Application of Southern Hills Bank of Edgemont

HENDERSON, Justice (on reassignment).

Appellee Southern Hills Bank of Edgem-ont (Southern Hills Bank) filed an application with the South Dakota Banking Commission (Commission) seeking permission to move its main office from Edgemont, South Dakota, to Custer, South Dakota. Appellants Custer County Bank and First Federal Savings and Loan Association of Rapid City (First Federal Savings) intervened to oppose the application. Following a two-day hearing, the Commission approved appellee Southern Hills Bank’s application, whereupon appellants appealed to the circuit court. On February 3, 1982, the circuit court entered an order affirming the Commission’s action. Appellants filed a notice of appeal to this Court. We affirm.

Appellants’ issues on appeal include: (1) Was the Commission’s decision clearly erroneous or beyond statutory authority? (2) Did Southern Hills Bank’s application attempt to establish a branch bank in Custer in violation of SDCL 51-20-4? (3) Were appellants’ due process rights violated by the Commission’s failure to require identification of the new bank’s directors and admitting into evidence the Director of the Division of Banking and Finance’s report which contained deletions?

A bank is an important member of a community. As Justice Story wrote during the inceptual years of the United States Supreme Court: “[A] bank, whose stock is owned by private persons, is a private corporation, although ... its objects and operations partake of a public nature.” Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 669, 4 L.Ed. 629, 667 (1819) (Story, J., concurring). See also, Wall v. Fenner, 76 S.D. 252, 76 N.W.2d 722 (1956); State v. Scougal, 3 S.D. 55, 75, 51 N.W. 858, 865 (1892) (for South Dakota decisions recognizing that banking is “affected with a public interest”).

During the Commission hearing, Gordon Dretsch, executive vice president of Custer County Bank, acknowledged that Custer County was one of the fastest growing counties in South Dakota. Finding of Fact four of the Commission states in part: “The 1980 census figures show that Custer County is one of the fastest growing counties in the State of South Dakota.” Mr. Dretsch also admitted that business in Custer County had not been bad during the five years prior to the hearing. Finding of Fact three of the Commission provides in part: “Custer, South Dakota, is an important shopping and business center for Custer County, and other surrounding counties and communities and other adjacent areas in all directions, and has and continues to have an excellent business development and growth.” An expanding population and solid business base were both factors in favor of Southern Hills Bank’s application before the Commission. These factors were critical in In re Am. State Bank, Pierre, 254 N.W.2d 151 (S.D.1977) and Valley State Bank of Canton v. Farmers State Bank, 87 S.D. 614, 213 N.W.2d 459 (1973).

Evidence at the hearing convincingly established that Custer County Bank made handsome returns on the assets it garnered from the public in Custer County. Rather than invest most of its nonloaned Custer County capital back into the Custer County area, this bank chose to primarily invest in government securities, federal funds, and highly rated municipal bonds. In loaned money, South Dakota banks from 1976-1980 had an average loan-to-deposit ratio of 49 to 57%. Custer County Bank had a below average loan-to-deposit ratio of 34.5% in 1976; 40.6% in 1977; 40.3% in 1978; close to 45% in 1979; and 38% in 1980. In contrast, during the same time period, South*313ern Hills Bank, the applicant, had a loan-to-deposit ratio of 55 to 64%.

Custer County Bank did not make Federal Housing Administration loans to help local people get housing. Nor did Custer County Bank make Veteran’s Administration loans for housing to aid returning veterans from the armed forces. Custer County Bank did not offer loans designed to help rural-oriented families get started in life. All applications for loans of this type were referred directly to Farmers Home Administration. Custer County Bank did not participate in State Housing Authority loans to aid local people in securing low-interest loans to build homes. Perhaps most dramatically, Custer County Bank did not cultivate the future of the youth of Custer County, as the Bank failed to offer student loans.

It was established that Custer County Bank failed to offer consistent overdraft protection for its customers. Mr. Dretsch, of Custer County Bank, candidly admitted Custer County Bank had not made any significant improvements to its physical plant over the ten-year period prior to the hearing. Examples: no drive-in or walk-up facilities to service the people. Finding of Fact twelve of the Commission expresses in part: “The evidence shows that the present financial institutions, and primarily the Custer County Bank, is not competitive in all respects of the banking industry, and in fact does not perform some of the services ordinarily performed by a full service bank.”

Mr. Robert Cullum, a twenty-year resident of Custer and president of one of Custer County’s larger employers, Pacer Corporation, testified that he encountered numerous difficulties with Custer County Bank over Pacer’s impress payroll account. Although Mr. Cullum had a $10,000.00 guarantee for his payroll, his employees, members of Custer County’s public, had difficulties cashing their payroll checks at Custer County Bank. Mr. Mike Carter, who runs the Coast-to-Coast Hardware Store across the street from Custer County Bank testified: ,

Well, whenever somebody comes to town and doesn’t have a checking account here, I know on Friday afternoons, I spend most of my time as a banking facility, trying to cash those checks for those people, and if they’ve got to go out of town to do their banking, it seems to me like they’re also going to do their shopping in the same place.

Mr. Eugene A. Erickson, of Southern Hills Bank, testified: “Our research indicates that somewhere around half of the people— half of the people in Custer bank other than at Custer County Bank.” This is expressly found in Finding of Fact thirteen by the Banking Commission: “The Commission finds that approximately one-half of the banking in Custer now goes elsewhere and that the loan to deposit ratio of the Custer County Bank is low as compared to the loan to deposit ratio of the State of South Dakota as a whole, and it has historically been lower than the South Dakota average.”

As we held in Valley State Bank, 213 N.W.2d at 465-66:

The legislature has recognized that the expertise required in some fields of legislative authority is better left to qualified administrators who have refined abilities in narrow areas, controlled only'by general guidelines established by the legislature. Affiliated Distillers Brands Corp. v. Gillis, 1964, 81 S.D. 44, 130 N.W.2d 597. The administrative agency must, however, lend credence to the guidelines established in the statutes which give rise to its existence.*

A ruling or decision of an administrative agency is upheld unless we find, in light of the entire record, the decision is clearly erroneous or we are left with a definite conviction that a mistake has been made. Dakota Harvestore v. S.D. Dep’t of Reven*314ue, 331 N.W.2d 828 (S.D.1983); In re Hobelsberger, 85 S.D. 282, 181 N.W.2d 455 (1970). In reviewing the trial court’s judgment under the Administrative Procedures Act, we review the entire record as does the trial court. In re Est. Certain Terr. Elec. Boundaries, 318 N.W.2d 118 (S.D.1982).

Ample evidence was introduced establishing that Custer County Bank and the Custer branch office of First Federal Savings were not adequately meeting the needs of the Custer County public. The Banking Commission so found in Finding of Fact fourteen: “The evidence further shows a lack of adequate service and dissatisfaction with the service by the Custer business community and an absence of choice of banking services in Custer under existing circumstances. The evidence further showed a past growth in bankings debits and deposits in the Custer county area.” We are convinced the Commission’s decision to allow Southern Hills Bank’s application was not clearly erroneous.

We are unable to adopt appellants’ position that Southern Hills Bank would be opening a branch office in Custer, South Dakota. Conclusion of Law twenty-six provides: “The public convenience and necessity justify and require the organization of such branch bank in Edgemont and the moving of the bank’s main office to Custer and its authorization to commence, engage in and carry on the business of banking.” Our state legislature has accorded broad discretion to the Commission to recognize when a branch bank is established. SDCL ch. 51; South Dakota v. Nat’l Bank of South Dakota, 219 F.Supp. 842 (D.S.D.1963), aff’d, 335 F.2d 444 (8th Cir.1964), cert. denied, 379 U.S. 970, 85 S.Ct. 667, 13 L.Ed.2d 562 (1965). See also, In re Live Stock State Bank, Artesian, 252 N.W.2d 227 (S.D.1977). We are unwilling to strip the State Banking Commission of its authority. Commission members have expertise in the field of banking. The Commission held extensive hearings and obviously decided on the basis of all the evidence that Southern Hills Bank did not intend to open a branch bank in Custer, South Dakota. It is the province of the legislature to decide if more precise criteria of a “main office” are advisable. Therefore, we affirm the Commission’s decision on this issue.

We are also unable to conclude appellants’ rights were violated by the admission of the Director’s report or the failure to identify the new bank’s proposed directors. SDCL 51-16-36 provides in part:

The records of the division shall be open to public inspection; provided, however:
(1) The director may withhold from public inspection any record for so long as he deems necessary for the protection of a person or bank or to be in the public interest; and
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Any record of the division shall be made available upon order of a court of competent jurisdiction when cause is shown.

SDCL 51-16-36 specifically and unambiguously provides the director with the power to delete sensitive information from division records. Appellants were well aware of the Director’s deletions in his report prior to the hearing. As SDCL 51-16-36 provides, appellants should have petitioned a court for a show cause order if they desired the deleted information. They failed to do so and cannot be heard to complain now at appellate level. Appellants were also free to call the Director as a witness and attempt examination upon the deleted names. We cannot springboard appellants’ own failure to comport with our state statute into reversible error.

In Bank of Glenwood v. Arkansas State Banking Bd., 260 Ark. 677, 678-79, 543 S.W.2d 761, 763 (1976), the Arkansas Supreme Court confronted a comparable factual setting:

The Bank Commissioner later ruled, we think correctly, that certain information in that file, with respect to proposed officers of the new bank, was confidential, and that the release of certain other data would give the Bank of Glenwood an unfair competitive advantage over the *315new bank. The Commissioner directed that information pertinent to those two matters be removed from the file, with the remaining contents of the file being made available to the appellant. ...
The appellant also argues that the limitation upon discovery prevented its attorney from adequately preparing to cross-examine ....

Justice George Rose Smith, writing for the majority, held the Commissioner had not abused his discretion. Likewise, the North Dakota Supreme Court in American State Bank v. State Banking Bd., 289 N.W.2d 222 (N.D.1980), held information can be deleted or withheld without creating reversible error. These cases illustrate this point: it is one thing to allow or require the Commission to obtain certain sensitive information helpful to the Commission’s analysis, and it is quite another matter to require the Commission to mechanically hand over anything and everything to a bank’s competitor. The ruinous effect of the latter position should be obvious.

Public convenience and necessity justify and require the grant of the application of Southern Hills Bank for a charter to conduct business in Custer, South Dakota, as a main office, with a branch bank at Edgemont, South Dakota. Competition is the lifeblood of the banking system and the banking regulatory laws. Banking laws are not intended to give exclusive benefits to institutions which have been granted a license to conduct banking business. . Banking laws are regulatory in nature and are not to create a monopoly which stifles the growth of a community. “And the law favors competition in banking,” 1 Mitchie, Banks and Banking, ch. 1, § 4, at 19 (1973). Affirmed.

FOSHEIM, C.J., and MORGAN, J., concur. WOLLMAN and DUNN, JJ., dissent.

We have recently strengthened the legislative guidelines requirement. Guidelines must now be “sufficient” and “understandable.” See S.D. Migratory Bird Ass’n v. S.D. Game, Etc., 312 N.W.2d 374 (S.D.1981); Oahe Conservancy Subdistrict v. Janklow, 308 N.W.2d 559 (S.D.1981).