National City acquisition by PNC
Encyclopedia
The National City acquisition by PNC was the deal by PNC Financial Services
to acquire National City Corp.
on October 24, 2008 following National City's untenable loan losses during the subprime mortgage crisis
. The deal received much controversy due to PNC using TARP funds to buy National City only hours after accepting the funds while National City itself was denied funds, as well as civic pride for the city of Cleveland, Ohio
, where National City was based.
, with National City being able to print U.S. currency until the United States Treasury assumed operations in the 1920s. Both would have strong bases in their home markets, although PNC would until the 1980s be dwarfed in Pittsburgh by Mellon Bank
(now The Bank of New York Mellon) and the massive influence of the Mellon family
.
Both banks began interstate expansion in the 1980s, with the two eventually competing in Cincinnati and Louisville
by the end of the decade. Although PNC would never enter the Cleveland market on its own before the National City deal, National City did enter Pittsburgh in late 1995 with its acquisition of Pittsburgh-based Integra Bank
, putting it in third in market share behind PNC and Mellon, and eventually second after Mellon sold off its retail banking
division to RBS
-owned Citizens Financial Group
in 2001.
began to burst, and consumers began to default
on subprime mortgages
, which National City had gotten involved with. Although National City was otherwise healthy on paper, the mortgage business was dragging down profits into losses, with the company CEO even fearing that the bank might fail
. National City then put itself up for sale in March 2008.
Adding to the bank's problems, The Wall Street Journal
reported on June 6, 2008 that National City 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.
By October 2008, National City was in serious sale discussions following the failure of Washington Mutual
and the forced sale of Wachovia
to Wells Fargo
. Among the publicly known front-runners were Minneapolis-based U.S. Bancorp
, Toronto
-based Scotiabank
, and eventual buyer PNC. Scotiabank, which has long stayed out of the U.S. market unlike its Canadian
rivals, was considered the best option for the local government since Scotiabank didn't have a pre-existing presence in the United States, allowing most of the National City operations to stay in Cleveland. Although National City and PNC had minimal overlap, the close proximity of Cleveland to Pittsburgh meant massive layoffs in both cities.
Wells Fargo
, Fifth Third Bank
, and crosstown rival KeyBank all also expressed interest in National City, with Fifth Third even offering to move its corporate headquarters to Cleveland from across the state in Cincinnati if it were to buy National City. Like U.S. Bancorp, Fifth Third had a redundant footprint with National City, while Wells Fargo (even after its acquisition of Wachovia
) had virtually no overlap with National City at all. KeyBank and National City had very little overlap outside Ohio
.
Meanwhile, the U.S. government began to issue out TARP funds from the $700 billion bailout plan
to banks to help stabilize their funds and issue out loans again. On October 23, 2008, when the National City board of directors
were about to decide on the U.S Bancorp deal, PNC made an 11th hour offer to buy National City and be its white knight
. The following day, after National City was denied TARP funds by the U.S. government, they accepted PNC's offer at about $5.2 billion in stock.
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 eventually to be dissolved.
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 the PNC 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. Overall, the deal made PNC the fifth-largest bank in the United States.
After the acquisition, PNC conducted a review of National City's balance sheet and took write-offs and reserves of $12.6 billion on the loan portfolio, indicating how severe the problems were at National City.
U.S Representative
Dennis Kucinich
of Cleveland unsuccessfully fought against the merger, arguing that National City's TARP funds application was never seriously considered, PNC actually took National City's own allotment of TARP funds in addition to its own, and the effects on the local economy. In addition, National City was the only one of the 25 largest U.S. banks eligible to receive TARP funds to be denied TARP funds, with Omaha, Nebraska
-based Lauritzen Corporation
(ranked 37th nationally) being the next-largest bank denied funds. (Banks owned by foreign companies such as Citizens Financial Group
, HSBC Bank USA
, and TD Bank, N.A. were automatically disqualified from receiving TARP funds.) Many Cleveland-based local businesses also had an unsuccessful grassroots
movement to save National City.
There was also criticism from National City shareholders. The deal was described as a "take-under," meaning the purchase price was below National City's market value. Shareholders felt that they were being undervalued for their National City stock. Eight National City stockholders received a settlement from PNC on July 31, 2009. Under terms of the settlement, investors dropped their claims in return for the release of more than 400 pages of documents in Delaware State Court.
Nonetheless, the deal was approved by shareholders of both banks on December 23, 2008, and finalized on December 31, 2008.
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. Wells Fargo, KeyBank, and Fifth Third—which had inquired about acquiring National City as a whole and in the case of Fifth Third had existing branches in Pittsburgh—were all interested in buying the National City branches. JPMorgan Chase, Huntington Bancshares
, First Niagara Bank
and FNB Corporation
were also in discussions for the branches, with Huntington and FNB, like Fifth Third, having existing branches in Pittsburgh.
On April 7, 2009, PNC reached a deal with Buffalo
-based First Niagara Bank
to buy 57 of the branches. First Niagara officially took over those branches on September 8 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 were retained (First Niagara, in fact, established a regional office in Pittsburgh at 11 Stanwix Street
near National City's Pittsburgh headquarters at 20 Stanwix Street, adding more jobs there.), there were still heavy layoffs at National City's headquarters in Cleveland.
Because of the significant overlap in Pittsburgh that remains, PNC closed seven National City branches & five PNC branches on November 6, 2009, and later closed two more PNC branches on April 23, 2010, with the accounts at those branches being moved to the nearby PNC branch that will remain. 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. 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%.
Although experts had expected more TARP funds to be used by stronger banks to buy out weaker rivals, no more deals were ultimately done involving TARP funds.
(where the two had the most overlap), Florida, and the Youngstown
& Steubenville
, Ohio regions. That day 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.
The conversion of National City to PNC was completed in June 2010, in the following phases:
upon acquiring National City, PNC has since slipped to second-largest in the state behind Fifth Third Bank
, and is neck-and-neck with third place Huntington Bancshares
for the second-place spot. Much of the losses for PNC came in Cleveland, where many Clevelanders left PNC upon the April 2010 conversion of National City in the area for other banks, most notably KeyBank, which became the Cleveland market's largest bank by deposits. While National City was Cleveland's top bank at the time of PNC's acquisition, PNC slipped to fourth overall in the area behind KeyBank, locally-owned Third Federal Savings & Loan, and Citizens Financial Group's
Charter One brand. PNC has, however, been able to regain some of the losses back, and is currently second in the Cleveland market behind KeyBank.
Outside of Greater Cleveland
, PNC's acquisition of National City has been considered a success by experts. The move allowed PNC to experience growth in Chicago
, and was able to use the Florida
footprint acquired from National City to expand in the Southern United States
. In 2011, PNC expanded its Florida presence by acquiring branches from BankAtlantic
in the Tampa Bay Area
, and is currently in the process of acquiring RBC Bank
from the Royal Bank of Canada
as well as the Atlanta-area branches of Flagstar Bank. Within Cleveland, PNC opened a museum dedicated to the history of National City within National City's former headquarters in Cleveland.
PNC ultimately paid back its TARP funds in full in February 2010 while the National City conversion was still underway. However, it required the bank to sell its Global Investment Servicing division to BNY Mellon in order to have the funds to buy back its shares.
First Niagara Bank
, which had mostly been a semi-regional bank within Western New York
before acquiring the National City branches in the Pittsburgh area that PNC had to divest, used the National City branches it bought as a launching pad to expand into other markets, acquiring banks in Philadelphia and New England
before acquiring HSBC Bank USA's
Upstate New York
branches.
PNC Financial Services
PNC Financial Services Group, Inc. is a U.S.-based financial services corporation, with assets of approximately $264.3 billion...
to acquire National City Corp.
National City Corp.
National City Corporation was a regional bank holding 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...
on October 24, 2008 following National City's untenable loan losses during the subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
. The deal received much controversy due to PNC using TARP funds to buy National City only hours after accepting the funds while National City itself was denied funds, as well as civic pride for the city of Cleveland, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
, where National City was based.
Pre-merger history
Both PNC and National City's corporate histories date to the mid-19th century, when National City was founded as the City Bank of Cleveland in 1845 while PNC was founded in longtime Cleveland rival Pittsburgh as the Pittsburgh Trust and Savings Company in 1852. Both banks would later receive national charters under the National Banking ActNational Banking Act
The National Banking Acts of 1863 and 1864 were two United States federal laws that established a system of national charters for banks, and created the United States National Banking System. They encouraged development of a national currency backed by bank holdings of U.S...
, with National City being able to print U.S. currency until the United States Treasury assumed operations in the 1920s. Both would have strong bases in their home markets, although PNC would until the 1980s be dwarfed in Pittsburgh by Mellon Bank
Mellon Financial
Mellon Financial Corporation, was one of the world's largest money management firms. Based in Pittsburgh, Pennsylvania, it was in the business of institutional and high-net-worth-individual asset management, including the Dreyfus family of mutual funds; business banking; and shareholder and...
(now The Bank of New York Mellon) and the massive influence of the Mellon family
Mellon family
The Mellon family is a wealthy and influential family originally of Pittsburgh, Pennsylvania, United States, and its vicinity. In addition to Mellon Bank they were principally known for their control over Gulf Oil, Alcoa, Pittsburgh Tribune-Review and Koppers, as well as their major influence on...
.
Both banks began interstate expansion in the 1980s, with the two eventually competing in Cincinnati and Louisville
Louisville, Kentucky
Louisville is the largest city in the U.S. state of Kentucky, and the county seat of Jefferson County. Since 2003, the city's borders have been coterminous with those of the county because of a city-county merger. The city's population at the 2010 census was 741,096...
by the end of the decade. Although PNC would never enter the Cleveland market on its own before the National City deal, National City did enter Pittsburgh in late 1995 with its acquisition of Pittsburgh-based Integra Bank
Integra Bank (Pittsburgh)
Integra Financial was a Pittsburgh-based bank that was eventually acquired by National City Corp. in late 1995 in one of National City's first attempts at becoming a major powerhouse in American banking....
, putting it in third in market share behind PNC and Mellon, and eventually second after Mellon sold off its retail banking
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
division to RBS
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
-owned Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
in 2001.
National City problems
The downfall of National City began in 2007 when the United States housing bubbleUnited States housing bubble
The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. On December 30, 2008 the...
began to burst, and consumers began to default
Default (finance)
In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either...
on subprime mortgages
Subprime lending
In finance, subprime lending means making loans to people who may have difficulty maintaining the repayment schedule...
, which National City had gotten involved with. Although National City was otherwise healthy on paper, the mortgage business was dragging down profits into losses, with the company CEO even fearing that the bank might fail
Bank failure
A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. More specifically, a bank usually fails economically when the market value of its assets declines to a value that is...
. National City then put itself up for sale in March 2008.
Adding to the bank's problems, The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
reported on June 6, 2008 that National City had entered into a memorandum of understanding
Memorandum of understanding
A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in...
with federal regulators, effectively putting the bank on probation
Probation
Probation literally means testing of behaviour or abilities. In a legal sense, an offender on probation is ordered to follow certain conditions set forth by the court, often under the supervision of a probation officer...
. Terms of the confidential agreement, entered into a month earlier with the Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
(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.
By October 2008, National City was in serious sale discussions following the failure of Washington Mutual
Washington Mutual
Washington Mutual, Inc. , abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until its collapse in 2008....
and the forced sale of Wachovia
Wachovia
Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo in 2008, Wachovia was the fourth-largest bank holding company in the United States based on total assets...
to Wells Fargo
Wells Fargo
Wells Fargo & Company is an American multinational diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization. Wells Fargo is the second largest bank in deposits, home...
. Among the publicly known front-runners were Minneapolis-based U.S. Bancorp
U.S. Bancorp
U.S. Bancorp is a diversified financial services holding company, headquartered in Minneapolis, Minnesota. It is the parent company of U.S. Bank, the fifth largest commercial bank in the United States based on $330 billion in assets. U.S. Bank ranks as the sixth largest bank in the U.S. based on...
, Toronto
Toronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
-based Scotiabank
Scotiabank
The Bank of Nova Scotia , commonly known as Scotiabank , is the third largest bank in Canada by deposits and market capitalization. It serves some 18.6 million customers in more than 50 countries around the world and offers a broad range of products and services including personal, commercial,...
, and eventual buyer PNC. Scotiabank, which has long stayed out of the U.S. market unlike its Canadian
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
rivals, was considered the best option for the local government since Scotiabank didn't have a pre-existing presence in the United States, allowing most of the National City operations to stay in Cleveland. Although National City and PNC had minimal overlap, the close proximity of Cleveland to Pittsburgh meant massive layoffs in both cities.
Wells Fargo
Wells Fargo
Wells Fargo & Company is an American multinational diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization. Wells Fargo is the second largest bank in deposits, home...
, Fifth Third Bank
Fifth Third Bank
Fifth Third Bank is a U.S. regional banking corporation, headquartered in Cincinnati, Ohio and is the principal subsidiary of holding company Fifth Third Bancorp ....
, and crosstown rival KeyBank all also expressed interest in National City, with Fifth Third even offering to move its corporate headquarters to Cleveland from across the state in Cincinnati if it were to buy National City. Like U.S. Bancorp, Fifth Third had a redundant footprint with National City, while Wells Fargo (even after its acquisition of Wachovia
Wachovia
Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo in 2008, Wachovia was the fourth-largest bank holding company in the United States based on total assets...
) had virtually no overlap with National City at all. KeyBank and National City had very little overlap outside Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
.
Takeover by PNC
In early October 2008, PNC had offered a deal with National City, but backed out. Combined with Scotiabank's decision to once again not enter the U.S. market, National City began preliminary merger talks with U.S. Bancorp.Meanwhile, the U.S. government began to issue out TARP funds from the $700 billion bailout plan
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
to banks to help stabilize their funds and issue out loans again. On October 23, 2008, when the National City board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
were about to decide on the U.S Bancorp deal, PNC made an 11th hour offer to buy National City and be its white knight
White knight (business)
In business, a white knight, or "friendly investor," may be a corporation or a person that intends to help another firm. There are many types of white knights...
. The following day, after National City was denied TARP funds by the U.S. government, they accepted PNC's offer at about $5.2 billion in stock.
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 eventually to be dissolved.
The deal made PNC the largest bank in Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
, and Kentucky
Kentucky
The Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...
, as well as the second largest bank in Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
and Indiana
Indiana
Indiana is a US state, admitted to the United States as the 19th on December 11, 1816. It is located in the Midwestern United States and Great Lakes Region. With 6,483,802 residents, the state is ranked 15th in population and 16th in population density. Indiana is ranked 38th in land area and is...
. It greatly expanded the PNC presence in the Midwest
Midwestern United States
The Midwestern United States is one of the four U.S. geographic regions defined by the United States Census Bureau, providing an official definition of the American Midwest....
as well as entering the Florida market. Pittsburgh, Louisville, Kentucky
Louisville, Kentucky
Louisville is the largest city in the U.S. state of Kentucky, and the county seat of Jefferson County. Since 2003, the city's borders have been coterminous with those of the county because of a city-county merger. The city's population at the 2010 census was 741,096...
, and Cincinnati were the only three markets before the acquisition deal that both banks had a major presence in. Overall, the deal made PNC the fifth-largest bank in the United States.
After the acquisition, PNC conducted a review of National City's balance sheet and took write-offs and reserves of $12.6 billion on the loan portfolio, indicating how severe the problems were at National City.
Criticism
While some Clevelanders didn't like the fact that National City was being taken over by a Pittsburgh-based rival because of the longstanding NFL rivalry between the two cities, many of the reactions to the PNC-National City deal involved the fact that TARP funds were used by PNC to buy National City.U.S Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Dennis Kucinich
Dennis Kucinich
Dennis John Kucinich is the U.S. Representative for , serving since 1997. He was furthermore a candidate for the Democratic nomination for President of the United States in the 2004 and 2008 presidential elections....
of Cleveland unsuccessfully fought against the merger, arguing that National City's TARP funds application was never seriously considered, PNC actually took National City's own allotment of TARP funds in addition to its own, and the effects on the local economy. In addition, National City was the only one of the 25 largest U.S. banks eligible to receive TARP funds to be denied TARP funds, with Omaha, Nebraska
Omaha, Nebraska
Omaha is the largest city in the state of Nebraska, United States, and is the county seat of Douglas County. It is located in the Midwestern United States on the Missouri River, about 20 miles north of the mouth of the Platte River...
-based Lauritzen Corporation
Lauritzen Corporation
Lauritzen Corporation is a financial and interstate bank holding company headquartered in Omaha, Nebraska. Lauritzen Corporation currently has bank branches in Nebraska and Iowa, and has total assets of approximately $17.76 billion . In addition to banks, Lauritzen Corporation has five holding...
(ranked 37th nationally) being the next-largest bank denied funds. (Banks owned by foreign companies such as Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
, HSBC Bank USA
HSBC Bank USA
HSBC Bank USA, National Association, the American subsidiary of UK-based HSBC Holdings plc, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia . HSBC Bank USA, N.A...
, and TD Bank, N.A. were automatically disqualified from receiving TARP funds.) Many Cleveland-based local businesses also had an unsuccessful grassroots
Grassroots
A grassroots movement is one driven by the politics of a community. The term implies that the creation of the movement and the group supporting it are natural and spontaneous, highlighting the differences between this and a movement that is orchestrated by traditional power structures...
movement to save National City.
There was also criticism from National City shareholders. The deal was described as a "take-under," meaning the purchase price was below National City's market value. Shareholders felt that they were being undervalued for their National City stock. Eight National City stockholders received a settlement from PNC on July 31, 2009. Under terms of the settlement, investors dropped their claims in return for the release of more than 400 pages of documents in Delaware State Court.
Nonetheless, the deal was approved by shareholders of both banks on December 23, 2008, and finalized on December 31, 2008.
Aftermath
In the case of Pittsburgh, the two banks had significant overlap to the point it would pose antitrustAntitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
issues in Western Pennsylvania
Western Pennsylvania
Western Pennsylvania consists of the western third of the state of Pennsylvania in the United States. Pittsburgh is the largest city in the region, with a metropolitan area population of about 2.4 million people, and serves as its economic and cultural center. Erie, Altoona, and Johnstown are its...
since both banks had the top two market shares in the Pittsburgh region. As a result, the United States Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
required PNC to sell off 50 National City branches in the Pittsburgh area and 11 more branches in and around Erie
Erie, Pennsylvania
Erie is a city located in northwestern Pennsylvania in the United States. Named for the lake and the Native American tribe that resided along its southern shore, Erie is the state's fourth-largest city , with a population of 102,000...
to competitors. Wells Fargo, KeyBank, and Fifth Third—which had inquired about acquiring National City as a whole and in the case of Fifth Third had existing branches in Pittsburgh—were all interested in buying the National City branches. JPMorgan Chase, Huntington Bancshares
Huntington Bancshares
Huntington Bancshares, Inc., is a US$53 billion Midwestern bank holding company headquartered in Columbus, Ohio. It is the 24th largest American bank. As of October 22, 2008, it was listed on the S&P 500...
, First Niagara Bank
First Niagara Bank
First Niagara Bank is a Federal Deposit Insurance Corporation-insured regional banking corporation headquartered in the historic Larkin Terminal Warehouse in Buffalo, New York.-History:...
and FNB Corporation
FNB Corporation
FNB Corporation is a financial services corporation based in Hermitage, Pennsylvania, which operates banks under the name First National Bank in Ohio and Pennsylvania....
were also in discussions for the branches, with Huntington and FNB, like Fifth Third, having existing branches in Pittsburgh.
On April 7, 2009, PNC reached a deal with Buffalo
Buffalo, New York
Buffalo is the second most populous city in the state of New York, after New York City. Located in Western New York on the eastern shores of Lake Erie and at the head of the Niagara River across from Fort Erie, Ontario, Buffalo is the seat of Erie County and the principal city of the...
-based First Niagara Bank
First Niagara Bank
First Niagara Bank is a Federal Deposit Insurance Corporation-insured regional banking corporation headquartered in the historic Larkin Terminal Warehouse in Buffalo, New York.-History:...
to buy 57 of the branches. First Niagara officially took over those branches on September 8 after the signs were changed over from National City during Labor Day Weekend
Labor Day
Labor Day is a United States federal holiday observed on the first Monday in September that celebrates the economic and social contributions of workers.-History:...
. The branches not purchased by First Niagara were the four in Crawford County, Pennsylvania
Crawford County, Pennsylvania
Crawford County is a county located in the U.S. state of Pennsylvania. As of 2010, the population was 88,765.Crawford County was created on March 12, 1800, from part of Allegheny County and named for Colonel William Crawford...
that PNC had to divest; of those four, one branch in Titusville
Titusville, Pennsylvania
Titusville is a city in Crawford County, Pennsylvania, United States. The population was 6,146 at the 2000 census. In 1859, oil was successfully drilled in Titusville, resulting in the birth of the modern oil industry.-History:...
was sold to Emclaire Financial Group while the other three (one in Conneaut Lake
Conneaut Lake, Pennsylvania
Conneaut Lake is a borough in Crawford County, Pennsylvania at the southern end of a lake with the same name. The population was 708 at the 2000 census.-History:...
, the other two in Meadville
Meadville, Pennsylvania
Meadville is a city in and the county seat of Crawford County, Pennsylvania, United States. The city is generally considered part of the Pittsburgh Tri-State and is within 40 miles of Erie, Pennsylvania. It was the first permanent settlement in northwest Pennsylvania...
, including the branch inside Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
) were sold to Marquette Savings Bank. Although employees at the branches being sold off were retained (First Niagara, in fact, established a regional office in Pittsburgh at 11 Stanwix Street
11 Stanwix Street
11 Stanwix Street, formerly known as and still frequently referred to as the Westinghouse Tower, is one of the major distinctive and recognizable features of Downtown Pittsburgh, Pennsylvania...
near National City's Pittsburgh headquarters at 20 Stanwix Street, adding more jobs there.), there were still heavy layoffs at National City's headquarters in Cleveland.
Because of the significant overlap in Pittsburgh that remains, PNC closed seven National City branches & five PNC branches on November 6, 2009, and later closed two more PNC branches on April 23, 2010, with the accounts at those branches being moved to the nearby PNC branch that will remain. As part of the agreement to buy the 57 National City branches from PNC, First Niagara has the right of first refusal
Right of first refusal
Right of first refusal is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party...
to buy the National City branches PNC closes. 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
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
with 13%.
Although experts had expected more TARP funds to be used by stronger banks to buy out weaker rivals, no more deals were ultimately done involving TARP funds.
Conversion to PNC
The National City name, as expected, lasted well into 2009 since it would take PNC some time to integrate the two banks together. PNC began to phase out the National City name in favor of PNC on November 7, 2009, starting with PennsylvaniaPennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
(where the two had the most overlap), Florida, and the Youngstown
Youngstown, Ohio
Youngstown is a city in the U.S. state of Ohio and the county seat of Mahoning County; it also extends into Trumbull County. The municipality is situated on the Mahoning River, approximately southeast of Cleveland and northwest of Pittsburgh, Pennsylvania...
& Steubenville
Steubenville, Ohio
Steubenville is a city located along the Ohio River in Jefferson County, Ohio on the Ohio-West Virginia border in the United States. It is the political county seat of Jefferson County. It is also a principal city of the Weirton–Steubenville, WV-OH Metropolitan Statistical Area...
, Ohio regions. That day 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
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
branches having yet to convert being legally known as PNC Bank, N.A., d/b/a
Doing business as
The phrase "doing business as" is a legal term used in the United States, meaning that the trade name, or fictitious business name, under which the business or operation is conducted and presented to the world is not the legal name of the legal person who actually own it and are responsible for it...
National City Bank.
The conversion of National City to PNC was completed in June 2010, in the following phases:
- February 19, 2010 Central & Southern Ohio (including Cincinnati, DaytonDayton, OhioDayton is the 6th largest city in the U.S. state of Ohio and the county seat of Montgomery County, the fifth most populous county in the state. The population was 141,527 at the 2010 census. The Dayton Metropolitan Statistical Area had a population of 841,502 in the 2010 census...
, and the state capital of ColumbusColumbus, OhioColumbus is the capital of and the largest city in the U.S. state of Ohio. The broader metropolitan area encompasses several counties and is the third largest in Ohio behind those of Cleveland and Cincinnati. Columbus is the third largest city in the American Midwest, and the fifteenth largest city...
), Southeastern IndianaIndianaIndiana is a US state, admitted to the United States as the 19th on December 11, 1816. It is located in the Midwestern United States and Great Lakes Region. With 6,483,802 residents, the state is ranked 15th in population and 16th in population density. Indiana is ranked 38th in land area and is...
, and all of KentuckyKentuckyThe Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...
. - April 12, 2010 Northern Ohio (including National City's home market of Cleveland, AkronAkron, OhioAkron , is the fifth largest city in the U.S. state of Ohio and the county seat of Summit County. It is located in the Great Lakes region approximately south of Lake Erie along the Little Cuyahoga River. As of the 2010 census, the city had a population of 199,110. The Akron Metropolitan...
, CantonCanton, OhioCanton is the county seat of Stark County in northeastern Ohio, approximately south of Akron and south of Cleveland.The City of Caton is the largest incorporated area within the Canton-Massillon Metropolitan Statistical Area...
, and ToledoToledo, OhioToledo is the fourth most populous city in the U.S. state of Ohio and is the county seat of Lucas County. Toledo is in northwest Ohio, on the western end of Lake Erie, and borders the State of Michigan...
) and all of MichiganMichiganMichigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
. - June 14, 2010 The rest of Indiana and all of IllinoisIllinoisIllinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
, MissouriMissouriMissouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...
, and WisconsinWisconsinWisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
.
Legacy
Despite becoming the largest bank in OhioOhio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
upon acquiring National City, PNC has since slipped to second-largest in the state behind Fifth Third Bank
Fifth Third Bank
Fifth Third Bank is a U.S. regional banking corporation, headquartered in Cincinnati, Ohio and is the principal subsidiary of holding company Fifth Third Bancorp ....
, and is neck-and-neck with third place Huntington Bancshares
Huntington Bancshares
Huntington Bancshares, Inc., is a US$53 billion Midwestern bank holding company headquartered in Columbus, Ohio. It is the 24th largest American bank. As of October 22, 2008, it was listed on the S&P 500...
for the second-place spot. Much of the losses for PNC came in Cleveland, where many Clevelanders left PNC upon the April 2010 conversion of National City in the area for other banks, most notably KeyBank, which became the Cleveland market's largest bank by deposits. While National City was Cleveland's top bank at the time of PNC's acquisition, PNC slipped to fourth overall in the area behind KeyBank, locally-owned Third Federal Savings & Loan, and Citizens Financial Group's
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
Charter One brand. PNC has, however, been able to regain some of the losses back, and is currently second in the Cleveland market behind KeyBank.
Outside of Greater Cleveland
Greater Cleveland
Greater Cleveland is a nickname for the metropolitan area surrounding Cleveland, Ohio and is part of what used to be the Connecticut Western Reserve.Northeast Ohio refers to a similar but substantially larger area as described below...
, PNC's acquisition of National City has been considered a success by experts. The move allowed PNC to experience growth in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, and was able to use the Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
footprint acquired from National City to expand in the Southern United States
Southern United States
The Southern United States—commonly referred to as the American South, Dixie, or simply the South—constitutes a large distinctive area in the southeastern and south-central United States...
. In 2011, PNC expanded its Florida presence by acquiring branches from BankAtlantic
BankAtlantic
BankAtlantic, Member FDIC, is a subsidiary of BankAtlantic Bancorp, Inc. . The company's headquarters is based in Fort Lauderdale, Florida, in Southeast Florida. BankAtlantic is a company that provides consumer and business banking services to communities throughout the state of Florida...
in the Tampa Bay Area
Tampa Bay Area
The Tampa Bay Area is the region of west central Florida adjacent to Tampa Bay. Definitions of the region vary. It is often considered equivalent to the Tampa-St. Petersburg-Clearwater Metropolitan Statistical Area defined by the United States Census Bureau. The Census Bureau currently...
, and is currently in the process of acquiring RBC Bank
RBC Bank
RBC Bank, formerly Centura Banks, is the United States retail banking division of the Royal Bank of Canada. The headquarters for the bank are located in Raleigh, North Carolina. Banking centers and automated teller machines are located throughout the Southeastern United States...
from the Royal Bank of Canada
Royal Bank of Canada
The Royal Bank of Canada or RBC Financial Group is the largest financial institution in Canada, as measured by deposits, revenues, and market capitalization. The bank serves seventeen million clients and has 80,100 employees worldwide. The company corporate headquarters are located in Toronto,...
as well as the Atlanta-area branches of Flagstar Bank. Within Cleveland, PNC opened a museum dedicated to the history of National City within National City's former headquarters in Cleveland.
PNC ultimately paid back its TARP funds in full in February 2010 while the National City conversion was still underway. However, it required the bank to sell its Global Investment Servicing division to BNY Mellon in order to have the funds to buy back its shares.
First Niagara Bank
First Niagara Bank
First Niagara Bank is a Federal Deposit Insurance Corporation-insured regional banking corporation headquartered in the historic Larkin Terminal Warehouse in Buffalo, New York.-History:...
, which had mostly been a semi-regional bank within Western New York
Western New York
Western New York is the westernmost region of the state of New York. It includes the cities of Buffalo, Rochester, Niagara Falls, the surrounding suburbs, as well as the outlying rural areas of the Great Lakes lowlands, the Genesee Valley, and the Southern Tier. Some historians, scholars and others...
before acquiring the National City branches in the Pittsburgh area that PNC had to divest, used the National City branches it bought as a launching pad to expand into other markets, acquiring banks in Philadelphia and New England
New England
New England is a region in the northeastern corner of the United States consisting of the six states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut...
before acquiring HSBC Bank USA's
HSBC Bank USA
HSBC Bank USA, National Association, the American subsidiary of UK-based HSBC Holdings plc, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia . HSBC Bank USA, N.A...
Upstate New York
Upstate New York
Upstate New York is the region of the U.S. state of New York that is located north of the core of the New York metropolitan area.-Definition:There is no clear or official boundary between Upstate New York and Downstate New York...
branches.