Omaha daily bee., 1897-01-03
OMAHA SAVINGS SUSPENDS
Unable Longer to Stand the Steady Drain
of Deposits
INABILITY TO REALIZE ON SECURITIES
President Mnnderson Says the Con-
ccrn is In n solvent Condition
and thnt All Dcpositors
VIII lie Paid.


SI50,000 is in balances due depositors. The
assets, including real estate acquired by the
foreclosure of mortgages. amount to abou;
100000 in excess of the liabilities The
continued drain caused by the action Of
depositors Withdrawing their accounts and
the inability Of the management to realize
on its securities rapidly enough to meet
the demand compelled the directors to stop
business and this action was taken volun-
tarily by them at a meeting held Friday
night.
Yesterday morning Examiner Dodder as
sumed control and the front door of the bank
was ornamented with brief notice. which
stated that on account of the fact that $780,
600 in deposits had been withdrawn in the
past six months the directors had decided
| to suspend business. During the forenoon
| there was n group of people around the
| doors, but there was no demonstration and
| so far the closing of the bank has not re-
| suited in any run on any of the other banks.
| The facts in regard to the action of the
| directors were fully stated yesterday morning
| by Charles f. Henderson, president of the
| bank He says that the bank is positively in a
solvent condition and that, while 1t may re-
| quire some little time to realize on its Sc
! curities, every dollar deposited will be paid
| in full and that even the stock will prob
| ably be saved.
HISTORY OF THE BANK.
The Omaha Savings bank was organized
| fifteen years ago." said General Mander-
| SON at was started because of the apparent
demand for such an institution in Omaha.
| 1t is the oldest bank of that character in
| the city and the only one that during all
| its career has confined itself strictly to the
| legitimate business of a savings bank. 1t
has never loaned a dollar of money on un-
secured paper. No matter how great mans
wealth might be he could not borrow one dol
lar without putting up real estate or collateral
security that made the loan perfectly secure.
Its stock is Sl5OOOO, every dollar of which
is paid up There can be no question in the
mind of any one but that the bank has been
conservatively, honestly and faithfully
managed. In the spring of 1893 we had 81
100000 on deposit During the financial
panic of the following summer we paid out
curities which could then be
placed by us in the east with
the greatest ease because of their recognized
character and because eastern people were
then investing in real estate securities. In
the fall of 1898 the deposits were $lO00,000
which increased until July 9, 1885, when
they amounted to $1,3G0,000. The German
Savings bank closed on that date, and i'm
mediately there was a steady and con-
stant drain on our bank. Our deposits have
shrunk from S1,3GO,000 to $750OO0 showing
that we have paid out about 100000 to de-
positors in a little more than five months
Inc Dank mas Deen cOWpelleu on account or
non-payment OF interest on it's mortgage
loans to foreclose manv of its mortgages and
has taken in about $275, 900 in real estate,
which now constitutes a part of its assets.
This real estate has been purchased under
foreclosure proceedings at extremely low
prices and in fairly prosperous times would
certainly AFFORD large margin of profit on
being resold. Some has been sold and al
ways at a profit to us, even in these de-
pressed times.
SURPLUS AND PROFITS.
"Whle the bank has been making money
even during these times of depression on
account of our large holdings of real estate |
not dollar has been paid as a dividend to |
any stockholder since 1898. But we have |
allowed the profits to accumulate surplus. |
This surplus is now $3.50 and there Ia |
about $4,000 in profits. This immense sum
of 100000 not only drained US of all our |
cash, but compelled us to raise money in |
addition to cash on hand by the sale of
available securities which is most cases were |
disposed OF here at home. 1t has also com |
PEELED us to borrow of the commercial banks |
of Omaha. securing them by pledges of |
securities The bank today owes $3.50 900 |
to its depositors and $4,000 to the COM |
mercial banks. making the total liabilities |
SS9O,OOO. Taking our real estate at cost and |
our real estate and other securities simply |
at their face value, we have nearly 5000, 900 |
of assets beyond liabilities. While the
bank is unable at this time to pay it's de-
while it will take some time to realize, not
a dollar will be lost by any creditor or de-
pcsitor. II addition to the assets there is
also the double liability of the stockholders,
which Swells the amount to at least 81 POO
900. My expectation is that with careful
management of the affairs of the bank in
closing its business much of the stock will be
saved. The simple fact is that with debtors
of bank in these times of depression unable
to pay their loans and our cash reserve hav-
ing run below the per cent required by
law, for the protection of our depositors we |
had to close business. The community need
feel no ALARM for there is no necessity
for it,"
BANK SIMPLY STOOD ALONE.
In addition General Henderson wished il
to be distinctly understood that the bank had
no connection whatever with any other
Omaha bank More than that. the insttu-
ton had never been "milked" by the stock
holders, as none Of them had ever borrowed
a dollar from it, 1t had transacted its busl-
ness on the most conservative principles and
the closing purely due TO the tremen-
ious pressure OF depositors, which had been
augmented by the receat bank failures in
Chicago and St. Paul. The stockholders ex-
pected 20 be able TO file a bond and close
up their affairs themselves, thus saving the
iepositors the expense of receivership.
During the fifteen years which the bank
las been in existence 1t has withstood sew
'ral serious runs and without betrayng an |
Indication of weakness. In 1884, two years !
after IL was organized, 1t experienced it's
irst run. This was a result of the Grant
z Ward failure in New York and did not
occasion any serious difficulty. The tremen-
lous run OF 1898 sapped its resources, but ,
t weathered the storm successfully and ,
,nce then about $3.50 900 of the amount ,
withdrawn was covered back into the ,
,ank. The run was resumed after the :
allure of the German Savings bank and was q
Emphasized by the general uneasiness in
ident to an exciting political campaign l
Iven after that the officers expected to be
BILE to continue business. The recent fail y
res at Chicago and St. Paul aggravated the
sposition of the depositors to withdraw
heir funds. The cash reserve was an s
and as there was absolutely no
narke. for real estate securities at this II
ime, the closing up of business was inn .
eratiye. II Is stated on reliable authority
hat fully rs per cent of the assets OF the q,
ank consist of real estate and real estate
ccurities. Consequently the date of the
quidation Of its Indebtedness Is difficult TO $
orecast. 1t will depend very largely on
he general business situation during the !
ext year and the disposition OF investors TO
cal in real estate securities. h
ACTION OF CLEARING HOUSE. e
The condition of the bank was a subject
consideration at a special meeting OF tho
maha Clearing house held Friday after I
con. 1t has been known for some time by !.
maha bankers that the securities held by