The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1919-12-24
New Ruling By State Bank
Commissioner Will Take
Effect Jan. |
NO ACCRUED INTEREST
IN SURPLUS FUND
All Banks Must Maintain 10 Per Cent
Surplus On Deposits More Will
Protect Depositors-Opinion BY At
torney General

MONTPELIER, Dec. 2l.--Gcorge T..
Carpenter, state bank commissioner,
has made ruling effective Jan. l next
10 the effect that savings banks and
trust companies in computing the sur
plus fund required by statute shall
not include rs part of the surplus ac
crucd interest account. The effect of
this ruling will be to place practically
all banks on a four per cent basis be-
ginning Jan | 1920.
In making mp their statements for
] some time past, banks have included
as surplus the accrued interest account
which has resulted III several institu-
! tions accommodating surplus in excess
! of 10 per cent OF their deposits, and
under this method of determining sur
| plus some banks have felt justified in
| paying interest ON their deposits at
the rate OF four and 4 ql.arter and four
and u half per cent.
Mr.. Carpenter has believed for some
time that surplus accounts should be
established and maintained in accord
ance with sections J429 and J437 and
THAT the intent OF these sections is
primarily to provide for the protection
of depositorS a certain reserved fund
and that il should be maintained al
all times in q certain ratio TO deposits
because of the Interpretation which has
been given, however. he was reluctant
To make any ruling without submitting
Tie question To the attorney general
which lie has done, and Attorney Gep
eral Frank G. Archibald, III an G MOI
rendered, holds this view about 1ac
crued interest. and has intcrpY tee
, the '.surplus fund to mean that II
actual surplus Of 10 per cent of. III,
deposits and other liabilities. except
ing surplus. is ncct Ssary before 4 rat,
exceeding fouT per cent uiaE he pal,
on deposits. Eaekcd by Tie opinion o
the attorney general. Mr.. Carpente,
ha; taken the firm position that thi
; fund must be established in strict nc
cordanec with the provisions Of Law
! and he item of accrued interest shall
no, be construed as any part Of tn
= surplus other than undivided profits
II taking this step which mav no
meet with favor in some quarters. NJ
Garpertnr is guided by the basic prir
: ciplc Of conservative banking whi,.
~ '''lAS''S w Nv III tiit 1HIttltSl VI III
dePositors. ANY competition anon
banks to increase he rate OF intercs
unless warranted after fulfilling Ill
, statute requirements might result. it
= feit, IN the accumulation of asset
: which although paving a higher rctur
y would not I've Of a class hitherto COZ
" sidercd. L IS 4 recognized fact tn,
Vermont banking institutions have q
> cnviablc record for safety and il
the purpose of the department. tn;
This rcrutation be maintained
In respect 10 the question raised I
certain trust companies as to whcth
they must accumulate n surplus of
per cent of their savings deposits alon
The commissioner holds that ras Il
fund is reserved for the protection
depositors, the surplus OF 10 per ceI
OF all deposits, savings a. well as coI
9, merciai, will DO required, whit
:, he considers ample though not exec
y, sive.. The commissioner also is sati
!; fed that the policy of paying III
70 4 - per cent would not be wise to ado
- or have in force throughout the sta
y. III view of the state tax of seven tent
49, Of one per cent levied on ali dcposi
- in state banks. Mr. Carpenter is sen
D ing ont letters to all state banking
stitutions calling attention to the RI
ing.