The Waterbury Democrat., 1932-01-16
Absurd And Untrue
 Rumors About Bank
(Continued From Page D


 protection to these savings funds all of which was done. We have devoted our first and chief atten' tion to the analysis and conserva tion of these funds and while thii process is not yet completed the picture to date is assuring. Nearly half of the funds set aside to SC cure savings deposits are repre- sented by first mortgage loans, the amount thereof being about $1,' 75O,O00 out of the total amount ol $3,60O,O00 savings deposits. We have carefully examined these mortgages, between 300 and 400 ir number and find them in good form and condition, comparing fa- vorably with the average condition Of such large group of savings loans in the other savings banks or commercial banks of the city. These are not what could be called a H. auid investment of course, but first mortgage loans have always been considered among the highest type of investments. Those who have savings deposits in the Merchants Trust company can be assured by the information that practically one half of their funds are so well invested and while it would be im- possible at the present time to H. quidate such a large amount of mortgages because of the shortage of mortgage funds in general, nev- ertheless there can be no dought of the safety of first mortgage loans for a long term investment and just as in normal times all savings de- positors do not require all of their funds at once but only a working margin thereof, so in abnormal times, as the present, 1t is equally impossible for a bank to pay all deposits at once because of the dif- ficulty of wholesale liquidation. An- other large portion of the secur- ities set aside for the protection of savings depositors is represented by large list of stocks and bonds. A great majority of the bonds are of the highest type security being rated from A to AAA by such a well known security analyst as Moody's, with more of the AAA type than the other. Of course. the whole bond market has been under pressure for sometime and even the highest grade bonds like the best type of stocks have been sell ing for less than their intrinsic worth. This is a situation which has always corrected itself, how ever, and undoubtedly will again and here again time will be great help. The stocks in the savings fund group are also very high type being principally New York bank stocks which are legal investment for trust funds and while these too are selling much below their book value and intrinsic worth in the present depressed status in the security markets they are undoubt- edly worth much more. The im- cause of the depression and be- cause of the market depreciation should not however equal even five cents on the dollar of total sav- ings deposits and is covered not only by the prospect of improved prices but also by other assets and surplus of the bank. The collateral loans made in the savings depart ment are for the most part loans against savings accounts in the bank itself and in every case these are worth one hundred cents on the dollar. On the whole there fore, it can be stated at this stage of our analysis of the savings de- partment of the bank that the pie ture is assuring and that there is no ground for any fear that the savings depositors will be subjected to absurd or drastic losses on their deposits.
 An analysis of the commercial department of the bank has not proceeded as far as that of the savings department. Here, how ever, a few statements of fact would obviously show the situa- tion.
 The total commercial deposits in checking accounts are about $1,- 600,000. When it is recalled that the last statement of the bank showed capital stock paid in by stockholders plus surplus, undivid- ed profits and reserves of approxi- mately $1,500.00O, all of which in addition to the lans of approxi- mately $2,3O0,000 and other in- vestments of the bank are available as protection to this $1,600,O00 worth of deposits it would appear from the statement of the bank that there are assets securing these deposits in a ratio of ? to i. Until these assets are appraised under order of the court as they later will be it will not be possible to actu- ally estimate the ratio of security of these accounts but 1t is obvious from the above facts that there would have to be depreciation of $1.500,000 out of approximately $3.500.000 before depositors in checking accounts would suffer a loss. Later procedure will disclose the situation which exists but here again 1t must be borne in mind that improvement in security val ues and in the business world will improve this situation.
 The fact that 6 bank closes does not necessarily mean that It's de- positors must suffer. Ciosings are more often caused by the inability of q bank to maintain the amount of cash required by law and the banks inability to do this is very often oceasioned by the gr0undiess fear and lack of cooperation on Inc part Of It's own depositors who draw Sut money beyond rheir needs aad at a rate faster than the bank can accommodate them by It's loans and invest