Evening star., 1938-06-25
SAVINGS AND LOAN
INSURANCE GROWS
zoos Associations, Listing
Nearly $4,000, 900, 0,0O0in
Assets, Members.

~.1S0S9SSS,SS III
Assets, Members.
The Federal Savings & Loan In
surance Corp. this week ended -four
years OF successful operation and
steady growth with 2,003 savings and
loan associations having combined
assets approaching $4,000 900 900 on
It's roll Of protected institutions.
To date approximately one-half OF
the savings, building and loan insti-
tutions Of the country which are con-
sidered eligible for insurance have
this protection for their investors
And the trend toward insurance con-
tinues. reports Nugent Fallon. gen.
eral manager of the corporation, as
evidenced by the fact that Is asso-
Citations were granted insurance GER
'tif1cates last month.
In four years of operation, Mr.
Fallon stated. no investor in an in
sured institution has lost a cent.
The corporation is now in the strong
est position In its history, with capital
and reserves of $l13,000,O00
Initiated by $100,0OO,O0O Fund.
Congress. in 1894, realizing that
savers in thrift and home-financing
institutions should have a protection
such as that given depositors in COM
mercial banks by the Federal Deposit
Insurance Corp, established the Fed
eral Savings & Loan Insurance
Corp. It was provided with a paid-in
capital of s1o0,00o,ooO. The act stip-
ulated that all Federal chartered
savings and loan associations must
provide this insurance for their in
vestors and that State chartered as
sociations might obtain insurance by
meeting .srtaln standard requirements
for finaAc1al soundness and compe-
tent ADMINISTRATION.
The response of associations to
this opportunity of protecting their
investors snare accounts up to $4,000
for each investor has been stronger
each year." said Mr. Fallon. In
addition to the 1886 Federal asso-
Citations, which are required to carry
insurance, 667 State-chartered insti-
tutions have qualified. making total
of 2003 insured associations. Together
these have assets of $1,885. .847 900
and hold the investments of some
1,S50,000 persons.
Only Four Claims.
''As the result of careful selection
,of the institutions to be insured and
the continuing supervision of their
operations, the corporation within
the last four years has been called
on to meet only four claims All
have been promptly settled in cash.
The first of these claims was that
OF an association which was liouidated
with all shareholders being paid in
full. The cost to the corporation
was $2,024. In a Southern State a
newly organized association was
liquidated a few months after its
founding. All accounts were redeemed
and the liquidation cost the insurance
corporation 1892.
In New England another new as
sociation was liquidated because its
officers concluded that its field of
operation was not sufficiently broad
An orderly liquidation resulted in full
payment of shareholders at an eX-
'pense of $3.50 to the corporation.
Most interesting of the cases was
that of an institution in the Middle
West, because it illustrated the cor
poration's facilities to prevent liqui-
dation and enable an association to
continue in business and re-establish
Its financial position.
Contributes More Than 100000
This institution was on the verge
Of default. The corporation reviewed
the situation, persuaded the share
i holders to make a change in man.
.Ngement. and then contributed a lit
D'e more than 100000 to reorganize
tie association on a stable basis. The
consequence was that private funds
were steadily and continuously in
vested in the association daily, its
shareholders giving it their unquali-
fed support, and it has now been re-
stored to normal operation"
Under the law, investors in an in
sured institution which is liquidated
despite these safeguards and the
emergency powers of the insurance
corporation, have these alternatives
/. They may exchange their share
accounts in the dissolved association
for others of the same value in an
other insured association. 2. Or they
may elect to receive Immediately 10
per cent of the amount of their shares
in cash, As per cent within one year
In cash and As per cent within three
years in cash. AS a matter of actual
practice, however, the corporation has
paid all claimants Immediately.
Five Points Stressed.
Picturing the present position of
! the insurance corporation, Mr.. Fall
Ion stressed these points:
l. It now has an annual income
of more than s5.0O0,00O from pre-
miums and earnings on capital, all of
which is going into reserves.
2. Not dollar of premiums re-
ceived, or of interest on the corpo-
ration's capital funds. is currently
used to pay expenses or losses. Total
annual expense, which is less than
per CeuL Ol lhcOH1e, mas Deen met Dy
interest from its invested reserve
funds,
8. The corporation has capital and
reserves aggregating 10 per cent of
the total accounts it insures, an ex-
traordinarily high coverage.
4. New investments by the public
IN insured institutions increased III
per cent in 1887 as shown by study
of l,435 associations. This indi-
Gates their financial position is con-
&tantly growing stronger.
S. Net cash earnings of insured in
stitutions are approximately per
cent of invested capital.
Simplifies Fireplaces.