The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Committ ee on Branch Group & hE..i.n
(Jan - ar 1931)
Bd.1 ing
Banks
Branch
4
.D
•
•
END
KIND OF MATERIAL OR HUMBER
NAME
OR SUBJECT
SHEET
4 1.11
Committee on Branch Group & Chain Banking
DATES (Inclusive)
J;:...n -
PART HUMBER
6
ar 19.31
• rch 31. 1931 •
•
0
1
0
1 '
i
1
o r 1
t
ly
t
or.
•
•
•
B . . \.l''H.
FEDE t.AL REHEHY E
OF CLEYELA..."" 'D
.!arch 50, 1951 •
• J. H. Riddle, Secretary,
Committee on Branch, Group and
Chain Banking,
Federal Reserve Board,
{ashington, D. C.
y dear Mr. Riddle:
I have your letter of
arch 24th but re-
gret that I was not in the bank in order to ackno ledge
receipt of it earlier.
I am very sorry indeed that the error in
listing Mr. Riefler as being connected with the Committee
on Branch, Group and Chain Bankihg, occurred.
I hope it
ill not inconvenien ce you any and would suggest that
Mr. Riefler's na.:ne be ruled out and your name written
above his.
If this is not satisfactor y I
ill be glad
to send you corrected sheets which can be substituted
in lieu of the ones shotlng the error.
Yours very trul·
>
F.m
>
.
,
p
i
.l
0
•
t
•
5. l
ty
r
Go
rnor
r.
or
I
Governor
11 y' s le ter of • rch 18th to
ne o
c
it liz tio •
rul
no.
our in o
yours,
t1on
co
of
, l
t
•
'
•
2, 1 .1.
o ernor
•
• roh 24, 19 1.
r
t
ly yo r ,
'
2 •
9 1.
or
r
•
r
C
t
r
,
h
•
23, 19 1
•arc
r
r.
r
s
propo
i
d to
0
0
He
'()
al.
t
do
t
r
0
•
oc
•
'
_
.1
Vil
s to
t
r-
o.
tl
~
*~~ ~ -
o ld
it
t
1eth r t
C
.
1 •
.
19
tlon
tio
nt
cono ic
i
ry i
b
h
0
1
11
t ri 1 1
t
0
,
on it if' t
1 in
au of A ricult r 1
nd t
n
a
is 1
•
to
.a.h
in 1923
co
r.
1nv
xp ct
se
ile
of
t
it
ban s
ir loan
t
rdin
tion r
to t
cti
1ch h
r.
y
d
ch
a tent tive
ion
0
,,
.:k..-<-
.0-X...,
,,
11
or
.c.
Fl::iJE.RAL RESERVE:
BOARD
To
1lr . Hai'JilQ.lld
From
.....r .
')
•
Date_ :"rch 23
Subject:_
• •n
2 - 8496
have · ~-~c
tar (signed br ...,•• eo.d) to tne Jo.notro 1ler t &
office askin
or tne c
it'on reports on tllo gro1ps of bnnks . One roupJ
consists of 225 nationa l ro.n s which s1sr~nde d dirinR 1929 an 1930 , und
we reaueste d in e ch
se t'1.e l'lst c 11 report nrior to • ilure . r:iss
eston unoer ... tal"I s tout the kin of tabul1.ti on~ to be ·tde 1ith tnese
reports an can proceed 1ith the corn'1iln tions 1hen thoy come over . The
othor groun on ists of 800 ~tional banks nich
re in existenc e on
rovembe r 15 , 1920, but have since suspende d .
,e :3 ked tor tilese 800 banks
the cal 1 report of 1:ovember 15 , 1920 .
ne data wnich ve ant to take fron
the~e reports wnen t ey come over is the sn~e as that hom on nu es 36 - 38
of lolwne Io the o~ntrol ler' s renort for 1920 . ~his mRtoria l s oula be
co.npiled by s !ltes as well as by size of bank, size of co.. t:1Unity , etc •
•.•r . Smeud underst na.s the type 'Jf :-nal.;&i s which I have in -nin here . If
these r no ts C'1.ne over in y ab ence , nybe you can m ke ar ·ange.en ts to
proceed witn the tabul tions .
Ir .
is enc ing us si.x c rie of nis stu :r on "non-ban king
'Jo:npeti ·on in
te o.f Ohio . '' 'Jhen they arrive . 11ill you ple se prepare or Dr . ~ol en eiser t s ~i ature a lotter to each of the eder 1 e serve banks '.!nicago , Kansa ~ity an
alla.s asicin the, to prepare si il r
studies . ~end to e'1ch of these 'lanl<"s a copy of le. in • s re ort a a
ide . Be sure, 10,;ev r , to an•lise them that it i not necessar ;r 1n all
respects to be a elabora te ac r.1erelan d 'las . The im"lortan t points ar
a statisti cal story of tne growth of co~peti nf inst i tions a~ conpared
vith banks, a su.."'?'?lary of the princip al n ovi ions
a11s co erin such
instit 1tions. and erhg,us co e testi ony from L>nn'k:er. as to the kin of
competi t ·on the .. are meeting and its effects .
l ming • s stuay is restrict ed
almost entirely to buil 1n ano l an a soci tions . In the other i tricts,
oNeve, the. sno1la. f!·ve attentio n t0 othAr competi n, instit tions, such
a interme iate ere it ar.'k:s , feaeral l n~ b nks , etc . You 1ill probably
ant o
a r th r carefall y le. in t s re o ·t before you prepare the
lett r t0 the other reserve b n,cs in or er t h'lt you
y co,ument , ore
fully on t e imno r t nt features .
,,iss ~vans ants to take a vacat;on of three rneks, "ithout oay
se , beginnin B 'on ay • rcn . 0 h OP uod:nest:19:y if:I3rH 1st I BfA no t
su=e::iim;e:i11.._
lea e check :.1 the a.ate· it:, ner ana. notif'< ..:r . qo na
ays bf fore the date hat sne wi 11 oe off t e nay roll for t'l
·eeks . I lw'i11 nrobably rn k arr n ment to ay or to - orro~ 1ith
nother co:nptom eter operato r to c1:ne i ... nea.iatel ana b 11i t
s a , onth .
I i11 aa.rise ritn yo
r her > ut tnis before lenving so that yo can
n re ner put on the nay rol 1 for th month .
iss H
il 1 can snow ou
fro, ~e fi1Ps the nrocedu re in getting peonle on tn ~a roll .
I
2,...-
•r. Ha ond
r.
le
i
r. · istr sp
0 e bout
This ill be~
ons o
'lnt t et bul ti0ns
clerica l ssi t nee in
r nged, but uni er no
sched le to su fr .
h~- vork.
s
T
If t
nd. i io
e loy
an i
cler;c
l
t1
o
l clerk or t
be unAcono~ic 1 to
is
ill will l ok fter
it tn tn nroner o~rti s. ~hem
ents, etc., sho,1 be u ep ea or vo
for ")r. '}ol en1eiser •
l/:"Il'lture.
... ince r. 1ickens h
the arran ment itnhi, toa
nut him on t11
a
· ork ve ... l1
o·
11 ·n
,i:r,
• i1
n
i tribute
letter, such a
c.tmovle
ut all other letters
in the ho pi al ev
vork ·or the .,o nmit te
~oon as he
ell
r
of t 1ree
ff
mni 11
t
p
to have
~0ur~e. t
r. ,, o1 en· e i E
assistan t o
l
n
n, il
,.
e proper n
s ch
s
ts TJl c don
___ ,
t
'3
·e 1 ci.e
h ve not
y to o in
o
.... .
k,
•
In t
h
/:,rm. NO, 131
-
Offi ce Cor resp ond ~nce
To
~-t1k
-
F"EDERAL RESERVE
BOARD
• • r • ...,mead
rrntions Fil
Date_ ~r h ... 3 .._ 1931
Subject:
From ..:r . :uadle
jPe
e
i<
n
tentativ f1 sched 1le nrerore d by.
n oposes ti send to nctive banks with
infonM .tion
egar in
he view o ·
thAir loans 'lnd in1estm ents .
to talk to you about tnis so .etime uhile I
q
&.
a'I v .
• ,ickens wnicn he
ettin~ some detaile d
:. r . ,l'! ens may vant
'i.'his is, o
c-:>ur&e ,
first r0uph ara t and he exnect s to do scxne ed·t~n~ on it if the iaea
seer.is to meet vi th apurovn l .
out
sirn 1 r ;nriuiry i
comp rison o~
mo e i
prob11 1
nretty
ell
1923 and thn
he pe ;ods · ou11
ve should ask fo
oul
The Bureau of
sions for slJlle
ears
materi al is still
vailab le .
oubtles s be very interes ting .
i'Urther-
this info!"'I! :ltion as of the end of 1930, it
i ve S'Jme ina.ic• t ior
leaned up o
gri.cu1 tural Econo.n ics sent
s to vhethPr the banks
ere n'J v
·hether •;e :ni --ht expect a continu ance of
o come .
uspen-
.
•
•
1
•
•
•
t
•
ti
•
•
n
•
•
•
•
"
II
"
r
2•
•
•
•
----------.
re
• 1 31 .
n
, 1
2
0
1.
'
•
c.
0
1.
ly
INSTRUCTIONS TO FEDER.AL RES:ERVE BANKS FOR .ANALYZING TYPICAL C.ASES
OF MEMBER BANKS WHICH H.AVE SUSP:ENDED OPERATIONS
PURPOSE:
The purpose of the analysis is to show in concise form the history
(gained from comments contained in the reports of Examiners over a period of
years) of factors developing in the bank mich u1 timately led to its suspension. The history should commence at a time the bank was in a satisfactory
or fairly satisfactory condition and be followed through to its suspension.
It is intended that a person reading the report should be able to
obtain an understanding of the problems which confronted the bank and to form
therefrom an intelligent opinion of how its affairs had been conducted for a
few years imnediately preceding its suspension.
METHOD:
For each of the twenty suspended banks on the attached list prepare
an analysis in accordance with the attached examples, Exhibit 12/1 and Exhibit 12/2. In the interest of uniformity these examples should be closely
followed. In order that this small sample may be as nearly typical as possible of the suspended banks ir, your district the names have been picked at
random without any regard to size, location or cause of failure.
Do not write the names of the oanks on the analysis forms, but number
them according to the numbers on the attached list.
In furnishing the population of the city or town in which the bank was
situated, give the census figures for 1910, 1920 and 1930.
So that those studying these re:ports my have some idoa of the economic life of the community served by the oank which suspended, a brief reference
to the principal crops grown or industries followed should be given.
EXAMINERS, 1 co:::•:ENTS:
Attention should be devoted to brief com.-nents by the Examiners indicating their impressions of the general affairs of the bank. Examiners in
each instance should be designated by letters of tl1e alphabet, merely to
inform the reader whether or not the reports had been prepared by the same
ma.n. W'nenever reference is made to a certain Examiner, obviously the same
letter should be used throughout.
The statistical information regarding the condition of the bank, given
at the beginning of a report and immediately following the comments of the
Examiner, are to ce taken from the examination reports.
•
-
2
-
EARNINGS:
1his information should be compiled for five complete calendar
years immediately preceding the bank's suspension. It is to be derived from
the Earnings Reports submitted by banks to the Comptroller of the Currency,
copies of which arc in the possession of the Federal Reserve Agent.
The item 11 Uet Income" comprises the difference between the total
debits and credits to Profit and Loss Account exclusive of debits for
"Losses Charged Off" and credits representing "Recoveries" on assets previously charged off.
'lhe item "Recoverias 11 represents the collection of items previously
charged off the bank's books as losses.
The i tern "Losses Charged Off 11 represents the write-off of worthless assets and depreciation on securities, banking house, furniture and
fixtures, etc.
ASSESSMENTS EEFORE SUSPENSION:
The histor~,r should include voluntary assassrnents as well as those
paid under statutory levy in order to remove an impairment of ca9ital.
13..l.D .il.SSZTS PURCH..\SED l3Y S IDCKHOLDERS:
Inasmuch as this information is not ~iven in Reports of Earnings,
but invariabl,r is touched u~Jon in the reports of Ex.a.miners, it will bo
necessary to search the latter recora.s to ascertain to what extent, if at
all, stockholders have purchased assets directly from tho bank or throU@l
a Holding Company, or have otherwise made voluntary contributions to avoid
an assossmunt or the reduction of Capital, Surplus or Undivided Profits
Accounts.
•
Federal Reserve Cornr.ii ttee on
Branch, C--roup and Chain Bankin;
Cour:ients Re,:;arding tl1e Preparation of Form
!far ch 20, 1931.
!'.
Form F sho1:..ld be prepared for each of the twenty suspended banks from
the beginnin6 of 1920 till the tine of suspension. Two exar,;.ination reports each
;rear sho,Jld be analyzed and a separate co11;· of Form F :prepared from each report.
In case there l1ave been nore than two examination re·L>orts of any bank in a given
year, select those nearest April 1st and October 1st of that ;:;ear. A blan..1< form
of t:1e exa.:,:iination re iort is attached with narked references to the i tens to be
tc:cen off on For;:n F. These are references to the current edition of the examination forn, of course, and certain adjustments vrill have to be made in ta~cing off
the data for earlier years.
1. In connection with slow loans, doubtful paper, etc., the earlier
ex~ination re-?orts had a colu.r:m 11 0ther undesirable pa-;_:,er II for which no provision
is J:1.ade on the analysis forn. This should be classed as 11 slo\v 11 with a footnote
indicatin6 the a.r.1ount.
2. Sor:ie of the iter.i.s, as for example, 11 Contracts for deed" (item 23)
require considerable scrutiny to see whet:1er anything along this line is shown
arwwhere in the exa.:r.ination report.
3. Iter:is 20-22, pertaining to real estate loans, require much care in
compiling because t:he fi 67.lres are not available in the desired forr:i in the re..;,orts,
and certain combinations are necessary.
4. In the earlier ~rears care i,1Li.st be exercised to see that rediscounts are included in loans and discounts. Furthernore, in obtaining total borrowings, care mu.st be ta.ken to see that rediscounts are added to bills pey-able, for
rediscounts are shown on the resource side as a deduction fron gross loans.
5. .After transcribing the fi 6ures fron a given examination re?ort, it
should be coopared with the previous report to see that it is on a conparable
basis.
After compiling the data for each bank for the period fron 19cD till
suspension, the fiGl.l.res for the twenty banks should be sUCT!'larized, using the sa;-10
for~ for su;:n:ia.ry re9orts. Since two exanination reports are analyzed for each
year tv!O sur:r;;iaries will be made for each year, one for the first exar:,ina.tion reryorts for the year and one for the second re~Jorts of t1.1e ye&. The assur:rption is
that these 7/ill be fairly representative of the condition of the banks during the
first half and second half of the year respectively. Please show the number of
banks entering the su.;7::-1.ry in each case.
It is understood, of course, that the absolute figures shown in t~ese
s·.1r.1r.nries ,1ill not be cor:rparable fror.1 year to year because of raergers, the drop9ing
out of banks t~rough suspensiont etc. This will not affect the data for our purposes, however, as we propose to compute ratios for t~e various iteos and m..1.l::e our
comparisons in this form.
Bank Organized:
Bank Suspended:
Population of Town:
(1910 census)
(1920 census)
(1930 census)
9599
14o27
10349
Principal Crops or Industry Served~ Bank:
Lumber, fishing, shipping.
AA(
Ir:rportant Excerpts froo Reports of Exa.i~ination: (
Loans Deposits Borrowings
)
11-16-20 Exru:ri.ner_'..J_:
4oo
2591
50
/
Classified Assets
Doubtful Loss
82
4
9-12-21 Exa."tliner A: ''Present rna.nage:r.i.ent is considered good. Large aggref;ate of
undesirable assets were mostly inherited from former management. There is no
question but what present capital is too large. At time of consolidation it was
left at this figure in anticipation of r.ia.terial increase of business but owing to
depression of business generally bank shows a loss in deposits instead of expected
increase. 11
9-12-21 Ex.1Jnner A: 4oo
80
13
1542
2015
195
63
4
2-28-22 Exa.~iner B: "Bank's present condition is probably due to some extent to
general slump in prices and business generally, but is mainly due to unwise policy
of previous management. Present manageoent is in no wey to blame for present
condition. 11
2-28-22 Examiner B: 200
12
1367
1614
507
53
0
10-17-22 Exa."tliner C: "President is not a factor in management but other officers
are capable. Tney with the more aggressive r.ieabers of the board will probably be
able to solve the problel!lS of bank's present rather undesirable situation. Man3,genent has been too eager for business with result that mny loans are frozen ::md
heavy losses are likely to be sustained. Bank is somewhat extended and has e:\Perienced some difficulty in financing seasonal operations of its customers. Directors
3.dvised that they believed worst of difficulties was over ond their future position
should be easier."
/
10-17-22 Exnoiner C: 200
~--1 1456
1914
73
33
15
4-10-23 Exa.~ner D: 11 This h.'.ls o.lways been a one man bank. Years ago President__
W.'.ls dominating figure, succeeded by C~shier
who recently resigned, and now being succeeded by Vice-President. President~hardly a factor in b.:Ulkls Illl\Ilagement. Pa.st t\..."'ld present management :.re anxious for business nany loans made 1.s a
matter of policy."
4--10-23 E:x:.'.l-'Tliner D: 200
4e 17 1421
2073
O
97
20
' ~.e-/
•
_.
Jhte
Page 2
C.:::i.p.
S;,.w.~.·
LoMs Deposits Borrowings
Classified Assets
Doubtful Loss
10-22-23 Ex.:uniner D: "Forner President decen.sed. President _ _ is follO\ving
closely in footsteps of predecessors o.nd conducting largely .:::i. one I!1tm bank so far
ns he can handle rotters. He appears very e.:::i.sy in eztending credit or making too
r.nny l .oans :1s .:::i. nntter of policy ond also very reluctant and timid in enforcing
collection on criticised lines apparently being ~fraid he might lose a customer
directly or indirectly. This report shows some impr.ovement but as a rule im?roveoent has been ID-'.'lde in reduction or elimination of slow or undesirable assets th1.t
were least subject to criticism, while loa.~s most severely criticised have chruiged
but little. Directors v,ere advised that unless nnterial improve:-.1ent was shown at
next exa.":lination, p~rtic,J.1.a.rly as applied to loans to directors Md concen1s in
which director.s _.•.1 ere interested as well as large anount of sto.tu.tory b~d debts,
overdue po.per, slm1, doubtful, c3.nd otherwise undesiro.ble p:xper, s:::iecial* (*frequent) eru::uno.tions •,1 ould be recotinended. 11
10-22-23 Ex...'"lniner D: 200
~
1$..
1537
1971
169
69
12
4-28-24 Exru-nner E: '~resident, who domin~tes policy to l3rge extent, is .:::i. good
'business getter 1 , but ra~1er weo.k in making collections, and is endeavoring to
hand.le too mu.ch of bank's affairs n.lone. He should have a conservative bank r:nn
to assist in nanageraent n.nd this m.1tter was thoroughly discussed with hio. Some
general improvenent hn.s been ro.de, D1. though there still re1mins r.1Uch to be done
before bank is clean. Slow assets show considerable reduction n.nd a. deal has been
made for so.le of Other Reo.1 Esto.te. 11
4-28-24 Examiner E: 200
¾,s.... J:-4..
1438
1727
271
52
6
-9-f
11-25-24 EX'.lJ!liner E: "Directors o.nd officers sto.te that large n.;.:1ount of slov1 and
doubtful assets were inherited o.t tine of consolido.tion with another b'Ul.k: sever~l
years ago. However, it appears trot a number of large lines o.nd slow assets h1,ve
~ccu.r.mlo.ted since then ns a result of 1business getting 1 policy o.nd too free extension of credit. Preside~t is capo.ble but too libero.l n.nd too lenient in n'Jk:ing
c.ollections. Besides, he h1,s recently spent too r.u ch tir.ie on personnl natters .:1.nd
enterprises. This wo.s also severely criticised by ex:u:iiner and he now pronises to
devote all his tir.i.e to bnnk's D,ffairs with o. vieu to gettin 6 b8.i1k in good condition
ngo.in. Princi"?nl r.ntter subject to criticism is large n.r.'lount of Overdue P'.lper v1hicl
including sto.tutory bn.d debts a 66 regates about 28% of bn,_.,--uc 1 s toto.l lo,::i.ns. This
~~~tter was severely criticised by exar:ri.ner during directors' ne eting. Exai::rl.ner inforr.1ed directors nnd President in po.rtiCul3r that unless decided improvenent in
nn.tter of attention to slow o.nd doubtful ').ssets and overdue p'1.per was shovm at an
enrly date by correspondence consideration mght be given by office of Chief TocaDiner to I!l3.tter of pl:1cing "'uank on Special List* (*moaning for frequent eL..'\.i--ni.n.::i.tion). 11
11-25-24 Exruniner E: 200
2011
103
58
1435
9
r
•
m±IB-111 i ~i
P'lge 3
Loans Do)osits Borrovn.ngs
6-22-25 Examiner E:
11
12-28-25 Ex-u:u.ner D:
11
Cl'.lssified Assets
Doubt~;l Loss
A r.nterial ir:1prover.1ent in note pouch is noted in regn.rd to
anoun t of overdue paper. Cl;>.s£ ific'.ltion of lO'w.iS, l10vrever, shows no inprove1:1ent.
Slor1 locms show '.l decre'1se of $40,000 but doubtf1.c.l i tcrJs show an incre.,,sc of
$52,000. Losses ch"l.rged off at fais tine or.1ountod to $17,690 ::i.s cocrp'lrcd i'li th
$9,452 o.t h.st ex:min.1.tion. L-irgc a:·.·,ount of L1cro ...,,se in 1xi.per classed doubtful
is o.lnost entirely due to change in cl:1ssific'"l.tion durinb exar.u.n;,.tion. :no ner, lonns
of slow and doubtful character are b0ing r.nde 1.nd nost of loans criticised ".t this
time h'.lve bec:1 in b:m::.: n. nu.;·1ber of ye-u-s o.:1d. ;1.re workout l)roblens. SoDo losses r:ey
d.evclop in i ter:1S cl 'J.ssed doubtful out i + i ~ 1-iP.lioved bo.:1k 1 s e::u-ning c~p"l.ci ty ,,ill
en'.1ble it to ch2r 6 e off J.osses .'.\S the;-- "C"P on. ifo dividends are to be pud until
b'.ld debts '.lnd doubtful i te1:is '.lre eli::iin,..,.ted. '1
6-22-25 E:,car.u.ner E: 200 1:t6.
~
1283
1555
306
t
150
13
Dircctors C\.S n. YThole co::"Q,'1rC favorably with .'.\VCr'\ge cou:1try
bank. They o.re successfl'.l nen in their indivic":.u'J.1 lines of business •1,:1d nould do
i7ell if tl1oy ho.d o.n ngbressi vc le"l.cler. l,h,.-i.._1,gc:·.1ent is veriJ '.7eGJ.c, L1.ckinf; force, if
not incor:ipetent, ns indic"l.ted fror.1 n"'J.f.J.erous cri ticisns listed. Preside:1t is well
:.:o"J.nin6 but ea.sy goinc; , e:1tirely too free i~1 ,.T'l.:1tinG of cr0di t a.nd '\7hilo et. lr>..rge
nu.-:1ber of frozen ".l1d qu.estionn.ble -:i.ssots n.re an i:1.heritance fro□ forner r.1.'Ui",i;0:-1ent
it is evidel1t t.11-:i.t President docs ;.1ot h:we -:tbili ty or inclin..,,tio:1 to collect or
cler.i...11 u.:p those old r:nttcrs. President is believed to hn.ve had little b'l..i.i1.dng experience outside of t~1.is b..,_:1lc. Co.shier is 'ls ov..s~r 2;oinG as Preside:1t ·:ri th even
loss initiative. It is, however, perhaps true t:v1.t Presiu.ent ;-10uld. :10t ?Cr:-J. t "1.Ssur.1_fltion of a.iv .:i.uthori t;;,· by 1.--iy other enploy.Jo n.s he x;r:)C.'J.l"s 'lnxious to n..,11n.6 e
entire b~il.,;: even includin._; openins of all r.nil _?erso:mlJ.~r. When sug;;estions \/Gre
r.1-1,de or cri ticisr.1s directed 1.t sevor'.11 he'.1ds of different dep,..,,rtnents t:10;: co::rnented
to ex:,.::1i:10r in effect th-:i. t Prcside:1 t n:1s cq.._l".11;:, to bl::u-.:lG 1.s he would :10 t -_,er--,i t
Ct.ny lec,r".;," vl1en they ~7cro C:.is;:>osed to bring 1,bou. t correction of sor.1e of cri tici o.od
r.r,ttGrs. Writer e:;::i..::u.ned b..,..:.i::: in 1923 'Uld n. cor1nrison rri th his Jrevios rc~1ort
discloses m.1I.1erov.s o.ssets cri ticisod '1.t tir.1e unc~rn6 0d "l.:id ,'11):;_)"..I'Cntl;y no 2tter:ipt
m.1.de since then to liquid-1.to V'\rious st.'ltutory b8.d debts 1.:.id other questio;.1::,,ble
t:t.-rid frozen "J.ss0ts.
Exr-..i::inor reco:'.1·.1onds th"l.t bx1l::: be pl1.ced on list for frequent
e:x:.'.1,.·:1.Lntions until cm1w. tion is s-i,.tisf':..ctory '"w.1d t;.1 . . .,t ne:d ex'1.r.:in1.tion be n:1de 90
d-:i;y s fror.1 d1. to. 11
12-28-25 Ex'.lDiner D: 200 1ts., .S-(
1855
2621
316
() 90
52
b... ,
4-10-26 Exnniner D: "Writer 0A...._,1:u.;.1ed b::mk in 1923 '1.t ri,ich tine Preside·i1t TT,'1.S
tl1en Vice ...Prcsident D.i."'ld .,t ·,-,:-:ich ti,:1e he succeeded to Presidency. B=i.nk l1a.s for
i:~y yea.rs been a one-r:n;.1 b::ml:, ::1:1d co11J.i tion {;0:1crn.lly unsn.tisf:1ctory 6 ru,'ltor
pCl.rt of tioe. At 0:x:t:tr:-in'\tion in 1923 ex:::i.:-.u.ncr urGod 1:1.'1111.gonent n.nd w.roctors to
tD.ke pror.1_Pt nnd O.@bressive steps to collect or sec-:.;.re l"',rgo o.1.1ount of st'"\.ti.1tor;:,bo.d debts nnd other ovord-:.::.e p:-t.per, slov, :1nd q_uostion':1ble n.ssots, c1.nd directors r,cre
,..,_dvised th'J.t unless such ::i.sscts ,1ore given ir.t·1ed.io,t0 1.ttontio:1 b'Ull:: i7:..s certain to
sust.'lL:1 l,..,.rgo lassos. E:x:"' 1·.1i11..'"l.ti0:n nf 12-28-25 '>7>cn cor.m.'U'od ',7ith 1923 ~:1ows
•
I(
Cl~ssified Assets
Dou tf,:.l Loss
:::u:i.jority of l'lrger ci..1d t".Ore undosiro.ble c\ssets still in bn.nk ,-:ith r.nny l-:u- 6 c lonns
unch.'.:\.L'1 6ed except th3,t t:1ey \7ere t\70 years r:iore ]?",st due nnd it ·.ns evident th".t
mn::.genent h'l.ve m.'.lde little, if n.ny, n.ttoopt to sec1~·e stntus of such pa,er subsequent to 1923 or previous. This st'l.te of 3.ffn.irs ~as rn.ther forccf"Jlly brought to
'lttcntion of directors during 12-28-25 ex'.U:ri.n'.ltion and n. subst'.J.;.1ti'11 n.:.10unt of
uncollectible assets of 1923 and previo~s uere listed '.).S estin".tcd lossess. So
many promises and so IID.!C:l assurance was given exarniner at previous examin:i.tion
that immediate steps wocld be taken to improve CO!ldi tion that the few changes and
lack of improvement are most disappointing and discouraging. Special e7.a:ninations
at short intervals vdll probably prove useless a.~1d a waste of time as b 1t little
improvement can be expected in three to four months' time. Frequent examin'.).tions
will undoubtedly create unfavorable comment and gossip to detriment of b'.Ulk.
Examiner has lost what little confidence he had in 1923 in President and Castier
and it is not believed these two will work the bank out of its most unsatisfactory
condition. Without frequent examinations and the present management in charge it
is believed ban.'!( will be permitted to drift and it ap1Jea.rs to be a choice of two
evils, each reacting unfavorably for bank and its shareholders. Directors were
advised t~nt examiner had no authority to demand or request resign~tion of any
employee but that it was duty of examiner to make recommendations to directors for
good of ban..'!( and it was suggested that if present mnagement did not show a desire
or inclination to work with directors that directors should employ someone who
would truce ch::l.rge of bank: 1 s loans and wl-10 would be responsible only to bo::u-d ~d
not subject to interference by President or C'.J.shier :i.nd it 7t:is further sug5 ested
that directors compel officers to compl~,' ,,i t:1 resolutions ~f)'.lssed tlnt no new lo'.llls
in exce s of $500 be made wi.thout first being aut:1orized by fin.'1.Ilce committee '.llld
that directors compel officers to furnish at Bo3.I'd meetings informntion they desire concerning status of lo3lls and other '.).ssets :md th3.t if ?resent officers ~re
not competent in opinion of directors and b3JL1{: 1s ·11elfo.re "oe ir.:iproved by a ch'.Ulge
of !Ill3Jlageroont th::i.t they give serious consider['.tion to s .1c. 11
19
118
268
2628
1941
4-10-26 Ex::uniner D: 200 ~ l/-~ \
8-13-26 Examiner F: "General condition shows very little ch::,.."l.ge. Condition is
most unsatisfactory ond unless some c· 1."l.ges '.lre mn.de I do not expect to see ".IlY
mn.terial ch:i.nge for some time to come. President ~s Tiell 'lS directors are of
opinion th-.t tl1ey s:1ould not be asked to put up rooncy to elimin"'\te O..."lY losses .,nd
doubtful priper, contending th'l.t bonk C'.Ul earn its ;ny out in time. Ex·1sci:1cr does
not agree :1nd informed them th::l.t the~r r;ould be given until nc;:t ex,'llllin:1tion to
provide for losses cstim'l.ted. Examiner informed directors t~~t they TTould be
given until next cx.'.lmination to IDc.'\ke some provision to provide for losses n.nd
other i terns tot.,.ling $144,819.39. Your exn.r;iiner h.'.J.rdly CAJ)CCts to get e:1o~h
m:mey to elimin-.te n.11 t:U.s po.per but thought thn.t by pb.cin.; this progr'.1l1l before
them they ·~ould exert themselves to collect this pc;per. ::stir.utcd losses r,ere not
ch~ged off for ~bove reason. Ex.::u:uner thought thrit if situ.~tio~ was to be broug.~t
he:.1.d it should be done a. t one time. My ide::i. vm.s to pl!'l.Ce them on notice th,, t
to
•
~
Puge
5
C ~ssifiod Assets
Loans Deposits :Borrowings~ Doubtft.1-l Loss
some t::.1ing ':'l'Ould h-.:we to be done by time of next ex-u!lination .'.:l,nd perh_:::i.ps some concerted action could be obtained for the better. It is respectfully rocorrrnendcd
that bank be not placed on sp0cial list at this time. I do not think Sl?ecial
examinations Ymuld be of any value now. 11
59
90
172
2672
1915
/
8-13-26 E::caminer F: 200 )6
1-23-27 Examiner F: "General condition sho,vs some slight improvement a:1d officers
and directors promised to continue efforts towards collecting criticised ~a,er.
At t:1is season business is very poor and collections slow. Real estate is extremely difficult to sell and a large araount of bank's loans depend on sale of city
property, farmland, and timber. With this condition it is extremely difficult for
management to collect a.n.y paper predicated on above assets. President is interested in entirely too many civic n.ffairs o...n.d other things and C'lrl::J.Ot ciovo·cc all his
time to bank. Durine; e:x.?.!nin1.tio:1 I took p1rticul'U' notice 'Ln.d ho spent rnnjori ty of
time out of b.'.:ln!c. T'nis vns forcefully c-illed to his 'l.ttention :1..--id his excuse is
that no one els8 will do it. Your eX3I!'liner h~d ~ fr'l.nl~ talk with Prcsitle~t
and e:.:1C:e0,vored to sh9,-r hi!!l th'1t he 'ilas doing ,;rrong. 0:.1 ot!1er h"l.i."1.d he S)ends his
person-:i.l money for benefit of b.-:t:12.: in wrzy of tr-....sportqtion, etc., 'w."ld t:hore is no
question th-:,,t he is doing his best to pl:i.cc b'U'l.lc in "'more s'l.tid'1ctoi-.:r co,1di tion.
He is one of mst ple'.lsing non I h:we h:J.d tho ple::i.sure to co:ne in cont'l.ct ·.-,i th but
is inclined to let people imi)Ose on hirn x1d sor:ie of his finn.ncing is su"ujoct to
criticism. He tries to help people ·1.nd concerns -;,ho do not even do busino:,s with
the b'l.nk :md r.l.nyonc cnn t::ike up ~1is time TThcnever facy desire. At prcse,1t b::i.nk
h::ts good en.rnii.1 6 en.po.city, ::1.p_9roxir,ntely from $25,000 to $40,000 per ·un-c..::i '1.ftor
expenses :.md with "- reduction in interest p'l.icl s'.lvinGs depositors it •wcld me"..11
some $IS, 000 D. ycn.r addi tion'l.l profits. In past fc·:, years 'l-11 C'l.rnings h.ve boor.
used to c:1'\rge off losses. In pri..st six yc1.rs b1,1k !1as clvirgcd off over $172,000
in losses ,'1.nd recoveries have o~~,or.nted to over $26,000. This is belicv._,CI. to h:-,vc
beo~1 in n.ddi tion to o.sscts elimi:1:'.~ed by .?.. rcciuctio:1 ii.1 Cr.l.pi t.:t.l of $200,000. Pr-,,ctic:illy '1.11 these .'l.sscts 1,7ere i:mcri ted by prese:1 t :1c'Jlla6 cr:-,cnt n.nd t:nt 11.olds t ood
Yri tl1 -:,,ssets criticised in this rc~_,ort. This r(,":pOrt shor:s esti;:... ._tcd losses :-,,i:,;.·rug3.tin6 $132,000 ::t.."1.d on Fcbru'\r:· 1l.1.th I ,7ircd yot:.r office sto.tu.s of situ-i.tion •
.A.ftcr sever.:11 conferences 1-rcrc hold directors ro.:1Chod conclusio:1 th,t 'Ul 'lssess,Jo:1t ;rould not be proper procodc!re. It ,,,n,s fin::tlly ri.groe th1.t the~r nould. i)erson.:-.,J.ly purchase t:1cse i te,ns 3,;.1d it m:i.s defini tcly u:..1dorstood tl1"..t tl1e,.: ,··ere to be
purc~1ased for c,9,sh and 1.mder no circumstances were a.ny notes to be tMen by bank.
This t:1.ey agreed to do, but .ra.11ted. 30 ~ s i n ',7hich to coaplete t!leir e1.:na..1ge.:1ents
a:1d accordingly your office ·,1as notified. YO'ir \TI.re of Febr'J.3.ry 15th ·;;as received
in ·.1:1ich you stated that icrp':..irrne:it notice rrould be vii thheld for 30 d3J"s o.nd I
a.ccordin6 ly notified man~e·::e:1t tn:it they -;,ould be {,i ve11 u:.1til M:1rch 15fo i:1 ..,.,hich
to co:nplete their pla..s.
132
19
2701
179
1803
1-28-27 Exar:ri.ner F: 200 ~/,(_I
6
ified Assets
~~t_f_u.l~ Loss
8- 2-27 Exa.-:iner F: "Condition remins most unsatisfact ory and mnage;:.ient .::i.ppe'l.rs
to be making very little progress in collecting criticised assets. President continues to dominate and apparently directors cannot control him. Bank is overloaned and President continues to make loans that will prove very slow and also
continues to try and finance everyone in the community. Regardless of advice he
receives fro~ examiners and experienced bankers he does not change his policies.
I am afraid that if he does not change his ways he will find bank in a serious
condition one of these deys. I had a talk with his principal corresponde nt ban~er
on Au.gust 16th and he told me he had talked to President a short time ago mid if
he did not cha.,ge they would be inclined to refuse his ba::ik further loans. The
Federal Reserve Bank is very reluctant to discount his eli 6 ible pnper and ,'.U'e constn.ntly w3.tching him. I am not .'.lll satisfied with condition or policies and feel
th'.lt something must be done to correct situation. In view of this situ3.tion it
is respectfull y recommended th~t bank be pl'.3.Ced on speci"l.l list and be .::i.g3.in
exnroined in '1.bou.t 90 dtzy-s. 11
l
4o
314
~ ~ 1950 2512
8- 2-27 Ex..1.!Ili.ner F: 200
1-20-28 Ex'l..rniner F: "As ex:unin.'ltion was made on basis of e;oing bank, it hn.s been
difficult to write re?ort, and eX'.lllliner has attempted to cl~ssify .'.lssets as they
I
a.re cl3.ssified under the receivershi p. It is to be noted that I slow assets rt'1.s
been elimin~ted. Examination w.::i.s conmenced on .::i.fternoon of 1-20-28 .'.)Jld W3.S completed 2-11-26. Precarious condition was thoroughly discussed with directors
latter part of February at which Chief Examiner was present and ways ::ind me!).:(;l.s to
elimin~te esti~ated losses 3..~d frozen ~ssets was topic of conversatio n. It w~s
concensus of opinion that efforts should be ma.de to orga..,ize ::i. nen b:mk to assume
deposit li'1.bilities nnd truce over a like ,'.:i.mount of assets. With this ti1ought in
mind ex'U1l:i.ncr 18ft b~nk but kept in touch with directors as to progress ran.de in
this direction. President tendered his resign.::i.tion the l~tter plll't of J.'.)JlU.'.lry and
this was publisr-cd in a loc.::i.l ~ewspaper in such a m~nncr ~~at it left a great dc~l
of inference vrith result th'.lt a run v,n.s started ,'f::ich re::.ched such proportions
th:::i.t cx:l..rniner was requested to return o.nd advise with directors. After ::i. thorough
nn'.llysis it vns cicemcd advisable to close the b,'.1,,ik :i.s ru.n had re'1.ched such propor)
tions that it ·;,as useless to keep open.
333
810
152
2473
~ 1745
1-20-28 Ex3.rainer F; 200
s-1
E:i.rni
~
Net Income (Gross E.')r!lings
less Expenses)
Recoveries
Losses Ch~rged Off
Assessments before Suspension
Bad Assets Purch~sed by Stockholder s
Dividends
1924 ~
1926
~
Total
34
29
17
36
30
146
0
25
0
0
8
1
19
0
0
0
10
35
6
1
33
G
18
156
0
68
0
8
0
0
0
44
0
0
0
68
•
Ban.:.c Organized:
:Bank Suspended:
1238 (1910
2957 (1920
2455 (1930
1900
1924
census)
census)
census)
Principal Crops or Industry Served :!?_y Bank:
Wheat~ potatoes, livestock, alfalfa, beets, seed-peas.
l!!!Portant Excerpts from Reports of Examination:
....,,.
10-13-20
Examiner A:
pap.
$,ax;
50
'5Q
P»ef.
Loans De"l')osi t :Borrowings
501
581
Classified Assets
Doub tfo.l Loss
0
0
7-14-21 Examiner B: "General condition is rather satisfactory on the whole, e.apecially in the lig.~t of two or three poor crop seasons experienced in L½is community. Ba:nk 1 s condition is extended but fact tl:at proportion of rediscounts is
so large speaks well for character of paper. Paper is of good general c1-.Q.!'acter
except that some wheat growers on dry land have become involved. With '~oocl. crop
returns this year material liquidation ma;y be expected. Management is ca::.•eful Md
efficient and gives close attention to paper. :fo one man dominates. 3::uik is situ:1.ted in good agricultural cormro.ni ty, pn.rtly irrigo,ted and partly non-irrigated
l:mds. Crop prospects on irrigated land 'lre fine 1:1.nd fair on dr~r lwds. 11
7-14-21 E.x::uniner 13: 50 50 6R
354
403
47
3
0
1-20-22 Examiner C: "In general, a well-m'1nn.6 ed and well-run ins ti tu tion. Personnel appears very capable and considering gener~l conditions here, t~ey h~ve done
very well to keep bD.nk in its present shape. C-ener:.ll conditions in t ·1is dry farm
country have been very unsatisf:.1ctory on .1,Ccount of :1oor crops n.nd. ·1'o"v-priccs 3.Ild
unless conditions improve banks here will be very !ia.rd pressed this co:-:ung year. 11
1-20-22 Examiner C: 50 50
2
671
451
277
17
0
7- 5-22 EX.'.l.miner D: 11:Maru:i.gement has been in the past too lenient in accepting
paper for RCCommodation of other b.'.Ulks. Most of the p~per is slow .-md must of
necessity be eliminated slowly. This is an element of danger ::ind considern.ble
losses may result before paper is eliminated entirely. (They taJ.ce lo'lns to accommod..."l.te other banks, $82,000). Bn.nk is in n. verJ extended condition but crop cond.i tions are very favorable ~s ~ whole. If ~dverse conditions prev~tl problems
for bank will be difficult. 11
7- 5-22 Exruniner D: 50
50 2£
663
394
371
11
7
'
EXHIBIT 12-2
•
Page 2
Cap. Sur. Prof.
Loans De~osits Borrowings
Cl 'lssfied Assets
Doubtful Loss
2-10-23 Ex'lminer E: "This b~ is in ::1. rn.ther d:1ngerous concli tion :i.t present due
to 11,rge amount of borrowed money n.nd excessive n.mount of slow :md doubtful paper.
Surplus is also imp'"rircd by estiJ'!JD.ted losses. Another contributing factor which
makes condition dn.ngerous is lsi.ck of confidence by public on -,,ccount of largo
number of banks which have closed. As yet t:us feeling h'l.s not been noticeable
here but matter should not be overlooked. Some of present stockholders probn.bly
could meet a 100% assessment but this applies only to a minor portion. The larger
sh/U'eholders are :ure~dy heavily involved. If permission to increase cn.pito.l
$50,000 is gr'l.nted it will r.io.terially better b-mk: 1s condition. Directors desire
to sell new stock .n. t $150. Premium of $25,000 to be used to cho.rge off losses o.nd
doubtful p'.3.per. Examiner recormnends e::mmination in 9G clays. 11
2-10-23 E~niner E: 50
50
2R
617
377
325
12
9
5-
8-23 Examiner E: ''Bank is still in dangerous condition due to large ar;i.ount
of borrowed mney and excessive ar.1ount of slow and doubtful assets. At lo.st
examination directors desired to increase capital to $100,000 and believed they
could seJ:l steel: at $150.n.nd were to use a.mount derived fr01n premium to chc1.rge
off estina.ted losses and doubtful paper as far as possible. At this e:mnin-:i.tion
capital had not been increased nor could stock be sold at 150 or even p.'U' at this
time. Examiner decided it best to clean house. Estimated losses n.ggregating
$37,000 were ordered charged off ood entries mn.de during eX3.'.-:1ination. This practically wipes out surplus and as a result ~nny excess loans a.re shoi7Il. Should
crops prove poor tl1is ye'.ll' or a1,rket conditions adverse b'.ID.k ·:,ill undoubtedly
suffer heavy losses. Confidence of people of comr:runity is none too good. E:i.ch
tine examiner visits bank there are so1:1e ,1i thdr3,rr~ls. President be;,1,rs confidence
of people but is also president of 'l.noth0r bw~ 1.Ild is obliged to spend most of
his time there. C'l.siier's person~lity does not inspire confidence of public in
b'.lnk. Stepc; ~re to be tl1ken to '.l.p·Joint one of the nos t influenti -,_1 stockholders
as vice-president who is conserv'l.ti ve, a good collector n.nd ·;rill devote nost of
his time to bank. It r.:i.3;y be of considerable benefit. E:,cnincr does not recor.1r.1end.
t:ll:ing bnnk off speci'.11 list (for frequent ex-u:u.n::i.tion). Should .-:my unusu.1.l conditions arise banl:: would hwe difficulty in r.1eeting der.nnds. 11
5- 8-23 Exar.uner E: 50
50 6Red
614
298
350
42
37
11-12-23 ~.!iner E: "Some ir.iprover.ient ros been ::nde since lo.st e.x.1.r.tlnation.
Loans have been reduced $63,000 borroued money $33,000 and deposits increased
$13),000. Principol improvenent is in restorn.tion of confidence of co[~unity in
b~nlc ::md it is believed th'.l.t danger point has paijsed. A very bood crop of wheat
is being harvested '.md mile prices ~re only f~ir, consider~ble liquidation fron
this source will be ha.d. People are i;;ottine; in some r.10ney and o.s :1 result a.
nu.ch better feclinG ~11 ~rJund prev3,ils. Officers and directors estioate th~t
•
'
•
EXHIBIT 12/2
Cn.p. Sur. Prof.
D:.te
Cl1.ssified Assets
Doubtful Loss
Lo.'.lns DG-oosi ts :Borrorrings
b'Ul.k mll be o.ble to cut dovm its bills pa.,v1.ble Yri th Feder~ Reserve :S.'1.nk another
$100,000 by J::i.nu.'.ll'y .1st. Exnniner b elieves thn.t a further reduction of $50,000 to
$75,000 in bills p.:i.yci.ble rrill be a.bout the best they c1.:1 do. This ,rill still
le.!1ve b'\IU inn. badly extended condition. It is believed th.'J.t prese:1t conditio:!.ls
h".l.ve taught officers o.. lesson and credit ndva.nces here"..iter TTill be c~efu.1 l~r considered before beini; n':l.de. C'1shier is not a very bood banker ,'.l..'t).d ::i. ch:inGe in
r:v.m1.ger.1ent ,wuld be of gro'.J.t benefit. President is believ0d C:J.p'l~Jlc ".nd ,'.l!l'.""ious
to 6 et ':l.ff~irs in good condition 6~in, but is obliged to spend nen.rly ~11 his tine
-i.t anothe r bn.n:i:: \7hich requires his close n.ttention. Iden. of ii.'1cro",sin 6 C";pi t-:,,l
h'\s been ,. . _bo...1donod o,s it is believed stock could not be sold. E:or::rl.ner rospoc t f ully
recor:nends th;-i,t b:J.n:.-:: be kept under surveillance by reports '.lnd correspondence
ra.ther th::m by frequent visits by ex".r.n.ner. Too libero.l gro.nting of credit in pnst
is C.'.luse of bn.:nk 1 s present condition. 11
2
16
327
379
551
6REd
13
11-12-23 ~~".:".iner E: 50
°B:3.I'nings:
(
1ili
Net Incooe (Gross E".rnings
13
less ~"Penses)
0
Recoveries
3
Losses Ch~r 6 ed Off
0
Assessnents before Suspension
0
E'.J.d Assets Purchased by Stoclr..holdcrs
16
Dividends
1920
14
1
B
0
0
10
~
1922
19.g}
16
1
12
9
2
42
0
0
0
0
0
1
0
0
0
3
3
r
"
Tobl
57
7
,;;•
vI' ,.J
0
0
27
.
..
•
,
Feder al Reserv e C0rnm ittee on
:Branc h, Group and Chain :Bankin6
•
Ferm F
Al!.ALYSIS O? Ns~'I'I03AL :P2..iliX EY_'..MI:T;..TION REPORT
Name of bank
l)a. te
Place
Item
Where found (page)
Amount
(L.=L iabilit ies on Page l)(In thousa nds
(R.~Re source s on Page 1)
and tenths )
1. Capita l ...... ...... ...... ...... ...... ...... .
2. Surplu s •..... •..... •..... ...... ...... ...... .
3. UncUv ided profit s •...• ...... ...... ...... ....
4. Reserv e for depre ciatio n and loss8s ...... ... .
$_ _ _ __
1 - L.l
1 - L.2
2.
- - - - - - 4.
5.
___
l - L.L+
:Banke rs 1 6.epos its ...... ...... ...... ...... .. .
Time de_)os its ...... ...... ...... ...... ...... .
7. U. S. de.,1osi ts •..... ...... ...... ...... ......
8. Total depos its ...... ...... ...... ..•... ......
1 - 1.13
9a ::.orrov red moYiey •..... ....•. ...... ...... ......
1 - L.17-2 0
1 - L.8
__ 6.
1 - L.8-14
1 - L.
12. :Banki ng house, furnit ure & fixtur es , •..... ..
Lnans to office rs & direct ors (direc t) •.....
Loans endors ed or guaran teed by off. & dir ••.
Lonns t0 intere sts of off. & dir. (direc t) ..•
18. Par v, lue ('If stock
5-11
1 - R, 12
1 - R. 11+-20
1-Part of R. 24
13. Reserv e, cash, cash items, and. d.u.3 fro.n banLs
15.
8,
16
10. Tote.l loans (inclu din_ redisco u...v1ts ) •..... .... l - R, 1
11. Total loans and invest me:its (incl, redisc ounts) 1-R. l &
Excess (if any) of expens es over earni~ gs •.•
7.
1 - L. 14
9b :Borrow ed oonC:s ...... ....•. ...... ...... ......
14.
1.
_ _ _ 3.
-
1 - L.).
5.
6.
16.
17.
of Repor t
_ _ _ _ _ _ 9a
______
_,, b
-_
-_
-_
-10
___
ll
_ _ _ _ _ _ 12.
___ ___ 13.
- - - - - -14.
___ ___ _15.
- - ___
- - -16.
___
17.
2
2
2
ned by direct ors •..... •
2
- - - - - -l&
Fast dt:.e loans ;. & :S •..... .. ...... ...• •..•..
4
_ _ _ _ _ 19.
20. First mortga ge (Loans vi thout prior liens,
except •-here called II contra c t 11 ) • • • • • • • • • • • •
21, Junior rnortga6 es (.All loans with prior liens)
22. Fri or lier:s (to junior mortt;a §_es) •..... ....•
23. Contr acts for deed (:nore often in reca·~J. of
inves t:nen ts on Page 7) ••••. ...... ...... ..•
5
5
5
_ _ _ _ _ _ 20.
_ _ _ _ _ _ 21.
22.
---
5
___ ___ 23.
19.
0
111
Liquid Invast ments
24. U.S. bonds 0th~r than those ser,uri ng circvl ati0n 1 Other invest ments not in defau lt (:uarl:e t val1:1~
25, Foreig n • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
26. Railro ad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . • . . .
7
27. Public uti.i..i ty • • . . . . . . . . . . . . . . . . . • . . . . . . . . . • 7
28. Indust ri2.l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
29. rf.unici:;,1al bonC:.s • . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
30. W.scel lan.eou s bonds, tax certif icates , \varran ts,
and other liquid invest ments , exclud inG foraclosur es, claims , judgm ents an ... defau l tee. oonds 7
Other Real Estate
1
3l. Book value •...• ...... ...... ...... ...... .....
32. Frio1"' liens ...... ...... ...... ...... ...... ... .
3~. E"'t1·""" f.ed valu
..,,
i,;11
""'..... ...
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•••
Slow loans ...... ...... ...... ...... ...... ... .
SloV' bon r., ss.ou. ritbs, etc ••...• ••.... ...••
Slow 11 0tll•••r 11 r 1 cataw ...... ...... ...... . .
-
..........
--- -
R.6
&
8
8
7
___ ___ 25
- - - - - -26.
,_ _ _ _ 27,
2f.<
----
- -29.
___ ___
______
_,
o.
_ _ _ _ _ _....,..1.
_ _ _ _ _ __,, 2.
s
_ _ __)3.
ll
4.
_ _,_ _35.
ll
--- --- -
ll
___ ___36.
11
11
___ ____,,8.
-
3 7.
38.
39.
Doubt ful assets end. losses
Lo~rns
Doubt ful assets a.'1u. losses - Bonds & secur ••.
Doubt ful assets e.nd losses - .All ofoer
......
11
_ _ _ _ __,9.
o.
Value of assets not shown on books .•••.. ....•
11
- - - - - -4o.
41.
Large state, count y~ munic ipal dc1os its
subjec t to check ...... ...... ...... ...... .. Yellow Page ).
_ _ _ _ _ __, I·
___ ___41.
0 ratiori
re
20, 1 31.
,,
.
.
2
t
•
o.
-·
' I
-·
INSTRUCTIONS ·I'O FEDERAL RES:ERVE :B.Al~S FOR .ANALYZING TYPICAL C.ASES
OF MEMBER BANKS WHICH !{AVE SUSPENDED OPERATIONS
-PURPOSE:
The purpose of the analysis is to show in concise form the history
(gained fro1n comments contained in the reports of Examiners over a period of
years) of factors developing in the bank v.ihich u.l tima telJr led to its suspension. The history should coIDIT1ence at a time the bank was in a satisfactory
or fairly satisfactory condition and be followed through to _its suspension.
It is intended that a person reading the 1eport should be able to
obtain an understanding of the problems which confronted the bank and to form
therefrom an intelligent opinion of how its affairs had been conducted for a
few years immediately preceding its suspension.
METHOD:
For each of the twenty suspended banks on the attached list prepare
an analysis in accordance with the attacned examples, Exhibit 12/1 and Exhibit 12/2. In the interest of uniformity these examples should be closely
followed. In order that this small sample may be as nearly typical as possible of the suspended ·oa.nks ir, :row· district the names have been picked at
random without any regard to size, location or cause of failure.
Do not write the names of the banks on the analysis forms, but nuinDer
them according to the numbers on the attached list.
In furnishing the population of the city or town in which the bank was
situated, give the census figures for 1910, 1920 and 1930.
So that those studying these re?orts may have sorue idea of the economic life of the co,mruni ty served by the "'i:lank which suspended, a brief reference
to the principal crops gTown or industries followed should be given.
EXAMINERS
I
CO:: :ENTS:
Attention should be devoted to brief corn..i:mts b? the Examiners indicating their impressions of the general affairs of the bank. Examiners in
each instance should be designated by letters of the alphabet, merely to
inform the reader whether or not the reports had beon prepared by the same
rran. W'.nenever referenca is made to a certain Examiner, obviously the same
letter should be used throughout.
The statistical information regarding the condition of the bank, given
at the beginnin 6 of a report and immediatel? following t11e cornnmnts of the
Examiner, are to ce taken fro1n the examination rupor ts.
-
2
-
EARNINGS:
This information should 0e compiled for five complete calendar
years immediately preceding the bank's suspJnsion. It is to Je derived from
the Earnings Reports submitted b:, banks to the Comptroller of the Currency,
copies of which are in the possession of tho Federal Reserve Agent.
The i tern "Net Inco.nc 11 comprises foe difference "uetween the total
debits and credits to Profit and Loss ~ccount exclusive of debits for
"Losses Charged Off 11 and credits representing "Recoveries" on assets previously chargGd off.
'llle i tern 11 Recoverias" represents the collection of items previously
charged off the bank's books as losses.
T"nG item "Losses Charged Off 11 represents the write-off of worthless assets and de?reciation on securities, bankin 6 house, furniture and
fixtures, etc.
ASSESSMENTS 3EFORE SUSPEWSIOH:
The history should include voluntar~r assassments as well as those
paid under statutory levy in order to remove an impairment 01 ca9ital.
B..:\D .A.SSZTS PURCiUSED BY S 'XiCKHOLDERS :
Inasmoch as this infor.nation is not 5 iven in Reports of Earnings,
but invariabl r is tot:chcd U_)On ir. the reports o:: Examiners, it will bo
necessary to search tho latter records to ascertain to wl1at extent, if at
all, stock.::oldcrs have purchased assets directly from the tank or throu$l
a Holding Co,npany, or have otherwise maei.e volunt2,ry contributions to avoid
an assossm,mt or th.J roduc tion of Capi te.l, Surplus or Undivided profits
.Accounts.
0
EXHIBIT 12/1
Population of Town:
Ba.."'lk Organized:
Bank Suspended:
9599
14027
10349
(1910 census)
(1920 census)
(1930 census)
Principal Crops or Industry Served J2iL Bank:
Lumber, fishing, shipping.
Ir;rportant Exce:r:pts fron Reports of Exar:ri.nation:
!ate (000 orai tted)
Cap. Sur. Prof. Loans Deposits Borrowings
11-16-20 Exa...nuner..:.J..:
4oo
2591
50
Classified Assets
Doubtful Loss
82
4
9-12-21 Exa..-:ri.ner A: "Present ma.nage~ent is considered good. Large aggrebate of
undesirable assets were mostly inherited from former management. There is no
question but what present capital is too large. At time of consolidation it was
left at this figure in anticipation of mterial increase of business but owing to
depression of business generally bank shows a loss in deposits instead of expected
incren.se. 11
4
63
195
2015
1542
13
80
9-12-21 Exa.'7ri.ner A: 4oo
2-28-22 Exa."':Uner B: "Bank~s present condition is probably due to some extent to
general slump in prices and business generally, but is mainly due to unwise policy
of previous r:ianagement. Present rna.nager.ient is in no wey to blame for present
condi tion. 11
0
53
507
1614
4o 12 1367
2-28-22 Ex.a.miner B: 200
10-17-22 Exa-:ri.ner C: ''President is not a factor in management but other officers
are capable. T'ney with the more aggressive me~bers of the board will probably be
able to solve the problel!lS of bank's present rather undesirable situation. Manageoent has been too eager for business wi~~ result that mny loans a.re frozen .m d
heavy losses are likely to be sustained. Bank is somewhat extended and has experienced some difficulty in financing seo.sonn.l operations of its customers. Directors
advised that they believed worst of difficulties wo.s over and their future position
should be easier."
15
33
73
1914
4o 17 1456
10-17-22 ExD.oiner C: 200
4-10-23 Exa.-:ri.ner D: 11 This 11.'.ls o.lwn.ys been a one man bank. Years ago President_
was d.omiIUting fi 5ure, succeeded by Cashier_ _ who recently resigned, and now being succeeded by Vice-President. President is hardly a factor in b3.Ilk: 1 s man~ ement. Past ~id present management are a....-uci.ous for business U'UlY loans made ~s a
matter of policy."
20
97
0
2073
1421
17
40
4-10--23 Ex3.miner D: 200
-·
EXIU:BI T 12/1
P3.ge 2
Cap. Sur. Prof.
Loans Deposits Borrowings
Classified Assets
Doubtful Loss
10-22-23 EX'.1Illiner D: 11 Forner President decea.sed. President __ is following
closely in footsteps of predecessors ond conducting largely o. one rxi.n bank so far
ns he can hn.ndle mtters. He appears very easy in eztending credit or making too
many l .oans :is o. nntter of policy and also very relucto.nt and timid in enforcing
collection on criticised lines apparently being ~fraid he might lose a customer
directly or indirectly. This report shows some imp~ovement but as a rule im 1rovement has been nnde in reduction or elimination of slow or undesirable assets th'1.t
were least subject to criticism, while loans most severely criticised have changed
but little. Directors vrere advised that unless nnterin.l iq,rove::.1ent wn.s shown at
next exa.'::ri.nation, p~rticularly as applied to loans to directors Md concerns in
which director.s .~1ere interested G.S well as large :mount of stc.tutory b~d debts,
overdue po.per, slow, doubtful, ~nd otherwise undesirable p~per, special* (*frequent) ex<mino.tions ',1 ould be recot1r:1ended. 11
10-22-23 Ex...'\Oiner D: 200
4o
19
1537
1971
169
69
12
4-28-24 Examiner E: 11President, who domino.tes policy to 13.rge extent, is n f;Ood
business getter', but rather wenk in mn.king collections, and is endenvorin£ to
hn.ndle too I!lll.Ch of bank's affairs alone. He should have a conservative ba.nk nun
to assist in oanagenent and this IIl.'.).tter was thoroughly discussed with hin. Some
g~neral improvement hns been r:'lll.de, although there still remn.ins r.mch to be done
before bank is clean. SloTT assets show considerable reduction o.nd a deo.l has been
made for s:3.le of Other Real Estate. 11
4-28-24 Examiner E: 200
4o 14 1438
1727
271
52
6
1
11-25-24 Ex3.miner E: "Directors and officers sta.te that large a.;:1ount of slow and
doubtful assets 'were inherited n.t tir:ie of consolidn.tion with .'.l.Ilother b'll'lk sever,1,l
years ~go. However, it appears trot n. number of large lines n.nd slow assets h'l.ve
~ccur;iulated since then as n. result of 'business getting 1 policy ~nd too free extension of credit. Preside~t is capable but too liberal ond too lenient in r1'.lking
c,ollections. Besides, he h'l.s recently spent too r:uch tine on personcl oatters -'.lnd
enterprises. This was also severely criticised by exXJ.iner n.nd he non prooises to
devote all his tifle to bruik's affairs with 3, vieTI to getting b~11k in good condition
again. Princi,nl r..ntter subject to criticism is large n.r2ount of Overdue Paper whicl
including statutory b'\d debts a,6 gregates about 28% of ba.·1.k: 1 s toto.l loans. This
r.iatter was severely criticised by e:x:aruner during directors' neoting. ExaLuner inforr.1ed directors and President in pn.rticul'il' trot unless decided ·improver.1ent in
nn.tter of attention to slow and doubtful 'lssets and ovcrd.ue p"l.per wn.s shown :1t an
early date by correspondence consideration cight be given by office of Chief Ex~niner to rrntter of placing banlc on Special List* (•meaning for frequent e:m.minntion). 11
11-25-24 Exn.rriner E: 200
4o 29
1435
2011
58
103
9
...
EJGU:BIT 12/1
C.1.p. Sur. Prof.
Lo~ns Do)osits Eorronings
011.ssifiod Assets
Doubtf~l Loss
6-22-25 Exa.n:i.ner E: "A r-ntorio.l ioprover1ent in note pouch is noted in re 6 :..rd to
~v:iount of overdue p1.1pcr. Cl')srific.1.tion of lo:w;,s, :10rwver, shows no icr_prover:ient.
S1011 loa..;,s show '.l decre:?.se of .$40 ,000 but douotftl i t0:.1s s~1ow an incre:-,,sc of
$52,000. Losses ch'U'ged off n.t ~1is ti:..1e :i.YJ.ounted to $17,690 1.s co,:ip'.lrod \'Ti th
::P9,452 o.t b.st exarJ.inn.tion. L'1.r 6 e x:.ount of ii.1cro'l.se i::1 p::tper cl1.ssed doubtful
is o.lr.iost entirely due to change in cl:1ssific".tion durinb ex.-1.r.1in.1.tion. rTo nerr 10.1.ns
of slow n.~1d doubtful cl1arn.c ter r-1.re b0in.; r.11,de 'Uld 1:1os t of lo.-.:1s criticised ".t this
tine h.1.ve bee:1 in b:m:: n. nunber of yc".rs 1:.1d ,1,re \70rl:ou t l)roblei.1s. Sor.10 lossos a-zy
develop in itc::is cl1.ssed doubtful but it is believed b.'.l.:llc 1 s C'"l..rning c.:,,p:::i.city •:ill
en'.lble it to c:1'1rge off losses :is they develop. ::o cliviclends n.re to b0 rn:i.d until
b1.d debts ~1d doubtful i te::15 '.1.re cli::rl.n,.,tcd. 11
6-22-25 llicn.r.uner E: 200
4o
16
1283
1555
306
150
13
12-28-25 Ex-1runer D: "Directors ::i.s o. ·ahole co:--r:_:>,'"l.re f::i.vorn.bly \71. th :::1.vor1.ge cou.:1try
b:-l.11]:;:. They .'.l.rO successf1.'.l non in their indiviC:::cJ.'\l lines of business '"l,.1cl iiould do
11ell if t!1cy h::i.d t:i..'1 ::i.fbTessivo le:::i.d.cr. ,.1".'-7.'1b'C •.1cnt is very wcxc, 1[1.C!-:inf; force, if
not incor.ipetent, ::i.s i:1dic1,ted fror.1 n-.:.r.1orous cri ticis::1s listed. Presid0:1t is well
:-.~e1.nin6 but o:-i.sy goin.:; , 0:1tircly too free i!1 .T-i:1tir.G of crvdi t .:i.nd •,1'hil0 .:. l."'..rse
nu:1ber of frozen '"l,nd q-!estionn.ble -:tssots n.rc an i::heri t'.Ulce froc:1 forner n:u "-G'-'- ent
it is evident t':l.".t President docs :.1ot hwe ".bili t;:,· or inclin"1tio:1 to collect or
cle::i.n up these old n'.ltters. President is believed to h~ve h1.d little b--,~~::inf experience outside of t:1is b'\:1.k. Cashier is 1.s C".s:- :;oin,;; as President ·:ti t~1 cvon
less ini tin.tive. It is, l10•,1cver, perhnps trae th~t Prcsid.e::1.t ;7ould :1ot "?~r ·it 1.ss-uc":'T_f)tion of a.ny .'.l.u.thori t? by ::i.:-iy ot!1or er:rploy0e .'.'ls he :r,;r})O:U-s :-i.nxious to l:."¼"1,'1,;;e
entire b:1.,,7.,k even includin...; ope:iin:; of 3,ll nail j;>erso:1:"..lJ.:,. '.'il1on s%,;;cstions m::re
□"de or cri ticis:-.1s cliroctod 'lt scvonJ. l1e1.ds of different dep"rtr.1ents t:10:r co .• e.ited
to e:~.'"l!'u:,er in effect tlnt Proside~1t ·.ns eq'..1."..ll:' to bl~r1C 1,s he would :iot ·,:,cr-,i t
ony lee,,~, w:1en they •.1oro d.is0osed to brin~ 1.bo::.t correction of so:.1e of c:rit::.ciocd
r.1".tt0rs. 7/ri tor e:;:,.1:.u:1ed b--,..:12,~ in 1923 eu1d .,_ coq_)'\riso:.1 Yri th bis :;_:,rovios rc.,ort
discloses mmerou.s .'.lsscts criticised .'.\t tir.10 u.."lc:1,.,_ne:;ed 3.nd [1.l)}'U'Ontly :io "tto:.1pt
r:11,de si:1ce then to liqu.id1.te v'U'ious sb.tutor~r b1.d debts 'l..i.d oth0r question,'.'-ble
rind froz0n -:tsscts. Ex:i ::i.ner reco~10n~s th1,t bx.1l:: be pl"l.Cecl on list for froqi.;.cnt
ex~':!i:1-;.tions until co:1w. tion is s.,_tisf':.ctorJ ..,_:d t~1."..t ne:~t ex-:i.::".in1,tion be :. '.ldc 90
d-ws fro:.1 d.1.te. 11
12-28-25 Ex'1!:i.:i.ner D: 200
40
11
1835
2o21
316
90
52
4-10-26 Ex:t."'Jiner D: "Wri tor o:~"l:.u~10d b:ml:: in 1923 1. t w· ich tir.10 President rrn.s
then Vicc ...Prcsident i,d ')t y1_:ich ti.:~0 he s·.1cccoded to Presidency. E"U'L-:: h::.s for
r.1'.:).ny yc.'.l.rs been a one-tn~1 b:i.."12.-:, ,'1:1d co~1u.i tion so:1crn.lly w1sn.tisf ctory 6 r~.-;.ter
p::i.rt of tine. At ex'.lI".in1,tion in 1923 cxa:-.1i:1er urbod r.1.'l:.11.ger.1ent n.nd directors to
tx-:e pror:ipt nnd a.&:;rcssive steps to collect or scc·:re l".rgc a,,.1ou."1.t of st'.\t'J.tor;,·
ba.d debts o..nd ot er over "..:e p:iper, slorr ::i.nd qt:.cstion:i.ble ::i.ssots, .,_ 1d directors rrere
",dvised th'lt unless such 1.ssets .;ere given ir.ncc:io..te :. tton tio::1 b~: ,1:,,s cert,.,in to
sust,-,jn l')..rge losses. Ex""~un,.,ti0n of 12-23-25 rr:cn coz:m'\rcd ·;rith 1923 n:1ow"'
EXHIBIT 12/1
Cc.-). Sur, Prof. LonJi.s Deposits Eorroivin.;s
Cl~ssifiod Assets
Doubtf1..·J. Loss
::J..."l.jori ty of larger .'.lnd core undosira.blo '.\ssets still in bn.nk ,-:i th r.1.'l.Il;y l".1.I'6C lo:1ns
unch;1.;"16 ed except th~t t:1ey i7ere ti70 yo11rs r:iore p ..... st d.ue nnd it ·.n.s evident th.,.t
I:l.3.!l'lger:.ent h'l.ve m-'lde little, if n.ny, .'.lttoopt to seci.,_re stn.tus of such f)n.:,er subsequent to 1923 or previous. This st"l.te of ::uf~irs ~as rnther forcefully brought to
'i.ttention of directors durin 6 12-28-25 ex:1.r:un~tion and n. subst,...·1tinl x.10unt of
•
uncollectib le assets of 1923 n.nd previous uere listed '.1S estio'\tcd lossess. So
ma.."zy promises and so m~c:i. assurance was given exa.~iner at previous examin3.tion
that immediate steps wo\.'..ld be taken to improve condition that the few changes and
lack of improvement are most disappointi ng and discouragin g. Special eY.a..ilinations
at short intervals will probably prove useless and a waste of time as but little
improvement can be e:x:-pected in three to four months' time. Frequent examin~tion s
will undoubtedly cre3,te unfavorable cormnent and gossip to detriment of b'Ulk.
Examiner has lost what little confidence he had in 1923 in President and Cashier
and it is not believed these two will work the bank out of its most unsatisfact ory
condition. Without frequent examination s and the present rranagement in charge it
is believed bank ?rill be permitted to drift and it appears to be a choice of two
evils, each reacting unfavorably for bank and its shareholder s. Directors were
advised t.1at e:x,-muner had no authority to demand or request resign~tion of any
employee but t~.'.lt it was duty of exa.~iner to make recommenda tions to directors for
good of b.::mk and it was suggested that if present man3gement did not sho~ a desire
or inclination to work ,ti th directors that directors should e1m.._:>loy someone who
would tnlce ch.'.lrge of bank's lo/llls nnd w;io would be responsible only to board and
not subject to interferenc e by President or C'\shier .:1nd it ~,~ further suggested
that directors compel officers to compl~: r,i th resolutions p'.1ssed th::1.t no new lonns
in excess of $500 be mnde wi foout first being aut:i.orized by finnnce committee 'lild
thnt directors compel officers to furnish at Bo3.rd meetinbs informD..tion they desire concerning status of 10311s a.~d other ~ssets :md t;i~t if yresent offieers are
not competent in opinion of directors 3.Ild ban2.~ 1 s welf~re be improved by a ch'Ulgc
of mo.nagement th'.l.t they give serious consider,...ti on to s 10. 11
4-10-26 EX3.miner D: 200
4o
3
1941
2628
268
118
19
8-13-26 Examiner F: "General condition shows very little chn.nge. Condition is
most unsatisfact ory ond unless some cn'lilges 'l.re m..~de I do not expect to see ".llY
mc.teri.'.ll ch311ge for some time to come. President :is ,1ell ~s di rec tors are of
opinion th""..t t!1ey should not be n.sked to put up rr.oney to elimin~te o.ny losses ~-id
doubtful p'.:l.per, contending th::l.t b.'.l?lk c,n earn its v1=i.y out in time. Ex: .u.ner does
not ::i.gree ~nd informed them that they TTould be given until ne:;:t ex:unin.'.ltion to
provide for losses cstim'lted. Exn.roiner informed dircc tors t:1 .... t they rmuld be
given until next e;m.minntion to mru;:o some provision to provide for losses o.nd
other i terns tot""..ling $144,819.39 . Your examiner lurdly C}..-pccts to get enoue;l1
m:mey to elimin . . . te n.11 this pnper but thought foat by pl:1.cin ~ this pro :un before
6
them they ·.1ould e:::ert themselves to collect this pc;_per. ::stimtcd losses r:erc not
ch"l.I'ged off for :.bove re son. Exoniner thought th3.t if si tu:.tio:1 w s to be brCYU ~ t
to a hen.d it should be done at one time. 1zy- idc~ vm.s to plo.ce them 011 notice th~t
EXHIBIT 12/1
Page
C::i.p. Sur. Prof.
5
Lon.ns Deposits Borrom.ngs
Cl~ssifi c d Assets
Doubtftl Loss
some foing would h"..ve to be done by time of next ex'll!linn.tion ,'.:i.nd perh::i,ps some concerted action could be obtained for the better. It is respectfull y rocom;nendcd
t~at bank be not placed on spcciaJ. list at this time. I do not think s~ccial
examination s ~-rould be of any value now. 11
3-13-26 Ezaminer F: 200
4o
7
1915
2672
172
90
59
1-23-27 Examiner F: "General cond.i tion shOivs some slight improvement a nd. officers
and directors promised to continue efforts towards collecting criticised 9ayer.
At t:1is season business is v0ry :poor and collections sloi'r. Real cs ta.to is extremely difficult to sell and a large amount of ba.l'lk•s loans depend on sale of cit;:;r
property, farmland, and timber. With this condition it is extremely difficult for
man~ement to collect a.~y paper predicated on above assets. President is interested in entirely too many civic n.ffairs n.nd other things n.nd cn.nnot dvvot c n.11 his
time to ba.'lk. During ex."~m.n'l.tio~1 I took p'l.rticul~,r notice Md he spent mD.jori ty of
tine oi.:t of bn..7.l,:, T'nis rns forceft.i_lly C'llled to his 'lttention ::..id his excuse is
th~t no one cls8 r1ill do it. Your OX3Inincr had ::l. fr::i.nk t::i.lk with Presicle:'.1.t
Md e:ic.euvored to s:19•,7 hi::i th'1t :ie ,1as doing mong. 0,1 ot~1er h-md !le S•? ends :1is
person.'J.l money for benefit of b~"1.:.: in VTG;f of tr::...isportr:i. tion, etc., ,..id t h0rc is no
question th".t he is doing his best to pl.'1.ce b"U'i!.c in 1- more s'ltisf1.cto:c y coadi tion.
He is one of mst pl8'lsing me:i. I ho.ve h.'.1d the ple::i.surc to come in cont-1.ct ·;-ri th but
is inclined to let people ii:Ji)Ose on him 3..'ld so:CTe of his finD..~Cing is suojcc t to
criticism. He tries to help p0ople ·1.nd concerns -.-,ho do not even do business \!i th
the b'1.nk 'llld ::i.nyo:10 cnn take up :1is time ~1henevcr t:1ey cicsire. At prose::\t b:mk
h-:ts good en.rnL1,; cn.p~ci ty, :i.pi;,roxim'.\ tely from $25,000 to ~O, 000 per -:tn::·.::...':l ..,_ftcr
expenses .:ui.d wit:! ..., reduction i:: interest p'1.id s':l.vin 6 s depositors it r.:ou.ld , e""...."l.
some $18,000 D. yeo..r addi tio:ru profits. In p::i.st fe·:r years '\ll 0'11'nings h,.v-3 beer.
used to c~1."..rge off losses. In :p:>.st six ye-,,rs bi7.k :1as cl1'1rged off over ~172,000
in losses :u1d recoveries have o.:.o,;.nted to over $25,000. This is beli cvvcl to h';..ve
bcc:1 in n.ddi tion to ~sscts elimi~'.:. ~Od by ':. roiiuctio:1 L.1 c::i.pi t .')..l of $200,000. Pr'1.Ctic::illy '.'1.ll these .' 1.ssets 1,7ere inr.ori ted by prcse:1 t :-.,':UlagCi:,c::t and t:1'l.t h olds l,OOd
'Tri t:1 .' )..sscts criticised in this rc:,:ort.
This rGport shor;s csti~·.- . . tcd losses ;,,i; •rt..lg3.tin6 $132,000 1.'1d on Fcbru."..r;-,· 1!..:.th I wired yo1:r office status of situ".tion.
Af tcr scvern.l conferences rrcrc held directors ro'lchod conclusion th '"'. t '1.11 c1.ssessr::c:1t ;r01.ud not be proper procod,..!.rc. It •.1as finally '"l,f;rced th;1.t t , oy ,1o'JJ.d 'f>Grso;.1-:.J.ly purcl1ase t~.csc i te~~s 1:1.d it m::i.s d.efini tcly mi.dcrstood t}1"..t c:·10~' ···ore to be
pi:;.rc~1 sed for cash and i..mder no circumstanc es were &iy notes to be ta.%:en b;r bank.
This t:"ey agreed to do, but .1an tee: 30 days ir. ·;1:1ici1 to c o;:rplete t:leir o.1·ra..."1ge;:1en ts
a:1d accordingly your office was notified. Y0'.1r \7ire of Febr.J.ary 15th ·;;as received
in ·:,:1ich you stated that ir.:rp~rr.,e::t notice ,rould be vrithheld for 30 d¥S n.~d I
accordin 6 ly notified mana.i;e ::e:1t foat the:,,· ·:rould be Gi ve:1 u:.1 til M.'1.rch 1.., t: L1 ·,- rhich
to co~lete their pla...'1s.
1-23-27 Exar:ti.ner F: 200
~O
1
1803
2701
179
19
132
1
'"
•
EXHI:BIT 12/1
Page
Date
Cap. Sur. Prof.
Loans Deposits Borro1;ings
6
Cl'1ssified Assets
Doubtful Loss
g;_ 2-27 Ex,:,.~nner F:
"Condition remains most unsatisfactory and maJ1a.ger.1ent o.ppe':l.rs
to be making very little progress in collecting criticised assets. President continues to dominate and apparently directors cannot control him. Bank is overloaned and President continues to make loans that will prove very slow and also
continues to try and finance everyone in the community. Regardless of advice he
receives from examiners and experienced bankers he does not change his policies.
I am afraid that if he does not change his ways he will find bank in a serious
condition one of these dey-s. I had a talk with his principal correspondent banker
on A11oP"\lst 16th and he told me he had talked to President n. short time ago and if
he did not change they would be inclined to refuse his ba:1k further loans. The
Federal Reserve Bank is very reluctant to discount his eli 6 ible pnper and are constn.ntly wo.tching him. I am not n.11 satisfied with condition or policies and feel
th'.lt something must be done to correct situation. In view of this situ.3.tion it
is respectfully recommended that bank be pl'.3.Ced on speci::u list and be again
examined in '1DOU t 90 <i.-zys. 11
8- 2-27 Ex::.miner F: 200
4o
12 1950 2512
314
4o
l
1-20-28 Ex::tminer F: "As examin::1tion wn.s 1mde on bn.sis of going bnnk, it hn.s baen
difficult to write report, and ex.'.lilliner has attempted to cl~ssify n.ssets as they
a.re classified under the receivership. It is to be noted that 'slow assets' has
been elimin'1ted. Examination was comnenced on n.fternoon of 1-20-28 IJ.l1d was completed 2-11-28. Precarious condition was thoroughly discussed with directors
latter part of ~ebruary at which Chief Examiner was present and weys nnd me~s to
eliminate estinuted losses 3.,.~d frozen ~ssets was topic of conversation. It was
concensus of opinion that efforts should be ma.de to organize a nen b~ to assume
deposit li'1bilities ~nd truce over a like ru.nount of assets. With this thought in
mind e:x..'1Jlliner 10ft b~nk but kept in touch with directors as to progress :rrndo in
this direction. President tendered his resignation the l~tter pn.rt of Jo.nu.o.ry n.nd
this wo.s published inn. loc~l newspaper in such a m~nncr L~at it left 1 great do~l
of inference vri th result thn.t a run wn.s started vr~iich re::sched such proportions
thn.t e:x,.·:i..rniner wo.s requested to return nnd advise with directors. After a thorough
o.nG.lysis it v1.'1s deemed o.dvisable to close the bank n.s run hn.d re'1ched such proportions that it ~o.s useless to keep open.
1-20-28 Ex:3..miner F: 200
4o
12 1745
2473
152
810
333
( 000 omitted)
E::i.rnings:
~
Net Income (Gross Earnings
less Expenses)
Recoveries
Losses Charged Off
Assessments before Suspension
Bad Assets Purclmsed by Stockholders
Dividends
1924 19_gs_
1926
1m.
Total
34
29
17
36
30
146
0
25
0
0
8
1
19
0
0
10
35
0
0
0
6
44
0
0
0
1
33
18
156
0
68
8
0
G
68
0
..,
•
EXHIBIT 12/2
Ban!c Organized:
Bank Suspended:
?o~ulation of Town:
1900
1924
1238
2957
2455
(1910 census)
(1920 census)
(1930 census)
Principal Crops or Industry Served~ Bank:
Wheat~ potatoes, livestock, alfalfa, beets, seed-peas.
l.!!!Pprtant Excerpts from Reports 9f Examination:
Date (000 omitted)
10-13-20 Examiner A:
Cap. Sur. Prof.
50
50
2
Loans De-r:>osi t Borrowings
501
581
45
Classified Assets
Doub tfu.l Loss
0
0
7-14-21 Examiner B: "General condition is rather satisfactory on t:he whole, eapecially in the light of two or three poor cro~ seasons experienced in ~~is community. Bank 1 s condition is extended but fact tl:.at proportion of rediscoun ts is
so large speaks well for character of paper. Paper is of good general CD.'.U'acter
except that some wheat growers on dry land have beco~ne involved. With ·;ooc1. crop
returns this year material liquid'ltion 1 ~ be expected. Management is c3,::.•eful ruid
efficient and gives close attention to paper. No one man dominates. 3.'.mk is sitU'lted in good agricultural comrruni ty, :p;:i,rtly irrigo..ted n..".ld partly non-irri 6::i.ted
bnds. Crop prospects on irrigated land -ire fine nnd fair on dry l'Ulds. 11
7-14-21 EY..aminer E: 50
50
6R
354
403
47
3
0
1-20-22 Examiner C: "In general, a well-m'l.Ilnr;ed and well-run ins ti tu. tion. Personnel appears very capable and considering gener~l conditions here, t~ey have done
very well to keep bank in its present shape. General conditions in t ·1is dry farm
country nave been very unsatisfactory on .3 ,ccount of ";?OOr crops o.nd ·1·o"irprices 3.!ld
unless conditions improve bo.nks here will be very ha.rd pressed this co::'ling year. 11
1-20-22 Exruniner C: 50
50
2
671
451
277
17
0
7- 5-22 Ex.::iminer D: "Mano.gement h;:i,s been in the past too lenient in accepting
paper for accommod'ltion of other b~ks. Most of the p~per is slow 'IDd must of
necessity be eliminated slowly. This is an element of danger nnd considera.ble
losses nny result before paper is eliminated entirely. (They take lo-ins to accommod.3.te other banks, $82,000). B~1u: is in a very extended conditio~ out crop conditions are very favorable ~s n. whole. If .'J.dverse conditions prev-:-..11 J:>roblems
for bank will be difficult. 11
7- 5-22 Examiner D: 50
50
.:IB.
663
394
371
11
7
EXHIBIT 12-2
Page 2
Cap. Sur. Prof.
Loans Deuosits Borrowings
Cl~ssfied Assets
Doubtful Loss
2-10-23 Ex'IDliner E: "This b::ink is in "- ro.thcr d3,ngerous condition :i.t present due
to l'lrge amount of borrowed money o.nd cxcessi ve 11IDOun t of slow :md doubtful p'lper.
Surplus is 3.lso ir.ip'lircd by estim'J.ted losses. .Another contributing fo,ctor 17hich
rrnkes condition dn.ngerous is lack of confidence by public on '7.Ccount of lo.rge
number of banks w~ich have closed. As yet t~us feeling h'\s not been noticeable
here but matter should not be overlooked. Some of present stockholders probably
could meet a 100% o.ssessment but this applies only to a minor portion. The larger
shareholders ~re :ure~dy heavily involved. If permission to increase capito.l
$50,000 is gr'U'l.ted it will m~terioJ.ly better b'1IJ.k 1 s condition. Directors desire
to sell new stock at $150. Premium of $25,000 to be used to chorge off losses o.nd
doubtful p:1per. Exn.miner recommends ex::i.mination in 9G clays. 11
2-10-23 EXD.miner E: 50
50
2R
617
377
325
12
9
5- 8-23 Examiner E: ''Bank is still in dangerous condition due to large amount
of borrowed r;io;iey Dnd excessive ar.1ount of slow and doubtful assets. At last
exanination directors desired to increase capital to $100,000 and believed they
could sel:l stocl: at $150.nnd were to use amount derived from premium to charge
off estir:ia.ted losses and doubtful paper as far as possible. At this exn.nin.'J.tion
capital had not been increased nor could stock be sold at 150 or even p'.ll' at this
tine. Examiner decided it best to clean house. Estir.l.'.lted losses aggregating
$37,000 were ordered ch'.lrged off and entries 1:i..1.de during CX'.3.'.:iination. This :Practically wipes out surplus and as a result ~nny excess loans a.re shorm. Should
crops prove poor t~ds ye'.11' or fil"l.rket conditions adverse b:mk ·:,ill undoubtedly
suffer heavy losses. Confidence of people of cor.t..T1U.i.iity is none too 6 ood. E:i.ch
tine ex~ner visits ba,,'1.k there are sone wi thdrarnls. Prcsiden t be.1.rs confidence
of people but is also president of ~noth8r b'l..nk 'U1.d is obliged to s,end most of
his time there. C'lshier's person~lity does not inspire confide~ce of public in
b:mk. Stepo..: 'lre to be t/lken to 3,p·,)oint one of the r.iost influenti"..l stockholders
!ls vice-president who is conserv'\tive, a good collector '.lnd ·:,ill devote nost of
his time to b3Ilk. It r:i.3.Y be of considerable benefit. Exn.r.uncr does not recoor.1end
t:i!.:ing b!lll..1< off speci::Q list (for frequent ex'"l.."':'lination). Sb.ould ::!..!lY unusu.'\l conditions arise ba.nk would hwe difficulty in r.1eeting cler.nnds. 11
5- 8-23 Ex::u:uner E: 50
50 6Red
614
298
360
42
37
11-12-23 ~'.ll.1iner E: "Some ir.1prover:ient ros been .~nde since 1[1.st e.A.'.lr.una,tion.
Lo.'.l!ls have been reduced $63,000 borrowed money $33,000 and deposits increased
$la:J,OOO. Princip'.ll improvenent is in restor~tion of confidence of conr.nnity in
bank ~d it is believed th'.1t danger point h.'.ls p~ssed. A ver-1 bood crop of wheat
is being ha.rvested 3Ild mile prices nrc only fa.ir, consider.1.ble liquid.n.tion fron
this source will be h,'1d. People n.re i;;otting in some r.10ney [Uld ns ::i, result n.
nuch better feclin,;; :..11 :1,r')u.nd prev:1ils. Officers n.nd directors estinate th.-:i.t
•
EXHIBIT 12/ 2
Cap . Sur. Prof.
Cl~ssified Assuts
Doubtful Loss
~01<1.s D3nosits Eorro~in 6 s
b'."I.Ilk lill be o.ble to cut dovm its bills pn,,v::ible ..-Ii th Feder~ Reserve R'1.:1k o..."lother
$100,000 °b'J J:irm-iry .1st. Exnniner believes trot n. further reduction of $5(),000 to
$75,000 in bills p::i.yn.ble rrill be :::i.bout the best they cn..."'1 do. This ·,'Till still
len.ve bCUL:: in n. badly extended condition. It is believed t:1::i.t prescat conditio!1s
h'J.ve taught officers o. lesson a.."ld credit n.dv.:mces hcre"..l'tcr \7ill be C'U'efully considered before being n'lde. C"..shicr is not o. very .;ood b~ker .::Llld o. ch.n.nG;e in
1
::1.'.lil:1.ger:.1ent ';rould be of gro'.lt benefit. Fr0sidont is believvd c::i.p'l. Jlc "..i1d ~dous
to 6 et 'lff~irs in good condition ~6 ~in, but is obliged to spend nearly ~11 his tiuu
'1.t ::mother bo..n:-: rrhich requires his close o.ttention. Idea. of i:1crc-..sin6 c-..pi t'.:'..l
h~s been ",ba..i.doned o..s it is believed stock could 1ot be sold. E:~'1.!':'.incr respvc tfully
recor:r::ends t ;,.t b~-:: bo kept under survcilln.ncc by reports ~nd correspondence
rather t.'Ul by frequent visits by ex..,r.incr. Too libern.l gr.'.mtin,s of credit in pa.st
is cause of bo.~•s present condition."
2
16
327
379
551
6:R.Ed
13
11-12-23 ~:,,__ .iner E: 50
E;1.rnin 6 s:
191:1
ct Incono (Jross E"rnings
13
less E;..--penses)
0
Recoveries
3
Losses Ch3rbud Off
0
Asscssnents before Suspension
::Bn.d Assets Purcho..sed by Stocltlloldors 0
16
Dividends
1920
~
14
l
0
3
8
3
0
0
0
0
10
C
1922
16
1
12
0
0
1
19Ki Tot'll
9
2
42
0
0
0
57
7
8
0
0
27
Federal Reserve Cocnittee on
Branch, Group and Chain Ba14~in 6
001:i.v:ients Re,;arding the Preparation of Forn
~:arch 20, 1931.
.E
Form F shoi.::.ld be prepared for each of the twenty s 1.:.spended banks from
the beginnin6 of 1920 till the tir:ie of suspension. Two examination reJ?Orts eacl1
year s:10,J.ld be analyzed and a separate cop:,· of Forr.1 F prepared fror:1 each report.
In case there :.1ave been r:iore than t\-rn examination re-l)orts of arr:; bank in a given
year, select those nearest April 1st and October 1st of that ;:rear. A blank form
of t:.1e exa·.:iination re 1ort is attached with t1arked references to the i tens to be
t:)lcen off on For:n F. These are references to the current edition of the exa:r.iination forn., of course, and certain adjustments will have to be r.ade in ta:.cing off
the data for earlier years.
1. In connection with slow loans, doubtful paper, etc., the earlier
exar..ination re.)orts had a colu..':l!l 11 0ther undesirable pa::,er 11 for which no provision
is 1:1ade on the analysis forn. This should be classed as 11 slow 11 with a footnote
indicatini; the a;.1ount.
2. S01:1e of the itens, as for exa~le, "Contracts for deed" ( item 23)
req1.,1.ire considerable scrutiny to see r1het:1er anyt~1ing along this line is shown
a~--w:1ere in the exa.:r.ination re:'.)ort.
3. IteDs 20-22, pertaining to real estate loans, require r:JUch care in
co~piling because t~e fi 6ures are not available in the desired fo~n in the reJorts,
and certain combinations are necessary.
4.
In the earlier :rnars care ;;us t be exercised to see that rediscounts are included in loans a11d discounts. Furthernore, in obtaining total borrowings, care r'.11.lst be taken to see that rediscounts are added to bills payable, for
redisr.ounts are shown on the resource side as a deduction fron gross loans.
5. After transcribin 6 the fi 6ures froo a given examination re?ort, it
should be co;;r_pa.red with the previous report to see that it is on a conparable
basis.
After compiline:; the dc'l.tD- for each b3n:c for the 11eriod fror.1 198) till
suspension, the fii:,-ures for the twenty bo.nlcs should be sun:iarized, using the sa:.10
forn for sur:u:ia.ry re·~)orts. Since two exor.iinci.tion rei1orts a.re analyzed for each
year two sur.1riaries will be made for each year, one for the first exru:iinn.tion re·?Orts for the year 3.nd one for the second re::_:>orts of t~e year. The assunption is
that these ~ill be fairly representative of the condition of the banks during the
first half and second half of the year respectively. Please show the number of
banks entering the sw:ir·.-:try in each case.
It is 11-~derstood, of course, that t~e absolute figures shown in t~ese
s·.u.1r:13.r ies will not be conparable fror,1 year to year because of r.1ergers, the drop::_)ing
0"-1.t of banks t:irough suspension. etc. This will not affect the data for our purposes. however, as we propose to compute ratios for the various iter.1s o.nd r:iake our
comparisons in this forra.
•
•
.
Federal Reserve Committee on
:Branch, Group and Chain Banking
K
Ferm F
A1TALYSIS O? NL'I'IOlJAL RUliK EX.1MI:V5ION REPORT
Item
Date of Report
Place
Name of bank
~'here found (pare)
.AJOoun t
(L.=Liab ilities on Page l)(In thousands
(R.~Resou rces on Page 1)
and tenths)
$_ _ _ _ _ l.
l. Capital ......... ......... ......... ......... .
2. Surplus •.....•.. ...•..... ......... ......... .
3•• UndiviQed profits •........ ......... .........
4 Reserve for depreciat ion anci loss8s ......... .
1 - L,l
1 - L,2
l - L,4-
- - - - - - 4.
5.
1 - L.8
1 - 1.13
_ _ _ _ _ 6.
:Bankers I ci.eposits ......... ......... ........ .
6. Time de_:,osits •........ ......... ......... ....
7. U. S. de_1osi ts •........ ......... ......... ...
B. Total deposits ......... ......... ..•...... ...
9a
9b
10.
ll.
:::orrovred money •........ .•....... ......... ...
:Borrowed bones •........ .•....... ..•...... ...
Total loans (includin ~ redisco1.L ~ts) •........ .
Total loans and investme:: 1ts (incl. rediscoun ts)
12. :Banking house, furniture & fixtures ........ .
13. Reserve, cash, cash ite:ns, anu. c..ue fro.n banks
14. Excess (if any) of expenses over earnings •.•
15, Ln8ns to officers & directors (direct) •.....
2.
_____ _ 3.
1 - L.~
5.
1 - L. 14
7.
l - L.8-14
8,
____ __ 9a
1 - L. 17-20
_ _ _ _ _ _9b
1 - L,lo
1 - R. l
1 - R. l &
5-11
1 - R, 12
1 - R. 11+-20
1-Part of R.
_ _ _ _ _ 10
_ _ _ _ _ _11.
12.
-_
-_
-_
-_
-l~.
__
24
- - - - -14.
_ _ _ _ _ 15.
6 ug,ran teed by off. & dir.,.
_ _ _ _ _ _16.
17. Loans t~ interests of off. & dir. (direct) ...
2
2
2
18. Par value ('If stock owned by ciirec tors •......
2
- - - - - -18'.
16. Loans endorsed or
19. Past due loans ,;,.
_ _ _ _ _ _17.
____ __19.
& i3 •..•..... ........• ......
20. First mo1·tgage (Loans vi thout prior liens,
except ,·here called II contrac t 11 ) • • • • • • • • • • • •
21. Junior mortgages (All loar,s with prior liens)
22. Frier liens (to junior morteatP.s ) .......... •
23. Con tra.c ts for deed (:nore often in reca9. of
invest~en ts on Page 7) ......... ......... . .
---- -- 21.
---- --22.
5
____ __ 23.
Liquid Investmen ts
24. U.S. bo. J.s other than those securing circ1..ua tiun 1 - R,6 &
Other investmen ts not in default (:nar~:et valutl
25. Foreign • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
26. Railroad • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . .
7
27. Public utility • • . . . • . . . . . . . . . . . . . • . . . . . . . . . • 7
28. Indus tri~l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
29. f.unic iJal bonds , . . . . . . . . . . . • . . . . . . . . . . . . . . . .
7
30. i!.iscella.n eous bends, tax certifica tes, warrar:ts,
and other liquid investmen ts, excludi~0 for3closures,c lai~s,jud@ }Ilents an~ efaulte~ oonds 7
Other Real Estate
,
31-. Book value •..••... ......... ......... ........
_ _ _ _ _ _20.
5
5
5
7
____ __25
26.
- - .- - -27.
____
- - - - - -2£<
- - - - - -29.
----- --- o.
g
_ _ _ _ _..-1
32. Prial"" liens ......... ......... ......... ..... .
33, Esti ted value . . . . . . . . . . . . . . . . . . . . . . . . . .. .
8
------.....;3,2.
_____ _
3 • Slow loans •. , ...•....• ......... ......... ....
ll
11
~5•.
8
____ _31+.
_ _ _ _ _35,
_____ __..,.36.
Slo bondfl,
uri ti , etc. • ...•...... ...••
Slow 11 0t1.,.,r' 1 r al estate ......... ......... ..
ll
3 7. Doubtful assets an losses - Loans ......... '
38. Doub ful assets a.."1d losses - Bonds & secur ••.
39. Doubtful assets ana. losses - .All other
......
11
11
11
_____
__,.~s.
_ _ _ _ _ 39.
Vcl.ue of assets not shown on books .•••..... . ,
11
---- --4o.
36
o.
41, Large state, county • municipal de1osits
subject to check.. .......... ..... . .......• Yellow Page A
-
_ _ _ _ _ __. I·
---- --41.
FEDERAL IlESER"\7E
B . . \.NK
March 20, 1931
Mr. J. H. Riddle, Secretary,
Committee on Branoh, Group and Chain Banking,
o/o Federal Rese"e Board,
Washington, D. C.
Dear Mr. Riddle:
e are forwarding you six oopies ot the •survey of
Banking Competition Ottered by Non-banking Institutions in Ohio•
requested in your ~ e r ot February 26.
It will be appreciated if you will return your copy
of the
nusori tori ina
you. There have been some
oorreotions made in the bound copies as you no doubt realize that
the manuscript was hastily prepared.
Member, o
on B,anoh, Group and Chain Banking
C
ti
'Orm ·o. 131
Off.ice
Correspon
...
To
ch
19, 1931
r.
••o
2-8405
or
z:.o.1 31
FEDERAL RESERVE
Offi ce Correspon
To
r. $'!lead
From
r.
BOARD
Date
M
ch 16, 1931
•••
You as
s b n
ich th
d rel"'
oi
OV
~
e
branch o
11,w
be
I) Pr
d
to escP.rt in ho~ m ny bans
d<>r. l re rve di 6tr ct
s in a
b
i
tU&t
d and, '\.f IJ'P b
of
<>dPrnl r <>rv<> be.n' s
ps
~incl tr t th .. r
r cords,
oth r Pd ra
IJ'P
"'r ou rat
"P.r than
h
hei
d t
f
iond
r
0
p
0 ,..
'Phoe
ic<>
7 br c
South At B
brench nth
C
t Pr
h
0
~
2- 8496
11 b enc
cnF, a t t
A
tr~ct 12, i
ch
otner 4 b<>i
D
a 1npn mb<>
riz on ., in
l th !)i tri. ct h
l
ict and 2 in th 12th Distric t.
0
n
t
Con,
11th Dis
D cos it Bank, ra
ort, K ntucky, e no m
8 , opPrat
1 branch at Sta
ng Ground
ct 4.
an , anvil
no
TPnn<>esee,
b<>r in
o o r ts 2 branch
of hich 11 r"' in Di t ict
t C8Jllden, T n ess
in Di trict 8.
0
,
0
0
•
In
but court
P.nci~ to
c iv
thP A t b-
.
e
r
Prri
th
cannot b<> co
n i.ts
st nc
ent · ty
I b s
i
rs rv
di.scuesi
e
t
inb r-
.
- 2 -
Bord's rP.ply as ritten by Judge ~lliott, thP.n OllDS l
oard nd published int
JunP. 1918 BullP.ti . P ge 522, con
e.r attach09
1922 the auestlon
Ag
ben the V lley
12th Dis triat took o er th 0 Gila:
al o i the 12t Dist \ct but o
Tr Governor at th t ti~e r 0 f rr
+-ore mimtioned.
Perus l of tho
0
or the
of hicb
s raiG d by lr.
ank ad Tr t Co
0
-Ve.11 y
enk and Tru t Co
r tPd 3 branch c in th _lt
d ~i~ speciftcallY., to th d
xaminetion reports of b t
t
0
ed ral Resorv
en
no ~ccount of
... tio
tr ct
ving
the 'li'ed r£Ll .esP.rve Bank of Dal a disclos
S n Franci co a
deral Reserve Ban of Dallas and no
th 0 r lley Bank n th
md
n hp San Francisco r port of any m moer b
i
t
0
ccount., in anv other dis tr ct.
US"'
I beli 0 vP the abo
o tho omotroll r.
fully
ns ers th
i quiry of
r.
o th
0
( "'OPY2
Pr.sh
of Branch of St~tP 3
k
cc
1
a
11.'l -l"'ffE>r<=>nt
it
RFJ
1
8.
P
PdPr
r.
.,. th·
nt b
~e.SP
,.,11 ot •
OU .,
,,
f
•
FED ERA L RES ERV E BAN K OF SAN fRA NCI SCO
arch 18, 1951
• J. H. Riddl e,
Secre tary, Committee on Branc h, Group and Chain Banking,
c/o Feder al Reser ve Board ,
ashin gton, D.C.
Dear ir. Ridd l:
I as glad to recei ve your lette r of March
givin g a review of the tatus of the ork no in proc es. lOt~,
accou nt of the many thing s hich have been happe ning since On
my
retur n from ashin gton, it is only no that I have the oppor
tunit y of talcin g up the ork of the Committees.
It is som hat urpri aing to find that you have
not receiv ed respo nses from Governors Geery, cDougal, Marti
n
and Talle y, relat ive to tho propo sed study of bank failu res
forarded to them under date of Janua ry 24th. I fe r d at the
that you had given them too much to dige tat one sittin g, time
hich
no seems to be the case.
In regar d to the cau for bank failu res, I am
convi nced that any defin ite statem ent made by our Co
ttee 11
be regar ded mor ly aa preju dice.
A ut the bet e can hope
to do is to set forth a sere of~ udie hich will enabl
one desir ing to pproa ch the subje ct serio usly to determ inee e ch
hims 1£ what have been the major cause n of su pensi on. At for
that,
o inion s ·11 diff r.
I hav been turnin g over in my rdnd ht dep
ble inform ation e could hop to obt ·n in seeki ng speci fic ndrespo ns s to the qu tions to b propound d to tho mang ing
ficer s of tho e bank hich have escap ed the fate of their ofpetit or. On hose bank has escap ed u pensi on ould not comconfess that his polic ies had be n almos t ident ical
th thos of
hi comp etitor , but that he had been mor fortu nat in h ving
a group of finan cially stron g stock holde r ho er
lling
sacri fice their man to vert a suspe nsion . Nor ould any to
banke r confe s that he sacri fice safet y for profi t in hi
loan
and inves tment polic ies. N verth ele s, the los
bing au taine d today are large ly fro inves tment s in high- yi ld bonds
.
r. J.
H.
Riddle - - 2
I would suggest that, in the study of 11 Economic
factors und changes inc. collJilUllity, 11 you include ·th road improvements, other public expenditures such as school, court houses,
etc. It is obvious that some communities have been fr too ambitious in these outlays to be arronted. Public improvement in
many rural • ections have so added to the tax r te as to absor an
exce~~ive amount of the farm income.
I ould appr ciate your fo rding to me copies
of corre~pondence hen the responses have been receiv d fro th
four Gov rnors above mentioned.
I
I am no eng ged in the revision of the materials
r lativo to Branch Banking end bank failures referred to in the
last paragraph of your letter of March 10th, so that they may be
plac din your hands at an early date.
Your. very truly,
cc. to Dr.
Mr.
Mr.
~r.
Golden 0iser
Sme d
Rounds
Fleming .
1 , 1931.
r
i
• Ri dl
iou
11
hioh h
d t
1
o 1
11
to
1th
OU
b
n
o loo
to
t
o
our
r, I
J·
\
-
•
•
)
/
FEDER AL RESER VE BANK
OF NEWY ORK
Mar.ch 11, 1951
Mr. J. H. Riddle, Secreta ry
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washineton, D. C.
Dear Mr. Riddle:
Your letter of the 6th is received advising you have so
far heard frora three of the four governo rs addresse d on January 24 asking their assistan ce in the prepara tion of a program for studying the
causes of bank failures .
I ~ve not given very much thought to the ques-
tion, particu larly in relation to the letter you addresse d tot
four
governo rs.
Our experien ce in this distric t with bank failures has
fortuna tely been quite limited , but it must be admitted we have been adding to it lately, and this has natural ly resulted in our giving the whole
problem conside rably more thought during the past winter than previou sly.
I recently dictated a memorandum on the general subject of bank failures ,
their causes, etc., and I think perhaps the best
would be to send you a copy of that memorandum.
ey
for me to be of help
It was dictated about a
month ago and since then other work has prevente d doing more with it, but
my
recollec tion is that there was a paragrap h or tro that I desired to
change.
I will endeavo r to read this over again within the next day or
two, after
hich I will send you a copy for what it m~ be
rth in this
connect ion.
Very truly yours,
~1
LAL
L. R. Rounds
Deputy Governor
II
rnor
r. Ir
Cler
ch 10, 1931.
2
ri 1 on con oli
tion
rch 9, 1931.
r
i
1
ort
iv
fro
t
tion
?
t
it
th
n
nro
ay
t
t d
old in
en any s
C
ir
i
t
er n
6 0
ct or
If t
on
s t
?
t
re ha
to
lid
' lo
tt
10n
uidity of
0
or
r
In ot
lio
t
in th
tin
I
onn
re.
tion
it
t
0
nt
o. n
t
11 in
p.
.•
FEDERAL RESERVE BANK
/
/
OF CLEVELAND
March 9, 1951.
Mr. J. H. Riddle,
Secretary, Committee on Branch,
Group and Chain Banking,
Federal Reserve Board,
~ashington, D. C.
Dear Mr. Riddle:
I have your letter of March 6th with reference to the
letter which you wrote to Governors of four Federal reserve banks on
January 24, 1951.
I am not surpirsed that you did not received very
much in the way of helpful suggestions.
At the time of the receipt
of your letter of January 24th we discussed it at some length in this
office.
In the tabulation which you enclosed with this letter
you showed excerpts from the report of examiners.
Just this morning
I was looking over an analysis of examinations in this District and
was surprised to note in one particular case of the great increase in
doubtful and loss paper within a period of five months. For example:
the set up beginning on page 4 of Mr. Clerk's proposal, under examiner
"F" shows doubtful $90,000 and losses at C59,000 on August 15, 1926.
The same examiner on January 8, 1927 showed ~19,000 doubtful and
$152,000 losses and on August 2, 1927 doubtful $40,000 with $1,000
losses.
This report was not so bad up to this time but five months
later the same examiner shows doubtful $810,000 and losses $555,000.
This shows that either the examiner was incompetent at the time he made
his examination of August 1926 and August 1927, or he was trying to
clear his skirts against a possible failure of this bank by setting up
doubtful figures of $810,000 and ~555,000 in January 1928.
I do not
see how it is possible for a bank in five months' time to get into the
condition that this particular bank was at the time it failed, if the
examiner was doing his duty prior to that time.
Any scheme that is set up by you, wherein the human element
appears as a foot rule in arriving at causes of failures and where the
personal equation enters into it in any way, cannot possibly succeed.
I am convinced there are three basic reasons for failures
of banks - First, Economic reasons beyond the control of the banker;
Second, Defalcation (either within the bank or in collusion with
borrowers); Third, Incompetent management.
w.
OF CLEVE:LAND
2.
Mr. J. H. Riddle.
March 9, 1951.
Economic reasons may cover only a local condition. By this
I mean that banks located within agricultural, manufacturing or mining
territory may be located in such towns which are what might be termed,
slowly bleeding to death. I have in mind western Pennsylvania which at
one time was a wonderful coal mine and coking region. Banks in that
oarticular locality were in excellent condition and apparently well
~anaged as earnings reflected such management.
Through poor conditions
in the coal business other business in that particular territory has been
drying up gradually and the ban.ks were endeavoring to maintain their old
earning rate against deposits which were not equal to and which would not
permit of loans comparable to the days V1hen the coal business was in a
flourishing condition.
This, of course, is reflected some~hat in the
management.
The management should have seen that the economic conditions
in that particular territory were getting into such a state that there
was not business enough in that particular territory to maintain the
ampunt of loans and earnings which the bank had been maintaining for years
previous.
In the case of state banks, and I suppose somewhat in the
case of national banks, here the officers of such institutions found
that economic conditions in that particular locality would not permit of
carrying along on the same plane, a.sin the old days, they have talked
to the supervising authorities and have been told to go back home and
run their business as no doubt the bank would be able to weather through.
In the case of western Pennsylvania the economic condition in the coal territory has not improved in the last ten years. Result has been, banks which were at onetime high class and good earning
institutions, have closed. Defalcations, of course, come as a surprise
to the institution where such defalcation occurs, except where defalcations are caused through collusion betv,een the bank and the borrower.
This, of course, is beyond anybody's control.
We have discussed this matter again today at some length
and still believe that when we get beyond facts and get into theories
we are treading on dangerous ground. I do not believe that you have,
up to this time, gotten away from facts and I am sure that any report
or program which is set up, based upon the data of January 24th ( · ich
is based upon theory and not facts) will be of no value, in other ords;
when you take the bank examiner's opinion without consideration as to
his ability or temperament, we are treading on dangerous ground.
I am sorry that I am unable to give you any suggestions
and this answer is only given to you after consulting with two of our men
FEDERA L RESER"V'E B;:\.Nli.
OF CLh""''\"EL AND
Mr. J. H. Riddle.
who are very much intereste d in
F.m
1ty
Governor,
March 9, 1951.
• roh 6,
ut
o
931.
rnor.
:ooh,
-
Oivi-
Bank Operations File
ln
1
ra
r
~
-
---
•
•
(
-
- -
-
-
-
...
-
(
-
•
(
-
- -
•
•
•
FIi
I,..
I/
,
,
·-
••
t
r
I'l' 12/1:
•
•
lz!2:
lB
l2/3:
IB
12/4:
•
12/5:
l
m
12/6:
lB
12/7•
tr
io
12/8:
1r
1o
rf
12/9:
1o
•
'
•
' C ifo 1 •
'
•
' I
B
• Or
o.
•
R e f e r r e d by M R. C L E R K
to Mr.._.§:=-~ -=AD=- ------
Please destroy 12/2
sent you in my 1 tter of
Jan
ry 1, 1931, and
substit te th
attached .
R ef u r
I}
d by M R. C L E R K
to ?.Ir ···-···..._.Ell)_________________________________
Please
estroy
Page 1 of 12/1
sent you ·n my letter o..
Ja1uary 10, 1931, anJ
substiu: it the attached .
-
te
10-22-23 Exlllllilc.er D: 200
•
-•
ot.
14
69
1971
1438
1721
2
l2
52
•
cipal
tory
u ...
58
103
6-22 2
1
40
16
1283
1555
30
150
18
-
-
Page3
ie
d debts
pl o
rt
316
52
t
1 '
18
28,..25
•
•
•
r
•
erio a co
268
o
a TflrY littl
13-2
llll.88.ti
oh
19
118
Co
•
iti
• I
~
as well
should not
t
0
t
t
emm.1.nat
1
Ti ion to prond tar loa s
4ly •xpeota to get enough
ot r lt
y t el
plao1D8 t 1 pro
b tor
,b6Cwu...lia.1.-
to
ino.t
ling
all
0
,
9•39•
--
la
•
•
59
90
gly
:200
40
"Co ditio r
68
l
l
ill
179
3
st
1
0
d
a o
er lo
disc unt hia
11g1bl
per
ar
co
ohi
him.
I
o
11
1sf1e
-·
. .-
~ - .§B!:•
olici
n
W
-
20
.r.,A,Q.MUUQI;
ine
40
classit
el
1;
5
Doubtful
oorrec
ctlbl.
e
ets
A
-
Loa■
t icn. •
lac
1n abo
1950
l2
1-20 28
dittioult
Page
W Classit
"fE..!...
Lo
~ el t.ba_t
__
uation it is res
ag in
a
A
2512
314
de
1
40
of going
er
t
olas
that ' 1
•
-20-28
~""-4,L-t
2-n-28.
estime.
li
opinio
•t
l
oh
:pa
s ~s
1n eu
t
ch pr
•
tter
tho
r ao d
oh propor
t it
op
200
40
l2
(000
1745
152
2473
itt d)
10
333
_!9_gz
30
46
••
r
~
34
~
29
!fil. l~g6
17
tal
0
l
10
6
1
18
25
1~
35
44
0
0
0
33
68
156
0
0
0
8
0
0
0
0
68
8
s
Pertly irri
ted.
2
5-
8- 23 ,
iner
:
11- 12- 23
miner H:
"Some improvement
have been reduced 63 , 000 borrowed mone
i cip 1 irn rove ont is in rester tio
be · ed that dan er pint
pa sed • .
an
le pric
•t
-
l.6
3'Z1
2
tpga:
~
18
3
0
0
D1Tidenb
16
1.4,
0
l
3
3
0
0
10
0
0
1
1
12
0
0
o1iel
'
57
0
0
0
0
0
~
2
-42
12/3
Dry :farming.
-
(000
•
5
-5 -3
•
t:.
0
••
2-13-18
2-13-18
irly 11g 1
'
••
7
253
235
7-1 18
7-1 18
11
l
246
t
:
1
3-19-20
a
15
8- 5--20
8- 5--20
••
•
1v •
1
f tr.
'3
311
1t1on.
3
0
tio
355
3-19-20
0
37
24!
2
1
3
0
35
12
rro
245
1 1o •
2
mtlmJI'l'
12/3
3
)
)
3
2
4
1
34
7
15
1229
(1910
lll2 ( 1920
9
•
l
: 10
-•
0
)
-Tiana)
(1930
)
t.
20
12
9
20
10
ll34
10
10
1
flr3
22
352
2
6s
'
2
)
•
•
o
0
y
or
rg
,
is
rt tie.
it
3
,,.
IBX 12/4
-
.
(
......,.
uane
__
• Prete
144
52
134
)
~
20
1
11
0
0
1921
23
1922
~
6
2
7
0
l
1
71
50
21
12
0
0
0
187
~
0
0
1
36
13
122
50
IB
12/
1913
--
-.
Pop
1923
297 ( 1910
2372 (1920
2250 (1930
-or
•
s,
Irrigated farming.
_(
7-
1-19
.
1-
9-20
••
~-20
.
-
• Prot •
•
25
35
25
25
50
6o
1
3
351
494
542
'715
525
3
2
)
17
l
13
20
7
1
4
0
3
2
3
59
19
34
0
0
,.
-ot
:i:
a:
dEZ,_t
'
-
t
(
ley,
-
10.30..19
.•
2- 3-20
.•
12
12- 1-20
7
12
r
.•
40
12
••
ot
~- - · ...!2!.•
40 u
1
6-2 -20
tarm.in8.
433
2R
30
445
4D6
C
U1
poubttul
379
268
144
226
248
224
14,8
l
0
0
0
21
)
•
.-
•
3
)
-• p
t.
ta
•
5
IBIT 12/
(
261
: (
133
4B
122
1
1920
>
2
l
l
10
1
3
3
0
0
0
8
0
18
5
0
•
12/7
Irr
le;
•
11-2
17
1
.•
2-
3
515
375
511
s 7
11-
7-
3
.• l
1
1
27
3
1
0
0
7
1
73
332
1
133
)
C
•
•
3
)
27
3
13
5
15
Pgp
2
( 1910 ~t~::::.·.::n.:z)
1 22 (1920
1003 (1930
••
_(
1-16
4-17-17
~- - · -2!.•
.• 35 7
A:
35
•
-27-18
C:
3
35
11-14-19
Di
35
'
5
----
3
15
l
1
l
10
36
5
231
33
250
13
376
365
l
20
11
55
23
2 2
25
1
132
223
359
1
)
)
d)
C
••
t
•
3
)
-•
t.
03
u7
t
(
)
0
•
-•
~
)
-
2R
0
0
3
d
r--
23
13
l
0
0
0
~
0
1~
37
13
4
EXHIBIT
12/9
iae :
ded:
•
h
12-14-20
1ng.
.•
d)
5-20-20
P,
.•
25 25
•
25
i d
0
-
• Prot •
30
3
857
1342
0
9
29
1139
100
931
3
0
l
51
21
,II
2
d)
0
•
--
• Prof.
p
)
•
3
-• -t.
1
•
47
32
I
1217
31
•
)
-
t.
.
.
4
d)
·-·
p
EXH1tBIT
12/9
t
•
)
6
-•
t.
--
91
.• (
)
~
~
13
16
27
1
14
23
0
0
1922
0
0
810Jl
1 Stoa ol
a
0
2
AW.
7
1
12
1926
1
36
0
0
l
59
9t0
23
0
1
•
•
•
2 , 1 ..
•
r.
r
r.
o r l
o
0
0
b
t
0
0
ln •
... 5, 1
b
:n.
r •
r ·r.
C
1.
1
1
1
1
•
C
•
•
f
FEDER.AL
ltE HE RYE ll..:,....~H.
February 24, 1931
• J. H. Riddle, Sooretary ,
Committee on Branoh, Group and Cha.in Banking,
c/o Federal Reserve Board,
1 shington, D. C.
D a.r
•
Riddle:
You have probably hnd an opportun ·ty of looking
over the survey on banking competiti on which
s forwarded to
you last week.
/.
our idea
s to pl ce the results of the survey
in your hands as soon as possible, and we consequen tly ere
unable to present it in other than manuscrip t form.
Please let us know whether the manuscrip t which
you have is sufficien t. If more copies are desired, it will
prob bly be a matter of ten days or two weeks before they could
be prepared.
Very truly/you rs,
C.:K
/
C
•
FEDER AL RESER VE BANK
OF NEwY ORK
Februruy 21, 19:31
Mr. J. H. Riddle, Secretar y
Committee on Branch, Group and Chain Banking
Federal Reserve Board
a.shingto n, D. C.
Dear r. Riddle:
Enclose d herewith I am sending you all of
the materia l submitte d by the Marine Midland Group in response to our
question naire on group banking .
plete ·ob on the
They seem to have done a very com-
hole.
Very truly yours,
Enc.
LAL
lk ~
Deputy Governor
FEDERAL PillSERVE BAN:ir.
OF CLEVELAND
February 20, 1951.
Mr. J. H. Riddle,
Secretary, Committee on Branch,
Group and Chain Banking,
Federal Reserve Board,
Washington, D. c.
Dear Mr. Riddle:
I am forwarding to you, under separate cover,
a binder covering memoranda relative to "A SURVEY OF BANKING
COMPETITION OFFERED BY NON-BANKING INSTITUTIONS IN OHIO. 11
While the contents of this binder does not show
considerable work I want to assure you that the data compiled
has been a result of friendly help and cooperation on the
part of people in the State Banking Department and of certain
member banks in the district.
Mr. Carter and Mr. Flinkers,
of this bank, have been extremely useful in procuring matter
entering into this data.
I am sure the survey will show that the matter
of competition in this district is primarily confined to competition of organizations operating under the Building and
Loan Act of the State of Ohio.
7
Yours
F.m
- ommittee on Branch,
and Chain Banking.
O, l
lo
.
I
ly o
•
1 loo
1.
S nt to all F. 1.
(i
• to ' •
0
nt"
nds)
l
, l
r.
•
r
r.
1.
- 4I B
k o erations Filo
CUC GO
February 16 , 1931
• • Goldenweise r , Chairman
Committee on Branch , Group and Chain B nking
es re Bo rd
Feder
ashine;ton , u. c.
Dr .
de r
r . Goldenweise r:
i..
•
1.
Det iled historic 1 study of nine b nks in this district
th th ve be n fore d to cl se. These b Ks rare sale
d e intended to show the trend .
as typical
2.
Conp rison of items in statements of vove mentioned nine
b ks, s om.ng ch nges in their reports during th y r
of this study .
3.
Historical study of six successful b nks selected s
ty ic 1 illustration s fort a purpose of this n ysis .
ed
It is my underst ding th t you are dividing your investig tion into t ,o parts ; that th study of th fi r st part co earning
genera economic c uses such s th effect of 1 nd specul tion nd price
de by your st ff ; nd th t i t i upon
ch nges upon b nk er dit will be
th second p rt, consisting largely of the histories of such banks
illustr ted by transcripts of t e records of such b nks , th t you ish
the ode 1 r serve b nks to furnish infor tion .
ile I h vein mind th t you suggest th t the el
of land sp cul tion nnd price chan es 1ill be nalyzed b your st
those factors e tered into the banking difficulti s so l~rg ly th t i t
n.11 be very difficult , if not imoossibl , to an lyze the oth r elements
,hich have c used b nking troubles without recognizing that most of them
ere l rgely developed by the general infl tion , which r ched its pe k
ho busines of the
in 1920 , nd the dr stic defl tion hich follo, ed .
tho troubles c nt red
d
eventh · strict de ends 1 rgely upon agriculture
mainly in the land specul tion .
·strict
The eventh Reserv
Io , and p rts of four other st tes . .r1.s it
with reg rd to an entire tate I will to so
but the t ndencies re pr ctic 11y the same
covers the ntir
ia e sir to get
e xtent use Io
figur s ,
over the entir district .
I/ 7)
2. • .i:... • Goldenweiser
-Dr
Federal Reserve Bea rd
Washington, D. c.
According to officie.l reports the price of land in Iowa,
without improvements, increased on an average of 125% betv-een 1900 and
1910 and increased approximately 130% between 1910 and 1920 . Between
1920 and 1925 land prices in Iowa decreo.sed approximately 40 • Further
decrease crone between 1925 and 19:50 but the census figures for 19 0 a.re
not yet available.
In 1920 within a few months the prices of all farm products, including live stock, which the farmer h d to sell, and the prices
of general comn:odities experienced a very large drop.
l~o such rapid increase in prices followed by a large decrease as that ·which occurred in lands and comrr:odities has ever occurred
in any kind of property without subsequent disaster.
The causes which lie at the root of the trouble were not
It is my judgment th t
the greatest cause w s the indiscriminate granting of charters to oper te
b nks.
any of these charters were granted prior to the period under
investigation . In many cases they were granted without adequate assurance
that he proposed bank would have a reaponsible Board of irectors or
experienced officers or a sufficient territory in which to operate'successfullv. One result of this wo.s the org1_3.,_Y1ization in newer sections of
a large number of s 11 banks, most of them with smnl 1 prospects of success.
/hen business difi'iculties came those States having an excessive nu.r.:tber of
banks experienced the largest number of failures.
all confined to the pe 'od under ex~.ination.
The reatest immedi te cnuse of bank f lures during this
period was no doubt due to incompetent management. Bankers found that
their ordinary st ndards of credit analysis were not applicable to the
situation .
pe cul a ti ve fever developed and they could not discriminate
bet ·een permanent values and infl.. ted prices. It was during these years
of infl tion that banks were loaded up with paper, the ultimate payment
of which depended principally upon the profitable sale of f rm lands purchased a.t an exorbitant price . -any of the banks' custo:u.ers who had enjoyed
substantial credit became involved in speculations of one for~ or another.
large runount of paper resulting from speculative operation or created by
the sale of so-c lled "Blue- ky" stock found its way into note c ses.
Credit was freely granted; banks ' note cases rapidly filled ith paper that
was soon rated as "frozen" and which rapidly developed through classifications of paper into 11 Slow 11 , "Doubtful II and "Loss 11 , -with n strong tendency
11
toward the Loss II column in each successive examination . In the hope of
reducing his losses the banker in many c ases endeavored to protect his
security by taking junior liens on real estate • ..,.e advanced interest on
first mortgages nd truces, most of which was ultimately
tot 1 loss.
3.
-Dr • ..;. • Goldenvreiser
Federal Reserve Board
,nshington, D. c.
Other contributing f ctors to bank failures during the
period involved, 11 of hich are traceable largely to incompetent m nagement, include the following:
!t'ailure to m inta.in adequate credit files.
Failure to carry second ry reserves.
C pit 1 loans - al rays unliquid.
Excessive loans.
.
Unwarranted loans to directors, officers,
and their interest.
Excessive r tes paid o time deposit.
Unwarranted amounts invested in b nking
property.
I obaer:ve that you have addressed the governors of three
other Federal reserve banks on the subnect under discus ion, also your
request for an expression of my opinion as to the dvisability of inviting
them to meet with your committee.
It is our desire to co-operate with you to the fuli"est
possible extent, and if you should decide that such
meetir.g is necessa
I shall endeavor to be present or to be represented. Ho ever, it seems to
me that if such a meeting is called, it would be better to give all of the
Federal reserve banks the opportunity of being represented.
Very truly yours,
(Signed) J.B.
Governor
cDougal
bru ry l , l 31.
r.
•
i h
0
•
FEDERAL RESERVE BANK
OF NEWYORK
February 14, 1951
Mr. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
ashington, D. C.
Dear Jr. Riddle:
hen Dr. Golden eiser telephoned me yesterday morning I had not yet read your lett r of Febru ry 12 advising that it seemed desirable to you in Washington to undertake
another project
hich you have called nba.nk supervisionn.
However,
on the basis of
Dr. Golden eiser's explanation of what it
s pro-
posed to do, it seemed to me to be entirely desir ble, and I so
told him.
Since then I have read your letter
change the vie
expressed over the telephone.
nd see no reason to
There is no doubt
whatever that the dual banking system has many defects, and I think
it would be
ell
orth hile to get at some of the f cts so as to get
a. clear picture of just what the situation is in that regard.
Very truly yours,
LAL
j
l , l
t
Tor •
C rbon copies to:
Dr. Golden eiser
r.
ead.
1.
r.
iddl
b
'
r
r.
., 12, 1931.
1 , 19 1.
I
FEDERAL HESETtYE IlANH:.
February 11, 1951.
'Ar. J. H. Riddle, Secretary,
Committee on Branch, Group and
Chain Banking,
Federal Reserve Board,
•ashington, D. C.
Dear Mr. Riddle:
I just finished having a meeting with Mr.
Carter, who has been, as you know, really ma.king the
survey as to banking competition.
e have not gone into the question of competition in the District, but have confined the survey
entirely to the competition of Building and Loan
Associations and Loan Companies which come under the
This is really
Building and Loan Act of this State.
the only competition, we believe, that amounts to much
in this District and is confined entirely to the State
We have it in a very minor way in Pennsylvania
of Ohio.
but not enough to cause any concern to the banking
fraternity.
It is expected that the study will be sent
of next eek at the latestA
end
you by the
(
Yours very truly,
r of the Committee on
ch Group and Chain Banking.
F.m
--
~No,131
Office <;orrespondence
To_
• Bl ttner
FEDERAL RESERVE
BOARD
l h 19 1
Subject:_ Pro_ dur
~-~......-..&.
Changes
•
From _
in
d
er
...
,
nt
s,
n
of
tio
t
xperi n
2-8495
. the
'Oh
tion
r
nera,
he
~
nnd they underto
s e in
n tion
oft
k
f
dy
r
le
o
on
th
t object is to c
1 h ve o
re
t 1, of
1
ine th
te £1
vings b
d
1
res
t te,
fi
nc.
ri
o of he
tion 1
lea fore c
t te
11
ately pp
or not the figures for conversions
ri
•
y do, ve
o ot, they must be
or
reconciled. Conver on
go O
C as th
inod s
y t 11.
fy
tot 1 n
of b ks, ut only in th
n of
or n tional.
,
o
n
ic
he ind· ·
red
fr
,
b
ry.
record
r
i
In
r
in spit
for
th
h
£or
k pt
ry
on,
of
ould
og
r
for
oul
h
h
t
l consolid tion
izations should b toget er, tc.
on t e
ork or
c
d
by
st te is co
leted, tler
to
11 b
o on fil
er, b
11 pritbr
-I
Office Corresponde nce
To
1 tt
•
FEDERAL RESERVE
BOARD
Subject:_
r
From _
r port d th ir
t
y
•
dur
in
ell
11
F ,..
.u ..,
L
B
,
1k Operations
fi
I K
F
T.
LO U I S
February 11, 1901
• .t\• Golden 'weisor,
hair an,
Coilllllitte , n ranch, Group & C in
Foder
,ezerve oard
e.shington , • C.
y dear
an.king
r. Goldemreiser:
or o. numb r of years now e have been n lyzing report of
exarnin tion of all member b nks in nn effort to dis cover the trend to rards
dis ster in time to do 1hat we could to have the trond corrected before the
inevitable occurred. ie have come to the conclusion th t little more c n
be said than that good management makes good banks nnd b d management b d
banks.
e have s en the proof of this in that rhen to meet
critic 1
condition new money has been placed in a badly manged bunk even to the
extent of
ing it sound again, where the same management conducts the
b kit is just a questio of
f
years before the b nk is right back
where it .as when the ne money was placed in it. ,e ha:ve seen good
management under the rorst of crop and drought conditions carry on th
bank safe y nd s tisfacto:rily, and at such a tie havo lso s n in the
s e tolm the results of bad management culmin te and th b nk close.
I run nlco inclined to think thtt the principles of good ban
manage~ nt o.nd b d bank managem nt are the s et roughout our entir
country. It perh ps may bes un rized, fir t, jud@nent in rog rd to credit;
second, syste, ,hich keeps th r cords in such sh ne th
the b ~ r lly
knows its exact condition at ny tim; third, liquidity, which mens th t
t e bank understands it has its expansion defir.itely li ·ted by its c pital
structur
d local d posits and must puruse
lo n nd inve tment rolicy
suf iciently div rsified tom et the possible demands of th community in
normal ti es with nough elasticity in its invest ent policy also to meet
bnorraal times; fourth, distinct r lization that the bnn ' first duty
is to see that its contract with d ositor is fully lived up to nd th t,
while dividends re necess ry, earnings re
second ry m tte· to s fety
of de osits. Of course, this includ s o..n ttitude of mind on the part
of officers nd directors nd their interests th t they h ve no right
unduly to borro the b nk's deposits.
There is ones tisf ctory thing bout this nnd th tis th t
b nk so run, s a rule, is profit ble.
uch a
n rl.11 lu ys ,ork
rlthin the limit oi' its c pital structure nd loc l deposits nd 1rhen
for some re son or other, such as good ro ds di vortine; doposi ts to 1 r_ger
centers, it beco os
ss profit ble s the ays go by, good
gm nt
ill r cot;nize th t i t is not needed by the comunity nd wil liquidate
in n orderly
nner ithout loss to d positors.
uch a b nk rill tre t
I/,
,2
d therefore not
sep rate thing froo loc 1 deposits
public deposits s
of them
investment
an
through
make
oossibly
n
c
it
.
.
th
bid more for tho.:i
thoroughly liquid form .
in
The proposal of r . Clerk gives one method of studying bank
exa; in tions, but , unfortun tely , co,llllents of the v rious examiners as to
b d ban's re very much the same and the co ents s to good bans s y vary
little other than '~1ell managed b nk" or so e such ,ords to th t effect .
I h ve also received from ..... r . Po,1ell his studies, ,hie a.re resented in
very ttr ctive form . However, hen everything is s id nd done, e ch
of these methods of study gets to the same conc:usion th t g~od an gement . . kes good b nks nd bad men ge ent b d b nks .
The study of r . Clerk is typic 1 of rh t ould be found by
simil r studies in this district and I am sure in ny other district , It
study
is so typical th t I think it would be useless ·mrk to h ve such
continued further or in other districts . A out the only result to be
chieved ,ould be to find that this ras a ~ypical study and the conclusions
the same .
~he results of the study of r . Po ·ell I lso elieve will
study in this district
be the same in 11 districts . I feel sure th t
of curves, though
trend
1
g;ener
me
s
the
she.ring
phs
gr
would produce
though not much . ,
,
rs
dif'ferentye
with
ry
v
might
peaks and depressions
• o ~11
C erk and
•
of
,ork
the
that
think
to
In brief, I run inclined
worl
further
and
lines
these
along
accomplished
be
has developed wh t c
is not necessar .
ich ve use in
sending you three studies on for 1S
I
this of.rice . In eo.ch instance I have had two banks selected loc ted in
the some to,m , rhich obviously h ve been subject to the s e economic
conditions . fhe figures of the good bank nd those of the bank that
eventually filed, for cop r tive purposes, are placed in par llel
nk can be studied t
columns . In this way the good bank nd the b d
the s e time . ~he f ct is though thnt two r tios are sufficient to give
the picture . One is tl1e insolvency ratio ( doubtful ssets and est· ted
loses to surpl us , :.mdivided profits and r serves) nd the other is the
liquidity r tio (slon assets , doubtful assets and estio ted losses to
tot 1 ssets) . The mistakes of bnd man gement n.l be indicted in the
fact ors th t go to make up these ratios and I a inclined to think th t
these studios I send are typical of the results th t ould be obt ined
by simil r studies in other districts .
Questionn ires sent out to selected successful bnnkers
Siers ould
would doubtless be interesting, but I doubt hethor the
rison of
cop
a
from
get
to
ble
re
add any inform tion to th t we
to judgment ,
c
b
right
get
rill
It
figur ,s of good s.nks and bad bahks .
'
stockholders
to
system , liquidity , nd priority of depositors ' interests
interests .
St tistic lly , the itens ra be pie ed out tha sho the
na.ge ent and bad management , sis done
difference in h ndling b· good
3
in the charts prepared by ,,ir . Po ell , but s banking deals with such
st tistical formul
int ngibles s judgment and honesty, I am fraid th t
for either the good bnnk or the b d bank will be very difficult to express .
take it thnt you h ve seen "Banking o.tios 11 by ecrist , in
mich he presents a study which my be of interest to bank man gement provided it will ever read it .
yin my
, of course , will be gl d to help out in any
poY1er in regard to this study and will be gle.d to attend any meeting
th t you think advisable .
Yours very truly ,
(Signed)
Governor
c
rtin
ry 1 , 19 1.
puty
r.
overnor ,
l
o 01
d,
d, Ohio.
r •r.
1
ing:
ry truly
o r ,
on
nch,
.-
FE•J£RAL RE5ERV£
Offic e Carre spond ence
To
From
BOARD
i J.le
,·r .
II
/
Date_ ebr..i·
1 Cj31 ·-
Subject:_
r. H
2
o,o
se
cd
sub,~ect
e~irn. le to
e.Hu •• ine
to
·id ucca 1:>·
, "viout ztu.entc to
·o utt :npt
·~s e
rrn
E'
..1u
econo. ies rn
effici nci
Ei
1ibnnne red ·n the 1 orth
in
l thoa
to -;iore ,
o · br nch b·nking it 10ul
rs un - nrricnn .
r nc~ ban in
e th t
out •:rw bt· nch bankin
mo:mt--
rny in the ... outh it ne·,cr
in pr· ctico
·acts n ,e f on ti110 to tLrie b en
hese
1
eet the ch
in
e to
waG co.nmon through-
,ar ; seconu , t iut it h - continue
nre ent in the ..,Juth .
n~ ve
·riterw on trie
11
by P•"'"tic·l l..
te
1
f" rst , thnt hro.nch b n~in
one into by the.n :
ut not
out the country be ore the .,ivil
ONn
ts
t ·of
· t has
nkin
ond. Jhain
·a. ch, Jr)1
our stu · · of
o
In the cours
V' i
e v o : t he
s e.n that tnewc
11
r-
im evi c1ence h ... - boon accu.
thi.,
the ,.,o.ru it t e in r
rill justi
1.
before they
n e
if Lult to con
hat t e b ·a ch -. stc>. o ·
:ni:.. e·
ct
·t b
ur til th
e' ntin
of r
~
r ..i
:Hr d 1 o
c, t
to b • rcn b nr..i
ore se
l
oy
or , vi t b ·
.me
ol .
he ..,eicon
c n rnt•""tion re,re&ent ed
1,no t f t 1
tion .
ecentr li
3.
1098 , exce t t 1r ob~ ction ,
, c.n i 1 ton ana . i c ho l •
E>re too
2.
r
re ... so
ob; ctiou e
ncv r nn
.hat there v
1 tc
the follo•.vin; con lu ions :
re~& ~n
n~h
an in
_,ivil
~a
·r ,
e i tonce , bee u e it
n~r 11
n1 at 1 .. t
,n
1nt
~ontinuou rl• n
C iCOl
mo l~ i ely out of
· ... econo ..1ica.l l y ,is
vant ...,eous .
d
tions
ere re
'ollo·vin
84.06
i
H
•
le
.ond
in th
.. h t t le
hibi e
na
re~ent
rn.tion·l
n
1
th ir
1
·in
c>n t,
0
li r
).
t.
i
' Yor
:n.
b
t
5.
e to h
br nch b nkin
0
0
i
, i
tt r
'7
rol lEir
.
0
h t t
ri in
lP
~
1
t i
in
l
iTe1 n
to ,o • re~
r.
n· l lJ rc>co •
0
n
i)
pro-
effi:-cti10 l
fli~
ct
n
~
I
throu h
v
s
0 •
int<>re..,t
A
~
i i
n
nt bantt-
in
"' .
in
in th
r~ i t
sti 11
t
' i
u
0
t
h
,.h
i
U O
0
r.
i i1
1
') t
t
·o 1
i
t
to
or
i
rn
t f~ I' t
to
to
ollov·n
f Li
of
r
n~
r,ue -
t on
·n ri
1.
n
ir.
b
i
o·
A
•b
cono i
11
onopOli ti ..
1
in
1
mit b
etit · on
t
en •n
h
bee1 in , li orni ?
n
I
it
'
n
·o
L,
r
lit
i
vant
C
oro
id
n':> t
rt
or t e
C
cct
nit
b
nk
nt
0
r.
b
t
on
in
i
br> n
ch
r
s '?
it
in
by
i
s p
in
l
.tri'i
nee o
n
~
n enc
oet it on , th
ir
tl-i
,
it~
')
0 •i
0
h
t
ll
t
u
hi to ic 1
11
1
:n b
th t
f "
1
f ct t
n
on
inl
r
b
istoric 1 ·n
11
on
,o
C
r
no int.,
oi
r
r.
itt r
13
co
it
•
• l
on
outhern b
e rin
'h
. . t· m
hi .•
i.,
beer: r- i
l
nEl 1·
of
e
i
.
y ..
n
r
u
t
of
num
1
r
ionn i r .. re
rn,,.,
by
it.:ner·ry -ho.11
oth
o
,l
i
9 0
~
.
'.)Ut ,. )
0
13 o
r
ion o
,r na
0
i e
,
'
ol
ee 1
i s: ... si
r. :
1
0:lt
'
in rn
'
>P
, tin
iv
..,ified
a tin
0
te.
T
rllr 1
i
i/
J.n
J
i.
ur,
ec
0f
yste
a , oper tin
lab
r- ol , in
e
<
1
ni,
'
ell
i
'
.
sisai
' -i
t • 0 ye r . . ol
")
north rn
17 Of i e
r
rn ...,ouisian
he rrer.a
oui i,,
l ~'
~h
nk, L'K
on in
r 1 r
0
~OV
ollo in :
0
.. .
th
I')
tu
:, le s·eu . ti r 1
n
l.
n
en ral,
r-e
'>
0~
tion
t ') t e
..,
a
10
r.i
in .u
n b llKin
n •h b n in"?
b
nA~i icon~
-
ebru·
•
iv<'r~ified r •ion
r r 1
in no th
'1iti
.. h
fi
s
eo
to
n.b:>lt 2·
PU ....
a.1
ol , lr
h,
r tin
0
citie
.
i
in
up
in
'
nk of ..,
tion 1
rr:
n
..,
n
o'" Io1i
n
i
:s
')
lab
i'
or in .
oint of
he
C')
or
n .,i,.
b
i
.tlt
of uni+ b
n in
he i
0
I,
•
th t
•;el 1
ll •
1ho
i io
0
T
lKu .
C
0
'l
.
In
Cl •
tion
ni
~
~n
t 'l
0
0
0
uninte
it
e, b
tne
e
)
u
vL, blo .
i:h i
re i ent .
bt
in tne
ly
of
e ervc
10
'Ii 11 un
k,
Ii t
l
0
t
i()n
.,
J.
b r,.;{
~alle
l
0
0
'
~our ... e ,
_,al ler b
r u
.. h
e
'i 11 in
t . L ui
11
t1 nta
i
1ch
t ue
to f'"1 ni h
i ... trict ,
or
•
i dle
·r .
·r . Ha ion
lt
IOU
bankin , it i
-4 -
tn" mrpotP of
elieved .nu,
1
-:::'m
1·
the trip i ' to invc st i ate branch
kin
it11 re<pect to bn.nK failure
e cic1cea. up
the ~o ..lIIlittce ' L
other. att rE- th't ~ill be 0f value in ;ritin
The ~· e inv~stiN~ti on s 011
~ rolin,
fornia .
t
n
uO
':'he itin°rar•
i_..,
n t
n""h barucin' t
outh ~~rol:n
in I orth
r. in :1ny oth r ttate rnve, li -
mrkcd out for the~e
t tne attitu~e both of thE
.IJ1
t'te . . , .or the taco .• that
th ,~rolin~ a
tl~ta
egerve
nk
no. of
here are , ho~c>ver , three or four i nort .. nt or 1"niz tions in
~orth ~a ol in
o•
th t '")..i.ld b0 ,isitPd on the return .
01
or-t ,
fiela in the other ~tates h~f.
rea~on t
it
·here there is mo e b
b~ u ne in
nd
11
u
tne J'lnk ,o .1 ii ~sioners of these state
:'he ~yste:ns in .•ary l ri.nu c n
later .
f
l~o be c lled
lforin No. 1a1
Offic e Correspo~d e
To_
From
r . "Ql
Pl"
e
FEDERAL RESERVE
BOARD
Subject:
•eiser
&
• r . ...J. Ue_
flf:ir
t
1
t
...
u!h :~
tion o the ~ount
o~osP~ to
n h
t·on . I hink he~ 011
('
~tu y br&.n"ri b nkir i
o
t:on to 1::0 P of o:ir oth r
hei·e
tion
onn
in
l
us8f
e
ury s)
H
2-&195
•• :rnc1 h
b, ch
oc-
i..., "eek .
'hi le>
.., ,
_ c n
~u"
the ·e .
cso e atten...
·ck
, 1931.
r.
1 tt
r.
1 dl
r
r
or
f
t
i
nt
r
•
•
r.
r
0
lt
rn
0
1
io
II-
o
1
0
lo
t
FEDERA L RESERV E BANK
OF NEWYO RK
February 5, 1951
r. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear
r. Riddle:
Your letter of yesterday is received
enclosing photograp hs of the two bank failure charts.
These
give a very good picture of the situation , and I appreciat e
your sending them to me.
Very truly yours,
P~ .
bru
2, 1931.
or ,
r.
trul
our ,
•
nc .
, 1 31.
r.
co,
r.
•
Correspon
cClelland
T
• Smead
ce
FEOERAL RESERVE
BOARD
-·
1/
Date_ Januair_ 27, 1931
Subject: Correspondence and Reports on
Caldwell ..:rroup, :BancoKentuclcyld
A. :B. :Banke cha1J,/"
~ •··
-M11r•
2
)
In accordan,..e with your telephone request, I am sending you
her<>-;;! th correspondence and reports that v,e have recei•.."cd from time
to tirre on the above subject. For your convenience, we have divided
the material into three par ta c.s follows, and I will appreciate it if/
you will kindly keep it in that form so that we rray be sure tha.t it
is all returned to our files, as ,e have no copies of ost of the
material:
1.
2.
3.
Correspondence with the Federal R.,~erve :Bank of Atlanta
re~arding the Rogers Caldwell eroup or chain,
orrespondence i th the Federal Reserve Bank ,:,f St. Lo'li s
regarding the • B. Banks Chain and the Roge Cald ;ell
group and the BancoKent c~.
The .American Banker (New York) for November 11, 1930;
six newspaper clippings; three copies of newspaper
articles: the December 2 daily ne~s~aper bulletin
of the Federal Reserve Bonk of St. Louis;and a summary of the Rogers Caldwell -- BcncoXentucky Group.
LEGRAM
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
178 b
~
RECEIVED AT WASHINGTON, D. C.
nfrancicco Jan 28 1105a
Riddle
ReseLve Board' ashingtcn .
Your le ter t
nty fourtn su g~st sending governors , ery
mcdougal martin and talley copy reports on typical cases
suspended b nlcs prep red in accordanc e with instructio ns
both contained my letter tenth so they may det rmine 1hether
finished product gives adeouate informatio n
Clerk
2?lp
·-
For rn, o. llJI
HDERAI. RESERVE
Offi ce Corr espo n
BOARD
To
Date .~ nur ry 26, 1931 .
Subject:
••o
r.
ounds c lled me uatu day to
viev ·ith •r . (}uy G eer and
thinks
has
c
ay he had an inter-
fovorabl y impre
ed 11i th him .
He
reer cold hanale the ,anadian ~tudy satisfac tor"ly and
e
ran eroonts for him to co~e to ,ashingt on to- night to
be he e to-mo row for an ·ntervle , v·th you
•r .
nd
r . Goldenv elser .
reer has had oui te a vi.de experien ce .
He 11ent to
aris Nith tne Peace ~onferen ce and spent sevor'l ye rs
:1eparat ion .,o
onaon end
isslon .
:fe ha
erlin ana ha$
re
esente
Le
ith
ho
Hi gins in both
ritten a book on the
hr .,oal
ltu -
t ion .
• ~reer has been ac~u~tom d to a substan ti 1 $alar;,
but I told him frankly
toe
to re~eive or
tion .
H s
o it for
-r1
~ s
e couldn ' t p y ryh~
h~t he i~ lookin
to think he
500 n r nonth .
re to hi •
heh s been accuspe . nent nosi-
for in
oald like the vork
·r .
ounds did not
nd I think would
ention a sal rv
2-84116
J
Dr.
•
1
old
ary 26, 19 1.
r
lddl
In o f r
tu
h
ot
inn
I
only
tat
hie
indi 1
prep r
to b
llo
d top
th
i
riod 19"'1-1930.
t
inn
ot
rop
I
in
11
ir
ro
out
1t
oh dul •
0
1r.n
t
ro p
t
t
oli •
rt of t
for
0
11
e
1th th
ing.
ch
1 o
t on of
of
h
r
1t
oc
in
ut
ot
8
tt r
ld
t
to
1 26-192 •
t
t
r
est ion-
in
ir t
cor or tlo
I th n
cor o
ho l
t
n
•
•
•
0
l
2
2, l
1.
•
0
•
0
•
•
3
' l
1.
Proposal of Mr. Clark
INSTRUCTIONS TO FEDERAL RESERVE J3ANKS FOR SELECTING AND .ANALYZING TYPICAL CASES
OF MEMBER BANKS WHICH HAVE SUSPENDED OPERATIONS.
THE PURPOSE OF THE .AN.A.LYSIS IS:
To show in concise form the history (gained from comments contained in
the reports of Examiners over a period of years) of factors developing in the
bank which ultimately led to its suspension. The history should commence at
a time the bank was in a satisfactory or fairly-satisfactory condition and be
followed through to its suspension.
It is intended that a person reading the report should be able to obtain an u.~derstanding of the problems which confronted the bank and to form
therefrom an intelligent opinion of how its affairs had been conducted for a
few years immediately preceding its suspension.
NUMBER OF CASES A.HD METHOD OF SELECTION:
Each Federal Reserve Bank should select nine typical cases, including,
as nearly as possible, the following:
Four or five banks which suspended between the years 1923 and 1926;
Four or five banks which suspended between the years 1927 and 1931.
Of these, thcr;e should be selected;
4 or 5 banks which had resources under $1,000,000;
4 or 5 ba.nks which had resources over $1,000,000 but not exceeding
$5,000,000.
Inasmuch as the confidential cormnents of E::mminers did not accompany report~
of examin3tion prior to 1921, it is desired (in the absence of this important IIJD.,terial) that banks which suspended prior to 1923 be omitted from the study.
Preferably, the banks selected should be those which were situated in tovms
of say 15,ODO popul~tion or under.
The selection should avoid the inclusion of a b,'.3.nk which could be readily
identified through the special or local character of industry in its comnuni ty.
Crops such as cotton, wheat, tobacco, rice, sugar beets, citrus fruits, and industries such as lumber, fishing, livestock or coal mining, are so general as not
to mtik:e possible the determination of actu,~1 location of b::mk described as serving a comnunity supported by such pursuits.
The selection should ~void the inclusion of banks which have consolid~ted
with or acquired the business of another bank during the period under review.
It is desirable ~lso that banks which had been in operntion much less than
-- ·
- 2 -
eight or ten years prior to suspension be not included.
Only banks which closed because of mismanagement or because of factors
(economic or otherwise) which could not be overcome by m'lllngement, should be
selected.
Banks in which misappropriation or def~lcation was the main or contributing cause of suspension should be omitted.
METHOD OR TREA.TMENT:
The attached report is a typical c~se which in form should be closely
ndhered to in the interest of uniformity.
In furnishing the population of the city or town in which the bank was
situated, give the 1910, 1920 and 1930 figures in accord'.Ulce with the publications by the Department of Commerce, Bureau of the Census.
So that those studying these reports mew have some idea of the economic
life of the cornmuni ty served by the bnnk which suspended, a brief reference to
the principal crops grown or industries followed should be given.
EXAMINER.$ 1 COMMENTS:
Attention should be devoted to brief comments by the Examiners indicating their impressions of the general 3.ff~irs of the bank. Examiners in
each instn.nce should be designated by letters of the alphabet, merely to
inform the reader whether or not the reports had been prepared by the same
mn.n. Whenever reference is ma.de · to a cert~in Examiner, obviously the so.:oe
letter should be used throughout.
The statistical information reg,'lI'ding the cond.i tion of the bank,
given at the beginning of a report n.nd immed.io..tely follovn.ng the comments of
the Examiner, nre to be taken from the exruninn.tion reports.
EARNINGS:
This information should be compiled for five corqplete calendar years
i m:..:edio.tely preceding the ba.nk 1 s suspension. It is to be derived from the
Earnings Reports submitted by banks to the Comptroller of the Currency or the
State Bank Commissioner, copies of which 3.re in the possession of the Feder~l
Res erve Agent.
The item "Net Income" comprises the difference betvreen the totn1 debits
rmd credits to Profit and Loss .A.ccount exclusive of debits for "Losses Chargod
Off" and credits representing "Recoveries II on assets previously charged off.
The i tern ''Recoveries" represents the collection of i terns previously
- 3 -
charged off the bank's books .as losses.
'The i tern "Losses Charged Off II represents the ,Jri te-off of worthless
assets 3.!ld de:precio.tion on securities, b::i.nking house, furniture nnd fixtures,
etc.
ASSESSMENTS BEFORE SUSPENSION:
T't1e history should include only assessments paid under statutory levy
in order to renove an ill!)airment of capital~
B.A.D ASSETS PURCHASED BY STOCKHOLDERS:
Inasmuch as t :1is information is not given in Reports of Earnings, but
invariably is touched upon in the reports of Examiners, it rri 11 be necessary
to search the latter records to ascertain to what extent, if nt all, stockholders hG.ve purch ~sed assets directly from the b.'.lillc or through /l Holding
Co~nny, or have otherwise made voluntary contributions to avoid a.n assessment or the reduction of Capital, Surplus or Undivided Profits Accounts.
EXHIBIT 12/1
Bank Organized:
Bank Suspended:
Population of Town:
9599
14o27
10349
(1910 census)
(1920 census)
(1930 census)
Principal Crops or Industry Served .QJC Bank:
Lumber, fishing, shipping.
Important Excerpts fron Reports of Exar:rination:
Date ( 000 orm.. t ted)
Cap. Sur. Prof. Loans Deposits Borrowings
11-16-20 E.xaminer_·_,;1__ : 4oo
80
18
2591
50
Classified Ass ets
Doubtful Loss
82
4
9-12-21 Exa..tlner A: ''Present rna.nager.ient is considered good. Large aggregate of
undesirable assets were mostly inherited from former management. There is no
question but \vhat present capital is too large. At time of consolidation it was
left at this figure in anticipation of I:Ja.terial increase of business but owing to
depression of business generally bank shows a loss in deposits instead of expected
increase , .:
9-12-21 Exarnner A: 4oo
80
13
1542
2015
195
63
4
2-28-22 Exa:-.1 iner B: 11Bank 1,s present condition is probably due to some extent to
general slu.TTip in prices and business generally, but is mn.inly due to unwise policy
of previous r:ia.n:1gement. Present manageoent is in no wey to blame for present
condi tion. 11
2-28-22 Examin8:-~ 13: 200
4o 12 1367
1614
507
53
0
10-17-22 Exa:-nn.Jl' C: "President is not a factor in management but other officers
are capable. T'ney with the more aggressive meabers of the board will probably be
able to solve the probleP.18 of bank's present rather undesirable situation. Manageoent has been too eager for business with result that r.iany loans are frozen ::md
heavy losses are likely to be sus ta.ined. Bank is somewhat extended and has e:,..--:perienced some difficulty in financing seasono.l operations of its customers. Directors
advised that t::1ey believed worst of difficulties wo.s over and their future position
should be eo.sier. 11
10-17-22 Exn.oiner C: 200
4o 17 1456
1914
73
33
15
4-10-23 Exar:riner D: 11 This lus o.lwo.ys been a one r.1£l.n b3llk. Years ago President_
was dominating fi 6ure, succeeded by Cashier
who recently resigned, and now being succeeded by Vice-President. President~hardly a factor in bank's !IllUl.."\gement. Past '\:1d present management ,3.re a.'1.Xious for business r:1.-my loans made -is 3.
mtter of policy."
4-10-23 Examiner D: 200
4o 17 1421
2073
0
97
20
, EXHIBIT 12/1
Cn.n. Sur. Prof.
Loans Deposits Borrowings
Classified Assets
Doubtful Loss
10-22-23 EX:J.miner D: 11 Foroer President deceased. President __ is follmving
closely in footsteps of predecessors and conducting largely n. one r.ia.n bank so fn.r
ns he can ho.ndle mtters. He appears very e.'.lsy in eztending credit or making too
1~,any l .oans '.ls .'.l nn.tter of policy and also very reluctant and timid in enforcing
collection on criticised lines apparently being n.frn.id he might lose a customer
directly or indirectly. This report shows some iq:>~ovement but as a rule im?roveoent has been nn.de in reduction or elimination of slow or undesirable assets th~t
were least subject to criticism, while loans most severely criticised have changed
but little. Directors were advised that unless rrnterial iq;,rove::1ent wn.s shown at
next exa.':'.lination, p~rticularly as applied to loans to directors Bnd concen1s in
which director.s ,-;1ere interested as well a.s large ar:iou.7lt of s to.tutory bo..d debts,
overdue pa.per, sl0v1, doubtful, 3nd otherwise undesiro.ble p::i.per, s:c,ecial * ( *frequent) ex(J.Oirotions ,1 ould be recor.mended."
10-22-23 Ex...-u:n.ner D: 200
4o
19
1537
1971
169
69
12
1
4-28-24 Examiner E: ''President, who domin.'\tes policy to l::i.rge extent, is n. 6 ood
'business getter 1 , but ra~1er wenk in m,'.).}dng collections, a.nd is endeavoring to
handle too much of bank's affairs alone. He should have a conservative ba.nk fil'.l.Il
to assist in m.nn.geraent and this z:ntter was thoroughly discussed with hio. Some
g~neral improvenent hn.s been m.de, al.though there still remo.ins r.1UCh to be done
before bank is clean. Slo~ assets show considerable reduction r.i.nd n. de.'.ll has been
made for sn.le of Other Real Estate. 11
14-28-24 Examiner E: 200
4o 14
1438
1727
271
52
6
11-25-24 E:x:.3.ID.iner E: "Directors and officers stn.te that large o;.10unt of slow and
doubtful assets were inherited at tine of consolidation with 3.!l.Other b'.l.11.k sever~l
years ::1.go. However, it appe::1.rs thn.t n. number of large lines o.nd slov, n.ssets h1.ve
~ccur:iulated since then n.s .'.l result of 1business getting 1 policy ~nd too free extension of credit. Preside~t is capable but too liberal n.nd too lenient in mnking
~ollections. Besides, he h1.s recently spent too ~uch tine on personcl natters and
enterprises. This was also severely criticised by exXJ.iner o.nd he now pronises to
devote all his tir:1e to bnnk's a.ffairs with n. vieu to getting bank in 6 ood condition
.:i.go.in. Princi"?al r.:ntter subject to criticism is large ru1ount of Overdue Paper \7hic1
including statutory bn.d debts ai;i;regates a.bout 23% of bn..--ik 1 s total lo'.lns. This
natter was severely criticised by e:x:aniner during directQrs I nee ting. Exai:uner inforr.ied directors n.nd President in particul3.I' that unless decided improver.1e:n.t in
on.tter of attention to slow o.nd doubtful 3.ssets and ovcrd.ue p1.per wn.s shovm at an
e.:i.rly date by correspondence consideration r.rl.ght be given by office of Chief Ex~niner to matter of pl~cing oanlt on Special List* (*nen.ning for frequent eXt.~lrlnn.tion). 11
11-25-24 Exn.rniner E: 200
4o 29
1435
2011
58
103
9
EJGU:BIT 12/1
C~p. Sur. Prof.
6-22-25 Exa.I:ti.ner E:
Lo~ns DoJosits Eorro~7ings
01'1.ssifiod Assets
Doubtf~l Loss
11.A.
r..ntorin.l ir.iprover.ient in note pouch is noted in re 6 n.rd to
~r.iount of overdue paper. Cl.,,srific'.ltion of lo:u"'ls, :1or1Cver, sho'l7s no irr_provcr.1cnt.
Slor1 loa~1s show '.l decrc"..se of $LIO ,000 but doubtf1:.l i tc;:15 show an incre:-,,sc of
$52,000. Losses ch'l.rged off n.t fais tiae :1.v:10-intod to $17,690 n.s cot:1p"'l.rod with
$9,452 at 13.s t exar:lin'1. ti on. L'lrgc a.::ow1 t of i;1crcnse in p2per cl "..S s ed doubtful
is o.lnost entirely due to c:.1SI1f;e in cl::issific"..tion during exar.ti.n!\tion. 1To nev, loo..ns
of slow a.~1d douotful character are being r:nde wd 1:10st of lon:1s cri ticisecl -.t this
tir.ie h[.l.ve bec:1 in b:m.:: n. nu:·1ber of ye".Is .'.:md n.re vrorJ:out probleas. S0:-.10 losses n:zy
cievclop in ito::is cl'.lssed cloubtful but it is believed bo.:1lc 1 s e.'1.I'ning c~:i_:n.city •;ill
en'.1blc it to c:1:1.rge off losses .'.).S they develop. i!o di vidend.s are to be pud until
b'"l.d debts 'li1d doubtful i tons :l.I'e clL:iin"..tcd. 11
6-22-25 lilicn.ainer E: 200
4o
16
1283
1555
306
150
13
12-28-25 Ex'U·.uner D: "Directors as ::;,, ,,hole co::n.-:irc fr.i.vorn.bly with :wor'1.6e co12:;:1try
bCl.Ilk. They o.rc su.ccessfcl non in t:ieir incli vi c:,_nl li nos of bu.sinoss ,,,:icl nould do
\7ell if t:1oy hn.d o.n D.f:bTessivo le~cior. 1/i".,;.7.'1bX}.:1ent is vor-J woxc, ln.c}:in.; force, if
not incor.ipetent, n.s indic'1.ted fror.1 n--..:r.1crous cri ticis:-.1s listed. Preside:1t is well
,.!c1.nin 6 but u'lsy goinc; , e:1tircly too free i:1 T~...1ti1~G of cr<Jdi t .:i.nd ·.1~ilc .'.1. l,"..r;.s,e
nu.·:1."oer of froze.1 "..11d q<1cstion,'1.ble ~ssots '.U'O an i:w.eri to.nee fro::1 fo:::-.?:1er r.1.·1n~.0 u.11,mt
it is evido:it ~1:1.t President docs ;1ot h:wc ':'.bili t;t or inclin"..tio:1 to collect er
clen...'1. ·ip those old r.nttors. Prcsiclont is believed to h:we h-:1.d little b-,,;"i).::in 6 experience outside of t:iis b"..nk. CCI.shier is "..S O.'.'.S~; GOinf; ,'ls Presidcat ·:ritl1 ovon
loss initiative. It is, J.1ormver, perhaps tr..1e th-..t ?rcsid.e::1.t ~70ulu. not ?er i t -..sst::.1_f)tion of ffi"JY o.v.. thori t~; by '1:"JY other er.1_Ploy0c n.s ho n.·J:i)o~s n.nxious to ?":."..Ilt1,6 e
entire b:1...J.~ even includin...; ope:::iin:;; of all r.nil :;_:,erso:1!'..lJ.~,. m1cn sug_;es tions 1Gro
t1".de or criticis:-.1s diroctod '1.t scv0n.l hc..,ds of different dep ....rtnents t:10:r co:nonted
to ex,,,_7i:1er in effect th'lt Prosidcat ',7'.lS oq'..1-:-,lly to bl1I1e -..she vrould not ·_,cr·,it
.:iny lee,:'\:· vr:1en they •.-:ere C:.is·)osed to brinb "..bo..:t correction of so:-1e of c::d t:cio..:d
r.ntters. Wri tor e:::..._,.,__d.:1e!l b-,~~ in 1923 '.l.."'ld ,, coq_)'1.rison r!i th his :;_:,rovios rc~~ort
discloses nu.i-:ierous .'.lsscts cri ticiscd -:tt tir.1t: unc:1 ....ne;ed ~nd ::i.p)"..rC;.1tly :io ".tte:.1_Pt
m'1.de si:1ce then to liq11id1.to v'U'ious st'l.tutor~r b'"l..d debts ci...-id other questio;,1;>.,ble
~nd frozen .'.1.Ss.Jts. Ex')J'.:incr roco~r:10nds th':1.t b'"'-'1!:: be pl'1.ced on list for frcqi.:ont
ex:i.."Jin'ltions until co:10.i. tion is S'"',.tisfc.ctorJ ,.,:1d t!·nt no:~t ox:u:-in't.tion be n:1.dc 90
d::ws fro,.1 d.'"l.tc. 11
12-28-25 :ZXo.!:'.iner D: 200
40
11
1855
2021
316
95
52
4-10-26 E:x::i."Jincr D: "~ritcr 0A1.;.:i:10d b::1.n.k in 1923 'l.t w.ich tine Pr0sidcnt n,'t.S
t:1en Vicc ...Prcsident O.O"'ld '1.t ~-,.-:ich tii:.:e ho s·:.1cccoded to Presidc:icy. E 111':: h'.1s for
rc:.w yeo.rs been n. one-0.'.l;.1 b:tnk, '.l:1d. co:1J.i tion go:;:1cro.J.ly unsn.tisf'J.ctory 6Tu."..tcr
p'.ll't of tine. At CX'.l:.:in'l.tion in 1923 c;,:a:.ti.ner urt,;ocl :-.1..-:l.n~gcr.1ont n.nd directors to
t:l.1::e pror~t nnd 0.6Gressive steps to collect or scc;;.ro l..._rgc ;-·ou.'1.t of sb,tu.tory
bo.d debts .'.l!ld other ovcrd~e pri.per, slon ::ind qucstion:ible o.ssots, n.nd directors noro
..,_dviscd th'lt unless such '.1ssets ,mre give:1 i1.t'.1ec.iD..tc '.1ttontio::i b'Ull:: ·.1:1.s certr:1.in to
sust'"l.in l,,.rgc losses. Ex--··.tln:-...tirm n~ J.2-28-25 \7:'on CODP'U'Cd ,...,i t:1 1923 ~:1owc:
•
. EXHI:BI T 12/1
P3.ge
CD-•).
Sur, Prof. Loans Deposits :Borro-.tin,::;s
4
Cl~ssified Assets
Doubtf·d Loss
D.'.ljori ty of larger n..1d r:'.ore undosiro.ble ~ssets still in bo.nk r,i th r.nny 1-:i.rge lo.'.1ns
uncha.i.--ibed except th3.t t l1ey uere t·,10 yon.rs r:iore p",st due n.nd it ~n.s evident th,.,,t
r:nn~enent h~ve :mn.de little, if n.ny, o.ttoopt to seCl'..l'e stntus of such paJer subsequent to 1923 or previous. This st'J.te of 3ff3,irs ~as rather forcefully brought to
~ttention of directors crurin 6 12-28-25 ex~:rl.n~tion nnd a subst'J.ntin.J. o.r.1 0unt of
uncollectib le assets of 1923 n.nd previous uere listed 'J.S estin~ted lossess. So
many promises and so muc:i. assurance was given exainner at previous examination
that immediate steps would be taken to improve condition that the few changes and
lack of improvement are most disappointi ng and discouragin g. Special eY. a:ninations
at short intervals vfill probably prove useless a:ad a waste of time as but little
improvement can be expected in three to four months' time. Frequent examin'J.tion s
will undoubtedly cre1te unfavorable comment n.nd gossip to detriment of b~.
Examiner has lost what little confidence he had in 1923 in President and Cashier
and it is not believed these two will work the bank out of its most unsatisfact ory
condition. Without frequent examination s and the present management in charge it
is believed ban.le will be permitted to drift and it appe3l's to be a choice of two
evils, each reacting unfavorably for bank and its shareholder s. Directors vrere
advised that examiner had no authority to demand or request resign3tion of any
employee but that it was duty of examiner to make recommenda tions to directors for
good of bank and it was suggested that if present ma.nn.gement did not show a desire
or inclino.tion to work with directors that directors should employ someone who
would toke chn.rge of bank's loans and wl10 would be responsible only to bo'trd :md
not subject to interferenc e by President or C'J.shier o.nd it i'I~ further suggested
that directors compel officers to compl~:· 'iri th resolutions po.ssed th'J.t no new lo:ms
in excess of $500 be mn.de wi tnout first being authorized by finance con:nni ttee '3.Ild
tho.t directors compel officers to furnish at :Bo3,rd meetings inforJDD.tion they desire concerning status of loans n..-rid other o.ssets :md t:i.3.t if ·,)resent offieers are
not competent in opinion of directors and ba.n..lc•s welfare b e i~roved by a ch'Ulge
of management th'.l.t they give serious consid.er.'.'..tion to s11.1e. 11
4-10-26 Ex.'.3.llliner D: 200
4o
3
1941
2628
268
118
19
8-13-aS Examiner F: "General condition shows very little chn...-ige. Condition is
most unsatisfact ory ::ind unless some cn'l...-ri6 es .~ e mnde I do not expect to see ".rly
rmterio.l change for some time to come. President ns well ~s directors are of
opinion th:,.t t:1ey should not be asked to put up m:mey to elimin'\te a.ny losses .:i.nd
doubtful po.per, contending that bn.nk c-m earn its vny out in ti me. Ex:ir:ri.ner does
not o.gree o.nd informed them that they TTould be given until ncJ:t ex:)J'Ilino.tion to
provide for losses estim~ted. Exn.miner informed directors t :nt they r10uld be
given until next cx.::i.minntion to m:.'1ke some provision to provide for losses Gnd
other items tot:1.ling $144,319.39. Your eXD!lliner h'J.rdly e:;...-p0cts to get e:w1~h
money to elimin-,_te all tl'lis pn.per but thought foo.t by pl:1.cin ; t h is progr'.l!Il before
them they ·,7ould exert themselves to collect this p.::;_per. J stitu ted losses r,ere not
ch~ged off for n.bove reason. Exoniner thought th:it if si t"l:'::1.tio:1 wns to be broug..'1t
to a hen.d it should be done n. t one time. ?.zy' idea vrn.s to plDC e them on notice th:i.t
.
EXHIBIT 12/1
Page
Date
C.'.lE· Sur. Prof.
5
Lon.ns Deposits Borrowings
Cl~ssificd Assets
D~Qbtful Loss
some t h ing ":70uld h:we to be done by time of next ex31nnn.tion o.nd perl\:::i:ps some concerted action c011ld be obtained for the better. It is respectfully rccorn,nended
that baJ:1.lc be not placed on special list at this time. I do not think SP.ccial
~xarninaJions ,1ould be of any value now. 11
8-13-20 Ezaminer F: 200
4o
7
1915
2672
172
90
59
1-28-27 Examiner F: "General condition sho,vs some slight improvement a:id officers
and directors promised to continue efforts towards collecting criticised 9aper.
At t:1is season business is very ·p oor and collections slow. Real es tatc is extremely difficult to sell and a large amount of bank's loans depend. on sale of city
property, farmland, and timber. With this condition it is extremely difficult for
management to collect a~y paper predicated on above assets. President is interested in entirely too many civic affairs n.nd other things and C'."1Ilnot dovote all his
time to bank. Du.ring e.x:1min"1.tio;1 I took p-u-ticul-:i..r notice 3Ild he spent rnn.jori ty of
tine out of bD.nk. Tnis w-:ts forcefully c~lled to his 1.ttention :1,.;d his excuse is
that no one els~ vlill do it. Your examiner had ,'l frank t.'.lll:: with Presiclent
ruid Ci:lc':.eavored to sh;m hi:n th-:i.t he 'ilas doing TTrong. On ot!1er lnnd he s,)ends h is
person::11 money for benefit of b ,XC'2: in wey of tr1.11sportation, etc., .'\i.id t ho rc is no
question th').t he is doing his best to plo..ce b'Ul.lc in .'.1 more s.1 .fid-:tcto1~J co;.1 di tion.
He is one of most pl0:'lsing men I hr.we h:::i.d tho ple:1.sure to come in cont'1.ct ~-,i th but
is inclined to let people im1)ose on him a.-id so!!l.e of his financing is su.ojec t to
criticism. He tries to help p0ople 'J.nd concerns ~ho do not even do busincos with
the b"l.nk :md anyone cnn tn.ke up :1is time whenever fooy desire. At prcscz1 t bo.nk
h'.ls good en.rni:1 5 capo.city, '.lpgroxinntely from $25,000 to $40,000 per 1.11:i.1 wJ ,.,,ftor
ex-_pcnsos ,'.JJld wi tn .,_, reduction in interest p"l.id. s0,ving; depositors it ··:ould mer,__'fl
some $18,000 o, ye.'.lr addi tion1.l profits. In past fe·:r years "1.ll e3..rnings h-.ve beer.
~sod to c:1.' \rge off losses. In -p:1.s t six ye1,rs b1'ik has ch'.lrgcd off over $172,000
in losses :1.nd recoveries hn.vc 0.:-~.0i.:ntod to over $26,000. This is beli cv..:cl to h'1ve
boo:1 in o.ddition to o.sscts elir:ri::l:>.:~od by;?:, roCt.uction in cn,pit.:i.l of $200,000. Pr-:tcticn.lly 't.ll those :is sots rrcre inncri ted by prcscn t :1cm3,€;01:icnt Md t:v1t holds bood
vii th ':\ssets cri ticisod i:;:i this re,ort. This r<-".Port shorrs estL:.,.,tod losse s :-:>-b •reg3.tin6 $132,000 1.'1d on Fobru::1.r~· 1l.1.th I \7ircd yo.;.r office stn.ti.ls of si tu'l.tion.
Jt:f ter severn.l conferences rrere held directors rco.chod conclusion th ,. ,,t 'Ul :1ssess~e:1t ·,ro'cld not be proper proc0d't.'..re. It ,10,s fin'1.lly ri,grced th.' lt t l1ey Vlo"Jld :person~lly purchase these i terns 3,nd it ,ms definitely un.dorstood th"..t t~cJ ···ere to be
purc~1ased for cash and under no circumstances were a..y notes to be ta.Len by bank.
This t:1ey agreed to do, but .ranted. 30 days in ';'lhich to c onplete t!leir D.rra.,ge::1en ts
a..,d accordingly your office was notified. Your \7ire of Febru.ar-.1 15th ·,ms received
in ·.1:1ich you stated that ir.xp3irr:1ent notice would be withheld for 30 d3(fs n,;:1d I
accordin 6 ly notified mano.se ·.'.'.e:1t that they 1-rould be t,i. ve:;.1 m1til M'.lrch 15tl1 L1 ·;rhich
to CO'.'!!J?lete their plans.
1-28-27 E::caniner F: 200
4D
1
1803
2701
179
19
132
1
" EXHIBIT 12/1
Page 6
Cap. Sur. Prof.
Loans Deposits Borrovlings
Cl~ssified Assets
Doubtful Loss
8- 2-27 Exa:u.ner F: 11 Condi tion remains most '\lllsa.tisfactory and im.nagenent 1:1.ppe-:.rs
to be making very little progress in collecting criticised assets. President continues to dominate and apparently directors cannot control him. Bank is overloaned and President continues to make loans that will prove very slow and also
continues to try and finance everyone in the community. Regardless of advice he
receives from examiners and experienced bankers he does not change his policies.
I am afraid that if he does not change his ways he will find bank in a serious
condition one of these dtzys. I had a talk with ,hi~ principal correspondent banker
on August 16th and he told roe he had talked to President a short time ago and if
he did not change they would be inclined to refuse his bank further loans. The
Federal Reserve Bank is very reluctant to discount his eligible paper and ,'.ll'e constantly w~tching him. I am not all satisfied with condition or policies and feel
th~t something IID.lst be done to correct situation. In view of this situ:i.tion it
is respectfully recommended that bank be pl9Ced on speci::u list 3.nd be 3.g~n
exnm!ned in 1.bout 90 d.-:zys. 11
8- 2-27 Exn.nrl.ner F: 200
4o
12
1950 2512
314
4o
1
1-20-28 Ex.'.lJlliner F: "As examin~tion was ma.de on b~sis of going bank, it has been
difficult to write report, and eX3.miner h...'\S attem,pted to cl~ssify assets as they
a.re cl3.ssified under the receivership. It is to be noted that 1 slow ~ssets 1 h.:l.s
been elimiMted. Examination wn.s comnenced on n.fternoon of 1-20-28 n.nd W:18 com,..
pletad 2-11-28. Precarious condition was thoroughly discussed with directors
latter part of E'ebrua.ry a.t which Chief Examiner was present and weys o.n.d me~s to
eliminate estirruted losses n.nd frozen ~ssets was topic of conversation. It w1:1.s
concensus of opinion that efforts should be ma.de to orgo.nize a new b~ to assume
dcposi t li'lbili ties and take over a like nrnount of assets. With this thought in
mind eX'.l.Illi.nor left b:mk but kept in touch wi. th directors o.s to progress made in
this direction. President tendered his resign::i.tion the latter part of JruiUD.ry o.nd
this was published in a loc~l newspaper in such a manner that it left a great deru.
of inference with result that a run mi.s started 'Thich reo.ched such proportions
thn.t exa.rniner was requested to return Md advise with directors. After a thorough
n.nru.ysis it w.:i.s deemed advis::lble to close the b:i.nk ~s run had re'"l.ched such proportions that it ~as useless to keep open,
1-20-28 Ex3.miner F: 200
4o
12 1745
2473
152
810
333
( 000 omitted)
E:l.rnings:
Not Income (Grosij E.'ll"!lin.gs
less Expenses)
Recoveries
Losses Charged Off
.A.ssessments before Suspension
Bad Assets Purchased by Stockholders
Dividends
~
1924
~
19aS
1m.
34
29
17
36
30
146
1
10
35
6
44
1
19
33
18
156
0
68
0
25
0
0
g
0
0
0
0
0
68
0
0
0
0
0
G
Total
g
EXHIBIT 12/2
Ban:.c Organized:
Bank Suspended:
?o--:iulation of Town:
1900
1924
1238
2957
2455
(1910 census)
(1920 census)
(1930 census)
Principal Crops or Industry Served~ Bank:
fueat. potatoes, livestock, alfalfa, beets, seed-peas.
l!!!Portant Excerpts from Reports of Examination:
Date ( 000 omitted)
10-13-20 Examiner A:
Cap. Sur. Prof.
50
50
2
I,.oans Denosi t 3orrowings
501
581
45
Cl~ssified Assets
Doubtfo.l Loss
0
0
7-14-21 Examiner B: "General condition is rather satisfactory on the 'Nhole, enpecially in the lig.~t of two or three poor crop seasons experienced in ~~is comr:mmity. Bank's condition is extended but fact tl:at proportion of rediscounts is
so large speaks well for character of pa.per. Paper is of good general ci:1:u-0..c ter
except that some wheat growers on dry land have beco.ne involved. Wi tr:. , oocl. crop
returns this yeo.r material liquidation ~ be expected. Management is cc..:::cful Md
efficient and gives close attention to paper. No one man do:ninates. 3o.nk is situ~tcd in good ogricultural conmunity, partly irrig~ted and partly non-irrignted
l'Ulds. Crop prospects on irri 6 ~ted land are fine n.nd fair on clr:r l'"'.llds. 11
O
3
47
403
354
6R
50
7-14-21 Ex::un:iner B: 50
1-20-22 Exn.r:ri.ner C: "In gencrn.l, a well-:n.'Ula&ed and well-run institution. Personnel appears very c:ipable ruid considering gener:,.l conditions here, t::ey have done
very well to keep bn.nk in its present sh3.pe. Genern.l conditions in t ·1is dry farm
country nave been very unsa. tisfn.c tory on 8-CCount of 1'.)oor cro"9s n.nd. ·1 ·o"'r prices :md
unless conditions improve b.'.l:nks here will be very bard pressed this coning year. 11
O
17
277
451
571
2
50
1-20-22 Examiner C: 50
7- 5-22 :&"'C.'.Jminer D:
has been in the past too lenient in accepting
paper for RCCor:unod'.\tion of other bn.nks. Most of the p:iper is slow nnd rrust of
necessity be eliminated slowly. This is ['.n element of danger ~ricl consider:1.ble
losses mn.y result before po.per is elimin~ted entirely. (They take lo~ns to accommocb.te other banks, $82,000). B111k is in n. ver-.r extended condition but crop conditions are very favorable ~s a. whole. If .'..ldverse conditions yrev~tl ?roblems
for bank \'fill be d.ifficul t. 11
("/"3
11
00
~
50
371
7- 5-22 Exo.miner D: 50
11 Mam.ge:nent
EXHIBIT 12-2
Page 2
Cap. Sur. Prof.
Loans De )08i ts Borrowings
1
Cl'lssfied Assets
Doubtful Loss
2-10-23 Ex'lminer E: "This bonk is in -:i, ra.ther d::mgerous concli tion :tt present due
to l<1rge amount of borrowed money a.nd excessive 11mount of slow :md doubtful paper.
Surplus is :1lso imp'rircd by estirnn.ted losses. Another contributing factor which
makes condition dnngerous is lack of confidence by public on '1CCount of large
number of banks which have closed. As yet t :us feeling h'1s not been noticeable
here but matter should not be overlooked. Some of present stockholders probn.bly
could meet a. 100% a.ssessment but this applies only to a minor portion. The larger
shareholders ~re :iJ.re~dy heavily involved. If permission to incre~se c~pitn.l
$50,000 is gr'Ulted it will r:in.teriru.ly better b'1IJ.k 1 s condition. Directors desire
to sell new stock at $150, Prer..tlum of $25,000 to be used to cb[I.I'ge off losses o.nd
daub tful paper. Exo,miner recormnends eX3.mina ti on in 9G clays. 11
2-10-23 Examiner E: 50
50
2R
617
377
325
12
9
5- 8-23 Examiner E: ''Bank is still in dangerous condition due to large ar;iount
of borro·.1ed ooney and excessive a.mount of slow and doubtful assets. At last
examination directors desired to increase capital to $100,000 and believed they
could seJ:l stoc!r at $150.n.nd were to use ar:1om1t derived from l)remium to charge
off estir.:ia.ted losses and doubtful paper as fax as possible. At this exonin.1 tion
capital had not been increased nor could stock be sold at 150 or even p3l' at this
time. Examiner decided it best to cleM house. Estinnted losses aggregating
$37,000 were ordered ch'.lrged off and entries mn.de during ex3.::iination. This :practically wipes out surplus and as a result ~nny excess loans are shom1. Should
crops prove poor tlii s ye'.lI' or nnrket conditions adverse b'.1Ilk ·:,ill undoubtedly
suffer heavy losses. Confidence of people of cor.1!:lUility is none too 6 ood. E~ch
tine examiner visits ba,;."lk there are sane withdrawals. President be~rs confidence
of people but is also president of ~nothor b!IDk '1nd is obli ged to spend most of
his time t~ere. c~shier 1 s persono.lity does not inspire confidence of public in
b:m.k. Stepo; ~re to be tnken to '.lppoint one of the most influenti~l stockholders
as vice-president who is conserv1,tive, a good collector ,-.:ind ·; fill devote nost of
his time to bank. It r.iey be of considern.ble benefit. Ex:u:u::ier does not recor.11:1end
to.king bn.nk off speciil. list (for frequent ex-u-:ri.nn.tion). Should ::,,ny unusu:11 conditions axise ban1: would h:we difficulty in r:ieeting der.nnds. 11
5- 8-23 Ex::i.r.uner E: 50
50 6Red
614
293
360
42
37
11-12-23 Ex'.:ll.2iner E: "Some ir.1provenent ms been ::nde since lnst e:.c..1.Lti.nation.
Lo.'.l!ls have been reduced $63,000 borrowed money $33,000 and deposits increased
$12) ,000. Princip::u ir.1prover.i.ent is in res toro.tion of confidence of cor.u,uni ty in
bank ,:md it is believed th-'.lt danger point has po.ssed. A very 6 ood crop of whe,"i.t
is being harvested .'.md mile prices are only fair, consi der'.1ble liquicl::i.tion froo
this source will be had. People '.lre i;;ottin{:,' in some r.10ney o.nd ns ::i. result a
rmch better feolin 6 :-ill n.r-:>und prevails. Officers o.nd directors estinate th::i.t
EXHIBIT 12/ 2
Pae;e 3
Ca.p. Sur. Prof.
I,o:ms Dep~si ts :Borrorlinr.:;s
Cl'\ssified ~ssots
Doubtful Loss
b~:: nill be able to cut dovm its bills peyn.ble rli th Feder~ Reserve :B~nl:: o.nothcr
$100,000 by J.'.lllll.'.:l.r .1st. Exnniner believes trui.t a. further reduction of $50,000 to
$75,000 in bills payable r1ill be a.bout the best they cn.n do. This •,7ill still
leave b ~ in a. badly extended condition. It is believed th::i.t prese:1t condi tio!1s
h~ve taught officers a. lesson and credit a.dv.:mces here~itor TTill be C'1.refully considered before beini; mde. C1.shicr is not o. very good banker .'.l."'ld ::i. chn.nGe in
nann.genent :,ould be of gre.' \t benefit. President is believed c3,p1."!:llo -ind a.n..tious
to 6 et '.lff"\irs in good condition ~s:\in, but is obliged to spend nearly ~11 his tine
1.t n.nother ba.ri'_;: ,1hich requires his close attention. Idea of incro'.1sin 6 co.pi t'.11
h'.'l.s been .'\bn..r.-idoned n.s it is believed stock could not 1)e sold. E:~:uner respoctfull;r
reco:r:r::1ends th:"',t b~:: be kept under survcilln.nce by reports and correspondence
rather tho.n by frequent visits by e~cri..runcr. Too libera.l gro.nting of credit in pn.st
is en.use of bo.nk 1 s present condition."
2
16
327
379
551
6?.Ed
13
11-12-23 ~:r·iner E: 50
1
Earnings:
1..91.9.
Net Incooe (Gross E".rnings
13
less Tocpenses)
0
Recoveries
Losses Ch~r 6 ed Off
3
0
Assessnents before Suspension
:B~d Assets Purchosed by Stoc~.holdcrs 0
16
Dividends
1920
14
l
8
0
0
10
.im
0
3
3
0
0
r
-
1922
16
l
12
0
0
1
1lli
9
2
Tobl
57
7
42
68
0
0
0
0
0
27
J'c..11c of Bank
D:" te of Rep crt
Flace
. Ca.pi tal . ........ .... ..... . ......... .. .. . . ... . .. . Page
2 . Su-I,:111s • •. • . . . .•..• .• • • ..• .. •••• •• •.••••...• •• • F gt"!
-·
- _- ro!~-1. ts •• .. . ... ..... . ..•.... .•. ... •. . Fage
'-' nrl'.1 v:ule
.'__ • TT
• ~e~erve :or Depreciation and Losses, , .• . ...... , Fage
1-1. 1
1-L. 2
1-L. 3
1-L. 4
,. ' :r.eoosi ts ••. •. . ..••. .... . .•. .• .. . .. . .•• pa~e
=r.:.:r.c and S9.vinP.:s Dcprsi ts ••... ••..•• . . . • ... .. .• Faf;3
7 . D. S , Do,I,o£i ts ••••.•... . ..••..•.... .. . . .. ... . ... :Page
8 . T.J tal Deposits •.•... . ....•.. : .• . ..•.. : . .... : . . ;pa ;e
1-L . 8
l-L.13
l-L . 14
1-L. 8-14
J:-:1.nl
-.t
.Ar\
'Shere Fc:und
(L . -Li~oilities on ?~ge 1)
(" • -Resources on Par;e 1)
Item
I
( Iri thousa:-id~ • .:
and tenths)/
$_ _
)
I
..,I
1,
)
2
3~
·1
5c
7.
8.
"'. P rro\ ed Mo~1.ey I'- 3 e v_roTied :i3onds •••.••• . •. ·; •.. . ;Page l-L . 16-20
9.
10 .
ll .
5:ou:;e, Furni tire & Fixtur s ............. Pa,::;e l-R . 12
13.Cash Funds •••.• . ...••....... • .••• , •••.... • • • . . • page 1- F. . 1L1-20
l • :SXt,>cnses in Excess of iarnirigs ••.. ... . • • • •• •. •• Pa,2;e 1-1, rt of R. 24
12 .
15 . Loans to Officers&: Directo.1.·s(Dir8 r,t) •••••••. . •Far;e 2
13 . Lo~ns ~dorsed or Gu~ranteed by Off . & Dir •.•.• Pae 2
7 . : oans to o:ficcrs 1& DirectorG 1 Interests(Dirc t)F be 2
15.
16.
17 .
sr share •.•.•• Pa~e 2
18 .
►
19 . Fast Due Loans A & B •••••. . • • •••• • ••• • •• • •••••• Page 4
19 .
20.Fi rst .,16 :-t riges-(T e al of l oo.ns wi hout prior SpociaJ pae:e foll owlie:.is , except where alled 11 contr,3.ct 11 in Col . · ing r.'.' a 5 , Itv: s 1,2,3
21.Junior Mortga6es-(All 1o:tns navin,,. pri or liens)Special pa ,0 f oll owing Fage 5 , Ite:nn 1,2,3
22 . Lie:r.s Prior to Roal l!..St~.te Loa !'.s OWned •• ••• • • •• Special pa e followinG Fags 5 ,ltans 1 , 2 , 3
Specinl pa e followof
.
fecap
in
es
23 . Contrncts for deed-(Someti
ing Fa;i:e 5,Ite:ns 1,2,3
••
.
...
.
....
.
••••.•••••.
7)
0
F"
on
:::nve"tr.lonts
20.
10 .Tnt.a.l Loar.s . . .. . . .. .. .... . .. ... . ..... ... . . .. . ... fa?.::: 1-R. i
11 . ifo·o·tc,.1 Lofl?:S ~ Invest:ncnts ••• • •••.. .... .. . •.... • ra.;e 1- R. l & 5-11
l.J Banki~
18 . Stock Owned by Directors~ $100
Liquid Invostmcn ts
& 7
Valuo , Pa ~e
Vnlue , F~~e
Valu'J , Fae:e
Value,Fa c
Value , Page
Value , Pa.:--e
2 .u . s . Bon.s other th~n those securiJg circulation ?a6e 1-R. 6
25 . Forei 1 -Inves t,.71.en ts - not in default ••.. • • • • . •.,1nrk. t
26 . Rnilr oad Investments - not in default •••• • • • ,,, Market
27 . I-ubli Utility Investments - not in default .••• Mar}·et
28 . Industriul Investments - not in default ••••.•.• Markct
29 . Municipal Bonds - not in default •••• , •••••••.•• Market
30 . Mi~cellaneous Bondn , Tax Certificate6, Warrants .~arket
and other Liq·id Investments , cxcludinu forecl osures , Claims , Jud@nen ts and Defaulted :Bonds
13 .
14.
21 .
22 .
23.
24.
25 .
26 ,
27 .
28 .
29 .
30.
7
7
7
7
7
7
Other Real ~state
~. l . 3ock -value •.•....... ,, ....... , .. . . . ............ Page 8
32 . Prior Liens ••••.•.•. ,,~ .•. .. . . . . ••............ , Page 8
33 . Estimated Yalue . ·. ·•••••• • •••••• , ••••• . ..•..••••• Fa ,,e. 8
.
31.
...~?..,
23 ,
4 . Sl C\7 ~ a'i'ls .... . •• • ••• • ••••••••••••••• •••••••.•• • Fa :-,e 11
r5.Slow Eons , S ~uriti es , eta •••••••...•.•. •.••• Page 11
... 6 . Slow 11 0tbcr 11 i::aul Estat;e•·····• ········•·~•·;··P a0 11
:34,
35
37. Doubtful Asse . and Losses - Loans. ; ••••••••••• P.. e 11
38 . D!Jtlbtful As se• ~nd Lossos-nonds & Socurities •• PaP,C 11
e 11
~d Losses - Al l Other.........
39 . ~oubtf·l Asset
37 .
38.
39
••••••••••••• Pas 11
48 .
r
~D . V luo of Azso ts
t shown on Bo~
~
~1. state , County & Municipal Deposits •••••.•••••.•• Yellow F c A
•~2~Sal n.rios ..,f O.ficero (exclude e.'llplrye s) ••••••• y ll ow Pa e A
Preceding Ye.:>r
43 . ll'et ear.,inc.s(befor e' rit, o ffs & rec overies) ••••
•_4 . ·,7 i to ffs reinus rocove ios •••••••••• • •••• • ••• • •
45,.Divi.de!lds aid. ••••. :·,. ... . ......... ... ......... . .. . . .
... 6
-.-
41 .
,;2 .
43 •
'-'4 .
,;5 .
1.
2.
LO
•
rn
•
pid
r
(
lo
5.,
l
lu
•
•
7.
l
r
1•
•
•
•
•
•
r.
rk,
•
r
0
1
•
•
C
t
31 •
2 , l
1.
r.
r
•
t
ly
o r ,
r nc ,
nc.
Januar y
r.
iddle
Guardia n DP-troit Union Group. Inc.
ex i
that it fill
Gro p holds a
th list of b n
o
uestion n ire, I ind
ntion 7 ban• in which
di
Detroi t Union
cent intere st.
hese 7 b n e b ve always been in1
aorta on grou-o b king with t e 25 n e
ich
in the r o t.
11 b
a, nonm bera of
dS t m. r.
. ord mention ed them n bia t
• ional
(See he inge).
On
T
214, 1931
b
a are:
ich.
II
vi
•
Thomoson S
vi
e
s a
of
av ng
en
of
B nk
ea
Stanton
e taburg
"
•
II
, l
19.
31
FEDERAL RESERVE BANK
OF NEWYOR K
J
i.l
<'lQ
19.:,1.
olden eis r, Chairm n
Co
Dear
·tt
o urou., Banc and Ch ·n
Federal heserv Board
, shingto , D. C.
r. Golden eiser:
r. Rounds he
you
.in
copy of h·s
sk
o to for
etter to lr. Cl rk d·tcd J
~
19,
d to
931.
V ry truly your,
Secret
to
r. Roun s
.
LEGRAM
I
FED ERA L RES ERV E SYS TEM
(LEASE D WIRE SERVIC lt)
gy
r
S r.
,a
!Jr
n
Cid nta l
OU•
· .. vita tlor: :
tt
t
r t.
abo
t
0
('\l e e
i
1
i
a"C
d
e
+ l +-
0 lr
tt
r "
8<)
11•
t.
c...
0
....,,..
........ ........ , . . . ~ -
...
osa . el
Q.
C
ti
t
f"
Li.
C
1 , 1931.
r
r,
, 1n accor d nc
t
o r
0
co
1t
or
1
p
•
0
t
O
ct
1 •
to
r
t
Cb<f?f,
(
1
enwei ■ er
re■• 1 ■ :
Alexi ■ Ooldamre1 ■ er
.bchatfenburger ■ tr.
erlin W30
J'aaD1'
9
l
0 N FILES SECTION
Form. No. 131
,
•
-
Office Corresponde nce
To
FEDERAL RESERVE
BOARD
tt/
2 71940
"y
'
Subject: Loan
N.r. Golden ei er
tmen.t
of branch
From _.Mr. J31attner
2-840/i,
, ••
]8.l'Jcs in group
<including ch ins), oper ting no branches, r port d total
nd inve tments of
loan
5,122,000,000
of June 30, 1930; those in group
oper ting branches, $6,897,000,000; total for group systems, equalling $12,019,000,000.
Banks, not members of ~roups but operating branches, had loans and inve tments of
roup
18,264,000,000.
Thus branch b nking system hether as oci ted
or not reported loans
anc
inve tment
of $25,161,000,000, of which amount
about $21,000,000,000 belonged to banks loc ted in state where branches
r stricted a
to location principally to the he d office city.
the country
0
re
All banks in
of June 30, 1930, reported total loans and inve tments of
group and branch systems accounting for $30,283,000,000.
,000,000, th
ith
58,✓
The follo ing tabulation hos the number of banking offic sin and outside of branch and
roup systems:
Bankin~ offic s--tot 1
Sin~le-office b
Banks o er tin branches (head office)
Br nche
June 30,
1930
g/ 27,470
23,035
817
3,618
Dec. 31,
1929 1/
28,177
23,808
822
3,547
Banking offices in groups-rtotr.l
Sin le-offico banks
branche (head offices)
B nlcs operati
Br ches
3,752
2.007
137
1,608
3,620
1,943
122
1,555
not in roups--tot 1
B nlcing offic
s ':J./
Single-office b
Bank op r tin br nche (he d office)
Branche
23,718
21,028
680
2,010
24,557
21,865
700
1,992
!/
Revi ed figure
g/ Representing 23,852 banks; on D c. 31, 1929, there were 24,630 b nlc.
J/
ndependent
in le-office banks.
-·
--
I
anuar y 16, 1931 .
FFILI TI0!1S
':'he irrmort r-::
of this
exten ion of bra ch and
~ood rPa~o ns vitn
thin •s
ubjec t i
two fold .
roun banki n~ is in
tock "obbin
t e reduc tion of
pa
ost peo 1 '
nd hi h financ e .
•1alue, cha
In the
It n
minds as oci ted for
been atton e
c
cons rvati o
oint of viev n~ve been decid edly ohady .
of branc h an
group bank ng it is nece sary
t them in
banki ng,
ve h ld in th
past
ill hol
nrohi bitea ,tit out f r
sorted to .
t i
instan ce, ha e
nd th tall the
s
b nker
ell info
i 11 pr mpt the
an
m
he sa~e old uevic e
of br nch an
gro p
, l
o pr ctice s that
ffecti ve contr ol is
ielu,
-m king,
he re son
ed about the me n
thin
d
rear
nd if they
re
of preve ntion than ha
of circ~ ~rent ion vill be re-
et th t branc h banki ng inter est
ot subst antia lly eve
ner
in or er
roup banki ng are pf'nn itted vitho ut ·11 ere tric-
tock jobbe r
o far ,
app
in the futur e, unle~ ~
ore atten tion to the
been of 1i tle ef ect .
not
n
remot er ana
e er been the ca e
tudy
re an.v s~ch merit s .
h
tions , th
nich from the
o study such activ it1e
In the second pl ce, it mu t be obvio us that tne
1
of
In a compr ehenv i1e
heir true relati onshi p to the real nrrit
uming there
by such
es of capit al stock , e ch nge
snare , and the creat ion of intric te corno rate rel t·ons
hios,
to
irst place , the
in
11
ornia , for
they wanted in the fir t pl ce,
ht consum~d in oppo ition have
to he t
of effec tin
t the
uthor ties :ere
affil i tions a
the br· ch
ere .
~till a third con~i derat ion iu that ve are not conii ent
vhat effec t
upon the
eser e
yste. contin ued conce ntrati on of banki n
seems impo~ sible to be as
ill hav .
'nd it
red on this point until ve knov bette r th n re
o
-2-
~hat means are possible for insul ting banking fro:n undisira ble corpora te
entan,le ment.
In 1ie·1 of these conside rations it is believed that the Committee
should lay the ground ~ork for future po1icy, by stu~ying affili tions as such-not only to kno, the extent of banking concent ration, but to get organize d infor:natio n on the differen t types of affiliat ion and tneir relative importan ce.
C
r
troll
l .
0
b
ot
............................
. .. ... . ... . ....... ... .. ... .... . . .. ... . ... . . ... .. . . .. . . ..
..........................................
.................................
1
............................................
...................
..............................
0
1
C
0
l
C
•
-
-
0
10 .
ol
11 .
0
1
.
11
0
olli
(c
11
0
(c
0
( corol l
0
..,
0
0
0
...............
) ...... -...... .
.............
0
l
L
1,
11 , 00
l
l
1
l
l
l
,1 l
0
1, 0
0
................................
1
l
I
ol
,
0
l ) .. • .. • • . • ... • • ...... • • • ..... • .... •
2 ) ••••••••• ••••••••• ••••••••• ••••••••• ••••
0
0
C O'
7
Ov
0
l
1
l
0
0
l
0
0
0
.
.
1
t
.............................
O, l 30
e
0
i
-
l .
controll
2.
0
•
0
it
ot
5.
0
it
othe
6.
o me
7.
ome
--
10.
s rho e
12 .
13 .
0 0
e t b
ub tot l
14.
In e endent
b
ol i
il
o
OU
1
or
ot e
affiliate
ot e
s
s ( so
( so
om other b
r
6
i
(
0
r
17
l.J,000
l
12, 7.J
l
l
(coroll
..............
22 ,278
157
ffili tion ••••••••••••
l
:JOO
5
................................
.................................................
?,:,
,
·t
om)
2
11
3
9
8
.............................
b
200
othe
l
0
1
cu i ie
ffili
o
2) •••••••••••••••••••••••••••••••••••••••
irector
r
7
l ) • • • • . • • • ... • . • . • . • • .... • • . • • • • • • •
0
0
th t
o • tion
c
a fili tions (co oll
, 60
................................
COi
ins . .•........•............................•..
C
,o
s •••••••••••••••••••••••••••••••••••••••••
ctor ... o
icors an
0
con troll in
n
r b
oth r baru s (coroll
~anks controllin
l
nt
ot
of icor
nlcs o mi
ll.
b n
invest
b
cont ollin
9.
o
f ili
b
•
toe .......................... .
........................................................
r b
ot
d
t
r
ot
l
f,
(co ol
D
0
ot
r
.l'1
of
0
3
.. 'l 0
7 ) •••••••••••••
b
jthoat b
13 •
7
600
10?,
l,l .:i,22
oh s . ...........•....•..•........
6
8
1 ,
1.
r.
r.
rt
t101
0
in
I- ,
'
0
B
I- ,
I
• t
n
•
o r ,
t
t
0
•
r.
ol
1 dl
nd thi
t
b t e
t
11
l
1
tt
on
to
•
r.
•
•u
••
r . C . B.
ond,
on
is
1'
~
r •
:,las ..:cYn
ht
r.
.rs. • i rzo.h
·arie
.r .
is
tr ,
on ,
r,
1 11
B. Ha
rd
'
.
I
PER.SO 1-JEL
I
of
C
TTEE O~
B1u
CH, GROUP, , · D ClL 1
de ~on, Elsie
B~rnes, Florenc e
lattner , J. i.
Brooks, Edith
Byers, rtulph ¥., Jr.
Cleek, Leolc..
Crossm:::n, Betty 1, •
D::_ gcf], Olive P.
Dowling , Patricia
Drain, Thorpe G•
.cvans, arie
Ferguso n, Ruth (now· Mrs. Ruth Jones)
·~rlock, ichard H.
Gree~ Guy E.
Hammill , Caroline (now 11rs. Caroline Cagle)
Harrnrnnd, C. Brn.y
l!.:m.lon, Marie B.
Hayward , "illiam B.
Johnson , Carol
Kuhn, EJ..izabe tl.
L ·e, r·-..:.n
Laue, Jet
•c,rm, Bernice
cKnight , Dolas D.
u str, Harold B.
Mon ay, Jessie
Riddle, J. H.
aunders , Barbara
Seals, Ciladys
Stewo.rt , Clara
Thompson, l!ifilth
Upha1'1, C. B.
l'arburto n, Clark
iarrm, Charlot te
e.;ton, Janet L.
"ickens , David L.
'I ills, Hugh E.
1
Br. Kl JG
Io
I
01: ')
K Operations
FEDERAL RESERVE BANK OF SAN fRANCISCO
anuary- 10, 1951.
Dr.
Chai
c/o
,
c.
ashington, D.
D ar Dr.
In
with th r ques
instrL1Ction to
typical cs of
osing
an
op
o typ cal
T
op
encl
d
eu
n
r difficult to
o
under th
,
o
mto~
s
o
~U..l,,L.l.u.
etudi
though
e
t
ink,
fo
udy
port,
tot
to
tlft~-·~A
t
to incl
ion ( app
I purposely omitted 1
tructiona that only n tional
it till 1 s po
bl to
d upo.
e
or
s
I
f yo
xposing
er
s
onf
ich will
y
lur
th
B
hie
•
~
fotmd it
our
ral R
ber
i
F
t
t
have
th
standard-
Our
r
aining
th
co
Yo
v ry
t~,
r
CAGQ
7-
0
0
1-
"
7-
n
7
"
7-
•
n
7
If
•
7-7
If
Bl
Pu
7
•
"
7-
"
•
ndi
mSTRUCTIONS TO FEDERAL RESERVE BANKS FOR SELECTnm AND ANALYZING TYPICAL CAS
OF
BANKS fflIICH HAVE SUSP DED OPERATIONS.
THE PURPOS O THE .ANALYSIS IS1
To
ow in concise fo
the hi tory ( ained from comment contain din
th r port of Exa.min r o er period of y ars) of factor developing 1n the
bank hich ultimately 1 d to it su. p n .ion. Th hi tory houl.d commenc
t
tim the bank w in a atisfactory or fairly- tisf otory condition end b
folio d through to it suspension.
It 1 in nd d that per on r
tain an und rst ding of he problem
ding er port should
abl to obich con.fronted th bank and to fo
therefrom an intelligent opinion of ho it aff irs had been conduct d for
t
ye
immedi t ly pr c ding its
sp n ion.
ERO
C SF.S
CTIO c
IOD OF S
D
s lect nin typical c
, includin,
ne
Four or fiv
Four or fiv
1925 end 1926;
1927 d 1951.
lect
Of
ch d
ich had
s und r
ov r
1,0 0,000;
1,0
,o
In smuch a
O but
ot
confid nti comm
a of Examin r did not
of um1nation prior to 19211 it i d ir d (in th ab c oft
i ) that bank
hich su pend d prior to 1925 b o tt
rom t
Pr fer b~, th bank
1 cted
of a:y 15,000 popul tion or und r.
Th
lee ion
tifi d through th
s cotton,
i
ommunit
d
c
cco p
y.
the inc
of
ich could
r atiily
c
ter
it community.
cc
ic
garb t
ts, and in, l
tock or coal mining,
ot
on
ctu loo tion of
d
rvh pursuits.
t
r, fi
et
rt d
d ir bl also
s,000,000.
ituat din town
ould
Th
1ection should void th inclu ion of
th or cquir d th bul!line of another
during th
It i
XC011::>,.u.1..1L~
t
hich h d
ch V C
riod under
in op r tion much 1
i
tor
of£ tor
ould
clo 1y
C
•
1
th
condit
ot
follo
r
ort.
GS1
d C
Off"
i
"
co
ri
•
tion of it
p
' .,.
ch
lo
d oft
•
wri
off of orthl
, fumitu r
d fixt
~~::iti~~~TS ~:E}K~R'.E SU
SIO
Th
d
in ord r
B
OLDERS&
d r
tory 1
"#
>
,I
IBlT 12/1
.
..
0
s
1&30
192
--
••
9599
14027
10349
(1910
(1920
(1930
C
)
)
C
)
p 1
• ~1
i
,
hip
•
io:
et
Ui
~ 000
Cap. ~ • Prot •
Loans D!l?
11-1
40
l
1963
2591
50
2
4
13
1542
2
15
195
3
4
1614
507
33
15
97
20
20
d
in
A: 400
9-12-21
Bo
22
1
1
i
()
io
2
B: 200
40
12
200
40
17
367
73
0
C
•
ly
or
lo
liar
ous -ror bus
poli •
4-10-~
1
r D: 200
40
17
ct
10
t
t
tatu ory
ial
* (~
d
qu
,
nnwina
direccto
, s
,
t) :;:~·=:U~ iona would b
oubttul
reco,J111DEmded
•
--
•
. -->
--
12/2
s
:
••
l 00
192
.
12
2957
)
245r..
)
)
.£!:
•
Z-~8-~1
•
00
0
0
50
2
601
1
0
0
BI
,.
12/2
Clas 1f1 d
(
5-8-2
l
L
51
.•
57
920
1
0
3
ol
r
0
0
1
32
14
1
0
0
10
~921
0
3
3
-
1922
7
l
1
12
0
2
2
0
0
l
0
0
0
0
2
0
0
2
ry
, 1 31.
r. I
r
r.
ry
ly yo r,
UNITED STATES DEPARTME NT OF AGRICULTU RE
BUREAU OF AGRICULTURA L ECONOMICS
WASHINGTON,
0. C.
J
:uary 5, 1930.
I
lr. J. H. Riddle,
C/o F deral Reserve Eo rd,
a hington, D. c.
Dear
• Riddle:
You ill recall our convers tion in Clevel nd recently
in hich I expl ined to you that the Bureau of
ricu.ltur l
conomics is planning to hold an informal conference t the
Co mo Club on Thur
y, J nuary 8, t to o'clock, to di cu s
condition in foreign countries which are likely to aff ct the
denand for
rican agricultura l products of 1931.
e shall b g d to
ve you participate in thi conf rence. The enclosed st tement giv
number of topic as
ba i for discussion.
Individual from the follo ing organizatio ns re bing
invited to attend:
t nt of ComIOOrc , F deral F m :Bo rd,
d r 1 R erve Bo rd, In titut of conomics, nd partment of
State.
Sincerely youre,
closure.
Foreign
Ash r Hobson,
In C rge,
ricultur l Service Divi ion.
•
•
- -
u ry 2, 1931 •
J
•
.
0
Oun
l
11
t
•
to
•
on
lunch
0 "CL
0
t
C
in
0
or
o t 1
0
lt
r t
ion.
V
t
ly your ,
@FedFRASER