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Vol. 6
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FEDERAL
HOME LOAN BANK
REVIEW
NOVEMBER
1939
ISSUED BY
FEDERAL HOME LOAN BANK BOARD
WASHINGTON D.C.
CONTENTS FOR NOVEMBER
FEDERAL
1939
SPECIAL ARTICLES
Page
HOME
LOAN
Operating ratios of savings and loan associations
A trend in dividend rates?
Year-end reports in a public relations program
Customer analysis as a guide in advertising
The nonfarm home-mortgage debt
34
38
42
46
49
STATISTICS
BANK
REVIEW
Published monthly by the
FEDERAL HOME L O A N
BANK BOARD
John H. Fahey, Chairman
T. D. Webb, Vice Chairman
F, W, Catlett
W. H. Husband
F, W, Hancock, Jr.
FEDERAL HOME LOAN
BANK SYSTEM
FEDERAL SAVINGS AND LOAN
ASSOCIATIONS
Residential construction and home-financing activity
Residential construction
Foreclosures
Mortgage recordings
Small-house building costs
New mortgage-lending activity of savings and loan associations
Federal Savings and Loan System
Federal Home Loan Bank System
Federal Savings and Loan Insurance Corporation
Statistical tables:
Nos. 1, 2: Number and estimated cost of new family dwelling units . . . .
No. 3: Indexes of small-house building costs
Nos. 4, 5: Estimated lending activity of all savings and loan associations . .
No. 6: Index of wholesale price of building materials
No. 7: Monthly operations of Federal and State-chartered insured associations
No. 8: Institutions insured by the Federal Savings and Loan Insurance
Corporation
No. 9: Lending operations of the Federal Home Loan Banks
No. 10: Government investments in shares of savings and loan associations .
Nos. 11, 12: Home Owners' Loan Corporation
Nos. 13, 14: Mortgage recordings .
52
54
54
55
55
56
57
57
67
58
60
62
63
64
64
65
65
65
66
FEDERAL SAVINGS AND LOAN
INSURANCE CORPORATION
HOME OWNERS' LOAN
CORPORATION
w
REPORTS
From the month's news
41
Directory of member, Federal, and insured institutions added during SeptemberOctober
,
68
SUBSCRIPTION PRICE OP REVIEW. The FEDERAL HOME LOAN BANK REVIEW is the Board's medium of communication with member
institutions of the Federal Home Loan Bank System and is the only official organ or periodical publication of the Board. The RBVIHW
will be sent to all member institutions without charge. To others the annual subscription price, which covers the cost of paper and
printing, is $1. Single copies will be sold at 10 cents. Outside of the United States, Canada, Mexico, and the insular possessions, subscription price is $1.60; single copies, 15 cents. Subscriptions should be sent to and copies ordered from Superintendent of Documents,
Government Printing Office, Washington, D. C.
APPROVED BY THE BUREAU OF THE BUDGET.
185767—39
1
OPERATING RATIOS OF SAVINGS AND LOAN
ASSOCIATIONS
For the first time, the REVIEW presents a study of certain significant
ratios between the operating expense, operating income, and average
net assets of savings and loan associations. The large number of
requests which have been received for such information indicates
the interest of savings and loan executives in this topic.
•
O P E R A T I N G ratios are one of the yardsticks
by which all forms of business measure the
efficiency of management. The definite need for
this type of statistical material about savings and
loan operations has been evidenced by the substantial number of requests which have been received
for it.
This article offers managers and boards of directors an opportunity to compare the ratios of their
own individual associations with similar data which
have been developed for a substantial majority of
the entire savings and loan membership of the Federal Home Loan Bank System. I t provides certain
important ratios existing between the fundamental
elements of association operations prepared from a
nation-wide sample of institutions: an analysis of
the source of gross operating income, and its distribution; and a study of the effect of the size of an association upon the relationship of income and expense
to average net assets.
I t must be emphasized that the presentation of
these figures does not constitute in any sense a recommendation as to the soundness or unsoundness of
any particular ratio. They are submitted solely for
their significance as actual ratios derived by consolidating the operating statements of 3,094 member
associations for the calendar year 1938. Analysis
was carried on by the Office of the Governor and the
Division of Research and Statistics of the Federal
Home Loan Bank Board with the cooperation of the
12 Federal Home Loan Banks. Reports were received from every Bank District, from every State,
and from every type of association. They reflect
the diverse operating conditions in different sections
of the country, and for this reason are believed to be
representative and useful.
SELECTED OPERATING R A T I O S
From the table at the bottom of the facing page
(Table 1), it may be seen t h a t each dollar of gross
34
operating income received by the average savings
and loan association is made up as follows: interest
on outstanding mortgage loans, 85.2 cents; interest
on real estate sold on contract, 3.8 cents; net income
from institutionally owned real estate, 3.5 cents;
receipts from premiums, commissions, appraisal fees,
fines, etc., 3.2 cents; and miscellaneous income, 4.3
cents.
I t is apparent from the breakdown by type of
association in this same table that the influencing
factor in any variation from these average ratios
may be attributed largely to the status of the real
estate owned and real estate sold on contract
accounts. As associations liquidate their owned
real estate through contract sales and otherwise,
the percentage of gross operating income which is
derived from real estate sold on contract will tend
to increase, and income from owned real estate will
constitute an increasingly smaller portion of gross
income. If the real estate account increases in proportion to the total assets of an association, the percentage of gross operating income received from the
ordinary collections of interest on outstanding
mortgage loans has a tendency to decrease.
The distribution of gross operating income may
also be traced from these statistics. A little more
than one out of every four dollars (25.9 percent) of
the income of an average association is used to meet
the normal expense arising out of its daily operations.
About one-half of the total operating expense is
accounted for by the compensation paid to employees,
officers, and directors. The remainder is divided
among such items as maintenance of the association
office, advertising, insurance and bond premiums,
depreciation of buildings and equipment, and ordinary operating supplies.
In addition to routine operations, there are always
transactions of an extraordinary nature which are
not a part of the normal functioning of an institution. The revenue received from, and the expense
Federal Home Loan Bank Review
incurred in, the handling of these non-recurring items
must be taken into consideration before arriving at
a net income for the year. On the basis of this study,
it is evident that last year the non-operating charges
were greater than the non-operating income for the
same period. I n view of the concerted effort on the
part of many associations to sell institutionally
owned real estate, a portion of these non-operating
charges appears to have been brought about by losses
in the sale of real estate.
Total expense for the year, in relation to gross
operating income, is found by adding together the
operating expense (25.94 percent) and the excess of
non-operating charges over non-operating income
(0.56 percent)—a total of 26.50 percent. This leaves
a net income (before interest charges) equal to 73.50
percent of the gross operating income. In other
words, almost three-fourths of all of the income of
the average savings and loan association during 1938
was available for dividends and interest paid for the
use of capital and for strengthening the financial
structure through additions to reserves and undivided profits.
Analysis of the 9.2 percent of gross operating income which is paid out in the form of interest charges
reveals that less than half of this amount is actually
interest on money borrowed either from the Federal
Home Loan Banks or other outside sources. The
substantial volume of deposit accounts in Ohio, and
of investment certificates in California, is responsible for more than half of the income devoted to
these charges. Almost the entire amount of these
accounts is found in the State-chartered institutions
of the Cincinnati and Los Angeles Bank Districts.
The disposition of net income is explained on the
next page (Table 2), but it is interesting to note that for
every $100.00 of net income almost $77.00 was paid
out in dividends or as interest on deposits and in-
Table 7.—Selected operating ratios for 3,094 reporting savings and loan members of the Federal
Home Loan Bank System
[Calendar year 1938]
Item
All
Number of institutions
_
Interest income:
On mortgage loans_
On real estate sold on contract
Net income on real estate owned. _ _
Premiums, fees, commissions, etc
All other operating income
_
___
Total gross operating income __
Compensation.. _ _
Maintenance of office quarters
Advertising
All other operating expense
__
Total operating expense
_ _
__
_ _ _
- _ _ __ __ _
__
_
____
_
___
Interest charges on:
Deposits, investment certificates, etc
F. H. L. B. advances.
Other borrowed money
Total interest charges
Net income (after interest charges) _ _
_
__
__ _ _ __
Net income (before interest charges).
__
__
Total expense for the year
November 1939
_ __ _
_
__
__
_
_
______
______
_
Total non-operating income
Total non-operating charges
_ _ __
_ .
,
_
Federals
Insured
Statechartered
Uninsured
Statechartered
3, 094
1, 355
Percent
85. 23
3.82
3. 44
3.24
4.27
Percent
86. 77
3.73
2.39
3.90
3.21
100. 00
100. 00
100. 00
12.71
2.57
2.06
8.60
13.27
2.88
3. 13
9.29
13.92
2.53
1.92
11. 19
11.
2.
0.
6.
25.94
28.57
29.56
20. 59
2.91
3.47
2. 61
2.44
3.25
2.31
3. 03
5. 39
26.50
28.40
28. 62
22 95
73.50
71. 60
71. 38
77 05
5.70
3. 18
0.31
0.06
4.69
0. 15
13. 39
2.78
0.37
7 06
1 73
0 46
9.19
4.90
16. 54
9 25
64. 31
66. 70
54. 84
67 80
588
Percent
83. 21
5.28
3.82 !
2.97
4.72
1, 151
Percent
84. 80
2.96
4. 38
2. 67
5. 19
100. 00
27
22
93
17
35
vestment certificates; $13.00 was credited to various reserve accounts; and nearly $6.00 was placed
in the undivided profits account.
Table 2.—Disposition of net income for the year
[Before interest charges]
Item
Number of institutions
Total net income
For bonus on shares
_
Legal reserves
Federal insurance reserve
For contingencies
_
Real estate reserve.
For other purposes
Federals
Insured
Statechartered
3,094 1,355
588
1, 151
Per- Percent
cent
100.0 100. 0
Percent
100.0
Percent
100.0
0.3
0.2
5. 1
6. 6
1.0
0.3
0. 1
3. 1
4.8
2.5
0.8
1.0
13.5
12. 3
13. 1
72.6
76.2
81.0
6.5
3.9
2.3
0.2
7.2
0.5
7. 1
0. 6
3.0
All
0. 1
2.7
3.2
5.2
1.2
0.7
Total transfers to reserves
- - 13. 1
Dividends (including interest on deposits and investment certificates) _ _ _ 76.6
Interest on F. H. L. B.
advances _
4.3
Interest on other borrowed
0.4
money. _ _
Balance to undivided profits. 5.6
1
Uninsured
Statechartered
0)
5. 0
0)
5. 4
1. 7
1. 0
Less than 0.1 percent.
OPERATING R A T I O S BY SIZE OF ASSOCIATION
Every manager is primarily interested in how his
association compares with others of a similar size.
To provide data which would permit this analysis,
a separate study by size of association was made
by the Office of the Governor of the Federal Home
Loan Bank System of the operating statements of
1,345 Federal associations during 1938.
Operating expense to gross operating income.—With
but one exception, the pattern of the ratios of operating expense to gross operating income in the
different asset groups followed a bell-shaped curve
with the peak registered by those associations with
assets in the $1,000,000-$1,499,999 group (see
chart). The lowest ratio was found among those
institutions with the largest assets (over $6,000,000),
but the next lowest was produced by the smallest associations ($0-$74,999). Associations in the
$4,000,000-$5,999,999 classification were the exception and their income-expense ratio registered
36
an increase in the face of a decreasing trend line.
This increase was due largely to the abnormal ratio
of compensation and advertising expenses which
were higher than the trend line for this size of
association would indicate. The average ratio for the
entire group of associations was 28.2 percent, and
there were seven size groups above that point and
four below it.
Gross operating income to average net assets.—
Apparently there can be little doubt about the fact
that as associations increase in size, their income,
expressed as a percentage of their assets, declines
(see chart). There is a slight increase between
the ratios of the two groups of smallest associations ($0-$74,999 and $75,000-$149,999), but
aside from this every asset group exhibits a smaller
ratio of income-to-assets as the size increases.
Operating expense to average net assets.—The trend
line of the ratios of operating expense to average net
assets for the different size groups follows generally
the pattern shown by the income-asset relationships.
I t is now evident that as associations grow, operating income decreases as a percentage of average net
assets. I t is also true that this decrease is offset by
a decline in the relationship of operating expense
to average net assets. 1 Concretely, the problem
involved is this: as an association increases in size,
does it operate with more, or less, or the same efficiency? The question is whether expense will assume
a larger, smaller, or the same proportionate share of
operating income.
Glancing back at the chart of operating expense to
operating income ratios, one is led to the conclusion
that until associations accumulate assets of from
$1,000,000-$1,499,999, expense increases faster than
the additional gross operating income received.
Therefore, the ratio of expense to income is growing
and its trend is upward. This means that there will
be less of the income received by the association
available for building reserves and payment of
dividends.
For associations above $1,500,000 (allowing for the
exception which has been noted in the $4,000,000$5,999,999 group), there seem to be indications t h a t
the opposite situation prevails; i. e., operating income is advancing more rapidly than the expense involved in operating these larger associations. With
the trend reversed, expense is shown as a decreasing
1
This does not mean, of course, that actual dollar amounts of income and expense will decrease. For example, an association with average net assets of
$500,000 and an operating income ratio of 6 percent would have an income of
$30,000. This same association, if it increased its assets to $1,000,000 and its incomeassets ratio dropped to 5.5 percent, would receive an income of $55 000.
Federal Home Loan Bank Review
Ratio oj gross operating income to average net
assets.—This ratio is derived by dividing Item 9
(gross operating income) by the average net assets.
Ratio of operating expense to average net assets.—
Item 25 of the standard form of Statement of Operations (total operating expense) is divided by the
average net assets to obtain this percentage.
Average net assets were computed in the following
manner: Net assets as of December 31, 1937, were
added to net assets as of December 31, 1938, and the
sum of these two figures divided by two. Associations
may have some difficulty in determining what to
include under net assets, 1 but for all practical purposes net assets may be denned in terms of gross
assets less mortgage pledged shares, unapplied mortgage credits, loans in process, and current expense.
proportion of gross operating income, resulting in a
larger percentage of net income.
DERIVATION OF T H E S E OPERATING RATIOS
To enable any savings and loan association to
compute its own income and expense ratios on a
basis comparable to that employed in the preparation
of data for this article, the following explanation of
each item is given. The Statement of Operations
contained in the standard form of annual report was
used as the basis for this analysis.
Ratio of operating expense to gross income.—This
ratio is the result of dividing Item 25 of the Statement
of Operations (total operating expense) by Item 9
(gross operating income). Total operating expense
includes only normal operating items. Non-operating income and non-operating charges or interest
charges are not included.
1
See Rules and Regulations for the Federal Home Loan Bank System, Section
1.011, definition of net assets.
OPERATING RATIOS OF 1,345 FEDERAL SAVINGS AND LOAN ASSOCIATIONS
\
FOR THE YEAR ENDING DECEMBER 31,1938
J
_
31
RATIO OF OPERATING EXPENSE
TO GROSS OPERATING INCOME
RATIO OF OPERATING EXPENSE
TO AVERAGE NET ASSETS
^
C.\J
t
30
. A — OQ TTAW
Ur
1.8
A**"
RATIO OF GROSS OPERATING INCOME
TO AVERAGE NET ASSETS
_
1 Rl © /
1
.\J
6.5
^0&A^
\l
29
6.44%
6.0
]-HV
'A
AVG.ALL CLASSES **r
56°/
/. >
UJ
1
o
sJi\
f
G.ALL CLASSE
28u12%
UJ
0.
M
i
UJ
CEN
»-|.6
z
r
AVG.ALL CLASSES**
5.52%
a:
UJ
UJ
a. 1.4
\—
a.
27
5.0
1
26
' ***
4.5
1.0
25
A
B
C
D
E
F
G
H
I
J
K
4.0
A
B
C
D
E
ASSET
1
I
i
A LESS THAN $ 7 5 , 0 0 0
B.„.~ 7 5 , 0 0 0 TO 149,999
C — 1 5 0 , 0 0 0 TO 299,999
0 - . 3 0 0 , 0 0 0 TO 499,999
E _ 5 0 P , 0 0 0 TO 749,999
F „ _ 7 5 0 , 0 0 0 TO 999,999
F
G
H
I
J
K
A
B
C
D
E
F
G
H
I
J
K
CLASSES
6.,...$ 1,000,000
H
1,500,000
1
2,500,000
J
4,000,000
K _ 6,000,000
TO $ 1 , 4 9 9 , 9 9 9
TO
2,499,999
TO
3,999,999
TO
5,999,999
AND OVER
DIVISION OF RESEARCH ANO STATISTICS
FEDERAL HOME LOAN BANK BOARD
The variation in operating ratios for institutions of different sizes is shown clearly in the three charts above. The ratio of operating expense to gross operating
income actually expresses the relationship existing between the other two charts. Its bell-shaped curve indicates that until associations accumulate assets of from
$1,000,000~$1,499,999, expense increases faster than gross operating income, but above thatfigureapparently the opposite is the case. The consistent downward trend lines
in the second and third charts are illustrative of the fact that as associations increase in size, their expense and gross operating income expressed as a percentage of assets
decline.
Novzmbzr 1939
37
A TREND IN DIVIDEND RATES?
Within the next six weeks, boards of directors of savings and
loan associations will meet to declare dividends. Trends in
home-mortgage interest rates and dividend rates of prime importance to directors and officers are discussed in this article.
•
I N recent years a number of basic factors
have combined to lower the return paid on
savings in this country. Of greatest importance
has been the downward movement of the entire
structure of interest rates, with both long-term and
short-term rates declining sharply. Home-mortgage interest rates, which are fundamental in savings
and loan operations, have been carried down in this
general shift.
Accompanying the general decline in interest rates
has been the growth of a highly competitive market
for home-mortgage loans. A home-financing institution that is truly serving its community today
must offer interest rates and loan terms which will
attract the best applicants for mortgage credit in this
competitive market. Prime loans can be made only
at interest rates markedly lower than in earlier
years. Since dividend rates of savings and loan
associations are directly dependent upon homemortgage interest rates, reduced return from loans
means lower dividend payments to investors in the
long run.
These economic changes have taken place against
a background of altered public opinion about investments. I t has been clearly demonstrated that the
public today looks primarily for safety, and only
secondarily for return, as the essential test of a
sound investment. Insurance of accounts places
savings and loan associations in a position to offer
the public what it wants.
The primary assurance of safety to the investor
consists, of course, in good management and adequate
reserves. Insurance of accounts supplements these
two fundamental requisites. In these days of increasing competition, the savings and loan industry
has intensified its efforts to build more substantial
reserves. Dividend rate reduction permits the accumulation of these reserves more rapidly, and thus
places an association in a stronger position to meet
any contingency. At the same time, public confidence is increased. Keference to the table on page
36 of this issue, which shows the disposition of net
income for the year 1938 by reporting members of
38
the Federal Home Loan Bank System, reveals t h a t
insured institutions were adding a greater proportion of net income to reserves and undivided profits
than were uninsured members. Total transfers to
reserves and undivided profits amounted to 20.7
percent of net income for Federal associations, to
19.4 percent for insured State-chartered members,
and to 16.1 percent for uninsured members.
T R E N D S IN HOME-MORTGAGE INTEREST
K A T E S IN
1939
All of these factors up to now have pointed to an
inevitable lowering of dividend rates of savings and
loan associations. With the outbreak of a European
war, there has been much discussion among homefinancing leaders centering on the question: Will interest rates stiffen? In the first few weeks there
has been some evidence that interest rates in the
general money market have tended to become firmer.
This is shown by a higher average yield on longterm U. S. Treasury and high-grade corporate bonds
and increases in the rate of return on medium and
short-term obligations.
There is increasingly general agreement, however,
that the stiffening of interest rates which developed
toward the end of the World War is not likely to
follow a similar pattern this time. Economists point
to the abundance of funds now lying idle awaiting
profitable investment, to the extensive system of
Governmental checks and balances designed to protect our national economy against any artificial
credit stringency. In addition, there is the fact
that the public is gradually becoming aware of the
value of simple loan contracts and moderate interest
charges. I t is estimated that the reduction of interest rates on home mortgages which has taken
place in the last five years represents an annual
saving to home owners of at least half a billion
dollars.
Two recent events tend to confirm the belief that
home-mortgage interest rates are not likely to rise
above present levels in the next few months. The
Federal Housing Administration announced t h a t
Federal Home Loan Bank Review
effective August 1, the maximum interest rate on
home mortgages insured under Title I I would be 4%
percent, to which is added an annual charge of onehalf of 1 percent to all borrowers for mortgage insurance premium. Following closely upon this announcement came the notice that the Home Owners'
Loan Corporation was reducing its interest charge
to home owners from 5 percent to 4 ^ per centum
per annum. This 4%-percent rate is applied to all
loans, advances, and to all sales of properties.
Present-day conditions are regarded as radically
changed in comparison with the conditions that
existed during the World War.
Home-financing
institutions recognize that moderated interest rates
and liberal long-term amortized loans have helped
to restore public confidence in home ownership. For
the immediate future, at least, this means that an
association must continue to mould its policies in
terms of 5- to 5 ^-percent interest rates if it is to
secure the best risks for its loan portfolio.
CURRENT POSITION OF DIVIDEND R A T E S
Recognition of the continued necessity for low
home-mortgage interest rates is clearly evident in
reports from savings and loan associations in all
sections of the country. Progressive management is
taking into account not only the prevalent and prospective interest rates on home-mortgage loans, but
also the fact that all over the country rates paid on
money placed in savings institutions have declined.
In many sections, they are down to 2 percent and
2% percent, while 3 percent is common. Although
member banks of the Federal Reserve System are
authorized to pay a maximum of 2% percent on
savings deposits, there are many areas where commercial banks are paying an interest rate substantially below the authorized level. In New Jersey, a
recent ruling by the State banking commissioner and
banking board limited the maximum interest to be
paid on savings deposits by banking institutions
under their supervision, including savings banks, to
1 percent. As a corollary, all member banks of the
Federal Reserve System in New Jersey lowered their
maximum interest rates to 1 percent, and the Post
Office Department officials announced a reduction
in the interest rate on postal savings in New Jersey
to 1 percent. This was the first break in the uniform
2-percent rate which has prevailed throughout the
country since the Postal Savings System began in
January 1911.
Mutual savings banks also report a continuation
of the reduction in the interest paid to depositors.
November 1939
Since 1935, the average interest rate paid by mutual
savings banks has been at steadily lower levels
below 3 percent. In announcing the record of
payments on June 30, 1939, the National Association
of Mutual Savings Banks stated that interest rates
on deposits continued downward, with a number of
banks placing reductions to 1 and 1% percent in
effect for the last half of 1939. On a "per deposit"
basis, the average interest rate paid by all mutual
savings banks on July 1, 1939, was 2.17 percent.
These facts indicate that general conditions of the
money market are continually bringing about the
establishment of still lower rates of return on savings. Savings and loan associations are directly
affected by these same influences. In the long run,
declining home-mortgage interest rates mean lower
dividend rates, for there must be a sufficient spread
between the cost of money and the rates secured on
mortgages to assure competent management and the
accumulation of adequate reserves. Under such
conditions, payment of a dividend at a rate substantially higher than the market, no matter what
the loan plan may be, places a real burden of responsibility on directors and management.
W H A T A R E THE FACTS ABOUT SAVINGS AND LOAN
ASSOCIATION DIVIDEND K A T E S ?
There is not complete current information on
dividend rates of savings and loan associations which
will settle the question: "Have dividend rates been
lowered sufficiently in recent years to keep step
with the downward movement of the general money
market?" There is evidence from many sections
of the country, however, which is worth examining.
As a general indication of the national pattern
of dividend payments, statistics of Federal savings
and loan associations are useful. They are complete, provide a reasonably comparable base from
year to year, and have the merit of being average
dividend rates weighted by the amount of invested
capital. From 1935 to 1937, the average annual
dividend rate of Federal associations declined from
3.69 percent to 3.50 percent. During 1938, dividend
rates were again lowered. Twenty-three of the 46
States for which comparable information is available
showed decreases in average dividend rates; no
change in dividend rate was indicated in eight States;
and slight increases were shown in 15.
Until the end of 1938, however, there was no clear
indication that dividend rates were moving downward generally for the savings and loan industry.
The available evidence did indicate a tendency for
39
average rates to decline but the movement was not
uniform throughout the country and in several areas
the tendency was clearly for rates to remain stable or
even to increase.
By contrast, examination of more recent data makes
one important fact stand out sharply: A more pronounced downward trend appears to be in the making
during the current year. For example, of the 64
Federal associations in the State of New York, only
three made reductions in dividend rates between
June 30, 1938, and December 31, 1938. At the end
of the first six months of 1939, however, there were
12 reductions and no increases. The major change
was the general reduction among Federals in the
metropolitan New York area to a 2.5-percent rate
on June 30, 1939. There was little shift in rates in
the State outside this area. The trend, however, is
important: Out of these 64 Federals on June 30,1938,
there were only 11 paying 2.5 percent or less; on
December 31, 1938, there were 14; and on June 30,
1939, there were 24.
I t is natural for dividend rates to reach lower
levels in such a financial center as the metropolitan
New York area, but this same tendency to reduce
rates is confirmed in many other parts of the country
and is not limited to Federal associations, but is
found among all classes of associations. The following summaries of results of questionnaires sent out by
a number of Federal Home Loan Banks to their
members in recent months show that lowered dividend rates are becoming increasingly common.
The Federal Home Loan Bank of Winston-Salem
sent out a questionnaire in mid-August to all members. Out of 239 replies, 17 associations stated that
they had already announced to their shareholders
that the next dividend would be at a lesser rate. In
addition, 25 other associations contemplated reduction at the next dividend period.
The Federal Home Loan Bank of Indianapolis
made a survey of members in the 50 largest cities in
Indiana and Michigan which showed that out of 113
associations, 75 were paying 3-percent dividends.
The Advisory Committee of the Board of Directors
of this Bank reported that interest rates were continuing their very definite downward trend and that
the great majority of associations paying 3 percent
were able to show substantial growth in private share
capital during 1938.
I n Illinois and Wisconsin, a questionnaire sent by
the Federal Home Loan Bank of Chicago to 222
Federal and insured State-chartered members at the
end of April brought 184 replies. Eleven associa40
tions reported that a rate reduction had already been
announced for June 30, 1939. Even more striking
was the fact that an additional 35 associations said
they intended to reduce dividends for the period
following July 1, 1939. If these reductions are carried out, there will be a substantial downward movement in the average dividend rate in this District.
On December 31, 1938, 123 associations declared
dividends at the rate of 4 percent or more; 61 associations paid either 3 percent or 3% percent. The
contemplated dividend reductions would result in
92 paying 4 percent or more, and 92 paying 3 percent
or 3% percent.
This same trend is evidenced by the member
associations of the Federal Home Loan Bank of Des
Moines. Out of 230 member associations replying
to a questionnaire on June 1, 1939, 30 reported that
they were planning to reduce dividend rates. This
number included 14 Federals, 3 insured State-chartered and 13 uninsured State-chartered members.
In addition, 19 replied that such a dividend reduction
was "possible". Comparison of the over-all average
dividend rate for the current period with the rate
one year ago shows that member institutions of all
classes in these five States have already effected some
reductions in dividend rates.
A similar questionnaire was sent to 102 members
of the Los Angeles Bank in early June. Analysis of
the 86 replies revealed that 13 associations, or 15
percent, were contemplating reduction of interest
rates at the next semiannual period.
These figures do not cover the entire membership
of the Bank System nor do they cover all sections of
the country. I t is notable, however, that there is
no area from which replies were received which does
not support the belief that the trend of dividend
rates is downward at present.
THREE
POINTS KELATED TO D I V I D E N D
EATE
REDUCTIONS
Supplementing these statistics which indicate
voluntary reductions in dividend rates of savings
and loan associations, there are three points which
stand out and deserve consideration by managers
and directors. First of these is the fact that a number of institutions replying to Bank questionnaires
stated that they would be willing to reduce their
dividend rates if other institutions in their immediate community would do likewise. In response to
the question, "Would you be willing to reduce rates
(Continued on p. 45)
Federal Home Loan Bank Review
«
« « FROM THE MONTH'S NEWS
» » »
Lost from idleness: $200,000,000,000
EXPERIMENTATION: "My own industry
. . . has been experimenting with all
wood construction with joistless floors,
studless walls, and rafterless roofs. We
are developing types which are structurally sound but use perhaps one-fifth
less lumber and one-fourth less labor. . . . "
Wilson Compton, Secretary,
National Lumber Manufacturers' Association, before U. S.
Building and Loan League
Convention, Atlantic City, Sept.
29, 1989.
RETURN: The average interest rate paid
in the first six months of 1939 by all
mutual savings banks, figured on a "per
deposit" basis, was 2.17 percent. For
the corresponding period in 1938, the
average interest rate was 2.22 percent.
The Month's Work, September
1939.
TAX EXEMPTION: "Although
three
States—Arkansas, Georgia, and Oklahoma—liberalized slightly their existing
homestead exemption laws this year,
no new States joined the 13 which already
had adopted such acts."
National Municipal
September 1989.
Review,
CONSISTENCY: "The advertising percentage is one of the relatively fixed parts
of the cost of doing business. . . . Great
damage is done by turning the faucet of
advertising on and off. Morale is disturbed; customers are not cultivated;
sales are lost irretrievably."
The National Resources Committee in its latest report estimates
that unemployment of men and machines during the years 1930
through 1937 caused a loss of 200 billions of dollars in the national
income of the United States. "If all the idle men and machines
could have been employed in making houses, the extra income
would have been enough to provide a new $6,000 house for every
family in the country. . . . Of such is the magnitude of the depression loss in income through failure to use available resources."
"The Structure of the American
Economy", report by the National
Resources Committee.
Houssng
res earch
"I do not believe we will get full recovery in the (housing) industry until we develop a radically new type of low-cost housing,
through centralized, impartial, and amply financed research. An
organization for this purpose might follow the research set-up of the
National Advisory Committee on Aeronautics, with equal representation from Government, industry, and the professions. Such
an organization would be able within 18 months to show a reduction
in the cost of multifamily dwelling construction of from 25 to 50
percent."
Robert L. Davison, Director of Housing
Research, John B. Pierce Foundation.
Dun's Review, October 1939.
Factors for lending volume
. . . . .
"The factors for today's increasing savings and loan lending
volume appear to be (1) competitive interest rates; (2) competitive
loan terms; (3) greater contacts with the 'middlemen'; (4) adequate
loan construction service; (5) prompt commitments; (6) quick loan
closing service; (7) more advertising; and (8) more specifically
worded advertising."
Fred T. Greene, President, Federal
Home Loan Bank of Indianapolis.
Building Loan Journal, August
1989.
Keith Collins, Assistant General Manager, New York
Times. California, September
1989.
WAR: "In 1914 the Federal Home Loan
Bank System was non-existent. Today,
thanks to this well-established agency,
the home-mortgage business may be
entirely divorced from the Nation's commercial credit structure. If commercial
banks desert the mortgage market en
masse in favor of industrial 'war baby*
investments (an unlikely step), the F. H.
L. B. System can supply Home Building
with most of the money it needs to carry
on a stable program."
Architectural Forum, October
1989.
November 1939
185767—39
2
Selected wholesale commodity price indexes
192S — 100
PER CENT
PER CENT
2 0 0 "BUI LQIN G MATERI ALS
-
"FUE - AN
A
3HTI
3 U
l\
J50
J
100
\
\V
s^
VY
•*~V"
s-»~s
200
/
/
\J /
'150
A
J
100
50
1913 *!4
'15
'IB
'H
'18
'ie ' 2 0 ' 2 1 ' 2 2
1913 ' 1 4
*15
'16
'17
'18 " I S
'20
'21
'22
|
The U. S. Bureau of Labor Statistics' indexes show that prices of building materials and of fuel and
lighting did not begin to rise sharply until the latter half of 1915. From 1919 to 1920 a rapid advance in
these prices occurred, followed by an equally sharp decline in 1921.
"Business Conditions", Federal Reserve Bank of Chicago, September
1989.
41
YEAR-END REPORTS IN A PUBLIC RELATIONS
PROGRAM
The publication of year-end statements of condition
is no longer regarded as a routine operation to fulfill
legal requirements. Savings and loan managers have
learned to use attractive, educational annual reports
as a definite part of public relations programs.
•
T H E laws of many States, the uniform bylaws
of Federal associations, and the regulations of
many charters provide that savings and loan associations must prepare annual statements of condition for the information of their members and the
general public. In another six weeks, associations
throughout the country will be sending copies of
these 1939 reports to printers and local newspapers
for publication in conformity with these legal requirements. This year, with greater emphasis than
ever before, these institutions will be incorporating
the publication of these annual statements as a part
of their regular public relations activities.
The number of associations which realize and appreciate the genuine opportunity for making a direct
educational and informative approach through these
reports to all present and prospective investors and
borrowers of their institutions is continually increasing. The conviction of this group of associations parallels the opinion of other types of enterprise that the dissemination of complete information
on business operations is an inherent part of any
program designed to build goodwill.
The general attitude of business management
today toward the publication of balance sheet data
is a complete reversal of the position which it took
during earlier years of American industry. In 1866,
the New York Stock Exchange was advised by a
well-known company, in response to a request for a
financial report, that it "made no reports and published no statements and had not done anything of
the kind for the last five years". 1 Recently, the
New York Stock Exchange reported that of the now
listed active domestic companies, 73 percent issue
income statements at quarterly intervals or more frequently, 15 percent announce the financial results of
their operations semiannually, and only about 12
percent make such reports to their stockholders no
more often than annually.
i New York Stock Exchange Bulletin, August 1939.
42
There is scarcely a major corporation at the present
time which does not consider its annual statement
of condition and report of operations as a definite
part of its permanent consumer education program.
The larger financial institutions, generally speaking,
have made considerable progress along these lines
within recent years. The same individual may be
a shareholder in a savings and loan association, a
depositor in a commercial bank, and a stockholder
or employee in a domestic corporation. All of these
institutions have an equal opportunity to use this
method of keeping the individual customer informed
of their progress. Industrial and commercial organizations have not overlooked its advantages, and the
increasing enthusiasm of savings and loan executives for intelligible year-end reports is therefore
commendable.
T H E NECESSARY APPROACH
Every step in the preparation of these summaries
must be made with consideration for one central
thought: the finished product must be easily understood by everyone who picks it up.
Primarily these reports were developed through a
desire to bring about a better understanding between
employee and employer, between stockholder and
management. To accomplish this, it is necessary to
bear in mind that balance sheets and operating
statements in their conventional forms are bewildering to the typical employee or stockholder who has
not had the technical background in economic and
accounting principles necessary to analyze properly
these statistical reports.
Those experienced in producing successful annual
reports and statements of condition in revised style
say that account and operation titles must be reduced to their most simple implications. Assets, for
instance, may be referred to as "what we own",
in contrast to the liability or equity side of the
balance sheet which may be listed as "what we owe"
or "where the money comes from".
Federal Home Loan Bank Review
The significance of a long column of figures is
increased for most people if there is a clear, concise
explanation of the meaning of the different accounts.
A good example of this technique is found in the
statement of the Waltham Federal Savings and Loan
Association illustrated on this page. First mortgage
loans of $5,691,924.99 takes on added significance
through the paragraph which says, "Your association
holds first mortgage loans on 1,743 home and other
properties in Waltham and its vicinity in the
amount shown above. The average loan is $3,200."
Considerable interest may be added to these reports through the use of suitable illustrations. Charts
may be used extensively to highlight certain features
of the report. Graphic presentation is especially
advantageous in showing the progressive trend of an
association's operations. A pie chart picturing the
proportionate distribution of the asset accounts, a
line graph presenting the increase in private share
capital, and a pictograph outlining the growth of
new members of the association are more easily
understood by the typical reader than are figures
alone.
The completed report, if written in simple terms
and arranged in an attractive, pleasing-to-the-eye
typographical form, has made a significant contribution toward the fulfillment of the purpose of these
humanized financial statements.
W A Y S IN W H I C H AN ASSOCIATION M A Y U S E
UNDERSTANDABLE BALANCE S H E E T
The examples of understandable balance sheets
and of mid-year and year-end reports which accompany this article are only a few of those which have
been received by the Public Relations Department
of the Federal Home Loan Bank Board. They
reveal the extent to which many savings and loan
associations have used this technique for improving
customer relationships. I t is evident from these
samples that this type of statement may be used
ife^
*&&
AN
^k
ASSETS
LIABILITIES
^^VVVvVVVvVvVXA^^
FIRST MORTGAGE LOANS
$5,691,924.99
SHAREHOLDERS1 SAYINGS AND INVESTMENTS . . . $6,333,607.55
This i s the amount e n t r u s t e d t o t h i s i n s t i t u t i o n by 4,552
individuals, p a r t n e r s h i p s and corporations. Each account,
as you know, s h a r e s in the resources and n e t p r o f i t s of
t h e Waltham Federal Savings, and each account i s insured
up t o $5,000 by the Federal Savings & Loan Insurance Corporation.
Tour Association holds f i r s t mortgage loans on 1,743 home
and o t h e r p r o p e r t i e s in Wdtham and i t s v i c i n i t y i n t h e
amount shown above. The average loan i s $3,200.
LOANS ON SHARES
50.850.00
Loans to our savings and investment members which are secured by their own accounts in this institution.
REAL ESTATE OWNED
i f c - _—,
fchftSftffl
DIVIDENDS PAYABLE JANUARY 10. 1939
439.553.63
I h e assessed value of t h e s e p r o p e r t i e s i s $558,900. All
are renovated and rented, producing a r e t u r n on t h e i n vestment . . . Wiile our r e a l e s t a t e owned has been s e l l ing s a t i s f a c t o r i l y , t h e r e s t i l l remain on our l i s t many
d e s i r a b l e p r o p e r t i e s which represent unusually fine v a l ues for persons seeking homes for occupancy o r for i n vestment. These homes may be acquired with a small down
payment and on a t t r a c t i v e , long-term financing.
CASH AND SECURITIES
LOANS IN PROCESS
ySffitot
C^B^3SL
BSaaafflfcfiq
564.422.07
We endeavor a t a l l times t o maintain an adequate amount
of cash on hand t o g e t h e r with q u i c k l y marketable s e c u r i t i e s . In addition t o the mount shown above, we have a t
the Federal Ifcme Loan Bank of Boston a l i q u i d i t y reserve
of $2,100,000.00 a v a i l a b l e a t any time for any purpose.
The above t o t a l c o n s i s t s of t h e following:
Cash on hand and in banks
U. S. Government Bonds
Federal Home Loan Bank Stock
OTHER REAL ESTATE OWNED
$341,240.92
MORTGAGORS
OTHER ASSETS
TOTAL ASSETS AND RESOURCES
November 1939
l h i 9
38.603.44
itero
covers funds a l l o c a t e d , but not a c t u a l l y d i s bursed, for financing homes and home r e p a i r s on uncorapleted l o a n s .
MISCELLANEOUS ACCOUNTS
2,026.16
ACCRUED TAXES ON REAL ESTATE OWNED . . . .
5,466.08
TOTAL LIABILITIES
6,471.243.41
RESERVES OVER AND ABOVE LIABILITIES
$348,551.36
This amount i s the margin of safety maintained for the
p r o t e c t i o n of members and t h e i r savings against unforeseen contingencies. I t c l a s s i f i e s as follows:
170,981.15
52,200.00
25.000.00
TAXES AND INSURANCE ADVANCED FOR
FURNITURE AND FIXTURES
91.540.18
This amount i s set a s i d e for d i s t r i b u t i o n i n cash or for
c r e d i t i n g t o savers and i n v e s t o r s as t h e i r s e m i - a n n u a l
dividends.
• For Contingencies
$127,514.00
Wyi For Federal Insurance
34,250.00
For Real E s t a t e Owned
35,835.00
4.797.12
For Uncollected I n t e r e s t
3,547*72
2.731.65
For Bonus on Share Accounts
2,000.00
40.515.31
$6,819,794.77
Undivided P r o f i t s
TOTAL LIABILITIES AND RESERVES .
145,404.64
$6,819,794.77
43
A FINANCIAL
STATEMENT
LIABILITIES
> „nt Share A c c o u » U . W » * »
Saving, and l a m e n t S h ^
credited
_
J
Asso
w lbe
Everyone Can Understand
We Have (Assets:)
71V,0SW» I
Mortgage
Loans
$»,710,17$.5%
Here's where the money is—invested
in good, sound loans on 772 pieces
of property, appraised at $2£77j000.
We are helping high type,
carefully,
selected
families
own their
own
homes.
14,984.02 1
Cash
*
$
38,528*59
Most of our money is at work—earn*
ing dividends for our
shareholders.
Add to this an unusual cash reser*
voir with the Federal Home
Loan
Bank of over a third of a million
dollars, instantly
available.
32&OO.OO
Stock in Federal Home
Loan
di tion
to ^ Y B V W ' V
RESERVE ioR ADVANCE
5.281.4»
Bank
A* or reserves. e»
fucome over a pe-
Mainly
"$
I Undivided E ^ N E T
1
47,78l.^j
^
.
27,900.00
$
28,072.00
our office building and fur*
Repossessed Real Estate
We have none, but we list this to
repeat that all our money is at work,
INCOME--
^ D I S T R I B U T E D NE .
... . $
Miscellaneous Other Assets
^ ,
TOTAL
POUCIBS^
$1,804,677.10
We Owe (Liabilities:)
Shareholders
$1,308,187.08
d*>J pnhh sh/irehnlder's.
investment
Sometimes Quality Means More Than Si
»nvestedb ave
,
been influence^
though the « * * * :
^
•"-12 - ^
eU c
.
a
tbetC
on
FIRST MORTGAGE LOANS ON RESIDENCES, Worth
^
busing a c t W ^ J c o n s e . a ^ ^
ably «
«»**•
WEOWN
.he 6 i * si* months^oG
^
REAL ESTATE CONTRACTS ON RESIDENCES, Balance
"*?&****
(These Four Homes Were Sold for $11,325.00)
t tSrao^aj
definite tten
hese P ^ e t ^
$246,
(On 118 Chicago and Suburban Properties)
e
REAL ESTATE (Four Residential Properties)
toge ther
^
J
(These Are Appraised at More Than Our Valuotion)
^
STOCK I N THE FEDERAL HOME LOAN BANK OF CHICAGO
r.. t a nd tote
It is
oUf
V i~*
bich
OFFICE EQUIPMENT, Worth Much More Than
duty,
than
roote
care. ^
must
be declared, »
enuusttoour
dividends can reserve
o £ earnings as
contingent-
^ ^
ASSESS
lSide.befotc
att
t.
ia\ P
We Paid 1939 Expenses in Advance, in the Amount of
The Federal Home Loan Bank Owes Us A Dividend of
And AFTER WE PAID OUR USUAL DIVIDEND ON DECEMBER 31,
1938, WE HAD CASH ON HAND AND I N BANKS of
S
T
A
MAKING TOTAL ASSETS of
§841,339.56
OUR SHAREHOLDERS HAYE INVESTED
t
Loans..
1 ^^Jg^jRM?
UoclaUoa'*
i S*« e . s
toans o n * l o a n , » t"ou»tft
3,595.26
12,000.0(
524,
44,86«
andEqHWBanks..
sr«^ts^-»lc,ftJ
SSS-*"
OUR CURRENT DEBTS Amount to
(This Includes Provision for 1938 Taxes on the Properties W |
552.<
tx-^-^^r:
THE FEDERAL HOME LOAN BANK OF CHICAGO H
The Sum of
55?
OUR BORROWING MEMBERS HAYE PAID US ALL 1
OWE EXCEPT
SO WE OWE OUR MEMBERS AND CREDITORS A T(
OUR TOTAL ASSETS EXCEED THIS BY
(This Excess Is Our Shareholders' Protection Against Future Losses. It is Large
In Proportion to Our Size (10.7% of Total Share Investments) Because We
Hove Always Operated Economically.)
The REVIEW desires to express its appreciation to the following associations for the use of these reports: First Federal Savings and Loan Association, Davenport, Iowa; Guaranty Savings and Homestead Association, New Orleans, La.; Oklahoma City Federal Savings and Loan Association, Oklahoma City, Okla.;
Worcester Co-operative Federal Savings and Loan Association, Worcester, Mass.; Valentine Federal Savings and Loan Association, Cicero, 111.: Watertown Building and Loan Association, Watertown, Wis.; First Federal Savings and Loan Association of Bakersfield, Bakersfield, Calif.; West Side Federal Savings and Loan
Association, New York, N. Y.
44
Federal Home Loan Bank Review
with equal effectiveness in newspaper advertisements
and the small folding reports prepared by most
institutions.
Newspapers.—It is not unusual to find in newspapers on the first of January or July entire pages
of statements of condition of every description,
printed in the smallest available type. These
advertisements accomplish little beyond the exact
fulfillment of legal regulations. Their cost is therefore high in proportion to their productiveness.
Expediency and sound management echo the thought
that "as long as we have to spend this money to
satisfy the law, we might better devise some other
way of presenting this statistical information which
will produce more tangible results".
The publication of an intelligible balance sheet
need not require additional space, although the
potential productiveness of revitalized forms may
justify it. The increased response received by those
associations which have tried this newer method has
more than compensated for any extra cost.
Printed material.—The prevailing type of small
booklet, or folding leaflet, which many associations
issue for displaying year-end statements, is easily
adapted to this thought. These reports are usually
sent to present investors and borrowers and distributed to prospective customers. With this circulation there are innumerable opportunities to
employ this material in a selling capacity as well as
part of an educational and informative program.
Many associations supplement the statistical
information in the report with a review of the year's
operations and a general discussion of management
policies. They stress the progress made during the
fiscal period just ended, and emphasize such factors
as the reduction of owned real estate, the increasing
volume of new mortgage loans, or the opening of
new office quarters in a more favorable location.
Often, they touch on the relationship between the
operations of the institution and general business
conditions, and the influence of these outside factors
upon association policies.
Of interest to prospective investors are the safety
of funds left with the association, the rate of dividends paid, and the outlook for future returns.
Those contemplating the construction of a new
home or the purchase of an existing dwelling should
be informed of the advantages of an association's
loan servicing program and lending policies: interest
rates, amortization plans, length of loan terms, and
the facilities for adequate advice on construction or
purchase of homes.
November 1939
A summary of the conditions under which an
institution operates from day to day may complement the snapshot-like view of its financial condition in a balance sheet. A personal letter from the
managing officer accompanying the distribution of
these pamphlets can re-emphasize the friendliness
and mutuality upon which his institution is based.
The preparation of simple, self-explanatory statements of condition does not involve costly experimentation with untried theories. The results obtainable have been demonstrated by those associations which have put such a program into effect.
The E E V I E W hopes to receive copies of statements
of this type prepared at the end of 1939 for study and
for preparation of further articles on this subject.
Dividend Rates
{Continued from p. 40)
if other associations in your community would do
the same?", 146 out of 252 members of the Federal
Home Loan Bank of Cincinnati replied, "Yes". All
of this points to the possibility of cooperative efforts
by associations in a community to effect simultaneous uniform reductions in dividend rates.
A second important factor in successful dividend
reductions is insurance of accounts. The Federal
Home Loan Bank of Indianapolis noted that in this
District in most cases an association can attract
money at a dividend rate of 3 percent only if at the
same time it offers insurance of accounts to the
public. Only a very few uninsured associations were
able to obtain an increase in private capital on a
3-percent basis.
Third, lower dividend rates permit the building
of reserves at a more rapid rate. This was emphasized by the Advisory Committee of the Board of
Directors of the Indianapolis Bank. Their study
showed that member associations which paid dividends at the rate of 3 percent over the 3-year period
1936-1938 were able to increase their reserves from
3.95 percent to 5.51 percent of net assets. During
this same 3-year period, member associations paying
4-percent dividends showed a slight decrease in the
ratio of combined reserves to net assets: from 8.43
percent to 8.39 percent. The Committee pointed
out the fact that the lower reserve position of the
associations paying 3-percent dividends was largely
the result of the fact that many of these associations
were newly organized in the period 1933-1936, and
started without reserves.
45
CUSTOMER ANALYSIS AS A GUIDE IN
ADVERTISING
How an association benefits from a thorough analysis
of its present customers, and the advertising media
available for contacting its potential investors and
borrowers.
•
SAVINGS and loan associations investigate
thoroughly every aspect of a loan application
before investing their funds in a mortgage loan.
Yet, many of these same institutions often spend a
considerable amount of money for advertising without exercising a comparable degree of caution to
make certain that the expenditures will not be unproductive and wasteful
The Department of Public Relations of the Federal Home Loan Bank Board, which is studying the
promotional activities of savings and loan associations, frequently does come across institutions which
adhere to the widely accepted principle of "investigate first—then invest". Such was the case with
a $3,000,000 association located in one of the Midwestern States.
About a year ago, the management of this institution was considering its 1939 advertising budget.
Not entirely satisfied with the results of its promotional efforts during 1938, this association determined
to devise a more effective plan for distributing its 1939
appropriations.
The president of this association tells his own
story of what they discovered after making a scientific
analysis of their present customers and a study of
the available means of reaching that portion of the
general public from which this association could
logically expect to seek additional business:
" I n making up our budget for 1939," he says, "we
began with a search for facts. In order to ascertain where we were getting our loans and where we
were getting our money, we mounted a city map on
a celotex board, dividing it into six sections: northern, eastern, southern, western, suburban, and outof-town accounts. I n locating our loan accounts,
we inserted a black tack where each house was
situated.
" I n spotting our savings and investment accounts,
we made up a sheet setting up as many columns as
we had districts. We then had one of our secretaries check our accounts, allocating all accounts of
$500.00 and over to the respective columns. When
46
she had finished and recorded the totals on the map,
we had a record that disclosed the neighborhoods
that patronized our institution and those t h a t did
not.
"We were somewhat surprised at the results. I t
showed that our best borrowing territory, especially
for construction loans, is on the outer rim of the
city, while our best territory for money is in the
next zone inside of that, made up of an older group
of people whose families have been raised and educated, and who are now building up reserves.
"We had 1,022 savings accounts, or more than half
of those in excess of $500.00, in the northern part of
the city, where we were formerly located. The
remainder of the accounts were distributed as follows: in the western part, 117; eastern, 239; southern, 111; suburban sections, 99; and out-of-town
accounts, 332.
"After considering these facts, we made up a
budget for 1939. In the neighborhoods from which
we got most of our business, we made up mailing
lists of home owners and those who had telephones.
To these groups, depending upon whether we want
mortgages or savings, we are sending postal cards
about once a month. The north end of the city
and the suburban areas are served by three neighborhood newspapers. These papers are distributed to
every home of their respective localities and each
has a coverage of approximately 2,000 homes. I t is
from these areas that we are now getting most of our
construction loans.
"Our program is concentrated on certain periods
of the year. We are advertising for loans during
March, April, and May, that being the peak of the
construction period; and for new money from June 1
to July 15, and from November 1 to January 15,
the two periods when many people shift their
investments."
A SCIENTIFIC APPROACH
This association has adopted a scientific approach
in solving its advertising problems. I t is an accepted
Federal Home Loan Bank Review
EXPLANATION: To show managers and boards of directors how a customer analysis map might be constructed, the Division
of Research and Statistics of the Federal Home Loan Bank Board has prepared this hypothetical map drawing upon the experience
of the association mentioned in this article. The three steps involved in preparing a map such as this include:
(1) The determination of the boundaries of the sections of the city. These are indicated on this map by the heavy black lines.
The association headquarters are located in the business district near the center of the community's commercial activity.
(2) The analysis of the savings and investment accounts. A work-sheet is prepared with one column for each of the districts
outlined on the map. A survey is then made of each account, checking the address of the investor and locating it in the proper
section. When this is completed, the totals may be shown in summary form as they are in the rectangular areas above.
(3) The analysis of the mortgage loan accounts. For purposes of studying the location of loan accounts in relation to security
areas, it is essential that the loan accounts be plotted individually. In this map, each loan is represented by a black dot, and
the geographic distribution indicates the heavy concentration of loans in the northern and outlying sections of the city.
November 1939
47
fact in modern advertising technique that the
present and former customers of any organization
furnish the key to potential sources of new business.
They constitute a representative group of the general
public which has already found a need for the products which the business offers. Advertising programs directed to the attention of this proven element of the total population are almost certain to
be the most effective and least costly.
By analyzing the accounts of its mortgage loan
portfolio and by studying the characteristics of its
present investors, this association knew in what geographic areas to concentrate its efforts to develop
additional mortgage loan prospects and sources of
new private share capital. I t might have gone even
further and classified these accounts: what percentage
belonged to men, to women, children, institutions, or
were jointly held? With information as to the sex,
age, location, and perhaps even the occupation and
income of present and past members of an association
over a period of years, it would be possible to construct advertising messages to be aimed directly at,
with more than average appeal for, these particular
types of individuals.
From the standpoint of dollars and cents, this
association found it could more profitably reach a
proportionately larger group of its potential prospects
by using the small neighborhood newspapers than by
taking space in the larger city dailies. There are
three daily papers in this city, with a coverage of 94
percent, 44 percent, and 21 percent, respectively,
of the homes.
No matter which of these the association chose as
an advertising medium, it would pay for space on
the basis of the newspaper's total circulation: the
larger the circulation, the greater the cost. Yet,
probably only a small percentage of that total circulation consists of genuine prospects for savings and
loan services, based on the association's study of its
present customers.
The space rates of the neighborhood newspapers
were materially lower, and furthermore, they were
far more certain of reaching the potential customers.
In addition to reducing the amount of money spent
for newspaper advertising, the association was increasing the efficiency of its promotional program.
The net result of this detailed study is that the
association is either obtaining more business for the
same amount of money spent, or, it is spending less
for the same amount of new business.
Knowing one's market is one of the keys to sales
success.
48
Labor and Material Costs in
Small-House Construction
•
I N a series of eight small demonstration houses
erected at a total reported cost of $23,000 in a
small community near Washington, D . C , $8,000 (35
percent) went for pay roll at the site, and $15,000
(65 percent) was cost of materials, according to the
Bureau of Labor Statistics. 1 These figures did not
include cost of land, contractor's profit, or certain
other items.
The plans for the eight houses were developed by
the National Small Homes Demonstration. This is a
project sponsored by the National Lumber Manufacturers' Association, the National Retail Lumber
Dealers' Association, and a number of buildingmaterials manufacturers and organizations. During
1938 some 2,000 demonstration houses were built in
over 1,000 communities for the purposes of encouraging improved design and local economy in building
and financing small low-cost homes. I t also served
to demonstrate new and varied uses of wood. The
houses varied in size from two to seven rooms, and
kitchen and bath.
Analysis of the reported costs revealed that "in
the eight demonstration homes, about $11,000 was
spent for carpentry, including about $4,000 for labor
and $7,000 for materials. The material and installation costs of kitchen cabinet and sink combinations,
of hardware, and of insulation were classed as carpentry as well as the lumber, millwork, and roofing.
Of this $7,000, the cost of lumber and millwork accounted for $5,000. Expenditures for masonry and
concrete work, for electrical work including stoves
and refrigerators, for plumbing, heating, painting,
plastering and lathing, each made up more than 5
percent of the total reported cost."
About 11,000 man-hours of labor at the site were
reported for the construction of the eight demonstration homes. Carpenters and carpenters' helpers
accounted for 4,400 hours; painters, 1,700 hours; and
there were 2,400 hours of common labor.
For each man-hour of labor on the site, it is estimated that about 1 % man-hours of off-site labor were
required. This is based upon an estimate that the
materials orders resulted in 16,000 or 17,000 manhours off the site, in fabrication, transportation,
office and sales, and similar operations.
1
"Labor and Material Costs in Small-House Construction," prepared under
the direction of Herman B. Byert Chief of the Bureau's Division of Construction
and Public Employment, and published in the Monthly Labor Review, Vol. 48,
No. 5.
Federal Home Loan Bank Review
THE NONFARM HOME-MORTGAGE DEBT
Final estimates by the Federal Home Loan Bank Board indicate
a $220,000,000
increase in the estimated outstanding homemortgage debt last year. Analysis of home-mortgage holdings
of the different classes of lenders during the decade 1929-1938
reveals important shifts in their distribution.
•
P R E L I M I N A R Y studies by the Federal Home
Loan Bank Board showed that last year for the
first time since 1930 there was a substantial increase
in the total outstanding volume of funds invested in
mortgages on 1- to 4-family nonfarm homes.* Since
annual changes in outstanding home-mortgage indebtedness have closely paralleled annual changes in
net capital formation in residential real estate, this
indicated that we added a little to the value of our
existing stock of residential buildings. We built new
units and brought sub-standard units up to par in
sufficient quantities to offset the depreciation of
existing dwellings and their loss through demolition,
fire, and similar causes.
After exhaustive study of recent surveys of mortgages recorded throughout the country by type of
mortgagee, and comparison of these analyses with
reported statistics of the mortgage holdings of savings and loan associations, life insurance companies,
mutual savings banks, commercial banks, and the
Home Owners' Loan Corporation, the Federal Home
Loan Bank Board has made public its estimates of
the outstanding balance of nonfarm home-mortgage
loans held by the different types of lenders on
December 31, 1938.
Two facts have enabled the Board to make more
accurate estimates of the home-mortgage debt than
have been possible up to this time: first, the initiation of a national study of mortgage recordings
($20,000 and under) at the end of 1938 makes currently
available for the first time a State and national
survey of new mortgages segregated by class of
mortgage lender; second, in recent reports for national
banks, the Comptroller of the Currency provided a
segregation of mortgage holdings that has permitted
a check on earlier estimates for commercial banks
and a more trustworthy guide to their 1938 activity.
was estimated by the Division of Kesearch and
Statistics as $17,721,000,000—an increase of $220,000,000 over the previous year-end figure. Table 1
shows in detail the estimated total home-mortgage
debt for the decade 1929-1938, analyzed according
to type of holder.
The only private lenders to show smaller estimated
total balances of home-mortgage loans outstanding at
the end of 1938 than on December 31, 1937, were
insurance companies and mutual savings banks. I n
each case, the differences were slight. The Home
Owners' Loan Corporation, since the completion of
Chart A
PERCENTAGE DISTRIBUTION OF ESTIMATED
OUTSTANDING MORTGAGE LOANS ON NONFARM
I TO 4 FAMILY HOMES, BY TYPES OF LENDERS
AS OF DEC 31 EACH YEAR, 1929-1938
OUTSTANDING URBAN HOME-MORTGAGE D E B T
The balance of outstanding mortgage loans on
nonfarm 1- to 4-family homes on December 31, 1938,
i "A Safer Home-Mortgage Debt", FEDEBAL HOME LOAN B A N E REVIEW,
June 1939, p. 262.
Novtmber1S39 '
185767—39—3
This flow chart shows the trends in the percentages of the total home-mortgage
debt held by different classes of lenders during the decade 1929 through 1938.
Savings and loan associations and commercial banks held their highest percentages of the total in 1929; insurance companies, mutual savings banks, and
"individuals and others" reached peaks in 1933.
4*
its lending operations in 1936, has shown a steadily
declining balance of loans held. Changes in the
balance of loans outstanding between the year-ends
of 1937 and 1938 may be summarized as follows:
[Millions of dollars]
Increase or
decrease
during 1938
Type of lender
Commercial banks
~
Individuals and others
Savings and loan associations
Insurance companies
Mutual savings banks
_
Home Owners1 Loan Corporation
-_
- __
.
-f$200
+ 152
-f 150
— 23
-30
-229
Trends in the percentages of the total home-mortgage debt held by different classes of mortgagees are
shown for the 10-year period«from 1929 through 1938
in Chart A. During this period, savings and loan
associations and commercial banks held their highest
percentages of the total in 1929, while insurance companies, mutual savings banks, and "individuals and
others" reached peaks in 1933. With the beginning
of H. O. L. C. refinancing operations in the latter half
of 1933, holdings of all private lenders began to
shrink, until at the end of 1935, H . O. L. C. held
approximately one-sixth of the total debt.
I n 1936, there were indications of a pronounced
revival in home financing by private institutions.
H. O. L. C. lending came to a close, with the greatest
distress in the home real estate market alleviated.
Recent trends in the percentages of total home-mortgage debt held by different types of lenders have
been: for commercial banks—upward since 1935; individuals and others—upward since 1936; savings
and loan associations—upward since 1936; insurance
companies—downward since 1931; mutual savings
banks—downward since 1933; H. O. L. C.—downward since 1935.
Similar comparisons reveal that commercial banks
and their trust departments are increasing their
home-mortgage holdings rapidly. "Individuals and
others" are also increasing their participation. Insurance companies have made 9 percent of total volume of mortgage recordings in 1939, and held 7.5
percent of the total home-mortgage debt at the end
of 1938. Mutual savings banks, which held 15.1 percent of the total, have made only 3.5 percent of the
home mortgages recorded so far this year.
REVISIONS IN E A R L I E R ESTIMATES
As a result of more complete information available
for this study just completed, the estimate of total
home-mortgage debt for the 1937 year-end has been
revised upward to SH^OljOOOjOOO.1 This increase of
$193,000,000 has been made in the light of additional
data on the 1937 holdings of "individuals and o t h e r s / '
(Continued on p. 68)
1
"The Nonfarm Home-Mortgage Debt in the United States: a Review".
FEDERAL HOME LOAN BANK REVIEW, August 1938, p. 388.
Chart B
ESTIMATED OUTSTANDING MORTGAGE DEBT
ON NONFARM I TO 4 FAMILY HOMES
AS OF DEC. 31 EACH YEAR, 1929-1938
CURRENT TRENDS
Comparison of the percentage distribution of the
estimated home-mortgage debt on December 31,
1938, among the different classes of lenders with the
volume of mortgages of $20,000 and less recorded by
these same types of lenders during the first eight
months of 1939 shows that savings and loan associations are clearly gaining a larger share of outstanding home-mortgage investments. These institutions
held 20.5 percent of the home-mortgage debt at the
end of 1938, but have made 31 percent of the total
volume of mortgages recorded so far this year.
50
1932
1933
(934
1935
1936
1937
1933
The estimated outstanding volume of mortgage loans on nonfarm 1- to4-family
homes reached a peak of $21,953,000,000 at the end of 1930. After six successive
years of declines, the total stood at $17,462,000,000 at the end of 1936. A slight
rise was shown in 1937, but 1938 marked the first year since 1930 that a substantial
increase took place.
Federal Home Loan Bank Review
Table 1.—Estimated outstanding mortgage loans on nonfarm 1 - to 4-family homes, by type of lender
[End of year.
Amounts are shown in millions of dollars]
1930
1931
1932
1933
1934
1935
1936
1937
1938
Savings a n d loan associations _ . $7, 008
3, 225
M u t u a l savings b a n k s
2,500
Commercial b a n k s
1,731
Insurance companies
Home Owners' Loan Corporation
_.
7,200
Individuals a n d others l
$6, 984
3,300
2,425
1,844
$6, 485
3,375
2, 145
1,899
$5, 756
3,375
1, 995
1,835
$4, 906
3,200
1,810
1,767
$4, 012
3,000
1, 189
1,547
$3, 467
2,850
1, 189
1, 415
$3, 361
2,750
1,230
1,358
$3, 480
2,700
1,400
1,343
$3, 630
2,670
1,600
1,320
7,400
7,500
7,000
103
6,700
2,209
6,200
2,897
6,000
2,763
6,000
2,398
6, 180
2, 169
6,332
21, 664
21, 953
21, 404
19, 963
18, 486
18, 157
17, 818
17,462
17, 5G1
17, 721
T y p e of lender
Total
1929
1
Includes trust departments of commercial banks, fiduciaries, real estate and bond companies, title and mortgage companies,
philanthropic and educational institutions, fraternal organizations, construction companies, RFC Mortgage Company, etc.
Sources of estimates on outstanding mortgage loans on nonfarm 1 - to 4-family homes:
These estimates have been developed by the Division of Research and Statistics of the Federal Home
Loan Bank Board from comprehensive analyses of recent surveys of mortgages recorded throughout the
country by type of mortgagee, used in conjunction with reported statistics and special studies. Chief sources
of basic information are summarized below.
Savings and loan associations: figures based on a compilation of the annual reports of Federal 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.
Insurance companies: estimates developed from study and summary of detailed reports 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.
Mutual savings banks: basic figures are their total mortgage holdings reported by the Comptroller of the
Currency. A special investigation by the Division of Research and Statistics made it possible to segregate
these mortgage holdings into the farm and nonfarm element and further to separate the nonfarm element
into mortgages on homes and other-than-home property. This 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 bank assets.
Commercial banks: a study conducted 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 segregated mortgages on homes from other nonfarm realestate holdings of the
reporting commercial banks. The relationships shown then have been applied to total mortgage holdings of
the banks for earlier years. In recent reports the Comptroller of the Currency has provided a segregation
of mortgage holdings by national banks. Adjustments have been made in the estimated data on the basis
of the Comptroller's reports as well as the Federal Housing Administration reports indicating increased mortgage lending by commercial banks.
Home Owners1 Loan Corporation: figures reflect the actual balance of mortgage loans held and advances
outstanding.
Individuals and others: estimates for recent years developed on the basis of studies of mortgage recordings
by type of mortgagee conducted by the Division of Research and Statistics. 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 H. O. L. C. 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.
November 1939
5.I
SUMMARY OF RESIDENTIAL CONSTRUCTION
AND HOME-FINANCING ACTIVITY
I. Industrial and commercial activity continues to gain during October, but consumer purchasing still lags behind increases in production.
II. Residential construction volume in September when adjusted for normal seasonal variation showed a drop of 24 percent.
A. The 39'percent decline in multifamily housing units was a major factor.
B. The number of 1- and 2-family units for which permits were granted decreased only 11 percent.
III. Rapid rises in building material prices shown by September and early October reports.
A. Cost of material for the F. H. L. B. B. standard house increases in September for the first time in two years.
B. Labor rates indicate no significant fluctuations as yet.
IV. Decline in total volume of nonfarm home-mortgage recordings accompanied the decline in residential construction in September.
A. Volume of mortgage recordings in 1939, first quarter: $784,000,000;
second quarter: $1,014,000,000/
third quarter:
$993,000,000.
B. Savings and loan associations' share of total financing volume increased from 29 percent during first quarter of 1939 to 33
percent in third quarter.
V. New mortgage loans of savings and loan associations totaled $90,000,000
level reached in August.
A. Home-purchase loans showed greatest resistance to this decline.
in September, a decline of 6 percent from the record
VI. The index of foreclosures in metropolitan communities set a new post-depression low during September in the face of a normal seasonal
increase during the August-September period.
VII. Reports over a 3-month period from a substantial group of insured associations indicate that the demand for mortgage funds exceeds
the flow of incoming share investment, resulting in increased F. H. L. B. borrowings.
RESIDENTIAL BUILDING ACTIVITY AND SELECTED INFLUENCING FACTORS
1926 * 100
600
1929
52
1930
193!
1932
1933
1934
1935
1936
5937
1938
1939
Federal Home Loan Bank Review
RESIDENTIAL CONSTRUCTION and HOME-FINANCING ACTIVITY
•
G E E A T E R volumes of orders for equipment
and supplies, together with an accompanying
rising price level, continue to drive industrial and
commercial activity to higher levels.
The seasonally adjusted index of residential construction declined 24 percent from August to September. Although building material prices have
been rising since mid-August, the greater part of
this reduction in the volume of residential building
was caused by a slackening of activities of the U. S.
Housing Authority, which grants loans and rental
subsidies to local governments for use in slum
clearance programs.
Abated home-building activity in September was
reflected in a decrease in the volume of construction
loans of savings and loan associations. While all loan
classifications shared in the drop during September,
loans for the purchase of existing homes receded
much less than the remaining groups.
Total mortgage-financing volume of all savings
and loan associations declined slightly less in September than did that of other home lenders com-
bined. According to mortgage-recording statistics,
savings and loan associations have now increased
their relative share of the total mortgage-lending
business from 29 percent during the first quarter of
1939 to 33 percent during the quarter ending in
September.
General Business Conditions
•
A T T E N T I O N of businessmen, economists, and
laymen has been focused more and more on
indicators of business activity and prices since early
September, due to the effect that violent changes
brought about by the European war might have on
their respective economic situations. I n the residential real estate and home-financing fields there is
always the danger that war conditions might lead
to general stagnation, that labor and materials might
be diverted to other industries, and that the demand
for homes except in areas of industrial concentration
might slacken.
ESTIMATED NUMBER AND COST OF FAMILY DWELLING UNITS
IN ALL CITIES OF 10,000 OR MORE POPULATION
PROVIDED
(Source: Federal Home Loan Bank Board. Compiled from residential building permits reported to U. S. Dept. of Labor)
NUMBER OF UNITS
30
1 '
PROVIDED
30
~T~
28
28
26
1
26
24
—/-
20
20
18
18
14
12
12
10
A931-35 AVt
8
i
6
•
4
" —-— - J ' "
^
10
\
8
|
1938
80
pU_
November 1939
APR.
MAY
JUN.
~Y
90
80
70
70
y
\/j
50
M1
60
N939 I
| 50
40
40
30
20
N
JUL.
^^^
\r \~J
6
4
2
FEB. MAR
|00
li 131-3 5 AV £
2
JAN.
110
90
60
/939 1
14
DEC.
no
16
V
120
24
22
r t
PROVIDED
100
—Nm
1938
22
I6
COST OF UNITS
120
AUG.
SEP
OCT.
NOV.
DEC.
0
*
r*^
10
0
DEC,
4
-''
20
y
\
10
1
JAN.
30
--«.\
FEB.
Division of Research 8t Statistics
Federal Home Loan Bank Board
MAR.
APR.
MAY
JUN.
JUL.
AUG.
SEP. OCT.
NOV. DEC.
0
53
At the end of September the rate of production at
mines and factories was the highest in two years and
substantially above the level reached during the
November-December peak in 1938. The first three
weeks of October were marked by a further expansion of business with volumes well ahead of September. The railway-equipment, machine-tool, and
steel industries showed exceptional advances, b u t
these have not been duplicated generally, although
lumber and other durable goods industries have received large orders in recent weeks.
Indicators of consumer purchasing do not yet show
a rise similar to the advance in production. Consumer purchasing is improving, however, according
to the most recent available data. The seasonally
adjusted index of income payments, a measure of
consumer purchasing power, showed a substantial rise
in September. Department store trade, an indicator
of the buying of general merchandise by consumers,
expanded more than seasonally in September, reaching the highest point since the autumn of 1937.
The sharp rise in wholesale commodity prices following the outbreak of a European war subsided
considerably during the first two weeks of October,
according to the Bureau of Labor Statistics. The
average wholesale price of building materials, however, rose to the highest level reached since the end
of 1937 with quotations higher for lumber, gravel,
and prepared roofing. The weekly index of average
wholesale prices for building materials has not decreased in any week since mid-August. On August
19, this index stood at 89.5 (1926 = 100); on October
28, the index had increased to 93.0 percent.
Commercial loans by banks began to increase in an
irregular fashion in the spring of this year. Since
the first of September commercial loans have increased sharply. The Department of Commerce
reports that the usual seasonal movement was reinforced by growing demand for working capital as
inventories and industrial operations increased. In
the four weeks ended September 27, reporting mem-
ber banks in 101 leading cities added more than
$200,000,000 to their business loans.
After the sharp decline in the prices of U. S. Treasury long-term bonds which occurred between midAugust and the end of September, prices moved u p ward slightly and the average yield on these long-term
Government obligations dropped from 2.74 percent
on September 30 to 2.51 percent on October 28.
Residential Construction
[Tables 1 and 2}
•
W H I L E the manufacturing sector of American
industry has been stimulated by increased demands, the construction of privately financed residences has remained relatively stationary with a
tendency to decline.
Usually there is a slight seasonal increase in the
volume of residential construction from August to
September, but the adjusted index shows a 24-percent decline during this period. The major part of
the decline in total residential construction during
September was accounted for by the coincidental
slackening of U. S. Housing Authority projects, although privately financed building activity receded
slightly. Multifamily construction activity in communities of 10,000 population or over suffered a
drop of 4,800 units, or 39 percent, from August,
while the number of 1- and 2-family houses decreased
only 1,800 units, or 11 percent.
Residential building for the first nine months of
1939 amounted to over 215,000 dwelling units, a rise
of 33 percent from the same period of last year.
Single-family, 2-family, and multifamily units all
shared in this rise, while joint home and business
structures, which represent a relatively small proportion of the total, recorded a decline.
Foreclosures
[1926=100]
•
Type of index
Sept.
1939
Aug.
1939
Percent
change
Residential construction l
Foreclosures (metro, cities)._ ___ ___
Rental index (N. I. C. B.)
B uilding material prices
_
Industrial production >
Manufacturing employment 2
Manufacturing pay rolls *
Average wage per emplovee
39.1
136.0
85.4
90.9
101.9
98.5
89.9
91.3
51.7
146.0
85.2
89.6
95.4
94.8
86.2
90.9
-24.4
-6.8
+0.2
+1.5
+6.8
+3.9
+4.3
+0.4
1
8
Corrected for normal seasonal variation.
Revised.
54
Sept.
1938
39.1
157.0
85.5
89.5
84.3
90.5
78.3
83. 5
Percent
change
0.0
-13.4
-0.1
+1.6
+20.9
+8.8
+14.8
+5.5
T H E seasonally adjusted index of foreclosures
in metropolitan communities registered a new
post-depression low mark during September and
carried the index to 136 (1926 = 100). This was the
lowest individual month in more than 10 years, and
was fractionally below the average for the year 1927.
The index of September foreclosures stood 7 percent under that for August, and 13 percent below that
for September of last year. The August-to-SepFederal Home Loan $ank Review
tember decline appears even more favorable in the
light of the customary 1-percent seasonal increase
for this period.
Foreclosure activity in these metropolitan communities during the first three quarters of 1939 was
11 percent under that for the same period of 1938.
Of the 81 communities for which comparable data
were available, 58 showed declines and 23 showed
increases from the first nine months of last year.
Mortgage Recordings
[Tables 18 and 14]
•
MORTGAGE-recording activity in September
($317,156,000) decreased 8.2 percent from August, with each type of lender reporting declines in
mortgage financing. Although reporting a decrease
of almost $8,000,000 from August, savings and loan
associations recorded $104,548,000 of mortgages in
September, which was the fifth consecutive month in
which these institutions have recorded more than
$100,000,000 of such mortgages.
More than $2,750,000,000 of nonfarm mortgages of
$20,000 or less were recorded by all types of mortgagees during the first nine months of 1939. The
volume of recordings in the third quarter ($993,000,000) practically equaled the second quarter activity,
and was $200,000,000 greater than recordings in the
first three months of the year. Of the 9-month
total, savings and loan associations accounted for 31.1
percent; commercial banks and trust companies, 24.3
percent; and individuals, 17.6 percent; with the
remaining 27.0 percent coming from insurance com-
panies, savings banks, and miscellaneous lenders
including mortgage companies.
The trend of these mortgage recordings points to
the increasing importance of savings and loan associations as a source of home-mortgage credit. Quarterly
totals of mortgage recordings show a steady gain in
the proportion of savings and loan association business. From 29 percent of all recordings of $20,000 or
less in the first three months of this year, savings and
loan associations expanded their relative share of
business to 31 percent of the second quarter's volume,
and accounted for 33 percent of such business in the
third quarter of the year. Savings banks have
increased their share from 3 percent in each of the
first two quarters to 4 percent in the July-September
period. Insurance companies have contributed 9
percent of the recordings in each quarter; while banks
and trust companies, individuals, and other lenders
have accounted for decreasing proportions of this
business.
Small-House Building Costs
[Tables 8 and 6]
•
A GENERAL rise in building material costs has
been experienced since the middle of August.
According to the U. S. Department of Labor, sharp
upturns in the cost of paint and paint materials, as
well as lumber, were the dominant influences effecting a rise of nearly 2 percent in the index of the
wholesale price of building materials.
Total cost of material used in the construction of
a standard 6-room frame house rose in September
Mortgage recordings by type of mortgagee
Mortgage recordings by quarters
Type of lender
Savings and loan associations
Insurance companies
Banks and trust companies
Mutual savings banks __
Individuals
Others
Total
November 1939
_-_
Percent Percent
change of Sepfrom
tember
August amount
-7. 1
-8.8
-6.8
-2.7
-9.9
-12.3
-8.2
33.0
8.9
23.5
4.2
16.7
13.7
Cumulative record- Percent
of total
ings (9
recordmonths)
ings
(thousands
of dollars)
$868, 233
245, 735
678, 346
99, 722
492, 583
406, 244
100.0 2, 790, 863
(Millions of dollars)
First Second Third
First Second Third
quarter quarter quarter quarter quarter quarter
31. 1 1 $227
70
8.8
201
24.3
24
3.6
17.6 1 149
113
14.6
100. 0
Percent of total
784
$318
87
248
34
174
153
$323
89
229
41
170
141
29
9
26
3
19
14
31
9
25
3
17
15
33
9
23
4
17
14
1,014
993
100
100
100
55
by one-half of 1 -percent—thefirstmonth in which this
series has shown an increment in over two years.
Recent rises in wholesale material prices charged to
dealers are now beginning to be reflected in the
prices actually quoted by the dealer to the buyer.
Both wholesalers' and dealers' building material
prices prior to September had been following an extremely even course for over a year. Now prices
are showing at least a temporary tendency to rise
rapidly. Labor rates in the home-construction industry have held much more closely to 1937 peak
levels than have material prices, and do not indicate
as yet any significant fluctuations.
Ten of the 25 cities reporting costs for building a
standard 6-room frame house in October showed
rises of more than $100 from July. Most of these
cities were located in the East. Only four cities, all
of which were located in the Midwest, reported declines greater than $100 (Table 3, page 60).
Construction costs for the standard house
[Average month of 1936 = 100]
Element of
cost
Material
Labor
TotaL
Percent
change
Sept.
1938
Percent
change
Sept.
1939
Aug.
1939
102.9
111.2
102.3
111.2
+ 0.6
0.0
103.4
112.4
-0.5
-1. 1
105.7
105.2
+ 0.5
106.4
-0.7
New mortgage loans distributed by purpose
[Amounts are shown in thousands of dollars]
Construction
Home purchase
Refinancing. _
Reconditioning
Other purposes
Total
Aug.
1939
Sept.
1939
Purpose
Percent
change
Sept.
1938
Percent
change
$27, 854 $29, 863 - 6 . 7 $21, 018 + 32.5
31, 367 32, 282 - 2 . 8 25, 698 + 22. 1
16, 021 17, 005 - 5 . 8 12, 416 + 29.0
5,544 5,909 - 6 . 2 4,791 + 15.7
8,946 9,979 - 1 0 . 4 7,724 + 15.8
89, 732 95, 038
- 5 . 6 71, 647 + 25.2
struction of homes led this recovery with a 33percent rise.
While new mortgage loans of Federal savings and
loan associations and nonmember institutions each
receded more than 8 percent, State-chartered members of the Federal Home Loan Bank System
recorded a decline in loan volume of less than 1
percent from August to September. However,
September loans of Federals were 45 percent above
the same 1938 month, and those of State members
rose 26 percent, whereas nonmember loans were
down nearly 7 percent.
TOTAL LOANS MADE BY ALL SAVINGS AND LOAN ASSOCIATIONS
UNITED STATES MILLIONS
OF DOLLARS
BY TYPE OF ASSOCIATION
I
New Mortgage-Lending Activity of
Savings and Loan Associations
[Tables 4 <*>nd 5\
•
SAVINGS and loan associations made new
mortgage loans amounting to approximately
$90,000,000 during the month of September, a
decline of over $5,000,000, or 6 percent, from the
record level reached in August; September lending
volume, however, was still 25 percent above the same
1938 month.
Home-purchase loans, although showing a 3percent decrease from August, indicated much
stronger resistance to the general contraction in
volume than did other loan classes which registered
drops ranging from nearly 6 percent to over 10
percent. Favorable comparisons with September
1938 were shown by each of the five major loan
classifications (see table); new loans for the con56
MAR JUN. SEP DEC. MAR. JUN. SEP. DEC.
1936
1937
Federal Home Loan Bank Review
During the first nine months of this year nearly
$724,000,000 was loaned on mortgage security by
savings and loan associations—$127,000,000 over the
total for the same period of last year. Increases
during this period were general throughout the
country, although nonmembers as a whole did not
show greatly accelerated activity.
Federal Savings and Loan System
[Table 7]
•
G R O W T H in the number of savings and loan
associations operating under Federal charter has
been checked considerably during the past year or so
primarily because of the strengthening process of
mergers and consolidations of existing institutions,
and because many of the State-chartered associations
eligible to convert and desiring to do so have already
become Federals.
Few Federal charters are being issued to new savings and loan associations since it is felt that most
urban communities are being adequately serviced
by existing home-financing institutions.
Only two more converted associations were operating under Federal charter at the end of September
than on August 31, bringing the total number of
such institutions to 759; new Federals remained unchanged at 635. On September 30, members of the
Federal System had nearly $1,500,000,000 in assets.
Federal associations which reported in August, as
well as in September, showed similar trends and
relationships to those of insured State-chartered
associations (Table 7, page 64); namely, more rapid
flow of funds into mortgages than received from new
share investments, rising volume of borrowings, and
increase in total assets.
Progress in number and assets of Federal savings
and loan associations
Number
Type~of association
Sept.
30,
1939
New
-_
Converted. __
635
759
Approximate assets
Aug.
31, Sept. 30, 1939 Aug. 31, 1939
1939
635 $412, 926, 000 $408, 593, 000
757 1, 072, 486, 000 1, 064, 336, 000
TotaL _. 1,394 1,392 1, 485, 412, 000 1, 472, 929, 000
Federal Home Loan Bank System
[Table 9]
•
S E P T E M B E R was the best month, with regard
to total lending operations by the Banks, since
October 1937 (excluding the sharp semiannual increases in Bank advances which usually take place in
June and December). During this month, advances
outstanding recovered $4,200,000—nearly one-half
of the total decline of the preceding two months.
Total advances amounted to $10,100,000 and repayments amounted to $5,900,000, which brought the
balance of advances outstanding to $163,700,000 at
the end of the month.
Advances made by the Banks for the first nine
months of 1939 totaled $80,600,000, which was
$3,600,000 greater than advances made for the same
period last year; repayments for the period were
$28,300,000 greater this year than last. Total
advances during September were nearly $2,400,000
greater than the advances for the preceding month
and nearly $3,600,000 greater than for September
of last year. Repayments received during September were $3,950,000 less than those during
August and $494,000 less than for September of the
preceding year.
Advances outstanding at the end of September
1939 constituted approximately 86 percent of the
average of monthly advances outstanding for the
year 1938 ($189,700,000), which is two points higher
than last month's percentage.
Eight Banks reported advances greater than repayments for the month, resulting in increases in
their advances outstanding, while the four remaining Banks reported reductions in advances outstanding ranging from $25,545 in the Boston District to
$482,740 in Cincinnati. The New York Bank had
the largest monetary and percentage increase in advances outstanding—$1,235,835, or 7.6 percent. All
but two Banks made greater advances during September than during August and all but three of the
Banks received less repayments.
A tabulation presenting the percentage of the
Banks' current assets to current liabilities on September 30, 1939, reveals that this figure was 444
percent, or the equivalent of four dollars of current
assets to one dollar of current liabilities.
The month of September reflected no change in
the total membership of the Federal Home Loan
Bank System over the preceding month's figure of
(Continued on p. 67)
November 1939
57
Table 7.—Number and estimated cost of new family dwelling units provided in all cities of 10,000
population or over in the United States x
[Source: Federal Home Loan Bank Board.
Compiled from residential building permits reported to U. S. Department of Labor]
[Amounts are shown in thousands of dollars]
N u m b e r of family units provided
JanuarySeptember
totals
Monthly totals
T y p e of dwelling
Aug.
1939
Sept.
1939
T o t a l cost of units
Sept.
1938
1939
1938
M o n t h l y totals
Sept.
1939
13, 252 14, 934 12, 550 121, 789 93, 918 $50,
1-family dwellings
778 8,656
932 1,088
2-family dwellings
7,974 2,
2
107
63
87
734
601
J o i n t home a n d business
3- and-more family dwellings. _ 7,469 12, 257 8,324 84, 622 59, 266 25,
Sept.
1938
Aug.
1939
608. 0 $58,
389. 5 2,
479.8
859. 8 43,
January-September
totals
940. 7 $47,
828. 3 2,
268.2
454. 4 28,
1939
780. 1 $477,
075. 6 22,
2,
381.3
332. 1 278,
1938
154. 3 $368,
033. 3 20,
692. 0
2,
627. 3 193,
989. 0
851. 8
571. 7
086. 4
21, 740 28, 342 21, 759 215, 668 161, 892 79, 337. 1 105, 491. 6 78, 569. 1 780, 497. 9 585, 498. 9
T o t a l residential
1
Estimate is based on reports from communities having approximately 95 percent of the population of all cities with population of 10,000 or over.
2
Includes 1- and 2-family dwellings with business property attached.
Table 2.—Number and estimated cost of new family dwelling units provided in all cities of 10,000
population or over, in September 1 9 3 9 , by Federal Home Loan Bank District and by State
[Source: Federal Home Loan Bank Board.
Compiled from residential building permits reported to U. S. Department of Labor
[Amounts are shown in thousands of dollars]
All 1- a n d 2-family dwellings
All residential dwellings
N u m b e r of
family dwelling
units
Federal H o m e Loan B a n k District
and State
Sept.
1939
21, 740
U N I T E D STATES
N o 1—Boston
_
Connecticut
Maine
Massachusetts
New Hampshire
R h o d e I s l a n d - __ _
Vermont
- - --
-_ --
Sept.
1938
E s t i m a t e d cost
Sept.
1939
Sept.
1938
N u m b e r of
family dwelling
units
Sept.
1938
Sept.
1939
21, 759 $79, 337. 1 $78, 569. 1
14, 271
E s t i m a t e d cost
Sept.
1939
Sept.
1938
13, 435 $53, 477. 3
$40, 479. 8
1,939
678
7, 190. 5
2, 998. 3
881
627
3, 815. 3
2, 865. 0
248
36
1,446
73
125
11
224
44
285
31
81
13
1, 095. 9
126.2
5, 215. 0
172.0
535.6
45.8
944. 1
148.7
1, 453. 8
89. 1
322. 1
40. 5
242
36
397
73
122
11
173
44
285
31
81
13
1, 071. 9
126. 2
1, 868. 8
172.0
530.6
45.8
728.0
66. 1
1, 546. 9
124.4
367.6
32.0
N o . 2—New Y o r k _ .
__ _
4,041
8,103
16, 314. 6
28, 854. 4
1,245
1,443
5, 617. 6
5, 156. 5
N e w Jersey
N e w York
__ _ _
862
3, 179
598
7,505
3, 381. 0
12, 933. 6
2, 286. 7
26, 567. 7
330
915
240
1,203
1, 562. 3
4, 055. 3
1, 121. 4
4, 035. 1
858
1,237
3, 843. 3
4, 677. 1
817
1,091
3, 770. 1
3, 424. 1
8
726
124
0
1,149
88
49. 1
3, 299. 4
494.8
0.0
4, 356. 4
320.7
8
689
120
0
1,003
88
49. 1
3, 241. 2
479. 8
29.3
3, 053. 9
340.9
No. 3—Pittsburgh
Delaware _ _ _ _ _
Pennsylvania
West Virginia
58
_
Federal Home Loan Bank Review
Table 2.—Number and estimated cost of new family dwelling units provided in all cities of 10,000
population or over, in September 1939, by Federal Home Loan Bank District and by State—Contd.
[Amounts are shown in thousands of dollars]
All 1- a n d 2-family dwellings
All residential dwellings
N u m b e r of
family dwelling
units
Federal H o m e Loan B a n k District
and State
No. 4—Winston-Salem
Alabama
District of Columbia
Florida
Georgia
MarylandN o r t h Carolina
South Carolina
Virginia
N o . 5—Cincinnati
Kentucky
Ohio. _
Tennessee
_ _
_
Sept.
1938
Sept.
1939
3,787
1,954
$11,790.3
$6, 382. 7
1,940
1,571
$6, 103. 5
$4, 605. 3
220
720
630
640
533
728
109
207
121
346
434
175
338
246
89
205
357.7
930. 3
156. 6
691. 1
856. 9
803. 1
249.8
744.8
207.3
1, 643. 3
1, 432. 5
478.5
1, 083. 7
639.9
212.4
685. 1
181
243
575
204
235
256
105
141
113
248
411
171
190
214
85
139
337.2
1, 194. 3
1, 945. 6
389. 1
733. 6
743.2
240.8
519. 7
198. 7
1, 108. 2
1, 278. 3
332. 5
603. 9
454. 2
162. 2
467. 3
1,207
934
4, 984. 0
4, 099. 8
971
753~
4, 181. 8
3, 494. 3
138
907
162
99
640
195
423.0
4, 150. 0
411.0
301.5
3, 180. 2
618. 1
127
690
154
99
515
139
391.4
3, 399. 4
391.0
372.3
2, 863. 9
258. 1
6, 413. 6
4, 182. 4
856
6, 226. 4
4, 098. 7
827
574
3, 934. 1
2, 913. 2
1,024
375
643
213
4, 656. 0
1, 570. 4
3, 215. 9
882.8
467
360
369
205
2, 401. 7
1, 532. 4
1, 794. 7
1, 118. 5
887
752
3, 172. 3
2, 653. 9
815
708
2, 984. 4
2, 030. 8
224
296
291
39
37
199
255
229
19
50
818.3
1, 205. 0
911.2
141.9
95.9
753.4
995.2
755.9
61.8
87.6
224
292
223
39
37
199
242
198
19
50
818.3
1, 192. 1
736.2
141.9
95.9
497. 3
691. 7
714. 3
48.2
79. 3
1,921
1,748
5, 356. 0
4, 581. 2
1,722
1,693
4, 069. 0
2, 788. 7
72
230
144
46
1,429
61
159
111
39
1,378
167.0
613. 8
215. 9
137.5
4, 221. 8
138.8
462. 5
184.7
161. 7
3, 633. 5
72 ]
226
141
46
1,237
57
155
111
39
1,331
167.0
605. 6
211.8
137. 5
2, 947. 1
82.
356.
128.
86.
2, 135.
577
604
1, 919. 8
1, 806. 4
543
523
1, 847. 5
1, 420. 3
_ _
158
107
104
208
177
123
62
242
574. 8
280.5
405.6
658.9
528. 1
332.6
246.4
699.3
135
99
101
208
112
111
62
238
526.0
264. 5
398. 1
658. 9
_ _ _ _
655
581
2, 261. 8
1, 859. 5
623
566
2, 174. 3
1, 317. 4
30
59
138
99
313
16
18
52
120
110
250
31
111.8
147.9
500. 6
341.4
1, 089. 9
70.2
57.5
121.7
486.9
394.5
667.6
131.3
30
55
125
99
298
16
18
49
116
110
242
31
111. 8
137.4
464.6
341. 4
1, 048. 9
70.2
66.
104.
336.
262.
497.
50.
2,975
3,066
9, 769. 9
10, 910. 0
2,428
2,644
8, 566. 1
6, 281. 8
31
2,928
16
39
3,005
22
83.3
9, 586. 0
100.6
153.2
10, 628. 9
127.9
27
2,385
16
39
2,583
22
71. 3
8, 394. 2
100.6
122. 1
6, 096. 1
63 6
___
__
_
__
_
No. 12—Los Angeles
~IT242~
1,399
_
_
" 1,459"
891. 5
3, 290. 9
_
No. 11—Portland.-
1, 2 4 6 " _ 6 , 508. 2 ^ 5 ^ 6 4 7 7 1
1, 388. 3 I
5, 025. 3
_
Colorado _ _
Kansas
Nebraska
Oklahoma
2,
2,
1,
1,
1,
Sept.
1938
246
996
N o . 10—Topeka
Sept.
1939
364
1,095
No. 9—Little Rock
November 1939
Sept.
1938
939.2
4, 707. 9
Iowa
Minnesota
Missouri.
North D a k o t a . .
South D a k o t a
Arizona
California
Nevada._
Sept.
1939
1, 393. 5
5, 114. 7
N o . 8—Des Moines
Idaho
Montana.Oregon
Utah
Washington
Wyoming.
Sept.
1938
250
996
N o . 7—Chicago _ __
Arkansas
Louisiana.
Mississippi
_
New Mexico
_
Texas
_ _ __ __
E s t i m a t e d cost
368
1,126
Indiana
Michigan
Illinois. __ _
Wisconsin. _ _
N u m b e r of
family dwelling
units
Sept.
1939
1,494
N o . 6—Indianapolis
E s t i m a t e d cost
__ _
_
378.
234.
185.
621.
3
6
2
0
6
5
8
8
2
5
5
0
2
5
7
5?
Table 3.—Cost of building the same standard house in representative cities in specific months1
NOTE.—These figures are subject to correction
[Source: Federal Home Loan Bank Board]
Cubic-foot cost
Federal Home Loan Bank District
and city
1939
Total cost
1939
1938
Oct.
$5, 745
5,676
5,536
6,007
5,938
6,165
$5, 790
5,581
5,539
6,115
5,726
6, 180
$5, 907
5,559
5,537
6,303
5,660
6,236
5, 897
5,956
5,553
6, 118
5,824
5, 750
5,966
5,506
6,118
5,834
5,854
5,831
5,424
6,181
5,900
5,742
5,765
5,353
6, 166
5,871
6,303
6, 043
6,550
5,960
6,052
5,851
6,051
6,287
6,000
6,548
6, 116
5,959
5,605
6,016
6,275
5,995
6,569
5,959
6,053
5,655
6,210
6,279
5,975
6,529
5,808
6,078
5,658
6,272
6,164
6,186
6,532
6, 112
6,887
5,528
5,998
6,310
6,282
6,594
6,161
6,932
5,400
6, 016
6, 255
6, 114
6, 522
6, 161
7,035
5,366
6,026
6, 304
6, 089
6, 532
6,078
6,996
5,495
5,880
6,272
6,001
6,456
6, 002
$0. 261
.243
.236
.261
. 241
.258
$0. 246
.232
.231
.263
.236
.260
.254
.239
. 244
.247
.236
.239
.240
. 223
.257
.245
6,095
5,725
5,848
5,935
5,672
No. 8—Des Moines:
Des Moines, Iowa
Duluth, Minn_ _ __
_____
St. Paul, M i n n . . _ _ _ _ _ _ __
Kansas City, Mo
St. Louis, Mo __ _ _ _
Fargo, N. Dak
__ __
__
Sioux Falls, S. Dak
_ __ __
.263
.252
.273
. 248
.252
.243
.252
.257
.258
.272
No. 11—Portland:
Boise, Idaho
____ _
|
Great Falls, Mont
Portland, Oreg
Salt Lake City, Utah
__
Seattle, Wash
__ _ __
Spokane, Wash__
__
Casper, Wyo
_
_
. 255
.287
.230 |
.250
.263
.262
. 275
.250
No. 6—Indianapolis:
Evansville, Ind __
Indianapolis, Ind____
South Bend, Ind
Detroit, Mich
_ __
Grand Rapids, Mich
__ _
_ __
.250
.243
.268
.227
.245
.261
. 262
. 268
$6, 056
5,884
Jan.
Oct.
No. 2—New York:
Atlantic City, N. J
Camden, N. J_
Newark, N. J__ __
Buffalo, N. Y
Utica, N. Y
White Plains, N. Y
1937
Oct.
Apr.
Oct.
July
1938
Oct.
$6, 272 2 $5, 867
5, 574
5,829
5,492
5,654
5,952
6,255
5,706
5,786
6,094
6, 198
2
5,989
5,832
6,436
5,455
5,880
6, 259
6, 286
6, 430
I
1936
Oct.
6,496
$5, 701
5, 258
5, 117
5,706
6,381
5,757
6,221
5,829
5,586
5,492
5, 583
5,251
5, 189
6,463
6,279
6,822 1
6, 090
6, 437
5, 975 |
6,344
6, 140
5, 765
5, 606
5, 300
6, 102
5, 586
5, 676
6, 159
7,039
6, 032
5, 712
6, 574
6, 532 !
6, 851
6, 563
5, 694
6,009
6, 175
6,206
1
The house on which costs are reported is a detached 6-room home of 24,000 cubic feet volume. Living room, dining
room, kitchen, and lavatory on first floor; three bedrooms and bath on second floor. Exterior is wide-board siding with brick
and stucco as features of design. Best quality materials and workmanship are used throughout.
The house is not completed ready for occupancy. It includes all fundamental structural elements, an attached 1-car garage,
an unfinished cellar, an unfinished attic, a fireplace, essential heating, plumbing, and electric wiring equipment, and complete
insulation. It does not include wall-paper nor other wall nor ceiling finish on interior plastered surface, lighting fixtures, refrigerators, water heaters, ranges, screens, weather stripping, nor window shades.
Reported costs include, in addition to material and labor costs, compensation insurance, an allowance for contractor's
overhead and transportation of materials, plus 10 percent for builder's profit.
Reported costs do not include the cost of land nor of surveying the land, the cost of planting the lot, nor of providing walks
and driveways; they do not include architect's fee, cost of building permit, financing charges, nor sales costs.
In figuring costs, current prices on the same building materials list are obtained every three months from the same dealers,
and current wage rates are obtained from the same reputable contractors and operative builders.
2
Revised.
60
Federal Home Loan Bank Review
RATE OF RESIDENTIAL BUILDING IN ALL CITIES OF 10,000 OR MORE POPULATION
REPRESENTS THE ESTIMATED NUMBER OF PRIVATELY FINANCED FAMILY DWELLING UNITS PROVIDED PER 100,000 POPULATION
Source: Federal Home Loan Bank Board.
Compiled from Building Permits reported to U S. Department of Labor.
FEDERAL HOME LOAN BANK
DISTRICTS
DISTRICT 4
WINSTON SALEM
DISTRICT 3
PITTSBURGH
DISTRICT 2
NEW YORK
DISTRICT I
BOSTON
1939-^
re
-j
1
H
OLTJ
[Jr^p^J
^1938
7931-35 AVG.-j
)
-LC
rt~
W »
1931-35
AVG."}
1931-35 AVG.-^
*. APR. MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC.
JUL. AUG. SEP OCT. NOV DEC.
i SEP. OCT NOV DEC.
i. MAR. APR. MAY JUN. .
JAN. FEB. MAR. APR. MAY JUN. JUL. AUG. SEP. OCT NOV. DEC.
DISTRICT 8
DES MOINES
DISTRICT 7
CHICAGO
DISTRICT 5
CINCINNATI
»939>
jTrh n
I938-*
jr mi-35 AVG.
~ ^ *
{__.
JAN. FEB. MAR. APR MAY
P-|
B
JAN. FEB. MAR. A
.. AUG. SEP. OCT. NOV DEC.
t
DISTRICT II
PORTLAND
rH fl-n ,
~\
LJ
I
$
DISTRICT 12
LOS ANGELES
?
^ n
JUN. JUL. AUG. SEP. OCT. NOV. DEC.
DISTRICT 10
TOPEKA
DISTRICT 9
LITTLE ROCK
l939
JUN. JUL. AUG. SEP OCT. NOV. DEC.
LJ t-
-
L_
^
^u
J
" " L - ri Z L
t JUL. AUG. SEP OCT. NOV DEC
AVG.
/93Z-355 AVG.
AVG.^
IT
T=t-
£7-L-v
i. FEB. MAR. APR ft
f1931-35
I. FEB. MAR APR. MAY JUN
,
i. SEP OCT. NOV. DEC.
i. FEB. MAR APR MAY
JUN. JUL. AUG. SEP OCT. NOV. DEC.
L FEB MAR. APR MAY
JUN. JUL. AUG. SEP OCT. NOV. OEC.
UNITED STATES AVERAGE
1930-1939
A-*,
r
1934
I93S
1936
1937
1938
1939
Aj^=y-
5
SEP.
November 1939
DEC.
SEP
DEC.
61
Table 4.—Estimated volume of new lending activity of savings and loan associations, classified by
District and type of association
[Amounts are shown in thousands of dollars]
N e w loans
Federal H o m e Loan B a n k District a n d t y p e of association
Sept. 1939 Aug. 1939
United States:
Total
Federal
State member.
Nonmember...
$89,
37,
36,
15,
732
090
989
653
$95,
40,
37,
17,
038
645
340
053
Percent
Percent
New
change,
change,
loans,
Sept. 1938
Aug. 1939
Sept. 1938 to Sept.
to Sept
1939
1939
-5.6
-8.7
-0.9
-8.2
$71,
25,
29,
16,
C u m u l a t i v e new loans (nine
months)
1939
1938
Percent
change
647
650
255
742
+ 25.2
+ 44.6
+ 26.4
-6.5
$723,
293,
290,
139,
898
645
314
939
$597,
211,
250,
135,
061
126
305
630
+ 21. 2
+ 39. 1
+ 16.0
+ 3.2
District No. 1: T o t a l _
Federal _
State m e m b e r .
Nonmember
8,279
2,676
4,037
1, 566
9,302
2,905
4,858
1,539
-11.0
-7.9
-16. 9
+ 1.8
7,064
1, 829
3,544
1,691
+ 17.2
+ 46.3
+ 13.9
-7.4
64,
20,
30,
13,
368
052
406
910
56,
15,
27,
13,
280
517
173
590
+ 14. 4
+ 29.2
+ 11.9
+ 2.4
_ ._
District No. 2: Total__
Federal. _
State member.
Nonmember
8,642
3,639
2,353
2,650
10, 026
4,484
2,213
3,329
-13.8
-18. 8
+ 6.3
-20. 4
7,248
1, 822
1,789
3,637
+ 19.2
+ 99.7
+ 31.5
-27. 1
70,
27,
16,
26,
579
658
415
506
56,
15,
14,
26,
957
948
915
094
+ 23. 9
+ 73.4
+ 10. 1
+ 1.6
T o t a l _ _ ___
Federal.
S t a t e member»
Nonmember
6,938
2, 179
1,573
3, 186
6,805
2,128
1,645
3,032
+ 2.0
+ 2.4
-4.4
+ 5.1
5,323
1, 150
1,419
2,754
+
+
+
+
30.3
89.5
10.9
15.7
59,
15,
15,
27,
252
823
433
996
46, 759
9,489
13, 677
23, 593
+
+
+
+
District No. 4: T o t a l
Federal
State member.
Nonmember
12, 871
5,483
5,569
1,819
12, 728
5,730
4,988
2,010
+ 1.2
-4.3
+ 11.6
-9.5
9,937
3,823
4,224
1,890
+ 29.6
+ 43.4
+ 31.8
-3.8
98,
40,
42,
15,
521
604
286
631
83,
28,
38,
15,
224
680
871
673
+ 18.4
+ 41.6
+ 8.8
-0.3
District No. 5: T o t a l
Federal_ _
State member.
Nonmember
14, 475
5,577
7, 197
1,701
14, 691
6,701
6, 577
1,413
-1.5
-16. 8
+ 9. 4
+ 20.4
11,253
4,240
5,233
1,780
+ 28.6
+ 31.5
+ 37.5
-4.4
114,
46,
54,
13,
177
140
717
320
91, 620
35, 347
41,311
14, 962
+ 24.6
+ 30.5
+ 32.5
-11.0
35, 048
16, 270
16, 269
2,509
25, 874
11,931
11, 844
2,099
+
+
+
+
35. 5
36.4
37.4
19. 5
+
+
+
+
23. 5
25.4
25. 6
16.9
District No. 3:
26.7
66.8
12.8
18.7
District N o . 6:
Total
Federal
State member.
Nonmember
4,850
2,246
2,259
345
5,090
2,236
2,423
431
-4.7
+ 0.4
-6.8
-20.0
3, 159
1,309
1,485
365
+ 53.
+ 71.
+ 52.
-5.
District No. 7:
Total
Federal
State m e m b e r .
Nonmember
9,564
3,250
4,567
1, 747
10, 332
3,533
4,298
2,501
-7.4
-8.0
+ 6.3
-30. 1
6,753
2,206
2,633
1,914
+ 41.6
+ 47.3
+ 73. 5
-8.7
73,
25,
31,
16,
162
026
946
190
59,
19,
25,
13,
District No. 8:
Total
Federal _ _
State m e m b e r .
Nonmember
5,823
2, 742
1,890
1, 191
6,521
3, 179
2,010
1,332
-10. 7
-13. 7
-6.0
-10. 6
5,046
2, 131
1,659
1,256
+ 15. 4
+ 28.7
+ 13.9
-5.2
45,
21,
13,
10,
140
312
675
153
36, 224
14, 882
11,961
9,381
+ 24.6
+ 43. 2
+ 14.3
+ 8.2
D i s t r i c t N o . 9:
Total
F e d e r a l . __ __
State member.
Nonmember
5,005
1,994
2,924
87
5, 126
1,947
3,037
142
-2.4
+ 2.4
-3.7
-38.7
4, 148
1,469
2,495
184
+ 20.7
+ 35.7
+ 17.2
-52.7
43, 697
17, 752
24, 321
1,624
36, 368
13, 896
20, 718
1,754
+ 20.2
+ 27.7
+ 17.4
-7.4
District No. 10 T o t a l . _ ._ _
Federal
State member.
Nonmember
4,251
2, 144
1,076
1,031
4,471
2, 129
1,238
1, 104
-4.9
+ 0.7
-13. 1
-6.6
3,581
1,572
1, 113
896
+ 18.7
+ 36.4
-3.3
+ 15. 1
35, 530
17, 536
9,277
8,717
30, 480
13, 146
9,372
7,962
+ 16.6
+ 33.4
-1.0
+ 9.5
District N o . 11 Total—
Federal
State member.
Nonmember
3,265
1,900
1, 191
174
3,149
1,975
1,086
88
+3.7
-3.8
+ 9.7
+ 97.7
2,530
1,411
933
186
+ 29. 1
+ 34.7
+ 27.7
-6. 5
25, 791
15, 445
9,024
1,322
21, 366
11,722
7,360
2,284
+ 20.7
+ 31.7
+ 22.6
-42. 1
District No. 12 T o t a l
Federal
State member.
Nonmember
5,769
3,260
2,353
156
6,797
3,698
2,967
132
-15. 1
-11.8
-20. 7
+ 18.2
5,605
2,688
2,728
189
+ 2. 9
+ 21.3
-13. 7
-17.5
58, 633
30, 027
26, 545
2,061
52, 651
20, 607
27, 661
4,383
+ 11.4
+ 45.7
-4.0
-53.0
62
5
6
1
5
258
961
442
855
Federal Home Loan Bank Review
Table 5.—Estimated volume of new loans by all savings and loan associations, classified according
to purpose and type of association
[Amounts are shown in thousands of dollars]
Type of association
Purpose of loans
Mortgage loans on homes
Period
Construc- Home pur- Refinancing
tion
chase
1937
January-Sept
September. _ __
1938
January-Sept
September _ __
October
November
December
1939
January-Sept
January _
February
March. _
April
May __
June
July
August. _
September. _
__
Reconditioning
Total
loans
Loans for
all other
purposes
Federals
NonmemState
bers
members
$234, 102
$326, 629
$180, 804
$62, 143
$92, 901
$896,579
$307,278
$379, 286
$210, 015
182, 119
20, 003
255, 731
29, 693
141, 341
14, 643
47, 728
5,790
69, 605
8,185
696, 524
78, 314
241, 872
26, 189
295, 547
33, 307
159, 105
18, 818
220, 458
265, 485
160, 167
58, 623
93, 263
797,996
" 286, 899
333, 470
177, 627
160, 580
21,018
22, 099
18, 627
19, 152
198,
25,
24,
21,
20,
777
698
677
205
826
122, 267
12, 416
12, 913
12, 182
12, 805
44, 050
4,791
5,727
4,821
4,025
597,061
71, 387
7,724
71, 647
7,515
72,931 1
7,235
64,070
7, 126 J 63,934
211, 126
25, 650
26, 534
24, 220
25, 019
250,
29,
30,
26,
26,
305
255
546
115
504
135, 630
16, 742
15, 851
13, 735
12,411
218, 254
248, 033
135, 744
44, 624
77,243
723, 898
293, 645
290, 314
139, 939
16, 099
16, 027
21, 254
23, 727
26, 646
29, 919
26, 865
29, 863
27, 854
17, 503
19, 118
24, 705
29, 903
31, 289
32, 228
29, 638
32, 282
31, 367
11,749
12, 551
14, 871
15, 384
15, 687
17, 123
15, 353
17, 005
16, 021
3,389
3,593
4,211
4, 974
6,069
5,802
5, 133
5,909
5,544
55, 567
58,309
73, 378
83,425
89, 123
94, 154
85, 172
95,038
89, 732
20, 894
22, 298
29,811
33, 400
36, 358
39, 094
34, 055
40, 645
37, 090
23, 071
24, 191
30, 124
32, 562
35, 426
36, 465
34, 146
37, 340
36, 989
11, 602
11, 820
13, 443
17, 463
17, 339
18, 595
16, 971
17, 053
15, 653
6,827 1
7,020
8,337
9,437
9,432
9,082
8, 183 !
9,979
8, 946
Table 6.—Index of wholesale price of building materials in the United States
[1926=100]
[Source: U. S. D e p a r t m e n t of Labor]
Period
All building m a terials
Brick a n d
tile
Cement
:
Lumber
Paint and
paint materials
Plumbing
and heating
Structural
steel
Other
1937: September
96.2
95.0
88.6
9.0
84.6
80.6
114.9
100.8
1938: September
October
November
December
89.5
89. 8
89. 2
89.4
90.9
91. 1
91. 5
91. 5
90. 7
90. 7
90. 6
90.6
90.4
90.3
90.2
90.9
80. 4
81. 1
80.9
81.0
78.5
78.5
78.7
78.7
107.3
107.3
107.3
107.3
91.3
91.7
89.7
89.7
1939: J a n u a r y
February
March
April
May
June
July
August
September
89.5
89.6
89.8
89.6
89.5
89.5
89. 7
89.6
90.9
92. 4
92. 4
92.5
93.0
91.7
91. 1
90. 6
90.5
91.0
90.6
91. 2
91. 5
91.5
91.5
91.5
91.5
91.3
91.3
91. 7
92.6
92. 1
91.5
91.2
90. 7
91.8
91.8
93.7
81.0
80.5
81.5
81.3
81.6
82.4
82.2
82. 1
84. 7
78.7
79.2
79.3
79.3
79.3
79.3
79.3
79.3
79.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3
89.6
89.3
89.8
89.7
89.6
89.5
89.6
89.5
90.3
+ 1.5%
+ 1.6%
+ 0.6%
+ 0.1%
0.0%
+ 0.7%
+ 2.1%
+ 3.7%
+ 3.2%
+ 5.3%
0.0%
+ 1.0%
0.0%
0.0%
+ 0.9%
-1.1%
Change:
Sept. 1939-Aug. 1939.
Sept. 1939-Sept. 1938
1
Based on delivered prices a t 48 cities a n d introduced into t h e calculation of t h e B u r e a u ' s general indexes of wholesale
prices beginning with M a r c h 1939.
November 1939
63
Table 7.—Monthly operations of 1,347 identical Federal and 710 identical insured State-chartered
savings and loan associations reporting during August and September 1939
[Amounts are shown in thousands of dollars]
1,347 Federals
710 insured State members
Type of operation
August
Change
August
to September
1, 319, 906
1, 308, 095
Percent
+ 0.9
894, 848
893, 766
Percent
+ 0. 1
$1, 015, 800. 6
$1, 008, 357. 0
+ 0. 7
$639, 568. 8
$638, 595. 8
+ 0.2
203, 080. 9
203, 055. 9
1, 218, 881. 5
Private share investments during month.
Repurchases during month. __ __
Mortgage loans made during month:
a. New construction _
b. Purchase of homes __
c. Refinancing
_ .._ _
d. Reconditioning __
e. Other purposes
September
Share liability at end of month:
Private share accounts (number)
Paid on private subscriptions
Treasury and H. 0 . L C. subscriptions
____
September
August
Change
August
to September
0)
2 39, 873. 7
2 39, 823. 7 '
+0. 1
1,211,412. 9
+ 0. 6
679, 442. 5
678, 419. 5
+ 0.2
24, 113. 1
16,811. 1
29, 602. 6
16, 119. 7
-18.5
+ 4.3
11, 367. 5
11, 122. 6
13, 930. 1
10, 439. 0
-18.4
+ 6. 5
14, 046. 7
11, 384. 1
6, 349. 7
1, 964. 7
2, 453. 3
14, 867. 9
11,923. 5
7, 279. 4
1, 918. 0
3, 801. 0
-5.5
-4. 5
-12.8
+ 2.4
-35.5
5, 018. 7
5, 374. 9
3, 014. 3
931. 1
1, 752. 0
5, 076. 9
5, 380. 2
3, 275. 8
918.3
1, 539. 4
— 1. 1
-0. 1
-8. 0
+ 1. 4
+13. 8
36, 198. 5
39, 789. 8
-9.0
16, 091. 0
16, 190. 6
-0. 6
1, 176, 211. 5
1, 156, 579. 0
+ 1.7
614, 647. 3
608, 314. 4
+ 1.0
85, 346. 4
3, 666. 4
82, 171. 2
3, 266. 8
+ 3.9
+ 12.2
33, 865. 8
3, 111.4
33, 550. 5
3, 138. 5
+ 0.9
— 0. 9
___ ___ _
89, 012. 8
85, 438. 0
+ 4. 2
36, 977. 2
36, 689. 0
+ 0. 8
Total assets, end of month __
1, 448, 843. 3
1, 435, 482. 6
+ 0.9
847, 658. 2
845, 042. 1
+ 0.3
Total
TotaL__ _
Mortgage loans outstanding
month
end of
Borrowed money as of end of month:
From Federal Home Loan Banks
From other sources
Total
1
1
2
Less than 0.1 percent.
Includes only H. O. L. C. subscriptions.
Table 8.—Institutions insured by the Federal Savings and Loan Insurance Corporation
1
[Amounts are shown ]in thousands of dollars]
Cumulative number at specified dates
Number of
private
investors
in repurchasable
shares 2
Assets
Private repurchasable capital
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Aug. 31, Sept. 30,
1936
1937
1939
1939
1938
1935
Sept. 30,
1939
Sept. 30,
1939
Sept. 30,
1939
Type of association
State-chartered associations
Converted F. S. and L. A_ _
New F. S. and L. A
Total
_ _
__ _
136
406
572
1, 114
382
560
634
1,576
566
672
641
1,879
737
3 723
637
2,097
793
749
635
2, 177
4
794
956, 000 $915, 635
«751
986, 600 1, 071, 286
364, 600
635
412, 926
2, 180 2, 307, 200 2, 399, 847
$684, 341
789, 044
252, 144
1, 725, 529
1
Beginning Dec. 31, 1936, figures on number of associations insured include only those associations which have remitted
premiums.
Earlier figures include all associations approved by the Board for insurance.
2
This series revised to agree with schedules submitted each month by insured institutions. Private investors in repurchasable 3shares in insured State-chartered members numbered 931,600 in June 1939: no other association type revised.
In addition, 6 Federals with assets of $1,505,000 had been approved for conversion but had not been insured as of Dec. 31.
4
In addition, 8 Federals with assets of $1,215,000 had been approved for conversion but had not been insured as of Aug. 31.
* In addition, 8 Federals with assets of $1,200,000 had been approved for conversion but had not been insured as of Sept. 30.
64
Federal Home Loan Bank Review
Table
9.—Lending operations of
Home Loan Banks
the
Federal
[Amounts are shown in thousands of dollars]
[Thousands of dollars]
Advances
outstanding a t
Re- t h e end
ReAdAdp a y - of t h e
vances mpeanyt-s vances m e n t s m o n t h
September
1939
Federal H o m e Loan
Bank
N o . 1—Boston
No. 2—New York
No. 3 — P i t t s b u r g h . . _
No. 4 — W i n s t o n - S a lem
No. 5—Cincinnati
N o . 6—Indianapolis. .
No. 7—Chicago
No. 8—Des M o i n e s - .
N o . 9—Little Rock__
No. 10—Topeka
No. 11—Portland
No. 12—Los Angeles.
Total
Jan.-Sept.
September
Jan.-Sept.
September
Jan.-Sept.
__
1939
1938
1938
1937
1937
$196
1,851
1,000
$222 $153 $167 $6, 283
616 1,385 2, 192 17, 556
903 16, 018
354
496
523
663 2 , 4 4 4
1,646
454 1,401
543 1,026
245
642
138
296
320 1,517
1,114 1,258
751
409
313
1,223
354
590
214
650
238
197
370
312
315
297
120
268
755 1,047
499
1,053
16, 056
17, 530
9,363
25, 349
16, 030
8,813
10, 441
5,341
14, 907
10, 152 5,935 7,768 9 , 8 8 5 163, 687
60, 625 95, 780
6,561 6,429
56, 980 67, 525
9 , 3 3 0 5,426
89, 668 55, 558
189, 550
179, 511
Table 11.—Reconditioning Division—Summary of
all reconditioning operations of H . O . L. C.
through Sept. 30, 1939 x
Cases received 2
8,362
Cumulative
through
Sept. 30,
1939
1, 096, 837
Contracts awarded:
Number
6, 182
699, 352
705, 534
$139, 692, 601$1, 666, 0891$141, 358, 690
Amount.
Cases completed:
Number
Amount
1
699, 022
6, 523
692, 499!
$136, 277, 032 $1, 824, 074 $138, 101, 106
All figures are subject to adjustment. Figures do not
include 52,269 reconditioning jobs, amounting to approximately $6,800,000, completed by the Corporation prior to the
organization of the Reconditioning Division on June 1, 1934.
2
Includes all property management, advance, insurance,
and loan cases referred to the Reconditioning Division which
were not withdrawn prior to preliminary inspection or cost
estimate prior to Apr. 15, 1937.
November 1939
H o m e Owners' Loan
Corporation
T y p e of operation
Federals 2
Federals
State
members
Total
Oct. 1935-Sept. 1939:
Applications:
1, 862
4, 570
Number..
967
5,537
$50,401 $199, 188 $62, 257 $261, 445
Amount
Investments:
4, 164
1,831
Number
_
734
4,898
$49, 300 $174, 660 $45, 081 $219, 741
Amount
$9,621
Repurchases
$5, 815 $2, 627
$8, 442
N e t outstanding
investments
$39, 679 $168, 845 $42, 454 $211, 299
September 1939:
Applications:
Number
A m o u n t . __ _
Investments:
Number
Amount _
Repurchases
1
$100
7
$435
8
$535
2
$25
2
$100
4
$125
1
Refers to number of separate investments, not to number
of 2associations in which investments are made.
Investments in Federals by the Treasury were made between December 1933 and November 1935.
Table 12.—Properties acquired by H . O . L. C.
through foreclosure and voluntary deed *
Period
1,
June 1, 1934 Sept.
1939
through
through
Aug. 31,
Sept. 30,
1939
1939
1, 088, 475
Treasury
August
1939
1
Type of operation
Table 10.—Government investments in savings and
loan associations l
Prior to 1935
1935: Jan. 1 through
July 1 through
1936: Jan. 1 through
July 1 through
1937: Jan. 1 through
July 1 through
1938: Jan. 1 through
July 1 through
1939: January
February
March
April
May
June
July
August
September
June 30
Dec. 31
June 30
Dec 31
June 30
Dec. 31
June 30
Dec. 31
Grand total to Sept. 30, 1939
Number
9
114
983
4,449
15, 875
23, 225
26, 981
28, 386
22, 533
3,400
2,771
3,410
2,998
3,506
3,424
2,773
2,857
2,590
150, 284
1
Does not include 9,937 properties bought in by H. O. L. C.
at foreclosure sale but awaiting expiration of the redemption
period before title in absolute fee can be obtained.
In addition to the 150,284 completed cases, 819 properties
were sold at foreclosure sale to parties other than the
H. O. L. C. and 20,516 cases have been withdrawn due to
payment of delinquencies by borrowers after foreclosure
proceedings were authorized.
65
Table 13.—Summary of estimated nonfarm mortgage recordings/ $20,000 and under, during
September 1939
(Amo j n t s
F e d e r a l Home L o a n B a n k
District
and
State
Saving > & loan
Insu -ance
comp i n i e s
assocj ations
N u m b e r Amount Number Amount
United S t a t e s
No. I—Boston
41,946 $104,548 5,352
_
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island..
Vermont
\
i
No. 2—New York
New Jersey
New York
No. 3 — P i t t s b u r g h . . .
Delaware
Pennsylvania
West Virginia
|
I
No. 4—Winston-Salem
Alabama
D i s t r i c t of Columbia..
Florida
_
Georgia
Maryland
North Carolina
South Carolina
Virginia
_
Kentucky
Ohio
Tennessee
No. 6 ~ l n d i a n a p o l i s
Indi ana
Michi gan
No, 7—Chicaao
are
in
thousa ids
of
23,627 $74,577
3,924
dollars)
Oth e r
mortg agees
N u m b e r Amount
1
Total
Number
$13,470 29,055 $53,018 14,009 $43,457 117,913 $317,156
10,629
229
1,305
1,101
3,983
2,090
5,407
2,166
3,897
1,074
222
395
2,455
234
157
48
776
951
7,603
622
592
85
48
25
145
303
147
787
3
8
27
42
289
263
302
10
67
170
1,245
515
1,254
45
242
682
425
373
922
212
121
37
1,406
694
3,144
700
411
52
517
387
998
103
101
60
1, 196
355
1,904
145
192
105
287
171
520
5
58
33
3,414 10,938
349
2,184
2,126
8,570
1,240
5,130
3,603
7,699
1,489
5,433 12,221
39,954
980
2,434
3,267
7,671
150
199
852
1,332
1,078
1,048
4,453
4,117
71
1,169
325
4,805
1,110
2,493
2,903
4,796
648
841
2,229
3,204
4,037
8,184
14,029
25,925
2,524
6,486
267
1,334
1,881
5,761
170
685
1,600
3,462
885
2,903
7,327
20,631
59
1,811
654
155
4,671
1,660
32
190
45
172
995
167
56
1,368
457
269
4,532
960
26
144
97
588
105
1,303
192
200
2,900
362
22
706
157
116
2,554
233
300
5,522
1,505
1,009
16,240
3,382
6,456 14,226
30
120
4,413
7,359
2,077
5,255 16,325
39,179
350
231
605
417
427
576
908
899
462
652
1,148
545
921
498
1,175
1,958
210
245
595
118
132
473
166
138
1,027
5,330
2,322
6,389
606
2,199
1,969
1,407
2,158
2,861
1,426
1,600
73
55
224
243
28
91
84
229
258
390
1,057
1,242
167
377
578
1,261
187
115
352
413
290
316
310
339
388
737
998
1,165
1,288
721
595
997
6,515 17,167
698
3,774
3,006
850 1,824
4,941 14,107
724 1,236
160
364
174
593
2,514
667
3,150 10,171
29,372
1,112
270
1,449
26
215
78
6,038
2,932 !
16,141
1,538
1,679 !
1,044 j
516
953
1,582
224
260
1,072
311
337
1,788
1,614
5,342
564
507
356
1,224
1,106
2,443
1,988
1,837
3,192
2,276
2,261
2,230
4,931
6,757
4,583
4,911
5,529
4,085
6,153
5,425 14,065
38,907
1
3
29
117
9,023
114
386
1,924
3,152
1,808
496
2,008
502
1,260
7,141
622
114
366
248
1,407
269
431
2,475
246
88
879
841
261
3,309
1,855
1,842
9,713
2,510
4,369
29,912
4,626
3,221
6,418
534
2,543
2,563
7,204
55
100
1,464
2,875
787
3,005
8,624
22,145
2,180
1,041
4,022
2,398
243
291
1,112
1,431
922
1,641
2,395
4,809
55
100
399
1,065
642
2,233
263
524
712
2,293
4,062
4,562
8,983
13,162
24
63
1,697
3,694
1,010
4,056
7,265
21,384
1,681
2,013
821
189
3,463
593
4,528
2,737
14,448
6,936
2,820
7,556
285
1,471
1,429
4,534
Illinois
Wi sconsin
1,987
833
5,341
2,225
210
75
1,135
336
818
611
2,828
1,706
24
63
692
1,005
No. 8—Des Moines
3,155
7,093
529
2,363
1,725
3,457
64
201
2,496
3,818
996
2,352
8,965
19,284 ]
741
1,243
863
147
161
1,587
3,233
1,682
329
262
85
289
134
II
10
339
1,171
771
53
29
570
526
469
89
71
1,152
1,023
1,006
145
131
480
681
1,146
78
III
712
1, 151
1,675
107
173
185
171
604
26
10
474
480
1,329
50
19
2,061
2,974
3,216
351
363
4,264
7,259
6,463
684
614
No. 9 — L i t t l e Rock
3,324
7,826
586
3,113
995
2,910
Arkansas
Louisiana
Mi ssi ssippi
New Mexico
Texas
335
1,165
228
217
1,379
655
3,085
478
304
3,304
21
39
28
63
238
120
498
2,692
140
153
123
59
520
307
405
358
133
1,707
2,575
5,266
208
1,124
692
1,651
350
746
646
833
901
1,412
1,175
1,778
19
61
67
61
83
289
293
459
151
226
71
244
431
519
148
553
1,818
3,972
202
722
1,181
3,274
108
245
349
201
837
78
221
589
794
525
1,650
193
12
39
40
16
91
4
75
125
133
69
310
10
106
124
137
205
570
39
426
467
327
617
1,265
172
2,613
6,961
438
2,822
Iowa
Minnesota
Missouri
North Dakota..
South Dakota
.
.
_ . _ _ _ _ _ .
No. |0—Topeka
Colorado
Kansas
Nebraska
Oklahoma
,
No. | | — P o r t l a n d . .
Idaho
Utah
Wyomina
No.12—Los Angeles
_.
_
__
4,606 17,321
64
201
4
13
2,325
4,28 1
1,595
4,355
8,829
22,498 |
4
13
174
449
264
313
1,125
245
864
461
473
2,238
95
299
103
81
1,017
148
702
290
56
3,159
765
2,105
746
670
4,543
1,418
5,294
1,707
966
13,113
5
6
1,586
2,225
788
2,318
5,854
12,590
5
6
636
260
244
446
974
340
421
490
226
207
69
286
653
446
227
992
1,382
1,500
1,097
1,875
3,042
3,006
2,264
4,278
128
379
1,252
1,876
630
1,872
5,211
12,095
16
59
108
4
319
1
219
164
298
III
369
91
283
276
520
122
509
166
79
33
138
58
290
32
158
47
463
107
991
106
524
605
978
591
2,265
248
1,163
1,504
2,296
1,440
5,044
648
4,529
8,680
870
3,333 13,056
39,117
Amount
Per
capita
(nonfarm)
Amount
3,511
404
460
666
795
931
1,736
808
656
No. 5—Cincinnati
$28,086
s h own
Banl s and
Mut u a l
Individuals
t r u s t cc m p a n i e s s a v i n g s b a n k s
Number Amount Number Amount Number Amount
$ 3.44
3.97
4.68
3.91
3.82
2.50
4.23
3.59
2.18
5.26
1.85
2.64
|
1.71
10.14
5.68
3.08
3.52
3.52
4.97
4.18
3.04
5.31
3.30
3.70
3.24
2. 18
3.37
2.86
4.35
2.57
2.41
2.03
1.93
4. 17
2.64
3.65
3.78
4 04
2 56
2i86
1 3.12
4.53
4.52
3.14
3.67
4.01
4.25
Arizona _
California
Nevada
52
371
103
97
183
4
42
98
148
35
292
841
2.50
_
4,382
2,524 6,699
4,487 16,891
8,456
430
2,761
818
3,189 12,641
37,996 ,
7.51
44
37
4
21
59
78
17
47
79
19
123
280 j
3.75
iBased upon county reports submit ted thrc>ugh the coopen ition of saving?> and locin assoc i at ions>, the I . S. Bui 1 ding and Loan League, the Mortg age
Bankers Association, and the American T i t l e A s s o c i a t i o n .
66
Federal Home Loan Bank Review
Table 14.—Estimated volume of nonfarm mortgages recorded, by type of mortgagee
[Amounts are shown in thousands of dollars]
Savings and
loan associations
Insurance
companies
Mutual
savings
banks
Banks and
trust
companies
Individuals
Other
mortgagees
All mortgagees
Period
Number:
1938: December...
1939: January
February
March
April
__ _
May . __
June
July
_
August
September. .
Total
Percent
32, 934
27, 283
27, 666
36, 008
38, 167
43, 648
43, 655
41, 048
44, 224
41, 946
31.9
30. 1
32.5
32.8
34.5
34.8
34. 1
34. 6
35.3
35.6
Amount:
1938: December... $80, 838
66, 114
1939: January
February. __ 68, 840
92, 337
March
94, 857
April
M a y . . _ 109,652
113,479
June
105, 890
July
112,516
August. .
September. _ 104, 548
Total
5,491
4,866
3,688
5,547
5,240
6,009
6,335
5,946
6,014
5,352
29.0 $27, 217
27. 1 22, 704
30.3 19, 278
29.5 28, 316
31.2 26, 839
31.4 29, 922
31. 5 30, 017
32. 1 29, 777
32. 6 30, 796
33.0 28, 086
Percent
5.3
5.4
4.3
5. 1
4.7
4.8
4.9
5.0
4.8
4. 5
Total
Percent
21, 970
20, 003
19, 138
23, 764
22, 768
25, 658
26, 779
22, 860
24, 750
23, 627
21.2
22. 1
22.5
21. 6
20. 6
20.4
20.9
19.3
19.7
20.0
9. 8 $71, 061
9.3 62, 697
8. 5 57, 843
9. 1 79, 920
8.8 73, 320
8.6 85, 417
8.3 89, 563
9.0 74, 960
8. 9 80, 049
8.9 74, 577
(Continued from p. 57)
3,942. Although there were 10 associations admitted
to membership and 10 associations withdrawn from
membership during the month, the majority of these
withdrawals were due to mergers and transfers of
stock in a progressive rehabilitation program strengthening the savings and loan industry.
Federal Savings and Loan Insurance
Corporation
[Tables 7 and 8]
R E P O K T S received from an identical group of
insured savings and loan associations indicate
that the demand for funds to be used in making new
mortgage loans is currently exceeding the flow of
new share investments into these institutions. This
excess is reflected in increased borrowings from the
Federal Home Loan Banks (Table 7, p. 64).
November 1939
3,601
2,143
2,059
2,895
2,978
3,825
3,524
3,909
3,908
3,924
25. 5 $10, 838
25.7 7,525
25. 5 7,031
25.6 9, 822
24. 1 10, 108
24.4 12, 195
24.8 12, 048
22.7 13, 679
23.2 13, 844
23.5 13, 470
Bank System
•
Total
Percent
3.5
2.4
2.4
2.6
2.7
3.0
2.8
3.3
3. 1
3.3
Total
Percent
Total
Percent
Combined
total
Percent
25, 927
24, 974
22, 903
28, 729
28, 441
30, 904
30, 710
30, 209
31, 174
29, 055
25. 1
27.6
26.9
26. 1
25.7
24.6
24.0
25.4
24.9
24.7
13, 424
11, 286
9,706
12, 930
12, 976
15, 560
17, 002
14, 693
15, 339
14, 009
13.0
12.4
11.4
11. 8
11.8
12.4
13.3
12.4
12.2
11.9
103, 347
90, 555
85, 160
109, 873
110, 570
125, 604
128, 005
118,665
125, 409
117, 913
100.0
100.0
100.0
100.0
100. 0
100. 0
100.0
100.0
100.0
100.0
3.9 $48, 582
3. 1 49, 032
3. 1 42, 528
3. 1 57, 036
3.3 55, 667
3. 5 59, 453
3.3 58, 967
4.2 58, 056
4.0 58, 826
4.2 53, 018
17.5 $39, 786
20. 1 35, 943
18. 7 31, 471
18.3 45, 034
18. 3 43, 560
17.0 52, 815
16.4 56, 794
17.6 47, 621
17.0 49, 549
16.7 43, 457
14.3 $278, 322
14. 7 244, 015
13.9 226, 991
14.4 312, 465
14.3 304, 351
15. 1 349, 454
15.7 360, 868
14.4 329, 983
14.3 345, 580
13.7 317, 156
100. 0
100.0
100.0
100.0
100. 0
100.0
100. Q
100.0
100.0
100.0
The 2,180 savings and loan associations insured
by the Federal Savings and Loan Insurance Corporation as of September 30, 1939, had total assets of
$2,400,000,000. Of these insured associations, 1,386
were operating under Federal charter and 794 under
State charter. Investors in private repurchasable
shares numbered 2,307,200 at the end of September,
and held private capital amounting to $1,725,500,000.
Of this amount, an estimated total of $1,637,000,000
was covered by insurance.
During the third quarter of 1939, 14 institutions
were insured (only about one-fourth the number
insured in the second quarter), having assets of
$17,476,000. Only two of these associations were
Federally chartered institutions. The 14 associations
insured during the third quarter of this year compare
with 44 insured during the same quarter of 1938 and
69 during the corresponding period of 1937.
The 710 insured State-chartered associations reporting in both August and September indicated-a
rise of $6,300,000 in the balance of mortgage loans
outstanding as compared with slightly over $1,000,000 increase in total repurchasable capital; during
67
September a net rise of over $300,000 was reported in
the Federal Home Loan Bank borrowings of these
institutions.
On September 30, 1939, total assets of the Federal
Savings and Loan Insurance Corporation were $120,700,000. During the first three months of the 1940
fiscal year, income from insurance premiums and
admission fees totaled $627,000: an increase of
$78,000 over similar income in the previous fiscal
period. Net income during the first quarter of this
fiscal year amounted to $1,409,000: an increase of
almost $71,000 over net income for the corresponding
period in 1939.
II. FEDERAL SAVINGS AND LOAN ASSOCIATIONS
CHARTERED BETWEEN SEPTEMBER 16 AND
OCTOBER 15, 1939
DISTRICT NO. 3
PENNSYLVANIA:
Cheltenham:
Cheltenham Federal Savings & Loan Association, 503 Central Avenue
(converted from Rowland Building & Loan Association).
Philadelphia:
Grand Union Federal Savings & Loan Association, 2105 Seventy-second
Avenue (converted from Grand Union Building Association).
D I S T R I C T NO. 5
KENTUCKY:
Covington:
Star Federal Savings & Loan Association, 258 Pike Street (converted
from Star Permanent Building Association of Covington, Kentucky).
CANCELATIONS OP FEDERAL SAVINGS AND LOAN ASSOCIATION
CHARTERS BETWEEN SEPTEMBER 16 AND OCTOBER 15, 1939
OHIO:
Norwood:
E Ism ere Federal Savings & Loan Association of Norwood (voluntary
dissolution by transfer of assets to the Fidelity Federal Savings & Loan
Association, Cincinnati, Ohio).
PENNSYLVANIA:
Directory of Member, Federal, and
Insured Institutions
Added during September-October
I. INSTITUTIONS ADMITTED TO MEMBERSHIP IN
THE FEDERAL HOME LOAN BANK SYSTEM BETWEEN SEPTEMBER 16 AND OCTOBER 15, 1939
[Listed by Federal Home Loan Bank Districts, States, and cities]
DISTRICT NO. 5
KENTUCKY:
Madisonville:
Madisonville Building & Loan Association, Main Street.
Philadelphia:
Lansdowne Avenue Federal Savings & Loan Association of Philadelphia
(merger with Second Federal Savings & Loan Association of Philadelphia, Philadelphia, Pennsylvania).
III. INSTITUTIONS INSURED BY THE FEDERAL
SAVINGS AND LOAN INSURANCE CORPORATION
BETWEEN SEPTEMBER 16 AND OCTOBER 15, 1939
D I S T R I C T NO. 2
N E W JERSEY:
Garfield:
Spencer Building & Loan Association, Passaic Street and Spencer Avenue.
Hackensack:
Oritani Building & Loan Association of Hackensack, New Jersey, 200
State Street.
Newark:
Carteret Building & Loan Association of Newark, New Jersey, 866 Broad
Street.
Westfleld:
Westfield-Home Building & Loan Association, 30 East Broad Street.
OHIO:
Cincinnati:
Losantiville Building & Saving Company, 603 First National Bank
Building.
DISTRICT NO. 6
INDIANA:
Edinburg:
Blue River Building & Loan Association, 117 Main Cross Street.
DISTRICT NO. 8
D I S T R I C T NO. 3
PENNSYLVANIA:
Philadelphia:
North Philadelphia Federal Savings & Loan Association, 3014 North
Seventh Street.
D I S T R I C T NO. 8
IOWA:
Sioux City:
Home Building-Loan & Savings Association, 617 Badgerow Building.
IOWA:
D I S T R I C T NO. 10
Waterloo:
Home Building & Loan Association, 529 Commercial Street.
WITHDRAWALS FROM THE FEDERAL HOME LOAN
SrsTEM BETWEEN SEPTEMBER 16 AND OCTOBER 15,
KANSAS:
BANK
1939
Goodland:
Goodland Building & Loan Association, 1114 Main Street.
MASSACHUSETTS:
Boston:
Homestead Cooperative Bank, 36 Bromfield Street (voluntary withdrawal) .
MISSOURI:
St. Louis:
Midland Building & Loan Association, 801 Chestnut Street (voluntary
withdrawal).
N E W JERSEY:
Citizens Building & Loan Association of Hackensack, N. J., 15 Main
Street '
Excel Building & Loan Association, 103 Hudson Street.*
North Bergen:
_
Victory Building & Loan Association of North Bergen, 823 Bergen Turnpike (voluntary withdrawal).
PENNSYLVANIA:
Minersville:
Minersville Progressive Building & Loan Association, 240 Sunbury
Street (voluntary withdrawal).
WISCONSIN:
Milwaukee:
. .
.
Pioneer Building & Loan Association, 1727 West Lincoln Avenue (voluntary withdrawal).
i The Citizens Building & Loan Association of Hackensack and the Excel
Building & Loan Association merged with the United Building & Loan Association of Hackensack, N. J., the name of the resulting association being "Oritani
Building & Loan Association of Hackensack, N. J."
68
Home-Mortgage Debt
(Continued from p. 50)
including trust departments of commercial banks, and
of a slight revision in estimated holdings of insurance
companies. Result of the change is to increase estimated holdings of "individuals and others" from
$6,000,000,000 to $6,180,000,000, of insurance companies from $1,330,000,000 to $1,343,000,000, and
to raise the estimated total debt from $17,308,000,000
to $17,501,000,000. This means that a slight increase
($39,000,000) in the estimated outstanding homemortgage debt took place during 1937, and that 1938
marked the first year since 1930 that a substantial
increase was shown.
Federal Home Loan Batik Review
U. S. GOVERNMENT PRINTING OFFICE: 1939
OFFICERS OF FEDERAL HOME LOAN BANKS
BOSTON
CHICAGO
B. J. ROTHWELL, Chairman; E . H . W E E K S , Vice Chairman; W . H.
C. E . BROUGHTON, Chairman; H . G. ZANDER, J R . , Vice Chairman; A. R.
NEATES,
President; H .
N.
FAULKNER,
Vice President;
FREDERICK
G A R D N E R , President; J. P . D O M E I E R , Vice President-Treasurer; C O N -
W I N A N T , J R . , Treasurer; L . E . D O N O V A N , Secretary; P . A. H E N D R I C K ,
STANCE M . W R I G H T , Secretary; UNGARO & SHERWOOD, Counsel.
Counsel.
NEW
GEORGE
MACDONALD,
YORK
DES
Chairman; F . V. D .
LLOYD, Vice
MOINES
Chairman;
C. B . B O B B I N S , Chairman; E . J. R U S S E L L , Vice Chairman; R. J. R I C H A R D -
G. L. BLISS, President; F . G. STICKEL, J R . , Vice President-General
SON, President-Secretary; W. H . LOHMAN, Vice President-Treasurer;
J. M . M A R T I N , Assistant Secretary; A. E . MUELLER, Assistant Treasurer; E . S. TESDELL, Counsel.
Counsel; R O B E R T G. CLARKSON, Vice President-Secretary;
C.
DENTON
L Y O N , Treasurer.
PITTSBURGH
LITTLE
ROCK
E . T . T R I G G , Chairman; C. S. T I P P E T T S , Vice Chairman; R. H . R I C H ARDS, President;
G.
R.
PARKER,
Vice
President;
H.
EL
GARBER,
W. C. JONES, J R . , Chairman; W . P . GULLEY, Vice Chairman; B . H .
W O O T E N , President; H . D . W A L L A C E , Vice President; W. F . T A R V I N ,
Secretary-Treasurer; R . A. CUNNINGHAM, Counsel.
Treasurer; J. C. CONWAY, Secretary; W. H. CLARK, JR., Counsel.
WINSTON-SALEM
TOPEKA
S. F . CLABAUGH, Chairman; E . C. B A L T Z , Vice Chairman; O. K . L A R O Q U E ,
President-Secretary; G. E . WALSTON, Vice President-Treasurer; J o s . W.
G. E . M C K I N N I S , Chairman; P . F . G O O D , Vice Chairman; C. A. STERLING,
H O L T , Assistant Secretary; R A T C L I F F E , H U D S O N & F E R R E L L , Counsel.
President-Secretary; R, H . BURTON, Vice President-Treasurer; JOHN
S. D E A N , JR., General Counsel.
CINCINNATI
PORTLAND
W M . M E C R U E B R O C K , Vice
Chairman; W A L T E R D . SHULTZ, President;
W . E . J U L I U S , Vice President; D W I G H T W E B B , J R . , Secretary; A . L .
F. S. MCWILLIAMS, Chairman; B . H . H A Z E N , Vice Chairman; F. H .
M A D D O X , Treasurer; T A F T , STETTINIUS & HOLLISTER, General Counsel;
JOHNSON,
R. B . JACOBY, Assigned Attorney.
Treasurer; Mrs. E . M . SOOYSMITH, Assistant Secretary; M . M . M A T THIESSEN, General Counsel.
President-Secretary;
IRVING
BOGARDUS,
Vice
President-
INDIANAPOLIS
Los
ANGELES
F. S. C A N N O N , Chairman-Vice President; S. R . LIGHT, Vice Chairman;
FRED T.
G R E E N E , President; B . F . B U R T L E S S ,
Secretary-Treasurer;
D.
G. D A V I S , Chairman; M . M .
H U R F O R D , President;
C. E .
G. E . OHMART, 2nd Vice President; J O N E S , H A M M O N D , B U S C H M A N N &
Vice President; F. C. N O O N , Secretary-Treasurer; V I V I A N
G A R D N E R , Counsel.
Assistant Secretary; RICHARD FITZPATRICK, General Counsel.
BERRY,
SIMPSON,
@FedFRASER