Putnam patriot., 1914-07-31
THE SAVINGS BANK
Preliminary Report by Expert Beadle
Assures Integrity of Mauagement-Meth.
 ods Better Than Average

ard Beadle of Hartford as to the condi- tion of the enjoined Putnam Savings Bank, which he made to the directors, is as follows.
 To the Directors of the Putnam Saw ingS Bank.
 Gentlemen: 1 herewith submit to 1 you report of the examination of | your institution, which l have made as of July ,, 1914. 1 have personally checked the assets of the bank, it's notes, bonds, cash, the totals of depos- itors' ledger, and the bank balances. 1 1 do not claim to have made as ex l haustive an audit as possible, compre- 1 hending for example, the examination of the records of the town clerk as to the validity of the mortgages held by 1 the bank, but in making this investi- gation 1 have given as careful and ear nest study to the whole problem as the sure that the conclusions that l lay be. fore you may be accepted with conh- 1 denee.
 The first and most important of these is that find no evidence of dis honest, shiftless or wasteful manage ment. The integrity of those In eon- tro l feel is assured.
 Secondly, as to their policies, l feel that there is little question but that | investments of the bank are overbal- | anced on the side of the bonds as l against loans. It is distinctly the l function of savings bank, by the con servative loaning of it's funds, to assist in the development of it's own commu- nifty and in the same way Ito help it's | depositors and others when in need of such accommodation.
 As to the methods in use, l believe the bank Is perhaps better oil than the average savings bank taking the whole state into consideration. To this report tand part thereof are appended:
 I. An appraisal of the securities of the bank.
 ,. A statement made up from my own figures .on the basis of such sp- praisal.
 3. Letters verifying the balances of cash in bank.
 This appraisal made iniconiunction with Mir. Ralph w. Cutler; president of the Hartford Trust Company, and MT. Ferdinand Richter, one of Hart ford's leading brokers, discloses in the bonds depreciation below book value of $3l2, ,725, and in the item of preferred stock depreciation of $l4, ,175, or to- tai of S326, 900. In considering these figures it must be borne in mind that they represent values on liquidation basis at the present market prices. For the purpose of your bank as going concern, however, the figures are mis- leading AS ithe large proportion of these bonds will be paid at their book value at maturity, in all probability. It should also be noted that these prl- ces do not include accrued interest which would increase above the fig ures here given the amount received for any bonds sold.
 By reference to the statement it may be seen that the total assets of the bank at present market prices fail to cover the amount of the deposits bySll2,5l5.- 40.after wiping out surplus, interest and profit and loss accounts. Although this difference would be somewhat les sened by the item of accrued interest amounting to approximately sl2,600, leaving net deficiency of about s99,. GOO.
 find that the income of the bank Is now about Sll6,000 per annum.
 As solution of the technical dilli- culty which this situation presents, four courses of action are open 10 the bank:
 1. Liquidation. Il cannot too strong ly lexpress my conviction that this should be avoided. The value of an institution like the Putnam Savings Bank as conservative factor in community such as Putnam, can hard ly be overstated. The bank should continue in business as permanent part of the life of the place, even if re- duced to one half of It's present size or less.
 2. A sealing of the deposits. It is my firm belief that in this case Il would be most unwise 10 reopen the bank by sealing the deposits to cover this depreciation in it's securities. The primary function Of a savings institu- tion is to safely guard Ithe principal of deposits received by them and return them, when needed, intact to their depositors. In this particular instance am confident that a large proportion of depositors of this bank would not understand the matter in it's true light and that returning less than their principal to them would only mean to them that there had been misuse of the funds intrusted to the bank. For the good name of the bank and the community therefore 1 strongly rec ommend that this method should not be em mployed.
 1 3. Keeping the bank closed for a year or until the income of the bank makes good the depreciation of the securities. While this course would result in great inconvenience to mum.