b. Hearings process.-There is no legal requirement that the Comptroller of the Currency, the Board of Governors, or the Federal Deposit Insurance Corporation hold hearings in connection with requests for approval of the opening of a new bank or branch. A few of the States require public hearings. The investigations made by other States, and by the Federal agencies, sometimes include hearings, usually of an informal character. c. Criteria for approval.-In the case of approval of branches of national banks, there are no criteria imposed on the Comptroller of the Currency except those regarding the location of branches (described above) and certain capital requirements. In considering applications for approval of branches the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation must give consideration to the same factors as those required for admission of a bank to insurance (enumerated above). Many of the States require the State bank supervisory agency to give consideration to similar factors, or at least to the need and convenience of the community. CHAPTER 2 MUTUAL SAVINGS BANKS 1 INTRODUCTION Mutual savings banks are the Nation's oldest specialists in thrift. Throughout their 147-year history, their fundamental objectives have been (1) to stimulate and protect individuals' savings and (2) to channel these savings into productive, long-term investments. Savings banks have no stockholders and distribute earnings solely as interest payments to depositors except for additions to protective reserves. The legal status of savings banks is that of debtors to their depositors. Owing largely to legal obstacles to geographic extension, the sayings bank industry is located in only 18 States and the Virgin Islands, as shown in chart 1. Through their out-of-State lending activities, however, savings banks have channeled a substantial volume of mortgage credit to all areas of the country. Operating with diversified investment powers, savings banks have responded flexibly to changes in credit demands and yield relationships. The most striking investment change during the postwar period has been the marked expansion in mortgage holdings. Savings banks also acquired significant amounts of corporate securities during periods of capital market stringency when bond yields were relatively attractive. In their mutuality, basic thrift objectives, role of debtors to their depositors, and diversified investment powers, savings banks represent a unique combination of financial characteristics. The size, structure, deposit, and investment activity, as well as the legal requirements and limitations on the savings bank industry are profoundly affected by these unique characteristics. 1 Prepared by Research Department, National Association of Mutual Savings Banks, with minor editing by the committee staff. 65 CHART 1 LOCATION AND NUMBER OF MUTUAL SAVINGS BANKS a. Number of banks and assets. At the close of 1962, the mutual savings banking industry comprised 512 institutions with combined assets of $46 billion, located in 18 States and the Virgin Islands. In addition, 222 savings banks operated 587 branch offices, bringing the total number of savings bank offices to 1,099. Reflecting in part the increased flow of overall savings in the areas in which they are located, total assets of mutual savings banks more than doubled between 1950 and 1962 (table 1). At the same time, the number of savings bank offices rose by 357, or nearly one-half. This growth in the network of savings bank offices was due almost entirely As of Sept. 1, 1963, due to the merger of two institutions in New York City, there were 511 savings banks with assets of $48.6 billion. to branch expansion. The number of institutions declined slightly between 1950 and 1962, mainly as a result of mergers within the industry. However, two new savings banks were organized during this span of years-one in Massachusetts in 1955 and one in Alaska in 1961. In New York, the leading savings bank State in terms of resources, savings banks are subject to stringent restrictions on the number of branches, and, as a result, have few branches relative to the total number of offices. Savings bank branches tend to be concentrated in head office cities. or head office counties, with relatively few (11 percent) being situated outside head office counties (table 2). In contrast, a much larger proportion of commercial bank branches (31 percent) are located outside head office counties, in both contiguous and noncontinguous counties. TABLE 1.-Total assets and number of offices of mutual savings banks, selected yearend dates, 1950–62 Source: Federal Deposit Insurance Corporation and National Association of Mutual Savings Banks. TABLE 2.-Distribution of number of branches by location with respect to head office, mutual savings banks and commercial banks, Dec. 31, 1962 NOTE. Data are not completely consistent with figures reported by FDIC and shown in table 1. Source: Board of Governors of the Federal Reserve System. b. Insured status.-Deposits in nearly all mutual savings banks are insured, in most instances by the Federal Deposit Insurance Corporation, and in the case of Massachusetts savings banks, by a State deposit insurance agency. At yearend 1962, deposits in 331 mutual savings banks were insured by FDIC. In the case of the savings banks in Massachusetts that have elected to join FDIC (there were eight at the end of 1962) the Mutual Savings Central Fund, Inc., insures amounts exceeding the $10,000 covered by FDIC. The remaining 173 Massachusetts savings banks were insured solely by the Mutual Savings Central Fund, Inc. Among the eight uninsured savings banks, six are located in Maine, and the other two in Wisconsin and the Virgin Islands. At the end of 1962, their combined deposits totaled $43 million, or only 0.1 percent of total savings bank deposits. General reserve accounts of uninsured savings banks represented 18 percent of their deposits at yearend 1962, nearly twice that of the industry as a whole. Since 1950 the number of FDIC-insured savings banks has increased substantially (tables 3 and 4). This rise reflected mainly the entry into FDIC membership in July 1960 of savings banks in Connecticut, whose deposits previously had been insured by a deposit insurance agency of that State, and of New Hampshire savings banks during the preceding several years. TABLE 3.-Number and proportion of insured mutual savings banks, selected yearend dates, 1950-62 18 Massachusetts savings banks are insured by FDIC for deposits up to $10,000 and by the Mutual Savings Central Fund, Inc., for deposits over that amount up to the State's statutory limits. Source: Federal Deposit Insurance Corporation and National Association of Mutual Savings Banks. TABLE 4.-Number and proportion of insured mutual savings banks, by States, at yearend 1950 and 1962 18 Massachusetts savings banks are insured by FDIC for deposits up to $10,000 and by the Mutual Savings Central Fund, Inc., for deposits over that amount up to the State's statutory limits. Source: Federal Deposit Insurance Corporation and National Association of Mutual Savings Banks. |