The Hartford herald. [volume] (Hartford, Ky.) 1875-1926, 1911-01-25
THE STATE BANK
At CENTERTOWN
Closed Its Doors Last Mon
day Morning.
BAD MANAGEMENT THE CAUSE
Attorneys for the Bank Say
Things Are Not as Bad
as Reported.
DEPOsITORs PROBABLY SAFE

Considerable CONSERVATION was
created in Hartford last Monday by
the report that the State Bank o.
'Centertown, this county, had closed
its doors and quit business. Upon
investigation this report was con-
firmed. State Inspector Lon Rog-
! ers, by order of Secretary of State
Ben L. Bruner, visited this banN
last Friday, and seems to have
found the banks affairs in quite q
precarious condition.
The Bank OF CenteTtown was or
ganized about eight years ago, with
a capital stock of $4,000. John B
Maddox is the President, John D.
Bell, Vice President. and H. H. Lew
is. Cashier. The directors are ]. B
Maddox, E. S. Barnes and H. H.
Lewis. The statement made on De-
cember Is, 1910, as published in
The Herald, showed that the bank
had $S7,335.16 resources, with total
deposits of S63,291.14.
The injudicious management of
the bank officials and those con-
trolling its policy, seems to have
been the cause of the crash. DR..
Ben Bruner, Secretary of State, in
an interview published in the daily
papers, has the following to say in
regard to the failure of the Bank of
Centertown:
my examiner found on examin-
ing TINS bank that four men had
borrowed directly over $4,000 and
were indorsers for over $4,000 more.
Zone of the officers of the institu-
ton had borrowed directly over
S1O,SOO and was indorser for over
s3.1OO more, or had borrowed d.
rectly and indirectly $1S,9QO or SO
per cent. of the capital and surplus
of the bank, while two other parties
had each borrowed over $500 each
and we're indorsers for about $2,-
800 each, more, while fourth party
had borrowed over $500. These
four men had borrowed from the
bank directly and indirectly $35, 900,
or So per cent. of the deposits.
This bank had a capital of $751;
900, with practically no surplus, and
under the banking laws of Kentucky
$500 is all any one man can bor-
row, and If he is an officer ,two-thirds
of this must be secured by mort
cages, and If not an officer, at least
one-third of 1t, and OF this entire
borrowing of $4,000 by these four
men, but very little of it is secured
by mortgages.
This is one of the most fragrant
cases of looting a bank that has
come to my knowledge since have
been at the head of the banking In
stitutions of Kentucky, and vet this
institution had refused to sign up
for eXomination and had first de-
INJURED to my examiner looking at
TIE books; but when told that they
could either show the books or close
the doors of the bank, they submit
tod 70 examination.
81 want to state, however, in this
connection that while am going to
prosecute these men to the full let
ter of the law, because l believe ev-
o~v man that knowingly borrows
from bank more money than he
knows the bank is allowed to loan,
is liable under the law as a conspir-
ator, and think this a good time to
make a few test cases of this kind. |
"My examiner thinks that the |
losses in this case will be total so
far as the stockholders are concern
ed, and will probably not pay over
fifty cents on the dollars to deposit
tors.
II cannot be too emphatic in my
statement that my examiner has
found the other banks that he has
examined in this immediate COM
mnritv in excellent condition"
Messrs. Heavrin & Woodward, re-
tanned on Monday by the stockhold-
ers. directors and trustee of the (
Bank of Centertown to act as attor-
neys for that institution in the IL
Nuidation of its affairs. have author I
issd the following statement:
o. January 20. 1911. Mr.. Lon
Roger. State Bank Examiner. dis