BANKING: 100 Cent Integrity

In the bank crisis of 1930-33 some 37 Philadelphia banks, with deposits of $110,000,000, gave up the ghost. One bank which squeaked by was Integrity Trust Co., witt $47,240,000 of deposits (1931). Integrity, with its assets badly frozen in real estate, was probably saved because it had its crisis before most others.

In the fall of 1931 it was barely saved when twelve Philadelphia banks, investing in panic-prevention, pledged it $50,000,000 credit, deposited $12,000,000 cash. Later the twelve banks, backed up by Reconstruction Finance Corp., forced the resignation of the president, hired instead short, short-tempered George Washington Brown Jr., RFC’s former Philadelphia manager.

With all the heat turned on, George Washington Brown could not thaw the frozen assets fast enough. In 1934 RFC had helped by buying $4,000,000 preferred stock on condition that the twelve banks would use $3,000,000 of their $12,000,000 deposited with Integrity Trust to buy a second preferred issue, give promise they wouldn’t scuttle and run. Still the assets refused to thaw.

Last summer FDIC examiners wrote LOSS in place of Brown’s “slow assets” and “doubtful assets,” on Integrity’s books, declared the bank insolvent.

The laying out of the body was done by FDIC, local banks and young Jack Bell, newly appointed Pennsylvania State Banking Secretary. Last week they invited the public in to see the damage.

Depositors took no loss because Federal Deposit Insurance Corp. worked out a plan whereby the $6,000,000 of over-$5,000 deposits as well as the $29,000,000 of under-$5,000 deposits which it is obligated to protect were handed over to two other Philadelphia banks. Reason, according to FDIC’s beaverlike Leo T. Crowley: “If we had let a bank like this go it might have had a bad effect on other Philadelphia banks. Also … it would mean a forced liquidation.” First National Bank of Philadelphia got Integrity’s $25,000,000 of commercial deposits, Western Saving Fund Society the $10,000,000 of savings accounts. To the two banks went $14,000,000 of Integrity’s cash assets and an advance of $21,000,000 from FDIC.

Whether FDIC will get its money back depends on how much it can realize on Integrity’s remaining assets, valued on the books at $28,000,000. It hopes not to lose more than $2,500,000. RFC’s $4,000,000 of preferred stock, the twelve Philadelphia banks’ $3,000,000 of second preferred, the holdings of the common stockholders (priced at $215 a share in 1929) were left in the cold. To George Washington Brown went the compliment of being asked to serve as liquidator of Integrity’s frozen assets.