Introduction

President Lincoln Might Have Banked Here

President Lincoln Might Have Banked Here

With Presidents’ Day just around the corner, we thought it was a great time to commemorate community banks that have stood the test of time and thrived.

To that end, we have a list of 50 community banks that are at least 140 years old and have also earned a 5-Star rating from BauerFinancial for a minimum of 100 consecutive quarters (the past 25 years) in this week's  issue of Jumbo Rate News.

You may be surprised at how many states (and which states) have no banks that meet these criteria.

President Lincoln Might Have Banked Here

Happy Birthday, President Lincoln! Presidents’ Day is just around the corner and that has led us down memory lane. What a great time to commemorate community banks that have stood the test of time.

The 50 banks listed on page 5 of this week’s Jumbo Rate News have two things in common:

1) They were all established prior to 1884 (and are therefore at least 140 years old); and

2) They have each earned a 5-Star rating from BauerFinancial for a minimum of 100 consecutive quarters (25 consecutive years).

Some of these banks would have been around and could have been the bank of choice for president Lincoln. Although, from what we understand of our nation’s 16th president, he would likely have chosen a national bank over a state bank. (You’ll see why on page 2.)

Only 11 of the banks listed (on page 5) have federal charters (highlighted in pale yellow). Most of those are located in the Northeast. The two that would have been viable choices for the former president were established well after his untimely death in 1865. They are 5-Star 1NB Bank, Carlyle, IL and 5-Star First National Bank of Kentucky, Carrollton, KY.  

After all, aside from his stint in D.C., Lincoln spent most of his life in Indiana, Illinois and Kentucky. If there were federally-chartered banks in those states when he was alive, they are long gone now.

The oldest bank on the list is 5-Star Institution for Savings in Newburyport, MA. Established in 1820 by 34 prominent locals (with approval from the Commonwealth  of Massachusetts) “for the purpose of receiving money on deposit and investing the same to the best advantage of the owners thereof.”

This list may seem a bit unfair to states that didn’t exist 140 years ago. It is true, we only had 38 states at that time. Three of the 12 newer states have no banks that have been rated 5-Stars for 25 straight years. They are Arizona, Hawaii and Utah.

The remaining nine young states contain 28 banks that have earned a 5-Star rating for 100 consecutive quarters; most were established long after statehood was achieved.

There is just one exception: Oklahoma, which had eight banks prior to statehood. The oldest being 5-Star First Bank of Okarche, Okarche OK, which was established by the Loosen Family in 1892. Oklahoma didn’t became a state until 1907, 15 years later. First Bank of Okarche has earned Bauer’s 5-Star rating for 123 consecutive quarters.

A sadder reality is that only 16 of the first 38 states are represented on page 5. Harsher still, is that only seven of the first 13 colonies have representation. Even Virginia, which produced eight of our nation’s presidents, lacks representation, as do Rhode Island, Delaware, Maryland and both North and South Carolina.

President Lincoln was known for many things during his 4+ years as Commander in Chief (1861-1865): the Civil War, the end of slavery, his stovepipe hat, and his humble beginnings are some things that everyone knows. We’d like to discuss something less widely known.

In between The Emancipation Proclamation (January 1, 1863) and the Gettysburg Address (November 19, 1863) something big happened in banking. The National Currency Act was signed into law (February 25, 1863).

This created a new, national banking system, as well as the Office of the Comptroller of the Currency (OCC) to regulate it. It was a project that Lincoln and his Treasury Secretary (Salmon Chase) worked out in an effort to fund the very expensive Civil War that was still raging.

A National Currency was also created in an attempt to replace the plethora of state-chartered bank notes. Substantial changes were made to that law in 1864, and the result was the National Banking Act that remains in effect today. The problem with so many different state-chartered bank notes, while not completely eliminated, was drastically reduced. By the end of 1864,  683 banks had been granted federal charters. Not everyone was happy with this new system, however.

One of the first banks to be chartered by the new OCC was 3½-Star First National Bank of McConnelsville, OH. Founded in 1863, it remains the oldest national bank still operating under its original name and charter.

President Lincoln tried to bring the nation’s financial system together and convince state-chartered banks to convert, but he met with staunch resistance. Many considered it  government overreach. State banks in particular did not want the added regulation, higher capital requirements or restrictions that the OCC would have imposed. (Some things never change.) This is one reason we continue to have state-chartered and federally-chartered banks. Eighty-five state banks that were chartered prior to 1863 still exist today.  (39 of them can be found on page 5).

It wasn’t until 1933, when President Franklin D. Roosevelt signed the National Banking Emergency Act into law that the FDIC was created. Deposit insurance was made available to ALL banks regardless of charter. At first, state-chartered banks were required to become members of the Federal Reserve System (FRS). That proved to be another “overstep”. Ultimately, the FDIC became the regulator for state-chartered banks that chose not to join the FRS while the FRS would regulate state-charted banks that did join.

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