Last year's record high of total receivables was surpassed on November 30, 1960, by nearly $7,000,000, an increase of 21.24%. You will find the comparative figures by category of receivable itemized on the consolidated balance sheet exhibit on page 8 of this report. We are pleased to note here, too, that the largest percentage increases occurred in the more profitable or "bread and butter" categories. Direct installment loans marked another significant gain this year with a 28.69% increase in outstandings. Increases in receivables outstanding closely govern proportionate increases in reserves for loss and deferred income as noted in preceding paragraphs. CAPITAL FUNDS In planning for continued growth, your company increased its capital funds during 1960 by $2,000,000. This consisted of $1,000,000 in Capital Debentures sold to residents of Iowa during the first half of 1960 and a $1,000,000 additional subordinated promissory note sold to an insurance company in October. Total capital funds at November 30, 1960, amounted to $10,745,363. This amount is the "borrowing base" of the company which enables us to borrow additional money of a senior nonsubordinated classification. A breakdown of these funds can be found in the liabilities section of the consolidated balance sheet. 733260-61-pt. 2——61 The annual dividend rate of $1.00 per share on Common and B-common stock established in the third quarter of 1959 was continued throughout 1960. Payment of dividends at this rate for the full year of 1960 compared to one-half year in 1959 plus payment of dividends on additional B-common shares sold through exercise of warrants accounted for the approximately $17,000 increase shown for common stock dividends in the accompanying chart, Sale of the additional $500,000 preferred and the share for share exchange of another $500,000 of 5 preferred for 512 preferred during the latter part of 1959 caused the increase in preferred stock dividends for 1960 of approximately $28,000. A new high level of net earnings was achieved by the Midwest Motor Agency with a remarkable 81.06% increase over the previous year to $40,410. The agency offers a general line of insurance through all offices of the company and maintains a skilled staff of adjusters at key points to service its writings. This adjusting service is also available to companies not normally operating in this area. The strong performance by the agency in 1960 was primarily in selling renewals of existing policies. This attests to the fine services rendered by the staff in our various offices and the resulting customer satisfaction. The Midwest Security Life Insurance Company, a wholly-owned subsidiary reinsuring credit life and health and accident policies, advanced its outstandings by 31.59% to $39,483,731. The progressive annual increases in the income tax rates which became effective in January of 1958 on life insurance operations have restricted the potential for net profit in this area. For 1961, the tax will be at regular corporation tax rates. DIRECT LOANS Interstate is continuing its expansion of direct loans on a sound, aggressive program. This includes the direct installment loans made under state small loan laws and on which data have been furnished earlier in this report. It also includes the Industrial Loans made through our automobile discount offices and which generally exceed the amounts available under the small loan category. Industrial Loans increased 24.28% to a new high outstanding of $3,587,589.49 in 1960. This performance by Interstate's newest service indicates a need is being fulfilled. With our combination of services the purchase of automotive and other sales contracts and the extension of credit direct to individuals over a wide range of needs for different amounts-we can take pride in becoming more and more the finance headquarters for all our customers. The soundness and value of our expanded customer service policy are directly reflected in the substantial growth shown in this report for these operations. PERSONNEL Frequent reference of appreciation has been made to our staff of 231 employees throughout this report. The achievements of the company year by year are a measure of the manner in which these people, as individuals, conduct themselves in their daily business responsibilities. Your management thinks the work has been carried through exceptionally well, not without room for improvement certainly, but in an outstanding manner. To encourage further excellence, the Interstate Profit Sharing Stock Bonus Plan was established effective as of December 1, 1959. All regular full time employees age 25 to 64 are participants in this plan which provides a savings program at no cost to the employee. Amounts realized by participants in the plan are governed by the success of the company and are based on the relative salaries earned under a specified limit. All funds of the plan originate from annual contributions by the company to a Trust Fund which invests in B-common stock of the company. The growth factor with longevity of service is expected to be substantial, and the plan will provide more employees an ownership interest in their company. The Interstate Profit Sharing Stock Bonus Plan supplements the Group Insurance Plan which has been in effect for 21 years and, through constant modernization, has proved equal to the best available in our area. Your management is confident these benefits will accrue to the benefit of stockholder and employee alike and will encourage the development of an even greater depth of experienced employees through whom progress will continue for years ahead. |