A statement of condition of The Dickinson County Building and Loan Association as of June 30, 1941, is included in Exhibit 50.

Operations of the Insurance Corporation

During the fiscal year 1941, total resources of the Insurance Corporation increased from $124,917,101 to $130,920,146, or by 5 percent. Reserves and surplus, as of June 30, 1941, totaled $29,388,884, as compared with $23,620,811 on the same date a year previous. Reserves have been built up as rapidly as possible during the Corporation's brief experience. During the same period, however, the

CHART L

RESOURCES OF THE FEDERAL SAVINGS AND Corporation's potential insured

LOAN INSURANCE CORPORATION

AS OF JUNE 30, 1935 AND JUNE 30, 1941

$130,920,146..

$101,874,480..

liability has grown at a faster rate, making the continued accumulation of reserves advisable.

The Corporation's potential insured liability, representing the total amount of all insured accounts up to $5,000 for each investor and the total creditor obligations of all insured associations, was $2,464,167,000 at the close of the reporting period as compared with $2,056,099,000 at the close of the 1940 reporting period. Expressed more simply, the Corporation on June 30, 1941, had for each dollar of capital, reserves, and surplus a potential liability of $18.82. Since a large proportion of the assets of insured institutions, aggregating $3,158,251,000, must be set up against the Corporation's potential liability, it is inconceivable under realistic conditions that the entire amount of this liability will ever become real. Even under the most adverse conditions, considerable amounts would be realized from accounts subrogated to the Corporation.

The capital stock of the Corporation, aggregating $100,000,000 was exchanged in 1934 for 3 percent guaranteed bonds of the Home Owners' Loan Corporation in a similar amount. Reserves and surplus

amounting to $29,388,884 are invested entirely in Government obligations and securities wholly guaranteed by the Government. Exhibit 51 shows the Corporation's statement of condition as of June 30, 1941. The Corporation receives its income from annual premiums paid by insured institutions, admission fees from associations when first insured, and interest on its investments. All income above expenses is placed in reserves. Disbursements in connection with insurance settlements are charged to reserves.

The Corporation's premium income is derived from the payment by each insured association of an annual insurance premium equal to % of 1 percent of its total share and creditor obligations, or an amount equal to approximately 11 cents for each $100 of assets. Premium income carned during the fiscal year 1941 totaled $3,063,115 as compared with $2,631,241 for the preceding reporting year. Associations which applied and were insured during the 1941 fiscal year paid an admission fee of 4 cents for each $100 of insurable accounts and creditor liabilities. Admission fees received during the reporting period totaled $24,371 as against $19,022 during the preceding fiscal year. Income of the Insurance Corporation from investments during the fiscal year 1941, including $13,365 in profits from the sale of securities, amounted to $3,494,673. Including miscellaneous items, the aggregate income of the Corporation for the year ending June 30, 1941, was $6,582,193, an increase of $457,533 over the preceding year.

Administrative expenses of the Corporation totaled $256,524 during the 1941 reporting period; and nonadministrative expenses resulting principally from costs incurred in connection with settlement cases totaled $8,492. This compares with $240,383 for administrative and $15,426 for nonadministrative expenses during the preceding fiscal year. After deduction of expenses, both administrative and nonadministrative, from gross income, the Corporation shows a net income for the reporting period of $6,317,177 as compared with $5,868,851 during the preceding fiscal year.

Financial assistance to insured institutions during the fiscal year 1941 aggregated $546,468 as compared with $537,472 the year before. Contingent commitments to prevent default in insured associations aggregated $291,374 on June 30, 1941, as against $323,756 a year previous. Exhibits 52 and 53 present detailed statements of income and expenses for the fiscal year 1941. The following table shows in abbreviated form various income and expense items for the 1941 fiscal period:

Condensed income and expense statement for the period July 1, 1940, to June 30, 1941

Contributions to insured associations deducted from legal reserve fund..

546, 468, 49

At the close of the reporting period, personnel employed by the Corporation totaled 42. The Corporation is enabled to operate efficiently with this small staff because it utilizes the general service divisions of the Federal Home Loan Bank Board, thus making it unnecessary for the Corporation to build up auxiliary departments. Throughout its seven years' experience, the Corporation has been able to meet its running expenses without using premium receipts or income received from original capital. Income on earned reserves has been more than sufficient to cover operating expenses.

VI

Home Owners' Loan Corporation

INCE June 12, 1936, when its refinancing activities were brought

ST

to a close, the Home Owners' Loan Corporation has been engaged primarily in liquidating its loans and the properties it has been forced to acquire. Substantial progress was made toward this goal during the reporting period. The total balance of loan and property accounts was reduced from $2,436,945,646 to $2,189,038,942, or by 10.2 percent. Sales of Corporation properties deserve special mention. An excess of property sales over new acquisitions brought about a drop of 30.2 percent in the number of properties owned and in process of acquiring title. The liability side of the Corporation's balance sheet shows a decline in bonded indebtedness from $2,634,808,900 to $2,419,608,800. Liquidation of the Home Owners' Loan Corporation is measured primarily by the ability of the Corporation's borrowers to repay their indebtedness. By June 30, 1941, a large majority of these borrowers had made real headway in their efforts to acquire debt-free home ownership. On that date, the average loan balance outstanding per active borrower was $2,108 as compared with an average loan of $2,884 to these same individuals. In short, the average present borrower from the Corporation has been able to reduce his indebtedness by almost 27 percent. Over 96 percent of the active original accounts still on the books of the Corporation at the end of the fiscal year were performing satisfactorily, and only 3.8 percent of active accounts were in default and not liquidating.

During the 1941 fiscal year, the Corporation was able to effect a reduction of 22.4 percent in the number of personnel. Administrative expenses of the Corporation also show a decrease of 15.3 percent, resulting both from the termination of personnel and the closing of a number of field offices.

1. REPAYMENT RECORD OF BORROWERS

Status of Accounts

Progressing liquidation of the Home Owners' Loan Corporation resulted in certain changes during the reporting period in the types of accounts carried on the Corporation's books. Thus, the number of

active original loan accounts declined somewhat due to foreclosures and payments in full. Property accounts declined because of an excess of sales over acquisitions. Since the large majority of property sales are made on a deferred payment basis, vendee accounts show a corresponding increase. A classification of accounts at the end of the last two fiscal years is shown in the following table:

Classification of accounts, June 30, 1940, and June 30, 1941

It will be noted that on June 30, 1941, the number of accounts set up by the Corporation totaled 1,019,510. This figure exceeds the 1,017,823 loans refinanced by the Corporation principally as the result of division of certain properties upon which original loans had been granted.

By the close of the reporting period, 12 percent of the Corporation's accounts had been completely terminated, leaving 88 percent to be liquidated. Over 70 percent of all accounts established by the