National City Corp.

National City Corporation

Company type	Public
Industry	Banking, Financial services
Founded	May 17, 1845 (1845-05-17) in Cleveland, Ohio, United States
Founder	Reuben Sheldon, Theodoric C. Severance
Defunct	December 31, 2008 (2008-12-31)
Fate	Acquired by PNC Financial Services
Headquarters	Cleveland, Ohio , United States
Area served	Primarily Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, Florida, Wisconsin; select nationwide markets
Products	Commercial and retail banking, mortgage lending and servicing, consumer finance, asset management

National City Corporation was a regional bank holding company based in Cleveland, Ohio, established in 1845. It ranked among the top ten U.S. banks by deposits, mortgage originations, and home equity lines of credit. Its subsidiary, National City Mortgage, is recognized for issuing the first mortgage in the United States. The corporation maintained an extensive presence primarily in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, Florida, and Wisconsin, while also catering to select markets nationwide. Its principal operations included commercial and retail banking, mortgage lending and servicing, consumer finance, and asset management. National City engaged customers through widespread advertising campaigns and robust online platforms. In its later years, it was often referred to as NatCity, with its investment banking arm branded as NatCity Investments.

In 2007, National City was ranked 188th on the Fortune 500 list and held the position of ninth largest U.S. commercial bank by revenue, managing assets totaling approximately $140 billion.

On October 24, 2008, PNC Financial Services announced its acquisition of National City for about $5.2 billion in stock, supported by financial assistance from the U.S. Treasury. At that time, National City was the seventh largest bank in the United States—two ranks higher than PNC itself. The transaction was finalized on December 31, 2008, with the National City brand being phased out by June 14, 2010.

Regulatory scrutiny

According to The Wall Street Journal on June 6, 2008, National City Corporation had entered into a memorandum of understanding with federal regulators, effectively placing the bank under probation. This confidential agreement had been reached a month earlier with the Office of the Comptroller of the Currency to address regulatory concerns.

On June 10, 2008, National City publicly acknowledged agreements with regulators concerning capital adequacy, risk management practices, and other operational matters. The company affirmed that no significant developments had occurred since signing these memorandums in April and May of that year.

History

Founded on May 17, 1845, by a group of Cleveland entrepreneurs who pooled $50,000 to create the City Bank of Cleveland, National City Bank was the first institution chartered under Ohio's Bank Act of 1845. The bank was organized by Reuben Sheldon and Theodoric C. Severance and began operations at No. 52 Superior Street.

National City Corporation played a significant role in financing Germany's reconstruction following World War I through the Dawes Plan, providing loans totaling $173 million. This included $30 million in insurance on securities issued by Allgemeine Elektrizitäts-Gesellschaft (A.E.G.) and $35 million extended to American I.G. Chemical (I.G. Farben).

In April 1973, National City Corporation was formed as a holding company for National City Bank of Cleveland to facilitate expansion beyond Cuyahoga County, Ohio via acquisitions.

By February 1992, National City announced plans to consolidate all member banks under the single National City brand within three years to simplify marketing and branding efforts across its subsidiaries.

Expansion in Ohio

Between 1975 and 2004, National City Corp. executed a vigorous growth plan throughout Ohio by acquiring numerous institutions, thereby substantially enhancing its market share and regional influence.

At the start of 1975, National City took over the failed Northern Ohio Bank from the Federal Deposit Insurance Corporation, increasing its assets by more than $100 million. Shortly thereafter, it secured the Cleveland-based Bank of Cleveland (finalized in 1976) and First National Bank of Elyria in Elyria for $4.6 million in cash (also completed in 1976). In 1977, the firm purchased First National Bank of Dayton for $40 million in stock.

Additional acquisitions included Huron County Banking Company located in Norwalk (concluded in 1979), Goodyear Bank in Akron (1981), and Ohio Citizens Bancorp from Toledo for $64 million in cash and notes (1981). In 1984, National City strengthened its central Ohio presence by acquiring BancOhio Bancorp of Columbus for $310 million in a combination of stock and cash.

The company further expanded its branch network by buying 18 offices from Broadview Savings & Loan Company in 1986 and entered the thrift sector through the acquisition of the insolvent Gem Savings Association based in Dayton in 1990 without federal assistance.

During the early 1990s, National City pursued additional growth with the $200 million purchase of Ohio Bancorp from Youngstown, integrating it into its Northeast division. This expansion peaked in the early 2000s with two significant transactions: acquiring Provident Financial Group based in Cincinnati for $2.1 billion in stock (completed 2004) and Wayne Bancorp from Wooster for $180 million in cash (completed 2004).

These calculated acquisitions strengthened National City's competitive positioning, diversified its product lines, and cemented its role as a leading bank within Ohio.

Expansion in Kentucky

In January 1988, National City Corp. revealed plans to acquire Louisville’s First Kentucky National Corporation for $660 million in stock, a deal finalized by July 1988. This move considerably increased National City's footprint in Kentucky and provided access to southern Indiana markets, establishing the combined entity as the nation’s 34th-largest bank holding company with approximately $20 billion in assets.

By February 1993, First Kentucky National Corp., then a wholly owned subsidiary, was rebranded as National City Bank Kentucky to unify operations under a single brand identity.

In January 1995, National City Corp. purchased Lexington-based United Bancorp of Kentucky Inc. for $63 million in stock. This transaction incorporated eight banks across central and southeastern Kentucky into National City's holdings, raising its state assets to $6.6 billion and bolstering market share throughout Kentucky and parts of Indiana.

Expansion in Indiana

In October 1991, National City Corp. announced it would acquire Merchants National Corporation of Indianapolis—including Merchants National Bank and Trust Company plus fourteen additional banks—for $604 million in stock. The acquisition was completed by May 1992, elevating National City's total assets to roughly $30 billion.

Further growth occurred in July 1994 when National City acquired Central Indiana Bancorp based in Kokomo for $48 million in stock. This expanded its reach within Indiana from eleven to thirteen counties. Central Indiana Bancorp owned First Federal Savings Bank, which operated five branches with assets totaling $243 million.

In January 1998, National City agreed to purchase Fort Wayne-based Fort Wayne National Corporation through a stock deal valued near $800 million. This acquisition positioned National City as Indiana’s second-largest bank. The transaction was finalized by March 1998.

Growth in Pennsylvania

In August 1995, National City Corp. revealed its plan to acquire Integra Financial Corporation, headquartered in Pittsburgh, for $2.1 billion in stock, finalizing the transaction by May 1996 at a total value of $2.4 billion. This acquisition strengthened National City's foothold in western Pennsylvania, elevating it to become the third-largest banking institution in Pittsburgh. To optimize efficiency, the company intended to reduce Integra’s staff by around 1,200 positions.

Growth in Michigan

National City Corp. expanded its Midwestern operations in December 1997 by purchasing First of America Bank Corporation, based in Kalamazoo and serving Michigan, Illinois, and Indiana, for $7.1 billion in stock. The merger was completed in March 1998, considerably amplifying National City's regional presence and broadening its range of financial products.

Growth in Missouri

In November 2003, National City Corp. announced plans to acquire Allegiant Bancorp of St. Louis for $475 million in stock, with the deal closing at $500 million in April 2004. This acquisition strategically enhanced National City's market penetration within the Midwest.

Growth in Florida

During July 2006, National City Corp. aggressively expanded its operations in Florida by acquiring Harbor Florida Bancshares of Fort Pierce for $1.1 billion in stock, a transaction finalized by December 2006. Simultaneously, it disclosed the purchase of Harbor Fidelity Bankshares based in West Palm Beach for $1 billion, which was completed in January 2007. These acquisitions significantly bolstered National City's market share and operational presence throughout Florida.

Growth in Illinois and Wisconsin

In May 2007, National City Corp. announced its acquisition of MAF Bancorp from Clarendon Hills, with branches located in Chicago and Milwaukee, for $1.9 billion in stock. The transaction was concluded by September 2007.

Recent Acquisitions and Divestitures

Between 2004 and 2008, National City intensified its expansion strategy through multiple acquisitions, including the $2.1 billion purchase of Provident Financial Group based in Cincinnati. Provident’s banking division specialized in warehouse lending facilities that provided commercial credit lines to mortgage banking companies for loan origination and secondary market transactions. Following the acquisition, this unit was rebranded as National City Warehouse Resources and remained profitable without contributing to subsequent financial difficulties faced by the bank.

In 2005, National City acquired Allegiant Bancorp to secure a presence within the St. Louis market. The following year’s acquisition of Fidelity Bankshares Inc., valued at roughly $1 billion—split evenly between cash and stock—alongside the $1.1 billion stock purchase of Harbor Florida Bancshares Inc., collectively increased National City's assets to $7.4 billion across 94 branches within Florida.

Conversely, National City divested certain non-core holdings by selling an 83% stake in National Processing Company—which specialized in merchant credit card transaction processing—to Bank of America. Additionally, it sold the First Franklin origination franchise and servicing platform located in San Jose to Merrill Lynch for $1.3 billion during December 2006.

The May 2007 acquisition of MAF Bancorp Inc., the holding company for MidAmerica Bank, substantially improved National City's market share. As of mid-2006 data, MidAmerica ranked ninth within the Chicago metropolitan area with a market share of 2.18%. Following the merger, the combined entity rose to fourth place locally with a market share of 3.96% and deposits surpassing $10 billion.

Strategic shifts and eventual decline

During the late 1990s, with David Daberko as CEO, National City adopted a strategy aimed at increasing asset yields by acquiring First Franklin Financial Corp., a prominent subprime mortgage lender, in 1999. Unlike conventional mortgage firms, National City retained a substantial portion of these loans to boost net interest margins and aggressively expanded loan originations through third-party brokers and home equity lending. By 2003, residential mortgage lending had surpassed commercial loans, positioning National City as the sixth-largest mortgage originator. Although First Franklin was sold in 2006, the bank continued to hold a significant portfolio of high-risk loans. The management underestimated the dangers associated with the subprime market and did not take sufficient steps to reduce exposure to real estate mortgages. Other strategic missteps included repurchasing $3 billion in stock during early 2007, which weakened capital reserves, and expanding operations into Florida just prior to a severe market downturn. As the subprime crisis intensified throughout 2007–2008, loan losses escalated sharply, leading to a net loss of $19 million in the third quarter of 2007 and culminating in a $1.8 billion deficit by mid-2008.

Acquisition by PNC

On October 9, 2008, it was reported that National City was in talks with multiple banks regarding a potential sale, including Pittsburgh-based PNC Financial Services, Toronto’s Scotiabank, and Minneapolis-based U.S. Bancorp. Scotiabank withdrew from negotiations due to concerns over the valuation of National City's mortgage assets.

PNC entered into a stock purchase agreement on October 24, 2008, with plans to integrate National City into its operations and retire the National City brand name. The transaction received regulatory approval on December 23 and was finalized on December 31, 2008. This acquisition elevated PNC to become the largest banking institution in Pennsylvania, Ohio, and Kentucky; the second largest in Maryland and Indiana; expanded its presence in the Midwest; and marked its entry into Florida’s banking market.

Given significant overlap in Pittsburgh—where both institutions held leading market shares—the U.S. Department of Justice mandated PNC to divest 50 National City branches within Pittsburgh and an additional 11 branches near Erie. In April 2009, PNC sold 57 branches to Buffalo-based First Niagara Bank, which assumed control by September. Branches located in Crawford County were subsequently sold to The Farmer's National Bank of Emlenton and Marquette Savings Bank.

While branch employees were largely retained, National City's Cleveland headquarters experienced substantial layoffs—initially estimated at 5,800 but ultimately exceeding 15,000—resulting in diminished market share. Previously holding the top deposit position in Cleveland, National City's merger enabled competitor KeyBank to assume market leadership.

The National City brand continued through 2010 during integration efforts. Following branch sales and closures, PNC secured a dominant 46% share of Pittsburgh’s banking market—more than triple that of second-place Citizens Financial Group at 13%. Conversion of remaining National City branches commenced on November 7, 2009, beginning with locations in Pennsylvania, Florida, Youngstown, and Steubenville.

The phased rebranding process concluded in June 2010:

• February 19, 2010: Central & Southern Ohio (including Cincinnati, Dayton, Columbus), Southeastern Indiana, and Kentucky.
• April 12, 2010: Northern Ohio (including Cleveland, Akron, Canton, Toledo) and Michigan.
• June 14, 2010: Remaining Indiana locations plus Illinois, Missouri, and Wisconsin.

Combined PNC and National City Overview

• Ranked among the top five U.S. banks by deposit volume and branch network
• Employs approximately 60,000 personnel domestically and internationally
• Operates 6,000 ATMs alongside 2,600 branch locations
• Holds $279 billion in total assets
• Maintains $181.1 billion in customer deposits
• Reports shareholder equity of $27.5 billion
• Manages assets totaling $121 billion
• Serves nearly 5 million retail and small business clients

Early Foundations through the Great Depression

• 1845: The City Bank of Cleveland is founded by Reuben Sheldon and Theodoric C. Severance.
• 1865: The institution is renamed National City Bank of Cleveland, obtaining a national charter that authorized issuing federal currency until the Federal Reserve's establishment.
• 1881: Bank assets surpass the $1 million mark.
• 1901: Total assets exceed $2 million.
• 1912–1913: Asset growth accelerates from $2.5 million to $4.5 million.
• 1914–1918: Invests $100 million in U.S. government bonds to support World War I efforts; asset base climbs to $15.5 million.
• 1929: Assets increase to $40 million.
• 1933: During President Roosevelt’s banking moratorium, remains the sole Cleveland bank to honor all depositor withdrawals; resumes full operations as a financially stable entity.

Growth Across Ohio

• 1945: Approaches half a billion dollars in assets while celebrating its centennial anniversary.
• 1972: Asset size exceeds $2 billion.
• 1973: Establishes National City Corporation as a holding company with National City Bank as its principal subsidiary.
• 1975–1978: Acquires several institutions including the troubled Northern Ohio Bank ($3.7 million), The Bank of Cleveland ($3.8 million), First National Bank of Dayton, and Huron County Banking Company (later renamed National City Bank, Norwalk).
• 1980: Relocates headquarters to the newly constructed 35-story National City Center in Cleveland.
• 1982: Purchases Ohio Citizens Bancorp (Toledo) and Goodyear Bank (Akron), Ohio’s first corporate-owned bank; implements Visa and MasterCard fees tied to Treasury Bill rates; reports increased earnings.
• 1984: Acquires BancOhio Corporation, creating Ohio’s largest bank holding company with assets of $12.5 billion and 350 branches spanning 52 counties.
• 1986: Gains 14 offices and deposits totaling $460 million from Broadview Savings and Loan Company acquisition.

Transition to Interstate Banking

• 1988: National City Corporation enters the Kentucky market by acquiring First Kentucky National Corporation of Louisville, which includes banks such as First National Bank of Louisville (established 1863), American National Bank & Trust Company in Bowling Green (1886), and Commerce National in Lexington, formed by merging Bank of Commerce (1911) and Second National Bank (1883).
• 1989: National City Mortgage Company acquires Shawmut Mortgage Company based in Miamisburg, Ohio.
• 1990: Launches National City Investment Corporation, providing comprehensive brokerage investment services.
• 1990: Acquires Gem Savings Association, a savings and loan institution with $1.6 billion in assets and 25 branches across Dayton and Cincinnati markets.
• 1991: Announces purchase of Merchants National Corporation headquartered in Indianapolis, incorporating regional banks including Anderson Banking Company (founded 1890) and Madison Bank & Trust Company (established 1833).
• 1993: Acquires Ohio Bancorp of Youngstown, which includes banks like The Dollar Savings and Trust Company (1887) and Bank 2000 (1915).
• 1995: Purchases both Central Indiana Bancorp in Kokomo and United Bancorp of Lexington, Kentucky.
• 1995: Celebrates its 150th year with assets totaling $32 billion, operating 640 branches, and employing around 20,000 people.
• 1995: Expands presence into the Pittsburgh metropolitan area through acquisition of Pittsburgh-based Integra Bank for $2.3 billion.

The concluding period: formation of a banking powerhouse

• In 1997, National City combined forces with First of America, resulting in the creation of the 13th-largest banking institution in the United States by asset size. This merger brought together $74.4 billion in assets, $48.4 billion in deposits, and $6.1 billion in shareholders’ equity. First of America was a bank holding company with $22 billion in assets, based in Kalamazoo, Michigan.
• Between 1997 and 1999, National City pursued growth through multiple acquisitions, including mortgage loan origination portfolios from First National Mortgage Corporation, Eastern Mortgage Services, and American Mortgage Source. Additionally, it acquired Fort Wayne National Corporation (with $3.3 billion in assets) and First Franklin Financial Companies.
• In 2004, National City completed a $2.1 billion purchase of Cincinnati-based Provident Financial Group. The bank also acquired Wayne Bancorp (holding $825 million in assets) and Allegiant Bancorp, facilitating entry into the St. Louis market and substantially increasing its branch footprint.
• By 2006, National City divested the First Franklin group to Merrill Lynch for $1.3 billion. It also strengthened its Florida presence by acquiring Fidelity Bankshares (with $4.2 billion in assets and 52 branches) located in West Palm Beach, along with Harbor Florida Bancshares ($3.2 billion in assets and 40 branches).
• In 2007, the acquisition of MAF Bancorp, Inc., owner of MidAmerica Bank with 82 branches throughout Chicago and Milwaukee, marked a significant expansion of market share in those areas. During this period, Peter Raskind replaced David A. Daberko as CEO amid concerns related to exposure to subprime mortgages and rapid expansion strategies.

Integration with PNC and final independent operations

• In 2007, National City announced the shutdown of its Wholesale Mortgage Division due to increasing foreclosure rates.
• During 2008, the bank came under an informal investigation by the SEC concerning loan underwriting practices and regulatory compliance issues, particularly regarding the sale of First Franklin Financial to Merrill Lynch.
• On October 24, 2008, PNC Bank declared its intention to acquire National City; shareholders gave their approval by December 23. Following the merger, operations were unified under the PNC brand headquartered in Pittsburgh, Pennsylvania.
• Despite shareholder lawsuits filed in December 2008 attempting to halt the acquisition, the transaction was finalized on December 31. To satisfy antitrust regulations, the U.S. Department of Justice required the divestiture of 61 branches located in Western Pennsylvania.
• In 2009, PNC sold 57 branches situated in Pittsburgh and Erie to First Niagara Bank, while four additional branches were transferred to local independent banks before Labor Day weekend. The remaining National City locations were gradually rebranded as PNC branches.
• By June 2010, the National City name was officially retired.

This closing chapter illustrates National City's strategic expansion through acquisitions across the Midwest and Florida markets before ultimately merging into PNC Bank amid challenges stemming from subprime mortgage risks and regulatory investigations.