dred thousands of persons in the Detroit Metropolitan area, and over $5 of every type of business represented there, has necessarily been a focus point f individual and business problems. It has been organized and conducted so to safely meet these problems from the standpoint of its customers and depe itors, and has, as rapidly as possible, adjusted its own affairs and those of it unit organizations to face the requirements of the present general business situation. During the year there was only a minor change in the outstanding capital of the Detroit Bankers Company, represented by the issuance of $2,679.60 of par value of Detroit Bankers Company stock in exchange for outstanding and unex changed shares of the First National Bank-Detroit. There are at present out standing 1,775,598 shares of $20.00 par value. In February, 1932, the Detroit Bankers Company established the First Na tional Bank at Pontiac, contributing $500,000.00 of Capital and $250,000.00 of initial Surplus. This was a newly incorporated National Banking Institutio for the purpose of taking over the deposits and liquidating the assets of the First National Bank & Trust Company of Pontiac. The general result of operations for the year 1932 is best shown by a on parison of the total Capital, Surplus and Undivided Profits of all the banking units as of December 31, 1931, and December 31, 1932, as follows: Capital, Surplus and Undivided Profits 12/31/31. Add: Capital Stock $500,000.00, Surplus $250,000.00 of new First $68,459,912 63 Total Add: Net Earnings after depreciation and all other charges but before Dividends. Total__. Deduct: Dividends Paid_ Transfers to Reserves.... 750,000.00 $69, 209, 912.00 5,740,348.29 $74,950, 260.32 $2, $13,500.00 12, 570, 993.2) Total Capital, Surplus and Undivided Profits 12/31/32 $62, 379, 267. (3 Provision was made for reductions in asset values by transfers to Reserves of nearly $10,000,000.00, in addition to nearly $3,000,000.00 of Reserves already provided for during the year out of current earnings and other sources. The banking units of your Company have, in the past three years of its existence, endeavored to meet the present economic conditions by setting up provisions for losses and contingencies in excess of $37,000,000.00 The combined statement of all banking units shows a decrease in total Income for the year, of $4,776,911.95, over 1931, slightly less than 14 per cem, due mostly to loss of Income as a result of liquidation of earning assets. The close control of operating and other expenses throughout the Group is evidenced by the fact that total Expenses in the same period were reduced $3,061,657.20, leaving a reduction of Net Operating Income of $1,715,254.75. Net earnings, after all charges but before Dividends for 1932, were $5,740,348.29, as compared with $7,475,293.47 for the year 1931 preceding-a decrease of $1,734,945.18. Dividends have been substantially reduced in greater proportion than the decline in Net Earnings. A total of $2,813,500.00 was paid in 1932 as against $6.051,400.00 in the year 1931. This dividend reduction of $3,237,900.00 exceeds the reduction in Net Earnings by $1,502,954.82, the capital investment being thereby strengthened by this latter amount. The First National Bank-Detroit, Board of Directors has had the large number of seventy-six members. It was determined, in December, 1932, to reduce the number of the Board of Directors of the Bank to thirty-eight, five to be Bank Officers and three Trust Company Officers, all of the present Dire tors of the Bank being made Directors of the Detroit Bankers Company at the annual meeting in January. The general activities of the Detroit Bankers Company, operating as a Holding Company, are rapidly being reduced to the simplest possible form. It will act almost solely as a holder of the stock of its constituent units, its E PRACTICES every other function having been eliminated but that of joint Tax, Auditing Metroplit and Insurance Departments for all units. of the nge Every effort has been put forth by your Management in the interests of economy and to reduce the burden of expense of the Holding Company to the affiliated units. The operating expenses of the Detroit Bankers Company itself, have been reduced from an average of approximately $46,000.00 per month at the first of the year of 1932, to an average estimated amount not to exceed $18,000.00 per month for the beginning of 1933. This reduction is at the rate of $336,000.00 a year. Further economies will be made in 1933, thes during which time the full benefit of this year's changes will be felt. Official gf salaries of the Detroit Bankers Company for the month of December, 1931, The were $12,075.30; in December, 1932, $3,633.30, and in March, 1933, will be further reduced to $1,633.30. This alone is a reduction of $10,400.00, or at the rate of $124,800.00 a year. All other salaries were $21,973.30 for the month of December, 1931, and are estimated for the month of January, 1933, Mat $7,000.00 a monthly reduction of nearly $15,000.00 or at the annual rate of $180,000.00. The following are reports of various corporations owned by your Company: FIRST NATIONAL BANK-DETROIT On December 31, 1931, the First National Bank in Detroit and the Peoples Wayne County Bank were consolidated into the First Wayne National Bank, thus combining in one institution, under a National Charter, all of the Detroit city banking business of this Company. This has made possible substantial economies in corporate expenses and operating organization. On October 10, 1932, the name was changed from First Wayne National Bank to First National Bank-Detroit, perpetuating the name of the oldest member of the banking units, originally established in 1863. The total Operating and Other Income for the First National Bank-Detroit was reduced $3,645,068.95 in the year 1932 from the year 1931. This was largely represented by loss of Interest Income resulting from liquidation of loans and other assets and the reduced rates of interest obtainable on investments made in the year 1932. This reduction was partially offset by an increase of miscellaneous income due to the specific efforts of the Management to establish suitable charges for services that have heretofore been unprofitable. To meet the reduction of Income, expenses of all kinds have been carefully surveyed and controlled. The expense reduction for the year 1932 as compared to 1931 was $2,753,240.79. Net Operating Income, before recoveries and charges, for 1931 was $8,103,945.07; for 1932, $7,212,116.91, a reduction of $891,828.16, or approximately 11 per cent. Dividends paid by the First National Bank-Detroit, to the Detroit Bankers Company during the year were $2,295,000.00 less than in 1931. This reduction in dividend payments recovered for the Bank the loss in Net Operating Income of $891,828.16, and retained $1,403,171.84 of operating profits. Provision was made for depreciation and more than $11,000,000.00 set aside for other Reserves. Beginning the year 1933 the total annual payroll will be approximately $1,000,000.00 less than at the beginning of the year 1932, as a result of general equalizations and salary reductions of Officers and Employees and some necessary eliminations. In keeping with the prevailing trend of interest rates on investments and the policies already established by large banks throughout the Country, interest rates paid on commercial accounts were reduced during the year. In addition, a regulation was recently passed by the Detroit Clearing House Association whereby, effective January 1, 1933, the maximum interest rate to be paid on Savings deposits will be 2% per annum instead of 3% as heretofore. These changes will be reflected in the year 1933 by a substantial reduction in interest expense. During the year 34 branches with over-lapping territories were consolidated and substantial operating economies obtained with very little loss of deposits due to these changes. This policy of consolidating competing branches will be continued. Resources, deposits and number of customers of First National Bank-Detroit, are greater than the total of all other Detroit banks combined. 175541-34-PT 11-26 DETROIT TRUST COMPANY In last year's annual report to the Stockholders, attention was called t the fact that the Detroit Trust Company had transferred to the Detroi Bankers Company its ownership of the First Detroit Company, which tra acted the bond and investment business of the Company, and that it wo thereafter devote its attention to activities of a purely corporate and fiduci nature. The net earnings of the Company of 1932 were $782,614.39, which is ab 10% upon the average of its Capital, Surplus and Undivided Profits for the year. During the year the Company has charged out of its Undivided Pros account and paid on account of its participation in the guaranty of depos of the American State Bank and other banks, the sum of $390,506.00. It transferred to reserves from Undivided Profits and current earnings, aft payment of dividends, the sum of $955,114.39. Its Capital, Surplus and divided Profits of December 31, 1932, were $7,273,008.18. In spite of existing business and financial conditions, a large volume new trust business has been placed upon the books of the Company duri the year. AFFILIATED BANKS Peoples Wayne County Bank of Dearborn First National Bank of Pontiac During the year just passed the Detroit Bankers Company caused a new bank to be organized in Pontiac, namely, the First National Bank at Pontiac The present eight outlying units are the result of the merging and consolidating of fifteen affiliated or independent institutions. This completes our chain eight wholly owned unit banks operating eighteen banking offices which serve suburban districts of Metropolitan Detroit and the city of Pontiac. These units have a combined invested capital of $3,347,647.35 and are use as depositaries for upward of 70,000 customers. Deposits in these eight subur ban institutions total in excess of $23,000,000.00. Net Operating Income for these banks in the year 1932 amounted to $150450.49. During the year provision for reduction in asset values were set-up amounting to $543,350.28. A comparison of the operations of these banks for the year 1931 and 19% is difficult, owing to the acquisition, during the latter year, of the First National Bank of Pontiac. If, and when, the Glass Bill passes, with its provision for State-wide branch banking, it is contemplated that all these banks, with the possible exception of the First National Bank at Pontiac, will become branches of First National Bank-Detroit. FIRST NATIONAL BANK BUILDING COMPANY AND GARAGE The operations of this company are absorbed in the First National BankDetroit. Net income before depreciation, but after taxes, in 1932 was $349, 447.57, as compared with $364,747.98 on the same basis for 1931, a decrease of only $15,300.41. In 1932 as compared with 1931, building rental income was down $54,892, or 4.3%; operating expense was down $50,838, or 14.2%; construction expense was up $4,325, or 8.1%; fixed expense was down $36,262, or 6.8%. Including the garage, the year closed with a net loss of $1,552, as compared to a net profit of $13,748 in the previous year. The garage loss in 1932 was greater by $20,197 than it was in 1931. (The garage paid the building $42000 rent). It is seen, therefore, that except for the garage, earnings were better in 1932 than in 1931. 1 COMPANY kholders a had a Were STD FIRST DETROIT COMPANY This is the investment unit of your company. On December 31, 1932, it had Capital, Surplus and Undivided Profits of $1,116,916.73. For the year 1932 its st DermNet Operating Profit was $96,844.07. Of this amount $36,227.68 was transthe Compe ferred to the Reserve for Contingencies, making that Reserve $466,672.22, and adjusting the Company's inventory acquired prior to 1932 to market value, no adjustment being necessary on securities purchased during the year. $13,954.85 in Special Operating Reserve was carried forward into 1933, and the balance of $46,661.67 was transferred to Undivided Profits. For the second consecutive year each office of the Company was operated at a profit. Branch offices of the Company were operated in New York, Chicago and San Francisco, the Boston and Los Angeles offices having been eliminated. Salaries and expenses were sharply contracted during the year, resulting in a total reduction of 46.71%. s and C Ton in the the sum of is and Its Cap DETROIT BANKERS SAFE DEPOSIT COMPANY This corporation with a capital of $100,000 was operated at a small profit in 1932. IN CONCLUSION You will be interested in the following excerpt from a speech made by the Hon. Carter Glass, Chairman of the Senate Banking and Currency Committee, upon the floor of the United States Senate on Thursday, January 5th, commenting upon the two principal Michigan Banking groups. "I am glad to testify from the thorough investigation of the Banking and Currency Committee, that the group banking system of the State of Michigan has been as thoroughly and effectively well-managed as is possible to a chain banking system, and has been of great service to the commercial, industrial and the credit requirements of that State. . . . They are capitalized upon a fair and honest basis. They have not gone out, as the managers of some such systems have done and stripped their victims by watering their stock in a shameful way." By Order of the Board of Directors. DIRECTORS E. D. STAIR, Albrecht, A. A., President, A. A. Albrecht Company. Butler, Lawrence K., Vice-President, Detroit Trust Company. Chittenden, Herbert L., Vice-Chairman, First National Bank-Detroit. Connely, E. F., President, First Detroit Company. Davidson, James E., Vice-Pres., Treasurer, American Ship Building Com pany. Dillon, William M., Vice-President, Scotten-Dillon Company. Drennan, George W., President, Drennan & Seldon, Inc. Eckert, Edwin J., Executive Vice-President, First National Bank-Detroit. Emmert, John H., Trustee, Murphy Family Trusts. Ferry, D. M. Jr., President, Ferry-Morse Seed Company. Fisher, Fred J., Vice-President, Director, General Motors Corporation. Ford, J. B. Jr., Vice-President, Director, Michigan Alkali Company. Hodges, Fred W., President, Detroit Lubricator Company. Hutchins, J. C., President, Woodlawn Cemetery Association. Livingstone, T. W. P., Senior Executive Vice-Pres., First National Be Detroit. McLeod, Norman, H. F., Director, Secretary & Treasurer, Parke, Davis & Newberry, Truman H., President, Newberry Estate, Inc. Obliger, Willard, Chairman, Frederick Stearns & Company. Rands, W. C., President, Rands, Incorporated. Robinson, W. Dean, President, Detroit Hume Pipe Company. Russel, Walter S., Chairman, Russel Steel Construction Company. Schlotman, Joseph B., President, Floridagold Citrus Corporation. Seyburn, Wesson, President, Dodge Estates Corporation. Shearer, Henry, Vice-President, General Manager, Michigan Central R.R. Shelden, Henry, President, Shelden Sons. Shiell, Robert, C. A. Parcells & Company. Smith, Howard F., Director, Canada & Dominion Sugar Company, Ltd. Stair, E. D., President, The Detroit Free Press. Stone, Ralph, Chairman, Detroit Trust Company. Stroh, Emil, President, Wabash Portland Cement Company. Young, DuBois, President, General Manager, Hupp Motor Car Company. |