Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-04-19

Now that 20 Of % District
have adopted annual dividend
intentions to do so. the race To-
the final curve Of circle.
I'VE are Just about back to
a prominent savings and loan e
Citations who thought they |
could take funds away from the
rest Of us have been check
mated. Their temporary advan-
tage didn't last long. The only
difference is we won't be build
ing our reserves as we should"
Led by Perpetual Building As
ISOLATION with around $500 mil
lion of assets, only handful Of
associations still maintain their
conservative position that pres
ent rates charged by the associ-
alton on home loans do not
permit the payment of 4 per
cent on invested savings after
expenses and adequate provi-
sion for reserves. Home loans
rarely average as much as a 51a
per cent yield TO the associa-
lions, it has been estimated.
Reserve Ratio Down
The conservative view is sup
ported strongly by Government
regulatory authorities and also
by the fact that reserves Of the
20 member associations of the
District Savings and Loan
League on March 81 showed a
further decline to 81 per cent
of invested savings, compared
with SO per cent a month
earlier and 81 per cent a year
earlier. They were well below
ia ratio of 10.5 per cent five
years earlier.
! Reserves of the District as
sociations amounted to $78 mill
lion on March 81, of moder-
ately from $79,871 900 a month
earlier, but we'll ahead of $73
million on March 81 last year
and around $50 million on the
same 1854 date.
Invested savings of $920.6
million on March 81 compared
with $905 million a month
earlier, $815.7 million a year
earle rand $500 million five
years earlier. In other words,
total invested savings have
gone up faster than reserves.
officials and directors of (
some associations which adopted
the 4 per cent rate have done |
so reluctantly. Their only other
alternative was to face loss of /
funds to competitors, they said.
District Becomes goth
Jefferson Federal Savings
and Loan Association became
the 10Th association to join the
parade Friday and The Star
learned yesterday that District
Building and Loan Association
will become the goth.
District will apply the higher
rate starting with the period
ended June 80. Several other
associations are said to be con-
sidering similar action.
AS the number of per cent
associations mounted, it has
become clear that no one as
ISOLATION will gain much COM
petitive advantage from the 4
per cent rate and that most of
the associations face the task
of finding new means of build
ing reserves. They may have
to consider charging more for
home loans.
/ With the general trend of
interest rates continuing up
ward, this alternative may be-
come the favorite solution at
least for the associations. What
effect this may have on pros
| pective home borrowers re-
mains to be seen.
No Apologies or Regrets
An executive of one of the
first associations to go to 4
per cent has no apologies or
regrets. Higher rates have been
one of the major reasons for
/ the upsurge of invested savings
in District associations, he de-
clared.
1.-THE rate of savings growth
has gathered speed as more
and more associations raised |
their dividends" he insisted.
Soothing at the contention
that higher rates endanger
sound reserves, the 4 per cent
leader declared that when more
money comes in and is placed
in good sound loans without
| too much delay, the aSSocia-
tons earning power and
! therefore its ability to build
still higher reserves is strength
ened. He conceded that big
increase of invested savings, h
without a compromising in
crease in reserves. could cause
a temporary decrease in the
ratio of reserves to savings.
Lending credence to the
theory that higher lending
/