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National City Corporation was based in Cleveland, Ohio, USA, and founded in 1845, used to be 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 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 completed on December 31, 2008[1], was described as a "take-under,"[2] meaning the purchase price was below National City's market value.[3]
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.[4]
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.[5]
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. [6] 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. [7]
National City has been on an acquisition spree from 2004 through 2008, including 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 is half cash, half stock. Also acquiring Harbor Florida Bancshares Inc. through a $1.1 billion stock deal, both banks are located in Florida. Combined it gives National City $7.4 billion of assets in Florida. It also gives National City 94 branches in a market that is growing quickly. 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 will rank 4th in the market with a market share of 3.96% and deposits of more than $10 billion.[10]
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 Bank and Toronto based Bank of Nova Scotia as the leading contenders. A spokesperson for National City declined to comment on the report [11]. On October 24, 2008 PNC Bank announced that it had finalized a purchase agreement for National City. The acquisition will be a stock purchase transaction to be completed by the end of 2008. National City will be merged into PNC and the National City brand will be dissolved.[12][13] The deal was approved by shareholders of both banks on December 23, 2008, although the National City name is expected to last well into 2009 since it will take PNC some time to integrate the two banks together.[14]
The deal will make PNC the largest bank in Pennsylvania, Ohio, and Kentucky, as well as the second largest bank in Maryland and Indiana. It will also greatly expand PNC's presence in the Midwest as well as entering the Florida market. The two also compliment each other since Pittsburgh and Louisville, Kentucky were the only two markets before the acquisition deal that both banks had a major presence in. The banks also overlap in Cincinnati.
In the case of Pittsburgh, because the two banks have significant overlap and would pose antitrust issues in Western Pennsylvania, the United States Department of Justice is forcing PNC to sell off 50 National City branches in the Pittsburgh area to competitors,[15] which also has the added benefit of reducing the amount of layoffs PNC would have to do as part of the deal, although layoffs are still expected at National City's headquarters in Cleveland. Likely banks that could acquire branches include Citizens Financial Group, Dollar Bank, Huntington Bancshares, FNB Corporation (all of which already have a major presence in the area), Fifth Third Bank (which has slowly expanded into the area in recent years by opening new branches as opposed to a takeover), WesBanco (which does have a presence in Washington County) or an outside bank with an adjacent area to Pittsburgh such as Chase Bank, KeyBank, or BB&T Bank.
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