Arizona republican., 1918-01-09

tion. after they had minutely examined the assets; they found that assets to the amount of nearly $500, 900 were un- deslrable-either slow and difficult to handle, or wholly worthless. This con- clusion, as to the character of the ob- Jectlonable assets, was quite contrary to the popular notion; that notion be-
 ing that they were simply slow" but generally good. The depositors' com
 mlttee persisting in their efforts to in
 terest these bankers, a plan of pro- | cedure, acceptable to all concerned was finally worked out.
 This plan provided for the organiza-
 tion of an entirely new bank, to be owned by the wealthy men just men
 toned, joined by some of the leading
 citizens of Phoenix, the new bank to
 nave the name of Valley bank Gnstead
 of The Valley Bank of Phoenix" the
 name of the failed institution). and to have cash capital, paid in, of half
 million dollars; the new bank to buy all the assests of the suspended bank
 and 10 pay it's depositorS in full. anc
 10 sell to another corporation all the assets of the old bank which the new | bank should consider undesirable for
 1t to retain. A condition of this ar engagement was that the depostors of
 the old bank and the directors of the old bank should form the projected purchasing corporation. which was to be known as The Valley Bank Adjust
 ment company. This corporation was to buy and pay for such of the assets of the old bank as the new bank mgh, deem undesirable to keep These un-
 desirable assets as finally listed. had a face value of SS69,000 and they
 were to be sold to the Adjustment | company for precisely their net cost to the bank, which was s562, ,000 The difference between the face value of the assets and the price at which they were purchased was represented by the capital and surplus of the failed bank.
 which sum was to be figured as a loss
 to the stockholders of the old bank.
 How to raise the needed sum of S5b2,00 was the final problem which confronted the committee of depositors, Those most familiar with the characte of the assets which were to be pur-
 chased were of the opinion that the
 ultimate yield therefrom should be ap ] proximately $212,000, together. possi- | ply, With the interest which should ac- | crue upon that sum during the period i of iquidation-Which period. it was realized, would necessarily be some
 years. The prospective owners of the ! new bank agreed, therefore. that, sell ing the undesirable assets for s562. .0O0 l they would grant long time for repay ment of S212000; the remainder of the ! purchase price to be paid in cash or its equivalent. This remainder of S35O. | 900 was to be the capital of the Ad l Justment company. It was agreed that l the depoSitorS should be invited to
 subscribe for $200,000, and the directors | of the old bank should subscribe for i sl50.000, the depositors, however to | have preferred stock in the Adjustment company and the directors of the old 1 bank to have common stock; which 1 meant, that if the depositors ever req lized anything on their stocK they
 would get dividends ahead of the hold
 CTS of common stock.
 This plan was carried out. The di-
 rectors of the old bank gave their
 separate notes. secured by mortgage
 or other collateral, in the aggregate
 sum of S1o0,000. executed to the Ad- l justment company, which in turn en- dorsed and guaranteed the notes to
 the new bank. To make up this
 s150,000. President Bennett of the old bank contributed s37,500: Cashier 1 Christy contributed 37,500. and the
 other six directors each contributed the sum of sf2.500. 'Contribution' is the proper word, for these officers and directors knew that, barring a miracle, their subscriptions to the common
 stock of the Adjustment company | would prove a total loss The cam
 paign with the depositors of the old
 bank was equally successful An an- alysis of the list of depositors having been made, it has been decided that if
 all were invited to subscribe one-fourth
 of their deposits in the old bank. the