Security State Bank - Melrose, MN

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: November 24, 1923
Location: Melrose, Minnesota (45.675, -94.808)

Metadata

Model: gpt-5-mini
Short Digest: 68f0256b

Response Measures

None

Description

State Banking Department ordered the bank closed (suspended) in late November 1923 because of worthless Montana mortgages and the failure of a Montana correspondent. No run is described in the articles; the banks were taken into charge by state examiners and ordered closed (likely permanent suspension/liquidation). Key dates in sources: suspension cited as close of business Nov 24, 1923 and announcement Nov 26, 1923.

Events (1)

1. November 24, 1923 Suspension

Cause: Government Action
Cause Details: Closed by order of State Bank Examiner A. J. Veigel / State Banking Department after Montana mortgages held by the banks proved of doubtful value and after failure of the State Bank of Ryegate which had guaranteed some paper; examiners took charge for protection of depositors.
Newspaper Excerpt: the suspension of the above named banks at the close of business on November 24th, 1923.
Source: newspapers

Newspaper Articles (3)

1. November 29, 1923 The Sauk Centre Herald Sauk Centre, MN

Article from The Sauk Centre Herald, November 29, 1923

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morning when the news spread that the Hilbert line of banks had been closed by order of State Bank Examiner A. J. Veigel. The banks affected were the Security State Bank at Melrose, The Farmers State Meire Grove; New Munich State Bank, and the State Bank of St. Martin. Prior to the death of Mr. Hilbert a few years ago, these banks were operated in connection with banks at Ryegate, Ekaloka, and Pebona, Mont. Many thousand dollars worth of the paper taken by the Montana banks was transferred to the Stearns county banks because of the unusually attractive rate of interest which they carried. Shrunken land values and crop failures for five years have completely frozen the securities carried by the Stearns County banks. Following the death of Mr. Hilbert, J. H. Spieker, president of the Security State Bank at Melrose, E. Ortman, cashier of the Meire Grove State Bank, and H. J. Terhaar, cashier of the New Munich State Bank, were named as executors of Mr. Hilbert's estate, but because of conditions in Montana have faced a stone wall in an endeavor to extricate the estate from its difficulties. The banks closed were officered by the following men: Security State Bank, Melrose-J. H. Spieker, Pres., H. T. Loosbrock, V. Pres.; H. C. Stalboerger, cashier, and H. H. Rehkamp, assistant cashier. State Bank of Meire Grove-J. H. Spieker, Pres.; J. H. Nathe, V. P.; E. Ortmann, cashier New Munich State Bank-M. Pitzi, Pres.; Casper Zierden, V. P.; H. J. Terhaar, cashier, and J. M. Terhaar, Ass't. cashier. State Bank of Martin Va! Haehn, Pres.; H. J. Terhaar, V. P.; R A. Kuhl, cashier. The Security State Bank of Mel rose has a capital stock of $50,000 with $10,000 surplus. The New Munich bank has a capital stock of $20,000 and $5,000 surplus. St. Martin Bank has a capital stock of $10,000 and $3,000 surplus. The Meire Grove bank has a capital stock of $12,000 and $3,500 surplus. At the last call for a statement by the Minnesota Banking Department Nov. 1, 1923, the four banks in question had deposits as follows: Security State Bank, Melrose, $589,000; Farmers State Bank, Meire Grove, $206,000; New Munich State Bank, $309,000; State Bank of St. Martin, $178,000; or a total deposit of $1,282,000 The following joint statement prepared by the active managers of the banks closed will be of interest to many Herald readers: "The undersigned, as active officers, take this means of apprising their creditors of the facts in connection with and the causes that have led up to and have resulted in the suspension of the above named banks at the close of business on November 24th, 1923. "Up to the time of his death, during the month of September 1921. Dr. P. A. Hilbert was extensively interested in the four banks named, as well as in three certain banks in the State of Montana, which fact, we believe, is generally known throughout this county. While SO interested and while having these connections, a considerable amount of Montana loans were placed in his Minnesota banks at the direction of Dr. Hilbert. Repeated crop failures in Montana. the sudden death of Dr. Hilbert and general abnormal and adverse conditions have brought about the recent closing of one of the Montana banks and the encountering of serious difficulties by the remaining two. The same conditions account for the slowness of a large amount of Montana notes carried by the Minnesota banks and the depreciation of the security held in connection therewith to such an extent that a portion of these lonas must now be considered as of doubtful value. The difficulties encountered by the Montana banks have also materially lessened the possibility of liquidating the Montana paper held by the Minnesota banks And. these same difficulties, after becoming known to the local depositors -as they undoubtedly would become in the very near future-would lead to withdrawls until reserves in the Minnesota banks were depleted, with the result that the Minnesota banks would eventually be forced to suspend. This depleting of reserves before closing would mean that some depositors, would paid coch

2. November 29, 1923 The Sauk Centre Herald Sauk Centre, MN

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Banks, with Deposits $1,300,000, Closed by Bank Examiner Monday shell was thrown into while the remaining ones would be compelled to await liquidation of all Stearns county Moonday assets or re-organization when the news spread that line of banks had been "With these probabilities in mind by order of State Bank and with a view of protecting the inA. J. Veigel. The banks terests of all depositors without exception we have reported to and conwere the Security State Melrose, The Farmers State sulted the State Banking Department. Grove; New Munich State The immediate closing of all banks of the Bank St. State was considered the proper step to take in order to do justice to all concerned. to the death of Mr. Hilbert "We are well aware of, and exago, these banks were in connection with banks at ceedingly regret the inconveniences Ekaloka, and Pebona, Mont. caused by the tieing up of all funds ousand dollars worth of the entrusted to us. We have particularly in mind those of limited means by the Montana banks to the Stearns county who have part or all of their savings with us. of the unusually atrate of interest which they "Special representatives of the Shrunken land values and Banking Department now have charge for five years have comof the banks. These men will confrozen the securities carried duct a thorough examination, deterStearns County banks. mine as nearly as possible the exact the death of Mr. Hilbert, conditions of the banks, and then proceed to take whatever action is for Spieker, president of the SeState Bank at Melrose, E. the best interests of the depositors. cashier of the Meire Grove It is quite probable that a meeting of all creditors and stockholders will be and H. J. Terhaar, of the New Munich State called for the purpose of explaining named as executors of and discussing all matters in detail estate, but because of and for the further purpose of formuin Montana have faced lating plans by which there will be a to endeavor in wall exan minimum of losses, if any. estate from its difficulties. "As above stated, we sincerely reclosed were officered by gret the inconveniences caused. We men: have in the past done everything withState Bank, Melrose-J in our power to safeguard all funds left with us and it will be our aim to Pres., H. T Loosbrock, H. C. Stalboerger, cashprocure for our creditors the quickH. H. Rehkamp, assistant est and most satisfactory settlement possible under the circumstances. "Dated, November 26th, 1923. Bank of Meire Grove-J. "John H. Spieker, Melrose. Pres.; J. H. Nathe, V. "Herman J. Terhar, New Munich. cashier. Ortmann, "Edward Ortmann, Meire Grove. Munich State Bank-M. Pitzi, "Robert A. Kuhl, St. Martin." asper Zierden, V. P.; H. J. -a cashier, and J. M. Terhaar, ashier. Mon was pay day for the creamof Bank Martin eries at Meirose, Meire Grove, and Va! New Munich, and $27,000 belonging Pres.; H. J. Terhaar, V. P.; R. cashier. 0 these three co-operative creameries vere tied up in three of the four Security State Bank of Mel anks closed. The directors for the a capital stock of $50,000 hree creameries affected. made ar10,000 surplus. The New angements and borrowed the necesbank has a capital stock of ary funds from the Borgerding and $5,000 surplus. St. State Bank at Melrose, paying the Bank has a capital stock of Carmers for their October butterfat. and $3,000 surplus. The The Herald understands that a bank has a capital stock number of Melrose citizens had conand $3,500 surplus. siderable sums of money deposited in last call for a statement by the Ryegate bank on time certificates Banking Department because of the attracttive rate of 1923, the four banks in quesnterest paid. deposits as follows: Security The Herald editor visited Melrose Melrose, $589,000; FarmWednesday and talked with a numBank, Meire Grove, $206,ber of business men. There was no Munich State Bank, $309,excitement and neither has there Bank of St. Martin, been, and to those who were familiar or a total deposit of $1,with the situation the closing of the banks had been looked upon as inollowing joint statement preevitable. On every hand profound the active managers of the will be of interest to sympathy is expressed for Mr. Spiekerald readers: er and his co-workers in Melrose and the other banks, and there is no critundersigned, as active offiicism of mis-management on their this means of apprising editors of the facts in conpart; in fact, it is generally admitted that the executors of the Hilbert with and the causes that have to and have resulted in the estate has made every human effort of the above named to get away from the Montana affiliation. the close of business on The late Dr. Pierre Hilbert owned 1923. 24th, a controlling interest in each of the the time of his death, durbanks closed and the officers in month of September 1921. charge were compelled to follow out A. Hilbert was extensively in the four banks named, his instructions in taking over the Montana securities. Each one of the in three certain banks in four banks was however a separate of Montana, which fact, we and distinct corporation. is generally known through& county. While SO interested In conversation with John E. Welle, having these connections, a cashier of the Borgerding State Bank amount of Montana at Melrose, Wednesday afternoon, he placed in his Minnesota stated to the Herald editor that in the direction of Dr. Hilbert. spite of the closing of the other crop failures in Montana. banks not one account had been withdeath of Dr. Hilbert and drawn from the Borgerding State abnormal and adverse condiBank. At the close of business on brought about the recent November 26th, the Borgerding State one of the Montana banks Bank carried deposits of $872,125,encountering of serious dif82. by the remaining two. The account the for nditions slowThere is much speculation as to a large amount of Montana just how badly the banks are inby the Minnesota banks volved. It is confidently expected depreciation of the security that all of the banks closed will be connection therewith to such re-opened, but it may take some time that a portion of these to iron out all of the difficulties, and now be considered as of it is quite probable that it will revalue. The difficulties enquire heavy assessments of the capby the Montana banks ital stock of the banks. materially lessened the posThe Herald understands that the of liquidating the Montana by the Minnesota banks. closing of the Stearns county banks same beafter difficulties, was precipitated by the failure of the known to the local depositors Ryegate State Bank in Montana last undoubtedly would become week. Following the close of the near future-would lead Ryegate bank the Montana bank exIrawls until reserves in the aminer made a demand upon the Hilbanks were depleted, with bert estate for a heavy assessment that the Minnesota banks on the capital stock of the Ryegate ventually be forced to susbank owned by the esate. The ex-

3. November 30, 1923 The Mankato Free Press Mankato, MN

Article from The Mankato Free Press, November 30, 1923

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FOUR BANKS ARE CLOSED IN STATL Stearns County Institutions Suspended Today REASON FOR ACTION Mortgages Held were Found of Doubtful Value, Declares Superintendent Veigel [Associated Press Dispatch.] St. Paul, November 26.-Four Stearns county state banks were closed today by the state banking department. They are the Farmers State bank of Meire Grove, the New Munich State bank of New Munich, the Security State bank of Melrose, and the State Bank of St. Martin. J. H. Spieker is president of the Meire Grove bank and also of the Melrose bank. The former bank was capitalized at $12,000 and had deposits totaling $206,000. The Security State bank of Melrose was capitalized at $50,000 and had deposits aggregating $589,000. H. J. Terhaar is cashier of the New Munich State bank which was capitalized at $20,000 and had deposits of $309,000. R. J. Kuhl is the cashier of the State bank of St. Martin which was capitalized at $10,000 and had deposits of $178,000. In a formal statement given shortly after the announcement had been made, Mr. Veigel declared that the four institutions were at one time owned by Dr. P. A. Hilbert of Melrose, now deceased, who also had an interest in Montana banks. Held Montana Mortgages "Several years ago," Mr. Veigel said, "a considerable number of Montana mortgages were placed in these four banks, and these mortgages have turned out to be of a doubtful value. Some of these mortgages were guaranteed by the State bank of Ryegate, Mont., which closed last week. thus removing the liability of this bank and further reducing the value of the paper. "It was therefore decided that the loss on this Montana paper would be so large that the banks would be unable to work out of their difficulty and they were therefore ordered closed." Today's closings brings the total number of state banks in Minnesota, which have been closed since January 1, to twenty-two. Deposits in the four institutions approximated nearly $1,283,000, according to the records in the state banking department. The reason for closing as explained by A. J. Veigel state superintendent of banks, is the failure of the State Bank of Ryegate, Montana, formerly owned by Dr. P. A. Hilbert, which had guaranteed a large amount of paper in each of the four Minnesota banks.