213 Market Street
Dauphin Deposit Corporation is one of the most successful mid-sized bank holding companies in the country, overseeing the operations of over 100 branch banking offices throughout central Pennsylvania, as well as two non-bank financial subsidiaries. Dauphin Deposit's continued expansion can be attributed to a history of conservative banking practices, careful acquisitions, and strong leadership.
Dauphin traces its history to the opening of the Harrisburg Savings Institution in Harrisburg, Pennsylvania, on September 28, 1835. With $50,000 in start-up capital, the bank was founded by several prominent men of Dauphin County and established on the site of a tavern on Market Street in downtown Harrisburg. The savings institution recorded $10,762.01 in deposits and $22,595 in assets after its first day of business, and after seven months, the bank paid its first dividend to stockholders. It was a promising start for an institution that would survive a Civil War, a Great Depression, two World Wars, and the ever-changing regulatory environment and competitive economic climate of the 1990s.
Among the first deposits at the Harrisburg Savings Institution was that made by James McCormick, a founder who entrusted $1,000 to the fledgling bank. McCormick would thereafter establish a stronger interest in Harrisburg Savings, and, although he was neither an officer nor a trustee in these early days, he would eventually become bank president in 1840. The McCormicks were one of Harrisburg's foremost families. Descendants of Irish immigrants who settled in Dauphin County, the McCormicks were successful in such business ventures as the law, publishing, land development, railroads, iron and steel, and eventually, banking.
The first years of the bank were a time of perseverance and change. Just two years after the bank opened, the country was hit with an economic crisis: the Panic of 1837, caused by overtrading and careless speculation of public lands, stock, and property. Pennsylvania banks were hit especially hard when incomes from new canals and turnpikes fell below expectations and revenues from the railroad lagged. Several banks failed during this time, and payment in specie was suspended and not fully resumed in Pennsylvania until early 1841. Nevertheless, Harrisburg Savings Institution withstood the Panic, and in fact, built a larger office during this time.
Under James McCormick's leadership, Harrisburg Savings became known as Dauphin Deposite Bank in 1845, with an extended charter and increased capitalization. (The 'e' was dropped from Deposite in 1859.) McCormick managed the bank until his death in 1870, when son Henry was named president for a short term. Another son, James McCormick, Jr., took over in 1874 and retained the position into the early part of the 20th century. From 1874 to 1905 the bank operated as a private institution, as directed by the estate of the first James McCormick, with the founder's sons and son-in-law James Donald Cameron serving as trustees.
In 1905, the bank was incorporated in Pennsylvania as the Dauphin Deposit Trust Company. During this time, as banking in Harrisburg became more complex, local banks and trust companies approved the creation of a clearing house, and Dauphin Deposit would figure prominently in its management. Moreover, Dauphin Deposit announced that it would become a member of the Federal Reserve System, as business grew and the city of Harrisburg as well as its school districts became depositors at the bank. The bank also reported holdings that included city water bonds, Pennsylvania Canal bonds, Pennsylvania Railroad bonds, and Northern Central Railroad bonds.
Another change in leadership occurred in 1908, when William K. Alricks, the founder's son-in-law, became president of the bank. He would serve until his death in 1912, when Donald McCormick, son of the younger James McCormick, began his term as president. Donald McCormick remained in this position for 33 years and was the last of the family to manage the bank.
By 1919, Dauphin's holdings included bonds of several railroads, including the Atchinson, Topeka & Santa Fe; Chicago B&O; Northern Pacific; the Pennsylvania Railroad; and the Reading Co. The number of stockholders at Dauphin also expanded, from three in 1905 to around 20 by 1925.
Dauphin Deposit survived the Great Depression under the strong, conservative McCormick family leadership. In fact, the bank maintained a reputation for stability during this time, assisted in part by some strategy on the part of Donald McCormick, who made sure that customers had a clear view of the stacks of currency that arrived daily at the bank. Regarding their own operations as secure, McCormick and the board of directors were reportedly reluctant to comply when President Franklin D. Roosevelt ordered all banks to close in 1933. Later, McCormick would occasionally refuse to reopen accounts closed by wary customers during the bank emergency.
When Dauphin Deposit celebrated its 100th anniversary in 1935, the Harrisburg Evening News featured a commemorative supplement, with pictures of the founding family and a statement by Donald McCormick citing that growth had resulted in more than $10.5 million in deposits and nearly $25 million in trust funds.
During World War II, many Dauphin Deposit employees served in the U.S. armed forces, prompting Donald McCormick to establish a company newsletter to help keep those employees serving abroad apprised of bank activity. When McCormick died in 1945, leadership passed for the first time to a non-family member, Harper W. Spong. A new era thus began at Dauphin Deposit, one in which the bank would prosper and expand geographically.
In the mid-1950s and into the 1960s, Dauphin Deposit entered into a series of mergers, acquiring the Market Street Trust Company of Harrisburg, the Penbrook Banking Company, the Carlisle Trust Company, and Peoples Bank in Steelton. Interestingly, the Carlisle Trust Company, which came on board with Dauphin in 1957, was said to have established the concept of the Christmas Club (a program through which customers put away money for use during the holiday season), having initiated such a program in 1909 for local schoolchildren. Dauphin Deposit also began establishing branch banks in Dauphin County during this time, as well as in the Pennsylvania counties of Cumberland, Lebanon, and York. The Camp Curtin Trust Company of Harrisburg, the Lemoyne Trust Company, Peoples National Bank of Hanover, and The First National Bank of Lebanon were also eventually acquired by Dauphin Deposit during this time.
Other developments included expansion of the bank's headquarters, still located on Market Street in Harrisburg. At this site, Dauphin erected its first time-and-temperature clock in 1958. The bank would eventually become the world's largest user of time-and-temperature equipment; over the next 20 years, such devices became familiar landmarks and reference points for many central Pennsylvanians driving or walking by the bank branches. Unfortunately, by 1977 Dauphin would be forced to curtail its use of the energy-consuming clocks in the face of the national energy crisis.
In May 1965 Dauphin's board decided to withdraw from the Federal Reserve System, a move it deemed necessary in achieving greater flexibility in operations. The trust department was restructured into the Financial Services Division, reflecting the broader scope of services Dauphin offered its customers. Also, an employee training and education system was developed to encourage employees to better their skills and knowledge of the industry. Toward that end, the bank established a tuition reimbursement plan and programs that allowed employees to attend various banking association courses and seminars.
Under the leadership of John D. Wickert, Dauphin Deposit reorganized in 1977, forming a holding company called the Dauphin Deposit Corporation to oversee the operations of the Dauphin Deposit Bank and Trust Company. Other subsidiaries of the new parent were Dauphin Life Insurance Company and Dauphin Investment Company.
The reorganization, and all the paperwork and record keeping that it engendered, prompted management to seek out more efficient administrative systems, and Dauphin Deposit took advantage of technological innovations of the time. In fact, Dauphin Deposit was among the first banks to utilize the central information files, postronic bookkeeping machines (through which balances and account numbers were automatically micro-encoded), automatic reading of checks through microencoding, electronic booking machines, data processing, and digital switchboards.
By the mid-1980s, Dauphin was reporting total assets of $2.3 billion, net income of $20.8 million, deposits of $1.94 billion, and total loans of $1 billion. Dauphin Deposit's growth was also evident through its stock performance. One hundred shares of Dauphin stock purchased in 1950 at a cost of $5,000, for example, would become 1,766 shares valued at a little over $60,000 by 1985, a figure that did not include the cash dividends paid out in the interim. Moreover, Dauphin Deposit was able to boast having paid uninterrupted dividends nearly since its inception.
In addition to its dividends, another long-standing Dauphin tradition was its commitment to the communities it served. Community projects taken on during the company's early years included a campaign for a safe water supply, the establishment of a hospital and dispensary in Harrisburg, and an effort to fund the rebuilding of the city of Chambersburg, which was torched by Confederate soldiers during the Civil War. Public service was still a bank concern in modern times, as Dauphin Deposit contributed to various charities and cultural events. Moreover, in 1980 the bank signed a "new beginning" agreement in response to charges that it had not done enough for inner-city residents. Specifically, Dauphin established a lending goal of $5 million to certain urban areas over a three-year period; provided extensive credit counseling for low- and moderate-income city residents; and offered a "good neighbor" discount of one percent on prevailing interest rates for home improvements and mortgage loans to Harrisburg residents. A Federal Reserve Board compilation of housing loans in the city in 1982 found that Dauphin Deposit had made 217 of the 441 loans that year. In 1984, the Urban League of Metropolitan Harrisburg honored the bank with its third annual Equal Opportunity Day Award.
During the 1980s, Dauphin Deposit continued to expand its market area. Mergers during this time included The Peoples National Bank of Shippensburg and Southern Pennsylvania Bank of York. In 1983, the Bank of Pennsylvania, based in Reading, was acquired, along with its holding company, Bancorp of Pennsylvania. Creating new services to meet the changing needs of banking customers, Dauphin responded to customer demands for easy, convenient banking services. New products included automated teller machines, credit cards, certificate of deposits, checking accounts with no minimum balance requirements, and home equity loans. Dauphin Deposit also developed an international unit to handle international transactions such as trade financing and providing letters of credit.
The late 1980s and early 1990s were a time of regulatory change, lending fads, volatile capital markets, and a slowing economy. But Dauphin Deposit consistently outperformed bank holding companies with assets in the $3 to $10 billion range through a prudent business strategy and continued acquisition. Some analysts attributed the bank's continued success in part to the economic strength of the central Pennsylvania area it served.
In 1987, Dauphin Deposit acquired Colonial Bancorp and announced an agreement to acquire The Farmers Bank and Trust Company of Hummelstown. Collectively, these acquisitions brought $275 million is assets. Later, a new 13-story corporate headquarters was built in downtown Harrisburg.
1991 was a landmark year for Dauphin Deposit. Earnings rose for the 20th consecutive year. The September 1991 issue of United States Banker ranked Dauphin Deposit third among the nation's second hundred largest banking companies, based on the company's performance in relation to the average equity/asset ratio and the average return on assets. Money Magazine reported in March 1991 that Veribanc, a bank rating agency, placed Dauphin Deposit among the safest banks in the United States.
More important to the bank's health perhaps was the 1991 acquisition of Hopper Soliday and Co. Inc., a Pennsylvania securities broker/dealer and the largest underwriter of general obligation municipal bonds in the commonwealth. With this purchase, Dauphin Deposit became only the fourth U.S. bank approved to underwrite corporate debt and the first mid-size bank in the country to break into the niche market of brokering. According to Dauphin Deposit's 1992 annual report, Hopper Soliday, in the first 18 months of affiliation, returned over 60 percent of the initial investment that the corporation made to acquire it.
In the August 1991 issue of ABA Banking Journal, Christopher R. Jennings, then-president of Dauphin Deposit Corporation, commented on the corporate vision: "Dauphin has concentrated on building capital and keeping its asset quality high. We have tried to create what we believe is the prototype of the smaller regional bank that can survive. Still, we believe that we have to increase our size through acquisition in order to make the economies work properly."
Other important acquisitions in the 1990s included the agreement to merge the FB&T Corporation and its major subsidiary Farmers Bank and Trust Company of Hanover, Pennsylvania. With assets of $648 million, FB&T expanded the Dauphin's franchise into Maryland and Pennsylvania counties where it had not had a presence before. In addition, Dauphin Deposit acquired Valley Bancorp, based in Chambersburg, which reported annual total assets of $324 million.
In addition, on July 1, 1994, Dauphin Deposit Bank acquired Eastern Mortgage Services, a full-service mortgage banking company, which originated, serviced, and sold first and second residential mortgage loans of varying types primarily to the eastern Pennsylvania and New Jersey mortgage markets. By the end of 1995, Eastern Mortgage was expected to expand to include 17 offices in six states.
Looking ahead to the 21st century, some industry analysts regarded Dauphin's profitability, strong capitalization, and relatively small size as providing an attractive acquisition package for larger banking companies. However, Dauphin remained independent in the mid-1990s, and its continued growth and strong leadership was likely to ensure a prosperous future.
Principal Subsidiaries: Dauphin Deposit Bank and Trust Company; Hopper Soliday & Co. Inc.; Dauphin Life Insurance Company; Dauphin Investment Company; Farmers Mortgage Corporation.