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Receiver and Judge in Bank Situation of its claim against the bank amount$127,824.35. MISCELLANEOUS LIABILITIES the following: Deposits matured principal (Sched40) $27,482.68 Deposits to cover matured bond (Schedules and 25,064.00 Accounts payable, mortgage department (Schedule 24,522.98 accounts (Schedule 43) 49,425.88 principal and escrow items (Schedule 19) 19,081.54 payable (Schedule 45) 37,788.19 Total $269,934.65 None of these liabilities warrant special in this reThe statement of the condition of the bank shown the does (Exhibit page 40) tingent except by way comments and notes. Numerous claims of this character have been presented and receivers intimations the filing claims. suggested that perhaps the holders of $500,000 par value the can Office will provision the building the and that the holders the first certain the properties the building aggregating will assert claims based The capital, surplus and undivided composing liability $4,239,550.25 liabilities only qualified sense to the stockholders the cannot assert in proall paid full. As the and of creditors, full, further this except in connection with EARNINGS OF THE BANK As earnings indicative of the the assets producing earnings, your feel report would not be the records of the bank, for this 1928 and they length time, and In the general plan of banking, all profits through operations find reflection an acdesignated This account be considered be surplus addition the account specifically designated the surplus account the bank. The profits the (based upon the book the assets and the assets and liabilities 1928, The increase year, payment dividends, was but was the surplus $277,817.15 divided profits the trust department. believe that would generally that the year 1928 was from earnings standpoint in commerce and this the ings for this of any year under conprofits reduced 1929 from $594,reflecting loss operations and dividend payments of $108.282.07, although during this period income was credited the value of stock,' which was not During 1930, the undivided profits loss operations (and amounting to During the undivided profits reflecting loss from operations dividend $160,162.33. in spite the fact that the was credited contingency of whereas exdebited from transfer reserve for contingencies of only Undivided profits increased in 1932 from the addition being by credited "transfer profits from $300,000,' transfer surplus $500,000. transfer whereas reserve for contingencies of $613,The undivided profits of June 1933, were which is prac- ing of the usual demands for payment reinforcement security upon indebted the bank. would also appear difficult for place, respect action with respect might have led relationship between the bank the majority directors officers. Clause 48 Section 4149 does have applicable the facts set Clause Section being any stock the lending this owing to the bank corporation known Bankshare audit which has been filed with this report. of approximately per of the mon the tion which the officers and directors bank, for money by Corporation the all which will fully appear from the This corporation was chartered and the the was in of and shares as December 1929 the loans this corporation aggregated January the was increased and in to which was owing the bank June 1933. When loan was increased December and sum the credit the board of directors, and the loan was and inability of the institution offset this decline by reduction in In this connection quote from the M. Pullen Comcontained in the report the follows: "There well over million dollars in the bank's not paying having the the note In the bank was Vacar Corporation of $1,135,bank examiners of the State Virginia of the bank February 1932, and the shown to doubtful assets In stating the undivided profits account year quesshown that the extent $162,000, charged off in The feel that should this their condition the from examinaits records. manifest that acts omission on the part coupled the under which acts could and did for long period the causes for the colof the that the profrom 1929 furnished factors the following Officers and directors' loans. The majority the the board directors and all the executive officers (or corporations which such officers directors substantially interested) and the advisory the be the in large the ber of these in the and fall of 1929, but in number they largely increased after. These loans, generally ing, years are secured by marketable security values pay the loans, the able apeither pay substanNot only condition directors and but extended the junior officers The loans the indi(not porations) remaining unpaid gregate These figures include much larger sum due corporations which the are substantially by nor does their nor of their but later by it to its cusExcluding one who now ings deposit, the remaining and executive officers had net balances March savings accounts of officers or directors had list the loans to diset and It of the and officers may ated deterrent the application to proper credit standards conthe applications by others, and the mak- the individual guarantees of thirteen the and one stockholder not director, the as follows: the American Trust Richmond, the one year the date any any and sums which the said Bankshare Corporation owe the said American Trust Company Richmond, provided the liability the undersigned limited the amount opposite his hereunder year date by giving three to One hundred and thousand dollars these were by persons then and now debted the bank, and now unable, in the opinion the obligations this the not be paid the the sufficient and the loan could only be paid Bankshare Corporation long dividends received by on the stock of the would that possibly the needs had influence in the dividend 1929 rom $190,000 and the continuation of and 1931 for this amount, and the payment of in Clause Section 4149 permits banks lend money on real security and sell real feel that the tual influence and the the only did this char acter of demand the tenance market mortgage and sold to the but many placed the bank and the had and the affairs the the money of notes mortgages real now the tomers of the bank, and the the primary the the these be The bank received large portion its book from brokerage commissions for making real loans. income at the ceived, current. fully profits. set up for future servicing the loans incident thereto. The largest these was received in 1928 when commission entered income for the handling of single notwithstanding the fact no set up the books the necessity for setting against the thus the fact the bank after the bonds the public, funds pay the interest the debtors defaulted. practice paying notes bonds sold to the public continued Heavy Outflow of Cash Toward Building and Land Projects Outlined; Borrowing of Million by Officials and Employees Shown June 30, and of paying interest 1932. is when these advances or bonds acwere subordinated to the lien and the hands the the bordinated the bank would at times make mercial" secured junior mortgage on the erty; in loan would made on different but the and in many unpaid in the hands their full face the Not the bank after acquiring matured coupons, to effect collection the acquired foreclosure the property securing the bonds, wholly subsidiary and that forthwith give the bank its note for the amount the unpaid accrued terest unpaid advances, and expenses foreclosure The was the bank. In case of the this The new the selling the which the the subsidiary would either be sold the the Mortgage poration, another wholly owned sidiary. retained the bank the that could not be fected. payment by these wholly owned subsidiaries per per anumn interest their and outstanding obligations the the public has not regarded clause of 4149, nor the created by the regarded 49 section 4149 The wholly used medium for the actions, now has an loan due the bank and has on this which was carried by the bank the asset accounts bill receivable Among the assets of the bank of interest couby the either so acquired or else hand the lic. now refor making mortgage resulted the the only the the equity in the mortgaged property. Hillcrest, (now in ship) which the of and $40,659.1 notes being sold the public) now indebted the the $375,626.03. Rosewood Construction Corporawhose mortgage notes $522,500 the on various accounts $223.Hampton Gardens whose mortgage of distributed on various accounts The published statements of the no multiple real and ingly the State designed 54 are not that end has inadequate. The results of the conditions and above naturally resulted the bank being without its required legal full capital and with virtually secondary rethe June 1933, the on dedepartment the the by first mortgage the great bulk the law as to General The difficulty realization and will be appreciated keenly by the court, well the when they realize that the total amount of loans discounts aggregate that forty individuals and corporations are indebted the bank in an aggregate sum, exclusive accrued interin and that many these individuals plainly meet obligathis and will not able to future date any will be the of many larger totally beyond good outside should borne in mind in this that the values placed the assets by the taking consideration all and resulted that $9,of assets worthless. might not remiss to mention of ginia did not make audit the American Bank and Company in April of year, but made, and examination provided We assume that this examination sympathetic and the benefit of every doubt given the and that where possible "going concern" values assigned bonds. loans discounts, but spite this mendable the part the Department of declared to $5,617,255.05 which the greater portion either doubtful, another way saying that they are difficult collection. And while true certain of the assets, which treated by the examiners and receivers as worthless, will the fuproduce certain amount for distribution to the crediit plain that many the treated the Banking Dewill develop into or worthless It interesting note the observaof the auditors page the comments follows: Considering that nearly all banks centered efforts liquid during the past three the this bank has its deposits up its loans and seems to be no doubt but the notes will be and process. It would that the deposit Continued on Page Column tically their amount at January 1928. that the book plus reduced from $1,250,000 to dealing with certain of the items into bank's earnings for the five the the decline in the operating earnings the bank Interest Expenses Notes, Checks Credited Home Office Overdrafts Dividends income & Branches Charged Off Paid 1928 190,000.00 1929 332,634.54 260,000.00 1930 311,564.97 33,188.61 260,000.00 1931 828,524.67 260,000.00 1932 775,353.43 298,596.13 398,306.18 247,500.00
