Central Trust Company of Md (Frederick, MD)

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STATE TAKES OVER BIG CHAIN Central Trust of Frederick Is Parent Concern; Assets Frozen Because of Slump FREDERICK, Md., Sept. 3. Doors of the Central Trust Company of Frederick and 12 branches which it controls in this part of the state were closed today. Decision not to open the bank was announced following a special meeting of the directors of the institution last night. George W. Page, state banking commissioner, has taken possession of the institution, and with a staff of deputies and bank examiners is investigating the affairs of the parent company and its subsidiaries, Depression Blamed The Central Trust Company had deposits of $2,568,054.71 and resources were listed in the last statement as $18,603,744.61. The bank is capitalized at $1,000,000 and claimed a surplus of $1,500,000. The 12 branches of the Central Trust Company are located in Smithburg, Woodboro, Emmitsburg, Thurmont, Union Bridge, Middletown, Myersville, Poolesville, Ellicott City, Monrovia, Walkersville, and Sykesville. Reports that the bank had failed because of heavy runs by depositors were denied by Emory L. Coblentz, president, who said that the directors had decided to turn over the affairs of the institution to the State banking commissioner because of the "continuing business depression." Coblentz, who is also State senator, said there had been "a steady seepage of deposits" due primarily to shaken confidence following "the miserable publicity" to which he had been "personally subjected in connection with the investigation of the affairs of a A Washington real estate firm." He was, it is believed, referring to the affairs of the F. H. Smith Company. He is under a perjury indictment in connection with the prosecution by the Department of Justice of officials of the real estate concern, failure of which caused losses to thousands investors. With C. Bryan Pitts, president (Continued on Page 2, Col. 2)

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FREDERICK IS CALM OVER BANK CLOSING First Excitement Subsides as Runs Fail to Develop at Other Houses. By a Staff Correspondent to The Star. FREDERICK Md., September 3.Excitement used last night by the first reports the one Central Trust Co. of Maryland would not open its doors had subsided today and a feeling almost of confidence had taken its place. There was no disorder, although people stood in groups on street corners discussing the closing. The closing of the Central Trust Co. apparently had no effect on Frederick's five other banks. which continued to do business as usual. Nothing akin to a run developed and no accounts were closed out. Company Pays 450. Trouble that was expected at the Ox Fiber Brush Works, which employs 450 men and pays off through the Central Trust Co., failed to materialize when all the employes were paid at noon with funds drawn from the Farmers' & Mechanics' National Bank of Frederick. News that the Central Trust Co. would not open this morning became general around midnight. Hundreds of people left their homes and congregated downtown in the hope of obtaining definite information. Several automobiles, in which were men who had not taken time to change from their pajamas, cruised through the streets. An extra detail of police was called out, but their services were not required. This morning only one officer was on duty in front of the Central Trust Co. Building at North Market and Church streets. At 9 o'clock, when the bank should have opened, the crowd there numbered less than 50, and at noon had dwindled to hardly more than a dozen. Preston Lane Arrives. Preston Lane, attorney general of Maryland, arrived here and was closeted with State Bank Commissioner George W. Page. His arrival seemed to hearten the people, who felt a reorganization would be effected and the depositors paid off in full. The closing of the bank was a particularly hard blow to the working classes since the trust company has made unusual efforts to obtain small deposits. It is estimated these deposits total one-third of the funds in Frederick banks. A crew of colored men, at work installing a pipe line to the city filtration plant, threw down their shovels and picks and refused to work when they discovered the Central Trust Co. had closed. The North Carolina firm employing them is said to have banked at the Central Trust Co. Many depositors from the outlying farm districts arrived in Frederick this morning, some of them coming from adjoining counties. One depositor who came from Rockville represented the general feeling here. "I have known the Central Trust Co. was shaky for some time," he said, "but I just put off from day to day drawing out my money."

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COMMUNITY BANKS PLANNED BY HEADS OF DEFUNCT CHAIN Conversion of 11 Branches Into Independent Units Sought by Directors. By a Staff Correspondent of The Star. FREDERICK, Md., September 4.-A plan of reorganization having as its principal feature the elimination of the chain system of banking was being considered today by the directors of the Central Trust Co. of Maryland, which, with 11 branch banks in nearby Maryland towns, went into the hands of receivers yesterday. While the directors were struggling with their reorganization plans, the affairs of the Central Trust Co. were in the hands of George W. Page, State (Continued on Page 2, Column 1.)

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COBLENTZ BANK WON'T TRY TO REORGANIZE Directors Abandon Plan as Receiver Reveals Assets Be to Are Liquidated FREDERICK, Md., Sept. 4. Plans for reorganization of the Central Trust Company, which, with 12 branches in five nearby Maryland counties, closed yesterday, have been abandoned by the directors following the announcement of George W. Page, State banking commissioner, that the assets are to be liquidated and the bank is to go out of business. Deposits of more than $14,000,000 have been tied up in this county. This includes at least a third of the Frederick county funds. It is not revealed whether these sums are protected by a surety bond, but about $300,000 of State money and $50,000 of Montgomery county funds in the Poolesville branch are protected. Page As Receiver The State banking commissioner took possession of the bank yesterday following decision of the directors to place the affairs of the institution in his department. Mr. Page was appointed receiver by Chief Justice Hammond Urner yesterday afternoon at the request of W. Preston Lane, State Attorney General. Emory L. Coblentz, State Senator, and president of the Central Trust Company, said too large a pr portion of the institution's assets consists of real estate in a "frozen condition." He said: "This is particularly true with reference to the loans of several borrowing companies which have large real estate holdings in Washington, whe.e values have been abnormally depressed."

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Frederick and Hagerstown Failures Are Traced to Central Trust. WITHDRAWALS HEAVY, SAYS COMMERCIAL HEAD Board of Directors Requests State Commissioner to Take Charge Immediately. Special Dispatch to The Star. FREDERICK, Md., September 28.Affected indirectly by the recent failure of the Central Trust Co. of Frederick and its 11 branches, two more Maryland banks and three branch institutions closed their doors today. The institutions which failed to open this morning are the Mechanics Loan and Savings Bank of Hagerstown and the Commercial Bank of Maryland, at Frederick. The latter bank has branches at Adamstown, Jefferson and Mount® Airy, which also were closed. It was understood both of the banks closed today sustained heavy withdrawals of deposits following the closing on September 3 of the Central Trust Co. and its branches, operated by Emory L. Coblentz. Casper C. Cline, president of the Commercial Bank of Maryland, issued the following statement: Board Orders Action. "Foliowing the closing of the Central Trust Co. of Maryland and 11 branches on September 3. various rumors and gossip of a damaging nature have been circulated about this institution, causing large withdrawals and the giving of notices for a very considerable amount of time-deposit money soon due for payment. It was ordered by the board of directors at a special meeting this morning that we request the bank commissioner of Maryland to take charge of the bank immediately. "This action was felt necessary to protect interests of all depositors and stockholders. Notwithstanding the present deflation and unusual depression through which we are passing, we believe the depositors should receive the amounts due them. It is most regretable, indeed, that this action has been found necessary, but every possible effort has been made to prevent it and no other prudent course remains open in fairness to depositors and stockholders. Consideration may be given to a plan of reorganization, but nothing definite can be stated at this time." Capitalized for $400,000. Mr. Cline's bank is capitalized for $400,000 and has resources of $3,200,000. This would make its deposits amount to approximately $2,080,000. A notice on the door of the Mechanics' Loan & Savings Bank stated that "This institution is in the hands of the State bank commissioner." The directors of the Mechanics' Loan & Savings Bank, at Hagerstown, issued this statement: "We announce with regret that we have felt it necessary to suspend the business of the Mechanics Loan & Savings Bank for the protection of our depositors and for the best interests of our many stockholders. During the past two years we have been suffering from the effects of the general depression existing throughout the Nation, and the unusual demands made upon this institution by its depositors have depleted its more liquid assets. "On July 1, 1930, the deposits of our bank were nearly $3,000,000, and at the close of business last Saturday we had on deposit a total of $1,970,632. We have endeavored to be conservative in the management of our institution and have tried to render at all time to this community efficient banking service. "It was impossible to liquidate our mortgages and other investments rapidly enough to meet the unusual demands made upon us, resulting from false and unfounded rumors recently circulated by irresponsible persons. Acting in the best interest of our people and the community at large. we did not feel justified in sacrificing the value of our assets, and our final action is the result of our best judgment in this regard. Although we regret the necessity of this action, we feel confident that with proper and orderly liquidation our depositors will be paid. Henry Holzapsel, president of the bank, refused to make any statement at this time, but it was learned a steady seepage of deposits since the failure of the Central Trust Co. is responsible for the bank's closing. The bank's statement of June 30, 1931, showed resources of $2,950,489 and deposits, both savings and special, of $1,756,730. George W. Page, State bank commissioner, began an examination of the books of both institutions this morning. The Central Trust Co. at the time of its failure held deposits of $14,000,000, about one-third of the total bank deposits of Frederick County. Coblentz blamed frozen assets and "miserable publicity" received by himself in connection with the Federal investigation of the F. H. Smith Co. of Washington for the bank's failure. Coblentz is under indictment in Washington on a charge of aiding in commission of perjury in connection with the operations of the Smith company.

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TWO MARYLAND BANKS CLOSE (Continued From Page 1) run for withdrawals since the day of the closing of the Central Company. Cline's Statement Mr. Cline, in a statement to The Washington Times, said: "Following the closing of the Central Company of Maryland and its 11 branches on September 3, various rumors and gossip of a damaging nature have been circulated about this institution causing large withdrawals and the giving of notices for a very considerable amount of time deposit money soon due for payment. "It was voted by the board of directors at a special meeting at 8:30 o'clock this morning that we request the bank commissioner of Maryland to take charge of the bank immediately. This action was felt necessary to protect the interest of all. depositors and stockholders. Only Course Left "Notwithstanding the present deflation and unusual depression through which we are passing, we believe depositors should receive the amounts due them. ident of the Central Company. that this action has been found necessary, but every possible effort has been made to prevent it, and no other pruduent course remained open in fairness to the depositors and stockholders. "Consideration may be given to a plan of reorganization, but nothing definite can be stated at this time." The Commercial Bank had branches in Maryland at Mt. Airy, Adamstown, and Jefferson. Deposits $2,500,000 Mr. Cline said the deposits at the bank amounted to $2,500,000 and the capital and surplus was $400,000. All the branches were closed today and also placed under the State bank commissioner. Leading business men and politicians of Frederick said today that they feel certain that, despite its closing, the Commercial Bank will give a higher return to the depositors than the Central Trust Company. H. E. Meeks, assistant State bank commissioner of Maryland, who took charge of the Commercial Bank, said he has not been able to study conditions there sufficiently to make a state ment as to its assets and liabilities. Back to Pitts Case The Central Trust Company had deposits amounting to $14,000,000. Emory L. Coblentz, State senator f: Frederick, was president of the Centray Company. Mr. Coblentz was recently indicted by the local Federal Grand Jury on charges of perjury in connection with testimony he gave in the defense of G. Bryan Pitts, president of the Smith Company, at his trial last fall.

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Central Trust Company was not able to earry out its part of the merger contract. He is also indicted jointly with Senator Coblentz on a charge of conspiracy to defraud. Senator Coblentz is indicted separately in two cases for accepting deposits when he knew his bank to be insolvent. He also is indicted with the four other bank officers with conspiracy to defraud. The Central Trust Company and its eleven branch banks in Western Maryland were closed September 3. 1931, and Mr. Page was named receiver. Mr. Page entered the Bank Commissioner's office as a clerk in 1908, was made Deputy Bank Commissioner four years later and commissioner in 1919 by appointment of Governor Crothers. A native of Frederick County, he is a brother of William C. Page, former City Collector here and now president of the Calvert Bank. His indictment is not supposed to affect his position as receiver for the several banks that have failed in Maryland, including the Chesapeake Bank here. Mr. Coblentz, who also is under indictment in Washington for "aiding in the commission of perjury" at the F. H. Smith Company conspiracy and embezzlement trial there last summer, organized the Central Trust Company in 1913 to take over the Central National Bank of Frederick, oldest banking institution in the county. He is 62 years old and long has been a leader in the business, civic, political and religious affairs of the county.

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New York Bankers To Aid at Frederick Reports from Baltimore indicate that important financial interests of New York are to become associated in the proposed reorganization plan of the Central Trust Company of Maryland, at Frederick, now in the hands of receivers. It was learned that the Maryland State Bank Commissioner and the depositors' executive committee of the trust company have planned important conferences with New York financiers.

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GOBLENTZ CASE GAJE TESTIMONY NEARS END Three Judges Sitting as Jury to Hear Arguments Tomorrow CUMBERLAND, Md., June 10. 1 Two vice presidents and the treasurer of the Central Trust Company of Frederick were on the stand today previous to its president, State Senator Emory L. Coblentz, being called to testify in his own behalf, he having been indicted for accepting a deposit when he knew the bank was insolvent. It was thought the testimony would be concluded today and the argument before three judges, sitting as a jury, would take place tomorrow. Vice President C. Thomas Summers told of rumors of runs on branch banks and Senator Coblentz called a meeting September 2, the day it was voted to close. He said he knew nothing of Coblentz sending out personal letters after the closing of the bank until the morning after. Vice President Charles McC Mathias told of the purchase by the Central Trust Company of 800 shares of its own stock at $30 to be used in the deal taking over the Sykesville National Bank.

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NEW TRIAL PLEA OF COBLENTZ UP Arrest of Judgment Asked on Ground Banker Did Not Accept Deposit. Special Dispatch to The Star. CUMBERLAND, Md., August 22.Argument on a motion for a new trial for Emory M. Coblentz, president of the Central Trust Co., Frederick, which closed its doors September 2 last, convicted here of receiving a deposit at the Ellicott City branch when he knew the institution was insolvent, got under way here today. The case was removed here from Howard County. Leo Weinberg of Frederick made the opening talk for the defense. He asked for an arrest of judgment in that the defendant aid not accept the cank deposit. He contended the indictment was defective as raised by the demurrer. The verdict, he declared, was against the WC ght of the evidence, and he added that newly discovered evidence would be presented. He said it was a pioneer case of its kind. He narrated the efforts made by President Coblentz to strengthen the financial reserves of the in paign Smith bank, publicity suit following in Washington connection the whispering and with with- cam- the drawals that followed. He cited in recent days, a huge financial institution. the Union Trust Co., Baltimore, was able to borrow over seven millions of dollars in Baltimore during a run, and was kept open. On the other hand his client was a victim of unfortunate circumstance. Mr. Weinberg was followed by James Clark, who prosecuted the case. He spoke briefly. He said the indictment was drawn in the language of the statute and such statute had been passed on as sufficient by the Court of Appeals. The verdict that the bank was "hopelessly insolvent," he averred, strengthened the State's case. The real point, he asserted, was the confidence of the people of Maryland should be restored in its banks and the administration of justice.

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Frederick Trial Of Coblentz To Begin Nov. 14th Charged With Accepting Deposits In Home Bank When Company Was Insolvent November 14 was set for the beginning of the trial in which State Senator Emory L. Coblentz, of Frederick, will face charges of accepting deposits in the Central Trust Company when he was alleged to have known that that institution was insolvent. The Frederick County grand jury indicted Senator Coblentz on October 3 on three separate charges of receiving deposits at the home bank when he knew the company was insolvent. The Central Trust Company, whose principal offices were in Frederick and its eleven branches closed September 3, 1931. Indictments have also been returned against Coblentz in Howard and Carroll Counties. The Howard County case was removed to the Allegany County Circuit Court and early this summer Coblentz who was the former president of the defunct institution, was convicted by the full bench of the Cumberland court of accepting a $317 deposit at the Ellicott City branch of the Central Trust Company and was sentenced to eighteen months in the Maryland House of Correction when the bench refused a motion for a new trial. Leo Weinberg, his counsel, immediately offered a petition for an appeal to the Court of Appeals and pending the decision of the State's highest court the defendant was released on bond. The date of the Frederick trial was set on agreement between State's Attorney Walter E. Sinn of Frederick and Leo Weinberg, who will conduct Mr. Coblentz' defense. The defendant has elected to have his case heard by Judges Urner and Willard of the Frederick court. No date has been assigned for taking up the charge of nonperformance of duties returned by the September grand jury of Frederick against George W. Page, State bank commissioner. It is believed, however, that this day will be set shortly after completion of the Coblentz cases. Co-incident with the setting of the date for trial of Coblentz charges, it was learned that attorneys in the case hope to limit the length of the trial to one week in contrast to the three weeks which the removed trial from Howard county to Allegany county consumed. It is felt that possibly some transcript of the Allegany county record may be used and that a portion of the previous great mass of testimony may be avoided.

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Bank Loses Court Plea

FREDERICK, Md., May 13.-Application of the Fidelity and Deposit Co., Baltimore, requesting the court to modify the decree, which included the assignment of four mortgages now in the hands of the receiver of the closed Central Trust Co., Frederick, to the People's Banking Co., Smithsburg, was denied by Chief Judge Hammond Urner D Willard,

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21 Suits Set for Hearing

FREDERICK. Md. July 14 (Special).-Twenty-one suits for preferred claims in the disposition of assets of the Central Trust Co., have been set for hearing within the next 10 days as a further step in the receivership of the bank. which closed 22 months ago. The hearings will be held in Circuit Court. at dates fixed by Chief Judge Hammond Urner. The claims are of various nature. relating largely to trust accounts. They were filed soon after the closing of the bank

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COBLENTZ AIRS BANK DEALS FREDERICK, Md., Aug. 23. Emory L. Coblentz, president of the closed Central Trust Company, was called as a witness yesterday in the case in which the Washington Trust Company of Ellicott City is seeking the return of a number of mortgages held by the Fidelity and Deposit Company of Baltimore. Coblentz, who recently was acquitted on charges of violation of the banking laws in connection with the closing of his banking company, was called in because the mortgages in question were among the assets of the Washington Trust Company at the time it merged with Coblentz's bank. The mortgages were assigned to the Fidelity Company, and the Ellicott City organization is attempting to have the assignments set aside on the grounds that the Central Trust was insolvent at the time the Washington Trust was taken over by the Baltimore institution. The complainants contend the merger was consummated through fraud and misrepresentation on the part of the officers of the Central Trust, but Coblentz yesterday denied all implications. He said he felt his organization could make a profitable branch at Ellicott City.

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52 Stockholders Of Central Trust Sued Chief Judge Hammond Urner and Judge Arthur D. Willard have set December 4 as the date for a hearing of the case of John J. Ghinger, State Banking Commissioner and receiver for the closed Central Trust Company, against stockholders of the Company from whom he is seeking to collect liability to the amount of the stock they hold. The suit was entered June 20 against seventy-three stockholders, twenty-one of whom subsequently filed answers, contesting the receiver's claim. A decree pro confesso was entered August 22 against the fifty-two remaining defendants. These include Emory L. Coblentz, president of the bank, and a large number of Frederick countians.

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Central Trust Suits Toll 625 Defendants FREDERICK, Md., Oct. 25. Executors, trustees and persons holding surviving interest in stock of the defunct Central Trust Company of Maryland are named as defendants in the ninth suit of the receiver, John J. Ghingher, to collect stock assessments. The suit, filed in equity court by order of Associate Judge Arthur D. Willard, brought the total number of persons sued to more than 625.