The South Bend State Bank — the bank that liquidated itself while solvent

1919 – 1931

The bank: The South Bend State Bank was organized in 1919 and banked at 911 South Michigan Street with capital of $50,000 — a neighborhood state bank on the city's south side. Its distinction is its end, which is documented in unusual fullness because it was litigated to the Indiana Supreme Court.

The solvent liquidation: On 31 January 1931, with the Depression deepening but its own house still in order, the South Bend State Bank made an agreement to liquidate voluntarily while solvent. The First National Bank took its commercial deposits and loans; the Union Trust Company took its savings accounts and mortgages, and its real estate as trustee. It was, on its face, the most orderly bank ending in the city's history. Then the buyers failed: by 5 June 1931, as the Supreme Court's opinion records, both the First National and the Union Trust were themselves in financial distress and closed their doors — the Union Trust's assets went to the State Bank Commissioner, and the First National's undertaking passed to the Indiana Trust Company, renamed the First Bank and Trust Company. The tangle of who owed the liquidating bank's depositors what, after both of its buyers had collapsed, occupied the Department of Financial Institutions and the courts for six years; the Indiana Supreme Court filed its decision in South Bend State Bank v. Department of Financial Institutions, 213 Ind. 396, on 21 December 1937. The case is the single best documentary window into South Bend's banking collapse of 1931, and this section's Depression entry rests on it.

Sources:

1. Polk's South Bend city directory, 1921, "Banks and Bankers" — the South Bend State Bank, organized 1919, 911 South Michigan, capital $50,000.
2. South Bend State Bank v. Department of Financial Institutions, 213 Ind. 396 (filed 21 December 1937) — the liquidation agreement of 31 January 1931 and its division between the First National and the Union Trust; the closings of 5 June 1931; the disposition of both buyers' affairs.