State Exchange Finance Company (SEFCO)  

At the 1923 Annual Stockholders Meeting of State Exchange Bank, a new corporation was organized, to be known as State Exchange Finance Company (SEFCO).

1923 - Apr 11 - Corportation Adds Financial Strength

An enterprise which will add considerably to the facilities as a financial center had bee achieved in the incoporation of the stiate Exchange Finance company.

The organization has been formed to place on a more lineral basis the insurance, legal, real estate, and minor loans business of the State Exchange Bank.

Heretofore, a large volume of business in the settling of estates, the issuing of insurance policies, the conduct of law suits, and the making of small loans has been done by Cashier W. O. Oshorn as a branch of the bank's buisness.

But with the goweth of the community and the developement of its farming, commerical and individual demands for quick financing, ir has been decided by the directors of the bank to place this department into an independent class, responible to itself and not the parent bank.

There is considerable possible profitable business ina small way which offered to a bank that the banking law does not sanction, though it may be perfectly legitimate and good.

As a separate orgnization the State Sxchange Finance company can take advantage of this business where the strict construction of the law would not permit a state bank to handle it.

The officers of the new State Exhange Finance company are as follows:
S. C. Shilling, president; J. P. Walter, vice president; I. M. Bogardus, secretary; W. O. Osborn, tresurer; Carl M. Adams, Assistant treasurer; W. O. Osborn, attorney.
The directors are the same as the State Exchange bank:
S. C. Shilling, W. O. Osborn, I. M. Bogardus, S. E.l Medbourn, L. C. DIllon, John P Walter, Louis Overmyer.

At this time, six hundred shares of SEFCO stock, $10 par value, were issued to bank stockholders in the same proportion as their stock in the State Exchange Bank.

The assets of the SEFCO were at all times pledged to State Exchange Bank.

The purpose of the new company was to afford development of specialized areas of insurance, real estate and financing.

In February 1943, the Board of Directors approved purchase of the Farmers State Bank, LaPaz, Indiana, by the State Exchange Finance Company. Deposits were $11,400,000, and Loans of over five million.

1978 - Farmers State Bank opened their branch in Bremen

1956 - The State Sxchange Bank Will Completely ReBuild (full article) the abstracted parts concerning fianance company:

Finance Company Segregated

To segrate the State Exchange Finance Company from our banking quarters by providing space for out Finance Company in the southeast corner of the main floor of our bank building...

Argos-LaPaz Improvements

We are also happy to announce that the directors of our banks have approved of the following inprovements:

1. Addition of two lots adojoing our peoperty at Lapaz, to be used for additional parking space.... - - Nov. 28, 1956 Citizen

1982 - Sept SEFCOs last known cash report, as of showed $4.1 million on hand

1982 - Dec 12 - A run on SEFCO stated Some $4 million was withdrawn from SEFCO in the two weeks before the Chapter 11 filing alone, bank officials have said in the past.

1982 August - Larry J Hannah (chairman of American Fletcher National Bank's loan committee) moved a $175,000 loan from State Exchange Finance Co. (SEFCO) in northern Indiana to Dusthimer's bank (Thomas Dusthimer, chairman of First National Bank of Elkhart), the indictment said, because he learned state inspectors were about to look at SEFCO.

On December 30, 1982, SEFCO filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

Culver -Based Loan Agency Files Bankruptcy Petition

SOUTH BEND, Ind. (UPI) — The depressed farm economy has forced the State Exchange Finance Co. into bankruptcy, company officials said Friday.

Representatives of the Culver - based loan agency filed for bankruptcy Thursday in U.S. District Court.

The action was "necessary due to loan losses the company has suffered primarily as a result of the depressed farm economy," board Chairman Fred Adams said.

The agency is located in rural areas, including Culver and Plymouth. Company officials said they decided to file for bankruptcy to minimize potential losses to holders of the company's investment notes.

Allen Cummins, president of the The State Exchange Bank said the filing will not affect his bank or the Farmers State Bank in Lapaz.

The State Exchange Bank is affiliated with the bankrupt company, and the Farmers State Bank is a subsidiary of the company.

The same board of directors supervises the finance company and the banks.

William Ray, director of the Indiana Association of Financial Institutions in Indianapolis, emphasized "the money invested in the banks is insured." He said the money in the finance company was not insured.

If bankruptcy is approved, the company would be operated by its top 10 creditors under the supervision of laywers.

1982 - Dec 30 - SEFCO - ceases doing business

In an Introductory paragraph to the 106-page document, it states that SEFCO "shall cease doing business" except to the extent necessary to convert its assets to cash and to pay its liabilities" State Exchange Bank, the former sister insitution of SEFCO, would act as liquidating agent

1982 - Dec 31 - State Exchange Finance files in bankruptcy court

State Exchange Finance Co., a holding company with ties to two Marshall County banks, has asked the federal bankruptcy court in South Bend for protection in the wake of a run on deposits and mounting farm loan losses.

The bankruptcy filing Thursday afternoon was forced by recent withdrawals prompted by "bad rumors around town", Allen H. Cummins, president of the finance company and related banks, said in a telephone interview this morning.

Farmers State Bank of LaPaz, a wholly owned subsidiary, and the State Exchange Bank of Culver, a separate institution with common ownership and management, are not affected by the action, according to a prepared statement by Fred E. Adams, chairman of the board and chief executive officer.

Cummins emphasized that deposits in the banks will be secure during the reorganization process.

"I don't see any reason why they (customers) shouldn't have confidence in the bank, Donald E. Husk, bank and trust supervisor for the Indiana Department of Financial Institutions, said this morning.

Husk was in Culver Thursday night meeting with Adams, Cummins and other executives of the finance company and banks.

The court filing listed unsecured debts of more than $5.9 million including nearly $3 million owned to trust funds for employees of the Finance bank and Bomarko, Inc., a Plymouth manufacturing company.

The finance company filed a petition in federal bankruptcy court Thursday afternoon asking for protection under Chapter 11 of the U.S. Bankruptcy Code.

The petition, if accepted by the court, would allow the company to reorganize under current management while negotiating a plan with creditors to repay debts.

Cummins estimated the assets of State Exchange Finance at $30 million to $32 million. He said that the State Exchange Bank the largest bank in the county has assets of $147 million and Farmers State Bank of LaPaz has assets of $45 million.

Husk, who was interviewed by files in telephone at his Indianapolis home, said he is satisfied that the assets of the institutions are large enough that the finance company's short-run problems can be overcome during a court-supervised reorganization.

The deposits of the banks are insured up to $100,000 each by the Federal Deposit Insurance Corp. (FDIC), but the finance company's deposits are not protected by the federal agency. FDIC officials in Washington could not be reached this morning.

Cummins said "a run on finance company deposits" during the past two weeks resulted from bad rumors around town. He refused to elaborate on the rumors beyond an assertion that, "They are just absolutely not true".

He apparently was referring to reports that have stemmed from realignment of the companies management ranks including the loan operations.

Cummins said the decision by federal regulators to allow so-called Super Now checking accounts with unregulated interest rates beginning next week two years ahead of the original timetable created new competition for investors dollars, aggravating the financial company's problems.

"With the bad agricultural economy we've got, a tremendous amount of our assets are tied up in agricultural loans, several of which are having troubles, and we just ran out of funds when we got this run", he added.

State Exchange Finance, a one-bank holding company owning the Farmers State Bank of LaPaz, also operates as a loan company, primarily in agriculture, and a real estate firm.

State Exchange Bank, based in Culver, has a branch in Plymouth. The Farmers State Bank of LaPaz has branches in Bremen and Argos.

The two banks, which have common stockholders, have operated as affiliates and shared management in recent years. Husk commented that the relationship; among the financial Company and) the two banks may be unique in the U.E.

The banks the seeking state and federal regulatory approval for a full merge come 1983.

No hearings have been scheduled by the bankruptcy court.

Detailed financial statements including an accounting of assets and liabilities, are due to be filed with the court by Jan. 17.

The ten largest unsecured creditors listed in the initial bankruptcy filing apparently are holders of the finance company's notes.

Employees Profit Sharing Trust FSB-SEB, representing employees of the two banks, was listed as the largest unsecured creditor. State Exchange Finance owes the trust more than $1.95 million.

In addition, Bomarko Employees Retirement Trust, is owed just over $1 million. Bomarko, a manufacturer of paper goods, is a division of Hollymatic Corp. of Park Forest Ill.

Other individuals and companies and the amounts of the debts included in the list of the ten largest unsecured creditors include:
Jean Keling, 16 Green Acres, LaPorte, $487,660.79;
H.B. Liegengood, Rt. 1, Silver Lake, $380,000;
Anne Banowitz, North Miami Beach, Fla., $394,812.10;
Stelrema Corp., Knox, $375,000;
Thompson-Smith Co., Hamlet, $350,000;
Benjamin Bierly, Rt. 3, Walkerton, $330,000;
Edward Levin, Palm Springs, Calif., $325,000; and
Burton Mechanical Contractors, Rochester, $311,234.87.


Richard P. Smith, president and founder of Stelrema, was elected to the board of directors of both banks in February 1980.

In other documents filed Thursday, State Exchange Finance asked the court for permission to be represented by Salvatore A. Barbatano, of the Chicago law firm of Sidley & Austin, and William L. Fortin, of the Plymouth law firm of Stevens, Wampler, Travis & Fortin

The demise of SEFCO is best to;ld in the news articles of the day which follow in a year by year accounting....

They have been gathered and presented to show the impact upon the Culver community, the people who were investors and a possible overview of what occured and happened.

SEFCO ~~ 1983 ~~ 1984~~ 1985 ~ ~ 1986