Evening star., 1936-10-17
HOME LENDING UP
| "a PCT. IN 1885
$641, $40 Total Reported.
{ D. c. Group Leads in
I Assets Gain.

I Reporting the financial' condiuon
Of the cooperative banks and the
savings, building and loan business
IN the United States. H. F. Cellarius.
Cincinnati, told the convention Of the
United States Building and Loan
League in New York City. which
closed today, that the home lending
business of these institutions increased
34.3 per cent in 1885 over the previous
year. Total 1885 loans were reported
at $641, $40, 900. ana total resources as
Of December 81. 1885. were $685..
7l0,326.
About 10 per cent Of the resources
Of these institutions were thus in
vested In new loans by the end Of
1895, showing the rapid pace at which
they are improving their loan port
folios," said Cellarius, who is secre-
tary-treasurer of the league. Il
estimate that only $1,000, ,000,0 900 Of
the loans which we have today are
pre- depression commitments made
when real estate values were COM
paratively high. OF course. new loans
made since 1881 have been on real
estate quoted at lowest, rather than
highest, prices, and are consequently
more favorable risks"
There are 1854 savings, building
and loan associations and cooperative
banks with 7,049,567 investing and
borrowing members. Accounts in
1,425 Of the associations are insured
with the Federal Savings and Loan
Insurance Corp. and 215 Massa-
chusetts cooperative banks have ac-
counts insured with the Cooperative
Central Bank Of the State.
Safety Is Cited.
Looking at the safety of the insti-
tutions, Cellarius indicated that the
total liabilities OF those which closed
in 1888 were less in amount than
in any year since 1890. when the
first compilation Of such data was
made. The safety percentage Of CO.
operative banks and savings, building
and loan assets for the year was
o9.73 per cent.
Increases in assets were shown by
the associations in District of Column
bia. New Hampshire, Florida, Con-
necticut, Georgia. Mississippi. Rhode
Island and South Carolina. The
greatest gain of $1o.24e,oO0 was in the
District. The decrease for the Nation
was 81 per cent. The report points
out, however, that the assets OF these
institutions are undergoing what Is
termed artificial deflation.
"On the average, when an asSocia-
ton or cooperative bank converts all
of its mortgage loans from the sinking
fund share accumulation plan to the
direct reduction plan, its total assets
will decrease nearly 20 per cent as q
result Of the write-down of the face
amount of the mortgage" the secre-
tary-treasurer explained. While most
of them undertake the transfer rather
slowly, still. they must correspondingly
increase their total resources by nearly
20 per cent in order to hold their own
with this process of transferring loans
going on as widely as it is today.
New requests for the withdrawal
Of funds are much less than what
would have been considered normal
in the years before the depression.
Position Of Institutions.
1T Is difficult to make any general
statement as to the relation between
the supply of funds flowing into these
institutions from the public and the
demand for sound mortgage loans.
In some areas more cooperative banks
and associations than for many years
are refusing to accept substantial in
vestments or are restricting the
amount which they will receive from
individual investors to relatively small
amounts per month. In those areas
the institutions find little or no use for
advances from the Federal Home Loan
Bank system or investments from the
other areas, especially where there has
been pronounced recovery in real es-
tate prices and new construction. the
rising demand for loans of the conven-
tional cooperative bank, building and
loan type has led to increasing use of
the reserve institution, the Federal
Home Loan Bank system, and at the
same time institutions in territories
where loan demand has been good
have made use of some $61 900 900 of
investments from the Home Owners
Loan Corporation during the first
eight months of this year. During
the same period an increase Of $25.-
100000 in the loans outstanding with
the bank system is shown.
"The reserve and undivided profit
funds, which the institutions have
built up as factor of safety, notably
during the last five difficult years, are
comforting evidence of their improved
financial condition as q class. These
safety funds have been substantially
augmented since 1881 so that at the
close Of 1885 they amounted to q
total of s615, ,607. .709, or 10.45 per cent
to total assets, a rather remarkable
achievement.
Tabulation of savings, building and
loan and cooperative bank total re.
sources. total members and number
Of associations. State by State. under
State and Federal charter, as Of De-
cember 81, 1885, is appended.