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BANKS IN GOOD SHAPE In his tenth biennial report to the governor, State Bank Examiner Wingfield of Mitchell, says the banks are in a generally prosperous condition. The report discusses the condition of 500 state banks, fourteen private banks and twelve trust companies. During the period covered by the report, forty state banks, one private bank and four trust companies were organized; six banks left the jurisdiction by becoming national banks, twenty-one liquidated voluntarily; three private banks incorporated as state banks, and eight banks forfeited their charters by failing to open for business within the time specified by law, making a total not gain of twenty-nine banks for the two years. Six banks suspended payments in the two years, namely, Chelsea State Bank, First State Bank, Onida; Northwestern State Bank, Newell; Meade County Bank, Sturgis; Farmers' State Bank, Mobridge; Henderson State Bank, Wessington. The examiner traces the failure of these banks to various causes, ranging from failure to maintain the required legal cash reserve, a large amount of delinquent loans, negligence of officers, and the carrying of heavy loans without good security. Because of the failures at Sturgis and South Shore, two cashiens committed suicide; several others have been given terms in the state penitentiary. In the case of impairment of capital, the examiner finds that stockholders in the majority will refuse to make an assessment on the stock, with the idea of forcing the minority stockholders into voluntary liquidation or submit to suspension by the examiner. The law does not give the bank examiner authority to intercede for the minority stockholders (and force the majority to make concessions. He suggests that the examiner be joined with the board of directors, which would then give him authority to levy an assessment to make stronger the impaired capital. The examiner makes a strong contention against the "one man" bank, as he has found it to exist in several cases. He suggests that the directors be increased from three to five and require from the five a closer attendance on the meetings of the board of directors. As a further protection to the stockholders and depositors, the examiner recommends the double liability of stockholders. To avoid the loaning of funds to officers of the bank, the examiner makes the following statement: "Much pooling, wrongful diversion and entanglement of funds from loaning to associated interests could be prevented by amending section 29, article 2; by inserting the word corporation, and making it read as follows: 'No individua, firm or corporation transacting a banking business in this state shall loan to any single corporation, firm or individual, including such loan or loans made to the several members of such corporation, firm or co-partnership, more than 25 per cent of the paid up capital and surplus of such bank.' I invite close inquiry into the preceding suggestion and trust some action will be taken."
