The building is insured for $52,000.

At the time it was purchased there was a mortgage thereon of $22,500. This has since been reduced to $7,500, which item is carried as a liability in this report. The accrued interest on the said mortgage was $140,63, which has also been included as a liability.

While the company reported the value to the department at $115,000 it is still carried as $76,000 on the books and it has, therefore, been necessary to carry the difference, to wit: $39,000 as an income item in this report.

Mortgage loans:

The mortgage loans are 53 in number, all on property located in Erie county. The papers were examined and found to be in order and proper fire insurance carried. At the time of the last examination there were 63 outstanding mortgages and 15 parcels were appraised by this department and no loans were found in excess of the legal limitation. At this time it was not deemed necessary to appraise as many as before, and five mortgages were selected to be appraised by an appraiser appointed by this department. His report dated November 15, 1919 shows the loans to be within the legal limits. The loans are nearly all on residences occupied by the owners and many are reduced from time to time.

At a meeting of the board of directors held on September 12, 1918, it was decided to raise all interest rates on mortgages to 512 per cent, where the rate had been 5 per cent, on the next interest date. The loans all bear interest now at 512 and 6 per cent. The interest received and accrued was checked and the figures are carried in this report.

The first three items as set forth above were counted and examined. The last two items were in possession of a bank as security for borrowed money amounting to $22,500. Proper certificates as to the amount borrowed and security held have been obtained from the bank. The money was borrowed to pay for the bonds.

The market values have been obtained from the audit bureau of this department, at which figure they are carried as an asset in this report. The difference between the book and market values, $448.97, is entered as an cutgo item.

The accrued interest on the above bonds amounted to $439.05, and is carried as an asset and an income.

Accounts receivable:

The accounts receivable representing fees due for abstracts and title policies were checked against the ledger accounts and found to be $33,497.50. Of this amount $4,156 was found to be twelve inonths overdue and in accordance with custom that amount has been deducted from the assets.

As each account was checked the liability of the company for commission was noted and the total of $270.62 has been set up as a liability in this report.

Cash:

The cash in banks was verified from the company's records reconciled with certificates obtained from the banks.

Title plant:

The value of the title plant at the time of the last examination was allowed at the value carried by the company, viz.: $100,000. Since that time the Insurance Department has directed all title companies to reduce the value of their title plants at least 10 per

cent each year. The company has so reported this item, and on December 31, 1918, it appears in the annual report at $60,000. At the time of this examination, September 30, 1919, threefourths of the current year had expired, hence there has been deducted $7,500 additional, representing the proportion for the said expired period. While the company reported the item in its annual statements with the reductions as requested by the department, it has not reduced the asset on its books: therefore it has been necessary in this report to enter the reduction as $47,500 in the outgo account.

Accrued interest:

These items are discussed under the headings of "Bonds" and "Mortgages on Real Estate" respectively.

Liabilities

Borrowed Money:

This item represents money borrowed to pay for Liberty bonds and is discussed under the asset item of "Bonds."

Mortgage payable on Company's Real Estate and accrued interest thereon; taxes:

These items are discussed under the asset item of "Real Estate."

Accrued Bills and Expenses:

This item was made up from a detailed check of the vouchers paid subsequent to September 30, 1919.

Accrued Commissions:

This item is discussed under the asset item of "Accounts Receivable."

Losses:

The company has paid no losses in 1919. Filed with the papers of this report is an affidavit from the General Manager to the effect that there are no outstanding claims against the company as of the date of this examination.

Surplus

In the report of the last examination there is a table showing the company's net earnings, dividends, and amount added to surplus each year from January 1, 1904 to the date of the examination, October 31, 1914.

The following is a continuation of that table from the latter date to September 30, 1919:

Surplus as per company's books September 30, 1919. . . . . Add profit on building account not included on company's books

Company surplus September 30, 1919..

Less deductions from surplus as a result of this examination

$151,379 16

1.734 92

$153, 114 08

11.399 44

Surplus as per report....

$141.714 64

The changes in surplus are accounted for as follows:

The company's business is in the title field only. It does not guarantee mortgages. Its management is conservative and its earnings such as to warrant the dividends paid. At the time of the last examination the surplus was reported as $174,494.01 – the surplus as a result of this examination is $141,714.64, or a decrease of $32,779.37 in five years. When it is considered that during that period there has been deducted $47,500 on account of the title plant it will be seen that without this reduction the actual change in surplus during that period would have resulted in an increase of $14,721.63.

TITLE AND MORTGAGE GUARANTEE COMPANY BUFFALO, N. Y.

Examined on increase of capital stock from $250,000 to

$500,000, as of February 27, 1920.

Report dated March 3, 1920.

Examiner: Herbert C. Clark.