Mr. PECORA. Well, but you would infer from this favorable comment from him that it was the usual thing for banks to have no billpayable? Mr. LORD. I would not infer that from it; no. Mr. PECORA. You would infer quite the contrary, wouldn't you? Mr. LORD. I would think so. Mr. PECORA. So that Mr. Reichert was not aware of this universal custom apparently? Mr. LORD. Of showing no bills payable? Mr. PECORA. Yes. Mr. LORD. I think he must have been aware of that; yes. Mr. PECORA. Why was he complimenting you specifically upon the fact that your banks showed not a single bill payable, if he knew it was the universal custom? Mr. LORD. Let me ask what you mean by the "universal custom ”— of showing no bills payable? Mr. PECORA. Exactly what you meant by it. I am using your language. Mr. LORD. Of showing no bills payable? Mr. PECORA. Yes. Mr. LORD. I think he meant it in a complimentary way, of the showing of the banks. Mr. PECORA. He thought it was an unusual showing, did he not? Mr. LORD. Yes: I think he must have. Mr. PECORA. What is that? Mr. LORD. I would gather so from his letter. Mr. PECORA. It would not be an unusual showing in his opinion if he knew that such a showing was simply due to universal custom and not to the fact? Isn't that logical? Mr. LORD. I would think so; yes. Mr. PECORA. That is logical, isn't it? Mr. LORD. Sounds logical. Mr. PECORA. Now, Mr. Chairman, it is 5 minutes to 4. The evidence I have I want to bring out by this witness I think can be reserved until tomorrow morning. The CHAIRMAN. We will take a recess now until 10:30 tomorrow morning. (Accordingly, at 3:55 p.m., the committee adjourned until 10:30 a.m. of the following day.) COMMITTEE EXHIBIT NO. 32-DECEMBER 20, 1933 $886, 104.00 $5,000, 866.60 $3, 194, 093. 49 $663,000.00 $9,744, 064. 09 1933 $15, 625.00 30,000.00 Second Nat. Bank & Trust Co., Saginaw Highland Park State Bank.... COMMITTEE EXHIBIT NO. 33, DECEMBER 20, 1933 Guardian Detroit Union Group, Inc., summary of cash dividends 45, 625.00 COMMITTEE EXHIBIT NO. 34-DECEMBER 20, 1933 To the Stockholders, Guardian Detroit Union Group, Inc. The liquidity of our banking institutions has continued to improve, notwithstanding the conditions existing in the year 1932. The cash position of our banks and trust companies on December 31, 1932 totalled $100,079,745.74 in Cash and U. S. Government Securities against total deposit liabilities of $290,075,462.10. While bettering their liquid position, our banks have at all times continued to render constructive, helpful service to customers and have played an important part in encouraging industry to maintain employment and in rendering distinct assistance and cooperation to their respective communities. The pursuance of this sound policy of looking first to the stability and liquidity of our banks and trust companies necessarily affected our earning power-for liquidity can be maintained only at the expense of profits. For the year 1932, operating earnings of the banks and trust companies in the Group, after all expenses of operation, taxes, depreciation on banking houses and equipment, and losses on securities sold, but before Reserves, were $2,619,443.05. On the same basis and for the same period, the consolidated net operating earnings of the Group Company, banks, trust companies, and all other affiliated companies, amounted to $1,316,952.52. Dividends paid during the year amounted to $375,134.00. Conservative policies made advisable the discontinuance of dividends during the second quarter of 1932. The remaining earnings of $941,818.52 together with recov eries of $1,131,005.93 from items charged off in previous years, plus sums taken from capital funds in an amount of $8,966,932.17, totalling $10,939,756.62, were transferred to Reserves. Computed on the basis of the aggregate Capital, Surplus and Undivided Profits of the unit banks and trust companies, as reflected by their published statements of December 31, 1932, plus the net worth of the other affiliated companies at market prices of securities on December 31, 1932, the book value of the Group stock amounts to $17.04 per share. This figure does not include total Reserves remaining in the banks and trust companies exceeding $6,700,000, nor does it include a Reserve of $5,000,000 on the books of the Group Company for contingencies not determinable at this time, but which your Management has deemed it prudent to create, in view of the present business situation. The policy of liquidating securities affiliates which was initiated in 1931 has been continued during 1932 in an orderly manner. During 1932, a difficult period for liquidation, securities carried on the books at $1,712,821.68 were sold with a resultant net loss of only $42,201.91. This liquidation was confined to sales of the least desirable holdings. On December 31, 1932, the aggregate market value of securities owned by these companies was $5,688,797.10. Drastic economies of operation were continued during the year with satis factory results. In spite of the fact that total operating income of banks and trust companies decreased 18.32%, the controllable operating expenses (ie., other than interest on deposits) were reduced 25.41%. To effect further operating economies, the Grosse Pointe unit, the Guardian Bank of Grosse Pointe, was merged with the Guardian National Bank of Commerce on December 31, 1932. The banking units of the Guardian Detroit Unit Group, Inc., are located in sixteen (16) communities in the State of Michigan. In a large majority of these communities, the Guardian units are first in size as measured by deposits. In four communities they are second in size. In only one of the smaller communities does our unit rank below second place. The table on page presents the aggregate deposits in the communities served and the amount of aggregate deposits held by Guardian units in these communities. It is interesting to note from this table that in three communities the Guardian unit is now the only banking institution. Officers and Directors of units of the Group as of January 12, 1933, owned over 400,000 shares of group stock, or more than 26% of the total of 1,544,844 shares outstanding. 1,435,978 shares, or 93%, are owned by residents, of the State of Michigan. There was a substantial increase in the number of shareholders during the last year. There are now 9,837 shareholders compared with 8,945 on December 31, 1931. Ownership of large holdings of stock remained practically unchanged during the year. Notwithstanding the exceptionally trying times and their effect upon our banking institutions during the year, our unit banks are entering the new year prepared to furnish better and more efficient banking service to the communities which they serve. Perhaps never in the history of banking has more been demanded of Directors, Officers and Staff, than in the past year. It has been an inspiration to note the unselfishness with which our organization has faced its daily problems. We wish to take this occasion to express to them our appreciation for their zeal, loyalty and cooperation which has been shown. We also take this opportunity to thank our shareholders for their splendid support during the year 1932, which has resulted in an increased amount of business being directed to units of the Group. Continuance of this confidence during 1933 will stimulate the operating staff to even greater endeavors in the interest of the Stockholders. The preeminence of the Guardian Detroit Union Group, Inc. as a vital factor in the economic and financial life of Michigan becomes impressive when one considers the outstanding men representing its affiliated institutions as Directors. With these contacts, any economic improvement or further development of Michigan's industries will be directly reflected within our own institution. Respectfully Submitted. ERNEST KANZLER, Chairman of the Board. ROBERT O. LORD, COMMITTEE EXHIBIT NO. 35-DECEMBER 20, 1933 GUARDIAN DETROIT UNION GROUP, INCORPORATED President. INTRA-GROUP MEMORANDUM Date JAN. 21, 1931 To The Directors of Guardian Detroit Bank From Mr. Robert O. Lord, President Subject Favorable comment from Guardian "Rooters " On January 2, 1931, there appeared in the Detroit newspapers a brief news item to the effect that the deposits of Guardian Detroit Bank had increased by $9,500,000 during the past three months to a new peak of $124,096,976.65. Clippings of this news item were sent to all bankers with whom Guardian maintains banking relationships-with the additional information that all of the twenty-three banks and trust companies comprising Guardian Detroit Union Group, Inc., showed on December 31, 1930, "Bills Payable-None". Extracts from letters written by these bankers-commenting upon the above are reproduced below as being of possible interest to you. [National City Bank of New York, N.Y.] I appreciate your letter of January 2nd. You have made a good showing.— Gordon Rentschler, President. [Bankers Trust Company, New York City] There isn't any good luck which you and the rest of your crowd could have that I wouldn't rejoice in.-Seward Prosser, Chairman. [The Chase National Bank, New York City] You have every reason to be proud of the Guardian Detroit Bank, as well as the Group.-Richard R. Hunter, Vice Pres. [The First National Bank, Chicago] You and your associates are to be congratulated on the excellent condition of the entire group of banks.-Melvin A. Traylor, President. [Continental Illinois Bank and Trust Company, Chicago] The substantial increase in deposits is indeed an item in which you are fully justified in taking a great deal of pride.-J. R. Washburn, Vice Pres. [Harris Trust & Savings Bank, Chicago] It is a record of accomplishment of which you may well be proud and I hope the year 1931 will be a banner year for you all.-C. G. Fisher, Vice President. [The Union Trust Company of Pittsburgh] You are great bankers up there.-H. C. McEldowney, President [The Bank of America, New York] Congratulations! Hope you can keep it up.-Edward C. Delafield, Pres. [Chemical Bank & Trust Company, New York] I am pleased to know that your institution is in such liquid position and want you to know that you have our every good wish for continued success.Percy H. Johnson, President [Mellon National Bank, Pittsburgh] I wish to take this opportunity to congratulate you on the splendid showing during the past year.-Richard K. Mellon, Vice Pres. [The First National Bank of Boston] Congratulations on the increase in your deposits. I hope you are able to make a little money as well.-Charles F. Mills, Vice Pres. [The National Shawmut Bank of Boston] Let me express my congratulations and those of my associates here on the result that has been accomplished, and the hope that at the end of 1931 your deposits will be higher and your profit and loss account all that you desire.W. F. Augustine, Vice Pres. [Foreman-State National Bank, Chicago] Heartiest congratulations!-Walter W. Head, President [Bankers Trust Company, New York] I don't want to miss the opportunity to congratulate you on the fine liquid showing which it makes. More power to you and yours.-Frederick S. Bale, Vice Pres. [Irving Trust Company, New York] We congratulate your institution, and especially so for the liquidity indicated by your statement that the several banks comprising your Group were completely out of debt at the close of 1930. If all the banks of the country pursued a similar policy, there would be a far greater stability in banking and less unsettlement during unusual periods.-William Feick, Vice Pres. [The Union Trust Company, Cleveland] I am pleased to know that you showed such a nice increase over the date of the last call. People are just so touchy at the present time and there are so many rumors as to all of the banks in the country that every banker is pleased to show increased deposits and also an increase in cash position.J. R. Kraus, Vice Pres. [Canal Bank & Trust Company, New Orleans] The growth of your wonderful institution is simply marvelous, and commented on very much by the bankers and business men throughout the south.William P. O'Neal, Vice Pres. [Bankers Trust Company, New York City] I am very much pleased to learn that the Guardian Detroit Bank is going ahead in such a gratifying way.-F. W. Shibley, Vice Pres. |