Central Trust Co. Closes Doors

September 3, 1931

Affairs and Assets Turned Over to Bank Commissioner

Eleven Branches Affected

Action, Result of Directors Meeting Held in Frederick Yesterday for Purpose of Protecting Depositors; Plan Reorganization

Doors of the Central Trust Company of Maryland, Frederick’s largest banking institution, operating the parent bank in that city, and eleven branch banks in Frederick, Howard, and Carroll Counties, closed today, and the affairs and assets of the institution will be taken over by the State Bank Commissioner, George W. Page. This action was taken at a meeting of the board of directors held Wednesday afternoon for the purpose of protecting depositors and stockholders.

In a statement given out by the president of the bank, Emory L. Coblentz, the reason assigned for this drastic step is due to the business depression which has affected the value of securities and real esate, placing a large proportion of the bank’s assets in a “frozen” condition.

Another immediate cause is given as the “miserable publicity” to which the president of the bank was subjected in connection with the investigation of the affairs of the F. H. Smith Company in Washington, which has seved, the statement says, to disturb public confidence and cause a seepage of deposits.

The directors decided to place the bank i the hands of the Bank Commissioners as a protection all interested. It is stated that a plan of re-organization is under consideration. However, no announcement can be made at this time.

It is understood that there were some rumors abroad as to the solvency of the bank and unless immediate steps had been taken it is likely that a run would have gotten under way, seriously jeopardizing the interests of both depositors and stockholders.

Mr. Coblentz’s statement follows:

“The Board of Directors of the Central Trust Company, at its meeting held this afternoon, voted to place the bank in the hands of the Bank Commissioner in order that its assets might be conserved for the benefit of depositors and stockholders.

“As a result of the serious depression through which the country is passing, affecting as it does the value of securities and real estate, the bank finds itself with too large a proportion of its assets in a ‘frozen’ condition. This is particularly true with reference to the loans of several borrowing companies which have large holdings in Washington real estate, where values have been abnormally depressed.

“Another contributing factor has been the miserable publicity to which I have been personally subjected in connection with the investigation of a Washington real estate firm. While the bank itself was in no wise connected with this matter, the attendant publicity, affecting me as president, very naturally disturbed public confidence and caused a slow, but steady seepage of deposits.

“In my judgment, the assets of the bank are sufficient, if liquidated in normal times and in an orderly fashion, to pay all depositors in full and leave a substantial sum for stockholders.

“In the past fifteen years, the Central Trust Company has had a wonderful growth, and has developed a system of station banks which are exceptionally clean and well managed.

“I personally regret more than I can state the necessity which prompts the action taken by our directors today. I have placed back of the institution in various ways practically all of my personal worth. The loss and inconvenience which this occasions me does not concern me. I am, however, deeply distressed that, notwithstanding the sacrifices and burdens made and borne, and the tireless and unceasing support of a capable organization, the staunch friends of the institution  of which there are thousands, should an any way suffer inconvenience and possible loss.

“In conclusion, I want to say that I pledge very bit of energy and resourcefulness that I may possess to aid in the liquidation of the assets of the bank, or in any proper reorganization thereof, to the end that both depositors and stockholders may suffer a minimum degree of inconvenience and loss, if any.”

The Central Trust Company holds deposits of approximately $14,000,000, about one-third of the total bank deposits of Frederick County. The statement at the close of business June 30, 1931, shows assets amounting to $18,603,744.66.

The branch banks are located in Ellicott City, Emmitsburg, Middletown, Monrovia, Myersville, Poolesville, Smithsburg, Sykesville, Thurmont, Union Bridge and Walkersville.

The Central Trust Company has expanded greatly in the last few years, five stations being added since 1927. The most recent additions were the Washington Loan and Trust Company, Ellicott City; the Valley Savings Bank, Middletown; the Poolesville National Bank, Poolesville; The Walkersville Savings Bank, Walkersville; and the two Smithburg banks. — Frederick Post.

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