PROGRESSIVE STEP

Nelson Evening Mail, Volume LXX, 26 May 1936, Page 2

PROGRESSIVE STEP

PERMANENT BUILDING SOCIETY OF NELSON 74th ANNUAL GENERAL MEETING LOWER INTEREST RATE CONTEMPLATED The seventy-fourth annual general meeting of members of the Permanent Building Society of Nelson was held at the office last evening, the chairman, Mr S. F. Bolton, presiding. The annual report stated: — In presenting the seventy-fourth anual report your directors have pleasure in placing before you the very satisfactory position of the society. The profit for the year has been dealt with by your board in term of rule 52 as follows: —

£8074 11 2 During the year interest received amounted to £12,052 14s Id, as against £11,789 9s last year, while profit allotted members on their shares was £123 4s 7d more. The reserve fund now stands at £26,512 5s 2d, and liquid reserve as follows: £ s. dDeposits with Bank of New Zealand 18,000 0 0 Post Office Savings Bank 2,141 1 3 Nelson City Council ... 2,000 0 0 £22,141 1 3 During the year 179 ioans were granted or rearranged, the amount involved being £80,035, and the amount on mortgage at the end of the financial year was £244,633, an increase of £18,163 for the year. The number of new dwellings financed totalled 60. All other accounts show that the society experienced a very active year —deposits with the society increased by £9,160. and the total amount held on deposit at the end of the year was £138,735.

Shares held by members increased by 895, and the 15,863 shares held by members stood at the £101,709 18s. Your directors deem it advisable to open a new account with a credit of £1512 5s 2d (part of the reserve fund), to be known as the “Profits Equalisation Fund,” and the necessary steps have been taken to adjust the general reserve fund accordingly. During the year two properties, one at Motueka and the other at Tahunanui fell into the society’s hands. The Tahunanui property was disposed of without loss. The society still owns four properties, the amount of capital at stake thereon being £3432. These will be sold as opportunity arises. In accordance with the rules, Messrs B. F. Bolton, N. L. Kerr and W. Thomson are the retiring directors, and being eligible, offer themselves for reelection, and being the only nominations received, must be duly elected to hold office for the next three years. Messrs W. G. ..Griffin and C. B. Hodgson, being the only nomination received for auditors, must also be reelected for the ensuing twelve months. CHAIRMAN’S REMARKS The chairman, before putting the motion for the adoption of the report, stated: "I would like to enlarge on the report, etc., and to express my satisfaction that the society has done so well during the past twelve months. During the past three or four years the society carried on its activities and has helped a large number of people to obtain homes, not only in the city but also in the surrounding districts. In Motueka especially, we have financed quite a number of new homes during the past year. Notwithstanding competition from other financial institutions, the society has maintained its popularity with the public. “During the past twelve months 182 applications lor loans were granted by your board, of which 60 were for the erection of new homes, 41 for paying off other mortgages, and the balance were rearrangements of existing mortgages with the society.

“Some idea of the activities of the society will be gained when I tell you that some £BO,OOO was loaned, whilst some £61,000 of loans were repaid during the period under review. “The 15 year, term is proving very popular with members, and to date some £72,297 is held on mortgage under this heading. "90 new loans were granted during the year in this term. “In view of the fact that freehold sections for building purposes are becoming more scarce each year, your directors have now agreed to lend on leasehold property, and two or three loans on this class of property have recently been .made. “As the amount loaned during the year increased, so also did the amount taken on deposit increase, and the amount held at the end of the year was easily a record for the society. More money was offered the society than could be accepted and made use of, thereby proving that the public held the society in high esteem as a source of investment.

“The number of shares also greatly increased with a corresponding increase in the capital account which now stands at £101,709. The members owning this large sum are credited each half year with profit at 5 per cent, on the share values, and during the year some £4392 was distributed this way.

“The majority of members who were previously finding it somewhat difficult to meet their monthly payments, managed to not only meet all current interest, but paid substantial sums off the principal, showing that matters financially were improving generally, and it is contemplated that during the coming year very few members will be in arrears as regards their undertakings with the society. During the past two or three years your directors have deemed it advisable to “carry” those members who were finding it somewhat difficult to make the regular peyments, and such action is now showing the results of so doing. Unfortunately, however, in two or three cases the position of the borrower was so hopeless that the board had to take action. “In conclusion I would just like to say a few words in regard to lower interest rates charged members for loans. Your directors consider that the general reserve fund is now large enough dor all practical purposes, and that adequate provision has been made for likely losses on properties, and that some steps for reducing interest rates should be taken. During the past two half-yearly periods a surplus (after deducting the usual 5

J per cent profit to all shareholdings) of some £727 in each case has been ■ made, and it is anticipated that at least the same amount will occur at the end of the current six months, and in all probability a similar surplus at the end of March next, provided however, that deposit rates are not increased. ‘ “Your directors therefore are of the opinion that as the 75th anniversary will take place on the 21st April next, that such an important event in the society’s history should be celebrated in a fitting manner, and no better way ' of doing so could be achieved than by i reducing the rate of interest on loans! by A per cent., viz., to 4£ per cent, per annum. Such reduction would be applicable not only to all loans in force at that date, but also to new loans taken up thereafter. “Such a reduction in the present turnover would mean that borrowers ; would pay between £I3OO and £I4OO less each year in interest, thereby re- I aucing the “surplus profits” made during each half-yearly period. The “surplus profits” made during the past year amounted to £1554. "Your directors realise that by lowering the rate of interest, as suggested, only a small ‘surplus’ can be anticipated at the end of each halfyear in future if the rate of profit of 5 per cent, is to be maintained, and; have therefore taken steps to transfer £ISOO odd from the general reserve fund to a special fund called “The Profits Equalisation Fund.’ It is also anticipated that the ‘surplus’ made during the coming year, will make up this fund to approximately £3,000. “Having taken steps to give the borrowing members some measure of relief by lower interest charges, your directors have also taken steps to give the non-borrowing members (about 20 per cent, of the total members) the same consideration by providing a fund that will be called upon if sary to make up sufficient each halfyear to allow them to declare the usual 5 per cent, profit, which by the way, has been maintained ever since 1901. Any surplus made during the next two or three years will no doubt oe also credited to this special fund, so that notwithstanding the lower interest rate to borrowers, the society should be abie to continue paying 5 per cent, profit for some years to come, until this special fund is exhausted. “Members must realise, however, that the rates payable on deposit money must play an important part in the making of ‘surplus profit,’ and any increase in future in deposit rates may make it necessary for your directors to reconsider increasing the inter- : est rate on loans. “When the Government reduced the deposit rates in 1932, 1933 and 1934, the full effects of so doing are only now being felt by the society, in fact it will be in August next that the last of the deposits subject to such reduction will mature, and then the full effects of such reduction will be felt by the society. “On the other hand any increase in rates will not be fully felt until two years after same occurs. “Taking these facts into consideration your directors feel justified in reducing the rate ot interest as anticipated in April next, and alsc feel confident that the rate of profit of 5 per cent, will be maintained in the future as in the past. “Your directors have acted on the assumption that the Government will not pass legislation making it impossible to carry out the foregoing, and in the event of such legislation being passed, then the board will have to re-consider the question accordingly. I also anticipate that - by the 31st March next the total amount of money out on mortgage will reach at least a quarter of a million pounds, , “May I in closing my remarks, just make a brief reference to the important part this society has played in the life of the Nelson district especially during the post-war years, in helping citizens to acquire new homes. “Since the beginning of 1919 the society has financed 340 new buildings of which roughly 320 were dwelling houses, in the city and district, and the money advanced for this purpose totalled £201,648. This works out at an average of 20 new buildings per year, and a yearly sum of £11,862. One can readily realise therefore the important part that the society is playing in the advancement and employment of the local population.” In seconding the motion Mr W. Lock referred to the fact that little interest appeared to be taken in the annual meeting by the members, which rather proved that they were more than satisfied in the manner in which the society’s affairs were conducted. There being no other speakers, the report was adopted. The directors’ remuneration was fixed at the same sum as last year, and the retiring directors, Messrs S. F. Bolton, N. L. Kerr and W. Thompson being the only nominations, were duly elected for a further term. The chairman also declared Messrs Griffin and Hodgson duly elected for a further term at the same remuneration. Before the meeting was closed Mr Leaper moved a vote of thanks to the auditors and staff, which was rev plied to by Mr Hodgson on behalf of the auditors, and the secretary on behalf of the staff.

30th Sept., 1935, profit of £ s. d. 5% credited all shares 31st March, 1936, profit of 2226 13 10 5% credited all shares Placed to Property Con2296 10 9 Fund Placed to Office Furniture 1395 12 2 Account Carried forward to meet accrued interest on de60 0 0 posits 2095 14 5