The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1922-04-24
Report of Auditors on Bank of
North Dakota Says Deprecia-
tiOn Will Be Felt
REVIEWS BANKS HISTORY
Final Report on State Industries
Takes Bank Condition From
The Beginning


made public today. The report is tn
fourth and last of the reports mad
by that firm OF the operation of th'
state industries for the new Indus
trial Commission. 1t covers a periot
of the banks operation from July
1919 to December IL, 1921.
lit is apparent" says the report
''that considerable amount of TIN
assets will be slow of liquidation anx
realization, and considerable ultimatt
losses of these assets will be sustain
ed which will correspondingly in
crease the book Deficit"
The auditors, in making their com
pIlations, listed all assets at fact
value, the report says and adds thai
mo reserves were computed by us tt
provide for such depreciation.
insufficient collateral required fol
loans, losses in loans to closed banks
and farm loans on which money has
been paid out but which cannot be
completed because OF unpaid taxes OF
lack of good title on the land are
among the conditions pointed out as
leading to further losses in the bank
Find Improved Condition
The auditors, however, find an i'm
proved condition under the new man
agement of the bank by c. r. Greene
and the new Industrial Commission
including marked reduction in ex-
penses, revision of records and more
careful consideration of loans made
The heaviest loss sustained in the
operation of the bank was during the
year 1921, the report shows. During
the year, 1919, when the bank was in
operation for about six months it sus
tained book loss of $4,795.S2, showed
a profit Of $74,924.07 in 1920 and a loss
Of $22O,6O3.89 in 1921 up to Decem-
ber IL, according to the report.
Discussing the bank reports issued
showed great profit the audit company
shows that these profits were paper
profits" and wee arrived at in large
measure by credMing to the bank In
terest on bank bonds which had not
been sold. In the year 1919 the bank
credited up to $47,234.04 interest on
bank bonds received and accrued, but
the bark did not charge itself with
any interest on the bank series bonds,
the report says: The bank also Gre
dIlted to itself discounts and commits
sions paid on bond sales, which re-
presented loss, and accrued inter
est In closed banks.
,"Thawing out" of frozen assets"
under the new bank management 1s
reflected i'm the statement that the
"frozen assets" now total $2,096, 481.-
73. At the peak they totalled several
million dollars.
Criticism Of Farm Loans
A condition Of which there is se-
we're criticism implied is the inability
of the bank to transfer $119,176.26 of
farm loans to the state treasurer be-
cause the loans, although made in
1919 and 1920, are still uncompleted.
The first loan made by the farm
loan department of the bank-loan No.
l., application No. 9-to James w.
Pauley, Aug. 16, 1919, "is still unc'om-
pleted5 and in an unsatisfactory con-
dition," the report says.
y Included in the amount of loans ON
which bonds cannot be issued because
they are in unsatisfactory condition
are four loans to D. J. Mcmahon, the
report says. They amount to $4,000
and are dated January 2, 1920. The
report says: "These loans were later
covered by one blanket mortgage. mo
interest was paid on this mortgage to
date of audit, and we were advised
that the taxes on the properties were
also unpaid"
'In detail No. 16 are listed the farm
loan special deposits in the open
banks, of $64,400.O0,' the report says
These deposits were made to provide
funds to clear up the incumbrance OF
the properties for which loans had
been applied for. You will observe
that Of these deposits two were made
in 1919. twelve in 1920 and one In
January 1921. 1t would seem that the
completion of these loans is unusually
SLOW" Farm loan deposits in closeo
banks amount to $4S,600.0O.
Among the loans of the bank is one
of $2S,972O2 to the Equity Co-pera'
tive Packing Company, Fargo, which
is in the hands of a receiver. The re,
port says the security to this Is
mortgage on some land, that an exc
cuted deed lis ON file ''but owing to TN
paid taxes thereon of $6,972O2. dht
deed had not been recorded"
Place OF Heaviest Losses
The greatest losses which Will bt
sustained by the bank are in transac
tions with closed banks, it is antici
pated The total liabilities Of closet
banks to the Bank of North DakOos
amount to $1,682,765.57.
"These assets, the same as all Othe
assets" the report says, ARE state'
ait full face value, but it is apparen
that the final liquidation (and the ii
quidation will be slow will result u
a very large depreciation of the sal
assets and will correspondingfy IN
crease the book deficit
The Scandinavian-American Ban
of Fargo, now closed, had incurre
an overdraft of s15,87401 when
closed, according to the audit repor
The bank has $232 2,O9S20 in redepos
its and $13S,794!51 in loans, the re
pert shows.
Included in the collateral are tw
notes executed by the Bering Sc
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