The story of City Bank is a complex one, encompassing multiple institutions with similar names across different states and eras. This article will explore the history of several City Banks, including National City Bank (formerly City Bank) which rose to prominence in Ohio, as well as City National Bank in Galveston, Texas, and City Bank & Trust Company in Louisiana, highlighting their origins, growth, and eventual fates.
National City Bank of Cleveland: A Legacy of Growth and Acquisition
National City Bank's origins trace back to 1845 in Cleveland, Ohio. Following a new state banking act that dissolved the banking privileges of certain organizations, Reuben Sheldon and Theodoric C. Severance, leading officers of the Fireman's Insurance Co. of Cleveland, sought to reorganize their firm. The City Bank of Cleveland was granted a state charter on May 17, 1845, and opened its doors in July at 52 Superior St., employing just two people. Three years later, it relocated to 21 Superior St., near Water (W. 9th) St.
Early Growth and Expansion
With an initial capital of $150,000 in the 1850s, City Bank experienced steady growth. In 1865, it reorganized as the National City Bank of Cleveland, with its capital increasing to $200,000. The bank continued to expand, moving to the Perry-Payne Building on Superior Avenue in 1888 and later to larger quarters in the Leader-News Building on E. 6th St.
Wartime Boom and Post-War Expansion
National City Bank, primarily focused on commercial banking, experienced rapid growth during World War I due to its involvement in war-industry financing. In 1921, it moved to the renovated Garfield Building at E. 6th St. and Euclid, renaming it the National City Bank Building. The bank expanded its services throughout the prosperous 1920s and successfully weathered the Great Depression.
In the post-World War II era, National City initiated a branch banking program, acquiring several smaller local banks and introducing new customer services to adapt to the changing financial landscape.
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Holding Company and Further Acquisitions
In 1973, The National City Corp. was formed as a holding company with National City Bank as its primary subsidiary. This marked a new phase of expansion as the corporation began acquiring banks throughout Ohio. By 1980, the corporation boasted 111 statewide offices, 2,800 employees, and $4 billion in assets. That same year, National City Center, located at E. 9th St. and Euclid Ave., opened as its new headquarters.
Under the guidance of Chairman Julien L. McCall, the multi-bank holding company merged with Columbus-based BANCOHIO NATIONAL BANK in 1984, increasing its assets to over $12 billion. In 1988, National City Corp. expanded into Kentucky by acquiring First Kentucky National Corp. of Louisville. Three years later, an agreement was reached to acquire Merchants National Corp., an Indianapolis-based holding company. By 1995, continued acquisitions had increased National City's assets to $33 billion. The corporation's principal banking subsidiaries were located in Cleveland, Columbus, Indianapolis, and Louisville.
Entry into Subprime Mortgages and Subsequent Crisis
During the mid-1990s, mortgages accounted for approximately five percent of National City's profits. Towards the end of the decade, the bank decided to increase its involvement in mortgages, particularly in riskier aspects such as variable-rate and subprime loans. This strategic shift led to the acquisition of California-based subprime lender First Franklin in 1999.
By 2003, National City had become the nation's sixth-largest mortgage lender, with home loans accounting for nearly half of its $2.1 billion annual profit. However, this aggressive expansion into subprime mortgages would eventually prove detrimental.
In 2006, National City chose to sell First Franklin but retained some of what became known as "toxic" mortgages. By the third quarter of 2008, National City posted a $729 million loss, reflecting the onset of a national financial crisis.
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Government Intervention and Acquisition by PNC
In response to the crisis, the Federal Government instituted the Troubled Asset Relief Program (TARP) to stabilize the stock market, strengthen financial institutions, and encourage market liquidity. After Pittsburgh-based PNC Bank received $7.7 billion in government funds through TARP at the end of 2008, they announced the purchase of National City.
Before its foray into the subprime market, National City's stock shares were valued at $30 each. Prior to the sale, National City employed more than 7,000 people in Northeast Ohio. Of the bank's 29,000 employees, 3,400 positions were cut during 2008, with plans to eliminate an additional 4,000 positions by 2012.
City National Bank (Moody National Bank) of Galveston: A Family Legacy
Another significant "City Bank" is the City National Bank of Galveston, Texas. This institution, later renamed Moody National Bank, holds a prominent place in Galveston's history.
Founding and Early Years
The City National Bank was founded in December 1907 by William Lewis Moody Jr. (1866-1954). In 1919-20, Moody commissioned a new bank building at 2219 Avenue D (aka Market Street) in downtown Galveston. The $200,000 structure was built specifically for City National Bank. The Moody family also constructed the Medical Arts Building (1927-29) and the Jean Lafitte Hotel (1927), which were among the largest structures in Galveston.
Renaming and Legacy of Mary Moody Northen
City National Bank renamed itself the Moody National Bank in 1953 to honor its founder. After William Lewis Moody Jr.'s death on July 21, 1954, his will conveyed his estate to Mary Moody Northen (1892-1986), who also became the administrator. Northen assumed financial control of the Moody National Bank and was named its president in 1954.
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Transition to Museum and Modernization
In 1972, Mary Moody Northen donated the downtown building to Galveston County, and in 1978, it opened as the Galveston County Historical Museum. The museum remained in the building until 2008 when Hurricane Ike caused severe damage, leading to the relocation of the museum's assets to the Galveston County Courthouse.
As Moody National Bank continued to grow, it required more office space. A new facility was constructed at 2302 Post Office Street, where the bank remains today.
City Bank & Trust Company of Natchitoches, Louisiana: A Response to Crisis
The City Bank & Trust Company of Natchitoches, Louisiana, emerged during the tumultuous period of the Great Depression, highlighting the resilience and adaptability of local banking institutions in the face of economic hardship.
Origins During the Great Depression
In March 1933, President of the United States ordered all banks in the nation to close temporarily to address a severe national money panic, an event known as the "Bank Holiday". It was during this period that the City Bank & Trust Company was conceived.
The City Bank & Trust Company was the successor to the Merchants & Farmers Bank. Due to the lack of depositor confidence, banks experienced severe liquidity issues during the Depression. Although the Merchants & Farmers Bank possessed substantial assets, it lacked sufficient cash reserves to meet demands. Consequently, it closed its doors on March 5, 1933, never to reopen.
Reorganization and New Beginnings
The new bank was named the City Bank & Trust Company of Natchitoches, Louisiana. In its reorganization, the City Bank & Trust Company assumed all the assets of the former bank. Stockholders of the Merchants & Farmers Bank lost their investments. However, depositors received fifty cents per dollar on their deposits and fifty cents per dollar in stock in the new bank, effectively making them stockholders in the City Bank & Trust Company.
Upon its establishment, the stock had a par value of $1.00, with 50,000 shares issued. While the Merchants & Farmers Bank had 79 stockholders at the time of its closure, City Bank had 354 stockholders when it opened, demonstrating broader community support.
Leadership and Legacy
Four key figures were responsible for the establishment of the City Bank & Trust Company: Hyman Cohen, Judge C.M. Cunningham, E.C. Readhimer, and J.D. Rusca. These men appointed Mr. C.L. Krieger as the first President of City Bank & Trust Company. He served until his death in 1945. After his death, G.H. (Doc) Pierson became President and served until his death in 1951. His son J.E. Pierson then took over as President, holding the position until 1985. Upon J.E. Pierson’s retirement, Joe H. Pierson, the bank’s Executive Vice President, was promoted to President and served until his retirement in 1993. Joe H. Pierson, Jr. succeeded his father as City Bank’s President and served for 20 years. In 2014, John E. Ackel was elected President of City Bank and Trust Company.
City Bank of Morton and Lubbock, Texas: Serving Communities
In 1941, five men founded the First State Bank of Morton in a small West Texas town. From the beginning, the bank focused on meeting the needs of the local community through banking services and community involvement. In 1962, the bank was purchased by local businessmen and farmers. Born in Morton, Texas, and raised on the South Plains, City Bank proudly serves the great state of Texas and Ruidoso, New Mexico. City Bank is headquartered in Lubbock, Texas, and has more than $4 billion in assets. It operates 24 branch locations and 7 mortgage locations throughout Texas and New Mexico. Additional banking services include mortgage lending, trust, investments, indirect lending, and private banking. Giving back to our communities is the heart and soul of City Bank. Our founders understood the importance of investing in our communities financially and with our time. That is why we are proud to deliver Meals on Wheels every week, volunteer at our local food banks, and provide meals to those in need. We also contribute monetarily to nonprofits through our Community Rewards program.
Citibank: A Global Financial Institution
Citibank's roots trace back to 1812 with the establishment of a new bank in New York. In 1865, City Bank converted its state charter to a national one, taking on the new name of National City Bank of New York. Moses Taylor was one of the original investors in the New York, Newfoundland, and London Telegraph Co., founded in 1854 by Cyrus West Field, who is credited with laying the first transatlantic cable. In 1914, National City Bank's first major push overseas reflected the growth in international trade as war broke out in continental Europe. In 1933, James Perkins became the new chairman. By the end of 1942, women accounted for 43 percent of the bank's workforce of almost 10,000, up from 23 percent at the end of 1940. In 1982, the Citigold service was inaugurated in Hong Kong. In 1998, Citigroup was born through a strategic merger.
George Dieter: Public Servant in El Paso
While not directly related to the banking histories above, George Dieter's story provides an interesting point of reference. In 1962, George Dieter moved to El Paso to become the city's public works director. His family had roots in El Paso dating back to the 1880s. Dieter was born in Austin in February 1918. He served in the military before becoming the public works director.