First & City National Bank of Lexington consolidated with the Phoenix National Bank and Trust Company on March 4, 1929 to form the First National Bank and Trust Company of Lexington. The consolidation was intended to establish a bank of sufficient size to meet the economic growth experienced in Lexington since the First World War.
Under terms of the merger agreement, the capital stock of the new bank was to be one million dollars, represented by 20,000 shares at fifty dollars par value. Stockholders of the Phoenix National Bank received an extra dividend of nine dollars to equalize the book value between the two banks. Then shares were exchanged share for share while at the same time a special dividend of fifty dollars per share was paid, to reduce par value from one hundred to fifty dollars.
The stockholders of the consolidated bank confirmed William H. Courtney (President of the Phoenix National Bank) as President and James E. McFarland and Benjamin M. Darnaby as Vice Presidents.
National Bank Note, Type 2, Series of 1929
Depression:
The crash of the stock market in October 1929 signaled the beginning of the Great Depression. However, the effects of the Depression did not reach Lexington until the early spring of 1931, when a number of businesses failed. In addition, those businesses that remained experienced significant reductions in business. One example was the Lexington Spring Service, an auto spring repair company, which employed over twenty workers during the late 1920s, but by April 1931, the company had cut back to four workers to survive. The Guaranty Bank and Trust failed during February 1931 and after being reorganized as the Citizen Bank and Trust Company subsequently closed again. The Commonwealth Bank and Trust also closed in February 1931. The weakened Fayette National Bank (which see) was acquired in April 1931 by the First National Bank.
National Bank Note, Type 2, Series of 1929
Bank Holiday:
In February 1933 a number of banks in Detroit failed, triggering another round of closings throughout the United States and before the panic subsided over a third of the country's banks closed. To stop the panic, newly elected President Roosevelt declared a bank holiday on Sunday, March 5, 1933. This proclamation ordered all banks, including those in Lexington, to close until Thursday, March 9. On Monday, March 6, all banking transactions in Lexington were suspended. Later in the day, First National, along with other local banks, were able to partly reopen to accept deposits, allow access to lockboxes, make change and accept payments on loans. Deposits were accepted in special trust accounts that allowed unlimited withdraws at anytime. Banks were restricted from paying out gold coins and certificates.
National Bank Note, Type 1, Series of 1929
In response to this crisis, the Lexington Clearing House began meeting twice daily to discuss the situation. On March 6th, in an emergency meeting in the Security Trust's boardroom, the Lexington Clearing House considered plans of issuing Clearing House Certificates to provide a medium of exchange as the currency supply died up. Meeting the next day at the First National Bank, all banks agreed to use checks instead. Businesses in Lexington began advertising that they would accept checks in lieu of cash. The Clearing House Association issued a statement "millions for credit, but not one cent for hoarding."
On March 8, restrictions were modified to allow limited withdraws for essential purposes of food, medicine and other necessities of life. Banks were ordered to prevent excessive withdraws in currency and prevent all withdraws of gold coins and certificates. Two days later, the Emergency Banking Relief Act of 1933 was passed extending the holiday indefinitely. All banks were directed to remain semi-closed until the books were inspected and the bank found to be solvent.
On Friday, March 10, all the Lexington banks requested permission from the Comptroller to reopen. On Tuesday, March 14, the First National, Security Trust and Second National were authorized to resume normal banking activities. The same day, the Kentucky Department of Banking allowed the local state banks to reopen.
After reopening, the banking industry was faced with a second crisis as depositors began withdrawing currency. To prevent a second panic forcing the remaining solvent banks to close, the Federal Reserve issued Federal Reserve notes to the remaining national banks. The Bureau of Printing and Engraving went on an emergency twenty-four hour schedule to meet the demand. Once the public found that they could withdraw all the currency wanted, the money began to flow back into the banking system and a second crisis was averted.
In 1933, Congress passed several acts to strengthen the people's faith in banks. The Glass-Steagall Banking Act prohibited commercial banks from engaging in investment banking (issuance and trading of securities). In addition, the Federal Reserve Act of 1933 established the Federal Deposit Insurance Corporation to insure bank deposits. This insurance acted as a deterrent against future panics. All members of the Federal Reserve, including First National, were required to join and contribute to the FDIC's initial capital. On January 1, 1934, all the deposits of the First National Bank were insured up to five thousand dollars.
In 1934, WLAP Radio was established as the first radio station in Lexington. The station was operated by Gilmore N. Nunn, a director of the First National Bank.
Over the Labor Day holiday during September 1934, the First National Bank relocated to the old Fayette National Building (which was renamed the First National Building). The bank purchased the property under an option granted at the time the Fayette National was acquired. Prior to the move, the bank operated the Fayette Branch of First National in the building.
Keeneland Association:
The Kentucky Association, after over a century in operations, conducted its final racing meet in the spring of 1933. This track was located on the south side of Lexington, on Fourth Street. The combined effects of the Depression and operating costs forced its closing. The following year Louis L. Haggin, II and Hal Price Headley organized a committee to establish a new thoroughbred track in Lexington. The committee also included Richard C. Stoll and William H. Courtney. These gentlemen were all associated with the First National Bank.
The next year the Jack Keene farm on Versailles Road was purchased and the Keeneland Race Track developed. The Keeneland Association was formed to operate the track with Louis L. Haggin, II and William H. Courtney serving as its first President and Treasurer, respectively.
By 1936, the Lexington economy recovered from the worst effects of the Depression. First National remained profitable throughout the Depression, with profits dropping during 1932 and 1933 before rebounding by 1935. The dividend was cut from seven to six dollars and fifty cents in 1932, to four dollars and fifty cents in 1933 and to four dollars in 1934. In addition, the price of the bank's stock dropped to a low of forty dollars per share in 1933 from a record high of one hundred eighty five dollars in 1929.
Committee for the Fourth War Loan Drive, January 1944.
Seated (left to right) Frazer D. LeBus, William H. Courtney, Edward S. Dabney, James D. Van Hooser and David Ades. Standing (left to right) Unidentified, W. Emmet Milward, Fred B. Wachs, John C. Nichols and Barkley A. Storey.
World War Two:
The Second World War began in September 1939 when German troops marched into Poland. Two years later, with the attack on Pearl Harbor, the United States found itself involved in the war. First National became a major issuer of Victory Bonds to help finance the war effort. William H. Courtney, President of the bank, served on the bond sales committee. During the seven wartime fund drives, the Fayette County Committee raised over sixteen million dollars, double the set quota.
The bank expanded by the high volume of economic activity cause by the war, with assets growing from eighteen million dollars in 1941 to forty five million dollars in 1945.
The post war period saw a major shift of the bank's business from commercial to consumer transactions. The American public went on a spending spree for consumer items such as automobiles, washer, dryers and homes. The bank created a Consumer Loan Department during 1946 to meet the credit needs of the returning servicemen.
Branch Banking:
During the late 1940s, Lexington experienced remarkable geographic growth, especially in the Chevy Chase, Southland and Eastland areas. Retail shopping shifted from downtown to Euclid Avenue and Southland Drive. First National responded to this shift, and liberalization of banking regulations, by opening the Chevy Chase Branch on Euclid Avenue in 1953. The Chevy Chase Branch was the first banking office located outside the Central Business District. The branch also allowed "drive in" banking for the convenience of customers. In June 1953, Lindsay Fitch was selected as the first Branch Manager and Edwin F. G. Hessel as the Assistant Manager. In October 1954, the branch moved from temporary quarters, in a trailer on the site, into the just completed building.
This branch was followed by the opening on March 18, 1955 of the Southland Branch, located at 416 Southland Drive in the Southland Shopping Center. The opening was timed to be near the 90th anniversary of the bank's founding. Charles L. Simpson was its first manager. An additional branch was built in 1957 on Winchester Road (Eastland Branch), which moved in 1959 to larger quarters in the Eastland Shopping Center.
Trust Committee of the Board of, November 6, 1946.
Left to right: James C. Carrick, Frazer D. LeBus, Robert S. Davis, William H. Courtney, David Ades, James H. Combs, John C. Nichols, James McFarland.
Trust Committee of the Board of Directors, November 29, 1949.
Left to right: John C. Nichols, Leroy M. Miles, James C. Carrick, Robert S. Davis, Dan S. Estill, William H. Courtney, William E. Lehman and David Ades.
Industrial Growth:
In the early 1950s, Singer Sewing Machine selected a site on Loudon Avenue for a new factory. However, as soon as the property owner found out that Singer was interested he increased the asking price by fifty percent, from one thousand dollars to fifteen hundred dollars per acre. Singer refused to consider the "increase" and located to another city.
Following the loss of the Singer plant, the Chamber of Commerce and a number of businessmen formed the non-profit Lexington Industrial Foundation. The Foundation was established to promote the city to potential manufacturing and industrial concerns. By selling preferred stock to banks, major businesses and community leaders, the Industrial Foundation purchased in 1954 one hundred thirty four acres on the northern beltline.
Kentucky Utilities was the Foundation's largest stockholder, followed by the First National Bank and Security Trust Company. Among the Industrial Foundation's founders were Floyd I. Fairman and Edward S. Dabney of the Security Trust Company, and William H. Courtney, Walter W. Hillenmeyer, Jr. and Gilmore N. Nunn of the First National Bank.
Square D Corporation was the first major company to locate a plant on the Industrial Foundation’s property. Mercer Road was named in honor of the President of Square D. Square D was followed later by the Trane Corporation, Dixie Cup Products, American Can and Westinghouse Air Brake Company (WABCO).
The Industrial Foundation announced in 1956 that IBM Corporation was relocating its electric typewriter division to Lexington and constructing a plant on Newtown Pike. W. T. Young and Alex G. Campbell helped develop this site. Both were involved with First National. LexMark, IBM's successor, is today one of the city's largest private employers with over 4,000 employees. By the 1960s, the preferred stockholders were all repaid from the sale of these parcels. In 1973, the Foundation purchased property on Palumbo Drive for the FMC Corporation to locate to Lexington.
These firms finally brought a diversified manufacturing base to the local economy to supplement the existing educational, agricultural and mercantile segments.
First National Card:
In May 1959, First National became the first bank in Kentucky to issue imprinted plastic charge cards. The First National Card permitted shoppers to charge retail purchases at a number of stores throughout Lexington. Under the program, cardholders would have a single citywide charge account and merchants would be freed from the expense of maintaining a credit department. Customers were allowed to apply for cards either at the bank or at participating stores.
Stock Certificate, in name of Garvice D. Kincaid.
Unfriendly Takeover Attempt:
During the late 1950s, Garvice D. Kincaid, a Lexington businessman, began acquiring First National stock and demanding a position on the Board of Directors. Mr. Kincaid was Chairman of Lexington's Central Bank and the Kentucky Central Life Insurance Company. He was well known for his "aggressive” business practices and purchased a substantial quantity of bank stock over a period of several years. The bank's Board was opposed to allowing Mr. Kincaid any influence in the bank's operations due to his business practices.
At one point Mr. Kincaid, accompanied by his attorney, insisted upon obtaining a list of the bank's stockholders. Kentucky law allows a stockholder the right to "copy the list during regular business hours.” Since the law did not specify mechanical forms of duplicating, Mr. Kincaid was provided with the list and informed that he could use his pen and a legal pad to make a copy. Eventually Mr. Kincaid abandoned this attempt and disposed of his First Security stock.
In 1955, J. Douglas Gay, Jr. (a First National director) established WLEX-TV as the first TV station in Lexington.
The bank's Presidents were William H. Courtney (1929 to 1953), John C. Nichols (1953 to 1957) and LeRoy M. Miles (1957 to 1961). Between 1957 and 1961, Julian B. Beard was Executive Vice President. In July 1957, discussions began concerning the merger of First National with the Security Trust Company (which see). During 1961 the merger of the two institutions was finally completed and First Security National Bank and Trust Company (which see) was established.
