Ralston State Bank - Ralston, NE

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: January 1, 1925*
Location: Ralston, Nebraska (41.205, -96.043)

Metadata

Model: gpt-5-mini
Short Digest: fa0cae9e

Response Measures

None

Description

Article (1929-09-18) reports the Ralston State Bank failed about four years ago (≈1925) and auditors found large self-dealing and bad loans by President T. J. Shannahan. No run is described; failure appears due to bank-specific malfeasance and the bank remained closed. Date is approximate based on 'about four years ago.'

Events (1)

1. January 1, 1925* Suspension

Cause: Bank Specific Adverse Info
Cause Details: Extensive self‑dealing and bad loans by the bank president (forgery and loans to himself, his wife, and others) leading to insolvency.
Newspaper Excerpt: It failed about four years ago. Its president was T. J. Shannahan. ... Shannahan loaned himself more than $16,000 ... he loaned his wife and other persons for his own use more than $18,000.
Source: newspapers

Newspaper Articles (1)

1. September 18, 1929 Newman Grove Reporter Madison, NE

Article from Newman Grove Reporter, September 18, 1929

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Article Text

What Auditors Find Everybody knows the legislature appropriated not to exceed $150,000 for an examination of the affairs of the many Nebraska banks that have failed in the past ten years, There are two objects: To recover additional funds if possible and to prosecute criminally any bankers found liable under the law. Former Governor Shallenberger was appointed chief examiner and he has a dozen or 80 auditors working under him. The first audit to be completed was that of the bank at Ralston. It failed about four years ago. Its president was T. J. Shannahan. Mr. Shallenberger has given out the principal facts found by the auditors. It is now learned that Shannahan loaned himself more than $16,000 to finance some real estate deals and that he loaned his wife and other persons for his own use more than $18,000. There were other loans in the bank of a similarly bad character. The capital stock of the bank was only $20,000. Some of these facts were known to the state banking department before the bank finally suspended four years ago but the department did nothing but caution the bank to improve its ways. This slap on the wrist didn't bother Shannahan. The auditors now suggest that it may be possible to prosecute Shannahan for forgery. The statute of limitations has run against some of the crimes against the banking law committed by Shannahan. These matters The Signal is giving in this detail because the auditors are going to find exactly these facts in a number of other failed banks. Time will prove whether the guess is right, but our notion is that most of the failures were caused with out criminal intent. The guaranty law invited hundreds of persons without experience and proved ability and with very little capital of their own to go into the banking business. Disaster was just as certain as the rising of the sun. The guaranty law was not properly buttressed by laws restricting the number of banks and the entry into banking by unqualified persons. Of course no money will be recovered as a result of the audit of the Ralston bank. Undoubtedly that will be the rule with most of the other audits. In the Ralston bank case, President Shannahan has already been tried in court and acquitted on one charge. Prosecution of the officals of failed banks has seldom resulted in convicton. Whatever his good intentions, Shannahan was a thief in fact. The facts about the Ralston bank were made public long ago when Shannahan was on trial and they are merely being brought again to public notice. For four years we did everything in a private bank and in a national bank that anybody could do, except furnish the capital, and our banking views are probably colored by that experience. If the people of the state had permitted the legislature dozen years ago to enact the legislation that is now being put into effect most of the bank failures would have been prevented. For one reason, many of the banks would not have been permitted to begin business. One good effect of the audit exposures will be to make the state banking department hard boiled in the treatment of banks that violate the provisions of the law. The state banking department was criminally negligent for not closing the Ralston bank long before its condition got so bad it had to close. The failed Geneva bank was permitted to operate long time after the department had knowledge ample for its closing. It is said that a chain is no stronger than its weakest link. The enforcement link is fully as important as the provisions of the banking law. The legislature and Governor Weaver seem to have hit upon a sound enforcement plan-Geneva Signal.