The Bismarck tribune., 1925-01-12
AUDIT REPORT
PUTS LOSS AT
$2,188,089.20
First Report of Accountants
to Set up Definite Loss
on Old Accounts
NO FUTURE HOPE SEEN
Bank Lacks Means to Employ
Funds PrOfitably; Must
Lose Money Conclusion

Lose Money Conclusion
The Bank of North Dakota has lost
$2,1S8,0s9.2O during the period Of its
operation of five and half years,
according to an estimate presented
in the audit of the bank made by
Temple Brissman and Co. certified
public accountants which has been
received by the North Dakota Indus
trial commission. In the opinion of
the auditors this loss must be met by
a deficiency tax levy.
Of this sum, $1SS,089.2O represents
direct deficit from operations, and
S2,0OO,000 is reserve set up by the
accountants to meet estimated losses
on sums due from closed banks, real
estate mortgage loans etc.
No Future Hope
Analysing the operations of
the bank the auditors declare
that;
ut is to he noted that the de-
ficit is steadily increasing re-
gardless of increased volume. In
fact with a large accumulation of
money resulting from the liqui-
datiOn which cannot he reinvest-
cd at anything like the profit
which it formerly yielded the
larger volume has resulted in in
creased loss. Adequate sources
Of profit are not available
The income of the farm loan de-
partment of the bank is insufficient
to meet its expenses the auditors
find, declaring that;
at is apparent from the statement
of expenses that the income from
application and appraisal fees is en-
tirely inadequate to meet the oper-
ating expenses of the department"
The audit was made as of October
Is, 1924. The footings of the bank
as Of that date are placed at $13,-
211 ,274.86. These figures include the
loss of $2,18S, ,0S9.2O already pointed
out
Loss Has Been Known
The loss of $2.OO0,OO0 ascrib.
ed by auditors to shrinkSse In
assets will cause no surprise in
official circles, except that the
amount is somewhat larger than
had been anticipated by some.
Independent officials are inclin-
ed to say that the losses resulted
chiefly from redepOsits and loans
made in closed banks by the Fra
zier administration of the bank,
and which the present manage
ment has not been able to "thaw
out" 1t was generally known
that heavy loss would eventual
ly be sustained, but no apprais-
al ever hal been previously made
in an attempt to determine the
loss. However. since there was
a good crop this year and COL
lection has been going on in the
fall, the accountants endeavor
to set up tbs reserve.
Discussion of Loss
In discussing this loss the account
ants make the following comment;
"While every diligence and econ
omy appears to have been exercised
by those charged with the manage
ment of the bank a loss has been ac-
due to economic condi-
tions for which they cannot be held
responsible.
1T will be observed that the de-
ficit more than exceeds the capital
account furnished by the state bank
bond series of $2,OO0,OOO. This loss
merits prompt attention as it would
appear that it must be restored
through a deficiency tax levy rather
than from future bank earnings" In
brief the bond liability still exists,
and there is not sufficient available
tangible resources to meet all of the
regular liabilities of the Bank and
pay off the bonds issued for its
working capital"
The assets on which this loss Of
is estimated are listed in
the banks statement as follows:
Due from closed banks $2,471 ,858.23
other Assets ........... 35,316.2S
Real Estate Mortgage
Loans ,................ 5S,9S8.69
Total ............... 1856. 1920
Less Reserve for losses $4,000, 100000
The largest item included in the
amount due from closed banks is
made up of the obligations of the
Scandinavian American Bank of Far
60 which come to $329,2O7. Other
''league banks" whose relations with
the Bank of North Dakota came into
the limelight four years ago also
figure in the present statement the
obligations of the Proper State Bank
for. example amounting to 1892.
Real estate mortgage loans which
are included among the probable
losses amount to over $4,000. Chief
among these is the loan made d. j.
Mcmahon of $25, 900 which figured in
political campaigns in 1920.
The largest item among the 10Th
er assets" to cover loss on which the
$2.O0O,OO0 reserve has been set up ID
q loan to the Equity Cooperative
Packing Co. Of Fargo Of $22.497.76.
ut is doubtful that any further liz