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General.-It is to be noted that the chart submitted herewith contains no radical changes from our present structure. There are noted three additions, rather than changes, which it is believed are essential and for which the group is now ready.

It is, of course, true that a large number of details must be perfected. This will take time and the principal items involved are noted here.

The purpose of this memorandum, however, is to find a means whereby the officers may be informed of their responsibilities, this being considered necessary for the following reasons: A considerable group of senior officers who handled a large variety of functions in their old institutions do not appear to have any specific duties or responsibilities. These men are of such senior rank from the standpoint of their title that their activities either require almost constant meetings or else almost invariably result in embarrassment to the official staff as well as themselves.

Recommendation. It is therefore respectfully recommended that the atattached chart, with such changes as may appear advisable, be circulated among all of the officers of the group.

Joint Real Estate and Mortgage Committee.--Mr. James S. Holden, Chairman; Mr. L. K. Butler; Mr. Henry Sheldon; Mr. Fred J. Robinson; Mr. Wm. P. Holliday; Mr. George W. Drennan. This committee meets each Monday at 2:00 P.M., and at such other times as it may be necessary. The meetings are held in the Directors' Room on the eighth floor of the First National Bank Building. There has been appointed a standing Sub-committee of which Mr. Butler is chairman and which meets on call (generally once each week). Other committees are appointed from time to time as the occasion demands.

The minutes of the Sub-Committee are reviewed by the Senior Committee and the full responsibility therefor lies in the Senior Committee. The functions of this committee are to review and advise all of the units of the group upon all assets which depend either directly or indirectly on real estate for any part of their value.

A group of employees, under Mr. Rogers, supplies the committee with information, and various officers are regularly called into the meeting to present their questions.

This committee, considering that it is faced with a most involved and difficult question, is progressing rapidly with its problems.

Investment Committee.--Mark A. Wilson, Chairman; T. W. P. Livingstone; James A. Wilson; Edwin K. Hoover; Henry Hart; E. F. Connaly; Ernest K. Matlock; William J. Thomas; Oscar J. Buhr. This committee meets each Thursday at 3:30 P.M. in the Directors' Room on the eighth floor of the First National Bank Building.

The function of this committee is to review and advise all of the units of the Group on their investment account.

A group of employees, under Mr. Connables, and known as the Statistical Department, supplies the committee with the necessary information.

To expend their activities to all assets, the value of which is predicated on securities other than Real Estate, will involve the appointment of a subcommittee. This is highly desirable for the following reasons: First, there are numerous corporations whose stock is used as collateral, etc., in various units, and to such an extent that if difficulties arise in connection with the company the losses will be passed to us. Second, numerous unlisted securities are used as collateral to loans and no facilities are provided the Loan Officers through which they can determine the actual value of the securities unless these involve Real Estate. Third, there are a few very heavy concentrations of collateral that should be under constant surveillance by the Investment Committee and upon which arbitrary values should be set.

As soon as these functions are assigned the operating departments will furnish all necessary information and bring to the attention of those involved, these and such other problems as may require attention.

Recommendation.—It is recommended that Mr. Lawrence K. Butler be appointed chairman of the sub-committee.

Special Loan Committee.-This is a new committee. Its need is evidenced by the fact that millions of dollars of charged off items have laid idle for months and years and that a large number of claims have been handled in a manner from which large additional losses have resulted. The volume of the items has grown to such proportions that it becomes necessary to have a very

large number of these handled by the Loaning Officer, and in order to prevent further losses the establishment of this committee is recommended.

Recommendation.-It is recommended that a Joint Special Loan Committee be appointed. That Mr. Mark A. Wilson be appointed as Chairman and that its personnel contain the following members: Lawrence N. Butler, Donald N. Sweeny, Guy G. Bratton, and such others as it may appear advisable to add. It is recommended that Dennis A. Darin act as Secretary to the Committee.

Functions.-Having determined that the various group heads are responsible for their loans, it shall be their duty to refer to this committee all loans handled by them, at least eight days before maturity, which are in any way doubtful. Through the Credit Department they will obtain full information regarding all liabilities, direct and indirect, found in any of the units of the Group and including the Trust Company, the Mortgage Department, and the Special Loan or Claims Department. This information, together with the recommendation of the group head, shall be submitted to the Joint Special Loan Committee who will determine the policy to be pursued. When the loan is secured, full information regarding the value of the collateral, to be obtained either from the Real Estate Committee or the Investment Committee, depending on the nature of the collateral, should accompany the information given the Special Loan Committee.

To summarize—the group head assumes the responsibility for all loans in his group except those which he refers to this committee. This places all the loans of a doubtful nature under the supervision of this committee and full information is on hand through which an intelligent opinion can be given on the method that will result in the greatest return to the Group.

Credit Department.-It is recommended that the Credit Departments be consolidated in the office of the First Wayne in the First National Bank Building (Third floor). The folders pertaining to loans handled at the Peoples Office, Wayne-Home Office, and Fisher Office, to be carried in those offices but an index placed in the file in the First National Office to indicate the existence of this information in those offices. It is recommended that there be attached to each Loan Group a senior representative of the Credit Department, through whom all information will funnel from and to the Credit Department and the various groups.

The functions of this department should be limited to the gathering of and disseminating of sound credit information, it being suggested that all public contacts be handled through the Loaning Officer or the Group Officer responsible for the account.

Salary Committee. This Committee has been appointed and while they have had no meeting recently, it is assumed they will meet in the near future to review a number of items on which information has been requested by them, etc.

Joint Committee on Operations and Personnel.-Is functioning properly in so far as they themselves are concerned. Operating Bulletin No. 2, copy attached hereto, indicates how the responsibilities in the First Wayne National Bank have been distributed. Operating costs can be materially reduced as soon as the officers of the bank understand the functions of this committee.

Joint Committee on Insurance.—This committee is of old standing and functioning properly. It is recommended that Mr. Kenneth C. Thom be appointed Chairman of the Committee.

Joint Committee on Donations and Subscriptions.- No change recommended in this committee.

Joint Committee on Advertising Publicity, and New Business.This new committee is recommended for various reasons. It is understood that those are well known. It is recommended that Mr. Julius C. Peter be appointed as Chairman to the Committee and that Mr. Howard F. Russ, Jr., A. V. Moninger, and Kenneth C. Thom, be among the personnel selected for this committee.

Auditing Department.—This Department is operating properly at this time. It should unquestionably be under the supervision of the Directors and report to the Senior Officer in the Group. Similarly, the Legal Department should be removed from the jurisdiction of all officers as these two departments, the former at all times and the latter at other times, together with the Comptroller

of the Company, are the Directors' only guarantee against the personal responsibility that accompanies their positions.

First National Company.-This Company is in the process of liquidation.

Detroit Company.—This Company acts as nominee for any of the units. It will take a considerable length of time to place the stock now in the names of others, under control. Stock has been transferred in the names of employees and their families, in a most negligent manner. In certain cases, Bank stocks or stocks that have been charged off, have been carried in this manner and it will take a considerable length of time before we know that we are receiving all of the income to which we are entitled and that we are not subject to the liability that normally accompanies the holding of Bank stock. The use of this company as nominee has resulted in stopping a very substantial leak.

First Detroit Company.This Company should close its out of town office at once. It should further prepare itself to become a department of the bank, in being recommended that Mr. Henry Hart be in charge of the Department, with Mr. Murray as assistant.

First Wayne National Bank.—The Executive Committee meets more often than necessay under the above plan. It is believed the meetings could be arranged in a manner whereby two meeting a week would suffice.

At this point, it is in order to call attention to the suggestion that has been made from time to time in connection with the Loan Groups. A separate and independent group should be set up at once to handle the branch loans. It is further suggested that each group consist of the present official staff, together with a New Business representative and a senior representative of the Credit Department. Some specific individual within the group should be designated to handle the secured loans with improper margin. The purposes and reasons of this particular set-up have been outlined at length in separate memorandums.

The Building Company and Garage Company should operate as departments of the Bankers Company with Mr. Wesson Seyburn responsible for the public contacts. This building can be operated more profitably than at present, the service to the tenants must be improved and the building can be better rented. An effort should be made to dispose of the Garage.

The Peoples Wayne Realty Company should be liquidated.

The Detroit Trust Company and the outlying metropolitan banks are making sufficient progress in an orderly manner, to suggest that they be not disturbed.

The above, while lengthy, is only a synopsis. The writer feels that no discussion is necessary on a number of the items covered and suggests that he be permitted to submit the reasons, in detail, on such questions as will result in disagreements.

Respectfully,

JFV: IMCH

Comptroller.

EXHIBIT G-1.-COMMITTEE EXHIBIT No. 102, JANUARY 30, 1934

1st De

troit Inv. No.

Amount

Bond

Unit cost

to 1st Det. Co.

Unit cost

to Det. Trust Co.

98%

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97
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96
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99. 50 100. 5212 103. 134

98.00 100.00 100.00 100.00

12 13

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EXHIBIT G-1.—COMMITTEE EXHIBIT No. 102, JANUARY 30, 1934—Continued

Ist De

troit Inv. No.

Amount

Bond

Unit cost

to lst Det. Co.

Unit cost

to Det. Trust Co.

9812

14 15 16 17 18 19 20 21

991 933 991 981 991

97. 50 100, 00 97.00 99 99 100.00

991

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Portland General Elec.
Toledo Light & Power.
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I hereby verify the above unit costs, and other relative figures are as per the records of the First Detroit Company.

FELIX M. FARRELL Date: Jan. 9, 1934,

EXHIBIT G-2.-COMMITTEE EXHIBIT No. 103, JANUARY 30, 1934

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EXHIBIT G-2.-COMMITTEE EXHIBIT No. 103, JANUARY 30, 1934—Continued

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I hereby verify the above unit costs and other relative figures are as per the records of the Detroit Trust Company.

The above unit cost does not include the usual fee allowed by state statutes for administering trust funds.

DETROIT TRUST COMPANY, By H. C. VAN EVERY, Auditor.

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