

Total receipts ---------------------Loss on principal sustained during the year __
------Balance of loans outstanding and properties on hand, June 30,
1941_-------------------

230, 794, 369
2 61, 431, 546
2, 189, 038, 942

1Debtor accounts include original loans and advances to borrowers, subsequent additions to the original
loans, and interest converted to principal by extension, they also include vendee accounts originating from
property sales of the Corporation and advances'to vendees. Property accounts represent the capital value
both of property owned and property in process on which a foreclosure judgment has been obtained or fore
closure sale has been held subject to redemption period; they include unpaid interest on the loan accounts
transferred to property accounts, the cost of initial repairs and improvements, and acquisition costs, taxes,
etc, applicable to the period prior to the acquisition of absolute title.
2
Including sales commissions and selling expenses of $8,221,827.

The Corporation still had investments in debtor and property
accounts amounting to $2,189,038,942 at the close of the 1941 fiscal
year. This total was composed of $1,521,046,216 representing
original mortgage loans and advances thereon, $349,246,315 in vendee
accounts and advances, $318,734,001 in property acquisitions, and
$12,410 in the form of unposted advances. From the beginning of




HOME

OWNERS'

169

LOAN CORPORATION

operations through June 30, 1941, the Corporation's gross investments
in loans and properties-aggregating $3,489,651,957 on that date
had been reduced by $1,300,613,014, or 37.2 percent of the total.
Of this reduction, $1,100,134,124, or 31.5 percent of total investments,
is accounted for by moneys actually received by the Corporation in
the form of repayments on debtor accounts and from the proceeds
of property sales. The remaining $200,478,891, or 5.7 percent of the
gross total, represents losses sustained in the liquidation of loans,
interest, and properties.
Reduction of total debtor and property accounts through June 30, 1941
Amount
Gross investment in loans and properties, June 30, 1941
Deduct

------------

Repayments on original loans .----- ----------------------------------Receipts-property sales and vendee accounts--------- ------------Net miscellaneous cash credits
..---- ---------------....-------Total
Total losses

__.----------.......--------------------.........--------------------------------

Balance of loans outstanding and properties on hand, June 30, 1941 --------

Percent

$3, 489, 651,957

100.0

956, 637, 553
135, 546,907
7,949, 664

27.4
3.9
0.2

1,100,134,124
1 200, 478,891

31. 5
5.7

2,189,038,942

62 8

SIncludes sales brokers' commissions and selling expenses.

The only other major type of investment which is subject to gradual
liquidation consists of investments in the shares of savings and loan
associations. During the reporting period, such investments de
clined by $20,170,850 as the net result of voluntary repurchases of
$20,377,800, retirements requested by the Board in the amount of
$1,213,050, and new investments of only $1,420,000.
The progress in liquidation varies substantially among the different
HOLC Regions as the chart on page 170 indicates. On June 30, 1941,
the San Francisco Region, including the Pacific and Mountain States,
led all other Regions with a reduction in gross investments in that
area of 45.59 percent, including losses sustained in the process of
liquidation. At the other extreme, the New York Region, compris
ing New York, New Jersey, and the several New England States,
was far below the national average with a reduction of only 26.83
percent.
The reduction in the Corporation's debtor and property accounts
has been accompanied by a reduction in the bonded indebtedness of
the Corporation. Total bonds outstanding on June 30, 1941, ag
gregated $2,419,608,800, as compared with a peak of $3,047,046,575
at the time the refinancing activity of the Home Owners' Loan Cor
poration ended in June of 1936. The Corporation has issued a gross
12
425085-41--




170

REPORT

OF FEDERAL HOME LOAN BANK BOARD,

1941

total in bonds of $5,903,318,875, which includes bonds issued solely
for refunding purposes. Bonds refunded through June 30, 1941,
amounted to $2,413,865,325 and bonds retired totaled $1,069,844,750,
leaving the net liability at the close of the reporting period at
$2,419,608,800.
In accordance with the provisions of the Home Owners' Loan Act,
all principal repayments by borrowers have been deposited regularly
in the Bond Retirement Fund and used only for the retirement of
CHART LIX
REDUCTION

OF THE

GROSS INVESTMENT IN LOANS AND PROPERTIES

AS OF JUNE 30, 1941, BY HO L C REGIONS
SRECOVERIES
0

10

20

INVESTMENTS
OUTSTANDING
30

40

UNITEDSTATES

LOSSES
SUSTAINED

PERCENT

50

60

70

80

90

100

,,

I-NEW YORK
2A- BALTIMORE
2B-CINCINNATI
3A- ATLANTA
3B-MEMPHIS
4A-CHICAGO
4B-DETROIT
5A- OMAHA
5B- DALLAS

"

'

6-SAN FRANCISCO
DIVISIONOF RESEARCH
AND STATISTICS
FEDERAL HOMELOAN BANK BOARD

bonds. Certain other receipts such as cash proceeds from property
sales and repurchases of investments in savings and loan associations
have likewise been applied to the retirement of bonds by order of
the Board. Through the close of the reporting period, principal re
payments of debtors and proceeds from property sales amounted to
$1,092,814,460; other items applicable to the retirement of bonds ag
gregated $43,211,024, giving a total of $1,136,025,484. Of this
amount, $1,115,843,304 had actually been deposited in the Fund
through June 30, 1941, and the remaining $20,182,181 was deposited




HOME OWNERS' LOAN CORPORATION

171

during July. The following table shows the disposition of the funds
allocated to the Bond Retirement Fund through June 30, 1941:
Applied to retirement of bonds-------------------------Deposited with U. S. Treasury for retirement of matured

bonds on which interest has ceased----------------_Available for future bond retirement------------------

_

$1, 069, 731, 805

10, 687, 950
35, 423, 548
1, 115, 843, 303

Amount due Bond Retirement Fund for June 1941 deposited
in July 1941-----------------------------------_

20, 182, 181
1,136, 025, 484

The discrepancy between the net reduction in bonded indebtedness
and the gross receipts applied to the retirement of bonds is a normal
result of the liquidation problem facing the Corporation. The Home
Owners' Loan Corporation has been obliged to acquire a substantial
volume of properties and to expend considerable amounts on recon
ditioning, taxes, and insurance. The Corporation has also made ad
vances both to original borrowers and vendees for a number of pur
poses. All of these factors have offset in part the reduction of
original loan balances and have naturally tended to create a lag in
a corresponding reduction in bonded indebtedness outstanding.







List of Charts

DEFENSE HOUSING
Page

I. Loans made by member savings and loan associa
tions in defense housing and other areas, by
months, January 1940 to June 1941---------II. Change in lending volume of insured associations
in defense housing areas, United States and
FHLB Districts, first six months of 1940 com
pared with first six months of 1941-----------

4

6

SURVEY OF HOUSING AND MORTGAGE FINANCE
III. Indices of residential construction and industrial
production, 1930 to June 1941 --------.-----IV. Construction other than residential, 1926 to June
1941------------------- ---------------V. Distribution of residential construction, private
and public, January 1938 to June 1941-------VI. Increase in private residential construction in de
fense and nondefense areas, first six months of
1940 compared with first six months of 1941-_
VII. Estimated value of residential construction, in
cluding maintenance, United States, 1915 to
1940-----------------------------------VIII. Increase in residential construction, by size of
community, fiscal year 1941 ---------------IX. Number of new nonfarm dwelling units built, by
type of dwelling, 1921 to 1940--------------X. Nonfarm real-estate foreclosures in the United
States, 1926 to June 1941------------------XI. Rate of nonfarm real-estate foreclosures, fiscal
year 1941--------------------------------XII. Reduction in residential real-estate overhang,
1938 to 1940 -----------------------------XIII. Wholesale price indices of lumber, all building
materials, and all industrial commodities, 1935
to June 1941 -----------------------------




173

15
15
16

17

18
21
22
26
26
28

30

174

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941
Page

XIV. Cost indices for construction of a standard six
room frame house, January 1936 to June 1941.
XV. Construction employment, 1935 to 1941-------_
XVI. Index of residential rentals, 1926 to 1941--- --XVII. Population growth, by size of city, 1920 to 1930
compared with 1930 to 1940---------------XVIII. Percent change in population, by age groups,
United States, 1940 over 1930_------ -----_
XIX. Home mortgage lending activity, 1929 to 1940___
XX. Estimated volume of mortgage loans made on non
farm one- to four-family dwellings, by type of
lender, calendar year 1940 -----------------XXI. Index of new mortgage lending, all savings and
loan associations, 1936 to June 1941 -------- _
XXII. Estimated volume of mortgage recordings on non
farm property, fiscal years 1940 and 1941-----_
XXIII. Mortgage recordings during fiscal year 1941, by
Federal Home Loan Bank Districts --------XXIV. Savings and loan construction lending compared
with one- and two-family home construction,
fiscal year 1941 over fiscal year 1940---------XXV. Annual changes in estimated private mortgage
debt on nonfarm one- to four-family dwellings,
1930 to 1940-----------------------------_
XXVI. Estimated balance of outstanding mortgage loans
on nonfarm one- to four-family dwellings, by
type of lender, December 31, 1940 ----------XXVII. Amounts of selected types of long-term savings
held by individuals, 1920 to 1940---_
XXVIII. Percent change of private investment in savings
and loan associations, by class of association,
calendar year 1940_------------------------

31
32
34
36
38
40

41
42
43
45

47

49

50
55

56

FEDERAL HOME LOAN BANK SYSTEM
XXIX. Federal Home Loan Bank System advances and
repayments, December 1936 to June 1941 .--XXX. Percentage of borrowing members to total mem
bership, 1936 to 1941------------------- --XXXI. Distribution of long-term and short-term ad
vances outstanding, 1936 to 1941-__-__




62
64
66

LIST OF CHARTS

175
Page

XXXII. Composition of consolidated assets of the twelve
Federal Home Loan Banks as of June 30, 1940,
and June 30, 1941 ----------_
XXXIII. Composition of consolidated liabilities and capital
of the twelve Federal Home Loan Banks as of
June 30, 1940, and June 30, 1941 ---XXXIV. Distribution of net income of the Federal Home
Loan Banks, fiscal year 1941---_-----------XXXV. Number and combined assets of member institu
tions of the Federal Home Loan Bank System,
1934 to 1941 ----------------------------XXXVI. Member savings and loan associations compared
with all operating savings and loan associations,
1938 to 1940----------------------------_
XXXVII. Volume of new mortgage loans made by savings
and loan associations, by type of association,
1936 to 1941-----------------------------XXXVIII. Percentage increase in new mortgage lending
activity of savings ar.d loan associations,
United States and Federal Home Loan Bank
Districts, June 30, 1940, to June 30, 1941----XXXIX. Percent change in assets of member savings and
loan associations, calendar year 1940 over 1939XL. Trend in selected asset accounts of all member
savings and loan associations, United States
and Federal Home Loan Bank Districts, De
cember 31, 1939, to December 31, 1940 -----XLI. Trend in selected liability accounts of all member
savings and loan associations, United States
and Federal Home Loan Bank Districts, Decem
ber 31, 1939, to December 31, 1940_- -

69

71
74

82

84

86

86
91

93

95

FEDERAL SAVINGS AND LOAN ASSOCIATIONS
XLII. Number and assets of Federal savings and loan
associations, 1934 to 1941 ------------XLIII. Percentage growth in assets and private repur
chasable capital of Federal savings and loan
associations, United States and FHLB Districts,
fiscal year 1941 over 1940 ------




105

106

176

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941
Page

XLIV. Index of private repurchasable capital outstand
ing in comparable Federal savings and loan
associations, 1935 to 1941-------------_____
XLV. Private and Government capital held by Federal
savings and loan associations, 1935 to 1941 ___
XLVI. Estimated volume of mortgage loans held by
Federal savings and loan associations, 1936 to
1941------------------------------_-

108
109

111

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
XLVII. Progress of insured institutions, June 30, 1936, to
June 30, 1941 _---_--_
_
--------XLVIII. Assets of insured associations, October 1934 to
June 1941. ----------------------------XLIX. Percentage change in selected balance-sheet items
of 2,159 identical insured associations, June 30,
1941, compared with June 30, 1940 ----------L. Resources of the Federal Savings and Loan Insur
ance Corporation as of June 30, 1935, and June
30, 1941--------------------------------

117
119

120

132

HOME OWNERS' LOAN CORPORATION
LI. Classification of accounts as of June 30, 1941 __
LII. HOLC collections and national income, 1936 to
1941------------------- ----------------LIII. Foreclosure operations, original accounts and
vendee accounts, January 1936 to June 1941 _
LIV. Properties acquired and sold, June 30, 1936, to
June 30, 1941___--- -------------------LV. Capital value of average HOLC property, based
on cumulative property sales through June 30,
1941----------------------------------LVI. Reconditioning cases completed, July 1936 to June
1941_--------------------------_
LVII. Total number of employees, July 1935 to June
1941______ ___-- _
_-__--__
LVIII. Administrative expenses of the Home Owners'
Loan Corporation, fiscal years 1936 to 1941___
LIX. Reduction of the gross investment in loans and
properties, by HOLC Regions, as of June 30,
1941 -------------------




136
139
150
152

155
157
160
162

170

_ __

I

I

__

List of Exhibits

SURVEY OF HOUSING AND MORTGAGE FINANCE
Page

1. New nonfarm residential building in the United States,
_
1921 to 1941 ---------------------------------2. Nonfarm. real-estate foreclosures in the United States,
1926 to 1941 ------------------------------3. Nonfarm real-estate foreclosures, by Federal Home Loan
Bank Districts and by States, June 30, 1940, and June

183
183

30, 1941--------------------------------184

4. Selected figures on residential real estate owned by financial
-institutions, December 31, 1940-------------5. Indices of total building cost, and of cost of materials and
labor used in construction of standard six-room frame
house, January 1936 to June 1941_-----------

185

-186

6. Population growth in the United States, by size of city,
1920 to 1930 and 1930to 1940---------------------7. Population changes in metropolitan districts of the United
_

States, 1930 to 1940_
---------------------

187
189

8. Estimated volume of mortgage loans originated on non
farm one- to four-family dwellings, by type of lender,
1929 to 1940 ------------------

-----------

189

9. Estimated recordings of nonfarm mortgages of $20,000 and
less, by type of mortgagee, fiscal year 1941---------_
10. Estimated balance of outstanding mortgage loans on non
farm one- to four-family dwellings, 1929 to 1940 --- _ 11. Changes in selected types of individual long-term savings,
1935 to 1940 --------------------------

190
192
193

FEDERAL HOME LOAN BANK SYSTEM
12. Federal Home Loan Banks-Advances and repayments
for the periods indicated, and the balance of advances
outstanding at the close of such periods_------_-----

194

13. Federal Home Loan Banks-Advances outstanding, by
Bank Districts, at the close of each fiscal year, 1934 to
1941

_---------




_

-----

---

195
177

178

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941
Page

14. Percentage of borrowing members to total membership,
by Federal Home Loan Bank Districts, at the close of
each fiscal year, 1936 to 1941 ----------15. Federal Home Loan Banks-Interest rates charged mem
ber institutions on advances, as of July 1, 1941-----16. Federal Home Loan Banks-Distribution of advances out
standing, by long-term and short-term advances, as of
June 30, 1940, and June 30, 1941 -----------17. Types of advances made by the Federal Home Loan
Banks-------------------------F---18. Federal Home Loan Banks-Statement of condition as of
June 30, 1941
___
-------__
--_--19. Federal Home Loan Banks-Investment holdings at the
close of the fiscal year 1941 -----__
_
-____
20. Federal Home Loan Banks-Statement of consolidated
debentures outstanding, June 30, 1941 ------21. Federal Home Loan Banks-Interest rates paid members
on time deposits, as of July 1, 1941 -----------------22. Federal Home Loan Banks-Statement of profit and loss
for the fiscal year ended June 30, 1941_------------23. Federal Home Loan Banks-Total dividends declared
through June 30, 1941, and the annual rates paid semi
annually for the fiscal years 1940 and 1941-----------24. Federal Home Loan Banks-Analysis of surplus and un
divided profits for the fiscal year ended June 30, 1941__
25. Distribution of net income of the Federal Home Loan
Banks, for the fiscal year ended June 30, 1941 ---26. Federal Home Loan Bank Board-Statement of receipts
and disbursements of the Board for the fiscal years
1940 and 1941 ------------------ ------27. Federal Home Loan Bank Board-Comparative statement
reflecting, by offices, the number of Board employees as
of the close of the fiscal years 1940 and 1941 ---28. Federal Home Loan Bank System-Members of the Federal
Savings and Loan Advisory Council, as of June 30, 1941_
29. Federal Home Loan Bank System-Number and estimated
assets of member institutions, June 30, 1940, and June
30, 1941_--------------------------_
30. Federal Home Loan Bank System-Member savings and
loan associations compared with all operating savings
_217
and loan associations, 1937 to 1940------------------




196
196

197
198
199
205
206
206
207

211
212
214

214

215
215

216

LIST OF

EXHIBITS

179
Page

31. Estimated volume of new mortgage loans made by savings
and loan associations, by type of association, January
1936 to June 1941--------------------------------32. Estimated volume of new mortgage loans made by all
savings and loan associations, by Federal Home Loan
Bank Districts, fiscal years 1940 and 1941 ------33. Federal Home Loan Bank System-Investments by the
U. S. Treasury and the Home Owners' Loan Corpora
tion in member savings and loan associations, by fiscal
year periods, 1934 to 1941 ---------------34. Combined balance-sheet items for all savings and loan
member institutions of the Federal Home Loan Bank
System, as of December 31, 1939, and December 31,
-----------1940
-----------35. Percentage distribution of balance-sheet items for all sav
ings and loan member institutions of the Federal Home
Loan Bank System, as of December 31, 1939, and De
-------------------cember 31, 1940
36. Operating ratios for reporting savings and loan member
institutions of the Federal Home Loan Bank System,
__
_
for the calendar years 1939 and 1940 --37. Consolidated statement of operations for 3,508 savings
and loan member institutions, classified by asset size
groups, December 31, 1940_----------------

218

219

220

221

222

223

225

FEDERAL SAVINGS AND LOAN ASSOCIATIONS
38. Federal savings and loan associations-Number and assets
as of the end of each fiscal year, 1934 to 1941 _-___-39. Federal savings and loan associations-Number of asso
ciations chartered, mortgage loans outstanding, .and
assets, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941----------40. Index of private repurchasable capital in comparable
Federal savings and loan associations, June 30, 1935, to
June 30, 1941 --------------------------------- _
41. Federal savings and loan associations-Private investors
in repurchasable shares and private repurchasable
capital, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941_----_
__-__




228

229

232

232

180

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941
Page

42. Federal savings and loan associations-Investments of
the U. S. Treasury and the Home Owners' Loan Cor
poration, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941------------_
_
43. Federal savings and loan associations-New mortgage
loans made by reporting associations during the year
ended June 30, 1941, by purpose of loan ------------ _
44. Federal savings and loan associations-Selected balance
sheet items for 1,394 identical new and converted asso
ciations, as of June 30, 1940, and June 30, 1941 -------45. Federal savings and loan associations-Consolidated state
ment of operations for 1,428 reporting Federal savings
and loan associations, for the year ended December 1940_
46. Federal savings and loan associations-Operating ratios of
1,428 reporting Federal savings and loan associations,
grouped as to size of association, for the year ended
December 31, 1940 ------------------------47. Federal savings and loan associations-Average annual
dividend rates declared for the calendar years 1939 and
1940 -----------------

234

235

237

237

239

241

FEDERAL SAVINGS AND LOAN
INSURANCE CORPORATION
48. Federal Savings and Loan Insurance Corporation
Number and assets of all insured associations and num
ber of private shareholders, by Federal Home Loan
Bank Districts and by States, June 30, 1941 -------49. Federal Savings and Loan Insurance Corporation-Com
parison of all savings and loan members of the Federal
Home Loan Bank System with all insured savings and
loan associations, by Federal Home Loan Bank Districts
and by States, June 30, 1941 ----------------50. Federal Savings and Loan Insurance Corporation-State
ments of condition and operation for insured institutions
---_
in receivership on June 30, 1941 --_
51. Federal Savings and Loan Insurance Corporation-State
----ment of condition as of June 30, 1941 ----




242

244

246
249

LIST OF EXHIBITS

181
Page

52. Federal Savings and Loan Insurance Corporation-Income
and expense statement for the period July 1, 1940,
_-------------------through June 30, 1941 53. Federal Savings and Loan Insurance Corporation
Expenses for the period July 1, 1940, to June 30, 1941 _-_

250
251

HOME OWNERS' LOAN CORPORATION
54. Home Owners' Loan Corporation-Average outstanding
original loan per borrower and average loan balance
outstanding, June 30, 1941, by HOLC Regions and by
States-----------------55. Home Owners' Loan Corporation-Net foreclosure authori
zations on original loans and vendee accounts, by
HOLC Regions and by States, cumulatively to June 30,
1941
-------------------56. Home Owners' Loan Corporation-Property acquisitions
and sales, by fiscal-year periods, 1936 to 1941_-- __57. Home Owners' Loan Corporation-Profit and loss on sales
of real estate, by calendar years, 1935 to 1941----__
58. Home Owners' Loan Corporation-Analysis of the various
elements entering into the capital value of properties
owned and in process of acquiring title, June 30, 1941 59. Home Owners' Loan Corporation-Percentage of vacant
units to units available for rent, percentage of rents col
lected to rent accruals, and average rent per unit, by
months, July 1936 to June 1941 --------_
-60. Home Owners' Loan Corporation-Summary of the
various income and expense items entering into the
operation of properties sold by the Corporation through
June 30, 1941 -----------------------------___61. Home Owners' Loan Corporation-Number of recondi
tioning contracts completed from the beginning of opera
tions through June 30, 1941_ ----------62. Home Owners' Loan Corporation-Number of employees
by departments, divisions, and sections, as of July 1,
1941 ---------------____
63. Home Owners' Loan Corporation-Balance sheet as of
June 30, 1941--------------------------




252

253
254
254

255

256

257

257

258
259

182

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941
Page

64. Home Owners' Loan Corporation-Investments in savings
and loan associations, by States, as of June 30, 1941 _
65. Home Owners' Loan Corporation-Bonds issued, refunded,
and retired to June 30, 1941, and outstanding as of
June 30, 1941---____________________________
66. Home Owners' Loan Corporation-Cash receipts and
expenditures, fiscal years 1940 and 1941 --------____
_
_
67. Home Owners' Loan Corporation-Statement of income
and expense for the fiscal year 1941 ---- _____
68. Home Owners' Loan Corporation-Statement of income
and expense from the beginning of operations, June 13,
__--- _
1933, to June 30, 1941 ---------------------69. Home Owners' Loan Corporation-Analysis of changes in
deficit for the fiscal year ended June 30, 1941 __---




262

264
265
266

267
268

EXHIBIT 1
New nonfarm residential building in the United States, 1921-41
[Thousands of dwelling units]
Calendaryear-famCalendar year
ily
ily

2-famsly
ly

Apartment
ment

1921
.-------- 316
437
1922 ------ --.--------513
1923
---....
534
1924
572
1925-----------491
1926 - -----454
1927 ----1928
-----------436
1929
------316
1930-------185
1931----------147

70
146
175
173
157
117
99
78
51
28
21

63
133
183
186
208
241
257
239
142
73
44

Total
449
716
871
893
937
849
810
753
509
286
212

Calendar year
1932------------1933 --1934
--1935------------1936--------1937---1938 ----- _-1939 ---- _-1940 -- ----Fiscal year 1940_
Fiscal year 1941_

1-famll
ily

2-faml
ily

Apartment
ment

6
4
3
6
13
15
17
28
37
30
39

61
39
42
110
203
219
261
351
425
375
497

Source' For 1921-36- National Bureau of Economic Research. For 1937 through 1941
Labor, on the basis of building permit reports for eitjes of 2,500 population or over.

7
11
10
28
60
52
69
86
78
79
80

Total
74
54
55
144
276
286
347
465
540
484
616

Department of

EXHIBIT 2
Nonfarm real-estateforeclosures in the United States, 1926-41
Rate per

Rate per

Number

1,000 nonfarm dwellings

1926----------68,100
1927
.------------ 000
91,
1928---------116,000
1929-_
-----134, 900
1930_----------150,100
1931-----193,800
1932-------248. 700
1933-----------252,400

3 6
4.8
6 1
7.1
7.9
10 2
13 1
13.3

1934
----------1935-----------1936_
---------1937
-----_
1938-----------1939_
---------1940 -----------1941 1
-------

Number

Year

Year

-

-

1,000non
farm dwell
ings

230, 350
228, 713
185,439
151,366
118, 505
100,961
75, 310
31,941

12.2
12.1
9 8
8.0
63
5.3
4.0
3.4

1 January to June; rate on annual basis.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.




183

184

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 3

Nonfarm real-estateforeclosures, by FederalHome Loan Bank Districtsand by States
I
I
]I
I
I
Number, Number,
year end- year end
ing June ing June

Number,
year end
ing June
30,1940

Number,
year end
ing June
30,1941

85, 726

68, 432

No. 7-Chicago -------------

4, 912

4, 273

10,367

7, 356

Illinois-------- ----

Connecticut--------Maine -----------------Massachusetts --------New Hampshire -----Rhode Island ---------Vermont -------

2, 886
2,026

2, 362
1,911

1,410
769
7,151
300
668
69

1,120
663
4, 759
266
481
67

5,157

4,063

No. 2-New York ----------

19,079

15,620

South Dakota ---------_

597
831
3, 200
230
299

517
646
2, 564
146
190

4,417
14, 662

3,412
12,208

No. 9-Little Rock----------

3,418

2, 565

360
661
342
124
1,931

305
485
231
77
1,467

3,090

2,843

357
1,096
811
826

341
1,098
715
689

1,427

964

89
114
390
126
623
85

53
81
369
71
332
58

3, 596

3, 086

181
3, 400
15

111
2, 964
11

Bank District and State

United States total _No. 1-Boston-------------

New Jersey -----------------New York No. 3-Pittsburgh ---------Delaware
Pennsylvania -------West Virginia ---------

212
11,248
769

184
9.398
703

No. 4-Winston-Salem ----- _

9,043

7,417

Kentucky -------------Ohio_-----------Tennessee----------No. 6-Indianapolis -------Indiana ----------

Michigan-_________

----

No. 8-Des Momes ----Iowa_---

-----------

Minnesota_ ------Missouri----------------

Arkansas-------------Louisiana_------------

Mississippi-------------New Mexico ....-----_-------Texas
No. 10-Topeka --------

1,118
326
1, 326
989
1, 761
1,715
412
1, 396

916
271
1,317
675
1,367
1, 241
305
1,325

8,887

7,172

1,356
5, 529
2,002

1,176
4,017
1,979

4,521

2,788

1, 532
2, 989

1,122
1, 666

Colorado ------Kansas ----------------Nebraska ----------- __

Oklahoma ---....--_--..
_
No. 11-Portland

_---..- _

Idaho-------------------

Montana -------Oregon--------

Utah_-------__
Washington -_---.-__-____
Wyomimg -----No. 12-Los Angeles ------Arizona
California_
Nevada -----------------

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




-

North Dakota -----

10,285

No. 5-Cincinnati-----------

30,1940

Wisconsin- -

12,229

Alabama---------------District of Columbia -Florida ---------------Georgia--------Maryland -------------North Carolina -------South Carolina --------Virginia ----------------

Bank District and State

30,1941

185

EXHIBITS
EXHIBIT 4

Selected figures on residential real estate owned by financial institutions, Dec. 31, 1940
All real estate owned
by savings
and loan
associations

FHLB Districts

United States...-------.

...

1- to 4-family Residential
nonfarm
real estate
homes owned owned by

ropr
Properties
owned by
the Home
by hlife
insur- insured com- Owners' Loan
ance cornmercial
Corporation
panics
banks
Corporation

$492,171,000

$209,631,000

$139, 314,000

$338,276,678

50,056,000

8,117,000

9,998,000

46,153,542

550,000
1,929,000
46,633,000
438,000
411,000
95,000

2, 610, 000
1,000
5,301,000
50,000
142,000
13,000

2,833,000
818,000
4,415,000
124,000
1,130,000
678,000

8, 327, 674
896, 550
32,089,671
815,562
3,338,695
685,390

156,197,000

63,385,000

43, 245,000

201,623, 940

121,043, 000
35,154,000

16, 501,000
46,884,000

18, 794,000
24,451,000

57,002, 790
144,621,150

68,462,000

25,258,000

52,561,000

12,922,489

273,000
65, 454, 000
2,735.000

108,000
24, 414, 000
736,000

643,000
50,011,000
1,907,000

66,019
12, 509, 483
346,987

9,843,000
1,452, 000
474,000
70, 000
173,000
4,138,000
1,786, 00
426, 000
1,324,000

20,179,000
5, 777, 000
421,000
1,796,000
4,176,000
272,000
6,807,000
226,000
704,000

6,925,000
731,000
769,000
540,000
1,680,000
1,273,000
640,000
79,000
1,213,000

11, 566,815
1,153,481
83,637
474,139
612,811
6,230,491
786,769
152,175
2,073,312

No. 5--Cincinnati-----------------------Kentucky------------------------------Ohio-....----------- -------Tennessee------------------- ----------

77,230,000
13,383,000
63, 262,000
585,000

19, 271,000
1,195,000
12,144,000
5,932,000

8,443,000
1,118,000
6, 597,000
728,000

12, 361, 837
1,124,893
10,106, 098
1,130,846

No. 6-Indianapolis ------------------------Indiana ....--------------------------Michigan...---..-----------------------

17,854, 000
8,734,000
9,120,000

24, 257,000
2,000,000
22,257,000

2, 676,000
2,006,000
670,000

10,964, 673
3,907,746
7,056,927

No. 7-Chicago-------------------------------

54, 232, 000
29,970,000
24,262,000

19, 534, 000
19,318,000
216,000

3, 403,000
2,432,000
971,000

15, 230, 374
5,005,053
10,225,321

13, 206,000
1, 568,000
738,000
9, 769,000
778,000
353,000

10, 729, 000
675,000
2,744,000
7,228,000
44,000
38,000

1,211,000
186,000
215,000
728, 000
55,000
27, 000

10,655, 844
663, 808
1,486,909
6, 977,887
537,539
989, 701

8,534,000

4,638,000

1,742,000

5,228,279

233,000
5,701,000
215,000
98,000
2,287,000

625,000
17,000
690,000
4,000
3,302,000

101,000
415,000
408,000
9,000
809, 000

735,205
1,858,235
600,925
45,169
1,988, 745

18,850,000
1,495,000
10,085,000
3,041,000
4,229,000

3,816, 000

189, 000
29,000
120,000
22,000
18,000

7,451, 301

No. 1-Boston----------------Connecticut ---------------------------Maine.-------------------.-------------Massachusetts----------------------New Hampshire --------------------Rhode Island---------------------------------Vermont..-----------------------------------

No. 2-New York_-----

New Jersey--------------------------------------------New York. .-No. 3-Pittsburgh. --Delaware

------------------

------------------------------

Pennsylvania- -------------------------------------West Virginia-------No. 4-Winston-Salem. ----------------------

Alabama -----------------------------District of Columbia -------------------.--------------------Florida ...
Georgia-...----------------------------Maryland- -----------------------------North Carolina ------------------ -----South Carolina ..--------------------- --------------------Virginia.--...

Illinois
--------------Wisconsin.-----------------------.-----..
No. 8-Des Moines --------

..------------.

Iowa-----------------------------------Mmnesota-.----- -----------------------------------------Missouri-North Dakota--------------South Dakota .-------------------------No. 9-Little Rock _..-----------------Arkansas..- ---...
---.----------------Louisiana-----------------------.--.---Mississippi- .-------------------------New Mexico.----------------------------...---.---------------.
Texas..-.
No. 10-Topeka-.----------------------.
Colorado.----------------------------Kansas--..---------------------------Nebraska--.----------------------Oklahoma.------------------------------See footnotes at end of table.
13
425085-41-




428,000
669,000
314,000
2,405,000

265,395
2,410,859
1,424,413
3,350,634

186

REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941
EXHIBIT 4-Continued

Selected figures on residential real estate owned by financial institutions, Dec. 31,
1940-Continued
All real es- 1- to 4-family
tare owne d nonfarm
homes owned
by savings hbomy insurlife
and loan
by life insomassociations
ance cornpanies

FHLB Districts

No. 11-Portland------------------------_Idaho ------------------------------Montana--------------------------Oregon ---------------------------Utah ------------------- --------Washington----Wyoming ---

----------

---------

$8,549,000
76,000
103,000
1,322,000
5,287,000
1. 691,000

Residential
Pr
real estate
Properties
owned by
insured cobym- the ome
insured co
Owners' Loan
Corporation 2
banks 1
mercial
Corporation

$4,256,000
4, 000
74,000
2,161,000
186,000
1, 824,000

$218,000
2,000
6,000
138,000
17,000
43,000

$1,644,031
155, 639
85,633
170,851
194,364
980, 605

70,000

Hawaii-------------------

7,000

12,000

56,939

9,158,000
70,000
9,033, 000
10,000

No. 12-Los Angeles --------------Arizona --------------------------------California------------------------- ----Nevada-----------------------------

6,191,000
61,000
6, 128, 000
2,000

8,703,000
101,000
8, 599,000
3,000

2,473,553
709, 673
1, 761, 968
1, 912

45,000

--

---

SExcluding possessions. Source" FDIC Report, Assets and Liabilities of Operating Insured Banks
Dec. 31, 1940.
2 Capital value. Excludes properties in process of acquiring title.

EXHIBIT 5
Indices of total building cost, and of cost of materials and labor used in construction
of standard 6-room frame house
[Average month 1935-39=100]
Mate
rials

Labor

1936

January ------February_----March_____-April -_______

_____
May June -___------

_

July----

August ------------September_-October ------November ---December_-

95. 8
*96 0
96. 2
96. 3
96. 5
96. 6
97. 0
97.4
97. 5
97.8
98. 4
99. 5

92. 6
92 6
92. 7
93. 2
93 8
94 3
94 7
94. 9
95 3
95. 8
96. 3
96. 4

94. 7
94. 9
95.0
95.3
95. 6
95. 8
96. 2
96. 6
96.8
97.1
97. 7
98 5

101.0
102. 5
104 5
105. 9
106. 8
107.0
107. 2
107. 3
107.1
106. 5
106. 0
104. 9

96. 9
97. 6
98. 9
100. 7
101. 7
103. 3
104 4.
104. 7
104. 8
105.0
105.0
104 8

99. 6
100. 9
102. 6
104. 2
105.0
105.8
106 3
106 4
106.3
106.0
105. 7
104. 9

S104. 1
103. 3
102. 6
102. 1
101. 7
101. 5
101 1
100.4
100. 4
100. 2

104 7
104. 7
105. 2
105. 2
105.1
105. 3
105. 7
106. 0
106.1
105.8

104. 3
103.8
103. 5
103.1
102. 8
102.8
102. 7
102. 3
102.3
102.1

1937

January_
---February-------March _ ___
_--April -----------May __ -___June--------July -------------

August_-

_----

September----------

October __----November_---December _--1938

January___February ----------March ------ ___----_.
April---_- _ --

May ---

June ----July --------------.

Mate
rials

Total

Total

1938- C ontinUed
November -_
December - __--

100 2
100.0

105.8
105.8

102. 1
102 0

1939
January _-- -February_--March ____--__________
April_-----May
---June -July
---August --------September ------October--_______
November -----December -_ -

100. 0
100 0
100 0
99. 9
99 7
99 5
99. 4
99. 3
99 9
100. 6
101.3
101.5

105. 6
105. 9
106 1
105. 6
105. 3
105. 0
105.1
104. 9
104 9
104. 8
104. 6
104. 4

101.9
102.
102 1
101.8
101.6
101.4
101.3
101.2
101.6
102 0
102.4
102. 5

1940
January _
--.February---__-____
March__________
April__________
May-_________
June --------July_--August
_________
September ______
October ------ ____-__. __
November -December
____--_

101 4
101.5
101.4
101.2
101 3
101. 3
101.2
101 4
101 9
103. 4
104.6
105 9

104. 0
104. 2
104.1
103.8
103. 7
103. 5
103 4
103 6
104. 8
106. 9
109.8
112.5

102. 3
102.4
102. 3
102.1
102. 2
102 1
102 0
102 1
102 9
104. 6
106. 4
108.1

106. 6
107. 8
108.0
108. 7
108.8
109. 2

114.5
115.1
115.3
116.1
117.0
118 6

109.3
110 2
110 4
111.2
111.6
112 4

January_
February.
March-_
April
May-June___-

1941

August _-___
September_----October -__--Source: Division of Research and Statistics, Federal Home Loan Bank Board.




Labor

187

EXHIBITS

EXHIBIT 6
Population growth in the United States, by size of city, 1920-30, 1930-40
1940

-

Percent
increase
1930-20

1920

101, 518, 199

Total nonfarm_ ------500,000 and over_- ----50,000-500,000_ - -__- 2,500-50,000 .-Rural nonfarm ------_

Percent
increase
1940-30

1930

92, 617, 533
20, 828, 542
21, 988, 642
26,137, 639
23, 662, 710

74, 351, 980

7. 4
4. 4
11.3
14 5

24 6

16, 369,
16, 325,
21, 609,
20, 047,

9. 6

22, 367,825
22, 964, 081
29, 091, 796
27, 094, 497

27. 2
34 7
21.0
18 0

301
772
530
377

EXHIBIT 7
Population changes in metropolitan districts of the United States, 1930-40
[Based on 133 districts for which 1930 and 1940 data are available]
Increase in
Metropolitancentral

city

Metropolitan district

Number

Per-

cent

Decrease in
central city
Num-

ber

Per-

cent

Increase outside central
i
Number

Decrease out
side central

t

cdistrictt
Per-

cent

Num-

ber

Per

cent

Akron, Ohio . ------------..- -------10, 249
4 0
13, 273 14. 5 13, 753 10. 6 Albany, Schenectady, Troy, N. Y -- __
.7, 437
2. 5
Allentown, Bethlehem, Easton, Pa --4,060
2. 2 ---...----7
.-----1, 090
0. 8
Pa
------------ .
.1, 840
2. 2
1, 702
5.3 Altoona,
1, 117
2. 2 _
-----4, 670 23.0 Asheville, N. C -------------Atlanta, Ga_ -_
---31,922 11.8 --------39,452 39. 2 -Atlantic City, N. J___--------------2,104
3. 2
176
.5 --4,801 28. 1
-5, 577
9 2 -------Augusta, Ga-- ------------54, 226
6. 7 ---------43,219 29 9 Baltimore, Md_
---3,433
3 2
14,192 73 9 -..--------Beaumont-Port Arthur, Tex -------Binghamton, N. Y 1,647
2.1 _--_--13, 504 25. 3
Birmingham, Ala-------7, 905
3.0 . ---__--- 17,154 13. 9 3. 5
-------------10, 372
1 3
52, 989
Boston, Mass --Bridgeport, Conn
------- 405
.3 -------12, 247 21 4 -Buffalo-Niagara, N. Y --5,394
.8 ---------31, 752 18. 5 -Canton, Ohio -----3, 495
3 3 -------- ----5,626
6 5
Cedar Rapids, Iowa------6, 023 10 7 -------- -----605
5 8 ----3,498 40.7
Charlotte, N. C_ ----- --18, 224 22 0 ------Charleston, S. C-----9,010 14 5 -------9,941 56. 8--Charleston, W. Va -------------------7, 506 12 4 -------20,666 43. 3
-Chattanooga, Tenn---8, 365
7.0 ---------16, 261 33 3 -Chicago, Ill
----------20, 370
.6 ------114,001 11. 5 -Cincinnati, Ohio ---------------------4, 450
1.0 -------25, 395
8.2 --.
22,093
2. 5
42,047 14. 3 -Cleveland, Ohio---------------Columbia, S. C _
-----10, 815 21 0 ------4, 777 21. 3 -Columbus, Ohio---15, 523
5. 3 -- -----9,873 19. 8--Corpus Christi, Tex--29, 560 106.6 -----------6,885 106. 1 -Dallas, Tex
--------34,259 13 2 -----_
_.
32, 631 66 3 -Davenport, Iowa-Rock Island, Moline,
Ill ---------12,482
9.5 ---------8,022 34 1 -_
9, 849
19.3 -9,736
4 8 -------- ---Dayton, Ohio --------_
1, 102 20 6 -----1, 795
3. 1 ---------Decatur, IlL_--19,060 44.4 -34,551 12.0 -------- ----Denver, Colo ------------------..
5, 750 31. 2 --17, 260 12. 1 ---_-Des Moines, Iowa -----136, 313 25. 4--Detroit, Mich_
-----54, 790
3. 5--3,083 17. 3
.----1, 375
1. 0
Duluth, Minn.-Superior, Wis
3,000 46. 2 -8, 158 15.7
-----Durham, N. C
-------2,951 18.4 ----5, 611
5.5
El Paso, Tex ---------- -3,234 23 4-Erie, Pa
---------988
.9------------- ----- -5,187
5 1
23,671 113 4 ------Evansville, Ind -3. 8 2,102
.9
1,695
----Fall River-New Bedford, Mass-------4,949
3.2
13, 564 57. 8 -__.
----Flint, Mich
--4, 363 37. 6 -3, 464
3.0 --------Fort Wayne, Ind ___18, 887 169.7 ----14, 215
8. 7 ---------Fort Worth, Tex__11, 214 43.8
8-8,172 15.6 -----------Fresno, Calif
5,452 101.7 ------7, 924 15.0 ---Galveston, Tex -7,019 18.2
4,300
26
-----------Grand Rapids, Mich
... -.
3,836 38. 7
5,750 10. 7 Greensboro, N. C.-.-------------




188

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 7-Continued
Population changes in metropolitan districts of the United States, 1930-40-Con.
Increase in
Increase in
central city
Metropolitan district

n
Decrease in
central city

Per-

cent

Num-

ber

Per-

cent

Hamilton-Middletown, Ohio.---------------356
.4
Harrisburg, Pa---------------3, 554
4. 4 -------Hartford-New Britain, Conn
..------2, 752
1.2 --Houston, Tex
-----92, 162 31. 5
--Huntington, W. Va., and Ashland, Ky__
3,727
3.6 ------Indianapolis, Ind-------------------22, 811
6. 3 ------------Jackson, Miss ------------13,825 28. 6
--Jacksonville, Fla---------43, 516 33.6 -------Johnstown, Pa -----------------325
----.5
Kalamazoo, Mich ..-------------------- -689
1.3
Kansas City, Mo., and Kansas City,
Kans -------------------- ------967
.2
Knoxville, Tenn_ ----5, 778
5. 5 ----Lancaster, Pa-----------1,396
2.3 -----Lansing, Mich-------------356
.5 -----Little Rock, Ark-----------6, 360
7.8
--- Lincoln, Nebr------6, 051
8.0 ---------Los Angeles, Calif_------266, 229 21.5 --Louisville, Ky----11,332
3. 7 - --Lowell-Lawrence-Haverhill, Mass ...-----------------1,548
.7
Macon, Ga -------------4,036
7. 5
---Madison, Wis
------9, 548 16. 5 ------Manchester, N. H_ --------851
1. 1---------Memphis, Tenn-----------39,799 15.7 ---__--Miami, Fla .------------------61, 535 55.6 --Milwaukee, Wis_----------9, 223
1.6 ---Minneapolis-St. Paul, Minn ---------44,144
6.0 -----Montgomery, Ala
------12,005 18. 2 -_-----Nashville, Tenn -----------13, 536
8. 8
-New Haven, Conn...-----------------------2, 050
1.3
New Orleans, La -----------35, 775
7. 8 ------_
--_
New York-Northeastern N. J---------- 492,896 ---------------Norfolk, Portsmouth, Newport News,Va_
22,313 10.6 -----------Oklahoma City, Okla -----------..
19,035 10 3 ------__
--_
Omaha, Nebr.-Council Bluffs, Iowa --9,229
3. 6 ----------Peoria, Ill-----------118
.1 -------------Philadelphia, Pa-----------------------19, 627
1.0
Pittsburgh, Pa_ ----------1,842
.3
--Portland, Maine -----------2, 833
4. 0 -------- ----Portland, Oreg_
-----3, 579
1. 2 ..---Providence, R. I__---523
.2 -------------Racine-Kenosha, Wis
--------------1, 844
1. 6
Reading, Pa .--------------------------.--- -----603
.5
Richmond, Va ---------------------10, 113
5. 5 1..---- Roanoke, Va ....
81
.1
--------Rochester, N. Y
-----------3, 157
1. 0
Rockford, Il------- ------------1, 227
1. 4
Sacramento, Calif
12, 208 13.0 -------------Saginaw-Bay City, Mich---------2,680
2 1 -------.
St. Joseph, Mo .---...------ --------------.
----5, 224
6. 5
St. Louis, Mo.------------.------.-5, 912
.7
Salt Lake City, Utah ----------9,667
6 9 ------------San Antonio, Tex.----- --------22, 312
9. 6 --San Diego, Calif_ -----55,346 37.4
-------

18,242

2.0 --------------

San Jose, Calif--------------10, 806 18. 7
Savannah, Ga---------10,972 12. 9
Scranton-Wilkes-Barre, Pa....------.-----.
Seattle, Wash.-------.---------.
2, 719
.7
Shreveport, La------------------21,512 28.1
Sioux City, Iowa
--------3,181
4. 0
South Bend, Ind.--------------------Spokane, Wash...
---6,487
5. 6
Springfield, Ill
--------3, 639
5.1
Springfield, Mo
...-----------------.
3,711
6. 5
Springfield-1Holyok]e, Mass,,-....
---,-------- -----




Decrease out
side central
city

_________
Number

San Francisco-Oakland, Calif---------

Increase outside central
city
Number

Per-

cent

Num-

ber

Per

cent

6,053 24. 4
8,141 10. 0
28, 256 11. 8
79,109 168. 6 ......
3,885
6. 6
14, 861 27. 8
5, 926 29. 7
3, 390 17. 7
4, 495
5. 6
5,163 28.8 --26,874
10, 337
7, 475
11, 306
7, 227

31.0
34. 611. 8
55. 7
23. 0

-

3, 700
37.3
319, 841 29.6
..--18, 680 19. 3 -4, 489
4.6
3,567 26. 6
4,451 69. 0
408 10. 6
16,552 72.0
--56,813 263.6
37,699 22. 8
34,675 36.0
3,303 26 8 -18,811
33. 9
16,554 12. 6
9, 378 26.0
296, 200 -27, 780 43 8 --31
.2
4, 618 25 9
17, 716 44. 6---71,123
7.9 .
38, 550
3.0 ------3, 859 13 3 .
24, 099 31.3 ------20,346
4. 6- --------3,456 22.1 .5,472
9. 2 - -15, 048 40.0 .-----7, 392 21.8 ---16, 536 23. 5
----3, 282 18. 9
19, 796 59. 5
6, 061 36. 6
696
6. 6 80, 373 17.0
----10, 370 23. 5
17,427 36. 5 ------20,002 60.6 ------

120, 189

32. 3 -----

-15,133 33. 1--------1, 567
7.7 -----3, 419
1.5 --------.-----19,312
-------------29, 257 53.1 .-----------4,647 49.4 .
-------- ----835 18.2 --2,925
2. 8
3,378
8.0 ---..--.--.
6,085 45.8 -__.---------3, 478 33.1 .----..-..3,140 51.2 ---3,133
1. 5 ...----.----...
..
1, 25

4 6

-,

189

EXHIBITS
EXHIBIT 7-Continued

Population changes in metropolitan districts of the United States, 1930-40-Con.
Decrease in
central city

Increase in
central city

Decrease out
side central
city

Increase outside central
city

Metropolitan district
Percent

Number

1, 919
2 8-- -----Springfield, Ohio--------------------. -6,751 14 1 -_------Stockton, Calif- ..--3, 359
1. 6
---Syracuse, N. Y- .....-----...---------27,617 19.5 -------Tampa-St. Petersburg, Fla - -------- --..
117
.2
---------Terre Haute, Ind --...-----2,591
2.4 ----Tacoma, Wash-------------------2.9
-----8,369
------Toledo, Ohio--------5.8 -------------3, 713
Topeka, Kans-------------------1, 341
1.1 .---.-------Trenton, N. J--------------------------.6 ------.899
Tulsa, Okla ---------------654
.5 --------Utica-Rome, N. Y--- -176, 222 36. 2 ___
----Washington, D. C
----- - -.6
.------588
Waterbury, Conn
-- _...---------------5,552 12. 0 ------- --Waterloo, Iowa ------------560
.9
Wheeling, W. Va -------------3,856
3 5-----------Wichita, Kans -----------------------5. 5 -.--------5, 907
Wilmington, Del ---4, 541
6.0 -------Winston-Salem, N. C
1, 617
.8
-- ----Worcester, Mass --------------------.. -1,458
2.6 ---------York, Pa ---- :------------- ---------1 3
.------------.-----2, 282
Youngstown, Ohio ------------

1. 558
10, 706
16, 696
13,066
1, 247
6, 656
3,502
2, 357
8, 568
4,456
5, 556
110,535
4, 835
4, 446
6, 277
4. 278
19,475
8,018
2, 518
3,974
10, 150

Total ------------

2, 158, 504

Number

Percent

Number

---

150, 950 ....

Number

Percent

Per
cent

30.0 - --76 9 ---46. 8 ---47. 6 ---6. 4 ----16 7 ----6. 3 ---31. 2 -12 8 -----10.6 ---9 8 ----82 4 ----11 9 ----40. 9 -4. 9 ----53. 1 --34. 2 ---36.4 ----2. 3---12.4 -----5 2 -

2, 751, 600 ---

25, 337

Source: Bureau of the Census.

EXHIBIT 8
Estimated volume of mortgage loans originated on nonfarm 1- to 4-family dwellings,
by type of lender
[Millions of dollars]
Type of lender

1929

1930

Savings and loan associa
tions -----------$1, 791 $1,
Insurance companies .-..
525
Mutual savings banks---612
Commercial banks and
their trust departments_ 1,040
Home Owners' Loan Cor
poration-------- ----------------Individuals and others 1_ 1,120
Total-----------

1931

262
400
484

$892
169
350

670

1932

1933

1934

1935

1936

1937

1938

1939

1940

$543
54
150

$414
10
99

$451
16
80

$564
77
80

$755
140
100

$897
232
120

$798
242
105

364

170

110

110

264

430

500

560

610

689

400

---175

132 2,263
100
150

583
443

128
605

27
723

81
669

151
740

111
865

5,088 3,536 2,175

1, 092

2,158 2,499 2,455 2,873

3,322

720

865 3,070 2,011

$986 $1,200
274
324
112
133

1 Includes fiduciaries, mortgage, title, and real-estate companies, construction companies, philanthropic
and educational institutions, fraternal organizations, State and local governments, etc.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.




190

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,

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192

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 10
Estimated balance of outstanding mortgage loans on nonfarm 1- to 4-family dwellings
[Millions of dollars]
Type of mortgagee
Savings and loan associa
tions ---------Insurance companies- ..Mutual savings banks _Commercial banks 2 Home Owners' Loan Cor
poration_
Individual and others 3__.
Total

-------

1929

1930

1931

1932

$6, 507
1, 626
3, 225
2, 500

$6, 402
1,732
3,300
2,425

$5, 890
1, 775
3, 375
2,145

$5,148
1, 724
3, 375
1, 995

1933

1934

$4, 437 $3, 710
1, 599 1, 379
3, 200 3, 000
1, 810 1, 189

1935

1936

1937

1938

1939

1940

$3, 293
1, 281
2, 850
1, 189

$3, 237
1, 245
2, 750
1, 230

$3, 420
1, 246
2, 700
1, 400

$3, 555
1,320
2, 670
1, 600

$3, 758
1,490
2, 680
1,810

$4, 104
1, 758
2, 700
2, 095

-_-------_ _--------132 2, 379 2, 897 2, 763 2, 398 2, 169 2, 038 1, 956
7, 200 7,400 7, 500 7, 000 6, 700 6, 200 6, 000 6, 000 6, 180 6, 332 6,440 6, 510

21,058 21, 259 20, 685 19, 242 17, 878 17, 857 17, 510 17, 225 17, 344 17, 646 18, 216 19, 123

1 The estimates of the outstanding balance of nonfarm home-mortgage loans by type of institution for
1940 and the revised statistics for the immediately preceding years have been developed from exhaustive
studies of the mortgage holdings of savings and loan associations, life insurance companies, mutual savings
banks, commercial banks, and the Home Owners' Loan Corporation. The figures for the Home Owners'
Loan Corporation reflect the actual balance of mortgage loans held and advances outstanding. The figures
for savings and loan associations are based on a compilation of the annual reports of Bederal savings and
loan associations to the Federal Home Loan Bank Board, and of the annual reports of State-chartered
savings and loan associations to their supervisors and to the Federal Home Loan Bank Board. The esti
mates for life insurance companies were developed from study and summary of detailed reports which
were received from a sample group of insurance companies holding more than 85 percent of life insurance
company assets. These schedules provide a detailed breakdown of their mortgage-loan portfolios. The
estimates for mutual savings banks were developed by the use of data on the total mortgage holdings of
these banks, as reported by the Comptroller of the Currency, and the National Association of Mutual
Savings Banks as well as certain additional material collected by the Division of Research and Statistics
of the Federal Home Loan Bank Board. As a result of this investigation, it was possible to segregate
mortgage holdings of mutual savings banks into the farm and nonfarm element and further to separate
the nonfarm element into mortgages on homes and other-than-home property. The project covered mutual
savings banks in the States of New York and Massachusetts, and involved institutions containing more
than 50 percent of all mutual savings banks assets. For commercial banks, use was made of a study con
ducted at the end of 1934 by the Federal Housing Administration in conjunction with the Comptroller of
the Currency, the Federal Reserve Board, and the Federal, Deposit Insurance Corporation. This canvass
segregated mortgages on homes from other nonfarm real-estate holdings of the reporting banks. The rela
tionships shown then have been applied to total mortgage holdings of the banks for earher years. In recent
reports the Federal Deposit Insurance Corporation has provided a segregation of mortgage holdings of
insured commercial banks. Adjustments have been made in the estimated data on the basis of the Federal
Deposit Insurance Corporation's reports as well as the FHA reports indicating increased mortgage lending
by commercial banks. Finally, in the case of individuals and other types of mortgagees, estimates have
been developed for recent years on the basis of studies of mortgage recordings by type of mortgagee con
ducted by the Division of Research and Statistics of the Federal Home Loan Bank Board. For earlier
years the estimates have been prepared after reviewing many studies, bulletins, and researches of various
Government and private agencies. Included in these sources are the Financial Survey of Urban Housing,
the refinancing operations of the Home Owners' Loan Corporation by type of mortgagee, local surveys
conducted by the National Association of Real Estate Boards, special surveys of the Federal Home Loan
Banks, figures supplied by the New York State Mortgage Commission, sundry reports of the Mortgage
Bankers Association, and hearings of the Sabath Committee investigating real-estate bond-holdings
committees.
2 Does not include trust departments of commercial banks.
3 Includes trust departments of commercial banks, fiduciaries, real-estate bond companies, title and
mortgage companies, philanthropic and educational institutions, fraternal organizations, construction
companies, RFC Mortgage Company, Federal National Mortgage Association, etc.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.




193

EXHIBITS
EXHIBIT 11

Changes in selected types of individuallong-term savings: Dec. 31, 1935, to 1940
[In millions of dollars]

1935

Total .- ..---......

__.

Life-insurance companies 2.----

1938

1939

1940

- 44,191

46, 951

49, 531

51,501

54, 510

57, 962

+6.3

17, 542

19,133

20, 510

21, 858

23, 381

25,025

_ 9,829

..---

1937

10, 013

10, 618

+7.0
+1.3

13, 062

+3 5

----

Mutual savings banks 3..
-...---------Insured commercial banks 4. _-- .

Percent
change,
1939-40

1936

10, 235

10,481

10, 575
-

11, 491

12,100

12,196

12, 622

4, 759

_

Savings and loan associations 5-..--------Postal savings 6 ....
_---- _
-------_
--2 -percent postal-savings bonds 7........
United States savings bonds 8-----

10,126

4, 449

4, 433

4,392

4,412

14,633

+5.0

1, 229
104
153

1, 291
99
475

1, 303
95
964

1, 286
92
1,442

1, 315
90
2, 209

1, 342
87
3,195

+2.1
-3.3
+44.6

1 Preliminary.
2 Estimated accumulated savings in United States life insurance companies. Represents reserves plus
unpaid dividends and surplus to policyholders, except that deduction is made of policy notes and loans
and net deferred and unpaid premiums. Source: Spectator Life Insurance Yearbook.
3
Deposits. Source: The Month's Work, published by National Association of Mutual Savings Banks.
4 Deposits evidenced by savings passbooks. Source: Assets and Liabilities of Insured Commercial
Banks, report of Federal Deposit Insurance Corporation.
5
Estimated private investments in savings and loan associations, including deposits, investment secu
rities, and shares pledged against mortgage loans. Source: Federal Home Loan Bank Board.
6 Due depositors; outstanding principal and accrued interest on certificates of deposits, outstanding
savings stamps, and unclaimed deposits. Source: Post Office Department.
7 Excludes such bonds held by the Postal Savings System. Source: Treasury Daily Statement and
Post Office Department.
8 Current redemption value. Source: Treasury Daily Statement.




194

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 12

Federal Home Loan Banks-Advances and repayments for the periods indicated, and
the balance of advances outstanding at the close of such periods
Period

Fiscal year.
1933-___- -------1934 --__ .-------------1935.------------1936 ------------------1937----------1938 ---------------------1939-------------------------

Advances

-

$48, 894, 602.41
62, 871, 970. 22
36, 683, 308. 61
78,195, 224.32
114,287,052 41
105, 432,157. 95
76, 659, 074. 62

Balance out

Repayments

$1, 230, 772. 82
25, 387, 445. 72
42, 599,148. 52
38, 840, 900. 50
65, 817,003.85
76, 264,107.15
103, 922,448 88

standing

$47, 663, 829. 59
85,148,354. 09
79, 232, 514.18
118, 586, 838. 00
167, 056,886. 56
196, 224, 937.36
168,961, 563.10

I---------------I

1939
July_----

A ugust

-------

-__--- _ _-------- - ----_-__

September __

--------- ----

October_- ----- ---__
_
November_-----------_
December-------------

6,823, 240. 00
7, 767, 958. 00
10, 152, 378.44
9,604, 571.96
5, 827, 035. 52
18, 723,885.15

14,197, 703.85
9,885, 280.86
5, 934, 956.06
4, 637, 720. 74
5, 659,170.45
6, 232,809 57

161, 587, 099. 25
159,469, 776.39
163, 687,198. 77
168, 654,049. 99
168, 821, 915. 06
181, 312, 990. 64

4, 386,398.89
2,010,995. 54
4, 374,870.00
4, 973, 207. 50
9, 884, 072. 50
23, 481, 287. 73

28, 911, 443. 55
14, 283, 556.42
11, 247, 974.04
8, 804, 899. 62
6,186, 099 84
3, 592, 802.17

156,
144,
137,
133,
137,
157,

1940

J an u ary _ ---- -_ _ - - - - - --- -February ---- ___---------------__-March ----------------------------April_ _------May -------------June ------------------------------Total, fiscal year 1940 --------

I

108,009,901.23
-- I

II

119,574,417.17
-

787,
515,
642,
810,
508,
397,

945 98
385.10
281.06
588. 94
561. 60
047.16

---------------I

1940
July .---August---

15, 542, 739.
12, 209, 287.
12,896, 570.
12,066,970
8, 952, 588.
23, 433,176.

September__
OctoberNovember
December _
JanuaryFebruary_
March --April -May

June

68
50
76
34
54
95

10, 718,007. 44
6, 029, 500. 24
5, 250, 670 57
6, 588, 388. 58
4, 931, 703.41
7,488,146 32

162, 221, 779. 40
168,401, 566. 66
176,047,466 85
181, 526, 048. 61
185, 546, 933. 74
201, 491, 964. 37

6,142, 675. 87
3,182, 473.86
4,201,171 66
5, 798, 618.13
9,132, 748. 00
29,316, 542.16

36, 785, 701.18
17,132,191. 64
15,141,495 98
9, 929, 309 66
5, 688, 329. 38
4, 691, 776. 51

170,
156,
145,
141,
145,
169,

1941

--

___Total, fiscal year 1941 ----------

142, 875, 563 45

130, 375, 220 91 -

Grand total through June 30, 1941-

773, 908, 855. 22

604, 011, 465 52 --




848, 939 06
899, 221.28
958, 896.96
828, 205 43
272, 624. 05
897, 389. 70

--------

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196

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 14
Percentageof borrowing members to total membership, by Federal Home Loan Bank
Districts, at the close of each fiscal year, 1936-41
Bank District

No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.

1936

1939

1940

Percent
44.0
61.7
80. 4
65.7
54. 8
70. 5
82.4
68. 7
62.7
67.5
67.2
68. 2

Percent
39.9
63.2
80. 8
71.7
56.0
66. 8
81.1
68.7
60.1
66.8
69. 3
73.4

Percent
32. 4
60.5
78. 1
56.6
46. 8
59.3
75. 3
65. 0
51.7
58.5
53.0
71.1

Percent
29. 9
58. 6
72.1
53.8
37.8
53.5
64.1
55.0
41.2
51.7
48.1
60. 5

63.6

2-New York
---------3-Pittsburgh--.
-4-Winston-Salem_ 5-Cincinnati-----6-Indianapolis
------7-Chicago
-----8-Des Moines. -_ --9-Little Rock _---10-Topeka ---------.-11-Portland
------------12-Los Angeles.
----

1938

Percent
40.4
60. 3
76.1
61.7
55. 6
54.1
80.5
60.7
59.5
63.2
60. 6
61.3

1-Boston------------------

1937

67.3

67.8

60.4

53.4

Total... --------------------------

1941
Percent
33. 2
58.3
69. 8
46.7
36.1
54. 8
68.6
57.8
43.8
46.9
42.9
56.1
52.4

EXHIBIT 15
1
Federal Home Loan Banks-Interest rates charged member institutions on advances,
as of July 1, 1941

Federal Home Loan Bank

Boston------------------------New York------------

---

Pittsburgh------------------Winston-Salem
-------------Cincinnati
----Indianapolis

-----------

Types of advances

Rate in
effect
Percent
1
2
Y
1
2
3
3
2Y
2

All short-term advances amortized within 1 year.
All long-term advances.
All short-term advances amortized within 1 year.
All long-term advances.
All advances.
Do.
Do.
Short-term advances not exceeding 15 percent of member's

share capital.
All long-term advances.
All short-term2 advances amortized, in equal monthly
installments.
2% All short-term advances amortized, by not less than 22
2
percent of the principal amount quarterly.
3
All other advances.

-------------

3
1

----Des Moines----------Little Rock--Topeka------------------------

3
3
3

Chicago.--------..

Portland---------------------Los Angeles--...------------

3
21
3

All advances.
Do.
Do.

Do.
Advances made on and subsequent to May 1, 1941, where
the proceeds are used solely for making FHA loans.
All other advances.

I Banks are required to charge
of 1 percent to 1 percent additional on advances to nonmembers.
2 Advances must not exceed 10 percent of member's assets.




197

EXHIBITS
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REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 17

Types of advances made by the Federal Home Loan Banks
The twelve Federal Home Loan Banks may make the following types of
advances:
ADVANCES TO MEMBERS

(a) Up to ten years on the security of home mortgages or obligations of or
guaranteed by the United States. Such advances up to one year need not be
amortized, though three Banks have a preferential rate for those advances amor
tized. Advances made for more than one year must be amortized on a monthly
or quarterly basis and are subject to the following limitations as to amount:
1. If secured by a mortgage insured under the provisions of Titles II and
VI of the National Housing Act, the advance may not be for an
amount in excess of 90 percent of the unpaid principal of the mort
gage loan.
2. If secured by a home mortgage given in respect of an amortized home
mortgage loan which was for an original term of six years or more,
or in cases where shares of stock, which are pledged as security for
such loan, mature in a period of six years or more, the advance may
be for an amount not in excess of 65 percent of the unpaid principal
of the home-mortgage loan; but in no case shall the amount of the
advance exceed 60 percent of the value of the real estate securing the
home-mortgage loan.
3. If secured by a home mortgage given in respect of any other home
mortgage loan, the advance shall not be for an amount in excess of
50 percent of the unpaid principal of the home-mortgage loan; but
in no case shall the amount of such advance exceed 40 percent of the
value of the real estate securing the home-mortgage loan.
4. If secured by obligations of the United States, or obligations fully guar
anteed by the United States, the advance shall not be for an amount
in excess of the face value of such obligations.
(b) Up to one year on securities other than obligations of or guaranteed by the
United States, providing such securities constitute an investment which the mem
ber is legally authorized to make, have a readily ascertainable market value, and
are not in default with respect to payments of interest or principal. Such ad
vances cannot be in excess of 80 percent of the market value or the principal
amount of such securities, whichever is less.
(c) Up to one year without security or on any kind of security to members
whose creditor liabilities (not including advances from the Federal Home Loan
Bank) do not exceed five percent of their net assets.
(d) Up to thirty days on an unsecured basis or on any kind of security. Such
advances must be repaid at maturity or refunded with eligible collateral. In
making such advances, there is no requirement that the creditor liabilities of the
member do not exceed five percent of its net assets.
ADVANCES

TO NONMEMBER

MORTGAGEES,

Up to ten years on mortgages insured under Title II of the National Housing
Act. Advances for more than one year must be repaid on a monthly or quarterly
amortization basis.




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205

EXHIBITS
EXHIBIT 19

FederalHome Loan Banks-Investment holdings at the close of the fiscal year 1941
Interest
rate
U. S. Treasury bonds:
Mar. 15, 1956-46.-------June 15, 1947-43----....
Apr. 15, 1946-44 .--------Oct. 15, 1945-43 ..----.
..-Dec. 15, 1952-49-....
June 15, 1949-46.----Sept. 15, 1955-51.. ----June 15, 1948-46 ------Mar. 15, 1960-55 ----Dec. 15, 1965-60---..-June 15, 1963-58---------Sept. 15, 1959-56 ----June 15, 1954-51 ---------Mar. 15, 1951-48--------Sept. 15, 1947-45 -------..
Mar. 15, 1958-56- .--.Mar. 15, 1954-52.---..
Dec. 15, 1953-49 .------.
Sept. 15, 1952-50.--.----.
--Sept. 15, 1948----Dec. 15, 1945
--------June 15, 1956-54-.------.
---Dec. 15, 1953-51June 15, 1955-53---------Dec. 15, 1950-48 ..------Mar. 15, 1950-48 .--Dec. 15, 1947 - ----------

334
3iV
34
34
32Y
3i
3

3

2%
24
2

24
24
24
2Y2
22

2Y
2Y
2Y
2%

2
2
2

Total------

Face
value

$200,000
200,000
850,000
150,000
300,000
900,000
140,000
1, 650,000
3,886, 000
2,875,000
1,000,000
838, 000
3,167,000
1, 295,000
1, 550,000
5,407, 200
4,140,000
4,300,000
3,050,000
200,000
300,000
1, 735, 000
600,000
500,000
1,080,000
1, 650,000
550, 000
42, 513,200

Interest
rate
U. S. Defense Savings bonds:
Series F June 1, 1953-----Series G June 1, 1953 -Series G May 1, 1953------

Total__-------.-1 (Eq.)




200,000
200,000
100, 000
900,000
1, 295,000
1
600,000
1
150, 000
% 3,440,000
%
450,000
4
34 1,635,000
250,000
14

9,220, 000

12 53
2 2

49,950
150,000
200, 000

Total----

399,950

Total Treasury issues-Miscellaneous securities:
Home Owners' Loan Cor
poration bonds:
May 1, 1952-44 --.July 1, 1944-42 .--.--June 1, 1947-45 -------

Total__-Federal Farm Mortgage
Corporation bonds: May
15, 1949-44----------Commodity Credit Cor
poration notes: Nov. 15,
1941
__---Reconstruction
Finance
Corporation notes:
July 15, 1943---.......-.
July 1, 1942 -----

.----

Total-----

U. S. Housing Authority
notes: Feb. 1, 1944 ---Total miscellaneous
issues-------Grand total-..-----

3
24

5,200, 800
100, 000
1

._
_ __ _

18
1

Oct. 15, 1942 ---------

Jan. 15, 1942 .

52,133,150

250, 000
400,800
1Y2 4, 550, 000

July 20, 1941----...
U. S. Treasury notes:
Dec. 15, 1942.. ---------Mar. 15, 1942------Dec. 15, 1941----------Dec. 15, 1943_ -June 15, 1943_Mar. 15, 1944 --..---Sept. 15, 1943---Dec. 15, 1945-- -_----Mar. 15, 1945..
------Sept. 15, 1944------------June 15, 1944---------

Face
value

200,000

930, 000
188,000
720, 000
1,800, 000
480,000
4,118,000
600, 000
10,218,800
62, 351,950

206

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 20
Federal Home Loan Banks-Statement of consolidated debentures outstanding,
June 30, 1941
outstand- Series D, 2 per- Series G, /4 of 1
ing
cent due Apr.
percent due
1, 1943
Apr. 15, 1942

STotal
Federal Home Loan Bank

Boston
-----------_
-------------New York ---------------------Pittsburgh -..-----------

0
0
$7, 500,000

Topeka--- --

0
1,000, 000

1,250, 000

75, 500,000

--------

--

2, 000, 000

1,500,000
5,000,000

23, 500,000

14, 500,000
2, 500,000
7,250,000
21,000,000
11, 500,000
1,500, 000

Portland
----------------------------------------Los Angeles ------------------------------------Total_-

0
0
$3, 500,000

3,250,000

Winston-Salem ----_
---------Cincinnati ---------------------Indianapolis --------------Chicago------_ Des Moines ------------------------Little Rock _
--------

0
0
$4, 000,000

-

2, 500,000
2, 500,000
2, 500,000
3, 000,000
4,500,000
1, 500,000

12, 000, 000
0
4, 750, 000
18,000,000
7,000,000
0
1, 500,000
4,000, 000
52, 000, 000

EXHIBIT 21
Federal Home Loan Banks-Interest rates paid members on time deposits, as of
July 1, 1941
Remaining
over 90
days

Federal Home Loan Bank

Boston--------------New York
------------Pittsburgh------------------Winston-Salem_
----Cincinnati---------------- ---------

Percent
1Y

--------

Indianapolis------------Chicago_
--------------Des Moines -------------------Little Rock --------------------Topeka --------------------------Portland_-----Los Angeles_-------

----

--------

-

-

$50,000 or 1 percent of assets.
None.
Do.
$100,000.
$100,000 or 5 times minimum stock
requirements.
Y None.
2
Do.
Do.
No interest paid.
Do.

---------

' One-half of l percent paid on deposits remaining 30 to 90 days.




Limitation (greater of two)

Y

Do.
None.

207

EXHIBITS
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208

REPORT OF FEDERAL THOME LOAN BANK BOARD,
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210

REPORT OF FEDERAL HOME LOAN
eq r-4 =
to 00 r--4

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211

EXHIBITS

EXHIBIT 23
Federal Home Loan Banks-Total dividends declared through June 30, 1941, and
the annual rates paid semiannually for the fiscal years 1940 and 1941
Total dividends declared through
Total dividendsdeclared through

Federal Home
Loan Bank

Fiscal year 1940

Fiscal year 1941

Members

$1, 244,944.20
Boston ----2,328,824.27
New York ---..
---1, 270,840.88
Pittsburgh
Winston-Salem-._
1,055, 559.45
-- 2,730,324.80
Cincinnatil-- -Indianapolis -----1,100, 695.34
Chicago
----2,402,420.28
Des Moines-----1, 073, 250.92
929, 016.47
Little Rock ------600,374.76
Topeka -. -----578, 084.59
Portland ------884,654.35
Los Angeles ------

$970,142.11
1,875,116.75
1, 057,037.39
787,989.29
1,866,929.67
805,195.59
1,909, 730.70
865,403.96
770, 614.62
496, 592. 56
498, 790. 88
700,850.61

$274,802 09
453,707.52
213,803.49
267, 570.16
863, 395.13
295,499.75
492,689.58
207,846 96
158,401 85
103, 782 20
79, 293.71
183,803.74

16, 198,990.31

12,604,394.13

3, 594,596.18--

Total-------

SDividends are usually declared on a calendar-year basis.




July 1
to Dec.
31, 1939

Jan. 1
to June
30, 1940

July 1
to Dec.
31, 1940

Jan. 1
to June
30, 1941

Percent

U. S. Government
subscription

Total

Percent

Percent

Percent

1
1
1
1
1
12
1
1%
1
1
1%
1%

1
1
(1)
(1)

1
1
1
1%
1
1
1
1

1
1
1
1
114
1Y
2
1%
1
1
1
1

1
1
(1)
(1)

1
1Y
1Y
1%
1
1
1
1

212

f

REPORT OF FEDERAL HOME LOAN BANK BOARD,

Y

^E3
<

h

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c
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03

t

111
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eq

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1941

213

EXHIBITS
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214

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 25
Distribution of net income of the FederalHome Loan Banks for the fiscal year ended
June 30, 1941
Amount
Amount

Percent to
ta
total

Allocation to reserves:
To legal reserves--------------To reserve for contingencies- _---------------------

$739,236 62
599, 755.22

Total to reserves ...---

1,338,991.84

36.2

1,421,058.14
505,168.85

38.4
13.7

1,926, 226.99

--------------------

20.0
16.2

52.1

Dividends paid
United States Government ----------------------Members -------------

Total dividends paid ..-----------------Balance to undivided profits- ..

-----------

---------------

Total net income (consolidated) -------

430,964.08

11.7

3, 696,182.91

------

100.0

EXHIBIT 26
Federal Home Loan Bank Board-Statement of receipts and disbursements of the
Board for the fiscal years 1940 and 1941
July 1, 1939, to
June 30, 1940
Balance at beginning of fiscal year ...--.-.-

---------------

$238,425.11

-

-------------------

Total cash and receipts ---------------

450,000 00
152,458.99
118,293.82
675,065 03
447.54
509.85

150,000.00
129,442.40
92,841.38
841,879.13
1,526.19
1, 215,689.10

1, 635, 200.34

-

$352,671.00

1,396,775.23

Receipts:
Assessments upon: 1
Federal Home Loan Banks
---------------Home Owners' Loan Corporation
--------Federal Savings and Loan Insurance Corporation -Examining receiptsMiscellaneous refunds -----------Receipts from sales of property_---------------Total receipts

1, 568,360.10

Disbursements:
Salaries------------------------------1,005,447.68
Supplies and materials---------12,601.73
Newspapers and periodicals_------96.18
Communications -------------------------------23,208.66
Travel---..-..-------------.----------171,799.94
Transportation of things----------614.30
Printing and binding_ -_
_
------------16,261.20
Photographing and duplicating ---------14,910.89
Rents ---------------------------------------23,667.02
Equipment, furniture, and fixtures
------11,021.74
Transferred to administrative expenses:
Federal Loan Agency----------2, 900. 00
Treasury Department--------------------Total disbursements-----------------------------------------Balance at end of fiscal year ..------------

-

--------------

1,034,851.67
9,380.46
78.68
24,037.43
183,763.71
546.98
17,344.95
19,127.72
24,675.93
6,393.55
5, 800. 00
-2,400.00

1, 282, 529.34

1,328,401.08

352, 671.00

239,959.02

1 Includes assessment made in advance of $150,000 for the period July 1 to Dec. 31, 1940.




July 1, 1940, to
June 30, 1941

215

EXHIBITS
EXHIBIT 27

Federal Home Loan Bank Board-Comparative statement reflecting, by ofices, the
number of Board employees as of the close of the fiscal years 1940 and 1941
1940
Offices of the Board Members-.
Office of the GovernorGovernor's immediate office-----Office of the Comptroller -------Office of the Chief Supervisor---Federal Home Building Service
Section
----Total, Governor's Office---Office of the Secretary----_
Office of Public Relations.-----------

1941

1940

1941

10
11
10

Division of Research and StatisticsLegal Department-----------Review Committee--------

13
14
12

8
233

9
295

11

11

11
34
26

12
37
27

20

5

91

81

Total, Examining Division ----

241

304

16
6

15
10

Grand total

396

460

Examining Division
Washington office---------------Field. _____-

------------

EXHIBIT 28
Federal Home Loan Bank System--Members of the Federal Savings and Loan
Advisory Council, as of June SO, 1941
Federal Home Loan Bank District

Name

Sumner W. Johnson -----------Boston----------New York ---------------LeGrande W. Pellett ----------Do--------------------------------Lucius R. Eastman------------J. J. O'Malley_----------Pittsburgh
------------Winston-Salem
------ George W. West_-------------Do
---------------------W. Waverly Taylor----------Cincinnati-------------H. F. Cellarius -------------Do----------------R. P. Dietzman-------------Indianapolis -------------- F. S. Cannon ---------Chicago --------------------------------W. E. Hodnett ---------------Do----------------H. G. Zander. Jr
--------Des Moines--------------John F. Scott_-----------Do--C. B. Robbins_--------Little Rock--------------------------I. Friedlander
Topeka----------------George E. McKmnis_ -----Portland-------------------------------Ben H. Hazen
------Do--------------------------B. A. Perham_-----Los Angeles----------------- Harold A. Noble---------------




Elected
orap

pointed

Elected.
Do.
Appointed.
Elected.
Do.
Appointed.
Elected.
Appointed.
Elected.
Do.
Appointed.
Elected.
Appointed.
Elected.
Do.
Do.
- Appointed.
Elected.

216

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 29
Federal Home Loan Bank System-Number and estimated assets of member insti
tutions, June 30, 1940, and June 30, 1941
of me
Number er
Number of members

Assets of members
[In thousands of dollars]

Bank District and State
1940
United States ---

1941

1940

1941

Connecticut .-----..-------------------

3,839

4, 927,154

5, 287,175

223

698,228

774,547

48

----

3, 914
221

--------

No. 1-Boston ------.------------------------

48

93,325

105, 122

--------------------------

22
125

23
124

18,951
515,013

' 19,671
532,011

Rhode Island -----------------------------Vermont-------------------------------------

17
4
5

19
5
4

35,872
30, 326
4,741

73,159
39, 383
5,201

413

391

457, 506

481, 294

289
124

267
124

179, 257
278, 249

176, 359
304, 935

541

503

261,976

276,792

7
503
31

7
467
29

2,
647
237,891
21, 438

2,893
250,769
23, 130

409

626,891

672,048

23
21
50
56
65
115
43
36

34,064
135,791
72,352
36,750
63,336
211, 431
32,739
40,
428

18,621
152,349
86,755
44,853
74,702
207,895
38,527
48,346

590

584

891,073

906,936

96
452
42

94
450
40

97,712
721,676
71,685

101,026
768,530
37,380

215

217

274,096

298,116

158
57

159
58

163,827
110,269

177,388
120, 728

462

455

425,528

464, 412

345

341

292, 621

333, 995

117

114

132, 907

130, 417

240

244

223, 536

249, 686

69
39
107
13
12

70
42
107
13
12

47, 539
57, 270
98,070
10,51510,142

53, 441
70, 382
103,528
11,768
10,567

284

281

357, 589

365, 193

41

41

18,576

20,790

67

67

94,806

100,007)

14
133

5,941
215,706

6,653
213,108

Maine----------

Massachusetts-------New Hampshire -------------No. 2-New York

-------------

New Jersey ----------------------------------

New York---------------------------------No. 3-Pittsburgh----------

-----------

Delaware ..---- ----------------Pennsylvania .---------------------West Virginia-------------------------------

No. 4-Winston-Salem---

__--------

Alabama -------.
District of Columbia

413

.-------------------------------

---..---------Fforida.
Georgia----------------Maryland -------------------------------North Carolina----------------South Carolina -------------------------------Virginia --No. 5-Cincinnati _------

Kentucky----------------------------------Ohio -------------------------Tennessee ---------------------No. 6-Indianapolis_------

Indiana.------------------------------------Michigan----------------------------------No. 7-Chicago --.---------------------Illinois--.--

--------------------

Wisconsin ------------------------------------..

No. 8-Des Moines ---..-----

--

---

-

Iowa----- ---------------------Minnesota ---------------------------------.

_-------------Missouri----North Dakota----------------------South Dakota --------------------No. 9-Little Rock---

-

--------

---------------------Arkansas....--Louisiana .--------- -------------------.------------------------Mississippi ..-- New Mexico -------------------------------

Texas..--_-----------------------------




23
20
51
56
69
117
43
34

26

14
136

'

26

22,560

24,635

217

EXHIBITS
EXHIBIT 29-Continued

Federal Home Loan Bank System-Number and estimated assets of member insti
tutions, June 30, 1940, and June 30, 1941-Continued
Number of members
u ber of members

"Assets of members
In thousands of dollars]

Bank District and State
1940
No. 10-Topeka

-----------

..-------

-..-------

--Idaho-..------------------------Montana -------------------------------Oregon ..._--------.------Utah ___.
_--------.----------Washington-------------------------Wyoming ..---------------------------Alaska .-----------------------No. 12-Los Angeles

1940

1941

--------------------------

Arizona------------------------------California ----- -----------------------Nevada-----.-----------------------Hawaii _------------------------.

230

226

202, 773

220,973

39
103
34
54

39
101
33
53

31, 556
59, 583
50, 778
60, 856

34,997
63,125
54,492
68, 359

133

--------------

Colorado -------------------------Kansas -----------------------------------------Nebraska-----------------Oklahoma --.----------------------No. 11-Portland .

1941

133

146, 919

168, 502

8
13
30
10
61
10
1

8
13
29
10
62
10
1

7,801
10, 646
32, 658
15, 520
74, 719
5, 303
272

8,435
11, 688
37, 056
18,152
86, 787
5, 938
446

172

173

361,039

408,676

3
162
3
4

3
164
2
4

4, 230
352, 324
794
3, 691

5,578
397, 533
885
4, 680

EXHIBIT 30
FederalHome Loan Bank System-Member savings and loan associations compared
with all operating savings and loan associations
Item
Number of operating savings and loan associations --Number of member associations----------------------Same, proportion to total (percent) ------Assets of operating savings and loan associations
(thousands of dollars) -----Assets of member associations (thousands of dollars)___
Same, proportion to total (percent)- ----First mortgage loans held by operating savings and
loan associations (thousands of dollars) __
First mortgage loans held by member associations
(thousands of dollars)
--------Same, proportion to total (percent)
---------Loans made during year by all savings and loan asso
ciations (thousands of dollars) -------Loans made during year by member associations
(thousands of dollars) ---------------Same, proportion to total (percent) --1 Preliminary estimate.

425085-41-15




1937

1938

1939

1940

8, 870
3, 895
43. 91

8, 289
3, 903
47.09

7, 719
3,870
50 14

i 7, 200
3,824
53.11

$5, 600, 408
3, 565, 731
63. 67

$5, 543,099
3, 786, 636
68. 31

$5, 524, 337
4, 053, 692
73 38

$5, 700, 000
4,425, 565
77. 64

$3, 841,880

$3, 907, 581

$4, 077,161

$4, 400,000

2, 583, 286
67. 24

2, 792, 720
71. 47

3,107, 387
76 21

3, 495, 884
79.45

$896, 579

$797, 996

$986, 383

$1,199, 579

686, 564
76. 58

620,369
77. 74

796, 378
80. 74

993, 212
82. 80

218

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 31
Estimated volume of new mortgage loans made by savings and loan associations, by
type of association, January 1936 through June 1941
Year and month
V

Federal associations

1936
January
------February --------------March_---------April..------------------------.
May.------June _--- ----------July ---------August------ -September -- ---October
--------November ----------December
--1937
January
---- --February -----------March-----------April ----------------May--- --------------------------June--------------July ---- August -----September ------------October-------------November ------------------December
- -----------1938
January
-------February
-----------------------March ----------------April -------May ------------June------------July -----------_
August------September -----------October -----------November
------December
-----------1939
January
-----February-------------March-----------------April --------------------- _May.- -------------------June.---------------------July ---------------------August_------September -------- -October
-- -----November ----------------. ----December -------

State member
associations

Nonmember
associations

Total

$11,764,000
12,105,000
15,310,000
17,740,000
18,966, 000
21,247,000
21,491, 000
21,571,000
22, 500, 000
23,914,000
19,771,000
22,517,000

$12,593,000
16,156,000
20,381,000
17,915,000
19,945,000
17,858,000
18, 507,000
18,864, 000
19, 652, 000
21,743,000
17, 200, 000
15, 766, 000

$42, 791, 000
45, 316, 000
57,871,000
64,252,000
67, 077, 000
68, 302, 000
67, 896, 000
67, 208,000
68, 913,000
76,521,000
63, 315, 000
65, 535, 000

17,543,000
19,360,000
27,829,000
32,915,000
30,998,000
31, 577,000
28,693, 000
26,768,000
26,189,000
24,539, 000
20,829,000
20, 038, 000

20,729,000
24,594,000
32,177,000
37, 395,000
39, 288,000
39,965,000
35, 758,000
32,334,000
33,307,000
32,104,000
27,113, 000
24,522, 000

15, 595, 000
12, 781, 000
17, 208,000
19, 290,000
19, 046, 000
20, 669,000
17, 783,000
17,915,000
18,818,000
18,813,000
16, 561, 000
15, 536, 000

53, 867, 000
56, 735,000
77, 214,000
89, 600, 000
89,332,000
92, 211,000
82, 234, 000
77, 017,000
78, 314, 000
75,456, 000
64, 503, 000
60, 096,000

16,781,000
17,520,000
23,356,000
26,107, 000
24,721,000
26,310,000
23,823,000
26,858,000
25, 650,000
26,534,000
24, 220,000
25,019, 000

20,879,000
22,073,000
27,835,000
30, 238,000
31,196, 000
30,350,000
28,973, 000
29, 506,000
29, 255,000
30, 546, 000
26,115,000
26,504, 000

11,442,000
10,500,000
14,027,000
16,962,000
16,362,000
16,407,000
14,843,000
18,345,000
16,742, 000
15,851,000
13, 735,000
12,411,000

49,102,000
50, 093, 000
65, 218, 000
73, 307, 000
72, 279, 000
73, 067, 000
67, 639, 000
74, 709, 000
71, 647, 000
72, 931, 000
64, 070, 000
63, 934, 000

20,894,000
22, 298, 000
29,811,000
33,400,000
36,358, 000

23, 071,000
24,191,000
30,124,000
32, 562,000
35,426,000

11,602, 000
11,820, 000
13,443, 000
17,463,000
17,339,000

55, 567, 000
58, 309, 000
73, 378, 000
83, 425, 000
89,123, 000

39,094,000
34.055,000
40,645,000
37, 090, 000
37,854,000
34,785,000
34, 053, 000

-

$18,434, 000
17,055,000
22,180,000
28,597,000
28,166,000
29,197,000
27,898, 000
26,773,000
26, 761, 000
30,864,000
26,344,000
27, 252,000

36,465,000
34,146,000
37, 340,000
36,989,000
37,847,000
34,671,000
33, 209, 000

18, 595,000
16,971,000
17,053, 000
15,653,000
17,596, 000
16,620, 000
15,850,000

94,154, 000
85,172, 000
95, 038, 000
89, 732,000
93, 297, 000
86, 076, 000
83,112, 000

28, 008,000
29,786,000
38, 241,000
46,577,000
49,287,000
47,435,000
48,676,000
50,305,000
46,480, 000
48,307,000
38,896, 000
37,715,000

25,737,000
28,941,000
36,484,000
43,015,000
45,803,000
42, 214,000
45,414,000
46,807,000
45,988, 000
46,224,000
40,143,000
36,729,000

13,199,000
12,795,000
15,643,000
18,409,000
19,452, 000
17,335,000
20,211,000
20,510,000
19,307,000
19,869,000
15, 528,000
14,109, 000

66, 944,000
71, 522,000
90,368, 000
108,001,000
114,542,000
106, 984, 000
114,301,000
117,622,000
111, 775, 000
114,400,000
94, 567,000
88, 553, 000

34,360,000
35,645, 000
45,365,000
51,371,000
55,396,000
57, 542, 000

33,947, 000
35,301,000
43,947,000
50,956,000
54,495,000
54, 857, 000

12, 133, 000
11,384,000
15,850,000
18,304, 000
21,062,000
21, 241, 000

80, 440,000
82,330,000
105,162, 000
120, 631, 000
130,953,000
133, 640, 000

1940
January..--------------------- ----------------February --- ,March --------April------------------------May ------June ---- - ---------------July_-----------August---------September
---------October---------November---------------------December ----------------

-

1941
January-- --------------February ----March -----------April_ ------------May_
-- --June------------------------




-

219

EXHIBITS
EXHIBIT 32

Estimated volume of new mortgage loans made by all savings and loan associations
during the fiscal years 1940 and 1941, by Federal Home Loan Bank Districts

United StatesNo.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.

___-----------------

1941

$1,090, 788,000

$1,294, 374,000

1S.7

101,181,000
101,154,000
84, 852, 000
160, 306,000
176, 305,000
55, 763,000
111,260,000
69,228,000
57,860,000
50,133,000
38, 963,000
83, 783,000

131, 528,000
129,220,000
100,020,000
181,808,000
220, 634,000
67, 625, 000
130,861,000
71, 721,000
61,898,000
52, 395,000
45, 742,000
100,922,000

30 0
27. 7
17.9
13.4
25.1
21.3
17. 6
3.6
7.0
4 5
17.4
20. 5

1-Boston--...----.---.-------------------------------2-New York
------3-Pittsburgh-. ------.--------- -------....
-4-Winston-Salem ___------.-------------5-Cincinnati_ .. _..---------6-Indianapolis
------------------------7-Chicago .-----_------------------------------------8-Des Moines-----9-Little Rock
......-----------------.------------10-Topeka ....------11-Portland.....-------.-----------------12-Los Angeles ....---------.---------.-------




Percent
ncreae

1940

Bank District

220

REPORT OF FEDERAL HOME LOAN BANK BOARD,

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221

EXHIBITS
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222

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 35
Percentage distribution of balance-sheet items for all savings and loan member insti
tutions of the Federal Home Loan Bank System, as of Dec. 31, 1939, and
Dec. 31, 1940
[Percentage ratio to total assets]
State-chartered
insured sav
ings and loan
associations

savings and Federal savings
All All
savings and
and loan
loan members
associations

Item

------ 7-- -

--- ;----I -

1940

1939

State-chartered
uninsured sav
ings and loan
associations

1939

1940

1940

1939

1939

-------- I------------I ---------I----------I

Number of institutions ----

3,818

3,868

1,400

1,433

1940

I

795

835

1,673

1, 550

ASSETS

First mortgage loans (including in
terest and advances)----------

Junior mortgage liens (including in
terest and advances) ..---------...
Other loans (including share loans) Real estate sold on contract ------Real estate owned-----------------Federal Home Loan Bank stock --

Percent Percent Percent Percent Percent Percent Percent Percent
81.52
83.21
74. 67
76.76
79.25
76.99
73.16
75.90
.12
.71
3.84
9.30
.99

Other investments (including ac
crued interest)----------1.72
Cash on hand and in banks
.------- 5.09
Office building (net) ------1.10
Furniture, fixtures, and equipment
(net)-----------.10
--------Other assets------------------.27
Total assets ----

--

100.00

.09
.68
3.79
6.80
.99

.04
.38
3.23
4.14
1 07

.12
.53
4 88
9 61
1.00

.10
.53
4.87
7.19
.99

.18
1.12
3 59
12 81
.87

.14
1.15
3.73
9.85
.87

1.55
5.50
1.05

I

.05
.41
3.46
5.70
1.09
.83
5.58
1.10

.69
5.99
1.02

1.96
5.48
1.32

1.96
5.79
1.22

2.49
4.37
.97

2.35
4.67
.97

.12
.31

.12
.24

.10
.20

I

.13
.13

I

100.00

100.00

.13
.10

I---------I

100.00

100.00

100.00
I

I

-

.06
.38

I

.06
.31
I

100.00

100.00
'

I

LIABILITIES AND CAPITAL

U. S. Government investment
(shares and deposits) ---------Private repurchasable shares-----Mortgage pledged shares ---------Deposits and investment certificates_
Advances from Federal Home Loan
Banks _____-----Other borrowed money --------Loans in process-------------Other liabilities
Capital, permanent reserve, or guar

6.17
67.43
4.11
7.20

5.00
69 57
3 31
6 96

13.21
70 81
.88
.02

9 69
74 45
.52
.02

4.43
58.12
2.41
17.52

3.73
60. 28
1.83
16 82

.02
69.58
8.42
8.32

.01
70.04
7.84
8.67

4.49
.44
1.12
1.09

4.54
.38
1.42
1.13

6.72
.31
1 78
1.15

6.79
.26
2.06
1.13

4.23
.42
1 19
1.34

4.19
.40
1.50
1.38

2.36
.58
.40
.89

1.96
.52
.58
.94

Specific reserves..---------------General reserves -----------------Undivided profits---------

.63
.28
4.89
2.15

.58
.22
4.49
2.40

.00
.26
3.27
1.59

.00
21
3.15
1.72

2 20
.33
5.63
2.18

2.00
-26
5 41
2.20

.34
.26
6.11
2.72

.32
.20
5.52
3.40

-

-

Total liabilities and capital--

100.00

100.00

anty stock

----------------

I

-

100.00

I

-

100 00

I

-

100.00

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




I

-

100.00

I

-

100.00

I

100.00

223

EXHIBITS
EXHIBIT 36

Operating ratios for reporting savings and loan member institutions of the Federal
Home Loan Bank System, for the calendar years 1939 and 1940
Percentage ratio to gross operating income

Item

Federal savings Insured State Uninsured State
and loan as
chartered mem chartered mem
ber associations ber associations
sociations

Total
--

-

I

-

Number of institutions reporting_

-I

1-

1939

1940

1939

1940

3,110

3,508

1,384

1,428

1939
642

1940
772

--

1939
1,084

1940
1,308

GROSS OPERATING INCOME

Interest:

On mortgage loans - ordinary Percent Percent PerrentPercent Percent Percent PercentPercent
85.23
85.04
86 23
88.06
82 28
86.19
84.35
85. 98
cash collections-------------.92
.51
.92
.99
.56
.99
1.03
.31
On mortgage loans-all other on shares, passbooks,
On loans
and certificates--------

On real estate sold on contract_On investments and bank de
posits_---....-------------Other .---.------------------Premiums or commissions on
loans (current installments
and amortized only) __...Appraisal fees, legal fees, and
initial service charges_-.-----.
Other fees and fines..---------Net income or loss from real es
tate owned --------Gross income from office build
ing_--------------------Dividends on stock in Federal
Home Loan Bank-.........
Other dividends_---------Miscellaneous operating income_
Gross operating income------

.62
3 79

.32
4 05

.30
3 81

.28
3.67

.39
5.29

.31
5.40

1.17
2.76

.37
3.58

1.10
.25

.93
.33

.66
.11

.42
.12

1.50
.39

1.14
.36

1 38
.33

1.46
.59

1 19

1.28

1 47

1.33

.96

1.03

1.01

1.40

1 44
.60

1 58
.59

2.18
.41

2 43
.39

1 42
.54

1 36
.46

.53
.88

.61
.93

3 00

2.44

1 99

1.40

4 41

3.04

3 29

3.43

1.09

1.12

1.13

1.01

1.04

1.24

1.08

1.17

.24
.05
.41

.19
.04
.38

.26
.03
39

.20
.02
.36

.24
.06
.56

.19
.07
.54

.21
.07
.32

.17
.04
.29

100.00

100.00

100.00

100 00

100.00

100.00

100.00

100.00

12.61
.35

12.60
.26

13 29
.22

13 11
.24

13 84
.73

13 69
.35

10.97
.24

11 15
.21

.54

.53

.55

.48

.68

.63

.45

.51

.27
1.51

.28
1.47

.34
1.77

.36
1.64

.34
1.52

.33
1.52

.12
1.18

.14
1.20

.98
.52

1.02
.53

1.03
.44

.99
.44

1.05
.67

1.19
.71

.88
.53

.95
.54

.47
2.12

.47
2.12

.64
3.01

.62
2.92

.47
2.11

.51
2.15

.25
1.00

.23
1.03

.75

.76

.85

.83

.80

.85

.58

.60

.53
.50

.53
.62

.64
.56

.63
.56

.59
.59

.58
.60

.36
.36

.34
.71

1.30
.30

1.33
.30

1.98
.22

1.97
.19

1.96
.25

1.99
.29

.00
.42

.01
.44

.42
.23
2.53

.42
.24
2.70

.45
.29
2.14

.41
.29
2 42

.64
.24
2.89

.66
.26
3.30

.25
.14
2.77

.27
.15
2 65

25.93

26.18

28 42

28.10

29.37

29.61

20.50

21 13

74 07

73.82

71.58

71.90

70.63

70.39

79.50

78.87

LESS OPERATING EXPENSES

Compensation to directors, officers,
--------------employees, etc
Collection expense (agents, etc.) -Legal services-retainer, traveling
expense and special services.....-Expense accounts of directors, offi
cers, and employees-------Rent, light, heat, etc_---------Repairs, taxes, and maintenance of
office building __--------_

Depreciation of office building.----Furniture, fixtures, and equipment,
including depreciation ----__----Advertising __
Stationery, printing, and office sup
plies--------------------------

Telegraph, telephone, postage, and
express---------------------Insurance and bond premiums ----

Federal insurance premium (if in
sured)---------------------------Audit-_--------------Supervising examinations and as
sessments....--------------Organization dues- .-------_.
Other operating expense ---------Total operating expense- --

Net operating income before interest
and other charges ------




224

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 36-Continued
Operating ratios for reporting savings and loan member institutions of the Federal
Home Loan Bank System, for the calendar years 1939 and 1940-Continued
I
Percentage ratio to gross operating income

Item

Federal savings Insured State- Uninsured State
and loan aschartered mem- chartered mem
sociations
ber associations ber associations

Total

1939

1940

1939

1940

1939

1940

1939

1940

LESS INTEREST CHARGES

On deposits, investment certificates,
etc---------------

On advances from Federal Home
Loan Bank- ___.. ________.-_.On borrowed money-------Total interest _------------Net operating income ..-----------

Percent Percent Percent Percent Percent Percent Percent Percent
5.07
4.44
0 04
0.09
12 11
10.88
6 61
5 46
2.42
.26

2 02
.21

3.42
.11

2 83
.11

2.31
30

1.87
.29

1.24
.43

1.05
.30

7.75

6 67

3 57

3.03

14.72

13 04

8 28

6.81

66 32

67.15

68 01

68 87

55 91

57.35

71 22

72 06

.17
1 59
33

.19
1.56
.20

02
1 70
.41

.01
1.42
.19

.19
2 06
.30

.15
2.07
.23

33
1 16
.25

.44
1 38
.20

.64

.39

.26

2 59

2 34

2 40

1.97

3 65

3 09

2 13

2.28

68 91

69 49

70 41

70.84

59 56

60.44

73.35

74.34

15
1.44
.07
.80

.15
1.49
.08
.82

.11
1 46
.08
63

.14
1.31
.04
.56

25
1.54
08
.74

.23
2 07
.19
.96

.15
1.34
.04
1.06

.10
1.31
06
1 06

ADD NONOPERATING INCOME

Dividends retained on repurchases
and withdrawals--------Profit on sale of real estate .------Profit on sale of investments -----Other nonoperating income ------Total nonoperating income -Net income after interest and before
charges--------------

.50

.39

.27

.35

1 10

LESS NONOPERATING CHARGES

Foreclosure costs and back taxes on
real estate acquired (unless capi
talized or charged to reserves) -Loss on sale of real estate .-------Loss on sale of investments.-----Other nonoperating charges ------Total nonoperating charges -Net income for the year ----------

2 46

2 54

2 28

2.05

2.61

3 45

2.59

2 53

66.45

66.95

68.13

68 79

56 95

56 99

70 76

71.81

.00
7.54
.00

.03
5.47
.05
5.18
2.28
1.35
74. 67
10.97

Percentage ratio to net income
LESS TRANSFERS FOR RESERVES
AND DIVIDENDS

--For bonus on shares----Legal reserves------------------Federal insurance reserve.------.-For contingencies---------Real-estate reserve --------Other reserves-------------Dividends-----------------------

Balance to undivided profits..-----

.11
4.53
3.45
4.69
1.39

1.44
75. 54
8 85

.11
2.95
3.92
6.07
1.61

.83
73.50
11.01

.23

1.56
5.60

.20
.27
5.97

.07

.07

5.56

4.48

5.04

6.11

5.66

7.13

3.73

5.29

4.03

1.14
.32
76.17
9 32

1.08
.45

1.62
1.61
72.67
9 70

1.62
.71
73.15
8.57

76. 35
7.82

72.74
12 16

Source: Division of Research and Statistics, Federal Home Loan Bank Board.'




1.56

2.70

225

EXHIBITS
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226

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228

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 38
Federal savings and loan associations-Number and assets as of the end of each
fiscal year, 1934-41
Number of associations

Assets (in thousands of dollars)

Date
Total
June
June
June
June
June
June
June
June

30,
30,
30,
30,
30,
30,
30,
30,

1934 --------1935----------1936----------1937 ---------1938 ---------1939---------1940 ----------1941------------

370
851
1,135
1,286
1, 346
1, 386
1, 429
1, 455

New
320
554
637
647
640
636
633
639

on
verted
50
297
498
639
706
750
796
816

Total

New

$41, 402
304, 569
655,192
986, 297
1, 213, 874
1,442, 069
1, 728, 865
2,029, 639

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




$3, 198
36,145
116, 670
222, 528
301, 242
397, 239
506, 588
629, 301

Converted
$38, 204
268,424
538, 522
763, 769
912, 632
1,044,830
1, 222, 277
1, 400, 338

229

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232

1941

REPORT OF FEDERAL HOME LOAN BANK BOARD,
EXHIBIT 40

Index of private repurchasable capital in comparable Federal savings and loan
associations1
[Average month 1935-1939=100]

Date

Private
repurchasable
capital

June 30, 1935.....
June 30, 1936--..
June 30, 1937--__

Percent increase over preceding year

75 82
94

---------

9
15

Private
repurchasable
capital

Date

June 30,
June 30,
June 30,
June 30,

1938 -1939 .-1940- ..
1941-.....

Percent in
crease over pre
ceding year

110
136
169
204

17
24
24
21

1This index eliminates the effect of conversion of State-chartered into Federally-chartered associations, and
the addition of newly-established Federal associations during the period. Any growth of associations
due to consolidation, merger, or purchase of assets from other institutions is not reflected in the index.

EXHIBIT 41
Federal savings and loan associations-Private investors in repurchasable shares
and private repurchasable capital, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941
Number of private investors
in repurchasable shares

Private repurchasable capital

Bank District and State
June 30,
1940
- I-----

United States ----------

June 30,
1941
I-----

In
crease
I-----

June 30,
1941
I-----------

Increase
-I -----------

$1, 554, 809, 600 $286, 761, 600

244, 773

$1, 268, 048, 000

119, 804

132, 209

12,405

105, 678, 500

131, 215, 000

25, 536, 500

Connecticut----.. -----Maine ----------------Massachusetts --------New Hampshire _-----Rhode Island __------Vermont -------

17, 016
927
90, 582
8, 379
1,142
1, 758

21, 241
1,150
95, 293
8, 726
2,854
2, 945

4, 225
223
4,711
347
1,712
1,187

10, 870, 200
601,300
84, 263, 600
7, 013, 600
581,300
2, 348, 500

17, 236, 500
913,400
100,140, 200
7, 864, 400
1,171,000
3,889, 500

6, 366, 300
312,100
15, 876, 600
850, 800
589,700
1, 541, 000

No. 2-New York --------.

197, 369

218, 663

21, 294

130,130,300

156,332, 900

26, 202, 600

New Jersey ------

3, 277
194, 092

7, 063
211, 600

3, 786
17, 508

3, 310, 000
126, 820, 300

6, 549, 900.
149, 783, 000

3,239,900
22, 962, 700

No. 3-Pittsburgh -__------.

87,850

111, 717

23, 867

62, 373, 900

86, 388, 000

24, 014, 100

97
Delaware----------77, 521
Pennsylvania ---------.------- 10, 232
West Virginia

140
99, 847
11, 730

43
22, 326
1, 498

220, 500
51, 778, 000
10, 375, 400

277, 500
73,
317,400
12, 793,100

57, 000
21, 539, 400
2, 417, 700

No. 1-Boston.._-

----

New York-------------

1, 562, 079 1, 806, 852

June 30,
1940
I-------------

No. 4-Winston-Salem ---.-

160, 748

197, 218

36, 470

144, 090, 800

192, 207, 800

48,117, 000

Alabama.-------------District of Columbia -Florida-------Georgia---------Maryland -------------North Carolina -------South Carolina --------.
Virginia------------.
..

9, 306
16, 020
39,188
21,454
29, 819
13, 596
15,458
15,907

11, 834
19,119
48,
200
25,860
37,944
16, 577
18, 590
19,094

2, 528
3, 099
9, 012
4,406
8,125
2,981
3,132
3,187

7, 024,900
13,961,300
39,038, 900
16,528, 600
22,010,400
12, 291,600
15, 515,300
17, 719,800

9,996, 000
19,412,100
53, 022, 600
22,897,200
28,308,200
16,812,100
19,833,700
21,925, 900

2,971,100
5,450,800
13,983,700
6,368,600
6, 297,800
4, 520, 500
4,318, 400
4, 206,100

No. 5-Cincinnati ---------

281,337

316, 219

34,882

242,902, 000

275, 555, 700

32,653, 700

Kentucky--...---------.
---.
Ohio-.----Tennessee _------

51, 052
206,902
23,383

55,335
233, 240
27, 644

4,283
26, 338
4,261

52,354, 700
173, 024,300
17, 523, 000

56, 759, 400
196, 015,100
22,781,200

4,404,700
22,990, 800
5, 258,200

No. 6-Indianapolis -------

122,805

134,974

12,169

108,279,200

121,286,500

13,007,300

Indiana __------_Michigan

84,762
38, 043

91,267
43, 707

6, 505
5,664

71,798,900
36,480,300

79,697,000
41, 589, 500

7,898,100
5,109, 200




----

233

EXHIBITS

EXHIBIT 41-Continued
Federal savings and loan associations-Private investors in repurchasable shares
and private repurchasable capital, by Federal Home Loan Bank Districts and
by States, June 30, 1940, and June 30, 1941-Continued
Number of private investors
in repurchasable shares

Private repurchasable capital

Bank District and State
June 30, June 30,
1941
1940

In
crease

June 30,
1940

June 30,
-

1

-1

Increase
I

1941

1 -

-

-

133, 094

160,179

27, 085

$105,803,500

$132,554,400

$26, 750,900

114,460
18, 634

138,040
22, 139

23,580
3, 505

89,497,200
16, 306, 300

111,372,100
21,182,300

21,874,900
4,876, 000

102, 030

123, 538

21, 508

76, 661,100

98,631, 200

21, 970, 100

14, 423
54, 393
29, 029
2, 828
1,357

18,124
66, 864
33, 926
3,156
1,468

3, 701
12, 471
4, 897
328
111

12,380, 600
34,320,300
26,953, 700
1, 855, 300
1,151,200

16, 810, 000
45, 198, 500
32, 937, 600
2,422, 600
1,262,500

4,429, 400
10, 878, 200
5,983,900
567, 300
111,300

No. 9-Little Rock----------

60, 532

71, 214

10, 682

66, 239, 500

83, 864, 700

17, 625, 200

Arkansas---------------Louisiana_---------Mississippi ----------New Mexico-------

7,498
7, 444
4, 053
1, 340
40,197

8,117
7, 753
5, 009
1, 604
48, 731

619
309
956
264
8, 534

9,879,300
11, 278, 700
4, 085, 500
1, 743, 800
39, 252, 200

11,612,600
11,863, 200
5, 667, 900
2, 357, 700
52, 363, 300

1, 733,300
584, 500
1, 582, 400
613,900
13,111,100

81, 413

89, 844

8,431

80, 324, 300

90, 553, 400

10, 229,100

17,397
24, 997
6, 498
32, 521

20,517
26, 091
7, 441
35, 795

3,120
1,094
943
3, 274

15,510,700
20,667, 300
5, 277, 000
38, 869, 300

18,166,900
22,466, 400
6, 484,100
43,436,000

2,656,200
1,799,100
1, 207,100
4, 566, 700

125,154

136, 010

10,856

54, 262,400

68, 427, 700

14,165, 300

8, 234
677
16,192
9,950
87, 353
2, 491
257

8, 487
952
18,508
11,684
92, 799
3, 257
323

253
275
2,316
1,734
5, 446
766
66

4,763, 800
385,800
9,514,800
4,550,200
32, 705, 300
2,165, 200
177, 300

5, 597, 200
850,200
12,326,000
5,723,500
40, 575,100
3,069,000
286, 700

833,400
464,400
2,811,200
1,173,300
7,869, 800
903, 800
109, 400

89, 943

115, 067

25, 124

91, 302, 500

117, 792, 300

26, 489, 800

Arizona _-------2, 526
California
_-------------529
85,
Nevada__
------560
Hawaii_ -_----1, 328

3, 556
109, 311
655
1, 545

1, 030
23, 782
95
217

1,907,900
87,005, 800
517, 300
1,871, 500

2,982, 300
111, 807,100
675, 400
2,327, 500

1,074, 400
24, 801,300
158,100
456, 000

No. 7-Chicago -Illinois ----Wisconsin

----------

No. 8-Des Moines---------Iowa
..------------Minnesota_-------Missouri---------North Dakota..--------South Dakota ..------

Texas------------

--

No. 10-Topeka --------Colorado---------------Kansas-----------------Nebraska_----------Oklahoma------No. 11-Portland-------Idaho ..--------------Montana -----___-Oregon. ___.__---------Utah--.....--Washington -----------Wyoming_-------Alaska_.------------No. 12-Los Angeles -------

Source:

Division of Research and Statistics, Federal Home Loan Bank Board.

425085-41-




16

234

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 42
Federal savings and loan associations-Investments of the U. S. Treasury and the
Home Owners' Loan Corporation, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941
Bank District and State

June 30, 1940

.......----

Connecticut--------------------Maine..------------------------------------Massachusetts -------------------New Hampshire --------.----------------Rhode Island...
-----------------Vermont -------------. -..-----No. 2-New York..................

No. 3-Pittsburgh-..-- ...

---........

---

--.

Delaware------------------------------------------

Pennsylvania--West Virginia ..
-------

9,413,800

7,840,400

--------------------------------

1, 573,400
---------------

204,200
628, 650
367,100
205,000
266,400
677, 500
579,800

22, 783, 300

17,047, 300

5, 736, 000

3,117,700
13, 534,800
6,130,800

1,998,200
10,046, 700
5,002,400

1,119,500
3, 488, 100
1,128,400

10,637,300

8,803,100

1,834, 200

7, 774,800
2,862, 500

6,272,600
2, 530, 500

1, 502,200
332, 000

21,750,200

19,388,800

2, 361,400

18,023,100
3, 727,100

15, 698,000
3, 690,800

2,325,100
36,300

18, 516, 900

17,111, 900

1,405,000

2,364,900
8,466,000
7,033,000
300, 500
352, 500

1,914,400
8,060, 200
6, 504,200
288,100
345,000

450, 500
405,800
528,800
12,400
7, 500

7, 901,300

5,190, 700

2, 710,600

1,332,300
267, 500
702,700
232, 500
5,366, 300

931,400
170,000
441, 500
122, 500
3, 525, 300

400,900
97, 500
261,200
110,000
1,841, 000

7,599,200
8, 734,200
.----------------------------

1, 135, 000

--

-----------------------------

-----------

-----------.

Colorado.....---------....---------------------Kansas-.---------------------.-------Nebraska-------------------------------------------------Oklahoma-----




1 50,000
3, 112,800

9, 858, 550
3, 558, 700
3,627, 500
2, 566,100
1,126,800
2,482, 700

Arkansas.....
----------------------------------Louisiana_-____--- -----------------Mississippi .----------.--.--------.---------------------------New Mexico_------Texas-------------------------------------------

1Increase.

3,062,800

341, 000
20,288,400

10, 487, 200
3,925,800
3,832, 500
2,832, 500
1,804, 300
3,062, 500

.-Iowa _-----... ...................
-Minnesota --.......----......--.--...
--...
--....
Missouri ..----------.----------..----------North Dakota ..........------------- _--------- -...
_
South Dakota.-------. --------------..------------

No. 10-Topeka

20, 629,400

---

2, 928, 650

......

--......

23, 692, 200

-

1,061,300

Illinois
-------------------------------Wisconsin---.. ,------.----------- --------.-------

No. 9-Little Rock ..--.---

285, 000

1,265, 500

Indiana ......-----------.........................
Michigan.................... .......-------------

..--------.-----

285, 000

24,281,650

Kentucky.. ---------Ohio-------Tennessee-----------------------------

No. 8-Des Moines .

1, 243,200
13,000
1, 761, 200

27, 210, 300

Alabama ---------------------------------------District of Columbia _---------------------Florida -....------------Georgia ..---------------Maryland. .
-------------------------------------North Carolina-----------------South Carolina..
--------------------------------Virginia
---------

No. 7-Chicago

3,017,400

1,862, 300
244,000
3,490, 000
----------------..---------------..--------------

3,105, 500
257,000
5, 251, 200

5, 272, 400
2,568,000

No. 4-Winston-Salem ---------.-----.---..

No. 6-Indianapolis ---------------..
....

$28,021,050

5,881,300

6, 360, 800
3,053,000

------------------------

No. 5-Cincinnati_---_--------------

$169,246,850

Decrease

291,000
23,401,200

....--------

------------------------ ------

New Jersey ...
New York- ...---

$197, 267, 900
8,898,700

United States-----------__-----...........--....
No. 1-Boston-.................

June 30, 1941

2,461,400
3,236, 800
1,153, 000
1,883,000

2,338, 300
3,070,400
869,000
1,321, 500

1, 088,400
485,000

123, 100
166,400
284,000
561, 500

235

EXHIBITS

EXHIBIT 42-Continued
Federal savings and loan associations-Investments of the U. S. Treasury and the
Home Owners' Loan Corporation, by Federal Home Loan Bank Districts and by
States, June 30, 1940, and June 30, 1941-Continued
June 30, 1940

June 30, 1941

.------------..------------- $17,645,900

$16,244, 700

$1,401,200

2, 029,100

236, 400

19, 228,400

855,400

Bank District and State
No. 11-Portland

Idaho ---.......--- ....--..-----

-------.-

2,265, 500

No. 12-Los Angeles

..........

....-----------------------------

Arizona_

----Cahfornia ..
Nevada-----------------------

-

---

--

-30,000 4,158,400
309,800
1,693,100
6,900
7,657, 200
566,100
643,600
282,000
33, 300----

30, 000
4,468,200
1, 700,000
8,223,300
925, 600
33, 300

.
..-----------------------------------Montana
------------ Oregon.----. ----------Utah _...-...
__...------....--Washington ...------....--------------Wyoming
--------------Alaska----..---------------------

Decrease

20,083,800
655,000

655,000-

19,428,800

18, 573,400

Hawaii---------------------------------------..--------

855,400

--

EXHIBIT 43
Federalsavings and loan associations-New mortgage loans made by reporting asso
ciations during the year ended June 30, 1941, by purpose of loan
Federal Home Loan Bank Construction
District and State
United States---....
No. 1-Boston ............

$227, 250,600

Home purchase

Refinancing

Repnirs
and roni

tioning
..

Other
purposes

T

$180, 728, 500 $84, 678, 500 $21, 966, 300 $35, 000, 600 $549, 624, 500

18, 243, 200

16,134, 500

6,399, 700

1, 832, 900

2, 546, 900

45, 157,200

4, 334, 700
76, 500
12, 546, 700
773, 100
214, 700
297, 500

2, 791, 500
183, 200
12, 058, 000
433, 800
266, 200
401,800

1,403, 800
65, 200
4, 223, 900
353, 600
206, 700
146, 500

204, 300
56,100
1, 359, 600
134, 400
200
78, 300

161, 000
16,100
1, 971, 300
316, 600
0
81, 900

8, 895, 300
397, 100
32,159, 500
2,011, 500
687, 800
1,006, 000

16, 204, 500

14, 705, 600

3, 577, 800

548, 600

803, 000

35, 839, 500

817, 200
15, 387, 300

907, 300
13, 798, 300

202, 700
3, 375,100

78, 400
470, 200

39, 000
764,000

2, 044, 600
33, 794, 900

No. 3-Pittsburgh .......

11,061, 100

19, 248, 800

6, 608, 500

1, 351, 700

1, 265, 600

39, 535, 700

Delaware ----------Pennsylvania- __---West Virginia .----

48, 400
9,141, 500

55, 300
17, 993, 400

5, 200
5, 591, 200

700
930, 600

0
916,200

109, 600
34, 572,900

1, 871, 200

1, 200,100

1,012,100

420,400

349, 400

4,853,200

No. 4-Winston-Salem-...

42, 054, 800

26, 292, 200

11, 482, 500

3, 397, 400

6,046, 200

89, 273, 100

1, 104, 600
4, 959, 700
14, 522, 700
3, 645, 900
5, 959, 600
3, 863, 700
3, 737, 200
4, 261, 400

1, 113,
1, 888,
3, 082,
3, 091,
10, 326,
1, 632,
1, 651,
3, 507,

500
100
000
200
300
300
500
300

1,002, 000
1, 167, 900
2, 486, 600
2, 260, 300
1, 157, 600
1,191, 000
1,013, 100
1, 204, 000

000
900
700
800
700
400
000
900

220, 200
351, 500
2,802, 300
470. 200
279, 000
773, 900
548, 000
601, 100

3, 645, 300
8, 505, 100
23, 849, 300
10,052, 400
17, 835, 200
7, 996, 300
7, 558, 800
9, 830, 700

29, 235, 700

31, 244, 800

11, 856, 900

3, 770, 500

4, 812, 700

80, 920, 600

3, 380, 400
21,
964, 100
3, 891, 200

5, 183, 400
24,
200, 600
1, 860, 800

1, 947, 600
8,082, 300
1, 827, 000

683,100
2, 633, 500
453, 900

834, 900
3, 346, 800
631, 000

12, 029, 400
60, 227, 300
8, 663, 900

Connecticut --------Maine--------------Massachusetts _---New Hampshire .-Rhode Island....---Vermont --..-No. 2-New York-.....
New Jersey---------New York ...---

Alabama ......-----District of Columbia-.
Florida...-------Georgia.-----Maryland..
-------North Carolina .--South Carolina .---Virginia ----No. 5--Cincinnati

-....
..

Kentucky...-------Ohio__-Tennessee------------




205,
137,
955,
584,
112,
535,
609,
256,

236

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 43-Continued
Federal savings and loan associations-New mortgage loans made by reporting asso
ciations during the year ended June 30, 1941, by purpose of loan-Continued
Federal Home Loan Bank Construction
District and State
No. 6-Indianapolis

.---

Home purchase

Refinancing

adec
ditioning
ditioning

Other
purposes

Tota

$14, 319, 300

$9, 844, 700

$6, 424, 300

$2, 081, 100

$2, 369, 700

$35, 039, 100

Indiana..---------Michigan------------

7, 368, 700

7, 464, 200

3, 619, 300

1, 605, 200

1, 470, 100

21, 527, 500

6, 950, 600

2, 380, 500

2, 805, 000

475, 900

899, 600

13, 511, 600

No. 7-Chicago _------

15, 763, 400

19, 517,000

9, 828,300

2,646,400

2, 993, 600

50, 748, 700

Illinois ......---Wisconsin-----------

13, 179, 300
2, 584, 100

17, 141, 600
2, 375, 400

8, 649, 000
1,179, 300

2, 379, 700
266, 700

2, 529, 600
464, 000

43, 879, 200
6, 869, 500

13, 388, 000

11, 566, 900

7, 119, 600

1, 657, 800

No. 8-Des Moines-----

400
200
300
200
900

2, 600, 100
4, 501, 800
4, 138, 300
222, 900
103, 800

1, 187,
3, 639,
2, 039,
189,
63,

10, 372, 500

6, 619, 100

3, 989, 900

Arkansas
.---------1, 485, 900
Louisiana ...------1, 371, 500
862, 600
Mississippi -------- .
381, 500
New Mexico--------6, 271, 000
Texas -----------

1, 217, 400
802, 600
499, 800
132, 300
3, 967, 000

647,
313,
561,
185,
2, 281,

8, 605, 700

9, 740, 000

5,057, 600

Colorado----------2,193, 800
Kansas-------------2, 360, 400
909, 900
Nebraska ----------Oklahoma
.
.-------- 141, 600
3,

2, 365, 600
2, 706, 900
725, 700
3, 941, 800

1, 361,
742,
341,
2, 611,

Iowa----------

Minnesota ---------Missouri -----------North Dakota --------

South Dakota

No. 9-Little Rock --

No. 10-Topeka----.

2, 193,
7, 957,
2, 861,
301,
74,

300
900
600
700
100

000
900
900
300
800

800
500
900
400

2, 214,000

35, 946, 300

400
100
000
000
300

413, 000
1, 495, 500
222, 200
54, 000
29, 300

6, 865,
18, 449,
9, 525,
806,
299,

1, 683, 700

2, 561, 300

25, 226, 500

540,
246,
237,
78,
1, 458,

500
200
200
800
600

4, 216, 800
2, 975, 800
2, 348, 600
832, 400
14, 852, 900

3, 429, 900

27, 976, 200

514,
704,
208,
2, 002,

6, 657,
6, 749,
2, 265,
12, 303,

471,
855,
264,
39,
28,

326,
241,
187,
54,
874,

000
600
100
500
500

1, 143, 000
221,
235,
79,
606,

700
200
300
800

400
500
800
200

200
500
400
800
400

300
500
600
800

No. 11-Portland.--..---.

11,807, 700

7,710,800

5, 717, 300

2, 668, 200

29, 238, 000

Idaho---------------..
Montana.------U tah ...
. . . . .
Washington -----Wyoming ---- _----.
Alaska.---------

634, 700
117, 400
2, 807, 700
1, 375, 800
6,187, 900
533, 100
151,100

524, 400
95,100
1, 279, 600
533, 000
4, 895,100
339, 500
44, 100

462, 300
29, 900
921,100
423, 700
3, 675, 200
174, 100
31, 000

191,
24,
235,
77,
664,
101,
40,

000
500
500
000
600
400
000

242, 900
38, 800
409, 300
176,000
1, 664,100
135, 200
1, 900

2, 055, 300
305, 700
5, 653, 200
2, 585, 500
17, 086, 900
1, 283, 300
268,100

No. 12-Los Angeles .-....

36,194, 700

8, 104, 100

6, 616,100

519,200

3, 289, 500

54, 723, 600

784, 800
Arizona -------__.
.
34, 911,100
California
..-------134, 800
Nevada-------Hawaii
_ -------364, 000

328, 700

209, 200
6, 230, 800
62, 000
114,100

85, 500
404, 700
5, 700
23, 300

118, 100
3,102, 200
45, 100
24,100

1, 526, 300
52, 034, 700
264,100
898, 500

Oregon _ -

-

7,385, 900
16, 500
373, 000

1, 334, 000

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




237

EXHIBITS

EXHIBIT 44
Federal savings and loan associations-Selectedbalance-sheet items for 1,394 identical
new and converted associations, as of June 30, 1940, and June 30, 1941
[Dollar amounts in thousands]

June 30, June 30, Percent June 30,
1941
change
1940
1940
Total assests
.-----.
$497,945 $614, 801
First mortgage loans
held------------ 445, 758 547,602
2, 769
2, 259
Real estate owned -Cash and Govern
ment obligations 31, 853 43, 875
329, 936 442,139
Private capital --..
Government in
91,051 79, 683
vestment-------Reserves and un
divided profits 114, 543 21,001

All 1,394 associations

770 converted associations

624 new associations

June 30,
1941

+23 $1, 171, 739 $1, 320, 645

June 30, Percent
change
1941

Percent June 30,
change
1940

+13 $1, 669, 684 $1, 935, 446

+16

+16
-22

1,357,055 1,609,005
80, 644
62, 649

+19
-22

+20
+16

138,116
110,148
1,222,744 1,480,132

+25
+21

+23
-18

911,297 1,061,403
77, 875
60, 390

+38
-34

94, 241
78, 295
892,808 1,037,993

-12

100,237

83, 849

-16

191, 288

163, 532

-15

+44

64, 316

72,416

+13

78, 859

93,417

+18

1 Reserves and undivided profits were taken from the July monthly reports in order to reflect the condi
tion of the institutions after the closing of the books and accumulations from net earnings during the pre
ceding 6 months.

EXHIBIT 45
Federal savings and loan associations- Consolidated statement of operationsfor 1,428
for the year ended December 1940
reporting Federalsavings and loan associations,
[Dollar amounts in thousands]
Ratio to

Amount

Item

gross oper- Ratio to
ating in- net income
come

GROSS OPERATING INCOME

Interest'
On mortgage loans-ordinary cash collections ---------------On mortgage loans-all other ----------On loans on shares, passbooks, and certificates------------------On real estate sold on contract-------------On investments and bank deposits -----------------Other__
__---------------Premium or commission on loans (current only) -----Appraisal fees, legal fees, and initial service charges -----Other fees and fines_------Gross income from real estate owned----------------------------Less-cost of repairs, taxes, and maintenance ---------------------.
Net income from real estate owned-----------------------Gross income from office building ----------------Dividends on stock in Federal Home Loan Banks_------Other dividends--------------------------------------------------Miscellaneous operating income------------------------Gross operating income----




----

--------------------

--

Percent
88.06
.31
.28
3.67
.42
.12
1 33
2.43
.39

$81, 271
285
257
3, 385
389
112
1,229
2, 243
361
--

1, 290
932
189
20
329
92, 292

Percent
--------------

--

-----------1.40-----1.01----------.20----------.02 .36 -------100.00

145. 36

238

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 45-Continued
Federalsavings and loan associations-Consolidated
statement of operationsfor 1,428
reportingFederalsavings and loan associations,for the year ended December 1940
Continued
[Dollar amounts in thousands]

Amount

Item

Ratio to
gross oper- Ratio to
ating in- net income
come

LESS OPERATING EXPENSE

Compensation to directors, officers, employees--------------------Collection expense (agents, etc.)---------------------------------Legal services-retainer, travel, and special------------------------Expense account of directors, officers, and employees-------------- Rent, light, heat, etc----- ------------------------------Repairs, taxes, and maintenance of office building-- --------------Depreciation of office building ------------------------------Furniture, fixtures, and equipment, including depreciation--------Advertising ----- ------.-----------------Stationery, printing, and office supplies---------------------------Telegraph, telephone, postage and express-------------------------Insurance and bond premiums-----------------------------------Federal insurance premium -_-------------------------Audit ----------_176
Supervising examinations and assessments------------------------Organization dues-----------------------------------------Other operating expense-------------------------------------Total operating expense--

-------------------------------

Net operating income before interest and other charges ----------

Percent
Percent
12,088
13.11
227
.24
446
.48
328
.36
1, 516
1.64 -----916
.99402
.44
570
.62 --2, 691
2.92 .-765
.83
586
.63
518
.56
1,816
1.97
17-----------------.19
381
.41
272
.29
2,234
2.42
25,932

28.10

40.84

66, 360

71.90

104. 52

LESS INTEREST CHARGES

On deposits, investment certificates, etc --------------------On advances from Federal Home Loan Banks---------------------On borrowed money----------------------------------------Total interest_

--------------

--

-

-

86
2,607
104

.09
2.83 ----.11

--------

2,797

3.03

4.41

Net operating income-_--_-------------------------

63, 563

68.87

100.11

9
1, 317
175
321

.01
1.42
.19
.35

.01
2.07
.28
.51

ADD NONOPERATING INCOME

Dividends retained on repurchases and withdrawals --------Profit on sale of real estate--------------- -- -------Profit on sale of investments---------------------------------------Other nonoperating income -----------------------------------------

1,822

1.97

2.87

Net income after interest and before charges ----------------------

Total nonoperating income-------------- --

65, 385

70.84

102.98

Foreclosure costs and back taxes on real estate acquired (unless capi
125
talized or charged to reserves)---------------------------------1,211
Loss on sale of real estate-------------------------Loss on sale of investments----------------------------------37
519
Other nonoperating charges-----------------------------------------

.14
1.31
.04
-. 56

.19
1.91
.06
.82

LESS NONOPERATING CHARGES

Total nonoperating charges----------------------------Net income for the year------------------

-

-----------

1,892

2 05

2.98

63,493

68.79

100.00

128 ----------172 -----------3, 787 -----------4, 523 ----------688-288 ---------46,186 -----------7,2
7,721 ----------

.20
.27
5.97
7.13
1.08
.45
72.74
12.16

LESS TRANSFERS FOR RESERVES AND DIVIDENDS

For bonus on shares--------------------------------------------Legal reserves--------------------------------------Federal insurance reserve------------------------For contingencies--------------------------Real-estate reserve -------------------------------------------Other-----------------------------------------------Dividends--------- ---------------------------------------Balance to undivided profits------------------ ---

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




239

EXHIBITS
EXHIBIT 46

Federal savings and loan associations-Operating
ratios of 1,428 reporting Federal
savings and loan associations, grouped as to size of association,for the year ended
Dec. 31, 1940
Ratio to gross operating income (in thousands of dollars)
Total
$0 to
$49

$50 to
$99

$100
to
$249

$250
to
$499

$500
to
$999

$1,000 $2,500 $5,000 $10,000
to
to
to
and
$2,499 $4,999 $9,999 over

Per
cent
92 11

Per
cent
92. 95

Per
cent
91.17

Per
cent
88.71

Per
cent
87. 52

Per
cent
88. 00

Per
cent
88. 99

Per
cent
86. 19

GROSS OPERATING INCOME

Interest:

On mortgage loans-or
dinary cash collections_
On mortgage loans-all
- --other----On loans on shares, pass
books, and certificates_
On real estate sold on con
tract--------------and
On investments

88. 70

.31

0

0

.16

.91

.33

.39

.39

.12

.28

0

0

.36

.44

.29

.26

.24

.23

.34

3 67

0

0

1.38

2.26

3.74

3.75

2.66

5.03

4.34

.42
.12

0
0

0
0

0

.26
.04

.19
.13

.30
.12

.48
.11

.83

.20

.45
.10

1 33

5 26

1.66

1.66

2.26

1.37

1.57

1.38

1.22

.41

2 43
.39

2 63
0

4.56
0

3.13
.59

2.16
.24

2.75
.30

2.52
.27

2.53
.43

1. 92
.33

2.40
.78

0

.83

.51

1.78

1.98

1.42

1.30

1.72

,57

1.01

owned-------------------building

Per
cent

1. 40

bank deposits ---- __-_
Other-----_

Premium or commission on
loans (current only)------Appraisal fees, legal fees, and
initial service charges --Other fees and fines ------Net income from real estate
Gross income

Per
cent
88. 06

0

0

.44

.44

.74

.91

1.00

1.70

.97

.20
.02

0
0

0
0

.12

.13

.02

.20
.02

.21
.02

.21
.04

.20
0

.36

0

0

.35

.44

.26

.24

from office
--------

Dividends on stock in Fed
eral Home Loan Banks-- Other dividends__-------Miscellaneous operating in
--------------come--

0
.28

.16

0

.24
.02

.35

.68

100.00 100.00

100.100.00.
Gross operating income_ 100.00 100.00 100.00 100.00.00 100.000

100. 00

11.63

12.39

LESS OPERATING EXPENSE

Compensation to directors,
officers, employees ------Collection expense (agents,
etc.)------------Legal services-retainer,
travel, and special ------Expense account of directors,
officers, and employees -Rent, light, heat, etc------Repairs, taxes, and mainte
nance of office building -Depreciation of office build
img ...-----------Furniture,
fixtures,
and
equipment, including de
preciation-----------------

13.11

14. 53

14.77

13.30

12.67

.19

.16

.29

.33

.42

.35

.30

.50

.53

.50

.39

.59

.16

.44
2.00

.35
1.82

.39
1.28

.37

2.22

.37
2.07

1.46

.27
1.42

.28

.43

.63

.86

1.01

1.55

1.26

.20

.35

.38

.50

.75

.33

.32
1. 58

.48
1.87

.69
2 58

.65
2.76

.71
2.98

.60
3.25

.50
3.80

.48

0

0

0
2.63

.42
1.66

.99

0

0

.44

0

0

0

0

.36
1 64

14.84

.06

0

0

.62
2.92

0
0
0

.41

.87

.94

.93

.88

.78

.80

.70

.63

0

.41

.59

.65

.70

.63

.62

.60

.68

2.06
.22

.39

.45
2 22

Stationery, printing, and of
fice supplies .--------

Telegraph, telephone, post
age, and express --------Insurance and bond premi
ums---------------Federal insurance premium__
Audit--------------------.-Supervising examinations
----------Other operating expense -and assessments
Organization dues

.83

.56
1.97
.19

0
2 63
0

.83
1.66
.41

.48
1.78
.20

.76
1 70
.31

.76
1.85
.21

.65
1.89
.20

.49
2.00
.18

.41
.29
2 42

2 63
0
0

.41

.87
.12
1.94

.68
.28
1.80

.51
.29
2 03

.42

.40
.32
2.45

0
2 91

~---I------!
--

I

-

I

I

-

I-

32
2.24

i

-

.28

.07

.30
2.93

.28
.24
2.81

I---

ex
S28.10
71.90

23 68

24.48

--

Net operating income before
interest and other charges_




15. 29

0

.83

Advertising -----------------

Total operating
pense---------

15.79

.24

---

76 32
-I-

75 52

27.05

1 --

72.95

i"""

29.50

27.67
72.
33

28.04

27 57
-I

27.91

28 43

70.
50

71 96

72.43

72.09

71.57

I

--

~

~"

_ _ ----

~

240

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 46-Continued
Federal savings and loan associations-Operatingratios of 1,428 reporting Federal
savings and loan associations, grouped as to size of association,for the year ended
Dec. 31, 1940-Continued
Ratio to gross operating income (in thousands of dollars)
Total

S .... ..

1-----1-- ----- 1--------1
LESS INTEREST CHARGES

On deposits, investment cer
tificates, etc------On advances from Federal
Home Loan Banks..---On borrowed money..------.
Total interest--------Net operating income..-----

Per
cent
.09
2.83
.11

1

cent
0

Per
cent
0

2.63
0

1.66
0

rer

..

Per
cent

0
2.65
.16

I

Per
cent
.30
3.00
.06

-

I ....

.....

......

..
.

$2,499 $4,999 $9,999
I

..

$2,500 $5,000 $10,000
to
to
and

$1,000
to

$250 $500
to
to
$499
$999

$0to $50to $100
to
$49 $99
S$249

I

over

I

I

Per
cent

Per
cent

Per
cent

.29

.05

.13

cent
0

3.20
.10

2.88
.08

3.08
.07

1.95
.23

Per

Per
cent

0
3.10
.12

3.03

2.63

1.66

2.81

3 36

3.59

3.01

3.28

2.18

3.22

68.87

73.69

73.86

70. 14

68.97

66.91

68.95

69.15

69.91

68.35

.63
.28
.08

.02
.74
.07
.26

.01
1.33
.06
.28

.01
1.33
.11
.31

.02
1.43
.10
.26

.01
1.76
.40
.49

0
1.77
.36
.53

.41

.99

1.09

1.68

1.76

1.81

2.66

2.66

74.27

71.13

70. 06

68.59

70.71

70.96

72.57

71.01

.08
.16

.07
.26
.02
.28

.06
.71
.01
.44

.06
.87
.01
.60

.05
.99
.12
.60

.46
2.11
.05
1.05

.11
2.96
0
.12

ADD NONOPERATING INCOME

Dividends retained on re
purchases and withdrawals_
Profit on sale of real estate Profit on sale of investments-_
Other nonoperating income.__
Total nonoperating in
come ..------------Net income after interest and
before charges .---...---..

.01
1.42
.19
.35

0
0
0
0

1.97

0

0

0
0

70.84 -73.69

.41

0

LESS NONOPERATING CHARGES

Foreclosure costs and back
taxes on real estate ac
quired (unless capitalized
or charged to reserves) Loss on sale of real estate ..
Loss on sale of investments__
Other nonoperating charges
Total nonoperating
charges_.....----Net income for the year.---..

.14
1.31
.04
.56
2.05
68.79

0
0
0
0
0

0
0
0
0

=_
_

73.69

0

.16
.40

0
74.27

.63

1.22

1.54

70.73

69.43

67.37

69.17

I

1.76

3.67

69.20

68.90

-

- i.

3.19
67.82

Distribution of net income for 1,428 reporting Federalsavings and loan associations,
for the year ended Dec. 31, 1940
Ratio to net income (in thousands of dollars)
Transfers for reserves and
dividends

Total

$0 to $50 to
$0
$
$4
$9

$100
to
$249

$250
to
$499

$500
to
$999

$1,000 $2,500 $5,000 $10,000
to
to
and
to
$2,499 $4,999 $9,999 over

Per- Per- Per- Per- Per- Per- Per- Per- Percent
cent
cent cent
cent
cent
cent
cent
cent
Net income for the year.---.-100. 00 100.00 100.00 100.00 100.00 100.00 100. 00 100.00 100.00
.20
For bonus on shares --------.27
Legalreserves_-------5.97
Federal insurance reserve -For contingencies --.------ 7.13
1.08
Real-estate reserve.--------.45
_
---------Other -----72. 74
Dividends -----------Balance to undivided profits-_ 12.16

0
0
3. 57
7.14
0
0
67. 86
21. 43

.56
0
5. 58
5.03
0
.56
71. 51
16.76

.28
.17
5. 32
6. 33
.17
.39
73. 68
13. 66

.13
.14
.19
.13
5.07
5. 41
6. 75
6. 81
.61 .89
.27
1.02
75. 21 74. 06
11.49 11.82

.12
.17
5. 75
7. 45
1.08
.40
73.18
11. 85

Source: Division of Research and Statistics, Federal Home Loan Bank Board.




.11
.11
6. 69
7. 38
1.04
.74
72. 57
11.36

.13
.22
5.65
6. 57
1.92
.49
72. 30
12. 72

Per
cent
100.00
.67
.97
6.96
7. 46
.66
-. 36
70.17
13. 47

241

EXHIBITS

EXHIBIT 47
Federal savings and loan associations-Average annual dividend rates declared
for the calendar years 1939 and 1940 1
Federal Home Loan Bank
District and State
United States

1939

1940

--------

3.39

3.25

No. 1-Boston -----------------

3.11

3.00

Connecticut-------------Maine.-------------------Massachusetts-----------------New Hampshire
Rhode Island-------------Vermont--------------------

3.41
3.13
3.04
3.50
3.00
3.03

3 25
3 04
2 95
3 00
3.00
3.16

2.58

2.43

3.00
2.58

2.86
2 42

No. 2-New York-------

--

New Jersey---------------New York ____-------------_
No. 3-Pittsburgh----

3.56

Delaware-------------Pennsylvania-----------West Virginia--------

3.50
3.67
3.91

3 50
3.50
3.83

No. 4-Winston-Salem----------

3.80

No. 5-Cincinnati_--Kentucky.-----_----__-__---_
Ohio

---------------------

Tennessee ------------------No. 6-Indianapolis_-Indiana_-----------Michigan ..----------

3.58

---

3.94
3.69
3.84
3.87
-3.44
4.08
3.82
3.98

3.95
3.39
3.51
3.71
3.33
3.87
3.65
3.66

3.40

Virginia---------------------

3.22

3.70
3.24
4.01

3.44
3.10
3.71

3.09

2.98

3.12
3.05

2 99

2.96

1 Average weighted by amount of invested capital.




No. 7-Chicago-..-

1939

1940

3.53

3.40

3.52
3.59

3.44
3.20

3.34

3.22

3.70
3.04
3.53
3.34
3.78

3.54
2.95
3.42
3.23
3.48

No. 9-Little Rock__

3.87

3.65

Arkansas---Louisiana --Mississippi--New Mexico-Texas------

4 02
3.84
3.85
3.99
3.84

3.83
3.34
3.84
4.03
3.64

No. 10-Topeka---

3.72

Alabama----------District of Columbia -Florida
------Georgia -------------------Maryland --------North Carolina------------South Carolina--------------

Federal Home Loan Bank
District and State

3.63

3.46

3.20
3 35
3.20
4 05

3.22
3.09
3.10
3.84

3.25
3.46
3.50
3.31
3.04
3.18
3.86
4.00

3.15

3.82

3.78
3.50
3.79
4.00
3.50

Illinois_
---Wisconsin-----No. 8-Des Moines
Iowa_--Minnesota---Missouri----North Dakota__
South Dakota.

Colorado --Kansas_-Nebraska--Oklahoma-----No. 11-Portland
Idaho -----Montana-------Oregon-----Utah___---Washington----Wyoming------Alaska ...-------

No. 12-Los Angeles_
Arizona---------California----Nevada.-------Hawaii--------

4 00
3 82
4 00
3.50

3.40
3.68
3.17
3.04
3 07
3.70
4.00

242

REPORT OF FEDERAL HOME LOAN BANK BOARD,

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244

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 49
of
Federal Savings and Loan Insurance Corporation-Comparison all savings and
loan members of the Federal Home Loan Bank System with all insured savings
and loan associations, by Federal Home Loan Bank Districts and by States,
June 30, 1941
[Assets in ithousands of dollars]
All savings and
loan members

All insured asso
1
ciations

Bank District and State
Num
ber

Assets

Ratio all
insured
associa
tions
to all
savings
and loan
members

Ratio of
assets
of all
insured
associa
tions to
assets
of all

ber

Assets

3,798

$4,626,920

2,310

$3,158,251

60. 8

68. 3

212

525,765

60

167,286

28. 3

31.8

45
23
122
13
5
4

48,617
19, 671
396,377
16,516
39,383
5,201

22
5
26
4
1
2

30,039
120,075
9, 782
4, 401

48. 9
21.7
21 3
30. 8
20. 0
50.0

61.8
6.7
30. 3
59. 2
4.3
84. 6

391

481,294

178

320,159

45.5

66.5

267
124

176,359
304,935

82
96

79,533
240,626

30.7
77.4

45.1
78 9

502

268,463

191

154,553

38.0

57.6

7
466
29

2,893
242,440
23,130

1
164
26

332
132,618
21,603

14 3
35 2
89.7

11.5
54.7
93.4

400

522,990

266

325,596

66.5

62.3

21
21
49
54
65
112
42
36

13,573
152,349
77,274
37,582
74,702
88,106
31,058
48,346

21
11
47
47
40
38
37
25

13,573
40,190
75,553
35,736
49,523
41,602
29,975
39,444

100.0
52.4
95.9
87.0
61.5
33.9
88 1
69.4

100.0
26.4
97.8
95.1
66 3
47.2
96 5
81.6

582

900, 643

335

627, 322

57.6

69. 7

93
450
39

98,800
768,530
33,313

56
241
38

68,091
526,032
33,199

60 2
53.6
97.4

68.9
68.4
99.7

United States

--------

No. 1-Boston.---------------------------Connecticut.----------------Maine __----------------------------

Massachusetts----------New Hampshire---------Rhode Island-----------Vermont.. -------------------No. 2-New York---------------------------New Jersey_---New York ----------------------No. 3-Pittsburgh------------------------------------Delaware __
Pennsylvania ----------West Virginia --------------------No. 4-Wmiston-Salem___

------

Alabama---------------------------District of Columbia-----------

Florida _.-----

------------

Georgia-----------------------------Maryland __----------------------SNorth Carolina -------

------------

South Carolina -------------------Virginia ----------------------------

No. 5-Cincinnati----------------------Kentucky--------------------------Ohio----------------------------.-------------------Tennessee -----No. 6-Indianapolis----------------Indiana----------------------------Michigan ---------------------------No. 7-Chicago

------------------

--Illinois
.--------------Wisconsin ..----------------------No. 8-Des Moines--------------Iowa --------------------Minnesota --------

----------------

-------------------Missouri -----North Dakota----------------------South Dakota ------------------See footnote at end of table.




1,314

1,675

savings
and loan
members

216

296,718

173

226,113

80.1

76.2

159
57

177,388
119,330

129
44

142,712
83,401

81.1
77.2

80.5
69.9

454

461,283

282

337,229

62.1

73.1

341
113

333,995
127,288

197
85

245,837
91,392

57.8
75.2

73 6
71.8

242

242,405

160

184,414

66.1

76.1

70
42
106
13
11

53,441
70,382
102,279
11,768
4,535

42
34
69
8
7

26,953
64,508
83,890
6,311
2,752

60.0
81.0
65.1
61.5
63.6

50.4
91.7
82.0
53.6
60.7

245

EXHIBITS
EXHIBIT 49-Continued

of
Federal Savings and Loan Insurance Corporation-Comparison all savings and
loan members of the Federal Home Loan Bank System with all insured savings
and loan associations, by Federal Home Loan Bank Districts and by States,
June 30, 1941-Continued
[Assets in thousands of dollars]
All insured asso
ciations 1

All savings and
loan members

Ratio of
assets
of all
insured
associa
associa
tions
tions to
to all
assets
savings
of all
and loan
savings
members
and loan
members
Ratio all
insured

Bank District and State
Num
ber

-

I-.-

_____________---

No. 9-Little Rock----

------

Num
ber

Assets

I1---

---

Assets

1-

-

I-----

I.
95. 6

98. 7

272

$240,750

260

39

17,294

37

67
25
14
127

100,007
8,698
6,653
108,098

68
23
13
119

223

185,118

156

-------

39
101
30
53

34,997
63,125
18,
637
68,359

No. 11-Portland _-------------------

132

167,119

112

139,642

84.8

83.6

8
13
29
10
61
10
1

8,435
11,688
37,056
18,152
85,404
5,938
446

8
8
23
9
54
9
1

8,435
10,113
19,366
17,961
79,086
4,235
446

100.0
61.5
79.3
90.0
88.5
90.0
100.0

100.0
86.5
52.3
98.9
92.6
71.3
100.0

172

334,372

137

286,377

3
163
2
4

5,578
323,229
885
4,680

3
130
1
3

5,578
276,642
758
3,399

Arkansas --------------------------..
Louisiana ----------------------

Mississippi----------------

--

New Mexico------------------------Texas -----------------------------No. 10-Topeka-------------------Colorado ------------------------Kansas------------------------------

Nebraska-------------Oklahoma------------

Idaho-----------------------------

Montana .----------------------Oregon _---------------------------Utah .-

----------------

Washington ------------------------Wyoming-----------------Alaska--------------No. 12-Los Angeles.--------Arizona.---------------------------California---------Nevada .------..----------------...
Hawaii-------.. --....------------

31
64
19
42

$237,586

94.9

97.5

100,123
7,814
6,042
106,747

101.5
92 0
92.9
93.7

100.1
89.8
90.8
98 8

151, 974

70.0

82.1

31,586
48, 463
10,631
61,294

79.5
63. 4
63.3
79.2

90.3
76. 8
57.0
89.7

16,860

79.7
100 0
79.8
50 0
75.0

85.6
100.0
85.6
85.6
72.6

1 Includes 5 insured nonmembers, 1 in the District of Columbia, with assets of $4,251,000; 1in Ohio whose
assets have been combined with an insured member institution due to a mrgr-'1 yet completed; 2 in
Louisiana with assets of $939,000, and 1 in California with assets of $462,000




246

REPORT

OF FEDERAL HOME

LOAN BANK

BOARD,

1941

EXHIBIT 50
Federal Savings and Loan Insurance Corporation-Statements of condition and
operation for insured institutions in receivership on June 30, 1941
Security Federal Savings and Loan Association of Guymon, Guymon, Okla.
CONDENSED COMPARATIVE STATEMENT OF CONDITION
Date of
receiversip
Feb. 12, 1940

As of une
30, 1941

ASSETS

Mortgage loans---------------------------------Real estate sold on contract----------------------------------------------Real estate owned __------------Cash and investments ..---------------Other assets. _
------------------

$94, 655. 29
1,107.80
118, 457.27
8, 697.00
483.00

$98,615. 27
0
53, 026.18
35, 024.16
28.00

223,400.36

186,693.61

14,236.01
2,048. 68
0
0
165, 940. 31
41,175.36

0
383. 31
942.41
164, 061.65
1,878. 66
19,427. 58

223,400. 36

186,693.61

Fiscal year
ended June
e
endd
3

Cumulative
Feb 121940
Feb. 12,1940p
through June
30, 1941

$6,135. 64
7, 930.19

$9, 366.12
9,200.41

-1, 794. 55
2, 528. 75

165. 71
4,531.87

734. 20
...------------------T otal ..
6, 252.80
Less losses sustained through realization of assets ---------------------

4, 697. 58
8,834.84

-5, 518.60

-4,137. 26

Total------------------LIABILITIES AND CAPITAL

Advances from Federal Home Loan Bank of Topeka_-- -------------Other liabilities.-----------------------------------------Advance payments by borrowers-------------------------------------Shares purchased by Federal Savings and Loan Insurance Corporation---------------------------------Other share account claims--.---Reserve for losses-----------------------------Total------------

-----------------------------

CONDENSED STATEMENTS OF OPERATION

..----------------Gross income-.
Less expenses ......--------------------Net operating income--------------------------------------------------Add profits derived from realization of assets ------------

Net credit to reserve for losses ------------




--

-

--------

247

EXHIBITS
EXHIBIT 50-Continued

Community Federal Savings and Loan Association of Independence, Independence,
Mo.
CONDENSED COMPARATIVE STATEMENT OF CONDITION
Date of receivership
June 26, 1940

As of June
AsofJune
30, 1941

ASSETS

Mortgage loans --------------Share loans -- --------------------------------------Otherloans -- Real estate sold on contract__ -----------Real estate owned, including office building .-- --------_
__
----Real estate in judgment subject to redemption --------Cash and investments
----------- -52,
Other assets --------------------------------------------------Total---------

--

-

$887, 090. 51
12, 194. 72
3,500.00
63, 528.37
213, 607.94
0
429.44
5, 954. 07

$744,354. 66
6, 948. 21
3,500.00
23, 856. 62
108,461.75
7,459.22
51, 641.54
5, 734. 73

1, 238,305.05

951, 956. 73

274, 730. 50
2, 276. 69
2,015. 00
0
0

43,933.20
4, 959. 75
0
1,116.64
1 316,410.84

335, 336.81
542,033.14
81,912. 91

18,173.93
537. 033.44
30, 328.93

----- 1, 238, 305.05

951,956. 73

---

----

LIABILITIES AND CAPITAL

Advances from Federal Home Loan Bank of Des Moines __
--Other liabilities
-----------------Loans in process -----------------Advance payments by borrowers_
----------------------------Shares purchased by Federal Savings and Loan Insurance Corporation-----Other share account claims:
Insured claims --------------------------Uninsured claims --------------------------Reserve for losses-_
---------------Total

-----------------------

--.-

CONDENSED STATEMENTS OF OPERATION
Fiscal year
ended June
30, 301941
Gross income_---Less expenses -----------------

------

--

Net operating income- ...--.........-----Add profits derived from realization of assets -

Cumulative
June 26, 1940
through June
30, 1941

$50,694.66
18, 837. 68

$50,768.87
18, 928.00

_
31,856. 98
. .-----------------5, 606.87

31,840. 87
6,141.80

--------------------..

Total- -----------------------------Less losses sustained through realization of assets---------------------------Net credit to reserve for losses- -----

-----------------------

_

37,463.85
26,041.21
-

37,982.67
26,041.21

11, 422. 64

11, 941.46

1Does not include 1 share account claim settled in amount of $60. This amount was paid on June 30,1941,
and placed on the Insurance Corporation's books as of June 30,1941, but was not placed on the receiver's
books at Independence, Mo., until July 8, 1941.




248

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 50-Continued
Trenton Building and Loan Association, Trenton, Ohio
CONDENSED COMPARATIVE STATEMENT OF CONDITION
Date of receivership
Apr. 15, 1940

As of June
31
30, 1941

ASSETS

Cash in bank--... .
..-. ------------------Shares in American Building and Loan Association of Middletown, Ohio-...
Stock in Federal,Home Loan Bank of Cincinnati -------------Mortgage loans-----------------------------------------Office building ----------------Furniture and fixtures -----------_
--------Deficiency account (shortage of Secretary) --------------- _______ _--__
-Liquidator's capital loss -- ---

$2, 664. 33
0
500.00
21,843.16
1,028.85
251.33
8, 494. 52
0
34, 782.19

Total_.
---------------

$21, 186.86
129.89
0
4,449.90
1, 028. 85
0
0
4,976.89
31, 772. 39

LIABILITIES AND CAPITAL

Advances from Federal Home Loan Bank of Cincinnati ------------------Interest on advances
.-----.-------------------------------Cash over-------------------Unapplied loan credits (pledged stock)_----------------_-Claims:
Outstanding checks ----------------------------Director's fees----------------------------------------------------------Examination fees-FHLBB ----- ___-----_------Shares purchased by Federal Savings and Loan Insurance Corporation------------Other share account claims ---------------------Undivided profits _
Liquidators's undivided profits--------------------------------------

137. 68
16. 50
202.52
0
28, 228. 50
3, 068. 74
0

0
0
0
28, 455. 44
0
3, 003.89
313. 06

-

34, 782.19

31, 772. 39

Total_

----

-------------

2, 500.00
17. 72
17. 30
593.23

0
0
0
0

CONDENSED STATEMENT OF OPERATION
Apr. 15, 1940,
through June
30, 1941
Gross income--------Less expenses ----------------------

-------------------------------------------------------------

$929. 52
406.36

Net operating income----------------------------Add profits derived from realization of assets----------------------

523 16
0

---------------------------------------------------Total------------------------------------Less losses sustained through realization of assets

523.16
210.10

-------

313.06

Net credit to reserve for losses -----------------------------




249

EXHIBITS
EXHIBIT 50-Continued
The Dickinson County Building and Loan Association, Abilene, Kans.
Statement of condition as of June 30, 1941
ASSETS

Real estate sold on contract--------------------------------$1,388. 36
31,307. 36
Real estate owned, including office building ---------Cash and investments -------------------------------------- 13, 737. 82
Other assets ----------------------------------------------819.05
15, 032. 55
----------------------------------------Reserve for losses
Total--

-

62, 285. 14

---------------------------------------LIABILITIES AND

CAPITAL

Advance payments by borrowers -------------------------------Other liabilities------------------------------------------------------------------Permanent stock--------------Share account claims ------------------Total-------------------------------------------

$5. 20
11.00
18, 000. 00
44, 268. 94
6,85. 14

EXHIBIT 51
Federal Savings and Loan Insurance Corporation-Statement of conditzcn as of
June 30, 1941
ASSETS

Cash in United States Treasury_-----------Accounts receivable:
Insurance premiums_------------------- $819, 962. 80
737. 12
---Other--------------------------

$924, 579. 33

820, 699. 92

Investments: U. S. Government obligations and securities
fully guaranteed by U. S_-----------------Accrued interest on investments -----------Subrogated accounts in insured institutions in liquidation _
Total assets-----------------------------------130,
LIABILITIES AND

128, 062, 480. 15
603, 398. 67
508, 987. 93
920, 146. 00

CAPITAL

Accounts payable ---------------------------------------Deferred income: Unearned insurance premiums------------Capital:
$100, 000, 000. 00
Capital stock outstanding----------*Reserves (including special reserve for
contingencies)-----------------29, 388, 883. 69

$39, 447. 59
1,491,814.72

129, 388, 883. 69
Total liabilities and capital_ -

-

--- -- -- -- - - - - - - -- -- -

$130,920, 146. 00

*Specific contingent liabilities in the amount of $291,374.11 are not reflected in the above statement.
- -425085--41--- 1




250

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 52

Federal Savings and Loan Insurance Corporation-Income and expense statement
for the persod July 1, 1940, through June 30, 1941
Income:

Insurance premiums earned _------------ $3, 063, 114. 94
Admission fees earned_------------_ ___ -24, 370. 83
Interest earned on U. S. Government obliga
tions and securities fully guaranteed by
U. S -------------------------- __

Miscellaneous_ ------------Administrative expenses:
Personal services-----------

_

----------

3, 481, 308. 13
-------

34. 00
$6, 568, 827. 90

$118, 631. 48

Travel expense------------

5, 833. 45

Printing and binding ------ _
Supplies and materials -------Telephone and telegraph ----Advertising ----------------Furniture and fixtures ------Miscellaneous-----------_Audit by Home Owners' Loan
Corporation-----_--__---Services rendered by Federal

3, 363. 39
704. 74
1, 161. 78
239.49
1, 398. 35
684. 49
1, 090. 23

Home Loan Bank Board--_

122, 217. 00

Administrator's office-Federal
Loan Agency-----------_

1, 200.00

Total administrative expenses----------Nonadministrative expenses:
Personal services ----------$3, 942. 31
3, 732. 04
Travel expense-------------Printing and binding
--258. 28
Telephone and telegraph-----395. 95
Examining expense ----------161. 50
Miscellaneous------------1. 71
Total nonadministrative expenses--------

256, 524. 40

8, 491. 79
-

265,016. 19

Net income from operations ---------___---------_-__
Other income: Profit on sale of securities------------___

6, 303, 811. 71
13, 365. 05

Net income for period----------------------------Adjustments of net income for prior years --------------------

6, 317, 176. 76
3, 104. 16

Net income_-----

6, 320, 280.92

------------------------------------

Distribution of net income
To special reserve for contingencies ----------------------To surplus
------------------------------------------Total- ----------------




,----,------

,,,

$3, 000, 000. 00
3,320,280. 92
$6, 320, 280. 92

251

EXHIBITS

EXHIBIT 53
Federal Savings and Loan Insurance Corporation-Expensesfor the period July 1,
1940, to June 30, 1941
Administrative expenses:
Personal services
-------------------$118, 631. 48
------------------Travel expense
5,833. 45
Printing and binding - ____--------3, 363. 39
Supplies and materials----------------704. 74
Telephone and telegraph --------- _-- -------------1,161. 78
Advertising ------------------239. 49
Furniture and fixtures ----------------1, 398. 35
Miscellaneous -----------------------------------684. 49
Audit by Home Owners' Loan Corporation_ -----1,090. 23
Services rendered by Federal Home Loan Bank Board --.
122,217. 00
Administrator's office-Federal Loan Agency__ -----1, 200. 00
Total administrative expenses ------------

256, 524. 40

Nonadministrative expenses:
Personal services ----------------Travel expense-----------------------------------Printing and binding----------Telephone and telegraph _
--------- __

-------

___

Examining expense_------------Miscellaneous -------------------------------------Total nonadministrative expenses -------------

Grand total ----------------------------------------




3, 942. 31
3,732. 04
258. 28
395. 95
161. 50
1.71
8, 491. 79

265, 016. 19

252

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 54
Home Owners' Loan Corporation-Average outstanding original loan per borrower
and average loan balance outstanding, June 30, 1941, by HOLC Regions and by
States
Average
Region and State

Average

Percent
OutreducOriginal standing
tion
loan
loan

Region and State

Percent
Outreduc
Original standing
tion
loan
loan

balance

balance

United States-_

$2, 884

$2,108

26.9

Region 4A-Chicago-_

$3, 737

$2,721

27.2

Region 1-New York

4, 329

3, 619

16.4

3,903
3, 332

2,799
2, 532

28. 3
24.0

4, 078
2,111
4,078
2, 198
4, 371
4, 658
3,862
2, 414

3,111
1, 527
3,464
1, 753
3,496
4,035
2,971
1,861

23. 7

Illinois ---....
Wisconsin------Region 4B-Detroit__

2,698

1,873

30. 6

Indiana ..-----Michigan -------

2, 282
2,924

1, 555
2,045

31.9
30.1

Region 5A-Omaha__

1,941

1, 377

29.1

Colorado---.--Iowa .---------Kansas--------Minnesota------Nebraska -----North Dakota -South Dakota- -,

1,943
1,883
1, 668
2,203
2,011
1,962
1,743

1, 339
1, 286
1,243
1, 522
1, 470
1, 551
1, 281

31.1
31.7
25. 5
30. 9
26. 9
20.9
26. 5

Region 5B-Dallas ..

2,253

1, 491

33. 8

2,033
2,290

1,351
1,421
1, 532

33. 5
35. 6
33.1

Region 6-San Fran
cisco----------

2,285

1,474

35. 5

Arizona ..-----California...---Idaho .--------Montana --..--Nevada -------Oregon-..----Utah _-----Washington .-Wyoming - ----Hawaii...........

2, 345
2,577
1,763
1,950
2,826
1,973
2, 238
1,820
2,318
2, 688

1,558
1, 646
1,181
1,301
1,822
1, 274
1,483
1,159
1, 506
1, 666

33. 6
36.1
33 0
33.3
35. 5
35.4
33.7
36. 3
35.0
38. 0

Connecticut- --Maine__-------Massachusetts--New Hampshire__
New Jersey-----New York --- _
Rhode Island --Vermont--. --Region 2A-Baltimore
Delaware _----District of Colum
bia ---------Maryland ----Pennsylvania --Virginia --..----.
Region 2B-Cincinnati
__----_-Ohio
West Virginia- .
Region 3A-AtlantaAlabama-------Florida-------Georgia--.......
North Carolina_South Carolina_
Puerto Rico --Region 3B-Memphis
Arkansas------_--Kentucky ..
Louisiana-.....
Mississippi- .--....-Missouri-Tennessee--------




27.7
15.1
20.2
20.0
13.4
23.1
22.9

2,846

2,109

25. 9

3,051

2, 225

27. 1

5,747
2,760
2, 728
3,031

4, 163
2, 145
2,019
2,152

27. 6
22. 3
26.0
29.0

3,030

2,156

28. 8

3,078
2, 531

2,196
1,741

28.7
31.2

2, 265

1,629

28. 1

2, 101
2, 225
2, 251
2,486
2,317
2,905

1, 512
1, 561
1, 622
1, 829
1, 634
2, 321

28. 0
29. 8
27.9
26.4
29. 5
20.1

2, 427

1,718

29.2

1, 791
2,631
2, 677
1,906
2, 838
2,166

1, 205
1,874
1, 860
1, 349

32. 7
28.8
30. 5
29. 2
28.1
28. 3

New Mexico ---Oklahoma ------

2,041
1, 552

Texas.---------

2, 205

II

253

EXHIBITS

EXHIBIT 55
Home Owners' Loan Corporation-Netforeclosure authorizations on original loans
and vendee accounts, cumulatively to June 30, 1941, by Regions and by States
Original loans,
net authorized

Original loans,
net authorized
Region
Region and State and
State
Cumulative

United States_
Region 1-New York
Connecticut-- -Maine ----.----Massachusetts -New Hampshire-_
New Jersey-----New York .---..
Rhode Island---Vermont ...-----.

Vendee
loans,
net auPercent thorized,
of total cumulaloans
tive
closed

Region and State
SPercent

Region 4A-Chicago__

193,612

19.0

2,882

61, 567

37.5

403

2,394
655
9,807
404
13, 649
32, 776
1,500
382

23. 3
19. 3
40.0
21. 6
37. 6
40.9
24.5
24. 2

14
6
81

13
86
191
8
4

Cumulative

Illinois -...-Wisconsin------Region 4B-Detroit_..
Indiana.---- ---Michigan---....

Vendee
loans,
net au
thorized,
of total cumula
loans
tive
closed

16,748

16.2

142

9,118
7, 630

13.0
23.1

100
42

14, 162

10.9

188

6, 699
7,463

13.7
9.2

84
104

Region 5A-Omaha-__

19,436

20. 5

497

Colorado .-----Iowa------------Kansas--------Minnesota.------

1, 202
2,853
5,719
2,861
3,895
1, 146
1,760

10.4
14. 5
30.9
13. 6
28. 6
26.0
28.7

42
69
114
81
122
25
44

Region 2A-Baltimore

16,414

18. 1

207

Delaware--...District of Colum
bia ..--. _-----_
Maryland------Pennsylvania.-Virginia-...-----

257

15. 6

6

267
3,503
10,243
2,144

12.8
22.0
17.4
17.8

7
25
110
59

Region 5B-Dallas--__

14,453

20.4

523

123

New Mexico ---.
Oklahoma ------

Texas ..--------

205
6,142
8,106

8.3
25. 6
18.3

13
125
385

Region 6-San Fran
cisco-----------.---

12,697

11.3

269

927

14. 2

27

1, 276
4,353
410
326
61
932
1, 604
2, 673
135

10. 6
10.9
8.7
8.9
5.0
9.9
14. 9
12. 5
5.5

Region 2B-Cincin
nati------------

Nebraska -------

13,826

12. 8

Ohio .- -_----- 13,026
800
West Virginia- .

13. 2

Region 3A-Atlanta

8, 525

8.8
13.4

111
12
189

Alabama------Florida .-----Georgia -------North Carolina___
South Carolina-Puerto Rico---.-

3,046
1, 325
1,801
1, 670
662
21

18.3
9.8
12.1
13. 6
11.6
3.6

Region 3B-Memphis_

15,784

19. 5

341

1, 680
1,579
2, 369
1,317
6, 634
2, 205

16. 2
17.1
16. 5
15.0
27.0
16.0

46
19
35
46
138
57

Arkansas-------Kentucky-...___
Louisiana .----Mississippi- ---..
Missouri ------..
Tennessee -...----




65
42
36
28
18

North Dakota -South Dakota ---

Arizona---------California:
Northern .-Southern -Idaho -----------

Montana--.
.-Nevada.------Oregon---------Utah-------.Washington--....
Wyoming __------

14
108

13
2
28

24
44
9

- -

254

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 56
Home Owners' Loan Corporation-Propertyacquisitions and sales, by fiscal-year
periods
Acquisitions

Sales

Ratio of

-. _

Period

Number
of properties 1

1936 ------------..
1937---------1938
------1939-- ------1940
-------1941 - -------------

--.-------

number of

Aggregate
capital
value 1

Number
of prop-

Aggregate
capital

erties

value

A

sales to
number of
acquisi

ggregate

sales price

tions

2

5,275
39, 534
55, 190
41, 743
23, 826
17, 382

142
2, 231
15,159
37, 771
49, 716
34, 745

$497,117
8, 248, 929
62, 001, 901
166, 888, 675
241, 270, 671
173, 474, 370

$523,055
8, 293,100
54, 182, 578
130,177,111
170, 505, 356
120, 297, 795

2 6
5. 4
26. 7
89.1
207.1
199.9

182, 950

Total---_-----------

$23,930,096
181,196, 458
303, 226, 436
228, 932, 138
127, 055, 797
85, 650, 581
949, 991, 506

139, 764

652, 381, 663

483, 978, 995

75. 7

1 Includes all adjustments to June 30, 1941.
2 For the purpose of computing the percentage of properties sold to those cumulatively acquired, properties
sold prior to acquisition have been added to the number of properties acquired.

EXHIBIT 57
Home Owners' Loan Corporation-Profit
and loss on sales of real estate, by calendar
years
Number of properties

sold at a profit and
amount of profit

Number of properties

sold at a loss and
amount of loss

Total number of prop

ot

ertes sold

prop

Year

Number
1935 .
---------1936 --------------1937_----------- 1938__ ------------1939___
---1940 - ----------1941 1----------.

-

1January to June, inclusive.




27
366
3,033
5,761
5, 442
3, 843
2,135

Profit
$6,926
125,782
1,218,126
1, 729, 446
1, 598, 793
1, 157, 266
823, 386

Number
2
235
2,214
22, 957
40, 787
40, 862
12,100

Loss
$1, 528
118,828
1,381,934
23, 123,114
56, 684, 231
68, 860. 946
20, 519, 053

Number
29
601
5,247
28, 718
46, 229
44, 705
14, 235

Proft (+)
or loss (-)
+$5, 398
+6,954
-163,808
-21, 393, 668
-55, 085, 438
-67, 703, 680
-19, 695, 667

255

EXHIBITS

EXHIBIT 58
Home Owners' Loan Corporation--Analysis of the various elements entering into
the capital value of propertzes owned and in process of acquiring title, June 30,
1941
Original capitalized value:
Unpaid balance of loans and advances__ $256, 599, 028. 58
Unpaid balance of accrued interest----

15, 997, 767. 62

Total_ --------------------------------------- 596, 796. 20
$272,
Subsequent capital charges:
Taxes and assessments
--------11, 097, 630. 76
1
Insurance-----------___-___
11, 136. 32
Reconditioning and capital repairs - 29, 878, 008. 65
Foreclosure and other acquisition costs_
7, 131, 213. 33
Miscellaneous ----------------------508, 266. 72
48, 603, 983. 14
Total
---------------------------------------Subsequent capital credits:
Rents (prior to acquisition of title) ----

648, 394. 63

Partial sales (no profit or loss recog
nized) ------------------------Collection of deficiencies - ---------Miscellaneous-----------------------

321,200, 779. 34

909,848. 35
297, 306. 88
611,228.71
2, 466, 778. 57

Total capitalized value at June 30, 1941 -------------1Net credit--results from cancellation of policies at acquisition.




318, 734, 000. 77

256

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 59
Home Owners' Loan Corporation-Percentage vacant units to units available for
of
rent, percentage of rents collected to rent accruals, and average rent per unit, by
months
Year and month

1,936
July ._
_.--------_
August---- September ---- --October...-------November ___--December---...-

Vacan

cies

Percent Percent
93 7
18 6
92. 4
18. 7
15.9
94.7
88.5
17 1
88.8
18 4
17.5
89 4

1937
18.7
January
__------18.3
February-----------17.8
March .-- --------.
15 0
April .....-------13.3
May--------12
June .
.-------------- 5
11.2
July .- ..---.
10.4
August_-----10.4
September-___ 10.4
October _------11.2
November_--- 32.4
December-------1938
January ----February ----- ----March--_____
April..---- ---May.------June. -------------July-- August --- -September ---October-November _------- -_
December --------. -




Collec
tions

13. 1
13. 5
14.3
12 6
11.6
11.5
12.0
11.0
10. 3
9.9
10 4
10. 5

Average
rent per
unit

Year and month
I
1939

$20.59
20.75
20.04
21.24
21.26
20.92

96. 2
95. 3
92 8
99.5
94 7
96.3
95 5
97. 7
97.3
97.7
97.9
96 7

22.61
22 90
23.90
23. 85
24.60
24.99
25. 27
25. 48
25.77
26 10
26.90
26.75

93. 3
96. 0
99 7
97.2
99.2
98 8
98.4
99.2
98.4
99.6
96.8
100.3

26.48
27.19
26.91
26.96
27 40
27.66
27.93
27.99
28 00
28 25
28 69
28.82

January _.....-.
February- ----March--..
---_..
April ----------May-------------June ----- --------July--Auust
September .
October------ -..
November -----December ----......
1940
January ---....
.
February ..--------March... -----April
..-----------------May
Jun -_------_
---- __July-- --August ----------September
..-----October_ --November ---------December--------

ties
I Vacan

Collec
tions

Average
rent per
unit

Percent
10 9
10.4
9.3
7.8
7.7
7.4
7.2
7.5
7.6
7.9
8.5
86

Percent
98. 7
99.4
99 8
99.9
100.0
99. 1
99.9
99.5
99. 1
99. 5
98.4
99 3

$29.01
28.95
29.14
29.45
29.33
'29 43
29.78
30. 02
29.99
30. 11
30.30
31.53

9.2
92
9.4
8.5
8.2
8.3
8.5
8.5
9.0
9.3
9.7
10.4

97.8
99.1
98.8
98.8
100. 0
100. 2
99 7
99.3
99. 3
99.9
99. 5
99.2

31.55
31.50
31.79
31 94
32.41
32.90
33.01
33.25
33.47
33.87
34. 09
34.48

10.9
10.8
10. 5
9.8
9.5
9.0

98 5
99. 3
98.9
99. 1
99 9
99. 2

34. 33
34 41
34. 57
34.88
35 23
35.33

1941
January __-- ------February----March_-

April_

May---- --June.-----------------

257

EXHIBITS
EXHIBIT 60

Home Owners' Loan Corporation-Summary of the various income and expense
items entering into the operation of properties sold by the Corporation through
June 30, 1941
Operating profit (or loss) on property sold:
--------------------------------- $17, 369, 704. 72
Expense-Taxes
Insurance-----------------------------1, 800, 882. 15
9, 959, 961. 27
Maintenance -----------------------------Miscellaneous_-------

-----------

4, 486, 753. 18

4, 535, 788. 08

Commissions--------Unallocated---------------------------Income ------------------------------------Net operating profit on property sold--------------------Number of properties sold -------_
------------------Average capital loss (including brokers' commissions and selling
expense)------------------------------------------Average operating profit-----------------------------------

38, 153, 089. 40
42, 234. 39
38, 195, 323. 79
44, 555, 677. 52
6, 360, 353. 73
139, 764
1, 431. 39
45. 51

EXHIBIT 61
Home Owners' Loan Corporation-Number of reconditioning contracts completed
from the beginning of operations through June 30, 1941
Number of Total dollar
contracts
amount
amount
completed

Type of case
1. Included in original loans to place homes of borrowers in a condi
tion of reasonable structural soundness ---------------------2. Advanced to borrowers since closing of loans for keeping homes in
sound condition

__------.-----

...

..------

----

3. Reconditioning to make acquired properties attractive for rent or
sale

......--------------------------.--

-------------..-------.

4. Insurance cases supervised by the Corporation_-Total....




_---_-_-

..----------.------------------------------

Average
dollar
amount

417, 396

$78, 257, 464

$187

18,821

3,180, 592

169

362, 971

79, 708, 573

7, 527, 758

230

831,850

168,674,387

203

32, 662

220

258

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 62

Home Owners' Loan Corporation-Numberof employees by departments, divisions,
and sections, as of July 1, 1941
Board Members and assistants - -------------------------Secretary's Office --------------------------------------Research and Statistics----------------------------------

48
200
54

Public Relations -----------------------------------------

14

Financial Adviser----------------------------------------

4

Total, Board ----------------------------------------General Manager, staff_-------------------------------457
Property Management _-----------------------------1,639
Loan Service ----------------------------------------1,787
Appraisal and Reconditioning -------------------------912
Comptroller and Accounting -------------------------961
Treasurer-----------------------------------537
10
Budget-----------------------------------------------342
Auditor---------------------------------------------62
Purchase and Supply -------------------------------------

1 320

Total, Management ------------------------------------

6,707

Legal Department --------------------------------------------Personnel Department
--------------------------------------

528
209

Total, HOLC -

-----------------------------------------

2

7,764

1Includes personnel of general service departments which serve all agencies under the Federal Home Loan
Bank Board.
2 Includes 23 W. A. E. employees and 107 employees on military leave.




259

EXHIBITS
EXHIBIT 63
sheet as of June 30, 1941
Home Owners' Loan Corporation-Balance
ASSETS

Mortgage loans, advances and sales in
struments-at present face value:
Original loans and advances there
$1,521, 046, 216. 03
on -----------------------Vendee accounts (purchase money
mortgages, sales contracts, or
349, 246, 315. 37
instruments used in lieu thereof)_
Unposted advances on mortgage
12, 409. 43
loans, and vendee accounts - Interest receivable-------------------Property: 1
Owned------------In process of acquiring title -----

$1, 870, 304, 940. 83
5, 713, 151. 51
$303, 029, 389. 97
15, 704, 610. 80
318, 734, 000. 77

Less reserve for losses ---------

-------

2, 194, 752, 093. 11
25, 658, 261. 81
2,169, 093, 831. 30

Investments -at cost:
Federal Savings and Loan Insur
ance Corporation (entire capital)
Savings and loan associations:
Federal-char
tered__-$145, 575, 950. 00
State char
37, 277, 410. 00
tered____

$100, 000, 000. 00

182, 853, 360. 00
282, 853, 360. 00
Bond Retirement Fund:
Cash (including $10,687,950.00 deposited with U. S.
Treasury for retirement of matured bonds)....

46, 111, 498. 43

1 Property owned and property in process of acquiring title are stated at values represented by unpaid
balances of loans and advances, unpaid interest to date of foreclosure sale or judgment, foreclosure costs, net
charges prior to date of acquisition, and permanent additions, initial repairs and reconditioning subsequent
to acquisition. Unpaid interest included in these values amounts to $15,997,767.62.
2 The reserve for losses is being accumulated at an annual rate which, it is intended, will approximate
eventually the total losses which may be sustained in the liquidation of mortgage loans, interest and proper
ty. During the period of accumulation, therefore, the carrying value of these assets, less the reserve, will
not necessarily represent their probable realizable value.




260

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 63-Continued
Home Owners' Loan Corporation-Balance
sheet as of June 30, 1941-Continued
ASSETS-continued

Cash:
Operating funds (includes $20,182,
180.55 payable to Bond Retire
ment Fund in July 1941; and
$17,794,970.26 deposited by bor
rowers -see contra) ------Special funds held by U. S. Treas
ury for payment of interest
coupons-(see contra) ------

$53, 585, 612. 51
11,300, 873. 05
$64, 886, 485. 56

Fixed assets:
Home Office land and building-at
cost_----------------Furniture, fixtures and equipment
at cost--------------

2, 987, 819. 93
2,525, 959. 87

Total fixed assets-_----

5,513, 779. 80
2, 754, 133. 08

Less reserve for depreciation ----

Other assets: Accounts receivable Deferred and unapplied charges -----

2, 759, 646. 72
106, 140. 63
121, 364. 73

-----------------

Total assets--------------------------------LIABILITIES AND

2, 565, 932, 327. 37

CAPITAL

Bonded indebtedness (guaranteed as to
principal and interest by the United
States, except $222,275 of unpaid
matured 4-percent bonds guaranteed
as to interest only):
Bonds outstanding-not matured- $2, 408, 920, 850. 00
Bonds matured-on which interest
has ceased-------------------10, 687, 950. 00
--------Accounts payable:
Interest due July 1, 1941 and prior
thereto (see contra)--------Vouchers payable ------Insurance premiums_----Commissions to sales brokers ---Special deposits by borrowers - Miscellaneous ---------




11, 300, 873.
61,920.
676, 112.
148, 481.
17,794, 970.
42,244.

$2, 419, 608, 800. 00

05
89
21
92
26
67
30,024, 603. 00

261

EXHIBITS

EXHIBIT 63-Continued
Home Owners' Loan Corporation-Balancesheet as of June 30, 1941-Continued
LIABILITIES AND

CAPITAL-Continued

Accrued liabilities:
Accrued interest on bonded in
debtedness--------------Other accrued liabilities ----

$4, 836, 521. 03
226, 106. 22
$5, 062, 627. 25

Deferred and unapplied credits:
Unamortized premium on bonds
sold-------------------Miscellaneous --------

1, 206, 794. 51
1, 165, 417. 87
2, 372, 212. 38

Reserves:
Fidelity and casualties ---Fire and other hazards--------

239, 419. 64
987, 356. 97
1, 226, 776. 61

Capital stock less deficit:
Capital stock:
Authorized, issued and out
standing_-------------Less deficit after provision for
losses in the manner de
scribed in footnote 2 on
page 259--------

200, 000, 000. 00

92, 362, 691. 87

Total liabilities and capital----------

107, 637, 308. 13
2, 565, 932, 327. 37

NOTE.-Except for property transactions which are recorded on a cash basis,
major items of income and expense are recorded on an accrual basis. Therefore,
no asset value has been recognized with respect to uncollected rentals or prepaid
taxes nor liability for accrued taxes.




262

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 64
Home Owners' Loan Corporation-Investments in savings and loan associations,by
States, as of June 30, 1941
Federal savings and
loan associations
Number
----Alabama------------------------Arizona ------------------------------------------.--..
--------Arkansas--------------------California....
Colorado..---. ------------------..
-------------------Connecticut..--------Delaware---------------------------------Florida-..---------------...........
Georgia------------------------------Idaho---- ---------Illinois
----------------Indiana-------------------------------------------------------------Iowa .-----------------------.----.
Kansas----------------------------------------------Kentucky ------....... ---... ----.---------.....
Louisiana---------------------------------------Maine-------------------------------------------------Maryland.------------------Massachusetts .----------------_.
Michigan .--....------...-.. ...-.--------..
Minnesota ----.----.--.--.--.----------------------Mississippi.--.---------------------..---------------Missouri---. ----------------------------.---..............
Montana-.......-----------Nebraska------------------------------------------Nevada---------------------------------------------New Hampshire ...........------------------------New Jersey ------------------------New Mexico------ ---------------------------..
----.............--.......
New York --.------..
North Carolina_------------ .
_------------......-----North Dakota ---.....-...----..--....-----Ohio -----Oklahoma................-----------------------------------------------------------------------------Oregon
Pennsylvania__------------------------Rhode Island------------South Carolina -....South Dakota----------------------.
Tennessee-..--....---..
---------------------Texas-----------------------Utah ....-------.................-Vermont- ......
----------------Virginia.......
-------................
Washington-.........------------West Virginia....
Wisconsin-......------------Wyoming---------------District of Columbia ......-----------------------Hawaiil-----. --.-----------Alaska----------------Total---------------------




Amount

Number

$787,700
655, 000
803, 200
16, 802,400
2, 236,100
1, 862, 300

42

---------

13
2
25
55
16
15

State-chartered savings
and loan associations

8, 212, 250
2, 906, 000
1, 818, 500
12, 238, 500
5, 818, 900
1, 532,100
2, 653, 500
1,964, 500
119, 500
244,000
3, 627, 500
3,490, 000
2,107,100
7,199, 600
287,100
5,020,800
30, 000
730, 500

40
6
81
51
22
20
29
8
6
19
10
25
28
16
30
1
9

1
1
11
5
3
2

Amount

$150, 000
65, 000
1, 605, 000
725.
000
50, 000
200, 000

121
18
4
16

902, 500
645, 000
51,000
2,184,000

28

4, 942, 600

3

145, 210

9

870, 000

1
8

20, 000
908,800
225,000
5,000

1
2

1
5
7
55
15
4
56
18
19
48
1
19
4
35
67
6
1
18
24
17
35
9
1
1
1

341, 000
"-44 -3, 000
338,
112, 500
16,104,
000
1, 231, 300
15
6
1,955,200
137, 500
244, 000
1
595, 000
7, 941, 500
34
7, 640, 000
1, 211, 000
1
100, 000
3, 352, 300
12
4, 954, 500
390, 000
285,000 ..------1
788, 600
75, 000
287, 000
3 ..---------4, 556,400 .-------- 8
3, 060,400
1, 630, 000
8
3
1, 639, 000
1,435, 000
..-------

2, 267, 400
6,969, 000
2,189,000
3, 521, 000
616, 800

10
3
37

1, 039, 000
240, 000
5, 732, 500

312
3121

37, 277, 410

33,300

14S, S7S, 960
1,036
1,036 1 145, 575,950 1

277,410-----37,

263

EXHIBITS

EXHIBIT 64-Continued
Summary of investments in savings and loan associations,fiscal year 1941
Federal say- State-char
ings and
tered savings
loan assoand loan
ciations
associations

Total

$203, 024, 210
1,420, 000

.---------.---- $163,130, 800
Investments-June 30, 1940 (net)-----..........
270,000
Investments-July 1, 1940, to June 30, 1941---.....----------Conversions from State to Federal charter-July 1, 1940, to
275,000
--June 30, 1941.------ -------------------------

$39, 893, 410
1,150, 000

-

163, 675,800

40,768,410

204,444,210

---------

145, 575, 950

37, 277, 410

182,853,360

Total ..-------

----------------------

Repurchases-July 1, 1940, to June 30, 1941

Investments-June 30, 1941 (net)- -- ---




- ----------

18,099,850

-275, 000 ..---......
3,491,000

21, 590, 850

264

REPORT OF FEDERAL HOME LOAN BAiNK BOAR~D,
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265

EXHIBITS

EXHIBIT 66
receipts and expenditures, fiscal years 1940
Home Owners' Loan Corporation-Cash
and 1941
1940
Receipts:
. .------.-----.....
---------.----- _
Collection of interest
Dividends on investments.--....-------- --------------Property income------------------------------------------Repayments of principal and miscellaneous property credits--------Repurchase of savings and loan shares----------------Miscellaneous unapplied and unposted items and borrowers' special
deposits for taxes and insurance

$90,204, 200
7, 292,109
26, 243, 551
222, 614, 633
14,973,000

$87, 225, 773
6,472, 686
20, 755,481
228, 376, 761
21,590,850

21, 178, 525

39,906,357

-------------------------.

382, 506,018

404, 327, 908

Expenditures:
Administrative expense-Federal Loan Agency and Federal Home
Loan Bank Board
__-------------------------

23, 653, 581

19,948, 289

59, 219, 430
22, 491, 659
13,177,019
70, 214, 604
22, 156,415
1, 538,400

55, 584, 323
17,182, 729
9,168, 553
18, 673, 326
12, 740, 842
1,420,000

Total receipts --- --

--------

_.---------_
.---------

1941

Interest on bonds
.
....------------------------Property expense ----.-----..
_
-----------Other nonadministrative expense--------------------------------Advances to borrowers -----------------------Advances for acquisition of, or due to ownership of property .-----Purchase of shares of savings and loan associations --------Miscellaneous unposted items and disbursements from borrowers'
special deposits for taxes and insurance -----------Total expenditures--_

------

Net receipts _---

--------

------------------

Net funds available-------------Funds allocated for retirement of bonds
-

425085-41-




18

. - .

--------.
-----------------...
...--

30, 351, 230
165,069, 292

159,884, 276

-----------------------

Means of financing:
Cash balance at beginning of year --------Net receipts (above)-------------------Bond sales
___
..---- ----------------------------

Cash balance at end of year ....

10,170, 634
222, 621,742

--

239, 258,616

79, 329, 628
159, 884, 276
117,171, 577

39, 702, 549
239, 258, 616
20,849,048

356,385,481
316, 682,932

299,810, 213
246, 224,601

39, 702, 549

53, 585, 612

266

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 67
Home Owners' Loan Corporation-Statement of income and expense for the fiscal
year 1941
Operating and other income:
Interest:
Mortgage loans and advances ------------------$73, 935, 175. 72
Vendee accounts and advances --------------- _-14, 431, 189. 86
Total------------------ ----------------Special investments_ ----------------------------

88, 366, 365. 58
19, 638. 71

Total
---------------------------------------------------------------Property income----Dividends received from savings and loan associations--___
Miscellaneous-------------------------------------Total income---------------------------_----

88, 386, 004.
20, 774, 182.
6, 473, 061.
851,479.

29
94
24
05

- 116, 484, 727. 52

Operating and other expenses:
Interest on bonded indebtedness----------Less amortization of premium on bonds sold -------

551 446, 135. 22
203, 831. 82
55,242, 303. 40

Administrative and general expenses:
Administrative expenses-current fiscal year ------Administrative expenses-first preceding fiscal year__
Administrative expenses-all other fiscal years --__
General expenses ----------------------Property expense------------------Total expenses_----------Net income before provision for losses which may be sustained
in the liquidation of assets------------------------

19,630, 538. 89

127, 470. 32
8, 068. 32
1, 178, 965. 68
16,680, 132. 27
92,867,478.88

23, 617, 248. 64

Provision for losses:
On mortgage loans, interest and property_
For fidelity and casualties -------For fire and other hazards ---------

40,353,330.80

Total
Loss for fiscal year




40,000,000.00
- 33,247.30
320,083.50

--

16, 736, 082. 16

267

EXHIBITS
EXHIBIT 68

Home Owners' Loan Corporation-Statementof income and expense from the
beginning of operations, June 13, 1933, to June 30, 1941
Operating and other income:

Interest:
Mortgage loans and advancesVendee accounts and advances

$785, 032, 446. 67
-.-

Special investments--------

Total

30, 554, 385. 53

815, 586, 832. 20
202, 061. 81

------------------------------------

Property income- ----------------------------Dividends received-Federal Savings and Loan Insurance
------------------------Corporation----Dividends received from savings and loan associations --Miscellaneous-----------------------Total --------------------------_
Operating and other expense:
Interest on bonded indebtedness------ $493, 673, 665. 75
Less amortization of premium on bonds
412,072.92
sold------_---------------------

Discount on refunded bonds ----Administrative and general expense---Property expense--------------------

493,
7,
229,
79,

261, 592.
158, 329.
822, 090.
299,181.

$815, 788, 894. 01
93,714, 150. 60
3, 035, 326. 09
29, 745, 820. 70
2, 502, 036. 88
944, 786, 228. 28

83
31
75
32
809, 541, 194. 21

Net income before provision for losses which may be sustained
___ ___------__-in the liquidation of assets -Provision for losses:
On mortgage loans, interest and property
(computed in accordance with Board
$226, 137, 153. 25
Resolution of Nov. 15, 1938)-------1, 110, 393. 54
For fidelity and casualties ------For fire and other hazards -----_
352, 746. 50
Loss for period June 13, 1933, to June 30, 1941-------__--__
$33, 780. 04
Add: Unlocated payments ------Less:
Unidentified payments- $12, 150. 35
Repayments unallo
cated - unidentified
14,197.04
difference --------26,347. 39

135, 245, 034. 07

227, 600, 293. 29
92,355,259. 22

7,432. 65

Deficit at June 30, 1941--------------------------------




92, 362, 691.87

268

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

EXHIBIT 69
Home Owners' Loan Corporation-Analysisof changes in deficit for the fiscal year
ended June 30, 1941
Deficit at July 1, 1940------- ------------------------Add:
Loss for the fiscal year ended June
30, 1941------------------$16,736,082.16
Unlocated payments ------------33, 780. 04
Adjustment to miscellaneous in
come ----------------------14, 333. 26

$76, 453, 005. 43

16, 784, 195. 46
93,237, 200. 89
Deduct:
Adjustment of discount on re
funded bonds----------------Adjustment of interest earned----Repayments unallocated-unidenti
fied difference ---------------Accounts payable-unclaimed
items---------------------Unidentified payments -------Miscellaneous credits------Deficit at June 30, 1941--




----------

840, 000. 00
14, 317. 02
14,197.04
3, 113. 80
2, 616. 10
265. 06
874, 509. 02
92, 362, 691. 87

INDEX
Page

Advances of the Federal Home Loan Banks-See FEDERAL HOME
LOAN BANKS.
Agencies of Federal Home Loan Bank Board, organization chart of_- Facing 1
Amortization-See HOME OWNERS' LOAN CORPORATION-Loans.
159
Appraisal Section of the Home Owners' Loan Corporation-------------Assets-See agency concerned.
Balance sheets-See agency concerned.
77
Bank Presidents' Conference-----------------------------------Bonds (see also HOME OWNERS' LOAN CORPORATION)_- 57-58, 164-165,
169-170
57-58
Defense----------------_------------------------------Members of Bank System issuing agents for sale of ----------- 57-58
Building and loan associations-SeeSavings and loan associations.
29-32
----------------------------Building costs ---31-32
Cost indices for six-room frame house ----------------------31
Labor costs, index of- ------------------------------------Lumber prices, index of -----------------------

30-31

------------------------------------------Material prices
Index of --------------------------------------------

29-32
30-31

Charters-See FEDERAL SAVINGS AND LOAN ASSOCIATIONS.
Charts, list of:
173
-----------------------------------------Defense Housing 174-175
Federal Home Loan Bank System -------------------------175-176
Federal savings and loan associations --------------------176
Federal Savings and Loan Insurance Corporation---------------176
__---------- --------Home Owners' Loan Corporation---_
173-174
Survey of Housing and Mortgage Finance -------------------Collections-See HOME OWNERS' LOAN CORPORATION.
Community programs-See FEDERAL SAVINGS AND LOAN IN
SURANCE CORPORATION.
46-47, 110-111
Construction lending, expansion of----------------------15-16
Construction, nonresidential- _----------------------------------15
-------------------------------Contracts awarded-----Construction, residential:
Costs-See Building costs.
2-3, 16-18
Defense housing on, effect of_---------------------------3
Dwelling units constructed, number of-------_--_-------------80-81
Federal Home Building Service Plan_ -----------------------14-15
Index of -----------------------------------------------Labor supply --------------------------------------32-33
New nonfarm dwellings:
21-23
-------------------------------------Number of21-23
_-------------------By type of dwelling---------




269

270

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Construction, residential-Continued
Private:
Compared with public..-------- _---______-----18-20
Concentration in defense areas _-____
----------------17-18
Distribution of---------------_----------- __
__
16-20
Increase in--------------------------------------14-21
Rate of, by size of community-----------------------21
Regional distribution of ----------------------------20-21
Public:
Compared with private-------------------------------18-20
Distribution of -----------------_
------------------16
Increase in-----------------------------18-20
New York Public Housing Law of 1939 -----------------19
Nonfarm dwelling units, number of ------------------- 18-20
United States Housing Act of 1937 --------------------19
Public and private, compared -----------------------------18-20
Regional distribution of ---------------------------20-21
Single-family dwellings: *
Preference for--------------------------------21-23
Effects of population trends on-------------------_
23
Value of, estimated --------------------------------18
Debentures-See FEDERAL HOME LOAN BANKS.
Debt:
Home mortgage --------------------------------48-51
Public Debt Act of 1941 -- ------------------------57
Default, insured associations in--See FEDERAL SAVINGS AND LOAN
INSURANCE CORPORATION.
DEFENSE HOUSING ----------------------------------------1-11
Coordination, national and local_-----------------------------9-10
Coordinator--_----_------------------------1
Demountable and portable housing--------_ ----------2
Federal Home Loan Bank Board in, participation of_ _
__
_
1, 7-11
Homes Registration Offices_ ---------------------------------3, 10
Lending by member institutions-- -------------------------5-7
Private industry in, place of ------------------------------2
Public funds in, use of-------------------------------2, 11
Dwelling units provided, number of----------------_ _2, 11
__--_----16-18
Residential construction, effect on------- ----------Trailers and dormitories_------------------------------2-3
Types of:
Demountable and portable-------------_-----------------2
Trailers and dormitories--------------------------------2-3
Defense housing area, definition of--------------------------__
4-5, 17
Defense program:
Bonds, members of Bank System issuing agents for sale of---57-58
Building labor supply affected by ---------------------------32-33
57
Cost of financing, plans to pay--------------------------------33-34
Vacancy ratios affected by------------------_-------------Direct-reduction loan plan -----------------_----_------------100




271

INDEX

Dividend rates:
Federal Home Loan Banks---_ ------------------------------ 74-75
Federal savings and loan associations ------ _------_---_----57, 113
Examinations:
Examining Division of Federal Home Loan Bank Board------- 78-79, 125
Federal Home Loan Banks ----------------------------- 77-80
Federal savings and loan associations -------------------------78
Federal Savings and Loan Insurance Corporation-_-----_---------78
Form, adoption of standard
---------------------------- 78-79
----_
---125
Insured savings and loan associations_ _ _
Joint--------------------------------------------78
Exhibits, list of:
Federal Home Loan Bank System ------ -------------_
_177
179
--------Federal savings and loan associations_-__180
Federal Savings and Loan Insurance Corporation-__
-_____--______
_
181
Home Owners' Loan Corporation
--------177
Survey of housing and mortgage finance --Expenses-See agency concerned.
Federal Home Building Service Plan ------_---__-------------80-81
FEDERAL HOME LOAN BANK BOARD:
Facing 1
7-11

Agencies of, organization chart of----------------------------------Defense housing, participation in

Examining Division----------

____-___----

Federal Home Building Service Plan -

Benefits of-----------------_------Decentralization of------------

78-79, 125

_______

_

------

-_____

80-81

80
-----

80

Purpose of
------------_____
___80
Funds, source of-----------------_-___
-- __
---75
Income and expenses of---------------__ ------75
Personnel of----------------------------------------75
Receipts and disbursements of -________-75
Rules and Regulations, amendments to_ ________
8-9
FEDERAL HOME LOAN BANK SYSTEM:
Administration of-------------------------------------- 75-77
Advances to members-See FEDERAL HOME LOAN BANKS.
Borrowing capacity of members ----------------------------68
Government investments, decline of-------------------87-91, 107-110
Interest rates, reduction of------------__
_65
Membership:
Admissions to-----------_
_
-------------------83
Applications for ----------------------------------------83
Borrowing capacity of members_ -------------------------68
Borrowing members ------------------------ ---------_
64
Proportion to total members ----------_
64
Changes in ------------------------------------------- 81-84
Compared with all operating savings and loan associations -----84
Defense bonds, issuing agents for sale of-------------------57-58
Defense housing, Title VI of National Housing Act---------_9
Dividends received from Federal Home Loan Banks --------- 74-75




272

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

FEDERAL HOME LOAN BANK SYSTEM-Continued
Membership-Continued
Financial condition ----- -------------------------_
91-97
Assets_ _-------------------------------81-84, 91-95
_---

83

Percent change -----------------------------

91

By type of institution ---------

_-------_----__

Compared with all operating savings and loan associa
tions_ --------------------------------------84
Trend in selected asset accounts, by Bank Districts --93
Balance sheet, consolidated, Exhibits 34 and 35--------- 221, 222
Borrowed money-----------------------------------96
Cash- ----------------------------------- 94-95
Liability accounts, trend in selected- -------------------95
Mortgage loans ----------_
----------------------92-93
Private investments------------_
----------------- 95-96
Real estate_
-------------------------------------93-94
Reserves
------------------------------------96-97, 100
Government investments in member associations ------87-91, 95-96
Dividends paid on_ --------------------------90-91
Issuing agents for sale of defense bonds- ------------------57-58
Management, improvement in_--------------_--------98-102
Mortgage lending activity---------------3-7, 84-87, 92-93, 99-100
Defense lending ------------___----------4-7
----Amount loaned, by purpose of loan -------5
Distribution, by purpose of loan----------------__5, 87
Percentage distribution, by type of association -----------86
Volume of loans made----- --------------------------85
Number of members-----------_----------------------81-84
83
By type of institution-- ---------------------------Compared with all operating savings and loan associations__
84
Operating ratios of member savings and loan associations ----97-98
Operating standards and management, improvement in---- _-- 98-102
Savings and loan graduate schools------------------ 101-102
Operation, plans of-----------_
----------__------97-100
------81-102
Operations of member institutions -----By asset size groups _----_----------------------98
Statement of ------------------------------------- 97-98
Private investments in member institutions- ---------------95-96
_
- 96-97, 100-101
Reserves of member institutions_ --------------Withdrawals from -------------------------------83

FEDERAL HOME LOAN BANKS:
Administration of-----------------------------------------75-77
Advances to members:
_------Amounts advanced_ -------------------------Interest rates charged on--------------------------------------------------Outstanding---------------By Federal Home Loan Bank Districts ------------------Long-term and short-term -------------------------------------------------------------Repayments of
Trends in
-------------------------------------------




62-68
65
65-68
65
66
62-68
62-65

INDEX

273

FEDERAL HOME LOAN BANKS-Continued
Advances to members-Continued
Types of_----------------------------------

Long-term and short-term_ ---------------------- _
Secured and unsecured ---------------------------Capital stock of----------------------------------------Reconstruction Finance Corporation holding ---------------Debentures
------------------------------------Deposits:
Demand and time --------------------------------Interbank -------Interest rates paid on___ --

----------------------------__'_-----___-

Member-----------------------------Dividends_
_-----------------------------------Examination and supervision of-------------------

65-68

65-68
66-67
71-72
71
69-70
70-71
70-71
70-71

70
74-75
77-80

Financial condition- _-_----_---_-------_-----------------68-72
------------------------------ 68-71
Assets---------Cash held ------------ _ ------------------------ 68-69
199
Balance sheet (combined and separate), Exhibit 18--------------------------------------------- 72-75
Income and expenses
Liabilities ------------------------------------------ 71-72
Net income, distribution of -------------------------------74
Profit and loss statement (combined and separate), Exhibit 22
207
73
Profit and loss statement, consolidated ---------------------72
Surplus and undivided profits --------------------------Government investments in stock of--------------------------71-72
Lending activity --------------- _ ----------------------- 61-65
Net income, distribution of----------------------------------74
-------------------------------------------- 61-81
Operations of
Purpose of ---------------------_-----------------------73
Reserves --------------_------------------------------72
69
Security investments-------- --------------------------------71-72
Stock subscriptions, members and U. S. Government------------Federal Housing Administration:
Homes accepted for mortgage insurance, drop in median number of
rooms------------------------------------------38
9
National Housing Act, Title VI of------------------------------Federal Savings and Loan Advisory Council------------------------ 76-77
Members, list of, Exhibit 28----------------------------------215
FEDERAL SAVINGS AND LOAN ASSOCIATIONS:
Cancellations ------------------------------------------- 105-106
Charters, number of--------------------------------------105-106
106-107
Conversions, number of ----------------------------------8-9
Defense housing, participation in -----------------------------Dividend rates----------------------------------------- 57, 110
Examination and supervision of------------------------------- 78-79
Financial condition -------------------------------------- 11-113
Assets------- --------- --------------------------- 104-107
104
Compared with all operating savings and loan associations__
Growth in -------------------------------------- 104-107
Percent, by Bank Districts ----------------------- 106




274

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

FEDERAL SAVINGS AND LOAN ASSOCIATIONS-Continued
Financial condition-Continued
Combined balance-sheet items for all operating Federals, Ex
hibits 34 and 35-------------------------221, 222
Consolidated statement for 1,428 reporting Federals, Exhibit 45_ _
237
Income and expenses ---------------------------112
Selected balance-sheet items for 1,394 identical associations,
Exhibit 44---------------__----__-,_--237
Investments in:
Private _--------------------------- 96, 106-110
Dividends paid on-----------____-_- _____
113
Index of

--------

_-_

-----

_

_

108

Number of investors -------------Percentage distribution --____--_
U. S. Government_--------__
89, 107-110,
Dividends paid on ----- -----_
----- _
_
Repurchases of---------------108-110,
Legislation: Sale of mortgages--------------------------------Lending activity, mortgage:
Construction loans, increase of----------

Increasein_
---------Percentage distribution

107
106
164
110
164
8-9

46-47, 84-86, 110-111

------------------- __ _
------

85-86, 110-111
85
111

Refinancing loans, decrease of_-------

Volume of loans made_ ------------------------- 84-85,110-111
----------111
By purpose of loan -----Loans outstanding----------------111
Mortgages, sale of
-----------------------------------------8-9
104-107
Number of associations, growth in-------------------By asset size distribution -__---------107
Changes in
---------------------------------------- 104-107
104
Compared with all operating associations --------------------------------------------------------- 111-113
Operating ratios
104
_
------------Operations, improved standard of-----_-, _
103
Purpose of
-----------------------------------------------FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION:
133
Admission fees- ----------------------------------------Applications for insurance _______

---------------

116-117

Community programs------------------------------------120-124
Advantages of -------------------------------------- 120-121
121
Altoona, Pa., program -----------------------------------121
------------------------------Chicago program--121-123
Milwaukee program -------------------------------123
Milwaukee Properties Bureau -----------------------------122
Paterson, N. J., program ---------------Default, operation of associations in:
Community Federal Savings and Loan Association of Independ
130-131
ence, Independence, Missouri -------------------------The Dickinson County Building and Loan Association, Abilene,
---------------------------------------- 131-132
Kansas
Security Federal Savings and Loan Association of Guymon,
131
------Guymon, Oklahoma -------------------Trenton Building and Loan Association, Trenton, Ohio---------




131

275

INDEX

FEDERAL SAVINGS AND LOAN INSURANCE CORP.-Con.
Disbursements-

__---_

-

-----------------------

115 -116, 128

124-125
_----------Eligibility requirements
Examination and supervision_-------_-------__---------- 124-125
Financial condition ----------------------- 132-134
------------115,132-133
Assets ---_----------------249
Balance sheet, Exhibit 51
----------- 250-251
Income and expenses, Exhibits 52 and 53--Income and expenses, condensed statement __

Funds, source of ______,__
------Insured associations:
-------------Assets of--Balance sheet items, percentage change in
Default, operation of associations in
Summary of -------------Examination of---

-

-

-----------

Investments, private-_------_--------Investors, number of---------------Mortgage lending by_-----------Number of--------------------------

--------

134
133

--- 117-120

----------119-120
----------- 130-132
- 130-132
-- 124-125
---119-120
----------- 115-118
----- _ - 6, 119-120

------ - 116-118

--------------------------------------- 116-120
Operations of Percent of all members insured--------------------------118
Progress of ----------------------------------------- 117-120
120
Reserves and undivided profits_ --------------------------Supervision of-----------------------------------124-125
Operations, summary of --------_----------------------132-134
Personnel- ----------------------------------------------134
Premiums -------------_------------------------------_
133
Progress of
-------------------------------------------- 115-116
Reserves ------------------------------------------ 115, 132-134
Settlements----------------------------------------125-129
Optional methods of __---------- -----------------------127
Summary of
--------------------------------------- 127-129
Supervision and examination-----------_-------- -------124-125
Surplus and reserves---- -----------------------115, 132-134
Finance-See Home mortgage finance.
Foreclosures:
Decline in ----------------------------------------------- 25-27
By Bank Districts
------------------------------------ 25-27
Home Owners' Loan Corporation-See HOME OWNERS' LOAN
CORPORATION.
Number of, total, nonfarm-- -------------------------------26
Rate of, by States ------------------------------------------26
Government investments:
Federal Home Loan Banks, capital stock of------------ -------71-72
Federal savings and loan associations, shares of---------------108-110
Home Owners' Loan Corporation, investments by, in member savings
and loan associations ----------------------------- 87-91
Member savings and loan associations, shares in----___----87-91, 95
Reduction of-----------------------------------87-91




276

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Home mortgage finance:
Debt, home mortgage:
Distribution, by type of lender_ -------_
--------------49-50
------------------------------------------ 48-50
Increase in48
_-_------Outstanding -----------------------------51
-------------------------Soundness of debt structure--Lending activity:
------------------------ 41-42
Analysis of-----------------46-47, 110-111
Construction loans, increase in--------------_---39-45
Increased volume of---------- ------------------------42
Index of
----------------------------------------------118
_
Insured institutions ---------------------------------51-54
Operations during emergency period --------------------52-54
Policies in a competitive market-- ------- __-------------Refinancing loans, decline in_----------------------------- 46-47
53-54
Reserve requirements, importance of --------------------39-45
Savings and loan associations, predominance of-------------Construction lending compared with 1 and 2 family home
47
_---------construction ------------------------46
_
Distribution of loans, by purpose ----------------------39-42
-----------------------Types of lenders------------51-54
------Lending practices, continued improvement in----------48-51
---------------------- __Loans outstanding- --_
43-45
Mortgage recordings ------------------------------------44
Average size of loan, by type of lender------------------------------- 43-45
Dollar distribution, by type of lender
45
Geographical distribution--_________--------42-45
_
_
Number of, by type of lender ------------------------45
------Percent of total dollar volume, by type of lender _
58-59
Problems raised by national emergency------------------13-59
Survey of_-----------------------------------51-52
Variable interest rates, recommendation of-------------------HOME OWNERS' LOAN CORPORATION:
Accounts:
136-137
------------Classification of---------_
168-171
-----------------Debtor and property, reduction of -137
--------------------------_--_
Delinquent_-------- ---Extension program on, effect of __-------------------136, 144-145
136
Number of original--__----------- --------------- -----136-141
Performance record of borrowers --------------------139-141
Repaid in full-------------------------------------135-138
Status of ----------------------------------------136, 140-141
Terminated--------------------------------------Vendee-See Vendee Accounts.
160-163
Administration of---------------------------------------162
Administrative expenses-__----------------------------------143-144, 156-157
Advances to borrowers, supplemental ----------------Amortization-See Loans, Extension of terms.
159
Appraisal Activity--------------------------------------150
-------------------------Arrearages at time of foreclosure --Bond Retirement Fund---------------------------163-165, 170-171




INDEX

277

HOME OWNERS' LOAN CORPORATION-Continued
57-58, 164-165, 169-171
Bonds--------------------------166
----------------------------Interest on-------------- 138-139
----Collections ---------------------------------139
Relation to national income -----------------------------3
Defense housing, place in-------------------------------------268
-Deficit, analysis of changes in, Exhibit 69-----------Extension of loan terms-See Loans, Extension of terms.
Financial condition:
163
-------------------------------------Assets, decrease in
259
Balance sheet, Exhibit 63------------------------------------------------------------------- 163-165
Changes in
Income and expense--------------------------------- 165-167
166
Condensed statement, fiscal years 1940 and 1941 -------268
Deficit, analysis of changes in, Exhibit 69----------------266
Statement for fiscal year 1941, Exhibit 67 ---------------267
Statement from June 13, 1933, to June 30, 1941, Exhibit 68165
SReceipts and disbursements ------------------------------Exhibit 66-------------------------------265
Foreclosures:
150
---------------------------Arrearages at time of-_-- --140, 148-151
---------------Authorized--------25-26
Effect on national figure -------------------------------Pending_
------------------------------------------136
Percent distribution, by period of arrearage ---------------_
150
----------------150-151
Policy re------------------------Reduction of, cause for---_----_--------------------148-149
------ 148-151,156
Vendee accounts ------------------------------------------------- 149-150
Withdrawals
147-148
Insurance program- ---------------------------------Insurance and tax accounts-See HOLC, Tax and insurance accounts.
Investments:
Defense housing, financing of_-------------------------9
Federal savings and loan associations, in-.-----_--_ 108-110, 164
Member savings and loan associations, in.
-------- _87-91, 169
Outstanding-------_
---------------------------------164
Lending activity---------------------------------------- 39-40
Leniency to borrowers--------------------------------150-151
Liquidation of
-------------------------------------- 135, 167-171
------------------------ ------------------- 141-144
Loan serviceBorrowers in military service, policy re- --------------------143
Loans:
Average loan and balance outstanding---------------- --135, 140
Exhibit 54-----------------------------------------252
Extension of terms------------------------144145
----Act authorizing-..-----.
-------..------------------144
Performance record of borrowers ----------------------145
Tax and insurance accounts required- -----------------146
Outstanding-------------------------------------- ---140
Repaid in full. ------------------------------------139-141
Supplemental
------------------------------- 143-144,156-157




278

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

HOME OWNERS' LOAN CORPORATION-Continued.
164-165
Losses, loan and property----------------------------165
Net worth ------ -----------------------------135, 160-163
Personnel--------------------------------162
Operation under Civil Service regulations----Properties:
Acquired:
Insurance of ------------------------------------ 147-148
Total--------------------------------------- 151-155
By price ranges- ---------------------------_
153
By size of community -- -----------------------_
153
Exhibit 56------------------------ ----254
Owned:
Capital value of ---------------------------------151, 163
Elements entering into-----------------------155
Decline of---------------------------27-29, 151-155
Income and expenses------------------------ 155-156
Insurance of ------------------------------------ 147-148
Location of ------------------------------------- 152-153
--------------------------------- 151-155
Management of-Number of -------------------------- 136, 151-155
155-156
------------------Operating income and expenses_
---------------156-158
Reconditioning of -----------156
Rent, average -------------------------------------156
Rent collections ------- ---------------------- Sales of---------------------------------------- 151-156
153-154
Analysis of -------------------------------------------153
By size of community----_-- --154
------------------------By terms--------254
Exhibit 56-----------------------154
Loss on-----------------------------------__
Units rented or available for rental
-------------Vacancies ----------

--

-

155-156
156

3, 156-158
-------------Reconditioning---------------------157-158
---------- ------------Contracts completed _--_ -Type of case ---------Defense housing, aid in_---------------------Results of_-------------------------

-

---

----

158
3, 158
158

----------------------------------

164-167

Retirement of share investments, waiver of---------------------

9

Reserves for losses -

145-146
--Savings to Corporation and borrowers-------------_-145-146
Tax and insurance accounts__----------------Cost of taxation in HOLC operations ------------------- 146-147
146-147
Effect of taxation costs on property acquisitions and sales - 146
Number of --------------------------------------------Required for all extension agreements -

-----------

--------Required for new vendee accounts Savings to borrowers and Corporation -----------------




146

146
145-146

279

INDEX

HOME OWNERS' LOAN CORPORATION-Continued
Vendee accounts:
Collections ---------------

138-139, 156

Dollar volume outstanding ------------------

156

Foreclosures of------------------Number of--------------------------_-Performance record of_ --- _-

148-151, 156
----

135-137, 156
136-138, 156

---------

Repaid in full- ---------------------------------141
Tax and insurance accounts required --------------------146
Home ownership, survey of_-------------------------------------13-59
Homes Registration Offices----------__
-------------- __-3,10
Housing, survey of-------------------------------------- 13-59
Income and expenses-See agency concerned.
Industrial production, index of---------------------------------- 14-16
Insurance of accounts-See FEDERAL SAVINGS AND LOAN INSUR
ANCE CORPORATION.
Insurance of HOLC properties-See HOME OWNERS' LOAN COR
PORATION.
Loans-See Home Mortgage Finance.
Labor costs, building ----____--____31-33
Labor supply, building--------------------------------- 32-33
_
Defense program on, effect of -------------- _--_
32-33
--- _Legislation: Title VI of National Housing Act --------------------9
Lending activity-See Home Mortgage Finance.
Letter of Transmittal --------___-I----------------------Milwaukee Properties Bureau---__- ----- _------_---------__--123
Mortgage finance and savings-__________----_
---------------- - 39-59
Mortgage loans-See Home Mortgage Finance.
Mortgage recordings-See Home Mortgage Finance.
Neighborhood conservation:
Defense housing-- _------------------------------------_
3
Reconditioning on, effect of-------------------------------158
Operations-Seeagency concerned.
Organization chart of agencies under Federal Home Loan Bank Board__ Facing 1
Personnel--See agency concerned.
Population trends--------------------------------------- 23, 34-38
Age groups, changes in-------------------------- _37-38
City population, changes in
------------------35-38
Families, increase in number of------

__----

_----_-

38

Family size, drop in --------------------------------------38
Metropolitan districts, changes in----------------------------36-37
Public Debt Act of 1941 ----

----------

-------------

57

Real estate:
Foreclosures-See Foreclosures.
Institutionally owned- ------------------------------_ _ 27-29
Market:
Defense program on, effect of -------------24
Improvement in--------------------------------------23-25
Obstacles to---------------------- --------------- 23-24
Long-range trends i---------,
--------------34-38




280

REPORT OF FEDERAL HOME LOAN BANK BOARD,

1941

Real estate-Continued
Market-Continued
Population trends -----------------------------------Tax burden -------------------------------------------Tax rates, comparison of_ --------------------------------Overhang:
Geographic distribution ----------- ___----------28-29
--Reduction of_-----------------------------------Reasons for ----------------------------------------Owned by member savings and loan associations ---------------Sales, increased -------------------------------------------Reconditioning-See HOME OWNERS' LOAN CORPORATION.
Reconstruction Finance Corporation---------___
-------------Dividends received from Federal Home Loan Banks ---- _-----_

35-38
24-25
25
27-29
29
93-94
24
71-75
74-75

Rents_------------------------------------------------------ 33-34
Index of residential rents - -------------------------------- 33-34
Reserves-See agency concerned.
Savings:
Defense savings bonds_ ------------------ __--------------57-58
Individual long-term ----------_-----------__-___54-57
Amounts of selected ------------------------------55
Changes in--------------------------------------------56
Declining return on -- ---------------------------------57
Growing volume of------------------------------------ 54-57
Savings and loan associations (See also FEDERAL HOME LOAN BANK
SYSTEM):
Home mortgage finance, predominance in field of--------_
39-45
Construction lending compared with 1- and 2-family home con
struction_ ------- -----------------------------------_
47
Debt, largest holders of_-----------------------------48-50
Loans, distribution of, by purpose----------------___46-47
Investments in, private:
Percent change, by class of association _--_-----_-----__
56
Mortgage lending activity- --------------------------------- 84-87
85
By type of institution-------------------------------Increase in, by Bank Districts -----------------------------86
Percentage distribution -------------------------------85
Sales agents for Treasury in defense bond campaign_--------- 57-58
101-102
Savings and loan graduate schools-------------------------Settlements-See FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION.
Tax rates-See Real Estate.
Transmittal, Letter of-----_----------------------------------i-iv
U. S. Government, investments of-See Government investments.
----------------------- 33-34
Vacancies, declining-----------------34
Defense program on, effect of ---------------------------------156
-------------------------------HOLC properties ----------




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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102