Evening star., 1928-06-03

very quickly invites the call. Arriving
at the bank the depositor is made ac-
quainted with the facts In the case as
shown by the analyses. The first request
Is not made for service charge. but
Is In the nature of suggestion that
the balance carried In the bank he
increased until it is capable Of return
ing revenue for services rendered.
A promise to see what can be done
in the way of bettering conditions Is
acceptable and, II satisfactory. that win
settle the matter. but the account will
be ttnder observation for time least.
II the depositor can see no imme-
diate prospect of reducing service
accommodations or Increasing balance
of deposit account. then the ultimatum
Is advanced, the service charge made
to represent the difference between cost
and the average profit desired is
imposed.
It Is a fact that the great majority
of depoSitofS. when presented with the
facts In their deposit account, readily
agree TO the impost Of the service
charge.
Due to Organization.
Before the District of Columbia
Bankers Association took UP the ques-
ton Of analyses of bank deposits, bank
ers we're accustomed to a more or less
haphazard treatment of accounts. If a
depositor acquired the habit of over
drawing he was given warning and
then required to take his account else
where. and not shown much considera-
ton. Checkkiters are always around and
always nuisance, endeavoring in many
cases to do business, in connection with
others of their ilk, for long periods on
hal Y0k
covered, get short shrift
At one of the conventions of the
local organization it was demonstrated
that very small part Of the average
deposits of banks actually produced
by far the larger share Of the expenses
and that the worthwhile accounts were
being made to carry the less profit
able ones. Hence, the service change
In Matter Of Loans.
In the matter of loans the compen-
sating balance is also an important
factor and here it is generally insist
ed on although there are exceptions
to all rules.
Character counts more in the matter
Of loans than anything else unless II
is collateral and the two are giver
much consideration.
"AtCAG 10 b|bAA NACAAb anu NJt'
lateral the average comperisating bal.
ance is usually not more than 10 pei
cent Of the amount Of the loan; com
mercial banks. making loans on com
mercial rating, on credit lines arranged
for after due examination into con.
ditions, ETC., usually are based on com
pensating balances Of about 20 per cent
that IS, the would-be borrower mus
maintain a deposit account equal Il
| 90 per cent of the desired loan anG
| must 50 maintain it during the life o
| the loan.
There is very little discounting o
notes in this city, although it Is tn
custom in country banks and help
wonderfully in the profit account. Col
| lecting the interest on note In advanc
enables the bank to loan the same owe
and over again in the course Of year
and where the note Is for a 1argl
amount, the resultant profit is wortl
while.
A compensating balance is insuranc,
against diScounting, In favor of a cor
| dial welcome in the conduct Of you
banking operations and all the service
Of an institution placed at your disposal
Banks that DO not use the servicl
charge and do not insist on a compkm
sating balance will find difficulty II
showing a satisfactory profit balance II
their annual statement