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Vol. 2

«3ke.

No. i

FEDERAL
HOME LOAN BANK

REVIEW
OCTOBER
1935

ISSUED BY
FEDERAL HOME LOAN BANK BOARD
WASHINGTON D.C.

Federal Home Loan Bank Review
TABLE OF CONTENTS
Page

Combined incomes and expenditures of 314 member associations of the fifth Federal
Home Loan Bank

Neighborhood standards as they affect investment risk

Current investments in mortgages by leading life insurance companies

Share repurchase

Residential construction activity in the United States

Growth and lending operations of the Federal Home Loan Banks

Interest rates on advances to member institutions

Federal Savings and Loan System

Federal Savings and Loan Insurance Corporation

Combined statement of condition of the Federal Home Loan Banks

Home Owners' Loan Corporation

Table of applications received and loans closed, by months

Summary of operations of the Reconditioning Division

Reconditioning activities of the Home Owners' Loan Corporation

Resolutions of the Board

Directory of member, Federal, and insured institutions added during August-September

SUBSCRIPTION PRICE OF REVIEW
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Bank System and is the only official organ or periodical publication of the Board. The REVIEW 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 $1.40; 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
21897-—35

Federal Home Loan Bank Board
J O H N H . FAHEY, Chairman
WILLIAM F . STEVENSON

T . D . W E B B , Vice
F . W . CATLETT

Chairman

H . E . HOAGLAND

OFFICERS OF FEDERAL HOME LOAN BANKS
BOSTON:
B. J . ROTHWELL, Chairman; W. H . NEAVES, President; H . N . FAULKNER, Vice President;
FREDERICK W I N A N T , J R . , Secretary-Treasurer.

N E W YORK:
GEORGE MACDONALD, Chairman; G. L. BLISS, President; F . G. STICKEL, Jr., Vice President-

General Counsel; ROBERT G. CLARKSON, Vice President-Secretary; DENTON C. LYON, Treasurer.
PITTSBURGH:

E . T . TRIGG, Chairman; R. H . RICHARDS, President; G. R. PARKER, Vice President; H . H . GARBER

Secretary-Treasurer.
WINSTON-SALEM:
IVAN ALLEN, Chairman; O. K. LAROQTJE, President-Secretary; G. E . WALSTON, Vice President-

Treasurer.
CINCINNATI:
H. S. KISSELL, Chairman; H . F . CELLARIUS, President; W. E . JULIUS, Executive Vice President;
H . J . BRODBECK, Second Vice President; W . B . FURGERSON, Treasurer; T . D W I G H T W E B B , Jr.,

Secretary-Comptroller. *

INDIANAPOLIS:

^^SStit***

F. S. CANNON, Chairman; F.^STmQ&BBiN, President; JOHN A. R H U E , Vice President; B . F .
BURTLESS, Secretary-Treasurer.

CHICAGO:
H . G. ZANDER, Chairman; A. R . GARDNER, President; E . H . BURGESS, Treasurer; R . D . H U L S E ,

Secretary.
DES MOINES:
C. B . ROBBINS, Chairman; R . J . RICHARDSON, President-Secretary; W. H . LOHMAN. Vice President-Treasurer; J. M . MARTIN, Assistant Secretary; A. E . MUELLER, Assistant Treasurer.
LITTLE ROCK:
I. FRIEDLANDJER, Chairman; B . H . WOOTEN, President; H . D . WALLACE, Vice President; J . C. C O N -

WAY, Secretary; W. F . TARVIN, Treasurer.
TOPEKA:
C. B . MERRIAM, Chairman; C. A. STERLING, President; W. L. BOWERSOX, Vice President; R . H .
BURTON, Secretary-Treasurer.

PORTLAND:
F . S. M C W I L L I A M S , Chairman; C. H . STEWART, President; IRVING BOGARDUS, Vice President-

Treasurer; W. H . CAMPBELL, Secretary; M R S . E . M . SOOYSMITH, Assistant Secretary.
Los ANGELES:
C H . W A D E , Chairman; M . M . HURPORD, President; F . C. N O O N , Secretary-Treasurer.

Combined Incomes and Expenditures of
314 Member Associations of the Fifth
Federal Home Loan Bank

HE accompanying tables present composite pictures of the percentages of
income derived from different sources during 1934 by an important group of building and loan associations, and of the
percentages of expenditure devoted to different purposes. Such essential operating
information is bound to be of interest to
every building and loan association but it
should not be accepted as a picture of permanent conditions nor as a norm by which
to judge the activities of any association.
The drawback to such use of the composite picture of a single year's operations
is that we have as yet nothing with which
to compare it. If 1934 was an abnormal
year, that abnormality is bound to be reflected in composite operating statistics
and to vitiate their usefulness as a standard. What are needed are composite pictures over a series of years, and to be nationally useful the pictures should include
representative associations by classes from
all States. It is the purpose of the Federal
Home Loan Bank Board to collect and present such composite statistics every year.
Thus, trends in the building and loan business will reveal themselves and the conditions of successful operation for a building
and loan association according to size will
gradually be defined. The accompanying
statistics are accordingly presented without any suggestion of finality but rather to
make a beginning and to show what the
Board seeks eventually to obtain. Because

Federal Home Loan Bank

Review

of our lack of comparative data no extensive analyses nor deductions are possible.
District 5 is one of the largest districts of
the Home Loan Bank System, ranking first
in number of building and loan association
members and in building and loan association assets. The accompanying tables include reports from 314 member associations, with adjusted net assets as of December 31, 1934, totaling $421,835,437.
The combined statement of incomes and
expenses of these 314 associations for the
District and by States is presented in table
1. In Ohio and Kentucky, the associations
derived their incomes principally from 2
sources: over 80 percent from interest on
mortgage loans and over 9 percent from
real estate other than office buildings. In
the Tennessee associations, however, income from mortgage loans represented only
62.5 percent, while income from real estate
represented 5.6 percent. Premiums furnished 13.7 percent of the Tennessee associations' incomes and various fees and fines
12.6 percent, whereas all these items combined supplied only 1 percent of the income
of Ohio associations and only 2.5 percent of
the income of Kentucky associations.
The probable explanation of this divergence lies in the relatively smaller size of
the reporting Tennessee associations and
in the fact that the State law makes it
necessary for them to compensate for fixed
low interest rates by charging premiums.
Of the 24 reporting Tennessee associations,
1

20 had assets of less than $100,000 and
many of these were newly organized Federals. It is obvious that in the early days
of an association, its fees must bulk large
in comparison with the small returns from
its loans.

the net income of all reporting associations
is revealed as 62 percent of gross income;
of Ohio associations, 61.1 percent; of Kentucky associations, 71.8 percent; and of
Tennessee associations, 57.8 percent.

OPERATING EXPENSES

OPERATING STATEMENTS BY SIZE OF ASSOCIATION

expenses consume 19.5 percent
of gross income for all associations reporting and range from 13.7 percent in the
Kentucky associations to 27.2 percent in the
Tennessee associations. This divergence
is explained by the heavier burden which
salaries represent in the Tennessee group—
16.4 percent as compared with 6.9 percent
for Kentucky. The explanation is not, of
course, that Tennessee associations pay
higher salaries, but that they must maintain a minimum of personnel and as their
small size makes their incomes small, the
amount they must expend for this purpose
appears disproportionately high.
In the group of " other expenses " attention should be called to items 25 and 27
which together comprise the expense imposed on the associations by real estate
owned other than office buildings. For all
the associations, these expenses amounted
to 13.8 percent of gross income. When this
is compared with the gross income from
" other real estate" of 9.3 percent, it is
clear that their other real-estate holdings
caused the reporting associations a net loss
of 4.5 percent. The Kentucky associations
alone show a net profit (amounting to 1
jpercent) in their " other real estate."
Interest on deposits and on investment
certificates is carried as an expense, and is,
of course, largest for Ohio associations with
their larger proportion of depositors. However, to give a correct picture, a comparison of net incomes should be on the basis
of incomes before any payment of profits
to investors—whether they be depositors or
shareholders—is deducted. On this basis,

2 presents the income and expense
items for groups of associations classified
on the basis of total adjusted assets. That
is, the 314 associations were grouped into 8
categories according to the amount of their
assets.
The 8 categories, the number of associations in each, and the combined assets of
each group are as follows:

OPERATING

TABLE

Size of classes in terms of
total adjusted assets

$0 to $25, 000
25,001 to
50,000
50, 001 to 100,000
100, 001 to 250,000
250, 001 to 500,000
500, 001 to 1, 000, 000
1, 000, 001 to 5, 000, 000
Over 5, 000, 000
Total

of
Number Amount
of asso- combined
adjusted
ciations
assets
27
8
15
52
62
73
60
17

$339, 857
273,169
1, 093, 589
8, 845, 577
23, 675, 605
51, 453, 379
117, 095, 690
219, 058, 571

314

421, 835, 437

The combined statement of incomes and
expenditures for each group is given separately in table 2. These groupings make it
possible to compare the peculiarities of the
income and expense items in small associations with the corresponding items in larger
associations.
The results bear out the conclusions
drawn from table 1, particularly with respect to sources of income for small associations. It will be noticed that " other
operating expenses" absorb 20.2 percent
of gross incomes of associations under $25,000 and 15.3 percent of associations under
$50,000. These undoubtedly represent the

Federal Home Loan Bank

Review

extraordinary expenditures attendant upon
organization. The final item—net income
before interest on dividends to investors—
reveals a rather curious uniformity for all
size groups. The largest associations with
59.9 percent showed the lowest ratio of
earnings, and the $250,000 to $500,000 asTABLE

sociations, with 67.6 percent, the highest.
The under-$25,000 associations showed net
income representing 67 percent of gross income. In view of the great differences in
sources of income and in distribution of
expenditures, this similarity of operating
ratios is surprising.

1.—Combined statement of incomes and expenses of 31U reporting building and loan member associations in Federal Home Loan Bank District No. 5, for the year ended Dec. 31, 1934*
[Percentages are based on total gross income as 100 percent]

District
total

Items

12.

Kentucky Tennessee

Percent
Percent
80.2
80.3
2.4
2.3 !
0.7
0.8
0.2
0.3
0.1
0.2
3.4
3.2
0.2
0.2
2.4
2.3
9.3
9.3
0.1
0.1
1.0
1.0

INCOME

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Ohio

Interest on mortgage loans
Interest on other loans
Premiums on loans
Loan fees and commissions
Other fees and fines
Gross profit from sale of real estate
Gross profit from sale of investments
Gross income—office building
Gross income—other real estate
Dividends retained on withdrawals
Miscellaneous income
Total gross income

100.0

Percent
83.1
1.8
0.4
0.9
1.2
0.1
0.4
1.2
9.6
0.0
1.3

Percent
62.5
2.9
13.7
4.3
8.3
2.4
0.1

100.0

6.9
0.5
1.2
0.2

16.4
0.3
1.3
0.4

0.7
0.9
0.0
3.0

0.9
0.0
7.9

100.0 1

5.6
0.3

EXPENSES

13.
14.
15.
16.
17.
18.
19.
20.
21.
22.

Operating expenses
Salaries
Legal service
Rent, heat, light, etc
Depreciation—Furniture and fixtures
Depreciation—office building
Office building expenses (maintenance and tax)
Advertising
Federal insurance premium
Other operating expenses
Total operating expenses

8.7
1.1
1.2
0.3
0.7
2.0
0.4
0.0
5.1

8.9
1.1

19.5

20.0

13.7

27.2

3.1
20.7
9.0
0.3
4.8
1.3

2.9
22.3
9.3
0.3
5.1
1.3

4.9
2.4
6.8
0.2
1.8
0.8

4.5
4.0
7.1

1.2 1

0.3
0.8
2.1
0.3
0.0
5.3

0.3 1

Other expenses
23.
24.
25.
26.
27.
28.

Interest on borrowed money
Interest—deposits and investment certificates
Maintenance and tax on other real estate
Foreclosure expense
Other real estate expense..
Loss charged to current earnings

0.0
3.4

29.

Total expenses

58.7 1

61.2

30.6

46.2

30.

Net profit

41.3 1

38.8

69.4

53.8

62.0

61.1

71.8

57.8

31. Net income before interest or dividends to investors
1

Out of the 314 reports, 65 were for dates near the end of 1934 instead of for the year ending 1934.

Federal Home Loan Bank

Review

2.—Distribution of income and expense items by size of association for 314 member building and
loan associations in Federal Home Loan Bank District No, 5, for the year ended Dec, 31, 1934 *

TABLE

[Percentages are based upon total gross income as 100 percent]

Size of members in terms of net assets 2

District
total

Items

o
o
o
o

o
o

©^
©~
©

©"
\n

3
O

INCOME

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Interest on mortgage loans
Interest on other loans
Premiums on loans.
Loan fees and commissions
Other fees and fines
Gross profit from sale of real estate
Gross profit from sale of investments
Gross income—office building
Gross income—other real estate
Dividends retained on withdrawals
Miscellaneous income

12.

Total gross income

PerPerPerPerPerPerPerPercent
cent
cent
cent
cent
cent
cent
cent
80.3| 33.7 53. 5 75.2 85.3 86.8 82.2 79.5
0.7
0.4
2.3
1.8
1.0
1.5
3.3
1.6
0. 8|
0.2
1.9
0.3
2.1
1.3
0.3 33.1 27.1
0.5
0.7
0.5
1.1
0.1
0.2| 30.8
3.3 13.5
0.7
0.3
0.2
0.5
3.1
1.4
1.0|
1.8|
1.4j
0.3
0.2
0.1
0.2
0.2
0.6
2.3
0.7
0.71
1.5
1.4
0.6
0.1
9.3
7.2
7.0 10.1
9.5
3.9
0.1
0.1
0.2
0.0
0.2
0.0
0.2
1.0
1.0
1.4
1.2
0.8
4.5
1.3 14.1
100. 0 100. 0 100. 0 100. 0 100. 0 100.0 100. 0 100.0

EXPENSES

13.
14.
15.
16.
17.
18.
19.
20.
21.

Operating expenses
Salaries
Legal service
,
Rent, heat, light, etc
Depreciation—Furniture and fixtures
Depreciation—office building
Office building expenses (maintenance and t a x ) . .
Advertising
Federal insurance premium
Other operating expenses

22.

Total operating expenses

8.7|
1.1
1.2|
0.3
0.7
2.01
0.4

7.7
0.0
0.5
0.4

9.6
1.8
2.4|
0.5

13.5
0.2
2. 0|
0.3

1.0|
o. o| 0.1
5.1 20.2

2.1
i5.*3

0.4|
1.1
0. 01
7.3

19.5

31.4

31.7

3.1
20.7
9.0|
0.3
4.8|
1.3

1.3
0.2
0.3
0.0

11.4
0.7
1.9
0.2
0.3
0.9
0.3

9.8
0.9
2.0
0.3
0.4
0.8
0.4

9.9|
1.2
1.6
0.3
0.6
1.5
0.61

5.3

11.1
0.7
1.5
0.2
0.3
0.7
0.4
0.0
4.7

4.5

5.7

24.8

21.0

19.8

19.1

21.4

4.1

4.8

o.'i

*2.*6

6.21

0.3
0.2

5.1
5.6
6.4
0.3
0.7
0.7

4.4
12.9
6.3
0.3
1.0
0.6

3.8|
15.7
9.9
0.4|
1.4
0.7

3.4
25.8|
9.1
0.3
3.8!
0.2

36.1

32. 7

39.8

45.3

50.9

61. 9

60.2

54.7

49.1

38.1

65.8

67.6

64.8

63.9

Other expenses
23.
24.
25.
26.
27.
28.

Interest on borrowed money
Interest—deposits and investment certificates...
Maintenance and tax on other real estate
Foreclosure expense
Other real estate expense
Loss charged to current earnings

29.

Total expenses

58.7

33.2

30.

Net profit

41.3

66.8

63.9

67.3

62.0

67.0

63.9

67.3

31. Net income before interest or dividends to investors
1
2

Out of the 314 reports, 65 were for dates near the end of 1934 instead of for the year ending 1934.
Asset classifications are in terms of adjusted net assets which exclude contra items.

Federal Home Loan Bank Review

Neighborhood Standards as They Affect
Investment Risk
This is the third in a series of articles defining the neighborhood standards essential to safety of
investment.

HE conditions that sustain most centers
of human habitation, whether they be
great cities or hamlets, are employment and
means of communication.
Residential
neighborhoods cannot exist without employment to support the occupants and
suitable means of access thereto. Thus, in
determining the desirability of a neighborhood as an investment risk the employment
possibilities and the transportation facilities connecting the homes with the places
of work must be carefully studied. In
weighing them, account must be taken of
the competition from other neighborhoods
that may be either more accessible or more
inviting.
These 3 tests constitute items III, IV, and
VI of the Outline for Analysis of a Neighborhood, published in the August issue of
the REVIEW, and the first 6 items of which
are here repeated:
I. Natural hazards, such as risk of
flood and difficulty of drainage.
II. Created hazards, such as incompatible uses, smoke, odor, noise,
and unsightly features.
III. Location in relation to places of
employment.
IV. Accessibility—transportation and
highways.
V. Population trends of the neighborhood.
VI. Competition from other neighborhoods that are either more accessible or more inviting.

Federal Home Loan Bank

Review

It will be remembered that items I and
II were discussed in the preceding article
of this series. The population trends of
the neighborhood, item V, by themselves
furnish an important guide to the stability
of the area and also facilitate judgment on
the other tests. Accordingly, items III to
VI will be discussed as a group in this
article.
SUPPLY OF DWELLINGS IN RELATION TO NEED

THE location of a neighborhood in relation to places of employment brings up the
prior question of how much employment
is available and whether the city as a
whole is overbuilt or underbuilt with regard to dwellings for the population it can
economically support. There is probably
only one practical means of answering this
question satisfactorily. That is to take at
least an annual inventory of the real-estate
operations of the city. This inventory
should include enumeration of new subdivisions and new dwelling units provided
by type, enumeration of demolitions, vacancies, families doubled up, and foreclosures, determination of rental trends,
and of population movements. With such
information for the city as a whole and for
each neighborhood separately, lending institutions can discover at once when the
community is beginning to overbuild or
what additional building is justified and
where.

The home-financing and real-estate interests of Utica, New York, have taken
such annual inventories for the last 15
years with such satisfactory results that the
vacancy ratio in Utica even at the height
of the depression never exceeded 5.7 percent and the city is said to be practically
the only one in New York in which mortgage money was available throughout the
depression. Without such exact information, it is difficult to see how any homefinancing institution can do other than
guess the degree of risk involved in investments in new subdivisions. This subject is a matter of such importance to homefinancing institutions that it will be dealt
with more extensively in later articles.
III. AND IV. NEIGHBORHOOD LOCATION AND
ACCESSIBILITY

IF THE housing needs of the community
as a whole are definitely known, relative
desirability of individual neighborhoods
can be better judged. In our ill-planned
cities of almost every size, failure to relate
residential neighborhoods to places of employment causes a tremendous economic
waste in movement between the home and
industry and a tremendous social waste in
time and fatigue. In dealing with existing
built-up neighborhoods, there is nothing
much the individual home-financing institution can do to avoid this waste and thus
protect its investments. However, in financing the building of homes in new subdivisions, the lending institution has an
opportunity to eliminate the evil of inaccessibility and to reduce the evil of bad
location. To do either is to add to the
safety of its investment.
It must not be forgotten that what a man
pays to go to and from his place of work
is part of the cost of his home. In the more
expensive developments, housing the wellto-do, this consideration may be in part
overlooked, but the lower the income of
the home owner, the more serious becomes
6

the item of transportation cost. The speculative builder who puts up workingmen's
houses in suburbs far distant from available employment may get out before the
buyers discover the insupportable economic cost of misplaced homes. But the
home-financing institution which carries
the mortgages is apt to find itself carrying
distressed borrowers. No home-financing
institution can afford to take mortgages in
a neighborhood, particularly of low-cost
homes, without giving careful consideration to where the people who live in those
homes are going to work, how they are going to get to and from their work, and
whether they can afford the cost of this
transportation.
The accessibility of a neighborhood is
measured, of course, by the facilities connecting it with industry, business, recreational centers, and other neighborhoods.
Possible facilities include mass transportation—streetcars, buses, and rapid-transit
lines—and arterial highways permitting
easy access by automobile. If the neighborhood houses members of the lower-income group, a lending institution should
make sure that it is adequately served by
mass transportation before investing in it.
The better any neighborhood is served with
arterial highways, the more satisfactory it
is bound to be to its residents and consequently the better risk it is. Congested approaches have destroyed residential values
in more than one neighborhood.
Given adequate transportation facilities,
the comparative desirability of residential
areas of the same class is determined by the
cost, time, and convenience of travel to
and from each. Other things being equal,
the home owner is going to prefer the
neighborhood which he can reach in a half
hour on a 5-cent fare to the one an hour
away and costing 10 cents to reach. Lending institutions that finance home owners
in the low-income group can perform a
constructive service to their borrowers and
Federal Home Loan Bank

Review

contribute to the efficient development of
their communities by giving careful consideration to the transportation needs of
prospective home owners.
V. POPULATION TRENDS

T H E location of the neighborhood in relation to places of employment and its accessibility are not, of course, the only factors that are reflected in the population
trends of a neighborhood. Probably the
commonest of the causes that drive home
owners out of neighborhoods are the encroachment of incompatible uses and loss
of character by the community. In any
event, the numerical movements of population in and out of neighborhoods constitute important indicators of the residential desirability of the neighborhood. If
there is a steady net exodus of owners,
however slow, it is safe to assume that the
stability of residential investment in the
neighborhood is decreasing. If there is a
great deal of moving in and out of a singlefamily residential neighborhood even
though there be no net loss of population,

Federal Home Loan Bank
21897—35

Review

some drawback to the desirability of the
neighborhood may well be suspected. Population movements should be carefully
watched, and the most practical method
of checking them is the yearly real property inventory.
VI. COMPETITION FROM OTHER NEIGHBORHOODS
IN WEIGHING the competition from other
neighborhoods that are either more accessible or more inviting, the comparative cost
of housing in the 2 areas must be kept in
mind. If the cost is about the same and
one neighborhood is the more inviting, the
ultimate result must be the adaptation of
the losing neighborhood to a lower-income
group. This does not mean that a homefinancing institution should cease investing in the less desirable neighborhood. On
the contrary, as was pointed out in the
preceding article in this series, the constructive approach is to adjust the loans
to lower values and to continue to extend
reasonable financing facilities so that
homes in the area may be maintained decently and pay their own way.

Current Investments in Mortgages by
Leading Life Insurance Companies

Y THE third week of September 1935,
47 leading life insurance companies
had already invested in urban mortgages
2y2 times as much as in the entire year
1934 (see chart). The figures, as reported
by the Wall Street Journal, were $122,251,484 for the period January 1-September
22, 1935, as compared with $49,508,508 for
1934 (table 1).

The steady expansion in purchases of
urban mortgages by these insurance companies began in February after 2 years of
virtual withdrawal from the mortgage field.
In 1933, they devoted 3.7 percent of their
currently available funds to urban mortgages and only 2.7 percent in 1934. By
July 1935, this percentage had risen to 8.6
percent (table 2). However, this figure is

VOLUME OF MORTGAGE LOANS ON CITY PROPERTY MADE BY INSURANCE COMPANIESCUMULATIVE BY WEEKS.
Millions of
Dollars
180

Millions of
Dollars

[Source: Wall Street JournaQ

YEAR

180

1935

YEAR 193 A

YEAR1933

—«—*"

•

._L
Y

^
S

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Lee
I

DIVISION OF REi 'EARCH AND STATISTICS
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1 1 I
I l 1
1 f 1 1.. .!.,.,! I | . 1 1
1. _ J
L_l
6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
FEB.
MAR
APR.
MAY
JUNE
JULY
AUG.
SEPT.'
OCT.
NOV.
OEC.

• n

2 3 4 5
JAN

i i i i i

M M

1 I !..._

Federal Home Loan Bank

Review

still a long way from the monthly average
of 49.1 percent of total investments devoted
to urban mortgages during the last 6
months of 1928.
The investments of these representative
insurance companies in farm mortgages
have failed to rise above the level of the
depression years. The heavier buying of
public utility securities, which began in
February, has been maintained, absorbing
more of the insurance companies' funds
than any other single class of investments
except government securities. During July
and August the percentage devoted to all
types of government securities fell off to
the lowest levels since 1932, but for the first
3 weeks in September, it was again up to
65.5 percent.
TABLE

1.—Investments in new mortgages
on urban property made by leading life
insurance companies, by months, 1934—35

TABLE

[Source: Weekly reports of 47 companies taken from the Wall Street
Journal]

1935

Month
January
February
March
April
May
June
July
August
September
October
November
December....

$3,138,158
2, 335, 078
1, 909, 765
2, 615, 746
2, 384, 263
2, 570, 082
5, 471, 379
6, 665,409
3,106, 553
6, 818, 903
6, 226,100
6, 267, 072

$4, 827,574
5, 503, 067
7,184, 725
9, 610, 016
17, 639,142
16, 211, 770
35, 096, 603
16, 822, 722
1
9, 355, 865

Yearly total

49, 508, 508

122, 251, 484

For the first 3 weeks of September only.

2.—Percentage distribution of new investments by 47 leading life insurance companies, 1928-35

Source: 1928-33, Weekly reports of 25 companies in New York Evening Post and Wall Street Journal. 1934-35, Weekly reports of 47 companies
in Wall Street Journal]

Mortgages
Period

1928 (6 months)
1929
1930
1931
1932
1933
1934

Farm
property

Dwellings
and
business
property

Railroad
securities

Public
utilities

Government
securities

Miscellaneous
securities

Percent
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Percent
11.1
8.7
10.1
7.6
9.3
3.5
1.6

Percent
49.1
43.3
44.8
36.5
31.3
3.7
2.7

Percent
10.6
8.4
9.9
10.3
1.1
3.5
5.9

Percent
13.6
7.4
15.4
20.4
9.9
6.5
7.2

Percent
10.1
11.3
11.1
20.1
44.0
80. 4
76.6

Percent
5.
20.
8.
5.
4.
2.
6.

100.0
100.0
100.0
100.0

1.4
1.9
1.1
1.9

2.2
2.1
3.0
3.0

4.6
9.0
6.3
4.6

6.6
6.4
6.4
8.3

81.8
72.5
77.7
75.5

3.4
8.1
5.5
6.7

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

1.5
2.7
1.5
1.6

2.1
3.1
3.6
5.1
6.7
6.3
8.6
8.4
7.0

4.7
5.9
5.2
7.8
3.8
3.5
2.3
7.8
6.0

7.2
9.1
10.9
13.8
14.8
12.4
33.5
17.1
11.0

65.1
72.5
72.0
67.1
60.4
65.6
48.2
53.3
65.5

19.4
6.7
6.8
4.6
12.6
11.0
6.3
11.9
8.1

Total

1934
1st quarter
2nd quarter
3rd quarter
4th quarter
1935
January
February
March
April
May
June
July
August
September *
1

Percentage distribution in September is based on totals for the first 3 weeks only.

Federal Home Loan Bank

Review

Share Repurchase
This is the eighth in a series of articles on practices prescribed for Federal savings and loan
associations.

T BECOMES increasingly clear that savings and loan associations occupy a position midway between deposit institutions
on the one hand and stock companies on
the other. What happens when this special
type of thrift, home-financing institution
slips over the line into the deposit group,
either by accepting demand deposits or
promising to pay withdrawals on a given
notice, was brought out in the preceding
article in this series appearing in the August REVIEW. In 1934 the Survey Committee of the New Jersey Building and Loan
League stressed failure to make payments
on withdrawal requests as promised as a
major cause of investor criticism of building and loan associations after 1929.
To protect Federal savings and loan associations from the loss of public confidence that comes when an association fails
to make repurchases it has promised, the
surest method is to prevent them from making such promises. Accordingly, the organic law forbids Federal savings and loan
associations to accept deposits or to issue
certificates of indebtedness (except for borrowed money) both of which, of course,
imply the right to withdraw in full on demand or on a given notice. The law further provides that Federal associations may
raise their capital only in the form of payments on the 4 types of shares authorized
in their charters.
For a savings and loan association to
step over into the category of stock companies by making no provision to permit
an investor to withdraw would be as un-

desirable as to accept deposits. To do so
would be to make necessary the establishment of a stock market on which savings
and loan shares could be bought and sold.
This would take the associations out of the
class of cooperative savings institutions
and make their shares speculative investments subject to the whims of the market
and destructive to the practice of systematic thrift. Accordingly, the law guarantees
to shareholders in Federal savings and loan
associations the right of having their
shares repurchased by the associations,
and the charter clearly defines the terms
under which repurchase shall take place.
Such definition is essential to secure fair
treatment to the individual investor and
to protect the interests of all the other investors who compose the corporate entity.
OPPOSING VIEWS ON REPURCHASE

THE conditions of repurchase laid down
in the charters of Federal savings and loan
associations are based upon the experience
of thousands of building and loan associations which for many years have tried
out a variety of methods for dealing with
the withdrawal problem. Two schools of
thought in the building and loan movement
have approached this problem from opposite points of view. The conservative
group argued that withdrawal should be
made difficult in order to encourage longterm investment. The liberal group argued
that withdrawal should be as easy as from
a savings bank in order to attract the largest possible volume of investment. In the

Federal Home Loan Bank

Review

preceding article of this series we saw the
flaw in the reasoning of the liberal group
when carried to the logical conclusion of
permitting withdrawal on demand. The
weakness in the argument of the extreme
conservatives is that they fail to take into
account the very real emergencies which
must occasionally confront investors. The
small investor who puts his savings in a
savings and loan association is usually laying by for a rainy day. When that rainy
day comes, whether in the form of sickness
or unemployment, to make it either impossible or unduly expensive for him to realize on his savings is unjust. The most
successful associations have been those
which found a middle ground between too
easy and too difficult terms of withdrawal. It is this middle ground which has
been adopted for Federal savings and loan
associations.
TERMS OF REPURCHASE

in Federal savings and loan
associations have the right to apply for the
repurchase of their shares in part or in
full at any time. The association shall
number and file such written applications
in the order received. After 30 days from
the receipt of such applications, it shall
either pay the shareholder the value
thereof or apply at least one third of the
receipts from its shareholders and borrowers to the repurchase of such shares in
numerical order. Furthermore, in order to
permit Federal associations to relieve a
pressing emergency need of any shareholder, the directors have a right to repurchase not exceeding $100 of any share
account in any order and regardless of
whether or not such shareholder has filed
an application for repurchase. To protect
the small shareholders from suffering for
the benefit of the large shareholders, there
is also a provision that no more than $1,000
shall be repurchased from a single shareholder until all other waiting applicants
have had their repurchase applications
SHAREHOLDERS

Federal Home Loan Bank

Review

met. This means that when a shareholder
asks for the repurchase of shares amounting to more than $1,000 his application is
renumbered after each $1,000 has been
paid and placed at the end of the list.
Every shareholder in a Federal association is thus reasonably assured of some
favorable action on an application to repurchase without undue delay. At the
same time, the interests of the association
and of the investors who are not seeking
repurchase of their shares are fully protected. A " r u n " is rendered impossible
and the shareholder's responsibilities and
risks are made clear. Thus, the association may continue to use up to two thirds
of the receipts from its shareholders and
borrowers to carry on its regular business
and make new loans to home owners.
These provisions emphasize and preserve
the long-term character of an investment
in a Federal savings and loan association
and help it to continue fulfilling its responsibilities as a home-financing institution
even in a period of depression and money
shortage. To further clarify and emphasize the nature of an investment in a Federal association, the charter contains a provision to the effect that " Shareholders filing written application for the repurchase
of their shares shall remain shareholders
until paid and shall not become creditors."
Perhaps it should again be pointed out
that the safety and ultimate availability of
the investment up to $5,000 for each investor in Federal associations are insured
by the Federal Savings and Loan Insurance
Corporation. The insurance of accounts
in all Federal savings and loan associations
with this Corporation also eliminates the
possibility of recapture of dividends. As
soon as a semiannual dividend is declared,
it becomes a part of the member's capital
investment and is protected by insurance.
DETERMINING THE REPURCHASE VALUE

W E come now to the method of arriving at
the repurchase value of shares. For ob11

vious reasons long-term money is usually
worth more than short-term money. Savings and loan institutions pay relatively
high dividends on the assumption that
they shall have the use of the funds invested with them for a long term. When
that expectation is disappointed and they
are asked to repurchase shares in advance
of maturity, it is clear that the funds thus
returned to the investor have earned less
than the dividends credited to them.
Accordingly, the charter of Federal savings and loan associations provides that on
shares repurchased within 1 year of the
date of investment, the association shall
retain a sum equal to one half of the dividends declared on the amount so repurchased; on shares repurchased between 1
and 3 years of the date of investment, the
association shall retain one fourth of the
dividends declared. But on shares repurchased any time after 3 years, the association shall pay the full amount paid in
thereon together with all dividends through
the latest semiannual dividend date. Any
member who applies for repurchase between dividend dates loses the right to any
earnings subsequent to the latest dividend
date.
The reasoning on which these provisions
are based is unquestionably sound. In
some communities, however, the very practical problem of competition from other
thrift institutions, which either do not retain dividends or which pay on demand,
requires special consideration.
Meanwhile, it may be pointed out that
the charter of Federal associations does
provide a means of enabling shareholders
to obtain part of their savings to meet
emergencies, without loss of dividends or
of their status as shareholders. The provision in question authorizes Federal associations to make loans against their shares
up to 75 percent of the amount actually
credited to the borrower's account. Such
loans may not be made when the associa12

tion has applications to repurchase remaining on file for more than 30 days.
THE REPURCHASE FEE

T H E wisdom of a repurchase fee to be
charged all withdrawing members has
caused much argument. It is certain that
in the past the method of determining the
fee has often been irrational and unfair.
Many building and loan officials claim that
the fee brings in too small a return to the
association to justify the irritation it frequently causes the retiring investor.
In reaching a decision authorizing Federal savings and loan associations to charge
a repurchase fee, the Federal Home Loan
Bank Board was actuated by the special
consideration that Federal associations are
denied other sources of income, such as
membership fees, which many building and
loan associations charge. Such limitations
on their revenues inevitably work a hardship on new and small associations. They
feel more keenly than a large association
the retirement of any shares. Their earnings from mortgage loans are not sufficient
to permit them to carry on an aggressive effort to grow. At the same time, they are
mutual cooperative institutions. Therefore, the charter of Federal associations
provides that under certain conditions they
may charge a repurchase fee, but only if
the shareholders themselves so vote. The
Federal Home Loan Bank Board questions
the advisability of use of this permission
by any but small associations. However,
on this matter, as on the retention of dividends on repurchased shares, it is probable
that competition will make the final decision for every association.
The charter reads that in any State in
which the law allows a building and loan
association to charge any repurchase, withdrawal, membership, or like fee, the Federal association may charge a repurchase
fee. The maximum amount of the possible
fee is carefully limited. It may not be in
Federal Home Loan Bank

Review

excess of that allowed to be charged by
State-chartered associations in the State,
and in no case in excess of a sum equal
to 2 percent of the par value of the share
subscribed, and in no case in excess of $25
to any one shareholder except on full-paid
income shares. The most serious evil of
the repurchase fee,, namely, that the investor is ignorant of it until he seeks to
withdraw, is guarded against by the pro-

Federal Home Loan Bank

Review

vision that the amount of the fee shall be
clearly indicated on each share certificate
issued.
The secret of good investor relations—
as of good borrower relations—for savings
and loan associations is absolute frankness and honesty. No law nor charter
provisions will ever take the place of conscientious management in insuring such
frankness.

Residential Construction Activity in the
United States

ESIDENTIAL building in September
for the second time this year showed
a better-than-seasonal upturn (chart 3).
The average daily value of residential construction contracts awarded in 37 Eastern
States, based on reports for the first 22
days in September from the F. W. Dodge
Corporation, increased 16.5 percent over
August. This exceeds by a sizeable margin the 10.9 percent average August-toSeptember increase for the three years
1932-1934 (table 1). In comparison with
September of last year, the average daily
value of construction showed an increase
of 135 percent.
For the period January 1 to September
22 residential construction amounted to
$326,836,000, which exceeded by 78.2 percent the value of residential contracts

awarded during the same period in 1934
(chart 2). Though this volume of construction surpassed that for the corresponding
period in any one of the past 3 years, it
amounted to only 21.6 percent of the $1,516,230,000 of residential construction contracts awarded in the comparative period
of 1929.
After a slow start in the early months
of the year, nonresidential construction
has gained momentum until during the
first 3 weeks of September it exceeded
activity in the comparative period of 1934
by 25 percent. The effect of this increase
in nonresidential building combined with
the continued expansion in residential construction has expanded the volume of total
construction contracts for the year to a
point where by September 22 it was less

V A L U E OF R E S I D E N T I A L CONSTRUCTION CONTRACTS AWARDED I N 1932-1935
( Bosed on F.W.Dodge Corp. Reports for 37 Eastern States)
CHART - I
Wiltons of
Dollars
35i
30

SEPTEMBER

1-22*

* Comparable Periods of 17 Business Days

CHART - 2
Millions of
Dollars
1 35

Millions of
Oollars
350 i—

300

JAN. I - SEPT. 22
Millions of
Dollars
—1350

250
20

200
150
100

100

1934

Federal Home Loan Bank

Review

CHART 3 . — A V E R A G E DAILY V A L U E OF RESIDENTIAL CONSTRUCTION CONTRACTS AWARDED I N 1935 COMPARED
W I T H SELECTED PERIODS.
(Based on F w. Oodge Reports for 3 7 Eastern States.)
Millions of
Oollors

Millions of
Dollars

I ZC

- AVERAGE OF 3 MEDIAN YEARS 1923-1929
(High <4 Low Values m Each Month Eliminated)

DEC.

JAN.

FER
p •

MAR.

APR.

MAY

JUNE JULY

AUG

SEPT

OCT

NOV.

DEC.

Prtlimmory

than 3 percent below the total volume of
construction contracts in the corresponding
period of 1934 (table 1).
Housing rentals in August (as compiled
by the National Industrial Conference
Board) increased 1.6 percent from July,
thus continuing the upward trend which
has prevailed for the past 19 months. The
TABLE

Board's index of housing rentals for August
advanced to 69.1 percent of the 1923-1925
base. This level compares with 68.1 percent in July 1935, and 63.2 percent in August 1934.1 The 1929 level of average
rentals was between 88 and 89 percent of
this same base period.
The cost of construction as measured by
the Federal Reserve Bank of New York
advanced slightly in August over July.
The index for the current month stood at
88.9 percent of the 1923-1925 base as compared with 88.8 percent in July 1935, 89.5
percent in August 1934, and 100.6 percent in
August 1929. Thus, it is clear that the disparity between rentals and building costs
remains large as a hampering factor upon
residential building and reemployment in
the construction industries.
In spite of the improved showing in
building activity of all kinds, total construction activity remains far behind gen*It should be pointed out that some other national
indexes of rents, taken on different bases, do not reveal
a movement upward of similar extent. Evidence from
many sources, however, indicates that the Conference
Board's index reflects fairly accurately the movement in
rental values of dwelling units currently leased.

1.— Value of construction contracts awarded in 37 Eastern States and percentage changes for
comparative periods
[Source: F. W. Dodge Corporation]

Average daily

Total for the period
Jan. 1-Sept. 22

Sept. 1-22
Type

(000 omitted)

(000 omitted)
Percent
change

1935

(000 omitted)

1934

Percent Sept.
change 1935
1935

1934

Aug.
1935

Sept.
1934

Percent change
Sept.
1935
from
Aug.
1935

Sept.
from
Aug.
3-year
aver-3
age

Sept.
1935
from
Sept.
1934

$29, 739 $13,139 + 126.3 $326, 836 $183, 368 + 78.2 $1, 749 $1, 501 $744 + 16.5 + 10.8 + 135.1
Residential
+ 9.2 + 38.5
4
Nonresidential . 90, 534 72,171 + 25.4 817, 759 995, 658 - 1 7 . 9 5,326 4,742 3,846 + 12.3
120, 273 85, 310 +41.0 1,144, 595 1,179, 026 - 2 . 9 7,075 6,243 4,590 + 13.3 + 9.3 + 54.1
Total
1

Based on the following number of business days: September 1935—17; August 1935—27; September 1934—24.
the first 22 days (17 business days).
of the percent change in September from August for the 3 years 1932-34.
Includes contracts for commercial buildings, public works, and utilities.

2
Based on preliminary reports for
3
Represents the geometric average
4

Federal Home Loan Bank
21897—35

Review

eral industrial production as measured by
the Federal Reserve Board. The index of
total construction contracts awarded in August, after adjustment for seasonal variation, rose to 37 percent of the 1923-1925 base
level, as compared with 35 percent in July
1935, and 27 percent in August 1934. Industrial production, on the other hand,
while being unchanged from July, maintained a level of 86 percent of the 19231925 base in August, which compares with
73 percent in August 1934. Thus, while industrial production is within 14 percent of
the base-year activity, total construction is
still 63 percent below this same base.
NUMBER OF FAMILIES FOR WHICH NEW DWELLING UNITS WERE PROVIDED IN AUGUST

THE estimated number of new dwelling
units authorized in August 1935, was almost 3 times the number authorized in
August of last year. According to building
permits issued in all cities of 10,000 population or over, collected by the Bureau of
Labor Statistics, 8,010 family units were
provided by all housekeeping dwellings in
August this year as compared with 2,858
in August 1934 (table 2).
For the first 8 months of 1935, the number of new residential units for which perTABLE

mits were issued totaled 50,036. This was
an increase of 151 percent over the 19,942
units provided in the first 8 months of 1934.
Increased residential building activity was
reported by cities of all sizes, but the greatest improvement in August as compared
with last year was found in the larger
metropolitan centers.
All types of dwellings, except the joint
home-and-business structure, showed increases of more than 175 percent in August
of this year as compared with August 1934.
In the current month, structures of the
1- and 2-family type accounted for 82.6 percent and multifamily homes for 17.4 percent of all housekeeping dwelling units
provided. For the first 8 months of this
year, dwelling units of the multiple type
accounted for 28 percent of all dwelling
units as compared with 23.2 percent during
the first 8 months of 1934. Multifamily
structures are accounting for a greater proportion of all residential structures in the
larger urban centers than in smaller sized
cities.
In August of this year the average cost
of 1-family units for which permits were
issued was $4,077, an increase of 15 percent over the average cost of $3,545 in

2.—Number and estimated cost of new housekeeping dwelling units for which permits
were issued in
all cities of 10,000 population or over in the United States in Aug. 1935 1
[Source: Federal Home Loan Bank Board.

Compiled from reports to U. S. Department of Labor]

Number of family
units provided

Total cost of units
(000 omitted)

Average cost of family
units

Type of structure

All housekeeping dwellings. .
Total 1- and 2-family dwellings
1-family dwellings
2-family dwellings
Joint home and business 2. ..
Multifamily dwellings

Aug.
1935

Aug.
1934

8,010

2,858 + 180.3

6,616
6,172
394
50
1,394

2,374
2,211
136
27
484

Percent
change

Aug.
1935

+ 178.7 $26, 301. 0
+ 179.1 25,162. 2
+ 189.7
1, 024. 3
+ 85.2
114.5
+ 188.0

Aug.
1934

Percent
change

$8, 291. 6 + 217.2
7, 837. 0 +221.1
371.0 + 176.1
83.6 + 37.0

Aug.
1935

Aug.
1934

$3, 975
4,077
2,600
2,290

$3, 493
3,545
2,728
3,096

Percent
change

+ 13.8
+ 15.0
-4.7
-26.0

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.

Federal Home Loan Bank

Review

August 1934. Between the same periods
the trend in the average cost of 2-family
dwelling units declined almost 5 percent
to $2,600 in August of this year.
NEW RESIDENTIAL CONSTRUCTION BY STATES IN
THE FEDERAL HOME LOAN BANK DISTRICTS

TABLE 3 shows the estimated cost of all new
residential building in cities of 10,000
population or over for which permits were
issued in August 1935 to have been $30,511,600. This represents an increase of 212
percent over the estimated cost of residential construction authorized in August
TABLE

1934. Of the total authorized expenditure
for building in the current month, $26,301,000 went for the construction of 1- and 2family dwellings. The increase in volume
of permits granted for the month as compared with the same period of the previous
year was more than 150 percent in each of
the Home Loan Bank Districts except District 1, where the gain was 59 percent.
Members of the Federal Home Loan
Banks can readily determine how much
money is being expended every month for
new residential building in their districts
and States by reference to table 3.

3.—Estimated cost of new residential buildings for which permits were issued in all cities of 10,000
population or over, in August 1935, by Federal Home Loan Bank Districts and by States *
[Source: Federal Home Loan Bank Board. Compiled from reports to U. S. Department of Labor]
Cost of all new residential
building (000 omitted)

Cost of all 1- and 2-family
dwellings (000 omitted)

Federal Home Loan Bank Districts and States
Percent
change

August
1935

August
1934

$30,511.6

$9, 775. 5

2, 257. 8

1, 419. 7

+ 59.0

443.0
82.1
1, 465. 3
56.2
176.7
34.5

166.0
105.6
860.2
87.0
166.1
34.8

6, 844. 7

August
Percent
1934 ! change

August
1935

$8, 291. 6

+ 217.2

2, 222. 2

1, 389. 3

+ 60.0

+ 166.9
-22.3
+ 70.3
-35.4
+ 6.4
-0.9

443.0
82.1
1, 429. 7
56.2
176.7
34.5

160.0
90.2
851.2
87.0
166.1
34.8

+ 176.9
-9.0
+ 68.0
-35.4
+ 6.4
-0.9

2, 714. 7

+ 152.1

3, 917. 4

1, 496. 2

+ 161.8

1, 266. 0
5, 578. 7

308.8
2, 405. 9

+ 310.0
+ 131.9

1, 266. 0
2, 651. 4

308.8
1,187. 4

+ 310.0
+ 123.3

N 0 3—Pittsburgh

2, 255. 8

510.3

+ 342.1

1,950.6

510.3

+ 282.2

Pennsylvania
West Virginia

48.0
1, 948. 7
259.1

22.0
473.7
14.6

+ 118.2
+ 311.4
(2)

48.0
1, 652. 6
250.0

22.0
473.7
14.6

+ 118.2
+ 248.9

No. 4—Winston-Salem

3, 996. 8

1, 017. 7

+292. 7

3, 733. 5

969.2

+285. 2

387. 3
1,199. 3
676. 6
281. 7
338.1
362. 9
165. 8
321. 8

25.6
454. 9
131. 3 |
48.2
49.9
118. 8
59.8
80.7

(2)
+ 163.6
+415.3
+484. 4
+ 577.6
+205. 5
+ 177.3
+ 298.8

UNITED STATES

No. 1—Boston
Connecticut
Maine
Massachusetts
Rhode Island
No. 2—New York
New Jersey
New York

387. 3
1, 378. 8
693. 4
281. 7
353.1
414. 9
165. 8
321. 8

District of Columbia
Florida
Maryland
North Carolina
South Carolina

25.6
()
482. 9
+ 185.5
131. 3
+428.1
48.2
+484.4
49.9
+ 607.6
+ 205. 5
135. 8
59.8 1 + 1 7 7 . 3
+282. 2
84.2

=====

+ 212.1 $26, 301. 0

—1

(2)

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
Increase of 1,000 percent or over.

Federal Home Loan Bank

Review

TABLE

(Source: Federal Home Loan Bank Board. Compiled from reports to U. S. Department of Labor]

Cost of all new residential
building (000 omitted)

Cost of all 1- and 2-family
dwellings (000 omitted)

Federal Home Loan Bank Districts and States
August
1935

August
1934

Percent
change

August
1935

August
1934

Percent
change

No. 5—Cincinnati

1, 640. 3

577. 3

+ 184.1

1, 602. 3

550. 3

+ 191.2

Kentucky
Ohio
Tennessee

139.0
1, 307. 0
194.3

82.6
461. 7
33.0

+ 68.3
+ 183.1
+488. 8

134. 0
1, 277. 0
191.3

82.6
434. 7
33.0

+ 62.2
+ 193.8
+479.7

No. 6—Indianapolis

1, 706. 9

486. 3

+251. 0

1, 706. 9

486. 3

+251. 0

Indiana

238.3
1, 468. 6

113.1
373. 2

+ 110.7
+ 293.5

238.3
1, 468. 6

113.1
373.2

+ 110.7
+ 293.5

No. 7—Chicago

1, 539. 7

339.5

+ 353.5

1, 431. 6

339.5

+ 321.7

703.9
835.8

183.3
156.2

+ 284.0
+435.1

628.9
802.7

183.3
156.2

+ 243.1
+ 413.9

1, 889. 5

702.9

+ 168.8

1, 857. 6

687.9

+ 170.0

North Dakota
South Dakota

357.5
620.0
734.3
100.0
77.7

125.8
281.5
365.9
27.3
2.4

+
+
+
+

184.2
120.2
176.2
266. 3
(2)

357.5
620.0
711.4
91.0
77.7

125.8
281.5
265.9
12.3
2.4

+
+
+
+

No. 9—Little Rock

2, 473. 7

770.9

+220. 9

2, 423. 3

695.0

+248. 7

Arkansas

52.9
191.0
201.6
47.4
1, 980. 8

7.9
62.8
5.6
13.6
681.0

+ 569.6
+204.1
(2)
+248.5 1
+ 190.9

52.9
191.0
193.8
47.4
1, 938. 2

7.9
62.8 j
5.6
2.5
616.2

+ 569.6
+204.1
+214. 5

867.7

197.3

+ 339.8

849.7

195. 3

+ 335.1

+ 177.9
+297.9
+428.3
+487.3

180.1
153.2
158.5
357.9

64.8
36.5
30.0
64.0

+ 177.9
+ 319.7
+428. 3
+459. 2

No. 8—Des Moines

No. 10—Topeka

180.1
153.2
158.5
375.9

Nebraska
Oklahoma
No. 11—Portland

Oregon

Utah
Washington
Wyoming
No. 12—Los Angeles
Arizona
California
Nevada
2
8

64.8
38.5 i
30.0
64.0

184.2
120.2
167.5
639.8

(2)

958.6

200.7

+ 377.6

948.9

189.5

+400. 7

34.7
77.3
26.8
48.7
713.4
57.7

11.2
18.6
42.3
18.3
102.5
7.8

+209.8
+ 315.6
-36.6
+ 166.1
+ 596.0
+ 639.7

25.0
77.3
26.8
48.7
713.4
57.7

11.2
18.6
42.3
18.3
91.3
7.8

+ 123.2
+ 315.6
— 36 6
+ 166.1
+ 681.4
+ 639.7

4, 080.1

838.2

+ 386.8

3,657.0

782.8

+ 367.2

137.9
3,516.1
3.0

780.8
2.0

+ 350.3
+ 50.0

137.9 1
3,939.2
3.0

0
836.2
2.0

()
+ 371.1
+ 50.0

(3)

Increase of 1,000 percent or over.
Represents an infinite percentage increase due to comparison with zero in the particular period.

Federal Home Loan Bank

Review

Growth and Lending Operations of the
Federal Home Loan Banks

T
•

HE Federal Home Loan Banks' net
balance of loans outstanding to mem—

_ ^ _ ^ _ ^ ^ _ ^ ^ ^ ^ _ ^ ^ ^ ^ .

have played a part in financing this muchneeded revival of real-estate activity, thus
,

i r , i M llllir..llll[lflll1 Il

••

The $86,000,000 of balances outstanding
at the end of August was distributed among
1,960 member institutions. As the total
membership of the System was 3,371 institutions, the number making use of its reserve facilities represented 58 percent.
CORRECTION IN DIVIDEND RATE REPORTED

August issue of the REVIEW carried a
table showing the dividends declared by
THE

the various Federal Home Loan Banks as
of June 30. In that table, the rate reported
for the Boston Bank was .50 percent and
that for the Indianapolis Bank was .75 percent. These rates were on a 6-month basis.
To conform with the rates reported for
other Banks they should have been on a
yearly basis, which would have made them
1 percent and 1.50 percent, respectively.

Federal Savings and Loan System
NET increase of 4.8 percent in the
A
combined volume of loans outstanding at the end of August as compared with
the end of July was reported by 254
converted Federal associations (table 1).
This increase is perhaps the most reliable
index to the vitality of these savings and
loan associations.
The 691 new and converted Federal associations from which reports were received together completed new mortgage
loans totaling $9,464,600 during August, an
increase of 7.7 percent over their July
activity. The proportion of loans for new
TABLE

construction has grown each month since
February and amounted to 29 percent in
dollar volume of all loans made in August.
Purchase of homes accounted for another
24 percent, bringing the total for these 2
purposes to 53 percent, as compared with
only 39 percent for refinancing. This
steady shift from refunding to new mortgage activity can only be interpreted to
mean that the real-estate and home-financing markets are reviving.
In August, for the first time since the inception of the System, the reporting converted associations registered a greater per-

1.—Federal Savings and Loan System—Combined summary of operations for August 1935 as
compared with July 1935
437 new associations

July

Change
July to
August

August

49, 907
510, 972
10

Percent
+ 3.5
+.9
0

230, 849
2, 729, 865
11.9

$17, 492, 892 $16,575,610
19,104, 200 16, 757, 700

+ 5.5
+ 14.0

36, 597, 092 33, 333, 310

+ 9.8

339
246, 759

332
256, 664

332, 951
1, 507, 631
1, 701, 369
737, 304

August

Total subscriptions at end of month:
Private share accounts
Shares privately subscribed

Treasury subscriptions
Total
Average paid on private subscriptions...
Repurchases during month
Mortgage loans made during month:
a. Reconditioning
b. New construction
c. Refinancing
d. Purchase of homes
Total for month
Loans outstanding end of month *
Borrowed money as of end of month:
From Federal Home Loan Banks...
From other sources
Total
1

July

Change
July to
August

219, 987
2, 566, 492
11.7

Percent
+4.9
+ 6.4
+ 1.7

$160,987,291 $158, 002, 810
18, 311, 900
16, 273, 000

+ 1.9
+ 12.5

179, 299,191

174, 275, 810

+2.9

+2.1
-3.9

700
3, 516, 066

721
3, 930, 992

-3.0
— 10.5

297, 201
1,149, 028
1, 690, 750
699,115

+ 12.0
+ 31.2
+ .6
+5.4

369,144
1, 266, 568
2, 017, 569
1, 532,103

439, 379
948, 956
2,102,153
1, 459, 619

— 16.0
+ 33.5
—4.0
+5.0

4, 279, 255 3, 836, 094
36, 882, 695 32, 850, 265

+ 11.5
+ 12.3

5,185, 384
153,275,539

4, 950,107
146,161, 258

+4.7
+4.8

51, 650
515, 828
10

Share liability at end of month:

254 converted associations

3, 539, 258
97, 762

2, 919, 223
76, 279

+21.2
+28.1

13, 031, 851
11, 791, 612
2, 310,155 | 1, 832, 233

+ 10.5
+26.1

3, 637, 020

2, 995, 502

+21.4

15, 342, 006

+ 12.6

13, 623, 845

These totals include loans made for other purposes than those listed.

Federal Home Loan Bank

Review

centage increase in number both of new
shareholders and of new share subscriptions than the reporting new Federals.
This indicates that many converted associations have had time to make the necessary adjustments to their Federal charters
and are aggressively seeking new business.
To help finance the heavy increase in
new loans made during the month, the 691
reporting Federal associations borrowed an
additional $1,860,274 from the Federal
Home Loan Banks, an increase of 12 percent over the amount borrowed at the end
of July. They also obtained $4,375,400
from additional subscriptions to their
shares by the United States Treasury.
TREASURY SUBSCRIPTIONS

T H E Treasury completed 148 subscriptions
totaling $4,909,500 to shares of Federal associations during August (table 2). This
TABLE

brought the total of all Treasury subscriptions to $41,954,000.
Table 3 reveals that 8 new and 20 converted Federal savings and loan associations joined the System during August with
combined assets of $26,138,714, making the
total number of associations in the System
922 with $391,945,282 in assets.
DIVIDENDS DECLARED BY FEDERALS

T H E average rate of semiannual dividends
declared as of June 30, 1935, by the 545
Federal savings and loan associations from
whom reports have been received was 3.76
percent. The combined total of the dividends declared by these associations
amounted to $3,334,200, of which $357,152
went to the Treasury. The average rate
represents an increase over the average
rate of 3.55 percent paid by 287 Federal
associations in 1934.

2.—Treasury subscriptions to stock of Federal savings and loan associations—Requests and
subscriptions
Dec. 31, 1934

June 30, 1934
Requests received:
Number
Amount
Subscriptions;
Number
Amount

707
$14, 839, 600

1,636
$43, 094, 500

1,790
$47, 941, 500

71
$1, 229, 300

536
$10, 725, 400

1,475
$37, 044, 500

1,623
$41, 954, 000

of the number of associations organized or
converted less than 6 months prior to the
dividend date, however, the known figure
of 545 paying dividends is most satisfactory.

3.—Progress in number and assets of the Federal Savings and Loan System
Assets

Number
Dec. 31, June 30, Dec. 31, June 30, July 31,
1935
1935
1934
1934
1933
New
Converted
Total

Aug. 31, 1935

184
$2, 726, 500

The number of Federal associations in
active operation on June 30 was 817. How
many of these, in addition to the 545 reporting, paid dividends is not known. In view
TABLE

July 31, 1935

Number

Assets

31,
July 31, 1935 Aug.
1935 Aug. 31,1935

57
2

321
49

481
158

554
297

564
330

$36, 875, 037
328, 931, 531

572
350

$37,516,790
354, 728,492

370

639

851

894

365, 806, 568

922

391, 945, 282

Federal Home Loan Bank

Review

Federal Savings and Loan Insurance
Corporation

ANY building and loan executives
have been uncertain as to whether
a sound and liquid association needs or will
benefit from insurance of its share ac-

PSSLTSML
PASADENA. C A M FORNIA
September IS, 1935

Mr. Fred W. Catlett, Trustee
Federal Savings and Loan
Insurance Corporation
Washington, D . C.
Dear Mr. Catlett:
You may be interested in having the following information concerning the effect on our certificate holders
of our insurance of accounts:
We received our certificate of insurance on August 21,
1935. The next day the first of our advertisements
announcing the insurance appeared in the local papers.
In the seventeen office days since August 21st our
certificates have increased 22%,
During this period
our advertisements carrying the insurance information
have appeared weekly, and sometimes bi-weekly, in the
local papers and we have written a number of personal
and form letters. However, the interesting thing is
that it is the "insured account" idea that is bringing
in the funds.
The Mutual has been in business in Pasadena for the
past ten years, has always paid all withdrawals on demand, has never paid less than 4% interest, and has
maintained the market on its certificates at 100£ on
the dollar. But it is not this reputation alone that
is drawing new accounts to us; it is the Government
insurance.
I am pleased to inclose several clippings of advertisements, et cetera, in which you may also be interested.

counts. A letter from a California building and loan association is reproduced in
facsimile on this page because it throws the
light of practical experience on this quesFederal Home Loan Bank

Review

tion. The association has found that its
own unbroken record of liquidity and high
dividends could not equal Federal insurance of its share accounts in winning
investor confidence.
Another State-chartered association in
California reports that since insurance of
its accounts, it has been obliged to limit the
amount of investment per person. The
letter reads in part as follows:
Our association is quite a booster for insurance, for, at this time, we are not only making
more loans than we have for several years and
advertising constantly for loans, but have been
obliged to limit investments to $100 per person
per month, due to the quantity of funds being
offered us.
At this time we are advertising in the newspaper for loans, both in the display and classified columns, we are contacting the realtors by
direct mail, as well as all of the title companies,
and are making personal calls on the lumber
yards and material dealers within 50 miles of
this city.
PROGRESS OF THE INSURANCE CORPORATION

T H E resources of savings and loan associations applying for insurance of share accounts had passed the $900,000,000 mark
by September 21, less than 1 year from the
date on which the Insurance Corporation
began to function. As of September 21,
applications had been received from 1,230
associations, of which 668 were old-established institutions (see table).
The number of associations actually insured as of September 21, was 975, and
their combined assets as of date of insurance totaled $544,914,593. The period August 24 to September 21 witnesses an in23

crease of nearly 100,000 in the number of
shareholders who gained protection of
their accounts by insurance. The number
of insured accounts reached 807,764 on
September 21.
Information received as this REVIEW goes
to press indicates that on October 7 conditional approval had been given to the
insurance applications of 50 State-chartered associations, with combined assets of
$87,000,000. Conditional approval means
that only minor technical difficulties remain to be cleared up before the insurance
certificate is granted.

GROUP ADVERTISING OF INSURANCE

Two advertisements of insurance are reproduced on the page following this article.
Special attention is called to the possibilities of group advertising illustrated by the
upper advertisement. This is one of four
nearly full-page displays announcing insurance which were used by the New
Orleans group. By combining their resources, a number of insured institutions
in the same community can get the benefits
of extensive and striking advertising at a
nominal cost to each member of the group.

Progress of the Federal Savings and Loan Insurance Corporation—Applications received
and institutions insured
APPLICATIONS RECEIVED
Number

Assets (as of date of application)

Dec. 31, Aug. 24, Sept. 21, Dec. 31, 1934 Aug. 24, 1935
1934
1935
1935
State-chartered associations
Converted F. S. and L. A
New F. S. and L. A
Total

53
134
393

239
403
538

580

1,180

Sept. 21,
1935

268 $110, 681, 409 $399, 947, 510 $467,174, 566
420 128, 907, 073 418, 661, 514 424, 470, 240
542
7, 578, 870
9,156, 431
9, 427, 830
1,230

247,167, 352

827, 765, 455

Number of
shareholders
(as of date
of insurance)

Share and
creditor lia- Assets (as of
bilities (as
date of inof date of insurance)
surance)

901, 072, 636

INSTITUTIONS INSURED

Number

Dec. 31, Aug. 24, Sept. 21, Sept. 21, 1935
Sept. 21,1935
1934
1935
1935
State-chartered associations
New and converted F. S. and L. A
Total

Sept. 21,
1935

4
447

70
862

81
894

220, 440 $158, 615, 977 $176, 208, 635
587, 324 338, 105, 472 368, 705, 958

451

932

975

807, 764

496, 721, 449

544, 914, 593

Federal Home Loan Bank

Review

ADVERTISEMENTS

INSURANCE AGAINST
LOSS ON ACCOUNTS UP
TO $ 5 , 0 0 0 AT

I N S U R E D STATE

U S E D BY

CHARTERED

ASSOCIATIONS

COLUMBIA BUILDING ASSOCIATION
**»*

WITH PRESENT PAYMENT

ON S A V I N G S ACCOUNTS
LOANS ON HOMES
AT LOWER RATES
Home purchaser, may obtam loan.
«p to nearly 70% o< At »?<*»*'
„lut of Ae property, repayable •"
« long-term ban*. at

HOW TO OPEN AN

INTEREST RATES
of 5%, » % * * * %

FEDERAL SAVINGS AND LOAN
CORPORATION SAFEGUARDS W ,

u . (.*< lines or commissions are

« I . O O U> $ 5 , 0 0 0 . 0 0

HE Columbi. Bu.ld.ng A$soc.*tion «t 716 II
ill 28th Anniversary by becoming the Iwrt
„ the D.strier of Columbu to, supply>£
-protection
^ - U T t to
o its
its thousands of shareholder memb.

b» tuildnig Associate

new accounts.

LOANS FOR
REPAIRS
Recondition*.* •"da""*'" ° '
M W ) to awner-oteupied propert y CM be «"»»««' h , r t *' l ° *
interest rates.
JOBJ gonod over
t$ way extend, •
Wi*« »* •*" "

$7.50 MONTHLY P e r
$1,000.00 LOANED

. , „ . - ,„«„„„«.« „ « . , . .

of $5.00000.
INSURANCE REQUIREMENTS
: Or 9 .«.«d,n October. WW. *

R «

V?*"££*

,„,«« «l.g.b.l.ty requirements of A . F.d«« ^
j
I t»« Coli»mb.a ba. emended «»»««« 9 ^ T J \
X e accoenf. her. In bemg <<«* •« ^
"'*«
| m m *«£"'
rf
C e , u m b l l | u( |d,ng *><«»t.
surance, the directors or v.m»
»»e«MT IA
„ „ n « by oM ana new shareholders MESENT RA
[ "%"«EDITED SEMI-ANNUALLY
ATTRACTIVE TO INVESTORS
To accumolet. .n fttwbW a—"*. ''«» * « »
I current re.e of 4%. Is * * « « ' * ' " » * J
,o have aromatic P«»*Con
'V'***™"^']
Colon*., »«.W-9 A.»C..*K», « A . - £ «''<
mveitor can obtain the advintage* of such in«i'»
«ot b*n «»»red by A . Federal S.»»9« •«<<
I £ t $100 or $10000 . c e n t e a r n i n g ^
• - * to be insured against sa«ng. •«»

HOMESTEAD
ACCOUNT...
You as an investor know the safety of
Insured Homestead Shares... know that
they are fully insured up to $5000 by the
Federal Savings and I^oan Insurance
Corporation . . . and that they are considered by nationwide authorities as one
of the safest, non-speculative investment*
offered in America today.
But do you know that steady, thrifty
savers, as we/1 as the large investors, are
taking advantage of this guaranteed, divi*
dend earning security? They are invest*
ing their savings in Insured Homestead
Shares.
Two plans are offered the investor:

call Monday'

• FIRST PLAN;

COLUMBIA BUILDING ASSJ
tfl.W.

Ooflll

"Partial Payment Plan" or Installment Share Account
Vou may open your account with as little as $1.00 and pay only 25c a week.
Each deposit is entered in your own account book. As soon as your account
is open your money starts working and earning the same dividend at exactly
the same rate that it does on a full-paid share.
• SECOND PLAN;
The Purchase of Full-Paid Shares
Full-paid shares may be purchased for $100 per share and are bought outright on this basis. Dividend earnings begin at once for this period.
Your investment in Insured Homestead Shares is fully insured up to $5000. Your Insured Homestead Savings will be paid a semi-annual dividend December 31,1935, at the rate of 3 Vi % per annum.
No account is too large or too small. One dollar opens your account and immediately your money
starts working for you.
Plan now to take advantage of the guarantee and security afforded by Insured Homestead Shares.
KNOW
YOUR MONEY IS SAFE. Visit one of the 13 Insured Homesteads tomorrow and open
an account.
The Following Homesteads Now Offer Insured Shores:
Algiers Homestead
Carrollton Homestead
Citizens Homestead
Dixie Homestead
Oryades Building & Loan
Eureka Homestead

Fifth District Homestead
General Building fe Loan
Homeseckert Building & Loan
Jackson Homestead
Pelican Homestead
Security Building & Loan
Sixth District Building & Loan

Federal Home Loan Bank Review

FEDERAL HOME
Combined statement of
Combined

Boston

New York

Pittsburgh

WinstonSalem

$969, 766. 64

$160, 111. 95

$133, 783. 07

ASSETS

Cash on hand in Banks and U. S. Treasury
Loans outstanding:
Members
Other
Total loans
Investments, U. S. Government
Total assets

$8, 534,105. 66

$862,454.59

86, 021, 347. 22 2, 363, 305. 86 14, 084, 987.02 10, 640, 390. 25 6, 677, 760. 69
0
0
0
4, 086.62
0
86, 025,433. 84 2, 363, 305. 86 14, 084, 987. 02 10, 640, 390. 25 6, 677, 760. 69
33, 711. 75
493, 667. 32
18, 676, 855.09 4, 350,000.00
1, 948. 25
24, 706. 94

65, 802. 53
159, 606. 25
2, 911. 68

56, 082.45
40, 822. 88
137, 900. 00 1,482, 752. 52
887. 34
3, 078. 35

113, 754, 768. 85 7, 611,420.45 15, 283, 074.12 10, 995, 371. 99 8, 338,197. 51

LIABILITIES AND CAPITAL

Liabilities:
Current
Fixed
Total liabilities
Capital:
Capital stock, fully paid, issued and
outstanding:
U. S. Government

5, 019, 634.55
0

506,417. 65
0

105, 015. 07
0

494, 896.09
0

500,120. 55
01

5,019, 634.55

506,417. 65

105, 015.07

494, 896. 09

500,120. 55|

22, 729, 800. 00 2, 000, 500. 00 3, 275, 700. 00 1, 674, 900.00 1, 882, 500.00
82, 345, 700. 00 5,000, 000. 00 11, 500, 000.00 8, 500, 000.00 5, 700, 000.00
105, 075, 500. 00 7, 000, 500. 00 14, 775, 700. 00 10,174, 900. 00 7, 582, 500. 00|

Subscription to capital stock:
Less balance due

U. S. Government
Less balance due
Surplus:
Reserves:
As required under section no. 16
of act
Surplus, unallocated
Total surplus

1, 440, 900.00
517, 435.13

38, 500.00
24, 050. 00

169, 900.00
90, 950. 13

139, 200. 00
70, 725. 00

101, 400. 00
23,125. 00

923, 464. 87

14, 450. 00

78, 949. 87

68, 475. 00

78, 275. 00

42, 395, 300. 00 7, 467, 500. 00 7, 463, 200. 00 2, 646, 300. 00 3, 508, 200. 00|
42, 395, 300. 00 7,467, 500. 00 7, 463, 200. 00 2, 646, 300. 00 3, 508, 200. 00|

1,133, 732.48
1, 602,436. 95

54, 846. 37
35, 206.43

148,496. 32
174, 912.86

121, 492.45
135, 608.45

75,181. 27
102,120. 69

2, 736,169.43

90, 052. 80

323,409.18

257,100. 90

177, 301. 96|

Total capital

108, 735,134. 30 7,105, 002. 80 15,178, 059.05 10, 500,475. 90 7, 838, 076. 96|

Total liabilities and capital

113, 754, 768. 85 7, 611, 420.45 15, 283, 074.12 10, 995, 371. 99 8, 338,197. 5l|

Federal Home Loan Bank

Review

LOAN BANKS
condition as at Aug. 31,1935
Indianapolis

Cincinnati

Chicago

Des Moines

$1,255,127.98 $1,833,210.62 $377, 712. 59

Little Rock

Topeka

Portland

$94, 705. 30 $591, 696. 23$1, 250, 336. 65 $638, 308.12

Los Angeles

$366, 891. 92

15,994,469.03 4, 250, 702. 0513,801,729.96 3, 946, 975. 68 4, 655, 903.12 3, 718, 514. 87 2, 553, 074. 95 3, 333, 533. 74
4, 086.62
0
0
0
0
0
0
0
15, 994, 469. 034, 250, 702. 0513,801,729.96 3, 946, 975. 68 4, 655, 903.12 3, 718, 514. 87 2, 553, 074. 95 3, 337, 620. 36
74, 229. 05
38, 413. 20
16, 933. 50
38, 725. 70 72, 726. 29
20, 583. 04
3,032,689.82 2, 088, 240. 49 121, 742. 43 1, 986, 018. 89 2,416, 725. 00 1, 053, 046. 88
1, 084. 33
5, 896. 74
697. 09
1, Oil. 11
1,166. 31
361. 32

21, 744. 38
13, 892. 55
710, 075. 00 1,138, 057. 81
5, 288. 37
376. 05

[20, 357, 600. 218, 212, 045.1714,379,808.01 6,066, 810.16 7, 685, 268. 71 6, 039, 843. 01 3, 915, 726. 67 4, 869, 602. 84

1,806,865.03
0

55,486.91 1,122, 370. 94
0
0

176,017. 40
0

92, 656. 88
0

103, 657. 77
0

30,130. 26
0

26, 000.00
0

1,806,865.03

55,486.91 1,122, 370. 94

176,017.40

92, 656. 88

103, 657. 77

30,130. 26

26,000.00

4,733,700.00 1, 953, 800. 002, 266, 400. 00 1, 016,000.00 1, 316,100. 00 983,400. 00
511, 500. 00 1,115, 300. 00
12, 775, 700. 006, 000,000.0010,500,000.00 4, 700, 000. 00 6,100, 000. 00 4, 700, 000. 00 3, 310, 000. 00 3, 560, 000.00
|17, 509,400. 007, 953, 800. 0012,766,400.00 5, 716,000.00 7,416,100. 00 5, 683,400.00 3, 821, 500.00 4, 675, 300.00

609, 400. 00
106, 075. 00

85,100. 00 110, 800. 00
68, 240.00
53, 300. 00

53, 800. 00
22, 650. 00

41, 600. 00
20, 770. 00

51, 800. 00
13, 750. 00

22, 900.00
13, 600.00

16, 500.00
10, 200.00

503, 325. 00

31, 800. 00

42, 560. 00

31,150. 00

20, 830. 00

38, 050. 00

9, 300.00

6, 300.00

577, 400. 003, 673, 900. 00 2, 694, 900. 00 2, 672, 400. 00 2, 633, 600. 00 2, 650,000. 00 6,407, 900.00
577, 400. 003, 673, 900. 00 2, 694, 900. 00 2, 672, 400. 00| 2, 633, 600. 002, 650, 000. 00 6, 407, 900.00

236, 755. 27
301, 254. 91

92, 322.43 153, 200. 43
78, 635. 83 295, 276. 64

55, 865. 92
87, 776. 84

88, 520. 05
67,161. 78

40, 835. 62
173, 899. 62

29, 934. 38
24, 862. 03

36, 281. 97
125, 720.87

538, 010.18

170, 958. 26 448, 477. 07

143, 642. 76

155, 681. 83J

214, 735. 24

54, 796.41

162, 002. 84

Il8, 550, 735.18|8,156, 558. 2613,257,437.07 5, 890, 792. 76 7, 592, 611. 83| 5, 936,185. 243, 885, 596.41 4, 843, 602. 84
20, 357, 600. 21k 212, 045.17 14,379,808.01 6, 066, 810.16 7, 685, 268. 71 6, 039, 843. 01 3, 915, 726. 67 4, 869, 602. 84

Federal Home Loan Bank Review

Home Owners' Loan Corporation
Applications received and loans closed by months *
Applications
received
(number)

Period

Loans closed
Number

Amount

1933
From date of opening through Sept. 3 0 . .
From Oct. 1 through Dec. 31

403,114
319, 682

593
36, 656

$1, 688, 787
104, 231, 556

790, 836
2 228, 246

307, 651
381, 341

933, 082,197
1,157, 985, 268

1934
From Jan. 1 through June 30.
From July 1 through Dec. 31.
1935
January. .
February.
March
April
May
June
July.
August
Sept. 1 to Sept. 19.

3
2, 914
140, 585

1, 885, 377

Grand total to Sept. 19, 1935.
1
2
3

54, 990
36, 542
23,140
13, 807
13, 593
13,142
13, 413
14, 623
7,657
917,148

166,
104,
70,
39,
41,
40,
41,
44,
25,

836,150
919, 941
664, 400
475,180
235, 897
557, 636
569, 800
775, 321
493, 934

2, 772, 516, 067

These figures are subject to adjustment.
Receipt of applications stopped Nov. 13, 1934, and was not resumed until May 28, 1935.
Represents applications received in 3 days. Order to receive applications for a 30-day period was issued May 28,

1935.

ReconditioningDivision—Summary of all reconditioning operations through Sept. 19, 1935

Period

June 1, 1934 through Aug. 21, 1935 l
Aug. 22, 1935 through Sept. 19, 1935 2
Grand total through Sept. 19, 1935

Number of
applications
received for
reconditioning loans

Total contracts executed

Number

Amount

Total jobs competed

Number

Amount

598, 885
22, 304

277, 979 $51, 072, 443
2, 045, 959
9,159

239, 224
15, 717

$42, 313, 894
2, 848, 809

621,189

287,138

254, 941

45,162, 703

53,118, 402

The totals for this period differ from those published in the September REVIEW due to subsequent corrections.
The figures for this period are subject to correction.
NOTE.—Prior to the organization of the Reconditioning Division on June 1, 1934, the Corporation had completed
52,269 reconditioning jobs amounting to approximately $6,800,000.
2

Federal Home Loan Bank Review

Reconditioning Activity of the Home
Owners9 Loan Corporation

F THE 917,000 homes which had been
refinanced by the Home Owners' Loan
Corporation through September 19, about
339,000, or more than one-third, had been
or were being put in good repair under the
direction of the Corporation's Reconditioning Division. The cost of this work, approximating $60,000,000, was advanced by
the Corporation and incorporated in the
loans made to the home owners benefited.
It is roughly estimated that the Reconditioning Division will be called upon to service some 175,000 additional properties from
among those on which the Corporation has
made or is making refinancing loans.
These reconditioning contracts are expected
to aggregate about $30,000,000 in the next
10 months. On this basis, the Corporation's expenditure for reconditioning will
amount to some $90,000,000.
DISTRIBUTION OF REPAIR EXPENDITURES

AN analysis of the total volume of reconditioning shows the following division
among the various construction trades on
the basis of each $100 expended:
Papering, painting
$41. 92
Roofing
22.11
Carpentry
15. 36
Masonry
4. 91
Heating
4.51
Plumbing
4.12
Plastering
2.86
Sheet Metal
2.22
Miscellaneous
1. 34
Wiring
.65
100.00
The average repair job entails an expenditure of $180. Engaging more than 125,-

Federal Home Loan Bank

Review

000 contractors and providing some 8,000,000 " working days " to construction labor,
this program has stimulated employment
nationally in the building trades as well as
in the industries that produce the materials
used. It is estimated that of every dollar
spent on reconditioning, 75 cents goes for
labor at the site.
To assure sound materials and competent workmanship at the minimum cost
to the borrower, trained employees of the
Corporation, at the time the loan is closed,
inspect the home and advise the owner on
the proposed repairs, prepare and secure
bids, approve contracts, and supervise the
progress of the actual work. In cases of
serious fire or storm damage to homes under mortgage to the Corporation, such as
resulted from the recent hurricane on the
South Atlantic coast, inspectors of the
Reconditioning Division cooperate with
insurance adjusters to provide for repair
or rebuilding that will be fair and satisfactory to the owner. More than 17,000
cases of this nature have been handled by
the Division at an outlay averaging more
than $40,000 a week and paid for by the
insurance companies. Employees of the
Division also make special inspections of
the mortgaged properties at the request of
field managers of the Corporation.
Working under a complete set of approved master specifications and organized
to supervise economically a large number
of small jobs distributed throughout the
nation, the Reconditioning Division represents a development of significance to the
home-construction industry and all lending institutions.

Resolutions of the Board
I.—PROVIDING FOR HEARINGS ON
AMENDMENTS TO THE RULES AND
REGULATIONS FOR INSURANCE OF
ACCOUNTS
The Board adopted the following resolution on October 3 :
Be it resolved by the Board of Trustees of the
Federal Savings and Loan Insurance Corporation
that Section 22 of the Rules and Regulations for
Insurance of Accounts be amended so that the
section reads as follows:
" Section 22. The Board expressly reserves the
right to alter, amend, or repeal these rules and
regulations in whole or in part.
(a) Amendments or changes deemed by the
Board to be major, affecting matters of general
principle or policy, and not of an emergency
character, submitted to the Board of Trustees by
a Member thereof, or by the Federal Savings and
Loan Advisory Council, if passed by the Board,
shall not go into effect until thirty days from a
date to be fixed by the Secretary to the Board
and published in the Federal Home Loan Bank
Review at the time of the publication of the
amendment or change. If at any time prior to
the effective date, as thus fixed, a hearing thereon
is requested of the Secretary to the Board in
writing by at least seven members of the Federal
Savings and Loan Advisory Council (provided
the amendment or change has not been proposed
by the council in the exact form passed) the
Board shall fix a time and place for a hearing
thereon of which the Secretary to the Board
shall in writing notify the members of the Advisory Council, and the amendment or change
shall be suspended until after the hearing and
until further action of the Board.
(b) If a hearing has not been requested by
seven members of the Advisory Council, but
within sixty days after the date fixed by the
Secretary to the Board and published in the Federal Home Loan Bank Review at the time of the
publication of the amendment or change, at least
fifty insured institutions, or institutions eligible
to apply for insurance under Section 403 (a) of

the National Housing Act, shall request a hearing, the Board shall fix the time and place
thereof, and the Secretary to the Board shall give
written notice thereof to the Advisory Council
and to each of the associations requesting such
hearings.
(c) Amendments or changes deemed by the
Board to be of a minor, procedural, or emergency
character, may be adopted, effective immediately, but in such case any seven members of the
Advisory Council, or any fifty insured institutions, or institutions eligible to apply for insurance under Section 403 (a) of the National Housing Act, may within sixty days after the adoption of such amendment, or change, file a written
request with the Secretary to the Board for a
hearing thereon. Changes or amendments will
be published in the issue of the Home Loan
Bank Review following the date of the adoption
of the amendment or change. In the issue following the receipt of the required number of
written requests for a hearing, a notice will be
published fixing the time and place of such
hearing.
(d) A request for a hearing from an association shall be evidenced by resolution of the
Board of Trustees or Directors thereof, certified
by the Secretary. Except as provided in paragraph (a) the amendment or change shall not be
suspended by such request for a hearing, but
after such hearing the Board shall reconsider the
change or amendment and take such action
thereon as it deems appropriate.
Any member of the Advisory Council, or any
institution requesting a hearing, or any other institution eligible to apply for insurance, may,
prior to the date of any hearing, file with the
Secretary to the Board a written brief or argument bearing upon the amendment or change, or
the general subject matter involved therein, and,
in addition thereto, if he or it so desires, such
individual or institution may appear in person
or by its representative at the time of the hearing
before the Board.
Such hearing will not be confined to those proposing or suggesting a modification in the
amendment or change, but shall be open to in-

Federal Home Loan Bank

Review

dividuals or representatives of any institution
favoring such amendment or change, or some
action on the subject matter involved.
(e) Recommendations of the Federal Savings
and Loan Advisory Council will be requested on
all amendments or changes made or published
within thirty days of a meeting of the Council,
and the members of the Board will, upon request
from the Council, attend the meeting of the
Council to permit the presentation of its views
thereon. The provisions heretofore made for
hearings at the request of seven members of the
Council shall not apply to amendments or
changes which have already been submitted to
the Council as a body.
Recommendations of groups of institutions
affected, or that may be affected, or from an
organized trade association, or associations, may
be filed with the Secretary to the Board either
prior to or at the time of any hearing, and such
group of institutions or organized trade association or associations may appear at the hearing
by a representative or representatives and be
entitled to be heard."
II.—AMENDING THE RULES AND REGULATIONS FOR I N S U R A N C E OF
ACCOUNTS TO R E Q U I R E SOUND
MANAGEMENT
On September 5, the Board wrote into
the Rules and Regulations for the Insurance
of Accounts the requirement that insured"
institutions shall maintain sound management and pursue financial policies consistent with economical home financing.
The resolution reads as follows:
Be it resolved by the Board of Trustees of the
Federal Savings and Loan Insurance Corporation, that the first sentence of Section 13 (a) of
the Rules and Regulations for Insurance of
Accounts be, and it is hereby, amended to read
as follows:
" For the protection of its insured members
and other insured institutions each insured institution shall maintain safe and sound manage-

Federal Home Loan Bank

Review

ment, pursue financial policies safe and consistent with economical home financing and the
purposes of insurance of accounts and shall be
examined and/or audited at least annually by the
Corporation."
III.—AMENDING THE R U L E S A N D
REGULATIONS FOR INSURANCE OF
ACCOUNTS CONCERNING DETERMINATION OF THE AMOUNT OF EACH
INSURED ACCOUNT IN EVENT OF
DEFAULT RY AN INSURED INSTITUTION
The Roard adopted the following resolution on October 3 :
Be it resolved by the Board of Trustees of the
Federal Savings and Loan Insurance Corporation,
that Section 18 (b) of the Rules and Regulations
for the Insurance of Accounts be amended by
inserting after the first sentence of Section 18 (b)
the following:
" The amount of each insured account will be
determined from the books and records of the
association and the evidence of the account held
by the insured member without regard to the
value of the assets of the insured institutions."
IV.—CONCERNING C A L L S O N T H E
HOME OWNERS' LOAN CORPORATION FOR S U R S C R I P T I O N S TO
SHARES OF FEDERAL SAVINGS AND
LOAN ASSOCIATIONS
On September 5, the Roard rescinded its
action of August 28, 1935, directing that
the Federal Savings and Loan Division
shall handle calls by Federal savings and
loan associations for subscriptions to shares
by the Home Owners' Loan Corporation in
the same manner as the Federal Savings
and Loan Division has heretofore handled
calls on the Secretary of the Treasury by
such associations.

Directory of Member, Federal, and
Insured Institutions
Added during August-September
I. INSTITUTIONS ADMITTED TO MEMBERSHIP IN THE FEDERAL HOME LOAN
BANK SYSTEM BETWEEN AUGUST 26, 1935,
AND SEPTEMBER 28, 1935 *
(Listed by Federal Home Loan Bank Districts, States,
and cities)

DISTRICT NO. 5
OHIO:

Delaware:
Fidelity Building Association & Loan Company.
Lakewood:
Midwest Savings & Loan Company.
Marysville:
Union County Savings & Loan Company, 109
South Main Street.

DISTRICT NO. 1

DISTRICT NO. 6

CONNECTICUT :

New London:
New London Building & Loan Association, Room
201, Dewart Building.
NEW

HAMPSHIRE:

INDIANA :

East Chicago:
Peoples Building & Loan Association, 4902 Indianapolis Boulevard.

Concord:
Concord Building & Loan Association.
DISTRICT NO. 2
NEW JERSEY:

Westville:
Old Buck Building & Loan Association.
DISTRICT NO. 3
PENNSYLVANIA :

Freeland:
Freeland Building & Loan Association, 923 Center
Street.
Philadelphia:
Marconi Italian Building & Loan Association of
Philadelphia, 1913 South Broad Street.
Matoaca Building & Loan Association, 2117 South
Twentieth Street.
St. Charles Building & Loan Association, No. 2,
5431 Cedar Avenue.
Prospect Park:
Ridley Building Association.
DISTRICT NO. 4
GEORGIA :

Covington:
Newton County Building & Loan Association, Public Square.
Toccoa:
Stephens County Building & Loan Association.
MARYLAND :

Baltimore:
Bohemian American Building Association, 730
North Collington Avenue.
Fullerton Permanent Loan Association, 7405 Belair
Road.
Progress Building Association, 1640 East Chase
Street.
1
During this period 5 Federal savings and loan associations were admitted to membership in the System.

DISTRICT NO. 7
ILLINOIS :

Chicago:
Grunwald Building & Loan Association, 3925 South
Eedzie Avenue.
Cicero:
Zajmy Lidu Building & Loan Association, 2333
South Fifty-sixth Avenue.
Clinton:
DeWitt County Building Association.
Minonk:
Minonk Building & Loan Association.
Nokomis:
Nokomis Building Association.
WISCONSIN :

Milwaukee:
Residence Park Building & Loan Association, 3418
West Fond du Lac Avenue.
DISTRICT NO. 8
MINNESOTA :

Pipestone:
Pipestone Building & Loan Association.
MISSOURI :

Kansas City:
Santa Fe Savings & Loan Association, 916 Baltimore Avenue.
DISTRICT NO. 9
LOUISIANA :

New Orleans:
Carrollton Homestead Association, 925 Maritime
Building.
General Building & Loan Association, Maritime
Building.
Pelican Homestead Association, 626 Canal Bank
Building.

Federal Home Loan Bank Review

DISTRICT NO. 3

DISTRICT NO. 10
WEST VIRGINIA:

KANSAS :

Garnett:
Garnett Savings & Loan Association.
NEBRASKA :

Chadron:
Chadron Building & Loan Association.

Ravenswood:
First Federal Savings & Loan Association of Ravenswood, First National Bank Building (converted from Conservative Building & Loan
Association).
DISTRICT NO. 4

DISTRICT NO. 11

MARYLAND :

MONTANA:

Deer Lodge:
Powell Building & Loan Association, 311 Missouri
Avenue.
WASHINGTON :

Seattle:
Puget Sound Savings & Loan Association, 1414
Fourth Avenue.

Baltimore:
Bradford Federal Savings & Loan Association, 159
North Luzerne Avenue (converted from Bradford
Loan & Savings Association of Baltimore City).
Irvington Federal Savings & Loan Association of
Baltimore City, 4106 Frederick Avenue (converted from Irvington Building & Savings Association of Baltimore City).
VIRGINIA :

WITHDRAWALS FROM THE FEDERAL HOME LOAN
BANK SYSTEM BETWEEN AUGUST 26, 1935, AND
SEPTEMBER 28, 1935
INDIANA :

Indianapolis:
Ashland Savings & Loan Association, 226 East
Ohio Street.
LOUISIANA :

Baton Rouge:
Peoples Building & Loan Association, 525 Third
Street.
TEXAS :

Beaumont:
Provident Building & Loan Association, 203 Wiess
Building.

II. FEDERAL SAVINGS AND LOAN ASSOCIATIONS CHARTERED BETWEEN AUGUST 27,
1935, AND SEPTEMBER 28, 1935
(Listed by Federal Home Loan Bank Districts, States, and
cities)
DISTRICT NO. 1
CONNECTICUT :

Branf ord:
Branford Federal Savings & Loan Association.
Stamford:
Stamford Federal Savings & Loan Association, 41
Bank Street (converted from Stamford Building
& Loan Association, Incorporated).
NEW HAMPSHIRE:

Manchester:
Manchester Federal Savings & Loan Association,
992 Elm Street (converted from Manchester
Building & Loan Association).
DISTBICT NO. 2
NEW YORK :

Brooklyn:
Brooklyn Federal Savings & Loan Association, 91
Court Street (converted from Brooklyn City Savings & Loan Association).
Sayville:
Sayville Federal Savings & Loan Association.
Wallkill:
Wallkill Valley Federal Savings & Loan Association (converted from Wallkill Valley Savings &
Loan Association).

Federal Home Loan Bank

Review

Alexandria:
First Federal Savings & Loan Association of Alexandria, 803 King Street.
Norfolk:
Mutual Federal Savings & Loan Association of Norfolk, 121-23 West Tazewell Street (converted
from Mutual Building Association of Norfolk,
Virginia).
Norfolk Federal Savings & Loan Association, 116
West Plume Street.
DISTRICT NO. 5
OHIO:

Belief ontaine:
Citizens Federal Savings & Loan Association of
Beliefontaine, 106 North Main Street (converted
from Citizens Building & Loan Company of
Belief ontaine, Ohio).
Canton:
Stark Federal Savings & Loan Association of
Canton, 213 Tuscarawas Street (converted from
Stark County Savings & Loan Company).
Columbus:
Central Ohio Federal Savings & Loan Association
of Columbus, 78 South Third Street (converted
from Central Ohio Building & Loan Company).
Clintonville Federal Savings & Loan Association
of Columbus, 3527 North High Street (converted
from Clintonville Savings & Loan Company).
Ohio State Federal Savings & Loan Association, 85
East Gay Street (converted from Ohio State
Savings Association).
Lakewood:
First Federal Savings & Loan Association of Lakewood (No. 2) (converted from Midwest Savings
& Loan Company).
Ripley:
Ripley Federal Savings & Loan Association, 109
Main Street (converted from Ripley Building,
Loan & Savings Company).
Wooster:
First Federal Savings & Loan Association of
Wooster, Southeast Side Public Square (converted
from Home Building & Loan Company).
DISTRICT NO. 6
MICHIGAN :

Plymouth:
Plymouth Federal Savings & Loan Association,
1550 South Main Street (converted from Plymouth Savings & Loan Association of Plymouth,
Michigan).

DISTRICT NO. 7
ILLINOIS :

Charleston:
Charleston Federal Sayings & Loan Association,
700 Jackson Street (converted from Charleston
Homestead & Loan Association).
Fairbury:
Fairbury Federal Savings & Loan Association,
Duell Block (converted from Fairbury Building & Loan Association).
WISCONSIN :

Prairie du Chien:
Prairie du Chien Federal Savings & Loan Association, 106*4 West Blackhawk Avenue.

III. INSTITUTIONS INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION BETWEEN AUGUST 31, 1935,
AND SEPTEMBER 30, 1935 *
(Listed b y Federal Home Loan Bank Districts, States, and
cities)
DISTRICT NO. 2
NEW

YORK:

Geneva:
Geneva Permanent Loan & Saving Association,
89 Seneca Street.
Oswego:
Security Building & Loan Association.
DISTRICT NO. 4

DISTRICT NO. 8
MINNESOTA:

Minneapolis:
Home Federal Savings & Loan Association, 217-20
Plymouth Building (converted from Home Building & Loan Association).
DISTRICT NO. 9
TEXAS:

Columbus:
Colorado County Federal Savings & Loan Association.
Denison:
Denison Federal Savings & Loan Association, 122
West Main Street (converted from Denison Building & Loan Association).

DISTRICT

OF COLUMBIA:

Washington:
Columbia Building Association, 716 Eleventh Street,
Northwest.
DISTRICT NO. 5
KENTUCKY:

Covington:
Kentucky Perpetual Building & Loan Association
of
Covington,
Kentucky,
Northeast
Corner
Eleventh Street & Scott Boulevard.
Newport:
Standard Savings, Building & Loan Association of
Newport, Kentucky, 821 York Street.
OHIO:

Cleveland:
Cuyahoga Savings & Loan Company, 128 The Arcade, Euclid Level.
DISTRICT NO. 7

DISTRICT NO. 10
WISCONSIN :

KANSAS:

El Dorado:
Mid-Continent Federal Savings & Loan Association
of £1 Dorado (converted from Mid-Continent
Building & Loan Association).

Milwaukee:
Northern Building & Loan Association, 2746 North
Teutonia Avenue.
DISTRICT NO. 9
LOUISIANA :

DISTRICT NO. 11
MONTANA :

Deer Lodge:
Deer Lodge Federal Savings Sc Loan Association,
311 Missouri Avenue (converted from Powell
Building & Loan Association).
DISTRICT NO. 12

Donaldsonville:
Ascension Building & Loan Association.
Ruston:
Ruston Building & Loan Association, Price Building, 100 North Vienna Street.
TEXAS:

Waco:
Pioneer Building & Loan Association, 520 Franklin
Avenue.

CALIFORNIA :

Alhambra:
First Federal Savings & Loan Association of Alhambra, 15 South Garfield Avenue (converted
from San Gabriel Valley Building-Loan Association) .
Colton:
Orange Belt Federal Savings & Loan Association,
124 East I Street (converted from Orange Belt
Building-Loan Association).
Los Angeles:
First Federal Savings & Loan Association of W i l mington.
San Francisco:
Bay View Federal Savings & Loan Association,
4749 Third Street (converted from Bayview
Building & Loan Association).

DISTRICT NO. 12
CALIFORNIA:

Berkeley:
Berkeley Guarantee Building & Loan Association,
2101 Shattuck Avenue.
Los Angeles:
State Mutual Building & Loan Association, 415
West Fifth Street.
Palo Alto:
Palo Alto Mutual Building & Loan Association, 257
University Avenue.
Pomona:
Home-Builders'
Loan
Association,
Second
at
Thomas Street.
1
During this period 32 Federal savings and loan associations were insured.

Federal Home Loan Bank Review

FEDERAL HOME LOAN BANK DISTRICTS

• BOUNDARIES OF FEDERAL HOME LOAN BANK DISTRICTS
FEOERAL HOME LOAN BANK CITIES.

U. S. GOVERNMENT PRINTING OFFICE: l » 3 5

Full text of Federal Home Loan Bank Review : October 1935, Vol. 2 No. 1

FRASER