United States National Bank of San Diego

United States National Bank of San Diego

Company type	Private
Industry	Banking, Financial services
Founded	1933
Founder	C. Arnholt Smith
Defunct	1973
Fate	Seized by Federal Deposit Insurance Corporation; assets acquired by Crocker National Bank
Headquarters	San Diego , United States
Area served	California
Key people	C. Arnholt Smith (proprietor), James Mulvaney (president)
Products	Banking services

United States National Bank of San Diego (abbreviated as USNB) was a prominent financial institution in California that was taken over by the Federal Deposit Insurance Corporation (FDIC) in 1973 following misconduct by its proprietor, C. Arnholt Smith (1899–1996). At the time of its seizure, it represented the largest bank intervention ever carried out by the FDIC. The bank’s assets and branch network were subsequently acquired by Crocker National Bank, which eventually became part of Wells Fargo.

Origin

Smith relocated to San Diego at the age of seven and, despite not completing high school, managed to establish a prosperous career in banking, including experience with Bank of America. In 1933, supported by his family, he purchased USNB for $50,000. At that point, the bank operated a single branch with deposits totaling $800,000 and assets amounting to $1.7 million.

USNB served as the foundation of Smith’s broad business conglomerate, largely organized under the Westgate-California Corporation (WCC). This diverse holding company included interests in airlines, tuna canneries, hotels, real estate, taxi services, and bus operations. Smith also acquired the minor league San Diego Padres, later transferring the name to the expansion team in the National League which he initially owned. He appointed James Mulvaney, who was USNB’s president, to lead the Padres organization. Smith emerged as an influential figure within San Diego’s business and political circles, notably maintaining a long-standing friendship and fundraising relationship with Richard Nixon. His portfolio also encompassed National Steel and Shipbuilding, now integrated into General Dynamics.

By 1973, USNB had expanded significantly, boasting assets valued at $1.2 billion (equivalent to over $9 billion in 2024 dollars) and operating more than 60 branches. This made it not only the largest bank in San Diego but also ranked it tenth among California banks.

Collapse

Over many years, Smith engaged in extensive self-serving financial practices. By the early 1970s, investigations into USNB, WCC, and affiliated entities were underway by both the U.S. Securities and Exchange Commission and the Office of the Comptroller of the Currency. In October 1973, faced with deposit withdrawals and mounting regulatory pressure due to Smith’s persistent self-dealing activities, the FDIC intervened and seized control of USNB. This event marked the largest bank takeover executed by the FDIC up to that time. The non-Smith related operations of USNB were taken over by Crocker National Bank. Subsequently, lacking bank support, WCC filed for Chapter X bankruptcy protection by February 1974.

Smith was eventually found guilty of embezzling $9 million from USNB. Because of his advanced age, his prison term was limited to eight months before his release in 1985.