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REPORT
of the

Home Loan Bank Board
FOR THE YEAR ENDING
DECEMBER 31, 1949

Covering operations of the
FEDERAL HOME LOAN BANK SYSTEM
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
HOME OWNERS' LOAN CORPORATION




MARCH 16, 1950.

TRANSMITTAL
To the Congress of the United States:
Acting under provisions of law, we transmit herewith the annual
reports of the Home Loan Bank Board, Federal Savings -and Loan
Insurance Corporation, and Home Owners' Loan Corporation for the
calendar year 1949.
Respectfully,
WILLIAM K. DIVERS, Chcirmanb

J. ALSTON ADAMs, Member,
OscA K. LAROQTE, Member,
Home Loan Bank Board,

This report, which covers the activities of the Home Loan Bank Board,
is Part 1I of the Third Annual Report of the Housing and Home Finance
Agency, of which the Home Loan Bank Board is a constituent agency.




CONTENTS

HOME LOAN BANK BOARD
Page
SUMMARY -------------------------------------------------------

HOME LOAN BANK BOARD---------------------------------------Reduction in Required Forms and Reports----------------------Responsibilities of the Examining Division of the Board----------............
Examinations Made in 1949---- -------------------------------Reduction in Overdue Examinations- --------------.------------Auditing---------------------------------------------Basic Elements of Supervision---------------------------------------------------------------------Methods and Procedures_
Highlights of Conditions and Trends in 1949Conservatorships and Receiverships ---------------------------Participation in Conferences

2
3
3
3
4
5
5
6
6-------------------7
7
7--------------------------

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

8

Functions of the Bank System---------------------------------Advances and Repayments During 1949------------------------Number and Percent of Borrowing Members---------------------.
Collateral for Advances....---......................-------------------.....--------------...
----------------------------------Interest Rates on Advances.........
Sources of Funds..---...............................-----------------------------------------Retirement of Government Stock-------------------------------.
Sale of Consolidated Obligations-------------------------------Interbank Deposits and Deposits of Members -----------------.Statutory and Other Reserves-----------------------------------------------------.
Consolidated Statement of Condition---.----...
Income and Expense ---------------------------------------.
Distribution of Dividends .....-----------------------------------Budgets of the Individual Banks------------------------------Audits and Reports --..----------------------------------------FEDERAL SAVINGS AND LOAN ASSOCIATIONS-- -----------------------

Creation and Purposes .----------------------.----------------.
Granting of Charters and Branches- .----------------------------...............
Growth and Development to Date-----------------------------......
Savings Activity and Trends During Year------------------......
Lending Activity and Trends During Year-----------------------...
Liquidity and Reserves-------------------------------------.
FEDERAL SAVINGS AND LOAN INSURANCE

CORPORATION---------------

8
-9
9
10
10
11
11
12
13
14
15
15
17
17
18
20
20
20
21
22
22
23
25

Introduction----------------------------------------------...
25
Extent of Insurance Coverage------- --------------------------.
25
Membership -_--__-------------------------------------------25
Eligibility Requirements----------------------------------25
Admissions--------------------------------------------26
Terminations ----------------------------------------26
Nature of Insurance Protection--------------------------------26
The Payment Record ----------------------------------------.
27
Condition of Corporation------------------------------------27
Operations of Corporation ----------------------------------28




TABLE OF CONT ENTS
--------------------Condition of Insured Associations---..
Average Association-----------------------------------------------------------------Assets....
---------------------Savings ------------Reserves--------------------HOME OWNERS' LOAN CORPORATION ---------------------------------------------------13 Years of Liquidation
General Operations -------------------------------...
Liquidation_
---------------------------Accelerated Liquidation ---------------------------------Status of Accounts-----.--------------------------------. ..
Properties---------------------Investments in Savings and Loan Associations ---------Bond Retirements ---------------------------Financial Operations- ..-- ....
.....---------------.----------Administrative
-----------------------------EXHIBITS-----------------------------------

1. Federal Home Loan Banks-Summary of Lending Operations,
1932-49.
------------------------------------------2. Federal Home Loan Banks-Schedule of Interest Rates on New
Advances and Interest Rates Paid on Members' Time Deposits,
January 1, 1950----------------------------------------3. Federal Home Loan Banks-Consolidated Statement of Condition
as of December 31, 1949
4. Federal Home Loan Banks-Consolidated Statement of Profit and
Loss for Year Ended December.31, 1949
----------5. Federal Home Loan Banks-List of Officers and Directors as of
---------------------December 31, 1949
6. Federal Savings and Loan Insurance Corporation-Statement of
Condition as of December 31, 1949, and December 31, 1948 _
7. Federal Savings and Loan Insurance Corporation-Statement of
Income and Expense for the Year Ended December 31, 1949
8. Federal Savings and Loan Insurance Corporation-Number and
Assets of Insured Savings and Loan Associations, by Type,
December 31, 1949, and 1948
9. Home Owners' Loan Corporation-Balance Sheet as of December
31, 1949--------------------------------------------10. Home Owners' Loan Corporation-Statement of Income and Ex
pense for the Calendar Year 1949 ----------------------11. Home Owners' Loan Corporation-Statement of Income and Expense
from the Beginning of Operations, June 13, 1933, to December
31, 1949.
..---------------------.------------.




Page
29
29
29
29
30
32
32
33

33
34
35
36

36
36

37
37
38
38

38
39
41
42
45
46

47
49
51

52

HOME LOAN BANK BOARD

SUMMARY
Member institutions of the Federal Home Loan Bank System again
led all other lendiig institutions in the number and volume of loans
on nonfarm homes.
Members increased their net holdings of savings during the 12
month period from $9,900,000,000 to $11,400,000,000, an increase of
$1,500,000,000.
Of the approximately 2,500,000 nonfarm mortgages of $20,000 or
less recorded in 1949, the great majority of which were on homes,
about 700,000 or 28 percent were made by members of the bank system.
During the year, there was a net increase of 91 members in the
bank system bringing the total number to 3,860 at the year end.
Stock ownership of members in the system increased during the
year from $121,237,475 to $136,239,250. Stock held by the Federal
Government declined from $119,791,200 to $95,818,000.
Interest charged by members on home mortgage loans averaged
about 5 Percent, and earnings on invested savings averaged close to
2.6 percent after payment of expenses and setting apart additional
reserves.
One thousand five hundred and eight Federal savings and loan
associations and 1,248 State-chartered associations are insured by the
Federal Savings and Loan Insurance Corporation. The combined
total of 2,756 associations have total assets above $11,300,000,000
and approximately 7,100,000 holders of savings share certificates.
The Home Owners' Loan Corporation is continuing to make sub
stantial progress in liquidating its loans. On December 31, 1948,
89.45 percent of its accounts had been liquidated with a balance of
$368,936,083. On December 31, 1949, the outstanding balance was
$230,660,630, representing a total liquidation of 93.41 percent.
During the year, the Home Owners' Loan Corporation passed from
red figure entries to black, marking the turn from a deficit to a surplus
in its total transactions.




iii

ORGANIZATION AND FUNCTION CHART OF THE
HOME LOAN BANK BOARD
Created pursuant to Reorganization Plan No. 3 of 1947. The Board consists
of three members, appointed by the President, by and with the advice and con
sent of the Senate. It supervises the Federal Home Loan Bank System, the
System of Federal Savings and Loan Associations, Federal Savings and Luan
Insurance Corporation, and Home Owners' Loan Corporation (in liquidation).

HOME LOAN BANK BOARD
Secretary
Assistant to the Chairman
Assistant to the Board

LEGAL DEPARTMENT

AUDITING DEPARTMENT

Responsible for the handling of all legal matters for
the Home Loan Bank Board, including the Federal Savings
nd Loan Insurance Corporation, the Home Owners' Loan
Corporation. and all other operations of the Board.

Responsible for the audit and verification of accounts
and records of the Home Loan Bank Board; the Federal
Savings and Loan Insurance Corporation and the Home
Conducts the examinations of
Owners' Loan Corporation.
Sthe Federal Home Loan Banks as required by law. Makes
reports of deviations from compliance with policies or
rules and other applicable general or specific governmental
and statutes.
standards

GENERAL COUNSEL

AUDITOR

EXAMINING DIVISION

SUPERVISORY DIVISION

Conducts the examinations or examinations and audits
of all Federal Savings and Loan Associations and of all
State-chartered, iured
institutions, except where State
examinations are accepted.
State examinations are
usually conducted jointly with State authorities. Con
ducts examinations of applicant institutions:

Responsible for supervision of all Federal Savings and
Loan Associations; exercises joint supervision with State
authorities of Insured State-chartered associations; con
fers with the Board's Supervisory Agents. Boards of
Directors and Officers of supervisaed institutions.

CHIEF EXAMINER

-

-

CHIEF SUPERVISOR

--

---

I
I FEDERAL SAVINGS & LOAN
INSURANCE CORPORATION

EDERAL HOME LOAN BANK
OPERATIONS
Supervises the financial and
other operations of the Federal
Home Loan Banks, including issu
ance by the Board of consolidated
Federal Home Loan.Bank obl!ga
Maintains contacts with
tions.
the U. S. Treasury and the Open
Market Committee of the Federal
Reserve System in such financing.
fiscal
Supervises the internal
affairs of the Board. except for
the FS & LIC and HOLC.

FEDERAL SAVINGS & LOAN

OPERATIONS
______________________
Acts In an analytical and recommendatory capacity upon pro
posals to organize Federal Sav
is and Loan Associations and
upon applications of Institutions
of the savings and loan type sub
mitted pursuant to the Board's
regulations.
CHIEF

DIRECTOR

I
INVESTMENT SECTION

COMPTROLLER'S SECTION

ANALYSIS SECTION

Analyzes and makes recom
mendations on Investment trans
actions of the Federal Home Loan
Banks; prepares text of quarterly
reports on the Banks and manages
the elections of the Banks' Boards
of Directors.

For the offices and departments
of the Board. exclusive of FS &
LICand HOLC: Plans. organizes.
and directs internal budgetary, ac
counting and fiscal activities:
operations
controls accounting
and prepares financial and statis
tical reports, estimates, and fore
casts ; controls operations pertain
ing to the receipt and disburse
ment of funds.

Analyzes and makes recommen
dations on proposed dividends,
budgets, and related matters of the
Federal Home Loan Banks. Ana
lyzes periodic reports of the oper
ations and condition of the Banks.

INVESTMENT ANALYST

COMPTROLLER

iv




ANALYST
BANK OPERATIONS

r

---- L--HOME

OWNERS' LOAN

CORPORATION

(I
-----------

ltquidation)

|

REPORT OF THE HOME LOAN BANK
FOR CALENDAR YEAR 1949

BOARD

Reports of the operating units of the Home Loan Bank Board
which describe their activities for calendar year 1949 indicate the
character and extent of the Board's participation in promoting savings
and the financing of home ownership. The Federal Home Loan Bank
System as a reservoir of funds for home financing, the Federal Savings
and Loan Associations as federally chartered instruments for the
local accumulation of savings and encouragement of home ownership,
the Federal Savings and Loan Insurance Corporation as a Federal
instrumentality for the protection of private savings, and the Home
Owners' Loan Corporation as a salvaging agency, operate under the
administrative direction of the Home Loan Bank Board. Each year
distinctive phases develop which serve to distinguish the work of the
Board from previous years and help to emphasize its functions.
In 1949 two undertakings, outside the customary program of ad
ministration, engaged the Board's attention. One was a careful
revision and simplification of its rules and regulations governing each
of its four operating units; another was a reduction in the volume of
reports and interoffice transactions between the national, regional,
and local offices of member organizations.
Early in 1948 the Board had appointed a committee to improve its
outstanding rules and regulations by making them more clear and by
eliminating obsolete provisions and accumulated conflicts and dupli
cations. In October 1948 the first substantial simplification was
effected in the lending and investment regulations for Federal Savings
and Loan Associations. Revisioni of the Federal Home Loan Bank
regulations was then begun. By January 1, 1949, the revisions were
completed and published. A part of the former Home Loan Bank
Board regulations controlling functions under the Board was sepa
rately incorporated into the general regulations of the Home Loan
Bank Board and regulatory authorities were also reestablished and
defined for the operations of the Home Owners' Loan Corporation
which primarily affected the internal affairs and contractual relations
of that Corporation. With the issuance of the 1949 edition of the
Code of Federal Regulations, all of the Board's regulations were
renumbered and redesignated in chapter I of title 24-B of the Federal
Code.




HOME LOAN BANK BOARD

Continuing the revision of regulations for Federal Savings and Loan
Associations, a second major improvement was proposed in the form
of a new simplified charter designated "Charter N." In March 1949,
after wide clearance in the industry, the proposal of this revision was
published. It was further modified to meet objections and finally
was adopted in July, effective August 15, 1949. Proposed regulations
for insurance of accounts by the Federal Savings and Loan Insurance
Corporation were published in December 1949. They have also had
the benefit of wide preliminary circulation in the industry and are
scheduled for the final consideration of the Board early in 1950.
Reduction in Required Forms and Reports
In connection with the revisions of its rules and regulations pub
lished by the Board in 1949, the Board on October 6, 1949, rescinded
its actions over a series of years from 1937 to 1948 by which it required
that certain specified forms of record and reporting be used either in
dealing with its own accounts and operations or with the public.
Like the rules and regulations, these forms ran the whole gamut of
activity from savings and home financing through accounting and
reporting. Some of the forms were so approved as to permit the
individual institution, upon specific approval by the Board, to use a
substitute form or wording. Others without change or alteration
were mandatory.
Of the 53 forms which from time to time were prescribed, only 7
now are required to be used by Federal Savingsand Loan Associations
and sent to the Home Loan Bank Board. These are standard forms
covering (1) Application for Permission to Organize, (2) Public Notice
of Application and Hearing, (3) Subscriptions to Capital Stock, (4)
Petition for Charter, (5) Certificates Evidencing Ownership of Sav
ings Share Accounts, (6) Fidelity Bonds, and (7) Forms for the Sub
mission of Monthly and Annual Reports. Each State-chartered organ
ization seeking to convert to a Federal charter or seeking to be insured
by the Federal Savings and Loan Insurance Corporation also is
required to file forms and reports similar to those required of Federal
associations, but the number has been largely reduced.
Initially, the forms were prescribed during the early stages of devel
opment of the Bank System as a means of obtaining uniformity of
methods and standards of operation. The broad purposes sought by
the prescribed practices have been achieved. While the continued
use of many of the forms will be considered necessary or desirable by
the executives of local institutions, their operating experience and
standards are such that wide latitude for individual preferences can
now safely be given. The Board considers that many of the specific
forms and much of the prescribed wording are no longer necessary.




HOME LOAN BANK BOARD

Special provisions or occasional revisions of specific forms are some
times determined by local laws or circumstances with which local
management can deal without the necessity of submitting every detail
to the Board in Washington. When on the basis of facts local prac
tices appear to be inadequate or unsound, the Board is free and, of
course, is obliged to take supervisory action. However, as a practical
matter it believes that such action has been reduced to a minimum.
The resulting emphasis on local autonomy in contrast to highly cen
tralized supervision is in harmony with our central purpose of encour
aging local responsibility and avoiding cumbersome mechanics and
costly overhead.
Responsibilities of the Examining Division of the Board
The Examining Division of the Home Loan Bank Board is respon
sible for the conduct of examinations of all Federal Savings and Loan
Associations, of State-chartered associations whose accounts are in
sured by the Federal Savings and Loan Insurance Corporation, and,
in States where examinations are not made by State departments, of
uninsured State-chartered members of the Federal Home Loan Bank
System. The Division also examines savings and loari associations
which apply for membership in the Bank System, for insurance of
accounts, or for conversion from State to Federal charter.
Examinations Made in 1949
There is a greater volume of work for the Examining Division year
after year because of the increasing number of insured institutions
and the growth in their mortgage loan portfolios and savings accounts.
In 1949 there was a net increase of 140 in the number of insured
associations. At the beginning of the year there were 2,616 insured
associations with assets aggregating $9,734,000,000. At the close
of the year there were 2,756 insured associations with total assets of
$11,300,000,000. Thus it will be seen that the average size of each
institution subject to examination increased from $3,721,000 to
$4,100,000.
During the year the Examining Division made 2,466 supervisory
examinations, 126 examinations of applicant institutions for member
ship, insurance, or conversion, and 37 other examinations or audits.
Reduction in Overdue Examinations
Public Law 895, approved July 3, 1948, providing that expenses in
connection with the making of examinations of savings and loan asso
ciations shall be considered as nonadministrative expenses, made it
possible to rebuild the staff of field examiners which had declined in
March 1948 to 127, the smallest number on the staff since the first
few months after organization in 1934. It was understood that the




HOME LOAN BANK BOARD

work would be considered current on June 30, 1949, if there were no
examinations more than 60 days past due.
The following schedule showing the number of insured associations
not examined in the preceding 12 months and the size of the staff of
examiners indicates how the program of overcoming the serious
arrearage was accomplished:
Date

Number of

overdue
examinations

Mar. 31, 1948---------------....-----------June 30, 1948-..--.........----..........---------------------------.................
Sept. 30, 1948.................
------------------------------------Dec. 31, 1948.--------------------------------------586
Mar. 31, 1949.-------------------------------------June 30, 1949.--------------.------------------------

724
746
706
437
176

Percent of

number of
associations
28. 5
29. 2
27.5
22.4
16.6
6.6

Number of

field
examiners

127
151
185
207
224
219

1 Did not include examinations of 58 State-chartered associations which by agreement were to be
made by State examiners.

During the last half of 1949 there was very little change in the vol
ume of arrearage. At the end of the calendar year there were 141
overdue examinations, not including 35 to be made by State exam
iners. However, there were among the 141 overdue examinations 51
which were more than 60 days past due. The staff of field examiners
at the end of the year was 209.
Rebuilding and maintaining an adequate examining staff was not
the only program for overcoming the backlog of past due examinations.
Constant attention through the years has been given to considering
and adopting methods of improving examining procedures. The aim
is to complete all examinations as rapidly as is consistent with sound
examining principles. There has been a reduction year after year in
average examination time in relation to the size of the institutions
examined. The Examining Division has consequently been able to
operate, at least for a period, with a staff of examiners that at the end
of 1949 was actually smaller than it was on June 30, 1941, when there
were 2,313 insured institutions with total assets of $3,159,763,000,
whereas on December 31, 1949, there were 2,756 insured associations
with assets aggregating $11,300,000,000.
Auditing
During the year plans were perfected by which the Board's Auditor
in cooperation with the General Accounting Office broadened the
scope of his audits and still further facilitated "spot checking" of
accounts by the Comptroller General. Examinations and reviews by
the auditor cover every phase of accounting and reporting done by
the Federal Home Loan Banks, the Federal Savings and Loan Insur
ance Corporation, and the Home Owners' Loan Corporation. Plans




HOME LOAN BANK BOARD

for auditing were developed not only to increase coverage and unify
accounting and reporting procedures, but to achieve further simplicity
and economy in the details of auditing. The efforts of the auditor
supported by the advice, concern, and cooperation of the General
Accounting Office, have sought to provide better, more intelligible,
and more comprehensive reports and analyses for the members of the
Home Loan Bank Board, the Housing and Home Finance Agency,
the Bureau of the Budget, and the Congress.
Basic Elements of Supervision
The purpose of supervision of Federal Savings and Loan Associa
tions and of State-chartered institutions the accounts of which are
insured by the Federal Savings and Loan Insurance Corporation is
protection of the interests of the public and of the millions of indi
viduals whose savings are entrusted to them.
Each supervised institution is privately owned and is governed by
its own board of directors, which selects the management and which
is primarily responsible for the safe conduct of the institution's af
fairs. In keeping with this fundamental fact, it is the Board's policy
to avoid encroachments upon the responsibilities and prerogatives of
management and to devote its supervisory efforts to those situations
and institutions where there is evidence of need for corrective action
with respect to important aspects of policy and operation such as
compliance with laws and regulations, reserves and reserve building,
lending and investment practices, collection policy, and basic account
ing practices and procedures.
Methods and Procedures
The Board's supervisory function is discharged by a supervisory
division directed by a chief supervisor and the supervisory work in the
field is carried on through the presidents of the Federal Home Loan
Banks in their capacity as supervisory agents in the respective bank
districts. This arrangement not only brings to supervision the
benefits of personal contact and of first-hand acquaintance with local
business conditions and developments, but it also facilitates and pro
motes cooperative relationships between the Board's supervisory
officials and the managements of individual associations, and with
the several State officials who exercise primary supervisory authority
over State-chartered institutions.
During 1949 the Board authorixed a further decentralization of
supervisory activity, particularly with respect to those insured in
stitutions in the most favorable classification as to financial stability.
Developed by the supervisory division in 1943 and refined in 1949,
the classification process used in determining the need for supervision




HOME LOAN BANK BOARD

measures the adequacy of reserves and reserve building programs, the
soundness of lending and investment policies, and the effectiveness
of collection policies and of programs for the disposition of foreclosed
real estate. The purposes of the revised procedure are to effect
certain economies in the operation of the supervisory division and to
enable it to concentrate more fully on major supervisory problems.
Highlights of Conditions and Trends in 1949
In 1949 the assets of Federal associations and other insured in
stitutions increased from $9,734,000,000 to $11,305,000,000; the num
ber of insured institutions increased from 2,616 to 2,756.
The supervisory division's study of lending policies with reference
to uninsured and unguaranteed loans made to finance home purchases
continued to reflect the policy of directors and management generally
to base mortgage loans on long-term values rather than on the inflated
prices at which real estate is sometimes currently being sold. Our
comprehensive sampling indicates that loans below 65 percent of
purchase price represent 67.3 percent of all uninsured and unguaran
teed home-purchase lending during 1949 as. compared with 64.4
percent in 1948, 61.7 percent in 1947, and 52.6 percent in 1946.
During 1949, the supervisory division inaugurated an analysis of
examination report data regarding payment performance on mortgage
loans. Thus, for the first time were averages as to delinquent loan
experience of insured savings and loan associations compiled on a
national and bank district basis. These averages afford supervision
a means of measuring and comparing current loan performance and
the effectiveness of collection policies in individual institutions.
Supervisory emphasis is being given to collections and incipient col
lection problems. In this connection, the loan-performance test
applied in supervisory examinations of insured institutions disclosed
that delinquent mortgage loans in 1949 averaged only 1.6 percent of
total mortgage loans outstanding.
As of January 1, 1949, 2,390 insured institutions had been classified
as to their reserve positions. Of that number, only 697 had reserves
and surpluses of less than 5 percent of their net assets. By the end
of the year, 174 of those with low reserves had increased their reserves
to 5 percent or more, leaving only 523 of this particular group in the
low-reserve category.
During the calendar year, 2,535 insured institutions were classified.
By reason of substantial increases in savings accounts without a
corresponding increase in reserves, some institutions that previously
had reserves of at least 5 percent fell below that figure. As of Decem
ber 31, 1949, all but 618 had reserves and surpluses equal to 5 percent
or more of net assets.




HOME LOAN BANK BOARD

In this connection, an amount equal to 19.2 percent of withdrawable
capital of all insured institutions at December 31, 1949, was at that
date either invested in United States Government obligations or
carried as cash, and 29.4 percent of their total mortgage loan invest
ment was represented by loans that were insured or guaranteed under
the provisions of the National Housing Act or the Servicemen's
Readjustment Act of 1944.
Conservatorships and Receiverships
No conservatorships or receiverships were established or were in
existence during 19.49.
Participation in Conferences
Throughout 1949 the Board has continued its policy of direct
participation with representatives of savings and home financing
institutions in discussing subjects of mutual interest. Attendance
at conferences carried Board members into every section of the United
States and enabled them to exchange views on such current subjects
as trends in savings and home ownership, lending methods and terms,
interest and dividend rates, liquidity, reserves, insurance, examina
tions, management, and legislation. Out of their conferences and
observations the Board members received direct information concern
ing the points of view and practices of member institutions of the
Federal Home Loan Bank System and received also cross-sections of
evidence and advice as to broad economic, social and political trends
and their influences on thrift and home financing. In exchange, the
Board members were able to give direct information concerning their
policies and programs and to interpret and clarify points arising from
new or revised regulations and charters.




FEDERAL HOME LOAN BANK SYSTEM
The Federal Home Loan Banks, created by act of Congress approved
July 22, 1932, constitute a permanent reservoir of credit for their
membership which is open to building and loan associations, savings
and loan associations, cooperative banks, homestead associations,
insurance companies, and savings banks. Eligibility requirements,
as defined in section 4 (a) of the Federal Home Loan Bank Act, as
amended, provide that each applicant shall be duly organized under
the laws of any State or of the United States, be subject to examina
tion and regulation by any State or the United States, and make long
term home mortgage loans. To become eligible as a Bank member,
each applicant in the judgment of the Home Loan Bank Board shall
be in a sound financial condition so that advances may safely be made
to it, and the character of its management and its home financing
policy shall be consistent with sound and economical home financing.
There were 3,860 members of the Federal Home Loan Bank System
on December 31, 1949, consisting of 3,822 savings and loan associa
tions, 30 savings banks, and 8 insurance companies. This total
membership represents a net increase of 91 members during the year,
resulting from the admission of 82 State-chartered savings and loan
associations, 16 new Federal savings and loan associations, 8 coopera
tive banks, and 4 savings banks, and the cancellation of 19 member
ships through withdrawals. Eight of the withdrawals represent
voluntary liquidations, 1 reincorporation, 6 consolidations and
4 were the result of members' requests. Also 13 State-chartered sav
ings and loan association members changed their status during the
year-11 converted to Federal charter, 1 to a mutual savings
bank, and 1 to a cooperative bank. As of December 31, 1949,
38 applications for membership were pending.
Functions of the Bank System
The principal function of the Federal Home Loan Banks is to supply
funds required by member institutions for the purpose of enabling
them to meet the home financing needs in their communities as well
as their other legitimate operating requirements. As a result of the
establishment of the Federal Home Loan Bank System, thrift and
home mortgage financing have been better protected against local
and national economic fluctuations, home ownership has been placed
on a more secure basis, and the construction of new homes as well as
the improvement of housing conditions generally has been encouraged.




HOME LOAN BANK BOARD

The Federal Home Loan Banks have made credit available to their
members at moderate rates and in volume more than sufficient for
their needs.
The extent to which the Federal Home Loan Banks have functioned
as a national credit reservoir is evidenced by the fact that, since they
first opened for business on October 15, 1932, to December 31, 1949,
the Federal Home Loan Banks (originally 12, now 11 in number) have
made advances to home financing institutions totaling $2,942,711,670,
of which $2,509,282,520 have been repaid, leaving a balance of
$433,429,150 outstanding on the latter date.
Advances and Repayments During 1949
During the year ended December 31, 1949, the Federal Home
Loan Banks advanced the sum of $255,662,642. Repayments during
the year aggregated $337,249,581. A summary of the lending opera
tions of the banks, by years, through December 31, 1949, is contained
in exhibit f which follows this text.
On December 31, 1949, 1,799 member institutions, or 46.6 percent
of the total membership, were borrowers from the Federal Home
Loan Banks, as compared with 1,993 member borrowers, or 52.9
percent of the membership, on December 31, 1948.
There was also one nonmember borrower indebted to a Federal
Home Loan Bank at the close of the year 1949, the advance to such
nonmember borrower representing the first advance of this type
since August 1939. The- average number of member borrowers during
the year 1949 was 1,715, or a decrease of 7.9 percent under the average
of 1,863 borrowing members during the preceding calendar year.
Number and Percent of Borrowing Members
Of the 1,799 borrowing members, as of December 31, 1949, 761
were Federal savings and loan associations, the outstaiding advances
to which aggregated $260,226,885 on that date. This amount of
outstanding advances represented 4.3 percent of the share accounts
in this type of association. The borrowing members as of the close
of the year also included 584 insured State-chartered institutions, the
indebtedness of which to the Federal Home Loan Banks totaled
$130,114,877, or 3.6 percent of the savings held by this type of insti
tutional member, and 453 noninsured State-chartered associations
with advances of $36,862,388, or 2.1 percent of the total savings held
by all members of this type. One insurance company member held
advances from a Federal Home Loan Bank in the amount of $6,
000,000. The nonmember mortgagee, a noninsured savings and loan
association, held advances totaling $225,000.
The number and percent of borrowing members as of December 31,
1949, and December 31, 1948, are reflected in the following tabulation:




9

HOME LOAN BANK BOARD
Dec. 31, 1949

Dec. 31, 1948

Percent of-

Percent of
Number

Number
Type
Borrowing members:
Federals......------------------------Insured State----------------------Noninsured State--------------------

761
584
454

50.5
46.9
41.0

Total

Type

42.3
32. 5
25.2

868
632
493
1,993
1,776

Total------------------------Nonborrowing members-----------------....

1,799
2,061

246.6
100.0
253.4 -----..........

Total members-------........------------

3,860

100.0-----------3, 769

58.5
56.1
42.6

Total

43.6
31.,7
24. 7

252.9
100.0
2 47.1 ..........
100.0 ......-----

1 Also 1 nonmember borrower.
2 Percentage of total membership.

Collateral for Advances
The secured advances of the Federal Home Loan Banks outstanding
on December 31, 1949, amounted to $321,920,182, which represented
the borrowings of 1,230 members and one nonmember mortgagee
and were 74.3 percent of the total advances outstanding on that
date. $202,323,231 of such advances were for terms of more than 1
year. These advances were collateralized by 128,196 home mort
gages, the unpaid balances of which aggregated $585,197,549, United
States Government obligations having a par value of $67,094,300,
and other collateral permitted by the regulations having a face value
of $5,987,218. The face value of all such collateral, exclusive of
$64,706,000 par value of Federal Home Loan Bank stock representing
that portion of members' stock applicable to their loans on which the
Banks held a statutory lien as additional collateral, amounted to
$658,279,067, or 204 percent of the secured advances, to all of which
collateral, exclusive of the Federal Home Loan Bank stock, the Banks
had assigned a collateral value of $469,194,014. Unsecured advances
aggregating $111,410,968, or 25.7 percent of the total, were outstand
ing to 751 members on December 31, 1949.
Interest Rates on Advances
Included in this report as exhibit 2 is a statement reflecting the rates
of interest charged by the Federal Home Loan Banks on advances to
member institutions which were in effect on December 31, 1949, and
the interest rates applicable to time deposits of members. Interest
rates charged by the Federal Home Loan Banks on advances to
members have been considerably reduced since the commencement
of their operations in October 1932, at which time interest rates on
Federal Home Loan Bank advances ranged from 4 percent to 5
percent. On December 31, 1949, however, as reflected in exhibit 2,
such rates ranged from 1% percent to 2% percent.
10



HOME LOAN BANK BOARD

Sources of Funds
The Federal Home Loan Banks obtain their funds from their capital
stock, the sale to the public of consolidated Federal Home Loan Bank
obligations, and deposits received from member institutions. The
capital stock of each Federal Home Loan Bank was originally owned
by both member institutions and by the United States Government,
the latter having originally invested in the capital stock of the banks,
pursuant to the provisions of the Federal Home Loan Bank Act, in
the aggregate amount of $124,741,000. Each member institution is
required by the act to invest in the stock of its Federal Home Loan
Bank in an amount at least equal to one percent of the aggregate
of the unpaid principal of its home mortgage loans, but in no event
less than $500. The Federal Home Loan Bank Act also requires
that the amount paid in on capital stock held by any member shall
at all times be not less than one-twelfth of the aggregate outstanding
advances made by any Federal Home Loan Bank to such member.
With the continued growth in number and assets of member institu
tions, the total member-owned stock in the banks on November 30,
1948, equaled that owned by the United States Government. By
December 31, 1948, the percentage had risen to 50.3 percent of the
total capital, so that at the beginning of 1949, the members owned
more than half of the capital stock of the Federal Home Loan Bank
System.
Retirement of Government Stock
The Federal Home Loan Bank Act provides that the Government
owned stock in each Federal Home Loan Bank must be retired to the
extent of 50 percent of all payments on capital stock made by members
subsequent to such time as the amount of member-owned stock in
such equals that originally owned by the Government. The act also
provides for the voluntary retirement of Government-owned stock
in the Federal Home Loan Banks by direction or with the approval
of the Home Loan Bank Board. During calendar year 1949, five of
the Federal Home Loan Banks made statutory retirements of Gov
ernment-owned stock to the extent of $3,567,300, while six of the
banks made voluntary retirements of such stock aggregating $20,405,
600. As a result of these transactions, Government-owned stock de
clined to $95,818,800. One bank, during the year, retired in full
the balance of its Government-owned stock. During the same period
the paid-in capital stock of the banks held by members was increased
by $15,001,775 to a total of $136,239,250, or 58.7 percent of the total
paid-in capital stock of all banks on December 31, 1949, as compared
to $95,818,800, or 41.3 percent held by the United States Government.




11

HOME LOAN BANK BOARD

Further retirements of Government-owned stock, totaling $20,
596,900, were accomplished during January 1950 when seven banks
made statutory retirements aggegating $3,723,300 and six banks
made voluntary retirements of $16,873,600, resulting in the Govern
ment holdings in two additional banks being retired in full and its total
investment being reduced to $75,221,900 as of January 31, 1950.

The following tabulation reflects, by individual banks, the original
Government investments in their capital stock and the balance of
such investments as of December 31, 1949, and January 31, 1950:

Federal Home Loan

ank of-

Original Government investment

Boston-----------------------------------New York
---------------------------------------Pittsburgh
Winston-Salem-------------------------------------------------------CincinnatL
Indianapolis -------------------------Chicago
-------------Des Moines--Little Rock-------------------------------Topeka_ ----------------------------------------------San Francisco----------------------Total

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

Balance held
Dec. 31, 1949

Balance held
Jan. 31, 1950

$10,000, 000
$9, 200,000
$12, 467, 500
15, 963, 200
14, 000,000
18,963,200
5, 000, 000
11, 146,300
11, 146, 300
5,821,300
6,618,000
9,208,200
5,000,000 ---------------12, 775, 700
----------6,577,400 -----------10,000,000
14,173,900
12,000,000
3,298,700 --------------7,394,900
8, 772, 400
8, 772, 400
8, 772, 400
6,764,400
7,092,300
7, 333.600
15,663,800
15,927,900
15,927,900
95,818,800

124, 741,000

75, 221,900

The following tabulation reflects the capital structure of the Federal
Home Loan Banks as of December 31, 1949, and December 31, 1948:
I

Dec. 31, 1949

Dec. 31, 1948

Capital stock, U.S. Government------------------------------------

$95,818,800

$119,791,200

Members:
------------------Stock subscribed
Less unpaid subscriptions---------------------------

136, 271,100
31,850

121, 249, 300
11,825

136, 239, 250
-------------------------Total paid-in capital-Surplus:
--------------------------------- ---------Legal reserve..------Reserve for contingencies----------------------------Undivided profits------------------------------ ----------Total surplus--

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

------

Total capital----------------------------------------

121, 237, 475

232, 058,050

241,028, 675

, 184,046
4,785, 651
9,026,884

12, 232, 449
4, 283, 027
9,001,282

26,996, 581

25, 516, 758

259,054, 631

266, 545, 433

Sale of Consolidated Obligations
As indicated before, the sale of consolidated Federal Home Loan
Bank obligations represents one source of funds employed by the
Federal Home Loan Banks in the conduct of their operations. These
obligations are the joint and several obligations of the 11 Federal Home
Loan Banks. They are not guaranteed by the United States Govern
ment. Since the first public offering of its consolidated obligations
in May 1937, the Federal Home Loan Banks through January 1, 1949,
had issued a total of $1,608,700,000, of which $1,192,200,000 had been
12




HOME LOAN BANK BOARD

retired, leaving $416,500,000 outstanding at the beginning of 1949.
During the year, three public offerings were made aggregating $206,
500,000 and one private sale of $51,500,000 was made. This financing
represented no new funds, but $258,000,000 of refunding and the
liquidating of $210,000,000, resulting in the balance of $206,500,000
of consolidated obligations outstanding on December 31, 1949, which
mature on the dates and in the amounts indicated below:
Consolidated obligations

Federal Home Loan Bank of-

Series A-1950 15

percent notes

Series B-1950 1Y Series C-1950 1.35

percent notes

Boston-----------------------New York--------------------Pittsburgh ---------------Winston-Salem -----

$6, 000, 000
6,000,000
---------------7,000,000

percent notes

due 2-15-50

due 1-20-50

due 9-15-50

$5, 000, 000
-..--.
5, 000,000
10, 900, 000

Total

$5, 000, 0 0
$16, 000, 000
.-------------- 000,000
6,
5, 000,000
10, 000,000
11, 100, 000
29,000,000

Cincinnati-----------------------------------Indianapolis-----------------------------------

3, 000, 000
9, 400, 000

3,000,000
9, 600,000

6,000, 000
19, 000, 000

..-----------------Chicago ----------------3,000,000
Des Moines.-------------------8, 000,000
Little Rock
----------------------------Topeka--------13, 000,000
San Francisco ....-----------------

14, 900, 000
7, 700,000
4, 700, 000
7, 200,000
20, 700,000

15, 100, 000
7, 800,000
4,800,000
7,300, 000
6, 300,000

30, 000,000
18, 500, 000
17, 500,000
14, 500, 000
40,000,000

88, 500,000

75,000,000

206, 500, 000

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

43,000,000

NOTE.-With the maturity of series A-1950 notes on Jan. 20, 1950, it was necessary to refinance a total
of $21,000,000 to meet the estimated requirements of 4 banks. This was accomplished through the.
private sale to 11 commercial banks of 1Y4percent notes maturing Feb. 15, 1950.

Each offering of consolidated Federal Home Loan Bank obligations
has been heavily oversubscribed, an indication of the high regard for
and confidence of the dealers and dealer banks in the Federal Home
Loan Bank System. As required by the Government Corporation
Control Act of December 6, 1945, each issue by the Home Loan Bank
Board of consolidated Federal Home Loan Bank obligations is cleared
with the United States Treasury Department.
Interbank Deposits and Deposits of Members
Deposits of cash by one Federal Home Loan isank, in an area of
smaller loan demand, with another Federal Home Loan Bank, in an
area of larger loan demand, continued to represent an important part
in the jinancing of the banks during the year and, to some degree, at
least, tended to decrease the extent to which some of the Federal Home
Loan Banks might otherwise have had to participate in the sales of
consolidated Federal Home Loan Bank obligations. At the beginning
of the year 1949, $6,250,000 of such interbank deposits were out
standing. During the year such deposits were made to the extent of
$47,700,000, repayments amounted to $25,250,000, .resulting in a
balance of $28,700,000 outstanding on December 31, 1949, all of
which were payable on demand.
As already indicated, deposits of member institutions represent one




13

HOME LOAN BANK BOARD

of the sources of funds of the Federal Home Loan Banks, a source of
constantly growing importance. During the year 1949 there was a
further substantial increase in such deposits,the total amount of which
as of December 31, 1949, aggregated $267,112,161, consisting of
$35,434,559 on a demand and $231,677,602 on a time basis. No
interest is paid by the Federal Home Loan Banks on members' demand
deposits. However, on members' time deposits remaining for 30
days or more, interest at rates ranging from 1 percent to 1Y percent
per annum is paid. (See exhibit 2.)
Statutory and Other Reserves
Section 16 of the Federal Home Loan Bank Act, as amended, pro
vides that each Federal Home Loan Bank shall carry to a reserve
account semiannually 20 percent of its net earnings until such reserve
account shall show a credit balance equal to 100 percent of the paid-in
capital stock of the bank, after which time 5 percent of the bank's net
earnings shall be added thereto semiannually. As indicated in the
tabulation reflecting the capital structure of the banks, this reserve
amounted to $13,184,046 as of December 31, 1949, in addition to
which there was a reserve for contingencies aggregating $4,785,651,
making total surplus reserves of $17,969,697. As was likewise already
indicated in the tabulation above referred to, the undivided profits of
the banks on December 31, 1949, amounted to $9,026,884, resulting
in a total earned surplus of $26,996,581 as of that date.
In addition to and exclusive of the statutory and contingent reserves
reported, each Federal Home Loan Bank maintains its pro rata portion
of a $100,000,000 "liquidity reserve." While such reserve is not re
flected in the balance sheet of the banks, they must, nevertheless,
maintain assets aggregating the amount thereof, as follows:
50 percent in 2 percent special series United States Treasury notes.
15 percent in 11' percent special series United States Treasury
notes.
35 percent in cash -and/or United' States Treasury bills, United
States Treasury certificates of indebtedness or United States
Treasury notes commonly traded in on the market on the same
basis as certificates of indebtedness.
The Federal Home Loan Banks are not permitted to use any portion
of this "liquidity reserve" without prior approval of the Home Loan
Bank Board and, if and when used, the 35 percent portion thereof
must first be utilized before resorting to the special series United
States Treasury notes which will be redeemed by the United States
Treasury Department upon request of the Home Loan Bank Board
only in case of an emergency when required funds are not available
from the assets of the banks or through the sale of consolidated Fed14




HOME LOAN BANK BOARD

eral Home Loan Bank obligations. On December 31, 1949, the
$100,000,000 "liquidity reserve" consisted of the following:
Cash, U. S. Treasury bills, certificates of indebtedness and/or notes- $35, 000, 000
50, 000, 000
2 percent special series U. S. Treasury notes- --------------12 percent special series U. S. Treasury notes ----------------15, 000, 000
Total-------------------------------------------

100, 000,000

In addition to the $100,000,000 "liquidity reserve," the Banks held
the following highly liquid assets as of December 31, 1949:
Cash, U. S. Treasury bills, certificates of indebtedness and/or notes- $11, 478, 884
60, 500, 000
11 percent and 1)/ percent special series Treasury notes---------Total----------------------------------------

----

71, 978, 884

Although on December 31, 1949, the Banks held United States
Government obligations of approximately $128,000,000 in excess of
statutory requirements, approximately $77,000,000 of the excess was
held in the "liquidity reserve" referred to above. During the year
ended December 31, 1949, United States Government obligations
were purchased by the Federal Home Loan Banks to the extent of
$559,193,000 face amount. United States Government obligations
having a par value of $558,293,000 were matured and/or sold, and
$272,793,000 face amount of such securities were held by the Banks on
December 31, 1949.
Consolidated Statement of Condition
A consolidated statement of condition of the 11 Federal Home
Loan Banks as of December 31, 1949, and December 31, 1948, is
contained in exhibit 3 of this report, from which it will be noted that
the total resources of the Banks decreased from $820,684,758 at the
close of 1948 to $734,274,206 at the close of 1949.
Income and Expense
A consolidated statement of income and expense of the 11 Federal
Home Loan Banks for the calendar years 1948 and 1949 is contained
in exhibit 4. The figures disclose that the total gross operating income
of the Banks for the calendar year 1949 was $13,426,355 as compared
with $12,684,043 for the preceding calendar year. This represents
an increase of 5.9 percent in gross operating income over that appli
cable to the year 1948, which may be primarily attributable to in
creased investment interest and decreased interest on advances.
The former reflected a gain of 53.2 percent while the latter decreased
14.4 percent. Also disclosed in exhibit 4 is the fact that the total
operating expenses for the calendar year 1949 amounted to $9,016,829




15

HOME LOAN BANK BOARD

as compared with $8,104,324 .for the preceding year. The non
operating income for 1949 aggregated $366,331 compared with the
total of $99,971 for 1948, and nonoperating charges for 1949 amounted
to $17,875 while such charges for the preceding calendar year aggre
gated $52,925. The net income of the Federal Home Loan Banks
for the calendar year 1949 aggregated $4,757,983 compared with
$4,626,764 for the preceding calendar year.
While the 1949 net income of the banks exceeded that for 1948 by
$131,200, a comparison, item by item, of the income and expenses
for the 2 years reveals that several factors were involved in arriving
at this net result. Interest earned on advances declined $1,276,000
due to the fact that the average amount of advances outstanding
during 1949 was $370,400,000 compared to an average of $440,500,000
during 1948. This decrease in interest on advances was, however,
more than offset by the increase in interest on investments purchased
with funds received on account of repayment of advances and from
deposits of members. Interest paid on such deposits reflected an
increase of $1,815,000 over 1948 while the cost of money from issuance
of consolidated obligations was $1,055,000 less than the previous year
by reason of a $73,500,000 smaller average amount outstanding at
slightly higher interest rates.
The average weekly balance of members' deposits during 1949
aggregated $217,206,150 and represented an annual cost of 1.17
percent. Funds derived by the Federal Home Loan Banks from the
sale of Federal Home Loan Bank obligations and outstanding during
1949 averaged $274,738,000, the annual cost of which was 1.73 percent
compared with the 1948 average of $347,200,000 and an annual cost
of 1.67 percent.
The total net income of the Federal Home Loan Banks for the
calendar year 1949, which, as indicated above, amounted to $4,758,000,
was distributed (in round figures) as follows:
Dividends paid:
U. S. Government------------------$1, 260, 300
Members-_--------------------1, 882, 700
Retirement fund-prior service 1- ---..
135, 200
951, 600
Legal reserve--------------------------Contingent reserve---------------------502, 600
25, 600
Undivided profits-------------------------

Total---------------------------4,758,000

Percent
26. 5
39. 6
2. 8
20. 0
10. 6
.5

100.0

I Represents supplemental contributions to increase retirement benefits of employees computed on serv

ices through June 30, 1949.

The net income of the Federal Home Loan Banks from the beginning
of their operations in October 1932 through December 31, 1949,
16



HOME LOAN BANK BOARD

aggregated $65,288,670 which was distributed (in round figures) as
follows:
Dividends paid:
U. S. Government-----------------$25, 157, 700
Members -------------------------

Retirement fund-prior service 1--------- -

12, 496, 400

Percent
38. 5
19. 2

638, 000

1. 0

Legal reserve..-----------------------Contingent reserve ------------------Undivided profits-----------------------

13, 184, 000
4, 785, 700
9, 026, 900

20. 2
7. 3
13. 8

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

65, 288, 700

100.0

1Represents contributions applicable to periods prior to date such contributions were made by individual

banks.

Distribution of Dividends
Dividend declarations by the Federal Home Loan Banks resulted
in the distribution of $3,143,000 for the year 1949, which amount
was $14,800 less than that applicable to the preceding year. The
dividend rates ranged from 1 percent to 24 percent per annum. Of
the amount of dividends distributed for the year 1949, the United
States Government received $1,260,300 and member* institutions
received $1,882,700. The total amount of dividends received by the
United States Government and member institutions on their stock
investments in the Federal Home Loan Banks from October 15,
1932, through December 31, 1949, aggregated $25,157,700 and
$12,496,400, respectively.
The following tabulation reflects the total dividend distribution
by the Federal Home Loan Banks from the begintling of their opera
tions through December 31, 1949:
Federal Home Loan Bank of-

Members

U. . Gov
ernment

Total

Boston...-------------------------------------$880,172. 45
New York--------------...-------------------1,134,151.70
Pittsburgh----------------------------------899, 588.89
Winston-Salem------------------------------1, 252, 601.84
Cincinnati
--------------------------------2, 537, 352.03
Indianapolis--------------------1, 427,355. 14
563,058.68
Chicago------------------------------------1,
893,656.36
Des Moines--------------------------------465, 420. 50
Little Rock ---------------------------------429, 639.88
Topeka..-------------------------------------1,013, 452. 24
--------.
San Francisco-------.----

$2,015, 204. 61
3, 456, 988. 75
2, 394, 593. 39
1, 740, 625. 79
3, 234, 798.08
1,523, 465. 34
3, 665, 163. 95
1,717,899.59
1, 625, 923.62
1, 189, 665. 06
2, 593, 332. 74

$2, 895, 377.06
4, 591, 140. 45
3, 294,182. 28
2, 993, 227. 63
5, 772, 150. 11
2, 950, 820. 48
5, 228, 222. 63
2,611,555.95
2,091,344. 12
1,619, 304. 94
3, 606, 784. 98

Total------......--...------------------------12, 496, 449. 71

25,157, 660. 92

37, 654, 110. 63

Budgets of the Individual Banks
In supervising the operations of the Federal Home Loan Banks
pursuant to the provisions of the Federal Home Loan Bank Act, as
amended, the Home Loan Bank Board requires each Federal Home
Loan Bank to submit to it for approval an annual budget covering the
estimated expenses to be incurred by it. The dividend declarations




17

HOME LOAN BANK BOARD

by the local boards of directors of the Federal Home Loan Banks are
likewise subject to the approval of the Home Loan Bank Board, as
are also the maximum rates of interest on advances, members' deposits
or interbank deposits.
With the exception of the purchase and sale of United States
Treasury bills, United States certificates of indebtedness, and United
States Treasury notes commonly traded in on the 'market in the same
manner as United States Treasury certificates of indebtedness, all
transactions of the banks in United States Government obligations
and in other investment securities are subject to the approval of the
Home Loan Bank Board. As provided in the Government Corpora
tion Control Act of December 6, 1945, all Government security
transactions of the Federal Home Loan Banks in excess of $100,000
are first cleared with the United States Treasury Department through
an official of the Federal Reserve Bank of New York, designated by
the Treasury Department for that purpose. All officers and counsel
appointed by the local boards of directors of the Federal Home Loan
Banks and their annual salaries are subject to the approval of the
Home Loan Bank Board. Under the Federal Home Loan Bank Act,
as amended, the management of each Federal Home Loan Bank is
vested in a local board of 12 directors, 4 of whom are appointed by
the Home Loan Bank Board and 8 of whom are elected by the
members. Annual elections of directors are held under the auspices
of the Home Loan Bank Board pursuant to its regulations governing
the election of directors. Exhibit 5 of this report contains a list of
the directors and officers of each Federal Home Loan Bank as of
December 31, 1949, and shows the designation or representation of
each director.
Audits and Reports
The Federal Home Loan Banks are audited semiannually pursuant
to law by examiners attached to the staff of the office of the auditor
of the Home Loan Bank Board. In addition thereto, the Federal
Home Loan Banks as well as the internal operations of the Home Loan
Bank Board are subject to an annual audit by representatives of the
General Accounting Office pursuant to the provisions of the Govern
ment Corporation Control Act of December 6, 1945. However, the
representatives of the General Accounting Office at present are con
fining their activities in this respect largely to periodic surveys of the
operations of the Federal Home Loan Banks and an analysis of reports
of examinations and audits thereof made by the examiners attached
to the staff of the board's auditor, thereby giving full recognition to
tlhe requirements of the Government Corporation Control Act to the
effect that the General Accounting Office use to the fullest extent
18




HOME LOAN BANK BOARD

deemed practical reports of examinations of Government corporations
made by a supervisory agency pursuant to law. This is likewise true
to a large extent with respect to the audit of the internal fiscal opera
tions of the Home Loan Bank Board whereby the effectiveness of the
internal audits and the use thereof warrant the omission of certain
detail auditing procedures that otherwise the Corporation Audits
Division should have deemed necessary. This arrangement affords
the Home Loan Bank Board and the Federal Home Loan Banks a
comprehensive audit and an analysis of operations at a minimum of
expense and effort.
The United States Treasury Department is furnished a copy of the
Home Loan Bank Board's annual report to the Congress as well as with
monthly reports reflecting all security transactions of the Federal
Home Loan Banks and with special quarterly and annual reports
pertaining to the operations of the Federal Home Loan Banks as
required by Budget-Treasury Regulation No. 3.




19

FEDERAL SAVINGS AND

LOAN ASSOCIATIONS

Creation and Purposes
The Federal Savings and Loan System had its inception in the
Home Owners' Loan Act of 1933, section 5 of which provided for the
chartering of Federal savings and loan associations either by the grant
ing of new charters to local organizing groups or by the conversion of
existing institutions of the savings and loan type from State to
Federal charter. The underlying purpose of this legislation was to
provide for adequate thrift and home financing facilities by creating
local institutions throughout the country that would operate on a
uniform plan incorporating the best practices and operating principles
of savings institutions specializing in the financing of homes.
Federal savings and loan associations are mutual institutions the
capital of which is represented entirely by the savings accounts of
members, who are the sole owners. All savings accounts participate
equally in the earnings of the association, on a pro rata basis, earnings
being paid semiannually at a rate determined by the directors on the
basis of net profits. As contrasted with commercial banks, the funds
of which are mainly derived from demand deposits and which make
short-term loans principally for commercial purposes, the funds re
ceived by Federal savings and loan associations are primarily of a
savings or investment nature. Such associations make their loans
principally on a monthly, long-trm, amortization basis on the security
of homes owned by citizens of the community.
Federal associations are not permitted to accept deposits or to issue
certificates of indebtedness except for such borrowed money as is
authorized by regulations made by the Home Loan Bank Board.
Their shares are nonassessable. All Federal savings and loan associa
tions must be members of the Federal Home Loan Bank System and
must qualify for insurance of their accounts by the Federal Savings
and Loan Insurance Corporation. Also, they are examined regularly
and supervised by the Board, and are subject to its regulations.
Granting of Charters and Branches
In accordance with the provisions of the act, applications for permis
sion to organize new Federal associations are considered on the basis
of all facts available with respect to the character and responsibility
of the organization group, the need for such an institution in the com
munity to be served, the prospects for its usefulness and success, and
20



HOME LOAN BANK BOARD

the question whether the association could be established without
undue injury to properly conducted, existing local thrift and home
financing institutions. In no case is an application approved without
provision having been made for a public hearing thereon, which usually
is dispensed with if no objection is recorded in response to locally
published notice of such hearing. During the year 1949, 16 new
Federal savings and loan associations were chartered.
In keeping with the Board's policy of strict impartiality as between
State-chartered and federally chartered associations, the Board applies
the same tests for conversion of an uninsured State association to
Federal charter as if it were seeking insurance of accounts under State
charter. In the case of insured associations it is the Board's policy
to permit associations to convert either from State to Federal charter
or from Federal to State charter, in accordance with the expressed
vote of the association's mutual shareholders. The dual system under
which the total assets of all savings and loan associations are about
evenly divided between State and Federal associations is considered
a healthy one. During 1949, 11 State-chartered savings and loan
associations converted to Federal charter and one Federal association
reincorporated as a State-chartered insured association.
When considering applications for branch offices by Federal asso
ciations, the Board applies the same tests as in the organization of new
associations. Branch offices are not permitted unless there is con
clusive evidence of a real need, and strong prospects that such need
can be served by the proposed branch without undue injury to existing
local institutions. Neither is a branch office approved without first
providing for a public hearing, notice of which is published locally
and also mailed to the appropriate State supervisory authorities and
to the organized savings and loan group, if any, in the locality. Those
who wish to protest the establishment of a branch may appear in
person or submit their objections in writing. As of December 31,
1949, 64 Federal associations were operating 80 branch offices and no
Federal association had more than 4 branches. During 1949 the
Board authorized Federal associations to operate 23 additional branch
offices.
Growth and Development to Date
As of December 31, 1949, a total of 1,508 Federal savings and loan
associations were in operation, of which 852 were converted from State
to Federal charter and 656 were originally organized under Federal
charter: There are Federal associations in each of the 48 States as
well as in the District of Columbia, Alaska, Hawaii, and Puerto Rico.
Combined assets of all Federal associations at the end of 1949
amounted to $7,107,000,000, representing a 15 percent increase during
1949 and 81 percent from December 31, 1945, the 4 year postwar




21

HOME LOAN BANK BOARD

period. Resources of Federal associations now account for almost
one-half (49 percent) of total resources of all savings and loan asso
ciations in the country. During the past year the average size of
Federal associations increased from $4,150,000 to $4,713,000, or by
14 percent.
During 1949, 27 Federal charters were issued, of which 16 were for
newly organized associations and 11 were for converted State associa
tions. Four charters were canceled, one by reason of voluntary liqui
dation, one Federal reincorporated as a State-insured association, one
consolidated with an insured State-chartered association, and the
remaining association consolidated with another Federal. All these
changes effected a net increase of 23 in number of Federal savings and
loan associations during the year.
Savings Activity and Trends During Year
At the end of 1949, the total number of private investors in Federal
associations was 4.260,000, an increase of 591,000, or 16 percent,
during the year. The flow of savings into Federal associations
continued at a record pace during 1949 and the net increase of
$877,000,000, or 14 percent, represents the largest annual gain in the
16-year history of Federals. The aggregate of all savings accounts in
Federal associations at December 31, 1949, was $6,132,000,000,
representing an increase of 82 percent during the 4-year postwar
period since December 31, 1945. Total savings invested during the
year amounted to $2,382,000,000, while withdrawals aggregated
$1,565,000,000, resulting in a withdrawal ratio of 66 percent. This
compares favorably with the 1948 ratio"of 70 percent.
Lending Activity and Trends During Year
First mortgage loans, secured primarily by one- to four-family
homes, represented 80 percent, of the total assets of Federal asso
ciations at the end of 1949. The total amount increased from
$4,938,000,000 to $5,673,000,000, or 15 percent during the year, as
compared with a 17-percent increase during 1948. The mortgage
loan portfolio of Federals on December 31., 1949, consisted of FHA
loans of $407,000,000, or 7 percent, GI loans of $1,369,000,000, or
24 percent, and conventional loans of $3,897,000,000, or 69 percent.
Federals made $1,770,000,000 of mortgage loans during 1949, a vol
ume 3 percent more than during 1948. A brief comparative sum
mary of new loans made by Federal associations during 1948 and
1.949, classified as to purpose of loan, is shown in the following table:

22




HOME LOAN BANK BOARD
New mortgage loans made by all Federal Savings and Loan Associations
[Dollar amounts in thousands]
1949

1948
Percent

Purpose

change
Amount

Construction--............------------------...
----.
Purchase-------.........----------------Refinancing.--------------------------Reconditioning...-----------------------------------------Other-------------........

$573, 166
719,892
189, 737
77, 517
210,087

Total--------------------------1,770,399

Percent of

total

Amount

Percent of

total

32. 4
40.7
10. 7
4. 4
11.8

$551,354
768,040
161,853
61,076
177,214

32.1
44.7
9. 4
3. 5
10.3

100.0

I719,537

100.0

in 1949

+4.0
-6.3
+17. 2
+26. 9
+18.5
+3.0

Liquidity and Reserves
Liquidity and reserves are becoming increasingly important as sub
jects of policy and administration. General reserves and undivided
profits accounts of all Federal associations increased from $393,000,000
to $470,000;000 during 1949 and such reserve accounts equaled 6.6
percent of total assets at December 31, 1949, as compared with 6.4
percent at the end of 1948 and 6 percent at the end of 1947. In rela
tion to savings accounts, the corresponding reserve ratios were 7.7
percent for 1949, 7.5 percent for 1948, and 7.1 percent for 1947.
Cash and United States Government obligations of all Federal asso
ciations amounted to $1,176,000,000, or 19.2 percent of all savings
accounts, and 16.5 percent of total assets at December 31, 1949.
This represents an increase of $166,000,000, or 16 percent during the
year. It is the Board's policy to encourage .naintenance of strong
liquidity and reserve positions, and Federal associations generally
have established substantial ratios in these respects, as evidenced by
the aforementioned percentages.




23

HOME LOAN BANK BOARD

ORGANIZATION AND FUNCTION CHART OF THE
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
Created by Title IV of the National Housing Act, 1934, for the purpose of insuring sav
ings in all Federal savings and loan associations and in all State-chartered savings and
loan, building and loan, and homestead associations and cooperative banks which apply and
qualify. The insurance coverage for each account is limited to $5,000.
HOME LOAN BANK BOARD
The Board provides a number of staff services for itself and the subordinate Cor
porations. They include legal services by the Board's General Counsel; Personnel
Department functions; Auditing; coordination of budget estimates and justifica
tions, and such housekeeping services as procurement, files and records, mail and
messenger services and the like.

GENERAL MANAGER
Under supervision and authority of the Home Loan Bank Board, plans, organizes
and directs the operations of the Corporation.

UNDERWRITING DIVISION

OPERATING ANALYSIS DIVISION

Develops programs for insurance of
accounts; passes upon all applications
for insurance of accounts; coordinates
underwriting activities with officials of
Federal Home Loan Banks and State
Supervisory authorities.

Provides analyses of financial and
other operating information pertaining
to the administrative and supervisory
problems of the Corporation and the
Federal Home Loan Bank System: com
piles and analyzes statistical series in
thrift, home mortgage, housing and real
estate activities; provides economic
background and other data bearing
upon problem cases of the Corporation.

ASSISTANT GENERAL MANAGER

CHIEF

INSURANCE SETTLEMENT
DIVISION

REHABILITATION AND RECOV
ERIES DIVISION

Supervises the payment and settle
ment of insurance to insured share
holders of institutions in receivership.
In addition to this primary function
the services of the division are used
to pass upon amendments to Charter,
bylaw and security forms and fidelity
bond coverage for all insured associa
tions.

Responsible for taking necessary
steps as provided by law to prevent a
default in an insured institution or re
store an insured institution in default
to normal operation. Supervises re
coveries and conversion into cash of
assets in institutions for which Cor
poration has been appointed receiver.

ASSISTANT

GENERAL

MANAGER

ASSISTANT

GENERAL

MANAGER

COMPTROLLER'S DIVISION
Plans, organizes and directs accounting and fiscal actiyjties of the Corporation.
Controls all accounting operations including receiverships and prepares financial
Controls all operations pertaining to the receipt
statements, reports and analyses.
and disbursement of funds of the Corporation; maintains internal control of
allotted budgetary funds.
COMPTROLLER

24



FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION
Introduction
Designed to apply the basic principles of insurance to the savings
in savings and loan associations, the Federal Savings and Loan Insur
ance Corporation was established by Congress in 1934.
Two major objectives were in sight. First, with recognition of the
important role played by savings and loan associations in the extension
of credit to home owners, it was expected that insurance of their
accounts would accelerate the flow of savings into these institutions,
thus providing an increased supply of funds to be channeled into home
financing activities. Second, guaranty of savings would tend to sta
bilize the financial structure of the country.

Extent of Insurance Coverage
Facilities of insured savings and loan associations today are avail
able in every State of the United States, the District of Columbia,
and in the Territories of Alaska, Hawaii, and Puerto Rico. They
hold over 77 percent of the gross assets of the savings and loan busi
ness. By December 31, 1949, a total of 2,756 institutions with
aggregate assets of $11,305,000,000 had qualified for insurance,
Federal savings and loan associations, which are required by law
to become insure.d, numbered 1,508, with assets of $7,107,000,000.
Insurance of savings is optional with State-chartered institutions of
the savings and loan type. In all, 1,248 State associations have
applied for insurance and received the Corporation's approval; their
assets on December 31, 1949, totaled $4,.198,000,000.
Approximately 7,1-00,000 savers and investors are using insured
associations as their savings medium. These individuals and organ
izations had accumulated $9,713,000,000 of savings in insured asso
ciations by December 31, 1949. Of this amount, over 93 percent was
covered entirely by insurance, with the balance representing the
amounts in excess of $5,000 per saver.
Membership
Eligibility requirements.-The broad standards of qualification for
insurance are found in the insurance law. In order to become in
sured, an institution must have unimpaired capital and must operate
under safe financial policies and management. The Corporation
may reject an application for insurance if it finds that the character
of the management of the applicant or its home financing policy is




25

HOME LOAN BANK BOARD

inconsistent with economical home financing or with the purposes of
insurance.
In order to obtain complete facts upon which a decision as to insur
ability of an applicant may be based, examiners of the Home Loan
Bank Board conduct a thorough examination of the applicant's assets,
liabilities, financial policies, and operating procedures. If the asso
ciation has not had an audit of its affairs within the preceding year,
the eligibility examination is extended to include an audit of its
accounts.
Following analysis of the facts included in the examination and
additional information supplied by the association, determination is
made by the Corporation as to whether the association is insurable
in its present condition, whether the association could qualify for
insurance by meeting certain conditions or whether the application
should be rejected. If conditions are stipulated, the association is
insured following compliance.
Admissions.-The steady upward trend in insurance admissions
which began in 1946 continued to a high in 1949, when 148 associations
were admitted to membership. The 1949 admissions constitute a
record for the decade, and apparently reflect a more general under
standing of the value of insurance and an increasing demand from the
public for the added protection which insurance provides. The asso
ciations admitted to membership during 1949 had total assets of
$220,835,000 at the time of insurance.
Terminations.-Associations have the right, granted by law, of
terminating their insurance contract, provided adequate notice is
given to all insured account holders. No association canceled its
insurance during 1949 in order to continue operations as an uninsured
institution. There were, however, eight withdrawals from the in
sured membership during the year. Four associations consolidated
with other insured institutions and two voluntarily dissolved. The
remaining two associations changed their corporate entity, one of them
becoming an insured mutual savings bank and the other an insured
State-chartered savings and loan association.
The Corporation has never found it necessary to terminate the
insured status of an institution for a violation of law or the rules and
regulations of the Corporation.
Nature of Insurance Protection
To achieve its purpose of protecting the saver against loss, the
Corporation has authority to act in two specific areas-rehabilitation
of impaired institutions and payment of insurance to account holders
of institutions placed in liquidation. In every case in which the
insured institution operates under State charter,the Corporation works
26




HOME LOAN BANK BOARD

in close cooperation with the State supervisory authorities. By this
cooperation the program agreed upon represents the combined judg
ment and participation of State and Federal supervisors and seeks
not only to comply with the State and Federal laws involved, but to
give full protection to local and public interests. If the facts warrant,
the Corporation may prevent the default of an insured institution or
restore an impaired association to normal operation under capable
management, in this manner protecting the savings entrusted to the
institution not only from loss but also from any disturbance. To
effect rehabilitation of an institution in trouble, a cash contribution
may be made to the association or the Corporation may make a loan
or may purchase assets with cash.
In cases where rehabilitation does not appear feasible and the deci
sion is made to liquidate the institution, the Corporation imme
diately effects payment of insurance, in the form of two methods of
settlement which are optional with the saver. First, the individual
may choose an insured account in another operating institution equal
to his insured savings in the liquidating association. If he selects
this method, his new account will share in earnings and be entitled to
the same rights and privileges as other accounts of that association.
To make this type of settlement, the Corporation contracts with other
insured institutions to issue the required number of accounts, reim
bursing those associationis in cash. It is also possible to create a new
savings and loan association solely for this purpose.
If the investor prefers, he may choose to receive 10 percent of his
insured account in cash and the balance in negotiable noninterest
bearing debentures of the Corporation, half of which are payable
within 1 year and the remainder within 3 years from the date of
default.
The Payment Record
In any insurance operation, claims under the insurance contract are
a natural and expected development. For over 5 years, the Corpora
tion has experienced no new lossesfor over 8 years no insured institu
tion has been placed in liquidation. This record is due in large part
to the favorable economic conditions which have existed during the
recent period and also to preventive efforts of the Corporation and
Federal and State supervisory authorities which have minimized
eventual loss by encouraging adherence to sound operating policies
by the insured membership.
Condition of Corporation
Recognizing the importance of liquidity in the operation of an
insurance fund, the Corporation maintains the bulk of its assets,
over 98 percent to be exact, in cash and United States Government




27

HOME LOAN BANK BOARD

securities. Of the total assets of $218,905,000 on December 31, 1949,
about $551,000 consisted of cash and $215,100,000 of Government
securities. The major portion of the remaining assets consisted of
insurance premiums due but not yet payable, in the amount of
$3,035,000.
The entire capital stock of the Corporation, in the amount of
$100,000,000, is held by the United States Treasury. In accordance
with a statute enacted on June 30, 1948, accumulated but undeclared
dividends on the capital stock were computed at the figure of $25,
182,000. Because of the uncertainty of the status of dividends since
that date, clarifying legislation is being sought.
Because capital and reserves show the extent to which insurance
claims may be paid and losses absorbed at a given mnoment, the
reserve fund is an important indication of the strength of an insurance
fund. In addition to its $100,000,000 of capital the Corporation had
accumulated a reserve of $113,128,000 by December 31, 1949.
Exhibit 6 presents a detailed comparative statement of condition of
the Corporation at the end of 1949 and 1948.
Operations of Corporation

The primary source of income of the Corporation is the premiums
paid by insured members at the annual rate of one-eighth of 1 percent
of their savings accounts and creditor liabilities. During 1949,
nearly 70 percent of gross income was received from this source, with
the balance coming in large part in the form of earnings on United
States Government securities.
Of the gross income of $15,711,000 during 1949, $10,948,000 con
sisted of premium income, $4,678,000 of interest income, and $80,000
represented admission fees paid by associations upon qualifying for
insurance. The admission fee is computed at $400 for each $1,000,000
of total savings accounts and creditor liabilities of the applicant
institution.
Administrative expenses of the Corporation, which in' effect show
the cost of operation of the Corporation, amounted to $602,000 during
1949. The major portion of these expenses were paid in the form of
salaries of $349,000 to Corporation employees. Other items included
in the heading of administrative expenses were the sums of $185,000
paid for services of the Home Loan Bank Board and $49,000 paid for
rent, supplies, communications, and audit expenses.
All furnitures, fixtures, and equipment owned by the Corporation
are carried on the records at cost and are fully depreciated at the
time of purchase. Depreciation charges during 1949 amounted to
$5,000. The amount of $11,000 represented expenses during 1949
in connection with the minimizing of insurance losses and the conduct
28




HOME LOAN BANK BOARD

of receiverships. Upon the termination of two receiverships during
the year, $278,000 was charged against operations for the excess of
book value of insured accounts paid by the Corporation over liqui
dating dividends received.
A complete income and expense statement of the Corporation for the
calendar years 1948 and 1949 appears in exhibit 7.
Condition of Insured Associations
Average association.-With recognitiol of the danger of misinter
pretation inherent in the use of averages, a concrete picture still may
be gained by examining the condition of the hypothetical "average
insured association" on December 31, 1949. The average association
had assets of $4,102,000, reflecting an increase of 10 percent during
the year. Nearly 2,600 savers and investors of the community had
entrusted their savings to the institution. Its first mortgage loans
had increased 10 percent during the year and were equivalent to
80 percent of assets. Liquid holdings, consisting of cash and United
States Government securities were equivalent to 16 percent of assets,
showing the same ratio of liquidity existing a year earlier. It had
accumulated reserves and undivided profits, which were available for
future losses, of about $282,000, or 6.9 percent of assets. Actual
figures showing the condition of the insured membership at the end
of 1949 are given below.
Assets.-Total assets of the insured membership grew during the
year by about 16 percent to a total of $11,305,000,000. This in
crease reflects not only the addition of new members to the insured
group, but also the growth experienced by those associations already
insured at the beginning of the year. Mortgage loans amounted to
$9,038,000,000 and liquid holdings, consisting of cash and United
States Government securities, totaled $1,862,000,000, equivalent to
16.5 percent of assets. Exhibit 8 shows a comparison of the number
and assets of insured associations at the end of 1949 and 1948, by
States.
Included in the mortgage loan portfolio were $2,065,000,000 of
loans insured or guaranteed by the Veterans' Administration and an
additional $593,000,000 of loans insured by the Federal Housing
Administration. About 29 percent of the mortgage loan portfolio,
therefore, consisted of insured or guaranteed loans, with the balance
in loans of the conventional uninsured type.
Savings.-Study of activity in the savings field reveals that the
net increase in savings experienced by insured associations was at a
rate nearly 30 percent greater than the rate of increase during 1948.
The flow of new savings into such institutions was nearly 15 percent
greater than during the preceding year, but withdrawals were only




29

HOME LOAN BANK BOARD

8 percent higher.
Expressed in dollar amounts, new savings of $3,688,000,000 were
received by insured associations during 1949. After deduction of
total withdrawals of $2,425,000,000, the net increase in savings during
the year amounted to $1,263,000,000. The ratio of withdrawals to
new savings received was 65.7 in 1949 as compared with 69.7 during
1948.
Reserves.-The reserves and undivided profits accounts of insured
associations, which are available for the absorption of losses arising
in the course of business, increased nearly 20 percent during 1949.
Insured institutions now hold aggregate reserves and undivided profits
of $776,000,000, equivalent to 6.9 percent of assets, while a year
earlier these accounts amounted to $648,000,000, or 6.7 percent of
assets.

30



HOME LOAN BANK BOARD

ORGANIZATION AND FUNCTION CHART OF THE
HOME OWNERS' LOAN CORPORATION
Created under the Act of June 13, 1933, for refinancing mortgages and extend
ing relief to distressed home owners. Since June 12, 1936, it has been engaged
in servicing its loans and liquidating its assets.

HOME LOAN BANK BOARD
The Board provides a number of staff services for itself and the subordi
nate Corporations. They include legal services by the Board's General
Counsel; Personnel Department functions; Auditing ; coordination of budget
estimates and justifications.

GENERAL MANAGER
Under the direction and authority of the Home Loan Bank Board, plans,
organizes and directs the operations of the Corporation.

LOANS AND PROPERTIES
DIVISION

ACCOUNTING DIVISION

Supervises and directs the servicing
of the Corporation's loans, management
of properties, reconditioning and appraisal operations. Maintains records
and provides for the payment of taxes
and insurance coverage on security and
owned properties.

Responsible for the maintenance of
all accounting records of the Corpora
tion; the preparation and interpreta
tion of all financial and statistical rec
ords and forecasts of financial condition
and operating results.

DEPUTY GENERAL MANAGER

CHIEF ACCOUNTANT

PURCHASE AND SUPPLY SECTION

TREASURY DIVISION

Responsible for purchase and sale
operations ; stock room; maintenance of
equipment: processes and promulgates
official regulations and procedures forms
and instructions.

Responsible for the safekeeping and
proper disbursement of all funds of the
Corporation, the safe keeping of bonds,
investment certificates, agreements, and
other valuable papers and instruments
entrusted to its care.

SUPERVISOR




TREASURER

31

HOME OWNERS' LOAN CORPORATION
13 Years of Liquidation
On June 12, 1936, the 3-year lending period of the Home Owners'
Loan Corporation terminated. Since that time, the major activity
of the Corporation has been the liquidation of its great volume of
loans. The results attained during this 13-year period of liquidation
have been gratifyingly favorable. Of the total lending of approxi
mately three and a half billion dollars, over 93 percent has been liqui
dated. Less than $231,000,000 of the cumulative investment was
outstanding at the end of calendar year 1949.
The loans of the Corporation were originally made to refinance the
mortgages of more than a million American home owners who were
victims of the depression. Most of these home owners were in arrears
nearly 2 years on principal and interest, and 3 years on taxes. At the
time, it was generally believed that this rescue operation might result
in a loss to the Government of three hundred million to half a billion
dollars. Instead, at the end of 13 years of liquidation, it now appears
that when liquidation of the remaining loans is completed, the Cor
poration will have repaid the three-and-a-half billion dollars of bonds
guaranteed by the Government and will be able to return, without
impairment, the $200,000,000 of capital originally subscribed by the
Government.
In the course of its operations, the Corporation extended a helping
hand to thousands of financial institutions by taking over almost
$2,000,000,000 of their mortgage loans at a time when no other re
financing was available. The Corporation also helped thousands of
local Government units by advancing $485,000,000 to pay taxes, many
of which were seriously delinquent. In addition, the Corporation
initiated a loan plan which has had a beneficial influence on the entire
structure and procedure of home financing. This was the 15-year
monthly payment, direct-reduction type of loan which proved to be
the safest and most economical type of home mortgage ever available
in this country. The lenient collection policy of the Corporation,
together with the servicing methods which it developed to help home
owners, also contributed greatly. The successful outcome of this
lending operation stands as a demonstration of the respect of bor
rowers for their financial obligations to their Federal Government
which extended a helping hand to them in a time of crisis.
32




HOME LOAN BANK BOARD

The Home Owners' Loan Corporation has devoted much effort to
individual servicing of its loan accounts. This servicing has enabled
the Corporation to locate causes of trouble and to take prompt action
to avoid foreclosure. As part of this servicing program, the Corpora
tion collects funds from borrowers on a monthly installment basis for
the payment of taxes and insurance. This procedure assists bor
rowers to avoid tax difficulties and reduces the Corporation's expenses
by eliminating the necessity for searching tax records to determine
whether delinquencies exist. The proportion of such accounts in
creased from 77.9 percent of outstanding loan accounts at the begin
ning of the 1949 calendar year to 87.6 percent at the end of the year.
General Operations
From June 13, 1933, through June 12, 1936, the Corporation loaned
$3,093,451,321. These loans were made to finance the home mort
gages of 1,017,821 individuals who were unable to finance their loans
elsewhere and were, therefore, dependent on the credit of the Govern
ment. The financial conditions prevailing then and later were so
adverse that some of these home owners, despite the efforts of the
Corporation, were unable to work out of their financial difficulties.
However, the Corporation has enabled more than 800,000 families
to avoid foreclosure on their homes.
The Corporation's original investment has been increased by supple
mentary advances made for the payment of taxes, insurance, mainte.
nance and reconditioning, the capitalization of delinquent interest,
and acquisition costs. From the beginning of operations to December
31, 1949, these supplemental capitalizations totaled $404,546,778, and
brought the Corporation's gross cumulative investment to $3,497,
998,099.
Liquidation

Liquidation of this investment has proceeded rapidly. At the end
of the 1949 calendar year, the balance of original loans, vendee ac
counts and property accounts was $230,660,630, a decrease of 37.5
percent from the balance of $368,936,083 at the beginning of the year.
Of the $3,497,998,099 gross cumulative investment, $3,267,337,469,
or 93.4 percent, had been liqutidated by the end of calendar year 1949.
The reduction in these assets is summarized in the following table:
Original amount loaned ---------------------------$3, 093, 451, 321. 01
Subsequent advances to borrowers, net additions included
in capitalized value of properties, etc-........------------404, 546, 778. 25
Original loans plus advances, capitalized additions, etc---.....




3, 497, 998, 099. 26

33

HOME LOAN BANK BOARD
Outstanding on Dec. 31, 1949:
Origihal loans and advances-------- $146, 266, 440. 06
..
Vendee accounts and advances------.
84, 356, 755. 67
Property acquired and in process of
acquisition-------------------37, 434. 07
Total outstanding-----------------------------Net reduction in mortgage and property assets ------

230, 660, 629. 80
3, 267, 337, 469. 46

Accelerated Liquidation

The Corporation has always encouraged its borrowers to pay off
their loans in full before maturity dates. This program has been
successful, particularly during the war and postwar periods. As a
result, the portfolio in some States was reduced to the point where
the cost of servicing was uneconomical.
Accordingly, in March 1948, a new speed-up program was launched
in States having small loan balances. Borrowers were induced by
letter to pay off their balances ins full if possible or to refinance them
with local institutions of their own choice. This program was grad
ually extended into 20 States and the District of Columbia; and by
December 31, 1949, all loans in 3 States had been entirely liquidated,

and in 13 other States the loan balances had been reduced by more
than 99 percent. The success of this program is reflected in the fol
lowing table:
Number of loans
States

Nevada--------Wyoming-------Montana -----------Idaho--------------Vermont-------

d
Date
started

3-48
4-48
5-48
6-48
8-48

Balances
7

Start

Dec. 31,
1949

Percent
liquidation

163 -----------384 -----552
1
655 --4
358

100.0
100. 0
99.8
100.0
98. 9

Dec. 31,
1949

-$105,155
242, 925
384, 180
436, 555 _
408, 785

8-48

9-48
New Hampshire--....
Delaware------------11-48
11-48
Maine -- ------12-48
Oregon-------------1-49
South Dakota---2-49
North Dakota-------3-49
Arizona
-----3-49
Utah -4-49
South Carolina ----4-49
District of Columbia4-49
Washington -.
5-49
--Mississippi
5-49
Arkansas ---6-49
..
Colorado
6-49
West Virginia--------

211,277

Percent
liquidation

-----43
----3, 518

100.0
100. 0
+99.9
100. 0
99.1
99. 4
99.8
89. 6
99.9
89. 9
99. 8
+99. 9
+99. 9
99. 5
99. 9
99.7
54. 5
75.6
99.8
69.1

1,617

368

2

350
473
724
912
1,029
730
869
1, 332
967
491
1,402
1. 230
1.351
1, 332
1, 466

2
1
7.
1
92
3
2
6
5
1
4
610
408
9
460

99. 4
99.8
89. 9
99.9
91.1
99. 6
99. 8
99. 5
99. 5
99. 8
99.7
50. 4
69.8
99. 3
68. 6

429, 813
588,527
731,398
748,390
789, 687
789, 680
836, 934
888, 665
960, 243
1, 053, 917
1,140,843
1, 183, 883
1,195,469
1,132, 271
1, 467, 533

2, 448
1,126
76, 133
943
80, 027
1,646
187
113
5, 234
1, 436
3,114
538, 092
291,097
2, 278
453 127

17,138

New Mexico -------

99.5

Start

1,684

90.2

15, 726,130

1,462,179

99.2

90.7

In June 1949, after previous consultations with the House and
Senate Independent Offices Appropriations Subcommittees regarding
the complete liquidation of the Corporation's outstanding mortgages
34




HOME LOAN BANK BOARD

by June 30, 1951, the Home Loan Bank Board, which serves as the
board of directors of the Home Owners' Loan Corporation, instituted
a program to sell or assign all mortgages by publicly offering them for
sale on a State-wide basis.
The first public offering was made on June 6, 1949, for the sale of
the loan portfolio of New York State, consisting of 40,000 loans with
an unpaid loan balance of $102,000,000. As a result of this offer, a
bid was accepted and the contract of sale executed on September 1,
1949. Bids have since been accepted and contracts of sale executed
for the portfolios of Massachusetts, Connecticut, Rhode Island, New
Jersey, and Michigan, making a total of 77,800 loans aggregating
$173,000,000 sold up to December 31, 1949. The purchasers
including mutual savings banks, commercial banks, trust companies,
and savings and loan associations-have paid par and accrued interest
plus premiums of up to 2.5 percent of balances. The Corporation
continues to service these mortgages and accepts maturity payments
where offered until date of actual transfer of the mortgages.
Status of Accounts
As previously stated, the Corporation made loans to 1,017,821
individuals during its 3 years of lending operations. Adding to this
original number 1,968 subsequent divisions and acquisitions of
property, and subtracting 103 subsequent consolidations, made a
net total of 1,019,686 accounts. Of this net number, 869,282 or over
85 percent have been terminated, leaving 150,404 accounts outstanding
as of December 31, 1949.
Included in the 869,282 terminated accounts were 724,066 original
loans and 129,589 vendee accounts paid in full; 15,381 acquired proper
ties sold for cash; and the remaining balances on 246 accounts charged
off.
Of the 150,404 accounts outstanding as of December 31, 1949, there
were 99,518 original loans, 50,866 vendee accounts and 20 properties.
Of the outstanding debtor accounts, 87,288 original loans had been
extended under the Mead-Barry Act. Of the 20 properties on hand,
5 were owned and 15 still subject to redemption.
Over 96 percent of the Corporation's outstanding accounts were
paid on schedule or less than 3 months in arrears at the end of the
reporting period. For the loans extended from the original 15 years
to not more than 25 years under authorization of the Mead-Barry
Act, the results have been especially noteworthy. All of these
borrowers were delinquent in their payments when the extensions
were granted. By December 31, 1949, there were 96.4 percent of the
outstanding extended original loans, which were paid on schedule
or less than 3 months in. arrears. By reducing the required monthly




HOME LOAN BANK BOARD

payments, these extensions averted many thousands of foreclosures
which would have resulted in losses to the Corporation.
Properties
As a result of foreclosures, voluntary deeds, abandonments, etc.,
the Corporation had acquired up to December 31, 1949, a total of
198,228 properties including 15 still subject to redemption. Of this
total, 4,007 were reacquisitions of properties sold and 74 other proper
ties acquired, leaving. 194,147 properties acquired from original bor
rowers. Subtracting these latter acquisitions from the 1,017,821
total original borrowers, .leaves 823,674, or 80.9 percent of original
borrowers whose homes have been saved from impending foreclosure
which they faced when the loans were made.
Investments in Savings and Loan Associations
In 1935 Congress authorized the Home Owners' Loan Corporation
to purchase shares of savings and loan associations in order to make
funds available to stimulate the local financing of home loans. The
cumulative investment in savings and loan shares made by the Corpo
ration totaled $223,856,710 by December 31, 1949. Of this invest
ment, only $1,951,800 remained outstanding at the end of the 1949
calendar year, as compared with $5,882,650 at the beginning of the
year. Dividends aggregating $44,731,877 have been received by the
Corporation from these investments.
Bond Retirements
The Home Owners' Loan Act of 1933 requires that all payments
upon principal of the Corporation's loans must be used to retire
outstanding bonds. In order to retire bonds, the Corporation also
uses certain other receipts such as amounts received as a result of the
repurchase of shares in savings and loan associations. By the end of
calendar 1949, the total applied to bond retirement was $3,328,029,792.
The amounts deposited with the Treasurer of the United States and
used or available to retire bonds are shown in the following table:
Disposition of funds allocated (through Dec. 31, 1949) to bond retirement fund
Applied to retirement of bonds ------------Deposited for matured or called bonds on which interest has
ceased-------------------------------------------Available for future retirement of unmatured bonds--------

$3, 328, 029, 792. 23

Gross amount deposited in bond retirement fund --Balance due retirement fund for December 1949 to be de
posited in January 1950_------------------------------

3, 329, 948, 113. 08

Total applicable to bond retirement--------------

3, 332, 249, 692. 40

1,855, 125. 00
63 195. 85

2, 301, 579. 32

As a result of bond retirements, the outstanding unmatured bonds
of the Corporation on December 31, 1949, totaled $29,000,000, or
36



HOME LOAN BANK BOARD

0.83 percent of the total amount of $3,489,453,550 of bonds which
had been issued for value. (On January 27, 1950, final payment was
made on upmatured bonds, thus completing the retirement of all
HOLC bonds outstanding.)
Financial Operations
The balance sheet of the Corporation as of December 31, 1949, is
presented in exhibit 9. Because of the rapid progress of the Corpo
ration's liquidation during calendar'1949, the total assets decreased
36.1 percent during the year. Exhibit 10 presents a cumulative
statement of income and expense from the beginning of operations
through December 31, 1949, and exhibit 11 a statement of income
and expense for calendar year 1949.
Up to December 31, 1949, the Corporation had a cumulative net
income of $347,531,025 before actual losses and provisions for future
losses. The total cumulative loss on the sale of properties amounted
to $336,541,314. This loss includes brokers' commissions, selling
costs, and the difference between the sale price and capital value of
the property. The capital value includes unpaid principal, delin
quent interest and subsequent capital charges for taxes, recondition
ing, acquisition, etc.
In addition to the .$336,541,314 loss on property sales,-there were
other losses amounting to $1,426,354 from principal, interest and
properties charged off, fire and other hazards, and fidelity and
casualty losses. This makes the cumulative total of all losses
$337,967,668 as of December 31, 1949.
Deducting the $337,967,668 cumulative losses from the $347,531,025
net income, leaves $9,563,357 net profit as of, December 31, 1949.
Balances in reserves and provisions for future losses amounted to
$772,057, leaving a surplus of $8,791,300 as of December 31, 1949.
During calendar year 1949, the total income of the Corporation
amounted to $14,785,925. Expenses, including interest on bonds
and administrative expense, amounted to $3,631,596, leaving a net
income of $11,154,329. Losses during the year amounted to $60,925,
leaving a net profit of $11,093,404. The $14,785,925 income for the
year included $277,224 premium on the sale of loans.
Administrative
The personnel and administrative expense of the Corporation has
been reduced rapidly in recent years. The number of employees/on
December 31, 1949, was 467 as compared with 473 1 year before,
and 21,000 at the peak of its operations. Its administrative ex
penses during calendar 1949 were $2,117,829 as compared with
$2,395,209 during the preceding year, and $37,427,000 during its
peak year.




37

HOME LOAN BANK BOARD

Exhibit 1
FEDERAL HOME

LOAN BANKS

Summary of lending operations
Year 1949
Repayments

Advances
Boston---------------------------------$20, 357, 569. 00
New York--------------------------------26, 108, 400.00
Pittsburgh--------------------------------14,543,050.00
Winston-Salem-----------------------------23,842, 500.00
Cincinnati--------------------------------14,314, 000. 00
Indianapolis-------------------------------9, 964, 014. 50
Chicago------------------------------------38,524,521.00
Des Moines-------------.------------------14, 775,887. 00
Little Rock ---------------11,186,200. 00
Topeka----------------------------------10,015,000.00
San Francisco------------------------------72,031, 500.00

Balance
outstanding
end of year

$27, 859, 056.00
30,231,122.83
36, 753, 105.00
58,786,906.65
27, 055, 800. 00
31, 247, 950. 11
61,248,059.50
23, 525,169. 81
22, 920, 661.00
21, 796, 291.97
92,005,026. 99

255, 662,641.50
337, 249, 580. 83
359,612,776.74
280,168.873. 35
351,079,350.99
208,961,931.93
329, 231,890. 68
230, 649,366. 93
277, 748, 276.84
213, 438, 982. 95
239, 254, 221.89
218, 759, 089. 74
156,925,588.93
176,070,303.60
99,461,876.19
189,695,394.41
157,600,420.85
139, 646,335.38
134,212,165.93
114,033,192.20
94,780,586.64
112,310,034.15
81,
958,343.39
83,153,601.22
123,251,172.91
68,440,498. 13
93,257,057. 50
50, 715, 704.66
59, 130,068. 56
43,046,971. 39
38, 675, 566. 12
37, 515, 249. 30
90,032, 164. 49
5, 427, 410. 12
837,500.00 ------------------

Total, year 1949-----------------------1948 ---------------------1947 -------------------------------------1946
-------------------------------------1945 -------------------1944 -------------------------------------1943 -------------------------------------1942
-------------------------------------191
-------------------------------------1940 ------------------------------------1939 .
-------------------------------------1938 ----------------------------------1937
...-----------------------------------1936 ----------------------------------1935 ---------------------------------1934 ----------------------------------1933 ---------------------------------1932..-----------------------------------------

$19, 726, 501.00
32, 850, 419. 46
20,832,072.50
58,275, 163.60
18,172,194. 22
15,
839, 208. 80
47,432,549.20
24,125, 621.87
18,456,493.00
11,344,356. 53
70,195,000. 65

433, 429, 149. 86
515,016,089. 19
435,572,185.80
293, 454, 766. 74
194, 872, 242. 99
130, 562, 949.10
110,067,816.95
129,212,531.62
219,446,049.84
201,491,964.37
181,312,990.64
198,842,438.15
200,037,695.98
145, 227,021.20
102, 685, 668.36
86, 602, 571.19
85, 442, 254.37
837,500.00

Grand total---------.......---------------- 2, 942, 711,670.15

2, 509,282,520. 29--..----....

Exhibit 2
FEDERAL HOME LOAN BANKS

Schedule of interest rates on new advances and interest rates paid on members' time
deposits Jan. 1, 1950

Advances to members

0

V
IM

-

0

-.

PerPer- Per- Per- Per- Per- Per- PerPer
cent
Percent cent cent cent cent cent cent cent Percent cent
2.0
2.0 ......----------.-----------2.0 2.25 ------------ 2.25
Only 1 rate in effect.
Secured advances:
2.0-2.5 -2.0 ------------ 2.0 2.0 ------------...
Not exceeding 1 year- 2.0 1.75-2.0
2,25 ----------.--.
2.5 ..
..-------------------------1 year to 5 years .-2.5
2.5 2.5 ------..---2.5
2.5 ----------------1year to 10 years Unsecured advances: 1
2.0-2.5 .---- ..-----...
2.5 ------...--- 2.0 2.0
2.0 1.75-2.0
year or less .----------..
Rates paid on time de
posits remaining:
1.0
1.0
11.0
1.0
1.5 1.0 ----...
1.0
1.0
1.5
1.0
Over 30 days- .--..
1.0 ------ --------- ------------------------Over 90 days---------------------.
-----. 1.25-------------------------------------------Over 6 months -------Certificates of deposit
1.5 1.25 1.25 ------.
1.5
1.5 --.....
1.5
(1 year)--------------1.5 ------- ---....
SNew rate effective since Oct. 1, 1949.

38




HOME LOAN BANK BOARD

Exhibit 3
FEDERAL HOME LOAN BANKS

Consolidatedstatement of condition as of Dec. 31, 1949 and 1948
Dec. 31, 1949
ASSETS
Cash:
On hand-including imprest funds---------....
----------.......$112,872.10
On deposit with:
------------7, 314, 843. 32
Treasurer of the United States--------.......------Commercial banks..--------------------------.....--.......
15,951,168.70
TOtal cash----.....-----------

Total investments------------------

-

--

30,336,489 15

6,886,093. 41
268, 082,257. 55

69,381,649.30
204,474,898. 78

274, 968,350.96

273,856,548.08

230,880,919.05
--............
202,323, 230.81

257,178,514.03
257,837,574. 26

-

..---

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

515.016,089.19
433, 204,149. 86
225,000.00 ...-------

Total to members..---------------------------------------Nonmember mortgagees-------------------------Total advances outstanding.-----------

433,429,149..86

515,016,089.19

1,647, 365.97
751,327.25

580, 503.18
696,111.04

2,398, 693. 22

1,276, 614. 22

69,056.43
6,591.72
7,666.18

179,689.49
11,154. 57
811. 10

83,314.33

------

-----------

191,655. 16

Accrued interest receivable:
Investments--------------------------------------------...
--------Advances...------------------------.

Total accrued interest receivable-- ---------------------

Deferred charges:
---------Prepaid consolidated obligations expense-,--------------Prepaid surety bond premiums--------------------------------------------------------Other prepaid expenses-----------...
Total deferred charges.-------

--------

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

Other assets:
------U. S. Savings bonds redeemed---------------Accounts receivable--------------Furniture and equipment---.....----------....
Total other assets------------------

---

-

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

15,813.96

LIABILITIES AND CAPITAL
Liabilities:
Deposits:
--------------------------Members-time.....-----Members-Demand ..-----------------------------------Applicants for membership-.... -------...----Government instrumentalities-demand.---------- ---------------

2,948.21 .........-----7,
351.65
12,854.75
11.00
11.00
7,362. 65

274, 206. 45

820,684, 758. 45

231,677,602.61
35434,558.70
147,550.00

18,801,049.43

267, 259, 711.31

133, 631,046. 25

717,190.09
1, 242, 975. 67

93, 507.93
3, 993, 950. 04

----

Total assets-------------------------------------------734,

Total deposits..---

$30,810.02
9, 685,084. 62
20,
620, 594. 51

23,378,884.12

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

Investments:
U. S. Treasury bills-....
----------- -------------------------Other U. S. Treasury obligations-----------------..............

Advances outstanding:
1 year or less..-------Amortized-1 to 10 years

Dec. 31,1948

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

Accrued interest payable:
Deposits-members' time..-----------------------------------..........
-Consolidated obligations...------........-----------

24,554,177.12

177,400.00
98, 419. 70

087, 457. 97
1, 960,165. 76
Total accrued interest payable-......................-------.............----4,
Dividends payable:
1,087,133. 43
Member institutions...........------------------..................--------------------681,879.25
U. S. Treasury.......................-------------------------------------...... -------

934,842. 56
849,464.88

Total dividends payable._.----------

1,769,012.68

1,784,307. 44

-

5, 685.99
204, 225, 000.00

6, 513.71
414, 630,000.00

475, 219. 575. 74

554,139,325. 37

------..

-----------------------------------Accounts payable
----------------Consolidated obligations (net) 1
Total liabilities------------------.......................---------------------1

Consolidated Federal HQme Loan Bank obligations issued by the Home Eoan Bank Board are the
joint and several obligations of all Federal Home Loan Banks and are not guiatanteed by the United,

States nor by any agency thereof.




39

HOME LOAN BANK BOARD

Exhibit 3
FEDERAL HOME LOA-T

-BANKS

Consolidated statement of condition as of Dec. 31,1949 and 1948 -Continued
Dec. 31, 1949

Dec. 31, 1948

136,182,900.00
88,200.00

121,224,000.00
25,300.00

Total member subscriptions------..
Less: Unpaid subscriptions------------------------------------

136, 271, 100.00

121,249, 300.00

31,850.00

11,825.00

Total paid in by members ...----------------------U. S. Government subscriptions (fully paid)....--------

136, 239, 250. 00
95, 818,800. 00

121, 237, 475.00
119, 791.200. 00

LIABILITIES AND CAPITAL--continued
Capital:
Capital stock outstanding (par):
Members (fully paid)..---..-------------------------------Members (partially paid)-----------------------

Total paid in on capital stock...................

....----------- 232,058,050.00

241, 028, 675.00

Surplus-earned:
Legal reserve ....--.........--------------------------Reserve for contingencies--..--------........-------------

13,184,945. 91
4, 785, 650. 60

12, 232, 449. 37
4, 283, 027.01

Total surplus reserves............
---------------------Undivided profits-------------------------------------------------

17, 969, 696. 51
9,026,884. 20

16, 515, 476. 38
9,001,281.70

Total earned surplus...........----------------..........-------------..
26, 996, 580.71
Total capital....---------------------------............................. 259,054, 630. 71

25, 516. 758. 08
266, 545, 433.08

Total liabilities and capital-- ......

820, 684, 758. 45

40



-------

------

734, 274, 206..45

HOME LOAN BANK BOARD

Exhibit 4
BANKS

FEDERAL HOME LOAN

Consolidated comparative statement of operations for the calendar years 1949 and 1948
Year ended
Dec. 31, 1949
Earned operating income:
Interest on advances-----------------------------.
Interest on securities .------------------------------------------Miscellaneous..-------------------------------------- ------

Year ended
Dec. 31, 1948

$7, 608,097. 09
5,815,223.81
3,034. 48

$8, 884,812. 97
3,796,212.15
3,017.60

13, 426, 355. 38

12, 684, 042. 72

Less operating charges:
1,276,097.79
-......
--....
Compensation, travel, and other expenses----------Interest on consolidated obligations----------------------------4, 417, 690.97
273, 150. 58
Consolidated obligation expense-concessions --------------------49,872.03
Paid through office of fiscal agent ----------------------------------------------------2,536, 858.69
Interest on members' deposits ----------.
20, 729.74
-------------GAO audit expense ------------------442, 429.29
Assessment for expenses of HLB Board --------------------------

1, 213,445.79
5, 412, 449. 92
329, 325.54
54.348.70
722, 284.94
7, 469.09
:365,000.00

Total earned operating income--------------------

Total operating charges ....-----

--

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

9,016, 829. 09

Add-nonoperating income:
Profit-sales of securities--............-----------------------------------.............
Assessment credit ............------------------.....-------------------------------------------------------------...
Miscellaneous------

8,104, 323. 98

409, 526. 29

---

Net operating income------------------------------------------4,

4, 579, 718. 74

286, 571.48
78, 679. 29 ...
1,080.28
366,331.05

Total nonoperating income.....----------------------------------

99, 377.28
---593.33
99,970. 61

Less-nonoperating charges:
14, 369.16
----4, 579. 32
------------------Loss-sales of securities--------13,295.35
10, 521. 16
Furniture and equipment purchased--------------------GAO audit expense (prior years)----............--------..---------------------------------28,035.11
17,874. 67

Total nfonoperating charges----------------------------------Net income..---------------....................-----------------------------4,

52,925.43

757, 982. 67

4,626, 763.92

DETAIL OF COMPENSATION, TRAVEL, AND O(rHER EXPENSES
Compensation:
Directors' fees
--------------------------------------------Officers' salaries ---------------------------------------------------------------------Counsel's compensation------Other salaries---------..........-------------------------------------

$57, 625. 00
435; 306.35
69,001.81
287,107. 44

$46, 490. 22
387,946.38
76, 51963
285,942. 36

849,040. 60

796, 898. 59

52,953.24
33,507.61
9,589.64
3, 989. 75

47, 054. 14
28.,517. 91
10,426.65
4, 032. 71

100, 040. 24

90,031.41

Other expenses:
64,973.19
Retirement fund contribution .---- ---------------------------26,070.30
Telephone and telegraph-----------------------------------------20, 363. 87
Postage and expressage ---------------------------------------------Stationery, printing, and other office supplies ------------------31, 358. 31
Rent of banking quarters (net)...--------------------91,030.75
13, 214.00
Maintenance of banking quarters and equipment ------------------Services of HLBB's examining division----..
..
........-----------------------4,164. 28
Safekeeping and protection services-----------------------------2, 529. 60
Insurance and surety bond premiums------------------------------....
16, 671.49
Reports and other publications ..--------------------------------6, 966. 94
17, 55. 23
-------------Stockholders', annual meeting expenses
Dues and subscriptions --------------------------------------------15, 236. 81
Public relations expense -......
........-------------------------------08
13, 240.
Miscellaneous operating expenses.-------------------------------3, 641.10

51. 639. 76
27, 519.63
19, 71fy 18
29. 070. 78
85,440.89
20, 427. 77
5,880. 11
2, 571.46
15, 628. 67
7, 885. 33
14, 463.11
14, 579. 84
12, 173. 44
19. 518. 82

--

Total compensation ...................---------------------------------------Travel expense:
-..-----.
--------------------------------Directors ----..
..------...-----------------------Officers ..-------------Counsel and others ------------------------------------------Maintenance and operation costs of automobile...-------------- -------Total travel expense.........------------.....-----------------------........

Total other expenses-- ........

---

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

Total compensation, travel, and other expenses ...............-----------------..




327, 016 95

326, 515. 79

1, 276, 097. 79

1,213, 445.79

41

HOME LOAN BANK BOARD

Exhibit 5
FEDERAL HOME LOAN BANKS
List of directors and officers, as of Dec. 81, 1949
BOSTON

PITTSBURGH

DIRECTORS

DIRECTORS

J. Bertram Watson (public interest).
Ernest T. Trigg 1 (public interest).
Frederick J. Dillon I (public interest). Charles S. Tippetts 2 (public interest).
Arthur B. Koontz (public interest).
William J. Pape (public interest).
Rockwell C. Tenney (public interest).
Walter B. Gibbons (public interest).
H. Dudley Mills (at large).
James J. O'Malley (at large).
Milton A. Barrett (at large).
Alexander Salvatori (at large).
Edward H. Weeks 2 (class A).
Norman E. Clark (class A).
Ralph M. Smith (class A).
C. Elwood Knapp (class A).
William J. D. Ratcliff (class B).
N. F. Braun (class B).
Frederic E. Small (class B).
Matthew L. Leib (class B).
Leo G. Shesong (class C).
Francis E. McGill (class C).
A. Hadley Shumway (class C).
Charles Warner (class C).
OFFICERS

OFFICERS

Herbert N. Faulkner, president.
G. R. Parker, president.
Lawrence E. Donovan, vice president Harold L. Tweedy, vice president.
and treasurer.
William M. Stout, vice president.
Paul H. Heywood, vice president and Dale Park, treasurer.
secretary.
Warren A. Sutton, secretary.
Beatrice E. Holland, assistant secretary.
WINSTON-SALEM

NEW YORK

DIRECTORS

DIRECTORS

W. Waverly Taylor (public interest).
George MacDonald 1 (public interest).
Horace S. Haworth I (public interest).
James Bruce (public interest).
Raymond D. Knight, (public interest).
Francis V. D. Lloyd 2 (public interest). James Grayson Luttrell (public inter
Eustace Seligman (public interest).
est).
E. H. Schoonmaker (at large).
Marion M. Hewell (at large).
Walter J. Babcock (at large).
Frank Muller, Jr. (at large).
Willis J. Almekinder (class A).
Wallace 0. DuVall (class A).
Cadman H. Frederick (class A).
Edward C. Baltz 2 (class A),
Joseph Holzka (class B).
Peyton R. Keller (class B).
John W. Cadman (class B).
D. R. Fonville (class B).
Arthur C. Blackwell (class C).
George E. Rutledge (class C).
James W. Cullen (class C).
H. L. Sudduth (class C).
OFFICERS

OFFICERS

Nugent Fallon, president.
Denton C. Lyon, vice president and
secretary.
Harold B. Diffenderfer, vice president
and treasurer.
Joseph F. X. O'Sullivan, assistant sec
retary.
I

Chairman.




3

Joseph W. Holt, president.
John M. Sink, Jr., vice president,
C. Edwin Kline, secretary.
James T. Spence, treasurer.

2 Vice chairmian.

3 As of January i, 1950,

HOME LOAN BANK BOARD
Schedule of directors and officers, Dec. 81, 1949-Continued
CINCINNATI
DIRECTORS

Frank K. Vaughn (public interest).
W. D. Gradison (public interest).
Howard L. Bevis I (public interest).
Frazer D. LeBus (public interest).
W. Megrue Brock 2 (at large).
W. B. Furgerson (at large).
A. E. Albright (class A).
Allen C. Knowles (class A).
John C. Mindermann (class B).
E. A. Covington (class B).
Eric L. Schulte (class C).
R. A. Stevens (class C).
OFFICERS

Walter D. Shultz, president.
W. E.. Julius, vice president and treas
urer.
J. W. Whittaker, vice president.
E. T. Berry, secretary.

CHICAGO
DIRECTORS

George F. Rowe (public interest).
Ralph M. Monk (public interest)
Charles E. Broughton 1 (public interest),
Henry G. Zander, Jr.2 (public interest).
Arthur G. Erdmann (at large).
Edward J. Czekala (at large).
A. H. Koepke (class A).
Robert M. Brown (class A).
Allen R. Calhoun (class B).
Rilen McConachie (class B).
Robert L. Hirschinger (class C).
Austin J. Waldron (class C).
OFFICERS

A. R. Gardner, president.
John P. Domeier, vice president and
treasurer.
Allan Anderson, secretary.

INDIANAPOLIS
DIRECTORS

S. Rudolph Light (public interest).
Herman B. Wells I (public interest).
Charles T. Fisher, Jr. (public interest).
E. Kirk McKinney (public interest).
Arthur H. Deitsch (at large).
Fermor S. Cannon 2 (at large).
W. B. Burdick (class A).
Walter Gehrke (class A).
Donald L. Adair (class B).
Grant H. Longenecker (class B).
D. L. Cooley (class C).
Amos N. Adams (class C).
OFFICERS

Fred T. Greene, president and secre
tary.
Fermor S. Cannop, vice president.
G. E. Ohmart, vice president and treas
urer.
Sylvia F. Brown, assistant secretary.
Caroline F. White, assistant treasurer.

DES MOINES
DIRECTORS

Willis L. Williams (public interest).
Harry H. Welsh, Jr. (public interest).
Robert E. Lee Hill 1 (public interest).
John D. Adams (public interest).
J. W. Davis (at large).
C. A. Williams (at large).
C. B. Fletcher (class A).
John W. Ballard (class A).
W. L. Sloan 2 (class B).
E. A. Kamp (class B).
Edward A. Murphy (class'C).
Stanton R. Dahlen (class C).
OFFICERS

Robert J. Richardson, president and
secretary.
W. H. Lohman, vice president and
treasurer.
A. E. Mueller, assistant treasurer.
J. M. Martin, assistant secretary.

1 Chairmau.

2 Vice chairman.




43

HOME LOAN BANK BOARD
Schedule of directors and officers, Dec. 81, 1949 -Continued
LITTLE ROCK
DIRECTORS

B. H. Wooten 1 (public interest).
Claude H. Roberts (public interest).
T. J. Butler (public interest).
Gordon H. Campbell (public interest).
Wilbur P. Gulley 2 (at large).
0. W. Boswell (at large).
Irvin H. Schonberg (class A).
Meredith Queen (class A).
A. J. Bush (class B).
R. H. McCune (class B).
Louis D. Ross (class C).
Robert T. Love (class C).

OFFICERS

C. A. Sterling, president and secretary.
R. H. Burton, vice president and treas
urer.
SAN FRANCISCO
DIRECTORS

Ben A. Perham 1 (public interest).
William A. Davis 2 (public interest).
Archibald B. Young (public interest).
C. W. Leaphart (public interest).
R. Floyd Hewitt (at large).
Guy E. Jaques (at large).
J. H. Andrews (class A).
Roy E. Hegg (class A).
C. N. Bloomfield (class B).
OFFICERS
H. D. Wallace, president and secretary. Douglas H. Driggs (class B).
P. C. Bulen (class C).
J. C. Conway, vice president.
F. M. Donahoe (class C).
Ennis M. Oakes, vice president.
W. F. Tarvin, treasurer.
OFFICERS

Guy E. Jaques, vice president.
Irving Bogardus, vice president and
DIRECTORS
treasurer.
A. 0. Johnson (public interest).
Frank C. Noon, vice president.
Harrington Wimberly' (public interest). L. F. Nolan, assistant treasurer.
Helen C. Stearman, assistant treasurer.
Paul F. Good (public interest).
Ray E. Humphrey, assistant treasurer.
Henry A. Bubb 2 (at large).
E. M. Jenness, assistant secretary.
Fred Brimmer (at large).
E. E. Pearson, assistant secretary
D. A. Willbern (class A).
Louis W. Grant (class A).
Leo Smith (class B).
J. L. Coffman (class B).
Cecil Calvert (class C).
Carl A. Hammel (class C).
TOPEKA

I Chairman.
2Vice chairman.

44




HOME LOAN BANK BOARD

Exhibit 6
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

Statement of condition
Dec. 31, 1949
ASSETS

Accounts receivable:
Insurance premiums-payments due..--------------------------Insurance premiums-payments deferred
Admission fees receivable.--------------------------agencies----------------------Due from governmental
-------......--------Miscellaneous--------

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

Investments:
U. S. Government securities (par value) ---------------Unamortized premium on investments..
-----

----

Total----.....-----------Accrued interest on investments

$551, 245. 92

$792, 925.15

134, 451.30
3,034, 533. 74
2, 299. 22
64. 20
875. 43

96,808. 25
2,647, 449. 48
3.20
886.46

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

Cash.....----------- --------------

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

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

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

--

Total---------------------------..........................................
Furniture, fixtures, and equipment........---------------..................---------Less: Reserve for depreciation.---Total..----

-----------

-------

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

. --....

.

.

2, 745,147.39

213, 962, 000. 00
16, 568. 15

198,962,000.00
17, 503. 91

213, 978, 568. 15

198,979, 503. 91

1, 117, 765. 53

171, 576. 69

----------

365,845.78
280,025.28
- .-....

10,146.38
710. 35

85,820. 50
10,146.38
718. 61

9,436.03

9, 427. 77

50,981.32
50,981.32

52, 629. 74
52, 629. 74

71, 879. 65
463. 64
2, 924. 38

44,621.51
927. 28
----------------

75, 267. 67
------

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

Total assets....

.- .

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

Deferred charges:
------------Home Loan Bank Board-----Fidelity bond and other insurance premiums-....-----------..........
Unallocated preliminary expense on problem cases---------..
Total ----

-

3,172, 223.89

Subrogated accounts in insured institutions in liquidation-.......... --------.......
...----------------------..........
..............
Less: Allowance for losses--Pending and unclaimed insured accounts in liquidated institutions..
Less: Allowance for losses----....----------------------

Dec. 31, 1948
I

I

45, 548. 79

218, 904, 507.19

202,829,950. 20

151.42
30,932. 28
13,86,1.15

69. 51
21,540. 23
13,304 12

10,146. 38
11,115.01

10,146. 38
2, 655. 97

66, 206. 24

47, 716. 21

5, 710, 562. 62
66. 97
37. 25

4,948, 599. 94
26.01

5, 710, 666. 84

4,948, 625. 95

LIABILITIES AND CAPITAL

Liabilities:
-----------Accounts payable_-----....--------.
Accrued liabilities------Deductions from employees' salaries- ----------------------Pending and unclaimed insured accounts in liquidated insti
tutions.------. ---------------------------------------------Custodial funds-receiverships.......----------------....................
Total.....---------------------------

-

Deferred credits:
---Unearned insurance premiums-..-------------------------Prepaid insurance premiumsUnapplied collections-----------------------------------------Total---------------------------------------Capital:
Capital stock..--------------Reserve fund as provided by law...
Unallocated income...-------

100,000,000.00
-----------------------

100,000,000.00

I 105, 354, 411.15
7, 773, 222. 96

92, 206, 266. 04
5, 627, 342.00

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

113,127, 634. 11

97,833,608.04

Total liabilities and capital---------............-------.............

218,904, 507.19

202, 829, 950. 20

1 Pursuant to Public Law 860, 80th Cong., cumulative dividends as of June 30, 1948, were determined to
be $25,181,749.98. Cumulative dividends thereafter are being computed by the Corporation at the rate of
$250,000 monthly.




45

HOME LOAN BANK BOARD

Exhibit 7
FEDERAL SAVINGS

AND

LOAN INSURANCE

CORPORATION

Income and expense statement
Jan. 1, 1949,
through
Dec. 31, 1949

Operating income and recoveries:
-----------------Insurance premiums earned....
Admission fees earned...-----------------------------------Interest earned on U. S. Government securities.---------------.
Miscellaneous...............---------------------------------------

Operating expenses and losses:
Administrative expenses---------.. -------------------Liquidation and other expenses-------------------------------Depreciation of furniture, fixtures, and equipment....-------------------------Losses on subrogated accounts_
-----------

Total operating expenses and losses. ---

Net income from operations-----------------------Nonoperating income:
Profit on sale of securities-----------------.........---------------Sale of furniture, fixtures, and equipment--------------------------------------Miscellaneous------------------------

Total nonoperating income-----------------

$10, 948, 225. 12
79, 686. 72
4, 677, 631. 44
5, 355. 78

$9, 456, 079. 50

15, 710, 899. 06

--------

Total operating income and recoveries.---

Jan. 1, 1948,
through
Dec. 31, 1948

13, 884, 648. 29

602, 346. 30
10,912. 96
5,003.60
278, 372. 19

515, 806. 52
13,140. 64
16,940.80
6, 343. 59

40, 295. 52
4, 388, 169. 53
103. 74

896, 635. 05

552, 231. 55

14, 814, 264.01

13, 332, 416. 74

190, 843. 77
6, 441.02
18. 51

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

197, 284. 79

18. 51

390.63

156.26

Net income before adjustment of valuation reserves------...........

15, 011, 158. 17

13, 332, 278. 99

Adjustment of valuation reserves:
Provision for losses on subrogated accounts in insured institu
tions in liquidation--------------------------------------Provision for losses on insured accoufits in institutions in liqui
-------dation-pending and unclaimed---------

280, 025. 28

7,530. 10

Nonoperating charges: Commission on securities-------------------

Net adjustments of valuation reserves

----

---

------

-Net income for period--------------------------------Adjustment of net income for prior years----------------Net income----------

46



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

8.26

92.02

280,033. 54

7, 622. 12

15, 291, 191. 71
2,834.36

13,339, 901.11
-5,116.29

15, 294, 026.07

13, 334, 784.82

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HOME LOAN BANK BOARD

Exhibit 9
HOME OWNERS'

LOAN CORPORATION

Balance sheet at Dec. 81, 1949
ASSETS

Mortgage loans, vendee accounts and advances-at present
face value._-------------------------------------- $230, 623, 195. 73
785, 834. 50
Interest receivable.--.----------------------------------Property:
$6, 339. 60
Owned-----------------------------37, 434. 07
31, 094. 47
In process of acquiring title------------Less: Reserve for losses-----------------------------

231, 446, 464. 30
522, 057. 11
230, 924, 407. 19

Investments-at cost:
Savings and loan associations:
Federally chartered_- $1, 158, 200. 00
State chartered----.-.
793, 600. 00

1, 951, 800. 00

Public debt obligations of the United States
(borrowers' special deposits)-at face
value----------------------------8,

200, 000. 00

Bond retirement fund: Cash (including $1,855,125 deposited
with U. S. Treasury for retirement of matured bonds)........
Cash:
Operating funds-(includes $2,301,579.32
payable to bond retirement fund in
January 1950); and $1,616,477.97 de
posited by borrowers and employees)
(see contra)-----------------------8, 886, 256. 50
Special funds held by the U. S. Treasury
for payment of bond interest (see
contra)--------------------------- 217, 890. 08
Special funds-Federal tax withheld (see
contra)-------------------------- -39,633. 28
Special funds-held by U. S. Treasury for
refunding of 1% percent series M bonds
called as of June 1, 1945----------------65,750. 00
Fixed assets:
Furniture, fixtures, and equipment-at
cost -----------------.--------Less: Reserve for depreciation----------..........
Other assets:
Accounts receivable-.................-----------------....
Less: Reserve for uncollectible accounts
receivIble---.----------------7-------

10, 151, 800. 00
1, 918, 320. 85

9, 209, 529. 86

232, 481. 07
232, 481. 07
79, 104. 41
4, 821. 65
4, 282. 76

Dividends receivable-savings and loan
associations--------------------------

21,941. 25

Deferred and unapplied charges--------------------------




26,224. 01
103, 824. 59
252, 334, 106. 50
49

HOME LOAN BANK BOARD
Balance sheet at Dec. 81, 1949-Continued
LIABILITIES AND CAPITAL

Bonded indebtedness:
(Guaranteed as to principal and interest
by United States, except $92,125 of
unpaid matured bonds guaranteed as to
interest only):
Bonds outstanding-not matured. - $29, 000, 000. 00
Bonds matured-on which interest
has ceased--------------------1, 920, 875. 00
Accounts payable:
Interest due (see contra) ------------Accrued pay roll------------------Insurance premiums----------------Special deposits
By borrowers--------------By employees (savings bonds)......
Civil service retirement deductions.
Federal tax withheld (see contra) - Miscellaneous-----------------------

$30, 920, 875. 00

217, 890. 08
31, 395. 63
120, 614. 21
9, 802, 140. 73
3, 819. 31
10, 517. 93
39, 633. 28
38, 435. 57

Accrued liabilities-----------------------------------Deferred and unapplied credits----------------------Reserve for fidelity and casualties---------------------Capital stock (held by U. S. Treasury):
Authorized, issued, and outstanding------....... 200, 000, 000. 00
Surplus-------------------------------8, 791, 300. 35

10, 264, 446. 74
47, 879. 81
2, 059, 604. 60
250, 000. 00
208, 791, 300. 35
252, 334, 106. 50

50



HOME LOAN BANK BOARD

EXHIBIT 10
HOME OWNERS'

LOAN CORPORATION

Statement of income and expense for the calendar year 1949
Operating and other income:
Interest:
Mortgage loans and advances--------------------Vendee accounts and advances--------------------

$8, 896, 115. 58
5, 237, 302. 53

-----

14, 133, 418. 11
124, 824. 77

Total---------------------------------------.
Property income-------------------------------------Dividends received from savings and loan associations..
Miscellaneous--.-------.
----------------

14, 258, 242. 88
310. 40
71, 013. 92
456, 358. 49

Special investments--------------------------

Total income... --------------------------------Operating and other expenses:
Interest on bonded indebtedness-...............----------------------.........
Administrative and general expenses:
Administrative expenses -------------------------General expenses---------------------------------Property expense--------------------------------------

14, 785, 925. 69

I, 485, 829. 02
2, 117, 829. 59
28, 204. 32
1 266. 51

Total expense---------------------------------------3, 631, 596. 42
Net income before provision for losses which may be sustained
in the liquidation of assets--------------------------------11, 154, 329. 27
Provision for losses:
On mortgage loans, interest and property ------------For fidelity and casualties-----------------------------For fire and other hazards ---------------------------For uncollectible accounts receivable---------------------Total provision for losses----------------------------Losses on investments in savings and loan associations ..

16, 507. 45
4, 389. 52

2

20, 896. 97
30, 557. 48
51,454. 45

Net income for calendar year after provision for losses -------Deficit at Dec. 31, 1948---------------- $4,407, 116. 64
Deduct: Surplus adjustments-net- .....
2, 095, 542. 17

11,102, 874. 82

Surplus at Dec. 31, 1949-----------------.-------------

8, 791, 300. 35

2, 311, 574. 47

Net credit

2

Excess liquidating dividends of $31, 080.61 included in income "Dividends on investments in
savings and loan associations"--Exhibit 11.




51

HOME LOAN BANK BOARD

EXHIBIT 11
HOME OWNERS' LOAN

CORPORATION

Statement of income and expense from the beginning of operations, June 13, 1933,
to Dec. 31, 1949
Operating and other income:
Interest:
Mortgage loans and advances. $1, 052, 799, 482. 40
Vendee accounts and ad
vances-----------------134, 729,108. 99
Special investments--------......

1, 187, 528, 591. 39
1, 374, 969. 65

Property income-- ___-----------------Dividends received--F. S. & L. I. C-------

$1, 188, 903, 561. 04

138, 645, 668. 78
28, 217, 076. 07

Dividends on investments in savings and loan asso
ciations -------------------------------------Miscellaneous ----------------------------------

44, 731, 877. 28
9,881, 978.53
1, 410, 380, 161. 70

Operating and other expenses:
Interest

on

bonded in
$655,191, 923. 96
debtedness
Less:
Pre
mium on

1, 618, 866. 43
bonds sold
-7,
Discount on refunded bonds-...

$653, 573, 057. 53
147, 710. 28

Administrative expenses---------

660, 720, 767. 81
270, 626, 738. 97

General expenses--------------Property expense -------------

18, 675, 414.,84
112, 826, 215. 05

Net income before provision for losses which may be sus
tained in the liquidation of assets ------------------Losses and provision for losses:
On mortgage loans, interest, and
property-------------------$349, 737, 153. 25
For fidelity and casualties .......
1, 371, 778. 31
For fire and other hazards-----881, 252. 50
For uncollectible accounts re
67, 810. 78
ceivable--------------------Total provision for losses-......
----Losses on investments in savings
and loan associations____.....

1,062, 849, 136. 67
347,531,025.03

352, 057, 994. 84
30, 557. 48

352, 088, 552. 32

Loss for period June 13, 1933, to Dec. 31, 1949_----Deduct: Surplus adjustments-reserve against fire and other
hazards, reserve for losses on mortgage loans, interest
and property and unlocated payments (net)---------

4, 557, 527. 29

Surplus at Dec. 31, 1949
52




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

13, 348, 827. 64
8, 791,300. 35


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102