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Ninth Annual Report FEDERAL HOME LOAN BANK BOARD for the period JULY 1, 1940, through JUNE 30, 1941 covering operationsof the FEDERAL HOME FEDERAL SAVINGS LOAN BANK SYSTEM AND LOAN ASSOCIATIONS FEDERAL SAVINGS LOAN INSURANCE HOME OWNERS AND CORPORATION LOAN CORPORATION Ninth Annual Report FEDERAL HOME LOAN BANK BOARD covering operations of the FEDERAL HOME FEDERAL SAVINGS LOAN BANK SYSTEM AND FEDERAL LOAN HOME SAVINGS INSURANCE OWNERS LOAN ASSOCIATIONS AND CORPORATION LOAN CORPORATION for the period JULY 1, 1940, through JUNE For sale by the Superintendent of Documents, Washington, D. C. 30, 1941 . . . . . . Price 30 cents Letter of Transmittal FEDERAL HOME LOAN BANK BOARD, Washington, D. C., October 1, 1941. THE SPEAKER OF THE HOUSE OF REPRESENTATIVES. SIR: Pursuant to section 20 of the Federal Home Loan Bank Act, we have the honor to submit herewith the Ninth Annual Report of the Federal Home Loan Bank Board for the period July 1, 1940, through June 30, 1941, covering the operations of the Federal Home Loan Banks, the Federal Savings and Loan Associations, the Federal Savings and Loan Insurance Corporation, and the Home Owners' Loan Corporation. The first section of the report presents a brief discussion of the vital question of defense housing, with particular emphasis on the partici pation of the Board and its agencies in the national program to provide adequate housing accommodations for workers in defense industries. Section II treats recent significant developments in the fields of resi dential construction and home finance. The sections which follow contain reports on the operating progress of each of the agencies under the Board during the 1941 fiscal year. In these days when world events occur with increasing rapidity, an operating report restricted to a specific period, even though that period be only a few months past, may well seem out of date in some respects when it comes from the press. Although every effort has been made in the report which follows to analyze trends in the thrift and home financing field as they are affected by the present emer gency and the Nation's all-out defense program, it is recognized that forces now at work may have far-reaching effects which cannot yet be predicted. It is encouraging, nonetheless, to realize that whatever the future may bring, the thrift and home financing resources of the country are in a better position than ever before to withstand shocks and to make readjustments. The Federal Home Loan Bank Board and its agen cies, in carrying out the various activities assigned to them by the Congress, have had a responsible part in correcting weaknesses which III IV LETTER OF TRANSMITTAL formerly handicapped this important sector of our economy. Al though time and experience may well raise new problems for which reforms and improvements so far achieved will offer only incomplete solutions, there can be no question that definite progress has already been made. Respectfully, JOHN H. FAHEY, Chairman, T. D. WEBB, Vice Chairman, FRED W. CATLETT, WILLIAM H. HUSBAND, FRANK W. HANCOCK, Jr., Members. Contents Page LETTER OF TRANSMITTAL I. -- ------------------------------ Defense lending by member institutions_--------Participation of the Federal Home Loan Bank Board in the defense housing program _--------- ---------II. SURVEY OF HOUSING AND MORTGAGE FINANCE-___- --- 1. Residential construction and the real estate marketIncreased residential building_----------------The defense program and residential building ----Growing importance of public housing Where new housing is built ------------------Continued preference for single-family houses - Improvement in the real-estate market---------Further decline in foreclosures __--------------Liquidation of real-estate overhang _--------Building costs-danger signals -------------Labor supply _---------------------------Rents and vacancies ----------------------Long-range market factors ------------------2. Mortgage finance and savings---------------Continued gains of home mortgage lending ----Expansion of construction lending_ ------------Increase in home mortgage debt- ------------Lending operations in the present emergency ---Growing volume of savings -------- _--------Savings for defense ----------------------Problems ahead---------------------------III. FEDERAL HOME LOAN BANK SYSTEM ---------------- 1. Operations of the Federal Home Loan Banks _. -. Lending activity -_--------------- -------- _ Types of advances_ ----___-----------------Financial condition of the Federal Home Loan Banks--------------------------------Income and expenses of the Federal Home Loan Banks-----------------------------72 III 1 DEFENSE HOUSING--------- ------------------------ 4 7 13 14 14 16 18 20 21 23 25 27 29 32 33 34 39 39 46 48 51 54 57 58 61 61 61 65 68 CONTENTS VI III. FEDERAL HOME LOAN BANK SYSTEM-Continued. 1. Operations of the Federal Home Loan Banks-Con. Income and expenses of the Federal Home Loan Bank Board ----------------------------Administration of the Federal Home Loan Bank System-----------------------------_ Examination and supervision -------. Federal Home Building Service Plan -----------2. Operations of member institutions ------------Changes in membership -------------------Lending activity- ___-----------------------Reduction of Government share investments ---Analysis of condition of member associations ---Statement of operations --------------------Improvement in operating standards and man agement---- --------------------------IV. FEDERAL SAVINGS AND LOAN ASSOCIATIONS.----Growth and development of Federal savings and loan associations _-------------------------------Gain in private capital_-------------------------Expanded lending activity -----------------------Financial operations-----_ ----------------------V. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION_ Operations of insured institutions ---------------Community programs -------------------------Supervision- _----------------------------------------------------Insurance settlements Operation of insured institutions in default --------Operations of the Insurance Corporation ----------- VI. HOME OWNERS' LOAN CORPORATION------------------ _----------1. Repayment record of borrowers ---Status of accounts _---------------------------------------------Collections _----Reduction of mortgage indebtedness by borrowers_ 2. General operations---------------------------Loan service_----------------------------Extension of loan terms-----------------Tax and insurance accounts ------------------Taxation ----------,------------_----------------------------Insurance program--------------------Foreclosures ------_ Property management ------------------- Page 75 75 77 80 81 81 84 87 91 97 98 103 104 107 110 111 115 116 120 124 125 130 132 135 135 135 138 140 141 141 144 145 146 147 148 151 CONTENTS VII VI. HOME OWNERS' LOAN CORPORATION-Continued. 2. General operations-Continued. Property income and expense ----------------Vendee accounts ..-------------------------Reconditioning---------------------------Appraisals-- -------------_ -----------3. Administration and personnel -----------------_-- -------------4. Financial operations ---Statement of condition --_______ ----_ _ Income and expense _-----------------------_---------5. Progress in liquidation ---------LIST OF CHARTS ----------------------------------- LIST OF EXHIBITS _------------------------------- Exhibits ------------ ------------------------INDEX_------------ ------ --------------------- Page 155 156 156 159 160 163 163 165 167 173 177 183 269 ORGANIZATION FEDERAL CHART HOME OF THE AGENCIES LOAN OF THE BAN K BOARD J I (Created by Federal Home Loan Bank Act -Approved July 22 1932) FEDERAL HOME LOAN BANK SYSTEM FEDERAL (Ceated by Federal Haom Loan Bank Ad (A Amendled) INSURANCE CORPORATION (Created by National Housing Act 1934 - Approved June 27, 1934) (As Amended) Ap red July 22. 1932) A credit reserve organization for thrift and home financing institutions. Regional Federal Home Loan Banks, subject to the regulations of the Federal Home Loan Bank Board. Make short-term and long-term advances to and accept deposits from their member institutions.. FEDERAL HOME FEDERAL SAVINGS BANKS LOAN SAVINGS & LOAN HOME OWNERS' LOAN CORPORATION (Authoet.d by Home Owners' Loan Act Aprosed Jane , (As Amended) An emergency organization created to extend relief to distressed home owners who were in danger of losing their homes through foreclosure. Since June 12, 1936 it has been engaged chiefly in servic. ing its loans, liquidating its assets and discharging its responsibilities to bond holders and the Government. Members of the Federal Home Loan Bank Board con stitute the Board of Directors of the Home Owners' Loan Corporation. An instrumentality of the United States est. ablished to*insure the safety of investment to a maximum of $5000.00 for each investor in each Federal savings and loan association and in each state-chartered institution of the savings and loan association type which applies and is approved. The members of the Federal Home Loan Bank Boardconstitute the Board of Trustees of the Fed eral Savings and Loan Insurance Corporation. & 1933) LOAN SYSTEM (Authortsed by Home Owners' Loan Act - Apprwed June 13, 1933) (As Amended) Local mutual savings institutions, chartered and supervised by the Federal Home j CHARL H91 AV.& LOANASSS ,STATECIOr . no LOANaa. j SA IN6 ANKS : .l: | I N6UYNA N c PAN I ES Loan Bank Board, and operated under boards of directors elected by their members. They encourage long-term thrift accounto AND LOANASSOCIATIONS 8 LOAN ASSOCIATIONS I INDIVIUAL BROI ERSNS and the financing of homes on long-term amortizedfirst mortgage loans. ANDBORROWERSINURED AWD~ D 11-15-39 INVETORAPPOV BQWabES , 4 .V % ft -' ^-e A 5 Chairman, FEDERAL HOME LOAN BANK BOARD 425085-41 (Face p. 1) __ I Defense Housing D URING the fiscal year ending June 30, 1941, the task of housing for defense became a vital influence at work in the fields of operation assigned to the Federal Home Loan Bank Board and its agencies. Thrift and home financing, like most normal business pursuits, have been passing through a period of readjustment and adaptation required by a war economy. When this country embarked upon its emergency program of defense in the summer of 1940, it was immediately recognized that one of the major problems to be met was the provision of adequate housing for defense workers. The experience of 1917 and 1918, when frantic and none-too-successful efforts were made to house those employed in war industries, was ample proof of the necessity for developing a comprehensive housing program as an integral part of the broader plan of rearmament. The responsibility of directing this part of the defense program was entrusted to a Defense Housing Coordinator appointed by the Presi dent on July 21, 1940. Until January 11, 1941, the Coordinator was attached to the National Defense Commission; since that date he has headed the Division of Defense Housing Coordination in the Office for Emergency Management. As his title implies, the Co ordinator has been assigned the task of analyzing local defense housing needs and then bringing together the resources of private and public organizations to meet those needs. It is true, of course, that housing as such contributes nothing directly to the actual manufacture of arms, munitions, tanks, airplanes, and all the other supplies which are essential to a preparedness program. On the other hand, it is axiomatic that without adequate shelter in areas of high industrial activity or of strategic military importance, all productive effort is seriously crippled. The responsibility of the Coordinator and the several housing agencies of the Government is, then, the task of seeing that no primary defense effort is slowed down or interfered with because of insufficient housing. 2 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 To private industry belongs the job of providing most of the addi tional housing needed in defense areas. Thus, housing designed for permanent use should be constructed and financed with private resources. On the other hand, there are certain localities where the risks involved in financing new residential construction are so great that private industry cannot be expected to assume them. In these areas, new housing must be provided with public funds. For ex ample, where the need is temporary and uncertain, or where the only effective demand is for housing to be rented at uneconomic levels, public construction is the obvious solution. Generally speaking public funds are employed for the construction of rental units and when private capital is unable or unwilling to provide needed housing. In terms of dollar outlay, the program for public defense housing, including funds authorized or in prospect for both dwelling units and community facilities aggregated almost $650,000,000 by the close of the 1941 fiscal year. On July 1, 1941, public funds had been allocated for 107,383 regular family dwelling units in defense areas, of which 66,656 were for industrial workers and 40,727 for enlisted and civilian personnel of the Army and Navy. Completed units at the close of the reporting period numbered 17,522, or 16.3 percent of total allocations. An additional 70,146 had been placed under construction contract. Two types of defense housing constructed with public funds deserve special mention. One is demountable and portable housing which is programmed in localities where defense activity is of uncertain dura tion and where the likelihood of integrating permanent new housing with normal housing needs is questionable. The "ghost towns" of the last post-war period emphasize the high cost of failure to recognize the temporary nature of the demand for defense housing in a number of localities. Of the 107,383 family dwelling units in defense areas for which public funds have been allocated through the close of the reporting period, 11,759 were scheduled as demountable and portable housing. It is hoped that this type of construction, which is relatively new in this country, will prove the answer to the very difficult problem of meeting an emergency need for housing in highly concentrated defense localities without, at the same time, creating a permanent drag on the real estate market by leaving an oversupply of housing after the emergency. Trailers and dormitories for single persons constitute the second type of public housing designed for temporary use only. Trailers are used primarily to provide interim housing until regular projects can DEFENSE HIOUSING 3 be completed. Dormitories are designed for use for several years and are often demountable in character. At the close of the 1941 fiscal year, a total of 1,170 trailers and 3,076 dormitory units had been completed. However, despite this large volume of public defense housing, private capital has been responsible for the bulk of residential con struction in defense areas. During the 1941 fiscal year, 616,000 dwelling units were constructed throughout the United States. Of this total, 510,000 units were built with private capital. Since an overwhelming proportion of this new housing is located in areas of concentrated defense activity, it is obvious that private capital is con tributing most of the housing constructed in these localities to meet emergency needs. Local savings and loan associations, which make up the majority of the membership of the Federal Home Loan Bank System, have long been the most important institutions financing small homes. It is not surprising, therefore, to find that these associations are proving them selves able participants in the defense effort, providing from their resources a substantial volume of housing in areas where the need is most urgent. It is estimated that during the reporting period, new dwelling units permanently financed by member savings and loan associations totaled 175,000, of which 63 percent were located in defense areas. The Home Owners' Loan Corporation, which also operates under the direction of the Federal Home Loan Bank Board, has played its part in the defense program by speeding up its reconditioning program in defense centers in order to place existing structures on the rental or sales market as rapidly as possible. Moreover, on August 20, 1941, the Coordinator announced a special program to encourage repair and modernization of private homes which will be carried out through offices of the Home Owners' Loan Corpo ration and local Homes Registration Offices. The program has been designed to make available to home owners without cost the services of fee technicians who will assist them in estimating the possibilities of repairing and converting their homes in order to make extra accom modations available for defense workers. As much of this work as possible will be done by salaried employees of the Home Owners' Loan Corporation and a special fund of $100,000 has been authorized by the President for use in employing fee technicians wherever necessary. It is expected that a substantial volume of needed housing can be supplied by conversion of existing dwellings in areas where acute shortages exist. 4 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Defense Lending by Member Institutions The member home financing institutions of the Federal Home Loan Bank System are in an excellent position to do their share in satisfying the emergent need for additional housing accommodations in defense areas. These institutions have a long and creditable experience in the home mortgage lending field, are operating in practically every urban area in the country, and have ample investable funds, which can be augmented from the resources of their Federal Home Loan CHART I LOANS MADE BY MEMBER SAVINGS AND LOAN ASSOCIATIONS IN DEFENSE HOUSING AND OTHER AREAS MILLIONS OFDOLLARS JANUARY 1940-JUNE 1941 BY MONTHS 120 100-M DEFENSEHOUSING M _A JAN. FEB. MAR. APR. MAY JUN, 1940 JUL. AUG. SEP OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUN. 1941 AND STATISTICS DIVISIONOF RESEARCH FEDERALHOMELOANBANKBOARD Banks. They have been accounting for about one-third of all record ings of urban mortgages of $20,000 or less, a fact which demonstrates that savings and loan associations represent a major source of the private credit which is being used to provide needed homes for defense workers. As a gauge of the extent to which member savings and loan associa tions are participating in the production of homes for defense, the Federal Home Loan Bank Board has initiated a monthly study of the lending activity of member institutions in "defense housing areas." These areas include only communities so designated by the Defense DEFENSE HOUSING Housing Coordinator and those defined as eligible for home mortgage insurance under Title VI of the National Housing Act. In both cases, a'severe housing shortage must exist before the locality can be approved as a defense housing area. During the fiscal year 1941, member savings and loan associations loaned $740,000,000 in defense housing areas. Although this over-all figure includes loans for all purposes, it is estimated that over 110,000 newly constructed housing units were permanently financed by mem ber savings and loan associations in defense housing areas. In addition to the defense housing areas above described, there are numerous localities in which the defense program has brought about an increased demand for housing, although acute shortages have not as yet developed. Thus, contracts let by the Army and Navy have resulted in a rapid expansion of industrial activity in a large number of communities where the problem of housing defense workers, although not yet pressing, is nevertheless serious. If these areas are included with localities of primary importance, the record of member savings and loan associations is even more significant. During the fiscal year 1941, member institutions loaned approximately $420,000,000 in financing 160,000 newly constructed family units in all areas where defense contracts have been awarded. Lending by member savings and loan associations in defense housing areas, by purpose of loan Purpose of loan Construction -----------------Home purchase------------Refinancing --------------------------------------------Reconditioning ---------,- ------------------Other -------------.----------------------Total -------- -- -------- January to June 1940 January to June 1941 Percent change $105, 107, 57, 12, 26, 837, 400 440, 900 866, 000 031, 300 518, 400 $137, 922,900 145, 682, 900 55, 496, 400 12, 768, 700 26, 901, 500 +30. 3 +35. 6 -4.1 +6.1 +1.4 309, 694, 000 378, 772, 400 +22. 3 Lending by member savings and loan associations in other areas, by purpose of loan January to June 1940 loan Purpose ofPurpose loan o Construction ---------------------------Home purchase __ ----------- --Refinancing -----------------Reconditioning_--------Other--------Total --- - --------- --- --. ---- January to June 1941 Percent change $47, 477, 600 47, 444,100 28, 903, 000 10, 752, 700 17,256,600 $53,490,100 62, 659,100 29, 772, 600 10,847, 300 17, 640, 500 +12. 7 +32.1 +3.0 +0. 9 +2. 2 151,834, 000 174, 409, 600 +14.9 The importance of member savings and loan associations of the Federal Home Loan Bank System as a major source of mortgage credit 6 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 in defense housing areas is further illustrated by a comparison of their lending record during the first 6 months of 1940, just prior to the beginning of the national emergency, with the first 6 months of 1941, when the preparedness program was well under way. As the preceding table indicates, loans for the construction of new housing in defense CHART II CHANGE IN LENDING VOLUME OF INSURED ASSOCIATIONS IN DEFENSE HOUSING AREAS UNITED STATES AND F.H.L.B. DISTRICTS; FIRST 6MO. 1940-FIRST 6MO. 1941 IN PERCENT 0 10 20 C R E A SE 30 40 50 UNITED STATES I - BOSTON 2-NEW YORK :: 3- PITTSBURGH ... -..-.... -.-: :.:.; .:-.-.:...I...-. .: TOTAL LOANS ' ".'.:i' CiNiS UjTOTA O S CONSTRUCTION LOANS 4- WINSTON SALEM. 5- CINCINNATI 6- INDIANAPOLIS 7- CHICAGO 8- DES MOINES 9-LITTLE ROCK II - PORTLAND : :: 12-LOS ANGELES DIVISIONOF RESEARCH AND STATISTICS FEDERAL HOMELOANBANKBOARD areas during the first 6 months of 1941 show an increase of 30 percent as compared with only 13 percent in nondefense localities. Recon ditioning loans in emergency defense areas also show a gain of 6 percent during the first 6 months of 1941, while loans for the same purpose in other areas increased only 1 percent. While it is impossible to say with any degree of exactitude to what extent the demand for homes in defense centers is being met by the reconditioning and conversion of DEFENSE HOUSING existing dwellings, there are numerous indications that this activity is taking care of a substantial percentage of the demand for new housing accommodations. The first six months of 1941 also saw decided shifts in lending vol ume among the twelve Federal Home Loan Bank Districts. Thus, as the chart on page 6 shows, the most substantial increases in lending activity and more particularly in the volume of construction loans made are found in the Federal Home Loan Bank Districts of Indianapolis, Cincinnati, Portland, and Boston. Undoubtedly, the unusual gains made in these areas are related directly to the fact that these same regions have received a large number of defense contracts and include a majority of the most concentrated defense centers. Participation of the Federal Home Loan Bank Board in the Defense Housing Program The Federal Home Loan Bank Board is governed by two principal objectives in its defense housing activities. First, it seeks to collabo rate to the fullest extent with other governmental departments and agencies in the development of an effective plan to provide needed additional housing in defense areas. Secondly, the Board has taken various measures to assure maximum cooperation on the part of the 3,839 member institutions of the Federal Home Loan Bank System in financing permanent-use defense housing. With the energetic assistance of the Presidents of the twelve regional Federal Home Loan Banks, the Board has been engaged during the fiscal year in carrying on a program designed to bring about the great est possible cooperation from member institutions of the Bank System in using their resources to provide permanent-use defense housing. Each of the Bank Presidents, assisted by a field force organized by the Board for this purpose,' has initiated and carried forward a com prehensive program designed to stimulate activity on the part of member institutions in his District. The basic objectives of these programs are to bring about complete understanding, active interest, and energetic participation in the national program for defense housing. The Bank Presidents, because of their familiarity with local housing conditions in their respective Districts, have also been able to assist the Defense Housing Coordinator in studying the defense housing needs of individual communities. Member institutions have been encouraged to analyze local housing and defense conditions with a view to determining the need for addi tional housing facilities and the extent to which their individual resources can be employed in financing them. Associations have 8 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 been urged to join forces with others interested in local housing condi tions to establish and conduct cooperative local defense housing pro grams. In a number of cases, member institutions, in cooperation with other local lenders, have conducted reconditioning and moderni zation programs in their communities. Such programs have proved advantageous since they provide within a short time additional hous ing facilities, reduce the danger of overbuilding, and require much less capital than new construction. In encouraging these activities by savings and loan associations, the Board has been motivated by the desire to meet urgent needs for additional housing accommodations. However, the Board has cau tioned lending institutions that it is of the utmost importance during the present emergency to r'equire observance of minimum construction standards, adequate inspection procedures, conservative appraisal practices, and firm collection policies. Enlistment in the defense housing program to the limit of each association's ability consistent with sound business practices is, in short, the obligation which the Board has urged each member institution to assume as its primary contribution to the national defense effort. Participation of member institutions in the defense housing program has been facilitated further by amendments to the Rules and Regula tions governing the operation of Federal and insured savings and loan associations. Recognizing that the acute need for defense housing in many localities is placing emphasis primarily on the origination of loans, the Board has liberalized its regulations to permit insured institutions to sell mortgages and use the proceeds for financing defense housing when necessary. In the case of Federal savings and loan associations located in recognized defense housing areas, the Board has indicated its willing ness to consider individual applications for permission to sell mortgages for the duration of the emergency without regard to the limitations established by the Regulations. Insured State-chartered institutions have also been advised that the Regulations have been amended to permit the sale of mortgages made to finance permanent-use defense housing. In taking this action, the Board had no intention of en couraging its member institutions to engage in a program of unre strained mortgage brokerage. Its purpose is rather to afford insured institutions a means whereby they can assist to a material degree in financing the construction of defense housing by setting up a revolving fund for the origination and sale of a substantial volume of their mortgage loans. DEFENSE HOUSING 9 As a matter of policy, applications from Federal savings and loan associations for permission to sell mortgage loans in excess of regula tory limitations are carefully examined and permission is granted only where there is ample evidence that the supply of loanable funds available to the institution is less than the demand for home mortgage credit. The Board has also required Federal associations to submit evidence of carefully developed lending programs designed to avoid overextension of loan commitments as a result of too extensive use of the sale privilege. The Board has also amended its Regulations to make available to Federal savings and loan associations the procedure for making loans under Title VI of the National Housing Act. This new title, de signed to encourage private building in defense areas, became oper ative on March 28, 1941. It authorizes the insurance by the Federal Housing Administration of mortgages written up to 90 percent of appraised value on builder-owned properties located in areas where the President finds "that an acute shortage of housing exists or im pends which wpuld impede national defense activities." The original legislation authorized insurance of mortgages under Title VI up to $100,000,000; by an amendment adopted on September 2, 1941, this figure was increased to $300,000,000. The Presidents of the Federal Home Loan Banks and the Board's special field staff have urged all member associations located in defense areas to take advantage of the insurance facilities of Title VI. Since 1938, the Board has restricted investments by the Home Owners' Loan Corporation in the shares of savings and loan associa tions to special rehabilitation, cases. However, the Board has now decided that where justified, moderate HOLC investments may be made to provide additional working capital to meet defense housing demands. Such investments are intended to enable the associations to build up and maintain a revolving fund for the origination and sale of mortgages made to finance defense housing projects. In addition, the Board has announced that requests for the retirement of HOLC share investments may be waived upon application by associations located in defen'se areas. Associations applying for such waivers are required to demonstrate a definite need for the retention of these funds to meet defense housing needs. As already indicated, the Board has strongly urged the member institutions of the Federal Home Loan Bank System to participate in the organization of local committee groups to survey existing hous ing resources and to determine additional housing needs in individual 425085-41-2 10 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 cities. The most effective local committees have proved to be those which bring together all community interests most directly concerned with housing-lending institutions, local housing authorities, operative builders, supply dealers, and representatives of labor and industry. Where local defense councils are in existence, the defense housing committees are usually set up as subcommittees of the councils. These committees are voluntary in nature and operate under no common plan of operation. Nevertheless, these groups are assuming a more and more important place in carrying out the defense program. It is true, of course, that national planning and coordination are es sential to any program of housing for defense. Local community organizations have neither the necessary information nor adequate resources for assuming responsibilities outside their immediate locality. However, it is in the local community that the actual con struction of needed housing must be carried on, where defense workers will be living and working, and where the post-emergency effects of defense housing will be felt. Any national organization removed, as it is, from the local scene finds itself handicapped in maling an analysis of either needs or resources without the assistance of those most fa miliar with local conditions. The task of the Defense Housing Co ordinator is made considerably easier in localities where he can rely for accurate information and analysis upon the recommendations of a well-organized cooperative committee. In addition to studying local housing problems as they are affected by defense activity, defense housing committees are undertaking numerous other responsibilities designed to meet the needs of their localities. The committees keep a check on the construction of defense housing to make sure that homes are made available as rapidly as is necessary. In many cities they have cooperated in the establishment and operation of Homes Registration Offices. By assembling in a central place all information on available vacant rooms, apartments, and homes, both for sale and rent, these Offices have proved an effec tive means of putting existing housing resources to the most econom ical use and are successful in relieving, in part at least, severe short ages. Another activity of local committees is the stimulation of programs to repair, modernize, and convert existing dwellings, thereby adding to the housing supply and avoiding unnecessary new con struction. In summary, the formation of local defense housing committees has been encouraged for the primary purpose of maintaining current information on the progress of builders in supplying the defense housing tentatively assigned to private enterprise and to deal with DEFENSE HOUSING 11 the post-war housing problem and the orderly liquidation of any excess housing which cannot be absorbed when the community returns to normal. At the close of the reporting period, the Defense Housing Coordi nator announced that private industry would be expected to provide a minimum of 400,000 new dwelling units in defense areas during the 1942 fiscal year. The record so far made by private building interests gives every reason to believe that this goal will be met. Certainly the member home financing institutions of the Federal Home Loan Bank System, whose "assets now total more than $5,000,000,000, can be expected to finance a substantial proportion of the housing needed for defense. __ II Survey of Housing and Mortgage Finance HE fiscal year 1941 was a period of continued progress in the fields of activity in which the Federal Home Loan Bank Board is primarily concerned. Construction of new homes, investment of savings in home mortgages, and general operations of the real-estate market all showed substantial improvement during the reporting period. A gain of 27 percent over the previous fiscal year brought residential construction in nonfarm areas back to the annual level of the late Twenties. Home mortgage lending by private financial institutions reached a new ten-year high. Except for a brief period during the fall of 1940, the flow of savings into financial institutions continued at an excellent rate. The real-estate market as a whole showed significant signs of improvement. Real estate owned by financial institutions declined to such an extent that the overhang of institu tionally-acquired properties, which for the past several years has been a serious drag on the market, no longer represents a major problem except in a few scattered areas. The accelerating tempo of the national defense program has at the same time raised new problems and uncertainties which are already affecting thrift and home financing operations. No business operates in a vacuum and the mobilization of economic resources in the interests of an all-out preparedness effort means readjustments in all business activity. Fortunately, the home financing structure is today better able to meet the challenge than at any time in the past. Member home financing institutions of the Federal Home Loan Bank System are supported by a substantial reservoir of credit on which they can rely, when necessary, for the payment of withdrawals or the financing of mortgage loans. Insurance of accounts in savings and loan associations has created a high degree of confidence on the part of savers and investors. Activities of the Federal Government in providing a ready market for insured mortgages is a further im portant bulwark to the home financing industry. Finally, the home mortgage debt of the country is basically sounder than in former periods of emergency. T 13 14 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 1. RESIDENTIAL CONSTRUCTION AND THE REAL-ESTATE MARKET Increased Residential Building The fiscal year 1941 witnessed profound changes in the national economy. By the beginning of the reporting period, the program for defense and all-out aid to the Democracies had reached the point where actual production was having measurable results in improved business conditions. Throughout the reporting period, the upward trends were maintained until by June 30, 1941, the various gauges of general business activity had reached the highest levels in many years. Thus, the index of industrial production was 157 for June 1941, a figure 30 percent higher than a year previous. Nonagricultural income rose from $66,616,000,000 during the 1940 fiscal year to $74,018,000,000 during the reporting period. Manufacturing payrolls increased $572,000,000, or 25.6 percent. Nonagricultural employment reached the record level of 32,647,000 in June 1941. Farm prices and cash income both enjoyed steady gains. New residential construction was no exception to this general trend. During the fiscal year 1941, the total volume of residential construction reached the highest point since 1928. On the basis of building permit figures compiled by the Department of Labor, construction was started on approximately 616,000 nonfarm dwelling units, with an estimated permit valuation of $2,136,842,000. Compared with the previous fiscal year, these figures show a gain of 27 percent in number and 29 percent in dollar volume. Number of new dwelling units provided in nonfarm areas, by quarters, fiscal years 1940 and 1941 uarter uarter Fiscal year 1940 124, 265 July-September ---------------------..------------ October-December -------------------------January-March .. ---April-June .----------....----------------- - 117,224 99,322 143, 427 Fiscal year 1941 150, 634 146, 617 128, 872 189,936 Percent increase 21.2 25.1 29.8 32.4 *Source: U. S. Department of Labor. Even more indicative of the acceleration in the rate of residential construction is a tabulation by quarters during the last two fiscal-year periods. On this basis, the first quarter of the current fiscal year shows an increase of 21 percent over the corresponding period a year 15 SURVEY OF HOUSING AND MORTGAGE FINANCE CHART III INDICES OF RESIDENTIAL CONSTRUCTION INDEX 1935 -1939 AND INDUSTRIAL PRODUCTION = 100 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD CHART IV CONSTRUCTION OTHER THAN RESIDENTIAL CONSTRUCTION CONTRACTS AWARDED 1935- 1939 = 100 INDEX or"x BY YEARS BY MONTHS 160 - 160 140 120 100 80 60 20t .. . . . , . ., , . 6 , , , 17 , . 18 =: , p , 19 Source: Board of Governors of the Federal Reserve System, based on reports of the E W Dodge Corporation o , , 1931940 ,A . . .. 1940 . . -. . . . .. MAR. JUN. 1941 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD 16 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 previous, while gains of 25, 30, and 32 percent were scored in the second, third, and fourth quarters. Despite the increased volume during the fiscal year 1941, residential building failed to keep pace with nonresidential building because of the rapid expansion in plant facilities which has accompanied the defense program. Only a short time ago idle factories and equipment were commonplace. Today, the sithation is completely changed. The staggering job of meeting within the shortest possible period of time the production demands of an all-out defense program has necessitated plant expansion on a huge scale. The Defense Program and Residential Building Like so many other fields of economic activity, residential construction during the fiscal year 1941 was greatly affected by the defense effort and, more particularly, by the CHART V program of defense housing. The DISTRIBUTION OF RESIDENTIAL CONSTRUCTION necessity of providing adequate PRIVATE AND PUBLIC NUMBEROF NONFARMDWELLINGUNITS shelter in defense areas, so that THOUSANDS no essential productive activity is hindered by the lack of housing 300 accommodations for defense j -C -PRIVATE : workers, is basic to the Nation's 250 , preparedness program. The stimulus given to the whole economic system by the program of national defense, as evidenced by rising industrial production, increased national 100 income, decreased unemploy ment, rising wages, and so forth, has in itself undoubtedly ac counted for a substantial amount of new residential building. In Jan:Jul.JanJul.Jan.Jul.Jan Jun Dec. Jun Dec Jun. Dec Jun. u938 1939 19 4 0 =i 1941 a sense then, it might be said OIVISIONOFRESEARCH AND STATISTICS that the general defense effort of FEDERALHOME LOAN BANKBOARD the country has been the primary cause of the increase in residential construction activity during the current fiscal year. The effects of the defense program are most clearly visible in the public housing field. During the fiscal year 1941, the total number of dwelling units provided in nonfarm areas through public funds 200 ,. 17 SURVEY OF HOUSING AND MORTGAGE FINANCE amounted to 105,788, or nearly twice the previous record set during the 1940 reporting period. According to the United States Depart ment of Labor, 63,767 units, or 60.3 percent of this total, represent defense housing placed under construction contract in localities where the preparedness program necessitated additional housing facilities. While these figures show the direct result of the defense emergency on public housing, they indicate only one part of the story. The substantial increase in the volume of housing provided by private resources, amounting to 84,454 units, was also broight about in substantial measure by the urgent need of additional housing facilities in defense localities. CHART VI IN PRIVATE RESIDENTIAL CONSTRUCTION DEFENSE AND NONDEFENSE AREAS INCREASE IN COMPARISON OF FIRST 6 MONTHS OF 1940 AND 1941 P E R C E N T TOTAL CONSTRUCTION 20 10 0 &II 22.3 S2. 30 IN C R E A S E 40 50 I 60 DEFENSEAREAS 257 NONDEFENSE AREAS I - FAMILY DWELLINGS 2-FAMILY DWELLINGS MULTI-FAMILY DWELLINGS 52.1 2.8 6.3 357.5 ~::i:.. ; :: ' .::.:. :::::: DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD The concentration of private housing in defense areas is illustrated in the chart above. During the first six months of 1941, private residential construction in "defense localities," 1 which represented over 75 percent of all private residential building in incorporated places, expanded by 22 percent as compared with a growth of only 13 percent during the first six months of 1940. These percentage gains un doubtedly minimize the stimulating effect of the defense program on private building, for they have been restricted to residential construc tion activity within city and town limits and, therefore, fail to take into account the large volume of housing located immediately outside boom towns. 1 "Defense localities" are defined as those areas for which public housing funds have either been allocated or where allocation is definitely under consideration as well as those which have been designated for FHA insurance under the new Title VI of the National Housing Act. 18 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 It must be recognized that a certain proportion of new private hous ing has undoubtedly been built to meet normal replacement require ments or to fill a demand divorced from any but the most indirect influence of the defense emergency. However, the substantial gains in private residential construction do signify that private housing is meeting a major portion of the demand for housing in defense areas. It should be noted in this connection that even where new home construction in defense areas is not specifically designed for occupancy by incoming defense workers, it does make available additional va cated units which may be used for this purpose. For this reason, any additional housing in defense areas helps in the execution of the armament program. Growing Importance of Public Housing As already stated, the number of publicly-financed nonfarm dwelling units on which construction was started in the 1941 fiscal year aggrer gated 105,788, an increase of 81 percent over the preceding fiscal yea. This rise is directly reflected in the share of total residential construc tion attributed to public housing during the reporting period. Housing CHART VII ESTIMATED VALUE OF RESIDENTIAL CONSTRUCTION INCLUDING MAINTENANCE BILLIONS OF DOLLARS 6 UNITED STATES; 1915-1940 MAINTENANCE:. S 4t Source: U.S. Deportment of Commerce 4 ^ TOTAL RESIDENTIAL <3CONSTRUCTION ..... .... .. .. DIVISIONOF RESEARCHAND STATISTICS FEDERALHOME LOANBANK BOARD SURVEY OF HOUSING AND MORTGAGE FINANCE 19 financed with Government funds represented 17 percent of total new nonfarm units in the fiscal year 1941 as compared with 12 percent during the previous year. The relationship between public and private housing in total residential construction activity is illustrated in Chart VII which indicates the volume of expenditures for new construction and maintenance, with a breakdown to show the relative amounts provided from private and public funds. The factor almost solely responsible for the increase in public hous ing was, of course, the necessity of meeting the demand for additional housing accommodations in defense centers which could not for good reason be met with private resources. The volume of public housing provided under the United States Housing Act of 1937 and the New York Public Housing Law of 1939 amounted to 60,200 units during the fiscal year 1941 as compared with 58,421 during the previous year. Included in this total for 1941 are 18,179 units placed under construc tion contract which will be used to house defense workers, for the duration of the emergency, but which will revert to their original function of slum clearance projects when they are no longer needed for this purpose. There was, therefore, relatively little increase in the volume of housing constructed for immediate or ultimate use as slum clearance projects. The following table compares the expansion of publicly-financed construction with the increase in private building activity in nonfarm areas: Comparison of private and public residential construction in nonfarm areas Total construction Fiscal-year period 1938-__- 1939__ - _____- --__ 1940 ____. _ 1941.-__-. --- _ Dwelling Increase units over precedstarted ing year Dwelling units started Number Number ____ 273,742 _____ 484,238 616, 059 _____ Private 419, 539 Percent ______ 53.3 15.4 27.2 _ 273,022 394,034 425,817 510,271 Public Increase Dwelling Increase over precedunits over preced ing year started ing year Percent ____________ Number 720 44. 3 25, 505 8.1 19.8 58 421 1105,788 Percent --- 3, 442. 4 129.1 81.1 1 Of this total, 63,767 units were built in defense housing projects. Direct construction of housing by Governmental agencies has resulted from two specific needs. The first is exemplified in the program of the United States Housing Authority-to replace sub marginal housing by providing decent living quarters which are rented on a subsidized basis to slum dwellers. The second is the urgent problem of meeting housing needs in defense areas where private 20 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 industry cannot handle the job because of the temporary character of the demand or because the demand is for housing at uneconomic rent levels. Present trends would seem to indicate that public housing for defense will play an increasingly important role in total residential construction activity. Where New Housing is Built During the 1941 fiscal year, the rate of private residential construction in nonfarm areas showed gains ranging from 4.1 to 32.4 percent in the nine major geographical divisions of the country. The East North Central, South Atlantic, New England, and East South Central States led the other Districts with increases of 25 percent or more, while the Middle Atlantic and Mountain States at the other end of the list showed increases of slightly more than 4 percent. The highest rates of private residential construction, continuing the trends of the last several years, were found in the Pacific, Moun tain, and Southern States. The lowest rates of residential construc tion, in terms of population, were found in the New England and the Middle Atlantic States. It is interesting to note that the New England States, where the rate of construction is lower than for any of the other eight geographical divisions, experienced one of the highest percentage increases during the reporting period. On the other hand, the Mountain States, which ranked second in terms of rate alone, experienced a gain of only 4.4 percent as compared with the previous year. Private residential construction in nonfarm areas, fiscal years 1940 and 1941 [Rate per 100,000 population] I Percent increase Geographic division 1940 1941 New England---.-- Middle Atlantic_------. East North Central-.... 206. 7 282. 2 331.4 270. 3 293. 7 438. 9 30.8 4.1 32.4 South Atlantic---------- 597.8 791.0 32.3 West North Central--... East South Central-... 351. 1 365.7 382. 9 460. 6 9. 1 26.0 G d9ces Geographic division West South Central-.... Mountain .-----------Pacific---------------. 1940 1941 504. 6 543. 2 581. 5 606. 9 981. 0 1, 192.4 United States total419. 4 502. 6 re 7. 6 4.4 21.5 19.8 1 In the compilation of this material, building permit data collected by the U. S. Department of Labor have been used; publicly financed units are excluded. In order to provide a basis for comparison of resi dential building activity between various sections of the country, a ratio of the total number of new family dwelling units to existing nonfarm population has been computed instead of the absolute number of dwelling units provided. Population estimates used in computing the rate of building are based on the U. S. Census of 1940. To complete the picture of where residential construction was carried on during the last fiscal year, the statistics have been expressed in the table below in terms of rate per 100,000 population in cities of varying size. Generally speaking, the highest rates were found in smaller communities and in rural nonfarm areas. 21 SURVEY OF HOUSING AND MORTGAGE FINANCE Rate of private residential construction, by size of community, fiscal year 1941 [Rate per 100,000 population] 502 488 413 432 485 Total nonfarm.---. --------------Total urban ----------------..--- . 500,000 and over- ....-------100,000-500,000_._...-- -----------. 50,000-100,000------------------- Fiscal year Population group year Fiscal 194] Population group 1941 25,000-50,000-----------------570 10,000-25,000-.---..-----------------579 . ----- --------------585 5,000-10,000--2,500-5,000---------------------------572 542 Rural nonfarm_---------------- ----- The increasing rates of construction in smaller communities are particularly interesting in view of population trends disclosed by the 1940 Census. Briefly, the Census showed that during the Thirties, CHART VIII INCREASE IN RESIDENTIAL CONSTRUCTION BY SIZE OF COMMUNITY FISCAL YEAR 1941 0 5 10 15 PERCENT 20 INCREASE 25 30 35 4 45 _ 50 TOTAL NONFARM 500,000 and over 50,000-500,000 2,500- 50,000 RURAL NONFARM N. 4, : DIVISION OF RESEARCHAND STATISTICS FEDERALHOME LOANBANK BOARD the highest rates of population increase occurred in small communities. Thus, the percentage increase in the number of persons living in communities of 500,000 or over was 7.4 percent during the decade of the Thirties, 4.4 percent in cities of 50,000 to 500,000, and 13.7 percent in urban areas of 2,500 to 10,000. Rural nonfarm areas show an even higher gain of 14.5 percent. This trend was a direct reversal of the population curve of the Twenties. 2 The above chart illustrates the higher percentage gains in total residential units provided during the fiscal year 1941 in smaller communities. Continued Preferencefor Single-Family Houses The Eighth Annual Report of the Federal Home Loan Bank Board emphasized the long-range trend toward an ever growing proportion 2 For detailed information on population trends as disclosed by the 1940 Census, see pp. 35-38. 22 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 of single-family dwellings in the annual additions to the residential housing supply of the country. This development, which started with the recovery of residential construction in 1935, is contrary to our experience in the upswing of previous building cycles. During the Twenties, for example, the proportion of new dwelling units con tained in apartment houses rose substantially during the period 1922 to 1928. During this same period, construction of one- and two-family houses remained relatively stable. CHART IX NUMBER 'THOUSANDS OF NEW NONFARM DWELLING UNITS BY TYPE OF DWELLING: 1921-1940 Source.NationalBureauof Economic Research 1921-1936 U.S. Department of Labor 1937-1941 BUILT DIVISIONOFRESEARCH AND STATISTICS FEDERAL HOMELOANBANKBOARD During the year under review, single-family houses assumed a posi tion of even greater importance. Approximately 81 percent of total nonfarm units built are found in dwellings of this type as compared with 78 percent during the previous fiscal year. The gain in single family home construction was made at the expense of multifamily housing developments as Exhibit 1 and the chart above indicate. The number of new single-family dwelling units provided during the fiscal year 1941 totaled 497,230, an increase of 32.4 percent over the previous fiscal year. The total volume of units provided in multi family structures, on the other hand, amounted to 80,018 during the SURVEY OF HOUSING AND MORTGAGE FINANCE 23 reporting period, or a gain of only 1.8 percent. The number of units provided in two-family structures showed a good increase during the fiscal year 1941 from 30,162 to 38,811. However, the relative impor tance of this type of housing remained practically unchanged, the figures for each of the last two fiscal years representing but 6 percent of the total new housing constructed. Undoubtedly one of the main explanations for the predominant posi tion of single-family houses in the volume of new construction during recent years is the fact that our population is increasing at a much faster rate in smaller communities and suburban areas than in central cities where most apartment building is concentrated. The tradi tional preference of the average American for a single-family home of his own is much more easily satisfied if he lives in a community where there is no problem of crowded living. It is no mere coincidence that the 1940 Census shows population during the Thirties to have grown three times as rapidly in suburban areas as in the central sections of our metropolitan communities. Improvement in the Real-Estate Market Recent Annual Reports of the Federal Home Loan Bank Board have emphasized that the real-estate market in this country has made only an incomplete recovery from the depression of the early Thirties. Reasons why recovery has lagged in this field are not difficult to find. Real estate is by its nature a commodity which moves slowly. Prices at which properties have been offered for sale have only recently been adjusted to realistic levels since many property holders refused to incur the very heavy sacrifices which would have been inevitable had they disposed of their investments at the depth of the depression. The avalanche of foreclosures during the first depression years resulted in an institutionally-owned overhang of properties which further deflated prices. Depreciation and obsolescence have exacted a heavy toll on older properties remaining unsold. The task of liquidation under these conditions has naturally been a difficult one. Until recently, the market has functioned under the in fluence of mixed and somewhat paradoxical trends. Thus, the sale prices of older and larger properties have steadily declined, reflecting competition with new low-priced homes and the common preference of prospective home purchasers for small new houses located in attractive neighborhoods. On the other hand, the institutionally owned overhang of properties has been steadily if slowly reduced, foreclosures have dropped to near normal levels, and sales activity, 24 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 particularly in the lower price brackets, has been on the upgrade. Compared with the slow recovery during the past few years, the real-estate market showed an accelerated improvement during the reporting period. The immediate return to boom conditions expected by a few optimists after the outbreak of the European war failed to occur, but all market factors, at least up to the present time, have been advancing in a positive direction. Sales activity, which was already showing a good increase during the 1940 fiscal year, moved upward during the reporting period to a new post-depression peak. Reports on the volume of real-estate transfers and general market activity show a continuing improvement which is encouraging to those engaged in the field of housing and mortgage finance. In many localities, definite tendencies toward a stiffening of the prices at which older properties are sold have been noted, although the demand for this type of structure is still much slower than for small, new, single-family dwellings. Member institutions of the Federal Home Loan Bank System, as well as other institutional holders of repossessed properties, also made excellent progress in liquidating their holdings during the current fiscal year. Prices have not only held up m most areas, but in some localities show a tendency to increase. As the defense program gathers greater momentum, it is having more and more noticeable effects on all sectors of the real-estate market. Thus, in a few locali ties where industrial activity has reached a new high pitch, there has been a concomitant upswing in real-estate activity. It is too early to draw any basic conclusions as to the long-run effects of the defense program on the real-estate market, but the few signs now available point toward increasing improvement. The excessive tax burden borne by real estate in many communities remains one of the major bars to further recovery of the real-estate market. Property tax levies show little change since the Board stated in its Annual Report a year ago: "Overvaluation of properties in terms of present prices and revenues, outmoded tax-appraisal methods, high tax rates, and excessive costs of tax collection through out the 175,000 overlapping tax jurisdictions discourage owner-occu pancy and investment in real estate alike." Statistics for 252 cities collected by the Detroit Bureau of Governmental Research, Inc., show, for example, that there was an increase of 1.0 percent in the average adjusted tax rate per $1,000 during 1940, accompanied by a decline of 1.5 percent in average assessed values. 25 SURVEY OF HOUSING AND MORTGAGE FINANCE 1 Comparisons of 1940 and 1939 average adjusted tax rates of 252 American cities Average adjusted rates per $1,000 of assessed value Average adjusted rates per $1,000 of assessed value Population group 500,000 and over _---300,000-500,000_-------100,000-300,000 -- --50,000-100,000--- ----- group __Population 1940 1939 $28.87 29.39 29.08 27. 14 $28.41 27.92 29.21 26.64 1940 Percent change +1.6 +5.3 - 0. 4 +1.9 30,000-50,000---------.All 252 cities -- - 1939 $27.65 $27.51 ---28.01 27.72 Percent change +0.5 +1.0 1 Source: National Municipal Review, December 1940, p. 795. Although tax rates are still on the increase, there has been a notice able deceleration in the rate during the last four years, indicating the possibility that rates are becoming more or less stationary. Accord ing to the Detroit Bureau, one explanation for this tendency may be that revenue from the taxation of real property may be approaching a point of diminishing returns-"further increase in tax rates may produce political reverberations and a migration of assessed values." 3 Further Decline in Foreclosures One of the most positive gauges of improving real-estate market condi tions is the steady decline in foreclosure activity. During the fiscal year 1941, the total number of nonfarm real-estate foreclosures de clined 20 percent from the previous year and represents the lowest annual volume since 1926. This latter year is generally considered to have been the low year of the previous foreclosure cycle. Foreclosures brought by the Home Owners' Loan Corporation have a strong influence on the trend for the country as a whole. In order to show the most accurate relationship between foreclosures and the normal real-estate market, Chart X has been prepared to illustrate the volume of foreclosures for each year since the previous low point of 1926, with separate trend lines for the Home Owners' Loan Cor poration and others. The chart shows clearly that the volume of "all other foreclosures" has been declining steadily for several years and is now at an encouraging low and stable level. Improvement of the general foreclosure picture during the last fiscal year was widespread among the Federal Home Loan Bank Districts. Each District and all but one State show a reduction in the number of foreclosures initiated during the reporting period as compared with the previous fiscal year. However, there are still a 3NationalMunicipal Review, December 1940, p. 793. 3 425085-41- 26 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 CHART X NONFARM REAL ESTATE FORECLOSURES IN THE UNITED STATES BY YEARS THOUSANDS 28 '29 '30 '31 '32 BY QUARTERS THOUSANDS '33 '34 '35 '36 D M J M 1937 J S J S D J S 1939 1938 S D J J S 1940 D M J 1941 DIVISIONOFRESEARCH AND STATISTICS FEDERALHOMELOANBANK BOARD CHART XI RATE OF NONFARM REAL ESTATE FORECLOSURES, FISCAL YEAR 1941 NUMBER OF FORECLOSURES 1.0 1.5 PER 1,000 HOMES 24 :7 " 45 SURVEY OF HOUSING AND MORTGAGE FINANCE 27 few States in which foreclosures are somewhat high. The map on the opposite page, which illustrates the foreclosure rate for each State during the fiscal year 1941, shows clearly that the States with the highest rates are concentrated along the Atlantic Coast and in New England. Four States in this region, New York, Massachusetts, Pennsylvania, and New Jersey, show a rate well above the national average of 3.6 per thousand nonfarm dwellings. States west of the Mississippi, with the exception of Missouri and Kansas, all show a rate lower than the national average. It is no coincidence that the remaining problem areas as far as foreclosures are concerned are the same areas where the real-estate market suffered most severely and where recovery has been slowest. A further reason for the higher volume of foreclosures along the Eastern Sea board is the fact that there are a large number of highly urbanized areas in this region. For many years, larger communities have shown the highest foreclosure rate. Although foreclosures can be expected to continue in some volume in these regions, the improve ment so far shown, plus the fact that in most areas of the country foreclosures have once more reached a low level, would appear to indicate that foreclosures no longer constitute a major economic problem. Exhibits 2 and 3 present data on nonfarm real-estate fore closures for the United States and for each Federal Home Loan Bank District. Liquidation of Real-Estate Overhang The declining rate at which financial institutions are acquiring resi dential properties, coupled with steadily increasing sales activity, is bringing about a substantial reduction in the real-estate overhang. During the calendar year 1940, the estimated book value of residential property owned by selected financial institutions, including savings and loan associations, mutual savings banks, commercial banks, life insurance companies, and the Home Owners' Loan Corporation, de clined from $2,401,594,000 1 to $1,863,879,000, or by 22.4 percent. The chart on page 28 illustrates the progress made during the last two years by each of the aforementioned institutions in disposing of owned properties. Savings and loan associations and the Home Owners' Loan Cor poration led other institutions in liquidating their acquired real estate during 1940. Savings and loan associations are estimated to have decreased their holdings by $188,686,000, or 27.7 percent. Real estate owned by the Home Owners' Loan Corporation declined $123,953,202, 1Revision. 28 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 or 26.8 percent. Life insurance companies show a drop totaling $120,076,000, or 21.3 percent. The balance sheet of commercial banks shows a reduction in residential real estate of $55,000,000, or 22.4 percent, and the comparable figures for mutual savings banks were $50,000,000 and 11.1 percent. Estimates of the real-estate overhang do not include such items as real estate owned by individuals, closed banks, and some other financing institutions, but they do show a fair picture of current trends in the liquidation of owned real estate. The volume of repos sessed properties held by financial institutions-$1,863,879,000-is still substantial and in itself emphasizes that there remains a liquida tion problem of some significance. However, the present real-estate CHART XII REDUCTION IN RESIDENTIAL REAL ESTATE OVERHANG AS OF DEC. 31 MILLIONS S500 1,000 EACH. YEAR, 1938-1940 OF DOLLARS 1,500 2,000- 2,500 3,000 .............. 1939 1939 R.......... ... 1940 . i~i-J SAVINGS a LOAN ASSOCIATIONS MUTUAL SAVINGS BANKS COMMERCIAL BANKS LIFE INS. COMPANIES HO. L. . DIVISION OF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD overhang is largely concentrated in a few States along the North Atlantic Seaboard and except for these areas no longer represents the basic threat to stability of the real-estate market which it did a few years ago. Provided another wave of foreclosures does not occur in the near future, it would appear that financial institutions throughout most of the country have made excellent progress in disposing of a particularly slow asset. For the past few years the concentration of owned real estate has been most serious in the four States of New York, New Jersey, Pennsylvania, and Massachusetts. Despite a reduction in the dollar volume of holdings during 1940, these four States still account for 75 percent of HOLC holdings, for 70 percent of residential properties owned by insured commercial banks, for 44 percent of small homes SURVEY OF HOUSING AND MORTGAGE FINANCE 29 owned by life insurance companies, and for 55 percent of the real estate holdings of savings and loan associations. In addition, about 87 percent of all real estate owned by mutual savings banks is located in these four States. Although the overhang problem is no longer as acute in this area as in the past, there still remains much to be done before institutions in this region can operate on a normal market. There are two important reasons for the substantial improvement shown by lending institutions during 1940 in liquidating their property holdings. The first of these is the belated recognition that it is highly dangerous for financial institutions to hold real estate in definitely in hope of recovery on a rising market. There has, there fore, been an increasing tendency for institutions to price their proper ties realistically and to make concerted drives to sell their properties at the best possible figure, taking whatever losses may be necessary. The second determining factor has undoubtedly been the revival in general business conditions attendant upon the defense program. In many localities where industrial activity has made rapid headway during the last year, financial institutions have found a vastly im proved market for their properties. A need for additional housing accommodations brought about by influxes of workers into industrial cities has also stimulated sales activity. Many financial institutions have engaged in extensive repair and rehabilitation programs in order to meet a demand for decent, adequate shelter in areas where shortages have arisen as a result of defense activity. The steadily mounting volume of employ ment and increasing income in the hands of industrial workers has in itself operated to broaden the market for existing residential properties. More and more individuals in this class are finding themselves with sufficient resources to acquire a home and in a large number of cases, particularly where there are large families involved, housing needs are best met by reconditioned older properties. Higher priced and smaller new homes are more often than not outside the reach and need of such individuals. Exhibit 4 shows data on residential real estate owned by selected financial institutions, tabulated by Federal Home Loan Bank Districts and by States. Building Costs-DangerSignals In its Eighth Annual Report, the Federal Home Loan Bank Board pointed out that building costs, unlike financing costs, had failed to show any appreciable decline during the past several years. During the first depression years, from 1929 to 1933, the price of building materials declined less than did the prices of most other commodities. 30 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, Despite this fact, after 1933, the price of building materials rose at a rate substantially higher than that for other commodities. Following the outbreak of the European war in the fall of 1939, further increases resulted, and at the beginning of the 1941 fiscal year, the index of wholesale building material prices compiled by the Department of Labor stood at 103.2 as compared with a figure of 96.2 for all commod ities (1935-1939=100). CHART XIII WHOLESALE PRICE INDICES OF LUMBER, ALL BUILDING MATERIALS AND ALL INDUSTRIAL COMMODITIES 1935 - 1939 = 100 INDEX 140 .---- 130 --- 140 ----- -------- -------- 3 120 - 0 90 80 -- _/_,..< ---- ---------------- -- -- ---- I I JUN. *,* 1I II DEC. 1935 LUMBER BUILDING MATERIALS I II II I i II JUN. I I BEC 1936 JUN. 1937 II I I DEC. II JUN. 1938 II I 1I DEC. I JUN. 1939 DEC. JUN. 1940 DEC. JUN. 1941 DIVISIONOF RESEARCH AND STATISTICS Source: U.S. Department of Labor FEDERALHOMELOANBANKBOARD During the first six months of the reporting period, when the defense program was going ahead at an ever accelerating rate, the index of wholesale building material prices advanced to a figure of 110.9 at the end of December 1940. During this same period, the index of all commodities rose to 99.3 During the second half of the fiscal year, building costs continued to increase, although at a some what declining pace. At the close of the fiscal year, in June 1941, the index stood at 112.8, or 9.3 percent above the figure for a year previous. Although wholesale prices of all groups of building materials which are included in arriving at the composite building material index 31 SURVEY OF HOUSING AND MORTGAGE FINANCE showed increases during the year under review, the tremendous jump in lumber prices during the first half of the year was largely responsible for the rapid rise in the index as a whole. The behavior of lumber prices which increased 25 percent during the last six months of 1940 gave considerable concern to those engaged in the building and home financing fields. In September 1940, the National Defense Advisory Commission stated that "the defense program did not justify any increase in lumber prices . . " CHART XIV COST INDICES FOR CONSTRUCTION 1936 1937 OF A STANDARD 1935 -1939 = 100 1938 1939 SIX ROOM FRAME HOUSE 1940 1941 DIVISION OF RESEARCHAND STATISTICS FEDERALHOME LOANBANKBOARD During the second half of the fiscal year, when the cantonment building program of the Army had largely been completed, lumber prices remained relatively stable, and even showed slight declines in some months. Nevertheless, the index of lumber prices stood at 131 in June 1941, an increase of 24 percent over the figure for a year previous. Rising building costs during the fiscal year 1941 are also indicated by the Federal Home Loan Bank Board's index of material and labor costs for constructing a standard six-room frame house in selected cities. Because it is based on dealers' prices, which usually lag behind 32 REPORT OF FEDERAt HOME. LOAN BANK BOARD, 1941 wholesale price quotations, this index does not reflect the substantial increases shown by the Department of Labor's statistics on wholesale prices. Nonetheless, the cost index of materials used in building the standard house increased from 101.3 to 109.2, and the labor index from 103.5 to 118.6 during the reporting period (1935-1939=100). As the chart on page 31 indicates, the rate of increase slackened somewhat after the beginning of 1941, but each month after January 1941 represented a new high for the index since it was started in 1936. Exhibit 5 shows the cost indices from January 1936 through June 1941. Labor Supply The stimulus of the defense program has had very noticeable effects on the demand for construction workers. Rapid plant expansion, construction of Army cantonments, shipbuilding, defense housing, residential building CHARTincreased CHART XV . CONSTRUCTION EMPLOYMENT AS OF JUNE 30 EACH MILLIONS OFEMLOYEES 2.0 - 1.8 1.6 1.4 7- 0.8 0.6 o I - ~ - YEAR all have had a hand in creating more job opportunities than have existed since long before the depression years. As indicated in Chart XV, the number of S construction workers employed on June 30, 1941, was higher by far than at the close of the six j i Sprevious fiscal years. v iThere is no indication as yet that widespread shortages of con struction labor have developed. S However, surveys of the labor market, conducted by the Bureau of Employment Security of the Social Security Board, show that .. i,1 .. DIVISION OF RESEARCHANDSTATISTI in numerous localities serious FEDERALHOMELOANBANK BOARD .935 93 1937 . m" ' local shortages have already oc 1935 1936 1937 1938 1939 1940 1941 curred. There are also some Source: U.S. Department of Labor indications of secondary short ages in smaller communities because the normal labor supply has been drawn into nearby cities where large defense contracts have been let. The defense program and rising industrial production may well raise serious problems in the construction field as far as the supply of labor is concerned. During the 1930's, when the volume of both residential and nonresidential construction remained at consistently 0.4 - SURVEY OF HOUSING AND MORTGAGE FINANCE 33 low levels as compared with the previous decade, there was a very natural decline in the number of skilled craftsmen in this field. Many workers were forced to enter employment in related or new fields, fewer younger men became apprentices in the various building trades, and the nucleus of trained specialists declined in size due to death, advancing age, and lack of replacements. This development is clearly shown by reports from many areas of high industrial activity at the present time where serious local short ages, particularly of skilled workers, have been reported. Various industries have been forced to engage in extensive training programs to build up the available labor supply and to reorganize work activity in order that more and more of the load can be handled by relatively untrained and unskilled labor. It should also be noted that the Selective Service Program, while it has drawn few skilled professional laborers out of the market, has cut down in some degree the number of younger unskilled workers available for training. Rents and Vacancies In view of generally rising prices during the fiscal year 1941, over-all rent indices remained surprisingly stable. For the two fiscal years prior to the reporting period, the index of residential rentals compiled by the National Industrial Conference Board had shown only minor fluctuations. For most of the fiscal year 1941, as shown by the chart on page 34, the index remained fairly even, although there was some indication of a slight rise toward the close of the year. However, local studies, which have been conducted by the Depart ment of Labor in defense communities from time to time during the fiscal year 1941, showed a more pronounced trend toward rising rents, particularly in units which rent for $30 or less per month. Up to the present time, these substantial increases in rentals have been confined to relatively few localities where concentrated armament orders and greatly expanded Army and Navy activity have created real boom conditions with nonexistent vacancies, rapidly rising rents, doubling up of occupants, and increased real-estate prices. Whether such conditions will become more widespread depends primarily upon the extent to which new construction is successful in meeting housing shortages. Generally, the situation is made more acute by the lack of large reserves of unoccupied family dwelling units in most communities. As of April 1, 1940, the date on which the last decennial Census was taken, vacancies throughout the country were low. For the country 34 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 as a whole, the Bureau of the Census reported a vacancy ratio of 5.0 percent. In urban areas, the rate was only 4.3 percent and in rural, 6.1 percent. Since completion of the Census, numerous WPA surveys have been made in a large number of defense localities. Almost without exception, these surveys showed declines in vacancy ratios from the low figures disclosed at the time the Census was taken. As in the case of rising rents, the lowest vacancy ratios and those showing the greatest declines are reported by communities in which CHART XVI INDEX INDEX OF RESIDENTIAL RENTALS 1935-1939 = 100 1932 1933 1934 1935 1936 Source: National Industrial Conference Board 1937 1938 1939 1940 DIVISIONOF RESEARCHAND STATISTICS FEDERALHOMELOAN BANKBOARD the defense program has brought about immediate demands for new housing accommodations. Again, the extent to which this condition may become common throughout the country cannot be determined on the basis of information presently available. Where vacancies are low or nonexistent, it follows, of course, that there will be a tendency for rents and real-estate prices to increase substantially. Long-range Market Factors The real-estate market today is most vitally subject to the influences not of normal long-range trends, but to the swift day-to-day changes brought about by the defense program. If, as seems most likely, SURVEY OF HOUSING AND MORTGAGE FINANCE 35 the country finds it necessary to expand its defense preparations at an ever-increasing tempo, the real-estate market may necessarily be subjected to emergency action which will determine its entire course, at least for the duration. On June 29, 1941, a program for giving priority aid to defense housing was announced. It is possible that similar action may have to be taken to assure an adequate supply of construction labor on defense projects. Heightened taxes, enforced savings, outright restriction of consumer purchases-any such development if it occurs, would mean a very sharp reduction in the output of housing just as it would mean belt tightening in many lines of economic lactivity not directly related to the preparedness program. In short, the Board recognizes that any discussion of real-estate market factors, whether it be from the stand point of immediate conditions or long-range trends, must recognize first of all that the paramount defense effort of the country may require a reduction of residential building except in those areas where new accommodations are essential to house defense workers. However, it is important to remember that such long-range factors as population trends, number and size of families, changing age structure of our population, degree of urbanization, and decentraliza tion will always, ovdr a period of time, play a heavy role in shaping housing demand. The over-all picture of current population trends is summarized in the comparative rates of increase during the last two decades. Thus, from 1920 to 1930, the total population of the United States increased from 105,710,620 to 122,775,046, or by 16.1 percent. Dur ing the decade of the Thirties, the number of individuals residing in this country reached the figure of 131,669,275, or an increase of only 7.2 percent. Even such unpicturesque over-all figures as these are a strong indication that we are approaching a stage of relative maturity in population growth. The story of population trends during the 1930's is no less important however, merely because the rate of increase was substantially under that of preceding decades. The most revealing fact about current population trends yet shown by the 1940 Census is that present day developments must be measured in terms of local shifts and variations rather than in terms of over-all expansion. Internal movements and migrations of population are quite as important a determinant of housing need as were the over-all gains of previous years. Census statistics on the growth of population during the Thirties in communities of varying size present a significant picture when compared with trends in the same localities during the preceding 36 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 decade. The chart below, for example, shows that from 1920 to 1930 the rate of population growth in larger cities was higher by a considerable margin than in smaller communities. During the Thirties, exactly the reverse was true with smaller communities and rural nonfarm areas showing far and away the largest percentage increase. During both decades, cities in the largest population group, however, show a contrary trend. The analysis of urban popula CHART XVII* tion trends is incomplete without POPULATION GROWTH, BY SIZE OF CITY particular attention to move 1920-1930, 1930-1940 PERCENT ments within metropolitan dis 40 tricts. The 1940 Census lists 35 63,000,000 people who are resi -- 1920-1930 dents of metropolitan districts, a 30 30 940 ---1iio - 1 gain of 15 percent during the Thirties. Total population in creased only 7 percent during the same ten-year period. The 20 1940 growth in metropolitan districts is attributable in part at least to the addition of new districts on the Census list which in 1940 included 140 as compared with 96 in 1930 and 85 in 1920. A difference in definition of the TOTAL 500000 50 0002O500RURAL NONFARMANDOVER 500,000 50000 NONFARM term "metropolitan district" by Source:- Bureau of the Census the Census Bureau accounts for DIVISION OFRESEARCH AND STATISTICS FEDERAL HOMELOANBANKBOARD a number of the areas added in the 1940 Census. More significant, perhaps, is the measurement of population growth in the 133 metropolitan districts for which information is available for both 1930 and 1940. Suburban areas in these districts show a gain of over 2,700,000 people during the Thirties, while central cities added only 2,000,000 to their population. On a percentage change basis, outlying districts were growing three times as rapidly as central cities. Individual cities show variations of this over-all pattern, of course. In some instances, actual losses were registered in central cities, while suburbs grew rapidly. In other cases, the entire metropolitan dis trict remained virtually static. In the majority of cities, however, there was a small gain in the central district and a rapid increase in the suburban area. Exhibit 7 gives a detailed breakdown showing population growth in individual metropolitan districts. *Figures underlying Chart XVII will be found in Exhibit 6. SURVEY OF HOUSING AND MORTGAGE FINANCE 37 Populationof 133 comparable metropolitan districts, inside and outside central cities, 1930-1940 Total population Increase, 1930-1940 1940 Number Location In central cities --------------Outside central cities .-------.------.------- Total ----------- 1930 Percent 42, 350, 996 19, 985, 686 40, 343,442 17, 259,423 2, 007, 554 2,726, 263 5.0 15. 8 62,336,682 57, 602,865 4, 733,817 8.2 Causes for the steady shift out of central cities into surrounding suburban areas are not difficult to find. Decentralization results, among other causes, from congestion of central business districts, high tax rates in older sections of the cities, poor zoning and planning, re strictive building codes, ease of transportation resulting from wide spread ownership of automobiles, and blighted areas which have been permitted to develop in many older communities. There is strong evidence that decentralization has already reached a point in a number of cities where the advantages to be obtained from a movement to newer and better planned developments are exacting an uneconomic toll from the community. Thus, as the radius of a city is expanded through the settlement and growth of suburban districts, the area which must be served by the municipality increases in geometric propor tion and causes corresponding heavy increases in the cost of municipal services. Extension of public utility lines, police and fire protection, city paving, and transportation systems all mean increased cost to local taxpayers. Where these services include too wide an area be cause of excessive decentralization, the result is a heavily increased tax burden which bears particularly hard on older properties in static or declining central city areas. Other significant population trends shown by the 1940 Census which have a direct bearing on the real-estate market include the "aging" of our population and a steady tendency toward smaller average size families. In April 1940, the number of persons aged 65 or over was 8,960,000, or 6.8 percent of total population, as compared with 6,630,000, or 5.4 percent in 1930. Statistics on younger age groups show that the number of persons approaching retirement will continue to increase in the future. Thus, in 1940 there were 25,947,000 persons, or 19.7 percent of total, in the age group from 45 to 64 years as compared with 21,415,000, or 17.4 percent, in 1930. Such changes as these in the age structure of our population have a direct influence on the need for housing. We may, for example, expect a greater demand for small,- compact dwelling units to house older people. 38 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, Of all population trends, probably none has greater significance in relation to the housing market than those reflecting the number and size of families, for housing demand is determined to a considerable degree by these two factors. On April 1, 1940, the number of private households (which corresponds closely to the number of families) was 34,860,000. It is, therefore, estimated that during the Thirties, there was a net gain of some 5,000,000 families, or 16.6 percent, as compared with an increase in total population of only 7.2 percent. Over half of the increase in the number of families during the Thirties resulted from a decrease in the average size of family from CHART XVIII PERCENT CHANGE IN POPULATION, BY AGE GROUPS UNITED STATES - 1940 OVER 1930 % DECREASE AGEGROUPS 10 5 PERCENT INCREASE 0 5 10 20 15 Source:- Bureu of the Census UNDERFEDERAL 14 - 25 30 35 40 DIVISIONOF RESEARCH AND STATISTICS HOMELOAN BANKBOARD 19 20- 24 25-44 45-64 65 AND OVER 9 Source:- Bureauof the Census DIVISION OF RESEARCH AND STATISTICS FEDERALHOMELOAN BANK ROARD 4.1 to 3.8. A drop in family size has been revealed by each Census since 1890 and further declines are likely because of a steadily decreas ing birth rate. Just as the number of families is a major determinant of the number of dwelling units needed, the number of persons in the average family decides, in the main, the size of units to be built. The increasing importance of smaller single-family houses in recent years in the total volume of residential construction is a direct reflec tion of this relationship. For example, the median number of rooms in new homes accepted for mortgage insurance by the Federal Housing Administration has dropped from 6.2 in 1936 to 5.6 in 1940. 4 4 Seventh Annual Report of the Federal Housing Administration, p. 66. SURVEY OF HOUSING AND MORTGAGE FINANCE 39 2. MORTGAGE FINANCE AND SAVINGS For the thrift and home financing industry, the fiscal year 1941 was a period of marked success. Home mortgage loans written by private lending institutions reached a new peak. Savings of individuals showed the largest net increase for any year since 1926, and brought the aggregate volume of long-term savings to a record level more than three times the 1920 total. The home financing industry at the close of the reporting period faced an uncertain and difficult future, but the success with which problems are being met justifies confidence in the ability of the industry to meet whatever readjustments the present emergency may necessitate. Continued Gains of Home Mortgage Lending Home mortgage lending once again showed substantial gains during the calendar year 1940, when the estimated volume of new mortgage loans written on one- to four-family homes totaled $3,322,000,000, an increase of 16 percent over the previous year. The chart on page 40 which shows the trend in the volume of home mortgage lending, by years since 1929, reveals that substantial recovery from the low point of 1933 has already been achieved with activity in 1940 closely ap proaching the 1930 level. When current trends in home mortgage lending are compared with prior years, account must also be taken of the fact that in recent years real-estate prices have been considerably lower than in predepression periods. The 1940 dollar volume of lending activity, in other words, undoubtedly means more in terms of the number of houses financed than did the volume of new loans made in 1929. All types of institutional lenders showed increased activity during 1940. Savings and loan associations again led the field by originating $1,200,000,000 in new loans, an increase of 22 percent over the previous calendar year. Commercial banks and their trust departments loaned $689,000,000, a figure 13 percent above the corresponding total dur ing 1939. Home mortgage loans written by life insurance companies increased 18 percent to a total of $324,000,000. Mutual savings banks placed $133,000,000 in home mortgages as compared with $112,000,000 the previous year. Individuals and others accounted for $865,000,000, a gain of 17 percent. Lending activity of the Home Owners' Loan Corporation deserves special comment. The Corporation has, of course, made no new mortgage loans since June 12, 1936, when its statutory authority to refinance mortgages expired. Since that time, 40 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 however, the Corporation has sold a number of acquired properties against purchase-money mortgages and has made supplemental advances to both borrowers and vendees for such purposes as the payment of delinquent taxes or the financing of needed repair and modernization work (see pages 143-4). These two factors account for "lending activity" of the Home Owners' Loan Corporation in the chart below during the period subsequent to June 1936. Exhibit 8 gives the estimated figures on mortgage lending activity for the years 1929 through 1940, by type of lender. CHART XIX HOME MORTGAGE LENDING ACTIVITY ESTIMATEDVOLUMEOF MORTGAGE LOANSMADEONNONFARMONE TO FOURFAMILYDWELLINGS 1929 THROUGH1940 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANK BOARD Chart XX on the facing page, illustrating the relative share of 1940 home mortgage lending accounted for by various lenders, shows that savings and loan associations continue to be the most important lend ing institutions in the small home field. The long experience of these institutions as specialists in the financing of homes has equipped them to maintain their predomindnt position, despite increasing compe tition from other lenders. The steadily increasing volume of savings and loan lending is even more clearly shown by the chart on page 42. Based on monthly lend ing reports received over the past five years, the Division of Research SURVEY OF HOUSING AND MORTGAGE FINANCE 41 and Statistics of the Federal Home Loan Bank Board has developed an index of new lending activity, adjusted for seasonal variations. By removing certain obscurities resulting from normal seasonal fluctua tions, the index shows with greater clarity than do monthly dollar statistics the upward trend of lending operations. A closer analysis of trends in mortgage lending activity is made possible by monthly statistics on mortgage recordings which have been collected by the Division of Research and Statistics of the Federal CHART XX ESTIMATED VOLUME OF MORTGAGE LOANS MADE ON NONFARM ONE-TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER CALENDAR YEAR 1940 H.O.L.C.- \S MUTUAL SAVINGS BANKS DIVISION OF RESEARCH AND STATISTICS FEDERAL HOME LOAN BANK BOARD Home Loan Bank Board since the end of 1938. This study is designed to measure activity in the field of small and medium-sized loans and information is, therefore, restricted to mortgages of $20,000 or less on nonfarm property. The data comprise not only home mortgages, but mortgages on other types of properties which fall within the $20,000 limitation. The geographical coverage included in the sample on which the statistics are based has.steadily been expanded until by June of 1941, reports were being received from more than 700 counties 425085-41-4 42 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 containing 68 percent of the total nonfarm population and located in every State and the District of Columbia. 5 Mortgage recording statis tics, because they report not only new lending but registrations resulting from changes in existing contracts, cannot be taken as an absolute measure of the volume of new lending. Furthermore, recording statistics are not a completely accurate measure of the source of mortgage credit. Many lending institutions, particularly CHART XXI INDEX OF NEW MORTGAGE LENDING ALL SAVINGS AND LOAN ASSOCIATIONS INDEX 1935 -1939 = 100 ADJUSTED FOR SEASONAL VARIATION o 1936 1937 1938 1939 I 1940 1941 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOME LOANBANKBOARD life insurance companies, operate through loan correspondents who record new mortgages in their own names. A fairly substantial AReports are received each month from field cooperators. Summaries of these reports are prepared for each State, by type of mortgagee, and from the totals of reported statistics, estimates representing total mortgages recorded in each State are developed on the basis of the relation of the nonfarm population in the sample to the total nonfarm population in the State. Adjustment factors are employed in the calculation to correct for the concentration of type of lenders and for the influence of metropolitan areas. Mortgage, recording data are not directly comparable with the estimates on home mortgage lending presented in Chart XIX and Exhibit 8. As pointed out in the text, recordings include mortgages on one- to four-family homes as well as mortgages on other types of properties within the $20,000 limitation. Moreover, the period covered by mortgages recoided and loans made is not necessarily the same. Lending statistics are reported as of the date of loan commitment, while recording figures reflect the actual date of loan registration. Finally, alterations in the terms of an existing contract may necessitate a new registration. In the case of the re financing of an institution'S own mortgage, for example, the face amount of the instrument would appear in the recording totals, whereas only that portion which represented an increase in funds loaned would be included in lending figures. SURVEY OF HOUSING AND MORTGAGE FINANCE 43 volume of mortgages are, therefore, made with the intention of subsequent sale to other mortgagees. Such transfers, when con summated, are usually not apparent from mortgage records. How ever, the movement of recordings over a period of time does give an excellent picture of trends in lending activity and shifts among the various classes of lenders. During the fiscal year 1941, total recordings of $20,000 or less numbered 1,545,000 in the amount of $4,362,000,000. Compared CHART XXII ESTIMATED VOLUME OF MORTGAGE RECORDINGS ON NONFARM PROPERTY OF $20,000 OR LESS MILLIONMORTGAGES l Y R 1"Q_40 AD FISAl YFARS A~n IQ41 MI DOLLAIONSF OF DOLLARS ANDSTATISTICS DIVISIONOFRESEARCH FEDERALHOMELOANBANKBOARD with the 1940 reporting period, these figures represent an increase of 12.8 percent in number and 16.2 percent in dollar volume. Since the initiation of the mortgage recording studies, the data have consistently shown savings and loan associations leading all other institutional lenders, accounting roughly for one-third of the annual total. The fiscal year 1941 was no exception to this rule. Savings and loan recordings measured by number of mortgages represented 34 percent of total and on the basis of dollar volume, 32 percent. The relative position of other institutional lenders shows little change from the previous year. Banks and trust companies again ranked second, accounting for 22 percent by number and 25 percent by dollar volume 44 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 of all recordings. Individuals and miscellaneous lenders ranked next, with insurance companies and mutual savings banks occupying a rela tively minor position in the home loan field. It is true, of course, that insurance companies have but recently reentered this particular ac tivity and mutual savings banks operate almost entirely in a few States along the Eastern Seaboard. Mortgage recordings by Federal Home Loan Bank Districts and by States are given in Exhibit 9. Total recordings of mortgages of $20,000 or less on nonfarm property, fiscal years 1940 and 1941 Total Percent of total Type of lender Increase Fiscal year 1940 Fiscal year 1941 Fiscal year 1940 Fiscal year 1941 Number of mortgages recorded Savings and loan associations ------Insurance companies ---------Banks and trust companies_ -------Mutual savings banks -Individuals ------------Others ._ ----------------Total_------ ---------- - 469, 578 61, 203 292,496 42, 357 327, 875 176, 634 527, 602 74, 728 338, 316 50,457 365, 225 188,930 58,024 13,525 45,820 8,100 37, 350 12, 296 34. 3 4. 5 21.3 3.1 23.9 12.9 34.2 4.8 21.9 3.3 23.6 12.2 1, 370,143 1, 545,258 175,115 100. 0 100. 0 Dollar amount of mortgages recorded (in thousands of dollars) Savings and loan associations ----Insurance companies---Banks and trust companies ----Mutual savings banks ----Individuals ---Others ------Total__-- --- --------------- $1, 175,056 308,179 931,031 157,816 612, 284 568, 344 $1, 392, 379 366, 795 1,093,234 190,107 696, 392 623, 328 $217, 323 58, 616 162, 203 32. 291 84,108 54, 984 31.3 8.2 24.8 4.2 16.3 15.2 3,752, 710 4, 362,235 609, 525 100.0 31.9 8.4 25.1 4.3 16.0 14. 3 100.0 The explanation for the larger proportionate share attributed to savings and loan associations in the number of mortgages recorded than in the dollar volume of registrations is found in the fact that the average size of the loans made by these institutions is considerably smaller than the average for other institutions. Thus, as indicated by the table below, the average loan recorded by savings and loan associations was $2,639 as compared with an over-all average of $2,823. Average size of nonfarm mortgage loans recorded, fiscal year 1941 Type of lender Type lenderof Individuals ---- _---------Savings and loan associations -----Banks and trust companies ----------Other mortgagees Average size of loan - $1,907 2,639 3,231 3,299 ize Av of loan Type oflender Mutual savings banks __-Insurance companies----------_ All mortgagees- - $3,768 4,908 2,823 45 SURVEY OF HOUSING AND MORTGAGE FINANCE The relative importance of the various types of mortgage lending institutions in different geographical areas is shown by the following chart. Explanations for the varying degrees of importance are not difficult to discover. Thus, in many localities savings and loan asso ciations have traditionally been the major source of home financing funds. In other localities where the savings and loan movement has. CHART XXIII MORTGAGE RECORDINGS DURING FISCAL YEAR 1941 BY FEDERAL HOME LOAN BANK DISTRICTS PERCENT OF TOTAL DOLLAR VOLUME, BY TYPE OF LENDER N T P E RE 0 10 20 30 40 50 60 70 80 90 100 I-BOSTON i~i~: ::::S~:85i' Zo .............. s; i::i i"':-''. : iii :'' i~ .: 2-NEW YORK 3-PITTSBURGH ii rr;e........ 4-WINSTON SAL EM ::::::::: X...::;~~'.::.~ ... ........ :~.,:. ..::::::;:8;i::~t:I~:(~i~~iIX: ::; '::r: 5-CINCINNATI 6-INDIANAPOLIS 7-CHICAGO 8-DES MOINES ' ....... ;;;s... 1~Z' ... : ;.:~;;;ME' 9- LITTLE ROCK ~tji~ ~:r::N:~ I -PORTLAND Iv: :. : ::. .:: : %~ E """" '''':'" 10- TOPEKA E"'~ :: . ........... 12-LOS ANGELES SAVINGS a LOAN INSURANCE ASSOCIATIONS COMPANIES BANKS8 TRUST COMPANIES MUTUAL SAVINGSBANKS INDIVIDUALS OTHER MORTGAGEES DIVISIONOFRESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD not developed to a similar degree, other financial institutions are of greater significance. The impact of the depression on lending institu tions and the degree of recovery so far attained are no respecters of geographical boundaries, and these factors have a direct influence on present business volume. In nine of the twelve Federal Home Loan Bank Districts, savings and loan associations ranked first in the list of lenders on residential mortgages of $20,000 or less. In the remaining three Districts, Pitts burgh, Indianapolis, and Los Angeles, commercial banks were the most important lenders in this field. 46 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, Expansion of Construction Lending For the past several years the volume of new loans made to finance the construction or purchase of homes has been assuming ever greater importance in the total lending picture. This trend has accompanied the steadily increasing amount of new residential construction and reflects, at the same time, a steady falling off in the demand for re financing loans. A good illustration of this fact is found in the shifts among the various classifications of loans made by savings and loan associations in recent years. Unfortunately a similar breakdown on the lending activity of other financial institutions is not available, but since the same influendes are at work throughout the financial community, it is highly probable that other lenders on residential real estate would show much the same experience. During the fiscal year 1941, the total volume of loans written by savings and loan associations reached a new post-depression peak of $1,294,400,000. As indicated by the table below, practically all of the 1941 increase in total lending activity by savings and loan asso ciations was accounted for by gains made in loans for the construction or purchase of homes. Thus, loans for new construction alone increased $96,300,000, or 28 percent. Home purchase loans which reflect an actual transfer of ownership increased $104,500,000, or 27 percent. Loans advanced for refinancing actually declined, while the figures for reconditioning and miscellaneous loans show only slight gains over the previous year. Distributionof loans made by all savings and loan associations, by purpose of loans, fiscal years 1937-1941 Amounts in millions of dollars Percent distribution Purpose of loan Construction ..- __ Home purchase...Refinancing-- .... Reconditioning.--. Other------- Total..---- 1937 1938 1939 1940 1941 1937 $226.3 298.6 184.0 65. 5 94.0 $213.2 286.6 167.4 59.4 94.1 $256.3 292.9 165.6 58. 3 95.8 $340.0 382.7 196.0 61.7 110.4 $436.3 487. 3 194. 8 63.4 112.6 26 34 21 8 11 26 35 20 7 12 29 34 19 7 11 31 35 18 6 10 34 37 15 5 9 868.4 820. 7 868.9 1,090.8 1,294.4 100 100 100 100 100 1938 1939 1940 1941 During the fiscal year 1937, at a time when a substantial volume of mortgage debt was being refinanced, loans made on newly-built homes represented only 26 percent of total savings and loan advances. In the fiscal year 1941, over one-third of the aggregate loan volume went to finance new construction. Much the same trend though in lesser 47 SURVEY OF HOUSING AND MORTGAGE FINANCE degree is shown by home purchase loans. Where loans for the buying of existing houses constituted 37 percent of total during the reporting period, the corresponding figure five years previous was 34 percent. In short, approximately 71 percent of the current lending volume of savings and loan associations is going to finance the construction or purchase of dwellings, whereas the similar percentage in the 1937 fiscal year was 60 percent. CHART XXIV SAVINGS AND LOAN CONSTRUCTION LENDING COMPARED WITH 1 AND 2 FAMILY HOME CONSTRUCTION PERCENT U.S. PERCENT 1 2 I CHANGE 3 FISCAL YEAR 1941 OVER FISCAL YEAR 1940 4 +0.5% -& LESS THAN 5 6 7 8 g 10 II FEDERAL HOMELOANBANK DISTRICTS 12 DIVISIONOF RESEARCH AND STATISTICS' FEDERALHOMELOANBANKBOARD Further evidence of the fact that savings and loan associations are accounting for an increasing proportion of new construction financing is found in the above chart which compares gains made in con struction loans of savings and loan associations with permits issued for one- and two-family homes-the type of dwelling on which most savings and loan funds are advanced. During the reporting period, the increase in association construction loans actually exceeded the gains in one- and two-family building in seven of the Federal Home Loan Bank Districts. 48 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Increase in Home Mortgage Debt The mortgage debt outstanding on nonfarm one- to four-family dwellings increased during 1940 for the fourth consecutive year. In dollar volume, the gain is estimated at $907,000,000, bringing the total debt to $19,123,000,000. This increase of 5 percent during 1940 compares with an increase of $570,000,000, or 3.2 percent during the previous year. The recent growth in home mortgage debt is the result of a number of factors. The steady increase in residential construction and the sale of properties on a low equity and longer amortization basis explains the major share of the increase. Progress made by financial institutions in liquidating property previously acquired through fore closure has also raised the volume of debt outstanding. The low level of foreclosures in recent years has removed one of the primary causes for cancellation of debt by transfer to ownership during the early depression period. Rising incomes and expanding industrial activity are undoubtedly contributing to a more active market. Because the Home Owners' Loan Corporation has since June of 1936 been primarily engaged in liquidating the $3,000,000,000 mort gage debt which it refinanced during the three previous years, changes in the over-all home mortgage debt fail to show the increase attribut able to expanded holdings of private mortgage lenders. As the table below indicates, operating mortgage lenders registered a net increase in mortgage holdings of $989,000,000 during 1940. Estimated balance of outstanding mortgage loans on nonfarm one- to four-family dwellings [Millions of dollars] Increase or decrease Classes of lenders Home 1936 1937 1938 1939 1936 1940 through 1940 1937 1938 1939 1940 -$365 -$229 -$131 -$82 -$807 Owners' $2, 763 $2,398 $2,169 $2, 038 $1, 956 uals).--------- 14, 462 14, 946 15, 477 16, 178 17, 167 +484 +531 +701 +989 +2,705 Total.------ 17,225 17,344 17,646 18,216 19,123 +119 +302 +570 +907 +1,898 Loan Corporation_ All others (institu tions and individ The steady recovery of home mortgage debt, particularly during the past three years, is especially significant when compared with trends in other types of long-term private debt. Although home mortgage debt is still well below the 1929 total, the steady gain since 1937 has brought the debt back to the 1932 level. The volume of SURVEY OF HOUSING AND MORTGAGE 49 FINANCE mortgage indebtedness on farms is virtually stationary and private long-term debt as a whole has increased only slightly during the past several years. Commercial banks and savings and loan associations have been responsible for the largest dollar increases in home mortgage debt since the turning point at the end of 1937. Loans held by commercial banks show a net gain of $695,000,000 during this period reaching a CHART XXV ANNUAL CHANGES IN ESTIMATED PRIVATE MORTGAGE DEBT ON NONFARM ONE TO FOUR FAMILY DWELLINGS MILLIONS 1930 THROUGH 1940 OF DOLLARS 1,000 800 t 600 400 200 ri) uj 400 600 11000 1,400 1,600 1.600- 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 AND STATISTICS DIVISIONOF RESEARCH FEDERALHOMELOANBANKBOARD total of $2,095,000,000 at the end of 1940. Savings and loan associa tions show a similar growth of $684,000,000 resulting in a total port folio of $4,104,000,000. Holdings of life insurance companies increased $512,000,000, mortgages held by individuals and "others" increased $330,000,000 while the liquidation of the HOLC brought about a decline of $442,000,000 in the volume of home mortgages held by that Corporation. During the calendar year 1940 alone, savings and loan associations, commercial banks, and life insurance companies were responsible for practically all of the $907,000,000 increase in home mortgage debt. Mutual savings banks and individuals and others show only nominal 50 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 increases while the holdings of the Home Owners' Loan Corporation declined by some $82,000,000. As indicated by the pie chart below, savings and loan associations continue to be the most important institutional holders of home mortgage debt. These institutions account for 21 percent of the total loans outstanding at the end of 1940 and are exceeded in im portance only by the miscellaneous group, individuals and others. Exhibit 10 shows a detailed breakdown of the home mortgage debt CHART XXVI ESTIMATED BALANCE OF OUTSTANDING MORTGAGE LOANS ON NONFARM ONE-TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER DECEMBER 31,1940 any time is the relative34.0% soundness of the debt structure. .\X \ H.O.L.C. % OTHERS 10.2% A volume INSURANCE COS.%. DIVISIONOF RESEARCHAND STATISTICS ASSOCIATIONS FEDERALHOME LOANBANK BOARD BANKS 14.1% COMMERCIAL & DIVISIONOF RESEARCH AND STATISTICS FEDERAL HOME LOANBANK BOARD structure by type type* of financial institution over a period of the last eleven years. increase in the volume of From a national viewpoint, the steady increase debt on nonfarm one- to four-family houses gives no particular cause for concern. The purchase of a home represents the largest invest ment ever made by the majority of the consuming public and results from cash transactions only in rare instances. Without Without financial assistance from mortgage lending institutions, institutions, widespread home owner ship would would be be aa practical impossibility. ship practical impossibility. of debt debt outstanding More important than the absolute volume of outstanding at at A volume structure. debt the any time is the relative soundness of SURVEY OF HOUSING AND MORTGAGE FINANCE 51 of debt only half the size of that now outstanding, incurred without proper attention to property and credit risks, might well prove many times more hazardous than a debt half again the size of that now existing but incurred only after careful examination and selection of risk. The debt structure of the Twenties was basically unsound in many respects as depression experience only too clearly emphasized. During the period of boom conditions after the last war, real estate was often overpriced, there was widespread and unsound speculation, inadequate attention was given to property appraisal and ceedit examination, and financing costs and loan terms were in many cases exorbitant and ill suited to the needs of borrowers. Many institutions overextended themselves or found themselves in an overextended position because of the lack of any reserve credit facilities. Many of these defects have largely been eliminated and progress is steadily being made toward further improvement in the debt struc ture. Appraisals are made on a more careful scientific basis and the importance of credit analysis is more generally recognized. Long-term amortized loans with low down payments make expensive junior financing less necessary. Thrift and home financing institutions are bulwarked by a reserve credit system on which they can rely to avoid the credit shortages which formerly threw operations completely out of gear. Lending Operations in the Present Emergency Despite the improvement already noted in the character of the debt on urban homes today as compared with the Twenties there is still sub stantial room for improvement and, as a matter of general policy, the Federal Home Loan Bank Board is constantly encouraging the mem ber institutions of the Federal Home Loan Bank System to maintain the high standards of operation which are the best defense against possible future trouble. The last depression proved the high cost of unsound and careless lending. A major aim in supervisory activities of the Board is to avoid similar difficulties in the future by encourag ing the widespread adoption of lending terms which will enable mem ber associations to attract and hold the best type of mortgage security in an increasingly competitive market. Variable interest rates are recommended by the Board to enable institutions to gear their lending operations to market demands and obtain a diversified portfolio on which earnings are more closely related to the degree of risk involved. The Board has urged institu tions to treat all borrowers equitably by refinancing old loans on more 52 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 realistic terms in order to maintain the good will of borrowers and protect portfolios against useless raiding. The direct relationship between the cost of money and mortgage interest rates has been emphasized and wherever dividend rates are uneconomically high, the Board seeks to influence associations to reduce rates to competitive levels. Experience has proved that the rate of return, provided it is not so low that thrift goes completely unrewarded, is of less im portance to prospective savers than safety of principal. In general, the policy advocated by the Board is the establishment of both dividend and' interest rates at levels which will (1) enable institutions to secure an adequate flow of savings funds, (2) to invest those funds in sound mortgage security, and (3) leave a sufficient spread to meet normal business expenses and provide adequate re serves against future losses. 6 The operations of mortgage lending institutions in the present market require the closest possible attention to risk analysis. In creasing competition, for example, although a healthy development, does give rise to the danger that some institutions, in their efforts to attract mortgage loans, may accept too many marginal risks for future safety. The steady trend during the past few years toward lower down payments and longer amortization periods has eased the burden of home ownership, but there is no denying the fact that this development has placed a greater responsibility on home financing institutions to make careful appraisals of the mortgage investments in which they are placing the savings funds entrusted to them. Even more important than these general market factors, however, is the fact that "business as usual" is disappearing in the present emergency. All economic activity is rapidly being diverted, in greater or lesser degree, to the primary defense needs of the country. Mort gage lending, like other business activity, is directly subject to the influence of our all-out armament program. The present-day housing demand is defined first as the need for shelter in defense areas. If necessary to the preparedness program, residential construc tion activity may be directed into meeting only that need. It is no easy task, then, which faces home financing institutions today. On the one hand, they are confronted with an emergent need for their facilities, a need which is not the result of normal market operations. On the other hand, there loom all the uncertainties as to the long-range character of the risks they are expected to assume, indeed uncertainty as to the whole future turn of events. Their 6 More detailed comment on the supervisory activities of the Federal Home Loan Bank Board will be found in the Eighth Annual Report, pp. 38-40, 48-49. SURVEY OF HOUSING AND MORTGAGE FINANCE 53 task, then, is to cooperate to the greatest possible extent in fulfilling their share of the defense effort. The difficulty arises in trying to avoid that indefinable lending area where extension of credit will result in the creation of unsound debt and future collapse. The Board is firmly of the opinion that although no hard and fast rules can be set up for the guidance of private lending institutions in this critical period, it is possible to avoid serious future consequences if proper attention is given to certain safeguards which should at this time more than ever be carefully followed by lending institutions. Thus, it is particularly important that every savings and loan associa tion carefully inspect the type of construction which it intends to finance. The jerry-building of past decades has been the cause of substantial losses suffered by financial institutions in periods of deflated value. The urgent need of the present day is no excuse for shoddy and unsound construction which has always in the long run proved the most expensive type of building. Careful, scientific appraisal will similarly ward off much future trouble. It is essential that the relationship between loan amount and appraised value of mortgage security be accurately determined. The credit rating of prospective borrowers should be carefully analyzed to avoid a repetition of the unsound lending which had such tragic effects both on overhoused borrowers and on financial institutions after the lastreal-estate collapse. Attention should be given to neighborhood trends, for there is a growing realization that security values represented by investments in real estate are determined to a high degree by the character of the locality in which the property is situated. Real estate is by its nature an immovable commodity and many sound structures are today suffering from encroachments of blighted areas. One of the best safeguards which any lending institution can em ploy is an adequate and systematic reserve policy. Too little attention has been paid in times past to the importance of reserves in the sav ings and loan industry. The Federal Home Loan Bank Board in cooperation with the Presidents of the Federal Home Loan Banks, State supervisory officials, and leaders of the industry have for some time urged in the strongest possible terms the necessity of providing now for losses which may have to be taken in the future. Statutory requirements for minimum reserve allocations should be considered the irreducible figure and wherever possible more substantial transfers should be made. The institutions which err on the side of generosity in their reserve policy have everything to gain and nothing to lose in the process; and the same is true for the individual investors in these 54 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 institutions. There is no problem of dividend payments on reserve accounts. If an amount equivalent to reserves is invested in con vertible low-rate investments, the liquidity position of the association is considerably enhanced. There is no set rule for determining the amount which should be built up in reserves, but it is highly important that every financial institution weigh carefully the risks it is presently assuming and attempt in the most accurate manner possible to set aside in reserve accounts an amount sufficient to balance the degree of risk involved. The job of lending, but lending on the soundest possible basis is particularly important to savings and loan associations. Because of the mutual character of these institutions, practically all of the in vestable funds in their possession have been entrusted to them in the form of small savings of average people. The trustee responsibility of safeguarding and protecting these savings is no less important in the managerial operations of savings and loan associations than is the extension of mortgage credit to prospective home owners. No institution is fulfilling its just obligations if it caters to the interests of either group to the exclusion of the other. Growing Volume of Savings The volume of individual long-term savings again showed an overall gain during the calendar year 1940. Most financial institutions experienced a temporary slowing down in receipt of new money during the late summer and early fall, but shortly thereafter the rate was again stepped up. It is probable that developments on the European war front during the summer of 1940-the collapse of France, repeated British losses and a sudden realization of possible dangers to this hemisphere-were largely responsible for this short reversal of previous trends. As indicated by Chart XXVII, savings funds dropped off during the first years of the depression, but since 1934 have shown a steady increase. The types of savings on which the chart is based include only such savings as are potentially available for investment in home mortgages or which are directly competitive with share investments in savings and loan associations. The figures include statistics on the volume of savings deposits in banks, savings in life insurance com panies and savings and loan associations, postal savings, postal savings bonds, and United States savings bonds. The volume of these savings increased approximately $3,500,000,000 during 1940 to a new all-time high of $57,962,000,000. Detailed information on the 55 SURVEY OF HOUSING AND MORTGAGE FINANCE distribution of long-term savings from 1935 through 1940 will be found in Exhibit 11. The importance of maintaining a steady flow of savings during an emergency period cannot be overestimated. One of the most im minent dangers faced by any country embarking on a period of rapid industrial expansion occasioned by a program of wholesale rearma ment is that through the development of inevitable bottlenecks and shortages, accompanied by rapidly rising income, demand for con CHART XXVII AMOUNTS BILLIONS OFDOLLARS OF SELECTED TYPES OF LONG-TERM SAVINGS HELD BY INDIVIDUALS 1920 60 THROUGH 1940 50 40 30 20 0 ___ -______ 1920 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 DIVISIONOF RESEARCHAND STATISTICS FEDERAL HOMELOANBANKBOARr sumer purchases will outstrip productive effort and bring about a period of vicious inflation. The increasing volume of individual savings entrusted to long-term investment institutions is, therefore, encouraging, for it shows that at least some portion of enlarged income payments is not used for consumer purchases. The comparative rates of increase among various classes of institu tions and savings media remained relatively unchanged during 1940. Savings bonds again showed by far the largest percentage increase. The current redemption value of these bonds grew by almost $1,000,000,000 during the year, an increase of 44.6 percent. Life 56 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 insurance companies showed an even larger dollar gain in savings funds, $1,644,000,000-or a gain of 7.0 percent. Savings deposits in insured commercial banks, which represent virtually all savings deposits in commercial banks, show an increase of $440,000,000, while savings and loan associations and mutual savings banks reported gains of $221,000,000 and $137,000,000, respectively. Postal savings grew by only $27,000,000. Although private capital, which is the measure of savings invested in savings and loan associations, increased by $221,000,000, or 5 percent, in all associations throughout the country, the picture is even more favorable if member institutions of the Federal Home Loan CHART XXVIII PERCENT CHANGE OF PRIVATE INVESTMENT IN SAVINGS AND LOAN ASSOCIATIONS BY CLASS OF ASSOCIATION10 PERCENT DECREASE 5 0 CALENDAR YEAR 1940 5 PERCENT 10 INCREASE 15 20 25 ALL MEMBERS FEDERALS INSURED STATE NONINSURED STATE NONMEMBERS 'q. DIVISIONOFRESEARCHAND STATISTICS FEDERALHOMELOANBANKBOARD Bank System are considered alone. These institutions which include the large majority of active operating associations, increased their private resources by $341,000,000, or 10 percent during the year. The fact that savings invested in operating nonmember institutions declined by $120,000,000, or 10 percent, explains the relatively small increase for savings and loan associations as a whole. There are still many nonmember institutions which are inactive and gradually withdrawing from the savings field; trends in these institutions color statistics for the industry as a whole. Among the member institutions of the Federal Home Loan Bank System, Federal savings and loan associations were far and away the most active group with regard to trends in private share capital. These institutions alone show a growth of $270,000,000, or 24 percent during the calendar year 1940. State-chartered insured associations SURVEY OF HOUSING AND MORTGAGE FINANCE 57 also show a good increase of 15 percent, while uninsured State member associations show a decline of 3 percent in private capital. Despite the fact that the defense effort has brought about a new demand for additional funds to finance the armament program, there is no indication as yet that the consistent trend toward lower rates of return on invested funds has come to a halt. Bond yields, for example, which have remained at consistently low levels for the last several years declined even further during the fiscal year. The yield on long-term U. S. Treasury bonds was 1.91 on June 30, 1941, as compared with 2.39 a year previous. The return on both high-grade and low-grade corporate bonds also declined to a record low. The weighted average dividend rate paid by mutual savings banks declined to 1.90 percent at the end of June 1941 as compared with 2.04 percent a year previous. Rates paid by commercial banks on savings de posits have been reduced in many localities below legal maxima. The dividend rate paid by Federal savings and loan associations dropped for the third consecutive year to a figure of 3.25 percent. Savingsfor Defense The cost of financing the tremendous expenditures necessitated by the defense program has raised new problems in the field of government finance. In order to avoid an inflationary spiral, every effort is being made to pay for a substantial percentage of current outlays from taxation and savings funds. The Public Debt Act of 1941 authorized the issuance of modified savings bonds for the purpose of attracting surplus public savings to the Treasury. These bonds, which went on sale May 1, 1941, are of three types-Series E, which are quite similar to the so-called Baby Bonds and which are sold only to individuals, and Series F and G, which are designed to attract corporate and large individual savings. Defense bonds are being sold through the voluntary efforts of a number of private financial institutions, including members of the Federal Home Loan Bank System, commercial and mutual savings banks, as well as through post offices. Member institutions of the Federal Home Loan Bank System were designated as issuing agents for the sale of defense bonds on April 15, 1941. Immediately thereafter, the Federal Home Loan Bank Board and the Presidents of the Federal Home Loan Banks actively endorsed and assisted in carrying out a program of participa tion by savings and loan associations. Federal associations, by virtue of the fact that they are agents of the Federal Government 425085-41-5 58 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 were authorized to make application directly to the Federal Reserve Bank of the District in which the institution is located. In a few cases it has been necessary for State legislatures and supervisory departments to revise either the statutes or the regulations under which State associations are operating, in order to permit them to act as issuing agents. No time was lost in any State in securing the necessary changes and by the close of the fiscal year, State-chartered member institutions of the Federal Home Loan Bank System in practically all States were permitted to apply. Savings and loan associations are peculiarly suited to serve as sales agents for the Treasury in the defense bond campaign. Member institutions of the Federal Home Loan Bank System are widely scattered throughout the United States and practically no community is outside the area served by one or more savings and loan associa tions. The customers of savings and loan associations constitute that group which will provide the best market for the sale of Series E bonds. The average citizen who is able to save small amounts and who is interested in purchasing a modest home is the same citi zen on whom the Government must rely as its most important pur chaser of defense savings bonds. Problems Ahead The present national emergency has raised a host of new problems in the general field of thrift and home finance-some of which have been discussed briefly in this chapter. The not unlikely prospect that additional measures may be necessary to divert a greater volume of private savings into defense financing and the certainty of higher taxes may well slow down the flow of private investments into home financing institutions. The urgent need for defense housing, the prospect of further increases in building costs, the possibility of labor shortages or the exercise of priorities on labor and materials-these are but a few of the recent developments which complicate the out look for the immediate future. The home financing industry, like all private business, faces a major challenge in solving its problems, but fortunately the industry is better able today than ever before to meet the test. Activities of the Federal Government during the last few years have done much to strengthen our home financing structure. The Federal Home Loan Bank System alone is a stalwart bulwark sorely needed and lacked by home financing institutions in previous emergency periods. The elasticity of credit made possible by membership in this national SURVEY OF HOUSING AND MORTGAGE FINANCE 59 credit system makes the job of conducting business today on a sound financial basis a much easier one. The Federal Savings and Loan Insurance Corporation, by insuring the safety of investments in savings and loan associations, has had considerable success in restoring public confidence in local home financing institutions and in maintaining a steady flow of private savings into the home mortgage lending field. The psychological advantages resulting from an insurance of the risk involved in invest ing the small savings of average people are hard to overestimate. Perhaps even more important than insurance itself, however, is the general improvement in operating standards and policies of insured savings and loan associations which must meet definite standards of eligibility before approval by the Corporation. The fact that insur ance of accounts has been extended to 2,310 institutions holding 53 percent of the assets of all operating associations in the country has brought about a recognized improvement in the whole home financing structure. Despite the importance of the various actions taken by the Govern ment to strengthen and support home mortgage lending, its efforts would amount to little were they not accompanied by better lending techniques and generally higher standards of operation in private financial institutions. Success or failure of home mortgage lending depends, in the final analysis, upon the capabilities of local manage ment and sound business methods. Ground for considerable en couragement is found in such developments as the improvement in appraisal standards, more critical and careful loan analysis, more realistic lending terms, and the increasing realization on the part of individual institutions that the job of lending on home mortgage credit is a business which requires training, skill, and specialized knowledge. Only time will tell whether recovery so far made in the home mortgage lending field and the structural improvements brought about both by the industry and the Federal Government will prove adequate to meet the inevitable strain to which it will be subjected. Undoubtedly, however, there is a general awareness, which stems perhaps from recent experience, of the possible dangers ahead and the need for careful, farsighted planning. This attitude in itself is a healthy one and gives promise that a determined effort will be made to avoid the unsound type of lending which has always, in the past, caused ultimate trouble. III Federal Home Loan Bank System FOR the Federal Home Loan Banks and their member home financing institutions, the 1941 fiscal year was a period of record breaking activity. Advances by the Banks and repayments by bor rowing member institutions both reached the highest figures for any fiscal year since the Bank System was established in 1932. A sub stantial inflow of private capital into member savings and loan asso ciations enabled them to write mortgage loans in the total amount of $1,084,866,000, an increase of 21.3 percent over the preceding fiscal year, and to reduce Government share investments by almost 13 percent. The combined balance sheet and operating statements of member savings and loan associations reflect steady improvement. The national emergency has confronted thrift and home financing institutions with a host of new problems. Fortunately the industry is better prepared than ever before to meet this challenge. Manage ment and operating standards have been substantially improved in recent years, the problems brought on by the depression of the early Thirties have largely been surmounted, and perhaps most important of all, the industry is now able to face a difficult future with the knowl edge that it is supported by the Federal Home Loan Bank System which stands ready to meet both emergency and normal credit demands. 1. OPERATIONS OF THE FEDERAL HOME LOAN BANKS Lending Activity The lending record of the Federal Home Loan Banks during the fiscal year 1941 demonstrates most clearly the ability of the System to meet the credit needs of its member institutions. The fact that ad vances outstanding on June 30, 1941, totaled $169,897,390, an in crease of 8 percent as compared with the close of the previous report ing period, tells only one part of the story. Of equal significance is the fact that advances made during the 1941 fiscal year reached a new high of $142,875,563, a figure 32 percent greater than that for the fiscal year 1940. An increase of 9 percent in the total volume of 61 62 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 repayments made by member institutions during the fiscal year 1941 accounts for the relatively small margin between the balance of out standing advances at the close of the last two fiscal years. The chart below shows a regularly recurring relationship between the volume of advances and the volume of repayments during each semiannual period. Normally, advances during the six-month period CHART XXIX FEDERAL HOME LOAN BANK SYSTEM ADVANCES AND REPAYMENTS DECEMBER 1936 MILLIONS . . . . . . . THROUGH JUNE 1941 . . . . . . . . . OFDCLLARS S ADVANCES OUTSTANDING 200 75 50 25 0 II IL i i i i L . . L i I I DIVISIONOF RESEARCH.AND STATISTICS FEDERAL HOMELOANBANKBOARD from July to December are well above repayments, while from Jan uary to June, exactly the reverse is true, with repayments substan tially in excess of advances. The last fiscal year was no exception to this general rule, but the movement of both advances and repayments was exaggerated in each six-month period due to certain special fac tors which influenced the lending activity of the twelve Banks. The chart indicates, for example, that during the first half of the reporting period, from July through December 1940, current advances FEDERAL HOME LOAN BANK SYSTEM 63 were substantially higher and current repayments considerably lower as compared with the first half of the preceding fiscal year. The need for an unusual amount of additional credit during this period is ex plained, in part at least, by a temporary slackening in the flow of private savings during the fall of 1940, probably brought on by psy chological reactions to the turn of events abroad. The collapse of France, mounting British reverses, and the very real danger of an in vasion of Great Britain apparently had some effect on the American investing public. For a few months at this time there were indica tions that hoarding, for example, was increasing. Home financing institutions generally were impressed with the necessity of maintaining a sufficiently liquid position to meet possible withdrawal demands. Therefore, they drew on the resources of the Federal Home Loan Banks to forestall any difficulty in this regard. Accompanying the temporary dropping off in the rate of private savings there was a steady demand for new mortgage funds which in turn led to increased use of the credit facilities of the Federal Home Loan Banks. During the second half of the reporting period, this trend was reversed. Again, the shift was undoubtedly the result of more than the normal seasonal factors which regularly cause a rate of repayment well in excess of new advances during this six-month period. Advances made during the first six months of 1941 amounted to $57,774,230, while repayments reached a new peak of $89,368,804. It is probable that this greater than seasonal variation resulted from the fact that in the early months of 1941, private capital began to flow into home financing institutions at a good rate. Member institutions borrowing from the Federal Home Loan Banks, no longer confronted with the imminent possibility of a growing withdrawal demand, were able to retire at least a portion of the funds previously obtained from their Regional Bank. In other words, emphasis during the second half of the fiscal year just closed was shifted from primary liquidity to unused lines of credit with the Federal Home Loan Banks. Although increasing private investments were undoubtedly the primary cause of the decline of advances outstanding after the all time peak in December 1940, there were other developments which strengthened the cash resources of member institutions and made it possible to retire indebtedness. Principal repayments on direct reduction loans increase steadily as the loans age, and many associa tions have now built their portfolios to a point where this factor alone is responsible for a substantial incoming volume of funds available for mortgage lending. The sale of a large number of owned properties 64 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 through the medium of purchase-money mortgages has brought in cash down payments and added to earning mortgage portfolios. An ever increasing number of associations are supplementing their avail able lending funds by selling enough insured mortgages to build up a revolving fund. This activity has not yet assumed importance for the country as a whole, but in certain defense areas has already become significant. Gross advances made by the Federal Home Loan Banks since the beginning of operations through June 30, 1941, totaled $773,908,855 and repayments made on such advances amounted to $604,011,465. CXX T Exhibit 12 summarizes in some CHART XXX detail advances, repayments, and PERCENTAGE OF BORROWING MEMBERS alane ttand since the balances outstanding since t TO TOTAL MEMBERSHIP PERCENT AS OF JUNE 30 EACH YEAR beginning of operations. Acomparison of advancesout :... standing in each of the Federal VGB I "LNONBORROWING so Home Loan Banks at the close of the last two fiscal years shows . ..... little uniformity in percentage 60 -increases or decreases. Nine of S' the Banks show gains of from 40 1 1.1 to 31.2 percent in advances S.4 held on June 30, 1941, over the BORROWING .i- S. -. o2 0 o i -~ i / 3o 1936 ....... 1937 1938 1939 1940 1941 DIVISIONOF RESEARCH AND STATISTICS FEDERAL HOMELON B BOo close of the previous fiscal year. The other three Banks show a contrary trend, with declines ranging from-0.9 to 13.5 percent. Exhibit 13 gives detailed in formation on outstanding ad in each of the Bank Districts for the past eight years. vances There was no substantial change at the close of the fiscal year in the number of member institutions borrowing from their Regional Banks. A year ago, on June 30, 1940, some 2,090 member institutions, or 53.4 percent of the total membership, were indebted to the Banks. On June 30, 1941, the corresponding figure was 2,010, or 52.4 percent of membership. This slight decline in the number of borrowing members and the somewhat higher volume of advances at the close of the reporting period is reflected in an increase in the average prin cipal indebtedness of borrowers from $75,310 on June 30, 1940, to $84,526 on June 30, 1941. The percentage of borrowing members at the close of each of the last six fiscal-year periods, by Federal Home Loan Bank Districts, is shown in Exhibit 14. FEDERAL HOME LOAN BANK SYSTEM 65 The maximum rate which can be charged by the Federal Home Loan Banks on advances to their member institutions has been set at 3 percent by the Federal Home Loan Bank Board. On July 1, 1940, the Banks were charging from 2}/ to 3 percent on long-term advances and from 1Y2 to 3 percent on short-term advances. During the reporting period, the Indianapolis Bank reduced its rate from 3 to 2% percent on short-term advances which do not exceed 15 percent of the institution's share capital. The Federal Home Loan Bank of Chicago lowered the cost of short-term ad vances from 3 to 2 percent if in each case the advance is amortized at the rate of at least 2} percent quarterly. If amortized within one year in equal monthly installments, associations in the Chicago District are permitted to borrow at 1% percent. The Los Angeles Bank reduced from 3 to 2% percent the interest rate charged on long-term advances provided in each case the association agrees to use the proceeds of the advance to make new mortgage loans insured by the Federal Housing Administration. Detailed information on the rates charged by each of the twelve Banks will be found in Exhibit 15. Types of Advances The trend toward an increasing proportion of short-term advances has continued steadily during the last two fiscal years. On June 30, 1941, advances which had been written for a period of one year or less amounted to $65,807,625, or 38.7 percent of all advances out standing. This compares with a figure of $42,664,098, or 27.1 per cent of the total at the close of the preceding fiscal year. As the chart below indicates, this development toward greater emphasis on short-term advances is a direct reversal of the trend which had previously continued for several years. The emphasis on short-term advances was general throughout the country, with ten of the twelve Banks showing an increase both in dollar volume and in relation to total advances outstanding during the 1941 fiscal year. In the Topeka District, the amount of short term advances declined, but rose from 11.8 to 12.2 percent of all advances. Only in the Portland Region did short-term advances decline both in dollar volume and ratio to total portfolio. The dis tribution of long- and short-term advances outstanding in each of the Federal Home Loan Bank Districts is shown in Exhibit 16. There are undoubtedly a number of reasons why member institu tions are borrowing to an increasing extent on a short-term basis. Some of the Banks have adopted variable interest rate schedules 66 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, which make the cost of short-term ing the period when small or new very rapid rate, credit was needed CHART XXXI DISTRIBUTION SHORT-TERM OF LONG-TERM -- have AND YEAR .. 1 ever, normal credit demands can often be met with short-term advances, supplemented by an adequate flow of private savings The majority of collateralized made by the Federal Home Loan Banks are long S term in character, and it is, : therefore, not surprising to find Sthe relationship between secured 20 Sand 1936 1937 1938 unsecured advances follow ing closely the pattern set by the 4 1939 As associations and mortgage repayments. II- 0 be czBadvances NG TER - M M S- could payments . - . which mortgage were received. . . . i.-. - I1 as - 80o -: 60 advances retired ADVANCES OUTSTANDING AS OF JUNE 30 EACH PERCENT 1 00 advances attractively low. Dur associations were expanding at a to meet the demand for mortgage loans, and it was valuable to terms on which 1941 1940 advances are extended. The increasing num ber of short-term advances dur ing the last fiscal year, for example, was accompanied by a growth in the volume of advances made without collateral. DIVISIONOF RESEARCH AND STATISTICS FEDERALHOME LOANBANK BOARD Trend of secured and unsecured advances outstanding, by fiscal-year periods Collateralized advances Date June June June June June June June June June 30, 30, 30, 30, 30, 30, 30, 30, 30, 1933 -_ 1934 __-----.--- --1935 ..-1936 ---.. -------1937------1938 -----1939..--------1940 --------1941_-- --------- Total advances outstanding $47, 663, 830 85,148, 354 79,232, 514 118, 586, 838 167,056, 887 196.224,937 168, 961, 563 157, 397,047 169,897, 390 Uncollateralized advances Amount outstanding Percent of total Amount outstanding $46, 521,239 82, 740, 248 68,045,199 89,964,281 130,944,112 163, 386,013 145,442,668 126, 342,499 121, 995,964 97.6 97.2 85.9 75.9 78.4 83.3 86.1 80.3 71.8 $1,142, 591 2,408,106 11,187,315 28, 622, 557 36, 112,775 32,838,924 23, 518, 895 31,054, 548 47,901, 426 Percent of total 2.4 2.8 14. 1 24. 1 21.6 16. 7 13. 9 19.7 28.2 As shown by the table above, "unsecured advances" which are col lateralized only to the extent of the borrowing association's invest ment in the capital stock of its Federal Home Loan Bank amounted FEDERAL HOME LOAN BANK SYSTEM 67 to $47,901,426 on June 30, 1941, or 28.2 percent of all advances out standing. At the beginning of the reporting period, advances of this character totaled $31,054,548, or 19.7 percent of total. Despite the fact that unsecured advances do not require a pledge of collateral, a number of other conservative, safeguards have been set up for this type of lending. Thus, when such advances are made for a period up to one year, under Section 11(g) of the Federal Home Loan Bank Act, member institutions are not permitted to have outstand ing liabilities to other creditors in an amount exceeding 5 percent of their net assets. This restriction insures the Federal Home Loan Bank recourse to a substantial share of the borrowing institution's assets. Furthermore, provision has been made whereby the Federal Home Loan Bank may utilize, if necessary, any excess collateral which may have been pledged by the institution as security for other advances. At the close of the fiscal year 1941, secured advances amounted to $121,995,964, or 71.8 percent of total. Collateral supporting these advances consisted of 130,546 home mortgages with unpaid balances of $302,821,736, obligations of the United States Government, direct or fully guaranteed, in the amount of $800,450, and other eligible collateral in the amount of $85,016. In addition, a statutory lien was held on stock owned by borrowing members in the amount of $23,752,000 which can, if necessary, be used to protect advances, both secured and unsecured. A detailed description of the types of advances made by the Federal Home Loan Banks will be found in Exhibit 17. Probably the most adequate proof of the conservative lending opera tions of the Federal Home Loan Banks is the fact that during nine years' operating experience not a single loss has been incurred on over $700,000,000 in advances. On June 30, 1941, except for 13 borrowers in voluntary or involun tary liquidation, no institutions were delinquent over 30 days. Ad vances held by the 13 institutions in liquidation totaled $649,714. Advances to 12 of these borrowers, aggregating $499,714, were secured. by home mortgages valued at $1,799,471 and stock in the Regional Banks in the amount of $123,100. An advance of $150,000 to the other liquidating institution was unsecured except for the association's $15,000 investment in the stock of its Bank. However, this advance is deemed amply protected by the large volume of the institution's assets. The advances to the 13 institutions are being liquidated reg ularly-in many cases ahead of schedule-and the generous margin of 68 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 security behind them promises complete recovery within a normal period of time. The borrowing capacity of each member institution has been defined by regulation of the Board as the amount for which an association can legally obligate itself or, in the absence of a legal limit, as the equivalent of 50 percent of the institution's net assets. On June 30, 1941, the total borrowing capacity of member associations, arrived at in the manner indicated, was $2,066,737,953. This figure should not be interpreted as a measure of the credit reservoir upon which member institutions can draw at will. On the contrary, every application for an advance is individually considered on its own merits and the appli cant's "borrowing capacity" is probably the least important factor determining approval or disapproval. Much more important, for example, are the prospective borrowing association's financial condi tion and the acceptability of its collateral. Nevertheless, the very wide margin between legal borrowing capacity and advances outstand ing indicates the potentialities of the Bank System. FinancialCondition of the FederalHome Loan Banks The consolidated balance sheet for the twelve Federal Home Loan Banks as of June 30, 1941, shows a highly liquid and sound financial picture. The volume of cash funds, $57,203,868, on June 30, 1941, was larger than at the close of any previous fiscal year and cash balances have been maintained during recent months at a higher point than during any prior period in the history of the Bank System. The primary measure of the value of the Federal Home Loan Bank System is its ability to meet any legitimate demand for credit, normal or extraordinary, which may be made by the home financing industry. Only in a secondary sense is the volume of advances which may be outstanding at any particular time a gauge of the System's usefulness or accomplishments. For this reason, it is important for the Banks to maintain a high degree of liquidity, particularly during critical times when any accurate estimation of future demand for advances is diffi cult to make. Cash holdings of $57,203,868 on June 30, 1941, represent an increase of 21 percent over the close of the preceding fiscal year. In addition, secondary liquid reserves in the form of investments in United States Government obligations, direct or fully guaranteed, amounted to $63,407,070 at the close of the reporting period. Combined cash and investments constituted 41 percent of consolidated assets on June 30, 1941, as compared with 39 percent a year previous. Cash available 69 FEDERAL HOME LOAN BANK SYSTEM for advances 7 and securities in excess of legal requirements 8 totaled $96,012,261 at the end of the 1941 fiscal period. A statement of condition for the Federal Home Loan Banks as a whole and for each of the Banks separately, as of June 30, 1941, is given in Exhibit 18. CHART XXXII COMPOSITION OF CONSOLIDATED ASSETS OF THE TWELVE FEDERAL HOME LOAN BANKS AS OF JUNE 30, 1940 AND JUNE 30,1941 10 0 JUNE 30 P ER C ENT 60 50 40 30 20 9421.8 JUN E 130 90 80 70 58 .............. . OTHER ASSETS 0.3 1ig ! ! 1: 1 CASH 100 INVESTMENTS ADVANCES OUTSTANDING OTHERASSETs 03 DIVISIONOF RESEARCHAND STATISTICS FEDERALHOMELOANBANKBOARD The book value of security holdings on June 30, 1941, amounted to $63,407,070, which is somewhat higher than the par value of $62,351,950, but is well under the current market price of $66,080,463. The following table shows the distribution of securities by maturity or dall dates and yields at the close of the last two fiscal years. A detailed list of securities held by the twelve Banks will be found in Exhibit 19. Distribution of securities held by the twelve Federal Home Loan Banks, as of June 30, 1940, and June 30, 1941 June 30, 1940 Maturity/Callable Amount Under 1 year--.------. 1 to 5 years -------. 5 to 10 years -------10 to 15 years -------15 to 20 years -------- 20 years and over -- Total ----------- - en of total June 30, 1941 Average weighted yield Amount $270,000 21,803,000 13,160,000 12, 343,000 2, 638,000 0.5 40. 6 24. 5 23.0 4.9 Percent 1.10 1.17 1.97 2. 55 2.45 $2, 780, 000 22, 458, 800 15, 592,000 16, 808,150 4, 713, 000 53,689,000 100.0 1.84 62, 351, 950 3,475, 000 6. 5 2. 58 ---------------- Pee of total -- Average weighted yield 4. 5 36. 0 25.0 26. 9 7. 6 Percent 0.85 1.17 2. 20 2. 33 2. 51 100.0 1. 83 1 Based on cost to maturity/callable dates. At the beginning of the fiscal year 1941, two series of consolidated debentures were outstanding in the total amount of $48,500,000. Series "C" amounting to $25,000,000 was retired at maturity on 7 Represents total cash less reserve requirements of 75 percent of members' demand deposits, 25 percent of members' time deposits, total applicants' deposits, interbank deposits, and imprest funds. a R epresents the face value or principal amount of investments owned above the necessary legal reserves. 70 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 December 1, 1940, leaving only Series "D" outstanding. On Novem ber 29, 1940, two additional series, "F" and "G," were issued to provide funds for anticipated requirements. Series "F" in the amount of $15,000,000 was sold on a short-term basis to mature on April 15, 1941, and carried an interest rate of X of 1 percent. This series was retired in full at maturity. Series "G," the second series issued on November 29, amounted to $52,000,000 and will mature April 15, 1942. This issue bears an interest rate of % of 1 percent. As in past offerings, both series issued during the reporting period were many times oversubscribed. * As a result of debenture transactions during the reporting period, outstanding obligations of the Federal Home Loan Banks totaled $75,500,000 at the close of the fiscal year. Consolidated debentures are the joint and several obligations of all of the Federal Home Loan Banks. The extent of the participation of each Bank in the issuance of each series now outstanding may be found in Exhibit 20. Deposits of member institutions in their Federal Home Loan Banks have varied from $25,000,000 to $35,000,000 for the last two fiscal-year periods. On June 30, 1941, the total volume of such deposits outstanding amounted to $31,306,869, of which 19 percent was on a noninterest-bearing demand basis and 81 percent in interest bearing time deposits. Although deposits of member institutions with the Federal Home Loan Banks have not yet reached a figure where they constitute a major source of funds, sufficient use has been made of this service of the Banks to indicate that many institutions are finding it a convenient means of preserving their liquidity positions. Interest rates paid by the Banks on time deposits were again reduced in several instances and prior to the close of the current fiscal year, it was announced that on and after July 1, 1941, the nine Banks paying interest on time deposits would pay a uniform rate of % of 1 percent. Except in one case, each of the nine Banks requires a ninety-day waiting period before interest is paid on deposits. The Boston Bank pays interest on deposits remaining from thirty to ninety days. Exhibit 21 gives a detailed account of the interest rates paid on time deposits as of July 1, 1941. Interbank deposits have proved particularly useful as a means of providing sufficient funds to meet the demand for advances within the Bank System. Through this means, the Banks are able by a comparatively simple device to maintain an interregional flow ot funds from areas of plenty to localities of temporary scarcity. Inter bank deposits are made on a demand basis and, by resolution of the 71 FEDERAL HOME LOAN BANK SYSTEM Federal Home Loan Bank Board, carry an interest rate of % of 1 per cent per annum. During the fiscal year 1941, interbank deposits totaled $17,500,000, and the amount outstanding on June 30, 1941, was $2,500,000. From the beginning of operations through the close of the current reporting period, more than $97,000,000 had been transferred within the Bank System by means of interbank deposits. Outstanding capital stock of the Federal Home Loan Banks totaled $171,283,200 on June 30, 1941, as compared with $167,373,475 a year previous. The increase of $3,909,725 was accounted for by addi tional share subscriptions of member institutions since capital stock owned by the Federal Government has remained unchanged at $124,741,000 since November 1937. On a percentage basis, the ratio CHART XXXIII COMPOSITION OF CONSOLIDATED LIABILITIES AND CAPITAL OF THE TWELVE FEDERAL HOME LOAN BANKS AS OF JUNE 30, 1940 AND JUNE 30,1941 10 0 20 30 P E 40 R CE 50 NT 60 70 80 90 100 JUNE 30 1940 0.3 $T g JUNE 30 'I MEMBERS U.S. GOVERNMENT CAPITAL STOCK SUBSCRIPTIONS SURPLUS MEMBER DEBENTURESOUTSTG. & UNDIV. DEPOSITS OTHERLIABILITIES0.4 PROFITS OFRESEARCHAND STATISTICS GIVISION FEDERALHOMELOANBANKBOARD of capital stock owned by member institutions to the total outstand ing has been increasing steadily since the organization of the Bank System. At the close of the fiscal year 1941, 27.2 percent of total stock was owned by member institutions as compared with 25.5 percent a year previous. On February 20, 1941, the capital stock of the Federal Home Loan Banks owned by the Federal Government was taken over from the U. S. Treasury by the Reconstruction Finance Corporation. This transfer of ownership was first suggested in the President's Budget Message for the Fiscal Year 1941, in which he outlined a program for recapturing approximately $700,000,000 of the capital funds of various Government corporations. Authority for the actual transfer was given by the Congress in an Act approved June 25, 1940. Except for this legislation, there has been no change in the statutes and regulations governing the capital structure of the Banks. 72 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Each member institution in the System is required to hold stock in its Regional Bank in an amount equal to at least 1 percent of the unpaid principal of its home mortgage portfolio, but not less than $500. Borrowing members are subject to the further requirement that paid-in stock must equal at least one-twelfth of their outstanding indebtedness to the Bank. Changes in capital structure of the twelve Federal Home Loan Banks June 30, 1940 Total stock subscriptions: Members ----------------------------------_ _ --- -------.... United States Government 1--------------------Payments received on stock subscriptions: Members --------------------------United States Government 1----------------------------Balance due on above stock subscriptions: Members---------------------------------------------------------- United States Government 1- - June 30, 1941 $42,647,900 124, 741, 000 $46, 571,900 124, 741,000 42, 632,475 124,741,000 46, 542, 200 124, 741, 000 15,425 29, 700 1 Government stock has been held by the Reconstruction Finance Corporation since February 20, 1941. That part of the capital structure of the twelve Banks represented by reserves and undivided profits was also strengthened during the reporting period. Net earnings allocated to reserves and undivided profits amounted to $3,696,183 during the 1941 fiscal year, of which $1,338,992 was transferred to reserves and $2,357,191 to undivided profits. Reserve allocations by the Banks have consistently been greater than required by statute. Thus, during the current reporting period, the total amount of earnings retained by the Banks over and above dividends was $1,030,719 in excess of statutory requirements. Since the beginning of operations, from the fall of 1932 to June 30, 1941, the Banks have built up surplus and undivided profits in the amount of $12,033,992, or 113 percent more than the reserve required by law. The ratio of reserves and undivided profits to paid-in capital stock was 7 percent at the close of the current reporting period as compared with 6 percent a year previous. Due principally to the increase in debenture obligations, total resources of the Banks increased during the last fiscal year from $260,067,459 to $291,511,973. At the close of the reporting period, current assets were 233 percent of current liabilities. Income and Expenses of the FederalHome Loan Banks During the current reporting period, earnings of the Federal Home Loan Banks were somewhat above the amount realized during the previous fiscal year. Gross income for the fiscal year 1941 was 73 FEDERAL HOME LOAN BANK SYSTEM $6,031,305 as compared with $5,715,959 during the preceding fiscal year period. Increased interest income on a larger average outstand ing volume of advances and profits from the sale of investments were mainly responsible for this trend. During the preceding fiscal year, when interest rates in a number of the Banks were reduced and loan volume declined as well, there was a substantial falling off in income. Although operating expenses of the Banks are not as flexible as income, the Banks were able to effect a reduction in total expenses during the reporting period. Deductions from gross income, there fore, declined from $2,479,232 to $2,335,122. The net effect of a higher gross income and lower operating costs was, of course, an in crease in net income from $3,236,727 during the 1940 fiscal year to $3,696,183 during the current reporting period. A detailed statement of profit and loss during the fiscal year 1941 for each of the Federal Home Loan Banks will be found in Exhibit 22. The following table presents a summary picture of income and expenses for the Bank System as a whole. Condensed consolidated statement of profit and loss of the twelve Federal Home Loan Banks Fiscal year 1940 Fiscal year 1941 Income: Interest-earned on advances-----_ ---- - Interest earned on investments -------------------Interest earned on deposits in commercial banks.----_-----__Nonoperating income ----------Gross income ----. -----------. . - ---- _---------------- --------------. ------------------------....-. --- Less-Charges: Compensation, travel, and other administrative expenses ... Interest on deposits .-------------------------------------Interest on debentures -,... ----------------------. ---Assessments for expenses of Federal Home Loan Bank Board -------Other expenses _-------------------------------.--------- -. Nonoperating charges --------------------------_------_ --------Total deductions --------Net income -------- ---..---------_ -------------------- -----. $4, 561,889 956, 533 570 $4, 610, 363 987, 472 1,042 196, 967 432, 428 5, 715, 959 6, 031, 305 927, 106 247, 393 938, 750 300,000 49, 358 16,625 934, 803 119, 524 814, 216 300,000 79, 589 86,990 2, 479, 232 2, 335, 122 3.., 236, 727 3, 696, 183 The Federal Home Loan Banks were created primarily for the pur pose of serving member home financing institutions as a credit reser voir upon which they can rely for advances during both normal and emergency periods. Earnings which can with safety be distributed in the form of dividends to stockholders are of secondary importance. Nevertheless, over $16,000,000 in earnings of the Federal Home Loan Banks has been paid to stockholders, both Government and institu tional, since the organization of the System. 425085-41-6 74 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 During the fiscal year 1941, dividends declared by the Banks ranged from one to two percent, with a weighted average rate of 1.14 percent, as compared with 1.07 percent during the previous reporting period. The increase in the average results from the fact that two Banks raised their dividend rates during the 1941 fiscal year. Dividends distributed CHART XXXIV* DISTRIBUTION OF NET INCOME FEDERAL HOME LOAN BANKS-FISCAL YEAR 1941 N \DNDS ..... ., PAID DIVISION OF RESEARCH AND STATISTICS FEDERAL HOME LOAN BANK BOARD during the current reporting period amounted to $1,926,227, of which $838,003 was paid to the United States Treasury, $583,054 to the Reconstruction Finance Corporation, and $505,169 to member insti tutions. From the time of the Banks' organization to December 31, 1940, the United States Treasury received $12,021,340 in dividends. *Figures underlying Chart XXXIV will be found in Exhibit 25. FEDERAL HOME LOAN BANK SYSTEM 75 When the Government's stock was transferred to the Reconstruction Finance Corporation in February 1941, the Treasury waived claim to any dividends declared after January 1, 1941. Future dividend payments on such stock will, of course, be made to the Reconstruction Finance Corporation. Exhibit 23 shows the dividend rates declared by each Bank for the fiscal years 1940 and 1941 and the cumulative amounts paid from the beginning of operations through June 30, 1941. As already indicated, allocations to reserves and undivided profits during the fiscal year 1941 were $1,030,719 in excess of the reserve requirements of the Federal Home Loan Bank Act. An analysis of the surplus and undivided profits of the Federal Home Loan Banks, individually and collectively, is given in Exhibit 24. Income and Expenses of the FederalHome Loan Bank Board Since the members of the Federal Home Loan Bank Board also com pose the Board of Directors of the Home Owners' Loan Corporation and the Board of Trustees of the Federal Savings and Loan Insurance Corporation, the Federal Home Loan Bank Board derives its operating funds not only from the Federal Home Loan Banks, but also from these two agencies for services rendered and from fees received for the examination of home financing institutions. Expenses of the Exam ining Division of the Board, which constitute the major portion of the Board's operating budget, are reimbursed by the institutions examined. During the 1941 fiscal year, total receipts of the Federal Home Loan Bank Board amounted to $1,215,689 as compared with $1,396,775 for the fiscal year 1940. In addition, a cash balance of $352,671 was carried over at the beginning of the fiscal year 1941. Disbursements during the same two periods aggregated $1,328,401 and $1,282,529, respectively. The cash balance as of June 30, 1941, amounted to $239,959. Exhibit 26 shows detailed information on administrative receipts and disbursements for the last two fiscal years. The personnel of the Bank Board totaled 460 at the close of the reporting period. Of this total, 304 employees constituted the staff of the Examining Division. Exhibit 27 gives a summary of personnel by departments as of June 30, 1940, and June 30, 1941. Administration of the FederalHome Loan Bank System The major administrative responsibility of the Federal Home Loan Bank Board is the establishment of basic policies and the maintenance of adequate safeguards to insure successful operation of the Federal Home Loan Bank System. The Board is assisted in this responsibility 76 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 by the Governor of the Federal Home Loan Bank System who acts as its chief administrative officer. The structural organization of the Bank System has been designed to -permit the maximum possible decentralization without loss of the over-all supervision which is necessary in the administration of a nation-wide organization and which is required by the Federal Home Loan Bank Act. Each of the twelve Regional Banks is governed by a Board of Directors which has been given considerable discretion and initiative within the terms of the Federal Home Loan Bank Act and the Rules and Regulations of the Bank Board. Under the general supervision of the regional directors, the officers of the Banks assume the actual job of management. The importance of maintaining the maximum of local autonomy possible in the administration of the Federal Home Loan Bank System has long been stressed by the Federal Home Loan Bank Board. If the Banks are to fulfill their responsibilities to member institutions, considerable freedom of action in meeting local problems and situations is essential. It should not be implied that this philosophy of administration means a lack of coordination and supervision on the part of the Board. To the contrary, regular semiannual examination of the Banks, daily and monthly reports on operations and condition from each of the Banks, and the requirement that full and complete minutes of direc tors' and executive committee meetings must be kept and certified copies forwarded to the Governor, all serve as means by which the Board is able to scrutinize closely the current operations and activities of each of the Banks with the view to maintaining basic rules and regulations governing Bank operations on a well-defined basis. The value of maintaining the Federal Home Loan Bank System on a decentralized but safeguarded administrative plan is illustrated by the successful operation of the Banks during the present emergency period. For example, there is little loss of time in meeting unusual situations either of a supervisory or credit nature which constantly confront the Banks in dealing with member institutions. All demands for credit are acted upon promptly by the Banks without reference to Wash ington. Officers of the Regional Banks are better able, because of their familiarity with local trends and conditions, to offer counsel and to take corrective action, if necessary, to prevent future trouble which may result from unsound lending or careless management during the present critical times. The Federal Home Loan Bank Board is materially assisted in carry ing out its supervisory responsibility for the safe conduct of the Bank System through periodic conferences with the Federal Savings and FEDERAL HOME LOAN BANK SYSTEM 77 Loan Advisory Council, a body created by statute to confer with the Board "on general business conditions, and on special conditions affecting the Federal Home Loan Banks and their members." The Council consists of one member elected by each of the twelve boards of directors of the Federal Home Loan Banks and six members appointed by the Federal Home Loan Bank Board. The Council held two meetings during the current fiscal year, at which time thorough discussions were held on such questions as defense housing, current appraisal practices, debenture financing, mortgage-interest and dividend rates, State and Federal legislation, retirement of Govern ment investments in Federal savings and loan associations, and the insurance of small associations. The Board derived, as.always, con siderable help in the formulation of policies not only from its dis cussions with the Council in these two meetings, but also by direct informal advices received from Council members throughout the reporting period. A list of members of the Council as of June 30, 1941, is attached as Exhibit 28. To effect an even closer working relationship between the twelve Bank Presidents and the Governor of the Federal Home Loan Bank System, the Board some time ago created the Bank Presidents' Conference, composed of the executive heads of the twelve Banks. The Conference met twice during the fiscal year 1941 to confer with the Governor. Meetings of the Presidents serve the very valuable purpose of bringing together periodically those most directly con cerned with day-to-day operations for a thorough discussion of both specific and general problems facing the Banks. At both Conference meetings during the last year, considerable time was devoted to the problem of defense housing and the cooperation of the Banks and their member institutions in furthering the aims of the national program. The Presidents were unanimous in supporting the program through the formation of local housing committees, conferences with representatives of public housing agencies, and surveys of defense housing needs in specific localities. Other subjects discussed at the meetings included debenture financing, investment and liquidity policies of the Banks, extensions of credit, supervisory duties of Bank officers, interest and dividend rates, and the cooperation of member institutions of the Bank System as issuing agents in marketing defense savings bonds and stamps. Examination and Supervision The Federal Home Loan Bank Board is charged by statute with the responsibility of examining and supervising the twelve Federal Home 78 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Loan Banks. Semiannual examinations of the Banks and their regular operating reports provide the factual basis on which the Board determines the policies and procedures which guide Bank operations. The Board also examines and supervises all Federal savings and loan associations. Supervision and, in most States, examination of State-chartered associations insured by the Federal Savings and Loan Insurance Corporation are shared with the respective State Depart ments. In a few cases where uninsured member institutions are not subject to State examination, it is customary for such institutions to submit to annual Federal examination. Each member institution is also required to file a detailed annual report which is analyzed by the Board's Examining Division. These reports are useful supervisory tools both for the Federal Home Loan Banks and the Board. From an organizational standpoint, examination and supervision of insured institutions are two separate and distinct functions of the Federal Home Loan Bank Board. Examinations are conducted by a single Examining Division serving the Board and each of its agencies. The Governor of the Federal Home Loan Bank System and the officers of the Federal Home Loan Banks, as agents for the Board, have been made responsible for carrying out the Board's supervisory responsibilities. The establishment of an Examining Division with the Chief Exam iner in Washington and a District Examiner in each Federal Home Loan Bank District has proved advantageous not only to the Board and its agencies but also to the associations themselves. A single examination of Federal savings and loan associations serves both the Federal Home Loan Bank Board, which charters these institutions, and the Federal Savings and Loan Insurance Corporation, which insures their investors' accounts. The examination of State-chartered insured associations is conducted jointly with the State authorities in a majority of the States. Data revealed by examinations are useful to the Board in considering various types of applications received from member institutions, including those for insurance of accounts by the Federal Savings and Loan Insurance Corporation, for conver sion to Federal charter, and for share investments by the Home Owners' Loan Corporation. A standard examination report form, developed by the National Association of Building and Loan Super visors, the United States Savings and Loan League, and the Federal Home Loan Bank Board is now used in examinations conducted by the Board and by over half of the State Supervisory Departments. Adoption of this form has eliminated considerable costly duplication FEDERAL HOME LOAN BANK SYSTEM 79 in examination of State associations and provides a convenient norm for individual case analysis. The separation of supervisory analysis and recommendations from actual examination of financial condition has proved a successful device for insuring, first, a high degree of independence to fact-finding examiners and, second, a detached consideration by supervisory offi cials of information revealed by examination. Examination and supervision, in other words, are two distinct but related activities of the Board. During an examination, the basic aim is to find and relate all essential facts concerning financial condition and current operations of a particular institution. The examination report is then carefully analyzed by trained supervisory officials who seek to determine whether the association is being operated in accordance with the Rules and Regulations of the Board and the best standards and practices of the industry. Recommendations for necessary supervisory action are usually based on these supervisory studies. The principles guiding the Board in its supervisory activities are, in reality, the same principles which guide local management and directorates of supervised institutions-the maintenance of the industry in the soundest possible condition, offering a safe place for the investment of savings, and a source of funds for economical home financing. To the extent that these objectives are attained in each individual association, the industry is contributing to a stronger and better planned financial structure. Supervision of financial institutions is a major responsibility involv ing protection of the interests of millions of private individuals whose savings funds are handled by these institutions. During critical times such as these, it is more important than ever that both institutional management and supervisory authorities recognize their joint obliga tion to avoid the type of operation which appears so profitable in "boom times," but which past experience has always shown ulti mately to be so costly. For example, one of the responsibilities of the Board can be defined in these terms: To encourage member institu tions of the Bank System to participate on a basis consistent with sound business practices in the program for housing defense workers. To carry out that responsibility implies a policy of watchful guidance with the constant aim of preventing at the earliest possible moment the development of unsound activities. The delegation of immediate supervisory functions to the officers of the Federal Home Loan Banks has been of immeasurable value to the Board. By this means, supervisory actions and decisions are 80 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 more responsive to varying conditions throughout the country and to special circumstances which are constantly developing in areas of concentrated defense activity. Rules and Regulations governing ordinary operations, supervisory examinations and analyses, the exercise of informal influence, in fact the whole sphere of supervision, cannot of itself insure successful operation or rule out the possibility of serious trouble. To effective supervision must be coupled intelligent management on the part of each and every home-financing institution. For this reason, the Board devotes considerable energy to encouraging the industry to adopt progressive operating plans and methods, to employ capable, efficient management-in short, to place institutional operations on a basis which experience has shown will do most to assure successful administration of home-financing institutions. FederalHome Building Service Plan The Federal Home Building Service Plan, initiated by the Federal Home Loan Bank Board in 1936 to stimulate the adoption of local "quality housing" programs was decentralized during the reporting period. Prior to this time, this activity of the Board was adminis tered directly by the Board in Washington through the Regional Federal Home Loan Banks. Operating experience and the necessity for conducting the plan on a basis sufficiently flexible to permit adap tation to varying conditions throughout the country account for the decision to transfer administration of the program to the Regional Banks in each of the twelve Federal Home Loan Bank Districts. The essential purpose of the Federal Home Building Service Plan re mains unchanged-to provide architectural counsel in the selection of a design suitable to site and neighborhood; to plan for future as well as present living requirements; to verify the specification of proper building materials; to supervise actual construction-all at a fee in line with the limited income of the average small-home buyer. Homes built under the Plan are registered with the Board in Wash ington and a certificate identifying the dwelling as a quality product is issued to the owner by the lending institution. The Federal Home Building Service Plan enables member institu tions of the Bank System to offer prospective borrowers assurance of sound planning, design, and construction. Emphasis on quality con struction in the small-home field, where architectural planning and guidance have long been sorely needed, benefits both the borrower and the lending institution-the borrower because he receives a better house for his money and the lending institution because the security FEDERAL HOME LOAN BANK SYSTEM 81 underlying its mortgage loans becomes a better risk. Under the present decentralized operation of the Plan, the Board is primarily concerned with over-all coordination of regional programs and the stimulation of public interest. General administration of the Plan rests with the Governor's office. The Board's Architectural Adviser approves architects and home de signs. Assistance is given by the Board's Public Relations Depart ment through the preparation of local and national publicity, adver tising material, and suggestions for individual promotion campaigns by cooperating institutions. To the Federal Home Loan Banks has been assigned the task of handling all direct contacts with member institutions. The Banks maintain complete information on the operation and extent of the program and have available all material needed by institutions de siring to adopt the Plan. Each of the Banks stands ready to assist through counsel and guidance any interested member institution. It has long been recognized that any program of this sort to be successful must be adaptable to varying local needs. Subjecting as sociations to detailed restrictions would hinder-not help-wide spread adoption of the Plan. The Federal Home Building Service Plan, in short, is a tool which member institutions can adopt to meet the special conditions of local markets while, at the same time, con ducting a quality construction program which is nationally recognized and which meets the high standards established for the program as a whole. As of June 30, 1941, there were 348 member institutions which had received approval by the Board to offer the Federal Home Building Service Plan to their patrons and 535 architects had qualified. On the same date, the number of individual home designs approved under the Service totaled 520. 2. OPERATIONS OF MEMBER INSTITUTIONS Changes in Membership The number of home financing institutions which are members of the Federal Home Loan Bank System has shown little change during the last four fiscal years. At the close of the reporting period there were 3,839 member institutions as compared with 3,914 a year previous. The combined assets of all members, however, continue to show significant increases. On June 30, 1941, aggregate resources totaled $5,287,175,000, a gain of $360,021,000, or 7.3 percent during the 1941 fiscal year. 82 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 The decline in the number of member institutions is accounted for principally by a continuing process of consolidation within the sav ings and loan industry.9 The trend is essentially a healthy one, resulting as it does in the gradual elimination of submarginal institu tions and the development of larger and stronger associations. The Board and the Federal Home Loan Banks have supported and en couraged the process by assisting in mergers and reorganizations, with subsequent insurance of accounts by the Federal Savings and CHART XXXV NUMBER AND COMBINED ASSETS OF MEMBER INSTITUTIONS OF THE FEDERAL HOME LOAN BANK SYSTEM NUMBER AS OF JUNE 30 EACH YEAR NUMBEROFBIL MEMBERINSTITUTIONS OF DOLLARS ESTIMATEDASSETS 6 5,000--- 5 4,000 3,000 2,000 O 0 1934 1935 1936 1937 1938 1939 1 9411 1934 1935 1936 1937 1938 1939 1940 1941 DIVISIONOF RESEARCHAND STATISTICS FEDERALHOMELOAN BANKBOARD Loan Insurance Corporation. The principle guiding the Board in this general policy has been the development of a membership of sound, well-managed institutions capable of meeting the greatly increased current needs for economical and efficient home financing. It is probable that the number of savings and loan associations will continue to decline for some time. The number of operating associa tions has already dropped from 11,442 in 1931 to approximately 7,200 at the end of 1940. It is estimated that among the latter, 1,500 associations are in a state of gradual liquidation. Since these insti 0For a detailed discussion of the process of consolidation in the savings and loan industry, see Eighth Annual Report of the Federal Home Loan Bank Board, pp. 56-9. 83 FEDERAL HOME LOAN BANK SYSTEM tutions are making no new loans and receive no new investments, it is expected that many of them will be reorganized, merged with more active associations, or formally dissolved. The record of admissions to and withdrawals from the Bank System during the last fiscal year is an additional indication of the trend toward fewer institutions. Thus, during the reporting period, 69 institutions were admitted to membership as compared with 90 during the fiscal year 1940. Applications for membership which were still pending on June 30, 1941, totaled 66 as against 96 a year previous. Membership terminations during the reporting period totaled 144 as compared with 122 during the 1940 fiscal period. Termination of membership in many cases does not mean quite what the phrase im plies. During the current fiscal year, for example, 30 terminations resulted from the merger or consolidation of associations within the membership of the Bark System. In such cases, the System as a whole does not lose all of the assets of the merged institution. As a matter of fact, where mergers are conducted as part of a community wide rehabilitation program, the resulting institutions, because they are financially sound, well-managed, and able to take an active part in the mortgage lending business of their community, may within a short period of time bring a substantial net addition to the resources of the System. In addition to the 30 membership terminations resulting from merger or consolidation, 81 member institutions went into liquida tion, and 33 institutions withdrew voluntarily. The following table presents a summary of the changes in membership during the fiscal year 1941: Number and assets of member institutions of the Federal Home Loan Bank System, June 30, 1941, compared with June 30, 1940 [Dollar amounts in millions] June 30, 1940 Number Savings and loan associations 1..--...--. Insured associations: Federally chartered-----------State-chartered-..-.-------._-Uninsured associations --Other members _____----Savings banks.---.. --------------Insurance companies----------------Total---.......------------.. Assets June 30, 1941 Number Assets Net change in fiscal year Number Assets 3,865 $4, 233 3,798 $4, 627 -67 +$394 1,421 812 1, 632 49 11 38 1,726 979 1, 528 694 213 481 1,452 857 1,489 41 12 29 2,028 1, 126 1,473 660 252 408 +31 +45 -143 -8 +1 -9 +302 +147 -55 -34 +39 -73 3,914 4,927 3,839 5,287 -75 +360 1Includes savings and loan associations, building and loan associations, homestead associations, and cooperative banks. 84 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Member savings and loan associations have for some time been the most active and substantial group within the entire thrift and home financing industry. Although representing but 53 percent of all operating institutions at the close of 1940, assets of members totaled 77 percent of aggregate resources for the industry as a whole, and their mortgage portfolio represented 80 percent of the combined CHART XXXVI* MEMBER SAVINGS AND LOAN ASSOCIATIONS COMPARED WITH ALL OPERATING SAVINGS AND LOAN ASSOCIATIONS BY CALENDAR YEARS : NONMEMBER ASSOCIATIONS ASSETS NUMBER M MEMBERASSOCIATIONS MORTGAGES HELD BILLIONS OFDOLLARS BILLIONS OFDOLLARS - , LOA ,NS MADE BILLIONS OF DOLLARS 5- 1.4 1.0 4 .... - ! .8 2 68% 73%c 78% 1938 1939 1940 1938 1939 1940 ., 940 1938 1939 1940 DIVISIONOF RESEARCHAND STATISTICS FEDERAL HOMELOANBANKBOARD holdings of all associations. Exhibit 29 presents the number and assets of member institutions by Federal Home Loan Bank Districts and by States, at the close of the last two fiscal years. Lending Activity Lending activity of member savings and loan associations reached new record levels during the reporting period. Estimates prepared by the Board's Division of Research and Statistics show that the volume of new mortgage loans made by member associations during the fiscal * For actual figures, see Exhibit 30. 85 FEDERAL HOME LOAN BANK SYSTEM year 1941 totaled $1,084,866,000 as compared with $894,212,000 during the preceding fiscal year, an increase of 21.3 percent. Loans written by nonmember institutions also showed a good gain, advancing from $196,576,000 during the 1940 fiscal year to $209,508,000. Lend ing activity of all savings and loan associations, therefore, reached a grand total of $1,294,374,000 during the reporting period. CHART XXXVII VOLUME OF NEW MORTGAGE LOANS MADE BY SAVINGS AND LOAN ASSOCIATIONS MILLIONS BY TYPE OF ASSOCIATION OFDOLLARS 1940 1941 DIVISION OF RESEARCH ANDSTATISTICS FEDERAL HOMELOANBANKBOARD Once again, member institutions were responsible for an increasing share in total savings and loan lending activity during the fiscal year 1941. On a percentage basis, savings and loan members accounted for 84 percent of the mortgage loans made by the entire industry, as compared with 82 percent during the previous fiscal year. The ratio of nonmember lending to total declined from 18 to 16 percent. Percentagedistribution of new mortgage loans made by savings and loan associations over the various classes of associations, fiscal-year figures Class of association -i-- 1938 ---------- . ------------------------All savings and loan associations Member savings and loan associations------------------------Federal associations-----------State-chartered associations ----------. ---- Nonmember associations------------ ----------- -- 1939 .. 1941 1940 .. I 100. 00 76. 71 100. 00 79. 03 100.00 81.98 100. 00 83. 82 34. 34 42.37 38.44 40. 59 41. 97 40. 01 42. 50 41.32 23. 29 20. 97 18. 02 16. 18 86 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 In the past, the relative position of member institutions and of Federal savings and loan associations as sources of mortgage credit was influenced directly by the increasing number of member and Federal associations. However, there have been only inconsequential changes in the number of member associations during recent years and it is, therefore, safe to conclude that the most active savings and loan associations are being concentrated to an ever greater degree within the Federal Home Loan Bank System. Another measure of this fact is found by comparing current lending activity with assets, by class of association. Such an analysis shows that member asso ciations loaned $244 for each thousand dollars of assets as compared with only $148 for nonmember institutions. The table on page 85 illustrates the shifts in the relative importance of various types of savings and loan associations, by indicating the percentage of mort gage loans accounted for by each of the groups during the last four fiscal years. CHART XXXVIII PERCENTAGE INCREASE IN NEW MORTGAGE LENDING ACTIVITY OF SAVINGS AND LOAN ASSOCIATIONS UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS-JUNE 30, 1940 TO JUNE30, 1941 0 5 10 15 20 25 30 UNITED STATES I - BOSTON 2-NEW YORK n~riz 3- PITTSBURGH 4-WINSTON SALEM 1yek fil{2 _ 5 - CINCINNATI 6-INDIANAPOLIS 7 -CHICAGO 8-DES MOINES -Kit _ _ _ _ __ 9 -LITTLE ROCK 10- TOPEKA I - PORTLAND 12 -LOS ANGELES DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANK BOARD 87 FEDERAL HOME LOAN BANK SYSTEM Exhibit 31 shows the monthly volume of new mortgage loans made by savings and loan associations, separated by class of associations, from January 1936 to June 1941, and Exhibit 32 presents the dollar amount and percentage increase in such loans by Federal Home Loan Bank Districts over the last two fiscal years. Stimulated lending activity was not restricted to any particular geographical area and each of the twelve Federal Home Loan Bank Districts reported substantial improvement during the current fiscal year as compared with the previous reporting period. Increases ranged from 4 percent in the Des Moines Federal Home Loan Bank District to 30 percent in the Boston District. The distribution of mortgage loans made by member institutions, according to the purpose for which the loans were granted, followed the same general pattern shown by the entire savings and loan industry. 0 The trends were, if anything, more accentuated in the case of member institutions. Thus, the volume of construction loans increased from 33.4 to 35.9 percent of total and home purchase advances also showed a good increase from 33.2 to 35.8 percent of gross lending volume. So substantial were the gains in these two types of loans that the ratio of refinancing, reconditioning, and miscellaneous loans declined materially during the year. Distribution of new mortgage loans made by all savings and loan members of the Federal Home Loan Bank System, according to purpose - Purpose of loan Construction----------- Home purchase ---Refinancing .---- ._---Reconditioning Other ------------ ------- Total ..------------ Fiscal year 1939 Dollars Percent $219, 726,000 216, 789,000 136, 494,000 41,842,000 - Fiscal year 1940 Dollars 32. 0 $298,628,000 31. 6 297, 243,000 19.9 166,191,000 71, 846,000 10. 4 6.1 46, 600,000 686, 697,000 100.0 894, 212,000 85, 550,000 Fiscal year 1941 Percent 33. 4 33.2 18.6 5. 2 9. 6 .100.0 Dollars Percent $389, 559,000 388, 376,000 168,201,000 35. 9 35. 8 15. 5 49, 396,000 4. 6 89, 334,000 1,084, 866, 000 8. 2 100.0 Reduction of Government Share Investments Outstanding investments of the United States Treasury and the Home Owners' Loan Corporation in the shares of savings and loan associations declined appreciably-by 12.9 percent, in fact-during the fiscal year 1941. Repurchases which resulted in a decline of outstanding Government investments from $237,161,310 on June 30, 1940, to $206,524,260 at the close of the reporting period are an effective refutation of the fears which have been expressed by some 1oSee Survey of Housing and Mortgage Finance, pp. 46-48. 88 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 that temporary Government assistance to private financial institutions leads to permanent Federal subsidy. The program for the investment of Government funds in the share capital of savings and loan associations originated in 1933 when the Home Owners' Loan Corporation was established to rescue hundreds of thousands of distressed home owners in imminent danger of losing their homes. Concurrently, with the establishment of this direct relief activity, the Congress wisely undertook the important task of bringing about a wholesale rehabilitation of the permanent home financing structure. As one part of this broader program, the Home Owners' Loan Act of 1933 and subsequent appropriations allocated Treasury funds of $49,300,000 for investment in the shares of Federal savings and loan associations. A short time later the Home Owners' Loan Corporation was permitted by amendment to its organic statute to make investments up to $300,000,000 in the shares of both Federal savings and loan associations and State-chartered associations which either belong to the Federal Home Loan Bank System or which are insured by the Federal Savings and Loan Insurance Corporation. Investment by the Government in the share structure of savings and loan associations was intended to provide sufficient capital for a tem porary period to enable these thrift and home financing institutions to meet demands for mortgage credit, thereby stimulating residential construction and employment. The program was highly successful in bringing about the desired result, for the lending activity of savings and loan associations was immediately stepped up as the program got under way. The following table shows the volume of investments made by the Treasury and the Home Owners' Loan Corporation for each of the fiscal years from 1934 through 1941: Gross investments made by the U. S. Treasury and the Home Owners' Loan Corporationin member savings and loan associations Investments by the U. S. Treasury Investments by the HOLC Total investments Fiscal year - ---- --- .. ---.-- -------_-- Amount invested Cumulative Amount invested Cumulative Amount invested $1,086, 300 29, 520, 400 $1,086, 300 -- ---30, 606, 700 --__------- __.._- __ ----- $1,086, 300 29, 520, 400 $1, 086, 300 30, 606, 700 18,693,300 49,300,000 $63, 142, 700 $63,142,700 81,836,000 112,442,700 1934 1935 _ 1936 --- 1937 1938 1939 -----------.. -----------------... --- ---------------_--- 1940 1941 - -- ------- --------------__---- ------ -------- 49, 300,000 119,890, 300 49, 300,000 28,964, 610 7, 152, 200 49, 300,000 49, 300,000 49,300,000 1, 538,400 1, 420,000 Cumula tive 183,033,000 119, 890, 300 211,997, 610 28,964,610 7,152, 200 219,149, 810 232, 333, 000 261, 297, 610 268. 449, 810 1, 538, 400 1, 420,000 269, 988, 210 271, 408, 210 220, 688, 210 222,108, 210 89 FEDERAL HOME LOAN BANK SYSTEM In the belief that it would be unsound to provide permanent capital for private financial institutions from Government funds, Congress provided for the gradual liquidation of share investments and charged the Federal Home Loan Bank Board both with supervising the original investments and their retirement. Under the terms of the Acts authorizing Government share investments, no requests for repur chase may be made for a period of five years from the date of invest ment; thereafter, requests may be made at the discretion of the Federal Home Loan Bank Board, but in no event in an amount exceeding, in any one year, ten percent of the total amount invested in the shares of any association. Through June 30, 1941, the volume of repurchases requested by the Federal Home Loan Bank Board after study of the financial condi tion of associations which had received investments was $3,972,850. Since retirements during the same period totaled $64,883,950, it is evident that savings and loan associations have retired volun tarily $16 for each dollar requested by the Board. This excellent record has been made possible because private investments have been received by member institutions at a rate sufficient not only to take care of current mortgage loan demands, but also to permit retirement of Government capital. While many associations have made partial repurchases of their Government share investments, a large number of institutions have been able to retire them in full, with the result that by June 30, 1941, the number of Federal associations holding Treasury money was reduced to 345 as compared with 661 associations which had originally received investments, and the number of Federal and State associations employing Home Owners' Loan Corporation funds had declined from 1,348 to 1,106. Repurchases of Treasury and HOLC investments by member savings and loan associations Treasury investments Fiscal year 1936 ------------1937 ------1938----------------1939 ----1940 1941_-- ---- lative,e- Cumtiv - HOLC investments Amount re- Cumulativ Total investments mount re- purchased purchased purchased $77,000 1,039,300 381,000 3,811,000 1 9, 854, 600 110,466, 200 $77,000 -----1,116,300 $12,000 $12,000 1,497,300 259,000 271,000 5,308,300 2,420,000 2,691,000 1 15,162,900 14,973,000 17, 664, 000 125, 629,100 2 21, 590, 850 2 39, 254, 850 $77,000 1,051,300 640,000 6,231,000 24, 827, 600 32, 057, 050 Cumula tive $77,000 1,128,300 1,768,300 7,999,300 32,826,900 64, 883,950 1 The following amounts were retired in accordance with section 5 (j) of the Home Owners' Loan Act: $671,800 in 1940; and $2,088,000 in 1941. 2 Of this amount, $1,213,050 was called for retirement by the Federal Home Loan Bank Board in accord ance with the Home Owners' Loan Act. 7 425085-41- 90 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Investment by the Treasury in the shares of Federal savings and loan associations was completed in 1936 when the $49,300,000 avail able was exhausted. Since that time, the large volume of voluntary repurchases has reduced the amount outstanding by more than one-half to a figure of $23,670,900 at the end of the fiscal year 1941.11 Investments by the Home Owners' Loan Corporation were made for the most part in 1936 and 1937. Since that time, investments have been approved on a restricted basis usually in connection with reorganization of individual associations and community rehabili tation programs. However, the Board has recently adopted the policy of considering HOLC investment requests which are received from institutions located in defense areas whose supply of local capital is insufficient to meet the immediate need for home financing.1' The balance of HOLC investments outstanding at the end of the fiscal year 1941 amounted to $182,853,360, a reduction of 18 percent in the gross total of $222,108,210. Net amounts of Treasury and HOLC investments outstanding Treasury investments _Fiscal y ear 1934 -------- .. Number of associations 1 - 1935 ---------1936 -----------------1937 ------------------1938--------1939. --_ ------1940-------1941 --------------- 60 576 661 661 623 585 501 345 eTotalinest HOLC investments . Amount Number of associations 1 $1,086,300 _ 30,606,700 ,---49,223,000 48,183,700 47,802,700 43,991,700 34,137,100 23,670,900 776 1,141 1,264 1,304 1, 231 1,106 Amount Amount ___----- $1,086,300 _---. ------$63,142,700 183,021,000 211,726,610 216,458,810 203,024, 210 182,853,360 30,606,700 112,365, 700 231, 204,700 259,529,310 260,450, 510 237,161,310 206, 524,260 1 A number of Federal associations have received both Treasury and HOLO investments. Investments by the Federal Government in the share capital of savings and loan associations have not only served the very useful purpose of encouraging home mortgage lending activity, but have also been a profitable earning asset on the national balance sheet. Through the close of the current reporting period, the United States Treasury had received $9,257,236 and the Home Owners' Loan Corporation, $32,553,691 as dividends on their share purchases. This is equivalent to a net earning yield of 3.41 percent on the average investments outstanding from 1934 through the fiscal year 1941-a rate well in excess of the cost of money to either the Home Owners' 11For more detailed information on investments by the Treasury in the shares of Federal associations, see pages 107-110. 12 See page 9. 91 FEDERAL HOME LOAN BANK SYSTEM Loan Corporation or the Treasury. Losses have been inconsequential, amounting to only $1,428 in the case of one liquidating association. A complete tabulation of Treasury and HOLC investments made and repurchased and net investments outstanding by class of member institution will be found in Exhibit 33. Analysis of Condition of Member Associations The combined balance sheet of all member savings and loan asso ciations shows a decided improvement during the calendar year 1940. The most important asset trends are found in a substantial increase in mortgage loans outstanding, a noteworthy decline in owned real estate, and a much stronger liquid position as measured in terms of cash on hand and in banks. The liability side of this master balance sheet shows a gain in private repurchasable capital and a substantial reduction in Government investments in the share capital of member associations. General reserves and undivided profits show a dollar increase of almost $19,000,000, but declined somewhat in relation to assets-a not unexpected trend in view of net losses incurred in the sale of a large volume of owned properties and the rapid growth of total resources. Exhibits 34 and 35 give a detailed balance sheet for all savings and loan members and a percentage distribution of the various balance-sheet items. CHART XXXIX PERCENT CHANGE IN ASSETS OF MEMBER CALENDAR SAVINGS AND LOAN ASSOCIATIONS YEAR 1940 OVER 1939 % DECREASE PERCENT 0 5 5 INCREASE 10 IS 90 ALL MEMBERS FEDERALS FR___.v QM~nA-v#lA-f2 STATE-INSURED ________ ______R! STATE-UNINSURED DIVISIONOF RESEARCH AND STATISTICS FEDERALHOME LOANBANKBOARD Assets.-Total assets of member savings and loan associations show a gain of almost $363,000,000 during 1940, reaching a new high of $4,411,000,000 on December 31, 1940. This gain of 9 percent com pares with an increase of $295,000,000, or 7.9 percent during the preceding year. Once again, the net increase in total assets was restricted to Federal savings and loan associations which show a gain of 18.5 percent and to State-chartered insured institutions whose total 92 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 resources grew by 13.5 percent. State-chartered uninsured members suffered a decline of $53,500,000 in gross assets. It should be recog nized, of course, that this decline resulted largely from the transfer of State associations to the insured or Federal categories. The gain in assets of member institutions was general throughout the entire country with associations in the Winston-Salem District show ing the most substantial increase-18.3 percent. Members in the Los Angeles and Portland Districts ranked second and third, showing per centage gains of 14.7 and 14.1, respectively.. The growth in assets of member institutions and mergers completed during the year are reflected in an increase of over $100,000 in the average size of member savings and loan associations. At the close of 1940, the average member institution had total resources of $1,155,000 as compared with $1,046,000 a year previous. First-mortgage loans.-The substantial gains in home mortgage lending activity during 1940 are reflected in a new high for first mortgage loans outstanding at the close of the year. The increase of $388,000,000 in net first-mortgage investments exceeded gains made in' previous years andl resulted in a total 'portfolio of $3,496,000,000. It is now estimated that member institutions hold 80 percent of the mortgage investments of the entire savings and loan industry. One of the most encouraging results of the increased lending activity of member savings and loan associations is the rising ratio of mortgage loans to total resources. At the close of 1940, first-mortgage holdings represented 79.3 percent of aggregate assets as compared with 76.8 percent at the beginning of the year. During the four-year period from 1936 to 1940, the mortgage account of member savings and loan associations has risen nearly ten percentage points in relation to total resources. Because home loans are the principal earning asset of savings and loan associations, the upward trend in this item is having a favorable effect on operating income. Throughout the country, ea6h of the Federal Home Loan Bank Dis tricts shows a gain in mortgage portfolios, with the Winston-Salem Region, as illustrated by the chart on the opposite page, maintaining the highest rate of increase. Associations in this area also show the highest ratio of mortgage loans to total assets. Federal savings and loan associations accounted for approximately two-thirds of the 1940 increase in total first-mortgage investments of member institutions. Federal associations alone built up their port folio by $1,553,677,000, or by 21 percent. State-chartered insured associations show the second best record, with a gain of 17 percent. 93 FEDERAL HOME LOAN BANK SYSTEM The portfolio of State-chartered uninsured associations remained vir tually static at $1,130,000,000. Junior mortgages, which have never represented a very important asset item on the balance sheet of savings and loan associations, de clined further during 1940 to a figure of some $3,800,000, or less than one-tenth of one percent of the total. Real estate.-The real-estate owned account of member savings and loan associations shows a reduction of over one-fifth during 1940. Im CHART XL TREND INSELECTED ASSET ACCOUNTS OF ALL MEMBER SAVINGS AND LOAN ASSOCIATIONS UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS- DEC 31,1939 TO DEC 31,1940 MORTGAGE LOANS REAL ESTATEOWNED OUTSTANDING ASSETS PERCENT INCREASE 0 5 10 15 PERCENT DECREASE 20 35 25 30 20 15 10 PERCENT INCREASE 5 0 0 5 10 15 20 UNITED STATES I-BOSTON 2-NEW YORK 3-PITTSBURGH f 4-WINSTON SALEM 5-CINCINNATI 6-INDIANAPOLIS . 7-CHICAGO 8-DES MOINES 9-LITTLE ROCK . . IO-TOPEKA II-PORTLAND 12-LOS ANGELES . . DIVISIONOFRESEARCHAND STATISTICS FEDERAL HOMELOAN BANKBOARD proving economic conditions, a rising real-estate market, and con certed efforts by association management to dispose of a particularly slow asset are the principal factors accounting for this trend. The excellent progress shown by member institutions in liquidating fore closed properties is clearly reflected in the following figures: At the end of 1936, member savings and loan associations held real estate valued on the books at $525,000,000, or 15.7 percent of total assets. At the end of 1940, four years later, the gross real-estate account had declined to $300,000,000 and represented less than 7 percent of aggre gate resources. Member institutions throughout the entire Federal 94 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Home Loan Bank System were successful in reducing their real-estate accounts. The most substantial decline occurred in the Chicago Region where associations were able to dispose of 33.2 percent of owned properties. The Indianapolis District was second, showing a decline of 30.1 percent, and the Pittsburgh Area ranked third with a decrease of 24.1 percent. By the end of 1940, real estate held by member institutions in 30 States, the District of Columbia, Alaska, and Hawaii represented less than 5 percent of total resources and in an additional 14 States repre sented between 5 and 10 percent of aggregate assets. Although real estate owned by member savings and loan associations is still some what high in a few regions where the overhang has been a particularly serious problem, it now appears safe to observe that institutionally owned properties no longer represent a nation-wide problem and that with the continuation of present trends, the vast majority of associa tions should be safely past the danger point within a short period of time. Real estate owned by member savings and loan associations, by Federal Home Loan Bank Districts Dollar amounts ointhousands) Proportion to total assets Federal Home Loan Bank District United States ------No. No. No. No. No. No. No. ----------- 1-Boston -_----------------2-New York.---_-----------------3-Pittsburgh.------------------4-Winston-Salem.---------------5-Cincinnati-------------------------6-Indianapolis.----.-------------------------------------------7-Chicago---- Dec. 31,1939 Dec. 31, 1940 $376,673 $299,838 9.30 6.80 45,264 72,128 31, 610 8,960 76,983 21,792 62,697 39, 696 62,625 23,985 6,904 62,935 15, 222 41,883 9. 53 16.04 13.30 2.17 9.38 8. 40 15.37 7.77 13.50 9.37 1.41 7.20 5.35 9.64 17, 454 14,773 10.60 8.48 11,006 8, 868 4.09 2.87 No. 8-Des Moines _---.--------------------. 13,889 No. 9--Little Rock . .--------.--..-----------10, 639 No. 10-Topeka_--..-----------.. No. 11-Portland ----------- --.----.----------------- No. 12-Los Angeles --------------------- 4,251 10,888 8, 253 3,806 Dec. 31,1939 Dec. 31, 1940 Percent Percent 6.82 5.02 3.15 4.72 3. 59 2.47 The increasing popularity of land contracts as a method of selling institutional properties is indicated by the $12,000,000 increase during 1940 in the volume of real-estate contracts held by member savings and loan associations. The dollar value of this account at the close of December 1940 was $167,000,000, or 3.8 percent of total assets. Cash.-The very natural desire for greater liquidity during the current critical period is reflected in an increase of $36,000,000 during 1940 in the cash accounts of member savings and loan associations. Cash on hand and in banks on December 31, 1940, represented 5.5 percent of the total assets of all member savings and loan associations. 95 FEDERAL HOME LOAN BANK SYSTEM There has been a steady increase in the volume of cash reserves since 1937 and the aggregate liquid funds held by associations at the close of 1940 amounted to almost a quarter of a billion dollars. Private repurchasable capital.-Private investments in member savings and loan associations showed an increase of almost 12 percent, or over $355,000,000 during 1940. Funds of this character, including shares, deposits, and investment certificates, totaled $3,376,000,000 on December 31, 1940, representing 76.5 percent of aggregate re CHART XLI TREND IN SELECTED LIABILITY ACCOUNTS OF ALL MEMBER SAVINGS AND LOAN ASSOCIATIONS UNITED STATES AND FEDERAL HOME LOAN BANK DISTRICTS - DEC.31,1939 TO DEC.31,1940 PRIVATEINVESTMENTS INVESTMENTS GOVERNMENT PERCENTINCREASE PERCENTDECREASE 0 5 10 15 20 25 20 15 10 5 PROFITS & UNDIVIDED RESERVES PERCENTCHANGE 0 -5 +5 0 +10 +15 +20 +25 UNITEDSTATES I-BOSTON 2-NEW YORK 3-PITTSBURGH . 4-WINSTON SALEM 5-CINCINNATI , . . : '~ . 6-INDIANAPOLIS 7-CHICAGO 8-DES MOINES 9-LITTLE ROCK 10-TOPEKA II-PORTLAND 12-LOSANGELES 9_ __ __ __ DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD sources as compared with 74.6 percent a year previous. A clearer picture of the growing interest of private individuals in savings and loan associations as an investment outlet is shown by the fact that the average member savings and loan association held private repurchas able capital of more than $884,233 at the close of 1940 as compared with a figure of $780,887 at the end of 1939. As already mentioned, the trend of Government investments in the share capital of member savings and loan associations shows a sub stantial reduction in contrast to the rise in private investments. Government investments in member associations declined from $250,000,000 on December 31, 1939, to $220,000,000 at the close of 96 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 1940. This decline was over three times as great as that experienced during 1939 and resulted primarily from the heavy voluntary repur chases during the year, made possible by an increased inflow of private savings. By the close of 1940, there was more than fifteen dollars of private money for every one dollar of Government funds in member institutions; a year previous, the ratio was twelve dollars to one dollar. Federal savings and loan associations show the best record in attracting private investments. These associations alone accounted for over two-thirds of the total increase in private repurchasable capital received by all member institutions, showing a net gain of $274,000,000, or a rise of 24.5 percent as compared with the previous year end. State-chartered insured associations accounted for an increase of $111,000,000, or 15.8 percent, while State-chartered unin sured institutions suffered a decline of 2}{ percent in the volume of private funds en trusted to them. Again the record of State-chartered uninsured institutions reflects in part the transfer of associations from this category to the Federal and insured groups. Associations in each of the Federal Home Loan Bank Districts show a good percentage gain in the volume of private investments held during 1940. Members in the Winston-Salem District led the System with an increase of 20.3 percent, with associations in the Los Angeles District a close second at 18.9 percent. Mortgage pledged shares declined from $166,000,000 to $146,000,000 or by 12.0 percent during 1940. This item now represents but 3.3 percent of total resources and will continue to be increasingly less important because of the widespread adoption of direct-reduction loans and the elimination of share-account sinking-fund loans. Borrowed money.-Borrowed money outstanding on December 31, 1940, over 92 percent of which was represented by Federal Home Loan Bank advances, showed a net increase of approximately 10 percent as compared with the volume outstanding on December 31, 1939. Because of the concomitant gain in total assets, however, this increase was insufficient to change the ratio of borrowings to total liabilities, the figure remaining at 4.9 percent. Reserves.-General reserves and undivided profits were increased by over $18,800,000, or 6.6 percent, during the calendar year 1940. However, this increase failed to keep pace with the growth in total resources and the ratio of reserves to gross assets declined fractionally from 7.0 to 6.9 percent. When the reserve position of member sav ings and loan associations is analyzed in light of the substantial reduc tion of real estate owned and the rapid growth of many new associa- FEDERAL HOME LOAN BANK SYSTEM 97 tions, the difficulty of bringing about an increase in the reserve ratio is understandable. The fact that associations have been able to dispose of over 20 percent of their owned real estate within a single year and to increase their assets during the same period by 9 percent while main taining reserve ratios is a feat which deserves commendation. Never theless, in the interests of conservative operation, the Board is urging associations to build up reserves as rapidly as possible while conditions are favorable. Statement of Operations Because consolidated income and expense data are available only for those member institutions which report on a calendar-year basis, and because there are changes in the number of member institutions from year to year, a comparison of operating ratios is more significant than changes in dollar volume. However, it is worth noting that the 3,508 institutions which reported their operations for the calendar year 1940 show a total gross operating income of $212,591,000 as com pared with $182,954,000 for the 3,110 reporting members in 1939. Net income after deduction of all charges aggregated $142,324,000 in 1940 as compared with $121,575,000 during 1939. Exhibit 36 con tains detailed operating ratios for member institutions during 1939 and 1940 by type of institution. The increase in mortgage investments of member savings and loan associations during 1940 is reflected in the fact that 86.2 percent of gross operating income was derived from interest on these loans. During 1939 the corresponding ratio was 85.2 percent. As might be expected from the large dollar volume of real estate sold on a contract basis, interest income from this account was also somewhat higher in 1940, representing slightly more than 4 percent of total income. Con versely, the decline of over $77,000,000 in real-estate holdings during 1940 brought about a reduction in income received from the manage ment of properties from 3 to 2.4 percent of gross income. The ratio of operating expenses to total income during 1940 shows a slight increase as compared with 1939 with most of the rise accounted for by gains in "other operating expenses." The expense ratios for compensation, maintenance of office quarters, and advertising re mained virtually unchanged. Of total income received during 1940, some 26.2 percent was used for the ordinary expenses involved in running an association, i.e., 12.6 percent went for compensation of personnel, 2.5 percent for maintenance of office quarters, 2.1 percent for advertising, and the remaining 9.0 percent for "other operating expenses." These latter items include depreciation of buildings and 98 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 equipment, payment of insurance and bond premiums, examination fees, stationery, printing, postage, and various communication charges. The distribution of net income by reporting associations during 1940 illustrates the increasing emphasis placed on the accumulation of adequate reserves and undivided profits. In 1940 dividend pay ments absorbed 73.6 percent of net income as compared with 75.7 percent in 1939 and 78.8 percent in 1938. Transfers to reserves and undivided profits, on the other hand, showed a contrary trend. Over 26 percent of net income was allocated to these accounts during 1940. In the previous year the corresponding ratio was 24.4 percent. For the first time the combined operating statements of member institutions have been segregated by asset size groups (Exhibit 37). Analysis of operating ratios by size of institution apparently bears out the conclusion that larger associations are able to operate more efficiently. The ratio of total expense to total operating income, although the trend is not entirely even, is generally lower in large institutions. Associations with less than $50,000 in assets, for example, had an operating expense ratio of 34 percent during 1940, while institutions in the over $10,000,000 asset bracket showed a ratio of 25 percent. Compensation costs for management and personnel which represent approximately one-half of total operating expenses show a steady reduction in relation to gross income as associations increase in size. Whereas institutions with assets of less than $50,000 had a compen sation expense ratio of 20.2 percent, the corresponding ratio for institutions in the over $10,000,000 group was but 11 percent. In general, the ratio of advertising expenses to gross operating income contrasted directly with the trend in compensation costs, and the larger institutions show progressively higher ratios. Examination of the operating ratios by size of institution which will be found in Exhibit 37 may prove of value to association managers in comparing their income and expense ratios with those for institutions of similar size. Improvement in OperatingStandards and Management The foregoing statistical analysis of the operations of member savings and loan associations has illustrated by fact and figure the progress of these home financing institutions during the present recovery period. There have been a number of factors responsible for this trend. In addition to such developments as assistance by the Federal Government through the Federal Home Loan Bank System and the FEDERAL HOME LOAN BANK SYSTEM 99 Federal Savings and Loan Insurance Corporation, and generally improved economic conditions, the evolution of new methods of operation designed to correct the weaknesses brought to light during the early depression period has been particularly important. Prior to the early Thirties, many savings and loan associations were run as small neighborhood clubs, operating on a part-time basis and under complicated and out of date lending and investment regulations. Operating plans had been developed over a long ex perience and not infrequently had failed to keep pace with changing needs. Many associations were accustomed to meet only periodi cally and in private quarters. No attempt was made to keep offices open for the conduct of business except on these particular occasions. Quite often savings and loan associations were conducted as a side line activity by other financial institutions. In a period of growing competition and a more well-defined home mortgage market, associations of this type soon found themselves at considerable disadvantage. The result has been a growing trend toward full-time, well-trained management, independent office quar ters, and the development of modern operating practices and standards. For example, the "permanent" plan of operation has largely replaced the old "serial" type of association in which series of shares are issued only at stated intervals. "Permanent" associations issue shares at any time desired by the prospective saver, thereby offering a competitive, modern investment outlet. All Federal savings and loan associations are required to operate on the permanent plan. The Federal Home Loan Bank Board and the officers of the Federal Home Loan Banks have encouraged other member institutions of the Bank System to make the change to this plan. Lending plans have also been streamlined to meet growing compe tition and to provide today's borrowers with a simple, easily under stood mortgage contract. The majority of loans now being written by savings and loan associations are direct-reduction loans. Until comparatively recent times, most associations offered mortgage money on the "share-account sinking-fund" or "cancel and endorse" bases. In the case of the share-account sinking-fund loan, the borrower subscribed to the shares of the association in an amount equal to his loan, and his monthly payments went to purchase share capital rather than to retire the loan. When payments on shares, plus accumulated earnings, reached a figure equal to the loan, the share investment was used to repay the borrower's indebtedness. The cancel and endorse plan worked much the same way, except that 100 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 as share payments were built up to the value of an entire share, that share was canceled and the loan reduced by a corresponding amount. Although these loan plans were distinct improvements over the older straight loan, both became unnecessarily complicated with the development of the direct-reduction loan. In the case of direct-reduction loans, no subscriptions to share capital are involved, and monthly payments are applied directly to the loan balance, with interest figured on the constantly reducing balance outstanding. The loan contract is easily understood and less expensive to the borrower. The Federal Home Loan Bank Board has required Federal savings and loan associations to use the direct reduction loan and has urged all member associations to adopt it. For the most part, the direct-reduction loan has become the standard type mortgage for the entire home-financing industry. Further improvements in lending plans offered by savings and loan associations include the adoption of variable interest rates by which institutions are better enabled to evaluate their loans and to fit mort gage terms to the degree of risk involved. Various charges, penalties, fines, and forfeitures which a few years ago were commonly made by savings and loan associations have been greatly reduced and in many cases completely eliminated. Today, the average borrower from a savings and loan association knows exactly what his loan is costing him and how long he must keep up his monthly payments to clear the indebtedness on his home. One of the most vital improvements in the conduct of savings and loan associations has been the increasing emphasis on stronger reserves. Early savings and loan associations, because they were mutual insti tutions, were often run on the theory that the accumulation of reserves was unfair to savings members because it meant a lower dividend return on investments. It is now generally recognized, however, that the accumulation of certain minimum reserves is essential to the sound conduct of the lending institution. In fact, most State laws, as well as the regulations governing Federal savings and loan asso ciations, now establish certain minimum reserve allocations for sav ings and loan associations. The savings of investors, it is now con ceded, are inherently safer in an institution which has built up a sufficient cushion to absorb inevitable losses. Hand in hand with the greater emphasis on reserves has come a development toward increased liquidity. Although savings and loan associations, because their funds are invested for the most part in long-term home mortgage security, are not completely liquid insti tutions, it is now recognized that there-are certain normal withdrawal FEDERAL HOME LOAN BANK SYSTEM 101 demands which all institutions must expect and for which they should be prepared. Another aspect of improved operating standards is the widespread adoption of carefully drawn operating budgets which are used as a guide in analyzing expenditures and keeping them in line with expected revenues. The Federal Government, through the Federal Home Loan Bank System, the Federal Savings and Loan Insurance Corporation, and the standards of operation which it has set for Federally chartered institutions, has been responsible in no small measure for the develop ment of the savings and loan industry into a more well-defined finan cial system. However, no activity which encourages sound operating techniques is in itself sufficient to insure permanent, sound savings and loan operations. Such supervisory efforts must be accompanied in each instance by trained, wide-awake, and efficient local manage ment. There is no question but that the level of management standards has been much improved during the last few years. The Board and its agencies have steadily encouraged this trend. Leaders of the industry, well aware of management problems, have also spared no effort to bring about higher professional standards. Within the last two years there has appeared a new development which is typical of the increasing importance attached to well-quali fied management-the first savings and loan graduate schools. Sev eral schools have been held in various parts of the country for the purpose of affording association executives an opportunity to compare their policies and activities and to study, analyze, and work out solu tions to the various managerial problems which confront them. The schools have been sponsored by local industry leaders with the coop eration of the Federal Home Loan Banks. The schools so far held have run from four or five days to two weeks, and are usually held in the summer on the campus of a well-known university. Trained specialists are engaged to lead concentrated study periods on various realistic questions. Lectures are given on savings and loan law, con struction loan procedure, business forecasting, financial problems, personnel administration, and market analysis. Open forums are usually held at which the attending executives have an opportunity to thrash out in common discussion stubborn operating problems. The graduate schools are still largely experimental, but each has aroused considerable interest and seems destined to become an increasingly important factor in management training. Encouraging response and the real interest shown by local managers is evidence 102 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 at least that there is a growing awareness of a need for more train ing and study in the field of savings and loan management. Another very recent development indicative of a growing profes sional attitude toward savings and loan operation is found in a number of local research projects initiated as a cooperative activity by a group of institutions for the purpose of acquainting themselves with local market trends. The increasingly complex society in which we live makes it ever more important to local management to know how general business conditions, employment and unemployment, con templated building activity, current volume of mortgage lending, trends in rents and vacancies, and long-time neighborhood trends react on savings and loan business, present and prospective. When associations were small and existed primarily to serve the interests of a local group, all of this was not so important. Now, however, that savings and loan associations are extending their operations over a wider field in an increasingly competitive market, research becomes a factor of considerable significance. Present efforts to broaden local technical knowledge in the field of housing and mort gage finance represent only the merest, but still a very encouraging, beginning. As in the case of graduate schools, these projects indicate a realization of a serious lack of essential information and a growing determination to do something about it. - -- I - - -C- - IV -- _- - -- Federal Savings and Loan Associations PUBLIC confidence in Federal savings and loan associations was once more evidenced by the rapid progress of these local thrift and home financing institutions during the 1941 fiscal year. Private share investments in the 1,4551 associations operating under Federal charter on June 30, 1941, increased by $286,761,600, or 23 percent, during the reporting period. The substantial inflow of private capital was sufficient to permit Federal associations to repurchase $28,566,050 of share investments held by the United States Government, although requests for retirements totaled only $3,160,050. At the same time, cash resources and reserves were substantially increased and new mortgage loans totaled $550,058,000, an increase of 20 percent over the preceding year. In providing for the establishment of Federal savings and loan asso ciations in 1933, Congress contemplated that these institutions would serve two purposes: (1) To provide sound thrift and home financing facilities in communities previously lacking adequate savings and home mortgage lending resources, and (2) to develop under Federal charter a group of home financing institutions operating under the best standards and practices evolved in the long history of savings and loan associations. The first aim has largely been carried out, resulting in the establishment as of June 30, 1941, of 639 newly-organized Fed eral associations, with assets of $629,301,000. It is not contemplated that there will be any further substantial increase in the number of new associations. The importance of Federal savings and loan associations as an active standardized thrift and home financing system is well illustrated by a few facts showing the place of Federals in the savings and loan industry as a whole. 1 Three associations are omitted from all statistical figures throughout this section because they had not fully completed organization prior to June 30, 1941; also, one association in process of liquidation whose charter had not been cancelled on that date is excluded. The difference between the 1,455 associations reported as operating under Federal charter and the 1,452 Federal savings and loan associations listed as members of the Federal Home Loan Bank System is due to the lapse of time between the issuance of Federal charters and the issuance of membership certificates. 103 104 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Federal savings and loan associations compared with all operating associations [Amounts in thousands of dollars] Number Date Dec. Dec. Dec. Dec. 31, 31, 31, 31, 1937-------------------1938 ------------------1939 -----------------1940 -7, Federal All operating savings and assoclaloan assotions lcations 8,870 8,289 7, 719 209 1, 323 1, 366 1,409 1, 441 Assets Percent of total 14. 92 16.48 18 25 19. 99 Federal All operating savings and associaloan asso tions clations $5, 600, 408 5, 543, 099 5, 524, 337 5, 716, 514 $1, 108, 931 1, 312, 585 1, 577, 981 1, 873, 350 Percent of total 19 80 23.68 28 56 32. 77 At the close of 1940, Federal savings and loan associations repre sented, by number, 20 percent of all operating associations. Assets of these institutions, however, constituted approximately 33 percent of all savings and loan assets, and mortgage loans written by Federals during the fiscal year 1941 constituted 42 percent of loans written by the entire industry. It is estimated that at the close of the report ing period, the mortgage portfolio of Federal savings and loan associa tions comprised 35 percent of the outstanding mortgage loans held by all institutions of this type. Federal savings and loan associations are required to operate on a uniform basis and under regulations designed to insure efficient, modern business operations. Both lending and savings plans are simple and easily understood, enabling Federal associations to meet with ease the current strong competition both for savings funds and mortgage loans. Although Federal associations, from the standpoint of years, represent the youngest group within the savings and loan industry, they have already set a standard for the industry as a whole and their influence has been responsible in no small degree for recent widespread improvement in the operating practices of all thrift and home financing institutions. Growth and Development of Federal Savings and Loan Associations The number of operating Federal associations changed only slightly during the reporting period. There was a net increase of 26 associa tions, bringing the total number on June 30, 1941, to 1,455. On the same date, however, the combined assets of Federal associations reached the record-breaking figure of $2,029,639,000, as compared with $1,728,865,000 a year previous-a growth of 17 percent. As the following chart shows, there have been practically no new Federal savings and loan associations chartered since 1936. Growth FEDERAL SAVINGS AND LOAN 105 ASSOCIATIONS, since that time has been almost entirely in the number of older institu tions which previously had been operating under State charters and converted to the Federal plan of operation. Assets of Federal savings and loan associations, on the other hand, show an excellent rate of increase whether taken from the standpoint of the progress of new institutions or gains made by older converted associations. It is natural, of course, because of the comparatively short time in which new associations have been operating, that their combined assets CHART XLII NUMBER AND ASSETS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS NUMBER MILLIONS NUMBER ASSETS OFDOLLARS 1,400 1,750 1,200 1,500 1,000 1,250 800 ,000. 400 ' 1934 1935 1936 1937 1938 1939 1940 41 1934 1935 1936 1937 1938 1939 1940 1941 Converted Federal Savings and Loan Associations Newly Chartered Federal Savings and Loan Associations DIVISIONOF RESEARCHAND STATISTICS FEDERALHOME LOAN BANK BOARD should be substantially smaller than in the case of converted associa tions which commenced operations as Federal institutions after growing to fairly good size prior to conversion. The net addition of 26 Federal associations during the fiscal year 1941 was the result of 43 new charters issued and 17 cancellations of existing charters. Of the new charters, 36 were for the conversion of State-chartered associations and only 7 for newly-organized insti tutions. The cancellations of Federal charters during the reporting period resulted from 16 mergers with other Federal savings and loan associations, and one voluntary dissolution. Where a reduction in 425085-41-8 106 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 the number of institutions results from mergers, the system as a whole suffers, of course, no loss of assets. Changes in number of Federal savings and loan associations, fiscal year 1941 Number of New charassociations ters issued June 30, 1940 Type of association Number of associations June 30, 1941 633 796 7 36 1 16 639 816 1, 429 43 17 1,455 New associations---------------------------------Converted associations--------------------------Total-------------------------- Charters canelle CHART XLIII PERCENTAGE GROWTH IN ASSETS AND PRIVATE REPURCHASABLE CAPITAL OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS US AND FHLB DISTRICTS-FISCAL YEAR 194/ OVER 1940 ASSETS PRIVATE REPURCHASABLE CAPITAL P E R C 10 0 UNITED E N T 20 PE 30 R 10 0 C E N 20 T 30 40 STATES I - BOSTON " 2-NEW YORK 3-PITTSBURGH " 4-WINSTON SALEM 5 -CINCINNATI I 6 -INDIANAPOLIS g 7 - CHICAGO k 8-DES MOINES 9-LITTLE ROCK : S | 10-TOPEKA I I -PORTLAND 12-LOS ANGELES DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD At the close of the reporting period, 86 applications for conversion to Federal charter were on file with the Federal Home Loan Bank Board, as well as two requests for the issuance of new charters. Fifty percent of the Federal charters issued to converting associations during the fiscal year 1941 were granted to institutions located in the States of Pennsylvania, Wisconsin, and New Jersey. In each of these States, the savings and loan industry is undergoing a major program 107 FEDERAL SAVINGS AND LOAN ASSOCIATIONS of rehabilitation, not infrequently involving segregation, merger, and conversion to Federal charter. As shown by Chart XLIII, Federal savings and loan associations in the Pittsburgh, Winston-Salem, and Los Angeles Federal Home Loan Bank Districts showed the greatest percentage gains in assets during the reporting period. Progress was not restricted to these particular areas, however, and each District shows an excellent rate of growth. Exhibit 38 shows the number and assets of Federal savings and loan associations classified by new and converted associations for each of the fiscal years from 1934 through 1941; and Exhibit 39 summarizes the number, assets, and mortgage loans outstanding of Federal associations, by Federal Home Loan Bank Districts and by States. The relatively little change in the number of Federal associations during the last few years, accompanied by the rapid rise in gross resources of these associations, has naturally meant a corresponding increase in the average size of Federal associations. At the close of the fiscal year 1941, the average Federal savings and loan association had assets of $1,395,000, as compared with $1,210,000 a year previous. The following table illustrates this trend by showing the distribution of Federal savings and loan associations by asset size groups at the close of the last three fiscal years. Thus, since June 30, 1939, the per centage of Federal associations in the asset group of $1,000,000 and more has increased from 28 to 38. At the other end of the scale, thepro portion of Federal associations with assets of less than $250,000 has decreased during the last two years from 32 to 21. Distributionof Federal savings and loan associations,by size groups June 30, 1939 ... Asset size group All associations..--------------- ------Less than $100,000 _------------$100,000 to $250,000--..--.----------- .$250,000 to $500,000 ------------$500,000 to $1,000,000 ------------$1.000.000 to $2,500,000 .--------------$2,500,000 and over- --... .. _------------ June 30, 1941 Number Percent Number Percent Number 1,386 146 308 284 264 260 124 100 10 22 21 19 19 9 1,429 89 275 309 296 300 160 100 6 19 22 21 21 11 1,455 57 252 292 305 347 202 - June 30, 1940 Percent 100 4 17 20 21 24 14 Gain in Private Capital During the fiscal year 1941, the number of individuals who have entrusted their savings funds to Federal savings and loan associations increased from 1,562,079 to 1,806,852. Their investments reached a new high on June 30, 1941, of $1,554,809,600, an increase of 23 percent as compared with the total volume of investments outstanding a year 108 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 previous. To eliminate the inflation of private capital trends which has resulted from the addition of new associations to the Federal sav ings and loan system, an index has been prepared on the experience. of a comparable group of Federal savings and loan associations which have been operating over the past six years. As the following chart indicates, private capital during this period has more than doubled and during thepast fiscal year alone showed an increase of 21 percent. Exhibit 41 summarizes, by CHART XLIV* Federal Home Loan Bank Dis INDEX OF PRIVATE REPURCHASABLE CAPITAL OUTSTANDING IN COMPARABLE FEDERAL tricts and by States, the number SAVINGS AND LOAN ASSOCIATIONS of private investors and the 1935-1939 =100 INDEX 250- AVERAGE MONTH 20 5so l0oo 50 1935 1936 volume of private investments held by Federal savings and loan associations. In contrast to the steady ____ increase in the volume of private capital invested in Federal sav Sings and loan associations, the past few years have witnessed a Ssteady decline in the volume of Government funds invested in these associations. During the -fiscal year 1941, investments o held by the United States Treas ury and the Home Owners' Loan Corporation declined from _____ 1937 193 1939 1940 1941 $197267,900 AS OF JUNE 30 $197,267,900 to $169,246,850. Approximately 93 percent of the DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANK BOARD amount of Government invest *For figures, see Exhibit 40. ments so far retired by Federal savings and loan associations is accounted for by voluntary repur chases. Investments called by the Federal Home Loan Bank Board under the terms of the Home Owners' Loan Act of 1933 have amounted to only $3,831,850 as compared with gross retirements of $56,887,950. As in the case of member institutions as a whole, the rate at which private capital has been received by Federals has made it possible for them to repay the Government at a faster rate than was contem plated by Congress. As a result of increasing private share subscrip tions and decreasing Government capital investments, the ratio of Government money to total capital outstanding declined from 13 to 10 percent during the reporting period. 109 FEDERAL SAVINGS AND LOAN ASSOCIATIONS Repurchases of Government investments by Federal savings and loans associations, cumulative, June 30 United States Treasury Loan Home Owne June 30 Total repurchased 1936 .------------.----------- Amount called $77,000 ------- .------ 1937 ------------------------------ 1,116,300 ------- 1938 11, 497, 300 3 ------.------- 1939 ---1940 1941 -------------------- -------------- --------------------------- Total repurchased Amount called $12,000 ----_____ 231, 000 ----- 1, 490, 000 -------5,,-----------------------, 308, 300 ----- _--$671,800 13,159,000 -----15,162,900 25,629,100 2, 759, 800 31,258, 850 - $1, 072, 050 CHART XLV By the close of the fiscal year CAPITAL HELD BY GOVERNMENT AND PRIVATE investment cumulative the 1941, FEDERAL SAVINGS AND LOAN ASSOCIATIONS MILLIONS Federal in the Government of savings and loan associations Of this 1,400 totaled $226,134,800. amount, $49,300,000 represented 0 share purchases by the Secre- I,20 o PRIVATE tary of the Treasury, and the ,,000 the by investments remainder Home Owners' Loan Corpora800 tion. No new investments have been made by the Treasury since 60oo0 November 1935 when the total o00 amount appropriated by ConfGOVER NMENT exwas purpose gress for this 00 ........... .. ** .... 2 by hausted. New investments I . ."" the Home Owners' Loan Coro OFDOLLARS poration during the fiscal year 1935 1936 1937 1938 1939 1940 1941 A FJUE 30 amounted to only $275,000. DIVISIONOF RESEARCH STATISTICS The President's Budget MessThe President's Budget Messi '^"^Ns s'o age for the Fiscal Year 1941 out lined a plan of recapturing approximately $700,000,000 from the capital funds of various Government agencies. The investments of the United States Treasury in the shares of Federal savings and loan associations were one of the items included in this program. Since voluntary re purchases have brought about a substantial reduction in the $49,300,000 capital investment of the Treasury to $23,670,900 at the close of the current fiscal year, and because of the increased need for private funds AND FEDERALHOMELOANBANK BOARD in home financing institutions to assist in the Nation's program of 110 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 defense housing, the President withdrew his request for the complete retirement of capital stock owned by the Government in Federal savings and loan associations. Treasury and HOLC investments in Federal savings and loan associations Investments Additional outstanding i ment June30,1940 scal 1941year Investing agency U. S. Treasury.---------------- Home Owners' Loan Corporation..---------Total------..... .-----..--... -----.---.. $34,137,100 ---------_ 163,130,800 2 $545,000 197, 267, 900 545, 000 Repurchases Investments fiscal year outstanding 1941 June 30, 1941 1$10, 466, 200 318,099,850 $23, 670, 900 145, 575, 950 28, 566, 050 169, 246, 850 1 Of this amount $2,088,000 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act. 2 Only $275,000 was actually invested in Federal savings and loan associations by the Home Owners' Loan Corporation. The remaining $270,000 represents an increase in investments outstanding at the end of the year as a result of the conversion to Federal charter of State associations which had already received HOLC investments. 8 Of this amount, $1,072,050 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act. A summary of investments by the United States Treasury and the Home Owners' Loan Corporation in Federal savings and loan associa tions, detailed by Federal Home Loan Bank Districts and by States, will be found in Exhibit 42. During the calendar year 1940, dividends paid to the United States Treasury and the Home Owners' Loan Corporation by Federal savings and loan associations amounted to $6,226,287, of which $1,003,948 went to the United States Treasury and $5,222,339 to the Home Owners' Loan Corporation. Since the first investments were made in these institutions in 1934, total dividends to the United States Govern ment, both Treasury and HOLC, have amounted to $33,166,182. This represents a weighted average return over the seven-year period ending with December 31, 1940, of 3.5 percent. Expanded Lending Activity Mortgage lending activity of Federal savings and loan associations broke all previous records during the fiscal year 1941. The total volume of mortage loans written during the reporting period is esti mated at $550,058,000 as compared with $457,816,000 during the fiscal year 1940, an increase of 20 percent. As previously pointed out, the past few years have shown a decided movement toward an increasing proportion of construction and home purchase loans in the lending activity of savings and loan associations (see pp. 46-8). Federal savings and loan associations show a particu larly strong trend in this direction. Thus, over the last five years, the proportion of construction loans has risen from 29 to 41 percent 111 FEDERAL SAVINGS AND LOAN ASSOCIATIONS of total, and home purchase lending, from 22 to 33 percent. Refi nancing, on the other hand, has declined in relation to total from 34 to 15 percent. Volume of new mortgage loans made by Federal savings and loan associations, by purpose of loan [Amounts in thousands of dollars] Fiscal year Volume of loans made 1936 -----------------1937 __--------------1938 . ------------------. 1939 --------------1940 ..--------------------------- --1941 .... Construetion Purchase of homes Refinancing Reconditioning Other Percent Percent Percent Percent Percent 29.1 34.5 33.7 37.0 39.1 41.4 221 28.9 30 0 28.5 30.3 32.9 $165,362 291,986 281,851 333, 959 457, 816 550,058 Exhibit 43 summarizes, by Bank Districts and by States, loans made by reporting Federal savings and loan , ,OF associations 34.4 23. 5 21.7 20.2 18.6 15.3 4.4 5.8 6.2 5.6 4.5 4.1 10.0 7.3 8.4 8.7 7.5 6.3 CHART XLVI -UME OF MORTGAGE LOANS HELD EY FEDERAL SSAVINGS & LOAN ASSOCIATIONS MLLIONS FISCAL YEARS 1936-1941 DOLLARS during the 1941 fiscal year, clas- I,6oo sified by purpose of loan. 1,400 Total loans held by Federal savings and loan associations ,2oo increased from $1,404,952,500 on June 30, 1940, to $1,688,241,200 1,000 at the close of the reporting o00 period. Because of the increas 600 ing principal repayments received on direct-reduction loans, and 400 also because an increasing num ber of associations are selling 200 enough loans to build up a 1o 936 revolving fund to make FHA insured mortgages in defense areas, the total current lending activity of these associations is not reflected entirely in trends from year to year in the volume of loans held. DIVISIONOFRESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD FinancialOperations The principal developments outlined on the preceding pages are re flected in the combined comparative statement of condition of all Federal savings and loan associations at the close of the calendar years 1939 and 1940. (See Exhibits 34 and 35.) Total assets increased 18.5 112 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 percent during this period. The major gains are reflected in mortgage loans outstanding (up 20.9 percent), and cash on hand and in banks (up 27.2 percent). Mortgage holdings represented 83.2 percent of total resources on December 31, 1940, as compared with 81.5 percent a year previous; real estate owned dropped from 5.7 percent to 4.1 percent of total assets and cash on hand increased as a ratio to total resources from 5.6 to 6.0 percent. The liability side of the balance sheet shows a gain of 24.6 percent in private capital, while Government capital declined and reserves and undivided profits rose from $76,089,000 to $90,476,000. Because com bined figures are somewhat distorted as a result of newly-chartered associations and mergers, selected balance-sheet items for a group of 1,394 identical Federal savings and loan associations, separated by new and converted institutions have been prepared'to obtain a more accurate basis for comparison. This material will be found in Ex hibit 44. Operating trends of the newly-organized Federal savings and loan associations vary significantly from those of older converted institutions. Thus, new associations show a more rapid growth in assets, private investments, and mortgage holdings. Property owned by both types of institutions showed a good decline with older associa tions showing the better percentage record. On the other hand, the ratio of owned property to total resources, as might be expected, is much lower in the case of new Federals. Reserves and undivided profits have been accumulated at a more rapid rate by new institutions, but the ratio of reserves and undivided profits to total assets is considerably lower in new associations due to the shorter period of time in which they have been operating. The consolidated statement of operations for Federal savings and loan associations during the calendar year 1940 (Exhibit 45) shows clearly the effect of increased lending activity on association income. Gross operating income of the 1,428 reporting Federal savings and loan associations during the calendar year 1940 amounted to $92,292,000 as compared with $78,255,000 for 1,384 reporting associations during 1939. Operating expenses aggregated $25,932,000 in 1940 as against $22,242,000 during the previous year. The ratio of operating expense to gross operating income shows a slight reduction from 28.4 percent during 1939 to 28.1 percent during 1940. Net income for the year 1940 (after interest and nonoperating items) aggregated $63,493,000 for reporting Federal associations as compared with $53,319,000 the year previous. FEDERAL SAVINGS AND LOAN ASSOCIATIONS 113 The increasing proportion of net income which is employed to strengthen the reserve position of Federal savings and loan associa tions is evidenced by the fact that 27.3 percent of 1940 net income was allocated to reserves and undivided profits as compared with 23.8 percent in 1939 and 22.1 percent in 1938. Dividend payments during 1940 took 72.7 percent of net income as compared with 76.2 percent in 1939. The largest single operating expense of Federal savings and loan associations during 1940 was the cost of compensation to officers, directors, and employees. Expenditures for this item aggregated $12,088,000, or 13.1 percent of gross operating income. The next largest item in the list of operating expenses is advertising which aggregated $2,691,000 during 1940, or 2.9 percent of gross operating income. Increasing emphasis on business promotion activities re sulted in an average advertising cost of $1,884 per association in 1940 as compared with $1,704 the year previous. 2 Because operating ratios of Federal savings and loan associations vary considerably with the size of individual associations, a tabulation of ratios on the basis of nine size groups is presented in Exhibit 46. This material may prove useful to individual association executives in comparing the operations of their own association with those of a number of institutions of comparable size. The dividend rates paid by Federal savings and loan associations on invested share capital have been declining steadily for the last several years. During the calendar year 1940, the average rate for all associa tions, weighted by the amount of invested capital, was 3.25 percent as compared with 3.39 percent during 1939, and 3.49 percent in 1938. During the year 1940, each of the Federal Home Loan Bank Districts showed a reduction in the average dividend rate paid by Federal associations. A downward trend in a large majority of the States likewise supports the observation that a reduction in rates is general throughout the country. There is a wide variation in the rates paid by Federal associations in different localities, as indicated by the fact that during 1940, rates ranged from a low of 2.42 percent in New York to a high of 4.03 percent in New Mexico. Exhibit 47 shows the average annual dividend rates paid by Federal savings and loan associations in each of the Federal Home Loan Bank Districts and States during the calendar years 1939 and 1940 2 For a detailed analysis of business promotion expenditures of savings and loan associations, see Federal Home Loan Bank Review, May, June, August, and October 1941. __ V ___ I __ __ Federal Savings and Loan Insurance Corporation progress was made during the fiscal year 1941 by the STEADY Federal Savings and Loan Insurance Corporation and the savings and loan associations whose investors' accounts it insures. At the close of the reporting period, there were 2,310 insured associations with assets of $3,158,251,000, giving 2,974,500 private investors the benefits of insurance. A year previous, the number of insured insti tutions totaled 2,235, gross assets amounted to $2,708,529,000, and insured investors numbered 2,591,600. In addition to the gains measured by these figures, the consolidated balance sheet for insured associations shows considerable improve ment in each of the more important items. Thus, mortgage holdings increased by 20 percent to $2,554,274,200. Real estate owned declined from $162,934,700 to $130,334,600, and now represents but 4 percent of gross assets. On the liability side, private repurchasable capital increased by 20 percent to $2,433,512,500, Government share capital declined from 9 to 7 percent of total resources, and the position of reserves and undivided profits was strengthened. Despite an increased work load, the Corporation itself was again able to operate throughout the fiscal-year period on interest earnings from invested reserves. This meant that the Corporation was able to increase its aggregate resources from $124,917,101 to $130,920,146. Surplus and reserves were built up from $23,620,811 to $29,388,884, or by 24 percent. The degree of recovery in the savings and loan business from the depression of the early Thirties can be measured in part at least by the fact that since the establishment of the Federal Savings and Loan Insurance Corporation in 1934, only 28 insured institutions have experienced difficulties so serious that corrective action by the Cor poration was necessary. In handling 16 of these cases, the Federal Savings and Loan Insurance Corporation made net cash disburse ments of $1,463,667 in order to prevent default. Recoveries received through June 30, 1941, in the amount of $20,202, have been deducted from gross disbursements to arrive at the foregoing figure. At the 115 116 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 close of the reporting period, contingent commitments to insured institutions in difficulty totaled $291,374. Three of the savings and loan associations so far assisted by the Corporation have been merged with other insured institutions, ten have continued operations as independent units, and three have liquidated voluntarily, paying all investors in cash. After an exhaus tive study of the condition of two other associations, it was found that. no financial assistance was needed from the Corporation. These institutions thereupon continued operation under approved plans. Operation of each of the associations is, of course, followed closely to prevent a recurrence of former trouble. In addition, four institutions have been declared in default and placed in liquidation. Two of these associations are being liquidated by the Insurance Corporation, one jointly by the Corporation and the Kansas Building and Loan Department, and one by the Ohio Building and Loan Department. By June 30, 1941, insured share holders in three of these associations had been issued new accounts in other insured institutions amounting to $508,988. This represents 87.3 percent of the number of insured claims to be settled, and 96.5 percent of the dollar amount involved. Payment of insurance to insured shareholders in the fourth association, which was placed in liquidation in June 1941, was pending final arrangements by the Insurance Corporation at the end of the reporting period. As the liquidation of these associations proceeds, it is probable that a sub stantial percentage of the funds issued to purchase new accounts will be recovered by the Corporation. At the close of the 1941 fiscal year, the Insurance Corporation was studying six cases in which some form of corrective action will probably have to be taken. Operations of Insured Institutions The number of savings and loan associations benefiting from insurance protection increased from 2,235 to 2,310 during the 1941 reporting period. Of this number, 1,450 were Federal savings and loan associa tions, and the remaining 860 were institutions operating under State charter. During the fiscal year 1941, insurance certificates were granted to 22 Federal savings and loan associations and to 62 State institutions. During the same period, certificates of 5 associations were canceled because of mergers with or sale of assets to other insured associations and 4 associations which went into liquidation were removed from the list of insured associations. On June 30, 1941, 236 applications for FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 117 insurance of accounts were pending. Applications from 394 associa tions had been withdrawn and 158 had been rejected by the close of the fiscal year. Changes sn number of insured associations,fiscal year 1941 Associations msured June 30, 1940 Type of association Federal savings and loan associations --State-chartered savings and loan associa tions ...-----------------------..Total-- -------- New inInsurance surance certificates certificates canceled issued Conversions to Federal charter Associa tions in sured June 30, 1941 1,450 1, 421 22 5 +12 814 62 4 -12 2,235 84 9 860 0 2,310 The growth in number of insured associations has slowed down substantially during recent years because a majority of the eligible associations within the business were insured in the years immediately following the establishment of the Corporation. In a number of CHART XLVII PROGRESS OF INSURED INSTITUTIONS JUNE 30, 1936 TO JUNE 30, 1941 ASSETS NUMBEROF INVESTORS NUMBEROF ASSOCIATIONS (MILLIONS OF DOLLARS) (THOUSANDS) 2,974 - 2,31 O2,235 2,170----2,015 . , 1,756--- ~ ' 2,592 _ 2,709 2,236_-______ 2,339 S,833 -- 1978 1,489 --. 1,579 ,y o. I915 .. 1936 '37 3,158---- ------- o- '38 '39 '40 '41 o 1936 '37 '38 '39 '40 '41 1936'37 '38 '39 '40 '41 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOAN BANK BOARD 118 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 localities throughout the country, associations are receiving insurance certificates only after reorganization and rehabilitation have placed the institutions in a position to meet the entrance standards of the Corporation. The task of broadening the insurance coverage of the Federal Savings and Loan Insurance Corporation, as a matter of fact, is now largely a responsibility which must be carried out in connection with such rehabilitation programs. The extent of insurance coverage already obtained is well illustrated by a comparison of insured associations with all member savings and loan associations of the Federal Home Loan Bank System. At the close of the reporting period, 60.8 percent of all member savings and loan associations were insured, and they held over 68 percent of the aggregate resources of all member associations. Insured institutions are operating in every State as well as in the District of Columbia, Alaska, and Hawaii. On June 30, 1941, insured institutions in 18 States and Alaska represented from 90 to 100 percent of the assets of all members and in 27 States and Hawaii, the resources of insured institutions represented over 70 percent of total member savings and loan association assets. Exhibit 48 shows the number and assets of insured associations and the number of investors in these institutions as of June 30, 1941, by Federal Home Loan Bank Districts and by States. Exhibit 49 com pares insured savings and loan associations with all savings and loan member institutions of the Federal Home Loan Bank System, by Federal Home Loan Bank Districts and by States, at the close of the fiscal year 1941. The operating progress of insured associations is well illustrated by the chart on the facing page which shows the trend of entering and present assets of savings and loan associations from the time insurance was granted through June 30,1941. The dotted line on the chart repre sents the assets of all associations insured since 1934 as of the respec tive dates insurance was granted; the solid line, the total assets of all insured institutions at the end of each month. The spread between the two lines indicates the gain in assets after insurance of accounts was granted. Another evidence of the growing importance of insured savings and loan associations within the industry is the fact that during the fiscal year 1941, new mortgage loans made by these institutions totaled $817,894,000, an increase of 23 percent over the previous reporting period and an amount equal to 75 percent of the total lending volume for all member institutions of the Federal Home Loan Bank System. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 119 CHART XLVIII BILLIONS OF DOLLARS ASSETS OF INSURED OCTOBER 1934 ASSOCIATIONS THROUGH JUNE 1941 35 r-r- 4 '34 1935 1936 1937 1938 1939 Estimates based upon current reports from approximately 95 % of all insured associations 1940 1941 DIVISION OF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD In order that the dollar volume and percentage changes in the vari ous major balance-sheet items of insured associations for the last two fiscal years may be compared more accurately, the chart on page 120 has been based on the percentage increase in pertinent ledger accounts of an identical group of 2,159 insured institutions, whose combined assets represented approximately 94 percent of the total resources of all insured associations at the close of the 1941 fiscal year. During the reporting period, gross assets of the 2,159 identical asso ciations operating during the last fiscal year increased $357,608,000, or by 14 percent. With the return of foreclosure activity to a normal level, and because of a more active and stable real-estate market, these institutions were able to reduce their real-estate holdings by $37,347,000, or 24 percent, and increase their mortgage portfolio from $2,050,272,000 to $2,402,522,000. The liquidity position of insured institutions as measured by cash and Government obligations increased from $173,408,000 to $211,839,000. Private capital was invested in the 2,159 identical associations at an excellent rate, and the net volume outstanding increased by 17 per cent during the reporting period. The particularly rapid decline in 120 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 the volume of owned real estate necessitated the write-off of losses involved in sales. Nevertheless, reserves and undivided profits show an increase of $19,647,000, or 13 percent. At the close of the report ing period, reserves and undivided profits were equal to 144 percent of total real estate owned. This was the first fiscal year end since the introduction of share insurance that reserves and unallocated income exceeded the book value of real estate held by identical associations. CHART XLIX PERCENTAGE CHANGE IN SELECTED BALANCE SHEET ITEMS OF 2,159 IDENTICAL INSURED ASSOCIATIONS JUNE 30, 1941 COMPARED PE R C E N T DECREASE WITH JUNE 30,1940 PE R C E N T INCREASE DIVISIONOF RESEARCHAND STATISTICS FEDERALHOMELOANBANK BOARD Progressof an identical group of 2,159 insured associations,fiscal year 1941 [Amounts in thousands of dollars] June 30, 1940 June 30, 1941 dolar olume Item Total assets ---------------------------------First mortgages held-------------------------Real estate owned-----------------------------Cash and Government obhgations-------Private repurchasable capital-------------------Government investment---------------Reserves and undivided profits $2, 601, 541 2, 050, 272 153, 318 173,408 1,940, 270 229,050 147,187 $2, 959,149 2,402, 522 115, 971 211,839 2, 279,154 197, 911 166,834 $357, 608 352, 250 37, 347 38,431 338, 884 31,139 19, 647 cget +13.7 +17. 2 -24.4 +22.2 +17. 5 -13.6 +13.3 Community Programs As this and previous Annual Reports have already explained, it is the policy of the Federal Savings and Loan Insurance Corporation to process insurance applications in certain areas not on an individual association basis, but rather as part of a community-wide program. Generally speaking, this approach is desirable and many times is nec essary in localities where there is either an excessive number of savings and loan associations or where many of the established institutions FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 121 have ceased to operate normally. Experience has shown that exten sion of insurance protection to problem areas on this basis is definitely more advantageous than the insurance of individual associations with out a general rehabilitation of other local thrift and home financing institutions. The community benefits by the development of a well balanced group of associations with adequate resources to meet local needs. Individual institutions have a much greater chance of oper ating successfully if the community is no longer troubled with subnormally operating institutions. Risks insured by the Federal Sav ings and Loan Insurance Corporation are much sounder in communities where all local home financing institutions are operating normally. Community programs are the primary responsibility of State super visory authorities. The Corporation works closely with and extends every assistance to the State Departments, but actual direction and control of local rehabilitation efforts are centered in State supervisors. The advantages of the community approach through the cooperation of State regulatory agencies and the Federal Savings and Loan Insur ance Corporation have been discussed at some length in previous Annual Reports of the Board.' Probably the major benefit lies in the fact that the progress of associations which eventually obtain insur ance under a community program is not hindered by the unfavorable influence of other associations in the same locality which are frozen or otherwise are in unsound financial condition. Several community programs in which the Corporation has par ticipated already have been completed. Notable among these are the programs for Altoona, Pennsylvania, and Milwaukee, Wisconsin. A comprehensive rehabilitation effort for the Chicago area is now ap proaching completion and similar programs are well under way in a number of other problem localities. Because of the high concentration of savings and loan associations in the State of New Jersey, and because of the particularly serious repercussions of the real-estate collapse in that area, the community approach has been especially useful. By June 30, 1941, a total of 20 separate programs, involving 220 associations with aggregate resources of $104,000,000, had been developed by the New Jersey State authorities with the collaboration and assistance of lo6al in dustry leaders, the Federal Home Loan Bank of New York, and the Federal Savings and Loan Insurance Corporation. Of this total, four individual programs had been fully completed by the close of the reporting period. 1 See Eighth Annual Report of the Federal Home Loan Bank Board, pp. 107-110. 425085--41-9 122 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 The program for Paterson, New Jersey, is an excellent illustration of the results that are being obtained. When the rehabilitation plan for this area was first originated in the fall of 1939, there were in existence a total of 34 associations, with combined assets of ap proximately $16,000,000. The majority of these institutions were small, part-time associations poorly located and unable to offer satis factory or economical thrift and home financing facilities. The Paterson community program has now virtually been completed and the city proper is served by six full-time associations, each of which is in sound financial condition, is centrally located in modern office quarters, and is operating with the protection of insurance of accounts. An outstanding example of the results which can be obtained by means of community programs is found in the recently completed rehabilitation of the savings and loan industry in Milwaukee: During the 1920's, local building and loan associations in Milwaukee expe rienced an abnormally rapid mushroom growth, reaching a peak in 1930, when there were well over 100 associations, with combined resources of approximately $221,000,000. It is estimated that at that time there were 200,000 shareholders in Milwaukee institutions, which is to say that one out of every three or four persons in Milwaukee County had invested in savings and loan shares. As a further measure of the prominent place of savings and loan associations in Mil waukee County, it has been conservatively estimated that during the ten-year period from 1921 through 1930, mortgage loans written by Milwaukee associa ions amounted to more than $300,000,000 in loans made to approximately 60,000 individual home borrowers. Due both to the extent of the economic depression and to unsound lending practices which had been pursued during the boom Twenties, the savings and loan associations of Milwaukee County encountered very serious difficulties in the early 1930's. Within a very short time after the crash, almost all of the institu tions in the County were forced to suspend or drastically curtail the payment of withdrawal requests. New mortgage lending virtually ceased. From 1930 to 1937, the combined assets of Milwaukee associations fell from $221,248,000 to $126,997,000. Mortgage loans held by these institutions shrank from $205,802,000 to only $55,668,000-a drop of 73 percent-while foreclosures brought about an increase in the real-estate owned account from $2,065,000 to $52,157,000. With the establishment of the Federal Savings and Loan Insurance Corporation in 1934, twelve of the Milwaukee associations were able to qualify for insurance, but due to the widespread loss of public confidence in building and loan associa tions, these few institutions made very slow progress during the next several years. In an effort to meet in some measure at least the requirements of Mil waukee for thrift and home mortgage facilities, five new Federal savings and loan associations were organized during the middle 1930's. Although these institutions were able to make some progress, it was evident that as long as the local industry was held in ill repute, all operating savings and loan associations would be defi nitely handicapped. The need for a general rehabilitation of savings and loan FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 123 associations throughout the community was clearly evident and in early 1939, the State supervisory authorities, in cooperation with the Federal Savings and Loan Insurance Corporation, launched a determined effort to clean up the situation. -In the course of the ensuing eighteen months, the State Banking Department of Wisconsin succeeded in effecting a thoroughgoing reconstruction of savings and loan facilities in Milwaukee. At the start of the program there were 107 savings and loan associations with combined assets of approximately $127,000,000. Of these, 11 associations with assets of $3,000,000 were in liquidation, 5 associa tions with assets of $6,000,000 were newly-organized Federal savings and loan associations, 12 institutions with assets of $11,000,000 were insured State-chartered associations, and the remaining 79-institutions with gross resources of $107,000,000 were uninsured State-chartered institutions. With the exception of the 5 Federal savings and loan associations and the 12 insured State-chartered institutions, almost all of the savings and loan associations in Milwaukee were completely frozen. During the course of the program, it was found possible to insure 27 additional associations independently on a 100 percent basis. A total of 6 associations received insurance certificates after a segregation of unsound assets. Another 12 institutions were merged in combinations which developed 4 insured units. An additional 8 associations were merged with institutions already insured. The State Department found it necessary to place a substantial number of associations in liquidation or under restrictions equivalent thereto. On the other hand, a few institutions were able to maintain normal operations without benefit of insurance. At the conclusion of the program, Milwaukee was being served by 63 associations with aggregate assets of approximately $83,000,000. The majority of these institutions are offering their investors the protection of share insurance. The progress of the insured group in Milwaukee is particularly encouraging. During the six-month period ending June 30, 1941, combined private capital in the 52 institutions insured as of January 1, 1941, increased from $47,163,000 to $48,580,000, or at an annual rate of approximately 6 percent. During this same period, new mortgage loans written by all insured Milwaukee County associations aggregated approximately $6,000,000. One of the most interesting developments of the Milwaukee rehabilitation program has been the Milwaukee Properties Bureau, a cooperative real-estate marketing organization established as an integral part of the program to facilitate the disposition of institutionally-owned properties.2 The success met by the Bureau is illustrated by the sales record through June 30, 1941. As of that date, the Bureau had been able to effect the sale of 2,412 parcels of real estate, at an aggregate sales price of $13,145,648, representing the disposition of 38.7 percent by number and 36.0 percent by dollar volume of all real estate owned by the associations and listed for sale. Sinceits establishment in the early summer of 1939, the Bureau has stimulated widespread interest and attention on the part of many State supervisory authori ties, savings and loan officials, and others. It appears not unlikely that as a result of the Bureau's highly satisfactory experience in disposing of real estate, similar organizations will be established in other communities as the need arises. 2A description of the Bureau and its operations will be found in the Eighth Annual Report of the Federal Home Loan Bank Board, Exhibit 49 124 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Practically all community programs have depended for their success on the reorganization of a number of local institutions unable by any other means to resume normal operations. However, cases in which reorganization is necessary before associations can qualify for insur ance are not restricted to those communities where the insurance pro gram has'been processed on a community basis, but have occurred in many other areas as well. The Corporation and the Federal Home Loan Banks have assisted several hundred institutions to reenter the ranks of operating savings and loan associations through various types of reorganization and subsequent insurance of accounts. In most cases, reorganization has taken the form of a segregation by which all good assets are transferred to a newly-organized association. In other cases, the reorganization has been attained by means of a write-down of shares in order to remove an impairment of capital or by a pledge and escrow of shares in order to provide a secondary reserve until the association's financial condition has been sufficiently strengthened. In almost every case, these reorganized and insured institutions have become a valuable asset to their community, pro viding a safe, profitable investment outlet ana a supply of credit for home-mortgage borrowers. Supervision Because the soundness of the Federal Savings and Loan Insurance Corporation as an insuring instrumentality depends to a very con siderable degree on the continued normal operation of insured insti tutions, close supervision is exercised over all savings and loan as sociations to which it is extending the benefits of insurance protec tion. Safeguards for the operation of insured savings and loan as sociations begin first with an examination of applicant institutions and a careful analysis and study to determine whether such associa tions meet the entrance standards of the Corporation. No detailed criteria have been established which must be met by each associa tion, for every applicant is considered individually and decisions are made on the basis of the pertinent facts and financial condition shown by each association. The Corporation requires that the applicant association show satisfactory evidence of sound financial condition, have competent management, adhere to safe lending and investment policies, possess satisfactory earning capacity, be able to meet normal withdrawal demands, and show corvincing prospects for successful future operations. Before approving an application for insurance, the Corporation also, requires an institution to show evidence of intention to maintain ia FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 125 dividend policy which will permit adequate reserve allocations and to charge mortgage interest rates that will enable the association to at tract and hold the best mortgage loans available in the territory it serves. Although exceptions may be made in unusual cases, the Cor poration looks more favorably upon the application of an institution with independent office quarters and full-time executive management. Once insured, all associations are subject to the Rules and Regula tions of the Corporation which include requirements that each insured institution pursue only those financial policies which are consistent with economical home financing. As previously indicated,3 supervision by the Insurance Corporation of operating insured institutions is conducted through the Governor of the Federal Home Loan Bank System and the officers of the Fed eral Home Loan Banks. Examinations of insured institutions are made by the Examining Division of the Federal Home Loan Bank Board. Thus, neither supervisory nor examining activities of the Insurance Corporation are subject to useless and expensive duplication which might be unavoidable were it not for the cooperative arrangement just described. In addition to complete annual examination of insured associations, supervision encompasses a close and continuing study of the progress of associations by an analysis of monthly reports and through direct contacts maintained by the officers of the twelve Federal Home Loan Banks. Supervisory responsibilities of the Corporation also include carrying out agreements with associations to which the Corporation has given cash assistance to remove an impairment of capital or to prevent default. Insurance Settlements Although every effort may be made to prevent the development of problem cases, it is recognized that influences not readily subject to control make certain losses inevitable in any insuring operation. In fact, the basic purpose of an insurance system is to absorb the risk of just such losses as these. During the fiscal year 1941, insurance payments were made by the Federal Savings and Loan Insurance Corporation to four associations which were threatened with default. In one other case referred to the Corporation during the year, it was determined, after careful study and the development of an approved plan of operation, that immediate financial assistance was not neces sary. This brings to a total of eighteen the number of insurance cases which have been handled by the Corporation. 8Sea p. 78. 126 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 During June 1941, the Federal Home Loan Bank Board appointed temporary conservators for three Federal savings and loan associations pending hearings to determine whether a conservator or receiver should be appointed. These associations were the First Federal Savings and Loan Association of Renton, Renton, Washington, for which a temporary conservator was appointed on June 19, 1941; the Aetna Federal Savings and Loan Association, Topeka, Kansas; and the First Federal Savings and Loan Association of Oklahoma, Okla homa City, Oklahoma, for which temporary conservators were ap pointed on June 26 and June 30, respectively. Hearings in these three cases had not been held by the close of the reporting period. Inefficient or dishonest management has been responsible for many of the loss cases which the Corporation has so far been called upon to manage. "Acts of God," such as flood and drought, as well as adverse economic conditions, have also been contributing factors in a number of the problem cases which had developed through the close of the reporting period. When there is a likelihood that an insured association is in need of assistance from the Insurance Corporation under Section 406 of the National Housing Act, as amended, the Corporation is notified by the Governor of the Federal Home Loan Bank System, or by a State supervisory authority. When an institution is referred to it for assistance, the first obligation of the Corporation is to determine by a careful examination of all facts the proper course of action to be fol lowed. Section 406 of the National Housing Act provides for cor rective action through a direct contribution, loan, or purchase of assets. Each method for prevention of default is thoroughly explored as it relates to the association in question and decision is based on a determination as to which of the alternative methods will be most beneficial to the shareholder, to the institution, and to the community, as well as most satisfactory to the Corporation. Once the decision, supported by factual study and analysis, has been reached, recommendations are made to the Board of Trustees of the Corporation (the Federal Home Loan Bank Board). Final decision as to the type of corrective action to be taken, if any, to prevent a default is the responsibility of the Board of Trustees. If it is decided that the deficit in capital funds is to be made up, the Corporation proceeds to do so under a plan which usually includes the utilization of reserves of the association and execution of an agreement stipulating the terms of settlement and the conditions on which recoveries may be made by the Corporation. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 127 In all cases where the difficulties of an association are traceable to poor management, the Corporation insists that management satis factory to the Board of Trustees be installed before any funds are granted. The selection of new management is left to the board of directors of the association, provided the individuals appointed meet the approval of the Corporation. Up to the present time, in no case referred to it has the Corporation made a loan or a purchase of assets as a means of solving the associ ation's problem. It is contemplated, however, that both of these means of settlement may be employed at some time in the future. In each case in which an insured association has been declared in default and placed in liquidation, the Corporation as required by statute, has offered all insured shareholders the two optional methods of settlement, i.e., a new account in an open insured association, or 10 percent of his account in cash immediately and the remaining 90 percent in negotiable noninterest-bearing Corporation debentures. Through the close of the reporting period, all insured shareholders had elected the first option. Summary of share settlement claims in insured institutions in liquidation as of June 30, 1941 1 Community Security Federal Savings and i edera Sa-n Trenton Build Loan Associa- ings and Loan Association of ing and and Loan Loan tionofGuymon, Indeedce Guymon, Oklahoma Total number of insured accounts_ - Total amount of insured accounts---------- Number of accounts settled--------------- Amount of accounts settled-------------Percent of accounts settled _ -------Percent of amount settled __ ------- --------- 233 Independence, Independence, Missouri Association, Trenton, Ohio renton, Ohi $164, 335 83 374 51 $334, 584 77 $28, 455.44 $164, 061 65 91 0 99 9 $316, 470 84 83. 4 94 6 $28, 455.44 100.0 100 0 212 312 51 1 The Dickinson County Building and Loan Association of Abilene, Kansas, is not included in this schedule since it was placed in liquidation just prior to the close of the fiscal year. There are 74 insured accounts aggregating $44,268.94 m this institution. To avoid delay and confusion, the Corporation has evolved a special procedure for "paying off" shareholders in liquidating insured institutions. Before offering shareholders an account in another institution, the Corporation makes arrangements with nearby insured associations for the issuance of the shares which it is estimated will be required, paying for them in cash as they are issued. Shares are then immediately made available to those electing this method of settle ment. Because the cooperating associations have available in cash from the Corporation an amount equal to the new accounts being 128 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 issued, each has so far seen fit to permit immediate withdrawal by the shareholders in accordance with the current policy of the association. By the close of the reporting period, experience had proved that a substantial percentage of individuals receiving new share accounts in connection with liquidation cases made no attempt to withdraw their savings from the operating institution. Withdrawals, in fact, have not exceeded 20 percent of the amount transferred. At the time new accounts are issued to shareholders in other insti tutions, their share accounts in the liquidating institution are assigned to the Corporation, leaving it in almost complete ownership of the association. When the exchange of share accounts has been com pleted, the Corporation has fulfilled its primary obligation as insurer and awaits its liquidating dividends along with others who have a claim against the institution. In those cases where the Corporation is acting as receiver for a Federal association, a special representative of the receiver is placed in charge of the association who proceeds to liquidate the assets under a plan adopted by the Board. In each liquidation case of this type the policy of the Corporation is to wind up the affairs of the association as inexpensively as possible and with a minimum of disturbance to shareholders and surrounding financial institutions. (For a report on the three liquidating insured associations, see page 130.) During the fiscal year 1941, financial assistance to insured asso ciations totaled $546,468.49 and undisbursed contingent commit ments, as of June 30, 1941, amounted to $291,374.11. Recoveries during the reporting period amounted to $2,094.25. In all cases referred to the Corporation since the beginning of operations, financial assistance has aggregated $1,483,869.29 and recoveries through June 30, 1941, have totaled $20,201.86. There follows a brief descrip tion of the 6 cases requiring financial help during the fiscal year 1941: Adverse climatic and economic conditions so substantially affected real estate values in an isolated section of a southwestern State that a small State-chartered association, already burdened with a large amount of real estate acquired through a former manager, was seriously threatened with default. Thorough study of the situation revealed that the community lacked home financing facilities and that a contribution, which was less than the expense of liquidation, would be sufficient to rehabilitate the institution. After determining that the association's execu tive officer, who had been previously employed to help the institution work out its problems, was capable, the Corporation made a contribution of $54,939.68 and allowed the association to continue under the same management. The Corpora tion also entered into an agreement with the association whereby that portion of the contribution ultimately not required to absorb losses on specific assets shall be returned to the Corporation. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 129 A similar type of settlement was made in the case of another State-chartered institution located in a large midwestern industrial city. Here again the diffi culties were due to extended adverse economic conditions, resulting in heavy appraised losses on real estate which exceeded the association's reserves. After surveying each possible method of settlement, the Corporation made an outright contribution of $45,773.27 without a recovery agreement in order that the asso ciation might continue operations on a normal basis. Since the executive officers and directors of the association had managed the institution's affairs as well as could have been expected under the unfavorable local conditions, the Corporation allowed them to continue under an agreement that they resign in such manner and at such time as requested if this arrangement proved unsatisfactory. The Corporation further strengthened the position of the association by authorizing it to purchase the acceptable assets of a nearby association which was in the process of liquidation. Losses suffered by a small Federal savings and loan association in a south eastern State exceeded the institution's reserves and fidelity bond coverage. After the election of three new directors, the employment of a new managing officer, and upon the execution of an agreement with the association providing for return to the Corporation of any amount in excess of that needed to absorb losses on specific assets, the Corporation made a contribution of $32,361.47 in order that the association might continue in a sound and solvent condition; $2,094.25 of this amount was immediately recovered under the terms of the agreement. Appraisals of real estate owned by a Federal savings and loan association in one of the Pacific States reflected a substantial impairment of capital. Examina tion of the association's condition revealed that its difficulty was caused largely by failure of the association to take a realistic approach to the solution of the institu tion's real estate problem. A survey of community conditions showed a definite need for an insured association in that area. Accordingly, upon the employment of new, full-time, executive management acceptable to the Board of Trustees and the adoption of a satisfactory operating budget, the Insurance Corporation made a contribution of $133,226.89 in order to allow the association to continue opera tion. It was agreed that that portion of the contribution ultimately not required to absorb losses is subject to return to the Corporation and if losses are greater than anticipated, the Corporation will make further contributions to a maximum of $21,117.65 upon approval of its Board of Trustees. During the fiscal year 1941, the Corporation made additional disbursements totaling $228,761.43 in order to prevent default in two associations which had pre viously been given financial assistance. However, at the time of the original settlement in each case, it was recognized that additional assistance might be necessary to cover certain losses which could not be determined at that time. Consequently, when subsequent examinations of those institutions showed additional aid necessary, the Board, after determining that the total amount of cash assistance was not in excess of that necessary to save the expense of liquida tion and that such settlement was in the best interests of the Corporation, made additional disbursements to prevent default and allowed the associations to con tinue operation. In addition, the Corporation paid out $53,500 to two insured institutions as pay ments on contingent contributions previously authorized by the Board. 130 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Operation of Insured Institutions in Default "Default" is defined as an official determination by a properly con stituted legal authority pursuant to which a conservator, receiver, or other legal custodian is appointed for an insured institution for the purpose of liquidation. A declaration of default in the case of Federal savings and loan associations is made by the Federal Home Loan Bank Board after a thorough examination has shown such action to be necessary; in the case of State-chartered institutions, the super visory authorities or a court of competent jurisdiction of the State in which the institution is located are responsible for a determination of default. In the event of default and liquidation of a Federal savings and loan association, the statutes provide that the Federal Savings and Loan Insurance Corporation must be appointed receiver. In the event of default and liquidation of an insured State association, the laws in a number of States permit the appointment of the Insurance Corporation as coreceiver with the State authorities. Since the establishment of the Insurance Corporation in 1934, four insured institutions, two Federal savings and loan associations and two State-chartered institutions, have been placed in liquidation. The Insurance Corporation is acting as receiver for the two Federal associations. One of the State-chartered institutions is being liqui dated under the joint responsibility of the Insurance Corporation and the Kansas Building and Loan Department. The supervisory officials of Ohio are in charge of the other State association. Under the terms of Section 406 (e) of the National Housing Act, as amended, the Corporation is required to make an annual report to the Congress on its operation of defaulted insured associations. The following detailed report and the financial statements in Exhibit 50 are therefore submitted: Both of the Federal savings and loan associations for which the Insurance Corporation is now acting as receiver were placed in liquidation during the fiscal year 1940. Following the appointment of the Insurance Corporation as receiver for the Community Federal Savings and Loan Association of Independence, Independ ence, Missouri, a hearing was held in compliance with the Rules and Regulations of the Federal Savings and Loan System at the Home Office of the association. At this hearing, interested parties were given an opportunity to submit evidence as to the condition of the association and its management and to propose any plan for its operation or for the disposition of its assets. Following the hearing, the Federal Home Loan Bank Board directed the Insurance Corporation to pro ceed with liquidation under the terms of a plan approved by the Board. The Board also appointed an agent for the Association to represent the Corporation, FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 131 with authority to take full possession of the institution, its books, records, and assets, and to carry out the duties of the Insurance Corporation as receiver. Subject to the supervision of the General Manager of the Insurance Corporation, the agent was given authority to proceed with liquidation of the assets of the association under the terms of a plan approved by the Board. The Community Federal Savings and Loan Association of Independence, Independence, Missouri, was placed in receivership on June 26, 1940, and liquidation proceedings were authorized on July 23, 1940. The Security Federal Savings and Loan Association of Guymon, Guymon, Oklahoma, was placed in receivership by the Board on February 12, 1940, and the Corporation was directed to proceed with liquidation on March 29, 1940. The Trenton Building and Loan Association, Trenton, Ohio, is being liquidated by the Superintendent of Building and Loan Associations of the State of Ohio. This institution was declared in default and placed in receivership for purposes of liquidation on April 15, 1940. Liquidation in each of these three cases is progressing as favorably as can be expected in view of the local circumstances affecting each institution. Every effort is being made to conserve the assets of the associations and to conduct the receiverships in a manner which will result in the greatest possible degree of recovery to the Corporation and to uninsured shareholders. Comparative state ments of condition and operations as of the date of each receivership through June 30, 1941, are shown in Exhibit 50. None of the receivership cases has as yet proceeded to a point where the Corporation can with any degree of accuracy estimate the ultimate recovery; however, present indications do show that the percentage return will probably be high. No liquidating dividends had been declared or paid through June 30, 1941, except to creditors. In addition to the three insured associations which had been declared in default and placed in liquidation prior to the close of the fiscal year 1941, the Insurance Corporation had an interest in one other insured institution which was placed in liquidation during the current reporting period. A report of this case follows: In accordance with Section 17-1032 of the General Statutes of the State of Kansas, the Kansas .Supervisor of Building and Loan Associations notified the General Manager of the Insurance Corporation on May 26, 1941, that it ap peared, upon examination of the affairs of The Dickinson County Building and Loan Association, Abilene, Kansas, that the association was in an unsound con dition and that the interests of its creditors were being jeopardized. Assets of the association totaled $65,989. The condition of the association was due primarily to unfavorable economic conditions and a general decline of real-estate values in the Abilene area. Opera tion of the association was unprofitable and it was impossible, even under compe tent management, to accumulate sufficient reserves to meet resulting losses. The Building and Loan Supervisory Board of the State of Kansas on June 9 concluded that a receiver for the association should be appointed and the Board of Trustees of the Insurance Corporation determined that the Corporation would act as coliquidator of the association with the Kansas Supervisor in accordance with' the provisions of the Kansas Statutes. Formal liquidation proceedings were pending at the close of the fiscal year. 132 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 A statement of condition of The Dickinson County Building and Loan Associa tion as of June 30, 1941, is included in Exhibit 50. Operations of the Insurance Corporation During the fiscal year 1941, total resources of the Insurance Corpora tion increased from $124,917,101 to $130,920,146, or by 5 percent. Reserves and surplus, as of June 30, 1941, totaled $29,388,884, as compared with $23,620,811 on the same date a year previous. Re serves have been built up as rapidly as possible during the Corpora tion's brief experience. During CHART L the same period, however, the RESOURCES OF THE FEDERAL SAVINGS AND Corporation's potential insured LOAN INSURANCE INSURANCE CORPORATION liability has grown at aa faster faster liability has grown at AS OF JUNE 30, 1935 AND JUNE 30, 1941 rate, making the continued accu $ 130,920,146 __ _mulation of reserves advisable. The Corporation's potential insured liability, representing the $ 101,874,480--- . .A total amount of all insured ac counts up to $5,000 for each investor and the total creditor obligations of all insured associa tions, was $2,464,167,000 at the ~ S close of the reporting period as compared with $2,056,099,000 at the close of the 1940 reporting g period. Expressed more simply, o the Corporation on June 30, 1 935 941 1941, had for each dollar of cap AND STATISTICS ital reserves, and surplus a po a po surplus and reserves, FEDERALHOMELOAN BANKBOARD tential liability of $18.82. Since a large proportion of the assets of insured institutions, aggregating $3,158,251,000, must be set up against the Corporation's potential liability, it is inconceivable under realistic conditions that the entire amount of this liability will ever become real. Even under the most DIVISION OF RESEARCH adverse conditions, considerable amounts would be realized from accounts subrogated to the Corporation. The capital stock of the Corporation, aggregating $100,000,000 was exchanged in 1934 for 3 percent guaranteed bonds of the Home Owners' Loan Corporation in a similar amount. Reserves and surplus FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 133 amounting to $29,388,884 are invested entirely in Government obliga tions and securities wholly guaranteed by the Government. Exhibit 51 shows the Corporation's statement of condition as of June 30, 1941. The Corporation receives its income from annual premiums paid by insured institutions, admission fees from associations when first in sured, and interest on its investments. All income above expenses is placed in reserves. Disbursements in connection with ,insurance settlements are charged to reserves. The Corporation's premium income is derived from the payment by each insured association of an annual insurance premium equal to s of 1 percent of its total share and creditor obligations, or an amount equal to approximately 11 cents for each $100 of assets. Premium income earned during the fiscal year 1941 totaled $3,063,115 as com pared with $2,631,241 for the preceding reporting year. Associations which applied and were insured during the 1941 fiscal year paid an admission fee of 4 cents for each $100 of insurable accounts and creditor liabilities. Admission fees received during the reporting period totaled $24,371 as against $19,022 during the preceding fiscal year. Income of the Insurance Corporation from investments during the fiscal year 1941, including $13,365 in profits from the sale of securities, amounted to $3,494,673. Including miscellaneous items,; the aggre gate income of the Corporation for the year ending June 30, 1941, was $6,582,193, an increase of $457,533 over the preceding year. Administrative expenses of the Corporation totaled $256,524 during the 1941 reporting period; and nonadministrative expenses resulting principally from costs incurred in connection with settlement cases totaled $8,492. This compares with $240,383 for administrative and $15,426 for nonadministrative expenses during the preceding fiscal year. After deduction of expenses, both administrative and non administrative, from gross income, the Corporation shows a net income for the reporting period of $6,317,177 as compared with $5,868,851 during the preceding fiscal year. Financial assistance to insured institutions during the fiscal year 1941 aggregated $546,468 as compared with $537,472 the year before. Contingent commitments to prevent default in insured associations aggregated $291,374 on June 30, 1941, as against $323,756 a year previous. Exhibits 52 and 53 present detailed statements of income and expenses for the fiscal year 1941. The following table shows in abbreviated form various income and expense items for the 1941 fiscal period: 134 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Condensed income and expense statement for the period July 1, 1940, to June 30, 1941 Income: Insurance premiums earned------------_ Admission fees earned----------_ Interest earned on investments ------Miscellaneous ------------------ $3, 063, 114. 94 24, 370. 83 3, 481, 308. 13 34. 00 $6, 568, 827. 90 Administrative expenses-----_------------ Nonadministrative expenses --------------- _ 256, 524. 40 8, 491. 79 265, 016. 19 Net income from operations---- _-----------------_ Other income: Profit on sale of securities_ ------------------- 6, 303, 811. 71 13, 365. 05 Net income for period_--______ Less: Adjustment of net income for prior years 6, 317, 176. 76 3-------, 104. 16 Net income --------- --------- ___ _ ------- 6, 320, 280. 92 Distribution of net income To special reserve for contingencies------------To surplus_-----------------_ ------------- --------- Total---------------------Contributions to insured associations deducted from legal reserve fund--------------------_______ $3,000,000. 00 3,320,280.92 6, 320, 280. 92 546, 468. 49 At the close of the reporting period, personnel employed by the Corporation totaled 42. The Corporation is enabled to operate efficiently with this small staff because it utilizes the general service divisions of the Federal Home Loan Bank Board, thus making it unnecessary for the Corporation to build up auxiliary departments. Throughout its seven years' experience, the Corporation has been able to meet its running expenses without using premium receipts or income received from original capital. Income on earned reserves has been more than sufficient to cover operating expenses. VI Home Owners' Loan Corporation June 12, 1936, when its refinancing activities were brought SINCE to a close, the Home Owners' Loan Corporation has been engaged primarily in liquidating its loans and the properties it has been forced to acquire. Substantial progress was made toward this goal during the reporting period. The total balance of loan and property accounts was reduced from $2,436,945,646 to $2,189,038,942, or by 10.2 percent. Sales of Corporation properties deserve special mention. An excess of property sales over new acquisitions brought about a drop of 30.2 percent in the number of properties owned and in process of acquiring title. The liability side of the Corporation's balance sheet shows a decline in bonded indebtedness from $2,634,808,900 to $2,419,608,800. Liquidation of the Home Owners' Loan Corporation is measured primarily by the ability of the Corporation's borrowers to repay their indebtedness. By June 30, 1941, a large majority of these borrowers had made real headway in their efforts to acquire debt-free home ownership. On that date, the average loan balance outstanding per active borrower was $2,108 as compared with an average loan of $2,884 to these same individuals. In short, the average present borrower from the Corporation has been able to reduce his indebtedness by almost 27 percent. Over 96 percent of the active original accounts still on the books of the Corporation at the end of the fiscal year were per forming satisfactorily, and only 3.8 percent of active accounts were in default and not liquidating. During the 1941 fiscal year, the Corporation was able to effect a reduction of 22.4 percent in the number of personnel. Administrative expenses of the Corporation also show a decrease of 15.3 percent, resulting both from the termination of personnel and the closing of a number of field offices. 1. REPAYMENT RECORD OF BORROWERS Status of Accounts Progressing liquidation of the Home Owners' Loan Corporation re sulted in certain changes during the reporting period in the types of accounts carried on the Corporation's books. Thus, the number of 135 136 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 active original loan accounts declined somewhat due to foreclosures and payments in full. Property accounts declined because of an excess of sales over acquisitions. Since the large majority of property sales are made on a deferred payment basis, vendee accounts show a corresponding increase. A classification of accounts at the end of the last two fiscal years is shown in the following table: Classification of accounts, June 30, 1940, and June 30, 1941 Total number of original accounts------------------Active original loan accounts on the books ----------------Active vendee accounts on the books ----------------Foreclosures pending (original loans and vendee accounts) -----------------Properties owned and in process of acquisition ---Accounts wholly terminated and exchanged ----- June 30,1940 June 30,1941 1, 019,138 759,137 97, 025 6,177 70, 780 86, 019 1, 019, 510 716, 676 125, 573 5, 508 49, 419 122, 334 It will be noted that on June 30, 1941, the number of accounts set up by the Corporation totaled 1,019,510. This figure exceeds the 1,017,823 loans refinanced by the Corporation principally as the result of division of certain properties upon which original loans had been granted. CHART LI CLASSIFICATION OF ACCOUNTS AS OF JUNE 30, 1941 ACCOUNTS WHOLLY \ TERMINATED I 2.0 % DIVISION OF RESEARCHAND STATISTICS FEDERAL HOME LOAN BANK BOARD By the close of the reporting period, 12 percent of the Corporation's accounts had been completely terminated, leaving 88 percent to be liquidated. Over 70 percent of all accounts established by the 137 HOME OWNERS' LOAN CORPORATION Corporation were still in active status on June 30, 1941, while 0.5 percent were in foreclosure pending judgment or sale. An additional 4.9 percent had shifted from mortgage loan status to property acquired or in process of acquisition, and the remaining 12.3 percent of total represented accounts set up for the purchasers of properties sold on a deferred payment plan. Of the active original borrowers' accounts still on the books at the end of the 1941 fiscal year, 689,398, or 96.2 percent, were performing satisfactorily. Borrowers in this category were either repaying their loans on schedule; were less than three months in arrears; or if more than three months in arrears, were reducing their delinquency by regular payments. Only 27,278, or 3.8 percent of active accounts, were in default and not liquidating. Of this number, but 2,765 were classified as insoluble. Two factors are primarily responsible for the low delinquency ratio on June 30, 1941. In the first place, generally improved economic conditions have had a salutary effect on current repayments by borrowers. Equally important is the influence of the Corporation's extension program. In a number of cases the Corpora tion makes supplementary advances in order to bring borrowers' accounts into current status at the time repayment periods are extended (see page 143). Of the 132,731 vendee accounts which had been set up by the Corporation through June 30, 1941, a total of 4,282 had been wholly retired through repayment in full, 2,303 accounts had been returned to the Corporation's property account as a result of foreclosure, and 3 accounts had been charged off or exchanged. An additional 570 vendee accounts were pending foreclosure judgment or sale at the close of the reporting period, thus leaving -125,573 vendee accounts in active status on June 30, 1941. Except for 2,190 cases, or 1.7 percent of total active vendees, all of these accounts were performing acceptably. Status of active borrower and vendee accounts, June 30, 1941 Total Original loan accounts Classification Percent Number e Number of total Total borrowers in "active status"_-----Paying on schedule or less than three months i arrears -----------More than three months in arrears but liquidating - ------Total in satisfactory status------------In default and not liquidating .---------- 425085-41- 10 Number Number Vendee accounts PercentNumber ofe total Number N Percent t of total 842,249 100 0 716, 676 100. 0 125, 573 100 0 787, 520 93 5 665, 465 92.9 122,055 97. 2 25, 261 812,781 29,468 30 96 5 3. 5 23,933 689, 398 27, 278 3. 3 96.2 38 1, 328 123, 383 2,190 1.1 98 3 1.7 138 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 The foregoing statistical summary is significant primarily because it shows that the large majority of HOLC borrowers are experiencing no insurmountable difficulty in retiring their obligations to the Cor poration. The low-cost, amortized loans made available to HOLC borrowers are proving an effective means of assisting most of these people not only to keep the homes they were in imminent danger of losing, but to increase their equities as well. Collections During the fiscal year 1941, the Home Owners' Loan Corporation received $73,122,180 in interest and $179,838,597 in principal from original borrowers. Total collections thus amounted to $252,960,777 as compared with $256,505,868 during the 1940 fiscal year. Increasing sales of acquired properties on a deferred payment basis are reflected in a larger volume of collections from vendees. Total receipts from this source during the reporting period amounted to $62,592,891 as compared with $50,048,308 the year before. Interest payments made by vendees alone totaled $14,142,293 as against $9,531,005 in the 1940 reporting period. From the beginning of operations through June 30, 1941, the Cor poration collected a grand total of $1,843,734,607 from both borrowers and vendees. Of this total, $1,092,184,460, or 59.2 percent, repre sents repayments on mortgage principal including loans paid in full, and the remaining $751,550,147 constitutes interest payments to the Corporation. Cash sales and initial payments on property sales have been included in these figures. The collection record of the Corporation has followed closely the fluctuations of general b'usiness conditions. Whenever employment slackens and family income declines, collections from borrowers tend to fall off. Conversely, as the following chart indicates, when economic activity improves, payment is made promptly on billings by the Corporation. The fiscal year 1941 shows an especially close correlation between national income and collections. The reporting period was one of rising industrial activity, increased employment, and higher incomes.' It is no mere coincidence that the ratio of payments received on active accounts to current billings actually exceeded 100 percent because of payments received on delinquent installments and prepayments during five of the first six months of 1941. 1 See pp. 14-15 HOME OWNERS' 139 LOAN CORPORATION Another evidence of the improved ability of HOLC borrowers to repay their obligations to the Corporation is the steadily increasing number who are finding it possible, either through resources of their own. or by private refinancing, to repay their loans in full. During the reporting period, 30,954 original borrowers retired the balance of their indebtedness to the Corporation. From the beginning of opera tions through the close of the fiscal year 1941, the total number of borrowers' accounts wholly terminated through payment in full numbered 108,095 in the amount of $249,846,629. CHART LII PERCENT 110 H.O.LC. AND NATIONAL INCOME COLLECTIONS T... -------- ----- , oBILLIONS 9 .....- o... --.- ...... --- -....... ......... ---- --8 110 -, THREE MONTHS MOVING AVERAGE 100- 8 RATIO OF COLLECTIONS I TO CURRENT BILLINGS (SCALEAT LEFT) | 70no ncluded urrent ccruals and becaue of loon reaymGHT) s full OF 76 E 705 1936 1939 €'-In some months the ratio 1937 exceeds 100% because1938 of the collection of arrearages not included in current accruals and because of loan repayments in full FEDERAL OE 1940 LOAN ANK ORD 1941 DIVISIONOF RESEARCHAND STATISTICS FEDERALhOME LOAN BANK BOARD On June 30, 1941, arrearages amourted to $15,278,304, of which $14,051,486 was due on original loan accounts and the remaining $1,226,818 on vendee accounts. Of the total amount due and still unpaid, $12,869,165 represented amounts uncollected on principal and $2,409,139, amounts still unpaid on interest. As might be expected from the improved repayment record of borrowers during the reporting period, arrearages at the close of the reporting period were substantially lower than a year previous, when the total amount due and unpaid amounted to $35,118,808. 140 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Reduction of Mortgage Indebtedness by Borrowers The liquidation of the Corporation's assets, and more particularly, the rapidity with which this goal can be accomplished is measured primarily by the ability of the Corporation's borrowers to repay their indebtedness. The following table demonstrates the progress already made by the present HOLC borrowers in reducing their mortgage obligations through the close of the reporting period: Debt liquidation of the average outstanding original loan Number of original accounts outstanding, June 30, 1941_-----721, 614 Original amount of these loans -------_ --_ -- _ $2, 081, 236, 692 Average original amount_ $2, 884 Loan balance, June 30, 1941________________ $1, 521, 046, 216 Average loan balance, June 30, 1941___-___ ____ _ $2, 108 Percent reduction____ ___ 26. 9 The present average borrower has been able, over a period of from five to eight years, to reduce by 26.9 percent the principal balance of his mortgage loan. This record is particularly noteworthy when it is recalled that a large majority of the original HOLC mortgagors were delinquent some two years on principal and interest payments and from two to three years on taxes and assessments at the time their obligations were refinanced by the Corporation. Not all of the original borrowers have, of course, been able to carry out their loan contracts. It was not expected, in fact, that the refinancing of distressed mortgages by the Home Owners' Loan Cor poration would result in the successful rehabilitation of all of the mort gagors to whom the Corporation's loans were granted. By June 30, 1941, foreclosure had been authorized in 193,612 cases when the borrowers, although given every opportunity and encouragement, still failed to meet their loan obligations. On the other hand, the 108,095 borrowers who have retired their loans in full have done more than meet their mortgage payments on schedule. Exhibit 54 shows the average original loan per active borrower and the average loan balance outstanding on June 30, 1941, by HOLC Regions and by States. The original refinancing loans made by the Home Owners' Loan Corporation aggregated $3,093,451,321. By the close of the 1941 fiscal year, subsequent advances to original borrowers for miscellaneous purposes, as well as the conversion of delinquent interest to principal, increased this investment to $3,263,957,817. By June 30, 1941, the Corporation's borrowers had retired, through repayment of principal, 141 HOME OWNERS' LOAN CORPORATION $956,637,553, or 29.3 percent of total original loans and advances. In addition, $786,274,048, or 24.1 percent of gross loans and advances had been transferred to other accounts, particularly the Corporation's property account. The net result of principal repayments and transfers was to leave a balance of original loans and advances out standing of $1,521,046,216 on June 30, 1941. Reduction of indebtedness of original borrowers Through Through June 30, 1940 June 30, 1941 Original amount of loans closed --------------------Advances to borrowers and interest merged with principal in extension agree ments----------------------------------------------------- $3,093,451, 321 $3, 093, 451, 321 153, 182, 289 170, 506, 496 ---------Cumulative gross indebtedness of borrowers Less principal repayments---------------Less balances transferred to property and similar accounts------- 3, 246, 633, 610 776, 798, 956 734, 951, 572 3,263, 957, 817 956, 637, 553 786, 274, 048 Balance of original loans and advances outstanding----- 1, 734, 883, 082 1, 521, 046, 216 In addition to the repayment in full of 108,095 original loans, a number of accounts have been terminated by charge-offs, cash sales, and other methods. The following table summarizes all accounts terminated as of the close of the last two fiscal years: Cumulative number of accounts terminated Through Through June 30, 1940 June 30, 1941 Original loans paid in full --------------------Cash sales at foreclosure--------------- Cash sales of acquired properties- .------------Vendee instruments paid in full -------------Properties and accounts charged off or consolidated------------Total accounts terminated -----_--- -- 77,141 908 108, 095 1,224 86, 064 122, 314 6,038 1, 797 180 --- 8, 471 4, 275 249 2. GENERAL OPERATIONS Loan Service Since its inception, the Home Owners' Loan Corporation has been confronted with a peculiarly difficult problem in servicing its loans. Unlike normal private lending institutions, the Corporation made its loans to home owners already seriously delinquent and unable to obtain from other sources the refinancing funds needed to avoid fore closure. The added responsibility of keeping such borrowers in their homes if reasonably possible impelled the Corporation to develop a highly specialized servicing operation. 142 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 By treating delinquent accounts on an individual case basis, the Corporation has been able to discover the source of borrowers' diffi culties and to take corrective measures in many cases which otherwise would have drifted into foreclosure. A representative of the Home Owners' Loan Corporation calling at the borrower's home can usually, by frank discussion with members of the family, diagnose the financial ills which led to delinquency in loan payments. In cases of small arrearage, the same results can often be obtained by direct correspondence. In any event, the Corporation bends every effort to assist the home owner to rehabilitate himself whether the difficulty be lack of employment, illness, financial reverses, crop failures, overhousing, excessive taxes, or any of the adversities which may beset home owners during the course of long-term financing. Through its representatives located in all sections of the country, the Corporation is in a position to help borrowers obtain employment or public assistance, to assist them in the sale or rental of their homes, or to grant temporary forbearance, adjustments of loan payments, or advances for taxes and reconditioning, if such action is justified by the circumstances of the individual case. The reduction in the number of active accounts in the Corporation's portfolio during the fiscal year due to foreclosures and payments in full was largely offset by sales of acquired properties on a deferred payment basis. As a result, the number of mortgage loans and ven dee accounts being serviced declined by only 13,393, or from 855,681 at the beginning of the fiscal year to 842,249 on June 30, 1941. Although the volume of accounts was reduced only slightly, the nature of the Corporation's servicing problem was altered by the large-scale extension activities during the 1940 fiscal year and the general improvement in business conditions which has been brought about by the national defense program. As a consequence of these developments, only 6.5 percent of the Corporation's loans were 3 months or more in arrears at the close of the fiscal year as compared with 25.9 percent in December 1939, just prior to the inauguration of the extension program under the Mead-Barry Act. Loans over 6 months in arrears represented but 1.2 percent of total as compared with 17.3 percent in December 1939. This shift in the delinquent status of accounts was accompanied by a transition from "curative" to "preventive" servicing. In other words, the Corporation's primary emphasis in servicing its loans is at this time not so much the elimination of serious delinquencies, HOME OWNERS' LOAN CORPORATION 143 although accounts in this category continue to receive close attention, but rather the task of helping home owners to avoid arrearages. Assistance of this latter type is especially necessary in those cases where the borrower's repayment period has been extended to bring his account current. Failure to maintain payments on the revised basis may well mean unavoidable foreclosure since extensions usually represent the ultimate possible liberalization of loan terms, if the integrity of the Corporation's loans as debtor obligations is to be maintained. A new servicing policy was adopted by the Corporation in December 1940 to permit special leniency to the borrower whose income is adversely affected by his induction or the induction of a member of his family into military service. By June 1941, the privilege of making reduced payments (generally equivalent to interest and taxes) during the period of military service had been granted to 235 Corporation borrowers. In a number of cases, the Corporation has agreed to carry the loans temporarily without any payment whatsoever, on the borrower's promise to make up the delinquent installments as soon as possible after the termination of military service. A servicing activity which protects both the Home Owners' Loan Corporation and its borrowers is the advance of supplemental amounts for the payment of taxes, insurance, repairs, and like costs. Many borrowers have been hard pressed, at times, to meet these costs in addition to their regular payments on interest and principal. In justifiable cases, therefore, the Corporation has followed the practice of advancing the needed funds, when the borrower is unable to take care of these items himself, increasing the loan by the amount thus paid out on his account. In this manner, the Corporation not only protects its own security by the amounts expended, but also assists its borrowers through temporary periods of difficulty. The table below indicates that almost 92 percent of total supple mental advances through June 30, 1941, were made for the payment of delinquent taxes. While funds for this purpose still accounted for the major share of funds advanced during the fiscal year 1941, it is noteworthy that the dollar volume decreased from $66,283,241 during the previous reporting period to $13,165,882, or by 80 percent, principally as a result of the growth in tax and insurance accounts (see pages 145-6). Advances for other purposes show relatively little change during the reporting period. 144 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Advances to original borrowers, by purpose Fiscal year Taxes 1934__ --------1935-------- -_ -----1936 -----------1937------ ---------1938 -----------1939--------------1940--------------1941----__------------------- $1,619 85,035 1,563,728 11,349,050 18, 607, 296 36,991,707 66, 283, 241 13, 165, 882 Cumulative, June 30, 1941------- 148,047,558 Insurance Maintenance $17,017 ------_.-391, 349 $3, 696 2,144,683 311,362 1,215, 925 528,159 1, 269,992 386,026 415,172 1,068,715 778, 422 886, 627 1, 103, 216 895,414 7, 989, 319 3,426,456 Mscellaneous Total $676 21,904 66,477 133, 013 145,979 881, 794 589, 950 $18,636 480, 756 4,041,677 13,159,611 20, 396, 327 38,621,573 68, 830,084 15, 754,462 1,839, 793 161, 303,126 Extension of Loan Terms Under the terms of the Mead-Barry Act approved on August 11, 1939, the Home Owners' Loan Corporation was authorized to extend the amortization period of borrowers' loan accounts to a maximum of 25 years from the date of the execution of the security instru ment, if, in the judgment of .the Corporation, the circumstances of the home owner and the condition of the security justify such extension. A substantial number of extension applications had been processed before the close of the 1940 fiscal year, and on June 30, 1940, the books of the Corporation showed 172,491 extended accounts. During the reporting period, an additional 61,134 accounts were extended on the books of the Corporation, bringing the total to 233,625 as of June 30, 1941. Authority to extend loan terms has considerably broadened the Corporation's servicing activities and has given thousands of borrowers a fresh opportunity to work out their delinquency problems and avoid foreclosure. Loan extensions have naturally been granted borrowers whose delinquency was most serious. Of the total loans extended on the books of the Corporation from the beginning of the program in the fall of 1939 through the close of the current reporting period, 48.3 percent were in arrears more than 12 monthly installments and 31.2 percent were delinquent 18 or more monthly payments at the time extensions were granted. Accounts extended from October 1, 1939, through June 30, 1941, classified by arrearageage groups at time of extension Percent of total Installments in arrears: -8-------_ 8. 5 ------------Less than 3 months--43.2 3 to 11 months ---------------------17.1 ----------------------------12 to 17 months --31. 2 -------18 months and over-------- Total_---------- -------------- 100. 0 HOME OWNERS' LOAN CORPORATION 145 Extended accounts require close servicing attention by the Cor poration, for failure to carry out the terms of revised contracts in most cases leaves no alternative but resort to foreclosure. There is a necessary limit to the leniency and assistance which can be extended to the Corporation's borrowers without sacrificing the interests of the Corporation and the taxpaying public, and there are few cases in which any further aid can be justified if extended terms of payment cannot be met. At the close of the reporting period, the books of the Corporation show that 225,784 of the 233,625 accounts which had received an extension of amortization period were in active status. The remain ing 7,841 had been terminated by foreclosure or payment in full. A large proportion of the extended accounts now on the books of the Corporation have been in effect for at least a year. Although this is not a sufficient period of time to warrant accurate conclusions as to the number of borrowers who will be able to rehabilitate themselves by means of an extension, the performance record of this group of Corporation debtors has to date been a satisfactory one. At the close of the reporting period, 95.2 percent of active extended accounts were in satisfactory status, while only 4.8 percent were in default and not liquidating. Tax and Insurance Accounts In dealing with over one million borrowers, the Home Owners' Loan Corporation found that one of the most serious cost problems involved in home ownership was the burden of taxes, insurance, and similar carrying charges which must be borne by the borrower in addition to his regular monthly loan installments. In the normal course of events, charges for taxes and insurance are levied on an annual basis and in many cases their payment in a lump sum represents a major hardship. In an effort to assist its borrowers, therefore, the Cor poration has established a special procedure by which home owners may accumulate funds for the payment of taxes and insurance on a systematic monthly installment basis. When taxes and insurance come due, they are paid automatically by the Corporation from the funds paid in by the borrower in this manner. This program has not only provided a safeguard for home owners against the accrual of insurance charges and penalties due to tax delinquency, but, in addition, it has brought about substantial econo mies in the Corporation's administrative expenses by obviating the need for searching public tax records on a large number of properties. During the reporting period, the number of Corporation borrowers 146 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 and vendees for whom tax and insurance accounts had been estab lished increased by 90,443 to a total of 418,517 on June 30, 1941. At the time the Mead-Barry extension program was inaugurated in the fall of 1939, the Board adopted, as a matter of policy, a requirement that tax and insurance accounts be established in each case where an extension was granted. Likewise, since October 1939, each vendee has been required to accumulate funds for the payment of taxes and insurance through such accounts. The value of the tax and insurance program is directly reflected in the fact that borrowers' tax delinquency has declined to the point where the Corporation now encounters little difficulty on this score. Taxation Tax and insurance accounts established by the Corporation have proved a successful means of assisting borrowers to meet their annual tax charges. However, the real root of the problem lies not in devices which facilitate the collection of tax bills, but in a more equitable real estate tax system. Taxes are, of course, cost factors over which the Corporation has no control. Its experience as one of the largest tax payers in the country, however, does offer some interesting facts on the relative importance of taxation in the average home buyer's budget. Analysis of the tax and insurance accounts during the calendar year 1940 shows that for the country as a whole, the average monthly tax and insurance installment represents approximately 33 percent of the average monthly loan installment. In four-States, real-estate taxes are equivalent to 50 percent or more of loan payments and in an additional 12 States, they represent between two-fifths and one-half of the monthly loan installment. Relating monthly tax accruals to mortgage interest shows that the average tax is equal to about 80 percent of the interest charged each month on the Corporation's loans and there are ten States in which taxes actually exceed the borrower's interest payments. A rigid cost such as taxation has a direct and evident bearing on the cost of home ownership. An oppressive tax load not only handi caps the borrower in meeting his mortgage indebtedness, but may well even discourage home ownership if the borrower knows that after the debt has been cleared he will still be left with an excessive tax burden. Taxation costs have a direct effect on property acquisitions and sales. It is impossible, of course, to single out taxation as the sole determi nant in HOLC property operations. However, it is undoubtedly more than a coincidence that the Home Owners' Loan Corporation has been 147 HOME OWNERS' LOAN CORPORATION forced to acquire fewer properties and has been able to dispose of its property acquisitions at a better rate in communities and areas where taxes are on a reasonable level. In the following table, annual taxes as a percentage of sales prices are shown to correlate closely with the percentage of sales to acquisi tions in the same localities. In Jersey City, for example, where annual taxes represented 7.41 percent of property values as represented by sales prices during the first six months of 1940, the Corporation had been able to liquidate only 26.6 percent of its total acquisitions. In San Francisco, on the other hand, where taxes represented but 1.89 percent of current market prices, the Corporation has been able suc cessfully to dispose of 97.4 percent of acquisitions. Annual tax rates and HOLC property sales in selected cities City Percentage Taxes as a of HOLC percent of sales to sales prices 1 properties acquired Jersey City_---Newark_----_ Rochester ---Buffalo -------Boston ------Brooklyn (N. Y.) _---Bronx (N. Y.) -- _---Queens (N. Y.) -----. New Orleans_---------- Milwaukee---------Pittsburgh ------------- Percent 7.41 5. 80 5. 70 5. 32 5.17 4. 72 4 32 3.81 3. 78 3 70 3.69 Percent 26. 6 27. 9 39.1 32 1 45. 6 36 7 55 1 33 3 86 0 74 1 74. 8 City St. Paul ..-------Minneapolis---------Fort Worth-----Indianapolis--------Dallas ---_ Atlanta ---------Tulsa--- -----Salt Lake City -------Oklahoma City-------Cleveland -------San Francisco.----------- Percentage Taxes as a of HOLC percent of sales to sales prices 1 properties acquired Percent 3 63 3. 59 2. 97 2. 53 2. 23 2. 21 2 19 2.04 2 03 2 00 1 89 Percent 91.0 88. 0 89. 4 82. 5 92 6 96. 3 86 0 98.3 94. 5 87. 0 97.4 Based on sales during the first six months of 1940. A further example of the cost of taxation in HOLC operations is found by relating the annual tax burden to gross income received by the Corporation from the properties it owns. During the fiscal year 1941, over 40 percent of total gross rentals received by the Corporation was disbursed in the form of taxes. Insurance Program As outlined in the Eighth Annual Report of the Board, certain changes were made in May 1940 in the Corporation's program with respect to insurance of borrowers' properties, as well as properties acquired by the Corporation, against fire, windstorm, and other bozards. An agreement was entered into with the Stock Company Association whereby borrowers who maintain tax and insurance accounts with the Corporation (see p. 145), as well as certain borrowers who neglect to obtain insurance, may have their properties insured by the Stock 148 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Company Association pursuant to its contract with the Corporation. This contractual agreement was concluded only after open competitive bids had been received from a number of qualified insurance carriers. The majority of the Corporation's borrowers are continuing to fur nish their own insurance policies from companies of their own selection and through their own agents. The Home Owners' Loan Corporation requires only that the insurance carriers be licensed by the 'State in which the borrower's property is located and that the policy be such in amount and other respects as to afford the Corporation adequate protection. However, 90 percent of the 418,517 borrowers and vend ees for whom tax and insurance accounts have been set up on June 30, 1941, had elected the convenience of having the insurance on their properties renewed with the Stock Company Association under the terms of its contract with the Corporation. On June 1, 1940, the Board discontinued the purchase of insurance against fire and other hazards on its owned properties. In lieu of insurance, a reserve was set up to which such losses might be charged. On the basis of previous loss experiences, reserve allocations were es tablished at the rate of fifty cents per month per owned property. From the time the reserve was first set up in June 1940 through the close of the fiscal year 1941, provisions for losses on this basis aggre gated $352,746.50, while losses charged to the reserve during the same thirteen months totaled only $115,389.53. Foreclosures After deduction of withdrawn cases, net foreclosures authorized on original loans during the fiscal year 1941 totaled 11,498. During the previous reporting period, net authorizations totaled 11,078. Fore closure authorizations on vendee accounts numbered 1,593 as against 795 during the 1940 fiscal year. Included in the above figures are 2,812 properties acquired during the reporting period by deed in lieu of foreclosure as compared with 4,334 during the previous fiscal year. The slight increase in the number of net foreclosure authorizations on mortgage loans during the fiscal year 1941 was accounted for principally by foreclosure actions brought during the first few months of the reporting period. The majority of accounts on which the Corporation was forced to institute proceedings at that time were cases in which foreclosure had previously been authorized, but which had been postponed during consideration of extension applications. In those cases where it was found after careful consideration that even the most liberal extension of loan terms would be insufficient to permit the borrower to carry his loan, it was necessary to resume 149 HOME OWNERS' LOAN CORPORATION foreclosure action. These cases account for the noticeable increase in foreclosure activity during the fall of 1940. After this period had passed, the trend of foreclosures was steadily downward, with net authorizations during the last six months of the reporting period totaling only 3,615 as compared with 7,883 during the previous six months. The downward trend in foreclosure activity during the closing months of the reporting period is attributed to two causes. First, the Corporation's extension program has placed a large number of marginal accounts on a satisfactory paying basis. At the end of June 1941, only about 7 percent of outstanding mortgage loan accounts were in default. Second and perhaps even more important, is the fact that improved economic conditions and rising incomes have enabled a great number of borrowers to maintain their loan contracts on a current basis. Foreclosureoperations during the fiscal year 1941, by months Original borrowers Month Authoriza-WithWithAuthorizations drawals Vendees Net authoriz tons AuthorizaAuthonza tions WithWithdrawals Net au thoriza tions 1940 July ---------August ------------- September--_ -- - October -------------November----------December--------1941 January------_February -March__---April-----.___,---__ May-------------June ---- - - Total------ - 1,554 1,829 351 385 1,203 1,444 151 179 2, 223 358 1,865 29 27 122 152 235 38 197 2, 117 1, 706 1,313 596 585 584 1, 521 1,121 729 255 192 182 47 42 65 208 150 117 1,525 1,510 1,497 1,140 946 879 611 691 712 781 563 524 183 212 242 171 154 125 66 69 74 96 71 64 117 143 168 75 83 61 18, 239 6, 741 914 819 785 359 383 355 111, 498 2,281 688 21, 593 1Includes 586 redemptions. 2 Includes 1 redemption. Since the beginning of operations, the Corporation has authorized 226,244 foreclosures on original loans, of which 32,632 have been withdrawn, leaving a net total of 193,612, or 19.0 percent of loans closed. Foreclosures which have been authorized on vendee accounts reached the cumulative figure of 3,825 on June 30, 1941. After deduction of withdrawals numbering 943, a net total of 2,882 remains. Compared with the total volume of vendee accounts set up on the books of the Corporation, this represents a foreclosure rate of only 2.2 percent and speaks well for the performance record of individuals who have purchased Corporation properties on a deferred payment basis. 150 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Exhibit 55 presents on a cumulative basis to June 30, 1941, net foreclosure authorizations on original loans and vendee accounts, by HOLC Regions and by States, and the ratio of net foreclosures on original loans to the total number of loans granted. As previous Reports of the Board have stated, the foreclosure policy of the Home Owners' Loan Corporation is predicated on the CHART LIII FORECLOSURE THOUSANDS 1936 ORIGINAL 1937 ACCOUNTS 1938 OPERATIONS AND VENDEE ACCOUNTS 1939 11 1940 1941 V -722 DIVISIONOF RESEARCHAND STATISTICS FEDERALHOMELOANBANKBOARD belief that foreclosure should be taken only after every other reason able means of enabling the borrower to keep his loan in satisfactory status has been exhausted. One measure of this policy is found in the following table: Percent distribution of foreclosures through June 30, 1941, by arrear ages at time of foreclosure Percent Arrearages before foreclosure: of total Less than 12 months --------------35. 5 12 months to 17 months---------------------------21. 4 18 months to 23 months -------------------------19. 4 24 months and over --------_ ------------------23. 7 Total ------- ,------------------------------ 100.0 HOME OWNERS' LOAN CORPORATION 151 In its efforts to work out fair means of settlement with its borrowers, the Corporation withheld foreclosure actions until the delinquencies amounted to more than 12 months in 64.5 percent of total cases. As a matter of fact, even this figure is something of an understatement. Extended accounts are brought into current status at time of exten sion by including in the loan amount delinquent principal and interest as well as advances made for delinquent taxes, assessments, and insurance. Iri the above table, therefore, arrearages at time of fore closure on these accounts include only the period of delinquency after approval of the extension agreement. If forbearance prior to this time were also computed, the percentage of foreclosed accounts upon which delinquencies totaled 12 monthly installments or more would be substantially higher than 64.5 percent. Property Management The 1941 reporting period saw a further substantial reduction in the real-estate holdings of the Home Owners' Loan Corporation. During the 1941 fiscal year, the number of properties owned and in process of acquiring title 2 decreased from 70,780 to 49,419, a reduction of 30.2 percent. The combined capital value 3 of properties owned and in process of acquiring title was $318,734,001 on June 30, 1941, as compared with $424,185,212 a year previous, a decline of 24.9 percent. The Corporation's declining real-estate account resulted, of course, from an excess of sales over new acquisitions during the reporting period. Only 17,382 properties were acquired during the fiscal year 1941, while property sales during the same twelve months totaled 34,745. Exhibit 56 shows property acquisitions and sales, by fiscal year periods, from 1936 through 1941. The policy guiding all property management activities of the Home Owners' Loan Corporation has been one of orderly liquidation, designed to dispose of acquired real estate as rapidly as is consistent with the Government's interest and with the Corporation's policy as a public agency to safeguard the stability of the real-estate market. The practice of "dumping" properties has never been followed on the premise that such a policy might well weaken the market and would represent an irresponsible sacrifice of the realizable value which the Corporation has in its properties. Instead, properties owned by the 2 Properties in process of acquiring title are those where the foreclosure action has been advanced to the point of judgment or sale but where because of the existence of a redemption period or for other reasons, some additional time must yet elapse before the Corporation can acquire full title. 3 The capital value of property is represented by unpaid balances of loans and advances; unpaid interest to date of foreclosure, sale, or judgment; foreclosure costs; other charges applicable to the period preceding acquisition; initial repairs; and reconditioning and permanent additions which enhance the value of the property. 152 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Home Owners' Loan Corporation are offered for sale at prices based on fair market values. Each property acquired by the Corporation is treated as an indi vidual case and disposition is based on an analysis of all factors involved. Decisions as to sale and rental prices and necessary recon ditioning to be performed are based on such analysis, the object of which is to determine the best means of liquidating the Corporation's CHART LIV PROPERTIES ACQUIRED AND SOLD NUMBEROF JUNE 30, 1936 TO JUNE 30, 1941 BY MONTHS EC. JUN 1940 DEC. \ JUN 1941 ANDSTATISTICS DIVISIONOF RESEARCH FEDERALHOMELOANBANKBOARD properties. All properties are listed for sale with brokers, and listings are distributed on an equitable basis to all reputable sales brokers in the community. The property holdings of the Corporation continue to show a ten dency toward concentration in certain areas where, in spite of generally improved economic conditions throughout the country, recovery of the local real-estate market continues to lag and sales are difficult. The real-estate problem of the Home Owners' Loan Corporation, like that of other financial institutions, has become primarily one of liquidating the properties which it now holds in these localities. 4 A conspicuous example of this concentration is found in the eastern and northeastern sections of the country, especially in such States as 4 See Survey of Housing and Mortgage Finance, pp. 27-29. HOME OWNERS' 153 LOAN CORPORATION New York, New Jersey, and Massachusetts. The proportion of prop erties in the New York Region, comprising New York, New Jersey, and the New England States, has increased progressively from 32.2 percent of total at the end of the fiscal year 1938 to 69.5 percent on June 30, 1941. Only 16.1 percent of the Corporation's loans were originally made in these same States. An inventory of properties owned on June 30, 1941, shows the heav iest concentrations to be in the very large and the very small com munities. Over 22.2 percent of the Corporation's properties were located in cities with one million or more inhabitants and 13.4 percent in towns of less than twenty-five hundred population. In particular, the scattering of properties throughout thousands of small communities has presented a unique problem in the marketing- activities of the Corporation. Previous analyses have shown that sales had a tend ency to lag in the population groups at each end of the scale, but recent reports indicate that sales, in each of the various community size groups, are approaching a closer balance. Property sales, by size of community, through June 30, 1941 Total Number of properties acquired i-------Number of properties sold---------Percentage sold -------------- 184, 686 139, 764 75 7 1,000,000 500,000 to 250,000 to 100,000 to 50,000 to and over 1,000,000 500,000 250,000 100,000 27,017 17, 035 63 1 12,410 9, 302 75.0 19, 667 15, 826 80.5 21,024 17, 363 82 6 16, 016 12,076 75.4 25,000 to 50,000 10,000 to 25,000 5,000 to 10,000 2,500 to 5,000 Less than 2,500 Number of properties acquired ----------16, 085 Number of properties sold ---------------------------12,930 Percentage sold ----------------------------------80 4 23, 182 17,392 75.0 13, 682 10, 661 77.9 10, 662 8,273 77.6 24,941 18,906 75.8 1 Includes properties sold prior to acquisition, as permitted by statute in certain States. Analysis of properties sold through June 30, 1941, shows a prepon derance of sales at prices of $4,000 or less. As the following table indicates, 85 percent or more of properties acquired and priced at $3,000 or less had been sold through June 30, 1941, and over 79 per cent of properties priced at $3,000 to $4,000 had also been liquidated. Properties acquired and sold, by price ranges, as of June 30, 1941 Less than $1,000 to $1,000 $2,000 Number of properties ac quired 1 ------------------Number of properties sold -_ Percentage sold---1 12,967 11,063 85 3 31,043 27, 076 87 2 $2,000 to $3,000 $3,000 to $4,000 $4,000 to $6,000 $6,000 to $10,000 35,144 29,987 85 3 32,502 25,801 79.4 44,149 28,870 65.4 25,851 15,088 58.4 Includes properties sold prior to acquisition as permitted by statute in certain States. 425085-41- 11 $10,000 and over 3,030 1,879 62.0 154 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Only a limited number of HOLC properties have been sold on a cash basis. The large majority have been sold with a down payment and the balance payable in equal monthly installments over a period ranging up to fifteen years. On June 30, 1941, the average down payment on such sales was 11.9 percent of the purchase price. Property sales through June 30, 1941, by terms Number of properties Cash sales-------------------_ -' Sales on security instruments -------------Sales contracts or other instruments m lieu thereof -----------Total ___--.. --------------... .---------------- Percent of total 8,478 6 1 76,430 54,856 54.7 39. 2 139, 764 100.0 Property sales through the end of the fiscal year 1941 resulted in a cumulative capital loss of $168,402,668, or an average of $1,204.91 per property, representing the spread between the sales price and the cap ital value carried on the books of the Corporation. The cumulative capital loss through the close of the reporting period was 25.8 percent of the capital value of all properties sold. A detailed statement of profit and loss on sales, by calendar years, is given in Exhibit 57. Without some explanation of the factors accounting for losses, these figures give a false picture of the Corporation's sales experience. Losses resulting from the sale of owned properties have been computed on the basis of a capital value which includes all costs resulting from the forbearance shown by the Corporation to its distressed borrowers. These book losses can, in fact, be taken in part to represent the cost of leniency toward borrowers who failed to rehabilitate themselves. Efforts to avoid foreclosure and to exhaust every possibility of work ing out a satisfactory solution to delinquency problems mean the accumulation of substantial arrearages in many cases before the Cor poration resorts to foreclosure. After foreclosure has been authorized, all costs incident to acquiring title are included in the capital value which in almost every instance has been increased as a result of the borrower's loan and tax delinquency. After acquisition, extensive reconditioning is many times necessary before the property can be placed in condition for rental or sale and amounts spent for these purposes are also added to capital value. As a result, the book value assigned to a large majority of the Corporation's acquired prop erties is well above current market prices, and the losses reported above should not be looked upon as losses resulting entirely from the sale of real estate. 155 HOME OWNERS' LOAN CORPORATION The various elements entering into the capital value of properties cumulatively sold through June 30, 1941, are shown in Exhibit 58. The chart which follows illustrates how capital value is built up on the average property so far sold by the Corporation. CHART LV CAPITAL VALUE OF AVERAGE H. . L. C. PROPERTY BASED ON CUMULATIVE PROPERTY SALES THROUGH JUNE 30, 1941 PLUS LESS PLUS PLUS $3,681 $413 $ 143 $392 $348 Amount of ORIGINAL LOAN Taxes and Assessments,lnsurance, Maintenance, Misc Repayments of Principal 8 Other Capital Credits Delinquent Interest Capitalized and Foreclosure Costs Initial Recondition ing andCapitalized Repairs AND STATISTICS DIVISIONOF RESEARCH FEDERALHOMELOANBANKBOARD Property Income and Expense Of the 62,868 units in properties owned by the Corporation on June 30, 1941, there were 51,606, or 82.1 percent, rented or available for rental. Of these units available for rental, 46,655, or 90.4 percent, were rented.5 The 11,262 units vacant and not available for rental on June 30, 1941, comprised those units held for repairs, properties held vacant for sale, those adversely occupied, and a few cases in transition from one of these categories to another. During the fiscal year 1941, the gross operating income derived from properties amounted to $20,774,183; and gross expenses, exclu sive of interest and administrative overhead costs, totaled $16,680,132, aIn 288 cases, dwelling units could not be rented because the tenants were in the process of eviction. 156 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 leaving a net operating income for the reporting period of $4,094,051. From the beginning of operations through June 30, 1941, property income aggregated $93,714,151, while total property expense amounted to $79,299,181, resulting in a cumulative net operating income of $14,414,970. Detailed information on vacancies, rent collections, and average rent per dwelling unit will be found in Exhibit 59. Exhibit 60 contains a summary of the various income and expense items entering into the operation of properties sold through June 30, 1941. Vendee Accounts The increasing volume of property sales is reflected in a corresponding growth in the number of accounts established for the purchasers of properties on a deferred payment basis. On June 30, 1941, vendee accounts totaled 126,143, or 14.9 percent of all debtor accounts as compared with 97,404, or 11.3 percent of total a year previous. The Corporation's collection experience on its vendee portfolio has been a satisfactory one. Of the total vendee accounts in active status on June 30, 1941, over 97 percent were paying on schedule or were less than three months in arrears; an additional 1.0 percent, although delinquent, were making satisfactory liquidation payments; and only 1.7 percent were in default and threatened with foreclosure. As already mentioned, foreclosures authorized on vendee accounts through June 30, 1941, totaled only 2,882, or but 2.2 percent of all properties sold on a deferred payment plan. By the close of the reporting period, 2,229 properties had been reacquired from vendees. 6 Through June 30, 1941, property sales on a deferred payment basis had brought a total sales price of $459,775,247, resulting in the estab lishment of vendee accounts in the amount of $401,573,895. The difference represents principally dowfi payments received from prop erty sales. Principal repayments and transfers to the Corporation's property account had reduced the dollar volume outstanding on vendee accounts at the close of the reporting period to $349,246,315, including $3,592,221 in advances made to vendees and unpaid balances of instru ments received from partial sales in the amount of $3,091,554. Reconditioning Reconditioning operations of the Home Owners' Loan Corporation are undertaken for two broad purposes. In the first place, funds have been advanced by the Corporation to a number of its borrowers 6 These properties are included in the acquisition figures given on page 151. 157 HOME OWNERS' LOAN CORPORATION to be expended for needed repairs and maintenance. As previously explained (see page 143), this servicing activity of the Corporation serves the dual purpose of protecting the interests of both the borrower and the Corporation. In the second place, it is necessary to recon dition a substantial number of properties which the Corporation has been forced to acquire. In order either to rent or sell many properties, it is essential that they be restored to a condition of normal habitability which will enable them to compete favorably with similar properties CHART LVI RECONDITIONING CASES COMPLETED 1936 THROUGH JUNE 1941 THOUSANDSJULY 4 TOTA CASES 12 10 8 6 PROET 4 AAEWN AE ALL OTHER CASES 2 0 JUN DEC 1936 JUN 1937 DEC JUN 1938 DEC JUN 1939 DEC JUN 1940 DEC JUN 1941 DIVISIONOF RESEARCHAND STATISTICS FEDERALHOME LOANBANK BOARD in the neighborhood. Determination of the character and extent of reconditioning and repairs is based, of course, on a careful analysis of each individual case. Reconditioning operations during the fiscal year 1941 show a decline from the previous year. This reduction is principally ac counted for by a drop in the number of properties acquired, thereby reducing the volume of necessary repair work on properties offered for sale. During the reporting period, a total of 35,982 reconditioning contracts were completed, in the amount of $11,653,483, as compared with 66,085, in the amount of $17,722,229 the preceding year. 158 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Of the contracts completed during the 1941 fiscal year, 30,289, or 84.2 percent, were for the reconditioning of properties acquired by the Corporation or in the process of acquisition. From the beginning of operations in 1933 through the close of June 1941, the Corporation had completed 831,850 reconditioning contracts involving a total expenditure of $168,674,387. In addition to cases handled directly by the Reconditioning Division of the Corporation, certain other expenditures are made by contract management brokers who have authority to provide for small maintenance repairs on properties under their supervision. It is estimated that the Corporation's reconditioning activity has, from the beginning of operations through June 30, 1941, provided approximately 17 million days of work for masons, carpenters, plumbers, painters, and others in the building industry. Detailed information on the various types of recondition ing cases completed since the beginning of operations will be found in Exhibit 61. The reconditioning program of the Home Owners' Loan Corpora tion has had two important results. Expenditures of the Corporation for moderate repair and rehabilitation work have improved the marketability of properties. Since these properties must compete on a market which offers the public attractive new homes at moderate prices, it is important to place older structures in an attractive and sound condition. A second result of reconditioning activity has been the effect of this type of operation in stopping neighborhood blight in older resi dential districts. In several cities, reconditioning by the Home Owners' Loan Corporation has stimulated private lenders and home owners to take similar action to protect their real-estate investments. The technical staff of the Corporation has cooperated in surveys of blighted areas in Baltimore and Chicago, and the findings of these studies have laid the groundwork for neighborhood rehabilitation programs in a number of other communities. As mentioned in the first section of this Report, the Corporation's Reconditioning Division is now engaged in making similar studies for the Defense Housing Coordinator with the view to developing modern ization and conversion programs in areas of concentrated defense in dustry as one means of adding to the existing supply of housing with a minimum of cost and delay.7 7 See page 3. HOME OWNERS' LOAN CORPORATION 159 Appraisals During the fiscal year 1941, the total number of appraisals completed by the Corporation numbered 60,264 as compared with 90,872 during the preceding reporting period. Of the appraisals completed during the current fiscal year, 20,264 were initial appraisals and 40,000 repre sented reappraisals or supplemental reviews. Changing economic conditions, the aging of the Corporation's properties, and the various contingencies that constantly affect their value make it necessary to conduct fairly frequent reappraisals of properties in order to keep this vital information on a current basis. The Corporation has, in fact, adopted the policy of ordering review appraisals whenever it is found that values are being affected by economic or neighborhood changes and that the latest appraisal information available has become out of date. In the early period of operations, appraisals were used primarily as a means of evaluating the security behind each of the million loans refinanced by the Corporation. In subsequent years, appraisals have been used by the Corporation principally as a property management tool for the determination of sales prices, rents, and the need for recon ditioning. In a few cases, appraisals are used in legal proceedings. Since the Appraisal Section of the Corporation has had considerable experience in estimating the value of real estate on a wide geographical basis and has available within its regional and field set-up trained specialists for this type of work, the other agencies under the Federal Home Loan Bank Board, as well as a number of unrelated Govern ment agencies, have made use of the appraisal facilities of the Corpo ration. Under a cooperative arrangement with the Federal Works Agency and the Procurement Division of the United States Treasury, the Appraisal Section of the Home Owners' Loan Corporation has assisted in the appraisal of various types of property, particularly old post office and customhouse structures no longer needed for Govern ment use. During the reporting period, the Corporation also made a large number of defense appraisals for the War and Navy Depart ments, involving all types of properties valued at several millions of dollars. Twenty-six appraisals were completed or were under way on June 30, 1941, for the War Department, and 62 for the Navy Depart ment, thus making it unnecessary for these agencies to develop exten sive appraisal facilities of their own. Cooperative appraisal work of the Corporation's Appraisal Section for other Government depart ments is done on a reimbursable basis. 160 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 3. ADMINISTRATION AND PERSONNEL The problems encountered in the administration of the Home Own ers' Loan Corporation are difficult and in many respects unique. Be cause the Corporation's loans were made to distressed home owners, it has been necessary to develop special service activities not usually required of private lenders. The cost of handling the Corporation's typically small accounts has also been relatively high since there is little difference in overhead expenses on a mortgage of $3,000 and one CHART LVII TOTAL 1935 NUMBER OF EMPLOYEES* BY MONTHS, JULY 1935-JUNE TuOUSANnS 1936 1937 1938 *Includes WA E Employees 1941 1939 1940 1941 DIVISIONOF RESEARCH AND STATISTICS FEDERALHOMELOANBANKBOARD ten times that figure. The very fact that the Corporation's loans and properties are located in virtually every county in the United States has made the problem of administering and controlling operations more complex than would otherwise be the case. Nevertheless, as the fol lowing figures will show, the Corporation has been able to effect steady reductions in administrative costs during the last several years. On July 1, 1941, personnel s employed by the Corporation numbered 7,764, of whom 1,256 were listed on the home office and 6,508 on the 8All personnel figures include employees on a per diem basis. HOME OWNERS' LOAN CORPORATION 161 field payrolls. Included in the figure for home office personnel are 203 individuals who were officially stationed in various field offices. These figures compare with a total of 1,274 home office employees and 8,569 field employees at the beginning of the fiscal year. In other words, during the reporting period, the Corporation was able to effect a reduc tion of 21.1 percent in number of personnel, with a resulting saving in annual salary cost of $3,831,400. At the height of refinancing activity in November 1934, the total personnel employed by the Corporation numbered more than 20,000. From that period, the staff of the Home Owners' Loan Corporation has been reduced by over 62 percent. This continuing retrenchment reflects the progressive adaptation of the organization to the reduced volume of its work and also the steady introduction of operating efficiencies and improvements as rapidly as developments would per mit. Detailed information on the number of employees on the pay roll as of July 1, 1941, broken down by departments, divisions, and sections will be found in Exhibit 62. The Corporation has been faced with the difficult problem of maintaining a high morale during a period when it has been necessary to cut down on administrative overhead in view of the over-all responsibility of the Corporation to liquidate its affairs as rapidly and as economically as possible. In order to take advantage of every opportunity to develop and maintain the complete support of its employees, the Board in 1940 authorized the development and publication of a statement of policy governing employee relations. Department heads, supervisors, and employees cooperated in the formation of clearly stated policies to which all agreed, and worked out procedures for an easy, free exchange of ideas and the prompt settlement of problems affecting both employees and management. Probably the most serious personnel problem confronting the Corporation has been the selection of personnel for separation when reductions in force are necessary. Great care has been exercised to develop and administer a uniform procedure for the fair and equitable determination of employees who must be separated. Consideration is given to such factors as efficiency, length of service, versatility, economic need for employment, and veteran's preference. As a public responsibility, the Corporation has assumed the task of assisting employees who must be separated to obtain other employ ment as rapidly as possible. Few of the employees separated during the reporting period were without employment for any extended length of time, and in the majority of cases, assistance by the Corpora tion was instrumental in enabling these individuals to find other jobs. 162 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 In the fall of 1940, it became apparent that the national defense program would require trained personnel in the rapidly expanding agencies of the Government responsible for the problem of housing for defense. In the interests of the broader public welfare, the Corporation immediately adopted a policy of making available its best qualified and most thoroughly seasoned employees for key posi tions in defense agencies although in many cases this meant a con siderable sacrifice on the part of its own organization. Positions with the Home Owners' Loan Corporation have been classified in accordance with the requirements of Executive Order No. 6746 of June 21, 1934, which CHART LVIII set compensation scales for ADMINISTRATIVE EXPENSES employees in emergency agen OF THE HOME OWNERS' LOAN CORPORATION cies. Under the terms of the Ramspeck Act, approved No vember 26, 1940, the Home 1941 FISCAL YEARS1936 THROUGH ooLLIs______ 40 Owners' Loan Corporation with 35-_ a number of other agencies of the Federal Government will begin to operate fully under Civil Service regulations and laws on January 1, 1942. In anficipa * * tion of this change in personnel ' 30 25 20 S - 20 j 2 15_? 5! _ i procedures, the Board on May se ^ o-; Si 5- ' ? 14, 1941, provided for the adop tion of salary rates and grades prescribed for agencies subject to the Classification iftI Act. By this action, the Board is assisting 1936 1937 1938 1939 1940 1941 its employees to secure at an DIVISIOFRESEARCH ANDSTATISTICS early date all of the benefits of FEDERAL HOMELOANBANKBOARD 'the Government service under the merit system. Personnel policies and procedures of the Corpo ration have been closely correlated with those of the Civil Service Commission since the establishment of the Corporation in 1933. It is, therefore, expected that the transition can be completed with a minimum of work and expense. During the 1941 fiscal year, 21 State, divisional, district, and other branch offices of the Corporation were closed, reducing the total number of such offices to 21 at the end of the reporting period. The number of field stations maintained by the Corporation for servicing purposes was also reduced from 56 to 47. The contraction in field C HOME OWNERS' LOAN CORPORATION 163 organization brought about during the reporting period was reflected not only in substantial salary savings, but also in reduction of rental and other overhead costs. 4. FINANCIAL OPERATIONS Statement of Condition The financial statement of the Home Owners' Loan Corporation shows further progress in the liquidation of assets during the fiscal year 1941. Aggregate resources declined from $2,790,002,453 on June 30, 1940, to $2,565,932,327 at the close of the reporting period, a decrease of 8 percent. A comparison of the balance sheet on June 30, 1941 (Exhibit 63), with the balance sheet a year previous, shows several significant shifts in major items during the reporting period. Changes in important balance-sheet items from June 30, 1940, to June 30, 1941 Assets: - $213, 836, 866 Original mortgage loans and advances thereon---------+ 72, 007, 186 Vendee accounts and advances thereon---------Property owned and in process of acquiring title---------- -105, 451, 211 +11, 044, 501 Bond Retirement Fund-----------------------------Investments ----------------------------------------20, 170, 850 Liabilities and Capital: Bonded indebtedness------------------------------215, 200, 100 +7, 000, 527 Accounts payable-----------------------------------21, 439, 806 Reserve for losses----------------------------------15, 909, 686 Net worth (capital stock minus deficit)------------------ Original mortgage loans.-The balance of original mortgage loans outstanding and advances thereon shows a decline during the reporting period from $1,734,883,082 to $1,521,046,216. This decrease is primarily accounted for by principal repayments on the part of original borrowers and to a lesser degree by the transfer of loan ac counts to property accounts through foreclosure or deed in lieu of foreclosure. Vendee instruments.-The progress of the Corporation in selling its owned properties on a deferred payment basis is reflected in an increase of vendee instruments outstanding and advances thereon from $277,239,129 to $349,246,315. Property owned.-The capital value of property owned and in process of acquiring title fell from $424,185,211 to $318,734,001 during the reporting period as a result of increasing property sales and declining acquisitions, analyzed in detail on pages 151-155. 164 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Bond Retirement Fund.-On June 30, 1940, the cash and security holdings of the Bond Retirement Fund totaled $35,066,998, of which $31,449,200 was represented by cash held in the United States Treasury for retirement of matured bonds. At the close of the current reporting period, the total of such funds, all in cash, amounted to $46,111,498, of which only $10,687,950 represented the portion held against matured obligations. The balance applicable to un matured bonds consequently increased during the year by $31,805,750. Investments.-Investments of the Home Owners' Loan Corporation include the entire capital stock of the Federal Savings and Loan Insurance Corporation in the amount of $100,000,000 and invest ments in the shares of Federal and State-chartered savings and loan associations. Due entirely to the repurchase of share investments by savings and loan associations, investments of the Corporation declined from $303,024,210 to $282,853,360. Exhibit 64 gives a detailed statement of HOLC investments in savings and loan associations. Bonded indebtedness.-The bonded indebtedness of the Corporation declined from $2,634,808,900 to $2,419,608,800 during the reporting period. Bonds outstanding on June 30, 1941, include $10,687,950 in matured bonds not yet presented for payment for which an equal amount of cash is on deposit with the Treasurer of the United States. Eliminating these bonds, the total liability of the Corporation on unmatured bonded indebtedness totaled $2,408,920,850 on June 30, 1941, and if allowance is made for funds held by or due the Bond Retirement Fund, a net liability of $2,373,497,300 results. All out standing unmatured bonds of the Corporation are guaranteed by the Government both as to principal and interest. No bonds were issued by the Home Owners' Loan Corporation to the public during the fiscal year ending June 30, 1941. The only securities issued during this period were $5,000,000 of 4 percent, Series N bonds, due October 1940 and $15,000,000, % percent, Series O bonds, due October 1941. Both of these series were sold at intervals to the United States Treasury for general corporate purposes and were repaid prior to June 30, 1941. Prior to May 15, 1941, cash totaling $190,837,900, which had been accumu lated in the Bond Retirement Fund, was deposited with the United States Treasury for the payment of a lile amount of % percent, Series L bonds, due on that date. This reduction in bonded indebtedness represented one of the largest single reductions of debt in the record of Government agencies. A detailed statement of bonds issued, refunded, and retired to June 30, 1941, and bonds outstanding on that date is presented in Exhibit 65 Reserves and losses.-At the beginning of the reporting period, the Corporation's reserve for losses on mortgage loans, interest, and 165 HOME OWNERS' LOAN CORPORATION property amounted to $47,098,068. Regular monthly allocations of $3,333,333 were added to the account during the fiscal year, resulting in total additions of $40,000,000. Losses sustained during the year on mortgage loans and property exceeded this amount, aggregating $61,439,806, and resulted in a reduction in the balance outstanding in the reserve at the close of the reporting period to $25,658,262. Net worth.-On June 30, 1941, the accumulated deficit, after pro vision for losses, aggregated $92,362,692. Hence, the net worth of the Corporation at the close of the reporting period stood at $107,637,308, a decline of $15,909,686 during the year. Exhibit 66 gives the cash receipts and disbursements of the Cor poration during the last two fiscal years. Their effect on cash working funds, Bond Retirement Fund, and bond liability, taking into con sideration assets of the Bond Retirement Fund, follows: Source of funds' Cash working funds, beginning of year -----------------------------_---------Balance m Bond Retirement Fund, beginning of year -Net receipts from operations.--------------------------------------------------------------Proceeds from bond sales--------------------------------Discount on bonds purchased-------------Net funds available _ ---- . . ..----------- -- - --- ---- Use of funds' Cash working funds, end of year_ ----------Balance m Bond Retirement Fund, end of year -----------------Bonds retired -------------Total -------------------- ----- ---- Fiscal year Fiscal year 1940 1941 $79, 329, 628 149, 217, 560 159, 884,275 117,171,577 112,631 $39, 702, 549 35,066, 998 240,118, 617 20, 009,048 505, 715, 671 334,897,212 39, 702, 549 35,066, 998 430, 946,124 53, 585, 613 46,111,499 235, 200,100 505, 715, 671 334, 897, 212 Income and Expense During the fiscal year 1941, both the income and the expenses of the Corporation show a substantial reduction. Operating and other income totaled $116,484,728 as compared with $128,527,812 during the preceding fiscal year. Operating and other expenses amounted to $92,867,479 as compared with $105,496,796 during the 1940 report ing period. There was, thus, a reduction of $12,043,084, or 9.4 percent in income and $12,629,317, or 12 percent in expenses. The greatest decline in income during the reporting period was the result of a reduction in interest income on mortgage loans and ad vances from $84,735,261 to $73,935,176. Two factors account for this drop, a decline in the number of loan accounts on the Corporation's books and a reduction in the principal amount on which interest is charged as a result of amortization. Most of the decline is accounted for by the latter of these factors. 166 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Interest income on vendee accounts increased $4,461,926 as a result of the addition of a large number of new accounts during the fiscal year. Property income for the fiscal year showed a substantial decline in the amount of $5,493,675, reflecting reduced property holdings and substantial progress in the sale of real estate. Dividends received from share investments in savings and loan associations declined due to retirements of these investments during the reporting period. Furthermore, a number of institutions have reduced the rate at which dividends are paid on their share capital. Condensed income and expense statement for the fiscal years 1940 and 1941 Items Operating and other income: Interest on original mortgage loans and advances .--..---------Interest on vendee accounts and advances----- ----------Interest on special investments----------------------------Property income---Dividends on investments in savings and loan associations_ Miscellaneous .--- -..----------.---------..---------------Total income ....---------- .------------------ Operating and other expenses' Net interest on bonded indebtedness---------------------------Amortization of discount on refunded bonds---------Administrative expense--------------------. ...-------------------------------General expense Property expense----------------------- --------------------Total expense_------------------- July 1, 1939 to June 30, 1940 July 1, 1940 to June 30, 1941 $84,735,261 9,969,264 41,407 26, 267,858 7, 253,960 260,062 $73, 935,176 14,431,190 19,639 20, 774,183 6, 473,661 851,479 128,527.812 116.484,728 56,393,368 1,466,777 23,331,735 2,296,198 22,008, 718 55, 242,303 19,766,078 1.178,966 16, 680,132 105,496,796 92,867,479 Net income before provision for losses------------------------Provision for losses----------------------------------------------- 23,031,016 40,067,690 23,617,249 40,353,331 Deficit for period------------------------- 17,036, 674 16, 736, 082 The drop in property expense during the reporting period accounted for approximately 42 percent of the total decline in Corporation expenses. Again, the decline can be attributed to the reduction in real-estate holdings of the Corporation. Administrative expenses also showed a substantial reduction of $3,537,321, or 15 percent during the reporting period. Interest on bonded indebtedness declined by $1,147,475 as a result of the reduction in the total volume of bonds outstanding. After provision for losses in the amount of $40,353,331 during the reporting period, a deficit for 1941 fiscal-year operations was sustained in the amount of $16,736,082 as against a loss of $17,036,674 in the preceding fiscal year. A detailed income and expense statement will be found in Exhibit 67. From the beginning of operations through June 30, 1941, total operating and other income of the Home Owners' Loan Corporation aggregated $944,786,228 and operating and other expenses during HOME OWNERS' LOAN CORPORATION 167 this same period amounted to $809,541,194. The difference between these two figures gives a net income of $135,245,034 before provision for losses which may be sustained in the liquidation of assets. After deduction of $227,600,293 for losses sustained and provision for future losses, together with a surplus adjustment of $7,433, the deficit on June 30, 1941, aggregated $92,362,692. A statement of income and expense from the beginning of operations to. June 30, 1941, and an analysis of changes in deficit for the reporting period are given in Exhibits 68 and 69. Since ordinary business practice requires the establishment of reserves to which losses may be charged, the Board of Directors of the Corporation has set aside from income each year specified amounts to maintain reserves to which losses arising from delinquent interest and the liquidation of mortgage loans and property may be charged. During the fiscal year 1941, allocations thus set aside totaled $40,000,000, but since losses charged off exceeded reserve provisions, the balance in the reserve account was reduced by $21,439,806. Analysis of reserves and charges to reserves Cumulative to June 30, Item Fiscal year 1941 1940 1941 $40,000, 000 Allocated to reserves--------------------------$186,137,153 Cumulative to June 30, $226,137,153 Losses" On mortgage loans and vendee instruments 1 .----------168, 710 ------2 115, 226,094 On capital value of property sold_. Sales brokers' commissions and selling expenses --------23, 432,941 On properties charged off--__ --------_ 211,340 Total losses------------Balance in reserves ------- ---------- 28,161 53,176, 575 8, 221, 827 13, 243 196, 3168,402, 31,654, 224, 871 669 768 583 139, 039, 085 61,439, 806 200, 478, 891 47, 098, 068 -21,439, 806 25, 658, 262 1 Includes reserve provisions for accumulated interest . 2 Includes accrued interest capitalized of $27,415,423.50 3 Includes accrued interest capitalized of $36,144,860 60. 5. PROGRESS IN LIQUIDATION During the reporting period, the Home Owners' Loan Corporation made further substantial progress in the liquidation of its resources. The task of liquidation consists primarily in the collection of the amount invested in outstanding mortgage loans plus the unpaid bal ance on properties acquired, subsequent additions in the form of ad vances to borrowers and vendees, interest capitalized, and necessary expenditures on properties acquired. 168 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 The net balance of loans outstanding and the capital value of prop erties on hand was reduced during the fiscal year ending June 30, 1941, from $2,436,945,646 to $2,189,038,942, or by 10.2 percent. This com pares with a net liquidation ratio of 7.3 percent during the previous fiscal year. The various processes by which this reduction in invest ment was brought about are illustrated in the following table: Reduction of total debtor and property accounts 1 in the fiscal year 1941 Balance of loans outstanding and property on hand, June 30, 1940----------------------------$2,436, 945,646 Plus: Additions during the year: Advances to original borrowers_ ----$16, 244, 641 Advances to vendees ------------2, 428, 898 Interest converted to principal (extensions)1, 126, 599 Interest capitalized in property--1, 720, 892 Capital charges to property____ _ 12, 539, 397 Sales brokers' commissions and selling ex pense----------------8,221,827 Miscellaneous-------------2, 036, 957 Total additions ----------------------- 44, 319, 211 2, 481, 264, 857 Minus: Receipts during the year: Principal repayments by original borrowers Principal repayments by vendees __ Miscellaneous capital cash credits-------Unposted advances, decrease ------- $179, 838, 597 48, 536, 004 1, 793, 954 625, 814 Total receipts ---------------------Loss on principal sustained during the year __ ------Balance of loans outstanding and properties on hand, June 30, 1941_------------------- 230, 794, 369 2 61, 431, 546 2, 189, 038, 942 1Debtor accounts include original loans and advances to borrowers, subsequent additions to the original loans, and interest converted to principal by extension, they also include vendee accounts originating from property sales of the Corporation and advances'to vendees. Property accounts represent the capital value both of property owned and property in process on which a foreclosure judgment has been obtained or fore closure sale has been held subject to redemption period; they include unpaid interest on the loan accounts transferred to property accounts, the cost of initial repairs and improvements, and acquisition costs, taxes, etc, applicable to the period prior to the acquisition of absolute title. 2 Including sales commissions and selling expenses of $8,221,827. The Corporation still had investments in debtor and property accounts amounting to $2,189,038,942 at the close of the 1941 fiscal year. This total was composed of $1,521,046,216 representing original mortgage loans and advances thereon, $349,246,315 in vendee accounts and advances, $318,734,001 in property acquisitions, and $12,410 in the form of unposted advances. From the beginning of HOME OWNERS' 169 LOAN CORPORATION operations through June 30, 1941, the Corporation's gross investments in loans and properties-aggregating $3,489,651,957 on that date had been reduced by $1,300,613,014, or 37.2 percent of the total. Of this reduction, $1,100,134,124, or 31.5 percent of total investments, is accounted for by moneys actually received by the Corporation in the form of repayments on debtor accounts and from the proceeds of property sales. The remaining $200,478,891, or 5.7 percent of the gross total, represents losses sustained in the liquidation of loans, interest, and properties. Reduction of total debtor and property accounts through June 30, 1941 Amount Gross investment in loans and properties, June 30, 1941 Deduct ------------ Repayments on original loans .----- ----------------------------------Receipts-property sales and vendee accounts--------- ------------Net miscellaneous cash credits ..---- ---------------....-------Total Total losses __.----------.......--------------------.........-------------------------------- Balance of loans outstanding and properties on hand, June 30, 1941 -------- Percent $3, 489, 651,957 100.0 956, 637, 553 135, 546,907 7,949, 664 27.4 3.9 0.2 1,100,134,124 1 200, 478,891 31. 5 5.7 2,189,038,942 62 8 SIncludes sales brokers' commissions and selling expenses. The only other major type of investment which is subject to gradual liquidation consists of investments in the shares of savings and loan associations. During the reporting period, such investments de clined by $20,170,850 as the net result of voluntary repurchases of $20,377,800, retirements requested by the Board in the amount of $1,213,050, and new investments of only $1,420,000. The progress in liquidation varies substantially among the different HOLC Regions as the chart on page 170 indicates. On June 30, 1941, the San Francisco Region, including the Pacific and Mountain States, led all other Regions with a reduction in gross investments in that area of 45.59 percent, including losses sustained in the process of liquidation. At the other extreme, the New York Region, compris ing New York, New Jersey, and the several New England States, was far below the national average with a reduction of only 26.83 percent. The reduction in the Corporation's debtor and property accounts has been accompanied by a reduction in the bonded indebtedness of the Corporation. Total bonds outstanding on June 30, 1941, ag gregated $2,419,608,800, as compared with a peak of $3,047,046,575 at the time the refinancing activity of the Home Owners' Loan Cor poration ended in June of 1936. The Corporation has issued a gross 425085-41--12 170 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 total in bonds of $5,903,318,875, which includes bonds issued solely for refunding purposes. Bonds refunded through June 30, 1941, amounted to $2,413,865,325 and bonds retired totaled $1,069,844,750, leaving the net liability at the close of the reporting period at $2,419,608,800. In accordance with the provisions of the Home Owners' Loan Act, all principal repayments by borrowers have been deposited regularly in the Bond Retirement Fund and used only for the retirement of CHART LIX REDUCTION OF THE GROSS INVESTMENT IN LOANS AND PROPERTIES AS OF JUNE 30, 1941, BY HO L C REGIONS SRECOVERIES 0 10 20 INVESTMENTS OUTSTANDING 30 40 UNITEDSTATES LOSSESSUSTAINED PERCENT 50 60 70 80 90 100 ,, I-NEW YORK 2A- BALTIMORE 2B-CINCINNATI 3A- ATLANTA 3B-MEMPHIS 4A-CHICAGO 4B-DETROIT 5A- OMAHA 5B- DALLAS " ' 6-SAN FRANCISCO DIVISIONOF RESEARCHAND STATISTICS FEDERAL HOMELOAN BANK BOARD bonds. Certain other receipts such as cash proceeds from property sales and repurchases of investments in savings and loan associations have likewise been applied to the retirement of bonds by order of the Board. Through the close of the reporting period, principal re payments of debtors and proceeds from property sales amounted to $1,092,814,460; other items applicable to the retirement of bonds ag gregated $43,211,024, giving a total of $1,136,025,484. Of this amount, $1,115,843,304 had actually been deposited in the Fund through June 30, 1941, and the remaining $20,182,181 was deposited HOME OWNERS' LOAN CORPORATION 171 during July. The following table shows the disposition of the funds allocated to the Bond Retirement Fund through June 30, 1941: Applied to retirement of bonds-------------------------Deposited with U. S. Treasury for retirement of matured bonds on which interest has ceased----------------_Available for future bond retirement------------------ _ $1, 069, 731, 805 10, 687, 950 35, 423, 548 1, 115, 843, 303 Amount due Bond Retirement Fund for June 1941 deposited in July 1941-----------------------------------_ 20, 182, 181 1,136, 025, 484 The discrepancy between the net reduction in bonded indebtedness and the gross receipts applied to the retirement of bonds is a normal result of the liquidation problem facing the Corporation. The Home Owners' Loan Corporation has been obliged to acquire a substantial volume of properties and to expend considerable amounts on recon ditioning, taxes, and insurance. The Corporation has also made ad vances both to original borrowers and vendees for a number of pur poses. All of these factors have offset in part the reduction of original loan balances and have naturally tended to create a lag in a corresponding reduction in bonded indebtedness outstanding. List of Charts DEFENSE HOUSING Page I. Loans made by member savings and loan associa tions in defense housing and other areas, by months, January 1940 to June 1941---------II. Change in lending volume of insured associations in defense housing areas, United States and FHLB Districts, first six months of 1940 com pared with first six months of 1941----------- 4 6 SURVEY OF HOUSING AND MORTGAGE FINANCE III. Indices of residential construction and industrial production, 1930 to June 1941 --------.-----IV. Construction other than residential, 1926 to June 1941------------------- ---------------V. Distribution of residential construction, private and public, January 1938 to June 1941-------VI. Increase in private residential construction in de fense and nondefense areas, first six months of 1940 compared with first six months of 1941-_ VII. Estimated value of residential construction, in cluding maintenance, United States, 1915 to 1940-----------------------------------VIII. Increase in residential construction, by size of community, fiscal year 1941 ---------------IX. Number of new nonfarm dwelling units built, by type of dwelling, 1921 to 1940--------------X. Nonfarm real-estate foreclosures in the United States, 1926 to June 1941------------------XI. Rate of nonfarm real-estate foreclosures, fiscal year 1941--------------------------------XII. Reduction in residential real-estate overhang, 1938 to 1940 -----------------------------XIII. Wholesale price indices of lumber, all building materials, and all industrial commodities, 1935 to June 1941 ----------------------------- 173 15 15 16 17 18 21 22 26 26 28 30 174 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Page XIV. Cost indices for construction of a standard six room frame house, January 1936 to June 1941. XV. Construction employment, 1935 to 1941-------_ XVI. Index of residential rentals, 1926 to 1941--- --XVII. Population growth, by size of city, 1920 to 1930 compared with 1930 to 1940---------------XVIII. Percent change in population, by age groups, United States, 1940 over 1930_------ -----_ XIX. Home mortgage lending activity, 1929 to 1940___ XX. Estimated volume of mortgage loans made on non farm one- to four-family dwellings, by type of lender, calendar year 1940 -----------------XXI. Index of new mortgage lending, all savings and loan associations, 1936 to June 1941 -------- _ XXII. Estimated volume of mortgage recordings on non farm property, fiscal years 1940 and 1941-----_ XXIII. Mortgage recordings during fiscal year 1941, by Federal Home Loan Bank Districts --------XXIV. Savings and loan construction lending compared with one- and two-family home construction, fiscal year 1941 over fiscal year 1940---------XXV. Annual changes in estimated private mortgage debt on nonfarm one- to four-family dwellings, 1930 to 1940-----------------------------_ XXVI. Estimated balance of outstanding mortgage loans on nonfarm one- to four-family dwellings, by type of lender, December 31, 1940 ----------XXVII. Amounts of selected types of long-term savings held by individuals, 1920 to 1940---_ XXVIII. Percent change of private investment in savings and loan associations, by class of association, calendar year 1940_------------------------ 31 32 34 36 38 40 41 42 43 45 47 49 50 55 56 FEDERAL HOME LOAN BANK SYSTEM XXIX. Federal Home Loan Bank System advances and repayments, December 1936 to June 1941 .--XXX. Percentage of borrowing members to total mem bership, 1936 to 1941------------------- --XXXI. Distribution of long-term and short-term ad vances outstanding, 1936 to 1941-__-__ 62 64 66 LIST OF CHARTS 175 Page XXXII. Composition of consolidated assets of the twelve Federal Home Loan Banks as of June 30, 1940, and June 30, 1941 ----------_ XXXIII. Composition of consolidated liabilities and capital of the twelve Federal Home Loan Banks as of June 30, 1940, and June 30, 1941 ---XXXIV. Distribution of net income of the Federal Home Loan Banks, fiscal year 1941---_-----------XXXV. Number and combined assets of member institu tions of the Federal Home Loan Bank System, 1934 to 1941 ----------------------------XXXVI. Member savings and loan associations compared with all operating savings and loan associations, 1938 to 1940----------------------------_ XXXVII. Volume of new mortgage loans made by savings and loan associations, by type of association, 1936 to 1941-----------------------------XXXVIII. Percentage increase in new mortgage lending activity of savings ar.d loan associations, United States and Federal Home Loan Bank Districts, June 30, 1940, to June 30, 1941----XXXIX. Percent change in assets of member savings and loan associations, calendar year 1940 over 1939XL. Trend in selected asset accounts of all member savings and loan associations, United States and Federal Home Loan Bank Districts, De cember 31, 1939, to December 31, 1940 -----XLI. Trend in selected liability accounts of all member savings and loan associations, United States and Federal Home Loan Bank Districts, Decem ber 31, 1939, to December 31, 1940_- - 69 71 74 82 84 86 86 91 93 95 FEDERAL SAVINGS AND LOAN ASSOCIATIONS XLII. Number and assets of Federal savings and loan associations, 1934 to 1941 ------------XLIII. Percentage growth in assets and private repur chasable capital of Federal savings and loan associations, United States and FHLB Districts, fiscal year 1941 over 1940 ------ 105 106 176 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Page XLIV. Index of private repurchasable capital outstand ing in comparable Federal savings and loan associations, 1935 to 1941-------------_____ XLV. Private and Government capital held by Federal savings and loan associations, 1935 to 1941 ___ XLVI. Estimated volume of mortgage loans held by Federal savings and loan associations, 1936 to 1941------------------------------_- 108 109 111 FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION XLVII. Progress of insured institutions, June 30, 1936, to June 30, 1941 _---_--_ _ --------XLVIII. Assets of insured associations, October 1934 to June 1941. ----------------------------XLIX. Percentage change in selected balance-sheet items of 2,159 identical insured associations, June 30, 1941, compared with June 30, 1940 ----------L. Resources of the Federal Savings and Loan Insur ance Corporation as of June 30, 1935, and June 30, 1941-------------------------------- 117 119 120 132 HOME OWNERS' LOAN CORPORATION LI. Classification of accounts as of June 30, 1941 __ LII. HOLC collections and national income, 1936 to 1941------------------- ----------------LIII. Foreclosure operations, original accounts and vendee accounts, January 1936 to June 1941 _ LIV. Properties acquired and sold, June 30, 1936, to June 30, 1941___--- -------------------LV. Capital value of average HOLC property, based on cumulative property sales through June 30, 1941----------------------------------LVI. Reconditioning cases completed, July 1936 to June 1941_--------------------------_ LVII. Total number of employees, July 1935 to June 1941______ ___-- _ _-__--__ LVIII. Administrative expenses of the Home Owners' Loan Corporation, fiscal years 1936 to 1941___ LIX. Reduction of the gross investment in loans and properties, by HOLC Regions, as of June 30, 1941 ------------------- 136 139 150 152 155 157 160 162 170 _ __ I I __ List of Exhibits SURVEY OF HOUSING AND MORTGAGE FINANCE Page 1. New nonfarm residential building in the United States, _ 1921 to 1941 ---------------------------------2. Nonfarm. real-estate foreclosures in the United States, 1926 to 1941 ------------------------------3. Nonfarm real-estate foreclosures, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 183 183 30, 1941--------------------------------184 4. Selected figures on residential real estate owned by financial -institutions, December 31, 1940-------------5. Indices of total building cost, and of cost of materials and labor used in construction of standard six-room frame house, January 1936 to June 1941_----------- 185 -186 6. Population growth in the United States, by size of city, 1920 to 1930 and 1930to 1940---------------------7. Population changes in metropolitan districts of the United _ States, 1930 to 1940_--------------------- 187 189 8. Estimated volume of mortgage loans originated on non farm one- to four-family dwellings, by type of lender, 1929 to 1940 ------------------ ----------- 189 9. Estimated recordings of nonfarm mortgages of $20,000 and less, by type of mortgagee, fiscal year 1941---------_ 10. Estimated balance of outstanding mortgage loans on non farm one- to four-family dwellings, 1929 to 1940 --- _ 11. Changes in selected types of individual long-term savings, 1935 to 1940 -------------------------- 190 192 193 FEDERAL HOME LOAN BANK SYSTEM 12. Federal Home Loan Banks-Advances and repayments for the periods indicated, and the balance of advances outstanding at the close of such periods_------_----- 194 13. Federal Home Loan Banks-Advances outstanding, by Bank Districts, at the close of each fiscal year, 1934 to 1941 _--------- _ ----- --- 195 177 178 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Page 14. Percentage of borrowing members to total membership, by Federal Home Loan Bank Districts, at the close of each fiscal year, 1936 to 1941 ----------15. Federal Home Loan Banks-Interest rates charged mem ber institutions on advances, as of July 1, 1941-----16. Federal Home Loan Banks-Distribution of advances out standing, by long-term and short-term advances, as of June 30, 1940, and June 30, 1941 -----------17. Types of advances made by the Federal Home Loan Banks-------------------------F---18. Federal Home Loan Banks-Statement of condition as of June 30, 1941 ___ -------__ --_--19. Federal Home Loan Banks-Investment holdings at the close of the fiscal year 1941 -----__ _ -____ 20. Federal Home Loan Banks-Statement of consolidated debentures outstanding, June 30, 1941 ------21. Federal Home Loan Banks-Interest rates paid members on time deposits, as of July 1, 1941 -----------------22. Federal Home Loan Banks-Statement of profit and loss for the fiscal year ended June 30, 1941_------------23. Federal Home Loan Banks-Total dividends declared through June 30, 1941, and the annual rates paid semi annually for the fiscal years 1940 and 1941-----------24. Federal Home Loan Banks-Analysis of surplus and un divided profits for the fiscal year ended June 30, 1941__ 25. Distribution of net income of the Federal Home Loan Banks, for the fiscal year ended June 30, 1941 ---26. Federal Home Loan Bank Board-Statement of receipts and disbursements of the Board for the fiscal years 1940 and 1941 ------------------ ------27. Federal Home Loan Bank Board-Comparative statement reflecting, by offices, the number of Board employees as of the close of the fiscal years 1940 and 1941 ---28. Federal Home Loan Bank System-Members of the Federal Savings and Loan Advisory Council, as of June 30, 1941_ 29. Federal Home Loan Bank System-Number and estimated assets of member institutions, June 30, 1940, and June 30, 1941_--------------------------_ 30. Federal Home Loan Bank System-Member savings and loan associations compared with all operating savings _217 and loan associations, 1937 to 1940------------------ 196 196 197 198 199 205 206 206 207 211 212 214 214 215 215 216 LIST OF EXHIBITS 179 Page 31. Estimated volume of new mortgage loans made by savings and loan associations, by type of association, January 1936 to June 1941--------------------------------32. Estimated volume of new mortgage loans made by all savings and loan associations, by Federal Home Loan Bank Districts, fiscal years 1940 and 1941 ------33. Federal Home Loan Bank System-Investments by the U. S. Treasury and the Home Owners' Loan Corpora tion in member savings and loan associations, by fiscal year periods, 1934 to 1941 ---------------34. Combined balance-sheet items for all savings and loan member institutions of the Federal Home Loan Bank System, as of December 31, 1939, and December 31, -----------1940 -----------35. Percentage distribution of balance-sheet items for all sav ings and loan member institutions of the Federal Home Loan Bank System, as of December 31, 1939, and De -------------------cember 31, 1940 36. Operating ratios for reporting savings and loan member institutions of the Federal Home Loan Bank System, __ _ for the calendar years 1939 and 1940 --37. Consolidated statement of operations for 3,508 savings and loan member institutions, classified by asset size groups, December 31, 1940_---------------- 218 219 220 221 222 223 225 FEDERAL SAVINGS AND LOAN ASSOCIATIONS 38. Federal savings and loan associations-Number and assets as of the end of each fiscal year, 1934 to 1941 _-___-39. Federal savings and loan associations-Number of asso ciations chartered, mortgage loans outstanding, .and assets, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941----------40. Index of private repurchasable capital in comparable Federal savings and loan associations, June 30, 1935, to June 30, 1941 --------------------------------- _ 41. Federal savings and loan associations-Private investors in repurchasable shares and private repurchasable capital, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941_----_ __-__ 228 229 232 232 180 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Page 42. Federal savings and loan associations-Investments of the U. S. Treasury and the Home Owners' Loan Cor poration, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941------------_ _ 43. Federal savings and loan associations-New mortgage loans made by reporting associations during the year ended June 30, 1941, by purpose of loan ------------ _ 44. Federal savings and loan associations-Selected balance sheet items for 1,394 identical new and converted asso ciations, as of June 30, 1940, and June 30, 1941 -------45. Federal savings and loan associations-Consolidated state ment of operations for 1,428 reporting Federal savings and loan associations, for the year ended December 1940_ 46. Federal savings and loan associations-Operating ratios of 1,428 reporting Federal savings and loan associations, grouped as to size of association, for the year ended December 31, 1940 ------------------------47. Federal savings and loan associations-Average annual dividend rates declared for the calendar years 1939 and 1940 ----------------- 234 235 237 237 239 241 FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 48. Federal Savings and Loan Insurance Corporation Number and assets of all insured associations and num ber of private shareholders, by Federal Home Loan Bank Districts and by States, June 30, 1941 -------49. Federal Savings and Loan Insurance Corporation-Com parison of all savings and loan members of the Federal Home Loan Bank System with all insured savings and loan associations, by Federal Home Loan Bank Districts and by States, June 30, 1941 ----------------50. Federal Savings and Loan Insurance Corporation-State ments of condition and operation for insured institutions ---__ in receivership on June 30, 1941 -51. Federal Savings and Loan Insurance Corporation-State ----ment of condition as of June 30, 1941 ---- 242 244 246 249 LIST OF EXHIBITS 181 Page 52. Federal Savings and Loan Insurance Corporation-Income and expense statement for the period July 1, 1940, _-------------------through June 30, 1941 53. Federal Savings and Loan Insurance Corporation Expenses for the period July 1, 1940, to June 30, 1941 _-_ 250 251 HOME OWNERS' LOAN CORPORATION 54. Home Owners' Loan Corporation-Average outstanding original loan per borrower and average loan balance outstanding, June 30, 1941, by HOLC Regions and by States-----------------55. Home Owners' Loan Corporation-Net foreclosure authori zations on original loans and vendee accounts, by HOLC Regions and by States, cumulatively to June 30, 1941 -------------------56. Home Owners' Loan Corporation-Property acquisitions and sales, by fiscal-year periods, 1936 to 1941_-- __57. Home Owners' Loan Corporation-Profit and loss on sales of real estate, by calendar years, 1935 to 1941----__ 58. Home Owners' Loan Corporation-Analysis of the various elements entering into the capital value of properties owned and in process of acquiring title, June 30, 1941 59. Home Owners' Loan Corporation-Percentage of vacant units to units available for rent, percentage of rents col lected to rent accruals, and average rent per unit, by months, July 1936 to June 1941 --------_ -60. Home Owners' Loan Corporation-Summary of the various income and expense items entering into the operation of properties sold by the Corporation through June 30, 1941 -----------------------------___61. Home Owners' Loan Corporation-Number of recondi tioning contracts completed from the beginning of opera tions through June 30, 1941_ ----------62. Home Owners' Loan Corporation-Number of employees by departments, divisions, and sections, as of July 1, 1941 ---------------____ 63. Home Owners' Loan Corporation-Balance sheet as of June 30, 1941-------------------------- 252 253 254 254 255 256 257 257 258 259 182 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Page 64. Home Owners' Loan Corporation-Investments in savings and loan associations, by States, as of June 30, 1941 _ 65. Home Owners' Loan Corporation-Bonds issued, refunded, and retired to June 30, 1941, and outstanding as of June 30, 1941---____________________________ 66. Home Owners' Loan Corporation-Cash receipts and expenditures, fiscal years 1940 and 1941 -------_____ _ 67. Home Owners' Loan Corporation-Statement of income and expense for the fiscal year 1941 ---- _____ 68. Home Owners' Loan Corporation-Statement of income and expense from the beginning of operations, June 13, __--- _ 1933, to June 30, 1941 ---------------------69. Home Owners' Loan Corporation-Analysis of changes in deficit for the fiscal year ended June 30, 1941 __--- 262 264 265 266 267 268 EXHIBIT 1 New nonfarm residential building in the United States, 1921-41 [Thousands of dwelling units] -famCalendaryear Calendar year ily ily 2-famsly ly Apartment ment 1921 .-------316 437 1922 ------ --.---------513 1923 ---.... 534 1924 572 1925-----------491 1926 - -----454 1927 ----1928 -----------436 1929 ------316 1930-------185 1931----------147 70 146 175 173 157 117 99 78 51 28 21 63 133 183 186 208 241 257 239 142 73 44 Total 449 716 871 893 937 849 810 753 509 286 212 Calendar year 1932------------1933 --1934 --1935------------1936--------1937---1938 ----- _-1939 ---- _-1940 -- -----Fiscal year 1940_ Fiscal year 1941_ 1-famll ily 2-faml ily Apartment ment 6 4 3 6 13 15 17 28 37 30 39 61 39 42 110 203 219 261 351 425 375 497 Source' For 1921-36- National Bureau of Economic Research. For 1937 through 1941 Labor, on the basis of building permit reports for eitjes of 2,500 population or over. 7 11 10 28 60 52 69 86 78 79 80 Total 74 54 55 144 276 286 347 465 540 484 616 Department of EXHIBIT 2 Nonfarm real-estateforeclosures in the United States, 1926-41 Rate per Rate per Number non1,000dwellfarm ings Year 1926----------68,100 1927 .-----------91, 000 1928---------116,000 1929-_ -----134, 900 1930_----------150,100 1931-----193,800 1932-------248. 700 1933-----------252,400 3 6 4.8 6 1 7.1 7.9 10 2 13 1 13.3 1934 ----------1935-----------1936_---------1937 -----_ 1938-----------1939_---------1940 -----------1941 1 ------- Year Number - - 1,000non farm dwell ings 230, 350 228, 713 185,439 151,366 118, 505 100,961 75, 310 31,941 12.2 12.1 9 8 8.0 63 5.3 4.0 3.4 1 January to June; rate on annual basis. Source: Division of Research and Statistics, Federal Home Loan Bank Board. 183 184 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 3 Nonfarm real-estateforeclosures, by FederalHome Loan Bank Districtsand by States I I ]I I I Number, Number, year end- year end ing June ing June Number, year end ing June 30,1940 Number, year end ing June 30,1941 85, 726 68, 432 No. 7-Chicago ------------- 4, 912 4, 273 10,367 7, 356 Illinois-------- ---- Connecticut--------Maine -----------------Massachusetts --------New Hampshire -----Rhode Island ---------Vermont ------- 2, 886 2,026 2, 362 1,911 1,410 769 7,151 300 668 69 1,120 663 4, 759 266 481 67 5,157 4,063 No. 2-New York ---------- 19,079 15,620 South Dakota ---------_ 597 831 3, 200 230 299 517 646 2, 564 146 190 4,417 14, 662 3,412 12,208 No. 9-Little Rock---------- 3,418 2, 565 360 661 342 124 1,931 305 485 231 77 1,467 3,090 2,843 357 1,096 811 826 341 1,098 715 689 1,427 964 89 114 390 126 623 85 53 81 369 71 332 58 3, 596 3, 086 181 3, 400 15 111 2, 964 11 Bank District and State United States total _No. 1-Boston------------- New Jersey -----------------New York No. 3-Pittsburgh ---------Delaware Pennsylvania -------West Virginia --------- 212 11,248 769 184 9.398 703 No. 4-Winston-Salem ----- _ 9,043 7,417 Kentucky -------------Ohio_-----------Tennessee----------No. 6-Indianapolis -------Indiana ---------- Michigan-_________ ---- No. 8-Des Momes ----Iowa_--- ----------- Minnesota_ ------Missouri---------------- Arkansas-------------Louisiana_------------ Mississippi-------------New Mexico ....-----_-------Texas No. 10-Topeka -------- 1,118 326 1, 326 989 1, 761 1,715 412 1, 396 916 271 1,317 675 1,367 1, 241 305 1,325 8,887 7,172 1,356 5, 529 2,002 1,176 4,017 1,979 4,521 2,788 1, 532 2, 989 1,122 1, 666 Colorado ------Kansas ----------------Nebraska ----------- __ Oklahoma ---....--__--.. No. 11-Portland _---..- _ Idaho------------------- Montana -------Oregon-------- Utah_-------__ Washington -_---.-__-____ Wyomimg -----No. 12-Los Angeles ------Arizona California_ Nevada ----------------- Source: Division of Research and Statistics, Federal Home Loan Bank Board. - North Dakota ----- 10,285 No. 5-Cincinnati----------- 30,1940 Wisconsin- - 12,229 Alabama---------------District of Columbia -Florida ---------------Georgia--------Maryland -------------North Carolina -------South Carolina --------Virginia ---------------- Bank District and State 30,1941 185 EXHIBITS EXHIBIT 4 Selected figures on residential real estate owned by financial institutions, Dec. 31, 1940 All real estate owned by savings and loan associations FHLB Districts United States...-------. ... 1- nonfarm to 4-family Residential real estate homes owned owned by ropr Properties owned by the Home by hlifeinsur- insured com- Owners' Loan ance cornmercial Corporation panics banks Corporation $492,171,000 $209,631,000 $139, 314,000 $338,276,678 50,056,000 8,117,000 9,998,000 46,153,542 550,000 1,929,000 46,633,000 438,000 411,000 95,000 2, 610, 000 1,000 5,301,000 50,000 142,000 13,000 2,833,000 818,000 4,415,000 124,000 1,130,000 678,000 8, 327, 674 896, 550 32,089,671 815,562 3,338,695 685,390 156,197,000 63,385,000 43, 245,000 201,623, 940 121,043, 000 35,154,000 16, 501,000 46,884,000 18, 794,000 24,451,000 57,002, 790 144,621,150 68,462,000 25,258,000 52,561,000 12,922,489 273,000 65, 454, 000 2,735.000 108,000 24, 414, 000 736,000 643,000 50,011,000 1,907,000 66,019 12, 509, 483 346,987 9,843,000 1,452, 000 474,000 70, 000 173,000 4,138,000 1,786, 00 426, 000 1,324,000 20,179,000 5, 777, 000 421,000 1,796,000 4,176,000 272,000 6,807,000 226,000 704,000 6,925,000 731,000 769,000 540,000 1,680,000 1,273,000 640,000 79,000 1,213,000 11, 566,815 1,153,481 83,637 474,139 612,811 6,230,491 786,769 152,175 2,073,312 No. 5--Cincinnati-----------------------Kentucky------------------------------Ohio-....----------- -------Tennessee------------------- ---------- 77,230,000 13,383,000 63, 262,000 585,000 19, 271,000 1,195,000 12,144,000 5,932,000 8,443,000 1,118,000 6, 597,000 728,000 12, 361, 837 1,124,893 10,106, 098 1,130,846 No. 6-Indianapolis ------------------------Indiana ....--------------------------Michigan...---..----------------------- 17,854, 000 8,734,000 9,120,000 24, 257,000 2,000,000 22,257,000 2, 676,000 2,006,000 670,000 10,964, 673 3,907,746 7,056,927 No. 7-Chicago------------------------------- 54, 232, 000 29,970,000 24,262,000 19, 534, 000 19,318,000 216,000 3, 403,000 2,432,000 971,000 15, 230, 374 5,005,053 10,225,321 13, 206,000 1, 568,000 738,000 9, 769,000 778,000 353,000 10, 729, 000 675,000 2,744,000 7,228,000 44,000 38,000 1,211,000 186,000 215,000 728, 000 55,000 27, 000 10,655, 844 663, 808 1,486,909 6, 977,887 537,539 989, 701 8,534,000 4,638,000 1,742,000 5,228,279 233,000 5,701,000 215,000 98,000 2,287,000 625,000 17,000 690,000 4,000 3,302,000 101,000 415,000 408,000 9,000 809, 000 735,205 1,858,235 600,925 45,169 1,988, 745 18,850,000 1,495,000 10,085,000 3,041,000 4,229,000 3,816, 000 189, 000 29,000 120,000 22,000 18,000 7,451, 301 No. 1-Boston----------------Connecticut ---------------------------Maine.-------------------.-------------Massachusetts----------------------New Hampshire --------------------Rhode Island---------------------------------Vermont..----------------------------------- No. 2-New York_----- New Jersey----------------------------------------New York. .------No. 3-Pittsburgh. --Delaware ------------------ ------------------------------ Pennsylvania- -------------------------------------West Virginia-------No. 4-Winston-Salem. ---------------------- Alabama -----------------------------District of Columbia -------------------.--------------------Florida ... Georgia-...----------------------------Maryland- -----------------------------North Carolina ------------------ -----South Carolina ..--------------------- --------------------Virginia.--... Illinois --------------Wisconsin.-----------------------.-----.. No. 8-Des Moines -------- ..------------. Iowa-----------------------------------Mmnesota-.----- -----------------------------------------Missouri-North Dakota--------------South Dakota .-------------------------No. 9-Little Rock _..-----------------Arkansas..- ---...---.----------------Louisiana-----------------------.--.---Mississippi- .-------------------------New Mexico.----------------------------...---.---------------. Texas..-. No. 10-Topeka-.----------------------. Colorado.----------------------------Kansas--..---------------------------Nebraska--.----------------------Oklahoma.------------------------------See footnotes at end of table. 13 425085-41- 428,000 669,000 314,000 2,405,000 265,395 2,410,859 1,424,413 3,350,634 186 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 4-Continued Selected figures on residential real estate owned by financial institutions, Dec. 31, 1940-Continued All real es- 1- to 4-family nonfarm tare owne dhomes owned by savings hbomy life insurand loan by life insomassociations ance cornpanies FHLB Districts No. 11-Portland------------------------_Idaho ------------------------------Montana--------------------------Oregon ---------------------------Utah ------------------- --------Washington----Wyoming --- ---------- --------- No. 12-Los Angeles --------------Arizona --------------------------------California------------------------- ----Nevada----------------------------Hawaii------------------- $8,549,000 76,000 103,000 1,322,000 5,287,000 1. 691,000 Residential Pr real estate Properties owned by insured cobym- the ome insured co Owners' Loan Corporation banks mercial1 Corporation 2 $4,256,000 4, 000 74,000 2,161,000 186,000 1, 824,000 $218,000 2,000 6,000 138,000 17,000 43,000 $1,644,031 155, 639 85,633 170,851 194,364 980, 605 70,000 7,000 12,000 56,939 9,158,000 70,000 9,033, 000 10,000 6,191,000 61,000 6, 128, 000 2,000 8,703,000 101,000 8, 599,000 3,000 2,473,553 709, 673 1, 761, 968 1, 912 45,000 -- --- SExcluding possessions. Source" FDIC Report, Assets and Liabilities of Operating Insured Banks Dec. 31, 1940. 2 Capital value. Excludes properties in process of acquiring title. EXHIBIT 5 Indices of total building cost, and of cost of materials and labor used in construction of standard 6-room frame house [Average month 1935-39=100] Mate rials Labor 1936 January ------February_----March_____-April -_______ _____ May June -___------ _ July---- August ------------September_-October ------November ---December_- 95. 8 *96 0 96. 2 96. 3 96. 5 96. 6 97. 0 97.4 97. 5 97.8 98. 4 99. 5 92. 6 92 6 92. 7 93. 2 93 8 94 3 94 7 94. 9 95 3 95. 8 96. 3 96. 4 94. 7 94. 9 95.0 95.3 95. 6 95. 8 96. 2 96. 6 96.8 97.1 97. 7 98 5 101.0 102. 5 104 5 105. 9 106. 8 107.0 107. 2 107. 3 107.1 106. 5 106. 0 104. 9 96. 9 97. 6 98. 9 100. 7 101. 7 103. 3 104 4. 104. 7 104. 8 105.0 105.0 104 8 99. 6 100. 9 102. 6 104. 2 105.0 105.8 106 3 106 4 106.3 106.0 105. 7 104. 9 S104. 1 103. 3 102. 6 102. 1 101. 7 101. 5 101 1 100.4 100. 4 100. 2 104 7 104. 7 105. 2 105. 2 105.1 105. 3 105. 7 106. 0 106.1 105.8 104. 3 103.8 103. 5 103.1 102. 8 102.8 102. 7 102. 3 102.3 102.1 1937 January_ ---February-------March _ ____--April -----------May __ -___June--------July ------------- August_- _---- September---------- October __----November_---December _--1938 January___February ----------March ------ ___----_. April---_- _ -- May --- June ----July --------------. Mate rials Total Total 1938- C ontinUed November --_ December - __-- 100 2 100.0 105.8 105.8 102. 1 102 0 1939 January _-- -February_--March ____--__________ April_-----May ---June -July ---August --------September ------October--_______ November -----December -_ - 100. 0 100 0 100 0 99. 9 99 7 99 5 99. 4 99. 3 99 9 100. 6 101.3 101.5 105. 6 105. 9 106 1 105. 6 105. 3 105. 0 105.1 104. 9 104 9 104. 8 104. 6 104. 4 101.9 102. 102 1 101.8 101.6 101.4 101.3 101.2 101.6 102 0 102.4 102. 5 1940 January _ --.February---__-____ March__________ April__________ May-_________ June --------July_--August _________ September ______ October ------ ____-__. __ November -December ____--_ 101 4 101.5 101.4 101.2 101 3 101. 3 101.2 101 4 101 9 103. 4 104.6 105 9 104. 0 104. 2 104.1 103.8 103. 7 103. 5 103 4 103 6 104. 8 106. 9 109.8 112.5 102. 3 102.4 102. 3 102.1 102. 2 102 1 102 0 102 1 102 9 104. 6 106. 4 108.1 106. 6 107. 8 108.0 108. 7 108.8 109. 2 114.5 115.1 115.3 116.1 117.0 118 6 109.3 110 2 110 4 111.2 111.6 112 4 January_ February. March-_ April May-June___- 1941 August _-___ September_----October -__--Source: Division of Research and Statistics, Federal Home Loan Bank Board. Labor 187 EXHIBITS EXHIBIT 6 Population growth in the United States, by size of city, 1920-30, 1930-40 1940 Total nonfarm_ ------500,000 and over_- ----50,000-500,000_- - -__- 2,500-50,000 .-Rural nonfarm ------_ - Percent increase 1940-30 1930 Percent increase 1930-20 1920 101, 518, 199 92, 617, 533 9. 6 22, 367,825 22, 964, 081 29, 091, 796 27, 094, 497 20, 828, 542 21, 988, 642 26,137, 639 23, 662, 710 7. 4 4. 4 11.3 14 5 74, 351, 980 24 6 16, 369, 16, 325, 21, 609, 20, 047, 27. 2 34 7 21.0 18 0 301 772 530 377 EXHIBIT 7 Population changes in metropolitan districts of the United States, 1930-40 [Based on 133 districts for which 1930 and 1940 data are available] Increase in Metropolitancentral city Metropolitan district Number Per- cent Decrease in central city Num- ber Per- cent Increase outside central i Number Decrease out side central t cdistrictt Per- cent Num- ber Per cent Akron, Ohio . ------------..- -------10, 249 4 0 13, 273 14. 5 13, 753 10. 6 Albany, Schenectady, Troy, N. Y -- __ .7, 437 2. 5 Allentown, Bethlehem, Easton, Pa --4,060 2. 2 ---...----7 .-----1, 090 0. 8 Pa -----------. .1, 840 2. 2 1, 702 5.3 Altoona, 1, 117 2. 2 _ -----4, 670 23.0 Asheville, N. C -------------Atlanta, Ga_ -_ ---31,922 11.8 --------39,452 39. 2 -Atlantic City, N. J___--------------2,104 3. 2 176 .5 --4,801 28. 1 -5, 577 9 2 -------Augusta, Ga-- ------------54, 226 6. 7 ---------43,219 29 9 Baltimore, Md_ ---3,433 3 2 14,192 73 9 -..--------Beaumont-Port Arthur, Tex -------Binghamton, N. Y 1,647 2.1 _--_--13, 504 25. 3 Birmingham, Ala-------7, 905 3.0 . ---__--- 17,154 13. 9 3. 5 ---------10, 372 1 3 52, 989 Boston, Mass -------Bridgeport, Conn ------- 405 .3 -------12, 247 21 4 -Buffalo-Niagara, N. Y --5,394 .8 ---------31, 752 18. 5 -Canton, Ohio -----3, 495 3 3 -------- ----5,626 6 5 Cedar Rapids, Iowa------6, 023 10 7 -------- -----605 5 8 ----3,498 40.7 Charlotte, N. C_ ----- --18, 224 22 0 ------Charleston, S. C-----9,010 14 5 -------9,941 56. 8--Charleston, W. Va -------------------7, 506 12 4 -------20,666 43. 3 -Chattanooga, Tenn---8, 365 7.0 ---------16, 261 33 3 -Chicago, Ill ----------20, 370 .6 ------114,001 11. 5 -Cincinnati, Ohio ---------------------4, 450 1.0 -------25, 395 8.2 --. 22,093 2. 5 42,047 14. 3 -Cleveland, Ohio---------------Columbia, S. C _ -----10, 815 21 0 ------4, 777 21. 3 -Columbus, Ohio---15, 523 5. 3 -- -----9,873 19. 8--Corpus Christi, Tex--29, 560 106.6 -----------6,885 106. 1 -Dallas, Tex --------34,259 13 2 ------_ _. 32, 631 66 3 -Davenport, Iowa-Rock Island, Moline, Ill ---------12,482 9.5 ---------8,022 34 1 -9, 849 19.3 -9,736 4 8 -------- ----_ Dayton, Ohio --------_ 1, 102 20 6 -----1, 795 3. 1 ---------Decatur, IlL_--19,060 44.4 -34,551 12.0 -------- ----Denver, Colo ------------------.. 5, 750 31. 2 --17, 260 12. 1 ---_-Des Moines, Iowa -----136, 313 25. 4--Detroit, Mich_ -----54, 790 3. 5--3,083 17. 3 .----1, 375 1. 0 Duluth, Minn.-Superior, Wis 3,000 46. 2 -8, 158 15.7 -----Durham, N. C -------2,951 18.4 ----5, 611 5.5 El Paso, Tex ---------- -3,234 23 4-Erie, Pa ---------988 .9------------- ----- -5,187 5 1 23,671 113 4 ------Evansville, Ind -3. 8 2,102 .9 1,695 ----Fall River-New Bedford, Mass-------4,949 3.2 13, 564 57. 8 -__. ----Flint, Mich --4, 363 37. 6 -3, 464 3.0 --------Fort Wayne, Ind ___18, 887 169.7 ----14, 215 8. 7 ---------Fort Worth, Tex__11, 214 43.88-8,172 15.6 -----------Fresno, Calif 5,452 101.7 ------7, 924 15.0 ---Galveston, Tex -7,019 18.2 4,300 26 -----------Grand Rapids, Mich ... -. 3,836 38. 7 5,750 10. 7 Greensboro, N. C.-.------------- 188 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 7-Continued Population changes in metropolitan districts of the United States, 1930-40-Con. Increase in Increase in central city Metropolitan district n Decrease in central city Per- cent Num- ber Per- cent Hamilton-Middletown, Ohio.---------------356 .4 Harrisburg, Pa---------------3, 554 4. 4 -------Hartford-New Britain, Conn ..------2, 752 1.2 --Houston, Tex -----92, 162 31. 5 --Huntington, W. Va., and Ashland, Ky__ 3,727 3.6 ------Indianapolis, Ind-------------------22, 811 6. 3 ------------Jackson, Miss ------------13,825 28. 6 --Jacksonville, Fla---------43, 516 33.6 -------Johnstown, Pa -----------------325 ----.5 Kalamazoo, Mich ..-------------------- -689 1.3 Kansas City, Mo., and Kansas City, Kans -------------------- ------967 .2 Knoxville, Tenn_ ----5, 778 5. 5 ----Lancaster, Pa-----------1,396 2.3 -----Lansing, Mich-------------356 .5 -----Little Rock, Ark-----------6, 360 7.8 --- Lincoln, Nebr------6, 051 8.0 ---------Los Angeles, Calif_------266, 229 21.5 --Louisville, Ky----11,332 3. 7 - --Lowell-Lawrence-Haverhill, Mass ...-----------------1,548 .7 Macon, Ga -------------4,036 7. 5 ---Madison, Wis ------9, 548 16. 5 ------Manchester, N. H_ --------851 1. 1---------Memphis, Tenn-----------39,799 15.7 ---__--Miami, Fla .------------------61, 535 55.6 --Milwaukee, Wis_----------9, 223 1.6 ---Minneapolis-St. Paul, Minn ---------44,144 6.0 -----Montgomery, Ala ------12,005 18. 2 -_-----Nashville, Tenn -----------13, 536 8. 8 -New Haven, Conn...-----------------------2, 050 1.3 New Orleans, La -----------35, 775 7. 8 ------_ --_ New York-Northeastern N. J---------- 492,896 ---------------Norfolk, Portsmouth, Newport News,Va_ 22,313 10.6 -----------Oklahoma City, Okla -----------.. 19,035 10 3 ------__ --_ Omaha, Nebr.-Council Bluffs, Iowa --9,229 3. 6 ----------Peoria, Ill-----------118 .1 -------------Philadelphia, Pa-----------------------19, 627 1.0 Pittsburgh, Pa_ ----------1,842 .3 --Portland, Maine -----------2, 833 4. 0 -------- ----Portland, Oreg_ -----3, 579 1. 2 ..---Providence, R. I__---523 .2 -------------Racine-Kenosha, Wis --------------1, 844 1. 6 Reading, Pa .--------------------------.--- -----603 .5 Richmond, Va ---------------------10, 113 5. 5 1..---- Roanoke, Va .... 81 .1 --------Rochester, N. Y -----------3, 157 1. 0 Rockford, Il------- ------------1, 227 1. 4 Sacramento, Calif 12, 208 13.0 -------------Saginaw-Bay City, Mich---------2,680 2 1 -------. St. Joseph, Mo .---...------ --------------. ----5, 224 6. 5 St. Louis, Mo.------------.------.-5, 912 .7 Salt Lake City, Utah ----------9,667 6 9 ------------San Antonio, Tex.----- --------22, 312 9. 6 --San Diego, Calif_ -----55,346 37.4 ------- 18,242 2.0 -------------- San Jose, Calif--------------10, 806 18. 7 Savannah, Ga---------10,972 12. 9 Scranton-Wilkes-Barre, Pa....------.-----. Seattle, Wash.-------.---------. 2, 719 .7 Shreveport, La------------------21,512 28.1 Sioux City, Iowa --------3,181 4. 0 South Bend, Ind.--------------------Spokane, Wash... ---6,487 5. 6 Springfield, Ill --------3, 639 5.1 Springfield, Mo ...-----------------. 3,711 6. 5 Springfield-1Holyok]e, Mass,,-.... ---,-------- ----- Decrease out side central city _________ Number San Francisco-Oakland, Calif--------- Increase outside central city Number Per- cent Num- ber Per cent 6,053 24. 4 8,141 10. 0 28, 256 11. 8 79,109 168. 6 ...... 3,885 6. 6 14, 861 27. 8 5, 926 29. 7 3, 390 17. 7 4, 495 5. 6 5,163 28.8 --26,874 10, 337 7, 475 11, 306 7, 227 31.0 34. 611. 8 55. 7 23. 0 - 3, 700 37.3 319, 841 29.6 ..--18, 680 19. 3 -4, 489 4.6 3,567 26. 6 4,451 69. 0 408 10. 6 16,552 72.0 --56,813 263.6 37,699 22. 8 34,675 36.0 3,303 26 8 -18,811 33. 9 16,554 12. 6 9, 378 26.0 296, 200 -27, 780 43 8 --31 .2 4, 618 25 9 17, 716 44. 6---71,123 7.9 . 38, 550 3.0 ------3, 859 13 3 . 24, 099 31.3 ------20,346 4. 6- --------3,456 22.1 .5,472 9. 2 - -15, 048 40.0 .-----7, 392 21.8 ---16, 536 23. 5 ----3, 282 18. 9 19, 796 59. 5 6, 061 36. 6 696 6. 6 80, 373 17.0 ----10, 370 23. 5 17,427 36. 5 ------20,002 60.6 ------ 120, 189 32. 3 ----- -15,133 33. 1--------1, 567 7.7 -----3, 419 1.5 --------.-----19,312 -------------29, 257 53.1 .-----------4,647 49.4 . -------- ----835 18.2 --2,925 2. 8 3,378 8.0 ---..--.--. 6,085 45.8 -__.---------3, 478 33.1 .----..-..3,140 51.2 ---3,133 1. 5 ...----.----... .. 1, 25 4 6 -, 189 EXHIBITS EXHIBIT 7-Continued Population changes in metropolitan districts of the United States, 1930-40-Con. Decrease in central city Increase in central city Decrease out side central city Increase outside central city Metropolitan district Percent Number 1, 919 2 8-- -----Springfield, Ohio--------------------. -6,751 14 1 -_------Stockton, Calif- ..--3, 359 1. 6 ---Syracuse, N. Y- .....-----...---------27,617 19.5 -------Tampa-St. Petersburg, Fla - -------- --.. 117 .2 ---------Terre Haute, Ind --...-----2,591 2.4 ----Tacoma, Wash-------------------2.9 -----8,369 ------Toledo, Ohio--------5.8 -------------3, 713 Topeka, Kans-------------------1, 341 1.1 .---.-------Trenton, N. J--------------------------.6 ------.899 Tulsa, Okla ---------------654 .5 --------Utica-Rome, N. Y--- -176, 222 36. 2 ___ ----Washington, D. C ----- - -.6 .------588 Waterbury, Conn -- _...---------------5,552 12. 0 ------- --Waterloo, Iowa ------------560 .9 Wheeling, W. Va -------------3,856 3 5-----------Wichita, Kans -----------------------5. 5 -.--------5, 907 Wilmington, Del ---4, 541 6.0 -------Winston-Salem, N. C 1, 617 .8 -- ----Worcester, Mass --------------------.. -1,458 2.6 ---------York, Pa ---- :------------- ---------1 3 .------------.-----2, 282 Youngstown, Ohio ------------ 1. 558 10, 706 16, 696 13,066 1, 247 6, 656 3,502 2, 357 8, 568 4,456 5, 556 110,535 4, 835 4, 446 6, 277 4. 278 19,475 8,018 2, 518 3,974 10, 150 Total ------------ 2, 158, 504 Number Percent Number --- 150, 950 .... Number Percent Per cent 30.0 - --76 9 ---46. 8 ---47. 6 ---6. 4 ----16 7 ----6. 3 ---31. 2 -12 8 -----10.6 ---9 8 ----82 4 ----11 9 ----40. 9 -4. 9 ----53. 1 --34. 2 ---36.4 ----2. 3---12.4 -----5 2 - 2, 751, 600 --- 25, 337 Source: Bureau of the Census. EXHIBIT 8 Estimated volume of mortgage loans originated on nonfarm 1- to 4-family dwellings, by type of lender [Millions of dollars] Type of lender 1929 1930 Savings and loan associa tions -----------$1, 791 $1, Insurance companies .-.. 525 Mutual savings banks---612 Commercial banks and their trust departments_ 1,040 Home Owners' Loan Cor poration-------- ----------------Individuals and others 1_ 1,120 Total----------- 1931 262 400 484 $892 169 350 670 1932 1933 1934 1935 1936 1937 1938 1939 1940 $543 54 150 $414 10 99 $451 16 80 $564 77 80 $755 140 100 $897 232 120 $798 242 105 364 170 110 110 264 430 500 560 610 689 400 ---175 132 2,263 100 150 583 443 128 605 27 723 81 669 151 740 111 865 5,088 3,536 2,175 1, 092 2,158 2,499 2,455 2,873 3,322 720 865 3,070 2,011 $986 $1,200 274 324 112 133 1 Includes fiduciaries, mortgage, title, and real-estate companies, construction companies, philanthropic and educational institutions, fraternal organizations, State and local governments, etc. Source: Division of Research and Statistics, Federal Home Loan Bank Board. 190 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, 00 000000 c C) t5 01 -000 00 00 0) 0000 000000 0 00 00 000000000t- I10 C00 0000000000'0 00000000 c'(=cqC-000060 1 100 0i 0000 t-000C 000000 X 00000-000004 t-00 0-00000 i00o~ 1000 0 0 0m00 0 00 I0 ,_ al U (a) da 0000 00 0 00000000 00000000X000 L00 -0 00 0 Ri 0 0- N000 0 00 r 00 00 U) co C)0 C)0m0001 o - co0 oo C)0 w = CI )000 c00 t- 0000 i 0 ccC 00 ?-.00 00 00 o cC 00 > 000 04 - - 0 100nt00"v1 0cc 01q 01 c oCqr 00m0w000 m cc N00 - 00 q 1.t t l 00_0010100 - ) D I '0 ke-e 0 t000- t-_r.4 00-0 m00-000 0 06'00 '00''q - c 00cc X c 0000101000ooI ( X I 00 .d0 00 C; X4e e ,100 0 t00 t0 > C40N000 r--4 -4r-4 C)'C0000 t- 0 6 c 000-00 - 00001CD0N m t-"011tv00 r-4 1-tv 0014*4 t- 00cc 0 =0 o 5 00 0000t 00 000 -( m00000m 00 z.*0100 m0 0 -I co6' 00000-0 -- 0 ko K 0- - c c I----00 rX0 " 000000 -lr4 t-0I 0000-0C40?-I00 t- t00 0 0000 000000 cq VD00cm 000000-40W0000 000 100m000000- 4000000c00 m0m000 m( N 10000m 00 00q00 - NI W 0 o 00?00 00c0&&?-4 r0000 0- 000L0o000 - C "000 Q) H R 000010 -4 m (a)C>cc 01000 000000000010 c 0 q o 000( N 0d0--0c k -x00000 000 0I 000000 0-0-00000000)00 cc0000 0010000010 000000000000= * cq 00010 r0000te144 0 C) 0 0000000 or-q -0000 00 0 000 00t0000-0-0-=00-c-c0000'0010(M-01400 00 o Z00000 co0 0000000000000 0 L cc 0 m40D t 000000 CD00 ''0 II0 '00' I cc'0 ii 00010 0CI 0000000 0 :II 0 00y 0000 co +-I 0)- IzQ g00 :) co0 00 00 I ccZ 00) -z -:4cct10 t--4 1- 0 m= o - t C C1: 0 000e00 I m 1 0 0 00 00 0 00010 I ?--q0cc-m0w0t000000--.m0001 0 C)=0000000 t-00L00004 00 - I m000 X. 000000 iq00 0-000000000000 q0010000 D dq00t- - ?" 000000--4 0 10 M r14 1 a00 r" 00 z c 00 0 -00 0x00000 0-00r-4 00 -000000000000000 00 0 O0C10 ;0O 0 t 0Jm.: 0m 0014 _r-_C __c t-CI000 00 0 - r4 0 0-00 "0 o0I000- 00 t0000000000I- 000000m 0-NC0 cqI-ooX0 000 mhNkD C 00001-M-:t 0 000 000000 - M r-4 'Ilio-oot--oo C1 r--400000q - -4C 10011 LOt 00 0000-4 00 1 000 0- I 0 ev C IM t00 00> 00 0000-000-0-100 00) 00 t -00 -00 ' M q00 00 00- 0 N0'0 00 I-t-00t4 0 00 000000000000 00 0S0co^0-001- CO 0 r0 00II T--4 0000-00 00100 000 0 0000 001 -q COt00' ,r00 00 0 Zn - --0 0- 0 00 0 000000 00 01 X)I 00 I rm000Cc I 00om 10 r-4 0000- I 0 00 1- 000"1 - 0 4o 0 0 ,ti c100000 ~ 00000 i U) 0< 00 . 01 00000 00-0-000- 00cc 00000 00 0 C - ' 00 10 C 0 I, 000 C^ 0 o 00-0-0040 0 00 0000 t-0NI0000 000000000000cq <=tX0000000000000 qc100co--,v It0 ~ 0t-00 t4 0 6 00- -4CO M 0 000 0 0-000 00000000000000r-04 000 cc000 0= l lo 0000 II4_ .14 0 0~~~~~~~ 00 0~L~ o zzz 5 E5 0 204 00) ~ o 0 0+ - 0)0 5- z z w0 z 191 EXHIBITS 44 Co LO CoCmOC 0Co M 0CO Co C-C Co CoCOOCOQ 1 & C.0 l CodICI- oOCO r-iorC0 1 o7-oL 4f C44444-r-i f r- x 10OxO(0>C) =oCO C4 Co CO4 COCOYCo COCo 1-COCo4 =ccO Cq OCo01 C14C 10r--401 - Co COCq C C 11tmCo 01c 414644zCoOC 44i=L oo 0 4oiCl 0q t- CO t- 0 1 Co C 100 C ti d44C Co CO 1 Cot- CoD COO Co4COcom C)Ot 0 00Co Cob Co 0) o0 C 0 ~ C) I II N10 Cd 0 CIoo-o = Co - 01o" I' 01 c0C COc ooC-=Iqcc O OCO co r--4oC XCo =Oo "__-__-__-- I cOo C t r- CoC0,0Cx C OI1CoC -C 4Co q r4tC--v-4M4 C-4 m =,7, 1 _-C-_-- CC _--qCD~~ 101Co o 0 Co CO 4 LCO CO6COC 16cy O m XoO o0 to- I-CO I II C-C O .1C-O CO1 0) C OCOCor- NCO CoC)C14O 01 q 104Y rCO4 I II COOI COCoComCqoC O6 r1COZo0.CO C~~~~~~~j~~ 0CO C01OoO OoOoO OCOW Co C -~O1 0q1 C MC ;(o CoO 0 CO o o-COo C Co1 OOCqoo CCoo0C10 Ii m0 1 CC 0 r--4m 7 Co t-C o co 414 *- CoooCO CCoCOC c O) ccO CoC N IX CC1CCOmCO01 CO 41 CCYD CCO01C-C (MC t-CoCO'l 0CO C C6- 44444io 'Clio, Cq co r-i Cro-4 00 C)I 00to COOo -CC 0)CO - Co CO COt 10 kCoC O CoCo 01 SoC Coi4Co CO 10C 1400 C C-0 C 4441 I COCo-oCO O6 COOz 10 CO1 C-1 t oo 1-tiq =CCo C1CO - 0C- 0CO CoqCor444q COO o C-Co 00C0(c t- Co l C606 c6L6 7-4C4 iI IIII IIII II cq C cc 00 U'.) II IIII 0 iifI I II Co i 00C~~ C0 01 Co -- CO m4 X0144t 400 C cOOiz0 I 7--CCOOmCO CeC6 cq r-4 m 00C4 444a) OI~d II Irl-I- Cq C) C) " m to 1114 co 00 C-4r- M 1104 1 cq m CO r-q T-4 4-l:444 C C-LO4m I CoCo0 N Coa 0 0 C0CoC-1C 0q10 441 X C> CoC r4 4440coI~ - 4 4c I 4 r4' ?-q- C6 COO 4z C11 cq cocO CDo -C C0"" Co l4r:coc6 t- t r-4 CY.) Cot~ 00MCo r4',4' C) Co C q1o 0 ( C. C 00 C- x1C Cq CoC -C o OO xC -- IoO01 (=1XCO C xO ox COCO t-om11 1 0 C)-4 C 1o - Co ti =o x C)o t,Co I 4c Z c n6iz Co C-1OCo coO=C 4ql O z q q C CD o o o 0 COCm -4 C4 z6S-64 t-oCO 0 t-00CmC-.-4 o.o C 0 mO (= ~00COt-1tComI00 lb 010 :5 co64-ZZ'c ' P4 z 00 m CoCOCOCoCOCo C) ' CO" C- 4z co oCCC c Co z Q C0d C z 0,- C C1 JJCO Im C, C.)~ 192 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 10 Estimated balance of outstanding mortgage loans on nonfarm 1- to 4-family dwellings [Millions of dollars] Type of mortgagee Savings and loan associa tions ---------Insurance companies- ..Mutual savings banks _Commercial banks 2 Home Owners' Loan Cor poration_ Individual and others 3__. Total ------- 1929 1930 1931 1932 $6, 507 1, 626 3, 225 2, 500 $6, 402 1,732 3,300 2,425 $5, 890 1, 775 3, 375 2,145 $5,148 1, 724 3, 375 1, 995 1933 1934 $4, 437 $3, 710 1, 599 1, 379 3, 200 3, 000 1, 810 1, 189 1935 1936 1937 1938 1939 1940 $3, 293 1, 281 2, 850 1, 189 $3, 237 1, 245 2, 750 1, 230 $3, 420 1, 246 2, 700 1, 400 $3, 555 1,320 2, 670 1, 600 $3, 758 1,490 2, 680 1,810 $4, 104 1, 758 2, 700 2, 095 -_-------_ _--------132 2, 379 2, 897 2, 763 2, 398 2, 169 2, 038 1, 956 7, 200 7,400 7, 500 7, 000 6, 700 6, 200 6, 000 6, 000 6, 180 6, 332 6,440 6, 510 21,058 21, 259 20, 685 19, 242 17, 878 17, 857 17, 510 17, 225 17, 344 17, 646 18, 216 19, 123 1 The estimates of the outstanding balance of nonfarm home-mortgage loans by type of institution for 1940 and the revised statistics for the immediately preceding years have been developed from exhaustive studies of the mortgage holdings of savings and loan associations, life insurance companies, mutual savings banks, commercial banks, and the Home Owners' Loan Corporation. The figures for the Home Owners' Loan Corporation reflect the actual balance of mortgage loans held and advances outstanding. The figures for savings and loan associations are based on a compilation of the annual reports of Bederal savings and loan associations to the Federal Home Loan Bank Board, and of the annual reports of State-chartered savings and loan associations to their supervisors and to the Federal Home Loan Bank Board. The esti mates for life insurance companies were developed from study and summary of detailed reports which were received from a sample group of insurance companies holding more than 85 percent of life insurance company assets. These schedules provide a detailed breakdown of their mortgage-loan portfolios. The estimates for mutual savings banks were developed by the use of data on the total mortgage holdings of these banks, as reported by the Comptroller of the Currency, and the National Association of Mutual Savings Banks as well as certain additional material collected by the Division of Research and Statistics of the Federal Home Loan Bank Board. As a result of this investigation, it was possible to segregate mortgage holdings of mutual savings banks into the farm and nonfarm element and further to separate the nonfarm element into mortgages on homes and other-than-home property. The project covered mutual savings banks in the States of New York and Massachusetts, and involved institutions containing more than 50 percent of all mutual savings banks assets. For commercial banks, use was made of a study con ducted at the end of 1934 by the Federal Housing Administration in conjunction with the Comptroller of the Currency, the Federal Reserve Board, and the Federal, Deposit Insurance Corporation. This canvass segregated mortgages on homes from other nonfarm real-estate holdings of the reporting banks. The rela tionships shown then have been applied to total mortgage holdings of the banks for earher years. In recent reports the Federal Deposit Insurance Corporation has provided a segregation of mortgage holdings of insured commercial banks. Adjustments have been made in the estimated data on the basis of the Federal Deposit Insurance Corporation's reports as well as the FHA reports indicating increased mortgage lending by commercial banks. Finally, in the case of individuals and other types of mortgagees, estimates have been developed for recent years on the basis of studies of mortgage recordings by type of mortgagee con ducted by the Division of Research and Statistics of the Federal Home Loan Bank Board. For earlier years the estimates have been prepared after reviewing many studies, bulletins, and researches of various Government and private agencies. Included in these sources are the Financial Survey of Urban Housing, the refinancing operations of the Home Owners' Loan Corporation by type of mortgagee, local surveys conducted by the National Association of Real Estate Boards, special surveys of the Federal Home Loan Banks, figures supplied by the New York State Mortgage Commission, sundry reports of the Mortgage Bankers Association, and hearings of the Sabath Committee investigating real-estate bond-holdings committees. 2 Does not include trust departments of commercial banks. 3 Includes trust departments of commercial banks, fiduciaries, real-estate bond companies, title and mortgage companies, philanthropic and educational institutions, fraternal organizations, construction companies, RFC Mortgage Company, Federal National Mortgage Association, etc. Source: Division of Research and Statistics, Federal Home Loan Bank Board. 193 EXHIBITS EXHIBIT 11 Changes in selected types of individuallong-term savings: Dec. 31, 1935, to 1940 [In millions of dollars] 1935 Total .- ..---...... __. Life-insurance companies 2.---- ..--- 1937 1938 1939 1940 - 44,191 46, 951 49, 531 51,501 54, 510 57, 962 +6.3 17, 542 19,133 20, 510 21, 858 23, 381 25,025 _ 9,829 10, 013 10, 618 +7.0 +1.3 13, 062 +3 5 ---- Mutual savings banks 3.. -...---------Insured commercial banks 4. _-- . _ Savings and loan associations 5-..--------Postal savings 6 .... _----------_ _ --2 -percent postal-savings bonds 7........ United States savings bonds 8----- Percent change, 1939-40 1936 - 10,126 10, 235 10,481 10, 575 11, 491 12,100 12,196 12, 622 4, 759 4, 449 4, 433 4,392 4,412 14,633 +5.0 1, 229 104 153 1, 291 99 475 1, 303 95 964 1, 286 92 1,442 1, 315 90 2, 209 1, 342 87 3,195 +2.1 -3.3 +44.6 1 Preliminary. 2 Estimated accumulated savings in United States life insurance companies. Represents reserves plus unpaid dividends and surplus to policyholders, except that deduction is made of policy notes and loans and 3 net deferred and unpaid premiums. Source: Spectator Life Insurance Yearbook. Deposits. Source: The Month's Work, published by National Association of Mutual Savings Banks. 4 Deposits evidenced by savings passbooks. Source: Assets and Liabilities of Insured Commercial report of Federal Deposit Insurance Corporation. Banks, 5 Estimated private investments in savings and loan associations, including deposits, investment secu rities, and shares pledged against mortgage loans. Source: Federal Home Loan Bank Board. 6 Due depositors; outstanding principal and accrued interest on certificates of deposits, outstanding savings stamps, and unclaimed deposits. Source: Post Office Department. 7 Excludes such bonds held by the Postal Savings System. Source: Treasury Daily Statement and Post Office Department. 8 Current redemption value. Source: Treasury Daily Statement. 194 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 12 Federal Home Loan Banks-Advances and repayments for the periods indicated, and the balance of advances outstanding at the close of such periods Period Fiscal year. 1933-___- -------1934 ---__ .-------------1935.------------1936 ------------------1937----------1938 ---------------------1939------------------------- - Advances Repayments $48, 894, 602.41 62, 871, 970. 22 36, 683, 308. 61 78,195, 224.32 114,287,052 41 105, 432,157. 95 76, 659, 074. 62 $1, 230, 772. 82 25, 387, 445. 72 42, 599,148. 52 38, 840, 900. 50 65, 817,003.85 76, 264,107.15 103, 922,448 88 Balance out standing $47, 663, 829. 59 85,148,354. 09 79, 232, 514.18 118, 586, 838. 00 167, 056,886. 56 196, 224, 937.36 168,961, 563.10 I---------------I 1939 July_---- A ugust ------- -__----- _ _------- - ----_-__ September __ --------- ---- October_- ----_ ---__ November_-----------_ December------------- 6,823, 240. 00 7, 767, 958. 00 10, 152, 378.44 9,604, 571.96 5, 827, 035. 52 18, 723,885.15 14,197, 703.85 9,885, 280.86 5, 934, 956.06 4, 637, 720. 74 5, 659,170.45 6, 232,809 57 161, 587, 099. 25 159,469, 776.39 163, 687,198. 77 168, 654,049. 99 168, 821, 915. 06 181, 312, 990. 64 4, 386,398.89 2,010,995. 54 4, 374,870.00 4, 973, 207. 50 9, 884, 072. 50 23, 481, 287. 73 28, 911, 443. 55 14, 283, 556.42 11, 247, 974.04 8, 804, 899. 62 6,186, 099 84 3, 592, 802.17 156, 144, 137, 133, 137, 157, 1940 J an u ary _ ---- --- -_--_ - - - - February ---- ___---------------__-March ----------------------------April_ _------May -------------June ------------------------------Total, fiscal year 1940 -------- I 108,009,901.23 -- I II 119,574,417.17 - 787, 515, 642, 810, 508, 397, 945 98 385.10 281.06 588. 94 561. 60 047.16 ---------------I 1940 July .---August--- 15, 542, 739. 12, 209, 287. 12,896, 570. 12,066,970 8, 952, 588. 23, 433,176. September__ OctoberNovember December _ JanuaryFebruary_ March --April -May June 68 50 76 34 54 95 10, 718,007. 44 6, 029, 500. 24 5, 250, 670 57 6, 588, 388. 58 4, 931, 703.41 7,488,146 32 162, 221, 779. 40 168,401, 566. 66 176,047,466 85 181, 526, 048. 61 185, 546, 933. 74 201, 491, 964. 37 6,142, 675. 87 3,182, 473.86 4,201,171 66 5, 798, 618.13 9,132, 748. 00 29,316, 542.16 36, 785, 701.18 17,132,191. 64 15,141,495 98 9, 929, 309 66 5, 688, 329. 38 4, 691, 776. 51 170, 156, 145, 141, 145, 169, 1941 -- ___Total, fiscal year 1941 ---------- 142, 875, 563 45 130, 375, 220 91 - Grand total through June 30, 1941- 773, 908, 855. 22 604, 011, 465 52 -- 848, 939 06 899, 221.28 958, 896.96 828, 205 43 272, 624. 05 897, 389. 70 -------- EXHIBITS 9l o k 0>I 0 "-4 000 CD00 N m C -q00 00 N N zt- I 00~~0000000000 t C) 0mt- Cr-00q ~Y OfC000U"." q = wC) 0000000000000000 0 0- 0 0 0= 0, R 0 C) C0 000 Oo 48 I 0) m0 "-I 0 0 00 N0000000 L 0 q00t- "00 4 C00000 O 14:v aO000'0006 -,d t-0-0000 I 00 o m 0000 : -q00 .000000 m 00 m 00 00000 -0Cc0 to O 0000000000000000000000 CD 000 0 "0010--1 00000 0 00 X0co000x CIO mI I N 0 " N LO-o = " 000m0<D0I0*00m0co00000 001 0CD CO o- omco14 0) 00 00 0000000000t~ 00 m x- 1000000000000o Q m UD Wo~~ct~~rCc c 00 000000000000000000 00 0000000 0000000 W I- co _4 00 N00 00000o"74t LO O 0 0000000L0000o0 00 000- 0 ,.000000000 0 r-4-000 M f.* 00 M to m0t- 01 =0m0m0=0 ~3~ 00 CD0L00000000 4 r5r-r Cq Cq-0C)0m00 r-i lll r.4 00im00t0000000 r-l 000 LOCD 00000001000000000000 00 0 0 00 4000q cC> 00 007-4 00 000000000=000o0-0000m - 000m0 C600 000m000000cc 0 0000 I00 0--0-I00000000000 qM0 ~D~I scc,c~ 0)6 0qI qD c4 m o6 =Cc6 q.f00 00 O 0000r,-fm.0 MC0 r i - X QDMt C C4I N cc W - C M -,torrr o X 0-q -O M -00 0000 -I ZZZZZZZZZZcZ I +zo F~ N~lcO~JcO~f(~Mr &qA.,o ~-rlr r( (E-4 CI, Ci~c90cc~c~-l~~~SmC~ ~3 1 "- q M X o q - , - 0u 195 196 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 14 Percentageof borrowing members to total membership, by Federal Home Loan Bank Districts, at the close of each fiscal year, 1936-41 Bank District No. No. No. No. No. No. No. No. No. No. No. No. 1-Boston------------------ 2-New York ---------3-Pittsburgh--. -4-Winston-Salem_ 5-Cincinnati-----6-Indianapolis ------7-Chicago -----8-Des Moines. -_ --9-Little Rock _---10-Topeka ---------.-11-Portland ------------12-Los Angeles. ---- 1936 1937 1938 1939 1940 Percent 40.4 60. 3 76.1 61.7 55. 6 54.1 80.5 60.7 59.5 63.2 60. 6 61.3 Percent 44.0 61.7 80. 4 65.7 54. 8 70. 5 82.4 68. 7 62.7 67.5 67.2 68. 2 Percent 39.9 63.2 80. 8 71.7 56.0 66. 8 81.1 68.7 60.1 66.8 69. 3 73.4 Percent 32. 4 60.5 78. 1 56.6 46. 8 59.3 75. 3 65. 0 51.7 58.5 53.0 71.1 Percent 29. 9 58. 6 72.1 53.8 37.8 53.5 64.1 55.0 41.2 51.7 48.1 60. 5 63.6 67.3 67.8 60.4 53.4 Total... -------------------------- 1941 Percent 33. 2 58.3 69. 8 46.7 36.1 54. 8 68.6 57.8 43.8 46.9 42.9 56.1 52.4 EXHIBIT 15 1 Federal Home Loan Banks-Interest rates charged member institutions on advances, as of July 1, 1941 Federal Home Loan Bank Boston------------------------New York------------ --- Pittsburgh------------------Winston-Salem -------------Cincinnati ----Indianapolis ----------- Percent 1 2 1Y 2 3 3 2Y 2 ------------- ----Des Moines----------Little Rock--Topeka------------------------ 3 3 3 Portland---------------------Los Angeles--...------------ All short-term advances amortized within 1 year. All long-term advances. All short-term advances amortized within 1 year. All long-term advances. All advances. Do. Do. Short-term advances not exceeding 15 percent of member's share capital. All long-term advances. All short-term2 advances amortized, in equal monthly installments. 2% All short-term advances amortized, by not2 less than 22 percent of the principal amount quarterly. 3 All other advances. 3 1 Chicago.--------.. Types of advances Rate effectin 3 21 3 All advances. Do. Do. Do. Advances made on and subsequent to May 1, 1941, where the proceeds are used solely for making FHA loans. All other advances. I Banks are required to charge of 1 percent to 1 percent additional on advances to nonmembers. 2 Advances must not exceed 10 percent of member's assets. 197 EXHIBITS 0 l 4 0wt"C) o - - - 0 0C C6oo r'00 O441XO 0 t-D qm q o rc$ $1 CC I M O W O t ?1 0 - - - o O~loOE~ C t0 C> M Ir-4 6O = CYD 4 00g:I00Co (M00 0 q Co~O~Co~oO 0Co r-4 o . . . C5 ol ;> C) C3"C5 " ~~ O~~ N . . . . C) t-00 lq 0Ctcl D toto - t.:01, 000c t- Co~~or d t 04 qt- 0 oOmo oDw Nd C m1 N ko cc d CNx 00 (= Co C ~ ~u" 0000 tC - rcDOc)M M o0 C) oCCc-coCDoCC== ~coo 0 CCe 0Ido CD C)CCC t- C)wC D Co co Y 644 om, Y-iclicliOdiI ioa c to00(mt inO C= Cm > C C14 O 10 t- - -*1't ct1 o c C c 0 x t O t ft ctYT Co cq--q C OT 00C - C" CDWO ~~t C co w t- C C C Co 0 4 (C-1Co Ol rd CC 'C P4 ) = C cCC-4Cq 00 mo OCmC----6- o1= I"~toUu~rgt ~C) (a) z ComoQ I ( 0 P--4o -o o OOL01 a 1- )C 0 CCO 0 co C- C Co O1O~c~O-o'C-O0ItcO Os(0ccO3~o~o~cO~~o-olo 0U q) C I 0k C) ' C)5 ~tI _ C)oo~~o C)l CCC CO N cyzC*4 "-Ir-4 = 10Co w t-- Co00 0oo O e CoC-C C) CoIZo4 - to p"d. c Ia ca =-CC ) 6C) CD C C)o oC C)V-4 4J HoQ 41 ( 0cyi000:06C6o1044 44060Z 0o q 000l 4Cq MO-14Co Co qD i _101-=_mtom__ CcI--m C) ( .4 C3cc 0t000 r6 6 C ( C3 ~ E-1N O~ 198 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 17 Types of advances made by the Federal Home Loan Banks The twelve Federal Home Loan Banks may make the following types of advances: ADVANCES TO MEMBERS (a) Up to ten years on the security of home mortgages or obligations of or guaranteed by the United States. Such advances up to one year need not be amortized, though three Banks have a preferential rate for those advances amor tized. Advances made for more than one year must be amortized on a monthly or quarterly basis and are subject to the following limitations as to amount: 1. If secured by a mortgage insured under the provisions of Titles II and VI of the National Housing Act, the advance may not be for an amount in excess of 90 percent of the unpaid principal of the mort gage loan. 2. If secured by a home mortgage given in respect of an amortized home mortgage loan which was for an original term of six years or more, or in cases where shares of stock, which are pledged as security for such loan, mature in a period of six years or more, the advance may be for an amount not in excess of 65 percent of the unpaid principal of the home-mortgage loan; but in no case shall the amount of the advance exceed 60 percent of the value of the real estate securing the home-mortgage loan. 3. If secured by a home mortgage given in respect of any other home mortgage loan, the advance shall not be for an amount in excess of 50 percent of the unpaid principal of the home-mortgage loan; but in no case shall the amount of such advance exceed 40 percent of the value of the real estate securing the home-mortgage loan. 4. If secured by obligations of the United States, or obligations fully guar anteed by the United States, the advance shall not be for an amount in excess of the face value of such obligations. (b) Up to one year on securities other than obligations of or guaranteed by the United States, providing such securities constitute an investment which the mem ber is legally authorized to make, have a readily ascertainable market value, and are not in default with respect to payments of interest or principal. Such ad vances cannot be in excess of 80 percent of the market value or the principal amount of such securities, whichever is less. (c) Up to one year without security or on any kind of security to members whose creditor liabilities (not including advances from the Federal Home Loan Bank) do not exceed five percent of their net assets. (d) Up to thirty days on an unsecured basis or on any kind of security. Such advances must be repaid at maturity or refunded with eligible collateral. In making such advances, there is no requirement that the creditor liabilities of the member do not exceed five percent of its net assets. ADVANCES TO NONMEMBER MORTGAGEES, Up to ten years on mortgages insured under Title II of the National Housing Act. Advances for more than one year must be repaid on a monthly or quarterly amortization basis. 199 EXHIBITS C)0C0 0 0000 A606 6o "oto C-1 Co0 CoCC 6 004( ~4r4 146L C) a)0 oo C) 6 co m C C=00 c; 6o- C) 0 Cw 0CC) C ) C) c oC6c6 r4C kaCOOC C =c - Idq 0C cOCtmC0C C cc C~C -l I 4 6 r4 I 6 CD La 0 C Lo~ o LO o LO COCN to CC C ~/ Co s o 0 C- OC k6 CC CO CO"CN C m Co o C) cq Q NC 0OL ~ mC CO 0 CqCq CO 0 0 O O CO- 64 cq tO CO D10 L6 -4 a C D ) 6 C CC 0CoOo t ko C C C04 CO o OC) c IMC CqccO C~ ) toI 1 CCC4' C:CO:C co 014C-1C o 6 4 4CC C) C6 C O6c Cr-o4C-C-- 0 (M CC C)C CO C D O 0 0C0 0Co CXC c6 CIC 0 CC 6 0 0 6 o 6 0 H0 CO o 16 C CC o CCCO viCC COCC C CO CCCC Co0 Co CmCC= CCt 00C o 1- r-4 4 64l 6Ot 0 Co CCC-4 o o C-4 " -Il CC llz0 CO 0Ctoo COc CC 00 10 40 co CO CO O Co CO o C C 6LO600 6 CoCO m - 0 ICC C C! C OCCO OC tI-,C) 6 6 0o Co L664-:66C6 f5 -c oC - OC-=CC aoO C- C6CC aCO C-, o 4 CC OO m C Co Co0 r-4 I- L44 6 0C 'o y:C/o tCCC666 t- 106~ze ?--4 o 0ICCCC I-OCC -4CC CC o 1 00 06 CCC Co 0 CCO oo - CO O6r-0-CC <= O0oCD CD too 6 CC 666 Co ClC4 C C 6 C 0 0 tmCo CC 6 614 0 C t-I 66 0COC :e Co C o t6- C-C 44 0CC o O CqCCq C 0C Co!Oo- o=OCOo C 666 C o00 6 6X6 rCo4 o)"-4 t6C0 OCccO 14 q Co CC CO 0Ct- kCO mo co CC 0 Co C t- 6 O CO c 0 0 COm 0 C to o LOLO (= 6 t "I64 t- Co C C~ t - . -d 0 CO /ctom ____________________________ _________________m______________________________m______________ c 6o1 CC CC'' 0 'C ~CC C CC CC'' Cc) C3 H C CC'' S 0~, H 4'j b.0 'C-0C'mC 0c' V) , 10-4 co rC 'C' 9c Cd 0 CC .0C~ CCCC C CC 'C cc adcc'c P-4L,'C- 0 CC 'CC ~ iC t % / C CC CCC-(2) r0c$ -Cm P-41 U"4C0 CCCCC CC -CC CCCo C r-4 ca 0 FCCq 0 -CCl .0 200 REPORT OF FEDERAL HOME LOAN BANK B3OARD, 000( LO1t 000 C 000C V4C 1941 = X0 C) t c;o '"q00 C> C) C) C) 0> t- mC 40 0' r-4 0C 0 0)~~ 'oo C) r-. 0 C 0r- 0 m ,=4 o 00 0 XOoo 0C0 40 -0 C t00 0 JO oC~ loi 0 00 00 05 0=C-D 00D C- 070 ' 06 0 0 0 ll0 0 0 00 00 0 0 00CD0t o0IR0r-C>cq 00 o 0 4- 0000 0 000"0 C 00000 c 0000 CDC 06' 0000000 '0 0 t- cc c 0 0> CO 0 0 Do6 00 10 - to0Z1 00)0> 0 0000 >t- 0 00 0 Mr 00I 00 C 00' 00'm C-C 10 o C-= 0 4ci vi 0000a C- 0COCO 00t-I 00 000 t: Cm oi 0 00 L6 0t'C) C> C)0 C0 0 ir 6oC 0m0C->00 C0 k. 00' 00 CO 0 0 0 0 7-- 00000 0l 0 CO 0 0 oo oC 0 0q 0q 00 o 5 : 00 oq - 0 000C0> Cl to00 00 ; m00dq 00000C0D 00 6; 00 0 -0 00'C11 t- C.000 6C0600 00 0 t- 000 000 000000- 6o > -:o6r . T-o6 mtoo4 CO 00 00 '0 C) 0 01 =N= 00000:0g0C00 0) 00C0 6 0 iq-t C0C 00 C~ 00 C 00 o 00 11LO0C) 0000 00 C6606 C)CD' 'rC40 00 C-00 00o0C 66 4 0 ' 00 C'Nc, 0 0 0 '0 '0) 0 Co E-4 0~ 1 10 00 1' 0' CO0 '00 '00 ''0) 0)8 0"0 00l) 0) 0 4-M 0)00)4 rc2 .,.4 1 ~0 '''0) C3II .,-I 0 '0)04)P a) C .- 4 '0) P4 0) C.) 0) '0 0' ''0 00)0 -e r" c P,5.P4 '0 5.4 0 in-g " %0 -. o 0 0 EXHIBITS COCO C) C CoCO1 (6o 6 6 C6 00 00 CI CD t6 e 06 L6 CCOD CO C1O0OCC COD -o r 00CD ceci CiO mC cq cq CO Ci C4 - C14 C O C C) CD 0C ) O CO> 0 o CO O CO o0 --t c)C 0 O 0 C C 0 CO e ci CO o 0 k co-,d4Cm 4 t-C-1C Co C C -CO CCO C OCD to cO 0 0 C CO COI CO CO ,ti4 o6 c- 6 COD 0 C CO N C 4 COC O C 6i 66 00 C6 0) C) 0 0 CO CO c- 0)0XO 00 O 0m D CO CO 6o 6 CO C- X6C 0 0 0 0 CO CO CO CO 00 0 00 o 0 CO co co r~0 CO CO C 0 co C OCO C00CO e6e L6C C6 0 COO 0 CO 0C 5"Ct-Z OCO 1 C M Co - O CO) Co> O C C 4 x r4 14 C-C CO Co CO Co0 N CO OO O C C COI-,CO CO CO cc C cc O CO O C CwrOC CO ?C-.C.CO 0 0COm 4 C6 "44 CO Co CON CO CO C&) C1C0 0 46 CO t6 mC CO I co C CmC t--CO -CO CO t,: 4 C t- OOI' CO CCI C) o C O CO m CO)0 iCO:0 C CO CO606 CC 0 14CO 0 O CO CO C CO COX COC1C6C OCCij COCO OC oC C 6O CO CO CO -O O 6 C c X0 CCO o 0 06 00 0C) )CO)6 6 66C)C) 6OX6 CO QC)OC11 o -.'4 4 0 6 CO 4:C1CO 1C Co CO c6 ; Co0 0 100 0 0 , 10 I 1:rn Ce C ce C3 C3 0 ce " 0CoC Cd o 'r.1 m Cd Q 0A Cd 0 Ce 0 425085-41-14 H E- C) 201 202 REPORT OF FEDERAL HOME LOAN BANK BOARD, 0 L6 =c = A C; CO4 t-OC) O1 6444 6 cooo 1941 i6 C14 0 r-4 C>I C) M 0 0 0caC 0 1 0) 1 t,6Ao6o O 0 0 C.) - co to00C 00LOC C L6 cO 6 k 0 = toco00 C C) 0 t-N0a 6 0 00 C 1 ) cli k- la r-4 0 0 (M00 =OC- 6D c 0 0 10 r-4 C)0 cc ka v-4 -: 6 occq 0 L0 C 00 0 0> C) co o1 "4 m 0 0 0 6iO MoI c0o 0c c0o 0c-;- oml oCOX At-:o6 00 o CO 0C0) c6 CO 0 00 0 )0 c0 0 t 6) "0 0 0 0 0 I0 0 0 0 00 C'0 l 0 0 c cc4 0q 0 0 r -40 - -ol6 0c c>Z 4 6 O 0 QO X6 C10COO 0 X0X0 C-C> c> Cko r) O c644 CO 0 O 0 O o co ci q m m o C 1 'sccQ k64t0m 0o00 0 4 0X000 co4 o 6o - 6 ~ 6c o AC6 ~0-~ coi 0) 6 6 0 0 00 0 co 0 £ H o t- o D C l cc QCo0 0 cc t 1 co 0 0 mO 0 0 0000t ko c 0 0 o CO0 fr~ ~ C u o C O'0 0000 t-:''0 0 L mi?--Ir-4 cc 'o-c 0 00-4 6C-4 0 OO 0 6 Nomoc 0 oco co q o~ A o 00COt t l- 0 C0c rctoo 00 0 0 C o X0~46 = t C X CI cli 0 Co Cl) 4 0 PQ cl CO 0 c$ 0 1, CO E-4 ml -S e0 CO Go 0j .0 *c + P- 4 0 PC4 AC' - CO 6 4-D (a) ril rn Le Pat' CO CO CO 0 H E-i 203 EXHIBITS &C) C cc6)6C 00C C)6 66 C C56 0 0 C)6 C)001 (0 00 C4 C6 coo C o 0 C) C o010m I- tCo LO CD 6> =C 0 CC o, r-C="6 6C6m m 0C 1;1 0 O 0 C) =O4o 00 CmCo mcfc CqCCC o co 0 C6 ec6 Co o C CC4 Co r( C CoCo0) o v 6 Co 1, o0 0 00o 'd; o CC 00 00 0 0 CCC)0 00 r-: 1:4 CO Co C Co CC CoCC -C 00-4 o Co CC- Co, - 4 0 o L6 o Z C Co0 CoOCo r,: co0cq 0 Co t-0 0 0I00 0 C mCC0 CD0 o C C 00 o0 a 0 toCC C00o 0) CD0 CC CC d4 o o C 00 o 00 Co C Q o6 oCC3 o 00 CC mCoco Co CC CoCC Com C 00 0- ~ o 6t6 -q" t C 0oC 00o 00 r.o 0 000 00 t- 6Co 66 0 0 6 Co 0 C6 C1-: Co 4 Co 0C 00 0 0I0 0 00Co r--4 Cq CCIo,C o 100 -4 66 O C CC) r.. C o00 o0 00 o mCo- 1Co C 0Q C0 30 Co C0 Co 0 rCo 6 C ci Co C Cw CC 0 0 Co 00 C 00 Co t- 00 C00o Co 0 600 o00 00o C 00 CC CC 00 00Q 00 00o o 0 6Co o006 66 Oo 6 'C) Co XCo Co 1Co C-ro LO 6 L6 6 00 0 66>00 6 C CC CC= CoCC 'CC 0 00 0 0m0CCQ0 g6 6 C)O o "10000 Co m 00 CCO o ~o 0 oCo)0 C c6ooo=o 0c0;0 0CC Co 6 ;6 Co 00 o <6 0 Co 6g - r 00 t- 0 0r- 6 Co Co Coo- 0*Co 0CC CC )oC C0 C0 0) C>oO) =C) Co Co 0 6 o Co 0CC CC q00 C ) to ~r C4, 6 00c)C)0 666fee66 Co C C6 r-z qlz 'CCOC) 66 ) CoO C0 4C4oC6 oo C) 0 Co Co C666 C; C0 0 0 CC 0CC C>CC 0 MCo ) "C Q M0 (M C6 COo C 6 )0 0CD 0 >00 o 6oCo 0qCC CCO .1 C), CC oi 0 1C CC Co Co Co CCoo CCr0-4C 00 )0C> CD0 0DCo)co 0 m c) L00 o Co CCoC -Co CoC) -OrICo o Co Co CC 0 QoC)0 C> 6C0 Co)Co 0CC CC~ O Coo c; c; OC)oC0 CC CN0m0 C66) C6M 0CC= C m TC oC o coo cc o Co 610 OT o C 00 00 C NCCCC C CC 656( 66(= C;6C 00( 10 C6C C6 I II i II II I i CO C '0 z Co-C 'C 4-5 0 '+~ 'CO rd6 ~ C) C 4 o 2 A M II2( MC(3. (vOC U4'Ag 0.C '59' (v C-C C1) Cq M C tC m 4116. CCo ~ CO 0 0 C 0 CCz Co~ $D0 0 C C w 204 REPORT OF FEDERAL HOME LOAN BANK BOARD, 00 o COO 0 oO 91. I co ^0 o0 o 0 0 I I It "o~ C)~ 6CD o II ~~o 00^ 00 0 0 0 t t0 C)c C)) 6o C) C) 0' co' C> D t C C ~0)o -D0 § a~a '§ 00,0 rcl a 0 000 0F: 0.. ^> O §D So 0N 00 0 00 0 00 00 O000 O w0bI0 () <0 0 0 0 LOS C i0 - CqYc 0 00 c 6 co 0 C Q co LO 0 La 0 X 00 m -1 cq xt 00 0 4o10 c Nd r COTC)O CO X0 0 O 0j 0C) 00 C) 0 0 C) 0-010 I C IO |[ 000 C) 0 co t4 00 t0-0 0Q e00600 IIt 0 000 00I 00 00 a2a '"o C)~ 0 l i r TIt.0 000 0 0 000 0 ~0 Cd 0C60 t 6 co 0|t it 00 cc 0-~ 00 0 tm 0 0 I>r0 00c 00 CO 0 '^3 0 -S 0 $00 .+ 00 h$ 00 00 s 00) ~ ~ b1& C-00 0 I ic 0 00 I,j 00 ?-q "00 00 t---r0 OTl 03 c 00 0 C34 ,oo 0 © t oI 1 ;.O 4 co 0 0 c O 00 00 0 00 0 01 00e 0 0 00 00 00 0 00 a0-0 00 C> C) C) 0 00 0 IOoN 0 xL 00 0 0 N 00)0 C)~ w C) oo0)a Co)00 00a,0 aa Q) &4,0 r8 g 511^ CasCOca Z1^00 0 .a,O c0 X W ,0 o N < I3 1jl '§ 6, C3 C0, ^ Q11e ii2^ p 0p0 0)0A ^oka acO S '0H^ ^*So aC caP<- 0 ogfFla akclll mIfl fl oii cr.C~ y r(0 0) CO~d ^S ^ba FSg'oiS w^U? kr§tr q)C O 1941 205 EXHIBITS EXHIBIT 19 FederalHome Loan Banks-Investment holdings at the close of the fiscal year 1941 Interest rate U. S. Treasury bonds: Mar. 15, 1956-46.-------June 15, 1947-43----.... Apr. 15, 1946-44 .--------Oct. 15, 1945-43 ..----. ..-Dec. 15, 1952-49-.... June 15, 1949-46.----Sept. 15, 1955-51.. ----June 15, 1948-46 ------Mar. 15, 1960-55 ----Dec. 15, 1965-60---..-June 15, 1963-58---------Sept. 15, 1959-56 ----June 15, 1954-51 ---------Mar. 15, 1951-48--------Sept. 15, 1947-45 -------.. Mar. 15, 1958-56- .--.Mar. 15, 1954-52.---.. Dec. 15, 1953-49 .------. Sept. 15, 1952-50.--.----. --Sept. 15, 1948----Dec. 15, 1945 --------June 15, 1956-54-.------. ---Dec. 15, 1953-51June 15, 1955-53---------Dec. 15, 1950-48 ..------Mar. 15, 1950-48 .--Dec. 15, 1947 - ---------- 334 3iV 34 34 32Y 3i 3 3 2% 24 2 24 24 24 2Y2 22 2Y 2Y 2Y 2% 2 2 2 Total------ Face value $200,000 200,000 850,000 150,000 300,000 900,000 140,000 1, 650,000 3,886, 000 2,875,000 1,000,000 838, 000 3,167,000 1, 295,000 1, 550,000 5,407, 200 4,140,000 4,300,000 3,050,000 200,000 300,000 1, 735, 000 600,000 500,000 1,080,000 1, 650,000 550, 000 42, 513,200 Interest rate U. S. Defense Savings bonds: Series F June 1, 1953-----Series G June 1, 1953 -Series G May 1, 1953------ Total__-------.-1 (Eq.) 200,000 200,000 100, 000 900,000 1, 295,000 1 600,000 1 150, 000 % 3,440,000 %4 450,000 34 1,635,000 250,000 14 9,220, 000 12 53 2 2 49,950 150,000 200, 000 Total---- 399,950 Total Treasury issues-Miscellaneous securities: Home Owners' Loan Cor poration bonds: May 1, 1952-44 --.July 1, 1944-42 .--.--June 1, 1947-45 ------- Total__-Federal Farm Mortgage Corporation bonds: May 15, 1949-44----------Commodity Credit Cor poration notes: Nov. 15, 1941 __---Reconstruction Finance Corporation notes: July 15, 1943---.......-. July 1, 1942 ----- .---- Total----- U. S. Housing Authority notes: Feb. 1, 1944 ---Total miscellaneous issues-------Grand total--..----- 3 24 5,200, 800 100, 000 1 _ __ _ ._ 18 1 Oct. 15, 1942 --------- Jan. 15, 1942 . 52,133,150 250, 000 400,800 1Y2 4, 550, 000 July 20, 1941----... U. S. Treasury notes: Dec. 15, 1942.. ---------Mar. 15, 1942------Dec. 15, 1941----------Dec. 15, 1943_ -June 15, 1943_Mar. 15, 1944 --..---Sept. 15, 1943---Dec. 15, 1945-- -_----Mar. 15, 1945.. ------Sept. 15, 1944------------June 15, 1944--------- Face value 200,000 930, 000 188,000 720, 000 1,800, 000 480,000 4,118,000 600, 000 10,218,800 62, 351,950 206 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 20 Federal Home Loan Banks-Statement of consolidated debentures outstanding, June 30, 1941 outstand- Series D, 2 per- Series G, /4 of 1 ing cent due Apr. percent due 1, 1943 Apr. 15, 1942 STotal Federal Home Loan Bank Boston -----------_ -------------New York ---------------------Pittsburgh -..----------- 0 0 $7, 500,000 Winston-Salem ----_ ---------Cincinnati ---------------------Indianapolis --------------Chicago------_ Des Moines ------------------------Little Rock _ -------Topeka--- -- -------- -- 0 0 $3, 500,000 3,250,000 2, 000, 000 1,500,000 5,000,000 0 1,000, 000 1,250, 000 75, 500,000 23, 500,000 14, 500,000 2, 500,000 7,250,000 21,000,000 11, 500,000 1,500, 000 Portland ----------------------------------------Los Angeles ------------------------------------Total_- 0 0 $4, 000,000 - 2, 500,000 2, 500,000 2, 500,000 3, 000,000 4,500,000 1, 500,000 12, 000, 000 0 4, 750, 000 18,000,000 7,000,000 0 1, 500,000 4,000, 000 52, 000, 000 EXHIBIT 21 Federal Home Loan Banks-Interest rates paid members on time deposits, as of July 1, 1941 Remaining over 90 days Federal Home Loan Bank Boston--------------New York ------------Pittsburgh------------------Winston-Salem_ ----Cincinnati---------------- --------- Percent 1Y -------- Indianapolis------------Chicago_ --------------Des Moines -------------------Little Rock --------------------Topeka --------------------------Portland_-----Los Angeles_------- ---- -------- - - $50,000 or 1 percent of assets. None. Do. $100,000. $100,000 or 5 times minimum stock requirements. Y2 None. Do. Do. No interest paid. Do. --------- ' One-half of l percent paid on deposits remaining 30 to 90 days. Limitation (greater of two) Y Do. None. 207 EXHIBITS 00oj 06o c0000C0 00~ 0000C C00 0)0- C4 lz :eciL6 00 z C 0 6 'N 'N 40; .-i p: t: 606 -: ":v00 0) t- X0 0) t- 0 o 'D m-0m 00 C) r .q = ltmL 0 -q00 o 00C9 cq 06C) N0 W.) 0 r-C 0.-I0 m 0 0-00tt-000 CO -q K 00 T-04 0 00 C 00-0 00 m 000000 o e 0000 00 oc o C-) 00 00 co m0c00000000 m - 00o 0006 ci w C6 ro -::i 0 114 00 00 m-00 00 C to 400 l 0 000-c0 '0 i 0 00000000 0 0 0 0 1-,t:,00~ 0-0C 00 0 ii 00 00 m,00 t 00 ccC oio C04 0 ,00 0 C- C- 4=00 0 00 00 0 00 0) 0 o w 1 -4 0 t-0 00 00 0000 cc0 = t00 M0-. 00Ctf00<D 00m 0- 0m 00= 0-1 000 0 1 000 000 I q 0-00 0000 0~0 t- 00 00 00 000000000- m6 6 00cq 0 0 00 t0000000 00 0 -000 k00 0 w 00I C-N0 mC 00r0400o00q0000 =0000060 000 0 00 0t00 0 0m00>LO00 0000000o 00 C 0m 00 0 w m 00 00 00000-00 0C6m6 0 0000 00 0 0 00 0 0) 0r ca 0 I et,:, 0 00 0000 -0 oo 000000-0--. 00000 4, 00 0 ~C, M 00 06 e66 o6 " 1 U, .- oI m 0000 m00 w0 0 00000X000o00 e06 4oa 0 0000r-q Cm 0000 00 10 0 C, 100'0 02 0 0 0~ 000) 0 0 0 '.4a"E (I,0t 0 4z + 00-6-'D -- 00 :0)(2 0 a) ra 'a0 r-000 044 0000loo : ce000 0) 00 e 00-i :00o 0 oO 0 00 00 z 4cg 0 0 S 0. 04 z 208 REPORT OF FEDERAL THOME LOAN BANK BOARD, cq 00 kf 0 0= 000000eo 00000 C1 IZ0;20t00 00 1r 00 C)00 00 00 6 (:: CC) 000000q 00- c 00 f': cc C) V-4 C) C) 02 oo0CD C> 00 c 0 O 10 1 C1 IA 6s 04 000m002 00 ( o N m00=0002 c 0000)000000 t oC - )00200 c 0 -c (M 0"-qC c000N0qNCq -i 0000'-444t- 00 0O010t- 0 c c 4N ti0000 0 C r 1-4 C21 10 C "vt0000000 C 00 -q 02 C)020 C)00 c00 c -f 00000000oi T1O o14rq0 14 0 cc 00 00LO 4 C0 1-4 0- 0 ) D: O 0 M N c o2 0042000C> x11 q:mt- CO C00000 00- 0 c 02 Cc CDM 000 0-0-0002==0 :v- 00MP0041 000w 02000cc I 00 00t~ C) Z0 z 000000= C> C) C) ) cc00-00 C)000 00 0200- m m0 00c0 c00000002C0000 C00 C00 00 = 00000 004 cii cli 0 -4 D Lo 00 000t C) LOC) 00 C) C) C) r-i C 00 00 C) C11 m IrD C600 06t, to 10 CDt- m = C5,06 -4 ke t-TV Itiq 69.C11 co C-1 o600 -q-,d, 02 ~02 02 000 Q 0 02 XO0 X000 t 0-0-0002000 Cjm 02 4-00 CN - c 19 41 209 EXHIBITS 0) 000 000 0000 C00 00 k5o6 m C11 00 o sI 6 aoo: 0 LO 101-01,1 00 00005L0 cq C) 00 000C C) ko 00() 10 000 C) cl 0 I 00 t-ci 000 c00 ~0q It 09 C90000 0) 000- C) 0 cc111:co 00 00 1-10000r-4 0000000 0 00000000 -00040- 00C)-IRV0 1-4000 00 0000 0 0 cc00 00000000L 0 00 0 t - 00-00m Co 00 C 00 0000000000. 00 0 C x0q c 1- 00 0 0-0 -0 CI0 0 )0 L0 -0 00 C>0 00 0:) 00-4 LO000CD 0 00 0000 00 00 tw0N CD 00 to0 c00 00 )00 00 00 to -00 c00 0 00 10 0 t00 m0 00 m00 =0 0000000 001 0 0-00-4000t-00C 064&cece C0e 0 0 00- U00 )00 00 .4-# 00 000 0 c 00 100c0 L00 0 0 0"00= 0 0L6 00 00c 00 C)0 I 0s0 00 00 o o 00o0 0C; 00. l000 t00 .1 t 00000Iq z -00 li000 0000 0 0 O m0 00z 00i 00 0 CD0 000-00o -0000t-0 0 I 00 C 0000000 =C 6 000 IzLCt-00t r-00 000000-C140m "i 140c 00 L 0 m00 0 0000l-o 00o 0m 0-I T0 000 c> 00o 00C)0000cc I00 C01 00 p 00 = 00 00 0II 0 LI0D0 m00 1100 0 00 00 00 00q 00c 00 cc 10 N 0 C) 000C 00-4 t1I.004 c> -, to O 04000t000m0 0o0000000t0-0000000 000= m000 cc LO .1 4 00C 0 00 "00 00 00U0I0m 0 0 000 0-V, 0 000 0 0 ce ' c'-1 0 00to 00 0 0 0 -0 00 0 0 1e 0 0 o '-0 " :C/I 0 ,,, 0( C00 h0 00 0 1o'c C~a) 0, 0 000 'm'm0 -4 ~00 o lC.0 C) C) g0~ 00 0 00 m 0 4 0 U /0) +Q 00r00 'PA p'So f C, 0W 4- S 00 0 m~ 0 0 -4 m00 00 00 00 E-1 00 44 0 o00 I ca 400 Q) 0 0 210 REPORT OF FEDERAL HOME LOAN eq r-4 = to 00 r--4 00C)to00 =0l0q - 00 0000)0C)0(M ?00-4 - 4-D 000 X64 00 a; co 00 =Rdi r4lke 0 iC0000 0 000000 BANK BOARD, 0000="t rI0000 C6Ldci 6 a; C C14 - '" cc~ k-CO O14 0 00 0C:m000 C0 00 40000 t- =00 0000 0 r' i, C Y C1 I t c) 0 Cr0 C) C) a) C> 00t C)0000f0000 C = CD 0l( C4 q m 000C0)0t- m0 k -m -C kmCc-00 0 1 01 m - 00 m HIT M0 000m000T-0040to 0000-4111 0-000 COt00CD0 0 004 z cc CDro o C00 N o 00 m - c1 0- coc 0 0z-c o 00 l dcq 400 0 W-40k-O v g00co00 00 00v m cc=r-4 I CDNoo00 V-1":v o CD000 =c o 00oco-I O 'oocor-4 1 o 0m u.0 C6 0ace e 000 00 00 z -00 00 0 0 p0a o 9! ol t1 C -IV00 00 a-zt:, 1 a -- 0000000M X0 Q -J r-4r- 0 - z C) P4 H 14 z- )00m000 00 00 00 00000Ct CD= 4= = 000004 0 X0 00 00 000 0 -0 0t-0C cic coo 0I-o Cq cel00 t- m LO0000 C>0->00 4 0000000000 c t00000P CqC1 o CD C14 X0 4 td C CC 1 04 0 k600: c>~0~ E71o~ o'.4 I00 00000000 -p0000qo H ~ o~ 00~~010p 0 ul Cd 00D MA m 'go En0 e C3 7500 0 () 000 Q0010 0o u 0- &,Op a 000 4ce 0 00 o H- 0 0010 o0 19 41 211 EXHIBITS EXHIBIT 23 Federal Home Loan Banks-Total dividends declared through June 30, 1941, and the annual rates paid semiannually for the fiscal years 1940 and 1941 Total declared through Total dividends dividendsdeclared through Federal Home Loan Bank U. S. Government subscription Members $1, 244,944.20 Boston ----2,328,824.27 New York ---.. ---1, 270,840.88 Pittsburgh Winston-Salem-._ 1,055, 559.45 -- 2,730,324.80 Cincinnatil-- -Indianapolis -----1,100, 695.34 Chicago ----2,402,420.28 Des Moines-----1, 073, 250.92 929, 016.47 Little Rock ------600,374.76 Topeka -. -----578, 084.59 Portland ------884,654.35 Los Angeles ------ $970,142.11 1,875,116.75 1, 057,037.39 787,989.29 1,866,929.67 805,195.59 1,909, 730.70 865,403.96 770, 614.62 496, 592. 56 498, 790. 88 700,850.61 $274,802 09 453,707.52 213,803.49 267, 570.16 863, 395.13 295,499.75 492,689.58 207,846 96 158,401 85 103, 782 20 79, 293.71 183,803.74 16, 198,990.31 12,604,394.13 3, 594,596.18-- Total------- Total SDividends are usually declared on a calendar-year basis. Fiscal year 1940 Fiscal year 1941 July 1 to Dec. 31, 1939 Jan. 1 to June 30, 1940 July 1 to Dec. 31, 1940 Jan. 1 to June 30, 1941 Percent Percent Percent Percent 1 1 1 1 1 12 1 1% 1 1 1% 1% 1 1 (1) (1) 1 1 1 1% 1 1 1 1 1 1 1 1 114 1Y 2 1% 1 1 1 1 1 1 (1) (1) 1 1Y 1Y 1% 1 1 1 1 212 f REPORT OF FEDERAL HOME LOAN BANK BOARD, Y ^E3 < h < c <o 03 t 111 fleq H 1 h CO ?S Fg CO E CO rt 9) t^ 1941 213 EXHIBITS 00C 00Co'000t C:6 0Co4 CO 4)0 664A66 00000400-4 c) c) o6 0 C0 X0CiO0~ 60C) (M66 Le F" o r4 CqoC C cq Co4 o P-4 C> 00 D C oo C6c Ia00) N Co 0 C COC>m co cqC4o o--4 to 00 C) C00m 0 C)00) CmCo 0t o A 0 0- o VDCo Co CoOt- 0 -C r0000 0000 t-~ -CO ~ O 40 o o0 00 m co 4- CCo 4=cq C000to0C too 00D Loo __ __ 4t- 1_ 6 CO o 1TV'=0mt00m o 000=0m04 00 0 00 cCDCzoro4 00 000000 m m Ct- 00 mCo ) '00 T Co m4' m '0 Co C.6 6 o64Co-00 o6 6 000 i6 ~ Co0 r" 00 00 .100o., 'o 0 6 0 Co'0 C'-0 04C> D 0o 000M OCOCICo 0Co 4C6o Co Co 0Coo 6o CcO 0o~0 6 cO 4 00 6 Co 00 cri r" c0 ) 'Co P-4 Fd t,: co C ' l0 C 0 C0CM 0-oC-O 0 oC C "to000000 Co C '0 CO C4 C) ' o r'6o li 0 oo 6 "t-cor C366 o m Co oC Co m o o '04000040 co 400 . SWo o 0 ril co 4 c6 =0 4 'LO IC"C" 4CO CO Co1 4Co Q NCNo=ooC X0CoX C! o ~ Co CO 00 ~ - 66C4 l 6 r4Co tC C C 0 0000 00IRV Co0010 m) Co - O _ 4A cq 0c'-4 Co 000r44D m C1C00 11 C CDC CD 0X0 C X0 '04 co OCm o oC co 00 CO Co o6 o66o6 C CD W w0000to400 '-4CON0'- ?--4 CY6 COO a0)0 0 o '06 Co00 Co 4'" C Co C 214 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 25 Distribution of net income of the FederalHome Loan Banks for the fiscal year ended June 30, 1941 Amount Amount to Percent ta total Allocation to reserves: To legal reserves---------------To reserve for contingencies- _--------------------- Total to reserves ...--- -------------------- $739,236 62 599, 755.22 20.0 16.2 1,338,991.84 36.2 1,421,058.14 505,168.85 38.4 13.7 1,926, 226.99 52.1 Dividends paid United States Government ----------------------Members ------------- Total dividends paid ..-----------------Balance to undivided profits- .. ----------- --------------- Total net income (consolidated) ------- ------ 430,964.08 11.7 3, 696,182.91 100.0 EXHIBIT 26 Federal Home Loan Bank Board-Statement of receipts and disbursements of the Board for the fiscal years 1940 and 1941 July 1, 1939, to June 30, 1940 Balance at beginning of fiscal year ...--.-.- --------------- Receipts: Assessments upon: 1 Federal Home Loan Banks ---------------Home Owners' Loan Corporation --------Federal Savings and Loan Insurance Corporation -Examining receiptsMiscellaneous refunds -----------Receipts from sales of property_---------------Total receipts - ------------------- Total cash and receipts --------------- $238,425.11 $352,671.00 450,000 00 152,458.99 118,293.82 675,065 03 447.54 509.85 150,000.00 129,442.40 92,841.38 841,879.13 1,526.19 1,396,775.23 1, 215,689.10 1, 635, 200.34 1, 568,360.10 Disbursements: Salaries------------------------------1,005,447.68 Supplies and materials---------12,601.73 Newspapers and periodicals_------96.18 Communications -------------------------------23,208.66 Travel---..-..-------------.----------171,799.94 Transportation of things----------614.30 Printing and binding_ -__ ------------16,261.20 Photographing and duplicating ---------14,910.89 Rents ---------------------------------------23,667.02 Equipment, furniture, and fixtures ------11,021.74 Transferred to administrative expenses: Federal Loan Agency----------2, 900. 00 Treasury Department--------------------Total disbursements-----------------------------------------Balance at end of fiscal year ..------------ - -------------- 1,034,851.67 9,380.46 78.68 24,037.43 183,763.71 546.98 17,344.95 19,127.72 24,675.93 6,393.55 5, 800. 00 -2,400.00 1, 282, 529.34 1,328,401.08 352, 671.00 239,959.02 1 Includes assessment made in advance of $150,000 for the period July 1 to Dec. 31, 1940. July 1, 1940, to June 30, 1941 215 EXHIBITS EXHIBIT 27 Federal Home Loan Bank Board-Comparative statement reflecting, by ofices, the number of Board employees as of the close of the fiscal years 1940 and 1941 1940 Offices of the Board Members-. Office of the GovernorGovernor's immediate office-----Office of the Comptroller -------Office of the Chief Supervisor---Federal Home Building Service Section ----Total, Governor's Office---Office of the Secretary----_ Office of Public Relations.----------- 1941 1940 Division of Research and StatisticsLegal Department-----------Review Committee-------- 1941 10 11 10 13 14 12 8 233 9 295 11 11 11 34 26 12 37 27 20 5 91 81 Total, Examining Division ---- 241 304 16 6 15 10 Grand total 396 460 Examining Division Washington office---------------Field.- _____- ------------ EXHIBIT 28 Federal Home Loan Bank System--Members of the Federal Savings and Loan Advisory Council, as of June SO, 1941 Federal Home Loan Bank District Name Sumner W. Johnson -----------Boston----------New York ---------------LeGrande W. Pellett ----------Do--------------------------------Lucius R. Eastman------------J. J. O'Malley_----------Pittsburgh ------------Winston-Salem ------ George W. West_-------------Do ---------------------W. Waverly Taylor----------Cincinnati-------------H. F. Cellarius -------------Do----------------R. P. Dietzman-------------Indianapolis -------------- F. S. Cannon ---------Chicago --------------------------------W. E. Hodnett ---------------Do----------------H. G. Zander. Jr --------Des Moines--------------John F. Scott_-----------Do--C. B. Robbins_--------Little Rock--------------------------I. Friedlander Topeka----------------George E. McKmnis_ -----Portland-------------------------------Ben H. Hazen ------Do--------------------------B. A. Perham_-----Los Angeles----------------- Harold A. Noble--------------- Electedorap pointed Elected. Do. Appointed. Elected. Do. Appointed. Elected. Appointed. Elected. Do. Appointed. Elected. Appointed. Elected. Do. Do. - Appointed. Elected. 216 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 29 Federal Home Loan Bank System-Number and estimated assets of member insti tutions, June 30, 1940, and June 30, 1941 of members me er Number Number of Assets of members [In thousands of dollars] Bank District and State 1940 United States --- -------- ---- No. 1-Boston ------.------------------------ Connecticut .-----..------------------- 1941 1940 1941 3, 914 3,839 4, 927,154 5, 287,175 221 223 698,228 774,547 48 48 93,325 105, 122 -------------------------- 22 125 23 124 18,951 515,013 ' 19,671 532,011 Rhode Island -----------------------------Vermont------------------------------------- 17 4 5 19 5 4 35,872 30, 326 4,741 73,159 39, 383 5,201 413 391 457, 506 481, 294 289 124 267 124 179, 257 278, 249 176, 359 304, 935 541 503 261,976 276,792 7 503 31 7 467 29 2,647 237,891 21, 438 2,893 250,769 23, 130 409 626,891 672,048 23 21 50 56 65 115 43 36 34,064 135,791 72,352 36,750 63,336 211, 431 32,739 40,428 18,621 152,349 86,755 44,853 74,702 207,895 38,527 48,346 590 584 891,073 906,936 96 452 42 94 450 40 97,712 721,676 71,685 101,026 768,530 37,380 215 217 274,096 298,116 158 57 159 58 163,827 110,269 177,388 120, 728 462 455 425,528 464, 412 345 341 292, 621 333, 995 117 114 132, 907 130, 417 240 244 223, 536 249, 686 69 39 107 13 12 70 42 107 13 12 47, 539 57, 270 98,070 10,51510,142 53, 441 70, 382 103,528 11,768 10,567 284 281 357, 589 365, 193 41 41 18,576 20,790 67 67 94,806 100,007) 14 133 5,941 215,706 6,653 213,108 Maine---------- Massachusetts-------New Hampshire -------------No. 2-New York ------------- New Jersey ---------------------------------- New York---------------------------------No. 3-Pittsburgh---------- ----------- Delaware ..---- ----------------Pennsylvania .---------------------West Virginia------------------------------- No. 4-Winston-Salem--- __-------- Alabama -------. District of Columbia 413 .------------------------------- ---..---------Fforida. Georgia----------------Maryland -------------------------------North Carolina----------------South Carolina -------------------------------Virginia --No. 5-Cincinnati _------ Kentucky----------------------------------Ohio -------------------------Tennessee ---------------------No. 6-Indianapolis_------ Indiana.------------------------------------Michigan----------------------------------No. 7-Chicago --.---------------------Illinois--.-- -------------------- Wisconsin ------------------------------------.. No. 8-Des Moines ---..----- -- --- - Iowa----- ---------------------Minnesota ---------------------------------. _-------------Missouri----North Dakota----------------------South Dakota --------------------No. 9-Little Rock--- - -------- ---------------------Arkansas....--Louisiana .--------- -------------------.------------------------Mississippi ..-- New Mexico ------------------------------- Texas..--_----------------------------- 23 20 51 56 69 117 43 34 26 14 136 ' 26 22,560 24,635 217 EXHIBITS EXHIBIT 29-Continued Federal Home Loan Bank System-Number and estimated assets of member insti tutions, June 30, 1940, and June 30, 1941-Continued Number of members u ber of members "Assets of members In thousands of dollars] Bank District and State 1940 No. 10-Topeka ----------- -------------- Colorado -------------------------Kansas -----------------------------------------Nebraska-----------------Oklahoma ---.----------------------No. 11-Portland . ..------- -..------- --Idaho-..------------------------Montana -------------------------------Oregon ..._--------.------Utah ___. _--------.----------Washington-------------------------Wyoming ..---------------------------Alaska .-----------------------No. 12-Los Angeles -------------------------- Arizona------------------------------California ----- -----------------------Nevada-----.-----------------------Hawaii _------------------------. 1941 1940 1941 230 226 202, 773 220,973 39 103 34 54 39 101 33 53 31, 556 59, 583 50, 778 60, 856 34,997 63,125 54,492 68, 359 133 133 146, 919 168, 502 8 13 30 10 61 10 1 8 13 29 10 62 10 1 7,801 10, 646 32, 658 15, 520 74, 719 5, 303 272 8,435 11, 688 37, 056 18,152 86, 787 5, 938 446 172 173 361,039 408,676 3 162 3 4 3 164 2 4 4, 230 352, 324 794 3, 691 5,578 397, 533 885 4, 680 EXHIBIT 30 FederalHome Loan Bank System-Member savings and loan associations compared with all operating savings and loan associations Item Number of operating savings and loan associations --Number of member associations----------------------Same, proportion to total (percent) ------Assets of operating savings and loan associations (thousands of dollars) -----Assets of member associations (thousands of dollars)___ Same, proportion to total (percent)- ----First mortgage loans held by operating savings and loan associations (thousands of dollars) __ First mortgage loans held by member associations (thousands of dollars) --------Same, proportion to total (percent) ---------Loans made during year by all savings and loan asso ciations (thousands of dollars) -------Loans made during year by member associations (thousands of dollars) ---------------Same, proportion to total (percent) --1 Preliminary estimate. 425085-41-15 1937 1938 1939 1940 8, 870 3, 895 43. 91 8, 289 3, 903 47.09 7, 719 3,870 50 14 i 7, 200 3,824 53.11 $5, 600, 408 3, 565, 731 63. 67 $5, 543,099 3, 786, 636 68. 31 $5, 524, 337 4, 053, 692 73 38 $5, 700, 000 4,425, 565 77. 64 $3, 841,880 $3, 907, 581 $4, 077,161 $4, 400,000 2, 583, 286 67. 24 2, 792, 720 71. 47 3,107, 387 76 21 3, 495, 884 79.45 $896, 579 $797, 996 $986, 383 $1,199, 579 686, 564 76. 58 620,369 77. 74 796, 378 80. 74 993, 212 82. 80 218 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 31 Estimated volume of new mortgage loans made by savings and loan associations, by type of association, January 1936 through June 1941 Year and month V Federal associations 1936 January ------February --------------March_---------April..------------------------. May.------June _--- ----------July ---------August------ -September -- ---October --------November ----------December --1937 January ---- --February -----------March-----------April ----------------May--- --------------------------June--------------July ---- August -----September ------------October-------------November ------------------December - -----------1938 January -------February -----------------------March ----------------April -------May ------------June------------July ------------_ August------September -----------October -----------November ------December -----------1939 January -----February-------------March-----------------April --------------------- _May.- -------------------June.---------------------July ---------------------August_------September -------- -October -- -----November ----------------. ----December ------- - State member associations Nonmember associations Total $11,764,000 12,105,000 15,310,000 17,740,000 18,966, 000 21,247,000 21,491, 000 21,571,000 22, 500, 000 23,914,000 19,771,000 22,517,000 $18,434, 000 17,055,000 22,180,000 28,597,000 28,166,000 29,197,000 27,898, 000 26,773,000 26, 761, 000 30,864,000 26,344,000 27, 252,000 $12,593,000 16,156,000 20,381,000 17,915,000 19,945,000 17,858,000 18, 507,000 18,864, 000 19, 652, 000 21,743,000 17, 200, 000 15, 766, 000 $42, 791, 000 45, 316, 000 57,871,000 64,252,000 67, 077, 000 68, 302, 000 67, 896, 000 67, 208,000 68, 913,000 76,521,000 63, 315, 000 65, 535, 000 17,543,000 19,360,000 27,829,000 32,915,000 30,998,000 31, 577,000 28,693, 000 26,768,000 26,189,000 24,539, 000 20,829,000 20, 038, 000 20,729,000 24,594,000 32,177,000 37, 395,000 39, 288,000 39,965,000 35, 758,000 32,334,000 33,307,000 32,104,000 27,113, 000 24,522, 000 15, 595, 000 12, 781, 000 17, 208,000 19, 290,000 19, 046, 000 20, 669,000 17, 783,000 17,915,000 18,818,000 18,813,000 16, 561, 000 15, 536, 000 53, 867, 000 56, 735,000 77, 214,000 89, 600, 000 89,332,000 92, 211,000 82, 234, 000 77, 017,000 78, 314, 000 75,456, 000 64, 503, 000 60, 096,000 16,781,000 17,520,000 23,356,000 26,107, 000 24,721,000 26,310,000 23,823,000 26,858,000 25, 650,000 26,534,000 24, 220,000 25,019, 000 20,879,000 22,073,000 27,835,000 30, 238,000 31,196, 000 30,350,000 28,973, 000 29, 506,000 29, 255,000 30, 546, 000 26,115,000 26,504, 000 11,442,000 10,500,000 14,027,000 16,962,000 16,362,000 16,407,000 14,843,000 18,345,000 16,742, 000 15,851,000 13, 735,000 12,411,000 49,102,000 50, 093, 000 65, 218, 000 73, 307, 000 72, 279, 000 73, 067, 000 67, 639, 000 74, 709, 000 71, 647, 000 72, 931, 000 64, 070, 000 63, 934, 000 20,894,000 22, 298, 000 29,811,000 33,400,000 36,358, 000 23, 071,000 24,191,000 30,124,000 32, 562,000 35,426,000 11,602, 000 11,820, 000 13,443, 000 17,463,000 17,339,000 55, 567, 000 58, 309, 000 73, 378, 000 83, 425, 000 89,123, 000 39,094,000 34.055,000 40,645,000 37, 090, 000 37,854,000 34,785,000 34, 053, 000 36,465,000 34,146,000 37, 340,000 36,989,000 37,847,000 34,671,000 33, 209, 000 18, 595,000 16,971,000 17,053, 000 15,653,000 17,596, 000 16,620, 000 15,850,000 94,154, 000 85,172, 000 95, 038, 000 89, 732,000 93, 297, 000 86, 076, 000 83,112, 000 28, 008,000 29,786,000 38, 241,000 46,577,000 49,287,000 47,435,000 48,676,000 50,305,000 46,480, 000 48,307,000 38,896, 000 37,715,000 25,737,000 28,941,000 36,484,000 43,015,000 45,803,000 42, 214,000 45,414,000 46,807,000 45,988, 000 46,224,000 40,143,000 36,729,000 13,199,000 12,795,000 15,643,000 18,409,000 19,452, 000 17,335,000 20,211,000 20,510,000 19,307,000 19,869,000 15, 528,000 14,109, 000 66, 944,000 71, 522,000 90,368, 000 108,001,000 114,542,000 106, 984, 000 114,301,000 117,622,000 111, 775, 000 114,400,000 94, 567,000 88, 553, 000 34,360,000 35,645, 000 45,365,000 51,371,000 55,396,000 57, 542, 000 33,947, 000 35,301,000 43,947,000 50,956,000 54,495,000 54, 857, 000 12, 133, 000 11,384,000 15,850,000 18,304, 000 21,062,000 21, 241, 000 80, 440,000 82,330,000 105,162, 000 120, 631, 000 130,953,000 133, 640, 000 1940 January..--------------------- ----------------February --- ,March --------April------------------------May ------June ---- - ---------------July_-----------August---------September ---------October---------November---------------------December ---------------- - 1941 January-- --------------February ----March -----------April_ ------------May_ -- --June------------------------ - 219 EXHIBITS EXHIBIT 32 Estimated volume of new mortgage loans made by all savings and loan associations during the fiscal years 1940 and 1941, by Federal Home Loan Bank Districts United StatesNo. No. No. No. No. No. No. No. No. No. No. No. ___----------------- 1941 $1,090, 788,000 $1,294, 374,000 1S.7 101,181,000 101,154,000 84, 852, 000 160, 306,000 176, 305,000 55, 763,000 111,260,000 69,228,000 57,860,000 50,133,000 38, 963,000 83, 783,000 131, 528,000 129,220,000 100,020,000 181,808,000 220, 634,000 67, 625, 000 130,861,000 71, 721,000 61,898,000 52, 395,000 45, 742,000 100,922,000 30 0 27. 7 17.9 13.4 25.1 21.3 17. 6 3.6 7.0 4 5 17.4 20. 5 1-Boston--...----.---.-------------------------------2-New York -------------3-Pittsburgh-. ------.--------.... -4-Winston-Salem ___------.-------------5-Cincinnati_ .. _..---------6-Indianapolis ------------------------7-Chicago .-----_------------------------------------8-Des Moines-----9-Little Rock ......-----------------.------------10-Topeka ....------11-Portland.....-------.-----------------12-Los Angeles ....---------.---------.------- Percent ncreae 1940 Bank District 220 REPORT OF FEDERAL HOME LOAN BANK BOARD, (M'00 c00 00m '0000 qc0 404 4) z5 40 ='M'''''004 c 12)4 0 '''''f 4 P44 00 '0 0 4 C4) 4 C) p4 Q 0 40 '4to00 00m C) '4 0 '4 0 I rn(=)(> 0 0 *c3 '4 o '4 0 4z - M -q'4X '00 0t0400 e 0 000c r 0' = eq )4=+) I" 4)0 C)000C0 '4 4) 0 4) 0 0D I m ,0 4) (1)% 4 o4-C) 4o r-4r- r4 " C) '0 P.4cccc' ' IIm 00 t- I ;>404400 0-q(M cooooc; ,0 r2 '4 C000000 OD e~ co040 cs 0s '4 00 '4 0000 0e k ~0000~ C)000000 '4 4)10 ce '000000 %-4 6o4. 4 r04000 P4 0 0 ''000 6.4E '40044o4m I00 0 $44) -4()0( 00 Q4 co ro44' ce l000000 00 0 0 00m e&4 -d4 4 4"4 C c ro 4- 40 c0 Q m COm O 0 '4 ,-PC)tocqrd04'1=$4 0O4) 4-' 4) 4) Q ~ ~ - 4Z (3 C44C0 C) 0 -40 4m4- oc> o444,4 (:3 ce 4E-4 14 F44 440404'- 00040,-) 00000000 0 z4 1941 221 EXHIBITS COk'" o koOoOoo O -4 oCoCoCOCoCoCOC-COCOCoCOCOCO CoCoCOCo Co COCo Co Co CoCOCo CoC CO .CO CO CoCoCoCoCoC-COCoCoCOCOCoCo Co wo m D o t u0 0 ~CO~0iCo~ Co Co Co Co Co0 "- 4-o &4CC L I II I I ~ C Co4COOr-4 CoO CO-CoNCo-Co Co1 COo d oooOq CCoo ceCD 4-'C e06eo c, ,c mCo cezCoj Co Co Co- m~COCO LO CoCCOoooC4 oC C 4 C 6,4 C I CoCOCOt- Co-C-Co C t- Co Cor-CoOCO=Co Co oX C-L C CO CO CDCOr-4 -. Co4CoCOOa q -Co Co Co -4-CCO CoCMoC CC COC-C woC oCC C - CoCoOC Co - Co - CoC Co Co Co CCcqC~ CDo c mt-11-rI r-o C q 0Cq o CC C CO boC0 I caC m~C -- - - - - - - - - - CO mCo = =o00 (C C Co 0 X' X 0 ce Co ce CoMO 0Or-4-t- 00 0 CrO 0 wo N N Co - ro- 0 o oro4 o oCo CLOC -Co C-oooo CoCCq C-0 O C- o"otCO "ZoCS Co P4 CCWCo ~~~ooo~~~C4,o r4 C 1t o6' -4C C.o 0 P- 5 o o 14t Co4o-4CCOONCOO Co~~~~~~~o rCO o C o kaC Cq OC~o a qC) co c14 -4 C110 0 t o CO cc LoOOCoq C C OoOoO CCo H 0 CoO-Co4ComCo r- CoCoqCoO=Co Co Co CCO"Coo Co=CoCo4Co C C6 CoC oC CO C oC Co C -4 o oMO Co CoCoCo oo t-Co=o(m =Coq C 16 OC 0 Co Co Co4 0 C r.4 k 0.- 2. 0.Q 5c I 00 oo C6 cc CC Qo mC = N oNM t-ON t N0 OCIOO4 0No mC==ONc-c 0 t-NoN 0 k~t CZS, 04 ,=4 AC2 -!9 ca oo o o o e)t ( o - Coo ko aOoC Co4NC-Cmrocc( oCo00m CoM 14= O~toC oo +- 0 MC Ea :::U) ;> t8 nC S z CC E- 222 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 35 Percentage distribution of balance-sheet items for all savings and loan member insti tutions of the Federal Home Loan Bank System, as of Dec. 31, 1939, and Dec. 31, 1940 [Percentage ratio to total assets] State-chartered insured sav ings and loan associations savings Federal savings All All savings and and and loan loan members associations Item ------ 7-- - --- ;----I - 1940 1939 State-chartered uninsured sav ings and loan associations 1939 1940 1940 1939 1939 -------- I------------I ---------I----------I Number of institutions ---- 3,818 3,868 1,400 1,433 1940 I 795 835 1,673 1, 550 ASSETS First mortgage loans (including in terest and advances)---------- Junior mortgage liens (including in terest and advances) ..---------... Other loans (including share loans) Real estate sold on contract ------Real estate owned-----------------Federal Home Loan Bank stock -- Percent Percent Percent Percent Percent Percent Percent Percent 81.52 83.21 74. 67 76.76 79.25 76.99 73.16 75.90 .12 .71 3.84 9.30 .99 Other investments (including ac crued interest)----------1.72 Cash on hand and in banks .------- 5.09 Office building (net) ------1.10 Furniture, fixtures, and equipment (net)-----------.10 --------Other assets------------------.27 Total assets ---- -- 100.00 I .09 .68 3.79 6.80 .99 .05 .41 3.46 5.70 1.09 .04 .38 3.23 4.14 1 07 .12 .53 4 88 9 61 1.00 .10 .53 4.87 7.19 .99 .18 1.12 3 59 12 81 .87 .14 1.15 3.73 9.85 .87 1.55 5.50 1.05 .83 5.58 1.10 .69 5.99 1.02 1.96 5.48 1.32 1.96 5.79 1.22 2.49 4.37 .97 2.35 4.67 .97 .12 .31 .12 .24 .10 .20 I .13 .13 I 100.00 100.00 .13 .10 I---------I 100.00 100.00 100.00 I I - .06 .38 I .06 .31 I 100.00 100.00 ' I LIABILITIES AND CAPITAL U. S. Government investment (shares and deposits) ---------Private repurchasable shares-----Mortgage pledged shares ---------Deposits and investment certificates_ Advances from Federal Home Loan Banks _____-----Other borrowed money --------Loans in process-------------Other liabilities Capital, permanent reserve, or guar 6.17 67.43 4.11 7.20 5.00 69 57 3 31 6 96 13.21 70 81 .88 .02 9 69 74 45 .52 .02 4.43 58.12 2.41 17.52 3.73 60. 28 1.83 16 82 .02 69.58 8.42 8.32 .01 70.04 7.84 8.67 4.49 .44 1.12 1.09 4.54 .38 1.42 1.13 6.72 .31 1 78 1.15 6.79 .26 2.06 1.13 4.23 .42 1 19 1.34 4.19 .40 1.50 1.38 2.36 .58 .40 .89 1.96 .52 .58 .94 Specific reserves..---------------General reserves -----------------Undivided profits--------- .63 .28 4.89 2.15 .58 .22 4.49 2.40 .00 .26 3.27 1.59 .00 21 3.15 1.72 2 20 .33 5.63 2.18 2.00 -26 5 41 2.20 .34 .26 6.11 2.72 .32 .20 5.52 3.40 - - Total liabilities and capital-- 100.00 100.00 anty stock ---------------- I - 100.00 I - 100 00 I - 100.00 Source: Division of Research and Statistics, Federal Home Loan Bank Board. I - 100.00 I - 100.00 I 100.00 223 EXHIBITS EXHIBIT 36 Operating ratios for reporting savings and loan member institutions of the Federal Home Loan Bank System, for the calendar years 1939 and 1940 Percentage ratio to gross operating income Item Federal savings Insured State Uninsured State and loan as chartered mem chartered mem ber associations ber associations sociations Total -- Number of institutions reporting_ - I - -I 1- 1939 1940 1939 1940 3,110 3,508 1,384 1,428 1939 642 1940 772 -- 1939 1,084 1940 1,308 GROSS OPERATING INCOME Interest: On mortgage loans - ordinary Percent Percent PerrentPercent Percent Percent PercentPercent 85.23 85.04 86 23 88.06 82 28 86.19 84.35 85. 98 cash collections-------------.92 .51 .92 .99 .56 .99 1.03 .31 On mortgage loans-all other passbooks, on shares, On loans and certificates-------- On real estate sold on contract_On investments and bank de posits_---....-------------Other .---.------------------Premiums or commissions on loans (current installments and amortized only) __...Appraisal fees, legal fees, and initial service charges_-.-----. Other fees and fines..---------Net income or loss from real es tate owned --------Gross income from office build ing_--------------------Dividends on stock in Federal Home Loan Bank-......... Other dividends_---------Miscellaneous operating income_ Gross operating income------ .62 3 79 .32 4 05 .30 3 81 .28 3.67 .39 5.29 .31 5.40 1.17 2.76 .37 3.58 1.10 .25 .93 .33 .66 .11 .42 .12 1.50 .39 1.14 .36 1 38 .33 1.46 .59 1 19 1.28 1 47 1.33 .96 1.03 1.01 1.40 1 44 .60 1 58 .59 2.18 .41 2 43 .39 1 42 .54 1 36 .46 .53 .88 .61 .93 3 00 2.44 1 99 1.40 4 41 3.04 3 29 3.43 1.09 1.12 1.13 1.01 1.04 1.24 1.08 1.17 .24 .05 .41 .19 .04 .38 .26 .03 39 .20 .02 .36 .24 .06 .56 .19 .07 .54 .21 .07 .32 .17 .04 .29 100.00 100.00 100.00 100 00 100.00 100.00 100.00 100.00 12.61 .35 12.60 .26 13 29 .22 13 11 .24 13 84 .73 13 69 .35 10.97 .24 11 15 .21 .54 .53 .55 .48 .68 .63 .45 .51 .27 1.51 .28 1.47 .34 1.77 .36 1.64 .34 1.52 .33 1.52 .12 1.18 .14 1.20 .98 .52 1.02 .53 1.03 .44 .99 .44 1.05 .67 1.19 .71 .88 .53 .95 .54 .47 2.12 .47 2.12 .64 3.01 .62 2.92 .47 2.11 .51 2.15 .25 1.00 .23 1.03 .75 .76 .85 .83 .80 .85 .58 .60 .53 .50 .53 .62 .64 .56 .63 .56 .59 .59 .58 .60 .36 .36 .34 .71 1.30 .30 1.33 .30 1.98 .22 1.97 .19 1.96 .25 1.99 .29 .00 .42 .01 .44 .42 .23 2.53 .42 .24 2.70 .45 .29 2.14 .41 .29 2 42 .64 .24 2.89 .66 .26 3.30 .25 .14 2.77 .27 .15 2 65 25.93 26.18 28 42 28.10 29.37 29.61 20.50 21 13 74 07 73.82 71.58 71.90 70.63 70.39 79.50 78.87 LESS OPERATING EXPENSES Compensation to directors, officers, --------------employees, etc Collection expense (agents, etc.) -Legal services-retainer, traveling expense and special services.....-Expense accounts of directors, offi cers, and employees-------Rent, light, heat, etc_---------Repairs, taxes, and maintenance of office building __--------_ Depreciation of office building.----Furniture, fixtures, and equipment, including depreciation ----__----Advertising __ Stationery, printing, and office sup plies-------------------------- Telegraph, telephone, postage, and express---------------------Insurance and bond premiums ---- Federal insurance premium (if in sured)---------------------------Audit-_--------------Supervising examinations and as sessments....--------------Organization dues- .-------_. Other operating expense ---------Total operating expense- -- Net operating income before interest and other charges ------ 224 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 36-Continued Operating ratios for reporting savings and loan member institutions of the Federal Home Loan Bank System, for the calendar years 1939 and 1940-Continued I Percentage ratio to gross operating income Item Federal savings Insured State- Uninsured State and loan aschartered mem- chartered mem sociations ber associations ber associations Total 1939 1940 1939 1940 1939 1940 1939 1940 LESS INTEREST CHARGES On deposits, investment certificates, etc--------------- On advances from Federal Home Loan Bank- ___.. _.- ________.-On borrowed money-------Total interest _------------Net operating income ..----------- Percent Percent Percent Percent Percent Percent Percent Percent 5.07 4.44 0 04 0.09 12 11 10.88 6 61 5 46 2.42 .26 2 02 .21 3.42 .11 2 83 .11 2.31 30 1.87 .29 1.24 .43 1.05 .30 7.75 6 67 3 57 3.03 14.72 13 04 8 28 6.81 66 32 67.15 68 01 68 87 55 91 57.35 71 22 72 06 .17 1 59 33 .19 1.56 .20 02 1 70 .41 .01 1.42 .19 .19 2 06 .30 .15 2.07 .23 33 1 16 .25 .44 1 38 .20 .64 .39 .26 2 59 2 34 2 40 1.97 3 65 3 09 2 13 2.28 68 91 69 49 70 41 70.84 59 56 60.44 73.35 74.34 15 1.44 .07 .80 .15 1.49 .08 .82 .11 1 46 .08 63 .14 1.31 .04 .56 25 1.54 08 .74 .23 2 07 .19 .96 .15 1.34 .04 1.06 .10 1.31 06 1 06 ADD NONOPERATING INCOME Dividends retained on repurchases and withdrawals--------Profit on sale of real estate .------Profit on sale of investments -----Other nonoperating income ------Total nonoperating income -Net income after interest and before charges-------------- .50 .39 .27 .35 1 10 LESS NONOPERATING CHARGES Foreclosure costs and back taxes on real estate acquired (unless capi talized or charged to reserves) -Loss on sale of real estate .-------Loss on sale of investments.-----Other nonoperating charges ------Total nonoperating charges -Net income for the year ---------- 2 46 2 54 2 28 2.05 2.61 3 45 2.59 2 53 66.45 66.95 68.13 68 79 56 95 56 99 70 76 71.81 .00 7.54 .00 .03 5.47 .05 5.18 2.28 1.35 74. 67 10.97 Percentage ratio to net income LESS TRANSFERS FOR RESERVES AND DIVIDENDS --For bonus on shares----Legal reserves------------------Federal insurance reserve.------.-For contingencies---------Real-estate reserve --------Other reserves-------------Dividends----------------------- Balance to undivided profits..----- .11 4.53 3.45 4.69 1.39 1.44 75. 54 8 85 .11 2.95 3.92 6.07 1.61 .83 73.50 11.01 .23 1.56 5.60 .20 .27 5.97 .07 .07 5.56 4.48 5.04 6.11 5.66 7.13 3.73 5.29 4.03 1.14 .32 76.17 9 32 1.08 .45 1.62 1.61 72.67 9 70 1.62 .71 73.15 8.57 76. 35 7.82 72.74 12 16 Source: Division of Research and Statistics, Federal Home Loan Bank Board.' 1.56 2.70 225 EXHIBITS ClO 5o C)~ C)~ 0) O C 04 C CO 01 0 000 00 1~ 0 O CO Cr- CO 0o t CO C CO QcO COO C 0 O 0 Co CO 4 00> Co CO 0i 0CO C O CO mc LO 04 0 m 00 C I 00O CO CO C C C CO CcO 00 0 0 0= m r-4 ci O =CO CO tC cO COC CO CCC COCO CO 0 C CO C CO 0 00 0 CO COO tCO0 O C CO 0c C- O CO COO" 0 LO r O0CO 0 CO r 004 C m O C COO C CO 00 4.Q Cc 0 0= e0 0MCO0 I C1 60 ca 00l 0 C 602, o I cl f& / cq c 00 cOcO C 00-q cs i cq CO <0 CO 0 0 000 0 ll0 O v tm co SS 69 rCO 0 M 00O 1-4 CO C CO CV00 OTt 4 0 ~m00 C> Lo rj cq cq o m 00I C:) CO C F" cc CO . .. 0 Q 0D 0"~ 0 C C . . -~0 0 OC . 0 CC , O C CO 0 CO cO 0) . - - C9 r=q 0)tCO 00 O CO CO CO COCO COLOO N 1- 00 CO C C1o 6cC0 tO I O OC4C'C O COO6, CO OO CO C) H 0) X0 m M LO cc 0 0 CC DCO 0 COC OO rCO CO 1CCO COOOIG& 0 CO C) 00" 0C CO0 0CC 0 C-3 03 91 c0 0 0 C0: Co 02 0~ 0C ti. C 03 O C0 014000 cO CO t- rQ COO, '00 C) 00 0 004C-C.")O Im cq 0I- q r. CO I C C I C Co C- -CO-( -z C O CO C CO 00 C -lD 1 -CO L 01 I COO 0 COCO M 14 Cq COo cOc OO1O0 oO '4 CD OC)V o CO C C CO COD COCO 0 CO 0 CO C-1 6s 0 0 .0 o t- 0 0C 0 LOOOX0O 0 0 C43 IiN 4 0CO C--- 1 IPo u~ir-4 ~3 I CO C-O 0 cj 0 11OO0 " cO CO CO ~3CO C- "1 C I0 0 COC IkCO 0 CO MCO CO CO =0 CO-C O O 4O4Ct'-CO ccO 0 0 CO C C C10 r, C 0 q o r-tCOO r-4 C CO rI .4 q CO d OCO CO C - CO. 0 COI CO S -i 0 0 Oo;I CC CO O CO C CO C 03 co CO C-4 ILCD tcc r "-4 c C6 00 90 C44 I 00 3L 06oOr C- COO 0"T C67-1 0 COm CO CO 1CO I CO odI 0 1 : ca W 0 I u c 9W O Wc F1 k W ' C .4 z O 4-D 4I.C 0 -rba Q mr 0 0 10 O0 ' I0r" I e 4-D 0 la _ _ 0 cc~ dl 1~"aQ ma Cd 0 u 0 R 0 i ,ce n dO 1)2% O0 t . C) 0" ce. i Nr/ CP0" clO~ e cC C. O C 0 0 P- CCQCw W Im "Sca 4-11 0 226 REPORT OF FEDERAL HOME LOAN BANK BOARD, CD .00-41 00 to eqC)t-(Oo C) 1941 0000-4 000O001 eq 1 C9eqq q00q 00 I CY.) lt4 00 00 Cq CO o 0 .dq t~ 0t00 00 000 cq co eq q e 10 t-cq m00 4.)0C9 00 co 0C9 000 0m I- C9 000 m 00 C 0 .tv 00 oo 00000 0000 0C 00C V-4 000 Go000 00 I- 0 0 m0004 0C90La 000cc co 000 0400 L 00 m 01r-0 eq o00 1 .00.o <D 00 CC 000 0000 CCC0 104N l~ 00000 0 t I 0dq 000 t- eq .4m0 q00m0cc C q 00 "00 CO 00 X0 0 00o00-. 0em - 10 0400 10 eq 0000 00 ?.. -o 00 00 M0 .0 q t- eq 00 0000o 0000 - eq LO ec LO 100-C> 000 I0V00 qc CD Niq 0000 000 00 m 0 eq 114 00000 0000IV q .oi mLo 00 co cli C) 00 ,-4 00 00 0 eq q eq eq 00 0 cli XS 10 CYD C-1 0 00 0 C5 0) 00 00 eq1 00 100 eqi 001C11Co It0000D L0-0 000 r40 0 06~ CIO co -COD 00 002 co 00 C). t- C4 00 00 t4 - 0004 100 = 0000 00q e1qr-4 eq 0i00 eq m q 000C)eq 000 C)0 0000c0000 C9tr4. C4 x eq 0000- 00I00 00000 00 r00 1.6 eq r-q lei eq 00 m I- 227 EXHIBITS 00 00-C)0000 000010110 ____ _ ___ 0o000c0000t- I _-_-___ t__0 _ 0 11_LII--1_1 _ 1____ _ 0m00000- C M t- 0000Cc o- r-00 m -o 00 00000-00000000 t eq t- di = 0 000C Ci 1.00 0 00 _ cc 7-4t- = Q IQ I- Lo oI X6 =00100 - 0M0to011 000000 ka00 i t0 c a; _t-____ 0000000 0 C 04 6 6 cS- 000 1o omlCD 414 t-0 C0=0Q ~00 000000 0 C17'0 0 -000000 00 4=0 N co 0 m 0 m m t- 0- 0 100 N0=0 00000 m- 0 000QC0D0 00 > m 00 00 -W 0 000 r- 00 00 m 000000 0 00O 000000000 0- 00* oC o00 tq 00000 _ 0 fm00 I00 00 U. 000 - -4 0 r 00 C) 000 0=00 i _-4__ _ _ iY4"41- 4=0- 000 00 00 00 m0 0000000m 00 ."vf4 00a 00)00 004 00 00 0 000000m 0 0 000-0. 0000 00 f 0 o00000000000 LO cc 0 0W 00 00 0 U 00-00000000V= 000000o -0 00 00000000000 000c 0= 0 0-C ( G00q00- 10000t r-400 0 T-000000000"000 0m0000000 00 0 _ 00000000100c000-0000.00 0000000LO m0P00400000 0 00 c0000- M o M..) - t 00000000000000 0- Of 0m q4 t-'0000200.I'0C0 0000 = CD 0 00 6 1; 00 01o00000 01 _0_ 00 0 00 -0-00 0- 00co 14 00 0t0-00000C 000k00C0q0-O00t00U0- r- 00= X 001.0400 0 406 00 C l6 0000 0004=0-0m0 000000000000 0000000w 0 1 c00 0! 00 0 t0-00000040t 00a00 00 4 00 Ill.- C rq ul - m0 r4 00 o6 r4 t-i6 0m00 00qc 000000 m0000 0 0 r0000 0r-40 0 o6 ci00r.6 00 m 400 0- 00000 o 000 0 0 000_ 4 o 01 - c0m0ccR00-000 01 00 00 00 m-400 ,4 ci c m m00000000000000 000000m000000000 0 00100 0 000000004 o1 oo0 4 00m0= -- 00000m e0000 00q 00 0000 00 I0-ttl0000CMm A 64vi*o6 A 11 00 c 0000 00 0 0- 0 0- = m00 &a0=00"0= 00 'o 11 00000 m0 000000 00 00 0, C 00 r-000 'D 00 0 c 6C3c 00c ol to == ".. Mtq0co coOmJc) 00 0q0 0 t -.4i 1-t',) cc0 5to0-0m0000C i4 - o6o C4 m0r0000=co000 t0 ___ vi 000m0 00co0l 00o __ 10__1_ 00 00 0004= 0 = 0m0 00N 00t- 00 0000060 000 0 0 1 000000000000000Icq 0000 RV 0 0000000m -4r f 0m 0 00 000 000000 0 00 00004- 0 T 000 00 00 91 0000000000 000m0r 0000=0c ?-qU 00coc 000 000000000 00-00 C3 00-00000 000000000000 000000-0 0r 02 -4 o5 0 02 o202e P4 oO CA z ~ 0 : : o o 20 0. 02 W0 IZ .)00 0 04 AW " g 00 cc g 0 0 0 Cc)U02 0 -4 01-) E-4 0 021 P42202 '~00 ;C.' 0 ~ C 0 0 C3ca 020 0 o 2 0 924 C30 228 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 38 Federal savings and loan associations-Number and assets as of the end of each fiscal year, 1934-41 Number of associations Assets (in thousands of dollars) Date Total June June June June June June June June 30, 30, 30, 30, 30, 30, 30, 30, 1934 --------1935----------1936----------1937 ---------1938 ---------1939---------1940 ----------1941------------ 370 851 1,135 1,286 1, 346 1, 386 1, 429 1, 455 New 320 554 637 647 640 636 633 639 on verted 50 297 498 639 706 750 796 816 Total New $41, 402 304, 569 655,192 986, 297 1, 213, 874 1,442, 069 1, 728, 865 2,029, 639 Source: Division of Research and Statistics, Federal Home Loan Bank Board. $3, 198 36,145 116, 670 222, 528 301, 242 397, 239 506, 588 629, 301 Converted $38, 204 268,424 538, 522 763, 769 912, 632 1,044,830 1, 222, 277 1, 400, 338 229 EXHIBITS 00C 00C 00000000m 00000000r-- 000 00 000000C to00 00 ce te 00q 4 00) 000 oDoooCDooooooo looooo00 0 0) 0C 00000 C )C 00 00 00000000 0 0 0 > C00D 0 0 0 0000 )0 C000D 0 400 000L00 000 CD 0 ( 00000000) C C m9t-0m0-000 00 C,;C 00 006,066 'C 0 0 e09 co 00 C) C-) 0000> 000a 0000ti 00000000 00000000 00000000 C)000 000>C 000)C 00 c 000= CIA m 0) 0YD 5o~44~4 000000000-0 00000000000 ~ooi~4o~4 00 65 (2) ul co (a) 00 000)cc 00 C 0000 C 000) C) ti (o4 ( 00000 14 0 co l C0 0 oo 000 4If. 00 0 00 00 H 00 r0 6s 00q 00 0r 0 oooooo 00-;0000 i o00r l4~ 0-00-0 0000- 4 l oo o, < 0 0 :0 06 0 0 44~05 o loo=oN 00 010 010 r-0 ooC000 r,00000"' d 4000-C00 000000000000 r- xo C1IC4 c~ 0~ 00000000 44f 000000COO C1 1 olc4e4ze LCC) 0o Nco l4NC1 00000000 00000000 ~~ 000>C 00000L 0 000L L6 cio6 4 C 0000r-q0000000 Lo ) (Mcc 0-i C mc o -10- 400z ga0 000 0 00000 C C &00 CO00 0000000000 C.) ,d4r-4-CI C, ~0 0~ 00 0000 P COD~ 004 0 00000000 00 q 0j0 100000r4 =I 00 00 C0', ?- <MC 0 0 0 0000000000= m 00000 00 C 230 REPORT OF FEDERAL HOME LOAN C>0)0Co BANK BOARD, C) Co Co- 19 41 Co)0C>C)oO C) =C CD 0)0 0CDOCoCo CIOCYD X0 0 "tiqr- C) C) 0C 000CD V-40 000>= C; toV-4 oce.) 00)0 0 0 )C 0 0 ~00 4zo - LO o oo Co I- M m C11o 0(00 0 00C C C 00 m0000 0 0 rI- dq0 r- O -o ft .I -o 1 V-4 0) 1o DC)C (> 0 M00 0 D0 00 01) 1q00 C0 m -Co oI ?I Oo-M - -0 -1-4 dq-Cqo oc 0 CO 00 00C 00 0 0 q00 0, [00~ 0 CoO(-- e:Cot "q00 c000C llq0ti m 0l CD CoCo tot000)00 0 Co Co ~Co I II 0 C) C14 xe ce I II 00( )00 c)~o COC Co0)C 00 00 0 C) C)0C Co 0)0r-Co Co 7-1=Odim O -4 rco 0 Cd 0) +0 C~ 0 X 000r= (M00 0 )0r-4 00 r co C X0 00 q 00o Co q 0) r 0) 0 0 a) a000) 0C 0000) 0 0C L- C-1 0 ca 00)0C 00) 00 C CO r-4 r4 00 )00000 0)000C D C DC D000D Il0o oqcN= 0)000 )D 0co cOr0 * - CD 00 -q(> cq 7laco 0 L 6 f V4 0 00 0 10 r:6 o 0 -- 0 qc c000)0) co m m o cc -4 o No040c - 0 0 0) C00000C ) 00000) ) C CO )CoT-o 00 0 C C11.Iqr Co1 10 = L-M 0) oi C o rqr( cNc L 00C)C>000 C) CO 000CI V-l00 CotC ceoCo CCo10Co)00 Lel 0-:Co~x 0)li '"m 00 IOI~OOOI0I1o00 ~ ~ ~ CO~ C)0C)00 ) 0IoIQ00 Ni CO (s, Co) Co r-o-4 C . 0 0mo m M =0 Co 0( O m) o) qo N o )( 0000) cld qoco c.)odqo C0 c om Mr-iCroo C3 Co Co -o C o0Co0Co 0) i C.) C0 (1) 4-D C) Pd. 0) c CoQ 0). 0 bj CoEon) K C 0) 0 , Od Co mc -q1 CN EXHIBITS 0) 0 =0000000 - Iiqt 0cto000c 0o14 oili c 10 C0000000 000004:6 0C) 0000C)o 14 ~ 0000Ci 0 C,:, C)C Or- C 00- 00Iq -q 00 4000 ) r4 00C00 o oo 000 o6 roooo "t 0 C 0 m 00 cq1 00l 0 0 4 000c0 0 00 C> 0 C ZDw 00q2 0 00001 00 00m000 mC r00 00 ~$C 0000000 000 -00 iCX000 0000 0000C 0000 0 10 C0-C 000000I'l 0000000ll - L 00 -0 r- 00 0000 q 00 &C c 00 0 00000- 004 0 0000000 mo 00 000000M0 0 0> ot CeZ 00 00000 m 00 00 x 000C 00 0010000 q 0 10O 1~C 0 C10m00 J40000 0 0 1C -' .Idq~ c= 00CD0o 000000 1 0 0 00 m00 P 0 00 0 000 0 (2) CC C0"14 0 0 00 oCIA 0 E-0 C0 C 0 00 &C00Zo .'t "o 00t- t-q r o'io 00 C)CC 0 Y 00! 0 -- C40 0 C w00q 000000 cld c o1 00000q 0o C C C> k Oi m 0z 0~ ) C oIlotoLOoolm C1". Itqc"&O r- 0 -I00000 t0 - dq 00 0000000-- 00 0 q 00k000000c~ 0 000000000 0000N C) 0 -,14 (=I0 0 0 0-000 C C C ) 00 000 ~ 04ZK z 000000 0-00 O C 231 232 1941 REPORT OF FEDERAL HOME LOAN BANK BOARD, EXHIBIT 40 Index of private repurchasable capital in comparable Federal savings and loan associations1 [Average month 1935-1939=100] Date Private repurchasable capital June 30, 1935..... June 30, 1936--.. June 30, 1937--__ Percent increase over preceding year 75 82 94 --------- 9 15 Private repurchasable capital Date June 30, June 30, June 30, June 30, 1938 -1939 .-1940- .. 1941-..... Percent in crease over pre ceding year 110 136 169 204 17 24 24 21 1This index eliminates the effect of conversion of State-chartered into Federally-chartered associations, and the addition of newly-established Federal associations during the period. Any growth of associations due to consolidation, merger, or purchase of assets from other institutions is not reflected in the index. EXHIBIT 41 Federal savings and loan associations-Private investors in repurchasable shares and private repurchasable capital, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941 Number of private investors in repurchasable shares Private repurchasable capital Bank District and State June 30, 1940 - I----- United States ---------- June 30, 1941 I----- In crease I----- June 30, 1941 I----------- Increase -I ----------- $1, 554, 809, 600 $286, 761, 600 244, 773 $1, 268, 048, 000 119, 804 132, 209 12,405 105, 678, 500 131, 215, 000 25, 536, 500 Connecticut----.. -----Maine ----------------Massachusetts --------New Hampshire _-----Rhode Island __------Vermont ------- 17, 016 927 90, 582 8, 379 1,142 1, 758 21, 241 1,150 95, 293 8, 726 2,854 2, 945 4, 225 223 4,711 347 1,712 1,187 10, 870, 200 601,300 84, 263, 600 7, 013, 600 581,300 2, 348, 500 17, 236, 500 913,400 100,140, 200 7, 864, 400 1,171,000 3,889, 500 6, 366, 300 312,100 15, 876, 600 850, 800 589,700 1, 541, 000 No. 2-New York --------. 197, 369 218, 663 21, 294 130,130,300 156,332, 900 26, 202, 600 New Jersey ------ 3, 277 194, 092 7, 063 211, 600 3, 786 17, 508 3, 310, 000 126, 820, 300 6, 549, 900. 149, 783, 000 3,239,900 22, 962, 700 No. 3-Pittsburgh -__------. 87,850 111, 717 23, 867 62, 373, 900 86, 388, 000 24, 014, 100 97 Delaware----------77, 521 Pennsylvania ---------.------- 10, 232 West Virginia 140 99, 847 11, 730 43 22, 326 1, 498 220, 500 51, 778, 000 10, 375, 400 277, 500 73,317,400 12, 793,100 57, 000 21, 539, 400 2, 417, 700 No. 1-Boston.._- ---- New York------------- 1, 562, 079 1, 806, 852 June 30, 1940 I------------- No. 4-Winston-Salem ---.- 160, 748 197, 218 36, 470 144, 090, 800 192, 207, 800 48,117, 000 Alabama.-------------District of Columbia -Florida-------Georgia---------Maryland -------------North Carolina -------South Carolina --------. Virginia------------. .. 9, 306 16, 020 39,188 21,454 29, 819 13, 596 15,458 15,907 11, 834 19,119 48,200 25,860 37,944 16, 577 18, 590 19,094 2, 528 3, 099 9, 012 4,406 8,125 2,981 3,132 3,187 7, 024,900 13,961,300 39,038, 900 16,528, 600 22,010,400 12, 291,600 15, 515,300 17, 719,800 9,996, 000 19,412,100 53, 022, 600 22,897,200 28,308,200 16,812,100 19,833,700 21,925, 900 2,971,100 5,450,800 13,983,700 6,368,600 6, 297,800 4, 520, 500 4,318, 400 4, 206,100 No. 5-Cincinnati --------- 281,337 316, 219 34,882 242,902, 000 275, 555, 700 32,653, 700 Kentucky--...---------. ---. Ohio-.----Tennessee _------ 51, 052 206,902 23,383 55,335 233, 240 27, 644 4,283 26, 338 4,261 52,354, 700 173, 024,300 17, 523, 000 56, 759, 400 196, 015,100 22,781,200 4,404,700 22,990, 800 5, 258,200 No. 6-Indianapolis ------- 122,805 134,974 12,169 108,279,200 121,286,500 13,007,300 Indiana __------_Michigan 84,762 38, 043 91,267 43, 707 6, 505 5,664 71,798,900 36,480,300 79,697,000 41, 589, 500 7,898,100 5,109, 200 ---- 233 EXHIBITS EXHIBIT 41-Continued Federal savings and loan associations-Private investors in repurchasable shares and private repurchasable capital, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941-Continued Number of private investors in repurchasable shares Private repurchasable capital Bank District and State June 30, June 30, 1941 1940 In crease June 30, 1940 June 30, - 1 -1 Increase I 1941 1 - - - 133, 094 160,179 27, 085 $105,803,500 $132,554,400 $26, 750,900 114,460 18, 634 138,040 22, 139 23,580 3, 505 89,497,200 16, 306, 300 111,372,100 21,182,300 21,874,900 4,876, 000 102, 030 123, 538 21, 508 76, 661,100 98,631, 200 21, 970, 100 14, 423 54, 393 29, 029 2, 828 1,357 18,124 66, 864 33, 926 3,156 1,468 3, 701 12, 471 4, 897 328 111 12,380, 600 34,320,300 26,953, 700 1, 855, 300 1,151,200 16, 810, 000 45, 198, 500 32, 937, 600 2,422, 600 1,262,500 4,429, 400 10, 878, 200 5,983,900 567, 300 111,300 No. 9-Little Rock---------- 60, 532 71, 214 10, 682 66, 239, 500 83, 864, 700 17, 625, 200 Arkansas---------------Louisiana_---------Mississippi ----------New Mexico------- 7,498 7, 444 4, 053 1, 340 40,197 8,117 7, 753 5, 009 1, 604 48, 731 619 309 956 264 8, 534 9,879,300 11, 278, 700 4, 085, 500 1, 743, 800 39, 252, 200 11,612,600 11,863, 200 5, 667, 900 2, 357, 700 52, 363, 300 1, 733,300 584, 500 1, 582, 400 613,900 13,111,100 81, 413 89, 844 8,431 80, 324, 300 90, 553, 400 10, 229,100 17,397 24, 997 6, 498 32, 521 20,517 26, 091 7, 441 35, 795 3,120 1,094 943 3, 274 15,510,700 20,667, 300 5, 277, 000 38, 869, 300 18,166,900 22,466, 400 6, 484,100 43,436,000 2,656,200 1,799,100 1, 207,100 4, 566, 700 125,154 136, 010 10,856 54, 262,400 68, 427, 700 14,165, 300 8, 234 677 16,192 9,950 87, 353 2, 491 257 8, 487 952 18,508 11,684 92, 799 3, 257 323 253 275 2,316 1,734 5, 446 766 66 4,763, 800 385,800 9,514,800 4,550,200 32, 705, 300 2,165, 200 177, 300 5, 597, 200 850,200 12,326,000 5,723,500 40, 575,100 3,069,000 286, 700 833,400 464,400 2,811,200 1,173,300 7,869, 800 903, 800 109, 400 89, 943 115, 067 25, 124 91, 302, 500 117, 792, 300 26, 489, 800 Arizona _-------2, 526 California _------------85, 529 Nevada__ ------560 Hawaii_ -_----1, 328 3, 556 109, 311 655 1, 545 1, 030 23, 782 95 217 1,907,900 87,005, 800 517, 300 1,871, 500 2,982, 300 111, 807,100 675, 400 2,327, 500 1,074, 400 24, 801,300 158,100 456, 000 No. 7-Chicago -Illinois ----Wisconsin ---------- No. 8-Des Moines---------Iowa ..------------Minnesota_-------Missouri---------North Dakota..--------South Dakota ..------ Texas------------ -- No. 10-Topeka --------Colorado---------------Kansas-----------------Nebraska_----------Oklahoma------No. 11-Portland-------Idaho ..--------------Montana -----___-Oregon. ___.__---------Utah--.....--Washington -----------Wyoming_-------Alaska_.------------No. 12-Los Angeles ------- Source: Division of Research and Statistics, Federal Home Loan Bank Board. 425085-41- 16 234 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 42 Federal savings and loan associations-Investments of the U. S. Treasury and the Home Owners' Loan Corporation, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941 Bank District and State United States-----------__-----...........--.... No. 1-Boston-................. .......---- Connecticut--------------------Maine..------------------------------------Massachusetts -------------------New Hampshire --------.----------------Rhode Island...-----------------Vermont -------------. -..-----No. 2-New York.................. No. 3-Pittsburgh-..-- ... ....-------- ------------------------ ------ New Jersey ... New York- ...--- ---........ --- --. Delaware------------------------------------------ Pennsylvania--West Virginia ..------- 20, 629,400 3,062,800 291,000 23,401,200 341, 000 20,288,400 1 50,000 3, 112,800 9,413,800 7,840,400 -------------------------------- --- 1, 573,400 --------------- 204,200 628, 650 367,100 205,000 266,400 677, 500 579,800 22, 783, 300 17,047, 300 5, 736, 000 3,117,700 13, 534,800 6,130,800 1,998,200 10,046, 700 5,002,400 1,119,500 3, 488, 100 1,128,400 10,637,300 8,803,100 1,834, 200 7, 774,800 2,862, 500 6,272,600 2, 530, 500 1, 502,200 332, 000 21,750,200 19,388,800 2, 361,400 18,023,100 3, 727,100 15, 698,000 3, 690,800 2,325,100 36,300 18, 516, 900 17,111, 900 1,405,000 2,364,900 8,466,000 7,033,000 300, 500 352, 500 1,914,400 8,060, 200 6, 504,200 288,100 345,000 450, 500 405,800 528,800 12,400 7, 500 7, 901,300 5,190, 700 2, 710,600 1,332,300 267, 500 702,700 232, 500 5,366, 300 931,400 170,000 441, 500 122, 500 3, 525, 300 400,900 97, 500 261,200 110,000 1,841, 000 7,599,200 8, 734,200 .---------------------------- 1, 135, 000 -- ----------------------------- ----------- -----------. Colorado.....---------....---------------------Kansas-.---------------------.-------Nebraska-------------------------------------------------Oklahoma----- 23, 692, 200 - 9, 858, 550 3, 558, 700 3,627, 500 2, 566,100 1,126,800 2,482, 700 Arkansas..... ----------------------------------Louisiana_-____--- -----------------Mississippi .----------.--.--------.---------------------------New Mexico_------Texas------------------------------------------- 1Increase. 285, 000 10, 487, 200 3,925,800 3,832, 500 2,832, 500 1,804, 300 3,062, 500 .-Iowa _-----... ................... -Minnesota --.......----......--.--... --... --.... Missouri ..----------.----------..----------North Dakota ..........------------- _--------- -... _ South Dakota.-------. --------------..------------ No. 10-Topeka 285, 000 2, 928, 650 ...... --...... 1, 243,200 13,000 1, 761, 200 1,061,300 Illinois -------------------------------Wisconsin---.. ,------.----------- --------.------- No. 9-Little Rock ..--.--- 3,017,400 1,862, 300 244,000 3,490, 000 ----------------..---------------..-------------- 3,105, 500 257,000 5, 251, 200 1,265, 500 Indiana ......-----------......................... Michigan.................... .......------------- ..--------.----- $28,021,050 5,881,300 24,281,650 Kentucky.. ---------Ohio-------Tennessee----------------------------- No. 8-Des Moines . $169,246,850 8,898,700 27, 210, 300 Alabama ---------------------------------------District of Columbia _---------------------Florida -....------------Georgia ..---------------Maryland.-------------------------------------. North Carolina-----------------South Carolina..--------------------------------Virginia --------- No. 7-Chicago $197, 267, 900 Decrease 5, 272, 400 2,568,000 No. 4-Winston-Salem ---------.-----.---.. No. 6-Indianapolis ---------------.. .... June 30, 1941 6, 360, 800 3,053,000 ------------------------ No. 5-Cincinnati_---_-------------- June 30, 1940 2,461,400 3,236, 800 1,153, 000 1,883,000 2,338, 300 3,070,400 869,000 1,321, 500 1, 088,400 485,000 123, 100 166,400 284,000 561, 500 235 EXHIBITS EXHIBIT 42-Continued Federal savings and loan associations-Investments of the U. S. Treasury and the Home Owners' Loan Corporation, by Federal Home Loan Bank Districts and by States, June 30, 1940, and June 30, 1941-Continued June 30, 1940 June 30, 1941 .------------..------------- $17,645,900 $16,244, 700 $1,401,200 2, 029,100 236, 400 19, 228,400 855,400 Bank District and State No. 11-Portland Idaho ---.......--- ....--..----- -------.- 2,265, 500 No. 12-Los Angeles .......... ....----------------------------- Arizona_ ----Cahfornia .. Nevada----------------------- - --- -- -30,000 4,158,400 309,800 1,693,100 6,900 7,657, 200 566,100 643,600 282,000 33, 300---- 30, 000 4,468,200 1, 700,000 8,223,300 925, 600 33, 300 . ..-----------------------------------Montana ------------ Oregon.----. ----------Utah _...-... __...------....--Washington ...------....--------------Wyoming --------------Alaska----..--------------------- Decrease 20,083,800 655,000 655,000- 19,428,800 18, 573,400 Hawaii---------------------------------------..-------- 855,400 -- EXHIBIT 43 Federalsavings and loan associations-New mortgage loans made by reporting asso ciations during the year ended June 30, 1941, by purpose of loan Federal Home Loan Bank Construction District and State United States---.... No. 1-Boston ............ $227, 250,600 Home purchase Refinancing Repnirs and roni tioning .. Other purposes T $180, 728, 500 $84, 678, 500 $21, 966, 300 $35, 000, 600 $549, 624, 500 18, 243, 200 16,134, 500 6,399, 700 1, 832, 900 2, 546, 900 45, 157,200 4, 334, 700 76, 500 12, 546, 700 773, 100 214, 700 297, 500 2, 791, 500 183, 200 12, 058, 000 433, 800 266, 200 401,800 1,403, 800 65, 200 4, 223, 900 353, 600 206, 700 146, 500 204, 300 56,100 1, 359, 600 134, 400 200 78, 300 161, 000 16,100 1, 971, 300 316, 600 0 81, 900 8, 895, 300 397, 100 32,159, 500 2,011, 500 687, 800 1,006, 000 16, 204, 500 14, 705, 600 3, 577, 800 548, 600 803, 000 35, 839, 500 817, 200 15, 387, 300 907, 300 13, 798, 300 202, 700 3, 375,100 78, 400 470, 200 39, 000 764,000 2, 044, 600 33, 794, 900 No. 3-Pittsburgh ....... 11,061, 100 19, 248, 800 6, 608, 500 1, 351, 700 1, 265, 600 39, 535, 700 Delaware ----------Pennsylvania- __---West Virginia .---- 48, 400 9,141, 500 55, 300 17, 993, 400 5, 200 5, 591, 200 700 930, 600 0 916,200 109, 600 34, 572,900 1, 871, 200 1, 200,100 1,012,100 420,400 349, 400 4,853,200 No. 4-Winston-Salem-... 42, 054, 800 26, 292, 200 11, 482, 500 3, 397, 400 6,046, 200 89, 273, 100 1, 104, 600 4, 959, 700 14, 522, 700 3, 645, 900 5, 959, 600 3, 863, 700 3, 737, 200 4, 261, 400 1, 113, 1, 888, 3, 082, 3, 091, 10, 326, 1, 632, 1, 651, 3, 507, 500 100 000 200 300 300 500 300 1,002, 000 1, 167, 900 2, 486, 600 2, 260, 300 1, 157, 600 1,191, 000 1,013, 100 1, 204, 000 000 900 700 800 700 400 000 900 220, 200 351, 500 2,802, 300 470. 200 279, 000 773, 900 548, 000 601, 100 3, 645, 300 8, 505, 100 23, 849, 300 10,052, 400 17, 835, 200 7, 996, 300 7, 558, 800 9, 830, 700 29, 235, 700 31, 244, 800 11, 856, 900 3, 770, 500 4, 812, 700 80, 920, 600 3, 380, 400 21,964, 100 3, 891, 200 5, 183, 400 24,200, 600 1, 860, 800 1, 947, 600 8,082, 300 1, 827, 000 683,100 2, 633, 500 453, 900 834, 900 3, 346, 800 631, 000 12, 029, 400 60, 227, 300 8, 663, 900 Connecticut --------Maine--------------Massachusetts _---New Hampshire .-Rhode Island....---Vermont --..-No. 2-New York--..... New Jersey---------New York ...--- Alabama ......-----District of Columbia-. Florida...-------Georgia.-----Maryland..-------North Carolina .--South Carolina .---Virginia ----No. 5--Cincinnati -...... Kentucky...-------Ohio__-Tennessee------------ 205, 137, 955, 584, 112, 535, 609, 256, 236 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 43-Continued Federal savings and loan associations-New mortgage loans made by reporting asso ciations during the year ended June 30, 1941, by purpose of loan-Continued Federal Home Loan Bank Construction District and State No. 6-Indianapolis .--- Home purchase Refinancing adec ditioning ditioning Other purposes Tota $14, 319, 300 $9, 844, 700 $6, 424, 300 $2, 081, 100 $2, 369, 700 $35, 039, 100 Indiana..---------Michigan------------ 7, 368, 700 7, 464, 200 3, 619, 300 1, 605, 200 1, 470, 100 21, 527, 500 6, 950, 600 2, 380, 500 2, 805, 000 475, 900 899, 600 13, 511, 600 No. 7-Chicago _------ 15, 763, 400 19, 517,000 9, 828,300 2,646,400 2, 993, 600 50, 748, 700 Illinois ......---Wisconsin----------- 13, 179, 300 2, 584, 100 17, 141, 600 2, 375, 400 8, 649, 000 1,179, 300 2, 379, 700 266, 700 2, 529, 600 464, 000 43, 879, 200 6, 869, 500 13, 388, 000 11, 566, 900 7, 119, 600 1, 657, 800 No. 8-Des Moines----- 400 200 300 200 900 2, 600, 100 4, 501, 800 4, 138, 300 222, 900 103, 800 1, 187, 3, 639, 2, 039, 189, 63, 10, 372, 500 6, 619, 100 3, 989, 900 Arkansas .---------1, 485, 900 Louisiana ...------1, 371, 500 862, 600 Mississippi -------- . 381, 500 New Mexico--------6, 271, 000 Texas ----------- 1, 217, 400 802, 600 499, 800 132, 300 3, 967, 000 647, 313, 561, 185, 2, 281, 8, 605, 700 9, 740, 000 5,057, 600 Colorado----------2,193, 800 Kansas-------------2, 360, 400 909, 900 Nebraska ----------Oklahoma . .--------3, 141, 600 2, 365, 600 2, 706, 900 725, 700 3, 941, 800 1, 361, 742, 341, 2, 611, Iowa---------- Minnesota ---------Missouri -----------North Dakota -------- South Dakota No. 9-Little Rock -- No. 10-Topeka----. 2, 193, 7, 957, 2, 861, 301, 74, 300 900 600 700 100 000 900 900 300 800 800 500 900 400 2, 214,000 35, 946, 300 400 100 000 000 300 413, 000 1, 495, 500 222, 200 54, 000 29, 300 6, 865, 18, 449, 9, 525, 806, 299, 1, 683, 700 2, 561, 300 25, 226, 500 540, 246, 237, 78, 1, 458, 500 200 200 800 600 4, 216, 800 2, 975, 800 2, 348, 600 832, 400 14, 852, 900 3, 429, 900 27, 976, 200 514, 704, 208, 2, 002, 6, 657, 6, 749, 2, 265, 12, 303, 471, 855, 264, 39, 28, 326, 241, 187, 54, 874, 000 600 100 500 500 1, 143, 000 221, 235, 79, 606, 700 200 300 800 400 500 800 200 200 500 400 800 400 300 500 600 800 No. 11-Portland.--..---. 11,807, 700 7,710,800 5, 717, 300 2, 668, 200 29, 238, 000 Idaho---------------.. Montana.------U tah ... . . . . . Washington -----Wyoming ---- _----. Alaska.--------- 634, 700 117, 400 2, 807, 700 1, 375, 800 6,187, 900 533, 100 151,100 524, 400 95,100 1, 279, 600 533, 000 4, 895,100 339, 500 44, 100 462, 300 29, 900 921,100 423, 700 3, 675, 200 174, 100 31, 000 191, 24, 235, 77, 664, 101, 40, 000 500 500 000 600 400 000 242, 900 38, 800 409, 300 176,000 1, 664,100 135, 200 1, 900 2, 055, 300 305, 700 5, 653, 200 2, 585, 500 17, 086, 900 1, 283, 300 268,100 No. 12-Los Angeles .-.... 36,194, 700 8, 104, 100 6, 616,100 519,200 3, 289, 500 54, 723, 600 784, 800 Arizona ------. __. 34, 911,100 California ..-------134, 800 Nevada-------Hawaii _ -------364, 000 328, 700 209, 200 6, 230, 800 62, 000 114,100 85, 500 404, 700 5, 700 23, 300 118, 100 3,102, 200 45, 100 24,100 1, 526, 300 52, 034, 700 264,100 898, 500 Oregon _ - - 7,385, 900 16, 500 373, 000 1, 334, 000 Source: Division of Research and Statistics, Federal Home Loan Bank Board. 237 EXHIBITS EXHIBIT 44 Federal savings and loan associations-Selectedbalance-sheet items for 1,394 identical new and converted associations, as of June 30, 1940, and June 30, 1941 [Dollar amounts in thousands] June 30, June 30, Percent June 30, 1941 change 1940 1940 Total assests .-----. $497,945 $614, 801 First mortgage loans held------------ 445, 758 547,602 2, 769 2, 259 Real estate owned -Cash and Govern ment obligations 31, 853 43, 875 329, 936 442,139 Private capital --.. Government in 91,051 79, 683 vestment-------Reserves and un divided profits 114, 543 21,001 All 1,394 associations 770 converted associations 624 new associations June 30, 1941 +23 $1, 171, 739 $1, 320, 645 June 30, Percent change 1941 Percent June 30, change 1940 +13 $1, 669, 684 $1, 935, 446 +16 +16 -22 1,357,055 1,609,005 80, 644 62, 649 +19 -22 +20 +16 138,116 110,148 1,222,744 1,480,132 +25 +21 +23 -18 911,297 1,061,403 77, 875 60, 390 +38 -34 94, 241 78, 295 892,808 1,037,993 -12 100,237 83, 849 -16 191, 288 163, 532 -15 +44 64, 316 72,416 +13 78, 859 93,417 +18 1 Reserves and undivided profits were taken from the July monthly reports in order to reflect the condi tion of the institutions after the closing of the books and accumulations from net earnings during the pre ceding 6 months. EXHIBIT 45 Federal savings and loan associations- Consolidated statement of operationsfor 1,428 reporting Federalsavings and loan associations,for the year ended December 1940 [Dollar amounts in thousands] Ratio to Amount Item gross oper- Ratio to ating in- net income come GROSS OPERATING INCOME Interest' On mortgage loans-ordinary cash collections ---------------On mortgage loans-all other ----------On loans on shares, passbooks, and certificates------------------On real estate sold on contract-------------On investments and bank deposits -----------------Other__ __---------------Premium or commission on loans (current only) -----Appraisal fees, legal fees, and initial service charges -----Other fees and fines_------Gross income from real estate owned----------------------------Less-cost of repairs, taxes, and maintenance ---------------------. Net income from real estate owned-----------------------Gross income from office building ----------------Dividends on stock in Federal Home Loan Banks_------Other dividends--------------------------------------------------Miscellaneous operating income------------------------Gross operating income---- ---- -------------------- -- Percent 88.06 .31 .28 3.67 .42 .12 1 33 2.43 .39 $81, 271 285 257 3, 385 389 112 1,229 2, 243 361 -- 1, 290 932 189 20 329 92, 292 Percent -------------- -- -----------1.40-----1.01----------.20----------.02 .36 -------100.00 145. 36 238 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 45-Continued Federalsavings and loan associations-Consolidatedstatement of operationsfor 1,428 reportingFederalsavings and loan associations,for the year ended December 1940 Continued [Dollar amounts in thousands] Amount Item Ratio to gross oper- Ratio to ating in- net income come LESS OPERATING EXPENSE Compensation to directors, officers, employees--------------------Collection expense (agents, etc.)---------------------------------Legal services-retainer, travel, and special------------------------Expense account of directors, officers, and employees-------------- Rent, light, heat, etc----- ------------------------------Repairs, taxes, and maintenance of office building-- --------------Depreciation of office building ------------------------------Furniture, fixtures, and equipment, including depreciation--------Advertising ----- ------.-----------------Stationery, printing, and office supplies---------------------------Telegraph, telephone, postage and express-------------------------Insurance and bond premiums-----------------------------------Federal insurance premium -_-------------------------Audit ----------_176 Supervising examinations and assessments------------------------Organization dues-----------------------------------------Other operating expense-------------------------------------Total operating expense-- ------------------------------- Net operating income before interest and other charges ---------- Percent Percent 12,088 13.11 227 .24 446 .48 328 .36 1, 516 1.64 -----916 .99402 .44 570 .62 --2, 691 2.92 .-765 .83 586 .63 518 .56 1,816 1.97 17-----------------.19 381 .41 272 .29 2,234 2.42 25,932 28.10 40.84 66, 360 71.90 104. 52 LESS INTEREST CHARGES On deposits, investment certificates, etc --------------------On advances from Federal Home Loan Banks---------------------On borrowed money----------------------------------------Total interest_ -------------- -- - - 86 2,607 104 .09 2.83 ----.11 -------- 2,797 3.03 4.41 Net operating income-_--_------------------------- 63, 563 68.87 100.11 9 1, 317 175 321 .01 1.42 .19 .35 .01 2.07 .28 .51 ADD NONOPERATING INCOME Dividends retained on repurchases and withdrawals --------Profit on sale of real estate--------------- -- -------Profit on sale of investments---------------------------------------Other nonoperating income ----------------------------------------- 1,822 1.97 2.87 Net income after interest and before charges ---------------------- Total nonoperating income-------------- -- 65, 385 70.84 102.98 Foreclosure costs and back taxes on real estate acquired (unless capi 125 talized or charged to reserves)---------------------------------1,211 Loss on sale of real estate-------------------------Loss on sale of investments----------------------------------37 519 Other nonoperating charges----------------------------------------- .14 1.31 .04 -. 56 .19 1.91 .06 .82 LESS NONOPERATING CHARGES Total nonoperating charges----------------------------Net income for the year------------------ - ----------- 1,892 2 05 2.98 63,493 68.79 100.00 128 ----------172 -----------3, 787 -----------4, 523 ----------688-288 ---------46,186 -----------7,721 ----------7,2 .20 .27 5.97 7.13 1.08 .45 72.74 12.16 LESS TRANSFERS FOR RESERVES AND DIVIDENDS For bonus on shares--------------------------------------------Legal reserves--------------------------------------Federal insurance reserve------------------------For contingencies--------------------------Real-estate reserve -------------------------------------------Other-----------------------------------------------Dividends--------- ---------------------------------------Balance to undivided profits------------------ --- Source: Division of Research and Statistics, Federal Home Loan Bank Board. 239 EXHIBITS EXHIBIT 46 Federal savings and loan associations-Operatingratios of 1,428 reporting Federal savings and loan associations, grouped as to size of association,for the year ended Dec. 31, 1940 Ratio to gross operating income (in thousands of dollars) Total $0 to $49 $50 to $99 $100 to $249 $250 to $499 $500 to $999 $1,000 $2,500 $5,000 $10,000 to to to and $2,499 $4,999 $9,999 over Per cent 92 11 Per cent 92. 95 Per cent 91.17 Per cent 88.71 Per cent 87. 52 Per cent 88. 00 Per cent 88. 99 Per cent 86. 19 GROSS OPERATING INCOME Interest: On mortgage loans-or dinary cash collections_ On mortgage loans-all - --other----On loans on shares, pass books, and certificates_ On real estate sold on con tract--------------and On investments bank deposits ---- __-Other-----__ Premium or commission on loans (current only)------Appraisal fees, legal fees, and initial service charges --Other fees and fines ------Net income from real estate owned-------------------- Gross income building Per cent 88. 06 Dividends on stock in Fed eral Home Loan Banks-- Other dividends__-------Miscellaneous operating in --------------come-- 88. 70 .31 0 0 .16 .91 .33 .39 .39 .12 .28 0 0 .36 .44 .29 .26 .24 .23 .34 3 67 0 0 1.38 2.26 3.74 3.75 2.66 5.03 4.34 .42 .12 0 0 0 0 0 .26 .04 .19 .13 .30 .12 .48 .11 .83 .20 .45 .10 1 33 5 26 1.66 1.66 2.26 1.37 1.57 1.38 1.22 .41 2 43 .39 2 63 0 4.56 0 3.13 .59 2.16 .24 2.75 .30 2.52 .27 2.53 .43 1. 92 .33 2.40 .78 1. 40 0 .83 .51 1.78 1.98 1.42 1.30 1.72 ,57 1.01 0 0 .44 .44 .74 .91 1.00 1.70 .97 .20 .02 0 0 0 0 .12 .13 .02 .20 .02 .21 .02 .21 .04 .20 0 .36 0 0 .35 .44 .26 .24 from office -------- Per cent 0 .28 100.100.00. 100.000 Gross operating income_ 100.00 100.00 100.00 100.00.00 .16 0 .24 .02 .35 .68 100.00 100.00 100. 00 11.63 12.39 LESS OPERATING EXPENSE Compensation to directors, officers, employees ------Collection expense (agents, etc.)------------Legal services-retainer, travel, and special ------Expense account of directors, officers, and employees -Rent, light, heat, etc------Repairs, taxes, and mainte nance of office building -Depreciation of office build img ...-----------Furniture, fixtures, and equipment, including de preciation----------------Advertising ----------------- 13.11 fice supplies .-------- ----------Other operating expense -and assessments Organization dues Total operating pense--------- 15. 29 14.84 13.30 12.67 .19 .16 .29 .33 .42 .35 .30 .50 .53 .50 .39 .59 .16 .44 2.00 .35 1.82 .39 1.28 .37 2.22 .37 2.07 1.46 .27 1.42 .28 .43 .63 .86 1.01 1.55 1.26 .20 .35 .38 .50 .75 .33 .32 1. 58 .48 1.87 .69 2 58 .65 2.76 .71 2.98 .60 3.25 .50 3.80 .48 0 0 0 2.63 .42 1.66 .99 0 0 .44 0 0 0 0 .36 1 64 14.77 .06 0 0 .62 2.92 0 0 .83 0 .41 .87 .94 .93 .88 .78 .80 .70 .63 0 .41 .59 .65 .70 .63 .62 .60 .68 2.06 .22 .39 .45 2 22 .83 .56 1.97 .19 0 2 63 0 .83 1.66 .41 .48 1.78 .20 .76 1 70 .31 .76 1.85 .21 .65 1.89 .20 .49 2.00 .18 .41 .29 2 42 2 63 0 0 .41 .87 .12 1.94 .68 .28 1.80 .51 .29 2 03 .42 .40 .32 2.45 0 2 91 ~---I------! -- I - I I - I- 32 2.24 i - .28 .07 .30 2.93 .28 .24 2.81 I--- ex Net operating income before interest and other charges_ 14. 53 0 Stationery, printing, and of Telegraph, telephone, post age, and express --------Insurance and bond premi ums---------------Federal insurance premium__ Audit--------------------.-Supervising examinations 15.79 .24 S28.10 71.90 23 68 24.48 -- --- 76 32 -I- 75 52 27.05 27.67 1 -- 72.95 i""" 72.33 29.50 28.04 27 57 -I 27.91 28 43 70.50 71 96 72.43 72.09 71.57 I -- ~ ~" _ _ ---- ~ 240 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 46-Continued Federal savings and loan associations-Operatingratios of 1,428 reporting Federal savings and loan associations, grouped as to size of association,for the year ended Dec. 31, 1940-Continued Ratio to gross operating income (in thousands of dollars) Total S .... .. 1-----1-- ----- 1--------1 LESS INTEREST CHARGES On deposits, investment cer tificates, etc------On advances from Federal Home Loan Banks..---On borrowed money..------. Total interest--------Net operating income..----- Per cent .09 2.83 .11 1 cent 0 Per cent 0 2.63 0 1.66 0 rer .. Per cent 0 2.65 .16 I Per cent .30 3.00 .06 - I .... ..... ...... ... $2,499 $4,999 $9,999 I .. $2,500 $5,000 $10,000 to to and $1,000 to $250 $500 to to $499 $999 $0to $50to $100 to $49 $99 S$249 I over I I Per cent Per cent Per cent .29 .05 .13 cent 0 3.20 .10 2.88 .08 3.08 .07 1.95 .23 Per Per cent 0 3.10 .12 3.03 2.63 1.66 2.81 3 36 3.59 3.01 3.28 2.18 3.22 68.87 73.69 73.86 70. 14 68.97 66.91 68.95 69.15 69.91 68.35 .63 .28 .08 .02 .74 .07 .26 .01 1.33 .06 .28 .01 1.33 .11 .31 .02 1.43 .10 .26 .01 1.76 .40 .49 0 1.77 .36 .53 .41 .99 1.09 1.68 1.76 1.81 2.66 2.66 74.27 71.13 70. 06 68.59 70.71 70.96 72.57 71.01 .08 .16 .07 .26 .02 .28 .06 .71 .01 .44 .06 .87 .01 .60 .05 .99 .12 .60 .46 2.11 .05 1.05 .11 2.96 0 .12 ADD NONOPERATING INCOME Dividends retained on re purchases and withdrawals_ Profit on sale of real estate Profit on sale of investments-_ Other nonoperating income.__ Total nonoperating in come ..------------Net income after interest and before charges .---...---.. .01 1.42 .19 .35 0 0 0 0 1.97 0 0 0 0 70.84 -73.69 .41 0 LESS NONOPERATING CHARGES Foreclosure costs and back taxes on real estate ac quired (unless capitalized or charged to reserves) Loss on sale of real estate .. Loss on sale of investments__ Other nonoperating charges Total nonoperating charges_.....----Net income for the year.---.. .14 1.31 .04 .56 2.05 68.79 0 0 0 0 0 0 0 0 0 =_ _ 73.69 0 0 74.27 .16 .40 .63 1.22 1.54 70.73 69.43 67.37 69.17 I 1.76 3.67 69.20 68.90 - - i. 3.19 67.82 Distribution of net income for 1,428 reporting Federalsavings and loan associations, for the year ended Dec. 31, 1940 Ratio to net income (in thousands of dollars) Transfers for reserves and dividends Total $0 to $50 to $0$ $4 $9 $100 to $249 $250 to $499 $500 to $999 $1,000 $2,500 $5,000 $10,000 to to and to $2,499 $4,999 $9,999 over Per- Per- Per- Per- Per- Per- Per- Per- Percent cent cent cent cent cent cent cent cent Net income for the year.---.-100. 00 100.00 100.00 100.00 100.00 100.00 100. 00 100.00 100.00 .20 For bonus on shares --------.27 Legalreserves_-------5.97 Federal insurance reserve -For contingencies --.------ 7.13 1.08 Real-estate reserve.--------.45 _ ---------Other -----72. 74 Dividends -----------Balance to undivided profits-_ 12.16 0 0 3. 57 7.14 0 0 67. 86 21. 43 .56 0 5. 58 5.03 0 .56 71. 51 16.76 .28 .17 5. 32 6. 33 .17 .39 73. 68 13. 66 .13 .14 .19 .13 5.07 5. 41 6. 75 6. 81 .61 .89 .27 1.02 75. 21 74. 06 11.49 11.82 .12 .17 5. 75 7. 45 1.08 .40 73.18 11. 85 Source: Division of Research and Statistics, Federal Home Loan Bank Board. .11 .11 6. 69 7. 38 1.04 .74 72. 57 11.36 .13 .22 5.65 6. 57 1.92 .49 72. 30 12. 72 Per cent 100.00 .67 .97 6.96 7. 46 .66 -. 36 70.17 13. 47 241 EXHIBITS EXHIBIT 47 Federal savings and loan associations-Average annual dividend rates declared for the calendar years 1939 and 1940 1 Federal Home Loan Bank District and State United States 1939 1940 -------- 3.39 3.25 No. 1-Boston ----------------- 3.11 3.00 Connecticut-------------Maine.-------------------Massachusetts-----------------New Hampshire Rhode Island-------------Vermont-------------------- 3.41 3.13 3.04 3.50 3.00 3.03 3 25 3 04 2 95 3 00 3.00 3.16 2.58 2.43 3.00 2.58 2.86 2 42 No. 2-New York------- -- New Jersey---------------New York ____-------------_ No. 3-Pittsburgh---- 3.72 3.56 Delaware-------------Pennsylvania-----------West Virginia-------- 3.50 3.67 3.91 3 50 3.50 3.83 No. 4-Winston-Salem---------- 3.80 Alabama----------District of Columbia -Florida ------Georgia -------------------Maryland --------North Carolina------------South Carolina-------------Virginia--------------------- No. 5-Cincinnati_--Kentucky.-----_----__-__---_ Ohio --------------------- Tennessee ------------------No. 6-Indianapolis_-Indiana_-----------Michigan ..---------- --- 3.58 3.94 3.69 3.84 3.87 -3.44 4.08 3.82 3.98 3.95 3.39 3.51 3.71 3.33 3.87 3.65 3.66 3.40 3.22 3.70 3.24 4.01 3.44 3.10 3.71 3.09 2.98 3.12 3.05 2 99 2.96 1 Average weighted by amount of invested capital. Federal Home Loan Bank District and State No. 7-Chicago-..- 1939 1940 3.53 3.40 3.52 3.59 3.44 3.20 3.34 3.22 3.70 3.04 3.53 3.34 3.78 3.54 2.95 3.42 3.23 3.48 No. 9-Little Rock__ 3.87 3.65 Arkansas---Louisiana --Mississippi--New Mexico-Texas------ 4 02 3.84 3.85 3.99 3.84 3.83 3.34 3.84 4.03 3.64 No. 10-Topeka--- 3.63 3.46 3.20 3 35 3.20 4 05 3.22 3.09 3.10 3.84 3.25 3.46 3.50 3.31 3.04 3.18 3.86 4.00 3.15 3.82 3.78 3.50 3.79 4.00 3.50 Illinois_---Wisconsin-----No. 8-Des Moines Iowa_--Minnesota---Missouri----North Dakota__ South Dakota. Colorado --Kansas_-Nebraska--Oklahoma-----No. 11-Portland Idaho -----Montana-------Oregon-----Utah___---Washington----Wyoming------Alaska ...------- No. 12-Los Angeles_ Arizona---------California----Nevada.-------Hawaii-------- 4 00 3 82 4 00 3.50 3.40 3.68 3.17 3.04 3 07 3.70 4.00 242 REPORT OF FEDERAL HOME LOAN BANK BOARD, o: r00> 0 CD 0 0M nS4..; co 01 0000 t X 00"00 10 000 0t 0000 4cq 00 00000C)C0 0000000 Dl 00000100000-C~ 40 00)5 . 0- 04 r--4 66 -- 000 to0000000 000100000001j 00 Ittl C) m CI 7-4 1941 m I C> r-000 M0040000 - 000t 0vt00000000001 00000-010000 cq jr 00 14 r00 4 cc 01r00 46cq 14) 00 C) 0 00 00 0 4000 0 C-100t0000000-4 00 00 1 100 1) (M0a> '00o to4 M0 4 01,-q0 '0-01 ?0 '-=01 '0000 0 0 0LO 0004000 -r~ - C 00 C 04 m - 0 000 000!-1 i 40 00 00 011 CA) W0 004 01 or, to I r0m00 to00I'0000 00 cc 6 co S-40 T--4 ___ t0- 01 _ 00 00 0140 em 000 m 00 0 0C 4'0100 00 0-00t00 4 I= 0 C000 000t0-4I-000000.) to 00 0M0 000r1-40-40 -00000000000000 00 -r 000 016 009 -000I __tI I_ _I U) 0) 4Z W,0 0 0~ 0= p m 100too00q0 0-00 0 00 00 N 0 m0":0C) t 0 t- t-O C)6 0. 0)) 00m000 00 00 0 ,c C) ,no Q OD o00 00 00 00 .'01 k0 00o01000 0:000000 0 00q0 00=0r000 '0000 LO 00LO 00 t-' 0:mm 00 C C 00 = 00c~it: 6060 c 04T446 U00 00"0 t0000000 l LO 4o t lz~ 010000 0o ca 0 ''0 00 VA 0)i ___ M1 _ 4Q0 0 O ~ ~ __ 000=00000 00 m t- 0 ~ 100 &0000 00 V0- 00 to 0 ko LO m104 ~ __ ~ __4--__--__-__ft____ft 0 00t, 0000 1-0 U.)(=t- 00 '0-4-.1- .0 00 t 0000000000 " , 0 1 000 00r-4 00 -. 4 e0 00 o 00 rn0 Go00 00 0) ce~0 0 )0 1-4 c:z~) 0 co0 0 ~ ~ bb~ Hb 00 00q 00 00rk00 w o -14 006 kn 00 qD 0100 01Z o 0 So0Z0 Oo00 'Z0 :0000 0004 M -- ' m q 101 - C 1 01 0 0- '0 00 00 01 C00 0000-4 000-0 01" 0000-000 00 T01 00 00 = ~~~ 00 00000 46 000 : IC(9 000000010000oLO " 00)00 00> 00 0000=>0000t00to000101000000001000 >0 0-00 '0-0 0 00 00C0000010-4 -01.0004L0 0 aa 6 0 0000 t-0100m00 -0010 004010I1044 -42: r0- - - 00- 0 0000 co0- :0 r -0" -I00 CD )000000 1000 01000-00m00 00 t00 C000M00100-0 00 00001C) 00) 00000= 4)0)00 00 000000000000m0IR41-0")) 0000 00440001 01 00 - T4 N0to o= = _______ 000 6 00000040,00 00 T4.d o m"r00m ~ 0 000 0 01 000000-0000 r4I t004 0 - o " ________ 0 00000000 c 1 00 0 0 6 - 01 01 01 0 00 +Z1 0 A4 o 0130000o ~ rn C01 0 010Mo Zz z z 4-D0 ~ 0 or40 '" m________ 6oi6 -000000 00 X000000 t-00 00010 k r= 4 01 co00000 t000 m4m4N6400 "400000 "0 00 4 05 ,-'4 ,t -I q MC t 0000 X01 000000 4 m00m 001 4 o 4 ccc l - -,c 4 LO i 0 0 -00 1 0 z 100 000 000 243 EXHIBITS 00000.,C - C00000C C- ciCO 00000000L C0000-CL-0m 0400-0000 000CO C-to 00 C1 O IO- tm CO3 00oo o 04d 0 C6 r1 -z 10 V-4 mr-4N N C> O t t- 0I= C) CNoC> O 0Cq co00M 00 00 t- 0 C :I t00 qN O-l C)OLfD r4OC.0 00 000100C -00-o t0CO0 00 40 Co M CO00 Q00 NO 0 0> t--Cm 00 04 OM 04 oo -40000 0) MCt-- r" C)oON 00 C6,04 ICO I C00 00 tN cc 50 k0000 -,0000 '.-4mCO r-4C 004.-00000 "00 X0 m CO O r- =I o r1 mNt-- la to CO'li00 "O o 0 0 00 o I 000 NC-O -C-q I=00 t000olIc0cc c) o00C0 Cw C 0to-. 4 00Cq d4m 0007--0cc 4 to 0 0oo 0 q o -- ,dq -)t'CN C00 C LO I'0 00 000la 00 0CO C>O -400 'Co000oco( 0 -m CO0 mCoC) o o CoOr-4o44O=00 C t'00 r-4'0000 'CO-'0M cc00 Co 0cc'0 'O 1C1-0 - '4 C0 'C' r - '00 N .c-0co 00 00 0 00 'X0o 00 0 )0 ) tC-100Cm0D CLOt4 t- 00C'- co NC00Moq0 :I Co C0010 4ttcc r-t-4 .040000CD i oCOcOO C;0 0000040c0CO 00 t--0 C0Imto r-10C 0 OOCC k -400T--,: o - x6 00 m i C Co00 V00 00eI=C1 0 C 00 -i Nt--.00m 040L 00 '- ,: o6 Co 04Co -= 0 0 00 1 -0,::e0fC'- OL 00t L000O= C4t--LO '06Cc '0 0to -Z C' "C C <D 0 '000 t-101100to04 t-. r4 40000 v4 0=o 04f t0o m I 0C 1 c'0iLO 0 0 0 E r-C C001N ,:Om Ct a)j 00CO-to 1 0 :,'C '-400 IM'0 --4o01 'Q to m 'o00 t-o IdqC I N 1 0MC 00000404 Co mCr- l C w 00 0-qCoCDC) o0 00 0 L00 - C) (M 0 CO 00V-C4 CO 0cOico t-0 00 t--CN m ' O0 cOco M=oCO r4CDL0I000 '00 00 CO0 m0CO -oC- 0Ct--CN'Co 0 r--qLe IR-t 1 t-L6 00 100mo U00) 00-4 CI CO 00 N "D C) 00 00 Co O 0 t Io -Co 041Co 04)CccC'N m C >~- ~t- Ci 0 000w CO-CmCoCONO C- C cOc 00 'Oo MICooc 0' 00m m NO-4 C000 n T4I)Cc C )0000 0 C) coCl 0 O 400Oo 0 OOoOO 0 -400 -1 o~-4rI 6 C6o l16 CoD04C0t00-0 0M0000 w 0010CC)C t- N C C- C -COC 0000e CO .I N cc0 CO = 0 00 c *Cot-Co r =,-0NC 0I0p o0V-0N 001) Nco m ccO 0 00 m -0I 000' T-4C000V--Co00NO0N00 16 to CO 000 CcNtcc N cc 0L-Cto00 to m N r-4 r- t- St-- t--t-I- m4 COC?--I to. 00I CO-40 CoN t- CO 000 CO o I 0rCO -~ CC6 N 0 C -w4O 0 COLC CO 00 CO td4Com -m m ut'.4 C000 M-j4 0 tNf 'o C o=ot- cz 01t-O"00f4COCOU0)00 ~0C)Co~o'--O l 0 ~~ 00 00I0400o CoI 00 tm = 0100)00000mccCo-Iw to 14 N Coi-C u) C> toW to r-CW Ol 0Co000 0o 00-ti 00"0c0c0W00T" C' "dCO =C n u0=C"co 104 4 Mo=oI=00N0to04 co'-t0co Co-04-0- -0-oC-C-001 00Z 00q 06 0-1C, w=> = - 'n Tv cc 000cc O CCO1o1'.) m "-40r-40-- rto 400co ~ ~~~~= Of I IN0(COr00 :000-0'm t-- 0000 "' C>00 COC N o 000 ,g ''00o CO 010t, m X00 00 O 00 00' Cto0000Cc0 -4ito00 10 r4 C O CO0N CNo00 00O0000 00 W .10CO)40I 00 Co~ 04 M-, o6N' r-- C6-cOco, I04 to qO =,. CO~ 00CiO-0CCi0 CC -O CO CO--4 001 00 C 00C Nmt0iq000 N4 "040000 CO0 00N0" 04 0,:' 0oo 00 4Co ' 0000040000= C-q = a -ot041 m Oto0 mN oC o -MCo4 C n ON Cow0.0 0t Cow 00 --4 Co0 C'- 000Cto 00 L -otoC0400LO00 0 O0 000-M- to xl00: CI Ie 100 CO - (D0wto0Co -mCO Ci0CC-Ci0M-M1U 001 ri to 04to Co CO 00 r-4 --4 CO 00 o -o to -C 0 '00000 0c to2 0 cc 00t, "Re o to N 04 o to0 q 0) ~ cc -' - ttWM ''d,0 I= = " .dqm N ~ ~ m ro0e0 C20o ) m ot- tt 00 0 m'tt'CZ -4 -. toto a - 'T-o 010 ooo ct to (1) C-M 6 6 zo zcaz o 6 4c ~ ~ 6 z ~ zI ~ ~ Z 244 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 49 Federal Savings and Loan Insurance Corporation-Comparisonof all savings and loan members of the Federal Home Loan Bank System with all insured savings and loan associations, by Federal Home Loan Bank Districts and by States, June 30, 1941 [Assets in ithousands of dollars] All savings and loan members All insured 1asso ciations Bank District and State Num ber Assets Ratio all insured associa tions to all savings and loan members -------- No. 1-Boston.---------------------------Connecticut.----------------Maine __---------------------------- Massachusetts----------New Hampshire---------Rhode Island-----------Vermont.. -------------------No. 2-New York---------------------------New Jersey_---New York ----------------------No. 3-Pittsburgh------------------------------------Delaware __ Pennsylvania ----------West Virginia --------------------No. 4-Wmiston-Salem___ ------ Alabama---------------------------District of Columbia----------- Florida _.----- ------------ Georgia-----------------------------Maryland __----------------------SNorth Carolina ------- ------------ South Carolina -------------------Virginia ---------------------------- No. 5-Cincinnati----------------------Kentucky--------------------------Ohio----------------------------.-------------------Tennessee -----No. 6-Indianapolis----------------Indiana----------------------------Michigan ---------------------------No. 7-Chicago ------------------ --Illinois .--------------Wisconsin ..----------------------No. 8-Des Moines--------------Iowa --------------------Minnesota -------- ---------------- -------------------Missouri -----North Dakota----------------------South Dakota ------------------See footnote at end of table. of all ber Assets 3,798 $4,626,920 2,310 $3,158,251 60. 8 68. 3 212 525,765 60 167,286 28. 3 31.8 45 23 122 13 5 4 48,617 19, 671 396,377 16,516 39,383 5,201 22 5 26 4 1 2 30,039 120,075 9, 782 4, 401 48. 9 21.7 21 3 30. 8 20. 0 50.0 61.8 6.7 30. 3 59. 2 4.3 84. 6 391 481,294 178 320,159 45.5 66.5 267 124 176,359 304,935 82 96 79,533 240,626 30.7 77.4 45.1 78 9 502 268,463 191 154,553 38.0 57.6 7 466 29 2,893 242,440 23,130 1 164 26 332 132,618 21,603 14 3 35 2 89.7 11.5 54.7 93.4 400 522,990 266 325,596 66.5 62.3 21 21 49 54 65 112 42 36 13,573 152,349 77,274 37,582 74,702 88,106 31,058 48,346 21 11 47 47 40 38 37 25 13,573 40,190 75,553 35,736 49,523 41,602 29,975 39,444 100.0 52.4 95.9 87.0 61.5 33.9 88 1 69.4 100.0 26.4 97.8 95.1 66 3 47.2 96 5 81.6 582 900, 643 335 627, 322 57.6 69. 7 93 450 39 98,800 768,530 33,313 56 241 38 68,091 526,032 33,199 60 2 53.6 97.4 68.9 68.4 99.7 United States Ratio of assets of all insured associa tions to assets 1,314 1,675 savings and loan members 216 296,718 173 226,113 80.1 76.2 159 57 177,388 119,330 129 44 142,712 83,401 81.1 77.2 80.5 69.9 454 461,283 282 337,229 62.1 73.1 341 113 333,995 127,288 197 85 245,837 91,392 57.8 75.2 73 6 71.8 242 242,405 160 184,414 66.1 76.1 70 42 106 13 11 53,441 70,382 102,279 11,768 4,535 42 34 69 8 7 26,953 64,508 83,890 6,311 2,752 60.0 81.0 65.1 61.5 63.6 50.4 91.7 82.0 53.6 60.7 245 EXHIBITS EXHIBIT 49-Continued Federal Savings and Loan Insurance Corporation-Comparisonof all savings and loan members of the Federal Home Loan Bank System with all insured savings and loan associations, by Federal Home Loan Bank Districts and by States, June 30, 1941-Continued [Assets in thousands of dollars] All insured asso ciations 1 All savings and loan members Ratio of assets of all insured associa associa tions tions to to all assets savings of all and loan savings members and loan members Ratio all insured Bank District and State Num ber - I-.- _____________--- No. 9-Little Rock---- ------ Num ber Assets I1--- --- Assets 1- - I----- I. 95. 6 98. 7 272 $240,750 260 39 17,294 37 67 25 14 127 100,007 8,698 6,653 108,098 68 23 13 119 223 185,118 156 ------- 39 101 30 53 34,997 63,125 18,637 68,359 No. 11-Portland _------------------- 132 167,119 112 139,642 84.8 83.6 8 13 29 10 61 10 1 8,435 11,688 37,056 18,152 85,404 5,938 446 8 8 23 9 54 9 1 8,435 10,113 19,366 17,961 79,086 4,235 446 100.0 61.5 79.3 90.0 88.5 90.0 100.0 100.0 86.5 52.3 98.9 92.6 71.3 100.0 172 334,372 137 286,377 3 163 2 4 5,578 323,229 885 4,680 3 130 1 3 5,578 276,642 758 3,399 Arkansas --------------------------.. Louisiana ---------------------- Mississippi---------------- -- New Mexico------------------------Texas -----------------------------No. 10-Topeka-------------------Colorado ------------------------Kansas------------------------------ Nebraska-------------Oklahoma------------ Idaho----------------------------- Montana .----------------------Oregon _---------------------------Utah .- ----------------- Washington ------------------------Wyoming-----------------Alaska--------------No. 12-Los Angeles.--------Arizona.---------------------------California---------Nevada .------..----------------... Hawaii-------.. --....------------ 31 64 19 42 $237,586 94.9 97.5 100,123 7,814 6,042 106,747 101.5 92 0 92.9 93.7 100.1 89.8 90.8 98 8 151, 974 70.0 82.1 31,586 48, 463 10,631 61,294 79.5 63. 4 63.3 79.2 90.3 76. 8 57.0 89.7 16,860 79.7 100 0 79.8 50 0 75.0 85.6 100.0 85.6 85.6 72.6 1 Includes 5 insured nonmembers, 1 in the District of Columbia, with assets of $4,251,000; 1in Ohio whose assets have been combined with an insured member institution due to a mrgr-'1 yet completed; 2 in Louisiana with assets of $939,000, and 1 in California with assets of $462,000 246 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 50 Federal Savings and Loan Insurance Corporation-Statements of condition and operation for insured institutions in receivership on June 30, 1941 Security Federal Savings and Loan Association of Guymon, Guymon, Okla. CONDENSED COMPARATIVE STATEMENT OF CONDITION Date of receiversip Feb. 12, 1940 As of une 30, 1941 ASSETS Mortgage loans---------------------------------Real estate sold on contract----------------------------------------------Real estate owned __------------Cash and investments ..---------------Other assets. _ ------------------ $94, 655. 29 1,107.80 118, 457.27 8, 697.00 483.00 $98,615. 27 0 53, 026.18 35, 024.16 28.00 223,400.36 186,693.61 14,236.01 2,048. 68 0 0 165, 940. 31 41,175.36 0 383. 31 942.41 164, 061.65 1,878. 66 19,427. 58 223,400. 36 186,693.61 Fiscal year ended June e endd 3 Cumulative 121940 Feb Feb. 12,1940p June through 30, 1941 $6,135. 64 7, 930.19 $9, 366.12 9,200.41 -1, 794. 55 2, 528. 75 165. 71 4,531.87 734. 20 ...------------------T otal ..6, 252.80 Less losses sustained through realization of assets --------------------- 4, 697. 58 8,834.84 -5, 518.60 -4,137. 26 Total------------------LIABILITIES AND CAPITAL Advances from Federal Home Loan Bank of Topeka_-- -------------Other liabilities.-----------------------------------------Advance payments by borrowers-------------------------------------Shares purchased by Federal Savings and Loan Insurance Corporation---------------------------------Other share account claims--.---Reserve for losses-----------------------------Total------------ ----------------------------- CONDENSED STATEMENTS OF OPERATION ..----------------Gross income-. Less expenses ......--------------------Net operating income--------------------------------------------------Add profits derived from realization of assets ------------ Net credit to reserve for losses ------------ -- - -------- 247 EXHIBITS EXHIBIT 50-Continued Community Federal Savings and Loan Association of Independence, Independence, Mo. CONDENSED COMPARATIVE STATEMENT OF CONDITION Date of receivership June 26, 1940 As of June AsofJune 30, 1941 ASSETS Mortgage loans --------------Share loans -- --------------------------------------Otherloans -- Real estate sold on contract__ -----------Real estate owned, including office building .-- --------_ __ ----Real estate in judgment subject to redemption --------Cash and investments ----------- -52, Other assets --------------------------------------------------Total--------- -- - $887, 090. 51 12, 194. 72 3,500.00 63, 528.37 213, 607.94 0 429.44 5, 954. 07 $744,354. 66 6, 948. 21 3,500.00 23, 856. 62 108,461.75 7,459.22 51, 641.54 5, 734. 73 1, 238,305.05 951, 956. 73 274, 730. 50 2, 276. 69 2,015. 00 0 0 43,933.20 4, 959. 75 0 1,116.64 1 316,410.84 335, 336.81 542,033.14 81,912. 91 18,173.93 537. 033.44 30, 328.93 ----- 1, 238, 305.05 951,956. 73 --- ---- LIABILITIES AND CAPITAL Advances from Federal Home Loan Bank of Des Moines __ --Other liabilities -----------------Loans in process -----------------Advance payments by borrowers_ ----------------------------Shares purchased by Federal Savings and Loan Insurance Corporation-----Other share account claims: Insured claims --------------------------Uninsured claims --------------------------Reserve for losses-_ ---------------Total ----------------------- --.- CONDENSED STATEMENTS OF OPERATION Gross income_---Less expenses ----------------- ------ -- Net operating income- ...--.........-----Add profits derived from realization of assets - Fiscal year ended June 30, 301941 Cumulative June 26, 1940 through June 30, 1941 $50,694.66 18, 837. 68 $50,768.87 18, 928.00 _ 31,856. 98 . .-----------------5, 606.87 31,840. 87 6,141.80 --------------------.. Total- -----------------------------Less losses sustained through realization of assets---------------------------Net credit to reserve for losses- ----- ----------------------- _ - 37,463.85 26,041.21 37,982.67 26,041.21 11, 422. 64 11, 941.46 1Does not include 1 share account claim settled in amount of $60. This amount was paid on June 30,1941, and placed on the Insurance Corporation's books as of June 30,1941, but was not placed on the receiver's books at Independence, Mo., until July 8, 1941. 248 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 50-Continued Trenton Building and Loan Association, Trenton, Ohio CONDENSED COMPARATIVE STATEMENT OF CONDITION Date of receivership Apr. 15, 1940 As of June 31 30, 1941 ASSETS Cash in bank--... . ..-. ------------------Shares in American Building and Loan Association of Middletown, Ohio-... Stock in Federal,Home Loan Bank of Cincinnati -------------Mortgage loans-----------------------------------------Office building ----------------Furniture and fixtures -----------_ --------Deficiency account (shortage of Secretary) --------------- _______ _--__ -Liquidator's capital loss -- --Total_. --------------- $2, 664. 33 0 500.00 21,843.16 1,028.85 251.33 8, 494. 52 0 $21, 186.86 129.89 0 4,449.90 1, 028. 85 0 0 4,976.89 34, 782.19 31, 772. 39 LIABILITIES AND CAPITAL Advances from Federal Home Loan Bank of Cincinnati ------------------Interest on advances .-----.-------------------------------Cash over-------------------Unapplied loan credits (pledged stock)_----------------_-Claims: Outstanding checks ----------------------------Director's fees----------------------------------------------------------Examination fees-FHLBB ----- ___-----_------Shares purchased by Federal Savings and Loan Insurance Corporation------------Other share account claims ---------------------Undivided profits _ Liquidators's undivided profits-------------------------------------- 137. 68 16. 50 202.52 0 28, 228. 50 3, 068. 74 0 0 0 0 28, 455. 44 0 3, 003.89 313. 06 - 34, 782.19 31, 772. 39 Total_ ---- ------------- 2, 500.00 17. 72 17. 30 593.23 0 0 0 0 CONDENSED STATEMENT OF OPERATION Apr. 15, 1940, through June 30, 1941 Gross income--------Less expenses ---------------------- ------------------------------------------------------------- $929. 52 406.36 Net operating income----------------------------Add profits derived from realization of assets---------------------- 523 16 0 ---------------------------------------------------Total------------------------------------Less losses sustained through realization of assets 523.16 210.10 ------- 313.06 Net credit to reserve for losses ----------------------------- 249 EXHIBITS EXHIBIT 50-Continued The Dickinson County Building and Loan Association, Abilene, Kans. Statement of condition as of June 30, 1941 ASSETS Real estate sold on contract--------------------------------$1,388. 36 31,307. 36 Real estate owned, including office building ---------Cash and investments -------------------------------------- 13, 737. 82 Other assets ----------------------------------------------819.05 15, 032. 55 ----------------------------------------Reserve for losses Total-- - 62, 285. 14 ---------------------------------------LIABILITIES AND CAPITAL Advance payments by borrowers -------------------------------Other liabilities------------------------------------------------------------------Permanent stock--------------Share account claims ------------------Total------------------------------------------- $5. 20 11.00 18, 000. 00 44, 268. 94 6,85. 14 EXHIBIT 51 Federal Savings and Loan Insurance Corporation-Statement of conditzcn as of June 30, 1941 ASSETS Cash in United States Treasury_-----------Accounts receivable: Insurance premiums_------------------- $819, 962. 80 737. 12 ---Other-------------------------- $924, 579. 33 820, 699. 92 Investments: U. S. Government obligations and securities fully guaranteed by U. S_-----------------Accrued interest on investments -----------Subrogated accounts in insured institutions in liquidation _ Total assets-----------------------------------130, LIABILITIES AND 128, 062, 480. 15 603, 398. 67 508, 987. 93 920, 146. 00 CAPITAL Accounts payable ---------------------------------------Deferred income: Unearned insurance premiums------------Capital: $100, 000, 000. 00 Capital stock outstanding----------*Reserves (including special reserve for contingencies)-----------------29, 388, 883. 69 $39, 447. 59 1,491,814.72 129, 388, 883. 69 Total liabilities and capital_- - - --- -- -- -- - - - - - - -- -- - $130,920, 146. 00 *Specific contingent liabilities in the amount of $291,374.11 are not reflected in the above statement. - --425085--41--- 1 250 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 52 Federal Savings and Loan Insurance Corporation-Income and expense statement for the persod July 1, 1940, through June 30, 1941 Income: Insurance premiums earned _------------ $3, 063, 114. 94 Admission fees earned_------------_ ___ -24, 370. 83 Interest earned on U. S. Government obliga tions and securities fully guaranteed by U. S -------------------------- __ Miscellaneous_ ------------Administrative expenses: Personal services----------- _ ---------- 3, 481, 308. 13 ------- 34. 00 $6, 568, 827. 90 $118, 631. 48 Travel expense------------ 5, 833. 45 Printing and binding ------ _ Supplies and materials -------Telephone and telegraph ----Advertising ----------------Furniture and fixtures ------Miscellaneous-----------_Audit by Home Owners' Loan Corporation-----_--__---Services rendered by Federal 3, 363. 39 704. 74 1, 161. 78 239.49 1, 398. 35 684. 49 1, 090. 23 Home Loan Bank Board--_ 122, 217. 00 Administrator's office-Federal Loan Agency-----------_ 1, 200.00 Total administrative expenses----------Nonadministrative expenses: Personal services ----------$3, 942. 31 3, 732. 04 Travel expense-------------Printing and binding --258. 28 Telephone and telegraph-----395. 95 Examining expense ----------161. 50 Miscellaneous------------1. 71 Total nonadministrative expenses-------- 256, 524. 40 8, 491. 79 - 265,016. 19 Net income from operations ---------___---------_-__ Other income: Profit on sale of securities------------___ 6, 303, 811. 71 13, 365. 05 Net income for period----------------------------Adjustments of net income for prior years -------------------- 6, 317, 176. 76 3, 104. 16 Net income_----- 6, 320, 280.92 ------------------------------------ Distribution of net income To special reserve for contingencies ----------------------To surplus ------------------------------------------Total- ---------------- ,----,------ ,,, $3, 000, 000. 00 3,320,280. 92 $6, 320, 280. 92 251 EXHIBITS EXHIBIT 53 Federal Savings and Loan Insurance Corporation-Expensesfor the period July 1, 1940, to June 30, 1941 Administrative expenses: Personal services -------------------$118, 631. 48 ------------------Travel expense 5,833. 45 Printing and binding - ____--------3, 363. 39 Supplies and materials----------------704. 74 Telephone and telegraph --------- _-- -------------1,161. 78 Advertising ------------------239. 49 Furniture and fixtures ----------------1, 398. 35 Miscellaneous -----------------------------------684. 49 Audit by Home Owners' Loan Corporation_ -----1,090. 23 Services rendered by Federal Home Loan Bank Board --. 122,217. 00 Administrator's office-Federal Loan Agency__ -----1, 200. 00 Total administrative expenses ------------ 256, 524. 40 Nonadministrative expenses: Personal services ----------------Travel expense-----------------------------------Printing and binding----------Telephone and telegraph _--------- __ ------- ___ Examining expense_------------Miscellaneous -------------------------------------Total nonadministrative expenses ------------- Grand total ---------------------------------------- 3, 942. 31 3,732. 04 258. 28 395. 95 161. 50 1.71 8, 491. 79 265, 016. 19 252 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 54 Home Owners' Loan Corporation-Average outstanding original loan per borrower and average loan balance outstanding, June 30, 1941, by HOLC Regions and by States Average Region and State Average Percent OutreducOriginal standing tion loan loan Region and State Percent Outreduc Original standing tion loan loan balance balance United States-_ $2, 884 $2,108 26.9 Region 4A-Chicago-_ $3, 737 $2,721 27.2 Region 1-New York 4, 329 3, 619 16.4 3,903 3, 332 2,799 2, 532 28. 3 24.0 4, 078 2,111 4,078 2, 198 4, 371 4, 658 3,862 2, 414 3,111 1, 527 3,464 1, 753 3,496 4,035 2,971 1,861 23. 7 Illinois ---.... Wisconsin------Region 4B-Detroit__ 2,698 1,873 30. 6 Indiana ..-----Michigan ------- 2, 282 2,924 1, 555 2,045 31.9 30.1 Region 5A-Omaha__ 1,941 1, 377 29.1 Colorado---.--Iowa .---------Kansas--------Minnesota------Nebraska -----North Dakota -South Dakota- -, 1,943 1,883 1, 668 2,203 2,011 1,962 1,743 1, 339 1, 286 1,243 1, 522 1, 470 1, 551 1, 281 31.1 31.7 25. 5 30. 9 26. 9 20.9 26. 5 Region 5B-Dallas .. 2,253 1, 491 33. 8 2,033 2,290 1,351 1,421 1, 532 33. 5 35. 6 33.1 Region 6-San Fran cisco---------- 2,285 1,474 35. 5 Arizona ..-----California...---Idaho .--------Montana --..--Nevada -------Oregon-..----Utah _-----Washington .-Wyoming - ----Hawaii........... 2, 345 2,577 1,763 1,950 2,826 1,973 2, 238 1,820 2,318 2, 688 1,558 1, 646 1,181 1,301 1,822 1, 274 1,483 1,159 1, 506 1, 666 33. 6 36.1 33 0 33.3 35. 5 35.4 33.7 36. 3 35.0 38. 0 Connecticut- --Maine__-------Massachusetts--New Hampshire__ New Jersey-----New York --- _ Rhode Island --Vermont--. --Region 2A-Baltimore Delaware _----District of Colum bia ---------Maryland ----Pennsylvania --Virginia --..----. Region 2B-Cincinnati __----_-Ohio West Virginia- . Region 3A-AtlantaAlabama-------Florida-------Georgia--....... North Carolina_South Carolina_ Puerto Rico --Region 3B-Memphis Arkansas------Kentucky .._--Louisiana--..... Mississippi- .--Missouri--....-Tennessee-------- 27.7 15.1 20.2 20.0 13.4 23.1 22.9 2,846 2,109 25. 9 3,051 2, 225 27. 1 5,747 2,760 2, 728 3,031 4, 163 2, 145 2,019 2,152 27. 6 22. 3 26.0 29.0 3,030 2,156 28. 8 3,078 2, 531 2,196 1,741 28.7 31.2 2, 265 1,629 28. 1 2, 101 2, 225 2, 251 2,486 2,317 2,905 1, 512 1, 561 1, 622 1, 829 1, 634 2, 321 28. 0 29. 8 27.9 26.4 29. 5 20.1 2, 427 1,718 29.2 1, 791 2,631 2, 677 1,906 2, 838 2,166 1, 205 1,874 1, 860 1, 349 32. 7 28.8 30. 5 29. 2 28.1 28. 3 New Mexico ---Oklahoma ------ 2,041 1, 552 Texas.--------- 2, 205 II 253 EXHIBITS EXHIBIT 55 Home Owners' Loan Corporation-Netforeclosure authorizations on original loans and vendee accounts, cumulatively to June 30, 1941, by Regions and by States Original loans, net authorized Original loans, net authorized State Region andRegion State and Cumulative United States_ Region 1-New York Connecticut-- -Maine ----.----Massachusetts -New Hampshire-_ New Jersey-----New York .---.. Rhode Island---Vermont ...-----. Vendee loans, net auPercent thorized, of total cumulaloans tive closed Region and State SPercent Region 4A-Chicago__ 193,612 19.0 2,882 61, 567 37.5 403 2,394 655 9,807 404 13, 649 32, 776 1,500 382 23. 3 19. 3 40.0 21. 6 37. 6 40.9 24.5 24. 2 14 6 81 13 86 191 8 4 Cumulative Illinois -...-Wisconsin------Region 4B-Detroit_.. Indiana.---- ---Michigan---.... Vendee loans, net au thorized, of total cumula loans tive closed 16,748 16.2 142 9,118 7, 630 13.0 23.1 100 42 14, 162 10.9 188 6, 699 7,463 13.7 9.2 84 104 Region 5A-Omaha-__ 19,436 20. 5 497 Colorado .-----Iowa------------Kansas--------Minnesota.------ 1, 202 2,853 5,719 2,861 3,895 1, 146 1,760 10.4 14. 5 30.9 13. 6 28. 6 26.0 28.7 42 69 114 81 122 25 44 Region 2A-Baltimore 16,414 18. 1 207 Delaware--...District of Colum bia ..--. _-----_ Maryland------Pennsylvania.-Virginia-...----- 257 15. 6 6 267 3,503 10,243 2,144 12.8 22.0 17.4 17.8 7 25 110 59 Region 5B-Dallas--__ 14,453 20.4 523 123 New Mexico ---. Oklahoma ------ Texas ..-------- 205 6,142 8,106 8.3 25. 6 18.3 13 125 385 Region 6-San Fran cisco-----------.--- 12,697 11.3 269 927 14. 2 27 1, 276 4,353 410 326 61 932 1, 604 2, 673 135 10. 6 10.9 8.7 8.9 5.0 9.9 14. 9 12. 5 5.5 Region 2B-Cincin nati------------ Nebraska ------- 13,826 12. 8 Ohio .- -_----- 13,026 800 West Virginia- . 13. 2 Region 3A-Atlanta 8, 525 8.8 13.4 111 12 189 Alabama------Florida .-----Georgia -------North Carolina___ South Carolina-Puerto Rico---.- 3,046 1, 325 1,801 1, 670 662 21 18.3 9.8 12.1 13. 6 11.6 3.6 Region 3B-Memphis_ 15,784 19. 5 341 1, 680 1,579 2, 369 1,317 6, 634 2, 205 16. 2 17.1 16. 5 15.0 27.0 16.0 46 19 35 46 138 57 Arkansas-------Kentucky-...___ Louisiana .----Mississippi- ---.. Missouri ------.. Tennessee -...---- 65 42 36 28 18 North Dakota -South Dakota --- Arizona---------California: Northern .-Southern -Idaho ----------- Montana---. .-Nevada.------Oregon---------Utah-------.Washington--.... Wyoming __------ 14 108 13 2 28 24 44 9 - - 254 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 56 Home Owners' Loan Corporation-Propertyacquisitions and sales, by fiscal-year periods Acquisitions Sales Ratio of -. _ Period Number of properties 1 1936 ------------.. 1937---------1938 ------1939-- ------1940 -------1941 - ------------- --.------- Total---_----------- number of Aggregate capital value 1 Number of prop- Aggregate capital erties value A sales to number of acquisi ggregate sales price tions 2 5,275 39, 534 55, 190 41, 743 23, 826 17, 382 $23,930,096 181,196, 458 303, 226, 436 228, 932, 138 127, 055, 797 85, 650, 581 142 2, 231 15,159 37, 771 49, 716 34, 745 $497,117 8, 248, 929 62, 001, 901 166, 888, 675 241, 270, 671 173, 474, 370 $523,055 8, 293,100 54, 182, 578 130,177,111 170, 505, 356 120, 297, 795 2 6 5. 4 26. 7 89.1 207.1 199.9 182, 950 949, 991, 506 139, 764 652, 381, 663 483, 978, 995 75. 7 1 Includes all adjustments to June 30, 1941. 2 For the purpose of computing the percentage of properties sold to those cumulatively acquired, properties sold prior to acquisition have been added to the number of properties acquired. EXHIBIT 57 Home Owners' Loan Corporation-Profitand loss on sales of real estate, by calendar years Number of properties sold at a profit and amount of profit Number of properties sold at a loss and amount of loss Total number of prop ot ertes sold prop Year Number 1935 . ---------1936 --------------1937_----------- 1938__ ------------1939___ ---1940 - ----------1941 1----------. - 1January to June, inclusive. 27 366 3,033 5,761 5, 442 3, 843 2,135 Profit $6,926 125,782 1,218,126 1, 729, 446 1, 598, 793 1, 157, 266 823, 386 Number 2 235 2,214 22, 957 40, 787 40, 862 12,100 Loss $1, 528 118,828 1,381,934 23, 123,114 56, 684, 231 68, 860. 946 20, 519, 053 Number 29 601 5,247 28, 718 46, 229 44, 705 14, 235 Proft or loss (+) (-) +$5, 398 +6,954 -163,808 -21, 393, 668 -55, 085, 438 -67, 703, 680 -19, 695, 667 255 EXHIBITS EXHIBIT 58 Home Owners' Loan Corporation--Analysis of the various elements entering into the capital value of propertzes owned and in process of acquiring title, June 30, 1941 Original capitalized value: Unpaid balance of loans and advances__ $256, 599, 028. 58 Unpaid balance of accrued interest---- 15, 997, 767. 62 Total_ --------------------------------------$272, 596, 796. 20 Subsequent capital charges: Taxes and assessments --------11, 097, 630. 76 1 Insurance-----------___-___ 11, 136. 32 Reconditioning and capital repairs - 29, 878, 008. 65 Foreclosure and other acquisition costs_ 7, 131, 213. 33 Miscellaneous ----------------------508, 266. 72 48, 603, 983. 14 Total ---------------------------------------Subsequent capital credits: Rents (prior to acquisition of title) ---- 648, 394. 63 Partial sales (no profit or loss recog nized) ------------------------Collection of deficiencies - ---------Miscellaneous----------------------- 909,848. 35 297, 306. 88 611,228.71 321,200, 779. 34 2, 466, 778. 57 Total capitalized value at June 30, 1941 -------------1Net credit--results from cancellation of policies at acquisition. 318, 734, 000. 77 256 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 59 Home Owners' Loan Corporation-Percentageof vacant units to units available for rent, percentage of rents collected to rent accruals, and average rent per unit, by months Year and month 1,936 July ._ _.--------_ August---- September ---- --October...-------November ___--December---...- Vacan cies Percent Percent 93 7 18 6 92. 4 18. 7 15.9 94.7 88.5 17 1 88.8 18 4 17.5 89 4 1937 18.7 January __------18.3 February-----------17.8 March .-- --------. 15 0 April .....-------13.3 May--------12 5 June . .-------------11.2 July .- ..---. 10.4 August_-----10.4 September-___ 10.4 October _------11.2 November_--- 32.4 December-------1938 January ----February ----- ----March--_____ April..---- ---May.------June. -------------July-- August --- -September ---October-November _------- -_ December --------. - Collec tions 13. 1 13. 5 14.3 12 6 11.6 11.5 12.0 11.0 10. 3 9.9 10 4 10. 5 Average rent per unit Year I and month 1939 $20.59 20.75 20.04 21.24 21.26 20.92 96. 2 95. 3 92 8 99.5 94 7 96.3 95 5 97. 7 97.3 97.7 97.9 96 7 22.61 22 90 23.90 23. 85 24.60 24.99 25. 27 25. 48 25.77 26 10 26.90 26.75 93. 3 96. 0 99 7 97.2 99.2 98 8 98.4 99.2 98.4 99.6 96.8 100.3 26.48 27.19 26.91 26.96 27 40 27.66 27.93 27.99 28 00 28 25 28 69 28.82 January _.....-. February- ----March--.. ---_.. April ----------May-------------June ----- --------July--Auust September . October------ -.. November -----December ----...... 1940 January ---.... . February ..--------March... -----April ..-----------------May Jun -_------_ ---- __July-- --August ----------September ..-----October_ --November ---------December-------- ties I Vacan Collec tions Average rent per unit Percent 10 9 10.4 9.3 7.8 7.7 7.4 7.2 7.5 7.6 7.9 8.5 86 Percent 98. 7 99.4 99 8 99.9 100.0 99. 1 99.9 99.5 99. 1 99. 5 98.4 99 3 $29.01 28.95 29.14 29.45 29.33 '29 43 29.78 30. 02 29.99 30. 11 30.30 31.53 9.2 92 9.4 8.5 8.2 8.3 8.5 8.5 9.0 9.3 9.7 10.4 97.8 99.1 98.8 98.8 100. 0 100. 2 99 7 99.3 99. 3 99.9 99. 5 99.2 31.55 31.50 31.79 31 94 32.41 32.90 33.01 33.25 33.47 33.87 34. 09 34.48 10.9 10.8 10. 5 9.8 9.5 9.0 98 5 99. 3 98.9 99. 1 99 9 99. 2 34. 33 34 41 34. 57 34.88 35 23 35.33 1941 January __-- ------February----March_- April_ May---- --June.----------------- 257 EXHIBITS EXHIBIT 60 Home Owners' Loan Corporation-Summary of the various income and expense items entering into the operation of properties sold by the Corporation through June 30, 1941 Operating profit (or loss) on property sold: --------------------------------- $17, 369, 704. 72 Expense-Taxes Insurance-----------------------------1, 800, 882. 15 9, 959, 961. 27 Maintenance -----------------------------Miscellaneous_------- ----------- 4, 486, 753. 18 4, 535, 788. 08 Commissions--------Unallocated---------------------------Income ------------------------------------Net operating profit on property sold--------------------Number of properties sold -------_ ------------------Average capital loss (including brokers' commissions and selling expense)------------------------------------------Average operating profit----------------------------------- 38, 153, 089. 40 42, 234. 39 38, 195, 323. 79 44, 555, 677. 52 6, 360, 353. 73 139, 764 1, 431. 39 45. 51 EXHIBIT 61 Home Owners' Loan Corporation-Number of reconditioning contracts completed from the beginning of operations through June 30, 1941 Number of Total dollar contracts amount amount completed Type of case 1. Included in original loans to place homes of borrowers in a condi tion of reasonable structural soundness ---------------------2. Advanced to borrowers since closing of loans for keeping homes in sound condition __------.----- ... ..------ ---- 3. Reconditioning to make acquired properties attractive for rent or sale ......--------------------------.-- -------------..-------. 4. Insurance cases supervised by the Corporation_-Total.... _---_-_- ..----------.------------------------------ Average dollar amount 417, 396 $78, 257, 464 $187 18,821 3,180, 592 169 362, 971 79, 708, 573 7, 527, 758 230 831,850 168,674,387 203 32, 662 220 258 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 62 Home Owners' Loan Corporation-Numberof employees by departments, divisions, and sections, as of July 1, 1941 Board Members and assistants - -------------------------Secretary's Office --------------------------------------Research and Statistics---------------------------------- 48 200 54 Public Relations ----------------------------------------- 14 Financial Adviser---------------------------------------- 4 Total, Board ----------------------------------------General Manager, staff_-------------------------------457 Property Management _-----------------------------1,639 Loan Service ----------------------------------------1,787 Appraisal and Reconditioning -------------------------912 Comptroller and Accounting -------------------------961 Treasurer-----------------------------------537 10 Budget-----------------------------------------------342 Auditor---------------------------------------------62 Purchase and Supply ------------------------------------- 1 320 Total, Management ------------------------------------ 6,707 Legal Department --------------------------------------------Personnel Department -------------------------------------- 528 209 Total, HOLC - ----------------------------------------- 2 7,764 1Includes personnel of general service departments which serve all agencies under the Federal Home Loan Bank Board. 2 Includes 23 W. A. E. employees and 107 employees on military leave. 259 EXHIBITS EXHIBIT 63 Home Owners' Loan Corporation-Balancesheet as of June 30, 1941 ASSETS Mortgage loans, advances and sales in struments-at present face value: Original loans and advances there $1,521, 046, 216. 03 on -----------------------Vendee accounts (purchase money mortgages, sales contracts, or 349, 246, 315. 37 instruments used in lieu thereof)_ Unposted advances on mortgage 12, 409. 43 loans, and vendee accounts - Interest receivable-------------------Property: 1 Owned------------In process of acquiring title ----- $1, 870, 304, 940. 83 5, 713, 151. 51 $303, 029, 389. 97 15, 704, 610. 80 318, 734, 000. 77 Less reserve for losses --------- ------- 2, 194, 752, 093. 11 25, 658, 261. 81 2,169, 093, 831. 30 Investments -at cost: Federal Savings and Loan Insur ance Corporation (entire capital) Savings and loan associations: Federal-char tered__-$145, 575, 950. 00 State char 37, 277, 410. 00 tered____ $100, 000, 000. 00 182, 853, 360. 00 282, 853, 360. 00 Bond Retirement Fund: Cash (including $10,687,950.00 deposited with U. S. Treasury for retirement of matured bonds).... 46, 111, 498. 43 1 Property owned and property in process of acquiring title are stated at values represented by unpaid balances of loans and advances, unpaid interest to date of foreclosure sale or judgment, foreclosure costs, net charges prior to date of acquisition, and permanent additions, initial repairs and reconditioning subsequent to acquisition. Unpaid interest included in these values amounts to $15,997,767.62. 2 The reserve for losses is being accumulated at an annual rate which, it is intended, will approximate eventually the total losses which may be sustained in the liquidation of mortgage loans, interest and proper ty. During the period of accumulation, therefore, the carrying value of these assets, less the reserve, will not necessarily represent their probable realizable value. 260 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 63-Continued Home Owners' Loan Corporation-Balancesheet as of June 30, 1941-Continued ASSETS-continued Cash: Operating funds (includes $20,182, 180.55 payable to Bond Retire ment Fund in July 1941; and $17,794,970.26 deposited by bor rowers -see contra) ------Special funds held by U. S. Treas ury for payment of interest coupons-(see contra) ------ $53, 585, 612. 51 11,300, 873. 05 $64, 886, 485. 56 Fixed assets: Home Office land and building-at cost_----------------Furniture, fixtures and equipment at cost-------------- 2, 987, 819. 93 2,525, 959. 87 Total fixed assets-_---- 5,513, 779. 80 2, 754, 133. 08 Less reserve for depreciation ---- Other assets: Accounts receivable Deferred and unapplied charges ----- 2, 759, 646. 72 106, 140. 63 121, 364. 73 ----------------- Total assets--------------------------------LIABILITIES AND 2, 565, 932, 327. 37 CAPITAL Bonded indebtedness (guaranteed as to principal and interest by the United States, except $222,275 of unpaid matured 4-percent bonds guaranteed as to interest only): Bonds outstanding-not matured- $2, 408, 920, 850. 00 Bonds matured-on which interest has ceased-------------------10, 687, 950. 00 --------Accounts payable: Interest due July 1, 1941 and prior thereto (see contra)--------Vouchers payable ------Insurance premiums_----Commissions to sales brokers ---Special deposits by borrowers - Miscellaneous --------- 11, 300, 873. 61,920. 676, 112. 148, 481. 17,794, 970. 42,244. $2, 419, 608, 800. 00 05 89 21 92 26 67 30,024, 603. 00 261 EXHIBITS EXHIBIT 63-Continued Home Owners' Loan Corporation-Balancesheet as of June 30, 1941-Continued LIABILITIES AND CAPITAL-Continued Accrued liabilities: Accrued interest on bonded in debtedness--------------Other accrued liabilities ---- $4, 836, 521. 03 226, 106. 22 $5, 062, 627. 25 Deferred and unapplied credits: Unamortized premium on bonds sold-------------------Miscellaneous -------- 1, 206, 794. 51 1, 165, 417. 87 2, 372, 212. 38 Reserves: Fidelity and casualties ---Fire and other hazards-------- 239, 419. 64 987, 356. 97 1, 226, 776. 61 Capital stock less deficit: Capital stock: Authorized, issued and out standing_-------------Less deficit after provision for losses in the manner de scribed in footnote 2 on page 259-------- 200, 000, 000. 00 92, 362, 691. 87 Total liabilities and capital---------- 107, 637, 308. 13 2, 565, 932, 327. 37 NOTE.-Except for property transactions which are recorded on a cash basis, major items of income and expense are recorded on an accrual basis. Therefore, no asset value has been recognized with respect to uncollected rentals or prepaid taxes nor liability for accrued taxes. 262 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 64 Home Owners' Loan Corporation-Investments in savings and loan associations,by States, as of June 30, 1941 Federal savings and loan associations Number ----Alabama------------------------Arizona ------------------------------------------.--.. --------Arkansas--------------------California.... Colorado..---. ------------------.. -------------------Connecticut..--------Delaware---------------------------------Florida-..---------------........... Georgia------------------------------Idaho---- ---------Illinois ----------------Indiana---------------------------------------------Iowa .-----------------------.----.----------------Kansas----------------------------------------------Kentucky ------....... ---... ----.---------..... Louisiana---------------------------------------Maine-------------------------------------------------Maryland.------------------Massachusetts .----------------_. Michigan .--....------...-.. ...-.--------.. Minnesota ----.----.--.--.--.----------------------Mississippi.--.---------------------..---------------Missouri---. ----------------------------.---.............. Montana-.......-----------Nebraska------------------------------------------Nevada---------------------------------------------New Hampshire ...........------------------------New Jersey ---------------------------------------------------New Mexico-----.. ----.............--....... New York --.------.. North Carolina_-----------_. ------------......-----North Dakota ---.....-...----..--....-----Ohio -----Oklahoma................-----------------------------------------------------------------------------Oregon Pennsylvania__------------------------Rhode Island------------South Carolina -....South Dakota----------------------. Tennessee-..--....---.. ---------------------Texas-----------------------Utah ....-------.................-Vermont- ...... ----------------Virginia....... -------................ Washington-.........------------West Virginia.... Wisconsin-......------------Wyoming---------------District of Columbia ......-----------------------Hawaiil-----. --.-----------Alaska----------------Total--------------------- --------- Amount 13 2 25 55 16 15 $787,700 655, 000 803, 200 16, 802,400 2, 236,100 1, 862, 300 42 8, 212, 250 2, 906, 000 1, 818, 500 12, 238, 500 5, 818, 900 1, 532,100 2, 653, 500 1,964, 500 119, 500 244,000 3, 627, 500 3,490, 000 2,107,100 7,199, 600 287,100 5,020,800 30, 000 730, 500 40 6 81 51 22 20 29 8 6 19 10 25 28 16 30 1 9 State-chartered savings and loan associations Number 1 1 11 5 3 2 Amount $150, 000 65, 000 1, 605, 000 725.000 50, 000 200, 000 121 18 4 16 902, 500 645, 000 51,000 2,184,000 28 4, 942, 600 3 145, 210 9 870, 000 1 8 20, 000 908,800 225,000 5,000 1 2 1 5 7 55 15 4 56 18 19 48 1 19 4 35 67 6 1 18 24 17 35 9 1 1 1 341, 000 "-44 -3, 338, 000 112, 500 16,104, 000 1, 231, 300 15 6 1,955,200 137, 500 244, 000 1 595, 000 7, 941, 500 34 7, 640, 000 1, 211, 000 1 100, 000 3, 352, 300 12 4, 954, 500 390, 000 285,000 ..------1 788, 600 75, 000 287, 000 3 ..---------4, 556,400 .-------- 8 3, 060,400 1, 630, 000 8 3 1, 639, 000 1,435, 000 ..------- 2, 267, 400 6,969, 000 2,189,000 3, 521, 000 616, 800 10 3 37 1, 039, 000 240, 000 5, 732, 500 312 3121 37, 277, 410 33,300 14S, S7S, 960 1,036 1,036 1 145, 575,950 1 37,277,410------ 263 EXHIBITS EXHIBIT 64-Continued Summary of investments in savings and loan associations,fiscal year 1941 Federal say- State-char ings and tered savings loan assoand loan ciations associations Total $203, 024, 210 1,420, 000 .---------.---- $163,130, 800 Investments-June 30, 1940 (net)-----.......... 270,000 Investments-July 1, 1940, to June 30, 1941---.....----------Conversions from State to Federal charter-July 1, 1940, to 275,000 --June 30, 1941.------ ------------------------- $39, 893, 410 1,150, 000 - 163, 675,800 40,768,410 204,444,210 --------- 145, 575, 950 37, 277, 410 182,853,360 Total ..------- ---------------------- Repurchases-July 1, 1940, to June 30, 1941 Investments-June 30, 1941 (net)- -- --- - ---------- 18,099,850 -275, 000 ..---...... 3,491,000 21, 590, 850 264 REPORT OF FEDERAL HOME LOAN BAiNK BOAR~D, 0000 cq00t-000 ace2 000 00) t ~ -0 oo 00O. 4o 0C)00 00tomt.)00 000000C) 0C>C)a)C r4=000 "d00 1 01 - co C)C> )00 0L e16-o = L,00 & t &D -) oCI 1 M oco tzVD It =IN o0O -0--0 O 00 0 0 L 4z 90.qmcc C3 0 0) bi0 !4- -ic:) " - c C) 6& 0 0 00 0 0 4 o 4cqC) 0000) D 0C) t f 4 '- 0 - L 4 )C )( ) I~ 0q(=00 = 00 0000o X6 I r-40 Cd bn.0 Q j C> q014-000D0C)0100~0 t D .,2 -I 0 00 Z) 0000C ) C)COC>00 00 000CDCD0D0CC O00 -00 m - P +20"-4 CO w C0 - t 00000000000 t rq 0- r4 0 Q) 000 >-00000 C 00d2 0 ' 0 0 C-D (3 4-0'il os=C 4c 0~200 O oco Cq - 0 0 r.0 .q r0c CI 4-20 00 ca0 04Q 4-a 000 00a r"0 -Z am 00 R ce 0 0000 o 00000000000L ca00 00 0 00 30C0 t l 1941 265 EXHIBITS EXHIBIT 66 Home Owners' Loan Corporation-Cashreceipts and expenditures, fiscal years 1940 and 1941 1940 Receipts: . .------.-----..... ---------.------ _ Collection of interest Dividends on investments.--....-------- --------------Property income------------------------------------------Repayments of principal and miscellaneous property credits--------Repurchase of savings and loan shares----------------Miscellaneous unapplied and unposted items and borrowers' special deposits for taxes and insurance $90,204, 200 7, 292,109 26, 243, 551 222, 614, 633 14,973,000 $87, 225, 773 6,472, 686 20, 755,481 228, 376, 761 21,590,850 21, 178, 525 39,906,357 -------------------------. 382, 506,018 404, 327, 908 Expenditures: Administrative expense-Federal Loan Agency and Federal Home Loan Bank Board __------------------------- 23, 653, 581 19,948, 289 59, 219, 430 22, 491, 659 13,177,019 70, 214, 604 22, 156,415 1, 538,400 55, 584, 323 17,182, 729 9,168, 553 18, 673, 326 12, 740, 842 1,420,000 Total receipts --- -- -------- _.---------_ .--------- 1941 Interest on bonds . ....------------------------Property expense ----.-----.. _ -----------Other nonadministrative expense--------------------------------Advances to borrowers -----------------------Advances for acquisition of, or due to ownership of property .-----Purchase of shares of savings and loan associations --------Miscellaneous unposted items and disbursements from borrowers' special deposits for taxes and insurance -----------Total expenditures--_ ------ Net receipts _--- -------- ------------------ -- ----------------------- Means of financing: Cash balance at beginning of year --------Net receipts (above)-------------------Bond sales ___ ..---- ---------------------------Net funds available-------------Funds allocated for retirement of bonds Cash balance at end of year .... 425085-41- 18 . - . --------. -----------------... ...-- 10,170, 634 30, 351, 230 222, 621,742 165,069, 292 159,884, 276 239, 258,616 79, 329, 628 159, 884, 276 117,171, 577 39, 702, 549 239, 258, 616 20,849,048 356,385,481 316, 682,932 299,810, 213 246, 224,601 39, 702, 549 53, 585, 612 266 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 67 Home Owners' Loan Corporation-Statement of income and expense for the fiscal year 1941 Operating and other income: Interest: Mortgage loans and advances ------------------$73, 935, 175. 72 Vendee accounts and advances --------------- _-14, 431, 189. 86 Total------------------ ----------------Special investments_ ---------------------------- 88, 366, 365. 58 19, 638. 71 Total ---------------------------------------------------------------Property income----Dividends received from savings and loan associations--___ Miscellaneous-------------------------------------Total income---------------------------_---- 88, 386, 004. 20, 774, 182. 6, 473, 061. 851,479. 29 94 24 05 - 116, 484, 727. 52 Operating and other expenses: Interest on bonded indebtedness----------Less amortization of premium on bonds sold ------- 551 446, 135. 22 203, 831. 82 55,242, 303. 40 Administrative and general expenses: Administrative expenses-current fiscal year ------Administrative expenses-first preceding fiscal year__ Administrative expenses-all other fiscal years --__ General expenses ----------------------Property expense------------------Total expenses_----------Net income before provision for losses which may be sustained in the liquidation of assets------------------------ 19,630, 538. 89 127, 470. 32 8, 068. 32 1, 178, 965. 68 16,680, 132. 27 92,867,478.88 23, 617, 248. 64 Provision for losses: On mortgage loans, interest and property_ For fidelity and casualties -------For fire and other hazards --------- 40,353,330.80 Total Loss for fiscal year 40,000,000.00 - 33,247.30 320,083.50 -- 16, 736, 082. 16 267 EXHIBITS EXHIBIT 68 Home Owners' Loan Corporation-Statementof income and expense from the beginning of operations, June 13, 1933, to June 30, 1941 Operating and other income: Interest: Mortgage loans and advancesVendee accounts and advances $785, 032, 446. 67 -.- Special investments-------- Total 30, 554, 385. 53 815, 586, 832. 20 202, 061. 81 ------------------------------------ Property income- ----------------------------Dividends received-Federal Savings and Loan Insurance ------------------------Corporation----Dividends received from savings and loan associations --Miscellaneous-----------------------Total --------------------------_ Operating and other expense: Interest on bonded indebtedness------ $493, 673, 665. 75 Less amortization of premium on bonds 412,072.92 sold------_--------------------- Discount on refunded bonds ----Administrative and general expense---Property expense-------------------- 493, 7, 229, 79, 261, 592. 158, 329. 822, 090. 299,181. $815, 788, 894. 01 93,714, 150. 60 3, 035, 326. 09 29, 745, 820. 70 2, 502, 036. 88 944, 786, 228. 28 83 31 75 32 809, 541, 194. 21 Net income before provision for losses which may be sustained ___ ___------__-in the liquidation of assets -Provision for losses: On mortgage loans, interest and property (computed in accordance with Board $226, 137, 153. 25 Resolution of Nov. 15, 1938)-------1, 110, 393. 54 For fidelity and casualties ------For fire and other hazards -----_ 352, 746. 50 Loss for period June 13, 1933, to June 30, 1941-------__--__ $33, 780. 04 Add: Unlocated payments ------Less: Unidentified payments- $12, 150. 35 Repayments unallo cated - unidentified 14,197.04 difference --------26,347. 39 135, 245, 034. 07 227, 600, 293. 29 92,355,259. 22 7,432. 65 Deficit at June 30, 1941-------------------------------- 92, 362, 691.87 268 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 EXHIBIT 69 Home Owners' Loan Corporation-Analysisof changes in deficit for the fiscal year ended June 30, 1941 Deficit at July 1, 1940------- ------------------------Add: Loss for the fiscal year ended June 30, 1941------------------$16,736,082.16 Unlocated payments ------------33, 780. 04 Adjustment to miscellaneous in come ----------------------14, 333. 26 $76, 453, 005. 43 16, 784, 195. 46 93,237, 200. 89 Deduct: Adjustment of discount on re funded bonds----------------Adjustment of interest earned----Repayments unallocated-unidenti fied difference ---------------Accounts payable-unclaimed items---------------------Unidentified payments -------Miscellaneous credits------Deficit at June 30, 1941-- ---------- 840, 000. 00 14, 317. 02 14,197.04 3, 113. 80 2, 616. 10 265. 06 874, 509. 02 92, 362, 691. 87 INDEX Page Advances of the Federal Home Loan Banks-See FEDERAL HOME LOAN BANKS. Agencies of Federal Home Loan Bank Board, organization chart of_- Facing 1 Amortization-See HOME OWNERS' LOAN CORPORATION-Loans. 159 Appraisal Section of the Home Owners' Loan Corporation-------------Assets-See agency concerned. Balance sheets-See agency concerned. 77 Bank Presidents' Conference-----------------------------------Bonds (see also HOME OWNERS' LOAN CORPORATION)_- 57-58, 164-165, 169-170 57-58 Defense----------------_------------------------------Members of Bank System issuing agents for sale of ----------- 57-58 Building and loan associations-SeeSavings and loan associations. 29-32 ----------------------------Building costs ---31-32 Cost indices for six-room frame house ----------------------31 Labor costs, index of- ------------------------------------Lumber prices, index of ----------------------- 30-31 ------------------------------------------Material prices Index of -------------------------------------------- 29-32 30-31 Charters-See FEDERAL SAVINGS AND LOAN ASSOCIATIONS. Charts, list of: 173 -----------------------------------------Defense Housing 174-175 Federal Home Loan Bank System -------------------------175-176 Federal savings and loan associations --------------------176 Federal Savings and Loan Insurance Corporation---------------176 __---------- --------Home Owners' Loan Corporation---_ 173-174 Survey of Housing and Mortgage Finance -------------------Collections-See HOME OWNERS' LOAN CORPORATION. Community programs-See FEDERAL SAVINGS AND LOAN IN SURANCE CORPORATION. 46-47, 110-111 Construction lending, expansion of----------------------15-16 Construction, nonresidential- _----------------------------------15 -------------------------------Contracts awarded-----Construction, residential: Costs-See Building costs. 2-3, 16-18 Defense housing on, effect of_---------------------------3 Dwelling units constructed, number of-------_--_-------------80-81 Federal Home Building Service Plan_ -----------------------14-15 Index of -----------------------------------------------Labor supply --------------------------------------32-33 New nonfarm dwellings: 21-23 -------------------------------------Number of21-23 _-------------------By type of dwelling--------- 269 270 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Construction, residential-Continued Private: Compared with public..-------- _---______-----18-20 Concentration in defense areas _-____ ----------------17-18 Distribution of---------------_----------__ __ 16-20 Increase in--------------------------------------14-21 Rate of, by size of community-----------------------21 Regional distribution of ----------------------------20-21 Public: Compared with private-------------------------------18-20 Distribution of -----------------_ ------------------16 Increase in-----------------------------18-20 New York Public Housing Law of 1939 -----------------19 Nonfarm dwelling units, number of ------------------- 18-20 United States Housing Act of 1937 --------------------19 Public and private, compared -----------------------------18-20 Regional distribution of ---------------------------20-21 Single-family dwellings: * Preference for--------------------------------21-23 Effects of population trends on--------------------_ 23 Value of, estimated --------------------------------18 Debentures-See FEDERAL HOME LOAN BANKS. Debt: Home mortgage --------------------------------48-51 Public Debt Act of 1941 -- ------------------------57 Default, insured associations in--See FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION. DEFENSE HOUSING ----------------------------------------1-11 Coordination, national and local_-----------------------------9-10 Coordinator--_----_------------------------1 Demountable and portable housing--------_ ----------2 Federal Home Loan Bank Board in, participation of_ _ __ _ 1, 7-11 Homes Registration Offices_ ---------------------------------3, 10 Lending by member institutions-- -------------------------5-7 Private industry in, place of ------------------------------2 Public funds in, use of-------------------------------2, 11 Dwelling units provided, number of----------------_ _2, 11 __--_----16-18 Residential construction, effect on------- ----------Trailers and dormitories_------------------------------2-3 Types of: Demountable and portable-------------_-----------------2 Trailers and dormitories--------------------------------2-3 Defense housing area, definition of--------------------------__ 4-5, 17 Defense program: Bonds, members of Bank System issuing agents for sale of---57-58 Building labor supply affected by ---------------------------32-33 57 Cost of financing, plans to pay--------------------------------33-34 Vacancy ratios affected by------------------_-------------Direct-reduction loan plan -----------------_----_------------100 271 INDEX Dividend rates: Federal Home Loan Banks---_ ------------------------------ 74-75 Federal savings and loan associations ------ _------_---_----57, 113 Examinations: Examining Division of Federal Home Loan Bank Board------- 78-79, 125 Federal Home Loan Banks ----------------------------- 77-80 Federal savings and loan associations -------------------------78 Federal Savings and Loan Insurance Corporation-_-----_---------78 Form, adoption of standard ---------------------------- 78-79 -----_ ---125 Insured savings and loan associations_ _ _ Joint--------------------------------------------78 Exhibits, list of: Federal Home Loan Bank System -----_ -------------_177 179 --------Federal savings and loan associations_-__180 Federal Savings and Loan Insurance Corporation-__ -_____--______ _ 181 Home Owners' Loan Corporation --------177 Survey of housing and mortgage finance --Expenses-See agency concerned. Federal Home Building Service Plan ------_---__-------------80-81 FEDERAL HOME LOAN BANK BOARD: Facing 1 7-11 Agencies of, organization chart of----------------------------------Defense housing, participation in Examining Division---------- ____-___---- Federal Home Building Service Plan - Benefits of-----------------_------Decentralization of------------ 78-79, 125 _______ _ ------ -_____ 80-81 80 ----- 80 Purpose of ------------_____ ___80 Funds, source of-----------------_-___ -- __ ---75 Income and expenses of---------------__ ------75 Personnel of----------------------------------------75 Receipts and disbursements of -________-75 Rules and Regulations, amendments to_ ________ 8-9 FEDERAL HOME LOAN BANK SYSTEM: Administration of-------------------------------------- 75-77 Advances to members-See FEDERAL HOME LOAN BANKS. Borrowing capacity of members ----------------------------68 Government investments, decline of-------------------87-91, 107-110 Interest rates, reduction of------------__ _65 Membership: Admissions to-----------_ _ -------------------83 Applications for ----------------------------------------83 Borrowing capacity of members_ -------------------------68 Borrowing members -------------------------_---------64 Proportion to total members ----------_ 64 Changes in ------------------------------------------- 81-84 Compared with all operating savings and loan associations -----84 Defense bonds, issuing agents for sale of-------------------57-58 Defense housing, Title VI of National Housing Act---------_9 Dividends received from Federal Home Loan Banks --------- 74-75 272 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 FEDERAL HOME LOAN BANK SYSTEM-Continued Membership-Continued Financial condition ----_ -------------------------91-97 Assets_ _-------------------------------81-84, 91-95 _--- 83 Percent change ----------------------------- 91 By type of institution --------- _-------_----__ Compared with all operating savings and loan associa tions_ --------------------------------------84 Trend in selected asset accounts, by Bank Districts --93 Balance sheet, consolidated, Exhibits 34 and 35--------- 221, 222 Borrowed money-----------------------------------96 Cash- ----------------------------------- 94-95 Liability accounts, trend in selected- -------------------95 Mortgage loans ----------_ ----------------------92-93 Private investments------------_ ----------------- 95-96 Real estate_-------------------------------------93-94 Reserves ------------------------------------96-97, 100 Government investments in member associations ------87-91, 95-96 Dividends paid on_ --------------------------90-91 Issuing agents for sale of defense bonds- ------------------57-58 Management, improvement in_--------------_--------98-102 Mortgage lending activity---------------3-7, 84-87, 92-93, 99-100 Defense lending -------------___----------4-7 ----Amount loaned, by purpose of loan -------5 Distribution, by purpose of loan----------------__5, 87 Percentage distribution, by type of association -----------86 Volume of loans made----- --------------------------85 Number of members-----------_----------------------81-84 83 By type of institution-- ---------------------------Compared with all operating savings and loan associations__ 84 Operating ratios of member savings and loan associations ----97-98 Operating standards and management, improvement in---- _-- 98-102 Savings and loan graduate schools------------------ 101-102 Operation, plans of-----------_ ----------__------97-100 ------81-102 Operations of member institutions -----By asset size groups _----_----------------------98 Statement of ------------------------------------- 97-98 Private investments in member institutions- ---------------95-96 _ - 96-97, 100-101 Reserves of member institutions_ --------------Withdrawals from -------------------------------83 FEDERAL HOME LOAN BANKS: Administration of-----------------------------------------75-77 Advances to members: _------Amounts advanced_ -------------------------Interest rates charged on--------------------------------------------------Outstanding---------------By Federal Home Loan Bank Districts ------------------Long-term and short-term -------------------------------------------------------------Repayments of Trends in ------------------------------------------- 62-68 65 65-68 65 66 62-68 62-65 INDEX 273 FEDERAL HOME LOAN BANKS-Continued Advances to members-Continued Types of_---------------------------------- Long-term and short-term_ ---------------------- _ Secured and unsecured ---------------------------Capital stock of----------------------------------------Reconstruction Finance Corporation holding ---------------Debentures ------------------------------------Deposits: Demand and time --------------------------------Interbank -------Interest rates paid on___ -- ----------------------------__'_-----___- Member-----------------------------Dividends_ _-----------------------------------Examination and supervision of------------------- 65-68 65-68 66-67 71-72 71 69-70 70-71 70-71 70-71 70 74-75 77-80 Financial condition- _-_----_---_-------_-----------------68-72 ------------------------------ 68-71 Assets---------Cash held ------------ _ ------------------------ 68-69 199 Balance sheet (combined and separate), Exhibit 18--------------------------------------------- 72-75 Income and expenses Liabilities ------------------------------------------ 71-72 Net income, distribution of -------------------------------74 Profit and loss statement (combined and separate), Exhibit 22 207 73 Profit and loss statement, consolidated ---------------------72 Surplus and undivided profits --------------------------Government investments in stock of--------------------------71-72 Lending activity --------------- _ ----------------------- 61-65 Net income, distribution of----------------------------------74 -------------------------------------------- 61-81 Operations of Purpose of ----------------------_-----------------------73 Reserves --------------_------------------------------72 69 Security investments-------- --------------------------------71-72 Stock subscriptions, members and U. S. Government------------Federal Housing Administration: Homes accepted for mortgage insurance, drop in median number of rooms------------------------------------------38 9 National Housing Act, Title VI of------------------------------Federal Savings and Loan Advisory Council------------------------ 76-77 Members, list of, Exhibit 28----------------------------------215 FEDERAL SAVINGS AND LOAN ASSOCIATIONS: Cancellations ------------------------------------------- 105-106 Charters, number of--------------------------------------105-106 106-107 Conversions, number of ----------------------------------8-9 Defense housing, participation in -----------------------------Dividend rates----------------------------------------- 57, 110 Examination and supervision of------------------------------- 78-79 Financial condition -------------------------------------- 11-113 Assets------- --------- --------------------------- 104-107 104 Compared with all operating savings and loan associations__ Growth in -------------------------------------- 104-107 Percent, by Bank Districts ----------------------- 106 274 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 FEDERAL SAVINGS AND LOAN ASSOCIATIONS-Continued Financial condition-Continued Combined balance-sheet items for all operating Federals, Ex hibits 34 and 35-------------------------221, 222 Consolidated statement for 1,428 reporting Federals, Exhibit 45_ _ 237 Income and expenses ---------------------------112 Selected balance-sheet items for 1,394 identical associations, Exhibit 44---------------__----__-,_--237 Investments in: Private _--------------------------- 96, 106-110 Dividends paid on-----------____-_- _____ 113 Index of -------- _-_ ----- _ _ 108 Number of investors -------------Percentage distribution --____--_ U. S. Government_--------__ 89, 107-110, Dividends paid on ----_ ----------__ Repurchases of---------------108-110, Legislation: Sale of mortgages--------------------------------Lending activity, mortgage: Construction loans, increase of---------- Increasein_---------Percentage distribution 107 106 164 110 164 8-9 46-47, 84-86, 110-111 ------------------- __ _ ------ 85-86, 110-111 85 111 Refinancing loans, decrease of_------- Volume of loans made_ ------------------------- 84-85,110-111 ----------111 By purpose of loan -----Loans outstanding----------------111 Mortgages, sale of -----------------------------------------8-9 104-107 Number of associations, growth in-------------------By asset size distribution -__---------107 Changes in ---------------------------------------- 104-107 104 Compared with all operating associations --------------------------------------------------------- 111-113 Operating ratios 104 _ ------------Operations, improved standard of-----_-, _ 103 Purpose of -----------------------------------------------FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION: 133 Admission fees- ----------------------------------------Applications for insurance _______ --------------- 116-117 Community programs------------------------------------120-124 Advantages of -------------------------------------- 120-121 121 Altoona, Pa., program -----------------------------------121 ------------------------------Chicago program--121-123 Milwaukee program -------------------------------123 Milwaukee Properties Bureau -----------------------------122 Paterson, N. J., program ---------------Default, operation of associations in: Community Federal Savings and Loan Association of Independ 130-131 ence, Independence, Missouri -------------------------The Dickinson County Building and Loan Association, Abilene, ---------------------------------------- 131-132 Kansas Security Federal Savings and Loan Association of Guymon, 131 ------Guymon, Oklahoma -------------------Trenton Building and Loan Association, Trenton, Ohio--------- 131 275 INDEX FEDERAL SAVINGS AND LOAN INSURANCE CORP.-Con. Disbursements- __---_ - ----------------------- 115 -116, 128 124-125 _----------Eligibility requirements Examination and supervision_-------_-------__---------- 124-125 Financial condition ----------------------- 132-134 ------------115,132-133 Assets ---_----------------249 Balance sheet, Exhibit 51 ----------- 250-251 Income and expenses, Exhibits 52 and 53--Income and expenses, condensed statement __ Funds, source of ______,__ ------Insured associations: -------------Assets of--Balance sheet items, percentage change in Default, operation of associations in Summary of -------------Examination of--- - - ----------- Investments, private-_------_--------Investors, number of---------------Mortgage lending by_-----------Number of-------------------------- -------- 134 133 --- 117-120 ----------119-120 ----------- 130-132 - 130-132 -- 124-125 ---119-120 ----------- 115-118 ----- _ - 6, 119-120 ------ - 116-118 --------------------------------------- 116-120 Operations of Percent of all members insured--------------------------118 Progress of ----------------------------------------- 117-120 120 Reserves and undivided profits_ --------------------------Supervision of-----------------------------------124-125 Operations, summary of --------_----------------------132-134 Personnel- ----------------------------------------------134 Premiums -------------_------------------------------_ 133 Progress of -------------------------------------------- 115-116 Reserves ------------------------------------------ 115, 132-134 Settlements----------------------------------------125-129 Optional methods of __---------- -----------------------127 Summary of --------------------------------------- 127-129 Supervision and examination-----------_-------- -------124-125 Surplus and reserves---- -----------------------115, 132-134 Finance-See Home mortgage finance. Foreclosures: Decline in ----------------------------------------------- 25-27 By Bank Districts ------------------------------------ 25-27 Home Owners' Loan Corporation-See HOME OWNERS' LOAN CORPORATION. Number of, total, nonfarm-- -------------------------------26 Rate of, by States ------------------------------------------26 Government investments: Federal Home Loan Banks, capital stock of------------ -------71-72 Federal savings and loan associations, shares of---------------108-110 Home Owners' Loan Corporation, investments by, in member savings and loan associations ----------------------------- 87-91 Member savings and loan associations, shares in----___----87-91, 95 Reduction of-----------------------------------87-91 276 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Home mortgage finance: Debt, home mortgage: Distribution, by type of lender_ -------_ --------------49-50 ------------------------------------------ 48-50 Increase in48 _-_------Outstanding -----------------------------51 -------------------------Soundness of debt structure--Lending activity: ------------------------ 41-42 Analysis of-----------------46-47, 110-111 Construction loans, increase in--------------_---39-45 Increased volume of---------- ------------------------42 Index of ----------------------------------------------118 _ Insured institutions ---------------------------------51-54 Operations during emergency period --------------------52-54 Policies in a competitive market-- ------- __-------------Refinancing loans, decline in_----------------------------- 46-47 53-54 Reserve requirements, importance of --------------------39-45 Savings and loan associations, predominance of-------------Construction lending compared with 1 and 2 family home 47 _---------construction ------------------------46 _ Distribution of loans, by purpose ----------------------39-42 -----------------------Types of lenders------------51-54 ------Lending practices, continued improvement in----------48-51 ---------------------- __Loans outstanding- --_ 43-45 Mortgage recordings ------------------------------------44 Average size of loan, by type of lender------------------------------- 43-45 Dollar distribution, by type of lender 45 Geographical distribution--_________--------42-45 _ _ Number of, by type of lender ------------------------45 ------Percent of total dollar volume, by type of lender _ 58-59 Problems raised by national emergency------------------13-59 Survey of_-----------------------------------51-52 Variable interest rates, recommendation of-------------------HOME OWNERS' LOAN CORPORATION: Accounts: 136-137 ------------Classification of---------_ 168-171 -----------------Debtor and property, reduction of -137 --------------------------_--_ ---Delinquent_-------Extension program on, effect of __-------------------136, 144-145 136 Number of original--__----------- --------------- -----136-141 Performance record of borrowers --------------------139-141 Repaid in full-------------------------------------135-138 Status of ----------------------------------------136, 140-141 Terminated--------------------------------------Vendee-See Vendee Accounts. 160-163 Administration of---------------------------------------162 Administrative expenses-__----------------------------------143-144, 156-157 Advances to borrowers, supplemental ----------------Amortization-See Loans, Extension of terms. 159 Appraisal Activity--------------------------------------150 -------------------------Arrearages at time of foreclosure --Bond Retirement Fund---------------------------163-165, 170-171 INDEX 277 HOME OWNERS' LOAN CORPORATION-Continued 57-58, 164-165, 169-171 Bonds--------------------------166 ----------------------------Interest on-------------- 138-139 ----Collections ---------------------------------139 Relation to national income -----------------------------3 Defense housing, place in-------------------------------------268 -Deficit, analysis of changes in, Exhibit 69-----------Extension of loan terms-See Loans, Extension of terms. Financial condition: 163 -------------------------------------Assets, decrease in 259 Balance sheet, Exhibit 63------------------------------------------------------------------- 163-165 Changes in Income and expense--------------------------------- 165-167 166 Condensed statement, fiscal years 1940 and 1941 -------268 Deficit, analysis of changes in, Exhibit 69----------------266 Statement for fiscal year 1941, Exhibit 67 ---------------267 Statement from June 13, 1933, to June 30, 1941, Exhibit 68165 SReceipts and disbursements ------------------------------Exhibit 66-------------------------------265 Foreclosures: 150 ---------------------------Arrearages at time of-_-- --140, 148-151 ---------------Authorized--------25-26 Effect on national figure -------------------------------Pending_ ------------------------------------------136 Percent distribution, by period of arrearage ---------------_ 150 ----------------150-151 Policy re------------------------Reduction of, cause for---_----_--------------------148-149 ------ 148-151,156 Vendee accounts ------------------------------------------------- 149-150 Withdrawals 147-148 Insurance program- ---------------------------------Insurance and tax accounts-See HOLC, Tax and insurance accounts. Investments: Defense housing, financing of_-------------------------9 Federal savings and loan associations, in-.-----_--_ 108-110, 164 Member savings and loan associations, in.-------- _87-91, 169 Outstanding-------_ ---------------------------------164 Lending activity---------------------------------------- 39-40 Leniency to borrowers--------------------------------150-151 Liquidation of -------------------------------------- 135, 167-171 ------------------------ ------------------- 141-144 Loan serviceBorrowers in military service, policy re- --------------------143 Loans: Average loan and balance outstanding---------------- --135, 140 Exhibit 54-----------------------------------------252 Extension of terms------------------------144145 ----Act authorizing-..-----. -------..------------------144 Performance record of borrowers ----------------------145 Tax and insurance accounts required- -----------------146 Outstanding-------------------------------------- ---140 Repaid in full. ------------------------------------139-141 Supplemental ------------------------------- 143-144,156-157 278 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 HOME OWNERS' LOAN CORPORATION-Continued. 164-165 Losses, loan and property----------------------------165 Net worth ------ -----------------------------135, 160-163 Personnel--------------------------------162 Operation under Civil Service regulations----Properties: Acquired: Insurance of ------------------------------------ 147-148 Total--------------------------------------- 151-155 By price ranges- ---------------------------_ 153 By size of community -- ------------------------_ 153 Exhibit 56------------------------ ----254 Owned: Capital value of ---------------------------------151, 163 Elements entering into-----------------------155 Decline of---------------------------27-29, 151-155 Income and expenses------------------------ 155-156 Insurance of ------------------------------------ 147-148 Location of ------------------------------------- 152-153 --------------------------------- 151-155 Management of-Number of -------------------------- 136, 151-155 155-156 ------------------Operating income and expenses_ ---------------156-158 Reconditioning of -----------156 Rent, average -------------------------------------156 Rent collections ------- ---------------------- Sales of---------------------------------------- 151-156 153-154 Analysis of -------------------------------------------153 By size of community----_-- --154 ------------------------By terms--------254 Exhibit 56-----------------------154 Loss on-----------------------------------__ Units rented or available for rental -------------Vacancies ---------- -- - 155-156 156 3, 156-158 -------------Reconditioning---------------------157-158 ---------- ------------Contracts completed _--_ -Type of case ---------Defense housing, aid in_---------------------Results of_------------------------- - --- ---- 158 3, 158 158 ---------------------------------- 164-167 Retirement of share investments, waiver of--------------------- 9 Reserves for losses - 145-146 --Savings to Corporation and borrowers-------------_-145-146 Tax and insurance accounts__----------------Cost of taxation in HOLC operations ------------------- 146-147 146-147 Effect of taxation costs on property acquisitions and sales - 146 Number of --------------------------------------------Required for all extension agreements - ----------- --------Required for new vendee accounts Savings to borrowers and Corporation ----------------- 146 146 145-146 279 INDEX HOME OWNERS' LOAN CORPORATION-Continued Vendee accounts: Collections --------------- 138-139, 156 Dollar volume outstanding ------------------ 156 Foreclosures of------------------Number of--------------------------_-Performance record of_ --- _- 148-151, 156 ---- 135-137, 156 136-138, 156 --------- Repaid in full- ---------------------------------141 Tax and insurance accounts required --------------------146 Home ownership, survey of_-------------------------------------13-59 Homes Registration Offices----------__ -------------- __-3,10 Housing, survey of-------------------------------------- 13-59 Income and expenses-See agency concerned. Industrial production, index of---------------------------------- 14-16 Insurance of accounts-See FEDERAL SAVINGS AND LOAN INSUR ANCE CORPORATION. Insurance of HOLC properties-See HOME OWNERS' LOAN COR PORATION. Loans-See Home Mortgage Finance. Labor costs, building ----____--____31-33 Labor supply, building--------------------------------_ 32-33 Defense program on, effect of -------------- _--_ 32-33 --- _Legislation: Title VI of National Housing Act --------------------9 Lending activity-See Home Mortgage Finance. Letter of Transmittal --------___-I----------------------Milwaukee Properties Bureau---__- ----- _------_---------__--123 Mortgage finance and savings-__________----_ ---------------- - 39-59 Mortgage loans-See Home Mortgage Finance. Mortgage recordings-See Home Mortgage Finance. Neighborhood conservation: Defense housing-- _------------------------------------_ 3 Reconditioning on, effect of-------------------------------158 Operations-Seeagency concerned. Organization chart of agencies under Federal Home Loan Bank Board__ Facing 1 Personnel--See agency concerned. Population trends--------------------------------------- 23, 34-38 Age groups, changes in-------------------------- _37-38 City population, changes in ------------------35-38 Families, increase in number of------ __---- -_----_- 38 Family size, drop in --------------------------------------38 Metropolitan districts, changes in----------------------------36-37 Public Debt Act of 1941 ---- ---------- ------------- 57 Real estate: Foreclosures-See Foreclosures. Institutionally owned- ------------------------------_ _ 27-29 Market: Defense program on, effect of -------------24 Improvement in--------------------------------------23-25 Obstacles to---------------------- --------------- 23-24 Long-range trends i---------, --------------34-38 280 REPORT OF FEDERAL HOME LOAN BANK BOARD, 1941 Real estate-Continued Market-Continued Population trends -----------------------------------Tax burden -------------------------------------------Tax rates, comparison of_ --------------------------------Overhang: Geographic distribution ----------- ___----------28-29 --Reduction of_-----------------------------------Reasons for ----------------------------------------Owned by member savings and loan associations ---------------Sales, increased -------------------------------------------Reconditioning-See HOME OWNERS' LOAN CORPORATION. Reconstruction Finance Corporation---------___ -------------Dividends received from Federal Home Loan Banks ---- _-----_ 35-38 24-25 25 27-29 29 93-94 24 71-75 74-75 Rents_------------------------------------------------------ 33-34 Index of residential rents - -------------------------------- 33-34 Reserves-See agency concerned. Savings: Defense savings bonds_ ------------------ __--------------57-58 Individual long-term ----------_-----------__-___54-57 Amounts of selected ------------------------------55 Changes in--------------------------------------------56 Declining return on -- ---------------------------------57 Growing volume of------------------------------------ 54-57 Savings and loan associations (See also FEDERAL HOME LOAN BANK SYSTEM): Home mortgage finance, predominance in field of--------_ 39-45 Construction lending compared with 1- and 2-family home con struction_ ------_ -----------------------------------47 Debt, largest holders of_-----------------------------48-50 Loans, distribution of, by purpose----------------___46-47 Investments in, private: Percent change, by class of association _--_-----_-----__ 56 Mortgage lending activity- --------------------------------- 84-87 85 By type of institution-------------------------------Increase in, by Bank Districts -----------------------------86 Percentage distribution -------------------------------85 Sales agents for Treasury in defense bond campaign_--------- 57-58 101-102 Savings and loan graduate schools-------------------------Settlements-See FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION. Tax rates-See Real Estate. Transmittal, Letter of-----_----------------------------------i-iv U. S. Government, investments of-See Government investments. ----------------------- 33-34 Vacancies, declining-----------------34 Defense program on, effect of ---------------------------------156 -------------------------------HOLC properties ---------- O