The Bismarck tribune., 1931-12-26
Bank Of North Dakota Profit for
Last II Months Placed at l6,5S6
Auditor o. 3. Lund Says Profit
Represents 11.8 Per Cent
Earning

A net profit Of $216, ,586.36 was made
by the Bank of North Dakota for the
1l-month period, Oct. /, 1880, to Aug.
81, 1881, according to an audit sub
mitted to the state board of auditors.
The profit is shown after charging
up depreciation on the bank build
ing and fixtures, and for reserve for
unpaid and accrued interest on bank
series bonds outstanding.
O. B. Lund, Bismarck, auditor for
the state board of auditors, who made
the audit for the 11-month period,
said in his report that the profit rep
resents an annual earning of lib per
cent on the capital of $4,000, 900 after
charging off interest on capital bonds
or, 14.3 per cent, before considering
the bond interest. The profit is to
be applied on the old deficit account
OF the bank, Lund said.
There has been no great change
in the results of the operations of the
banking department during this audit
period, when compared to the previ-
GUS four years, except that the bank
sold North Dakota real estate bonds
in the amount of $4,411 900 during the
period that netted premium of $685.
941.46," Lund said in his report.
Prospects Are Reduced
Present economic conditions, short
crops and low prices of agricultural
products reduces the prospects of
making collections on the questionable
assets of the bank, and we have in
creased our estimated losses on the
old uncollcctable assets in the amount
of $27,059.99. and set up estimated
losses of $8,659.19 on the more re-
Gently made loans on hand.
THE bank department advances
funds to the farm loan department
for financing it's operations in con-
nection with farm loan closings and
collections. These advances have been
increased from time to time as re-
quired, until they now amount to
$984,927.67.
THE bank department charges the
farm loan department interest at the
rate of six per cent on these advances,
which has been charged to the oper-
ating expenses of the farm loan de-
partment and credited to the interest
income of the bank department.
The farm loan department carries
on deposit with the bank about one
third of these funds without receiv-
ing interest credit on the unused bal
ances. This has resulted in the farm
loan department paying between eight
per cent and nine per cent for the
funds actually used, which is over
double the average interest rate earned
by the bank on its funds as whole.
Follow Special Policy
1T has been our policy in the past
to set up the inter department trans
actions as they are carried on the in
stitution books, but in this case the
bank department is profiting at the
expense of the farm loan department
to the extent that to follow their prac-
tice in our statements would unrea-
sonably initiate the profits of the bank
department and increase the losses o1
the farm loan department.
During the past five years ovel
$2O0,OOO has been transferred from ths
farm loan department funds to th'
bank profits in the form Of interes
charges.
ITO equalize between the two de
partments we have transferred $l0O,
600 from the bank income to tn
farm loan income In our statement
which, in my opinion, divides the ne
income to each department NOR
equally"
n,,A; NJ
the farm loan department OF the bank
The audit shows loss of $32, 1882
for the 11-month period for the farm
loan department, before returning tn
excess interest charges made by tn
bank department.
The demand for farm loans at pres
ent, the report said, is the greatest II
the history of the department.
During the 11-month period tn
farm loan department completed an
assigned 1888 new loans to the stat
treasurer for $3,764,40 There wer
on hand over 100000 in loans in pro
cess of completion. and application
on file for over $2,500,O0O that wer
under consideration at the date o
audit.
S25O,OOO a Month
Applications were coming in durln
the time of the audit at the rate G
over $25O,OO0 a month, Lund said.
New real estate bonds were issue
for $45OO 900 to provide funds for II
nancing loans that had been com
pleted.
After crediting accrued interest o
open farm loans, that stand uncol
lected to Aug. 81, 1881. as carried o
the books of the department, and az
crued interest on bank deposits, the
4 charging accrued interest payable an
other expenses, we show net detlc
to date of $375, ,496.36 without consie
ering the state tax levy as an II
come" the report says.
Lund commented that under pre-:
ent economic conditions confrontil
the farmer, and the seasons crc
shortage in some parts OF the stat
the collection of interest and primo
pal installments on farm loans al
coming into the fund slowly, with II
dications Of a falling off during tt
next year.
A total of 933 loans have been for'
closed in which the state holds tit
to the land by sheriff deed. accordir
to the report. The lands acquired ar
owned cover 254,295 acres, and repr
sent unpaid loan balances OF $3,32t
743.94. In addition to this, loans Il
sl,097, 1880 are in the process OF for
closure, the report shows.
Accrued Interest Rises
The report states that 168 loans 81
gragating 40839 acres OF land a
auired by foreclosure were. subs
auently resold, part payment feceiv
in cash and part carried IN op'
loans, in addition to the foreclosure
The accrued interest unpaid on op
farm loans has increased over Sou
900 during the audit period.
An analysis set up In the report
TO the condition OF open loans on Al
81, 1881, showed the following:
Loans delinquent less than
months not considered)
Total