National City Corporation was a company based in Cleveland, Ohio, USA, 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 serves customers in selected markets nationally. Its core businesses included commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management. The bank reaches out to customers primarily through mass advertising and offers comprehensive banking services online. In its last years the company was commonly known in the media by the abbreviated NatCity , with its investment banking arm even bearing the official name NatCity Investments .
In 2007, National City Corp. ranked number 188 on the Fortune 500 list, and 9th in terms of revenue in the U.S. commercial banking industry with total assets of about $140 billion.
PNC Financial Services announced October 24, 2008 its purchase of National City for about $5.2 billion in stock with funds from the U.S. Treasury. The acquisition, which became formal on December 31, 2008, was described as a "take-under," meaning the purchase price was below National City's market value.
PNC began to convert the National City branches to the PNC name on November 7th, 2009, which also saw the rebranding of National City Mortgage into PNC Mortgage and NatCity Investments fully merged into PNC Investments. In addition, National City's bank charter was merged into PNC's, effectively having the retail banking branches having yet to convert being legally known as PNC Bank, N.A., d/b/a National City Bank .
Regulatory scrutiny
The Wall Street Journal reported on June 6, 2008 that National City Corp. had entered into a memorandum of understanding with federal regulators, effectively putting the bank on probation. Terms of the confidential agreement, entered into a month earlier with the Office of the Comptroller of the Currency (which regulates nationally chartered banks), were not known.
On June 10, 2008, National City Corp. confirmed that it had reached agreements with regulators "regarding capital levels, risk-management practices and other aspects of its business ." The company stated that there had been no material developments in these areas since these memorandums of understanding were signed in April and May, 2008.
History
National City Bank was founded on 17 May 1845, when a group of Cleveland 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. 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.
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 in 2004. In addition, in 2005, National City acquired Allegiant Bancorp to secure a presence in the St. Louis, MO market. In 2006, they acquired Fidelity Bankshares Inc. for an estimated $1 billion dollar 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 30 December 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 30 June 2006, MidAmerica Bank had the 9th-ranked market share in the Chicago-Naperville-Joliet Metropolitan Statistical Area 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.
Takeover by PNC
For more details on this topic, see National City acquisition 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 as the leading contenders. A spokesperson for National City declined to comment on the report. On October 24, 2008 PNC announced that it had finalized a purchase agreement for National City.
The acquisition was a stock purchase transaction completed before the end of 2008. National City will be merged into PNC, and the National City brand is to eventually be dissolved. The deal was approved by shareholders of both banks on December 23, 2008.
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 the Florida market. Pittsburgh, Louisville, Kentucky, and Cincinnati were the only three markets before the acquisition deal that both banks had a major presence in.
In the case of Pittsburgh, the two banks had significant overlap to the point it would pose antitrust issues in Western Pennsylvania, since both banks had the top two market shares in the Pittsburgh region. 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. On April 7, 2009, PNC reached a deal with Buffalo-based First Niagara Bank to buy 57 of the branches, and officially took over those branches on September 8th after the signs were changed over from National City during Labor Day Weekend. The branches not purchased by First Niagara were the four in Crawford County, Pennsylvania that PNC had to divest; of those four, one branch in Titusville was sold to Emclaire Financial Group while the other three (one in Conneaut Lake, the other two in Meadville, including the branch inside Wal-Mart) were sold to Marquette Savings Bank. Although employees at the branches being sold off will be retained (First Niagara, in fact, will be establishing a regional office in Pittsburgh, adding more jobs there), there were still heavy layoffs at National City's headquarters in Cleveland.
Due to the significant overlap in Pittsburgh that remains, PNC closed seven National City branches and five PNC branches on November 6th, as well as plans to close two more PNC branches on April 23rd, 2010, with the accounts at those branches being moved to the nearby PNC branch that remained. As part of the agreement to buy the 57 National City branches from PNC, First Niagara has the right of first refusal to buy the National City branches PNC closes.
The National City name, as expected, lasted well into 2009 since it would take PNC some time to integrate the two banks together. Despite the branch closures and the sale of others to First Niagara, PNC still ended up with a 46% market share in Pittsburgh, over three and a half times the market share of second-place Citizens Financial Group with 13%. PNC began to convert the National City branches that were not sold off or closed on November 7, 2009, starting with Pennsylvania (where the two had the most overlap), Florida, and the Youngstown & Steubenville, Ohio regions. The conversion of National City to PNC is expected to be completed by the end of June 2010, in the following phases:
- February 2010 Central & Southern Ohio (including Cincinnati, Dayton, and the state capital of Columbus), Southeastern Indiana, and all of Kentucky.
- April 2010 Northern Ohio (including National City's home market of Cleveland, Akron, Canton, and Toledo) and all of Michigan.
- June 2010 The rest of Indiana and all of Illinois, Missouri, and Wisconsin.
Combined PNC and National City Facts
- One of the nation’s top five banks by deposits and branches
- 60,000 employees across the United States and abroad
- 6,000 ATMs
- 2,600 branches
- $279 billion in assets
- $181.1 billion in deposits
- Shareholder equity $27.5 billion
- Assets Under Mgmt. $121 billion
- Customers- Approximately 5 million consumer and small business customers.
Historical timeline
From pioneer times to the Great Depress
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