The 5,000 mostly elderly and retired people who almost lost more than $10 million in the now defunct Roanoke Industrial Loan and Thrift Co., were repaid in full this week.
"These people lost their income," said Fred Phillips, president of the New Bank of Roanoke whose holding company devised a plan to collect Roanoke Industrial's bad loans and pay off its depositors when the savings institution closed its doors five years ago. The depositors were paid off their final 20 per cent on Tuesday.
The repayment came six months ahead of schedule, Phillips said. He added that all creditor have been paid this week as well as subordinated debenture holders who were expected to receive only 60 per cent of money. The savings were uninsured.
Subordinated debenture holders were paid a higher rate of interest but were third in line for repayment.
The State Corporation Commission closed Roanoke Industrial Loan and Thrift on Jan. 3, 1974 because of financial difficulties. About $112 million was lost, Phillips said and a Depression-era-type rush to the bank ensued. Most of its customers were "a lot of retired people who were looking to (their savings) to live on."
Roanoke Industrial had paid interest rates of 8 1/2 percent on five-year certificates of investment in 1973 when the highest interest rates were "in the 7s", Philips said. The higher interest rates attracted many elderly people, Phillips said.
Several months after Roanoke Industrial was closed the New Bank Corp. of Charlottesville agreed to collect Roanoke Industrial's substandard loans and repay its customers 10 per cent every six months. The money was deposited in savings accounts paying 5 per cent interest.
"We saw an opportunity," Phillips said. "The SCC was looking for a buyer. Commercial banks didn't know what part of the $12 million was collectible."