Citi Turns 200: Retail branch is "beacon of thrift"

In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog. The 13th installation below covers how National City Bank's new branches and compound interest department helped create new opportunities in retail banking. Read the 12th installment on how National City Bank embraced new communication technologies, here.

Retail branch is "beacon of thrift"

National City Bank acquired its first domestic branches in 1921 through a merger with Commercial Exchange Bank. Founded as the German Exchange Bank in 1872, this state-chartered bank changed its name during World War I and had three branches by the time it converted to a national bank, allowing the merger to take place. One of National City Bank's new branches, on 42nd Street, set up a compound interest department at the end of 1921. The bank said it was "now prepared to serve the banking needs of every element of the population." Anticipating strong interest among New Yorkers born abroad, the department hired people who could speak several foreign languages, including Italian, French, Spanish, Greek, Polish, Russian, German, and Chinese.

This unprecedented drive into retail banking was such a success that the new branch, in a prime location near Grand Central Terminal, was soon being described by the bank as a "financial department store." At lunchtimes, thousands of depositors working in nearby stores and offices would flood the branch, which had both street and subway access.

To attract new customers, an account could be opened with as little as a dollar, and interest at 3 percent compounded monthly was paid on deposits as small as $5 within the first month. Depositors who wished to put aside a moderate amount regularly were encouraged to understand that they were clients of National City Bank just as much as the traditional customer with many thousands in a checking account. All the facilities of the bank were available.

In early 1923, the bank set a target of 100,000 new compound interest accounts for the year. It held a six-week competition in which 3,041 employee contestants opened 45,226 new accounts with $3.3 million in deposits. The winner, with 320 new accounts and more than $86,000 in deposits, was Charles Caggiano, who was promoted to the branch's new business department. Among the other top 10 winners to receive watches from president Charles Mitchell were two women, Louise Keller and Anna Chiarchiaro, and Lee Fook from the Chinese draft department of International Banking Corporation. In 1923, the compound interest department service was extended to all local branches and to head office.