National City Corp. — BrandWiki

National City Corp.

Overview

National City Corporation

hq location country
type	Public
fate	Acquired by PNC Financial Services
industry	Banking · Investment banking · Financial services
successor	PNC Financial Services
founded	1845
defunct	December 31, 2008
hq location city	Cleveland, Ohio

National City Corporation was a regional bank holding company based in Cleveland, Ohio, founded in 1845; it was once one of the ten largest banks in America in terms of deposits, mortgages and home equity lines of credit. Subsidiary National City Mortgage is credited for doing the first mortgage in America. The company operated through an extensive banking network primarily in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, Florida, and Wisconsin, and also served customers in selected markets nationally. Its core businesses included commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management. The bank reached out to customers primarily through mass advertising and offered comprehensive banking services online. In its last years, the company was commonly known in the media by the abbreviated NatCity,[1][2] with its investment banking arm even bearing the official name NatCity Investments.[3]

In 2007, National City Corp. ranked number 188 on the Fortune 500

area served	Regional

products	Consumer banking, Corporate banking, Private banking, Financial analysis, Insurance, Investment banking, Mortgage loans, Private equity, Wealth management, Credit cards

divisions	NatCity Investments

subsid	National City Mortgage

History

National City Bank was founded on May 17, 1845, when a group of Cleveland, Ohio businessmen pooled $50,000 to organize the City Bank of Cleveland, the first bank opened under the Ohio Bank Act of 1845 in a small town with no gas, electricity, public waterworks, or railroad.[8] Reuben Sheldon and Theodoric C. Severance, formerly of the Fireman's Insurance Company, organized The City Bank of Cleveland. The city's only bank at the time, opened its doors to the public at No. 52 Superior Street.[9]

National City Corporation was one of the principal players in the Dawes Plan to rebuild Germany in the post World War I period, contributing $173,000,000 in loans.[10] Part of which included a $30,000,000 insurance on the securities of Allgemeine Elektrizitäts-Gesellschaft (A.E.G.), aka German General Electric, and $35,000,000 to American I.G. Chemical (I.G. Farben).[11]

In April 1973, National City Corporation was formed as the holding company for the National City Bank of Cleveland to allow the company to expand outside of Cuyahoga County through the purchase of other banks.[12]

In February 1992, National City announced that all member banks would change over to operate under the National City name within three years. Until this time, all acquired banks had continued to operate under the same name that they were using at the time of their acquisition. This change would allow a unified brand through the company and simplify advertising.[13]

Expansion in Ohio

In February 1975, National City Corp. announced that it was seeking to acquire the assets of the failed Northern Ohio Bank from the Federal Deposit Insurance Corporation.[14] The acquisition was completed by March 1975.[15]

In March 1975, National City Corp. announced that it was acquiring the Cleveland–based Bank of Cleveland for an undisclosed amount.[16] The acquisition was completed in January 1976.[17]

In December 1975, National City Corp. announced that it was acquiring the Elyria–based First National Bank of Elyria for $4.6 million in cash.[18] The acquisition was completed in August 1976.[19]

Historical timeline

From pioneer times to the Great Depression

1845: Reuben Sheldon and Theodoric C. Severance, formerly of the Fireman's Insurance Company, organize The City Bank of Cleveland.[91]
1865: City Bank of Cleveland becomes National City Bank of Cleveland, receiving a national charter that includes the right to print federal money. This responsibility lasts until the 20th century, when the Federal Reserve assumes the function of printing all U.S. currency.[91]
1881: National City Bank records more than $1 million in assets.[91]
1901: National City Bank passes $2 million in assets.[91]
1912–1913: National City Bank's assets rise from $2.5 million to $4.5 million.[91]
1914–1918: National City Bank purchases $100 million in U.S. Bonds to help finance World War I and sees its own assets increase to $15.5 million.[91]
1929: National City Bank accumulates $40 million in assets.[91]
1933: National City Bank is the only bank in Cleveland giving 100 cents on the dollar to its depositors, while for several weeks most other banks are providing only five cents on the dollar. When many other banks are forced to shut down permanently following Roosevelt's banking moratorium, National City Bank is deemed to be solid, and is permitted to resume full operations.[91]

Grows throughout much of Ohio

1945: Nearing $500 million in assets, National City Bank celebrates its 100th anniversary.[91]
1972: National City Bank's assets pass $2 billion.[91]
1973: A new holding company, National City Corporation, is created with National City Bank (its name shortened from National City Bank of Cleveland) as its lead bank and primary subsidiary.[91]
1975: National City Bank purchases the assets of the failing Northern Ohio Bank for $3.7 million.[91]
1976: National City Bank spends $3.8 million acquiring The Bank of Cleveland.[91]

Becomes interstate bank

1988: National City Corporation expands into the Kentucky market by acquiring First Kentucky National Corporation of Louisville. Member banks of First Kentucky include First National bank of Louisville (1863); American National Bank & Trust Company, Bowling Green (1886); Crestwood State Bank (1896); Central Bank and Trust Company, Owensboro (1890); third National Bank of Ashland (1916); and First National Bank of Indiana, New Albany (1904). The largest, Commerce National in Lexington, resulted from a merger of Bank of Commerce (1911) and Second National Bank (1883).[91]
1989: National City Mortgage Company acquires Shawmut Mortgage Company in Miamisburg, Ohio.[91]
1990: National City corporation establishes National City Investment Corporation, allowing the corporation to offer investment choices equal to that of a full-service brokerage.[91]
1990: Gem Savings Association, a $1.6 billion asset savings and loan company with 25 branches in Dayton and Cincinnati, is acquired.[91]

The final years: a banking conglomerate

1997: National City merges with First of America creating the 13th–largest banking organization in the U.S. at that time in terms of total assets. First of America is a $22 billion asset bank holding company headquartered in Kalamazoo, Michigan. The combined company had assets of $74.4 billion, deposits of $48.4 billion and stockholders' equity of $6.1 billion.[91]
1997: National City purchases certain assets of the mortgage loan origination businesses owned by First National Mortgage Corporation and Eastern Mortgage Services, Inc, and American Mortgage Source, Inc.[91]
1998: National City acquires Fort Wayne National Corporation with assets of $3.3 billion.[91]
1999: National City closes on acquisition of First Franklin Financial Companies.[91]

Merger with PNC and last actions as independent bank

2007: National City announces that their Wholesale Mortgage Division will cease operations effective December 31, 2007, in the face of record foreclosures. Employees were notified via email and conference call from Buck Bibb, head of National City Mortgage.[91]
2008: National City Corp. disclosed in a regulatory filing that it is the subject of an "informal" Securities and Exchange Commission investigation related to matters including loan underwriting, bank regulatory matters, and the sale of a subprime subsidiary, First Franklin Financial Corporation, to Merrill Lynch for $1.3 Billion in 2006.[91]
2008: On October 24, 2008 PNC Bank announced that it had purchased National City. The deal was approved by shareholders of both banks on December 23, 2008. According to a press release by PNC group, PNC intends to merge National City's banking affiliates into PNC Bank and they will assume the PNC Bank name. The merged entity will have its headquarters in Pittsburgh, Pennsylvania.[91]
2008: On December 9, 2008, shareholders of National City Corp. filed lawsuits to halt the sale of the commercial bank to

Recent transactions

National City went on an acquisition spree from 2004 through 2008, headed by its $2.1 billion purchase of Cincinnati–based Provident Financial Group. Provident Financial Group's banking arm, Provident Bank, specialized in warehouse lending facilities whereby it extended commercial credit lines to mortgage banking firms so that the mortgage banking firms could make loans to their customers and either keep those loans or sell them in the secondary market to government-sponsored enterprises (GSEs) or other institutional investors. After the acquisition, National City renamed the division National City Warehouse Resources. The warehouse lending division was a profit center and did not contribute to the bank's downfall. In addition, in 2005, National City acquired Allegiant Bancorp to secure a presence in the St. Louis, Missouri, market. In 2006, they acquired Fidelity Bankshares Inc. for an estimated $1 billion deal that was half cash, half stock. The bank also acquired Harbor Florida Bancshares Inc. through a $1.1 billion stock deal, with both acquired banks located in Florida; these acquisitions gave National City $7.4 billion of assets and 94 branches in Florida.

On the other side of the ledger, National City sold to Bank of America its 83% stake in National Processing Company, which earns fees from processing merchant credit card transactions. The sale of San Jose, California, based First Franklin origination franchise and related servicing platform to Merrill Lynch & Co. was completed on December 30, 2006, for $1.3 billion.

In May 2007, National City announced the purchase of MAF Bancorp Inc., the holding company for MidAmerica Bank. As of June 30, 2006, MidAmerica Bank had the 9th-ranked market share in the Chicago metropolitan area (Chicago-Joliet-Naperville) at 2.18%. Following the merger using the same dataset, the combined National City and MidAmerica Banks were expected to rank 4th in the Chicago market with a market share of 3.96% and deposits of more than $10 billion.[64]

Acquired by PNC

On October 9, 2008, The Wall Street Journal ran an article citing unnamed sources indicating that National City was in talks with several other banks for a possible sale. The article named Pittsburgh-based PNC Financial Services, Toronto-based Scotiabank, and Minneapolis–based U.S. Bancorp (U.S. Bank) as the leading contenders. A spokesperson for National City declined to comment on the report.[67][68] By taking over National City, Scotiabank would be able to "obtain a larger presence in the U.S. regional banking arena than their Canadian peers", however Scotiabank CEO Rick Waugh declined after they could not properly value National's mortgage assets.[69]

On October 24, 2008, PNC announced that it had finalized a purchase agreement for National City. The acquisition was a stock purchase transaction to be completed before the end of 2008. National City would be merged into PNC, and the National City brand would be dissolved.[70][71] The deal was approved by shareholders of both banks on December 23, 2008, and the acquisition was completed on December 31.[72]

The deal made PNC the largest bank in Pennsylvania, Ohio, and Kentucky, as well as the second largest bank in Maryland and Indiana. It greatly expanded PNC's presence in the Midwest, as well as entering PNC into the Florida market. Pittsburgh, Louisville, Kentucky, and Cincinnati were the only three markets before the acquisition in which both banks had a major presence.

In the case of Pittsburgh, the two banks had significant overlap, to the point that it would pose antitrust issues in Western Pennsylvania, since both banks had the top two market shares in that region.[73] As a result, the United States Department of Justice required PNC to sell off 50 National City branches in the Pittsburgh area and 11 more branches in and around Erie to competitors.[74] On April 7, 2009, PNC reached a deal with Buffalo-based First Niagara Bank to sell 57 of the branches;[75] First Niagara officially took over those branches on September 8, after the signs were changed over from National City during that year's Labor Day Weekend.[76] The branches not purchased by First Niagara were the four in Crawford County, Pennsylvania, that PNC was still required to divest: one branch in Titusville was sold to The Farmer's National Bank of Emlenton,[77] with the other three (one in Conneaut Lake, and the other two in Meadville, including the branch inside

Although employees at the branches being sold off were retained, there were still heavy layoffs at National City's headquarters in Cleveland. PNC originally stated that 5,800 employees would be laid off corporate-wide across the new organization. In actuality, over 15,000 employees were laid off, all of them from the previous National City, with PNC losing customer and deposit market share in the Cleveland area as a result. National City Bank had been the largest bank in the Cleveland market and held the largest deposit share of all of its competitors. After the PNC merger, crosstown rival KeyBank became the largest bank in Cleveland, gaining a significant share of deposits once held by National City; KeyBank would later buy First Niagara and move into PNC's home market of Pittsburgh with the former National City branches PNC had to sell off.

The National City name lasted into 2010, since it would take PNC some time to integrate the two banks together.[80] Despite the branch closures and the sale of others to First Niagara and Emclaire, PNC still ended up with a 46% market share in Pittsburgh,[81] over three times the market share of second-place Citizens Financial Group, with 13%.[75] PNC began to convert the National City branches that were not sold off or closed on November 7, 2009,[82] starting with Pennsylvania (where the two had the most overlap), Florida, and the Youngstown & Steubenville, Ohio regions.[81] The conversion of National City to PNC was completed in June 2010, in the following phases:[83]

February 19, 2010[84] Central & Southern Ohio (including Cincinnati, Dayton, and the state capital of Columbus[85]), Southeastern Indiana, and all of Kentucky.
April 12, 2010[86] Northern Ohio (including National City's home market of Cleveland,[87] Akron, Canton, and Toledo) and all of Michigan.
June 14, 2010[88] The rest of Indiana and all of Illinois,[89]

National City Corp.

Regulatory scrutiny

History

Expansion in Ohio

Combined PNC and National City Facts

Historical timeline

From pioneer times to the Great Depression

Grows throughout much of Ohio

Becomes interstate bank

The final years: a banking conglomerate

Merger with PNC and last actions as independent bank

External links

References

Expansion in Kentucky

Expansion in Indiana

Expansion in Pennsylvania

Expansion in Michigan

Expansion in Missouri

Expansion in Florida

Expansion in Illinois and Wisconsin

Recent transactions

Strategic changes and subsequent downfall

Acquired by PNC