The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1909-05-20
The STATE BANK LAW
Public Examiner Jones Presents the
Features Of the New State Bank
Law to Bankers.

Features OF Tic New state l1Ank
Law to Bankers.
AT the banquet given the visiting
bankers OF group four of the State
Banking Association, held at the Wild
mann MOTEL Wednesday evening, John
l.. Jones, of Madison, made the prin-
cipal address of the evening, when
he presented the principal features
OF the new state banking law, which
applies to the banking institutions Or
ganiZed under the state law. Among
other matters talked of MIR. Jones
made the following references in az
planning the features OF the banking
law:
After June 80, lJU9, a bank IA
not be organized With a capital of
less than $4,000. The capital
must be fully paid in lawful money
and u bank shall not open for bust
ness until so authorized by the Pub
lie Examiner.
The certificate issued by the Pub
lie Examiner, authorizing a bank to
open, must be published as per Sec
ton 8, OF Article 2.
No bank shall accept deposits in
excess OF 10 times its Capital and
Surplus combined-the average de-
posits for the six months last past
being considered.
a bank with a capital of less than
Sic, 900, shall not accept deposits
in excess of 10 times its Capital and
Surplus combined-the average for
six months being considered. (Sec-
ton L of Article 81
The law provides that at least
Three Directors shall reside in the
town or county wherein the bank is
located. This section will be LIBERAL
ly rather than literally construed,
but we will require members of
boards to be so located as to enable
them to attend to their duties in
such a manner as to be of assistance,
as we'll as to be present at bank ex-
%aminations when called for.
A director must own in his own
right and unpledged, not less than
5 shares of the stock Of his bank.
Directors and other officers shall be
personally liable for any and all
losses which a bank may suffer, by
any violation Of the banking law in
which such officials may participate.
Loans are limited in size to rs
per cent of the banks capital and
surplus combined, and in constituting
this section we must consider all
loans made to the various members
of a firm or co-partnership as one
loan. The only loans which will
be passed over and which our banks
viii. be permitted to carry, when
found to exceed such limit, will be
such as are secured by first mortgages
on farm lands and where the amount
loaned does not exceed SO per cent
Of a conservative valuation of such
security. This is a very liberal con
%struction of the law and all other
loans should be found within the
limit always.
Private bankers are not permitted
to borrow any of the funds of their
banks under any circumstances.
Loans made by a bank to it's direct
ors, officers or employees, must first
be acted upon and approved by a ma
jority of the banks board of direct
ors, at a regular or special meeting
and the minute book must show that
this has been done. In addition to
this, loans made to active officers OF
employees must be secured. See Sec.
ton 81 of Article 2 and do not over.
look this as there is a severe penalty
for violation.
The aggregate amount of all loans
made by a bank to it's stockholders
must not at any one time exceed
fifty per cent of the banks capital
This must include all loans made tc
such concerns or interests as any OF
the banks stockholders may be as.
ISOLATED with. This is important and
Sections 20 and 80 Of Article 2
which cover this matter should be
read carefully.
Active officers are held personally
responsible for all overdrafts and ex
cessive loans as per Section SO Of
Article 2 and said Section will be
rigidly enforced. Overdrafts of six.
ty days standing are not to be con,
sidered as an asset. See Section 80
of Article 2.
Two regular meetings of the
banks Board of Directors must be
held annually and these on the sec
ond Tuesdays of June and Decem
Der. A complete examination of the
banks condition shall be made a
such meetings and a report as tt